COMPANY PROFILE 1 A.COMPANY PROFILE OF RELIANCE LIFE INSURANCE ABOUT FOUNDER OF THE COMPANY Few men in history have made as dramatic a contribution to their country’s economic fortunes as did the founder of Reliance, Shri. Dhirubhai H Ambani. Fewer still have left behind a legacy that is more enduring and timeless. As with all great pioneers, there is more than one unique way of describing the true genius of Dhirubhai: The corporate visionary, the unmatched strategist, the proud patriot, the leader of men, the architect of India’s capital markets, the champion of shareholder interest. But the role Dhirubhai cherished most was perhaps that of India’s greatest wealth creator. In one lifetime, he built, starting from the proverbial scratch, India’s largest private sector enterprise. When Dhirubhai embarked on his first business venture, he had a seed capital of barely US$ 300 (around Rs 14,000). Over the next three and a half decades, he converted this fledgling enterprise into a Rs 60,000 crore colossus—an achievement which earned Reliance a place on the global Fortune 500 list, the first ever Indian private company to do so. Dhirubhai is widely regarded as the father of India’s capital markets. In 1977, when Reliance Textile Industries Limited first went public, the Indian stock market was a place patronised by a small club of elite investors which dabbled in a handful of stocks. 1
Final ProjectComparative Study of Reliance Life Insurance & Bajaj Allianz Life Insurance
Jul 29, 2015
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COMPANY PROFILE
1 ACOMPANY PROFILE OF RELIANCE LIFE INSURANCE
ABOUT FOUNDER OF THE COMPANY
Few men in history have made as dramatic a contribution to their countryrsquos economic fortunes as did the founder of Reliance Shri Dhirubhai H Ambani Fewer still have left behind a legacy that is more enduring and timeless
As with all great pioneers there is more than one unique way of describing the true genius of Dhirubhai The corporate visionary the unmatched strategist the proud patriot the leader of men the architect of Indiarsquos capital markets the champion of shareholder interest
But the role Dhirubhai cherished most was perhaps that of Indiarsquos greatest wealth creator In one lifetime he built starting from the proverbial scratch Indiarsquos largest private sector enterprise
When Dhirubhai embarked on his first business venture he had a seed capital of barely US$ 300 (around Rs 14000) Over the next three and a half decades he converted this fledgling enterprise into a Rs 60000 crore colossusmdashan achievement which earned Reliance a place on the global Fortune 500 list the first ever Indian private company to do so
Dhirubhai is widely regarded as the father of Indiarsquos capital markets In 1977 when Reliance Textile Industries Limited first went public the Indian stock market was a place patronised by a small club of elite investors which dabbled in a handful of stocks
Undaunted Dhirubhai managed to convince a large number of first-time retail investors to participate in the unfolding Reliance story and put their hard-earned money in the Reliance Textile IPO promising them in exchange for their trust substantial return on their investments It was to be the start of one of great stories of mutual respect and reciprocal gain in the Indian markets
Under Dhirubhairsquos extraordinary vision and leadership Reliance scripted one of the greatest growth stories in corporate history anywhere in the world and went on to become Indiarsquos largest private sector enterprise
Through out this amazing journey Dhirubhai always kept the interests of the ordinary shareholder uppermost in mind in the process making millionaires out of many of the
1
initial investors in the Reliance stock and creating one of the worldrsquos largest shareholder families
ABOUT RELIANCE LIFE INSURANCE
Reliance Life Insurance offers you products that fulfill your savings and protection needs Our aim is to emerge as a transnational Life Insurer of global scale and standard
Reliance Life Insurance is an associate company of Reliance Capital Ltd a part of Reliance - Anil Dhirubhai Ambani Group Reliance Capital is one of Indiarsquos leading private sector financial services companies and ranks among the top 3 private sector financial services and banking companies in terms of net worth Reliance Capital has interests in asset management and mutual funds stock broking life and general insurance proprietary investments private equity and other activities in financial services
Reliance - Anil Dhirubhai Ambani Group also has presence in Communications Energy Natural Resources Media Entertainment Healthcare and Infrastructure
VISION amp MISSION
Vision
Empowering everyone live their dreams
Mission
Create unmatched value for everyone through dependable effective transparent and profitable life insurance and pension plans
GOAL
Reliance Life Insurance would strive hard to achieve the 3 goals mentioned below
Emerge as transnational Life Insurer of global scale and standard
Create best value for Customers Shareholders and all Stake holders
Achieve impeccable reputation and credentials through best business practices
2
ACHIVEMENTS OF RELIANCE LIFE INSURANCE COMPANY
1 RLIC closed the last financial year with New Business Premium of Rs 3513 Crores
2 For 3 successive years since inception the Company has been amongst the fastest growing Companies in the Life Insurance Industry achieving a growth rate of 28 in the last financial year against a market growth of -6 In the Individual Business segment the company achieved a growth rate of 59 in terms of WRP against the private industry growth of 1
3 Reliance Life has been one of the fastest gainers in market share growing from 19 amongst private players in Mar06 to 103 as of Mar09 This has resulted in the Company growing to becoming the 4th largest private player in just two years starting at position of 11
4 The Company has been the fastest company to reach the 3 million policy mark and was the 3rd largest private insurer in terms of Policy count in 2008-09
5 Reliance Life has accomplished a large distribution ramp-up in the Industry in a short span of time by opening 1145 branches in just over 2 year
6 RLIC continues to be amongst the foremost Life Insurance companies in India to be certified ISO 90012000 for all the processes
7 Awarded the Jamnalal Bajaj Uchit Vyavahar Puraskar 2007- Certificate of Merit in the Financial Services category by Council for Fair Business Practices (CFBP)
8 The Company has been the fastest company to reach the 3 million policy mark and was the 3rd largest private insurer in terms of Policy count in 2008-09
9 The Company has also won the DL Shah Quality Council of India Commendation Award in the services category in feb 2008 for its work on promoting self help channels for service
LEADERSHIP TEAM
BOARD OF DIRECTORS
3
Gautam Doshi Director
Gautam is the Group Managing Director of Reliance Anil Dhirubhai Ambani Group and Director of Reliance Life Insurance Company Limited
In his long and illustrious career spanning 30 years Gautam has held key positions in various organisations such as Ms Bansi S Mehta RSM amp Co and Ambit Corporate Finance Pvt Ltd Presently as a Board member of various reputed public limited companies Gautam continues to power the industry with his profound knowledge and expertise
Gautam a qualified Chartered Accountant has served as the Chairman of the Institute of Chartered Accountants of India for the year 1982ndash83 He was also elected to the Council of the Institute of Chartered Accountants of India for two consecutive terms spanning over 1992 to 1998
Satya Pal Talwar Director
Satya Pal is the Director of Reliance Life Insurance Company Limited He holds an experience of more than 35 years in operations and policy formulation
Through his distinguished service in the financial industry Satya Pal has served as the lsquoChairman and Managing Directorrsquo of renowned organisations such as Bank of Baroda Union Bank of India and Oriental Bank of Commerce His in-depth knowledge of the sector has seen him rise quickly into pivotal positions at advisory and board levels in Indian and as well Global organisations such as SEBI IDBI and MasterCard International He has also held the coveted position of Deputy Governor of RBI from 1994 to 2001
Satya Pal holds a degree in Law He is a Certified Associate of the Indian Institute of Bankers and a member of the Indian Council of Arbitration
Saumen Ghosh Group President
Saumen is currently the Group President of Reliance Capital Limited
Saumen has worked in the UK for one of the leading Chartered Accountancy firms and then moved to Australia to join a subsidiary of the Allianz Group where he held various senior positions in the finance and international division In his immediate past assignment before joining Reliance Capital Limited Saumen was responsible for the overall Allianz operations in India and Middle East
Saumen is a qualified Chartered Accountant and is a member of the Institute of Chartered Accountant in England amp Wales and Australia
4
Malay Ghosh ndash President
Malay leads all activities at Reliance Life Insurance Company Limited Life and his key focus is on rapid expansion of all channels and accelerating the companyrsquos growth trajectory
Malay has over 24 years of work experience in the insurance industry He has worked for 17 years with LIC across various functions and for 7 years with Bajaj Allianz Life Insurance where he was last designated Head of Sales
Malay holds a Masters degree in statistics
Maneesha Thakur Chief Human Resources Officer
Maneesha in her role as the Chief Human Resource Officer at Reliance Life Insurance Company Limited has developed a performance driven and employee centric culture She has been at the forefront of the organization growth by facilitating talent acquisition and management
Maneesha in her career span of 15 years has worked with companies like SHCIL ALLTEL Transamerica ICICI Bank and VSNL
In addition to an MA in English Literature Maneesha holds a Post Graduate Diploma in Personnel Management amp Industrial Relations from XLRI Jamshedpur
C Mohan Chief Technology Officer
C Mohan is the Chief Technology Officer (CTO) of Reliance Life Insurance Company Limited and he is responsible for Information Technology Strategy Formulation and Deployment
Mohan is an Engineering Graduate and holds many International IT Certifications
Mohan has over 12+ years of IT Experience of which he spend more than 7+ years Executive Management Experience in overseas He worked with Cathay Pacific Airways and Computer Sciences Corporation in Asia Pacific Role at Singapore before he joined Reliance Life
In Year 2008 he has been awarded as Pioneer CIO by CIOL-DataQuest and Bold 100 CIO by IDG-CIO Forum He also received the Early SOA Adopter Award from IBM
He has recently been selected as a honoree in Global CIO 100 2009 Award Summit to be held in Colorado USA
5
R Rangarajan Chief Investment Officer
Rangarajan is the Chief Investment Officer at Reliance Life Insurance Company Limited He alongwith his team strives to give the best possible returns on investments to shareholders and policyholders keeping in mind their appetite for risk Rangarajan draws on his in-depth knowledge of investment and experience of 25 years to ensure that the goals of the organisation are metmdashwithout any compromise on the benefits of the investors
Prior to being a part of Reliance Life Insurance Rangarajan worked with AMP Sanmar Life Insurance as Head ndash Investments for three years His earlier assignment was with a large Mutual Fund organization
Rangarajan is a qualified Chartered Accountant
S V Sunder Krishnan Chief Risk Officer
Sunder is the Chief Risk officer for Reliance Life Insurance and is responsible for overseeing Risk Management Internal Audit and Compliance functions at Reliance Life Insurance
Sunder came with 23 years of experience and knowledge in Internal Audits Compliance Assurance Consulting and Risk Management He has worked for various leading organizations such as DSP Merrill Lynch ING Vysya Credit Lyonnais Standard Chartered Bank International Indonesia Ernst amp Young and Delloitte at senior and middle management positions with exposure to businesses and operations in more than 12 countries
Sunder is a qualified FCA CISA and CCSA He is also the President of Information Systems Audit Control Association (ISACA-USA) Mumbai Chapter for the year 2007-08 and was a member of the Board of Advisors to Bombay Chartered Accountants Society (BCArsquoS) for Internal Audit studies for the year 2005-06
RELIANCE ADA GROUP
6
HISTORY
7
Reliance Capital Limited announced the launch of its life insurance business on February 1 2006 This was after obtaining the required regulatory approvals from the Registrar Of Companies and the Insurance Regulatory and Development Authority
It was in August 2005 that the ball was set rolling when Reliance Capital Limited the financial arm of Reliance ndash Anil Dhirubhai Ambani Group (ADAG) ndash announced the requisition of 100 shareholding in AMP Sanmar Life Insurance Company Limited and the formal transfer of shares took place in October 2005 The company will issue all policy contracts under the Reliance Life Insurance Company limited name All the existing policy contracts also stand transferred to the Reliance Life Insurance entity with all the original contractual terms and commitments intact
A Reliance Capital company
Reliance started from scratch only to become Indiarsquos
largest private sector company in ~40 years
1966 1971-72 1977 1985 1992 1993
Birth of Reliance ndash
First Textile Mill at Naroda
Birth of Reliance ndash
First Textile Mill at Naroda
Launch of lsquoOnly Vimalrsquo brand
Launch of lsquoOnly Vimalrsquo brand
Sales Cross 4000 CrBecomes Largestprivate sector Co inIndia
Sales Cross 4000 CrBecomes Largestprivate sector Co inIndia
Launch of 1st
IPO for general public- start of a
trend
Launch of 1st
IPO for general public- start of a
trend
Total Assets cross 1000 Cr
Total Assets cross 1000 Cr
Twin IPOs receive 1million applications
Twin IPOs receive 1million applications
The Story of Growth First corporate in Asia to issues
50 and 100 yrs bond in US debt market
First corporate in Asia to issues
50 and 100 yrs bond in US debt market
1997 1998
Total assetscross 35000 CrRevenues cross
14000 Cr
Total assetscross 35000 CrRevenues cross
14000 Cr
8
A Reliance Capital company
2000 2000 2001 2003 2005 2006-07
Group Profits cross 2500 Cr
Revenues cross 20000 Cr
Total Assets cross 50000 Cr
Group Profits cross 2500 Cr
Revenues cross 20000 Cr
Total Assets cross 50000 Cr
Reliance Communication plans announced
Reliance Communication plans announced
Reliance Life Insurance rank 6th at 930 Cr
Reliance Life Insurance rank 6th at 930 Cr
Group revenues cross 60000 Cr
Largest Business group
in India
Group revenues cross 60000 Cr
Largest Business group
in India
Controlling stake in BSES (Reliance
Energy)Largest mobile
services co in India
Controlling stake in BSES (Reliance
Energy)Largest mobile
services co in India
ADA Group formedAMP Sanmar acquired and renamed Reliance
Life Insurance
ADA Group formedAMP Sanmar acquired and renamed Reliance
Life Insurance
And the journeyBecame the 1st
company to cross 1 million policy mark in 2 years of operations
Became the 1st
company to cross 1 million policy mark in 2 years of operations
Sep 2007 2007
Reliance became only the second National Insurance player to get ISO 9001-2000
Reliance became only the second National Insurance player to get ISO 9001-2000
A Reliance Capital company
Be the Change
2008 2008 2008 2007-08 2008-09
Reliance MF becomes 1st
AMC to cross
100000 Cr
Reliance MF becomes 1st
AMC to cross
100000 Cr
RCOM crosses 50 million customers
RCOM crosses 50 million customers
A total of more than 2000 Branches on anvil in the fiscal year
A total of more than 2000 Branches on anvil in the fiscal year
Continueshellip
RLIC jumps to 4th position
with 2750 Cr
RLIC jumps to 4th position
with 2750 Cr
Crosses 2million policies
Crosses 2million policies
9
SWOT ANALYSIS
STRENGTHS
Dedicated Employees Well Efficient Management Strong and popular brand name Adaptability to changes Goodwill of the company Transparency in service
WEAKNESS
Lack of good services
Lack of awareness about insurance among people
Less coverage in Rural Areas
Lack of credibility among the people because Reliance life insurance being a
private player
OPPORTUNITIES
Fast growing economy
Increasing per ndashcapita income in India
Saving behavior
High growth of Traditional industry
THREATS
Arrival of new entrants in the insurance industry
Cut throat competition within the industry
10
CORE VALUES
Reliance Life Insurance Company Limited has some core values which are listed as follows
1) Result Oriented2) Performance Driven3) Customer Focused4) Learning and Development Oriented5) Employee Centric6) Informal and Fun
1 B COMPANY PROFILE OF BAJAJ ALLIANZ LIFE INSURANCE
11
Bajaj Allianz Life Insurance Company limited is a joint venture between two leading conglomerates Bajaj Auto limited and Allianz AG company whose total asset value is of Rs 5900000 cr Bajaj whose wealth as of now is Rs 8000 cr group in India 55 years of experience 4th largest group in the world Above 15000 employees largest 2 amp 3 wheeler manufacture in India Allianz established in 1890 who has 115 years of experience in financial year
Bajaj Auto is one of the most trusted name is Indian auto for over 55 years At Bajaj Allianz customer delight is our guiding principle Ensuring world-class solutions by offering customized products with transparent benefits supported by best technology is our business philosophy
Notwithstanding the recession and a volatile stock market Bajaj Allianz life insurance posted a profit of Rs 45 cr for financial year 2009 against a loss of Rs 16 cr in the previous year
The company new business premium fell to Rs 4491 cr in the year against Rs 6674 cr recorded in the last year
We have been able to make a profit of profit of Rs 45 cr even in these difficult times Our new business premium declined by 30 to Rs 4491 cr because the stock market declined and we didnrsquot open any new office in FY 09rdquo Bajaj Allianz country manager and Bajaj Allianz life insurance CEO kamesh Goyal said
Bajaj Allianz Life Insurance has around 1200 offices and the company would not increase the number this year too Goyal said
The companyrsquos renewal premium grew by more than 100 to Rs 6133 cr in the 2008-2009 as compared to Rs 3051 cr in the previous fiscal year he saidIn the year Bajaj Allianz life insurance issued 29 lakh policies which were the second largest in the industry
Vision bull To be the first choice insurer for customers bull To be the preferred employer for staff in the insurance industry bull To be the number one insurer for creating shareholder value
MissionAs a responsible customer focused market leader we will strive to understand the insurance needs of the consumers and translate it into affordable products that deliver value for money
12) TRADITIONAL PLANS OF THE COMPANY
12
12A )TRADITIONAL PLAN OF RELIANCE LIFE INSURANCE -
Life insurance products are designed to suit the requirements of customers Fundamentally the product provide for
Risk cover
Investment
Health cover
In every product to a certain degree risk cover is imperative for it to fall under the category of insurance Based on the coverage of the product the premiums are calculated and the customer pays accordingly In order to suggest the right product it is essential for an agent to understand the requirements of the customer well
The traditional plans of the company have the following features- Fixed Tenure Potential for better returns Transparency Flexibility in investment Flexibility to invest more Flexibility to skip the premium Flexibility to choose the cover High liquidity Age term and sum assured decide the amount of premium Top- ups and switches are not allowed
Reliance Life Insurance Company Limited has offered 9Traditional plans to the customers which are listed as follows1) Reliance Term Plan2) Reliance Whole Life Plan3) Reliance Endowment Plan4) Reliance Special Endowment Plan5) Reliance Cash Flow Plan6) Reliance Credit Guardian Plan7) Reliance Special Credit Guardian PlanEach of the above traditional plans is discussed as follows
1) Reliance term plan-This insurance policy is designed for those who only want life cover for the protection of their family and do not wish to save for themselves It can also be useful to business firms that wish to provide financial security to their business against the sudden loss of partners or valuable manpower Since there is no saving element or bonus provision the premium is very lowHence this is a high-risk plan with a low premium
13
1048729 Features -a) Purely a term planb) Entry age minimum 18 years and maximum 65 yearc) Maximum premium paying term is 30 yeard) Loan facility NAe) Maturity amount = Sum assured
2) Reliance Whole Life Plan -This insurance policy is designed for people who do not wish to avail of any benefits themselves but wish to create an immediate estate to protect their family by availing of insurance cover on their life at a very low cost
1048729 Features -a) It is a whole life insurance policy with profitsb) Low cost life coverc) Maturity age is 85 year or 99 years last birthday as chosend) Maturity amount = Sum assured + Vested bonuse) Tax benefit is available
3) Reliance Endowment Plan -Reliance Life Insurancersquos Reliance Endowment Plan is the key to all your financial needs It is an inexpensive and easy way to protect you your family or your businessIn a nutshell this plan will keep you financially prepared for all the special occasions in your life - your daughterrsquos wedding your childrsquos university education or even a new office for your business - by eliminating the burden that a shortage of money createsIn the event of your untimely death Reliance Endowment Plan will also assist your loved ones through this difficult time by the financial support that it providesReliance Endowment Plan also gives you the additional benefit of participating in the companyrsquos profits which you will receive at the end of the policy period
1048729 Features -a) Entry age minimum is 5 year and maximum 65 yearb) Maturity age minimum is 18 year and maximum 75 yearc) Minimum premium paying term is 5 year and maximum 35 year in case of regular and in case of single 15 yeard) Minimum sum assured is Rs 25000 or as determined by the minimum premiume) Maximum sum assured is Rs 5 00000 (entry age below 18 years and no limit for entry age 18 and above)f) Premium mode annual half yearly quarterly and monthly (by salary deduction only)g) Loan up to 90 of the surrender value of the policyh) Maturity amount = Guaranteed sum assured + Reversionary bonus
4) Reliance Special Endowment Plan -
14
This insurance policy is designed for people who wish to combine savings with extended security The unique feature of this policy is that life protection continues for five years after you have stopped the payment of premium Payment of sum assured at the end of premium paying term and extension of life cover thereafter for the full sum assured for a period of 5 years are characteristics of the policyThis plan also participates in the profits
1048729 Features -a) Entry age minimum 12 year and maximum 65 yearb) Minimum sum assured is Rs 25000c) Minimum premium paying term is 10 year and maximum 40 yeard) Unique feature of this policy is that five year life protection continues after you have stopped the payment of premiume) Tax benefit is availablef) Under this policy bonus is compounded yearlyg) Loan facility is availableh) Maturity amount = Full sum assured before maturity date +Vested bonus at the time of maturity date
15
12 B) TRADITIONAL PLANS OF BAJAJ ALLIANZ LIFE INSURANCE
I ENDOWMENT PLAN
Saving plan which offer bonuses are excellent long term plan with complete safety Our products offer additional benefits which include 4 times life cover at a little extra cost limited premium payment terms and compounded reversionary bonuses making it a very good long term investment
1 Bajaj Allianz Invest GainInvest Gain is a specially designed plan that offers a unique combination of benefits that help you develop a sound financial portfolio for your family
4 Times Life Cover at a little extra cost
Limited premium payment option available
Additional Benefits
a) Accidental Death Benefit and Disability Benefit b) Critical Illness Benefit and Hospital Cash Benefit c) Family Income Benefit In case of death or accidental total permanent disability of insured all future premiums are waived and 1 of the sum assured is paid monthly
Invest Gain Save Care Economy SP Life Time Care
Super Saver
16
2 Bajaj Allianz save Care Economy SP
A One-time payment Investment plan that provides for savings with high risk cover for 10 years and also participates in the profits of the company It offers you high risk cover with easy liquidity and high returns
a) A single premium endowment plan that participates in the profitsb) 10 year Investment planc) Benefits payable on maturityc) Loans available
17
3 Bajaj Allianz life time care
A whole life plan which provides survival benefits at the age of 80 thereby making sure you are financially secure at the time when you need it the most Additional Benefits
a) Accidental Death Cover and Disability Cover b) Critical Illness Cover and Hospital Cash Cover c) Waiver of Premium Benefit
4Bajaj Allianz Super Saver plan
Bajaj Allianz Super Saver is a regular premium endowment plan which helps you save regular amounts for a safer tomorrow It also provides you with extra benefits of Guaranteed Additions to your sum assured at the end of each policy year
18
II MONEY BACK PLAN
Money back plans are Traditional Insurance plans that provide the investor with returns at regular stages of life
CashGain
1)Bajaj Allianz Cash Gain plan
A Money back plan which guarantees 125 payout + bonuses
Quadruple life cover
5 easy payouts which give upto 125 + bonuses
Additional Benefitsa) Accidental Death Benefit and Disability Benefitb) Critical Illness Benefit and Hospital Cash Benefitc) Family Income Benefit In case of death or accidental total permanent disability of insured all future premiums are waived and 1 of the sum assured is paid monthly
19
20
13) INDUSTRY PROFILE
MEANING OF INSURANCE
Insurance may be described as a social device to reduce or eliminate risk of loss to life and property Insurance is a collective bearing of risk Insurance is a financial device to spread the risks and losses of few people among a large number of people as people prefer small fixed liability instead of big uncertain and changing liability
Insurance can be defined as a ldquolegal contract between two parties whereby one party called insurer undertakes to pay a fixed amount of money on the happening of a particular event which may be certain or uncertainrdquo The other party called insured pays in exchange a fixed sum known as premiumInsurance is desired to safeguard oneself and onersquos family against possible losses on account of risks and perils It provides financial compensation for the losses suffered due to the happening of any unforeseen events
IMPORTANCE OF INSURANCE
Insurance constitutes one of the major segments of the financial marketInsurance services play predominant role in the process of financial Intermediary Today insurance industry is one of the most growing sectors in India There is lot of potential in the Indian Insurance Industry
There are many issues which require study The scope of the study of Insurance industry of India would be very great as there are ongoing Developments in the industry after the opening of the sectorOne of the major issues is the effects on LIC after the entry of private players in the market Though market share of LIC has been affected it has improved in terms of efficiency
There are number of other hot topics like penetration of Health Insurance Rural marketing of insurance new distribution channels new product ranges insurance brokersrsquo regulation incentive scheme of development officers of LIC etc So it offers lot of scope for studying the insurance industryRight now the insurance industry has great opportunities in a country like India or China which huge population Also the penetration of insurance in India is very low in both life and non-life segment so there is lot potential to be tapped Before starting the discussion on insurance industry and related issues we have to start with the basics of insurance So first we understand what is insurance How the word lsquoinsurancersquo is different from the word lsquoassurancersquo Etc
21
HISTORY OF INSURANCE
The concept of insurance is believed to have emerged almost 4500 years ago in the ancient land of Babylonia where traders used to bear risk of the carvan by giving loans which were later repaid with interest when the goods arrived safely
The concept of insurance as we know today took shape in 1688 at a place called Lloydrsquos Coffee House in London where risk bearers used to meet to transact business This coffee house became so popular that Lloydrsquos became the one of the first modern insurance companies by the end of the eighteenth centuryMarine insurance companies came into existence by the end of the eighteenth century These companies were empowered to write fire and life insurance as well as marine The Great Fire of London in 1966 caused huge loss of property and life With a view to providing fire insurance facilitiesDr Nicholas Barbon set up in 1967 the first fire insurance company known as the Fire office
Life insurance in its modern form came to India from England in 1818 The Oriental Life Insurance Company was the first insurance company to be set up in India to help the widows of European community The insurance companies which came into existence between 1818 and 1869 treatedIndian lives as subnormal and charged an extra premium of 15 to 20 per cent The first Indian insurance company the Bombay Mutual LifeAssurance Society came into existence in 1870 to cover Indian lives at normal rates
The Insurance Act 1938 the first comprehensive legislation governing both life and non-life branches of insurance were enacted to provide strict state control over insurance business This amended insurance Act looked into investments expenditure and management of these companiesBy the mid- 1950s there were 154 Indian insurers 16 foreign insurers and 75 provident societies carrying on life insurance business in India Insurance business flourished and so did scams irregularities and dubious investment practices by scores of companies As a result the government decided to nationalize the life assurance business in India The Life InsuranceCorporation of India (LIC) was set up in 1956 The nationalization of life insurance was followed by general insurance in 1972
22
MEANING OF LIFE INSURANCE
There are three parties in a life insurance transaction the insurer the insured and the owner of the policy (policyholder) although the owner and the insured are often the same person
Another important person involved in a life insurance policy is the beneficiary The beneficiary is the person or persons who will receive the policy proceeds upon the death of the insured
Life insurance may be divided into two basic classes ndash term and permanent
Term life insurance provides for life insurance coverage for a specified term of years for a specified premium The policy does not accumulate cash value
Permanent life insurance is life insurance that remains in force until the policy matures unless the owner fails to pay the premium when due
Whole life insurance provides for a level premium and a cash value table included in the policy guaranteed by the company The primary advantages of whole life are guaranteed death benefits guaranteed cash values fixed and known annual premiums and mortality and expense charges will not reduce the cash value shown in the policy
Universal life insurance (UL) is a relatively new insurance product intended to provide permanent insurance coverage with greater flexibility in premium payment and the potential for a higher internal rate of return A universal life policy includes a cash account Premiums increase the cash account If you want insurance protection only and not a savings and investment product buy a term life insurance policy
If you want to buy a whole life universal life or other cash value policy plan to hold it for at least 15 years Canceling these policies after only a few years can more than double your life insurance costs
23
HISTORY OF LIFE INSURANCE
Risk protection has been a primary goal of humans and institutions throughout history Protecting against risk is what insurance is all aboutOver 5000 years ago in China insurance was seen as a preventative measure against piracy on the sea Piracy in fact was so prevalent that as a way of spreading the risk a number of ships would carry a portion of another ships cargo so that if one ship was captured the entire shipment would not be lostIn another part of the world nearly 4500 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
Life insurance came about a little later in ancient Rome where burial clubs were formed to cover the funeral expenses of its members as well as help survivors monetarily With Romes fall around 450 AD most of the concepts of insurance were abandoned but aspects of it did continue through the Middle Ages particularly with merchant and artisan guilds These provided forms of member insurance covering risks like fire flood theft disability death and even imprisonment
During the feudal period early forms of insurance ebbed with the decline of travel and long-distance trade But during the 14th to 16th centuries transportation commerce and insurance would again reemergeInsurance in India can be traced back to the Vedas For instance yogakshema the name of Life Insurance Corporation of Indias 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
And similar to ancient Rome burial societies were formed in the Buddhist period to help families build houses and to protect widows and children
Modern InsuranceIllegal almost everywhere else in Europe life insurance in England was vigorously promoted in the three decades following the Glorious Revolution of 1688 The type of insurance we see today owes its roots to 17th century England Lloyds of London or as they were known then Lloyds Coffee House was the location where merchants ship owners and underwriters met to discuss and transact business dealsWhile serving as a means of risk-avoidance life insurance also appealed strongly to the gambling instincts of Englands burgeoning middle classGambling was so rampant in fact that when newspapers published names of prominent people who were seriously ill bets were placed at Lloydrsquos on their anticipated dates of death Reacting against such practices 79 merchant underwriters broke away in 1769 and
24
two years later formed a ldquoNew Lloydrsquos Coffee Houserdquo that became known as the ldquoreal Lloydrsquosrdquo Making wagers on peoples deaths ceased in 1774 when parliament forbade the practice
Insurance moves to AmericaThe US insurance industry was built on the British model The year 1735 saw the birth of the first insurance company in the American colonies inCharleston SC The Presbyterian Synod of Philadelphia in 1759 sponsored the first life insurance corporation in America for the benefit of ministers and their dependents And the first life insurance policy for the general public in the United States was issued in Philadelphia on May 22 1761But it wasnt until 80 years later (after 1840) that life insurance really tookoff in a big way The key to its success was reducing the opposition from religious groups
In 1835 the infamous New York fire drew peoples 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
With the creation of the automobile public liability insurance which first made its appearance in the 1880s gained importance and acceptanceMore advancement was made to insurance during the process of industrialization In 1897 the British government passed the Workmens Compensation Act which made it mandatory for a company to insure its employees against industrial accidents
During 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 most labor 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
25
BENEFITS OF LIFE INSURANCE
1) Risk cover -Life Insurance contracts allow an individual to have a risk cover against any unfortunate event of the future
2) Tax Deduction -Under section 80C of the Income Tax Act of 1961 one can get tax deduction on premiums up to one lakh rupees Life Insurance policies thus decrease the total taxable income of an individual
3) Loans -An individual can easily access loans from different financial institutions by pledging his insurance policies
4) Retirement Planning -What had provided protection against the financial consequences of premature death may now be used to help them enjoy their retirement yearsMoreover the cash value can be used as an additional income in the old age
5) Educational Needs -Similar to retirement planning the cash values that flow from ones life insurance schemes can be utilized for educational needs of the insurer or his children
26
ROLE OF LIFE INSURANCE IN THE GROWTH OF THE ECONOMY
The Life Insurance Industry has an enviable track record among public sector units It has a Consistent profit and dividend paying record accompanied by a steady growth in its financial resources Through investments in the Government sector and socially- oriented sectors the Industry has contributed immensely to the nations development The industry is recognized as one of the largest financial Institutions in the country The ventures initiated by the industry in the areas of Mutual Fund
Housing Finance has done exceedingly well in recent years To protect the countrys foreign exchange reserves the reinsurance arrangement are so organized that maximum retention is made possible within the country while at the same time protecting interests of the policy holders
27
ROLE OF IRDA
MISSION
ldquoTo protect the interests of the policyholders to regulate promote
and ensure orderly growth of the insurance industry and for matters
connected therewith or incidental theretordquo
The Insurance Act 1938 had provided for setting up of the Controller of Insurance to act
as a strong and powerful supervisory and regulatory authority for insurance Post
nationalization the role of Controller of Insurance diminished considerably in
significance since the Government owned the insurance companies But the scenario
changed with the private and foreign companies foraying in to the insurance sector This
necessitated the need for a strong independent and autonomous Insurance Regulatory
Authority was felt As the enacting of legislation would have taken time the then
Government constituted through a Government resolution an Interim Insurance
Regulatory Authority pending the enactment of a comprehensive legislation
The Insurance Regulatory and Development Authority Act 1999 is an act to provide for
the establishment of an Authority to protect the interests of holders of insurance policies
to regulate promote and ensure orderly growth of the insurance industry and for matters
connected therewith or incidental thereto and further to amend the Insurance Act 1938
the Life Insurance Corporation Act 1956 and the General insurance Business
(Nationalization) Act 1972 to end the monopoly of the Life Insurance Corporation of
India (for life insurance business) and General Insurance Corporation and its subsidiaries
(for general insurance business) The act extends to the whole of India and will come
into force on such date as the Central Government may by notification in the Official
Gazette specify Different dates may be appointed for different provisions of this Act
28
The Act has defined certain terms some of the most important ones are as follows
Appointed day means the date on which the Authority is established under the act
Authority means the established under this Act Interim Insurance Regulatory Authority
means the Insurance Regulatory Authority set up by the Central Government through
Resolution No 17(2) 94-lns-V dated the 23rd January 1996
Words and expressions used and not defined in this Act but defined in the Insurance Act
1938 or the Life Insurance Corporation Act 1956 or the General Insurance Business
(Nationalization) Act 1972 shall have the meanings respectively assigned to them in
those Acts A new definition of Indian Insurance Company has been inserted Indian
insurance company means any insurer being a company
(a) Which is formed and registered under the Companies Act 1956
(b) in which the aggregate holdings of equity shares by a foreign company either by
itself or through its subsidiary companies or its nominees do not exceed twenty-six
percent paid up capital in such Indian insurance company
(c) Whose sole purpose is to carry on life insurance business general insurance business
or re-insurance business
29
CURRENT SCENERIO
21) CURRENT SCENERIO OF THE INSURANCE INDUSTRY
With largest number of life insurance policies in force in the world insurance happens to be a mega opportunity in India Itrsquos a business growing at the rate of 15-20 per cent annually and presently is of the order of Rs 450 billion Together with banking services it adds about 7 per cent to the countryrsquos GDP Gross premium collection is nearly 2 per cent of GDP and funds available with LIC for investment are 8 per cent of GDP
Yet nearly 80 percent of Indian population is without life insurance cover while health insurance and non-life insurance continues to be below international standards And this part of the population is also subject to weak social security and pension systems with hardly any old age income security This it is an indicator that growth potential for the insurance sector is immense A well-develop and evolved insurance sector is needed for economic development as it provides long term funds for infrastructure development and at the same time strengthens the risk taking ability It is estimated that over the next ten years India would require investments of the order of one trillion US dollar The insurance sector to some extent can enable investment in infrastructure development to sustain economic growth of the country Insurance is a federal subject in India There are two legislation that govern the sector - The Insurance Act-1938 and The IRDA Act-1999
In India insurance is generally considered as a tax-saving device instead of its other implied long term financial benefits Indian people are prone to investing in properties and gold followed by bank deposits They selectively invest in shares also but the percentage is very small Even to this day Life Insurance Corporation of India dominates India insurance sector With the entry of private sector players backed by foreign expertise Indian insurance market has become more vibrant Business is becoming increasingly vulnerable due to wide variety of risk particularly after September 11 2001 disaster in which twin tower located in the hearts of New York city were crashed by terrorist attack resulting in loss of 6000 human lives as well as financial loss to the extent of $45 billion The impact of this terrorist attack has created new horizon of risk to the business world today
However rapid changes in the global economy development of technology and e-business already gathered momentum Increased dependency on technology has originated new risks that have resulted in well-published incidents Computer hackers obtaining credit card information from visa and Power-Gen the love bug virus cyber extortion web content liability professional errors and omissions computers and other crimes and activities such as terrorism kidnapping and companyrsquos executive and extortion of money commercial liability etc have significant impact on business resulting in extreme financial loss commercial embarrassment or regulatory implications
Corporation insurancerisk managers under the circumstances have to demand increasingly complex insurance products They have to be more attentive and
30
knowledgeable about emerging risks how those risks are managed effectively and efficiently and how they could ultimately affect a companyrsquos financial situation and therefore its position in the market place In short how such risks are managed and can give to an insured a competitive advantage
In the changing times adoption of e-commerce into business models the integration of web-based communication and data transfer capabilities into the business operations and leveraging of advanced network and technology architecture for maximum benefit are the new horizon of the risks For the corporate insurancerisks managers these new exposure-cyber-risks-can lead to cyber losses widening the interpretation of what constitute insure property damage particularly as it relates to information technology and dataAll the while organizations are tremendous pressure to reduce expenses and increase profit margin and cannot afford to suffer a property loss of business interruption due to any cause (risk) How a company identifies quantifies qualifies and manages these new risks exposure in addition to the well-known tradition risks is becoming an important factor in creating shareholders value This often means changing the way Everyone in the organization have to think about risk
Insurance managers are seeing price levels (premium) continue to rise-albeit modestly-in todayrsquos primarily commercial property and reinsurance markets They are demanding that insurers improve their risk assessment and quantification offerings so that an insured may avail the benefit in cost (premium rate) on account of well-managed riskThe good news for insurance managers is that as the economy evolves insurers are increasingly matching that evaluation with new products services and capabilities due to opening up the insurance market to the private players
Insurers who are truly listening to their customers and striving to be more in tune with their needs are responding to the fast changing corporate insurance and risk management landscape They are listening to their customers They are making fresh approaches to address the new challenges faced by insured organization by designing the new products as per the needs Insurers are providing value added services to insured to protect the value created by the business
Insurers are increasingly required to develop and expand their information technology platforms to ensure that the vast amount of data they collect about their customers Insurancerisk portfolio can easily and seamlessly be transformed into valuable risk management information To help their customers insurers should make better-informed decisions They must be able to swiftly deliver this data to their customers (insured) anywhere in the world Insurer are also discovering that risk assessment have to be customized to meet policyholdersrsquo new exposures and needs The insurance industry is stepping up and addressing these challenges in several different ways
31
22) CURRENT SCENARIO OF RELIANCE LIFE INSURANCE
RLIC offers wide range of innovative life insurance products targeted at individuals and groups It offers need based products that caters to four distinct segments namely protection child retirement and investment plans RLIC is committed to emerge as a
transnational Life Insurer of global scale and standard
Reliance Life Insurance Company Limited (RLIC) is amongst the fastest growing life insurance companies in India It is also amongst the top four private sector life insurance companies in India (As on FY 2008-2009)
As on March 31 2009 RLIC has an annualized premium of Rs 30 billion with a market share of 103 It has leapfrogged on the growth path and has reached the 4 million policy mark in a short span of within 3 years RLIC has a strong distribution network of 1145 branches with more than 149000 agents
32
Insurancersquos Market Share in Comparison of Other Private company
If we look at the status of Reliance Life Insurancersquos market share in comparison of other
private company in comparison of premium earned-
If we talk the growth of Insurance industryrsquos private players in recent years the data will
reflect-
CH - 3) RESEARCH METHODOLOGY
33
RESEARCH DESIGN-
COMPARITIVE STUDY- A comparative study has been undertaken to compare the traditional Plans of Reliance Life Insurance with that of Bajaj Allianz life insurance
DATA TYPE
INTRODUCTION - Any organization whether big or small private or public needs different type of information to know its popularity I have gathered secondary data and primary data and collected information from the combination of these two data
PRIMARY DATA - Primary data collection method was decided for observing working of the company and approaching the customers directly face to face A great care was taken while collecting the primary data to answer that it is relevant accurate current and unbiased
SECONDARY DATA - Secondary data collection method was used by referring to various websites books and newspapers for collecting information regarding the project under study Secondary data consist of the information that already exists somewhere else for some another purpose
SAMPLING TECHNIQUES-
SAMPLE SIZE- A sample size of 50 was taken to be analyzed
SAMPLE LOCATION-Various sectors of Kamla Nagar Civil lines Mukherji Nagar Model Town and selected areas of Delhi
SAMPLING PROCESS - Convenient sampling was used to overcome the time and money constraints that could have been faced by us while collecting the data The customers were contacted face to face directly and also by way of telephonic conversation with them
ANALYTICAL TOOLS - The data collected were arranged accordingly and statistical tools like bar graphs and pie-charts were used to analyze and present the data
RESEARCH INSTRUMENT USED-
34
SAMPLING MEDIA - Printed questionnaires consisting several questions were asked to have an idea of customers view about Reliance Life Insurance plans followed by personal questions
FIELD WORK - Rigorous field work was undertaken to locate the interested and potential respondents to fulfill the objectives of the study
THE PRIMARY OBJECTIVEOF THE STUDY -
The primary objective of the research study is to have a detailed analysis of Reliance Life Insurance bringing in focus the future prospects of the (Anil Dhirubhai Ambani group) with relevance to the customer perception regarding the various plans and products offered by Reliance Life Insurance
31) DATA ANALYSIS AND INTERPRETATION
35
PERSONAL DETAILS
1) AGE a) 18-30b) 31-50c) 51-65
AGE NO OF RESPONDENTS PERCENTAGE
18-30 21 42
31-50 19 38
51-65 10 20
TOTAL 50 100
INTERPRETATION-The bar graph reveals that 42 of the respondents belong to the age group of 18-30 years 38 lies in the age group of 31-50 years and 20 of them lie in the age group of 51-65 years
2) OCCUPATION
4238
20
05
1015202530354045
NO
O
F
RE
SP
ON
DE
NT
S
18 to 30 31 to 50 51 to 65
AGE (in year)
AGE WISE CLASSIFICATION
36
a) Serviceb) Businessc) Professiond) Housewifee) Retired
OPTION NO OF RESPONDENTS PERCENTAGE
Service 16 32
Business 14 28
Profession 5 10
Housewife 8 16
Retired 7 14
TOTAL 50 100
INTERPRETATION-The above bar graph reveals that 32 of the total respondents were servicemen 28 of them belonged to the business class 10 were professionals 16 were housewives and 14 of the total respondents fall in the retired category
3) INCOME
32
28
10
16
14
0
5
10
15
20
25
30
35
Service Business Profession Housewife Retired
OCCUPATION
OCCUPATION WISE CLASSIFICATION
37
a) 150000-300000
b) 300000-500000
c) Above 500000
OPTION NO OF RESPONDENTS PERCENTAGE
150000-300000 24 48
300000-500000 14 28
Above 500000 12 24
TOTAL 50 100
INTERPRETATION-The above bar graph reveals that out of the total respondents 48 lie in the income group of 150000-300000 28 of the total respondents belonged to the income group of 300000-500000 and 24 lie in the income group of people earning an income of above Rs 500000pa
4828 24
01020304050
N O
OF
RE
SP
ON
DE
NT
S
150000-300000
300000-500000
ABOVE500000
INCOME (in RS)
INCOME WISE CLASSIFICATION
38
4) FAMILY MEMBERS
a) 2b) 3c) 4d) Above 4
OPTION NO OF RESPONDENT PERCENTAGE
2 11 22
3 9 18
4 24 48
Above 4 6 12
TOTAL 50 100
INTERPRETATION The above bar graph shows that 22 of the total respondents had a family of 2 members 18 of them had 3 family members 48 of them had 4 family members and 12 of them had the no of family members above 4
Q1 Where do you prefer to invest
22 18
48
120
1020304050
No
o
f re
spo
nd
ents
2 3 4 Above 4
No of family members
MEMBER WISE CLASSIFICATION
39
a) fixed deposits
b) stock
c) mutual funds
d) insurance
e) others
Option No of respondents Percentage
Fixed deposits 5 10
Stock 10 20
Mutual fund 10 20
Insurance 18 36
others 7 14
TOTAL 50 100
Interpretation The above pie chart shows that out of 50 respondents 10 preferred to invest in fixed deposits 20 in stocks 20 in mutual funds 36 in insurance and 14 in others like property gold etc
Q2 What are your priorities for investment
40
a) protecting your family against pre-mature death
b) wealth creation
c) retirement needs
d) child education and marriage
e) protect income against disability sickness or critical illness
Option No of respondents Percentage
Protecting your family against pre mature death
10 20
Wealth creation 14 28
Retirement needs 5 10
Child education and marriage 7 14
Protect income against disability sickness or critical illness
14 28
TOTAL 50 100
Interpretation The above pie chart shows that out of 50 respondents 20 of them invest for protecting their family against premature death 28 for creating wealth 10 for meeting their future retirement needs 14 for child education amp marriage and 28 for protection against disability and sickness
Q3 What is your main motive behind investing in life insurance
41
a) tax benefit
b) savings
c) risk cover
Option No of respondents Percentage
Tax benefits 27 54
Savings 5 10
Risk cover 18 36
TOTAL 50 100
Interpretation The above pie chart shows that out of the sample respondents 54 have tax benefit 10 have savings and 36 have risk cover as their main motive for making an investment in life
Q4 What kind of investment do you prefer
42
a) high risk high gain
b) low risk low gain
c) moderate
d) vary times to times
Option No of respondents Percentage
High risk high gain 8 16
Low risk low gain 5 10
Moderate 12 24
Vary times to times 25 50
TOTAL 50 100
Interpretation The above pie chart shows that out of 50 respondents 16 preferred high risk- high gain form of investment 10 preferred low risk- low gain form of investment 24 preferred moderate investment and 50 preferred varied form of investment
43
Q5Are you interested to invest in Traditional Plans
a) YES
b) NO
Option No of respondents Percentage
YES 36 72
NO 14 28
TOTAL 50 100
Interpretation The above pie chart shows that 72 of the respondents preferred to invest in Traditional Plans
44
Q6 What is your level of annual investmenta) below 20000
b) 20000-40000
c) above 40000
Option No of respondents Percentage
Below 20000 41 82
20000-40000 7 14
Above 40000 2 4
TOTAL 50 100
Interpretation The above pie chart shows that 82 of the respondents are willing to invest below Rs 20000 per annum 14 of them want to invest within Rs 20000 per annum to Rs 40000 and 4 wanted to invest over and above Rs 40000
45
Q7 What factors would you consider most important before choosing an insurance policy
a) publicity of the company
b) reputation of the company
c) quality of life advisors
d) after sales-supporting of the company
Option No of respondents Percentage
Publicity of the co 5 20
Reputation of the co 25 50
Quality of life advisors 10 10
After sale-services 10 20
TOTAL 50 100
Interpretation out of the sample respondents 20 considers publicity of the company 50 considers reputation of the company 10 considers quality of life advisors and 20 considers after sales support of the company as the most important factor for choosing an insurance company
46
Q8 Which life insurance company would you prefer the most to invest ina) reliance life insurance (RLIC)
b) Bajaj Allianz life insurance
Option No of respondents Percentage
RLIC 21 42
BAJAJ ALLIANZ 29 58
TOTAL 50 100
Interpretation Out of 50 respondents 42 preferred to invest in reliance life insurance over 58 of the respondents who prefer to invest in Bajaj Allianz life insurance
47
Q9 If reliance life insurance then which particular plan you would like to invest ina) Reliance Term Plan
b) Reliance Whole Life Plan
c) Reliance Endowment Plan
d) Reliance Special Endowment Plan
Option No of respondents Percentage
Reliance term plan 6 2858
Reliance whole life plan 3 1428
Reliance endowment plan 9 4286
Reliance special endowment plan 3 1428
TOTAL 21 100
Interpretation Out of 21 respondents 2858 preferred to invest in term plan 1428 in whole life plan 4286 in endowment plan and 1428 of them preferred to invest in special endowment plan of reliance life insurance
48
Q10 If Bajaj Allianz life insurance then which particular plan you would like to invest in
I ENDOWMENT PLAN a) Bajaj Allianz Invest Gain
b) Bajaj Allianz save Care Economy SP
c) Bajaj Allianz life time care
d) Bajaj Allianz Super Saver plan
II MONEY BACK PLAN i Bajaj Allianz Cash Gain plan
Option No of respondents Percentage
Invest gain plan 3 1035
Save care economy SP 6 2069
Life time care 7 2415
Super saver plan 3 1035
Cash gain plan 10 3446
TOTAL 29 100
Interpretation Out of 29 respondents 1035 of them plan to invest in Bajaj Allianz- Invest Gain 2069 wish to invest in Bajaj Allianz save Care Economy SP 2415 want to invest in Bajaj Allianz life time care 1035 in Bajaj Allianz Super Saver plan and 3446 prefer to invest in Bajaj Allianz Cash Gain plan
49
32) SIGNIFICANCE OF STUDY
Life insurance is one of the most rapidly growing sectors in India The main reason
behind the growth can attributed to the high population density improving economical
condition improving education level and improving awareness Due to these factors there
is still huge scope for growth in this sector Like any other business when the
opportunities are present everybody tends to enter the industries This growth hence
fetches the new competitors as well as new strategies from existing players To sustain in
any competitive industry the organization must adapt to existing strategies and adopt
new ones This study will focus on the analysis of Reliance Life Insurance in comparison
with the present scenario of Bajaj Allianz Life Insurance with respect to the Traditional
Plans of both the companyrsquos This will mainly cover the following aspects
To know about the awareness and popularity of various Traditional Plans offered
by Reliance Life Insurance and Bajaj Allianz Life Insurance
How Reliance Life Insurance can develop and sustain a good distribution
network
These will provide it benefit both in terms of better market coverage as well as better
penetration
50
33) SCOPE OF THE STUDY
1) This helps in finding out vast potential of insurance company
2) The study was conducted in National Capital Region (NCR) only
3) The number of respondents to be surveyed can be improved
4) This study was conducted by comparing the performances amp products of three private
amp government insurance players in insurance industry
5) This study was conducted to analyze the market stand of Reliance life insurance
Company limited and Bajaj Allianz Life Insurance Company Limited of India insurance
companies
6) This study is done to eliminate all the myths which people have in their minds
regarding Insurance Sector
51
34) OBJECTIVES
To have a detailed understanding of Reliance Life Insurance and Bajaj Allianz Life Insurance
To find out various reasons considered while investing in policies
To get knowledge about the market exposure and future prospects about Reliance Life Insurance
To know the perception of the consumers about the life insurance
To analyze the Traditional plans of Reliance Life Insurance and compare it with Bajaj Allianz
To know about the brand awareness of Reliance Life Insurance its customer preferences over Bajaj Allianz in the market
To study a proper knowledge about the life insurance industry
To understand the consumer choice while investing in policies
52
CHAPTER 4
DISCUSSION AND FINDINGS OF THE STUDY
FINDINGS OF THE STUDY RECOMMENDATION AND SUGGESTIONS CONCLUSION LIMITATIONS BIBLIOGRAPHY ANNEXUREQUESTIONNAIRE
53
41) FINDINGS OF THE STUDY
1) The survey reveals that still a large proportion of population is interested to invest in other forms of investment other than insurance as still most of them are unaware about the importance of insurance in their life
2) Basically people make varied form of investment for creating wealth to protect their families against pre-mature death and to protect income against disability sickness or critical illness
3) The main motive of the individuals investing is receives benefits US 1010D People generally consider insurance as a tax saving device
4) Mostly people prefer time to time form of investment as they are not willing to take high degree of risk
5) 72 of the respondents are preferred to invest in Traditional Plans
6) Most of the people prefer to make an annual investment up to a maximum of Rs20 000 per annum
7) When the product is like life insurance reputation of the company publicity of the company amp after sale services of the company matters a lot This means that people would choose that insurance company only where the quality of life advisors is satisfactory
8) Most people prefer to invest in Bajaj Allianz Life Insurance as compared to making an investment in Reliance Life Insurance
9) The most preferable Traditional plan of Reliance Life Insurance is Endowment Plan
10) The most preferable plan of Bajaj Allianz Life Insurance co is Cash Gain Plan
54
42) SUGGESTIONS amp RECOMMENDATIONS
Based on the observations of the study some suggestions for the organization are made as
follows
1) Quality of advisors is also as important as the quantity Thus company should go
mainly for qualified professionals
2) Company should increase its budget on publicity so that awareness can be increased
3) Clarity and transparency should be provided to the customer regarding various
products
4) Training sessions should be planned in advance so that schedule can be provided to
the advisor in advance
5) Apart from the Brand Positioning in urban area a strategy should be adopted by
Reliance to make its brand also near to middle level or high aspirant people because they
are the main source of the business in India
6) Awareness Camp to the sub urban area should be focused by Reliance
7) Some innovative technique or product is required in order to attract the consumer
43) LITERATURE REVIEW
55
1) Robi Elenekave has explained in detail why various retirement plans and pension plans donrsquot give the desired returns The main difficulty is the use of incorrect method for calculations done to find out the return on investment This is primarily due to wrong assumptions The study provides information about the various precautions which need to be considered before planning so that the desired results can be achieved
2) Another paper provides insight about how various financial sectors invest in bond market The study was how the different players investment different instruments according to the risk appetite and desired rate of return The study shows that life insurance sector mainly invests in government bond which are low return and low risk instrument The investment in government bond it shows that life insurance companies are more conservative in investment
3) K Subhash has presented the history of Indiarsquos life insurance industry in three stages before independence after independence and post liberalization which not only provides information but also help in analyzing the impact of these major changes The authors have also discussed the huge potential which exists in the rural India The insurance company must realize the importance of rural sector because the future lies there The author commented about the increasing share of private player in the existing market This confirms the availability of opportunity in this sector The paper also provides the importance of professional and focused approach which was given no importance
4) Tapen Sinha has discussed the various challenges and opportunities in the insurance market One of the very important factors which have been discussed in the study is the importance of developing new and better products As the scenario changes the need of an individual also changes so any organization must understand and fulfill these needs The new product development requires constant research so organization must also focus on it
5) Roger G Ibbotson discusses how financial planners and advisors have recently started to recognize that human capital must be taken into account when building optimal portfolios for individual investors Any investorrsquos human capital has a unique mortality risk However life insurance in its forms can hedge against this mortality risk Thus human capital affects both the optimal asset allocation and the optimal demand for life insurance This paper provides a unified framework based on human capital in order to enable individual investors to make both decisions jointly
6) Rakesh Niraj study tells how the flow of information in any organization is important For any organization to grow the flow of information must be good both upwards as well as ownwards The proper flow of information will also ensure proper flow of good and services from organization to customer and proper flow of information from customer to organization The information from customers will help the organization in providing better goods and services to the customer For the above purpose organization must ensure good channel partner who can provide the organization with correct feedback Hence it becomes very important for any organization to acquire good channel partners
56
7) Stephen P Robbins has discussed how group dynamics works in any organization The success of any organization depends on the success of its various teams and how these teams work together The book provides various techniques which can be used by any organization to get result from the team effort The conflict resolution is a major task in any group Various techniques which the organization can use in conflict resolution are also discussed Another important aspect covered is the importance of leadership in the organization The various forms of leadership have been discussed and the kinds of leadership which can be effective in particular situations are also discussed
8) R Wayne Mondy has discussed the importance of training and development in any organization The training provides skills to perform the current job where as the development involve learning beyond present need The various type of training are discussed which can be used according to the requirement Training and development are not only important for better performance of an individual but it also gives satisfaction The major factors which influence training and development are found to be management support commitment of trainee and trainer complexity of the organization The process of developing good training plans is also provided In another part author has discussed the importance of right man for right job The compensation strategies are also given which are very crucial for ant industry
9) Philip Kotler has discussed the importance of channels partners Better the channel partners better will be the delivery model Detailed discussion about how to design the channel structure so that all the requirements could be fulfilled is provided The various issues faced by the organization while managing the channels are also given When an organization has more than one channel it becomes very important that all the channels should be integrated in such a way that the organization get the best out of all At times due to the conflicting benefit of the different channels the conflict arise so various strategies to manage these issues is also discussed in the chapter
10) Michael J Etzel has written about the marketing of services The marketing of services is different from the goods because of the characteristic of service like intangibility inseparability heterogeneity etc Brief about pricing strategies is also given in case of services The authors have also given the impact of technological development on the services marketing The author has also given the importance of brand and after sales support in case of services as perception of the customers plays an important role In other part of the book the authors has described the importance of distribution channels and designing of the same A channel partner should be consider as partner according to discussion The legal complications associated with channels are also discussed These complications are necessary to take into the consideration while managing the channels The conflicting interest of channels both horizontally and vertically are also taken into the consideration
57
11) Boone has discussed about the importance of personal financial planning The concept of time value of money has also been elaborated The importance of creating and implementing budget is given under money management The other important concepts for financial planning like credit management and understanding taxes are also explained In one section the authors have discussed the importance of investment and what should be the major considerations while making any investment The considerations include the risk associated with the investment return on the investment etc The importance and benefits of life insurance has also been given The discussion also includes various legal aspects associated with life insurance The overview of retirement planning is also given which includes importance and benefit of retirement planning Various tools for proper retirement planning are also discussed
58
44) CONCLUSION
1) The customers are very much sensitive towards their investment They would like to invest only in that insurance company which enjoys good public image along with quality good services
2) The result of the survey conducted shows that Bajaj Allianz Life Insurance is the leader in life insurance industry but Reliance Life Insurance and other private players are giving it a close competition
3) The motive of the people behind investing in life insurance is the tax benefits that they would receive under sec 80C and 1010D
4) In Life Insurance industry the after sales support of the company is as important as the quality of life advisors
59
45) LIMITATIONS
There were some limitations faced during the study as discussed below
Since the study was taken for two months so there was a constraint of time and effort
The study was limited only to some of the Delhi regions so the results may be biased
Questionnaire was given to 125 people however only 50 responded to it which is very small for such type of study
The biasness of consumer or responses error cannot be eliminated
Most of the people are not aware about the Importance and the necessity of insurance in their life
Adverse perception of the people towards insurance sector- People consider insurance as a tax saving device
Lack of awareness about the earning opportunity in the insurance sector
60
46) BIBLIOGRAPHY
wwwreliancelifeinsurancecom
wwwadagroupcom
wwwirdacom
wwwbajajallianzlifeinsurancecom
wwwallianzbajajcom
47) ANNEXURE
61
QUESTIONNAIRE
A comparative analysis of consumer perception regarding Traditional plans of Reliance Life Insurance with that of Bajaj Allianz Life Insurance
NAME ___________________________
PERSONAL DETAILS
1) AGE_________________
1) OCCUPATION______________
2) INCOME___________________
3) FAMILY MEMBERS_________
Q1 Where do you prefer to investa) Fixed deposits b) Stock c) Mutual funds d) Insurance e) Others
Q2 What are your priorities for investmenta) Protecting your family against pre-mature death b) Wealth creation c) Retirement needs d) Child education and marriage e) Protect income against disability sickness or critical illness
Q3 What is your main motive behind investing in life insurancea) Tax benefit b) Savings c) Risk cover
Q4 What kind of investment do you prefera) High risk high gain b) Low risk low gain c) Moderate d) Vary times to times
62
Q5Are you interested to invest in Traditional Plansa) Yes b) No
Q6 What is your level of annual investmenta) below 20000 b) 20000-40000 c) above 40000
Q7 What factors would you consider most important before choosing an insurance company
a) publicity of the company b) reputation of the company c) quality of life advisors d) after sales-supporting of the company
Q8 Which life insurance company would you prefer the most to invest ina) Reliance life insurance b) Bajaj Allianz life insurance
Q9 If reliance life insurance then which particular plan you would like to invest ina) Reliance Term Plan b) Reliance Whole Life Plan c) Reliance Endowment Plan d) Reliance Special Endowment Plan
Q10 If Bajaj Allianz life insurance then which particular plan you would like to invest in
I ENDOWMENT PLAN
a) Bajaj Allianz Invest Gain
b) Bajaj Allianz save Care Economy SP
c) Bajaj Allianz life time care
d) Bajaj Allianz Super Saver plan
II MONEY BACK PLAN
a) Bajaj Allianz Cash Gain plan
63
64
- COMPANY PROFILE
- ABOUT RELIANCE LIFE INSURANCE
- HISTORY
- Reliance Capital Limited announced the launch of its life insurance business on February 1 2006 This was after obtaining the required regulatory approvals from the Registrar Of Companies and the Insurance Regulatory and Development Authority
- It was in August 2005 that the ball was set rolling when Reliance Capital Limited the financial arm of Reliance ndash Anil Dhirubhai Ambani Group (ADAG) ndash announced the requisition of 100 shareholding in AMP Sanmar Life Insurance Company Limited and the formal transfer of shares took place in October 2005 The company will issue all policy contracts under the Reliance Life Insurance Company limited name All the existing policy contracts also stand transferred to the Reliance Life Insurance entity with all the original contractual terms and commitments intact
- CORE VALUES
- Reliance Life Insurance Company Limited has some core values which are listed as follows
- Vision bull To be the first choice insurer for customers bull To be the preferred employer for staff in the insurance industry bull To be the number one insurer for creating shareholder value
- Mission As a responsible customer focused market leader we will strive to understand the insurance needs of the consumers and translate it into affordable products that deliver value for money
- 12) TRADITIONAL PLANS OF THE COMPANY
- 12A )TRADITIONAL PLAN OF RELIANCE LIFE INSURANCE-
- Life insurance products are designed to suit the requirements of customers Fundamentally the product provide for
- In every product to a certain degree risk cover is imperative for it to fall under the category of insurance Based on the coverage of the product the premiums are calculated and the customer pays accordingly In order to suggest the right product it is essential for an agent to understand the requirements of the customer well
- The traditional plans of the company have the following features-
- Fixed Tenure
- Potential for better returns
- Transparency
- Flexibility in investment
- Flexibility to invest more
- Flexibility to skip the premium
- Flexibility to choose the cover
- High liquidity
- Age term and sum assured decide the amount of premium
- Top- ups and switches are not allowed
- Reliance Life Insurance Company Limited has offered 9
- 1) Reliance term plan-
- 2) Reliance Whole Life Plan -
- 3) Reliance Endowment Plan -
- 4) Reliance Special Endowment Plan -
- 13) INDUSTRY PROFILE
- MEANING OF INSURANCE
- Insurance may be described as a social device to reduce or eliminate risk of loss to life and property Insurance is a collective bearing of risk Insurance is a financial device to spread the risks and losses of few people among a large number of people as people prefer small fixed liability instead of big uncertain and changing liability
- Insurance can be defined as a ldquolegal contract between two parties whereby one party called insurer undertakes to pay a fixed amount of money on the happening of a particular event which may be certain or uncertainrdquo The other party called insured pays in exchange a fixed sum known as premium
- Insurance is desired to safeguard oneself and onersquos family against possible losses on account of risks and perils It provides financial compensation for the losses suffered due to the happening of any unforeseen events
- IMPORTANCE OF INSURANCE
- Insurance services play predominant role in the process of financial Intermediary Today insurance industry is one of the most growing sectors in India There is lot of potential in the Indian Insurance Industry
- There are many issues which require study The scope of the study of Insurance industry of India would be very great as there are ongoing Developments in the industry after the opening of the sector
- Right now the insurance industry has great opportunities in a country like India or China which huge population Also the penetration of insurance in India is very low in both life and non-life segment so there is lot potential to be tapped Before starting the discussion on insurance industry and related issues we have to start with the basics of insurance So first we understand what is insurance How the word lsquoinsurancersquo is different from the word lsquoassurancersquo Etc
- HISTORY OF INSURANCE
- The concept of insurance is believed to have emerged almost 4500 years ago in the ancient land of Babylonia where traders used to bear risk of the carvan by giving loans which were later repaid with interest when the goods arrived safely
- The concept of insurance as we know today took shape in 1688 at a place called Lloydrsquos Coffee House in London where risk bearers used to meet to transact business This coffee house became so popular that Lloydrsquos became the one of the first modern insurance companies by the end of the eighteenth century
- Marine insurance companies came into existence by the end of the eighteenth century These companies were empowered to write fire and life insurance as well as marine The Great Fire of London in 1966 caused huge loss of property and life With a view to providing fire insurance facilities
- Dr Nicholas Barbon set up in 1967 the first fire insurance company known as the Fire office
- Life insurance in its modern form came to India from England in 1818 The Oriental Life Insurance Company was the first insurance company to be set up in India to help the widows of European community The insurance companies which came into existence between 1818 and 1869 treated
- Indian lives as subnormal and charged an extra premium of 15 to 20 per cent The first Indian insurance company the Bombay Mutual Life
- Assurance Society came into existence in 1870 to cover Indian lives at normal rates
- The Insurance Act 1938 the first comprehensive legislation governing both life and non-life branches of insurance were enacted to provide strict state control over insurance business This amended insurance Act looked into investments expenditure and management of these companies
- By the mid- 1950s there were 154 Indian insurers 16 foreign insurers and 75 provident societies carrying on life insurance business in India Insurance business flourished and so did scams irregularities and dubious investment practices by scores of companies As a result the government decided to nationalize the life assurance business in India The Life Insurance
- Corporation of India (LIC) was set up in 1956 The nationalization of life insurance was followed by general insurance in 1972
- MEANING OF LIFE INSURANCE
- There are three parties in a life insurance transaction the insurer the insured and the owner of the policy (policyholder) although the owner and the insured are often the same person
- Another important person involved in a life insurance policy is the beneficiary The beneficiary is the person or persons who will receive the policy proceeds upon the death of the insured
- Life insurance may be divided into two basic classes ndash term and permanent
- HISTORY OF LIFE INSURANCE
- Risk protection has been a primary goal of humans and institutions throughout history Protecting against risk is what insurance is all about
- Over 5000 years ago in China insurance was seen as a preventative measure against piracy on the sea Piracy in fact was so prevalent that as a way of spreading the risk a number of ships would carry a portion of another ships cargo so that if one ship was captured the entire shipment would not be lost
- In another part of the world nearly 4500 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
- Life insurance came about a little later in ancient Rome where burial clubs were formed to cover the funeral expenses of its members as well as help survivors monetarily With Romes fall around 450 AD most of the concepts of insurance were abandoned but aspects of it did continue through the Middle Ages particularly with merchant and artisan guilds These provided forms of member insurance covering risks like fire flood theft disability death and even imprisonment
- During the feudal period early forms of insurance ebbed with the decline of travel and long-distance trade But during the 14th to 16th centuries transportation commerce and insurance would again reemerge
- And similar to ancient Rome burial societies were formed in the Buddhist period to help families build houses and to protect widows and children
- Modern Insurance
- Illegal almost everywhere else in Europe life insurance in England was vigorously promoted in the three decades following the Glorious Revolution of 1688 The type of insurance we see today owes its roots to 17th century England Lloyds of London or as they were known then Lloyds Coffee House was the location where merchants ship owners and underwriters met to discuss and transact business deals
- While serving as a means of risk-avoidance life insurance also appealed strongly to the gambling instincts of Englands burgeoning middle class
- Gambling was so rampant in fact that when newspapers published names of prominent people who were seriously ill bets were placed at Lloydrsquos on their anticipated dates of death Reacting against such practices 79 merchant underwriters broke away in 1769 and two years later formed a ldquoNew Lloydrsquos Coffee Houserdquo that became known as the ldquoreal Lloydrsquosrdquo Making wagers on peoples deaths ceased in 1774 when parliament forbade the practice
- Insurance moves to America
- The US insurance industry was built on the British model The year 1735 saw the birth of the first insurance company in the American colonies in
- Charleston SC The Presbyterian Synod of Philadelphia in 1759 sponsored the first life insurance corporation in America for the benefit of ministers and their dependents And the first life insurance policy for the general public in the United States was issued in Philadelphia on May 22 1761
- But it wasnt until 80 years later (after 1840) that life insurance really tookoff in a big way The key to its success was reducing the opposition from religious groups
- In 1835 the infamous New York fire drew peoples 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
- With the creation of the automobile public liability insurance which first made its appearance in the 1880s gained importance and acceptance
- More advancement was made to insurance during the process of industrialization In 1897 the British government passed the Workmens Compensation Act which made it mandatory for a company to insure its employees against industrial accidents
- During 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 most labor 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
- BENEFITS OF LIFE INSURANCE
- 1) Risk cover -Life Insurance contracts allow an individual to have a risk cover against any unfortunate event of the future
- 2) Tax Deduction -Under section 80C of the Income Tax Act of 1961 one can get tax deduction on premiums up to one lakh rupees Life Insurance policies thus decrease the total taxable income of an individual
- 3) Loans -An individual can easily access loans from different financial institutions by pledging his insurance policies
- 4) Retirement Planning -What had provided protection against the financial consequences of premature death may now be used to help them enjoy their retirement years
- 5) Educational Needs -Similar to retirement planning the cash values that flow from ones life insurance schemes can be utilized for educational needs of the insurer or his children
- The Life Insurance Industry has an enviable track record among public sector units It has a Consistent profit and dividend paying record accompanied by a steady growth in its financial resources Through investments in the Government sector and socially- oriented sectors the Industry has contributed immensely to the nations development The industry is recognized as one of the largest financial Institutions in the country The ventures initiated by the industry in the areas of Mutual Fund
- Housing Finance has done exceedingly well in recent years To protect the countrys foreign exchange reserves the reinsurance arrangement are so organized that maximum retention is made possible within the country while at the same time protecting interests of the policy holders
- 22) CURRENT SCENARIO OF RELIANCE LIFE INSURANCE
- RLIC offers wide range of innovative life insurance products targeted at individuals and groups It offers need based products that caters to four distinct segments namely protection child retirement and investment plans RLIC is committed to emerge as a transnational Life Insurer of global scale and standard
- CH - 3) RESEARCH METHODOLOGY
- RESEARCH DESIGN-
- SAMPLING TECHNIQUES-
- THE PRIMARY OBJECTIVEOF THE STUDY-
- 34) OBJECTIVES
- 7) Some innovative technique or product is required in order to attract the consumer
- 45) LIMITATIONS
- 46) BIBLIOGRAPHY
-
initial investors in the Reliance stock and creating one of the worldrsquos largest shareholder families
ABOUT RELIANCE LIFE INSURANCE
Reliance Life Insurance offers you products that fulfill your savings and protection needs Our aim is to emerge as a transnational Life Insurer of global scale and standard
Reliance Life Insurance is an associate company of Reliance Capital Ltd a part of Reliance - Anil Dhirubhai Ambani Group Reliance Capital is one of Indiarsquos leading private sector financial services companies and ranks among the top 3 private sector financial services and banking companies in terms of net worth Reliance Capital has interests in asset management and mutual funds stock broking life and general insurance proprietary investments private equity and other activities in financial services
Reliance - Anil Dhirubhai Ambani Group also has presence in Communications Energy Natural Resources Media Entertainment Healthcare and Infrastructure
VISION amp MISSION
Vision
Empowering everyone live their dreams
Mission
Create unmatched value for everyone through dependable effective transparent and profitable life insurance and pension plans
GOAL
Reliance Life Insurance would strive hard to achieve the 3 goals mentioned below
Emerge as transnational Life Insurer of global scale and standard
Create best value for Customers Shareholders and all Stake holders
Achieve impeccable reputation and credentials through best business practices
2
ACHIVEMENTS OF RELIANCE LIFE INSURANCE COMPANY
1 RLIC closed the last financial year with New Business Premium of Rs 3513 Crores
2 For 3 successive years since inception the Company has been amongst the fastest growing Companies in the Life Insurance Industry achieving a growth rate of 28 in the last financial year against a market growth of -6 In the Individual Business segment the company achieved a growth rate of 59 in terms of WRP against the private industry growth of 1
3 Reliance Life has been one of the fastest gainers in market share growing from 19 amongst private players in Mar06 to 103 as of Mar09 This has resulted in the Company growing to becoming the 4th largest private player in just two years starting at position of 11
4 The Company has been the fastest company to reach the 3 million policy mark and was the 3rd largest private insurer in terms of Policy count in 2008-09
5 Reliance Life has accomplished a large distribution ramp-up in the Industry in a short span of time by opening 1145 branches in just over 2 year
6 RLIC continues to be amongst the foremost Life Insurance companies in India to be certified ISO 90012000 for all the processes
7 Awarded the Jamnalal Bajaj Uchit Vyavahar Puraskar 2007- Certificate of Merit in the Financial Services category by Council for Fair Business Practices (CFBP)
8 The Company has been the fastest company to reach the 3 million policy mark and was the 3rd largest private insurer in terms of Policy count in 2008-09
9 The Company has also won the DL Shah Quality Council of India Commendation Award in the services category in feb 2008 for its work on promoting self help channels for service
LEADERSHIP TEAM
BOARD OF DIRECTORS
3
Gautam Doshi Director
Gautam is the Group Managing Director of Reliance Anil Dhirubhai Ambani Group and Director of Reliance Life Insurance Company Limited
In his long and illustrious career spanning 30 years Gautam has held key positions in various organisations such as Ms Bansi S Mehta RSM amp Co and Ambit Corporate Finance Pvt Ltd Presently as a Board member of various reputed public limited companies Gautam continues to power the industry with his profound knowledge and expertise
Gautam a qualified Chartered Accountant has served as the Chairman of the Institute of Chartered Accountants of India for the year 1982ndash83 He was also elected to the Council of the Institute of Chartered Accountants of India for two consecutive terms spanning over 1992 to 1998
Satya Pal Talwar Director
Satya Pal is the Director of Reliance Life Insurance Company Limited He holds an experience of more than 35 years in operations and policy formulation
Through his distinguished service in the financial industry Satya Pal has served as the lsquoChairman and Managing Directorrsquo of renowned organisations such as Bank of Baroda Union Bank of India and Oriental Bank of Commerce His in-depth knowledge of the sector has seen him rise quickly into pivotal positions at advisory and board levels in Indian and as well Global organisations such as SEBI IDBI and MasterCard International He has also held the coveted position of Deputy Governor of RBI from 1994 to 2001
Satya Pal holds a degree in Law He is a Certified Associate of the Indian Institute of Bankers and a member of the Indian Council of Arbitration
Saumen Ghosh Group President
Saumen is currently the Group President of Reliance Capital Limited
Saumen has worked in the UK for one of the leading Chartered Accountancy firms and then moved to Australia to join a subsidiary of the Allianz Group where he held various senior positions in the finance and international division In his immediate past assignment before joining Reliance Capital Limited Saumen was responsible for the overall Allianz operations in India and Middle East
Saumen is a qualified Chartered Accountant and is a member of the Institute of Chartered Accountant in England amp Wales and Australia
4
Malay Ghosh ndash President
Malay leads all activities at Reliance Life Insurance Company Limited Life and his key focus is on rapid expansion of all channels and accelerating the companyrsquos growth trajectory
Malay has over 24 years of work experience in the insurance industry He has worked for 17 years with LIC across various functions and for 7 years with Bajaj Allianz Life Insurance where he was last designated Head of Sales
Malay holds a Masters degree in statistics
Maneesha Thakur Chief Human Resources Officer
Maneesha in her role as the Chief Human Resource Officer at Reliance Life Insurance Company Limited has developed a performance driven and employee centric culture She has been at the forefront of the organization growth by facilitating talent acquisition and management
Maneesha in her career span of 15 years has worked with companies like SHCIL ALLTEL Transamerica ICICI Bank and VSNL
In addition to an MA in English Literature Maneesha holds a Post Graduate Diploma in Personnel Management amp Industrial Relations from XLRI Jamshedpur
C Mohan Chief Technology Officer
C Mohan is the Chief Technology Officer (CTO) of Reliance Life Insurance Company Limited and he is responsible for Information Technology Strategy Formulation and Deployment
Mohan is an Engineering Graduate and holds many International IT Certifications
Mohan has over 12+ years of IT Experience of which he spend more than 7+ years Executive Management Experience in overseas He worked with Cathay Pacific Airways and Computer Sciences Corporation in Asia Pacific Role at Singapore before he joined Reliance Life
In Year 2008 he has been awarded as Pioneer CIO by CIOL-DataQuest and Bold 100 CIO by IDG-CIO Forum He also received the Early SOA Adopter Award from IBM
He has recently been selected as a honoree in Global CIO 100 2009 Award Summit to be held in Colorado USA
5
R Rangarajan Chief Investment Officer
Rangarajan is the Chief Investment Officer at Reliance Life Insurance Company Limited He alongwith his team strives to give the best possible returns on investments to shareholders and policyholders keeping in mind their appetite for risk Rangarajan draws on his in-depth knowledge of investment and experience of 25 years to ensure that the goals of the organisation are metmdashwithout any compromise on the benefits of the investors
Prior to being a part of Reliance Life Insurance Rangarajan worked with AMP Sanmar Life Insurance as Head ndash Investments for three years His earlier assignment was with a large Mutual Fund organization
Rangarajan is a qualified Chartered Accountant
S V Sunder Krishnan Chief Risk Officer
Sunder is the Chief Risk officer for Reliance Life Insurance and is responsible for overseeing Risk Management Internal Audit and Compliance functions at Reliance Life Insurance
Sunder came with 23 years of experience and knowledge in Internal Audits Compliance Assurance Consulting and Risk Management He has worked for various leading organizations such as DSP Merrill Lynch ING Vysya Credit Lyonnais Standard Chartered Bank International Indonesia Ernst amp Young and Delloitte at senior and middle management positions with exposure to businesses and operations in more than 12 countries
Sunder is a qualified FCA CISA and CCSA He is also the President of Information Systems Audit Control Association (ISACA-USA) Mumbai Chapter for the year 2007-08 and was a member of the Board of Advisors to Bombay Chartered Accountants Society (BCArsquoS) for Internal Audit studies for the year 2005-06
RELIANCE ADA GROUP
6
HISTORY
7
Reliance Capital Limited announced the launch of its life insurance business on February 1 2006 This was after obtaining the required regulatory approvals from the Registrar Of Companies and the Insurance Regulatory and Development Authority
It was in August 2005 that the ball was set rolling when Reliance Capital Limited the financial arm of Reliance ndash Anil Dhirubhai Ambani Group (ADAG) ndash announced the requisition of 100 shareholding in AMP Sanmar Life Insurance Company Limited and the formal transfer of shares took place in October 2005 The company will issue all policy contracts under the Reliance Life Insurance Company limited name All the existing policy contracts also stand transferred to the Reliance Life Insurance entity with all the original contractual terms and commitments intact
A Reliance Capital company
Reliance started from scratch only to become Indiarsquos
largest private sector company in ~40 years
1966 1971-72 1977 1985 1992 1993
Birth of Reliance ndash
First Textile Mill at Naroda
Birth of Reliance ndash
First Textile Mill at Naroda
Launch of lsquoOnly Vimalrsquo brand
Launch of lsquoOnly Vimalrsquo brand
Sales Cross 4000 CrBecomes Largestprivate sector Co inIndia
Sales Cross 4000 CrBecomes Largestprivate sector Co inIndia
Launch of 1st
IPO for general public- start of a
trend
Launch of 1st
IPO for general public- start of a
trend
Total Assets cross 1000 Cr
Total Assets cross 1000 Cr
Twin IPOs receive 1million applications
Twin IPOs receive 1million applications
The Story of Growth First corporate in Asia to issues
50 and 100 yrs bond in US debt market
First corporate in Asia to issues
50 and 100 yrs bond in US debt market
1997 1998
Total assetscross 35000 CrRevenues cross
14000 Cr
Total assetscross 35000 CrRevenues cross
14000 Cr
8
A Reliance Capital company
2000 2000 2001 2003 2005 2006-07
Group Profits cross 2500 Cr
Revenues cross 20000 Cr
Total Assets cross 50000 Cr
Group Profits cross 2500 Cr
Revenues cross 20000 Cr
Total Assets cross 50000 Cr
Reliance Communication plans announced
Reliance Communication plans announced
Reliance Life Insurance rank 6th at 930 Cr
Reliance Life Insurance rank 6th at 930 Cr
Group revenues cross 60000 Cr
Largest Business group
in India
Group revenues cross 60000 Cr
Largest Business group
in India
Controlling stake in BSES (Reliance
Energy)Largest mobile
services co in India
Controlling stake in BSES (Reliance
Energy)Largest mobile
services co in India
ADA Group formedAMP Sanmar acquired and renamed Reliance
Life Insurance
ADA Group formedAMP Sanmar acquired and renamed Reliance
Life Insurance
And the journeyBecame the 1st
company to cross 1 million policy mark in 2 years of operations
Became the 1st
company to cross 1 million policy mark in 2 years of operations
Sep 2007 2007
Reliance became only the second National Insurance player to get ISO 9001-2000
Reliance became only the second National Insurance player to get ISO 9001-2000
A Reliance Capital company
Be the Change
2008 2008 2008 2007-08 2008-09
Reliance MF becomes 1st
AMC to cross
100000 Cr
Reliance MF becomes 1st
AMC to cross
100000 Cr
RCOM crosses 50 million customers
RCOM crosses 50 million customers
A total of more than 2000 Branches on anvil in the fiscal year
A total of more than 2000 Branches on anvil in the fiscal year
Continueshellip
RLIC jumps to 4th position
with 2750 Cr
RLIC jumps to 4th position
with 2750 Cr
Crosses 2million policies
Crosses 2million policies
9
SWOT ANALYSIS
STRENGTHS
Dedicated Employees Well Efficient Management Strong and popular brand name Adaptability to changes Goodwill of the company Transparency in service
WEAKNESS
Lack of good services
Lack of awareness about insurance among people
Less coverage in Rural Areas
Lack of credibility among the people because Reliance life insurance being a
private player
OPPORTUNITIES
Fast growing economy
Increasing per ndashcapita income in India
Saving behavior
High growth of Traditional industry
THREATS
Arrival of new entrants in the insurance industry
Cut throat competition within the industry
10
CORE VALUES
Reliance Life Insurance Company Limited has some core values which are listed as follows
1) Result Oriented2) Performance Driven3) Customer Focused4) Learning and Development Oriented5) Employee Centric6) Informal and Fun
1 B COMPANY PROFILE OF BAJAJ ALLIANZ LIFE INSURANCE
11
Bajaj Allianz Life Insurance Company limited is a joint venture between two leading conglomerates Bajaj Auto limited and Allianz AG company whose total asset value is of Rs 5900000 cr Bajaj whose wealth as of now is Rs 8000 cr group in India 55 years of experience 4th largest group in the world Above 15000 employees largest 2 amp 3 wheeler manufacture in India Allianz established in 1890 who has 115 years of experience in financial year
Bajaj Auto is one of the most trusted name is Indian auto for over 55 years At Bajaj Allianz customer delight is our guiding principle Ensuring world-class solutions by offering customized products with transparent benefits supported by best technology is our business philosophy
Notwithstanding the recession and a volatile stock market Bajaj Allianz life insurance posted a profit of Rs 45 cr for financial year 2009 against a loss of Rs 16 cr in the previous year
The company new business premium fell to Rs 4491 cr in the year against Rs 6674 cr recorded in the last year
We have been able to make a profit of profit of Rs 45 cr even in these difficult times Our new business premium declined by 30 to Rs 4491 cr because the stock market declined and we didnrsquot open any new office in FY 09rdquo Bajaj Allianz country manager and Bajaj Allianz life insurance CEO kamesh Goyal said
Bajaj Allianz Life Insurance has around 1200 offices and the company would not increase the number this year too Goyal said
The companyrsquos renewal premium grew by more than 100 to Rs 6133 cr in the 2008-2009 as compared to Rs 3051 cr in the previous fiscal year he saidIn the year Bajaj Allianz life insurance issued 29 lakh policies which were the second largest in the industry
Vision bull To be the first choice insurer for customers bull To be the preferred employer for staff in the insurance industry bull To be the number one insurer for creating shareholder value
MissionAs a responsible customer focused market leader we will strive to understand the insurance needs of the consumers and translate it into affordable products that deliver value for money
12) TRADITIONAL PLANS OF THE COMPANY
12
12A )TRADITIONAL PLAN OF RELIANCE LIFE INSURANCE -
Life insurance products are designed to suit the requirements of customers Fundamentally the product provide for
Risk cover
Investment
Health cover
In every product to a certain degree risk cover is imperative for it to fall under the category of insurance Based on the coverage of the product the premiums are calculated and the customer pays accordingly In order to suggest the right product it is essential for an agent to understand the requirements of the customer well
The traditional plans of the company have the following features- Fixed Tenure Potential for better returns Transparency Flexibility in investment Flexibility to invest more Flexibility to skip the premium Flexibility to choose the cover High liquidity Age term and sum assured decide the amount of premium Top- ups and switches are not allowed
Reliance Life Insurance Company Limited has offered 9Traditional plans to the customers which are listed as follows1) Reliance Term Plan2) Reliance Whole Life Plan3) Reliance Endowment Plan4) Reliance Special Endowment Plan5) Reliance Cash Flow Plan6) Reliance Credit Guardian Plan7) Reliance Special Credit Guardian PlanEach of the above traditional plans is discussed as follows
1) Reliance term plan-This insurance policy is designed for those who only want life cover for the protection of their family and do not wish to save for themselves It can also be useful to business firms that wish to provide financial security to their business against the sudden loss of partners or valuable manpower Since there is no saving element or bonus provision the premium is very lowHence this is a high-risk plan with a low premium
13
1048729 Features -a) Purely a term planb) Entry age minimum 18 years and maximum 65 yearc) Maximum premium paying term is 30 yeard) Loan facility NAe) Maturity amount = Sum assured
2) Reliance Whole Life Plan -This insurance policy is designed for people who do not wish to avail of any benefits themselves but wish to create an immediate estate to protect their family by availing of insurance cover on their life at a very low cost
1048729 Features -a) It is a whole life insurance policy with profitsb) Low cost life coverc) Maturity age is 85 year or 99 years last birthday as chosend) Maturity amount = Sum assured + Vested bonuse) Tax benefit is available
3) Reliance Endowment Plan -Reliance Life Insurancersquos Reliance Endowment Plan is the key to all your financial needs It is an inexpensive and easy way to protect you your family or your businessIn a nutshell this plan will keep you financially prepared for all the special occasions in your life - your daughterrsquos wedding your childrsquos university education or even a new office for your business - by eliminating the burden that a shortage of money createsIn the event of your untimely death Reliance Endowment Plan will also assist your loved ones through this difficult time by the financial support that it providesReliance Endowment Plan also gives you the additional benefit of participating in the companyrsquos profits which you will receive at the end of the policy period
1048729 Features -a) Entry age minimum is 5 year and maximum 65 yearb) Maturity age minimum is 18 year and maximum 75 yearc) Minimum premium paying term is 5 year and maximum 35 year in case of regular and in case of single 15 yeard) Minimum sum assured is Rs 25000 or as determined by the minimum premiume) Maximum sum assured is Rs 5 00000 (entry age below 18 years and no limit for entry age 18 and above)f) Premium mode annual half yearly quarterly and monthly (by salary deduction only)g) Loan up to 90 of the surrender value of the policyh) Maturity amount = Guaranteed sum assured + Reversionary bonus
4) Reliance Special Endowment Plan -
14
This insurance policy is designed for people who wish to combine savings with extended security The unique feature of this policy is that life protection continues for five years after you have stopped the payment of premium Payment of sum assured at the end of premium paying term and extension of life cover thereafter for the full sum assured for a period of 5 years are characteristics of the policyThis plan also participates in the profits
1048729 Features -a) Entry age minimum 12 year and maximum 65 yearb) Minimum sum assured is Rs 25000c) Minimum premium paying term is 10 year and maximum 40 yeard) Unique feature of this policy is that five year life protection continues after you have stopped the payment of premiume) Tax benefit is availablef) Under this policy bonus is compounded yearlyg) Loan facility is availableh) Maturity amount = Full sum assured before maturity date +Vested bonus at the time of maturity date
15
12 B) TRADITIONAL PLANS OF BAJAJ ALLIANZ LIFE INSURANCE
I ENDOWMENT PLAN
Saving plan which offer bonuses are excellent long term plan with complete safety Our products offer additional benefits which include 4 times life cover at a little extra cost limited premium payment terms and compounded reversionary bonuses making it a very good long term investment
1 Bajaj Allianz Invest GainInvest Gain is a specially designed plan that offers a unique combination of benefits that help you develop a sound financial portfolio for your family
4 Times Life Cover at a little extra cost
Limited premium payment option available
Additional Benefits
a) Accidental Death Benefit and Disability Benefit b) Critical Illness Benefit and Hospital Cash Benefit c) Family Income Benefit In case of death or accidental total permanent disability of insured all future premiums are waived and 1 of the sum assured is paid monthly
Invest Gain Save Care Economy SP Life Time Care
Super Saver
16
2 Bajaj Allianz save Care Economy SP
A One-time payment Investment plan that provides for savings with high risk cover for 10 years and also participates in the profits of the company It offers you high risk cover with easy liquidity and high returns
a) A single premium endowment plan that participates in the profitsb) 10 year Investment planc) Benefits payable on maturityc) Loans available
17
3 Bajaj Allianz life time care
A whole life plan which provides survival benefits at the age of 80 thereby making sure you are financially secure at the time when you need it the most Additional Benefits
a) Accidental Death Cover and Disability Cover b) Critical Illness Cover and Hospital Cash Cover c) Waiver of Premium Benefit
4Bajaj Allianz Super Saver plan
Bajaj Allianz Super Saver is a regular premium endowment plan which helps you save regular amounts for a safer tomorrow It also provides you with extra benefits of Guaranteed Additions to your sum assured at the end of each policy year
18
II MONEY BACK PLAN
Money back plans are Traditional Insurance plans that provide the investor with returns at regular stages of life
CashGain
1)Bajaj Allianz Cash Gain plan
A Money back plan which guarantees 125 payout + bonuses
Quadruple life cover
5 easy payouts which give upto 125 + bonuses
Additional Benefitsa) Accidental Death Benefit and Disability Benefitb) Critical Illness Benefit and Hospital Cash Benefitc) Family Income Benefit In case of death or accidental total permanent disability of insured all future premiums are waived and 1 of the sum assured is paid monthly
19
20
13) INDUSTRY PROFILE
MEANING OF INSURANCE
Insurance may be described as a social device to reduce or eliminate risk of loss to life and property Insurance is a collective bearing of risk Insurance is a financial device to spread the risks and losses of few people among a large number of people as people prefer small fixed liability instead of big uncertain and changing liability
Insurance can be defined as a ldquolegal contract between two parties whereby one party called insurer undertakes to pay a fixed amount of money on the happening of a particular event which may be certain or uncertainrdquo The other party called insured pays in exchange a fixed sum known as premiumInsurance is desired to safeguard oneself and onersquos family against possible losses on account of risks and perils It provides financial compensation for the losses suffered due to the happening of any unforeseen events
IMPORTANCE OF INSURANCE
Insurance constitutes one of the major segments of the financial marketInsurance services play predominant role in the process of financial Intermediary Today insurance industry is one of the most growing sectors in India There is lot of potential in the Indian Insurance Industry
There are many issues which require study The scope of the study of Insurance industry of India would be very great as there are ongoing Developments in the industry after the opening of the sectorOne of the major issues is the effects on LIC after the entry of private players in the market Though market share of LIC has been affected it has improved in terms of efficiency
There are number of other hot topics like penetration of Health Insurance Rural marketing of insurance new distribution channels new product ranges insurance brokersrsquo regulation incentive scheme of development officers of LIC etc So it offers lot of scope for studying the insurance industryRight now the insurance industry has great opportunities in a country like India or China which huge population Also the penetration of insurance in India is very low in both life and non-life segment so there is lot potential to be tapped Before starting the discussion on insurance industry and related issues we have to start with the basics of insurance So first we understand what is insurance How the word lsquoinsurancersquo is different from the word lsquoassurancersquo Etc
21
HISTORY OF INSURANCE
The concept of insurance is believed to have emerged almost 4500 years ago in the ancient land of Babylonia where traders used to bear risk of the carvan by giving loans which were later repaid with interest when the goods arrived safely
The concept of insurance as we know today took shape in 1688 at a place called Lloydrsquos Coffee House in London where risk bearers used to meet to transact business This coffee house became so popular that Lloydrsquos became the one of the first modern insurance companies by the end of the eighteenth centuryMarine insurance companies came into existence by the end of the eighteenth century These companies were empowered to write fire and life insurance as well as marine The Great Fire of London in 1966 caused huge loss of property and life With a view to providing fire insurance facilitiesDr Nicholas Barbon set up in 1967 the first fire insurance company known as the Fire office
Life insurance in its modern form came to India from England in 1818 The Oriental Life Insurance Company was the first insurance company to be set up in India to help the widows of European community The insurance companies which came into existence between 1818 and 1869 treatedIndian lives as subnormal and charged an extra premium of 15 to 20 per cent The first Indian insurance company the Bombay Mutual LifeAssurance Society came into existence in 1870 to cover Indian lives at normal rates
The Insurance Act 1938 the first comprehensive legislation governing both life and non-life branches of insurance were enacted to provide strict state control over insurance business This amended insurance Act looked into investments expenditure and management of these companiesBy the mid- 1950s there were 154 Indian insurers 16 foreign insurers and 75 provident societies carrying on life insurance business in India Insurance business flourished and so did scams irregularities and dubious investment practices by scores of companies As a result the government decided to nationalize the life assurance business in India The Life InsuranceCorporation of India (LIC) was set up in 1956 The nationalization of life insurance was followed by general insurance in 1972
22
MEANING OF LIFE INSURANCE
There are three parties in a life insurance transaction the insurer the insured and the owner of the policy (policyholder) although the owner and the insured are often the same person
Another important person involved in a life insurance policy is the beneficiary The beneficiary is the person or persons who will receive the policy proceeds upon the death of the insured
Life insurance may be divided into two basic classes ndash term and permanent
Term life insurance provides for life insurance coverage for a specified term of years for a specified premium The policy does not accumulate cash value
Permanent life insurance is life insurance that remains in force until the policy matures unless the owner fails to pay the premium when due
Whole life insurance provides for a level premium and a cash value table included in the policy guaranteed by the company The primary advantages of whole life are guaranteed death benefits guaranteed cash values fixed and known annual premiums and mortality and expense charges will not reduce the cash value shown in the policy
Universal life insurance (UL) is a relatively new insurance product intended to provide permanent insurance coverage with greater flexibility in premium payment and the potential for a higher internal rate of return A universal life policy includes a cash account Premiums increase the cash account If you want insurance protection only and not a savings and investment product buy a term life insurance policy
If you want to buy a whole life universal life or other cash value policy plan to hold it for at least 15 years Canceling these policies after only a few years can more than double your life insurance costs
23
HISTORY OF LIFE INSURANCE
Risk protection has been a primary goal of humans and institutions throughout history Protecting against risk is what insurance is all aboutOver 5000 years ago in China insurance was seen as a preventative measure against piracy on the sea Piracy in fact was so prevalent that as a way of spreading the risk a number of ships would carry a portion of another ships cargo so that if one ship was captured the entire shipment would not be lostIn another part of the world nearly 4500 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
Life insurance came about a little later in ancient Rome where burial clubs were formed to cover the funeral expenses of its members as well as help survivors monetarily With Romes fall around 450 AD most of the concepts of insurance were abandoned but aspects of it did continue through the Middle Ages particularly with merchant and artisan guilds These provided forms of member insurance covering risks like fire flood theft disability death and even imprisonment
During the feudal period early forms of insurance ebbed with the decline of travel and long-distance trade But during the 14th to 16th centuries transportation commerce and insurance would again reemergeInsurance in India can be traced back to the Vedas For instance yogakshema the name of Life Insurance Corporation of Indias 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
And similar to ancient Rome burial societies were formed in the Buddhist period to help families build houses and to protect widows and children
Modern InsuranceIllegal almost everywhere else in Europe life insurance in England was vigorously promoted in the three decades following the Glorious Revolution of 1688 The type of insurance we see today owes its roots to 17th century England Lloyds of London or as they were known then Lloyds Coffee House was the location where merchants ship owners and underwriters met to discuss and transact business dealsWhile serving as a means of risk-avoidance life insurance also appealed strongly to the gambling instincts of Englands burgeoning middle classGambling was so rampant in fact that when newspapers published names of prominent people who were seriously ill bets were placed at Lloydrsquos on their anticipated dates of death Reacting against such practices 79 merchant underwriters broke away in 1769 and
24
two years later formed a ldquoNew Lloydrsquos Coffee Houserdquo that became known as the ldquoreal Lloydrsquosrdquo Making wagers on peoples deaths ceased in 1774 when parliament forbade the practice
Insurance moves to AmericaThe US insurance industry was built on the British model The year 1735 saw the birth of the first insurance company in the American colonies inCharleston SC The Presbyterian Synod of Philadelphia in 1759 sponsored the first life insurance corporation in America for the benefit of ministers and their dependents And the first life insurance policy for the general public in the United States was issued in Philadelphia on May 22 1761But it wasnt until 80 years later (after 1840) that life insurance really tookoff in a big way The key to its success was reducing the opposition from religious groups
In 1835 the infamous New York fire drew peoples 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
With the creation of the automobile public liability insurance which first made its appearance in the 1880s gained importance and acceptanceMore advancement was made to insurance during the process of industrialization In 1897 the British government passed the Workmens Compensation Act which made it mandatory for a company to insure its employees against industrial accidents
During 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 most labor 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
25
BENEFITS OF LIFE INSURANCE
1) Risk cover -Life Insurance contracts allow an individual to have a risk cover against any unfortunate event of the future
2) Tax Deduction -Under section 80C of the Income Tax Act of 1961 one can get tax deduction on premiums up to one lakh rupees Life Insurance policies thus decrease the total taxable income of an individual
3) Loans -An individual can easily access loans from different financial institutions by pledging his insurance policies
4) Retirement Planning -What had provided protection against the financial consequences of premature death may now be used to help them enjoy their retirement yearsMoreover the cash value can be used as an additional income in the old age
5) Educational Needs -Similar to retirement planning the cash values that flow from ones life insurance schemes can be utilized for educational needs of the insurer or his children
26
ROLE OF LIFE INSURANCE IN THE GROWTH OF THE ECONOMY
The Life Insurance Industry has an enviable track record among public sector units It has a Consistent profit and dividend paying record accompanied by a steady growth in its financial resources Through investments in the Government sector and socially- oriented sectors the Industry has contributed immensely to the nations development The industry is recognized as one of the largest financial Institutions in the country The ventures initiated by the industry in the areas of Mutual Fund
Housing Finance has done exceedingly well in recent years To protect the countrys foreign exchange reserves the reinsurance arrangement are so organized that maximum retention is made possible within the country while at the same time protecting interests of the policy holders
27
ROLE OF IRDA
MISSION
ldquoTo protect the interests of the policyholders to regulate promote
and ensure orderly growth of the insurance industry and for matters
connected therewith or incidental theretordquo
The Insurance Act 1938 had provided for setting up of the Controller of Insurance to act
as a strong and powerful supervisory and regulatory authority for insurance Post
nationalization the role of Controller of Insurance diminished considerably in
significance since the Government owned the insurance companies But the scenario
changed with the private and foreign companies foraying in to the insurance sector This
necessitated the need for a strong independent and autonomous Insurance Regulatory
Authority was felt As the enacting of legislation would have taken time the then
Government constituted through a Government resolution an Interim Insurance
Regulatory Authority pending the enactment of a comprehensive legislation
The Insurance Regulatory and Development Authority Act 1999 is an act to provide for
the establishment of an Authority to protect the interests of holders of insurance policies
to regulate promote and ensure orderly growth of the insurance industry and for matters
connected therewith or incidental thereto and further to amend the Insurance Act 1938
the Life Insurance Corporation Act 1956 and the General insurance Business
(Nationalization) Act 1972 to end the monopoly of the Life Insurance Corporation of
India (for life insurance business) and General Insurance Corporation and its subsidiaries
(for general insurance business) The act extends to the whole of India and will come
into force on such date as the Central Government may by notification in the Official
Gazette specify Different dates may be appointed for different provisions of this Act
28
The Act has defined certain terms some of the most important ones are as follows
Appointed day means the date on which the Authority is established under the act
Authority means the established under this Act Interim Insurance Regulatory Authority
means the Insurance Regulatory Authority set up by the Central Government through
Resolution No 17(2) 94-lns-V dated the 23rd January 1996
Words and expressions used and not defined in this Act but defined in the Insurance Act
1938 or the Life Insurance Corporation Act 1956 or the General Insurance Business
(Nationalization) Act 1972 shall have the meanings respectively assigned to them in
those Acts A new definition of Indian Insurance Company has been inserted Indian
insurance company means any insurer being a company
(a) Which is formed and registered under the Companies Act 1956
(b) in which the aggregate holdings of equity shares by a foreign company either by
itself or through its subsidiary companies or its nominees do not exceed twenty-six
percent paid up capital in such Indian insurance company
(c) Whose sole purpose is to carry on life insurance business general insurance business
or re-insurance business
29
CURRENT SCENERIO
21) CURRENT SCENERIO OF THE INSURANCE INDUSTRY
With largest number of life insurance policies in force in the world insurance happens to be a mega opportunity in India Itrsquos a business growing at the rate of 15-20 per cent annually and presently is of the order of Rs 450 billion Together with banking services it adds about 7 per cent to the countryrsquos GDP Gross premium collection is nearly 2 per cent of GDP and funds available with LIC for investment are 8 per cent of GDP
Yet nearly 80 percent of Indian population is without life insurance cover while health insurance and non-life insurance continues to be below international standards And this part of the population is also subject to weak social security and pension systems with hardly any old age income security This it is an indicator that growth potential for the insurance sector is immense A well-develop and evolved insurance sector is needed for economic development as it provides long term funds for infrastructure development and at the same time strengthens the risk taking ability It is estimated that over the next ten years India would require investments of the order of one trillion US dollar The insurance sector to some extent can enable investment in infrastructure development to sustain economic growth of the country Insurance is a federal subject in India There are two legislation that govern the sector - The Insurance Act-1938 and The IRDA Act-1999
In India insurance is generally considered as a tax-saving device instead of its other implied long term financial benefits Indian people are prone to investing in properties and gold followed by bank deposits They selectively invest in shares also but the percentage is very small Even to this day Life Insurance Corporation of India dominates India insurance sector With the entry of private sector players backed by foreign expertise Indian insurance market has become more vibrant Business is becoming increasingly vulnerable due to wide variety of risk particularly after September 11 2001 disaster in which twin tower located in the hearts of New York city were crashed by terrorist attack resulting in loss of 6000 human lives as well as financial loss to the extent of $45 billion The impact of this terrorist attack has created new horizon of risk to the business world today
However rapid changes in the global economy development of technology and e-business already gathered momentum Increased dependency on technology has originated new risks that have resulted in well-published incidents Computer hackers obtaining credit card information from visa and Power-Gen the love bug virus cyber extortion web content liability professional errors and omissions computers and other crimes and activities such as terrorism kidnapping and companyrsquos executive and extortion of money commercial liability etc have significant impact on business resulting in extreme financial loss commercial embarrassment or regulatory implications
Corporation insurancerisk managers under the circumstances have to demand increasingly complex insurance products They have to be more attentive and
30
knowledgeable about emerging risks how those risks are managed effectively and efficiently and how they could ultimately affect a companyrsquos financial situation and therefore its position in the market place In short how such risks are managed and can give to an insured a competitive advantage
In the changing times adoption of e-commerce into business models the integration of web-based communication and data transfer capabilities into the business operations and leveraging of advanced network and technology architecture for maximum benefit are the new horizon of the risks For the corporate insurancerisks managers these new exposure-cyber-risks-can lead to cyber losses widening the interpretation of what constitute insure property damage particularly as it relates to information technology and dataAll the while organizations are tremendous pressure to reduce expenses and increase profit margin and cannot afford to suffer a property loss of business interruption due to any cause (risk) How a company identifies quantifies qualifies and manages these new risks exposure in addition to the well-known tradition risks is becoming an important factor in creating shareholders value This often means changing the way Everyone in the organization have to think about risk
Insurance managers are seeing price levels (premium) continue to rise-albeit modestly-in todayrsquos primarily commercial property and reinsurance markets They are demanding that insurers improve their risk assessment and quantification offerings so that an insured may avail the benefit in cost (premium rate) on account of well-managed riskThe good news for insurance managers is that as the economy evolves insurers are increasingly matching that evaluation with new products services and capabilities due to opening up the insurance market to the private players
Insurers who are truly listening to their customers and striving to be more in tune with their needs are responding to the fast changing corporate insurance and risk management landscape They are listening to their customers They are making fresh approaches to address the new challenges faced by insured organization by designing the new products as per the needs Insurers are providing value added services to insured to protect the value created by the business
Insurers are increasingly required to develop and expand their information technology platforms to ensure that the vast amount of data they collect about their customers Insurancerisk portfolio can easily and seamlessly be transformed into valuable risk management information To help their customers insurers should make better-informed decisions They must be able to swiftly deliver this data to their customers (insured) anywhere in the world Insurer are also discovering that risk assessment have to be customized to meet policyholdersrsquo new exposures and needs The insurance industry is stepping up and addressing these challenges in several different ways
31
22) CURRENT SCENARIO OF RELIANCE LIFE INSURANCE
RLIC offers wide range of innovative life insurance products targeted at individuals and groups It offers need based products that caters to four distinct segments namely protection child retirement and investment plans RLIC is committed to emerge as a
transnational Life Insurer of global scale and standard
Reliance Life Insurance Company Limited (RLIC) is amongst the fastest growing life insurance companies in India It is also amongst the top four private sector life insurance companies in India (As on FY 2008-2009)
As on March 31 2009 RLIC has an annualized premium of Rs 30 billion with a market share of 103 It has leapfrogged on the growth path and has reached the 4 million policy mark in a short span of within 3 years RLIC has a strong distribution network of 1145 branches with more than 149000 agents
32
Insurancersquos Market Share in Comparison of Other Private company
If we look at the status of Reliance Life Insurancersquos market share in comparison of other
private company in comparison of premium earned-
If we talk the growth of Insurance industryrsquos private players in recent years the data will
reflect-
CH - 3) RESEARCH METHODOLOGY
33
RESEARCH DESIGN-
COMPARITIVE STUDY- A comparative study has been undertaken to compare the traditional Plans of Reliance Life Insurance with that of Bajaj Allianz life insurance
DATA TYPE
INTRODUCTION - Any organization whether big or small private or public needs different type of information to know its popularity I have gathered secondary data and primary data and collected information from the combination of these two data
PRIMARY DATA - Primary data collection method was decided for observing working of the company and approaching the customers directly face to face A great care was taken while collecting the primary data to answer that it is relevant accurate current and unbiased
SECONDARY DATA - Secondary data collection method was used by referring to various websites books and newspapers for collecting information regarding the project under study Secondary data consist of the information that already exists somewhere else for some another purpose
SAMPLING TECHNIQUES-
SAMPLE SIZE- A sample size of 50 was taken to be analyzed
SAMPLE LOCATION-Various sectors of Kamla Nagar Civil lines Mukherji Nagar Model Town and selected areas of Delhi
SAMPLING PROCESS - Convenient sampling was used to overcome the time and money constraints that could have been faced by us while collecting the data The customers were contacted face to face directly and also by way of telephonic conversation with them
ANALYTICAL TOOLS - The data collected were arranged accordingly and statistical tools like bar graphs and pie-charts were used to analyze and present the data
RESEARCH INSTRUMENT USED-
34
SAMPLING MEDIA - Printed questionnaires consisting several questions were asked to have an idea of customers view about Reliance Life Insurance plans followed by personal questions
FIELD WORK - Rigorous field work was undertaken to locate the interested and potential respondents to fulfill the objectives of the study
THE PRIMARY OBJECTIVEOF THE STUDY -
The primary objective of the research study is to have a detailed analysis of Reliance Life Insurance bringing in focus the future prospects of the (Anil Dhirubhai Ambani group) with relevance to the customer perception regarding the various plans and products offered by Reliance Life Insurance
31) DATA ANALYSIS AND INTERPRETATION
35
PERSONAL DETAILS
1) AGE a) 18-30b) 31-50c) 51-65
AGE NO OF RESPONDENTS PERCENTAGE
18-30 21 42
31-50 19 38
51-65 10 20
TOTAL 50 100
INTERPRETATION-The bar graph reveals that 42 of the respondents belong to the age group of 18-30 years 38 lies in the age group of 31-50 years and 20 of them lie in the age group of 51-65 years
2) OCCUPATION
4238
20
05
1015202530354045
NO
O
F
RE
SP
ON
DE
NT
S
18 to 30 31 to 50 51 to 65
AGE (in year)
AGE WISE CLASSIFICATION
36
a) Serviceb) Businessc) Professiond) Housewifee) Retired
OPTION NO OF RESPONDENTS PERCENTAGE
Service 16 32
Business 14 28
Profession 5 10
Housewife 8 16
Retired 7 14
TOTAL 50 100
INTERPRETATION-The above bar graph reveals that 32 of the total respondents were servicemen 28 of them belonged to the business class 10 were professionals 16 were housewives and 14 of the total respondents fall in the retired category
3) INCOME
32
28
10
16
14
0
5
10
15
20
25
30
35
Service Business Profession Housewife Retired
OCCUPATION
OCCUPATION WISE CLASSIFICATION
37
a) 150000-300000
b) 300000-500000
c) Above 500000
OPTION NO OF RESPONDENTS PERCENTAGE
150000-300000 24 48
300000-500000 14 28
Above 500000 12 24
TOTAL 50 100
INTERPRETATION-The above bar graph reveals that out of the total respondents 48 lie in the income group of 150000-300000 28 of the total respondents belonged to the income group of 300000-500000 and 24 lie in the income group of people earning an income of above Rs 500000pa
4828 24
01020304050
N O
OF
RE
SP
ON
DE
NT
S
150000-300000
300000-500000
ABOVE500000
INCOME (in RS)
INCOME WISE CLASSIFICATION
38
4) FAMILY MEMBERS
a) 2b) 3c) 4d) Above 4
OPTION NO OF RESPONDENT PERCENTAGE
2 11 22
3 9 18
4 24 48
Above 4 6 12
TOTAL 50 100
INTERPRETATION The above bar graph shows that 22 of the total respondents had a family of 2 members 18 of them had 3 family members 48 of them had 4 family members and 12 of them had the no of family members above 4
Q1 Where do you prefer to invest
22 18
48
120
1020304050
No
o
f re
spo
nd
ents
2 3 4 Above 4
No of family members
MEMBER WISE CLASSIFICATION
39
a) fixed deposits
b) stock
c) mutual funds
d) insurance
e) others
Option No of respondents Percentage
Fixed deposits 5 10
Stock 10 20
Mutual fund 10 20
Insurance 18 36
others 7 14
TOTAL 50 100
Interpretation The above pie chart shows that out of 50 respondents 10 preferred to invest in fixed deposits 20 in stocks 20 in mutual funds 36 in insurance and 14 in others like property gold etc
Q2 What are your priorities for investment
40
a) protecting your family against pre-mature death
b) wealth creation
c) retirement needs
d) child education and marriage
e) protect income against disability sickness or critical illness
Option No of respondents Percentage
Protecting your family against pre mature death
10 20
Wealth creation 14 28
Retirement needs 5 10
Child education and marriage 7 14
Protect income against disability sickness or critical illness
14 28
TOTAL 50 100
Interpretation The above pie chart shows that out of 50 respondents 20 of them invest for protecting their family against premature death 28 for creating wealth 10 for meeting their future retirement needs 14 for child education amp marriage and 28 for protection against disability and sickness
Q3 What is your main motive behind investing in life insurance
41
a) tax benefit
b) savings
c) risk cover
Option No of respondents Percentage
Tax benefits 27 54
Savings 5 10
Risk cover 18 36
TOTAL 50 100
Interpretation The above pie chart shows that out of the sample respondents 54 have tax benefit 10 have savings and 36 have risk cover as their main motive for making an investment in life
Q4 What kind of investment do you prefer
42
a) high risk high gain
b) low risk low gain
c) moderate
d) vary times to times
Option No of respondents Percentage
High risk high gain 8 16
Low risk low gain 5 10
Moderate 12 24
Vary times to times 25 50
TOTAL 50 100
Interpretation The above pie chart shows that out of 50 respondents 16 preferred high risk- high gain form of investment 10 preferred low risk- low gain form of investment 24 preferred moderate investment and 50 preferred varied form of investment
43
Q5Are you interested to invest in Traditional Plans
a) YES
b) NO
Option No of respondents Percentage
YES 36 72
NO 14 28
TOTAL 50 100
Interpretation The above pie chart shows that 72 of the respondents preferred to invest in Traditional Plans
44
Q6 What is your level of annual investmenta) below 20000
b) 20000-40000
c) above 40000
Option No of respondents Percentage
Below 20000 41 82
20000-40000 7 14
Above 40000 2 4
TOTAL 50 100
Interpretation The above pie chart shows that 82 of the respondents are willing to invest below Rs 20000 per annum 14 of them want to invest within Rs 20000 per annum to Rs 40000 and 4 wanted to invest over and above Rs 40000
45
Q7 What factors would you consider most important before choosing an insurance policy
a) publicity of the company
b) reputation of the company
c) quality of life advisors
d) after sales-supporting of the company
Option No of respondents Percentage
Publicity of the co 5 20
Reputation of the co 25 50
Quality of life advisors 10 10
After sale-services 10 20
TOTAL 50 100
Interpretation out of the sample respondents 20 considers publicity of the company 50 considers reputation of the company 10 considers quality of life advisors and 20 considers after sales support of the company as the most important factor for choosing an insurance company
46
Q8 Which life insurance company would you prefer the most to invest ina) reliance life insurance (RLIC)
b) Bajaj Allianz life insurance
Option No of respondents Percentage
RLIC 21 42
BAJAJ ALLIANZ 29 58
TOTAL 50 100
Interpretation Out of 50 respondents 42 preferred to invest in reliance life insurance over 58 of the respondents who prefer to invest in Bajaj Allianz life insurance
47
Q9 If reliance life insurance then which particular plan you would like to invest ina) Reliance Term Plan
b) Reliance Whole Life Plan
c) Reliance Endowment Plan
d) Reliance Special Endowment Plan
Option No of respondents Percentage
Reliance term plan 6 2858
Reliance whole life plan 3 1428
Reliance endowment plan 9 4286
Reliance special endowment plan 3 1428
TOTAL 21 100
Interpretation Out of 21 respondents 2858 preferred to invest in term plan 1428 in whole life plan 4286 in endowment plan and 1428 of them preferred to invest in special endowment plan of reliance life insurance
48
Q10 If Bajaj Allianz life insurance then which particular plan you would like to invest in
I ENDOWMENT PLAN a) Bajaj Allianz Invest Gain
b) Bajaj Allianz save Care Economy SP
c) Bajaj Allianz life time care
d) Bajaj Allianz Super Saver plan
II MONEY BACK PLAN i Bajaj Allianz Cash Gain plan
Option No of respondents Percentage
Invest gain plan 3 1035
Save care economy SP 6 2069
Life time care 7 2415
Super saver plan 3 1035
Cash gain plan 10 3446
TOTAL 29 100
Interpretation Out of 29 respondents 1035 of them plan to invest in Bajaj Allianz- Invest Gain 2069 wish to invest in Bajaj Allianz save Care Economy SP 2415 want to invest in Bajaj Allianz life time care 1035 in Bajaj Allianz Super Saver plan and 3446 prefer to invest in Bajaj Allianz Cash Gain plan
49
32) SIGNIFICANCE OF STUDY
Life insurance is one of the most rapidly growing sectors in India The main reason
behind the growth can attributed to the high population density improving economical
condition improving education level and improving awareness Due to these factors there
is still huge scope for growth in this sector Like any other business when the
opportunities are present everybody tends to enter the industries This growth hence
fetches the new competitors as well as new strategies from existing players To sustain in
any competitive industry the organization must adapt to existing strategies and adopt
new ones This study will focus on the analysis of Reliance Life Insurance in comparison
with the present scenario of Bajaj Allianz Life Insurance with respect to the Traditional
Plans of both the companyrsquos This will mainly cover the following aspects
To know about the awareness and popularity of various Traditional Plans offered
by Reliance Life Insurance and Bajaj Allianz Life Insurance
How Reliance Life Insurance can develop and sustain a good distribution
network
These will provide it benefit both in terms of better market coverage as well as better
penetration
50
33) SCOPE OF THE STUDY
1) This helps in finding out vast potential of insurance company
2) The study was conducted in National Capital Region (NCR) only
3) The number of respondents to be surveyed can be improved
4) This study was conducted by comparing the performances amp products of three private
amp government insurance players in insurance industry
5) This study was conducted to analyze the market stand of Reliance life insurance
Company limited and Bajaj Allianz Life Insurance Company Limited of India insurance
companies
6) This study is done to eliminate all the myths which people have in their minds
regarding Insurance Sector
51
34) OBJECTIVES
To have a detailed understanding of Reliance Life Insurance and Bajaj Allianz Life Insurance
To find out various reasons considered while investing in policies
To get knowledge about the market exposure and future prospects about Reliance Life Insurance
To know the perception of the consumers about the life insurance
To analyze the Traditional plans of Reliance Life Insurance and compare it with Bajaj Allianz
To know about the brand awareness of Reliance Life Insurance its customer preferences over Bajaj Allianz in the market
To study a proper knowledge about the life insurance industry
To understand the consumer choice while investing in policies
52
CHAPTER 4
DISCUSSION AND FINDINGS OF THE STUDY
FINDINGS OF THE STUDY RECOMMENDATION AND SUGGESTIONS CONCLUSION LIMITATIONS BIBLIOGRAPHY ANNEXUREQUESTIONNAIRE
53
41) FINDINGS OF THE STUDY
1) The survey reveals that still a large proportion of population is interested to invest in other forms of investment other than insurance as still most of them are unaware about the importance of insurance in their life
2) Basically people make varied form of investment for creating wealth to protect their families against pre-mature death and to protect income against disability sickness or critical illness
3) The main motive of the individuals investing is receives benefits US 1010D People generally consider insurance as a tax saving device
4) Mostly people prefer time to time form of investment as they are not willing to take high degree of risk
5) 72 of the respondents are preferred to invest in Traditional Plans
6) Most of the people prefer to make an annual investment up to a maximum of Rs20 000 per annum
7) When the product is like life insurance reputation of the company publicity of the company amp after sale services of the company matters a lot This means that people would choose that insurance company only where the quality of life advisors is satisfactory
8) Most people prefer to invest in Bajaj Allianz Life Insurance as compared to making an investment in Reliance Life Insurance
9) The most preferable Traditional plan of Reliance Life Insurance is Endowment Plan
10) The most preferable plan of Bajaj Allianz Life Insurance co is Cash Gain Plan
54
42) SUGGESTIONS amp RECOMMENDATIONS
Based on the observations of the study some suggestions for the organization are made as
follows
1) Quality of advisors is also as important as the quantity Thus company should go
mainly for qualified professionals
2) Company should increase its budget on publicity so that awareness can be increased
3) Clarity and transparency should be provided to the customer regarding various
products
4) Training sessions should be planned in advance so that schedule can be provided to
the advisor in advance
5) Apart from the Brand Positioning in urban area a strategy should be adopted by
Reliance to make its brand also near to middle level or high aspirant people because they
are the main source of the business in India
6) Awareness Camp to the sub urban area should be focused by Reliance
7) Some innovative technique or product is required in order to attract the consumer
43) LITERATURE REVIEW
55
1) Robi Elenekave has explained in detail why various retirement plans and pension plans donrsquot give the desired returns The main difficulty is the use of incorrect method for calculations done to find out the return on investment This is primarily due to wrong assumptions The study provides information about the various precautions which need to be considered before planning so that the desired results can be achieved
2) Another paper provides insight about how various financial sectors invest in bond market The study was how the different players investment different instruments according to the risk appetite and desired rate of return The study shows that life insurance sector mainly invests in government bond which are low return and low risk instrument The investment in government bond it shows that life insurance companies are more conservative in investment
3) K Subhash has presented the history of Indiarsquos life insurance industry in three stages before independence after independence and post liberalization which not only provides information but also help in analyzing the impact of these major changes The authors have also discussed the huge potential which exists in the rural India The insurance company must realize the importance of rural sector because the future lies there The author commented about the increasing share of private player in the existing market This confirms the availability of opportunity in this sector The paper also provides the importance of professional and focused approach which was given no importance
4) Tapen Sinha has discussed the various challenges and opportunities in the insurance market One of the very important factors which have been discussed in the study is the importance of developing new and better products As the scenario changes the need of an individual also changes so any organization must understand and fulfill these needs The new product development requires constant research so organization must also focus on it
5) Roger G Ibbotson discusses how financial planners and advisors have recently started to recognize that human capital must be taken into account when building optimal portfolios for individual investors Any investorrsquos human capital has a unique mortality risk However life insurance in its forms can hedge against this mortality risk Thus human capital affects both the optimal asset allocation and the optimal demand for life insurance This paper provides a unified framework based on human capital in order to enable individual investors to make both decisions jointly
6) Rakesh Niraj study tells how the flow of information in any organization is important For any organization to grow the flow of information must be good both upwards as well as ownwards The proper flow of information will also ensure proper flow of good and services from organization to customer and proper flow of information from customer to organization The information from customers will help the organization in providing better goods and services to the customer For the above purpose organization must ensure good channel partner who can provide the organization with correct feedback Hence it becomes very important for any organization to acquire good channel partners
56
7) Stephen P Robbins has discussed how group dynamics works in any organization The success of any organization depends on the success of its various teams and how these teams work together The book provides various techniques which can be used by any organization to get result from the team effort The conflict resolution is a major task in any group Various techniques which the organization can use in conflict resolution are also discussed Another important aspect covered is the importance of leadership in the organization The various forms of leadership have been discussed and the kinds of leadership which can be effective in particular situations are also discussed
8) R Wayne Mondy has discussed the importance of training and development in any organization The training provides skills to perform the current job where as the development involve learning beyond present need The various type of training are discussed which can be used according to the requirement Training and development are not only important for better performance of an individual but it also gives satisfaction The major factors which influence training and development are found to be management support commitment of trainee and trainer complexity of the organization The process of developing good training plans is also provided In another part author has discussed the importance of right man for right job The compensation strategies are also given which are very crucial for ant industry
9) Philip Kotler has discussed the importance of channels partners Better the channel partners better will be the delivery model Detailed discussion about how to design the channel structure so that all the requirements could be fulfilled is provided The various issues faced by the organization while managing the channels are also given When an organization has more than one channel it becomes very important that all the channels should be integrated in such a way that the organization get the best out of all At times due to the conflicting benefit of the different channels the conflict arise so various strategies to manage these issues is also discussed in the chapter
10) Michael J Etzel has written about the marketing of services The marketing of services is different from the goods because of the characteristic of service like intangibility inseparability heterogeneity etc Brief about pricing strategies is also given in case of services The authors have also given the impact of technological development on the services marketing The author has also given the importance of brand and after sales support in case of services as perception of the customers plays an important role In other part of the book the authors has described the importance of distribution channels and designing of the same A channel partner should be consider as partner according to discussion The legal complications associated with channels are also discussed These complications are necessary to take into the consideration while managing the channels The conflicting interest of channels both horizontally and vertically are also taken into the consideration
57
11) Boone has discussed about the importance of personal financial planning The concept of time value of money has also been elaborated The importance of creating and implementing budget is given under money management The other important concepts for financial planning like credit management and understanding taxes are also explained In one section the authors have discussed the importance of investment and what should be the major considerations while making any investment The considerations include the risk associated with the investment return on the investment etc The importance and benefits of life insurance has also been given The discussion also includes various legal aspects associated with life insurance The overview of retirement planning is also given which includes importance and benefit of retirement planning Various tools for proper retirement planning are also discussed
58
44) CONCLUSION
1) The customers are very much sensitive towards their investment They would like to invest only in that insurance company which enjoys good public image along with quality good services
2) The result of the survey conducted shows that Bajaj Allianz Life Insurance is the leader in life insurance industry but Reliance Life Insurance and other private players are giving it a close competition
3) The motive of the people behind investing in life insurance is the tax benefits that they would receive under sec 80C and 1010D
4) In Life Insurance industry the after sales support of the company is as important as the quality of life advisors
59
45) LIMITATIONS
There were some limitations faced during the study as discussed below
Since the study was taken for two months so there was a constraint of time and effort
The study was limited only to some of the Delhi regions so the results may be biased
Questionnaire was given to 125 people however only 50 responded to it which is very small for such type of study
The biasness of consumer or responses error cannot be eliminated
Most of the people are not aware about the Importance and the necessity of insurance in their life
Adverse perception of the people towards insurance sector- People consider insurance as a tax saving device
Lack of awareness about the earning opportunity in the insurance sector
60
46) BIBLIOGRAPHY
wwwreliancelifeinsurancecom
wwwadagroupcom
wwwirdacom
wwwbajajallianzlifeinsurancecom
wwwallianzbajajcom
47) ANNEXURE
61
QUESTIONNAIRE
A comparative analysis of consumer perception regarding Traditional plans of Reliance Life Insurance with that of Bajaj Allianz Life Insurance
NAME ___________________________
PERSONAL DETAILS
1) AGE_________________
1) OCCUPATION______________
2) INCOME___________________
3) FAMILY MEMBERS_________
Q1 Where do you prefer to investa) Fixed deposits b) Stock c) Mutual funds d) Insurance e) Others
Q2 What are your priorities for investmenta) Protecting your family against pre-mature death b) Wealth creation c) Retirement needs d) Child education and marriage e) Protect income against disability sickness or critical illness
Q3 What is your main motive behind investing in life insurancea) Tax benefit b) Savings c) Risk cover
Q4 What kind of investment do you prefera) High risk high gain b) Low risk low gain c) Moderate d) Vary times to times
62
Q5Are you interested to invest in Traditional Plansa) Yes b) No
Q6 What is your level of annual investmenta) below 20000 b) 20000-40000 c) above 40000
Q7 What factors would you consider most important before choosing an insurance company
a) publicity of the company b) reputation of the company c) quality of life advisors d) after sales-supporting of the company
Q8 Which life insurance company would you prefer the most to invest ina) Reliance life insurance b) Bajaj Allianz life insurance
Q9 If reliance life insurance then which particular plan you would like to invest ina) Reliance Term Plan b) Reliance Whole Life Plan c) Reliance Endowment Plan d) Reliance Special Endowment Plan
Q10 If Bajaj Allianz life insurance then which particular plan you would like to invest in
I ENDOWMENT PLAN
a) Bajaj Allianz Invest Gain
b) Bajaj Allianz save Care Economy SP
c) Bajaj Allianz life time care
d) Bajaj Allianz Super Saver plan
II MONEY BACK PLAN
a) Bajaj Allianz Cash Gain plan
63
64
- COMPANY PROFILE
- ABOUT RELIANCE LIFE INSURANCE
- HISTORY
- Reliance Capital Limited announced the launch of its life insurance business on February 1 2006 This was after obtaining the required regulatory approvals from the Registrar Of Companies and the Insurance Regulatory and Development Authority
- It was in August 2005 that the ball was set rolling when Reliance Capital Limited the financial arm of Reliance ndash Anil Dhirubhai Ambani Group (ADAG) ndash announced the requisition of 100 shareholding in AMP Sanmar Life Insurance Company Limited and the formal transfer of shares took place in October 2005 The company will issue all policy contracts under the Reliance Life Insurance Company limited name All the existing policy contracts also stand transferred to the Reliance Life Insurance entity with all the original contractual terms and commitments intact
- CORE VALUES
- Reliance Life Insurance Company Limited has some core values which are listed as follows
- Vision bull To be the first choice insurer for customers bull To be the preferred employer for staff in the insurance industry bull To be the number one insurer for creating shareholder value
- Mission As a responsible customer focused market leader we will strive to understand the insurance needs of the consumers and translate it into affordable products that deliver value for money
- 12) TRADITIONAL PLANS OF THE COMPANY
- 12A )TRADITIONAL PLAN OF RELIANCE LIFE INSURANCE-
- Life insurance products are designed to suit the requirements of customers Fundamentally the product provide for
- In every product to a certain degree risk cover is imperative for it to fall under the category of insurance Based on the coverage of the product the premiums are calculated and the customer pays accordingly In order to suggest the right product it is essential for an agent to understand the requirements of the customer well
- The traditional plans of the company have the following features-
- Fixed Tenure
- Potential for better returns
- Transparency
- Flexibility in investment
- Flexibility to invest more
- Flexibility to skip the premium
- Flexibility to choose the cover
- High liquidity
- Age term and sum assured decide the amount of premium
- Top- ups and switches are not allowed
- Reliance Life Insurance Company Limited has offered 9
- 1) Reliance term plan-
- 2) Reliance Whole Life Plan -
- 3) Reliance Endowment Plan -
- 4) Reliance Special Endowment Plan -
- 13) INDUSTRY PROFILE
- MEANING OF INSURANCE
- Insurance may be described as a social device to reduce or eliminate risk of loss to life and property Insurance is a collective bearing of risk Insurance is a financial device to spread the risks and losses of few people among a large number of people as people prefer small fixed liability instead of big uncertain and changing liability
- Insurance can be defined as a ldquolegal contract between two parties whereby one party called insurer undertakes to pay a fixed amount of money on the happening of a particular event which may be certain or uncertainrdquo The other party called insured pays in exchange a fixed sum known as premium
- Insurance is desired to safeguard oneself and onersquos family against possible losses on account of risks and perils It provides financial compensation for the losses suffered due to the happening of any unforeseen events
- IMPORTANCE OF INSURANCE
- Insurance services play predominant role in the process of financial Intermediary Today insurance industry is one of the most growing sectors in India There is lot of potential in the Indian Insurance Industry
- There are many issues which require study The scope of the study of Insurance industry of India would be very great as there are ongoing Developments in the industry after the opening of the sector
- Right now the insurance industry has great opportunities in a country like India or China which huge population Also the penetration of insurance in India is very low in both life and non-life segment so there is lot potential to be tapped Before starting the discussion on insurance industry and related issues we have to start with the basics of insurance So first we understand what is insurance How the word lsquoinsurancersquo is different from the word lsquoassurancersquo Etc
- HISTORY OF INSURANCE
- The concept of insurance is believed to have emerged almost 4500 years ago in the ancient land of Babylonia where traders used to bear risk of the carvan by giving loans which were later repaid with interest when the goods arrived safely
- The concept of insurance as we know today took shape in 1688 at a place called Lloydrsquos Coffee House in London where risk bearers used to meet to transact business This coffee house became so popular that Lloydrsquos became the one of the first modern insurance companies by the end of the eighteenth century
- Marine insurance companies came into existence by the end of the eighteenth century These companies were empowered to write fire and life insurance as well as marine The Great Fire of London in 1966 caused huge loss of property and life With a view to providing fire insurance facilities
- Dr Nicholas Barbon set up in 1967 the first fire insurance company known as the Fire office
- Life insurance in its modern form came to India from England in 1818 The Oriental Life Insurance Company was the first insurance company to be set up in India to help the widows of European community The insurance companies which came into existence between 1818 and 1869 treated
- Indian lives as subnormal and charged an extra premium of 15 to 20 per cent The first Indian insurance company the Bombay Mutual Life
- Assurance Society came into existence in 1870 to cover Indian lives at normal rates
- The Insurance Act 1938 the first comprehensive legislation governing both life and non-life branches of insurance were enacted to provide strict state control over insurance business This amended insurance Act looked into investments expenditure and management of these companies
- By the mid- 1950s there were 154 Indian insurers 16 foreign insurers and 75 provident societies carrying on life insurance business in India Insurance business flourished and so did scams irregularities and dubious investment practices by scores of companies As a result the government decided to nationalize the life assurance business in India The Life Insurance
- Corporation of India (LIC) was set up in 1956 The nationalization of life insurance was followed by general insurance in 1972
- MEANING OF LIFE INSURANCE
- There are three parties in a life insurance transaction the insurer the insured and the owner of the policy (policyholder) although the owner and the insured are often the same person
- Another important person involved in a life insurance policy is the beneficiary The beneficiary is the person or persons who will receive the policy proceeds upon the death of the insured
- Life insurance may be divided into two basic classes ndash term and permanent
- HISTORY OF LIFE INSURANCE
- Risk protection has been a primary goal of humans and institutions throughout history Protecting against risk is what insurance is all about
- Over 5000 years ago in China insurance was seen as a preventative measure against piracy on the sea Piracy in fact was so prevalent that as a way of spreading the risk a number of ships would carry a portion of another ships cargo so that if one ship was captured the entire shipment would not be lost
- In another part of the world nearly 4500 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
- Life insurance came about a little later in ancient Rome where burial clubs were formed to cover the funeral expenses of its members as well as help survivors monetarily With Romes fall around 450 AD most of the concepts of insurance were abandoned but aspects of it did continue through the Middle Ages particularly with merchant and artisan guilds These provided forms of member insurance covering risks like fire flood theft disability death and even imprisonment
- During the feudal period early forms of insurance ebbed with the decline of travel and long-distance trade But during the 14th to 16th centuries transportation commerce and insurance would again reemerge
- And similar to ancient Rome burial societies were formed in the Buddhist period to help families build houses and to protect widows and children
- Modern Insurance
- Illegal almost everywhere else in Europe life insurance in England was vigorously promoted in the three decades following the Glorious Revolution of 1688 The type of insurance we see today owes its roots to 17th century England Lloyds of London or as they were known then Lloyds Coffee House was the location where merchants ship owners and underwriters met to discuss and transact business deals
- While serving as a means of risk-avoidance life insurance also appealed strongly to the gambling instincts of Englands burgeoning middle class
- Gambling was so rampant in fact that when newspapers published names of prominent people who were seriously ill bets were placed at Lloydrsquos on their anticipated dates of death Reacting against such practices 79 merchant underwriters broke away in 1769 and two years later formed a ldquoNew Lloydrsquos Coffee Houserdquo that became known as the ldquoreal Lloydrsquosrdquo Making wagers on peoples deaths ceased in 1774 when parliament forbade the practice
- Insurance moves to America
- The US insurance industry was built on the British model The year 1735 saw the birth of the first insurance company in the American colonies in
- Charleston SC The Presbyterian Synod of Philadelphia in 1759 sponsored the first life insurance corporation in America for the benefit of ministers and their dependents And the first life insurance policy for the general public in the United States was issued in Philadelphia on May 22 1761
- But it wasnt until 80 years later (after 1840) that life insurance really tookoff in a big way The key to its success was reducing the opposition from religious groups
- In 1835 the infamous New York fire drew peoples 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
- With the creation of the automobile public liability insurance which first made its appearance in the 1880s gained importance and acceptance
- More advancement was made to insurance during the process of industrialization In 1897 the British government passed the Workmens Compensation Act which made it mandatory for a company to insure its employees against industrial accidents
- During 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 most labor 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
- BENEFITS OF LIFE INSURANCE
- 1) Risk cover -Life Insurance contracts allow an individual to have a risk cover against any unfortunate event of the future
- 2) Tax Deduction -Under section 80C of the Income Tax Act of 1961 one can get tax deduction on premiums up to one lakh rupees Life Insurance policies thus decrease the total taxable income of an individual
- 3) Loans -An individual can easily access loans from different financial institutions by pledging his insurance policies
- 4) Retirement Planning -What had provided protection against the financial consequences of premature death may now be used to help them enjoy their retirement years
- 5) Educational Needs -Similar to retirement planning the cash values that flow from ones life insurance schemes can be utilized for educational needs of the insurer or his children
- The Life Insurance Industry has an enviable track record among public sector units It has a Consistent profit and dividend paying record accompanied by a steady growth in its financial resources Through investments in the Government sector and socially- oriented sectors the Industry has contributed immensely to the nations development The industry is recognized as one of the largest financial Institutions in the country The ventures initiated by the industry in the areas of Mutual Fund
- Housing Finance has done exceedingly well in recent years To protect the countrys foreign exchange reserves the reinsurance arrangement are so organized that maximum retention is made possible within the country while at the same time protecting interests of the policy holders
- 22) CURRENT SCENARIO OF RELIANCE LIFE INSURANCE
- RLIC offers wide range of innovative life insurance products targeted at individuals and groups It offers need based products that caters to four distinct segments namely protection child retirement and investment plans RLIC is committed to emerge as a transnational Life Insurer of global scale and standard
- CH - 3) RESEARCH METHODOLOGY
- RESEARCH DESIGN-
- SAMPLING TECHNIQUES-
- THE PRIMARY OBJECTIVEOF THE STUDY-
- 34) OBJECTIVES
- 7) Some innovative technique or product is required in order to attract the consumer
- 45) LIMITATIONS
- 46) BIBLIOGRAPHY
-
ACHIVEMENTS OF RELIANCE LIFE INSURANCE COMPANY
1 RLIC closed the last financial year with New Business Premium of Rs 3513 Crores
2 For 3 successive years since inception the Company has been amongst the fastest growing Companies in the Life Insurance Industry achieving a growth rate of 28 in the last financial year against a market growth of -6 In the Individual Business segment the company achieved a growth rate of 59 in terms of WRP against the private industry growth of 1
3 Reliance Life has been one of the fastest gainers in market share growing from 19 amongst private players in Mar06 to 103 as of Mar09 This has resulted in the Company growing to becoming the 4th largest private player in just two years starting at position of 11
4 The Company has been the fastest company to reach the 3 million policy mark and was the 3rd largest private insurer in terms of Policy count in 2008-09
5 Reliance Life has accomplished a large distribution ramp-up in the Industry in a short span of time by opening 1145 branches in just over 2 year
6 RLIC continues to be amongst the foremost Life Insurance companies in India to be certified ISO 90012000 for all the processes
7 Awarded the Jamnalal Bajaj Uchit Vyavahar Puraskar 2007- Certificate of Merit in the Financial Services category by Council for Fair Business Practices (CFBP)
8 The Company has been the fastest company to reach the 3 million policy mark and was the 3rd largest private insurer in terms of Policy count in 2008-09
9 The Company has also won the DL Shah Quality Council of India Commendation Award in the services category in feb 2008 for its work on promoting self help channels for service
LEADERSHIP TEAM
BOARD OF DIRECTORS
3
Gautam Doshi Director
Gautam is the Group Managing Director of Reliance Anil Dhirubhai Ambani Group and Director of Reliance Life Insurance Company Limited
In his long and illustrious career spanning 30 years Gautam has held key positions in various organisations such as Ms Bansi S Mehta RSM amp Co and Ambit Corporate Finance Pvt Ltd Presently as a Board member of various reputed public limited companies Gautam continues to power the industry with his profound knowledge and expertise
Gautam a qualified Chartered Accountant has served as the Chairman of the Institute of Chartered Accountants of India for the year 1982ndash83 He was also elected to the Council of the Institute of Chartered Accountants of India for two consecutive terms spanning over 1992 to 1998
Satya Pal Talwar Director
Satya Pal is the Director of Reliance Life Insurance Company Limited He holds an experience of more than 35 years in operations and policy formulation
Through his distinguished service in the financial industry Satya Pal has served as the lsquoChairman and Managing Directorrsquo of renowned organisations such as Bank of Baroda Union Bank of India and Oriental Bank of Commerce His in-depth knowledge of the sector has seen him rise quickly into pivotal positions at advisory and board levels in Indian and as well Global organisations such as SEBI IDBI and MasterCard International He has also held the coveted position of Deputy Governor of RBI from 1994 to 2001
Satya Pal holds a degree in Law He is a Certified Associate of the Indian Institute of Bankers and a member of the Indian Council of Arbitration
Saumen Ghosh Group President
Saumen is currently the Group President of Reliance Capital Limited
Saumen has worked in the UK for one of the leading Chartered Accountancy firms and then moved to Australia to join a subsidiary of the Allianz Group where he held various senior positions in the finance and international division In his immediate past assignment before joining Reliance Capital Limited Saumen was responsible for the overall Allianz operations in India and Middle East
Saumen is a qualified Chartered Accountant and is a member of the Institute of Chartered Accountant in England amp Wales and Australia
4
Malay Ghosh ndash President
Malay leads all activities at Reliance Life Insurance Company Limited Life and his key focus is on rapid expansion of all channels and accelerating the companyrsquos growth trajectory
Malay has over 24 years of work experience in the insurance industry He has worked for 17 years with LIC across various functions and for 7 years with Bajaj Allianz Life Insurance where he was last designated Head of Sales
Malay holds a Masters degree in statistics
Maneesha Thakur Chief Human Resources Officer
Maneesha in her role as the Chief Human Resource Officer at Reliance Life Insurance Company Limited has developed a performance driven and employee centric culture She has been at the forefront of the organization growth by facilitating talent acquisition and management
Maneesha in her career span of 15 years has worked with companies like SHCIL ALLTEL Transamerica ICICI Bank and VSNL
In addition to an MA in English Literature Maneesha holds a Post Graduate Diploma in Personnel Management amp Industrial Relations from XLRI Jamshedpur
C Mohan Chief Technology Officer
C Mohan is the Chief Technology Officer (CTO) of Reliance Life Insurance Company Limited and he is responsible for Information Technology Strategy Formulation and Deployment
Mohan is an Engineering Graduate and holds many International IT Certifications
Mohan has over 12+ years of IT Experience of which he spend more than 7+ years Executive Management Experience in overseas He worked with Cathay Pacific Airways and Computer Sciences Corporation in Asia Pacific Role at Singapore before he joined Reliance Life
In Year 2008 he has been awarded as Pioneer CIO by CIOL-DataQuest and Bold 100 CIO by IDG-CIO Forum He also received the Early SOA Adopter Award from IBM
He has recently been selected as a honoree in Global CIO 100 2009 Award Summit to be held in Colorado USA
5
R Rangarajan Chief Investment Officer
Rangarajan is the Chief Investment Officer at Reliance Life Insurance Company Limited He alongwith his team strives to give the best possible returns on investments to shareholders and policyholders keeping in mind their appetite for risk Rangarajan draws on his in-depth knowledge of investment and experience of 25 years to ensure that the goals of the organisation are metmdashwithout any compromise on the benefits of the investors
Prior to being a part of Reliance Life Insurance Rangarajan worked with AMP Sanmar Life Insurance as Head ndash Investments for three years His earlier assignment was with a large Mutual Fund organization
Rangarajan is a qualified Chartered Accountant
S V Sunder Krishnan Chief Risk Officer
Sunder is the Chief Risk officer for Reliance Life Insurance and is responsible for overseeing Risk Management Internal Audit and Compliance functions at Reliance Life Insurance
Sunder came with 23 years of experience and knowledge in Internal Audits Compliance Assurance Consulting and Risk Management He has worked for various leading organizations such as DSP Merrill Lynch ING Vysya Credit Lyonnais Standard Chartered Bank International Indonesia Ernst amp Young and Delloitte at senior and middle management positions with exposure to businesses and operations in more than 12 countries
Sunder is a qualified FCA CISA and CCSA He is also the President of Information Systems Audit Control Association (ISACA-USA) Mumbai Chapter for the year 2007-08 and was a member of the Board of Advisors to Bombay Chartered Accountants Society (BCArsquoS) for Internal Audit studies for the year 2005-06
RELIANCE ADA GROUP
6
HISTORY
7
Reliance Capital Limited announced the launch of its life insurance business on February 1 2006 This was after obtaining the required regulatory approvals from the Registrar Of Companies and the Insurance Regulatory and Development Authority
It was in August 2005 that the ball was set rolling when Reliance Capital Limited the financial arm of Reliance ndash Anil Dhirubhai Ambani Group (ADAG) ndash announced the requisition of 100 shareholding in AMP Sanmar Life Insurance Company Limited and the formal transfer of shares took place in October 2005 The company will issue all policy contracts under the Reliance Life Insurance Company limited name All the existing policy contracts also stand transferred to the Reliance Life Insurance entity with all the original contractual terms and commitments intact
A Reliance Capital company
Reliance started from scratch only to become Indiarsquos
largest private sector company in ~40 years
1966 1971-72 1977 1985 1992 1993
Birth of Reliance ndash
First Textile Mill at Naroda
Birth of Reliance ndash
First Textile Mill at Naroda
Launch of lsquoOnly Vimalrsquo brand
Launch of lsquoOnly Vimalrsquo brand
Sales Cross 4000 CrBecomes Largestprivate sector Co inIndia
Sales Cross 4000 CrBecomes Largestprivate sector Co inIndia
Launch of 1st
IPO for general public- start of a
trend
Launch of 1st
IPO for general public- start of a
trend
Total Assets cross 1000 Cr
Total Assets cross 1000 Cr
Twin IPOs receive 1million applications
Twin IPOs receive 1million applications
The Story of Growth First corporate in Asia to issues
50 and 100 yrs bond in US debt market
First corporate in Asia to issues
50 and 100 yrs bond in US debt market
1997 1998
Total assetscross 35000 CrRevenues cross
14000 Cr
Total assetscross 35000 CrRevenues cross
14000 Cr
8
A Reliance Capital company
2000 2000 2001 2003 2005 2006-07
Group Profits cross 2500 Cr
Revenues cross 20000 Cr
Total Assets cross 50000 Cr
Group Profits cross 2500 Cr
Revenues cross 20000 Cr
Total Assets cross 50000 Cr
Reliance Communication plans announced
Reliance Communication plans announced
Reliance Life Insurance rank 6th at 930 Cr
Reliance Life Insurance rank 6th at 930 Cr
Group revenues cross 60000 Cr
Largest Business group
in India
Group revenues cross 60000 Cr
Largest Business group
in India
Controlling stake in BSES (Reliance
Energy)Largest mobile
services co in India
Controlling stake in BSES (Reliance
Energy)Largest mobile
services co in India
ADA Group formedAMP Sanmar acquired and renamed Reliance
Life Insurance
ADA Group formedAMP Sanmar acquired and renamed Reliance
Life Insurance
And the journeyBecame the 1st
company to cross 1 million policy mark in 2 years of operations
Became the 1st
company to cross 1 million policy mark in 2 years of operations
Sep 2007 2007
Reliance became only the second National Insurance player to get ISO 9001-2000
Reliance became only the second National Insurance player to get ISO 9001-2000
A Reliance Capital company
Be the Change
2008 2008 2008 2007-08 2008-09
Reliance MF becomes 1st
AMC to cross
100000 Cr
Reliance MF becomes 1st
AMC to cross
100000 Cr
RCOM crosses 50 million customers
RCOM crosses 50 million customers
A total of more than 2000 Branches on anvil in the fiscal year
A total of more than 2000 Branches on anvil in the fiscal year
Continueshellip
RLIC jumps to 4th position
with 2750 Cr
RLIC jumps to 4th position
with 2750 Cr
Crosses 2million policies
Crosses 2million policies
9
SWOT ANALYSIS
STRENGTHS
Dedicated Employees Well Efficient Management Strong and popular brand name Adaptability to changes Goodwill of the company Transparency in service
WEAKNESS
Lack of good services
Lack of awareness about insurance among people
Less coverage in Rural Areas
Lack of credibility among the people because Reliance life insurance being a
private player
OPPORTUNITIES
Fast growing economy
Increasing per ndashcapita income in India
Saving behavior
High growth of Traditional industry
THREATS
Arrival of new entrants in the insurance industry
Cut throat competition within the industry
10
CORE VALUES
Reliance Life Insurance Company Limited has some core values which are listed as follows
1) Result Oriented2) Performance Driven3) Customer Focused4) Learning and Development Oriented5) Employee Centric6) Informal and Fun
1 B COMPANY PROFILE OF BAJAJ ALLIANZ LIFE INSURANCE
11
Bajaj Allianz Life Insurance Company limited is a joint venture between two leading conglomerates Bajaj Auto limited and Allianz AG company whose total asset value is of Rs 5900000 cr Bajaj whose wealth as of now is Rs 8000 cr group in India 55 years of experience 4th largest group in the world Above 15000 employees largest 2 amp 3 wheeler manufacture in India Allianz established in 1890 who has 115 years of experience in financial year
Bajaj Auto is one of the most trusted name is Indian auto for over 55 years At Bajaj Allianz customer delight is our guiding principle Ensuring world-class solutions by offering customized products with transparent benefits supported by best technology is our business philosophy
Notwithstanding the recession and a volatile stock market Bajaj Allianz life insurance posted a profit of Rs 45 cr for financial year 2009 against a loss of Rs 16 cr in the previous year
The company new business premium fell to Rs 4491 cr in the year against Rs 6674 cr recorded in the last year
We have been able to make a profit of profit of Rs 45 cr even in these difficult times Our new business premium declined by 30 to Rs 4491 cr because the stock market declined and we didnrsquot open any new office in FY 09rdquo Bajaj Allianz country manager and Bajaj Allianz life insurance CEO kamesh Goyal said
Bajaj Allianz Life Insurance has around 1200 offices and the company would not increase the number this year too Goyal said
The companyrsquos renewal premium grew by more than 100 to Rs 6133 cr in the 2008-2009 as compared to Rs 3051 cr in the previous fiscal year he saidIn the year Bajaj Allianz life insurance issued 29 lakh policies which were the second largest in the industry
Vision bull To be the first choice insurer for customers bull To be the preferred employer for staff in the insurance industry bull To be the number one insurer for creating shareholder value
MissionAs a responsible customer focused market leader we will strive to understand the insurance needs of the consumers and translate it into affordable products that deliver value for money
12) TRADITIONAL PLANS OF THE COMPANY
12
12A )TRADITIONAL PLAN OF RELIANCE LIFE INSURANCE -
Life insurance products are designed to suit the requirements of customers Fundamentally the product provide for
Risk cover
Investment
Health cover
In every product to a certain degree risk cover is imperative for it to fall under the category of insurance Based on the coverage of the product the premiums are calculated and the customer pays accordingly In order to suggest the right product it is essential for an agent to understand the requirements of the customer well
The traditional plans of the company have the following features- Fixed Tenure Potential for better returns Transparency Flexibility in investment Flexibility to invest more Flexibility to skip the premium Flexibility to choose the cover High liquidity Age term and sum assured decide the amount of premium Top- ups and switches are not allowed
Reliance Life Insurance Company Limited has offered 9Traditional plans to the customers which are listed as follows1) Reliance Term Plan2) Reliance Whole Life Plan3) Reliance Endowment Plan4) Reliance Special Endowment Plan5) Reliance Cash Flow Plan6) Reliance Credit Guardian Plan7) Reliance Special Credit Guardian PlanEach of the above traditional plans is discussed as follows
1) Reliance term plan-This insurance policy is designed for those who only want life cover for the protection of their family and do not wish to save for themselves It can also be useful to business firms that wish to provide financial security to their business against the sudden loss of partners or valuable manpower Since there is no saving element or bonus provision the premium is very lowHence this is a high-risk plan with a low premium
13
1048729 Features -a) Purely a term planb) Entry age minimum 18 years and maximum 65 yearc) Maximum premium paying term is 30 yeard) Loan facility NAe) Maturity amount = Sum assured
2) Reliance Whole Life Plan -This insurance policy is designed for people who do not wish to avail of any benefits themselves but wish to create an immediate estate to protect their family by availing of insurance cover on their life at a very low cost
1048729 Features -a) It is a whole life insurance policy with profitsb) Low cost life coverc) Maturity age is 85 year or 99 years last birthday as chosend) Maturity amount = Sum assured + Vested bonuse) Tax benefit is available
3) Reliance Endowment Plan -Reliance Life Insurancersquos Reliance Endowment Plan is the key to all your financial needs It is an inexpensive and easy way to protect you your family or your businessIn a nutshell this plan will keep you financially prepared for all the special occasions in your life - your daughterrsquos wedding your childrsquos university education or even a new office for your business - by eliminating the burden that a shortage of money createsIn the event of your untimely death Reliance Endowment Plan will also assist your loved ones through this difficult time by the financial support that it providesReliance Endowment Plan also gives you the additional benefit of participating in the companyrsquos profits which you will receive at the end of the policy period
1048729 Features -a) Entry age minimum is 5 year and maximum 65 yearb) Maturity age minimum is 18 year and maximum 75 yearc) Minimum premium paying term is 5 year and maximum 35 year in case of regular and in case of single 15 yeard) Minimum sum assured is Rs 25000 or as determined by the minimum premiume) Maximum sum assured is Rs 5 00000 (entry age below 18 years and no limit for entry age 18 and above)f) Premium mode annual half yearly quarterly and monthly (by salary deduction only)g) Loan up to 90 of the surrender value of the policyh) Maturity amount = Guaranteed sum assured + Reversionary bonus
4) Reliance Special Endowment Plan -
14
This insurance policy is designed for people who wish to combine savings with extended security The unique feature of this policy is that life protection continues for five years after you have stopped the payment of premium Payment of sum assured at the end of premium paying term and extension of life cover thereafter for the full sum assured for a period of 5 years are characteristics of the policyThis plan also participates in the profits
1048729 Features -a) Entry age minimum 12 year and maximum 65 yearb) Minimum sum assured is Rs 25000c) Minimum premium paying term is 10 year and maximum 40 yeard) Unique feature of this policy is that five year life protection continues after you have stopped the payment of premiume) Tax benefit is availablef) Under this policy bonus is compounded yearlyg) Loan facility is availableh) Maturity amount = Full sum assured before maturity date +Vested bonus at the time of maturity date
15
12 B) TRADITIONAL PLANS OF BAJAJ ALLIANZ LIFE INSURANCE
I ENDOWMENT PLAN
Saving plan which offer bonuses are excellent long term plan with complete safety Our products offer additional benefits which include 4 times life cover at a little extra cost limited premium payment terms and compounded reversionary bonuses making it a very good long term investment
1 Bajaj Allianz Invest GainInvest Gain is a specially designed plan that offers a unique combination of benefits that help you develop a sound financial portfolio for your family
4 Times Life Cover at a little extra cost
Limited premium payment option available
Additional Benefits
a) Accidental Death Benefit and Disability Benefit b) Critical Illness Benefit and Hospital Cash Benefit c) Family Income Benefit In case of death or accidental total permanent disability of insured all future premiums are waived and 1 of the sum assured is paid monthly
Invest Gain Save Care Economy SP Life Time Care
Super Saver
16
2 Bajaj Allianz save Care Economy SP
A One-time payment Investment plan that provides for savings with high risk cover for 10 years and also participates in the profits of the company It offers you high risk cover with easy liquidity and high returns
a) A single premium endowment plan that participates in the profitsb) 10 year Investment planc) Benefits payable on maturityc) Loans available
17
3 Bajaj Allianz life time care
A whole life plan which provides survival benefits at the age of 80 thereby making sure you are financially secure at the time when you need it the most Additional Benefits
a) Accidental Death Cover and Disability Cover b) Critical Illness Cover and Hospital Cash Cover c) Waiver of Premium Benefit
4Bajaj Allianz Super Saver plan
Bajaj Allianz Super Saver is a regular premium endowment plan which helps you save regular amounts for a safer tomorrow It also provides you with extra benefits of Guaranteed Additions to your sum assured at the end of each policy year
18
II MONEY BACK PLAN
Money back plans are Traditional Insurance plans that provide the investor with returns at regular stages of life
CashGain
1)Bajaj Allianz Cash Gain plan
A Money back plan which guarantees 125 payout + bonuses
Quadruple life cover
5 easy payouts which give upto 125 + bonuses
Additional Benefitsa) Accidental Death Benefit and Disability Benefitb) Critical Illness Benefit and Hospital Cash Benefitc) Family Income Benefit In case of death or accidental total permanent disability of insured all future premiums are waived and 1 of the sum assured is paid monthly
19
20
13) INDUSTRY PROFILE
MEANING OF INSURANCE
Insurance may be described as a social device to reduce or eliminate risk of loss to life and property Insurance is a collective bearing of risk Insurance is a financial device to spread the risks and losses of few people among a large number of people as people prefer small fixed liability instead of big uncertain and changing liability
Insurance can be defined as a ldquolegal contract between two parties whereby one party called insurer undertakes to pay a fixed amount of money on the happening of a particular event which may be certain or uncertainrdquo The other party called insured pays in exchange a fixed sum known as premiumInsurance is desired to safeguard oneself and onersquos family against possible losses on account of risks and perils It provides financial compensation for the losses suffered due to the happening of any unforeseen events
IMPORTANCE OF INSURANCE
Insurance constitutes one of the major segments of the financial marketInsurance services play predominant role in the process of financial Intermediary Today insurance industry is one of the most growing sectors in India There is lot of potential in the Indian Insurance Industry
There are many issues which require study The scope of the study of Insurance industry of India would be very great as there are ongoing Developments in the industry after the opening of the sectorOne of the major issues is the effects on LIC after the entry of private players in the market Though market share of LIC has been affected it has improved in terms of efficiency
There are number of other hot topics like penetration of Health Insurance Rural marketing of insurance new distribution channels new product ranges insurance brokersrsquo regulation incentive scheme of development officers of LIC etc So it offers lot of scope for studying the insurance industryRight now the insurance industry has great opportunities in a country like India or China which huge population Also the penetration of insurance in India is very low in both life and non-life segment so there is lot potential to be tapped Before starting the discussion on insurance industry and related issues we have to start with the basics of insurance So first we understand what is insurance How the word lsquoinsurancersquo is different from the word lsquoassurancersquo Etc
21
HISTORY OF INSURANCE
The concept of insurance is believed to have emerged almost 4500 years ago in the ancient land of Babylonia where traders used to bear risk of the carvan by giving loans which were later repaid with interest when the goods arrived safely
The concept of insurance as we know today took shape in 1688 at a place called Lloydrsquos Coffee House in London where risk bearers used to meet to transact business This coffee house became so popular that Lloydrsquos became the one of the first modern insurance companies by the end of the eighteenth centuryMarine insurance companies came into existence by the end of the eighteenth century These companies were empowered to write fire and life insurance as well as marine The Great Fire of London in 1966 caused huge loss of property and life With a view to providing fire insurance facilitiesDr Nicholas Barbon set up in 1967 the first fire insurance company known as the Fire office
Life insurance in its modern form came to India from England in 1818 The Oriental Life Insurance Company was the first insurance company to be set up in India to help the widows of European community The insurance companies which came into existence between 1818 and 1869 treatedIndian lives as subnormal and charged an extra premium of 15 to 20 per cent The first Indian insurance company the Bombay Mutual LifeAssurance Society came into existence in 1870 to cover Indian lives at normal rates
The Insurance Act 1938 the first comprehensive legislation governing both life and non-life branches of insurance were enacted to provide strict state control over insurance business This amended insurance Act looked into investments expenditure and management of these companiesBy the mid- 1950s there were 154 Indian insurers 16 foreign insurers and 75 provident societies carrying on life insurance business in India Insurance business flourished and so did scams irregularities and dubious investment practices by scores of companies As a result the government decided to nationalize the life assurance business in India The Life InsuranceCorporation of India (LIC) was set up in 1956 The nationalization of life insurance was followed by general insurance in 1972
22
MEANING OF LIFE INSURANCE
There are three parties in a life insurance transaction the insurer the insured and the owner of the policy (policyholder) although the owner and the insured are often the same person
Another important person involved in a life insurance policy is the beneficiary The beneficiary is the person or persons who will receive the policy proceeds upon the death of the insured
Life insurance may be divided into two basic classes ndash term and permanent
Term life insurance provides for life insurance coverage for a specified term of years for a specified premium The policy does not accumulate cash value
Permanent life insurance is life insurance that remains in force until the policy matures unless the owner fails to pay the premium when due
Whole life insurance provides for a level premium and a cash value table included in the policy guaranteed by the company The primary advantages of whole life are guaranteed death benefits guaranteed cash values fixed and known annual premiums and mortality and expense charges will not reduce the cash value shown in the policy
Universal life insurance (UL) is a relatively new insurance product intended to provide permanent insurance coverage with greater flexibility in premium payment and the potential for a higher internal rate of return A universal life policy includes a cash account Premiums increase the cash account If you want insurance protection only and not a savings and investment product buy a term life insurance policy
If you want to buy a whole life universal life or other cash value policy plan to hold it for at least 15 years Canceling these policies after only a few years can more than double your life insurance costs
23
HISTORY OF LIFE INSURANCE
Risk protection has been a primary goal of humans and institutions throughout history Protecting against risk is what insurance is all aboutOver 5000 years ago in China insurance was seen as a preventative measure against piracy on the sea Piracy in fact was so prevalent that as a way of spreading the risk a number of ships would carry a portion of another ships cargo so that if one ship was captured the entire shipment would not be lostIn another part of the world nearly 4500 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
Life insurance came about a little later in ancient Rome where burial clubs were formed to cover the funeral expenses of its members as well as help survivors monetarily With Romes fall around 450 AD most of the concepts of insurance were abandoned but aspects of it did continue through the Middle Ages particularly with merchant and artisan guilds These provided forms of member insurance covering risks like fire flood theft disability death and even imprisonment
During the feudal period early forms of insurance ebbed with the decline of travel and long-distance trade But during the 14th to 16th centuries transportation commerce and insurance would again reemergeInsurance in India can be traced back to the Vedas For instance yogakshema the name of Life Insurance Corporation of Indias 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
And similar to ancient Rome burial societies were formed in the Buddhist period to help families build houses and to protect widows and children
Modern InsuranceIllegal almost everywhere else in Europe life insurance in England was vigorously promoted in the three decades following the Glorious Revolution of 1688 The type of insurance we see today owes its roots to 17th century England Lloyds of London or as they were known then Lloyds Coffee House was the location where merchants ship owners and underwriters met to discuss and transact business dealsWhile serving as a means of risk-avoidance life insurance also appealed strongly to the gambling instincts of Englands burgeoning middle classGambling was so rampant in fact that when newspapers published names of prominent people who were seriously ill bets were placed at Lloydrsquos on their anticipated dates of death Reacting against such practices 79 merchant underwriters broke away in 1769 and
24
two years later formed a ldquoNew Lloydrsquos Coffee Houserdquo that became known as the ldquoreal Lloydrsquosrdquo Making wagers on peoples deaths ceased in 1774 when parliament forbade the practice
Insurance moves to AmericaThe US insurance industry was built on the British model The year 1735 saw the birth of the first insurance company in the American colonies inCharleston SC The Presbyterian Synod of Philadelphia in 1759 sponsored the first life insurance corporation in America for the benefit of ministers and their dependents And the first life insurance policy for the general public in the United States was issued in Philadelphia on May 22 1761But it wasnt until 80 years later (after 1840) that life insurance really tookoff in a big way The key to its success was reducing the opposition from religious groups
In 1835 the infamous New York fire drew peoples 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
With the creation of the automobile public liability insurance which first made its appearance in the 1880s gained importance and acceptanceMore advancement was made to insurance during the process of industrialization In 1897 the British government passed the Workmens Compensation Act which made it mandatory for a company to insure its employees against industrial accidents
During 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 most labor 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
25
BENEFITS OF LIFE INSURANCE
1) Risk cover -Life Insurance contracts allow an individual to have a risk cover against any unfortunate event of the future
2) Tax Deduction -Under section 80C of the Income Tax Act of 1961 one can get tax deduction on premiums up to one lakh rupees Life Insurance policies thus decrease the total taxable income of an individual
3) Loans -An individual can easily access loans from different financial institutions by pledging his insurance policies
4) Retirement Planning -What had provided protection against the financial consequences of premature death may now be used to help them enjoy their retirement yearsMoreover the cash value can be used as an additional income in the old age
5) Educational Needs -Similar to retirement planning the cash values that flow from ones life insurance schemes can be utilized for educational needs of the insurer or his children
26
ROLE OF LIFE INSURANCE IN THE GROWTH OF THE ECONOMY
The Life Insurance Industry has an enviable track record among public sector units It has a Consistent profit and dividend paying record accompanied by a steady growth in its financial resources Through investments in the Government sector and socially- oriented sectors the Industry has contributed immensely to the nations development The industry is recognized as one of the largest financial Institutions in the country The ventures initiated by the industry in the areas of Mutual Fund
Housing Finance has done exceedingly well in recent years To protect the countrys foreign exchange reserves the reinsurance arrangement are so organized that maximum retention is made possible within the country while at the same time protecting interests of the policy holders
27
ROLE OF IRDA
MISSION
ldquoTo protect the interests of the policyholders to regulate promote
and ensure orderly growth of the insurance industry and for matters
connected therewith or incidental theretordquo
The Insurance Act 1938 had provided for setting up of the Controller of Insurance to act
as a strong and powerful supervisory and regulatory authority for insurance Post
nationalization the role of Controller of Insurance diminished considerably in
significance since the Government owned the insurance companies But the scenario
changed with the private and foreign companies foraying in to the insurance sector This
necessitated the need for a strong independent and autonomous Insurance Regulatory
Authority was felt As the enacting of legislation would have taken time the then
Government constituted through a Government resolution an Interim Insurance
Regulatory Authority pending the enactment of a comprehensive legislation
The Insurance Regulatory and Development Authority Act 1999 is an act to provide for
the establishment of an Authority to protect the interests of holders of insurance policies
to regulate promote and ensure orderly growth of the insurance industry and for matters
connected therewith or incidental thereto and further to amend the Insurance Act 1938
the Life Insurance Corporation Act 1956 and the General insurance Business
(Nationalization) Act 1972 to end the monopoly of the Life Insurance Corporation of
India (for life insurance business) and General Insurance Corporation and its subsidiaries
(for general insurance business) The act extends to the whole of India and will come
into force on such date as the Central Government may by notification in the Official
Gazette specify Different dates may be appointed for different provisions of this Act
28
The Act has defined certain terms some of the most important ones are as follows
Appointed day means the date on which the Authority is established under the act
Authority means the established under this Act Interim Insurance Regulatory Authority
means the Insurance Regulatory Authority set up by the Central Government through
Resolution No 17(2) 94-lns-V dated the 23rd January 1996
Words and expressions used and not defined in this Act but defined in the Insurance Act
1938 or the Life Insurance Corporation Act 1956 or the General Insurance Business
(Nationalization) Act 1972 shall have the meanings respectively assigned to them in
those Acts A new definition of Indian Insurance Company has been inserted Indian
insurance company means any insurer being a company
(a) Which is formed and registered under the Companies Act 1956
(b) in which the aggregate holdings of equity shares by a foreign company either by
itself or through its subsidiary companies or its nominees do not exceed twenty-six
percent paid up capital in such Indian insurance company
(c) Whose sole purpose is to carry on life insurance business general insurance business
or re-insurance business
29
CURRENT SCENERIO
21) CURRENT SCENERIO OF THE INSURANCE INDUSTRY
With largest number of life insurance policies in force in the world insurance happens to be a mega opportunity in India Itrsquos a business growing at the rate of 15-20 per cent annually and presently is of the order of Rs 450 billion Together with banking services it adds about 7 per cent to the countryrsquos GDP Gross premium collection is nearly 2 per cent of GDP and funds available with LIC for investment are 8 per cent of GDP
Yet nearly 80 percent of Indian population is without life insurance cover while health insurance and non-life insurance continues to be below international standards And this part of the population is also subject to weak social security and pension systems with hardly any old age income security This it is an indicator that growth potential for the insurance sector is immense A well-develop and evolved insurance sector is needed for economic development as it provides long term funds for infrastructure development and at the same time strengthens the risk taking ability It is estimated that over the next ten years India would require investments of the order of one trillion US dollar The insurance sector to some extent can enable investment in infrastructure development to sustain economic growth of the country Insurance is a federal subject in India There are two legislation that govern the sector - The Insurance Act-1938 and The IRDA Act-1999
In India insurance is generally considered as a tax-saving device instead of its other implied long term financial benefits Indian people are prone to investing in properties and gold followed by bank deposits They selectively invest in shares also but the percentage is very small Even to this day Life Insurance Corporation of India dominates India insurance sector With the entry of private sector players backed by foreign expertise Indian insurance market has become more vibrant Business is becoming increasingly vulnerable due to wide variety of risk particularly after September 11 2001 disaster in which twin tower located in the hearts of New York city were crashed by terrorist attack resulting in loss of 6000 human lives as well as financial loss to the extent of $45 billion The impact of this terrorist attack has created new horizon of risk to the business world today
However rapid changes in the global economy development of technology and e-business already gathered momentum Increased dependency on technology has originated new risks that have resulted in well-published incidents Computer hackers obtaining credit card information from visa and Power-Gen the love bug virus cyber extortion web content liability professional errors and omissions computers and other crimes and activities such as terrorism kidnapping and companyrsquos executive and extortion of money commercial liability etc have significant impact on business resulting in extreme financial loss commercial embarrassment or regulatory implications
Corporation insurancerisk managers under the circumstances have to demand increasingly complex insurance products They have to be more attentive and
30
knowledgeable about emerging risks how those risks are managed effectively and efficiently and how they could ultimately affect a companyrsquos financial situation and therefore its position in the market place In short how such risks are managed and can give to an insured a competitive advantage
In the changing times adoption of e-commerce into business models the integration of web-based communication and data transfer capabilities into the business operations and leveraging of advanced network and technology architecture for maximum benefit are the new horizon of the risks For the corporate insurancerisks managers these new exposure-cyber-risks-can lead to cyber losses widening the interpretation of what constitute insure property damage particularly as it relates to information technology and dataAll the while organizations are tremendous pressure to reduce expenses and increase profit margin and cannot afford to suffer a property loss of business interruption due to any cause (risk) How a company identifies quantifies qualifies and manages these new risks exposure in addition to the well-known tradition risks is becoming an important factor in creating shareholders value This often means changing the way Everyone in the organization have to think about risk
Insurance managers are seeing price levels (premium) continue to rise-albeit modestly-in todayrsquos primarily commercial property and reinsurance markets They are demanding that insurers improve their risk assessment and quantification offerings so that an insured may avail the benefit in cost (premium rate) on account of well-managed riskThe good news for insurance managers is that as the economy evolves insurers are increasingly matching that evaluation with new products services and capabilities due to opening up the insurance market to the private players
Insurers who are truly listening to their customers and striving to be more in tune with their needs are responding to the fast changing corporate insurance and risk management landscape They are listening to their customers They are making fresh approaches to address the new challenges faced by insured organization by designing the new products as per the needs Insurers are providing value added services to insured to protect the value created by the business
Insurers are increasingly required to develop and expand their information technology platforms to ensure that the vast amount of data they collect about their customers Insurancerisk portfolio can easily and seamlessly be transformed into valuable risk management information To help their customers insurers should make better-informed decisions They must be able to swiftly deliver this data to their customers (insured) anywhere in the world Insurer are also discovering that risk assessment have to be customized to meet policyholdersrsquo new exposures and needs The insurance industry is stepping up and addressing these challenges in several different ways
31
22) CURRENT SCENARIO OF RELIANCE LIFE INSURANCE
RLIC offers wide range of innovative life insurance products targeted at individuals and groups It offers need based products that caters to four distinct segments namely protection child retirement and investment plans RLIC is committed to emerge as a
transnational Life Insurer of global scale and standard
Reliance Life Insurance Company Limited (RLIC) is amongst the fastest growing life insurance companies in India It is also amongst the top four private sector life insurance companies in India (As on FY 2008-2009)
As on March 31 2009 RLIC has an annualized premium of Rs 30 billion with a market share of 103 It has leapfrogged on the growth path and has reached the 4 million policy mark in a short span of within 3 years RLIC has a strong distribution network of 1145 branches with more than 149000 agents
32
Insurancersquos Market Share in Comparison of Other Private company
If we look at the status of Reliance Life Insurancersquos market share in comparison of other
private company in comparison of premium earned-
If we talk the growth of Insurance industryrsquos private players in recent years the data will
reflect-
CH - 3) RESEARCH METHODOLOGY
33
RESEARCH DESIGN-
COMPARITIVE STUDY- A comparative study has been undertaken to compare the traditional Plans of Reliance Life Insurance with that of Bajaj Allianz life insurance
DATA TYPE
INTRODUCTION - Any organization whether big or small private or public needs different type of information to know its popularity I have gathered secondary data and primary data and collected information from the combination of these two data
PRIMARY DATA - Primary data collection method was decided for observing working of the company and approaching the customers directly face to face A great care was taken while collecting the primary data to answer that it is relevant accurate current and unbiased
SECONDARY DATA - Secondary data collection method was used by referring to various websites books and newspapers for collecting information regarding the project under study Secondary data consist of the information that already exists somewhere else for some another purpose
SAMPLING TECHNIQUES-
SAMPLE SIZE- A sample size of 50 was taken to be analyzed
SAMPLE LOCATION-Various sectors of Kamla Nagar Civil lines Mukherji Nagar Model Town and selected areas of Delhi
SAMPLING PROCESS - Convenient sampling was used to overcome the time and money constraints that could have been faced by us while collecting the data The customers were contacted face to face directly and also by way of telephonic conversation with them
ANALYTICAL TOOLS - The data collected were arranged accordingly and statistical tools like bar graphs and pie-charts were used to analyze and present the data
RESEARCH INSTRUMENT USED-
34
SAMPLING MEDIA - Printed questionnaires consisting several questions were asked to have an idea of customers view about Reliance Life Insurance plans followed by personal questions
FIELD WORK - Rigorous field work was undertaken to locate the interested and potential respondents to fulfill the objectives of the study
THE PRIMARY OBJECTIVEOF THE STUDY -
The primary objective of the research study is to have a detailed analysis of Reliance Life Insurance bringing in focus the future prospects of the (Anil Dhirubhai Ambani group) with relevance to the customer perception regarding the various plans and products offered by Reliance Life Insurance
31) DATA ANALYSIS AND INTERPRETATION
35
PERSONAL DETAILS
1) AGE a) 18-30b) 31-50c) 51-65
AGE NO OF RESPONDENTS PERCENTAGE
18-30 21 42
31-50 19 38
51-65 10 20
TOTAL 50 100
INTERPRETATION-The bar graph reveals that 42 of the respondents belong to the age group of 18-30 years 38 lies in the age group of 31-50 years and 20 of them lie in the age group of 51-65 years
2) OCCUPATION
4238
20
05
1015202530354045
NO
O
F
RE
SP
ON
DE
NT
S
18 to 30 31 to 50 51 to 65
AGE (in year)
AGE WISE CLASSIFICATION
36
a) Serviceb) Businessc) Professiond) Housewifee) Retired
OPTION NO OF RESPONDENTS PERCENTAGE
Service 16 32
Business 14 28
Profession 5 10
Housewife 8 16
Retired 7 14
TOTAL 50 100
INTERPRETATION-The above bar graph reveals that 32 of the total respondents were servicemen 28 of them belonged to the business class 10 were professionals 16 were housewives and 14 of the total respondents fall in the retired category
3) INCOME
32
28
10
16
14
0
5
10
15
20
25
30
35
Service Business Profession Housewife Retired
OCCUPATION
OCCUPATION WISE CLASSIFICATION
37
a) 150000-300000
b) 300000-500000
c) Above 500000
OPTION NO OF RESPONDENTS PERCENTAGE
150000-300000 24 48
300000-500000 14 28
Above 500000 12 24
TOTAL 50 100
INTERPRETATION-The above bar graph reveals that out of the total respondents 48 lie in the income group of 150000-300000 28 of the total respondents belonged to the income group of 300000-500000 and 24 lie in the income group of people earning an income of above Rs 500000pa
4828 24
01020304050
N O
OF
RE
SP
ON
DE
NT
S
150000-300000
300000-500000
ABOVE500000
INCOME (in RS)
INCOME WISE CLASSIFICATION
38
4) FAMILY MEMBERS
a) 2b) 3c) 4d) Above 4
OPTION NO OF RESPONDENT PERCENTAGE
2 11 22
3 9 18
4 24 48
Above 4 6 12
TOTAL 50 100
INTERPRETATION The above bar graph shows that 22 of the total respondents had a family of 2 members 18 of them had 3 family members 48 of them had 4 family members and 12 of them had the no of family members above 4
Q1 Where do you prefer to invest
22 18
48
120
1020304050
No
o
f re
spo
nd
ents
2 3 4 Above 4
No of family members
MEMBER WISE CLASSIFICATION
39
a) fixed deposits
b) stock
c) mutual funds
d) insurance
e) others
Option No of respondents Percentage
Fixed deposits 5 10
Stock 10 20
Mutual fund 10 20
Insurance 18 36
others 7 14
TOTAL 50 100
Interpretation The above pie chart shows that out of 50 respondents 10 preferred to invest in fixed deposits 20 in stocks 20 in mutual funds 36 in insurance and 14 in others like property gold etc
Q2 What are your priorities for investment
40
a) protecting your family against pre-mature death
b) wealth creation
c) retirement needs
d) child education and marriage
e) protect income against disability sickness or critical illness
Option No of respondents Percentage
Protecting your family against pre mature death
10 20
Wealth creation 14 28
Retirement needs 5 10
Child education and marriage 7 14
Protect income against disability sickness or critical illness
14 28
TOTAL 50 100
Interpretation The above pie chart shows that out of 50 respondents 20 of them invest for protecting their family against premature death 28 for creating wealth 10 for meeting their future retirement needs 14 for child education amp marriage and 28 for protection against disability and sickness
Q3 What is your main motive behind investing in life insurance
41
a) tax benefit
b) savings
c) risk cover
Option No of respondents Percentage
Tax benefits 27 54
Savings 5 10
Risk cover 18 36
TOTAL 50 100
Interpretation The above pie chart shows that out of the sample respondents 54 have tax benefit 10 have savings and 36 have risk cover as their main motive for making an investment in life
Q4 What kind of investment do you prefer
42
a) high risk high gain
b) low risk low gain
c) moderate
d) vary times to times
Option No of respondents Percentage
High risk high gain 8 16
Low risk low gain 5 10
Moderate 12 24
Vary times to times 25 50
TOTAL 50 100
Interpretation The above pie chart shows that out of 50 respondents 16 preferred high risk- high gain form of investment 10 preferred low risk- low gain form of investment 24 preferred moderate investment and 50 preferred varied form of investment
43
Q5Are you interested to invest in Traditional Plans
a) YES
b) NO
Option No of respondents Percentage
YES 36 72
NO 14 28
TOTAL 50 100
Interpretation The above pie chart shows that 72 of the respondents preferred to invest in Traditional Plans
44
Q6 What is your level of annual investmenta) below 20000
b) 20000-40000
c) above 40000
Option No of respondents Percentage
Below 20000 41 82
20000-40000 7 14
Above 40000 2 4
TOTAL 50 100
Interpretation The above pie chart shows that 82 of the respondents are willing to invest below Rs 20000 per annum 14 of them want to invest within Rs 20000 per annum to Rs 40000 and 4 wanted to invest over and above Rs 40000
45
Q7 What factors would you consider most important before choosing an insurance policy
a) publicity of the company
b) reputation of the company
c) quality of life advisors
d) after sales-supporting of the company
Option No of respondents Percentage
Publicity of the co 5 20
Reputation of the co 25 50
Quality of life advisors 10 10
After sale-services 10 20
TOTAL 50 100
Interpretation out of the sample respondents 20 considers publicity of the company 50 considers reputation of the company 10 considers quality of life advisors and 20 considers after sales support of the company as the most important factor for choosing an insurance company
46
Q8 Which life insurance company would you prefer the most to invest ina) reliance life insurance (RLIC)
b) Bajaj Allianz life insurance
Option No of respondents Percentage
RLIC 21 42
BAJAJ ALLIANZ 29 58
TOTAL 50 100
Interpretation Out of 50 respondents 42 preferred to invest in reliance life insurance over 58 of the respondents who prefer to invest in Bajaj Allianz life insurance
47
Q9 If reliance life insurance then which particular plan you would like to invest ina) Reliance Term Plan
b) Reliance Whole Life Plan
c) Reliance Endowment Plan
d) Reliance Special Endowment Plan
Option No of respondents Percentage
Reliance term plan 6 2858
Reliance whole life plan 3 1428
Reliance endowment plan 9 4286
Reliance special endowment plan 3 1428
TOTAL 21 100
Interpretation Out of 21 respondents 2858 preferred to invest in term plan 1428 in whole life plan 4286 in endowment plan and 1428 of them preferred to invest in special endowment plan of reliance life insurance
48
Q10 If Bajaj Allianz life insurance then which particular plan you would like to invest in
I ENDOWMENT PLAN a) Bajaj Allianz Invest Gain
b) Bajaj Allianz save Care Economy SP
c) Bajaj Allianz life time care
d) Bajaj Allianz Super Saver plan
II MONEY BACK PLAN i Bajaj Allianz Cash Gain plan
Option No of respondents Percentage
Invest gain plan 3 1035
Save care economy SP 6 2069
Life time care 7 2415
Super saver plan 3 1035
Cash gain plan 10 3446
TOTAL 29 100
Interpretation Out of 29 respondents 1035 of them plan to invest in Bajaj Allianz- Invest Gain 2069 wish to invest in Bajaj Allianz save Care Economy SP 2415 want to invest in Bajaj Allianz life time care 1035 in Bajaj Allianz Super Saver plan and 3446 prefer to invest in Bajaj Allianz Cash Gain plan
49
32) SIGNIFICANCE OF STUDY
Life insurance is one of the most rapidly growing sectors in India The main reason
behind the growth can attributed to the high population density improving economical
condition improving education level and improving awareness Due to these factors there
is still huge scope for growth in this sector Like any other business when the
opportunities are present everybody tends to enter the industries This growth hence
fetches the new competitors as well as new strategies from existing players To sustain in
any competitive industry the organization must adapt to existing strategies and adopt
new ones This study will focus on the analysis of Reliance Life Insurance in comparison
with the present scenario of Bajaj Allianz Life Insurance with respect to the Traditional
Plans of both the companyrsquos This will mainly cover the following aspects
To know about the awareness and popularity of various Traditional Plans offered
by Reliance Life Insurance and Bajaj Allianz Life Insurance
How Reliance Life Insurance can develop and sustain a good distribution
network
These will provide it benefit both in terms of better market coverage as well as better
penetration
50
33) SCOPE OF THE STUDY
1) This helps in finding out vast potential of insurance company
2) The study was conducted in National Capital Region (NCR) only
3) The number of respondents to be surveyed can be improved
4) This study was conducted by comparing the performances amp products of three private
amp government insurance players in insurance industry
5) This study was conducted to analyze the market stand of Reliance life insurance
Company limited and Bajaj Allianz Life Insurance Company Limited of India insurance
companies
6) This study is done to eliminate all the myths which people have in their minds
regarding Insurance Sector
51
34) OBJECTIVES
To have a detailed understanding of Reliance Life Insurance and Bajaj Allianz Life Insurance
To find out various reasons considered while investing in policies
To get knowledge about the market exposure and future prospects about Reliance Life Insurance
To know the perception of the consumers about the life insurance
To analyze the Traditional plans of Reliance Life Insurance and compare it with Bajaj Allianz
To know about the brand awareness of Reliance Life Insurance its customer preferences over Bajaj Allianz in the market
To study a proper knowledge about the life insurance industry
To understand the consumer choice while investing in policies
52
CHAPTER 4
DISCUSSION AND FINDINGS OF THE STUDY
FINDINGS OF THE STUDY RECOMMENDATION AND SUGGESTIONS CONCLUSION LIMITATIONS BIBLIOGRAPHY ANNEXUREQUESTIONNAIRE
53
41) FINDINGS OF THE STUDY
1) The survey reveals that still a large proportion of population is interested to invest in other forms of investment other than insurance as still most of them are unaware about the importance of insurance in their life
2) Basically people make varied form of investment for creating wealth to protect their families against pre-mature death and to protect income against disability sickness or critical illness
3) The main motive of the individuals investing is receives benefits US 1010D People generally consider insurance as a tax saving device
4) Mostly people prefer time to time form of investment as they are not willing to take high degree of risk
5) 72 of the respondents are preferred to invest in Traditional Plans
6) Most of the people prefer to make an annual investment up to a maximum of Rs20 000 per annum
7) When the product is like life insurance reputation of the company publicity of the company amp after sale services of the company matters a lot This means that people would choose that insurance company only where the quality of life advisors is satisfactory
8) Most people prefer to invest in Bajaj Allianz Life Insurance as compared to making an investment in Reliance Life Insurance
9) The most preferable Traditional plan of Reliance Life Insurance is Endowment Plan
10) The most preferable plan of Bajaj Allianz Life Insurance co is Cash Gain Plan
54
42) SUGGESTIONS amp RECOMMENDATIONS
Based on the observations of the study some suggestions for the organization are made as
follows
1) Quality of advisors is also as important as the quantity Thus company should go
mainly for qualified professionals
2) Company should increase its budget on publicity so that awareness can be increased
3) Clarity and transparency should be provided to the customer regarding various
products
4) Training sessions should be planned in advance so that schedule can be provided to
the advisor in advance
5) Apart from the Brand Positioning in urban area a strategy should be adopted by
Reliance to make its brand also near to middle level or high aspirant people because they
are the main source of the business in India
6) Awareness Camp to the sub urban area should be focused by Reliance
7) Some innovative technique or product is required in order to attract the consumer
43) LITERATURE REVIEW
55
1) Robi Elenekave has explained in detail why various retirement plans and pension plans donrsquot give the desired returns The main difficulty is the use of incorrect method for calculations done to find out the return on investment This is primarily due to wrong assumptions The study provides information about the various precautions which need to be considered before planning so that the desired results can be achieved
2) Another paper provides insight about how various financial sectors invest in bond market The study was how the different players investment different instruments according to the risk appetite and desired rate of return The study shows that life insurance sector mainly invests in government bond which are low return and low risk instrument The investment in government bond it shows that life insurance companies are more conservative in investment
3) K Subhash has presented the history of Indiarsquos life insurance industry in three stages before independence after independence and post liberalization which not only provides information but also help in analyzing the impact of these major changes The authors have also discussed the huge potential which exists in the rural India The insurance company must realize the importance of rural sector because the future lies there The author commented about the increasing share of private player in the existing market This confirms the availability of opportunity in this sector The paper also provides the importance of professional and focused approach which was given no importance
4) Tapen Sinha has discussed the various challenges and opportunities in the insurance market One of the very important factors which have been discussed in the study is the importance of developing new and better products As the scenario changes the need of an individual also changes so any organization must understand and fulfill these needs The new product development requires constant research so organization must also focus on it
5) Roger G Ibbotson discusses how financial planners and advisors have recently started to recognize that human capital must be taken into account when building optimal portfolios for individual investors Any investorrsquos human capital has a unique mortality risk However life insurance in its forms can hedge against this mortality risk Thus human capital affects both the optimal asset allocation and the optimal demand for life insurance This paper provides a unified framework based on human capital in order to enable individual investors to make both decisions jointly
6) Rakesh Niraj study tells how the flow of information in any organization is important For any organization to grow the flow of information must be good both upwards as well as ownwards The proper flow of information will also ensure proper flow of good and services from organization to customer and proper flow of information from customer to organization The information from customers will help the organization in providing better goods and services to the customer For the above purpose organization must ensure good channel partner who can provide the organization with correct feedback Hence it becomes very important for any organization to acquire good channel partners
56
7) Stephen P Robbins has discussed how group dynamics works in any organization The success of any organization depends on the success of its various teams and how these teams work together The book provides various techniques which can be used by any organization to get result from the team effort The conflict resolution is a major task in any group Various techniques which the organization can use in conflict resolution are also discussed Another important aspect covered is the importance of leadership in the organization The various forms of leadership have been discussed and the kinds of leadership which can be effective in particular situations are also discussed
8) R Wayne Mondy has discussed the importance of training and development in any organization The training provides skills to perform the current job where as the development involve learning beyond present need The various type of training are discussed which can be used according to the requirement Training and development are not only important for better performance of an individual but it also gives satisfaction The major factors which influence training and development are found to be management support commitment of trainee and trainer complexity of the organization The process of developing good training plans is also provided In another part author has discussed the importance of right man for right job The compensation strategies are also given which are very crucial for ant industry
9) Philip Kotler has discussed the importance of channels partners Better the channel partners better will be the delivery model Detailed discussion about how to design the channel structure so that all the requirements could be fulfilled is provided The various issues faced by the organization while managing the channels are also given When an organization has more than one channel it becomes very important that all the channels should be integrated in such a way that the organization get the best out of all At times due to the conflicting benefit of the different channels the conflict arise so various strategies to manage these issues is also discussed in the chapter
10) Michael J Etzel has written about the marketing of services The marketing of services is different from the goods because of the characteristic of service like intangibility inseparability heterogeneity etc Brief about pricing strategies is also given in case of services The authors have also given the impact of technological development on the services marketing The author has also given the importance of brand and after sales support in case of services as perception of the customers plays an important role In other part of the book the authors has described the importance of distribution channels and designing of the same A channel partner should be consider as partner according to discussion The legal complications associated with channels are also discussed These complications are necessary to take into the consideration while managing the channels The conflicting interest of channels both horizontally and vertically are also taken into the consideration
57
11) Boone has discussed about the importance of personal financial planning The concept of time value of money has also been elaborated The importance of creating and implementing budget is given under money management The other important concepts for financial planning like credit management and understanding taxes are also explained In one section the authors have discussed the importance of investment and what should be the major considerations while making any investment The considerations include the risk associated with the investment return on the investment etc The importance and benefits of life insurance has also been given The discussion also includes various legal aspects associated with life insurance The overview of retirement planning is also given which includes importance and benefit of retirement planning Various tools for proper retirement planning are also discussed
58
44) CONCLUSION
1) The customers are very much sensitive towards their investment They would like to invest only in that insurance company which enjoys good public image along with quality good services
2) The result of the survey conducted shows that Bajaj Allianz Life Insurance is the leader in life insurance industry but Reliance Life Insurance and other private players are giving it a close competition
3) The motive of the people behind investing in life insurance is the tax benefits that they would receive under sec 80C and 1010D
4) In Life Insurance industry the after sales support of the company is as important as the quality of life advisors
59
45) LIMITATIONS
There were some limitations faced during the study as discussed below
Since the study was taken for two months so there was a constraint of time and effort
The study was limited only to some of the Delhi regions so the results may be biased
Questionnaire was given to 125 people however only 50 responded to it which is very small for such type of study
The biasness of consumer or responses error cannot be eliminated
Most of the people are not aware about the Importance and the necessity of insurance in their life
Adverse perception of the people towards insurance sector- People consider insurance as a tax saving device
Lack of awareness about the earning opportunity in the insurance sector
60
46) BIBLIOGRAPHY
wwwreliancelifeinsurancecom
wwwadagroupcom
wwwirdacom
wwwbajajallianzlifeinsurancecom
wwwallianzbajajcom
47) ANNEXURE
61
QUESTIONNAIRE
A comparative analysis of consumer perception regarding Traditional plans of Reliance Life Insurance with that of Bajaj Allianz Life Insurance
NAME ___________________________
PERSONAL DETAILS
1) AGE_________________
1) OCCUPATION______________
2) INCOME___________________
3) FAMILY MEMBERS_________
Q1 Where do you prefer to investa) Fixed deposits b) Stock c) Mutual funds d) Insurance e) Others
Q2 What are your priorities for investmenta) Protecting your family against pre-mature death b) Wealth creation c) Retirement needs d) Child education and marriage e) Protect income against disability sickness or critical illness
Q3 What is your main motive behind investing in life insurancea) Tax benefit b) Savings c) Risk cover
Q4 What kind of investment do you prefera) High risk high gain b) Low risk low gain c) Moderate d) Vary times to times
62
Q5Are you interested to invest in Traditional Plansa) Yes b) No
Q6 What is your level of annual investmenta) below 20000 b) 20000-40000 c) above 40000
Q7 What factors would you consider most important before choosing an insurance company
a) publicity of the company b) reputation of the company c) quality of life advisors d) after sales-supporting of the company
Q8 Which life insurance company would you prefer the most to invest ina) Reliance life insurance b) Bajaj Allianz life insurance
Q9 If reliance life insurance then which particular plan you would like to invest ina) Reliance Term Plan b) Reliance Whole Life Plan c) Reliance Endowment Plan d) Reliance Special Endowment Plan
Q10 If Bajaj Allianz life insurance then which particular plan you would like to invest in
I ENDOWMENT PLAN
a) Bajaj Allianz Invest Gain
b) Bajaj Allianz save Care Economy SP
c) Bajaj Allianz life time care
d) Bajaj Allianz Super Saver plan
II MONEY BACK PLAN
a) Bajaj Allianz Cash Gain plan
63
64
- COMPANY PROFILE
- ABOUT RELIANCE LIFE INSURANCE
- HISTORY
- Reliance Capital Limited announced the launch of its life insurance business on February 1 2006 This was after obtaining the required regulatory approvals from the Registrar Of Companies and the Insurance Regulatory and Development Authority
- It was in August 2005 that the ball was set rolling when Reliance Capital Limited the financial arm of Reliance ndash Anil Dhirubhai Ambani Group (ADAG) ndash announced the requisition of 100 shareholding in AMP Sanmar Life Insurance Company Limited and the formal transfer of shares took place in October 2005 The company will issue all policy contracts under the Reliance Life Insurance Company limited name All the existing policy contracts also stand transferred to the Reliance Life Insurance entity with all the original contractual terms and commitments intact
- CORE VALUES
- Reliance Life Insurance Company Limited has some core values which are listed as follows
- Vision bull To be the first choice insurer for customers bull To be the preferred employer for staff in the insurance industry bull To be the number one insurer for creating shareholder value
- Mission As a responsible customer focused market leader we will strive to understand the insurance needs of the consumers and translate it into affordable products that deliver value for money
- 12) TRADITIONAL PLANS OF THE COMPANY
- 12A )TRADITIONAL PLAN OF RELIANCE LIFE INSURANCE-
- Life insurance products are designed to suit the requirements of customers Fundamentally the product provide for
- In every product to a certain degree risk cover is imperative for it to fall under the category of insurance Based on the coverage of the product the premiums are calculated and the customer pays accordingly In order to suggest the right product it is essential for an agent to understand the requirements of the customer well
- The traditional plans of the company have the following features-
- Fixed Tenure
- Potential for better returns
- Transparency
- Flexibility in investment
- Flexibility to invest more
- Flexibility to skip the premium
- Flexibility to choose the cover
- High liquidity
- Age term and sum assured decide the amount of premium
- Top- ups and switches are not allowed
- Reliance Life Insurance Company Limited has offered 9
- 1) Reliance term plan-
- 2) Reliance Whole Life Plan -
- 3) Reliance Endowment Plan -
- 4) Reliance Special Endowment Plan -
- 13) INDUSTRY PROFILE
- MEANING OF INSURANCE
- Insurance may be described as a social device to reduce or eliminate risk of loss to life and property Insurance is a collective bearing of risk Insurance is a financial device to spread the risks and losses of few people among a large number of people as people prefer small fixed liability instead of big uncertain and changing liability
- Insurance can be defined as a ldquolegal contract between two parties whereby one party called insurer undertakes to pay a fixed amount of money on the happening of a particular event which may be certain or uncertainrdquo The other party called insured pays in exchange a fixed sum known as premium
- Insurance is desired to safeguard oneself and onersquos family against possible losses on account of risks and perils It provides financial compensation for the losses suffered due to the happening of any unforeseen events
- IMPORTANCE OF INSURANCE
- Insurance services play predominant role in the process of financial Intermediary Today insurance industry is one of the most growing sectors in India There is lot of potential in the Indian Insurance Industry
- There are many issues which require study The scope of the study of Insurance industry of India would be very great as there are ongoing Developments in the industry after the opening of the sector
- Right now the insurance industry has great opportunities in a country like India or China which huge population Also the penetration of insurance in India is very low in both life and non-life segment so there is lot potential to be tapped Before starting the discussion on insurance industry and related issues we have to start with the basics of insurance So first we understand what is insurance How the word lsquoinsurancersquo is different from the word lsquoassurancersquo Etc
- HISTORY OF INSURANCE
- The concept of insurance is believed to have emerged almost 4500 years ago in the ancient land of Babylonia where traders used to bear risk of the carvan by giving loans which were later repaid with interest when the goods arrived safely
- The concept of insurance as we know today took shape in 1688 at a place called Lloydrsquos Coffee House in London where risk bearers used to meet to transact business This coffee house became so popular that Lloydrsquos became the one of the first modern insurance companies by the end of the eighteenth century
- Marine insurance companies came into existence by the end of the eighteenth century These companies were empowered to write fire and life insurance as well as marine The Great Fire of London in 1966 caused huge loss of property and life With a view to providing fire insurance facilities
- Dr Nicholas Barbon set up in 1967 the first fire insurance company known as the Fire office
- Life insurance in its modern form came to India from England in 1818 The Oriental Life Insurance Company was the first insurance company to be set up in India to help the widows of European community The insurance companies which came into existence between 1818 and 1869 treated
- Indian lives as subnormal and charged an extra premium of 15 to 20 per cent The first Indian insurance company the Bombay Mutual Life
- Assurance Society came into existence in 1870 to cover Indian lives at normal rates
- The Insurance Act 1938 the first comprehensive legislation governing both life and non-life branches of insurance were enacted to provide strict state control over insurance business This amended insurance Act looked into investments expenditure and management of these companies
- By the mid- 1950s there were 154 Indian insurers 16 foreign insurers and 75 provident societies carrying on life insurance business in India Insurance business flourished and so did scams irregularities and dubious investment practices by scores of companies As a result the government decided to nationalize the life assurance business in India The Life Insurance
- Corporation of India (LIC) was set up in 1956 The nationalization of life insurance was followed by general insurance in 1972
- MEANING OF LIFE INSURANCE
- There are three parties in a life insurance transaction the insurer the insured and the owner of the policy (policyholder) although the owner and the insured are often the same person
- Another important person involved in a life insurance policy is the beneficiary The beneficiary is the person or persons who will receive the policy proceeds upon the death of the insured
- Life insurance may be divided into two basic classes ndash term and permanent
- HISTORY OF LIFE INSURANCE
- Risk protection has been a primary goal of humans and institutions throughout history Protecting against risk is what insurance is all about
- Over 5000 years ago in China insurance was seen as a preventative measure against piracy on the sea Piracy in fact was so prevalent that as a way of spreading the risk a number of ships would carry a portion of another ships cargo so that if one ship was captured the entire shipment would not be lost
- In another part of the world nearly 4500 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
- Life insurance came about a little later in ancient Rome where burial clubs were formed to cover the funeral expenses of its members as well as help survivors monetarily With Romes fall around 450 AD most of the concepts of insurance were abandoned but aspects of it did continue through the Middle Ages particularly with merchant and artisan guilds These provided forms of member insurance covering risks like fire flood theft disability death and even imprisonment
- During the feudal period early forms of insurance ebbed with the decline of travel and long-distance trade But during the 14th to 16th centuries transportation commerce and insurance would again reemerge
- And similar to ancient Rome burial societies were formed in the Buddhist period to help families build houses and to protect widows and children
- Modern Insurance
- Illegal almost everywhere else in Europe life insurance in England was vigorously promoted in the three decades following the Glorious Revolution of 1688 The type of insurance we see today owes its roots to 17th century England Lloyds of London or as they were known then Lloyds Coffee House was the location where merchants ship owners and underwriters met to discuss and transact business deals
- While serving as a means of risk-avoidance life insurance also appealed strongly to the gambling instincts of Englands burgeoning middle class
- Gambling was so rampant in fact that when newspapers published names of prominent people who were seriously ill bets were placed at Lloydrsquos on their anticipated dates of death Reacting against such practices 79 merchant underwriters broke away in 1769 and two years later formed a ldquoNew Lloydrsquos Coffee Houserdquo that became known as the ldquoreal Lloydrsquosrdquo Making wagers on peoples deaths ceased in 1774 when parliament forbade the practice
- Insurance moves to America
- The US insurance industry was built on the British model The year 1735 saw the birth of the first insurance company in the American colonies in
- Charleston SC The Presbyterian Synod of Philadelphia in 1759 sponsored the first life insurance corporation in America for the benefit of ministers and their dependents And the first life insurance policy for the general public in the United States was issued in Philadelphia on May 22 1761
- But it wasnt until 80 years later (after 1840) that life insurance really tookoff in a big way The key to its success was reducing the opposition from religious groups
- In 1835 the infamous New York fire drew peoples 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
- With the creation of the automobile public liability insurance which first made its appearance in the 1880s gained importance and acceptance
- More advancement was made to insurance during the process of industrialization In 1897 the British government passed the Workmens Compensation Act which made it mandatory for a company to insure its employees against industrial accidents
- During 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 most labor 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
- BENEFITS OF LIFE INSURANCE
- 1) Risk cover -Life Insurance contracts allow an individual to have a risk cover against any unfortunate event of the future
- 2) Tax Deduction -Under section 80C of the Income Tax Act of 1961 one can get tax deduction on premiums up to one lakh rupees Life Insurance policies thus decrease the total taxable income of an individual
- 3) Loans -An individual can easily access loans from different financial institutions by pledging his insurance policies
- 4) Retirement Planning -What had provided protection against the financial consequences of premature death may now be used to help them enjoy their retirement years
- 5) Educational Needs -Similar to retirement planning the cash values that flow from ones life insurance schemes can be utilized for educational needs of the insurer or his children
- The Life Insurance Industry has an enviable track record among public sector units It has a Consistent profit and dividend paying record accompanied by a steady growth in its financial resources Through investments in the Government sector and socially- oriented sectors the Industry has contributed immensely to the nations development The industry is recognized as one of the largest financial Institutions in the country The ventures initiated by the industry in the areas of Mutual Fund
- Housing Finance has done exceedingly well in recent years To protect the countrys foreign exchange reserves the reinsurance arrangement are so organized that maximum retention is made possible within the country while at the same time protecting interests of the policy holders
- 22) CURRENT SCENARIO OF RELIANCE LIFE INSURANCE
- RLIC offers wide range of innovative life insurance products targeted at individuals and groups It offers need based products that caters to four distinct segments namely protection child retirement and investment plans RLIC is committed to emerge as a transnational Life Insurer of global scale and standard
- CH - 3) RESEARCH METHODOLOGY
- RESEARCH DESIGN-
- SAMPLING TECHNIQUES-
- THE PRIMARY OBJECTIVEOF THE STUDY-
- 34) OBJECTIVES
- 7) Some innovative technique or product is required in order to attract the consumer
- 45) LIMITATIONS
- 46) BIBLIOGRAPHY
-
Gautam Doshi Director
Gautam is the Group Managing Director of Reliance Anil Dhirubhai Ambani Group and Director of Reliance Life Insurance Company Limited
In his long and illustrious career spanning 30 years Gautam has held key positions in various organisations such as Ms Bansi S Mehta RSM amp Co and Ambit Corporate Finance Pvt Ltd Presently as a Board member of various reputed public limited companies Gautam continues to power the industry with his profound knowledge and expertise
Gautam a qualified Chartered Accountant has served as the Chairman of the Institute of Chartered Accountants of India for the year 1982ndash83 He was also elected to the Council of the Institute of Chartered Accountants of India for two consecutive terms spanning over 1992 to 1998
Satya Pal Talwar Director
Satya Pal is the Director of Reliance Life Insurance Company Limited He holds an experience of more than 35 years in operations and policy formulation
Through his distinguished service in the financial industry Satya Pal has served as the lsquoChairman and Managing Directorrsquo of renowned organisations such as Bank of Baroda Union Bank of India and Oriental Bank of Commerce His in-depth knowledge of the sector has seen him rise quickly into pivotal positions at advisory and board levels in Indian and as well Global organisations such as SEBI IDBI and MasterCard International He has also held the coveted position of Deputy Governor of RBI from 1994 to 2001
Satya Pal holds a degree in Law He is a Certified Associate of the Indian Institute of Bankers and a member of the Indian Council of Arbitration
Saumen Ghosh Group President
Saumen is currently the Group President of Reliance Capital Limited
Saumen has worked in the UK for one of the leading Chartered Accountancy firms and then moved to Australia to join a subsidiary of the Allianz Group where he held various senior positions in the finance and international division In his immediate past assignment before joining Reliance Capital Limited Saumen was responsible for the overall Allianz operations in India and Middle East
Saumen is a qualified Chartered Accountant and is a member of the Institute of Chartered Accountant in England amp Wales and Australia
4
Malay Ghosh ndash President
Malay leads all activities at Reliance Life Insurance Company Limited Life and his key focus is on rapid expansion of all channels and accelerating the companyrsquos growth trajectory
Malay has over 24 years of work experience in the insurance industry He has worked for 17 years with LIC across various functions and for 7 years with Bajaj Allianz Life Insurance where he was last designated Head of Sales
Malay holds a Masters degree in statistics
Maneesha Thakur Chief Human Resources Officer
Maneesha in her role as the Chief Human Resource Officer at Reliance Life Insurance Company Limited has developed a performance driven and employee centric culture She has been at the forefront of the organization growth by facilitating talent acquisition and management
Maneesha in her career span of 15 years has worked with companies like SHCIL ALLTEL Transamerica ICICI Bank and VSNL
In addition to an MA in English Literature Maneesha holds a Post Graduate Diploma in Personnel Management amp Industrial Relations from XLRI Jamshedpur
C Mohan Chief Technology Officer
C Mohan is the Chief Technology Officer (CTO) of Reliance Life Insurance Company Limited and he is responsible for Information Technology Strategy Formulation and Deployment
Mohan is an Engineering Graduate and holds many International IT Certifications
Mohan has over 12+ years of IT Experience of which he spend more than 7+ years Executive Management Experience in overseas He worked with Cathay Pacific Airways and Computer Sciences Corporation in Asia Pacific Role at Singapore before he joined Reliance Life
In Year 2008 he has been awarded as Pioneer CIO by CIOL-DataQuest and Bold 100 CIO by IDG-CIO Forum He also received the Early SOA Adopter Award from IBM
He has recently been selected as a honoree in Global CIO 100 2009 Award Summit to be held in Colorado USA
5
R Rangarajan Chief Investment Officer
Rangarajan is the Chief Investment Officer at Reliance Life Insurance Company Limited He alongwith his team strives to give the best possible returns on investments to shareholders and policyholders keeping in mind their appetite for risk Rangarajan draws on his in-depth knowledge of investment and experience of 25 years to ensure that the goals of the organisation are metmdashwithout any compromise on the benefits of the investors
Prior to being a part of Reliance Life Insurance Rangarajan worked with AMP Sanmar Life Insurance as Head ndash Investments for three years His earlier assignment was with a large Mutual Fund organization
Rangarajan is a qualified Chartered Accountant
S V Sunder Krishnan Chief Risk Officer
Sunder is the Chief Risk officer for Reliance Life Insurance and is responsible for overseeing Risk Management Internal Audit and Compliance functions at Reliance Life Insurance
Sunder came with 23 years of experience and knowledge in Internal Audits Compliance Assurance Consulting and Risk Management He has worked for various leading organizations such as DSP Merrill Lynch ING Vysya Credit Lyonnais Standard Chartered Bank International Indonesia Ernst amp Young and Delloitte at senior and middle management positions with exposure to businesses and operations in more than 12 countries
Sunder is a qualified FCA CISA and CCSA He is also the President of Information Systems Audit Control Association (ISACA-USA) Mumbai Chapter for the year 2007-08 and was a member of the Board of Advisors to Bombay Chartered Accountants Society (BCArsquoS) for Internal Audit studies for the year 2005-06
RELIANCE ADA GROUP
6
HISTORY
7
Reliance Capital Limited announced the launch of its life insurance business on February 1 2006 This was after obtaining the required regulatory approvals from the Registrar Of Companies and the Insurance Regulatory and Development Authority
It was in August 2005 that the ball was set rolling when Reliance Capital Limited the financial arm of Reliance ndash Anil Dhirubhai Ambani Group (ADAG) ndash announced the requisition of 100 shareholding in AMP Sanmar Life Insurance Company Limited and the formal transfer of shares took place in October 2005 The company will issue all policy contracts under the Reliance Life Insurance Company limited name All the existing policy contracts also stand transferred to the Reliance Life Insurance entity with all the original contractual terms and commitments intact
A Reliance Capital company
Reliance started from scratch only to become Indiarsquos
largest private sector company in ~40 years
1966 1971-72 1977 1985 1992 1993
Birth of Reliance ndash
First Textile Mill at Naroda
Birth of Reliance ndash
First Textile Mill at Naroda
Launch of lsquoOnly Vimalrsquo brand
Launch of lsquoOnly Vimalrsquo brand
Sales Cross 4000 CrBecomes Largestprivate sector Co inIndia
Sales Cross 4000 CrBecomes Largestprivate sector Co inIndia
Launch of 1st
IPO for general public- start of a
trend
Launch of 1st
IPO for general public- start of a
trend
Total Assets cross 1000 Cr
Total Assets cross 1000 Cr
Twin IPOs receive 1million applications
Twin IPOs receive 1million applications
The Story of Growth First corporate in Asia to issues
50 and 100 yrs bond in US debt market
First corporate in Asia to issues
50 and 100 yrs bond in US debt market
1997 1998
Total assetscross 35000 CrRevenues cross
14000 Cr
Total assetscross 35000 CrRevenues cross
14000 Cr
8
A Reliance Capital company
2000 2000 2001 2003 2005 2006-07
Group Profits cross 2500 Cr
Revenues cross 20000 Cr
Total Assets cross 50000 Cr
Group Profits cross 2500 Cr
Revenues cross 20000 Cr
Total Assets cross 50000 Cr
Reliance Communication plans announced
Reliance Communication plans announced
Reliance Life Insurance rank 6th at 930 Cr
Reliance Life Insurance rank 6th at 930 Cr
Group revenues cross 60000 Cr
Largest Business group
in India
Group revenues cross 60000 Cr
Largest Business group
in India
Controlling stake in BSES (Reliance
Energy)Largest mobile
services co in India
Controlling stake in BSES (Reliance
Energy)Largest mobile
services co in India
ADA Group formedAMP Sanmar acquired and renamed Reliance
Life Insurance
ADA Group formedAMP Sanmar acquired and renamed Reliance
Life Insurance
And the journeyBecame the 1st
company to cross 1 million policy mark in 2 years of operations
Became the 1st
company to cross 1 million policy mark in 2 years of operations
Sep 2007 2007
Reliance became only the second National Insurance player to get ISO 9001-2000
Reliance became only the second National Insurance player to get ISO 9001-2000
A Reliance Capital company
Be the Change
2008 2008 2008 2007-08 2008-09
Reliance MF becomes 1st
AMC to cross
100000 Cr
Reliance MF becomes 1st
AMC to cross
100000 Cr
RCOM crosses 50 million customers
RCOM crosses 50 million customers
A total of more than 2000 Branches on anvil in the fiscal year
A total of more than 2000 Branches on anvil in the fiscal year
Continueshellip
RLIC jumps to 4th position
with 2750 Cr
RLIC jumps to 4th position
with 2750 Cr
Crosses 2million policies
Crosses 2million policies
9
SWOT ANALYSIS
STRENGTHS
Dedicated Employees Well Efficient Management Strong and popular brand name Adaptability to changes Goodwill of the company Transparency in service
WEAKNESS
Lack of good services
Lack of awareness about insurance among people
Less coverage in Rural Areas
Lack of credibility among the people because Reliance life insurance being a
private player
OPPORTUNITIES
Fast growing economy
Increasing per ndashcapita income in India
Saving behavior
High growth of Traditional industry
THREATS
Arrival of new entrants in the insurance industry
Cut throat competition within the industry
10
CORE VALUES
Reliance Life Insurance Company Limited has some core values which are listed as follows
1) Result Oriented2) Performance Driven3) Customer Focused4) Learning and Development Oriented5) Employee Centric6) Informal and Fun
1 B COMPANY PROFILE OF BAJAJ ALLIANZ LIFE INSURANCE
11
Bajaj Allianz Life Insurance Company limited is a joint venture between two leading conglomerates Bajaj Auto limited and Allianz AG company whose total asset value is of Rs 5900000 cr Bajaj whose wealth as of now is Rs 8000 cr group in India 55 years of experience 4th largest group in the world Above 15000 employees largest 2 amp 3 wheeler manufacture in India Allianz established in 1890 who has 115 years of experience in financial year
Bajaj Auto is one of the most trusted name is Indian auto for over 55 years At Bajaj Allianz customer delight is our guiding principle Ensuring world-class solutions by offering customized products with transparent benefits supported by best technology is our business philosophy
Notwithstanding the recession and a volatile stock market Bajaj Allianz life insurance posted a profit of Rs 45 cr for financial year 2009 against a loss of Rs 16 cr in the previous year
The company new business premium fell to Rs 4491 cr in the year against Rs 6674 cr recorded in the last year
We have been able to make a profit of profit of Rs 45 cr even in these difficult times Our new business premium declined by 30 to Rs 4491 cr because the stock market declined and we didnrsquot open any new office in FY 09rdquo Bajaj Allianz country manager and Bajaj Allianz life insurance CEO kamesh Goyal said
Bajaj Allianz Life Insurance has around 1200 offices and the company would not increase the number this year too Goyal said
The companyrsquos renewal premium grew by more than 100 to Rs 6133 cr in the 2008-2009 as compared to Rs 3051 cr in the previous fiscal year he saidIn the year Bajaj Allianz life insurance issued 29 lakh policies which were the second largest in the industry
Vision bull To be the first choice insurer for customers bull To be the preferred employer for staff in the insurance industry bull To be the number one insurer for creating shareholder value
MissionAs a responsible customer focused market leader we will strive to understand the insurance needs of the consumers and translate it into affordable products that deliver value for money
12) TRADITIONAL PLANS OF THE COMPANY
12
12A )TRADITIONAL PLAN OF RELIANCE LIFE INSURANCE -
Life insurance products are designed to suit the requirements of customers Fundamentally the product provide for
Risk cover
Investment
Health cover
In every product to a certain degree risk cover is imperative for it to fall under the category of insurance Based on the coverage of the product the premiums are calculated and the customer pays accordingly In order to suggest the right product it is essential for an agent to understand the requirements of the customer well
The traditional plans of the company have the following features- Fixed Tenure Potential for better returns Transparency Flexibility in investment Flexibility to invest more Flexibility to skip the premium Flexibility to choose the cover High liquidity Age term and sum assured decide the amount of premium Top- ups and switches are not allowed
Reliance Life Insurance Company Limited has offered 9Traditional plans to the customers which are listed as follows1) Reliance Term Plan2) Reliance Whole Life Plan3) Reliance Endowment Plan4) Reliance Special Endowment Plan5) Reliance Cash Flow Plan6) Reliance Credit Guardian Plan7) Reliance Special Credit Guardian PlanEach of the above traditional plans is discussed as follows
1) Reliance term plan-This insurance policy is designed for those who only want life cover for the protection of their family and do not wish to save for themselves It can also be useful to business firms that wish to provide financial security to their business against the sudden loss of partners or valuable manpower Since there is no saving element or bonus provision the premium is very lowHence this is a high-risk plan with a low premium
13
1048729 Features -a) Purely a term planb) Entry age minimum 18 years and maximum 65 yearc) Maximum premium paying term is 30 yeard) Loan facility NAe) Maturity amount = Sum assured
2) Reliance Whole Life Plan -This insurance policy is designed for people who do not wish to avail of any benefits themselves but wish to create an immediate estate to protect their family by availing of insurance cover on their life at a very low cost
1048729 Features -a) It is a whole life insurance policy with profitsb) Low cost life coverc) Maturity age is 85 year or 99 years last birthday as chosend) Maturity amount = Sum assured + Vested bonuse) Tax benefit is available
3) Reliance Endowment Plan -Reliance Life Insurancersquos Reliance Endowment Plan is the key to all your financial needs It is an inexpensive and easy way to protect you your family or your businessIn a nutshell this plan will keep you financially prepared for all the special occasions in your life - your daughterrsquos wedding your childrsquos university education or even a new office for your business - by eliminating the burden that a shortage of money createsIn the event of your untimely death Reliance Endowment Plan will also assist your loved ones through this difficult time by the financial support that it providesReliance Endowment Plan also gives you the additional benefit of participating in the companyrsquos profits which you will receive at the end of the policy period
1048729 Features -a) Entry age minimum is 5 year and maximum 65 yearb) Maturity age minimum is 18 year and maximum 75 yearc) Minimum premium paying term is 5 year and maximum 35 year in case of regular and in case of single 15 yeard) Minimum sum assured is Rs 25000 or as determined by the minimum premiume) Maximum sum assured is Rs 5 00000 (entry age below 18 years and no limit for entry age 18 and above)f) Premium mode annual half yearly quarterly and monthly (by salary deduction only)g) Loan up to 90 of the surrender value of the policyh) Maturity amount = Guaranteed sum assured + Reversionary bonus
4) Reliance Special Endowment Plan -
14
This insurance policy is designed for people who wish to combine savings with extended security The unique feature of this policy is that life protection continues for five years after you have stopped the payment of premium Payment of sum assured at the end of premium paying term and extension of life cover thereafter for the full sum assured for a period of 5 years are characteristics of the policyThis plan also participates in the profits
1048729 Features -a) Entry age minimum 12 year and maximum 65 yearb) Minimum sum assured is Rs 25000c) Minimum premium paying term is 10 year and maximum 40 yeard) Unique feature of this policy is that five year life protection continues after you have stopped the payment of premiume) Tax benefit is availablef) Under this policy bonus is compounded yearlyg) Loan facility is availableh) Maturity amount = Full sum assured before maturity date +Vested bonus at the time of maturity date
15
12 B) TRADITIONAL PLANS OF BAJAJ ALLIANZ LIFE INSURANCE
I ENDOWMENT PLAN
Saving plan which offer bonuses are excellent long term plan with complete safety Our products offer additional benefits which include 4 times life cover at a little extra cost limited premium payment terms and compounded reversionary bonuses making it a very good long term investment
1 Bajaj Allianz Invest GainInvest Gain is a specially designed plan that offers a unique combination of benefits that help you develop a sound financial portfolio for your family
4 Times Life Cover at a little extra cost
Limited premium payment option available
Additional Benefits
a) Accidental Death Benefit and Disability Benefit b) Critical Illness Benefit and Hospital Cash Benefit c) Family Income Benefit In case of death or accidental total permanent disability of insured all future premiums are waived and 1 of the sum assured is paid monthly
Invest Gain Save Care Economy SP Life Time Care
Super Saver
16
2 Bajaj Allianz save Care Economy SP
A One-time payment Investment plan that provides for savings with high risk cover for 10 years and also participates in the profits of the company It offers you high risk cover with easy liquidity and high returns
a) A single premium endowment plan that participates in the profitsb) 10 year Investment planc) Benefits payable on maturityc) Loans available
17
3 Bajaj Allianz life time care
A whole life plan which provides survival benefits at the age of 80 thereby making sure you are financially secure at the time when you need it the most Additional Benefits
a) Accidental Death Cover and Disability Cover b) Critical Illness Cover and Hospital Cash Cover c) Waiver of Premium Benefit
4Bajaj Allianz Super Saver plan
Bajaj Allianz Super Saver is a regular premium endowment plan which helps you save regular amounts for a safer tomorrow It also provides you with extra benefits of Guaranteed Additions to your sum assured at the end of each policy year
18
II MONEY BACK PLAN
Money back plans are Traditional Insurance plans that provide the investor with returns at regular stages of life
CashGain
1)Bajaj Allianz Cash Gain plan
A Money back plan which guarantees 125 payout + bonuses
Quadruple life cover
5 easy payouts which give upto 125 + bonuses
Additional Benefitsa) Accidental Death Benefit and Disability Benefitb) Critical Illness Benefit and Hospital Cash Benefitc) Family Income Benefit In case of death or accidental total permanent disability of insured all future premiums are waived and 1 of the sum assured is paid monthly
19
20
13) INDUSTRY PROFILE
MEANING OF INSURANCE
Insurance may be described as a social device to reduce or eliminate risk of loss to life and property Insurance is a collective bearing of risk Insurance is a financial device to spread the risks and losses of few people among a large number of people as people prefer small fixed liability instead of big uncertain and changing liability
Insurance can be defined as a ldquolegal contract between two parties whereby one party called insurer undertakes to pay a fixed amount of money on the happening of a particular event which may be certain or uncertainrdquo The other party called insured pays in exchange a fixed sum known as premiumInsurance is desired to safeguard oneself and onersquos family against possible losses on account of risks and perils It provides financial compensation for the losses suffered due to the happening of any unforeseen events
IMPORTANCE OF INSURANCE
Insurance constitutes one of the major segments of the financial marketInsurance services play predominant role in the process of financial Intermediary Today insurance industry is one of the most growing sectors in India There is lot of potential in the Indian Insurance Industry
There are many issues which require study The scope of the study of Insurance industry of India would be very great as there are ongoing Developments in the industry after the opening of the sectorOne of the major issues is the effects on LIC after the entry of private players in the market Though market share of LIC has been affected it has improved in terms of efficiency
There are number of other hot topics like penetration of Health Insurance Rural marketing of insurance new distribution channels new product ranges insurance brokersrsquo regulation incentive scheme of development officers of LIC etc So it offers lot of scope for studying the insurance industryRight now the insurance industry has great opportunities in a country like India or China which huge population Also the penetration of insurance in India is very low in both life and non-life segment so there is lot potential to be tapped Before starting the discussion on insurance industry and related issues we have to start with the basics of insurance So first we understand what is insurance How the word lsquoinsurancersquo is different from the word lsquoassurancersquo Etc
21
HISTORY OF INSURANCE
The concept of insurance is believed to have emerged almost 4500 years ago in the ancient land of Babylonia where traders used to bear risk of the carvan by giving loans which were later repaid with interest when the goods arrived safely
The concept of insurance as we know today took shape in 1688 at a place called Lloydrsquos Coffee House in London where risk bearers used to meet to transact business This coffee house became so popular that Lloydrsquos became the one of the first modern insurance companies by the end of the eighteenth centuryMarine insurance companies came into existence by the end of the eighteenth century These companies were empowered to write fire and life insurance as well as marine The Great Fire of London in 1966 caused huge loss of property and life With a view to providing fire insurance facilitiesDr Nicholas Barbon set up in 1967 the first fire insurance company known as the Fire office
Life insurance in its modern form came to India from England in 1818 The Oriental Life Insurance Company was the first insurance company to be set up in India to help the widows of European community The insurance companies which came into existence between 1818 and 1869 treatedIndian lives as subnormal and charged an extra premium of 15 to 20 per cent The first Indian insurance company the Bombay Mutual LifeAssurance Society came into existence in 1870 to cover Indian lives at normal rates
The Insurance Act 1938 the first comprehensive legislation governing both life and non-life branches of insurance were enacted to provide strict state control over insurance business This amended insurance Act looked into investments expenditure and management of these companiesBy the mid- 1950s there were 154 Indian insurers 16 foreign insurers and 75 provident societies carrying on life insurance business in India Insurance business flourished and so did scams irregularities and dubious investment practices by scores of companies As a result the government decided to nationalize the life assurance business in India The Life InsuranceCorporation of India (LIC) was set up in 1956 The nationalization of life insurance was followed by general insurance in 1972
22
MEANING OF LIFE INSURANCE
There are three parties in a life insurance transaction the insurer the insured and the owner of the policy (policyholder) although the owner and the insured are often the same person
Another important person involved in a life insurance policy is the beneficiary The beneficiary is the person or persons who will receive the policy proceeds upon the death of the insured
Life insurance may be divided into two basic classes ndash term and permanent
Term life insurance provides for life insurance coverage for a specified term of years for a specified premium The policy does not accumulate cash value
Permanent life insurance is life insurance that remains in force until the policy matures unless the owner fails to pay the premium when due
Whole life insurance provides for a level premium and a cash value table included in the policy guaranteed by the company The primary advantages of whole life are guaranteed death benefits guaranteed cash values fixed and known annual premiums and mortality and expense charges will not reduce the cash value shown in the policy
Universal life insurance (UL) is a relatively new insurance product intended to provide permanent insurance coverage with greater flexibility in premium payment and the potential for a higher internal rate of return A universal life policy includes a cash account Premiums increase the cash account If you want insurance protection only and not a savings and investment product buy a term life insurance policy
If you want to buy a whole life universal life or other cash value policy plan to hold it for at least 15 years Canceling these policies after only a few years can more than double your life insurance costs
23
HISTORY OF LIFE INSURANCE
Risk protection has been a primary goal of humans and institutions throughout history Protecting against risk is what insurance is all aboutOver 5000 years ago in China insurance was seen as a preventative measure against piracy on the sea Piracy in fact was so prevalent that as a way of spreading the risk a number of ships would carry a portion of another ships cargo so that if one ship was captured the entire shipment would not be lostIn another part of the world nearly 4500 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
Life insurance came about a little later in ancient Rome where burial clubs were formed to cover the funeral expenses of its members as well as help survivors monetarily With Romes fall around 450 AD most of the concepts of insurance were abandoned but aspects of it did continue through the Middle Ages particularly with merchant and artisan guilds These provided forms of member insurance covering risks like fire flood theft disability death and even imprisonment
During the feudal period early forms of insurance ebbed with the decline of travel and long-distance trade But during the 14th to 16th centuries transportation commerce and insurance would again reemergeInsurance in India can be traced back to the Vedas For instance yogakshema the name of Life Insurance Corporation of Indias 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
And similar to ancient Rome burial societies were formed in the Buddhist period to help families build houses and to protect widows and children
Modern InsuranceIllegal almost everywhere else in Europe life insurance in England was vigorously promoted in the three decades following the Glorious Revolution of 1688 The type of insurance we see today owes its roots to 17th century England Lloyds of London or as they were known then Lloyds Coffee House was the location where merchants ship owners and underwriters met to discuss and transact business dealsWhile serving as a means of risk-avoidance life insurance also appealed strongly to the gambling instincts of Englands burgeoning middle classGambling was so rampant in fact that when newspapers published names of prominent people who were seriously ill bets were placed at Lloydrsquos on their anticipated dates of death Reacting against such practices 79 merchant underwriters broke away in 1769 and
24
two years later formed a ldquoNew Lloydrsquos Coffee Houserdquo that became known as the ldquoreal Lloydrsquosrdquo Making wagers on peoples deaths ceased in 1774 when parliament forbade the practice
Insurance moves to AmericaThe US insurance industry was built on the British model The year 1735 saw the birth of the first insurance company in the American colonies inCharleston SC The Presbyterian Synod of Philadelphia in 1759 sponsored the first life insurance corporation in America for the benefit of ministers and their dependents And the first life insurance policy for the general public in the United States was issued in Philadelphia on May 22 1761But it wasnt until 80 years later (after 1840) that life insurance really tookoff in a big way The key to its success was reducing the opposition from religious groups
In 1835 the infamous New York fire drew peoples 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
With the creation of the automobile public liability insurance which first made its appearance in the 1880s gained importance and acceptanceMore advancement was made to insurance during the process of industrialization In 1897 the British government passed the Workmens Compensation Act which made it mandatory for a company to insure its employees against industrial accidents
During 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 most labor 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
25
BENEFITS OF LIFE INSURANCE
1) Risk cover -Life Insurance contracts allow an individual to have a risk cover against any unfortunate event of the future
2) Tax Deduction -Under section 80C of the Income Tax Act of 1961 one can get tax deduction on premiums up to one lakh rupees Life Insurance policies thus decrease the total taxable income of an individual
3) Loans -An individual can easily access loans from different financial institutions by pledging his insurance policies
4) Retirement Planning -What had provided protection against the financial consequences of premature death may now be used to help them enjoy their retirement yearsMoreover the cash value can be used as an additional income in the old age
5) Educational Needs -Similar to retirement planning the cash values that flow from ones life insurance schemes can be utilized for educational needs of the insurer or his children
26
ROLE OF LIFE INSURANCE IN THE GROWTH OF THE ECONOMY
The Life Insurance Industry has an enviable track record among public sector units It has a Consistent profit and dividend paying record accompanied by a steady growth in its financial resources Through investments in the Government sector and socially- oriented sectors the Industry has contributed immensely to the nations development The industry is recognized as one of the largest financial Institutions in the country The ventures initiated by the industry in the areas of Mutual Fund
Housing Finance has done exceedingly well in recent years To protect the countrys foreign exchange reserves the reinsurance arrangement are so organized that maximum retention is made possible within the country while at the same time protecting interests of the policy holders
27
ROLE OF IRDA
MISSION
ldquoTo protect the interests of the policyholders to regulate promote
and ensure orderly growth of the insurance industry and for matters
connected therewith or incidental theretordquo
The Insurance Act 1938 had provided for setting up of the Controller of Insurance to act
as a strong and powerful supervisory and regulatory authority for insurance Post
nationalization the role of Controller of Insurance diminished considerably in
significance since the Government owned the insurance companies But the scenario
changed with the private and foreign companies foraying in to the insurance sector This
necessitated the need for a strong independent and autonomous Insurance Regulatory
Authority was felt As the enacting of legislation would have taken time the then
Government constituted through a Government resolution an Interim Insurance
Regulatory Authority pending the enactment of a comprehensive legislation
The Insurance Regulatory and Development Authority Act 1999 is an act to provide for
the establishment of an Authority to protect the interests of holders of insurance policies
to regulate promote and ensure orderly growth of the insurance industry and for matters
connected therewith or incidental thereto and further to amend the Insurance Act 1938
the Life Insurance Corporation Act 1956 and the General insurance Business
(Nationalization) Act 1972 to end the monopoly of the Life Insurance Corporation of
India (for life insurance business) and General Insurance Corporation and its subsidiaries
(for general insurance business) The act extends to the whole of India and will come
into force on such date as the Central Government may by notification in the Official
Gazette specify Different dates may be appointed for different provisions of this Act
28
The Act has defined certain terms some of the most important ones are as follows
Appointed day means the date on which the Authority is established under the act
Authority means the established under this Act Interim Insurance Regulatory Authority
means the Insurance Regulatory Authority set up by the Central Government through
Resolution No 17(2) 94-lns-V dated the 23rd January 1996
Words and expressions used and not defined in this Act but defined in the Insurance Act
1938 or the Life Insurance Corporation Act 1956 or the General Insurance Business
(Nationalization) Act 1972 shall have the meanings respectively assigned to them in
those Acts A new definition of Indian Insurance Company has been inserted Indian
insurance company means any insurer being a company
(a) Which is formed and registered under the Companies Act 1956
(b) in which the aggregate holdings of equity shares by a foreign company either by
itself or through its subsidiary companies or its nominees do not exceed twenty-six
percent paid up capital in such Indian insurance company
(c) Whose sole purpose is to carry on life insurance business general insurance business
or re-insurance business
29
CURRENT SCENERIO
21) CURRENT SCENERIO OF THE INSURANCE INDUSTRY
With largest number of life insurance policies in force in the world insurance happens to be a mega opportunity in India Itrsquos a business growing at the rate of 15-20 per cent annually and presently is of the order of Rs 450 billion Together with banking services it adds about 7 per cent to the countryrsquos GDP Gross premium collection is nearly 2 per cent of GDP and funds available with LIC for investment are 8 per cent of GDP
Yet nearly 80 percent of Indian population is without life insurance cover while health insurance and non-life insurance continues to be below international standards And this part of the population is also subject to weak social security and pension systems with hardly any old age income security This it is an indicator that growth potential for the insurance sector is immense A well-develop and evolved insurance sector is needed for economic development as it provides long term funds for infrastructure development and at the same time strengthens the risk taking ability It is estimated that over the next ten years India would require investments of the order of one trillion US dollar The insurance sector to some extent can enable investment in infrastructure development to sustain economic growth of the country Insurance is a federal subject in India There are two legislation that govern the sector - The Insurance Act-1938 and The IRDA Act-1999
In India insurance is generally considered as a tax-saving device instead of its other implied long term financial benefits Indian people are prone to investing in properties and gold followed by bank deposits They selectively invest in shares also but the percentage is very small Even to this day Life Insurance Corporation of India dominates India insurance sector With the entry of private sector players backed by foreign expertise Indian insurance market has become more vibrant Business is becoming increasingly vulnerable due to wide variety of risk particularly after September 11 2001 disaster in which twin tower located in the hearts of New York city were crashed by terrorist attack resulting in loss of 6000 human lives as well as financial loss to the extent of $45 billion The impact of this terrorist attack has created new horizon of risk to the business world today
However rapid changes in the global economy development of technology and e-business already gathered momentum Increased dependency on technology has originated new risks that have resulted in well-published incidents Computer hackers obtaining credit card information from visa and Power-Gen the love bug virus cyber extortion web content liability professional errors and omissions computers and other crimes and activities such as terrorism kidnapping and companyrsquos executive and extortion of money commercial liability etc have significant impact on business resulting in extreme financial loss commercial embarrassment or regulatory implications
Corporation insurancerisk managers under the circumstances have to demand increasingly complex insurance products They have to be more attentive and
30
knowledgeable about emerging risks how those risks are managed effectively and efficiently and how they could ultimately affect a companyrsquos financial situation and therefore its position in the market place In short how such risks are managed and can give to an insured a competitive advantage
In the changing times adoption of e-commerce into business models the integration of web-based communication and data transfer capabilities into the business operations and leveraging of advanced network and technology architecture for maximum benefit are the new horizon of the risks For the corporate insurancerisks managers these new exposure-cyber-risks-can lead to cyber losses widening the interpretation of what constitute insure property damage particularly as it relates to information technology and dataAll the while organizations are tremendous pressure to reduce expenses and increase profit margin and cannot afford to suffer a property loss of business interruption due to any cause (risk) How a company identifies quantifies qualifies and manages these new risks exposure in addition to the well-known tradition risks is becoming an important factor in creating shareholders value This often means changing the way Everyone in the organization have to think about risk
Insurance managers are seeing price levels (premium) continue to rise-albeit modestly-in todayrsquos primarily commercial property and reinsurance markets They are demanding that insurers improve their risk assessment and quantification offerings so that an insured may avail the benefit in cost (premium rate) on account of well-managed riskThe good news for insurance managers is that as the economy evolves insurers are increasingly matching that evaluation with new products services and capabilities due to opening up the insurance market to the private players
Insurers who are truly listening to their customers and striving to be more in tune with their needs are responding to the fast changing corporate insurance and risk management landscape They are listening to their customers They are making fresh approaches to address the new challenges faced by insured organization by designing the new products as per the needs Insurers are providing value added services to insured to protect the value created by the business
Insurers are increasingly required to develop and expand their information technology platforms to ensure that the vast amount of data they collect about their customers Insurancerisk portfolio can easily and seamlessly be transformed into valuable risk management information To help their customers insurers should make better-informed decisions They must be able to swiftly deliver this data to their customers (insured) anywhere in the world Insurer are also discovering that risk assessment have to be customized to meet policyholdersrsquo new exposures and needs The insurance industry is stepping up and addressing these challenges in several different ways
31
22) CURRENT SCENARIO OF RELIANCE LIFE INSURANCE
RLIC offers wide range of innovative life insurance products targeted at individuals and groups It offers need based products that caters to four distinct segments namely protection child retirement and investment plans RLIC is committed to emerge as a
transnational Life Insurer of global scale and standard
Reliance Life Insurance Company Limited (RLIC) is amongst the fastest growing life insurance companies in India It is also amongst the top four private sector life insurance companies in India (As on FY 2008-2009)
As on March 31 2009 RLIC has an annualized premium of Rs 30 billion with a market share of 103 It has leapfrogged on the growth path and has reached the 4 million policy mark in a short span of within 3 years RLIC has a strong distribution network of 1145 branches with more than 149000 agents
32
Insurancersquos Market Share in Comparison of Other Private company
If we look at the status of Reliance Life Insurancersquos market share in comparison of other
private company in comparison of premium earned-
If we talk the growth of Insurance industryrsquos private players in recent years the data will
reflect-
CH - 3) RESEARCH METHODOLOGY
33
RESEARCH DESIGN-
COMPARITIVE STUDY- A comparative study has been undertaken to compare the traditional Plans of Reliance Life Insurance with that of Bajaj Allianz life insurance
DATA TYPE
INTRODUCTION - Any organization whether big or small private or public needs different type of information to know its popularity I have gathered secondary data and primary data and collected information from the combination of these two data
PRIMARY DATA - Primary data collection method was decided for observing working of the company and approaching the customers directly face to face A great care was taken while collecting the primary data to answer that it is relevant accurate current and unbiased
SECONDARY DATA - Secondary data collection method was used by referring to various websites books and newspapers for collecting information regarding the project under study Secondary data consist of the information that already exists somewhere else for some another purpose
SAMPLING TECHNIQUES-
SAMPLE SIZE- A sample size of 50 was taken to be analyzed
SAMPLE LOCATION-Various sectors of Kamla Nagar Civil lines Mukherji Nagar Model Town and selected areas of Delhi
SAMPLING PROCESS - Convenient sampling was used to overcome the time and money constraints that could have been faced by us while collecting the data The customers were contacted face to face directly and also by way of telephonic conversation with them
ANALYTICAL TOOLS - The data collected were arranged accordingly and statistical tools like bar graphs and pie-charts were used to analyze and present the data
RESEARCH INSTRUMENT USED-
34
SAMPLING MEDIA - Printed questionnaires consisting several questions were asked to have an idea of customers view about Reliance Life Insurance plans followed by personal questions
FIELD WORK - Rigorous field work was undertaken to locate the interested and potential respondents to fulfill the objectives of the study
THE PRIMARY OBJECTIVEOF THE STUDY -
The primary objective of the research study is to have a detailed analysis of Reliance Life Insurance bringing in focus the future prospects of the (Anil Dhirubhai Ambani group) with relevance to the customer perception regarding the various plans and products offered by Reliance Life Insurance
31) DATA ANALYSIS AND INTERPRETATION
35
PERSONAL DETAILS
1) AGE a) 18-30b) 31-50c) 51-65
AGE NO OF RESPONDENTS PERCENTAGE
18-30 21 42
31-50 19 38
51-65 10 20
TOTAL 50 100
INTERPRETATION-The bar graph reveals that 42 of the respondents belong to the age group of 18-30 years 38 lies in the age group of 31-50 years and 20 of them lie in the age group of 51-65 years
2) OCCUPATION
4238
20
05
1015202530354045
NO
O
F
RE
SP
ON
DE
NT
S
18 to 30 31 to 50 51 to 65
AGE (in year)
AGE WISE CLASSIFICATION
36
a) Serviceb) Businessc) Professiond) Housewifee) Retired
OPTION NO OF RESPONDENTS PERCENTAGE
Service 16 32
Business 14 28
Profession 5 10
Housewife 8 16
Retired 7 14
TOTAL 50 100
INTERPRETATION-The above bar graph reveals that 32 of the total respondents were servicemen 28 of them belonged to the business class 10 were professionals 16 were housewives and 14 of the total respondents fall in the retired category
3) INCOME
32
28
10
16
14
0
5
10
15
20
25
30
35
Service Business Profession Housewife Retired
OCCUPATION
OCCUPATION WISE CLASSIFICATION
37
a) 150000-300000
b) 300000-500000
c) Above 500000
OPTION NO OF RESPONDENTS PERCENTAGE
150000-300000 24 48
300000-500000 14 28
Above 500000 12 24
TOTAL 50 100
INTERPRETATION-The above bar graph reveals that out of the total respondents 48 lie in the income group of 150000-300000 28 of the total respondents belonged to the income group of 300000-500000 and 24 lie in the income group of people earning an income of above Rs 500000pa
4828 24
01020304050
N O
OF
RE
SP
ON
DE
NT
S
150000-300000
300000-500000
ABOVE500000
INCOME (in RS)
INCOME WISE CLASSIFICATION
38
4) FAMILY MEMBERS
a) 2b) 3c) 4d) Above 4
OPTION NO OF RESPONDENT PERCENTAGE
2 11 22
3 9 18
4 24 48
Above 4 6 12
TOTAL 50 100
INTERPRETATION The above bar graph shows that 22 of the total respondents had a family of 2 members 18 of them had 3 family members 48 of them had 4 family members and 12 of them had the no of family members above 4
Q1 Where do you prefer to invest
22 18
48
120
1020304050
No
o
f re
spo
nd
ents
2 3 4 Above 4
No of family members
MEMBER WISE CLASSIFICATION
39
a) fixed deposits
b) stock
c) mutual funds
d) insurance
e) others
Option No of respondents Percentage
Fixed deposits 5 10
Stock 10 20
Mutual fund 10 20
Insurance 18 36
others 7 14
TOTAL 50 100
Interpretation The above pie chart shows that out of 50 respondents 10 preferred to invest in fixed deposits 20 in stocks 20 in mutual funds 36 in insurance and 14 in others like property gold etc
Q2 What are your priorities for investment
40
a) protecting your family against pre-mature death
b) wealth creation
c) retirement needs
d) child education and marriage
e) protect income against disability sickness or critical illness
Option No of respondents Percentage
Protecting your family against pre mature death
10 20
Wealth creation 14 28
Retirement needs 5 10
Child education and marriage 7 14
Protect income against disability sickness or critical illness
14 28
TOTAL 50 100
Interpretation The above pie chart shows that out of 50 respondents 20 of them invest for protecting their family against premature death 28 for creating wealth 10 for meeting their future retirement needs 14 for child education amp marriage and 28 for protection against disability and sickness
Q3 What is your main motive behind investing in life insurance
41
a) tax benefit
b) savings
c) risk cover
Option No of respondents Percentage
Tax benefits 27 54
Savings 5 10
Risk cover 18 36
TOTAL 50 100
Interpretation The above pie chart shows that out of the sample respondents 54 have tax benefit 10 have savings and 36 have risk cover as their main motive for making an investment in life
Q4 What kind of investment do you prefer
42
a) high risk high gain
b) low risk low gain
c) moderate
d) vary times to times
Option No of respondents Percentage
High risk high gain 8 16
Low risk low gain 5 10
Moderate 12 24
Vary times to times 25 50
TOTAL 50 100
Interpretation The above pie chart shows that out of 50 respondents 16 preferred high risk- high gain form of investment 10 preferred low risk- low gain form of investment 24 preferred moderate investment and 50 preferred varied form of investment
43
Q5Are you interested to invest in Traditional Plans
a) YES
b) NO
Option No of respondents Percentage
YES 36 72
NO 14 28
TOTAL 50 100
Interpretation The above pie chart shows that 72 of the respondents preferred to invest in Traditional Plans
44
Q6 What is your level of annual investmenta) below 20000
b) 20000-40000
c) above 40000
Option No of respondents Percentage
Below 20000 41 82
20000-40000 7 14
Above 40000 2 4
TOTAL 50 100
Interpretation The above pie chart shows that 82 of the respondents are willing to invest below Rs 20000 per annum 14 of them want to invest within Rs 20000 per annum to Rs 40000 and 4 wanted to invest over and above Rs 40000
45
Q7 What factors would you consider most important before choosing an insurance policy
a) publicity of the company
b) reputation of the company
c) quality of life advisors
d) after sales-supporting of the company
Option No of respondents Percentage
Publicity of the co 5 20
Reputation of the co 25 50
Quality of life advisors 10 10
After sale-services 10 20
TOTAL 50 100
Interpretation out of the sample respondents 20 considers publicity of the company 50 considers reputation of the company 10 considers quality of life advisors and 20 considers after sales support of the company as the most important factor for choosing an insurance company
46
Q8 Which life insurance company would you prefer the most to invest ina) reliance life insurance (RLIC)
b) Bajaj Allianz life insurance
Option No of respondents Percentage
RLIC 21 42
BAJAJ ALLIANZ 29 58
TOTAL 50 100
Interpretation Out of 50 respondents 42 preferred to invest in reliance life insurance over 58 of the respondents who prefer to invest in Bajaj Allianz life insurance
47
Q9 If reliance life insurance then which particular plan you would like to invest ina) Reliance Term Plan
b) Reliance Whole Life Plan
c) Reliance Endowment Plan
d) Reliance Special Endowment Plan
Option No of respondents Percentage
Reliance term plan 6 2858
Reliance whole life plan 3 1428
Reliance endowment plan 9 4286
Reliance special endowment plan 3 1428
TOTAL 21 100
Interpretation Out of 21 respondents 2858 preferred to invest in term plan 1428 in whole life plan 4286 in endowment plan and 1428 of them preferred to invest in special endowment plan of reliance life insurance
48
Q10 If Bajaj Allianz life insurance then which particular plan you would like to invest in
I ENDOWMENT PLAN a) Bajaj Allianz Invest Gain
b) Bajaj Allianz save Care Economy SP
c) Bajaj Allianz life time care
d) Bajaj Allianz Super Saver plan
II MONEY BACK PLAN i Bajaj Allianz Cash Gain plan
Option No of respondents Percentage
Invest gain plan 3 1035
Save care economy SP 6 2069
Life time care 7 2415
Super saver plan 3 1035
Cash gain plan 10 3446
TOTAL 29 100
Interpretation Out of 29 respondents 1035 of them plan to invest in Bajaj Allianz- Invest Gain 2069 wish to invest in Bajaj Allianz save Care Economy SP 2415 want to invest in Bajaj Allianz life time care 1035 in Bajaj Allianz Super Saver plan and 3446 prefer to invest in Bajaj Allianz Cash Gain plan
49
32) SIGNIFICANCE OF STUDY
Life insurance is one of the most rapidly growing sectors in India The main reason
behind the growth can attributed to the high population density improving economical
condition improving education level and improving awareness Due to these factors there
is still huge scope for growth in this sector Like any other business when the
opportunities are present everybody tends to enter the industries This growth hence
fetches the new competitors as well as new strategies from existing players To sustain in
any competitive industry the organization must adapt to existing strategies and adopt
new ones This study will focus on the analysis of Reliance Life Insurance in comparison
with the present scenario of Bajaj Allianz Life Insurance with respect to the Traditional
Plans of both the companyrsquos This will mainly cover the following aspects
To know about the awareness and popularity of various Traditional Plans offered
by Reliance Life Insurance and Bajaj Allianz Life Insurance
How Reliance Life Insurance can develop and sustain a good distribution
network
These will provide it benefit both in terms of better market coverage as well as better
penetration
50
33) SCOPE OF THE STUDY
1) This helps in finding out vast potential of insurance company
2) The study was conducted in National Capital Region (NCR) only
3) The number of respondents to be surveyed can be improved
4) This study was conducted by comparing the performances amp products of three private
amp government insurance players in insurance industry
5) This study was conducted to analyze the market stand of Reliance life insurance
Company limited and Bajaj Allianz Life Insurance Company Limited of India insurance
companies
6) This study is done to eliminate all the myths which people have in their minds
regarding Insurance Sector
51
34) OBJECTIVES
To have a detailed understanding of Reliance Life Insurance and Bajaj Allianz Life Insurance
To find out various reasons considered while investing in policies
To get knowledge about the market exposure and future prospects about Reliance Life Insurance
To know the perception of the consumers about the life insurance
To analyze the Traditional plans of Reliance Life Insurance and compare it with Bajaj Allianz
To know about the brand awareness of Reliance Life Insurance its customer preferences over Bajaj Allianz in the market
To study a proper knowledge about the life insurance industry
To understand the consumer choice while investing in policies
52
CHAPTER 4
DISCUSSION AND FINDINGS OF THE STUDY
FINDINGS OF THE STUDY RECOMMENDATION AND SUGGESTIONS CONCLUSION LIMITATIONS BIBLIOGRAPHY ANNEXUREQUESTIONNAIRE
53
41) FINDINGS OF THE STUDY
1) The survey reveals that still a large proportion of population is interested to invest in other forms of investment other than insurance as still most of them are unaware about the importance of insurance in their life
2) Basically people make varied form of investment for creating wealth to protect their families against pre-mature death and to protect income against disability sickness or critical illness
3) The main motive of the individuals investing is receives benefits US 1010D People generally consider insurance as a tax saving device
4) Mostly people prefer time to time form of investment as they are not willing to take high degree of risk
5) 72 of the respondents are preferred to invest in Traditional Plans
6) Most of the people prefer to make an annual investment up to a maximum of Rs20 000 per annum
7) When the product is like life insurance reputation of the company publicity of the company amp after sale services of the company matters a lot This means that people would choose that insurance company only where the quality of life advisors is satisfactory
8) Most people prefer to invest in Bajaj Allianz Life Insurance as compared to making an investment in Reliance Life Insurance
9) The most preferable Traditional plan of Reliance Life Insurance is Endowment Plan
10) The most preferable plan of Bajaj Allianz Life Insurance co is Cash Gain Plan
54
42) SUGGESTIONS amp RECOMMENDATIONS
Based on the observations of the study some suggestions for the organization are made as
follows
1) Quality of advisors is also as important as the quantity Thus company should go
mainly for qualified professionals
2) Company should increase its budget on publicity so that awareness can be increased
3) Clarity and transparency should be provided to the customer regarding various
products
4) Training sessions should be planned in advance so that schedule can be provided to
the advisor in advance
5) Apart from the Brand Positioning in urban area a strategy should be adopted by
Reliance to make its brand also near to middle level or high aspirant people because they
are the main source of the business in India
6) Awareness Camp to the sub urban area should be focused by Reliance
7) Some innovative technique or product is required in order to attract the consumer
43) LITERATURE REVIEW
55
1) Robi Elenekave has explained in detail why various retirement plans and pension plans donrsquot give the desired returns The main difficulty is the use of incorrect method for calculations done to find out the return on investment This is primarily due to wrong assumptions The study provides information about the various precautions which need to be considered before planning so that the desired results can be achieved
2) Another paper provides insight about how various financial sectors invest in bond market The study was how the different players investment different instruments according to the risk appetite and desired rate of return The study shows that life insurance sector mainly invests in government bond which are low return and low risk instrument The investment in government bond it shows that life insurance companies are more conservative in investment
3) K Subhash has presented the history of Indiarsquos life insurance industry in three stages before independence after independence and post liberalization which not only provides information but also help in analyzing the impact of these major changes The authors have also discussed the huge potential which exists in the rural India The insurance company must realize the importance of rural sector because the future lies there The author commented about the increasing share of private player in the existing market This confirms the availability of opportunity in this sector The paper also provides the importance of professional and focused approach which was given no importance
4) Tapen Sinha has discussed the various challenges and opportunities in the insurance market One of the very important factors which have been discussed in the study is the importance of developing new and better products As the scenario changes the need of an individual also changes so any organization must understand and fulfill these needs The new product development requires constant research so organization must also focus on it
5) Roger G Ibbotson discusses how financial planners and advisors have recently started to recognize that human capital must be taken into account when building optimal portfolios for individual investors Any investorrsquos human capital has a unique mortality risk However life insurance in its forms can hedge against this mortality risk Thus human capital affects both the optimal asset allocation and the optimal demand for life insurance This paper provides a unified framework based on human capital in order to enable individual investors to make both decisions jointly
6) Rakesh Niraj study tells how the flow of information in any organization is important For any organization to grow the flow of information must be good both upwards as well as ownwards The proper flow of information will also ensure proper flow of good and services from organization to customer and proper flow of information from customer to organization The information from customers will help the organization in providing better goods and services to the customer For the above purpose organization must ensure good channel partner who can provide the organization with correct feedback Hence it becomes very important for any organization to acquire good channel partners
56
7) Stephen P Robbins has discussed how group dynamics works in any organization The success of any organization depends on the success of its various teams and how these teams work together The book provides various techniques which can be used by any organization to get result from the team effort The conflict resolution is a major task in any group Various techniques which the organization can use in conflict resolution are also discussed Another important aspect covered is the importance of leadership in the organization The various forms of leadership have been discussed and the kinds of leadership which can be effective in particular situations are also discussed
8) R Wayne Mondy has discussed the importance of training and development in any organization The training provides skills to perform the current job where as the development involve learning beyond present need The various type of training are discussed which can be used according to the requirement Training and development are not only important for better performance of an individual but it also gives satisfaction The major factors which influence training and development are found to be management support commitment of trainee and trainer complexity of the organization The process of developing good training plans is also provided In another part author has discussed the importance of right man for right job The compensation strategies are also given which are very crucial for ant industry
9) Philip Kotler has discussed the importance of channels partners Better the channel partners better will be the delivery model Detailed discussion about how to design the channel structure so that all the requirements could be fulfilled is provided The various issues faced by the organization while managing the channels are also given When an organization has more than one channel it becomes very important that all the channels should be integrated in such a way that the organization get the best out of all At times due to the conflicting benefit of the different channels the conflict arise so various strategies to manage these issues is also discussed in the chapter
10) Michael J Etzel has written about the marketing of services The marketing of services is different from the goods because of the characteristic of service like intangibility inseparability heterogeneity etc Brief about pricing strategies is also given in case of services The authors have also given the impact of technological development on the services marketing The author has also given the importance of brand and after sales support in case of services as perception of the customers plays an important role In other part of the book the authors has described the importance of distribution channels and designing of the same A channel partner should be consider as partner according to discussion The legal complications associated with channels are also discussed These complications are necessary to take into the consideration while managing the channels The conflicting interest of channels both horizontally and vertically are also taken into the consideration
57
11) Boone has discussed about the importance of personal financial planning The concept of time value of money has also been elaborated The importance of creating and implementing budget is given under money management The other important concepts for financial planning like credit management and understanding taxes are also explained In one section the authors have discussed the importance of investment and what should be the major considerations while making any investment The considerations include the risk associated with the investment return on the investment etc The importance and benefits of life insurance has also been given The discussion also includes various legal aspects associated with life insurance The overview of retirement planning is also given which includes importance and benefit of retirement planning Various tools for proper retirement planning are also discussed
58
44) CONCLUSION
1) The customers are very much sensitive towards their investment They would like to invest only in that insurance company which enjoys good public image along with quality good services
2) The result of the survey conducted shows that Bajaj Allianz Life Insurance is the leader in life insurance industry but Reliance Life Insurance and other private players are giving it a close competition
3) The motive of the people behind investing in life insurance is the tax benefits that they would receive under sec 80C and 1010D
4) In Life Insurance industry the after sales support of the company is as important as the quality of life advisors
59
45) LIMITATIONS
There were some limitations faced during the study as discussed below
Since the study was taken for two months so there was a constraint of time and effort
The study was limited only to some of the Delhi regions so the results may be biased
Questionnaire was given to 125 people however only 50 responded to it which is very small for such type of study
The biasness of consumer or responses error cannot be eliminated
Most of the people are not aware about the Importance and the necessity of insurance in their life
Adverse perception of the people towards insurance sector- People consider insurance as a tax saving device
Lack of awareness about the earning opportunity in the insurance sector
60
46) BIBLIOGRAPHY
wwwreliancelifeinsurancecom
wwwadagroupcom
wwwirdacom
wwwbajajallianzlifeinsurancecom
wwwallianzbajajcom
47) ANNEXURE
61
QUESTIONNAIRE
A comparative analysis of consumer perception regarding Traditional plans of Reliance Life Insurance with that of Bajaj Allianz Life Insurance
NAME ___________________________
PERSONAL DETAILS
1) AGE_________________
1) OCCUPATION______________
2) INCOME___________________
3) FAMILY MEMBERS_________
Q1 Where do you prefer to investa) Fixed deposits b) Stock c) Mutual funds d) Insurance e) Others
Q2 What are your priorities for investmenta) Protecting your family against pre-mature death b) Wealth creation c) Retirement needs d) Child education and marriage e) Protect income against disability sickness or critical illness
Q3 What is your main motive behind investing in life insurancea) Tax benefit b) Savings c) Risk cover
Q4 What kind of investment do you prefera) High risk high gain b) Low risk low gain c) Moderate d) Vary times to times
62
Q5Are you interested to invest in Traditional Plansa) Yes b) No
Q6 What is your level of annual investmenta) below 20000 b) 20000-40000 c) above 40000
Q7 What factors would you consider most important before choosing an insurance company
a) publicity of the company b) reputation of the company c) quality of life advisors d) after sales-supporting of the company
Q8 Which life insurance company would you prefer the most to invest ina) Reliance life insurance b) Bajaj Allianz life insurance
Q9 If reliance life insurance then which particular plan you would like to invest ina) Reliance Term Plan b) Reliance Whole Life Plan c) Reliance Endowment Plan d) Reliance Special Endowment Plan
Q10 If Bajaj Allianz life insurance then which particular plan you would like to invest in
I ENDOWMENT PLAN
a) Bajaj Allianz Invest Gain
b) Bajaj Allianz save Care Economy SP
c) Bajaj Allianz life time care
d) Bajaj Allianz Super Saver plan
II MONEY BACK PLAN
a) Bajaj Allianz Cash Gain plan
63
64
- COMPANY PROFILE
- ABOUT RELIANCE LIFE INSURANCE
- HISTORY
- Reliance Capital Limited announced the launch of its life insurance business on February 1 2006 This was after obtaining the required regulatory approvals from the Registrar Of Companies and the Insurance Regulatory and Development Authority
- It was in August 2005 that the ball was set rolling when Reliance Capital Limited the financial arm of Reliance ndash Anil Dhirubhai Ambani Group (ADAG) ndash announced the requisition of 100 shareholding in AMP Sanmar Life Insurance Company Limited and the formal transfer of shares took place in October 2005 The company will issue all policy contracts under the Reliance Life Insurance Company limited name All the existing policy contracts also stand transferred to the Reliance Life Insurance entity with all the original contractual terms and commitments intact
- CORE VALUES
- Reliance Life Insurance Company Limited has some core values which are listed as follows
- Vision bull To be the first choice insurer for customers bull To be the preferred employer for staff in the insurance industry bull To be the number one insurer for creating shareholder value
- Mission As a responsible customer focused market leader we will strive to understand the insurance needs of the consumers and translate it into affordable products that deliver value for money
- 12) TRADITIONAL PLANS OF THE COMPANY
- 12A )TRADITIONAL PLAN OF RELIANCE LIFE INSURANCE-
- Life insurance products are designed to suit the requirements of customers Fundamentally the product provide for
- In every product to a certain degree risk cover is imperative for it to fall under the category of insurance Based on the coverage of the product the premiums are calculated and the customer pays accordingly In order to suggest the right product it is essential for an agent to understand the requirements of the customer well
- The traditional plans of the company have the following features-
- Fixed Tenure
- Potential for better returns
- Transparency
- Flexibility in investment
- Flexibility to invest more
- Flexibility to skip the premium
- Flexibility to choose the cover
- High liquidity
- Age term and sum assured decide the amount of premium
- Top- ups and switches are not allowed
- Reliance Life Insurance Company Limited has offered 9
- 1) Reliance term plan-
- 2) Reliance Whole Life Plan -
- 3) Reliance Endowment Plan -
- 4) Reliance Special Endowment Plan -
- 13) INDUSTRY PROFILE
- MEANING OF INSURANCE
- Insurance may be described as a social device to reduce or eliminate risk of loss to life and property Insurance is a collective bearing of risk Insurance is a financial device to spread the risks and losses of few people among a large number of people as people prefer small fixed liability instead of big uncertain and changing liability
- Insurance can be defined as a ldquolegal contract between two parties whereby one party called insurer undertakes to pay a fixed amount of money on the happening of a particular event which may be certain or uncertainrdquo The other party called insured pays in exchange a fixed sum known as premium
- Insurance is desired to safeguard oneself and onersquos family against possible losses on account of risks and perils It provides financial compensation for the losses suffered due to the happening of any unforeseen events
- IMPORTANCE OF INSURANCE
- Insurance services play predominant role in the process of financial Intermediary Today insurance industry is one of the most growing sectors in India There is lot of potential in the Indian Insurance Industry
- There are many issues which require study The scope of the study of Insurance industry of India would be very great as there are ongoing Developments in the industry after the opening of the sector
- Right now the insurance industry has great opportunities in a country like India or China which huge population Also the penetration of insurance in India is very low in both life and non-life segment so there is lot potential to be tapped Before starting the discussion on insurance industry and related issues we have to start with the basics of insurance So first we understand what is insurance How the word lsquoinsurancersquo is different from the word lsquoassurancersquo Etc
- HISTORY OF INSURANCE
- The concept of insurance is believed to have emerged almost 4500 years ago in the ancient land of Babylonia where traders used to bear risk of the carvan by giving loans which were later repaid with interest when the goods arrived safely
- The concept of insurance as we know today took shape in 1688 at a place called Lloydrsquos Coffee House in London where risk bearers used to meet to transact business This coffee house became so popular that Lloydrsquos became the one of the first modern insurance companies by the end of the eighteenth century
- Marine insurance companies came into existence by the end of the eighteenth century These companies were empowered to write fire and life insurance as well as marine The Great Fire of London in 1966 caused huge loss of property and life With a view to providing fire insurance facilities
- Dr Nicholas Barbon set up in 1967 the first fire insurance company known as the Fire office
- Life insurance in its modern form came to India from England in 1818 The Oriental Life Insurance Company was the first insurance company to be set up in India to help the widows of European community The insurance companies which came into existence between 1818 and 1869 treated
- Indian lives as subnormal and charged an extra premium of 15 to 20 per cent The first Indian insurance company the Bombay Mutual Life
- Assurance Society came into existence in 1870 to cover Indian lives at normal rates
- The Insurance Act 1938 the first comprehensive legislation governing both life and non-life branches of insurance were enacted to provide strict state control over insurance business This amended insurance Act looked into investments expenditure and management of these companies
- By the mid- 1950s there were 154 Indian insurers 16 foreign insurers and 75 provident societies carrying on life insurance business in India Insurance business flourished and so did scams irregularities and dubious investment practices by scores of companies As a result the government decided to nationalize the life assurance business in India The Life Insurance
- Corporation of India (LIC) was set up in 1956 The nationalization of life insurance was followed by general insurance in 1972
- MEANING OF LIFE INSURANCE
- There are three parties in a life insurance transaction the insurer the insured and the owner of the policy (policyholder) although the owner and the insured are often the same person
- Another important person involved in a life insurance policy is the beneficiary The beneficiary is the person or persons who will receive the policy proceeds upon the death of the insured
- Life insurance may be divided into two basic classes ndash term and permanent
- HISTORY OF LIFE INSURANCE
- Risk protection has been a primary goal of humans and institutions throughout history Protecting against risk is what insurance is all about
- Over 5000 years ago in China insurance was seen as a preventative measure against piracy on the sea Piracy in fact was so prevalent that as a way of spreading the risk a number of ships would carry a portion of another ships cargo so that if one ship was captured the entire shipment would not be lost
- In another part of the world nearly 4500 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
- Life insurance came about a little later in ancient Rome where burial clubs were formed to cover the funeral expenses of its members as well as help survivors monetarily With Romes fall around 450 AD most of the concepts of insurance were abandoned but aspects of it did continue through the Middle Ages particularly with merchant and artisan guilds These provided forms of member insurance covering risks like fire flood theft disability death and even imprisonment
- During the feudal period early forms of insurance ebbed with the decline of travel and long-distance trade But during the 14th to 16th centuries transportation commerce and insurance would again reemerge
- And similar to ancient Rome burial societies were formed in the Buddhist period to help families build houses and to protect widows and children
- Modern Insurance
- Illegal almost everywhere else in Europe life insurance in England was vigorously promoted in the three decades following the Glorious Revolution of 1688 The type of insurance we see today owes its roots to 17th century England Lloyds of London or as they were known then Lloyds Coffee House was the location where merchants ship owners and underwriters met to discuss and transact business deals
- While serving as a means of risk-avoidance life insurance also appealed strongly to the gambling instincts of Englands burgeoning middle class
- Gambling was so rampant in fact that when newspapers published names of prominent people who were seriously ill bets were placed at Lloydrsquos on their anticipated dates of death Reacting against such practices 79 merchant underwriters broke away in 1769 and two years later formed a ldquoNew Lloydrsquos Coffee Houserdquo that became known as the ldquoreal Lloydrsquosrdquo Making wagers on peoples deaths ceased in 1774 when parliament forbade the practice
- Insurance moves to America
- The US insurance industry was built on the British model The year 1735 saw the birth of the first insurance company in the American colonies in
- Charleston SC The Presbyterian Synod of Philadelphia in 1759 sponsored the first life insurance corporation in America for the benefit of ministers and their dependents And the first life insurance policy for the general public in the United States was issued in Philadelphia on May 22 1761
- But it wasnt until 80 years later (after 1840) that life insurance really tookoff in a big way The key to its success was reducing the opposition from religious groups
- In 1835 the infamous New York fire drew peoples 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
- With the creation of the automobile public liability insurance which first made its appearance in the 1880s gained importance and acceptance
- More advancement was made to insurance during the process of industrialization In 1897 the British government passed the Workmens Compensation Act which made it mandatory for a company to insure its employees against industrial accidents
- During 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 most labor 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
- BENEFITS OF LIFE INSURANCE
- 1) Risk cover -Life Insurance contracts allow an individual to have a risk cover against any unfortunate event of the future
- 2) Tax Deduction -Under section 80C of the Income Tax Act of 1961 one can get tax deduction on premiums up to one lakh rupees Life Insurance policies thus decrease the total taxable income of an individual
- 3) Loans -An individual can easily access loans from different financial institutions by pledging his insurance policies
- 4) Retirement Planning -What had provided protection against the financial consequences of premature death may now be used to help them enjoy their retirement years
- 5) Educational Needs -Similar to retirement planning the cash values that flow from ones life insurance schemes can be utilized for educational needs of the insurer or his children
- The Life Insurance Industry has an enviable track record among public sector units It has a Consistent profit and dividend paying record accompanied by a steady growth in its financial resources Through investments in the Government sector and socially- oriented sectors the Industry has contributed immensely to the nations development The industry is recognized as one of the largest financial Institutions in the country The ventures initiated by the industry in the areas of Mutual Fund
- Housing Finance has done exceedingly well in recent years To protect the countrys foreign exchange reserves the reinsurance arrangement are so organized that maximum retention is made possible within the country while at the same time protecting interests of the policy holders
- 22) CURRENT SCENARIO OF RELIANCE LIFE INSURANCE
- RLIC offers wide range of innovative life insurance products targeted at individuals and groups It offers need based products that caters to four distinct segments namely protection child retirement and investment plans RLIC is committed to emerge as a transnational Life Insurer of global scale and standard
- CH - 3) RESEARCH METHODOLOGY
- RESEARCH DESIGN-
- SAMPLING TECHNIQUES-
- THE PRIMARY OBJECTIVEOF THE STUDY-
- 34) OBJECTIVES
- 7) Some innovative technique or product is required in order to attract the consumer
- 45) LIMITATIONS
- 46) BIBLIOGRAPHY
-
Malay Ghosh ndash President
Malay leads all activities at Reliance Life Insurance Company Limited Life and his key focus is on rapid expansion of all channels and accelerating the companyrsquos growth trajectory
Malay has over 24 years of work experience in the insurance industry He has worked for 17 years with LIC across various functions and for 7 years with Bajaj Allianz Life Insurance where he was last designated Head of Sales
Malay holds a Masters degree in statistics
Maneesha Thakur Chief Human Resources Officer
Maneesha in her role as the Chief Human Resource Officer at Reliance Life Insurance Company Limited has developed a performance driven and employee centric culture She has been at the forefront of the organization growth by facilitating talent acquisition and management
Maneesha in her career span of 15 years has worked with companies like SHCIL ALLTEL Transamerica ICICI Bank and VSNL
In addition to an MA in English Literature Maneesha holds a Post Graduate Diploma in Personnel Management amp Industrial Relations from XLRI Jamshedpur
C Mohan Chief Technology Officer
C Mohan is the Chief Technology Officer (CTO) of Reliance Life Insurance Company Limited and he is responsible for Information Technology Strategy Formulation and Deployment
Mohan is an Engineering Graduate and holds many International IT Certifications
Mohan has over 12+ years of IT Experience of which he spend more than 7+ years Executive Management Experience in overseas He worked with Cathay Pacific Airways and Computer Sciences Corporation in Asia Pacific Role at Singapore before he joined Reliance Life
In Year 2008 he has been awarded as Pioneer CIO by CIOL-DataQuest and Bold 100 CIO by IDG-CIO Forum He also received the Early SOA Adopter Award from IBM
He has recently been selected as a honoree in Global CIO 100 2009 Award Summit to be held in Colorado USA
5
R Rangarajan Chief Investment Officer
Rangarajan is the Chief Investment Officer at Reliance Life Insurance Company Limited He alongwith his team strives to give the best possible returns on investments to shareholders and policyholders keeping in mind their appetite for risk Rangarajan draws on his in-depth knowledge of investment and experience of 25 years to ensure that the goals of the organisation are metmdashwithout any compromise on the benefits of the investors
Prior to being a part of Reliance Life Insurance Rangarajan worked with AMP Sanmar Life Insurance as Head ndash Investments for three years His earlier assignment was with a large Mutual Fund organization
Rangarajan is a qualified Chartered Accountant
S V Sunder Krishnan Chief Risk Officer
Sunder is the Chief Risk officer for Reliance Life Insurance and is responsible for overseeing Risk Management Internal Audit and Compliance functions at Reliance Life Insurance
Sunder came with 23 years of experience and knowledge in Internal Audits Compliance Assurance Consulting and Risk Management He has worked for various leading organizations such as DSP Merrill Lynch ING Vysya Credit Lyonnais Standard Chartered Bank International Indonesia Ernst amp Young and Delloitte at senior and middle management positions with exposure to businesses and operations in more than 12 countries
Sunder is a qualified FCA CISA and CCSA He is also the President of Information Systems Audit Control Association (ISACA-USA) Mumbai Chapter for the year 2007-08 and was a member of the Board of Advisors to Bombay Chartered Accountants Society (BCArsquoS) for Internal Audit studies for the year 2005-06
RELIANCE ADA GROUP
6
HISTORY
7
Reliance Capital Limited announced the launch of its life insurance business on February 1 2006 This was after obtaining the required regulatory approvals from the Registrar Of Companies and the Insurance Regulatory and Development Authority
It was in August 2005 that the ball was set rolling when Reliance Capital Limited the financial arm of Reliance ndash Anil Dhirubhai Ambani Group (ADAG) ndash announced the requisition of 100 shareholding in AMP Sanmar Life Insurance Company Limited and the formal transfer of shares took place in October 2005 The company will issue all policy contracts under the Reliance Life Insurance Company limited name All the existing policy contracts also stand transferred to the Reliance Life Insurance entity with all the original contractual terms and commitments intact
A Reliance Capital company
Reliance started from scratch only to become Indiarsquos
largest private sector company in ~40 years
1966 1971-72 1977 1985 1992 1993
Birth of Reliance ndash
First Textile Mill at Naroda
Birth of Reliance ndash
First Textile Mill at Naroda
Launch of lsquoOnly Vimalrsquo brand
Launch of lsquoOnly Vimalrsquo brand
Sales Cross 4000 CrBecomes Largestprivate sector Co inIndia
Sales Cross 4000 CrBecomes Largestprivate sector Co inIndia
Launch of 1st
IPO for general public- start of a
trend
Launch of 1st
IPO for general public- start of a
trend
Total Assets cross 1000 Cr
Total Assets cross 1000 Cr
Twin IPOs receive 1million applications
Twin IPOs receive 1million applications
The Story of Growth First corporate in Asia to issues
50 and 100 yrs bond in US debt market
First corporate in Asia to issues
50 and 100 yrs bond in US debt market
1997 1998
Total assetscross 35000 CrRevenues cross
14000 Cr
Total assetscross 35000 CrRevenues cross
14000 Cr
8
A Reliance Capital company
2000 2000 2001 2003 2005 2006-07
Group Profits cross 2500 Cr
Revenues cross 20000 Cr
Total Assets cross 50000 Cr
Group Profits cross 2500 Cr
Revenues cross 20000 Cr
Total Assets cross 50000 Cr
Reliance Communication plans announced
Reliance Communication plans announced
Reliance Life Insurance rank 6th at 930 Cr
Reliance Life Insurance rank 6th at 930 Cr
Group revenues cross 60000 Cr
Largest Business group
in India
Group revenues cross 60000 Cr
Largest Business group
in India
Controlling stake in BSES (Reliance
Energy)Largest mobile
services co in India
Controlling stake in BSES (Reliance
Energy)Largest mobile
services co in India
ADA Group formedAMP Sanmar acquired and renamed Reliance
Life Insurance
ADA Group formedAMP Sanmar acquired and renamed Reliance
Life Insurance
And the journeyBecame the 1st
company to cross 1 million policy mark in 2 years of operations
Became the 1st
company to cross 1 million policy mark in 2 years of operations
Sep 2007 2007
Reliance became only the second National Insurance player to get ISO 9001-2000
Reliance became only the second National Insurance player to get ISO 9001-2000
A Reliance Capital company
Be the Change
2008 2008 2008 2007-08 2008-09
Reliance MF becomes 1st
AMC to cross
100000 Cr
Reliance MF becomes 1st
AMC to cross
100000 Cr
RCOM crosses 50 million customers
RCOM crosses 50 million customers
A total of more than 2000 Branches on anvil in the fiscal year
A total of more than 2000 Branches on anvil in the fiscal year
Continueshellip
RLIC jumps to 4th position
with 2750 Cr
RLIC jumps to 4th position
with 2750 Cr
Crosses 2million policies
Crosses 2million policies
9
SWOT ANALYSIS
STRENGTHS
Dedicated Employees Well Efficient Management Strong and popular brand name Adaptability to changes Goodwill of the company Transparency in service
WEAKNESS
Lack of good services
Lack of awareness about insurance among people
Less coverage in Rural Areas
Lack of credibility among the people because Reliance life insurance being a
private player
OPPORTUNITIES
Fast growing economy
Increasing per ndashcapita income in India
Saving behavior
High growth of Traditional industry
THREATS
Arrival of new entrants in the insurance industry
Cut throat competition within the industry
10
CORE VALUES
Reliance Life Insurance Company Limited has some core values which are listed as follows
1) Result Oriented2) Performance Driven3) Customer Focused4) Learning and Development Oriented5) Employee Centric6) Informal and Fun
1 B COMPANY PROFILE OF BAJAJ ALLIANZ LIFE INSURANCE
11
Bajaj Allianz Life Insurance Company limited is a joint venture between two leading conglomerates Bajaj Auto limited and Allianz AG company whose total asset value is of Rs 5900000 cr Bajaj whose wealth as of now is Rs 8000 cr group in India 55 years of experience 4th largest group in the world Above 15000 employees largest 2 amp 3 wheeler manufacture in India Allianz established in 1890 who has 115 years of experience in financial year
Bajaj Auto is one of the most trusted name is Indian auto for over 55 years At Bajaj Allianz customer delight is our guiding principle Ensuring world-class solutions by offering customized products with transparent benefits supported by best technology is our business philosophy
Notwithstanding the recession and a volatile stock market Bajaj Allianz life insurance posted a profit of Rs 45 cr for financial year 2009 against a loss of Rs 16 cr in the previous year
The company new business premium fell to Rs 4491 cr in the year against Rs 6674 cr recorded in the last year
We have been able to make a profit of profit of Rs 45 cr even in these difficult times Our new business premium declined by 30 to Rs 4491 cr because the stock market declined and we didnrsquot open any new office in FY 09rdquo Bajaj Allianz country manager and Bajaj Allianz life insurance CEO kamesh Goyal said
Bajaj Allianz Life Insurance has around 1200 offices and the company would not increase the number this year too Goyal said
The companyrsquos renewal premium grew by more than 100 to Rs 6133 cr in the 2008-2009 as compared to Rs 3051 cr in the previous fiscal year he saidIn the year Bajaj Allianz life insurance issued 29 lakh policies which were the second largest in the industry
Vision bull To be the first choice insurer for customers bull To be the preferred employer for staff in the insurance industry bull To be the number one insurer for creating shareholder value
MissionAs a responsible customer focused market leader we will strive to understand the insurance needs of the consumers and translate it into affordable products that deliver value for money
12) TRADITIONAL PLANS OF THE COMPANY
12
12A )TRADITIONAL PLAN OF RELIANCE LIFE INSURANCE -
Life insurance products are designed to suit the requirements of customers Fundamentally the product provide for
Risk cover
Investment
Health cover
In every product to a certain degree risk cover is imperative for it to fall under the category of insurance Based on the coverage of the product the premiums are calculated and the customer pays accordingly In order to suggest the right product it is essential for an agent to understand the requirements of the customer well
The traditional plans of the company have the following features- Fixed Tenure Potential for better returns Transparency Flexibility in investment Flexibility to invest more Flexibility to skip the premium Flexibility to choose the cover High liquidity Age term and sum assured decide the amount of premium Top- ups and switches are not allowed
Reliance Life Insurance Company Limited has offered 9Traditional plans to the customers which are listed as follows1) Reliance Term Plan2) Reliance Whole Life Plan3) Reliance Endowment Plan4) Reliance Special Endowment Plan5) Reliance Cash Flow Plan6) Reliance Credit Guardian Plan7) Reliance Special Credit Guardian PlanEach of the above traditional plans is discussed as follows
1) Reliance term plan-This insurance policy is designed for those who only want life cover for the protection of their family and do not wish to save for themselves It can also be useful to business firms that wish to provide financial security to their business against the sudden loss of partners or valuable manpower Since there is no saving element or bonus provision the premium is very lowHence this is a high-risk plan with a low premium
13
1048729 Features -a) Purely a term planb) Entry age minimum 18 years and maximum 65 yearc) Maximum premium paying term is 30 yeard) Loan facility NAe) Maturity amount = Sum assured
2) Reliance Whole Life Plan -This insurance policy is designed for people who do not wish to avail of any benefits themselves but wish to create an immediate estate to protect their family by availing of insurance cover on their life at a very low cost
1048729 Features -a) It is a whole life insurance policy with profitsb) Low cost life coverc) Maturity age is 85 year or 99 years last birthday as chosend) Maturity amount = Sum assured + Vested bonuse) Tax benefit is available
3) Reliance Endowment Plan -Reliance Life Insurancersquos Reliance Endowment Plan is the key to all your financial needs It is an inexpensive and easy way to protect you your family or your businessIn a nutshell this plan will keep you financially prepared for all the special occasions in your life - your daughterrsquos wedding your childrsquos university education or even a new office for your business - by eliminating the burden that a shortage of money createsIn the event of your untimely death Reliance Endowment Plan will also assist your loved ones through this difficult time by the financial support that it providesReliance Endowment Plan also gives you the additional benefit of participating in the companyrsquos profits which you will receive at the end of the policy period
1048729 Features -a) Entry age minimum is 5 year and maximum 65 yearb) Maturity age minimum is 18 year and maximum 75 yearc) Minimum premium paying term is 5 year and maximum 35 year in case of regular and in case of single 15 yeard) Minimum sum assured is Rs 25000 or as determined by the minimum premiume) Maximum sum assured is Rs 5 00000 (entry age below 18 years and no limit for entry age 18 and above)f) Premium mode annual half yearly quarterly and monthly (by salary deduction only)g) Loan up to 90 of the surrender value of the policyh) Maturity amount = Guaranteed sum assured + Reversionary bonus
4) Reliance Special Endowment Plan -
14
This insurance policy is designed for people who wish to combine savings with extended security The unique feature of this policy is that life protection continues for five years after you have stopped the payment of premium Payment of sum assured at the end of premium paying term and extension of life cover thereafter for the full sum assured for a period of 5 years are characteristics of the policyThis plan also participates in the profits
1048729 Features -a) Entry age minimum 12 year and maximum 65 yearb) Minimum sum assured is Rs 25000c) Minimum premium paying term is 10 year and maximum 40 yeard) Unique feature of this policy is that five year life protection continues after you have stopped the payment of premiume) Tax benefit is availablef) Under this policy bonus is compounded yearlyg) Loan facility is availableh) Maturity amount = Full sum assured before maturity date +Vested bonus at the time of maturity date
15
12 B) TRADITIONAL PLANS OF BAJAJ ALLIANZ LIFE INSURANCE
I ENDOWMENT PLAN
Saving plan which offer bonuses are excellent long term plan with complete safety Our products offer additional benefits which include 4 times life cover at a little extra cost limited premium payment terms and compounded reversionary bonuses making it a very good long term investment
1 Bajaj Allianz Invest GainInvest Gain is a specially designed plan that offers a unique combination of benefits that help you develop a sound financial portfolio for your family
4 Times Life Cover at a little extra cost
Limited premium payment option available
Additional Benefits
a) Accidental Death Benefit and Disability Benefit b) Critical Illness Benefit and Hospital Cash Benefit c) Family Income Benefit In case of death or accidental total permanent disability of insured all future premiums are waived and 1 of the sum assured is paid monthly
Invest Gain Save Care Economy SP Life Time Care
Super Saver
16
2 Bajaj Allianz save Care Economy SP
A One-time payment Investment plan that provides for savings with high risk cover for 10 years and also participates in the profits of the company It offers you high risk cover with easy liquidity and high returns
a) A single premium endowment plan that participates in the profitsb) 10 year Investment planc) Benefits payable on maturityc) Loans available
17
3 Bajaj Allianz life time care
A whole life plan which provides survival benefits at the age of 80 thereby making sure you are financially secure at the time when you need it the most Additional Benefits
a) Accidental Death Cover and Disability Cover b) Critical Illness Cover and Hospital Cash Cover c) Waiver of Premium Benefit
4Bajaj Allianz Super Saver plan
Bajaj Allianz Super Saver is a regular premium endowment plan which helps you save regular amounts for a safer tomorrow It also provides you with extra benefits of Guaranteed Additions to your sum assured at the end of each policy year
18
II MONEY BACK PLAN
Money back plans are Traditional Insurance plans that provide the investor with returns at regular stages of life
CashGain
1)Bajaj Allianz Cash Gain plan
A Money back plan which guarantees 125 payout + bonuses
Quadruple life cover
5 easy payouts which give upto 125 + bonuses
Additional Benefitsa) Accidental Death Benefit and Disability Benefitb) Critical Illness Benefit and Hospital Cash Benefitc) Family Income Benefit In case of death or accidental total permanent disability of insured all future premiums are waived and 1 of the sum assured is paid monthly
19
20
13) INDUSTRY PROFILE
MEANING OF INSURANCE
Insurance may be described as a social device to reduce or eliminate risk of loss to life and property Insurance is a collective bearing of risk Insurance is a financial device to spread the risks and losses of few people among a large number of people as people prefer small fixed liability instead of big uncertain and changing liability
Insurance can be defined as a ldquolegal contract between two parties whereby one party called insurer undertakes to pay a fixed amount of money on the happening of a particular event which may be certain or uncertainrdquo The other party called insured pays in exchange a fixed sum known as premiumInsurance is desired to safeguard oneself and onersquos family against possible losses on account of risks and perils It provides financial compensation for the losses suffered due to the happening of any unforeseen events
IMPORTANCE OF INSURANCE
Insurance constitutes one of the major segments of the financial marketInsurance services play predominant role in the process of financial Intermediary Today insurance industry is one of the most growing sectors in India There is lot of potential in the Indian Insurance Industry
There are many issues which require study The scope of the study of Insurance industry of India would be very great as there are ongoing Developments in the industry after the opening of the sectorOne of the major issues is the effects on LIC after the entry of private players in the market Though market share of LIC has been affected it has improved in terms of efficiency
There are number of other hot topics like penetration of Health Insurance Rural marketing of insurance new distribution channels new product ranges insurance brokersrsquo regulation incentive scheme of development officers of LIC etc So it offers lot of scope for studying the insurance industryRight now the insurance industry has great opportunities in a country like India or China which huge population Also the penetration of insurance in India is very low in both life and non-life segment so there is lot potential to be tapped Before starting the discussion on insurance industry and related issues we have to start with the basics of insurance So first we understand what is insurance How the word lsquoinsurancersquo is different from the word lsquoassurancersquo Etc
21
HISTORY OF INSURANCE
The concept of insurance is believed to have emerged almost 4500 years ago in the ancient land of Babylonia where traders used to bear risk of the carvan by giving loans which were later repaid with interest when the goods arrived safely
The concept of insurance as we know today took shape in 1688 at a place called Lloydrsquos Coffee House in London where risk bearers used to meet to transact business This coffee house became so popular that Lloydrsquos became the one of the first modern insurance companies by the end of the eighteenth centuryMarine insurance companies came into existence by the end of the eighteenth century These companies were empowered to write fire and life insurance as well as marine The Great Fire of London in 1966 caused huge loss of property and life With a view to providing fire insurance facilitiesDr Nicholas Barbon set up in 1967 the first fire insurance company known as the Fire office
Life insurance in its modern form came to India from England in 1818 The Oriental Life Insurance Company was the first insurance company to be set up in India to help the widows of European community The insurance companies which came into existence between 1818 and 1869 treatedIndian lives as subnormal and charged an extra premium of 15 to 20 per cent The first Indian insurance company the Bombay Mutual LifeAssurance Society came into existence in 1870 to cover Indian lives at normal rates
The Insurance Act 1938 the first comprehensive legislation governing both life and non-life branches of insurance were enacted to provide strict state control over insurance business This amended insurance Act looked into investments expenditure and management of these companiesBy the mid- 1950s there were 154 Indian insurers 16 foreign insurers and 75 provident societies carrying on life insurance business in India Insurance business flourished and so did scams irregularities and dubious investment practices by scores of companies As a result the government decided to nationalize the life assurance business in India The Life InsuranceCorporation of India (LIC) was set up in 1956 The nationalization of life insurance was followed by general insurance in 1972
22
MEANING OF LIFE INSURANCE
There are three parties in a life insurance transaction the insurer the insured and the owner of the policy (policyholder) although the owner and the insured are often the same person
Another important person involved in a life insurance policy is the beneficiary The beneficiary is the person or persons who will receive the policy proceeds upon the death of the insured
Life insurance may be divided into two basic classes ndash term and permanent
Term life insurance provides for life insurance coverage for a specified term of years for a specified premium The policy does not accumulate cash value
Permanent life insurance is life insurance that remains in force until the policy matures unless the owner fails to pay the premium when due
Whole life insurance provides for a level premium and a cash value table included in the policy guaranteed by the company The primary advantages of whole life are guaranteed death benefits guaranteed cash values fixed and known annual premiums and mortality and expense charges will not reduce the cash value shown in the policy
Universal life insurance (UL) is a relatively new insurance product intended to provide permanent insurance coverage with greater flexibility in premium payment and the potential for a higher internal rate of return A universal life policy includes a cash account Premiums increase the cash account If you want insurance protection only and not a savings and investment product buy a term life insurance policy
If you want to buy a whole life universal life or other cash value policy plan to hold it for at least 15 years Canceling these policies after only a few years can more than double your life insurance costs
23
HISTORY OF LIFE INSURANCE
Risk protection has been a primary goal of humans and institutions throughout history Protecting against risk is what insurance is all aboutOver 5000 years ago in China insurance was seen as a preventative measure against piracy on the sea Piracy in fact was so prevalent that as a way of spreading the risk a number of ships would carry a portion of another ships cargo so that if one ship was captured the entire shipment would not be lostIn another part of the world nearly 4500 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
Life insurance came about a little later in ancient Rome where burial clubs were formed to cover the funeral expenses of its members as well as help survivors monetarily With Romes fall around 450 AD most of the concepts of insurance were abandoned but aspects of it did continue through the Middle Ages particularly with merchant and artisan guilds These provided forms of member insurance covering risks like fire flood theft disability death and even imprisonment
During the feudal period early forms of insurance ebbed with the decline of travel and long-distance trade But during the 14th to 16th centuries transportation commerce and insurance would again reemergeInsurance in India can be traced back to the Vedas For instance yogakshema the name of Life Insurance Corporation of Indias 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
And similar to ancient Rome burial societies were formed in the Buddhist period to help families build houses and to protect widows and children
Modern InsuranceIllegal almost everywhere else in Europe life insurance in England was vigorously promoted in the three decades following the Glorious Revolution of 1688 The type of insurance we see today owes its roots to 17th century England Lloyds of London or as they were known then Lloyds Coffee House was the location where merchants ship owners and underwriters met to discuss and transact business dealsWhile serving as a means of risk-avoidance life insurance also appealed strongly to the gambling instincts of Englands burgeoning middle classGambling was so rampant in fact that when newspapers published names of prominent people who were seriously ill bets were placed at Lloydrsquos on their anticipated dates of death Reacting against such practices 79 merchant underwriters broke away in 1769 and
24
two years later formed a ldquoNew Lloydrsquos Coffee Houserdquo that became known as the ldquoreal Lloydrsquosrdquo Making wagers on peoples deaths ceased in 1774 when parliament forbade the practice
Insurance moves to AmericaThe US insurance industry was built on the British model The year 1735 saw the birth of the first insurance company in the American colonies inCharleston SC The Presbyterian Synod of Philadelphia in 1759 sponsored the first life insurance corporation in America for the benefit of ministers and their dependents And the first life insurance policy for the general public in the United States was issued in Philadelphia on May 22 1761But it wasnt until 80 years later (after 1840) that life insurance really tookoff in a big way The key to its success was reducing the opposition from religious groups
In 1835 the infamous New York fire drew peoples 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
With the creation of the automobile public liability insurance which first made its appearance in the 1880s gained importance and acceptanceMore advancement was made to insurance during the process of industrialization In 1897 the British government passed the Workmens Compensation Act which made it mandatory for a company to insure its employees against industrial accidents
During 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 most labor 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
25
BENEFITS OF LIFE INSURANCE
1) Risk cover -Life Insurance contracts allow an individual to have a risk cover against any unfortunate event of the future
2) Tax Deduction -Under section 80C of the Income Tax Act of 1961 one can get tax deduction on premiums up to one lakh rupees Life Insurance policies thus decrease the total taxable income of an individual
3) Loans -An individual can easily access loans from different financial institutions by pledging his insurance policies
4) Retirement Planning -What had provided protection against the financial consequences of premature death may now be used to help them enjoy their retirement yearsMoreover the cash value can be used as an additional income in the old age
5) Educational Needs -Similar to retirement planning the cash values that flow from ones life insurance schemes can be utilized for educational needs of the insurer or his children
26
ROLE OF LIFE INSURANCE IN THE GROWTH OF THE ECONOMY
The Life Insurance Industry has an enviable track record among public sector units It has a Consistent profit and dividend paying record accompanied by a steady growth in its financial resources Through investments in the Government sector and socially- oriented sectors the Industry has contributed immensely to the nations development The industry is recognized as one of the largest financial Institutions in the country The ventures initiated by the industry in the areas of Mutual Fund
Housing Finance has done exceedingly well in recent years To protect the countrys foreign exchange reserves the reinsurance arrangement are so organized that maximum retention is made possible within the country while at the same time protecting interests of the policy holders
27
ROLE OF IRDA
MISSION
ldquoTo protect the interests of the policyholders to regulate promote
and ensure orderly growth of the insurance industry and for matters
connected therewith or incidental theretordquo
The Insurance Act 1938 had provided for setting up of the Controller of Insurance to act
as a strong and powerful supervisory and regulatory authority for insurance Post
nationalization the role of Controller of Insurance diminished considerably in
significance since the Government owned the insurance companies But the scenario
changed with the private and foreign companies foraying in to the insurance sector This
necessitated the need for a strong independent and autonomous Insurance Regulatory
Authority was felt As the enacting of legislation would have taken time the then
Government constituted through a Government resolution an Interim Insurance
Regulatory Authority pending the enactment of a comprehensive legislation
The Insurance Regulatory and Development Authority Act 1999 is an act to provide for
the establishment of an Authority to protect the interests of holders of insurance policies
to regulate promote and ensure orderly growth of the insurance industry and for matters
connected therewith or incidental thereto and further to amend the Insurance Act 1938
the Life Insurance Corporation Act 1956 and the General insurance Business
(Nationalization) Act 1972 to end the monopoly of the Life Insurance Corporation of
India (for life insurance business) and General Insurance Corporation and its subsidiaries
(for general insurance business) The act extends to the whole of India and will come
into force on such date as the Central Government may by notification in the Official
Gazette specify Different dates may be appointed for different provisions of this Act
28
The Act has defined certain terms some of the most important ones are as follows
Appointed day means the date on which the Authority is established under the act
Authority means the established under this Act Interim Insurance Regulatory Authority
means the Insurance Regulatory Authority set up by the Central Government through
Resolution No 17(2) 94-lns-V dated the 23rd January 1996
Words and expressions used and not defined in this Act but defined in the Insurance Act
1938 or the Life Insurance Corporation Act 1956 or the General Insurance Business
(Nationalization) Act 1972 shall have the meanings respectively assigned to them in
those Acts A new definition of Indian Insurance Company has been inserted Indian
insurance company means any insurer being a company
(a) Which is formed and registered under the Companies Act 1956
(b) in which the aggregate holdings of equity shares by a foreign company either by
itself or through its subsidiary companies or its nominees do not exceed twenty-six
percent paid up capital in such Indian insurance company
(c) Whose sole purpose is to carry on life insurance business general insurance business
or re-insurance business
29
CURRENT SCENERIO
21) CURRENT SCENERIO OF THE INSURANCE INDUSTRY
With largest number of life insurance policies in force in the world insurance happens to be a mega opportunity in India Itrsquos a business growing at the rate of 15-20 per cent annually and presently is of the order of Rs 450 billion Together with banking services it adds about 7 per cent to the countryrsquos GDP Gross premium collection is nearly 2 per cent of GDP and funds available with LIC for investment are 8 per cent of GDP
Yet nearly 80 percent of Indian population is without life insurance cover while health insurance and non-life insurance continues to be below international standards And this part of the population is also subject to weak social security and pension systems with hardly any old age income security This it is an indicator that growth potential for the insurance sector is immense A well-develop and evolved insurance sector is needed for economic development as it provides long term funds for infrastructure development and at the same time strengthens the risk taking ability It is estimated that over the next ten years India would require investments of the order of one trillion US dollar The insurance sector to some extent can enable investment in infrastructure development to sustain economic growth of the country Insurance is a federal subject in India There are two legislation that govern the sector - The Insurance Act-1938 and The IRDA Act-1999
In India insurance is generally considered as a tax-saving device instead of its other implied long term financial benefits Indian people are prone to investing in properties and gold followed by bank deposits They selectively invest in shares also but the percentage is very small Even to this day Life Insurance Corporation of India dominates India insurance sector With the entry of private sector players backed by foreign expertise Indian insurance market has become more vibrant Business is becoming increasingly vulnerable due to wide variety of risk particularly after September 11 2001 disaster in which twin tower located in the hearts of New York city were crashed by terrorist attack resulting in loss of 6000 human lives as well as financial loss to the extent of $45 billion The impact of this terrorist attack has created new horizon of risk to the business world today
However rapid changes in the global economy development of technology and e-business already gathered momentum Increased dependency on technology has originated new risks that have resulted in well-published incidents Computer hackers obtaining credit card information from visa and Power-Gen the love bug virus cyber extortion web content liability professional errors and omissions computers and other crimes and activities such as terrorism kidnapping and companyrsquos executive and extortion of money commercial liability etc have significant impact on business resulting in extreme financial loss commercial embarrassment or regulatory implications
Corporation insurancerisk managers under the circumstances have to demand increasingly complex insurance products They have to be more attentive and
30
knowledgeable about emerging risks how those risks are managed effectively and efficiently and how they could ultimately affect a companyrsquos financial situation and therefore its position in the market place In short how such risks are managed and can give to an insured a competitive advantage
In the changing times adoption of e-commerce into business models the integration of web-based communication and data transfer capabilities into the business operations and leveraging of advanced network and technology architecture for maximum benefit are the new horizon of the risks For the corporate insurancerisks managers these new exposure-cyber-risks-can lead to cyber losses widening the interpretation of what constitute insure property damage particularly as it relates to information technology and dataAll the while organizations are tremendous pressure to reduce expenses and increase profit margin and cannot afford to suffer a property loss of business interruption due to any cause (risk) How a company identifies quantifies qualifies and manages these new risks exposure in addition to the well-known tradition risks is becoming an important factor in creating shareholders value This often means changing the way Everyone in the organization have to think about risk
Insurance managers are seeing price levels (premium) continue to rise-albeit modestly-in todayrsquos primarily commercial property and reinsurance markets They are demanding that insurers improve their risk assessment and quantification offerings so that an insured may avail the benefit in cost (premium rate) on account of well-managed riskThe good news for insurance managers is that as the economy evolves insurers are increasingly matching that evaluation with new products services and capabilities due to opening up the insurance market to the private players
Insurers who are truly listening to their customers and striving to be more in tune with their needs are responding to the fast changing corporate insurance and risk management landscape They are listening to their customers They are making fresh approaches to address the new challenges faced by insured organization by designing the new products as per the needs Insurers are providing value added services to insured to protect the value created by the business
Insurers are increasingly required to develop and expand their information technology platforms to ensure that the vast amount of data they collect about their customers Insurancerisk portfolio can easily and seamlessly be transformed into valuable risk management information To help their customers insurers should make better-informed decisions They must be able to swiftly deliver this data to their customers (insured) anywhere in the world Insurer are also discovering that risk assessment have to be customized to meet policyholdersrsquo new exposures and needs The insurance industry is stepping up and addressing these challenges in several different ways
31
22) CURRENT SCENARIO OF RELIANCE LIFE INSURANCE
RLIC offers wide range of innovative life insurance products targeted at individuals and groups It offers need based products that caters to four distinct segments namely protection child retirement and investment plans RLIC is committed to emerge as a
transnational Life Insurer of global scale and standard
Reliance Life Insurance Company Limited (RLIC) is amongst the fastest growing life insurance companies in India It is also amongst the top four private sector life insurance companies in India (As on FY 2008-2009)
As on March 31 2009 RLIC has an annualized premium of Rs 30 billion with a market share of 103 It has leapfrogged on the growth path and has reached the 4 million policy mark in a short span of within 3 years RLIC has a strong distribution network of 1145 branches with more than 149000 agents
32
Insurancersquos Market Share in Comparison of Other Private company
If we look at the status of Reliance Life Insurancersquos market share in comparison of other
private company in comparison of premium earned-
If we talk the growth of Insurance industryrsquos private players in recent years the data will
reflect-
CH - 3) RESEARCH METHODOLOGY
33
RESEARCH DESIGN-
COMPARITIVE STUDY- A comparative study has been undertaken to compare the traditional Plans of Reliance Life Insurance with that of Bajaj Allianz life insurance
DATA TYPE
INTRODUCTION - Any organization whether big or small private or public needs different type of information to know its popularity I have gathered secondary data and primary data and collected information from the combination of these two data
PRIMARY DATA - Primary data collection method was decided for observing working of the company and approaching the customers directly face to face A great care was taken while collecting the primary data to answer that it is relevant accurate current and unbiased
SECONDARY DATA - Secondary data collection method was used by referring to various websites books and newspapers for collecting information regarding the project under study Secondary data consist of the information that already exists somewhere else for some another purpose
SAMPLING TECHNIQUES-
SAMPLE SIZE- A sample size of 50 was taken to be analyzed
SAMPLE LOCATION-Various sectors of Kamla Nagar Civil lines Mukherji Nagar Model Town and selected areas of Delhi
SAMPLING PROCESS - Convenient sampling was used to overcome the time and money constraints that could have been faced by us while collecting the data The customers were contacted face to face directly and also by way of telephonic conversation with them
ANALYTICAL TOOLS - The data collected were arranged accordingly and statistical tools like bar graphs and pie-charts were used to analyze and present the data
RESEARCH INSTRUMENT USED-
34
SAMPLING MEDIA - Printed questionnaires consisting several questions were asked to have an idea of customers view about Reliance Life Insurance plans followed by personal questions
FIELD WORK - Rigorous field work was undertaken to locate the interested and potential respondents to fulfill the objectives of the study
THE PRIMARY OBJECTIVEOF THE STUDY -
The primary objective of the research study is to have a detailed analysis of Reliance Life Insurance bringing in focus the future prospects of the (Anil Dhirubhai Ambani group) with relevance to the customer perception regarding the various plans and products offered by Reliance Life Insurance
31) DATA ANALYSIS AND INTERPRETATION
35
PERSONAL DETAILS
1) AGE a) 18-30b) 31-50c) 51-65
AGE NO OF RESPONDENTS PERCENTAGE
18-30 21 42
31-50 19 38
51-65 10 20
TOTAL 50 100
INTERPRETATION-The bar graph reveals that 42 of the respondents belong to the age group of 18-30 years 38 lies in the age group of 31-50 years and 20 of them lie in the age group of 51-65 years
2) OCCUPATION
4238
20
05
1015202530354045
NO
O
F
RE
SP
ON
DE
NT
S
18 to 30 31 to 50 51 to 65
AGE (in year)
AGE WISE CLASSIFICATION
36
a) Serviceb) Businessc) Professiond) Housewifee) Retired
OPTION NO OF RESPONDENTS PERCENTAGE
Service 16 32
Business 14 28
Profession 5 10
Housewife 8 16
Retired 7 14
TOTAL 50 100
INTERPRETATION-The above bar graph reveals that 32 of the total respondents were servicemen 28 of them belonged to the business class 10 were professionals 16 were housewives and 14 of the total respondents fall in the retired category
3) INCOME
32
28
10
16
14
0
5
10
15
20
25
30
35
Service Business Profession Housewife Retired
OCCUPATION
OCCUPATION WISE CLASSIFICATION
37
a) 150000-300000
b) 300000-500000
c) Above 500000
OPTION NO OF RESPONDENTS PERCENTAGE
150000-300000 24 48
300000-500000 14 28
Above 500000 12 24
TOTAL 50 100
INTERPRETATION-The above bar graph reveals that out of the total respondents 48 lie in the income group of 150000-300000 28 of the total respondents belonged to the income group of 300000-500000 and 24 lie in the income group of people earning an income of above Rs 500000pa
4828 24
01020304050
N O
OF
RE
SP
ON
DE
NT
S
150000-300000
300000-500000
ABOVE500000
INCOME (in RS)
INCOME WISE CLASSIFICATION
38
4) FAMILY MEMBERS
a) 2b) 3c) 4d) Above 4
OPTION NO OF RESPONDENT PERCENTAGE
2 11 22
3 9 18
4 24 48
Above 4 6 12
TOTAL 50 100
INTERPRETATION The above bar graph shows that 22 of the total respondents had a family of 2 members 18 of them had 3 family members 48 of them had 4 family members and 12 of them had the no of family members above 4
Q1 Where do you prefer to invest
22 18
48
120
1020304050
No
o
f re
spo
nd
ents
2 3 4 Above 4
No of family members
MEMBER WISE CLASSIFICATION
39
a) fixed deposits
b) stock
c) mutual funds
d) insurance
e) others
Option No of respondents Percentage
Fixed deposits 5 10
Stock 10 20
Mutual fund 10 20
Insurance 18 36
others 7 14
TOTAL 50 100
Interpretation The above pie chart shows that out of 50 respondents 10 preferred to invest in fixed deposits 20 in stocks 20 in mutual funds 36 in insurance and 14 in others like property gold etc
Q2 What are your priorities for investment
40
a) protecting your family against pre-mature death
b) wealth creation
c) retirement needs
d) child education and marriage
e) protect income against disability sickness or critical illness
Option No of respondents Percentage
Protecting your family against pre mature death
10 20
Wealth creation 14 28
Retirement needs 5 10
Child education and marriage 7 14
Protect income against disability sickness or critical illness
14 28
TOTAL 50 100
Interpretation The above pie chart shows that out of 50 respondents 20 of them invest for protecting their family against premature death 28 for creating wealth 10 for meeting their future retirement needs 14 for child education amp marriage and 28 for protection against disability and sickness
Q3 What is your main motive behind investing in life insurance
41
a) tax benefit
b) savings
c) risk cover
Option No of respondents Percentage
Tax benefits 27 54
Savings 5 10
Risk cover 18 36
TOTAL 50 100
Interpretation The above pie chart shows that out of the sample respondents 54 have tax benefit 10 have savings and 36 have risk cover as their main motive for making an investment in life
Q4 What kind of investment do you prefer
42
a) high risk high gain
b) low risk low gain
c) moderate
d) vary times to times
Option No of respondents Percentage
High risk high gain 8 16
Low risk low gain 5 10
Moderate 12 24
Vary times to times 25 50
TOTAL 50 100
Interpretation The above pie chart shows that out of 50 respondents 16 preferred high risk- high gain form of investment 10 preferred low risk- low gain form of investment 24 preferred moderate investment and 50 preferred varied form of investment
43
Q5Are you interested to invest in Traditional Plans
a) YES
b) NO
Option No of respondents Percentage
YES 36 72
NO 14 28
TOTAL 50 100
Interpretation The above pie chart shows that 72 of the respondents preferred to invest in Traditional Plans
44
Q6 What is your level of annual investmenta) below 20000
b) 20000-40000
c) above 40000
Option No of respondents Percentage
Below 20000 41 82
20000-40000 7 14
Above 40000 2 4
TOTAL 50 100
Interpretation The above pie chart shows that 82 of the respondents are willing to invest below Rs 20000 per annum 14 of them want to invest within Rs 20000 per annum to Rs 40000 and 4 wanted to invest over and above Rs 40000
45
Q7 What factors would you consider most important before choosing an insurance policy
a) publicity of the company
b) reputation of the company
c) quality of life advisors
d) after sales-supporting of the company
Option No of respondents Percentage
Publicity of the co 5 20
Reputation of the co 25 50
Quality of life advisors 10 10
After sale-services 10 20
TOTAL 50 100
Interpretation out of the sample respondents 20 considers publicity of the company 50 considers reputation of the company 10 considers quality of life advisors and 20 considers after sales support of the company as the most important factor for choosing an insurance company
46
Q8 Which life insurance company would you prefer the most to invest ina) reliance life insurance (RLIC)
b) Bajaj Allianz life insurance
Option No of respondents Percentage
RLIC 21 42
BAJAJ ALLIANZ 29 58
TOTAL 50 100
Interpretation Out of 50 respondents 42 preferred to invest in reliance life insurance over 58 of the respondents who prefer to invest in Bajaj Allianz life insurance
47
Q9 If reliance life insurance then which particular plan you would like to invest ina) Reliance Term Plan
b) Reliance Whole Life Plan
c) Reliance Endowment Plan
d) Reliance Special Endowment Plan
Option No of respondents Percentage
Reliance term plan 6 2858
Reliance whole life plan 3 1428
Reliance endowment plan 9 4286
Reliance special endowment plan 3 1428
TOTAL 21 100
Interpretation Out of 21 respondents 2858 preferred to invest in term plan 1428 in whole life plan 4286 in endowment plan and 1428 of them preferred to invest in special endowment plan of reliance life insurance
48
Q10 If Bajaj Allianz life insurance then which particular plan you would like to invest in
I ENDOWMENT PLAN a) Bajaj Allianz Invest Gain
b) Bajaj Allianz save Care Economy SP
c) Bajaj Allianz life time care
d) Bajaj Allianz Super Saver plan
II MONEY BACK PLAN i Bajaj Allianz Cash Gain plan
Option No of respondents Percentage
Invest gain plan 3 1035
Save care economy SP 6 2069
Life time care 7 2415
Super saver plan 3 1035
Cash gain plan 10 3446
TOTAL 29 100
Interpretation Out of 29 respondents 1035 of them plan to invest in Bajaj Allianz- Invest Gain 2069 wish to invest in Bajaj Allianz save Care Economy SP 2415 want to invest in Bajaj Allianz life time care 1035 in Bajaj Allianz Super Saver plan and 3446 prefer to invest in Bajaj Allianz Cash Gain plan
49
32) SIGNIFICANCE OF STUDY
Life insurance is one of the most rapidly growing sectors in India The main reason
behind the growth can attributed to the high population density improving economical
condition improving education level and improving awareness Due to these factors there
is still huge scope for growth in this sector Like any other business when the
opportunities are present everybody tends to enter the industries This growth hence
fetches the new competitors as well as new strategies from existing players To sustain in
any competitive industry the organization must adapt to existing strategies and adopt
new ones This study will focus on the analysis of Reliance Life Insurance in comparison
with the present scenario of Bajaj Allianz Life Insurance with respect to the Traditional
Plans of both the companyrsquos This will mainly cover the following aspects
To know about the awareness and popularity of various Traditional Plans offered
by Reliance Life Insurance and Bajaj Allianz Life Insurance
How Reliance Life Insurance can develop and sustain a good distribution
network
These will provide it benefit both in terms of better market coverage as well as better
penetration
50
33) SCOPE OF THE STUDY
1) This helps in finding out vast potential of insurance company
2) The study was conducted in National Capital Region (NCR) only
3) The number of respondents to be surveyed can be improved
4) This study was conducted by comparing the performances amp products of three private
amp government insurance players in insurance industry
5) This study was conducted to analyze the market stand of Reliance life insurance
Company limited and Bajaj Allianz Life Insurance Company Limited of India insurance
companies
6) This study is done to eliminate all the myths which people have in their minds
regarding Insurance Sector
51
34) OBJECTIVES
To have a detailed understanding of Reliance Life Insurance and Bajaj Allianz Life Insurance
To find out various reasons considered while investing in policies
To get knowledge about the market exposure and future prospects about Reliance Life Insurance
To know the perception of the consumers about the life insurance
To analyze the Traditional plans of Reliance Life Insurance and compare it with Bajaj Allianz
To know about the brand awareness of Reliance Life Insurance its customer preferences over Bajaj Allianz in the market
To study a proper knowledge about the life insurance industry
To understand the consumer choice while investing in policies
52
CHAPTER 4
DISCUSSION AND FINDINGS OF THE STUDY
FINDINGS OF THE STUDY RECOMMENDATION AND SUGGESTIONS CONCLUSION LIMITATIONS BIBLIOGRAPHY ANNEXUREQUESTIONNAIRE
53
41) FINDINGS OF THE STUDY
1) The survey reveals that still a large proportion of population is interested to invest in other forms of investment other than insurance as still most of them are unaware about the importance of insurance in their life
2) Basically people make varied form of investment for creating wealth to protect their families against pre-mature death and to protect income against disability sickness or critical illness
3) The main motive of the individuals investing is receives benefits US 1010D People generally consider insurance as a tax saving device
4) Mostly people prefer time to time form of investment as they are not willing to take high degree of risk
5) 72 of the respondents are preferred to invest in Traditional Plans
6) Most of the people prefer to make an annual investment up to a maximum of Rs20 000 per annum
7) When the product is like life insurance reputation of the company publicity of the company amp after sale services of the company matters a lot This means that people would choose that insurance company only where the quality of life advisors is satisfactory
8) Most people prefer to invest in Bajaj Allianz Life Insurance as compared to making an investment in Reliance Life Insurance
9) The most preferable Traditional plan of Reliance Life Insurance is Endowment Plan
10) The most preferable plan of Bajaj Allianz Life Insurance co is Cash Gain Plan
54
42) SUGGESTIONS amp RECOMMENDATIONS
Based on the observations of the study some suggestions for the organization are made as
follows
1) Quality of advisors is also as important as the quantity Thus company should go
mainly for qualified professionals
2) Company should increase its budget on publicity so that awareness can be increased
3) Clarity and transparency should be provided to the customer regarding various
products
4) Training sessions should be planned in advance so that schedule can be provided to
the advisor in advance
5) Apart from the Brand Positioning in urban area a strategy should be adopted by
Reliance to make its brand also near to middle level or high aspirant people because they
are the main source of the business in India
6) Awareness Camp to the sub urban area should be focused by Reliance
7) Some innovative technique or product is required in order to attract the consumer
43) LITERATURE REVIEW
55
1) Robi Elenekave has explained in detail why various retirement plans and pension plans donrsquot give the desired returns The main difficulty is the use of incorrect method for calculations done to find out the return on investment This is primarily due to wrong assumptions The study provides information about the various precautions which need to be considered before planning so that the desired results can be achieved
2) Another paper provides insight about how various financial sectors invest in bond market The study was how the different players investment different instruments according to the risk appetite and desired rate of return The study shows that life insurance sector mainly invests in government bond which are low return and low risk instrument The investment in government bond it shows that life insurance companies are more conservative in investment
3) K Subhash has presented the history of Indiarsquos life insurance industry in three stages before independence after independence and post liberalization which not only provides information but also help in analyzing the impact of these major changes The authors have also discussed the huge potential which exists in the rural India The insurance company must realize the importance of rural sector because the future lies there The author commented about the increasing share of private player in the existing market This confirms the availability of opportunity in this sector The paper also provides the importance of professional and focused approach which was given no importance
4) Tapen Sinha has discussed the various challenges and opportunities in the insurance market One of the very important factors which have been discussed in the study is the importance of developing new and better products As the scenario changes the need of an individual also changes so any organization must understand and fulfill these needs The new product development requires constant research so organization must also focus on it
5) Roger G Ibbotson discusses how financial planners and advisors have recently started to recognize that human capital must be taken into account when building optimal portfolios for individual investors Any investorrsquos human capital has a unique mortality risk However life insurance in its forms can hedge against this mortality risk Thus human capital affects both the optimal asset allocation and the optimal demand for life insurance This paper provides a unified framework based on human capital in order to enable individual investors to make both decisions jointly
6) Rakesh Niraj study tells how the flow of information in any organization is important For any organization to grow the flow of information must be good both upwards as well as ownwards The proper flow of information will also ensure proper flow of good and services from organization to customer and proper flow of information from customer to organization The information from customers will help the organization in providing better goods and services to the customer For the above purpose organization must ensure good channel partner who can provide the organization with correct feedback Hence it becomes very important for any organization to acquire good channel partners
56
7) Stephen P Robbins has discussed how group dynamics works in any organization The success of any organization depends on the success of its various teams and how these teams work together The book provides various techniques which can be used by any organization to get result from the team effort The conflict resolution is a major task in any group Various techniques which the organization can use in conflict resolution are also discussed Another important aspect covered is the importance of leadership in the organization The various forms of leadership have been discussed and the kinds of leadership which can be effective in particular situations are also discussed
8) R Wayne Mondy has discussed the importance of training and development in any organization The training provides skills to perform the current job where as the development involve learning beyond present need The various type of training are discussed which can be used according to the requirement Training and development are not only important for better performance of an individual but it also gives satisfaction The major factors which influence training and development are found to be management support commitment of trainee and trainer complexity of the organization The process of developing good training plans is also provided In another part author has discussed the importance of right man for right job The compensation strategies are also given which are very crucial for ant industry
9) Philip Kotler has discussed the importance of channels partners Better the channel partners better will be the delivery model Detailed discussion about how to design the channel structure so that all the requirements could be fulfilled is provided The various issues faced by the organization while managing the channels are also given When an organization has more than one channel it becomes very important that all the channels should be integrated in such a way that the organization get the best out of all At times due to the conflicting benefit of the different channels the conflict arise so various strategies to manage these issues is also discussed in the chapter
10) Michael J Etzel has written about the marketing of services The marketing of services is different from the goods because of the characteristic of service like intangibility inseparability heterogeneity etc Brief about pricing strategies is also given in case of services The authors have also given the impact of technological development on the services marketing The author has also given the importance of brand and after sales support in case of services as perception of the customers plays an important role In other part of the book the authors has described the importance of distribution channels and designing of the same A channel partner should be consider as partner according to discussion The legal complications associated with channels are also discussed These complications are necessary to take into the consideration while managing the channels The conflicting interest of channels both horizontally and vertically are also taken into the consideration
57
11) Boone has discussed about the importance of personal financial planning The concept of time value of money has also been elaborated The importance of creating and implementing budget is given under money management The other important concepts for financial planning like credit management and understanding taxes are also explained In one section the authors have discussed the importance of investment and what should be the major considerations while making any investment The considerations include the risk associated with the investment return on the investment etc The importance and benefits of life insurance has also been given The discussion also includes various legal aspects associated with life insurance The overview of retirement planning is also given which includes importance and benefit of retirement planning Various tools for proper retirement planning are also discussed
58
44) CONCLUSION
1) The customers are very much sensitive towards their investment They would like to invest only in that insurance company which enjoys good public image along with quality good services
2) The result of the survey conducted shows that Bajaj Allianz Life Insurance is the leader in life insurance industry but Reliance Life Insurance and other private players are giving it a close competition
3) The motive of the people behind investing in life insurance is the tax benefits that they would receive under sec 80C and 1010D
4) In Life Insurance industry the after sales support of the company is as important as the quality of life advisors
59
45) LIMITATIONS
There were some limitations faced during the study as discussed below
Since the study was taken for two months so there was a constraint of time and effort
The study was limited only to some of the Delhi regions so the results may be biased
Questionnaire was given to 125 people however only 50 responded to it which is very small for such type of study
The biasness of consumer or responses error cannot be eliminated
Most of the people are not aware about the Importance and the necessity of insurance in their life
Adverse perception of the people towards insurance sector- People consider insurance as a tax saving device
Lack of awareness about the earning opportunity in the insurance sector
60
46) BIBLIOGRAPHY
wwwreliancelifeinsurancecom
wwwadagroupcom
wwwirdacom
wwwbajajallianzlifeinsurancecom
wwwallianzbajajcom
47) ANNEXURE
61
QUESTIONNAIRE
A comparative analysis of consumer perception regarding Traditional plans of Reliance Life Insurance with that of Bajaj Allianz Life Insurance
NAME ___________________________
PERSONAL DETAILS
1) AGE_________________
1) OCCUPATION______________
2) INCOME___________________
3) FAMILY MEMBERS_________
Q1 Where do you prefer to investa) Fixed deposits b) Stock c) Mutual funds d) Insurance e) Others
Q2 What are your priorities for investmenta) Protecting your family against pre-mature death b) Wealth creation c) Retirement needs d) Child education and marriage e) Protect income against disability sickness or critical illness
Q3 What is your main motive behind investing in life insurancea) Tax benefit b) Savings c) Risk cover
Q4 What kind of investment do you prefera) High risk high gain b) Low risk low gain c) Moderate d) Vary times to times
62
Q5Are you interested to invest in Traditional Plansa) Yes b) No
Q6 What is your level of annual investmenta) below 20000 b) 20000-40000 c) above 40000
Q7 What factors would you consider most important before choosing an insurance company
a) publicity of the company b) reputation of the company c) quality of life advisors d) after sales-supporting of the company
Q8 Which life insurance company would you prefer the most to invest ina) Reliance life insurance b) Bajaj Allianz life insurance
Q9 If reliance life insurance then which particular plan you would like to invest ina) Reliance Term Plan b) Reliance Whole Life Plan c) Reliance Endowment Plan d) Reliance Special Endowment Plan
Q10 If Bajaj Allianz life insurance then which particular plan you would like to invest in
I ENDOWMENT PLAN
a) Bajaj Allianz Invest Gain
b) Bajaj Allianz save Care Economy SP
c) Bajaj Allianz life time care
d) Bajaj Allianz Super Saver plan
II MONEY BACK PLAN
a) Bajaj Allianz Cash Gain plan
63
64
- COMPANY PROFILE
- ABOUT RELIANCE LIFE INSURANCE
- HISTORY
- Reliance Capital Limited announced the launch of its life insurance business on February 1 2006 This was after obtaining the required regulatory approvals from the Registrar Of Companies and the Insurance Regulatory and Development Authority
- It was in August 2005 that the ball was set rolling when Reliance Capital Limited the financial arm of Reliance ndash Anil Dhirubhai Ambani Group (ADAG) ndash announced the requisition of 100 shareholding in AMP Sanmar Life Insurance Company Limited and the formal transfer of shares took place in October 2005 The company will issue all policy contracts under the Reliance Life Insurance Company limited name All the existing policy contracts also stand transferred to the Reliance Life Insurance entity with all the original contractual terms and commitments intact
- CORE VALUES
- Reliance Life Insurance Company Limited has some core values which are listed as follows
- Vision bull To be the first choice insurer for customers bull To be the preferred employer for staff in the insurance industry bull To be the number one insurer for creating shareholder value
- Mission As a responsible customer focused market leader we will strive to understand the insurance needs of the consumers and translate it into affordable products that deliver value for money
- 12) TRADITIONAL PLANS OF THE COMPANY
- 12A )TRADITIONAL PLAN OF RELIANCE LIFE INSURANCE-
- Life insurance products are designed to suit the requirements of customers Fundamentally the product provide for
- In every product to a certain degree risk cover is imperative for it to fall under the category of insurance Based on the coverage of the product the premiums are calculated and the customer pays accordingly In order to suggest the right product it is essential for an agent to understand the requirements of the customer well
- The traditional plans of the company have the following features-
- Fixed Tenure
- Potential for better returns
- Transparency
- Flexibility in investment
- Flexibility to invest more
- Flexibility to skip the premium
- Flexibility to choose the cover
- High liquidity
- Age term and sum assured decide the amount of premium
- Top- ups and switches are not allowed
- Reliance Life Insurance Company Limited has offered 9
- 1) Reliance term plan-
- 2) Reliance Whole Life Plan -
- 3) Reliance Endowment Plan -
- 4) Reliance Special Endowment Plan -
- 13) INDUSTRY PROFILE
- MEANING OF INSURANCE
- Insurance may be described as a social device to reduce or eliminate risk of loss to life and property Insurance is a collective bearing of risk Insurance is a financial device to spread the risks and losses of few people among a large number of people as people prefer small fixed liability instead of big uncertain and changing liability
- Insurance can be defined as a ldquolegal contract between two parties whereby one party called insurer undertakes to pay a fixed amount of money on the happening of a particular event which may be certain or uncertainrdquo The other party called insured pays in exchange a fixed sum known as premium
- Insurance is desired to safeguard oneself and onersquos family against possible losses on account of risks and perils It provides financial compensation for the losses suffered due to the happening of any unforeseen events
- IMPORTANCE OF INSURANCE
- Insurance services play predominant role in the process of financial Intermediary Today insurance industry is one of the most growing sectors in India There is lot of potential in the Indian Insurance Industry
- There are many issues which require study The scope of the study of Insurance industry of India would be very great as there are ongoing Developments in the industry after the opening of the sector
- Right now the insurance industry has great opportunities in a country like India or China which huge population Also the penetration of insurance in India is very low in both life and non-life segment so there is lot potential to be tapped Before starting the discussion on insurance industry and related issues we have to start with the basics of insurance So first we understand what is insurance How the word lsquoinsurancersquo is different from the word lsquoassurancersquo Etc
- HISTORY OF INSURANCE
- The concept of insurance is believed to have emerged almost 4500 years ago in the ancient land of Babylonia where traders used to bear risk of the carvan by giving loans which were later repaid with interest when the goods arrived safely
- The concept of insurance as we know today took shape in 1688 at a place called Lloydrsquos Coffee House in London where risk bearers used to meet to transact business This coffee house became so popular that Lloydrsquos became the one of the first modern insurance companies by the end of the eighteenth century
- Marine insurance companies came into existence by the end of the eighteenth century These companies were empowered to write fire and life insurance as well as marine The Great Fire of London in 1966 caused huge loss of property and life With a view to providing fire insurance facilities
- Dr Nicholas Barbon set up in 1967 the first fire insurance company known as the Fire office
- Life insurance in its modern form came to India from England in 1818 The Oriental Life Insurance Company was the first insurance company to be set up in India to help the widows of European community The insurance companies which came into existence between 1818 and 1869 treated
- Indian lives as subnormal and charged an extra premium of 15 to 20 per cent The first Indian insurance company the Bombay Mutual Life
- Assurance Society came into existence in 1870 to cover Indian lives at normal rates
- The Insurance Act 1938 the first comprehensive legislation governing both life and non-life branches of insurance were enacted to provide strict state control over insurance business This amended insurance Act looked into investments expenditure and management of these companies
- By the mid- 1950s there were 154 Indian insurers 16 foreign insurers and 75 provident societies carrying on life insurance business in India Insurance business flourished and so did scams irregularities and dubious investment practices by scores of companies As a result the government decided to nationalize the life assurance business in India The Life Insurance
- Corporation of India (LIC) was set up in 1956 The nationalization of life insurance was followed by general insurance in 1972
- MEANING OF LIFE INSURANCE
- There are three parties in a life insurance transaction the insurer the insured and the owner of the policy (policyholder) although the owner and the insured are often the same person
- Another important person involved in a life insurance policy is the beneficiary The beneficiary is the person or persons who will receive the policy proceeds upon the death of the insured
- Life insurance may be divided into two basic classes ndash term and permanent
- HISTORY OF LIFE INSURANCE
- Risk protection has been a primary goal of humans and institutions throughout history Protecting against risk is what insurance is all about
- Over 5000 years ago in China insurance was seen as a preventative measure against piracy on the sea Piracy in fact was so prevalent that as a way of spreading the risk a number of ships would carry a portion of another ships cargo so that if one ship was captured the entire shipment would not be lost
- In another part of the world nearly 4500 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
- Life insurance came about a little later in ancient Rome where burial clubs were formed to cover the funeral expenses of its members as well as help survivors monetarily With Romes fall around 450 AD most of the concepts of insurance were abandoned but aspects of it did continue through the Middle Ages particularly with merchant and artisan guilds These provided forms of member insurance covering risks like fire flood theft disability death and even imprisonment
- During the feudal period early forms of insurance ebbed with the decline of travel and long-distance trade But during the 14th to 16th centuries transportation commerce and insurance would again reemerge
- And similar to ancient Rome burial societies were formed in the Buddhist period to help families build houses and to protect widows and children
- Modern Insurance
- Illegal almost everywhere else in Europe life insurance in England was vigorously promoted in the three decades following the Glorious Revolution of 1688 The type of insurance we see today owes its roots to 17th century England Lloyds of London or as they were known then Lloyds Coffee House was the location where merchants ship owners and underwriters met to discuss and transact business deals
- While serving as a means of risk-avoidance life insurance also appealed strongly to the gambling instincts of Englands burgeoning middle class
- Gambling was so rampant in fact that when newspapers published names of prominent people who were seriously ill bets were placed at Lloydrsquos on their anticipated dates of death Reacting against such practices 79 merchant underwriters broke away in 1769 and two years later formed a ldquoNew Lloydrsquos Coffee Houserdquo that became known as the ldquoreal Lloydrsquosrdquo Making wagers on peoples deaths ceased in 1774 when parliament forbade the practice
- Insurance moves to America
- The US insurance industry was built on the British model The year 1735 saw the birth of the first insurance company in the American colonies in
- Charleston SC The Presbyterian Synod of Philadelphia in 1759 sponsored the first life insurance corporation in America for the benefit of ministers and their dependents And the first life insurance policy for the general public in the United States was issued in Philadelphia on May 22 1761
- But it wasnt until 80 years later (after 1840) that life insurance really tookoff in a big way The key to its success was reducing the opposition from religious groups
- In 1835 the infamous New York fire drew peoples 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
- With the creation of the automobile public liability insurance which first made its appearance in the 1880s gained importance and acceptance
- More advancement was made to insurance during the process of industrialization In 1897 the British government passed the Workmens Compensation Act which made it mandatory for a company to insure its employees against industrial accidents
- During 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 most labor 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
- BENEFITS OF LIFE INSURANCE
- 1) Risk cover -Life Insurance contracts allow an individual to have a risk cover against any unfortunate event of the future
- 2) Tax Deduction -Under section 80C of the Income Tax Act of 1961 one can get tax deduction on premiums up to one lakh rupees Life Insurance policies thus decrease the total taxable income of an individual
- 3) Loans -An individual can easily access loans from different financial institutions by pledging his insurance policies
- 4) Retirement Planning -What had provided protection against the financial consequences of premature death may now be used to help them enjoy their retirement years
- 5) Educational Needs -Similar to retirement planning the cash values that flow from ones life insurance schemes can be utilized for educational needs of the insurer or his children
- The Life Insurance Industry has an enviable track record among public sector units It has a Consistent profit and dividend paying record accompanied by a steady growth in its financial resources Through investments in the Government sector and socially- oriented sectors the Industry has contributed immensely to the nations development The industry is recognized as one of the largest financial Institutions in the country The ventures initiated by the industry in the areas of Mutual Fund
- Housing Finance has done exceedingly well in recent years To protect the countrys foreign exchange reserves the reinsurance arrangement are so organized that maximum retention is made possible within the country while at the same time protecting interests of the policy holders
- 22) CURRENT SCENARIO OF RELIANCE LIFE INSURANCE
- RLIC offers wide range of innovative life insurance products targeted at individuals and groups It offers need based products that caters to four distinct segments namely protection child retirement and investment plans RLIC is committed to emerge as a transnational Life Insurer of global scale and standard
- CH - 3) RESEARCH METHODOLOGY
- RESEARCH DESIGN-
- SAMPLING TECHNIQUES-
- THE PRIMARY OBJECTIVEOF THE STUDY-
- 34) OBJECTIVES
- 7) Some innovative technique or product is required in order to attract the consumer
- 45) LIMITATIONS
- 46) BIBLIOGRAPHY
-
R Rangarajan Chief Investment Officer
Rangarajan is the Chief Investment Officer at Reliance Life Insurance Company Limited He alongwith his team strives to give the best possible returns on investments to shareholders and policyholders keeping in mind their appetite for risk Rangarajan draws on his in-depth knowledge of investment and experience of 25 years to ensure that the goals of the organisation are metmdashwithout any compromise on the benefits of the investors
Prior to being a part of Reliance Life Insurance Rangarajan worked with AMP Sanmar Life Insurance as Head ndash Investments for three years His earlier assignment was with a large Mutual Fund organization
Rangarajan is a qualified Chartered Accountant
S V Sunder Krishnan Chief Risk Officer
Sunder is the Chief Risk officer for Reliance Life Insurance and is responsible for overseeing Risk Management Internal Audit and Compliance functions at Reliance Life Insurance
Sunder came with 23 years of experience and knowledge in Internal Audits Compliance Assurance Consulting and Risk Management He has worked for various leading organizations such as DSP Merrill Lynch ING Vysya Credit Lyonnais Standard Chartered Bank International Indonesia Ernst amp Young and Delloitte at senior and middle management positions with exposure to businesses and operations in more than 12 countries
Sunder is a qualified FCA CISA and CCSA He is also the President of Information Systems Audit Control Association (ISACA-USA) Mumbai Chapter for the year 2007-08 and was a member of the Board of Advisors to Bombay Chartered Accountants Society (BCArsquoS) for Internal Audit studies for the year 2005-06
RELIANCE ADA GROUP
6
HISTORY
7
Reliance Capital Limited announced the launch of its life insurance business on February 1 2006 This was after obtaining the required regulatory approvals from the Registrar Of Companies and the Insurance Regulatory and Development Authority
It was in August 2005 that the ball was set rolling when Reliance Capital Limited the financial arm of Reliance ndash Anil Dhirubhai Ambani Group (ADAG) ndash announced the requisition of 100 shareholding in AMP Sanmar Life Insurance Company Limited and the formal transfer of shares took place in October 2005 The company will issue all policy contracts under the Reliance Life Insurance Company limited name All the existing policy contracts also stand transferred to the Reliance Life Insurance entity with all the original contractual terms and commitments intact
A Reliance Capital company
Reliance started from scratch only to become Indiarsquos
largest private sector company in ~40 years
1966 1971-72 1977 1985 1992 1993
Birth of Reliance ndash
First Textile Mill at Naroda
Birth of Reliance ndash
First Textile Mill at Naroda
Launch of lsquoOnly Vimalrsquo brand
Launch of lsquoOnly Vimalrsquo brand
Sales Cross 4000 CrBecomes Largestprivate sector Co inIndia
Sales Cross 4000 CrBecomes Largestprivate sector Co inIndia
Launch of 1st
IPO for general public- start of a
trend
Launch of 1st
IPO for general public- start of a
trend
Total Assets cross 1000 Cr
Total Assets cross 1000 Cr
Twin IPOs receive 1million applications
Twin IPOs receive 1million applications
The Story of Growth First corporate in Asia to issues
50 and 100 yrs bond in US debt market
First corporate in Asia to issues
50 and 100 yrs bond in US debt market
1997 1998
Total assetscross 35000 CrRevenues cross
14000 Cr
Total assetscross 35000 CrRevenues cross
14000 Cr
8
A Reliance Capital company
2000 2000 2001 2003 2005 2006-07
Group Profits cross 2500 Cr
Revenues cross 20000 Cr
Total Assets cross 50000 Cr
Group Profits cross 2500 Cr
Revenues cross 20000 Cr
Total Assets cross 50000 Cr
Reliance Communication plans announced
Reliance Communication plans announced
Reliance Life Insurance rank 6th at 930 Cr
Reliance Life Insurance rank 6th at 930 Cr
Group revenues cross 60000 Cr
Largest Business group
in India
Group revenues cross 60000 Cr
Largest Business group
in India
Controlling stake in BSES (Reliance
Energy)Largest mobile
services co in India
Controlling stake in BSES (Reliance
Energy)Largest mobile
services co in India
ADA Group formedAMP Sanmar acquired and renamed Reliance
Life Insurance
ADA Group formedAMP Sanmar acquired and renamed Reliance
Life Insurance
And the journeyBecame the 1st
company to cross 1 million policy mark in 2 years of operations
Became the 1st
company to cross 1 million policy mark in 2 years of operations
Sep 2007 2007
Reliance became only the second National Insurance player to get ISO 9001-2000
Reliance became only the second National Insurance player to get ISO 9001-2000
A Reliance Capital company
Be the Change
2008 2008 2008 2007-08 2008-09
Reliance MF becomes 1st
AMC to cross
100000 Cr
Reliance MF becomes 1st
AMC to cross
100000 Cr
RCOM crosses 50 million customers
RCOM crosses 50 million customers
A total of more than 2000 Branches on anvil in the fiscal year
A total of more than 2000 Branches on anvil in the fiscal year
Continueshellip
RLIC jumps to 4th position
with 2750 Cr
RLIC jumps to 4th position
with 2750 Cr
Crosses 2million policies
Crosses 2million policies
9
SWOT ANALYSIS
STRENGTHS
Dedicated Employees Well Efficient Management Strong and popular brand name Adaptability to changes Goodwill of the company Transparency in service
WEAKNESS
Lack of good services
Lack of awareness about insurance among people
Less coverage in Rural Areas
Lack of credibility among the people because Reliance life insurance being a
private player
OPPORTUNITIES
Fast growing economy
Increasing per ndashcapita income in India
Saving behavior
High growth of Traditional industry
THREATS
Arrival of new entrants in the insurance industry
Cut throat competition within the industry
10
CORE VALUES
Reliance Life Insurance Company Limited has some core values which are listed as follows
1) Result Oriented2) Performance Driven3) Customer Focused4) Learning and Development Oriented5) Employee Centric6) Informal and Fun
1 B COMPANY PROFILE OF BAJAJ ALLIANZ LIFE INSURANCE
11
Bajaj Allianz Life Insurance Company limited is a joint venture between two leading conglomerates Bajaj Auto limited and Allianz AG company whose total asset value is of Rs 5900000 cr Bajaj whose wealth as of now is Rs 8000 cr group in India 55 years of experience 4th largest group in the world Above 15000 employees largest 2 amp 3 wheeler manufacture in India Allianz established in 1890 who has 115 years of experience in financial year
Bajaj Auto is one of the most trusted name is Indian auto for over 55 years At Bajaj Allianz customer delight is our guiding principle Ensuring world-class solutions by offering customized products with transparent benefits supported by best technology is our business philosophy
Notwithstanding the recession and a volatile stock market Bajaj Allianz life insurance posted a profit of Rs 45 cr for financial year 2009 against a loss of Rs 16 cr in the previous year
The company new business premium fell to Rs 4491 cr in the year against Rs 6674 cr recorded in the last year
We have been able to make a profit of profit of Rs 45 cr even in these difficult times Our new business premium declined by 30 to Rs 4491 cr because the stock market declined and we didnrsquot open any new office in FY 09rdquo Bajaj Allianz country manager and Bajaj Allianz life insurance CEO kamesh Goyal said
Bajaj Allianz Life Insurance has around 1200 offices and the company would not increase the number this year too Goyal said
The companyrsquos renewal premium grew by more than 100 to Rs 6133 cr in the 2008-2009 as compared to Rs 3051 cr in the previous fiscal year he saidIn the year Bajaj Allianz life insurance issued 29 lakh policies which were the second largest in the industry
Vision bull To be the first choice insurer for customers bull To be the preferred employer for staff in the insurance industry bull To be the number one insurer for creating shareholder value
MissionAs a responsible customer focused market leader we will strive to understand the insurance needs of the consumers and translate it into affordable products that deliver value for money
12) TRADITIONAL PLANS OF THE COMPANY
12
12A )TRADITIONAL PLAN OF RELIANCE LIFE INSURANCE -
Life insurance products are designed to suit the requirements of customers Fundamentally the product provide for
Risk cover
Investment
Health cover
In every product to a certain degree risk cover is imperative for it to fall under the category of insurance Based on the coverage of the product the premiums are calculated and the customer pays accordingly In order to suggest the right product it is essential for an agent to understand the requirements of the customer well
The traditional plans of the company have the following features- Fixed Tenure Potential for better returns Transparency Flexibility in investment Flexibility to invest more Flexibility to skip the premium Flexibility to choose the cover High liquidity Age term and sum assured decide the amount of premium Top- ups and switches are not allowed
Reliance Life Insurance Company Limited has offered 9Traditional plans to the customers which are listed as follows1) Reliance Term Plan2) Reliance Whole Life Plan3) Reliance Endowment Plan4) Reliance Special Endowment Plan5) Reliance Cash Flow Plan6) Reliance Credit Guardian Plan7) Reliance Special Credit Guardian PlanEach of the above traditional plans is discussed as follows
1) Reliance term plan-This insurance policy is designed for those who only want life cover for the protection of their family and do not wish to save for themselves It can also be useful to business firms that wish to provide financial security to their business against the sudden loss of partners or valuable manpower Since there is no saving element or bonus provision the premium is very lowHence this is a high-risk plan with a low premium
13
1048729 Features -a) Purely a term planb) Entry age minimum 18 years and maximum 65 yearc) Maximum premium paying term is 30 yeard) Loan facility NAe) Maturity amount = Sum assured
2) Reliance Whole Life Plan -This insurance policy is designed for people who do not wish to avail of any benefits themselves but wish to create an immediate estate to protect their family by availing of insurance cover on their life at a very low cost
1048729 Features -a) It is a whole life insurance policy with profitsb) Low cost life coverc) Maturity age is 85 year or 99 years last birthday as chosend) Maturity amount = Sum assured + Vested bonuse) Tax benefit is available
3) Reliance Endowment Plan -Reliance Life Insurancersquos Reliance Endowment Plan is the key to all your financial needs It is an inexpensive and easy way to protect you your family or your businessIn a nutshell this plan will keep you financially prepared for all the special occasions in your life - your daughterrsquos wedding your childrsquos university education or even a new office for your business - by eliminating the burden that a shortage of money createsIn the event of your untimely death Reliance Endowment Plan will also assist your loved ones through this difficult time by the financial support that it providesReliance Endowment Plan also gives you the additional benefit of participating in the companyrsquos profits which you will receive at the end of the policy period
1048729 Features -a) Entry age minimum is 5 year and maximum 65 yearb) Maturity age minimum is 18 year and maximum 75 yearc) Minimum premium paying term is 5 year and maximum 35 year in case of regular and in case of single 15 yeard) Minimum sum assured is Rs 25000 or as determined by the minimum premiume) Maximum sum assured is Rs 5 00000 (entry age below 18 years and no limit for entry age 18 and above)f) Premium mode annual half yearly quarterly and monthly (by salary deduction only)g) Loan up to 90 of the surrender value of the policyh) Maturity amount = Guaranteed sum assured + Reversionary bonus
4) Reliance Special Endowment Plan -
14
This insurance policy is designed for people who wish to combine savings with extended security The unique feature of this policy is that life protection continues for five years after you have stopped the payment of premium Payment of sum assured at the end of premium paying term and extension of life cover thereafter for the full sum assured for a period of 5 years are characteristics of the policyThis plan also participates in the profits
1048729 Features -a) Entry age minimum 12 year and maximum 65 yearb) Minimum sum assured is Rs 25000c) Minimum premium paying term is 10 year and maximum 40 yeard) Unique feature of this policy is that five year life protection continues after you have stopped the payment of premiume) Tax benefit is availablef) Under this policy bonus is compounded yearlyg) Loan facility is availableh) Maturity amount = Full sum assured before maturity date +Vested bonus at the time of maturity date
15
12 B) TRADITIONAL PLANS OF BAJAJ ALLIANZ LIFE INSURANCE
I ENDOWMENT PLAN
Saving plan which offer bonuses are excellent long term plan with complete safety Our products offer additional benefits which include 4 times life cover at a little extra cost limited premium payment terms and compounded reversionary bonuses making it a very good long term investment
1 Bajaj Allianz Invest GainInvest Gain is a specially designed plan that offers a unique combination of benefits that help you develop a sound financial portfolio for your family
4 Times Life Cover at a little extra cost
Limited premium payment option available
Additional Benefits
a) Accidental Death Benefit and Disability Benefit b) Critical Illness Benefit and Hospital Cash Benefit c) Family Income Benefit In case of death or accidental total permanent disability of insured all future premiums are waived and 1 of the sum assured is paid monthly
Invest Gain Save Care Economy SP Life Time Care
Super Saver
16
2 Bajaj Allianz save Care Economy SP
A One-time payment Investment plan that provides for savings with high risk cover for 10 years and also participates in the profits of the company It offers you high risk cover with easy liquidity and high returns
a) A single premium endowment plan that participates in the profitsb) 10 year Investment planc) Benefits payable on maturityc) Loans available
17
3 Bajaj Allianz life time care
A whole life plan which provides survival benefits at the age of 80 thereby making sure you are financially secure at the time when you need it the most Additional Benefits
a) Accidental Death Cover and Disability Cover b) Critical Illness Cover and Hospital Cash Cover c) Waiver of Premium Benefit
4Bajaj Allianz Super Saver plan
Bajaj Allianz Super Saver is a regular premium endowment plan which helps you save regular amounts for a safer tomorrow It also provides you with extra benefits of Guaranteed Additions to your sum assured at the end of each policy year
18
II MONEY BACK PLAN
Money back plans are Traditional Insurance plans that provide the investor with returns at regular stages of life
CashGain
1)Bajaj Allianz Cash Gain plan
A Money back plan which guarantees 125 payout + bonuses
Quadruple life cover
5 easy payouts which give upto 125 + bonuses
Additional Benefitsa) Accidental Death Benefit and Disability Benefitb) Critical Illness Benefit and Hospital Cash Benefitc) Family Income Benefit In case of death or accidental total permanent disability of insured all future premiums are waived and 1 of the sum assured is paid monthly
19
20
13) INDUSTRY PROFILE
MEANING OF INSURANCE
Insurance may be described as a social device to reduce or eliminate risk of loss to life and property Insurance is a collective bearing of risk Insurance is a financial device to spread the risks and losses of few people among a large number of people as people prefer small fixed liability instead of big uncertain and changing liability
Insurance can be defined as a ldquolegal contract between two parties whereby one party called insurer undertakes to pay a fixed amount of money on the happening of a particular event which may be certain or uncertainrdquo The other party called insured pays in exchange a fixed sum known as premiumInsurance is desired to safeguard oneself and onersquos family against possible losses on account of risks and perils It provides financial compensation for the losses suffered due to the happening of any unforeseen events
IMPORTANCE OF INSURANCE
Insurance constitutes one of the major segments of the financial marketInsurance services play predominant role in the process of financial Intermediary Today insurance industry is one of the most growing sectors in India There is lot of potential in the Indian Insurance Industry
There are many issues which require study The scope of the study of Insurance industry of India would be very great as there are ongoing Developments in the industry after the opening of the sectorOne of the major issues is the effects on LIC after the entry of private players in the market Though market share of LIC has been affected it has improved in terms of efficiency
There are number of other hot topics like penetration of Health Insurance Rural marketing of insurance new distribution channels new product ranges insurance brokersrsquo regulation incentive scheme of development officers of LIC etc So it offers lot of scope for studying the insurance industryRight now the insurance industry has great opportunities in a country like India or China which huge population Also the penetration of insurance in India is very low in both life and non-life segment so there is lot potential to be tapped Before starting the discussion on insurance industry and related issues we have to start with the basics of insurance So first we understand what is insurance How the word lsquoinsurancersquo is different from the word lsquoassurancersquo Etc
21
HISTORY OF INSURANCE
The concept of insurance is believed to have emerged almost 4500 years ago in the ancient land of Babylonia where traders used to bear risk of the carvan by giving loans which were later repaid with interest when the goods arrived safely
The concept of insurance as we know today took shape in 1688 at a place called Lloydrsquos Coffee House in London where risk bearers used to meet to transact business This coffee house became so popular that Lloydrsquos became the one of the first modern insurance companies by the end of the eighteenth centuryMarine insurance companies came into existence by the end of the eighteenth century These companies were empowered to write fire and life insurance as well as marine The Great Fire of London in 1966 caused huge loss of property and life With a view to providing fire insurance facilitiesDr Nicholas Barbon set up in 1967 the first fire insurance company known as the Fire office
Life insurance in its modern form came to India from England in 1818 The Oriental Life Insurance Company was the first insurance company to be set up in India to help the widows of European community The insurance companies which came into existence between 1818 and 1869 treatedIndian lives as subnormal and charged an extra premium of 15 to 20 per cent The first Indian insurance company the Bombay Mutual LifeAssurance Society came into existence in 1870 to cover Indian lives at normal rates
The Insurance Act 1938 the first comprehensive legislation governing both life and non-life branches of insurance were enacted to provide strict state control over insurance business This amended insurance Act looked into investments expenditure and management of these companiesBy the mid- 1950s there were 154 Indian insurers 16 foreign insurers and 75 provident societies carrying on life insurance business in India Insurance business flourished and so did scams irregularities and dubious investment practices by scores of companies As a result the government decided to nationalize the life assurance business in India The Life InsuranceCorporation of India (LIC) was set up in 1956 The nationalization of life insurance was followed by general insurance in 1972
22
MEANING OF LIFE INSURANCE
There are three parties in a life insurance transaction the insurer the insured and the owner of the policy (policyholder) although the owner and the insured are often the same person
Another important person involved in a life insurance policy is the beneficiary The beneficiary is the person or persons who will receive the policy proceeds upon the death of the insured
Life insurance may be divided into two basic classes ndash term and permanent
Term life insurance provides for life insurance coverage for a specified term of years for a specified premium The policy does not accumulate cash value
Permanent life insurance is life insurance that remains in force until the policy matures unless the owner fails to pay the premium when due
Whole life insurance provides for a level premium and a cash value table included in the policy guaranteed by the company The primary advantages of whole life are guaranteed death benefits guaranteed cash values fixed and known annual premiums and mortality and expense charges will not reduce the cash value shown in the policy
Universal life insurance (UL) is a relatively new insurance product intended to provide permanent insurance coverage with greater flexibility in premium payment and the potential for a higher internal rate of return A universal life policy includes a cash account Premiums increase the cash account If you want insurance protection only and not a savings and investment product buy a term life insurance policy
If you want to buy a whole life universal life or other cash value policy plan to hold it for at least 15 years Canceling these policies after only a few years can more than double your life insurance costs
23
HISTORY OF LIFE INSURANCE
Risk protection has been a primary goal of humans and institutions throughout history Protecting against risk is what insurance is all aboutOver 5000 years ago in China insurance was seen as a preventative measure against piracy on the sea Piracy in fact was so prevalent that as a way of spreading the risk a number of ships would carry a portion of another ships cargo so that if one ship was captured the entire shipment would not be lostIn another part of the world nearly 4500 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
Life insurance came about a little later in ancient Rome where burial clubs were formed to cover the funeral expenses of its members as well as help survivors monetarily With Romes fall around 450 AD most of the concepts of insurance were abandoned but aspects of it did continue through the Middle Ages particularly with merchant and artisan guilds These provided forms of member insurance covering risks like fire flood theft disability death and even imprisonment
During the feudal period early forms of insurance ebbed with the decline of travel and long-distance trade But during the 14th to 16th centuries transportation commerce and insurance would again reemergeInsurance in India can be traced back to the Vedas For instance yogakshema the name of Life Insurance Corporation of Indias 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
And similar to ancient Rome burial societies were formed in the Buddhist period to help families build houses and to protect widows and children
Modern InsuranceIllegal almost everywhere else in Europe life insurance in England was vigorously promoted in the three decades following the Glorious Revolution of 1688 The type of insurance we see today owes its roots to 17th century England Lloyds of London or as they were known then Lloyds Coffee House was the location where merchants ship owners and underwriters met to discuss and transact business dealsWhile serving as a means of risk-avoidance life insurance also appealed strongly to the gambling instincts of Englands burgeoning middle classGambling was so rampant in fact that when newspapers published names of prominent people who were seriously ill bets were placed at Lloydrsquos on their anticipated dates of death Reacting against such practices 79 merchant underwriters broke away in 1769 and
24
two years later formed a ldquoNew Lloydrsquos Coffee Houserdquo that became known as the ldquoreal Lloydrsquosrdquo Making wagers on peoples deaths ceased in 1774 when parliament forbade the practice
Insurance moves to AmericaThe US insurance industry was built on the British model The year 1735 saw the birth of the first insurance company in the American colonies inCharleston SC The Presbyterian Synod of Philadelphia in 1759 sponsored the first life insurance corporation in America for the benefit of ministers and their dependents And the first life insurance policy for the general public in the United States was issued in Philadelphia on May 22 1761But it wasnt until 80 years later (after 1840) that life insurance really tookoff in a big way The key to its success was reducing the opposition from religious groups
In 1835 the infamous New York fire drew peoples 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
With the creation of the automobile public liability insurance which first made its appearance in the 1880s gained importance and acceptanceMore advancement was made to insurance during the process of industrialization In 1897 the British government passed the Workmens Compensation Act which made it mandatory for a company to insure its employees against industrial accidents
During 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 most labor 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
25
BENEFITS OF LIFE INSURANCE
1) Risk cover -Life Insurance contracts allow an individual to have a risk cover against any unfortunate event of the future
2) Tax Deduction -Under section 80C of the Income Tax Act of 1961 one can get tax deduction on premiums up to one lakh rupees Life Insurance policies thus decrease the total taxable income of an individual
3) Loans -An individual can easily access loans from different financial institutions by pledging his insurance policies
4) Retirement Planning -What had provided protection against the financial consequences of premature death may now be used to help them enjoy their retirement yearsMoreover the cash value can be used as an additional income in the old age
5) Educational Needs -Similar to retirement planning the cash values that flow from ones life insurance schemes can be utilized for educational needs of the insurer or his children
26
ROLE OF LIFE INSURANCE IN THE GROWTH OF THE ECONOMY
The Life Insurance Industry has an enviable track record among public sector units It has a Consistent profit and dividend paying record accompanied by a steady growth in its financial resources Through investments in the Government sector and socially- oriented sectors the Industry has contributed immensely to the nations development The industry is recognized as one of the largest financial Institutions in the country The ventures initiated by the industry in the areas of Mutual Fund
Housing Finance has done exceedingly well in recent years To protect the countrys foreign exchange reserves the reinsurance arrangement are so organized that maximum retention is made possible within the country while at the same time protecting interests of the policy holders
27
ROLE OF IRDA
MISSION
ldquoTo protect the interests of the policyholders to regulate promote
and ensure orderly growth of the insurance industry and for matters
connected therewith or incidental theretordquo
The Insurance Act 1938 had provided for setting up of the Controller of Insurance to act
as a strong and powerful supervisory and regulatory authority for insurance Post
nationalization the role of Controller of Insurance diminished considerably in
significance since the Government owned the insurance companies But the scenario
changed with the private and foreign companies foraying in to the insurance sector This
necessitated the need for a strong independent and autonomous Insurance Regulatory
Authority was felt As the enacting of legislation would have taken time the then
Government constituted through a Government resolution an Interim Insurance
Regulatory Authority pending the enactment of a comprehensive legislation
The Insurance Regulatory and Development Authority Act 1999 is an act to provide for
the establishment of an Authority to protect the interests of holders of insurance policies
to regulate promote and ensure orderly growth of the insurance industry and for matters
connected therewith or incidental thereto and further to amend the Insurance Act 1938
the Life Insurance Corporation Act 1956 and the General insurance Business
(Nationalization) Act 1972 to end the monopoly of the Life Insurance Corporation of
India (for life insurance business) and General Insurance Corporation and its subsidiaries
(for general insurance business) The act extends to the whole of India and will come
into force on such date as the Central Government may by notification in the Official
Gazette specify Different dates may be appointed for different provisions of this Act
28
The Act has defined certain terms some of the most important ones are as follows
Appointed day means the date on which the Authority is established under the act
Authority means the established under this Act Interim Insurance Regulatory Authority
means the Insurance Regulatory Authority set up by the Central Government through
Resolution No 17(2) 94-lns-V dated the 23rd January 1996
Words and expressions used and not defined in this Act but defined in the Insurance Act
1938 or the Life Insurance Corporation Act 1956 or the General Insurance Business
(Nationalization) Act 1972 shall have the meanings respectively assigned to them in
those Acts A new definition of Indian Insurance Company has been inserted Indian
insurance company means any insurer being a company
(a) Which is formed and registered under the Companies Act 1956
(b) in which the aggregate holdings of equity shares by a foreign company either by
itself or through its subsidiary companies or its nominees do not exceed twenty-six
percent paid up capital in such Indian insurance company
(c) Whose sole purpose is to carry on life insurance business general insurance business
or re-insurance business
29
CURRENT SCENERIO
21) CURRENT SCENERIO OF THE INSURANCE INDUSTRY
With largest number of life insurance policies in force in the world insurance happens to be a mega opportunity in India Itrsquos a business growing at the rate of 15-20 per cent annually and presently is of the order of Rs 450 billion Together with banking services it adds about 7 per cent to the countryrsquos GDP Gross premium collection is nearly 2 per cent of GDP and funds available with LIC for investment are 8 per cent of GDP
Yet nearly 80 percent of Indian population is without life insurance cover while health insurance and non-life insurance continues to be below international standards And this part of the population is also subject to weak social security and pension systems with hardly any old age income security This it is an indicator that growth potential for the insurance sector is immense A well-develop and evolved insurance sector is needed for economic development as it provides long term funds for infrastructure development and at the same time strengthens the risk taking ability It is estimated that over the next ten years India would require investments of the order of one trillion US dollar The insurance sector to some extent can enable investment in infrastructure development to sustain economic growth of the country Insurance is a federal subject in India There are two legislation that govern the sector - The Insurance Act-1938 and The IRDA Act-1999
In India insurance is generally considered as a tax-saving device instead of its other implied long term financial benefits Indian people are prone to investing in properties and gold followed by bank deposits They selectively invest in shares also but the percentage is very small Even to this day Life Insurance Corporation of India dominates India insurance sector With the entry of private sector players backed by foreign expertise Indian insurance market has become more vibrant Business is becoming increasingly vulnerable due to wide variety of risk particularly after September 11 2001 disaster in which twin tower located in the hearts of New York city were crashed by terrorist attack resulting in loss of 6000 human lives as well as financial loss to the extent of $45 billion The impact of this terrorist attack has created new horizon of risk to the business world today
However rapid changes in the global economy development of technology and e-business already gathered momentum Increased dependency on technology has originated new risks that have resulted in well-published incidents Computer hackers obtaining credit card information from visa and Power-Gen the love bug virus cyber extortion web content liability professional errors and omissions computers and other crimes and activities such as terrorism kidnapping and companyrsquos executive and extortion of money commercial liability etc have significant impact on business resulting in extreme financial loss commercial embarrassment or regulatory implications
Corporation insurancerisk managers under the circumstances have to demand increasingly complex insurance products They have to be more attentive and
30
knowledgeable about emerging risks how those risks are managed effectively and efficiently and how they could ultimately affect a companyrsquos financial situation and therefore its position in the market place In short how such risks are managed and can give to an insured a competitive advantage
In the changing times adoption of e-commerce into business models the integration of web-based communication and data transfer capabilities into the business operations and leveraging of advanced network and technology architecture for maximum benefit are the new horizon of the risks For the corporate insurancerisks managers these new exposure-cyber-risks-can lead to cyber losses widening the interpretation of what constitute insure property damage particularly as it relates to information technology and dataAll the while organizations are tremendous pressure to reduce expenses and increase profit margin and cannot afford to suffer a property loss of business interruption due to any cause (risk) How a company identifies quantifies qualifies and manages these new risks exposure in addition to the well-known tradition risks is becoming an important factor in creating shareholders value This often means changing the way Everyone in the organization have to think about risk
Insurance managers are seeing price levels (premium) continue to rise-albeit modestly-in todayrsquos primarily commercial property and reinsurance markets They are demanding that insurers improve their risk assessment and quantification offerings so that an insured may avail the benefit in cost (premium rate) on account of well-managed riskThe good news for insurance managers is that as the economy evolves insurers are increasingly matching that evaluation with new products services and capabilities due to opening up the insurance market to the private players
Insurers who are truly listening to their customers and striving to be more in tune with their needs are responding to the fast changing corporate insurance and risk management landscape They are listening to their customers They are making fresh approaches to address the new challenges faced by insured organization by designing the new products as per the needs Insurers are providing value added services to insured to protect the value created by the business
Insurers are increasingly required to develop and expand their information technology platforms to ensure that the vast amount of data they collect about their customers Insurancerisk portfolio can easily and seamlessly be transformed into valuable risk management information To help their customers insurers should make better-informed decisions They must be able to swiftly deliver this data to their customers (insured) anywhere in the world Insurer are also discovering that risk assessment have to be customized to meet policyholdersrsquo new exposures and needs The insurance industry is stepping up and addressing these challenges in several different ways
31
22) CURRENT SCENARIO OF RELIANCE LIFE INSURANCE
RLIC offers wide range of innovative life insurance products targeted at individuals and groups It offers need based products that caters to four distinct segments namely protection child retirement and investment plans RLIC is committed to emerge as a
transnational Life Insurer of global scale and standard
Reliance Life Insurance Company Limited (RLIC) is amongst the fastest growing life insurance companies in India It is also amongst the top four private sector life insurance companies in India (As on FY 2008-2009)
As on March 31 2009 RLIC has an annualized premium of Rs 30 billion with a market share of 103 It has leapfrogged on the growth path and has reached the 4 million policy mark in a short span of within 3 years RLIC has a strong distribution network of 1145 branches with more than 149000 agents
32
Insurancersquos Market Share in Comparison of Other Private company
If we look at the status of Reliance Life Insurancersquos market share in comparison of other
private company in comparison of premium earned-
If we talk the growth of Insurance industryrsquos private players in recent years the data will
reflect-
CH - 3) RESEARCH METHODOLOGY
33
RESEARCH DESIGN-
COMPARITIVE STUDY- A comparative study has been undertaken to compare the traditional Plans of Reliance Life Insurance with that of Bajaj Allianz life insurance
DATA TYPE
INTRODUCTION - Any organization whether big or small private or public needs different type of information to know its popularity I have gathered secondary data and primary data and collected information from the combination of these two data
PRIMARY DATA - Primary data collection method was decided for observing working of the company and approaching the customers directly face to face A great care was taken while collecting the primary data to answer that it is relevant accurate current and unbiased
SECONDARY DATA - Secondary data collection method was used by referring to various websites books and newspapers for collecting information regarding the project under study Secondary data consist of the information that already exists somewhere else for some another purpose
SAMPLING TECHNIQUES-
SAMPLE SIZE- A sample size of 50 was taken to be analyzed
SAMPLE LOCATION-Various sectors of Kamla Nagar Civil lines Mukherji Nagar Model Town and selected areas of Delhi
SAMPLING PROCESS - Convenient sampling was used to overcome the time and money constraints that could have been faced by us while collecting the data The customers were contacted face to face directly and also by way of telephonic conversation with them
ANALYTICAL TOOLS - The data collected were arranged accordingly and statistical tools like bar graphs and pie-charts were used to analyze and present the data
RESEARCH INSTRUMENT USED-
34
SAMPLING MEDIA - Printed questionnaires consisting several questions were asked to have an idea of customers view about Reliance Life Insurance plans followed by personal questions
FIELD WORK - Rigorous field work was undertaken to locate the interested and potential respondents to fulfill the objectives of the study
THE PRIMARY OBJECTIVEOF THE STUDY -
The primary objective of the research study is to have a detailed analysis of Reliance Life Insurance bringing in focus the future prospects of the (Anil Dhirubhai Ambani group) with relevance to the customer perception regarding the various plans and products offered by Reliance Life Insurance
31) DATA ANALYSIS AND INTERPRETATION
35
PERSONAL DETAILS
1) AGE a) 18-30b) 31-50c) 51-65
AGE NO OF RESPONDENTS PERCENTAGE
18-30 21 42
31-50 19 38
51-65 10 20
TOTAL 50 100
INTERPRETATION-The bar graph reveals that 42 of the respondents belong to the age group of 18-30 years 38 lies in the age group of 31-50 years and 20 of them lie in the age group of 51-65 years
2) OCCUPATION
4238
20
05
1015202530354045
NO
O
F
RE
SP
ON
DE
NT
S
18 to 30 31 to 50 51 to 65
AGE (in year)
AGE WISE CLASSIFICATION
36
a) Serviceb) Businessc) Professiond) Housewifee) Retired
OPTION NO OF RESPONDENTS PERCENTAGE
Service 16 32
Business 14 28
Profession 5 10
Housewife 8 16
Retired 7 14
TOTAL 50 100
INTERPRETATION-The above bar graph reveals that 32 of the total respondents were servicemen 28 of them belonged to the business class 10 were professionals 16 were housewives and 14 of the total respondents fall in the retired category
3) INCOME
32
28
10
16
14
0
5
10
15
20
25
30
35
Service Business Profession Housewife Retired
OCCUPATION
OCCUPATION WISE CLASSIFICATION
37
a) 150000-300000
b) 300000-500000
c) Above 500000
OPTION NO OF RESPONDENTS PERCENTAGE
150000-300000 24 48
300000-500000 14 28
Above 500000 12 24
TOTAL 50 100
INTERPRETATION-The above bar graph reveals that out of the total respondents 48 lie in the income group of 150000-300000 28 of the total respondents belonged to the income group of 300000-500000 and 24 lie in the income group of people earning an income of above Rs 500000pa
4828 24
01020304050
N O
OF
RE
SP
ON
DE
NT
S
150000-300000
300000-500000
ABOVE500000
INCOME (in RS)
INCOME WISE CLASSIFICATION
38
4) FAMILY MEMBERS
a) 2b) 3c) 4d) Above 4
OPTION NO OF RESPONDENT PERCENTAGE
2 11 22
3 9 18
4 24 48
Above 4 6 12
TOTAL 50 100
INTERPRETATION The above bar graph shows that 22 of the total respondents had a family of 2 members 18 of them had 3 family members 48 of them had 4 family members and 12 of them had the no of family members above 4
Q1 Where do you prefer to invest
22 18
48
120
1020304050
No
o
f re
spo
nd
ents
2 3 4 Above 4
No of family members
MEMBER WISE CLASSIFICATION
39
a) fixed deposits
b) stock
c) mutual funds
d) insurance
e) others
Option No of respondents Percentage
Fixed deposits 5 10
Stock 10 20
Mutual fund 10 20
Insurance 18 36
others 7 14
TOTAL 50 100
Interpretation The above pie chart shows that out of 50 respondents 10 preferred to invest in fixed deposits 20 in stocks 20 in mutual funds 36 in insurance and 14 in others like property gold etc
Q2 What are your priorities for investment
40
a) protecting your family against pre-mature death
b) wealth creation
c) retirement needs
d) child education and marriage
e) protect income against disability sickness or critical illness
Option No of respondents Percentage
Protecting your family against pre mature death
10 20
Wealth creation 14 28
Retirement needs 5 10
Child education and marriage 7 14
Protect income against disability sickness or critical illness
14 28
TOTAL 50 100
Interpretation The above pie chart shows that out of 50 respondents 20 of them invest for protecting their family against premature death 28 for creating wealth 10 for meeting their future retirement needs 14 for child education amp marriage and 28 for protection against disability and sickness
Q3 What is your main motive behind investing in life insurance
41
a) tax benefit
b) savings
c) risk cover
Option No of respondents Percentage
Tax benefits 27 54
Savings 5 10
Risk cover 18 36
TOTAL 50 100
Interpretation The above pie chart shows that out of the sample respondents 54 have tax benefit 10 have savings and 36 have risk cover as their main motive for making an investment in life
Q4 What kind of investment do you prefer
42
a) high risk high gain
b) low risk low gain
c) moderate
d) vary times to times
Option No of respondents Percentage
High risk high gain 8 16
Low risk low gain 5 10
Moderate 12 24
Vary times to times 25 50
TOTAL 50 100
Interpretation The above pie chart shows that out of 50 respondents 16 preferred high risk- high gain form of investment 10 preferred low risk- low gain form of investment 24 preferred moderate investment and 50 preferred varied form of investment
43
Q5Are you interested to invest in Traditional Plans
a) YES
b) NO
Option No of respondents Percentage
YES 36 72
NO 14 28
TOTAL 50 100
Interpretation The above pie chart shows that 72 of the respondents preferred to invest in Traditional Plans
44
Q6 What is your level of annual investmenta) below 20000
b) 20000-40000
c) above 40000
Option No of respondents Percentage
Below 20000 41 82
20000-40000 7 14
Above 40000 2 4
TOTAL 50 100
Interpretation The above pie chart shows that 82 of the respondents are willing to invest below Rs 20000 per annum 14 of them want to invest within Rs 20000 per annum to Rs 40000 and 4 wanted to invest over and above Rs 40000
45
Q7 What factors would you consider most important before choosing an insurance policy
a) publicity of the company
b) reputation of the company
c) quality of life advisors
d) after sales-supporting of the company
Option No of respondents Percentage
Publicity of the co 5 20
Reputation of the co 25 50
Quality of life advisors 10 10
After sale-services 10 20
TOTAL 50 100
Interpretation out of the sample respondents 20 considers publicity of the company 50 considers reputation of the company 10 considers quality of life advisors and 20 considers after sales support of the company as the most important factor for choosing an insurance company
46
Q8 Which life insurance company would you prefer the most to invest ina) reliance life insurance (RLIC)
b) Bajaj Allianz life insurance
Option No of respondents Percentage
RLIC 21 42
BAJAJ ALLIANZ 29 58
TOTAL 50 100
Interpretation Out of 50 respondents 42 preferred to invest in reliance life insurance over 58 of the respondents who prefer to invest in Bajaj Allianz life insurance
47
Q9 If reliance life insurance then which particular plan you would like to invest ina) Reliance Term Plan
b) Reliance Whole Life Plan
c) Reliance Endowment Plan
d) Reliance Special Endowment Plan
Option No of respondents Percentage
Reliance term plan 6 2858
Reliance whole life plan 3 1428
Reliance endowment plan 9 4286
Reliance special endowment plan 3 1428
TOTAL 21 100
Interpretation Out of 21 respondents 2858 preferred to invest in term plan 1428 in whole life plan 4286 in endowment plan and 1428 of them preferred to invest in special endowment plan of reliance life insurance
48
Q10 If Bajaj Allianz life insurance then which particular plan you would like to invest in
I ENDOWMENT PLAN a) Bajaj Allianz Invest Gain
b) Bajaj Allianz save Care Economy SP
c) Bajaj Allianz life time care
d) Bajaj Allianz Super Saver plan
II MONEY BACK PLAN i Bajaj Allianz Cash Gain plan
Option No of respondents Percentage
Invest gain plan 3 1035
Save care economy SP 6 2069
Life time care 7 2415
Super saver plan 3 1035
Cash gain plan 10 3446
TOTAL 29 100
Interpretation Out of 29 respondents 1035 of them plan to invest in Bajaj Allianz- Invest Gain 2069 wish to invest in Bajaj Allianz save Care Economy SP 2415 want to invest in Bajaj Allianz life time care 1035 in Bajaj Allianz Super Saver plan and 3446 prefer to invest in Bajaj Allianz Cash Gain plan
49
32) SIGNIFICANCE OF STUDY
Life insurance is one of the most rapidly growing sectors in India The main reason
behind the growth can attributed to the high population density improving economical
condition improving education level and improving awareness Due to these factors there
is still huge scope for growth in this sector Like any other business when the
opportunities are present everybody tends to enter the industries This growth hence
fetches the new competitors as well as new strategies from existing players To sustain in
any competitive industry the organization must adapt to existing strategies and adopt
new ones This study will focus on the analysis of Reliance Life Insurance in comparison
with the present scenario of Bajaj Allianz Life Insurance with respect to the Traditional
Plans of both the companyrsquos This will mainly cover the following aspects
To know about the awareness and popularity of various Traditional Plans offered
by Reliance Life Insurance and Bajaj Allianz Life Insurance
How Reliance Life Insurance can develop and sustain a good distribution
network
These will provide it benefit both in terms of better market coverage as well as better
penetration
50
33) SCOPE OF THE STUDY
1) This helps in finding out vast potential of insurance company
2) The study was conducted in National Capital Region (NCR) only
3) The number of respondents to be surveyed can be improved
4) This study was conducted by comparing the performances amp products of three private
amp government insurance players in insurance industry
5) This study was conducted to analyze the market stand of Reliance life insurance
Company limited and Bajaj Allianz Life Insurance Company Limited of India insurance
companies
6) This study is done to eliminate all the myths which people have in their minds
regarding Insurance Sector
51
34) OBJECTIVES
To have a detailed understanding of Reliance Life Insurance and Bajaj Allianz Life Insurance
To find out various reasons considered while investing in policies
To get knowledge about the market exposure and future prospects about Reliance Life Insurance
To know the perception of the consumers about the life insurance
To analyze the Traditional plans of Reliance Life Insurance and compare it with Bajaj Allianz
To know about the brand awareness of Reliance Life Insurance its customer preferences over Bajaj Allianz in the market
To study a proper knowledge about the life insurance industry
To understand the consumer choice while investing in policies
52
CHAPTER 4
DISCUSSION AND FINDINGS OF THE STUDY
FINDINGS OF THE STUDY RECOMMENDATION AND SUGGESTIONS CONCLUSION LIMITATIONS BIBLIOGRAPHY ANNEXUREQUESTIONNAIRE
53
41) FINDINGS OF THE STUDY
1) The survey reveals that still a large proportion of population is interested to invest in other forms of investment other than insurance as still most of them are unaware about the importance of insurance in their life
2) Basically people make varied form of investment for creating wealth to protect their families against pre-mature death and to protect income against disability sickness or critical illness
3) The main motive of the individuals investing is receives benefits US 1010D People generally consider insurance as a tax saving device
4) Mostly people prefer time to time form of investment as they are not willing to take high degree of risk
5) 72 of the respondents are preferred to invest in Traditional Plans
6) Most of the people prefer to make an annual investment up to a maximum of Rs20 000 per annum
7) When the product is like life insurance reputation of the company publicity of the company amp after sale services of the company matters a lot This means that people would choose that insurance company only where the quality of life advisors is satisfactory
8) Most people prefer to invest in Bajaj Allianz Life Insurance as compared to making an investment in Reliance Life Insurance
9) The most preferable Traditional plan of Reliance Life Insurance is Endowment Plan
10) The most preferable plan of Bajaj Allianz Life Insurance co is Cash Gain Plan
54
42) SUGGESTIONS amp RECOMMENDATIONS
Based on the observations of the study some suggestions for the organization are made as
follows
1) Quality of advisors is also as important as the quantity Thus company should go
mainly for qualified professionals
2) Company should increase its budget on publicity so that awareness can be increased
3) Clarity and transparency should be provided to the customer regarding various
products
4) Training sessions should be planned in advance so that schedule can be provided to
the advisor in advance
5) Apart from the Brand Positioning in urban area a strategy should be adopted by
Reliance to make its brand also near to middle level or high aspirant people because they
are the main source of the business in India
6) Awareness Camp to the sub urban area should be focused by Reliance
7) Some innovative technique or product is required in order to attract the consumer
43) LITERATURE REVIEW
55
1) Robi Elenekave has explained in detail why various retirement plans and pension plans donrsquot give the desired returns The main difficulty is the use of incorrect method for calculations done to find out the return on investment This is primarily due to wrong assumptions The study provides information about the various precautions which need to be considered before planning so that the desired results can be achieved
2) Another paper provides insight about how various financial sectors invest in bond market The study was how the different players investment different instruments according to the risk appetite and desired rate of return The study shows that life insurance sector mainly invests in government bond which are low return and low risk instrument The investment in government bond it shows that life insurance companies are more conservative in investment
3) K Subhash has presented the history of Indiarsquos life insurance industry in three stages before independence after independence and post liberalization which not only provides information but also help in analyzing the impact of these major changes The authors have also discussed the huge potential which exists in the rural India The insurance company must realize the importance of rural sector because the future lies there The author commented about the increasing share of private player in the existing market This confirms the availability of opportunity in this sector The paper also provides the importance of professional and focused approach which was given no importance
4) Tapen Sinha has discussed the various challenges and opportunities in the insurance market One of the very important factors which have been discussed in the study is the importance of developing new and better products As the scenario changes the need of an individual also changes so any organization must understand and fulfill these needs The new product development requires constant research so organization must also focus on it
5) Roger G Ibbotson discusses how financial planners and advisors have recently started to recognize that human capital must be taken into account when building optimal portfolios for individual investors Any investorrsquos human capital has a unique mortality risk However life insurance in its forms can hedge against this mortality risk Thus human capital affects both the optimal asset allocation and the optimal demand for life insurance This paper provides a unified framework based on human capital in order to enable individual investors to make both decisions jointly
6) Rakesh Niraj study tells how the flow of information in any organization is important For any organization to grow the flow of information must be good both upwards as well as ownwards The proper flow of information will also ensure proper flow of good and services from organization to customer and proper flow of information from customer to organization The information from customers will help the organization in providing better goods and services to the customer For the above purpose organization must ensure good channel partner who can provide the organization with correct feedback Hence it becomes very important for any organization to acquire good channel partners
56
7) Stephen P Robbins has discussed how group dynamics works in any organization The success of any organization depends on the success of its various teams and how these teams work together The book provides various techniques which can be used by any organization to get result from the team effort The conflict resolution is a major task in any group Various techniques which the organization can use in conflict resolution are also discussed Another important aspect covered is the importance of leadership in the organization The various forms of leadership have been discussed and the kinds of leadership which can be effective in particular situations are also discussed
8) R Wayne Mondy has discussed the importance of training and development in any organization The training provides skills to perform the current job where as the development involve learning beyond present need The various type of training are discussed which can be used according to the requirement Training and development are not only important for better performance of an individual but it also gives satisfaction The major factors which influence training and development are found to be management support commitment of trainee and trainer complexity of the organization The process of developing good training plans is also provided In another part author has discussed the importance of right man for right job The compensation strategies are also given which are very crucial for ant industry
9) Philip Kotler has discussed the importance of channels partners Better the channel partners better will be the delivery model Detailed discussion about how to design the channel structure so that all the requirements could be fulfilled is provided The various issues faced by the organization while managing the channels are also given When an organization has more than one channel it becomes very important that all the channels should be integrated in such a way that the organization get the best out of all At times due to the conflicting benefit of the different channels the conflict arise so various strategies to manage these issues is also discussed in the chapter
10) Michael J Etzel has written about the marketing of services The marketing of services is different from the goods because of the characteristic of service like intangibility inseparability heterogeneity etc Brief about pricing strategies is also given in case of services The authors have also given the impact of technological development on the services marketing The author has also given the importance of brand and after sales support in case of services as perception of the customers plays an important role In other part of the book the authors has described the importance of distribution channels and designing of the same A channel partner should be consider as partner according to discussion The legal complications associated with channels are also discussed These complications are necessary to take into the consideration while managing the channels The conflicting interest of channels both horizontally and vertically are also taken into the consideration
57
11) Boone has discussed about the importance of personal financial planning The concept of time value of money has also been elaborated The importance of creating and implementing budget is given under money management The other important concepts for financial planning like credit management and understanding taxes are also explained In one section the authors have discussed the importance of investment and what should be the major considerations while making any investment The considerations include the risk associated with the investment return on the investment etc The importance and benefits of life insurance has also been given The discussion also includes various legal aspects associated with life insurance The overview of retirement planning is also given which includes importance and benefit of retirement planning Various tools for proper retirement planning are also discussed
58
44) CONCLUSION
1) The customers are very much sensitive towards their investment They would like to invest only in that insurance company which enjoys good public image along with quality good services
2) The result of the survey conducted shows that Bajaj Allianz Life Insurance is the leader in life insurance industry but Reliance Life Insurance and other private players are giving it a close competition
3) The motive of the people behind investing in life insurance is the tax benefits that they would receive under sec 80C and 1010D
4) In Life Insurance industry the after sales support of the company is as important as the quality of life advisors
59
45) LIMITATIONS
There were some limitations faced during the study as discussed below
Since the study was taken for two months so there was a constraint of time and effort
The study was limited only to some of the Delhi regions so the results may be biased
Questionnaire was given to 125 people however only 50 responded to it which is very small for such type of study
The biasness of consumer or responses error cannot be eliminated
Most of the people are not aware about the Importance and the necessity of insurance in their life
Adverse perception of the people towards insurance sector- People consider insurance as a tax saving device
Lack of awareness about the earning opportunity in the insurance sector
60
46) BIBLIOGRAPHY
wwwreliancelifeinsurancecom
wwwadagroupcom
wwwirdacom
wwwbajajallianzlifeinsurancecom
wwwallianzbajajcom
47) ANNEXURE
61
QUESTIONNAIRE
A comparative analysis of consumer perception regarding Traditional plans of Reliance Life Insurance with that of Bajaj Allianz Life Insurance
NAME ___________________________
PERSONAL DETAILS
1) AGE_________________
1) OCCUPATION______________
2) INCOME___________________
3) FAMILY MEMBERS_________
Q1 Where do you prefer to investa) Fixed deposits b) Stock c) Mutual funds d) Insurance e) Others
Q2 What are your priorities for investmenta) Protecting your family against pre-mature death b) Wealth creation c) Retirement needs d) Child education and marriage e) Protect income against disability sickness or critical illness
Q3 What is your main motive behind investing in life insurancea) Tax benefit b) Savings c) Risk cover
Q4 What kind of investment do you prefera) High risk high gain b) Low risk low gain c) Moderate d) Vary times to times
62
Q5Are you interested to invest in Traditional Plansa) Yes b) No
Q6 What is your level of annual investmenta) below 20000 b) 20000-40000 c) above 40000
Q7 What factors would you consider most important before choosing an insurance company
a) publicity of the company b) reputation of the company c) quality of life advisors d) after sales-supporting of the company
Q8 Which life insurance company would you prefer the most to invest ina) Reliance life insurance b) Bajaj Allianz life insurance
Q9 If reliance life insurance then which particular plan you would like to invest ina) Reliance Term Plan b) Reliance Whole Life Plan c) Reliance Endowment Plan d) Reliance Special Endowment Plan
Q10 If Bajaj Allianz life insurance then which particular plan you would like to invest in
I ENDOWMENT PLAN
a) Bajaj Allianz Invest Gain
b) Bajaj Allianz save Care Economy SP
c) Bajaj Allianz life time care
d) Bajaj Allianz Super Saver plan
II MONEY BACK PLAN
a) Bajaj Allianz Cash Gain plan
63
64
- COMPANY PROFILE
- ABOUT RELIANCE LIFE INSURANCE
- HISTORY
- Reliance Capital Limited announced the launch of its life insurance business on February 1 2006 This was after obtaining the required regulatory approvals from the Registrar Of Companies and the Insurance Regulatory and Development Authority
- It was in August 2005 that the ball was set rolling when Reliance Capital Limited the financial arm of Reliance ndash Anil Dhirubhai Ambani Group (ADAG) ndash announced the requisition of 100 shareholding in AMP Sanmar Life Insurance Company Limited and the formal transfer of shares took place in October 2005 The company will issue all policy contracts under the Reliance Life Insurance Company limited name All the existing policy contracts also stand transferred to the Reliance Life Insurance entity with all the original contractual terms and commitments intact
- CORE VALUES
- Reliance Life Insurance Company Limited has some core values which are listed as follows
- Vision bull To be the first choice insurer for customers bull To be the preferred employer for staff in the insurance industry bull To be the number one insurer for creating shareholder value
- Mission As a responsible customer focused market leader we will strive to understand the insurance needs of the consumers and translate it into affordable products that deliver value for money
- 12) TRADITIONAL PLANS OF THE COMPANY
- 12A )TRADITIONAL PLAN OF RELIANCE LIFE INSURANCE-
- Life insurance products are designed to suit the requirements of customers Fundamentally the product provide for
- In every product to a certain degree risk cover is imperative for it to fall under the category of insurance Based on the coverage of the product the premiums are calculated and the customer pays accordingly In order to suggest the right product it is essential for an agent to understand the requirements of the customer well
- The traditional plans of the company have the following features-
- Fixed Tenure
- Potential for better returns
- Transparency
- Flexibility in investment
- Flexibility to invest more
- Flexibility to skip the premium
- Flexibility to choose the cover
- High liquidity
- Age term and sum assured decide the amount of premium
- Top- ups and switches are not allowed
- Reliance Life Insurance Company Limited has offered 9
- 1) Reliance term plan-
- 2) Reliance Whole Life Plan -
- 3) Reliance Endowment Plan -
- 4) Reliance Special Endowment Plan -
- 13) INDUSTRY PROFILE
- MEANING OF INSURANCE
- Insurance may be described as a social device to reduce or eliminate risk of loss to life and property Insurance is a collective bearing of risk Insurance is a financial device to spread the risks and losses of few people among a large number of people as people prefer small fixed liability instead of big uncertain and changing liability
- Insurance can be defined as a ldquolegal contract between two parties whereby one party called insurer undertakes to pay a fixed amount of money on the happening of a particular event which may be certain or uncertainrdquo The other party called insured pays in exchange a fixed sum known as premium
- Insurance is desired to safeguard oneself and onersquos family against possible losses on account of risks and perils It provides financial compensation for the losses suffered due to the happening of any unforeseen events
- IMPORTANCE OF INSURANCE
- Insurance services play predominant role in the process of financial Intermediary Today insurance industry is one of the most growing sectors in India There is lot of potential in the Indian Insurance Industry
- There are many issues which require study The scope of the study of Insurance industry of India would be very great as there are ongoing Developments in the industry after the opening of the sector
- Right now the insurance industry has great opportunities in a country like India or China which huge population Also the penetration of insurance in India is very low in both life and non-life segment so there is lot potential to be tapped Before starting the discussion on insurance industry and related issues we have to start with the basics of insurance So first we understand what is insurance How the word lsquoinsurancersquo is different from the word lsquoassurancersquo Etc
- HISTORY OF INSURANCE
- The concept of insurance is believed to have emerged almost 4500 years ago in the ancient land of Babylonia where traders used to bear risk of the carvan by giving loans which were later repaid with interest when the goods arrived safely
- The concept of insurance as we know today took shape in 1688 at a place called Lloydrsquos Coffee House in London where risk bearers used to meet to transact business This coffee house became so popular that Lloydrsquos became the one of the first modern insurance companies by the end of the eighteenth century
- Marine insurance companies came into existence by the end of the eighteenth century These companies were empowered to write fire and life insurance as well as marine The Great Fire of London in 1966 caused huge loss of property and life With a view to providing fire insurance facilities
- Dr Nicholas Barbon set up in 1967 the first fire insurance company known as the Fire office
- Life insurance in its modern form came to India from England in 1818 The Oriental Life Insurance Company was the first insurance company to be set up in India to help the widows of European community The insurance companies which came into existence between 1818 and 1869 treated
- Indian lives as subnormal and charged an extra premium of 15 to 20 per cent The first Indian insurance company the Bombay Mutual Life
- Assurance Society came into existence in 1870 to cover Indian lives at normal rates
- The Insurance Act 1938 the first comprehensive legislation governing both life and non-life branches of insurance were enacted to provide strict state control over insurance business This amended insurance Act looked into investments expenditure and management of these companies
- By the mid- 1950s there were 154 Indian insurers 16 foreign insurers and 75 provident societies carrying on life insurance business in India Insurance business flourished and so did scams irregularities and dubious investment practices by scores of companies As a result the government decided to nationalize the life assurance business in India The Life Insurance
- Corporation of India (LIC) was set up in 1956 The nationalization of life insurance was followed by general insurance in 1972
- MEANING OF LIFE INSURANCE
- There are three parties in a life insurance transaction the insurer the insured and the owner of the policy (policyholder) although the owner and the insured are often the same person
- Another important person involved in a life insurance policy is the beneficiary The beneficiary is the person or persons who will receive the policy proceeds upon the death of the insured
- Life insurance may be divided into two basic classes ndash term and permanent
- HISTORY OF LIFE INSURANCE
- Risk protection has been a primary goal of humans and institutions throughout history Protecting against risk is what insurance is all about
- Over 5000 years ago in China insurance was seen as a preventative measure against piracy on the sea Piracy in fact was so prevalent that as a way of spreading the risk a number of ships would carry a portion of another ships cargo so that if one ship was captured the entire shipment would not be lost
- In another part of the world nearly 4500 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
- Life insurance came about a little later in ancient Rome where burial clubs were formed to cover the funeral expenses of its members as well as help survivors monetarily With Romes fall around 450 AD most of the concepts of insurance were abandoned but aspects of it did continue through the Middle Ages particularly with merchant and artisan guilds These provided forms of member insurance covering risks like fire flood theft disability death and even imprisonment
- During the feudal period early forms of insurance ebbed with the decline of travel and long-distance trade But during the 14th to 16th centuries transportation commerce and insurance would again reemerge
- And similar to ancient Rome burial societies were formed in the Buddhist period to help families build houses and to protect widows and children
- Modern Insurance
- Illegal almost everywhere else in Europe life insurance in England was vigorously promoted in the three decades following the Glorious Revolution of 1688 The type of insurance we see today owes its roots to 17th century England Lloyds of London or as they were known then Lloyds Coffee House was the location where merchants ship owners and underwriters met to discuss and transact business deals
- While serving as a means of risk-avoidance life insurance also appealed strongly to the gambling instincts of Englands burgeoning middle class
- Gambling was so rampant in fact that when newspapers published names of prominent people who were seriously ill bets were placed at Lloydrsquos on their anticipated dates of death Reacting against such practices 79 merchant underwriters broke away in 1769 and two years later formed a ldquoNew Lloydrsquos Coffee Houserdquo that became known as the ldquoreal Lloydrsquosrdquo Making wagers on peoples deaths ceased in 1774 when parliament forbade the practice
- Insurance moves to America
- The US insurance industry was built on the British model The year 1735 saw the birth of the first insurance company in the American colonies in
- Charleston SC The Presbyterian Synod of Philadelphia in 1759 sponsored the first life insurance corporation in America for the benefit of ministers and their dependents And the first life insurance policy for the general public in the United States was issued in Philadelphia on May 22 1761
- But it wasnt until 80 years later (after 1840) that life insurance really tookoff in a big way The key to its success was reducing the opposition from religious groups
- In 1835 the infamous New York fire drew peoples 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
- With the creation of the automobile public liability insurance which first made its appearance in the 1880s gained importance and acceptance
- More advancement was made to insurance during the process of industrialization In 1897 the British government passed the Workmens Compensation Act which made it mandatory for a company to insure its employees against industrial accidents
- During 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 most labor 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
- BENEFITS OF LIFE INSURANCE
- 1) Risk cover -Life Insurance contracts allow an individual to have a risk cover against any unfortunate event of the future
- 2) Tax Deduction -Under section 80C of the Income Tax Act of 1961 one can get tax deduction on premiums up to one lakh rupees Life Insurance policies thus decrease the total taxable income of an individual
- 3) Loans -An individual can easily access loans from different financial institutions by pledging his insurance policies
- 4) Retirement Planning -What had provided protection against the financial consequences of premature death may now be used to help them enjoy their retirement years
- 5) Educational Needs -Similar to retirement planning the cash values that flow from ones life insurance schemes can be utilized for educational needs of the insurer or his children
- The Life Insurance Industry has an enviable track record among public sector units It has a Consistent profit and dividend paying record accompanied by a steady growth in its financial resources Through investments in the Government sector and socially- oriented sectors the Industry has contributed immensely to the nations development The industry is recognized as one of the largest financial Institutions in the country The ventures initiated by the industry in the areas of Mutual Fund
- Housing Finance has done exceedingly well in recent years To protect the countrys foreign exchange reserves the reinsurance arrangement are so organized that maximum retention is made possible within the country while at the same time protecting interests of the policy holders
- 22) CURRENT SCENARIO OF RELIANCE LIFE INSURANCE
- RLIC offers wide range of innovative life insurance products targeted at individuals and groups It offers need based products that caters to four distinct segments namely protection child retirement and investment plans RLIC is committed to emerge as a transnational Life Insurer of global scale and standard
- CH - 3) RESEARCH METHODOLOGY
- RESEARCH DESIGN-
- SAMPLING TECHNIQUES-
- THE PRIMARY OBJECTIVEOF THE STUDY-
- 34) OBJECTIVES
- 7) Some innovative technique or product is required in order to attract the consumer
- 45) LIMITATIONS
- 46) BIBLIOGRAPHY
-
HISTORY
7
Reliance Capital Limited announced the launch of its life insurance business on February 1 2006 This was after obtaining the required regulatory approvals from the Registrar Of Companies and the Insurance Regulatory and Development Authority
It was in August 2005 that the ball was set rolling when Reliance Capital Limited the financial arm of Reliance ndash Anil Dhirubhai Ambani Group (ADAG) ndash announced the requisition of 100 shareholding in AMP Sanmar Life Insurance Company Limited and the formal transfer of shares took place in October 2005 The company will issue all policy contracts under the Reliance Life Insurance Company limited name All the existing policy contracts also stand transferred to the Reliance Life Insurance entity with all the original contractual terms and commitments intact
A Reliance Capital company
Reliance started from scratch only to become Indiarsquos
largest private sector company in ~40 years
1966 1971-72 1977 1985 1992 1993
Birth of Reliance ndash
First Textile Mill at Naroda
Birth of Reliance ndash
First Textile Mill at Naroda
Launch of lsquoOnly Vimalrsquo brand
Launch of lsquoOnly Vimalrsquo brand
Sales Cross 4000 CrBecomes Largestprivate sector Co inIndia
Sales Cross 4000 CrBecomes Largestprivate sector Co inIndia
Launch of 1st
IPO for general public- start of a
trend
Launch of 1st
IPO for general public- start of a
trend
Total Assets cross 1000 Cr
Total Assets cross 1000 Cr
Twin IPOs receive 1million applications
Twin IPOs receive 1million applications
The Story of Growth First corporate in Asia to issues
50 and 100 yrs bond in US debt market
First corporate in Asia to issues
50 and 100 yrs bond in US debt market
1997 1998
Total assetscross 35000 CrRevenues cross
14000 Cr
Total assetscross 35000 CrRevenues cross
14000 Cr
8
A Reliance Capital company
2000 2000 2001 2003 2005 2006-07
Group Profits cross 2500 Cr
Revenues cross 20000 Cr
Total Assets cross 50000 Cr
Group Profits cross 2500 Cr
Revenues cross 20000 Cr
Total Assets cross 50000 Cr
Reliance Communication plans announced
Reliance Communication plans announced
Reliance Life Insurance rank 6th at 930 Cr
Reliance Life Insurance rank 6th at 930 Cr
Group revenues cross 60000 Cr
Largest Business group
in India
Group revenues cross 60000 Cr
Largest Business group
in India
Controlling stake in BSES (Reliance
Energy)Largest mobile
services co in India
Controlling stake in BSES (Reliance
Energy)Largest mobile
services co in India
ADA Group formedAMP Sanmar acquired and renamed Reliance
Life Insurance
ADA Group formedAMP Sanmar acquired and renamed Reliance
Life Insurance
And the journeyBecame the 1st
company to cross 1 million policy mark in 2 years of operations
Became the 1st
company to cross 1 million policy mark in 2 years of operations
Sep 2007 2007
Reliance became only the second National Insurance player to get ISO 9001-2000
Reliance became only the second National Insurance player to get ISO 9001-2000
A Reliance Capital company
Be the Change
2008 2008 2008 2007-08 2008-09
Reliance MF becomes 1st
AMC to cross
100000 Cr
Reliance MF becomes 1st
AMC to cross
100000 Cr
RCOM crosses 50 million customers
RCOM crosses 50 million customers
A total of more than 2000 Branches on anvil in the fiscal year
A total of more than 2000 Branches on anvil in the fiscal year
Continueshellip
RLIC jumps to 4th position
with 2750 Cr
RLIC jumps to 4th position
with 2750 Cr
Crosses 2million policies
Crosses 2million policies
9
SWOT ANALYSIS
STRENGTHS
Dedicated Employees Well Efficient Management Strong and popular brand name Adaptability to changes Goodwill of the company Transparency in service
WEAKNESS
Lack of good services
Lack of awareness about insurance among people
Less coverage in Rural Areas
Lack of credibility among the people because Reliance life insurance being a
private player
OPPORTUNITIES
Fast growing economy
Increasing per ndashcapita income in India
Saving behavior
High growth of Traditional industry
THREATS
Arrival of new entrants in the insurance industry
Cut throat competition within the industry
10
CORE VALUES
Reliance Life Insurance Company Limited has some core values which are listed as follows
1) Result Oriented2) Performance Driven3) Customer Focused4) Learning and Development Oriented5) Employee Centric6) Informal and Fun
1 B COMPANY PROFILE OF BAJAJ ALLIANZ LIFE INSURANCE
11
Bajaj Allianz Life Insurance Company limited is a joint venture between two leading conglomerates Bajaj Auto limited and Allianz AG company whose total asset value is of Rs 5900000 cr Bajaj whose wealth as of now is Rs 8000 cr group in India 55 years of experience 4th largest group in the world Above 15000 employees largest 2 amp 3 wheeler manufacture in India Allianz established in 1890 who has 115 years of experience in financial year
Bajaj Auto is one of the most trusted name is Indian auto for over 55 years At Bajaj Allianz customer delight is our guiding principle Ensuring world-class solutions by offering customized products with transparent benefits supported by best technology is our business philosophy
Notwithstanding the recession and a volatile stock market Bajaj Allianz life insurance posted a profit of Rs 45 cr for financial year 2009 against a loss of Rs 16 cr in the previous year
The company new business premium fell to Rs 4491 cr in the year against Rs 6674 cr recorded in the last year
We have been able to make a profit of profit of Rs 45 cr even in these difficult times Our new business premium declined by 30 to Rs 4491 cr because the stock market declined and we didnrsquot open any new office in FY 09rdquo Bajaj Allianz country manager and Bajaj Allianz life insurance CEO kamesh Goyal said
Bajaj Allianz Life Insurance has around 1200 offices and the company would not increase the number this year too Goyal said
The companyrsquos renewal premium grew by more than 100 to Rs 6133 cr in the 2008-2009 as compared to Rs 3051 cr in the previous fiscal year he saidIn the year Bajaj Allianz life insurance issued 29 lakh policies which were the second largest in the industry
Vision bull To be the first choice insurer for customers bull To be the preferred employer for staff in the insurance industry bull To be the number one insurer for creating shareholder value
MissionAs a responsible customer focused market leader we will strive to understand the insurance needs of the consumers and translate it into affordable products that deliver value for money
12) TRADITIONAL PLANS OF THE COMPANY
12
12A )TRADITIONAL PLAN OF RELIANCE LIFE INSURANCE -
Life insurance products are designed to suit the requirements of customers Fundamentally the product provide for
Risk cover
Investment
Health cover
In every product to a certain degree risk cover is imperative for it to fall under the category of insurance Based on the coverage of the product the premiums are calculated and the customer pays accordingly In order to suggest the right product it is essential for an agent to understand the requirements of the customer well
The traditional plans of the company have the following features- Fixed Tenure Potential for better returns Transparency Flexibility in investment Flexibility to invest more Flexibility to skip the premium Flexibility to choose the cover High liquidity Age term and sum assured decide the amount of premium Top- ups and switches are not allowed
Reliance Life Insurance Company Limited has offered 9Traditional plans to the customers which are listed as follows1) Reliance Term Plan2) Reliance Whole Life Plan3) Reliance Endowment Plan4) Reliance Special Endowment Plan5) Reliance Cash Flow Plan6) Reliance Credit Guardian Plan7) Reliance Special Credit Guardian PlanEach of the above traditional plans is discussed as follows
1) Reliance term plan-This insurance policy is designed for those who only want life cover for the protection of their family and do not wish to save for themselves It can also be useful to business firms that wish to provide financial security to their business against the sudden loss of partners or valuable manpower Since there is no saving element or bonus provision the premium is very lowHence this is a high-risk plan with a low premium
13
1048729 Features -a) Purely a term planb) Entry age minimum 18 years and maximum 65 yearc) Maximum premium paying term is 30 yeard) Loan facility NAe) Maturity amount = Sum assured
2) Reliance Whole Life Plan -This insurance policy is designed for people who do not wish to avail of any benefits themselves but wish to create an immediate estate to protect their family by availing of insurance cover on their life at a very low cost
1048729 Features -a) It is a whole life insurance policy with profitsb) Low cost life coverc) Maturity age is 85 year or 99 years last birthday as chosend) Maturity amount = Sum assured + Vested bonuse) Tax benefit is available
3) Reliance Endowment Plan -Reliance Life Insurancersquos Reliance Endowment Plan is the key to all your financial needs It is an inexpensive and easy way to protect you your family or your businessIn a nutshell this plan will keep you financially prepared for all the special occasions in your life - your daughterrsquos wedding your childrsquos university education or even a new office for your business - by eliminating the burden that a shortage of money createsIn the event of your untimely death Reliance Endowment Plan will also assist your loved ones through this difficult time by the financial support that it providesReliance Endowment Plan also gives you the additional benefit of participating in the companyrsquos profits which you will receive at the end of the policy period
1048729 Features -a) Entry age minimum is 5 year and maximum 65 yearb) Maturity age minimum is 18 year and maximum 75 yearc) Minimum premium paying term is 5 year and maximum 35 year in case of regular and in case of single 15 yeard) Minimum sum assured is Rs 25000 or as determined by the minimum premiume) Maximum sum assured is Rs 5 00000 (entry age below 18 years and no limit for entry age 18 and above)f) Premium mode annual half yearly quarterly and monthly (by salary deduction only)g) Loan up to 90 of the surrender value of the policyh) Maturity amount = Guaranteed sum assured + Reversionary bonus
4) Reliance Special Endowment Plan -
14
This insurance policy is designed for people who wish to combine savings with extended security The unique feature of this policy is that life protection continues for five years after you have stopped the payment of premium Payment of sum assured at the end of premium paying term and extension of life cover thereafter for the full sum assured for a period of 5 years are characteristics of the policyThis plan also participates in the profits
1048729 Features -a) Entry age minimum 12 year and maximum 65 yearb) Minimum sum assured is Rs 25000c) Minimum premium paying term is 10 year and maximum 40 yeard) Unique feature of this policy is that five year life protection continues after you have stopped the payment of premiume) Tax benefit is availablef) Under this policy bonus is compounded yearlyg) Loan facility is availableh) Maturity amount = Full sum assured before maturity date +Vested bonus at the time of maturity date
15
12 B) TRADITIONAL PLANS OF BAJAJ ALLIANZ LIFE INSURANCE
I ENDOWMENT PLAN
Saving plan which offer bonuses are excellent long term plan with complete safety Our products offer additional benefits which include 4 times life cover at a little extra cost limited premium payment terms and compounded reversionary bonuses making it a very good long term investment
1 Bajaj Allianz Invest GainInvest Gain is a specially designed plan that offers a unique combination of benefits that help you develop a sound financial portfolio for your family
4 Times Life Cover at a little extra cost
Limited premium payment option available
Additional Benefits
a) Accidental Death Benefit and Disability Benefit b) Critical Illness Benefit and Hospital Cash Benefit c) Family Income Benefit In case of death or accidental total permanent disability of insured all future premiums are waived and 1 of the sum assured is paid monthly
Invest Gain Save Care Economy SP Life Time Care
Super Saver
16
2 Bajaj Allianz save Care Economy SP
A One-time payment Investment plan that provides for savings with high risk cover for 10 years and also participates in the profits of the company It offers you high risk cover with easy liquidity and high returns
a) A single premium endowment plan that participates in the profitsb) 10 year Investment planc) Benefits payable on maturityc) Loans available
17
3 Bajaj Allianz life time care
A whole life plan which provides survival benefits at the age of 80 thereby making sure you are financially secure at the time when you need it the most Additional Benefits
a) Accidental Death Cover and Disability Cover b) Critical Illness Cover and Hospital Cash Cover c) Waiver of Premium Benefit
4Bajaj Allianz Super Saver plan
Bajaj Allianz Super Saver is a regular premium endowment plan which helps you save regular amounts for a safer tomorrow It also provides you with extra benefits of Guaranteed Additions to your sum assured at the end of each policy year
18
II MONEY BACK PLAN
Money back plans are Traditional Insurance plans that provide the investor with returns at regular stages of life
CashGain
1)Bajaj Allianz Cash Gain plan
A Money back plan which guarantees 125 payout + bonuses
Quadruple life cover
5 easy payouts which give upto 125 + bonuses
Additional Benefitsa) Accidental Death Benefit and Disability Benefitb) Critical Illness Benefit and Hospital Cash Benefitc) Family Income Benefit In case of death or accidental total permanent disability of insured all future premiums are waived and 1 of the sum assured is paid monthly
19
20
13) INDUSTRY PROFILE
MEANING OF INSURANCE
Insurance may be described as a social device to reduce or eliminate risk of loss to life and property Insurance is a collective bearing of risk Insurance is a financial device to spread the risks and losses of few people among a large number of people as people prefer small fixed liability instead of big uncertain and changing liability
Insurance can be defined as a ldquolegal contract between two parties whereby one party called insurer undertakes to pay a fixed amount of money on the happening of a particular event which may be certain or uncertainrdquo The other party called insured pays in exchange a fixed sum known as premiumInsurance is desired to safeguard oneself and onersquos family against possible losses on account of risks and perils It provides financial compensation for the losses suffered due to the happening of any unforeseen events
IMPORTANCE OF INSURANCE
Insurance constitutes one of the major segments of the financial marketInsurance services play predominant role in the process of financial Intermediary Today insurance industry is one of the most growing sectors in India There is lot of potential in the Indian Insurance Industry
There are many issues which require study The scope of the study of Insurance industry of India would be very great as there are ongoing Developments in the industry after the opening of the sectorOne of the major issues is the effects on LIC after the entry of private players in the market Though market share of LIC has been affected it has improved in terms of efficiency
There are number of other hot topics like penetration of Health Insurance Rural marketing of insurance new distribution channels new product ranges insurance brokersrsquo regulation incentive scheme of development officers of LIC etc So it offers lot of scope for studying the insurance industryRight now the insurance industry has great opportunities in a country like India or China which huge population Also the penetration of insurance in India is very low in both life and non-life segment so there is lot potential to be tapped Before starting the discussion on insurance industry and related issues we have to start with the basics of insurance So first we understand what is insurance How the word lsquoinsurancersquo is different from the word lsquoassurancersquo Etc
21
HISTORY OF INSURANCE
The concept of insurance is believed to have emerged almost 4500 years ago in the ancient land of Babylonia where traders used to bear risk of the carvan by giving loans which were later repaid with interest when the goods arrived safely
The concept of insurance as we know today took shape in 1688 at a place called Lloydrsquos Coffee House in London where risk bearers used to meet to transact business This coffee house became so popular that Lloydrsquos became the one of the first modern insurance companies by the end of the eighteenth centuryMarine insurance companies came into existence by the end of the eighteenth century These companies were empowered to write fire and life insurance as well as marine The Great Fire of London in 1966 caused huge loss of property and life With a view to providing fire insurance facilitiesDr Nicholas Barbon set up in 1967 the first fire insurance company known as the Fire office
Life insurance in its modern form came to India from England in 1818 The Oriental Life Insurance Company was the first insurance company to be set up in India to help the widows of European community The insurance companies which came into existence between 1818 and 1869 treatedIndian lives as subnormal and charged an extra premium of 15 to 20 per cent The first Indian insurance company the Bombay Mutual LifeAssurance Society came into existence in 1870 to cover Indian lives at normal rates
The Insurance Act 1938 the first comprehensive legislation governing both life and non-life branches of insurance were enacted to provide strict state control over insurance business This amended insurance Act looked into investments expenditure and management of these companiesBy the mid- 1950s there were 154 Indian insurers 16 foreign insurers and 75 provident societies carrying on life insurance business in India Insurance business flourished and so did scams irregularities and dubious investment practices by scores of companies As a result the government decided to nationalize the life assurance business in India The Life InsuranceCorporation of India (LIC) was set up in 1956 The nationalization of life insurance was followed by general insurance in 1972
22
MEANING OF LIFE INSURANCE
There are three parties in a life insurance transaction the insurer the insured and the owner of the policy (policyholder) although the owner and the insured are often the same person
Another important person involved in a life insurance policy is the beneficiary The beneficiary is the person or persons who will receive the policy proceeds upon the death of the insured
Life insurance may be divided into two basic classes ndash term and permanent
Term life insurance provides for life insurance coverage for a specified term of years for a specified premium The policy does not accumulate cash value
Permanent life insurance is life insurance that remains in force until the policy matures unless the owner fails to pay the premium when due
Whole life insurance provides for a level premium and a cash value table included in the policy guaranteed by the company The primary advantages of whole life are guaranteed death benefits guaranteed cash values fixed and known annual premiums and mortality and expense charges will not reduce the cash value shown in the policy
Universal life insurance (UL) is a relatively new insurance product intended to provide permanent insurance coverage with greater flexibility in premium payment and the potential for a higher internal rate of return A universal life policy includes a cash account Premiums increase the cash account If you want insurance protection only and not a savings and investment product buy a term life insurance policy
If you want to buy a whole life universal life or other cash value policy plan to hold it for at least 15 years Canceling these policies after only a few years can more than double your life insurance costs
23
HISTORY OF LIFE INSURANCE
Risk protection has been a primary goal of humans and institutions throughout history Protecting against risk is what insurance is all aboutOver 5000 years ago in China insurance was seen as a preventative measure against piracy on the sea Piracy in fact was so prevalent that as a way of spreading the risk a number of ships would carry a portion of another ships cargo so that if one ship was captured the entire shipment would not be lostIn another part of the world nearly 4500 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
Life insurance came about a little later in ancient Rome where burial clubs were formed to cover the funeral expenses of its members as well as help survivors monetarily With Romes fall around 450 AD most of the concepts of insurance were abandoned but aspects of it did continue through the Middle Ages particularly with merchant and artisan guilds These provided forms of member insurance covering risks like fire flood theft disability death and even imprisonment
During the feudal period early forms of insurance ebbed with the decline of travel and long-distance trade But during the 14th to 16th centuries transportation commerce and insurance would again reemergeInsurance in India can be traced back to the Vedas For instance yogakshema the name of Life Insurance Corporation of Indias 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
And similar to ancient Rome burial societies were formed in the Buddhist period to help families build houses and to protect widows and children
Modern InsuranceIllegal almost everywhere else in Europe life insurance in England was vigorously promoted in the three decades following the Glorious Revolution of 1688 The type of insurance we see today owes its roots to 17th century England Lloyds of London or as they were known then Lloyds Coffee House was the location where merchants ship owners and underwriters met to discuss and transact business dealsWhile serving as a means of risk-avoidance life insurance also appealed strongly to the gambling instincts of Englands burgeoning middle classGambling was so rampant in fact that when newspapers published names of prominent people who were seriously ill bets were placed at Lloydrsquos on their anticipated dates of death Reacting against such practices 79 merchant underwriters broke away in 1769 and
24
two years later formed a ldquoNew Lloydrsquos Coffee Houserdquo that became known as the ldquoreal Lloydrsquosrdquo Making wagers on peoples deaths ceased in 1774 when parliament forbade the practice
Insurance moves to AmericaThe US insurance industry was built on the British model The year 1735 saw the birth of the first insurance company in the American colonies inCharleston SC The Presbyterian Synod of Philadelphia in 1759 sponsored the first life insurance corporation in America for the benefit of ministers and their dependents And the first life insurance policy for the general public in the United States was issued in Philadelphia on May 22 1761But it wasnt until 80 years later (after 1840) that life insurance really tookoff in a big way The key to its success was reducing the opposition from religious groups
In 1835 the infamous New York fire drew peoples 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
With the creation of the automobile public liability insurance which first made its appearance in the 1880s gained importance and acceptanceMore advancement was made to insurance during the process of industrialization In 1897 the British government passed the Workmens Compensation Act which made it mandatory for a company to insure its employees against industrial accidents
During 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 most labor 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
25
BENEFITS OF LIFE INSURANCE
1) Risk cover -Life Insurance contracts allow an individual to have a risk cover against any unfortunate event of the future
2) Tax Deduction -Under section 80C of the Income Tax Act of 1961 one can get tax deduction on premiums up to one lakh rupees Life Insurance policies thus decrease the total taxable income of an individual
3) Loans -An individual can easily access loans from different financial institutions by pledging his insurance policies
4) Retirement Planning -What had provided protection against the financial consequences of premature death may now be used to help them enjoy their retirement yearsMoreover the cash value can be used as an additional income in the old age
5) Educational Needs -Similar to retirement planning the cash values that flow from ones life insurance schemes can be utilized for educational needs of the insurer or his children
26
ROLE OF LIFE INSURANCE IN THE GROWTH OF THE ECONOMY
The Life Insurance Industry has an enviable track record among public sector units It has a Consistent profit and dividend paying record accompanied by a steady growth in its financial resources Through investments in the Government sector and socially- oriented sectors the Industry has contributed immensely to the nations development The industry is recognized as one of the largest financial Institutions in the country The ventures initiated by the industry in the areas of Mutual Fund
Housing Finance has done exceedingly well in recent years To protect the countrys foreign exchange reserves the reinsurance arrangement are so organized that maximum retention is made possible within the country while at the same time protecting interests of the policy holders
27
ROLE OF IRDA
MISSION
ldquoTo protect the interests of the policyholders to regulate promote
and ensure orderly growth of the insurance industry and for matters
connected therewith or incidental theretordquo
The Insurance Act 1938 had provided for setting up of the Controller of Insurance to act
as a strong and powerful supervisory and regulatory authority for insurance Post
nationalization the role of Controller of Insurance diminished considerably in
significance since the Government owned the insurance companies But the scenario
changed with the private and foreign companies foraying in to the insurance sector This
necessitated the need for a strong independent and autonomous Insurance Regulatory
Authority was felt As the enacting of legislation would have taken time the then
Government constituted through a Government resolution an Interim Insurance
Regulatory Authority pending the enactment of a comprehensive legislation
The Insurance Regulatory and Development Authority Act 1999 is an act to provide for
the establishment of an Authority to protect the interests of holders of insurance policies
to regulate promote and ensure orderly growth of the insurance industry and for matters
connected therewith or incidental thereto and further to amend the Insurance Act 1938
the Life Insurance Corporation Act 1956 and the General insurance Business
(Nationalization) Act 1972 to end the monopoly of the Life Insurance Corporation of
India (for life insurance business) and General Insurance Corporation and its subsidiaries
(for general insurance business) The act extends to the whole of India and will come
into force on such date as the Central Government may by notification in the Official
Gazette specify Different dates may be appointed for different provisions of this Act
28
The Act has defined certain terms some of the most important ones are as follows
Appointed day means the date on which the Authority is established under the act
Authority means the established under this Act Interim Insurance Regulatory Authority
means the Insurance Regulatory Authority set up by the Central Government through
Resolution No 17(2) 94-lns-V dated the 23rd January 1996
Words and expressions used and not defined in this Act but defined in the Insurance Act
1938 or the Life Insurance Corporation Act 1956 or the General Insurance Business
(Nationalization) Act 1972 shall have the meanings respectively assigned to them in
those Acts A new definition of Indian Insurance Company has been inserted Indian
insurance company means any insurer being a company
(a) Which is formed and registered under the Companies Act 1956
(b) in which the aggregate holdings of equity shares by a foreign company either by
itself or through its subsidiary companies or its nominees do not exceed twenty-six
percent paid up capital in such Indian insurance company
(c) Whose sole purpose is to carry on life insurance business general insurance business
or re-insurance business
29
CURRENT SCENERIO
21) CURRENT SCENERIO OF THE INSURANCE INDUSTRY
With largest number of life insurance policies in force in the world insurance happens to be a mega opportunity in India Itrsquos a business growing at the rate of 15-20 per cent annually and presently is of the order of Rs 450 billion Together with banking services it adds about 7 per cent to the countryrsquos GDP Gross premium collection is nearly 2 per cent of GDP and funds available with LIC for investment are 8 per cent of GDP
Yet nearly 80 percent of Indian population is without life insurance cover while health insurance and non-life insurance continues to be below international standards And this part of the population is also subject to weak social security and pension systems with hardly any old age income security This it is an indicator that growth potential for the insurance sector is immense A well-develop and evolved insurance sector is needed for economic development as it provides long term funds for infrastructure development and at the same time strengthens the risk taking ability It is estimated that over the next ten years India would require investments of the order of one trillion US dollar The insurance sector to some extent can enable investment in infrastructure development to sustain economic growth of the country Insurance is a federal subject in India There are two legislation that govern the sector - The Insurance Act-1938 and The IRDA Act-1999
In India insurance is generally considered as a tax-saving device instead of its other implied long term financial benefits Indian people are prone to investing in properties and gold followed by bank deposits They selectively invest in shares also but the percentage is very small Even to this day Life Insurance Corporation of India dominates India insurance sector With the entry of private sector players backed by foreign expertise Indian insurance market has become more vibrant Business is becoming increasingly vulnerable due to wide variety of risk particularly after September 11 2001 disaster in which twin tower located in the hearts of New York city were crashed by terrorist attack resulting in loss of 6000 human lives as well as financial loss to the extent of $45 billion The impact of this terrorist attack has created new horizon of risk to the business world today
However rapid changes in the global economy development of technology and e-business already gathered momentum Increased dependency on technology has originated new risks that have resulted in well-published incidents Computer hackers obtaining credit card information from visa and Power-Gen the love bug virus cyber extortion web content liability professional errors and omissions computers and other crimes and activities such as terrorism kidnapping and companyrsquos executive and extortion of money commercial liability etc have significant impact on business resulting in extreme financial loss commercial embarrassment or regulatory implications
Corporation insurancerisk managers under the circumstances have to demand increasingly complex insurance products They have to be more attentive and
30
knowledgeable about emerging risks how those risks are managed effectively and efficiently and how they could ultimately affect a companyrsquos financial situation and therefore its position in the market place In short how such risks are managed and can give to an insured a competitive advantage
In the changing times adoption of e-commerce into business models the integration of web-based communication and data transfer capabilities into the business operations and leveraging of advanced network and technology architecture for maximum benefit are the new horizon of the risks For the corporate insurancerisks managers these new exposure-cyber-risks-can lead to cyber losses widening the interpretation of what constitute insure property damage particularly as it relates to information technology and dataAll the while organizations are tremendous pressure to reduce expenses and increase profit margin and cannot afford to suffer a property loss of business interruption due to any cause (risk) How a company identifies quantifies qualifies and manages these new risks exposure in addition to the well-known tradition risks is becoming an important factor in creating shareholders value This often means changing the way Everyone in the organization have to think about risk
Insurance managers are seeing price levels (premium) continue to rise-albeit modestly-in todayrsquos primarily commercial property and reinsurance markets They are demanding that insurers improve their risk assessment and quantification offerings so that an insured may avail the benefit in cost (premium rate) on account of well-managed riskThe good news for insurance managers is that as the economy evolves insurers are increasingly matching that evaluation with new products services and capabilities due to opening up the insurance market to the private players
Insurers who are truly listening to their customers and striving to be more in tune with their needs are responding to the fast changing corporate insurance and risk management landscape They are listening to their customers They are making fresh approaches to address the new challenges faced by insured organization by designing the new products as per the needs Insurers are providing value added services to insured to protect the value created by the business
Insurers are increasingly required to develop and expand their information technology platforms to ensure that the vast amount of data they collect about their customers Insurancerisk portfolio can easily and seamlessly be transformed into valuable risk management information To help their customers insurers should make better-informed decisions They must be able to swiftly deliver this data to their customers (insured) anywhere in the world Insurer are also discovering that risk assessment have to be customized to meet policyholdersrsquo new exposures and needs The insurance industry is stepping up and addressing these challenges in several different ways
31
22) CURRENT SCENARIO OF RELIANCE LIFE INSURANCE
RLIC offers wide range of innovative life insurance products targeted at individuals and groups It offers need based products that caters to four distinct segments namely protection child retirement and investment plans RLIC is committed to emerge as a
transnational Life Insurer of global scale and standard
Reliance Life Insurance Company Limited (RLIC) is amongst the fastest growing life insurance companies in India It is also amongst the top four private sector life insurance companies in India (As on FY 2008-2009)
As on March 31 2009 RLIC has an annualized premium of Rs 30 billion with a market share of 103 It has leapfrogged on the growth path and has reached the 4 million policy mark in a short span of within 3 years RLIC has a strong distribution network of 1145 branches with more than 149000 agents
32
Insurancersquos Market Share in Comparison of Other Private company
If we look at the status of Reliance Life Insurancersquos market share in comparison of other
private company in comparison of premium earned-
If we talk the growth of Insurance industryrsquos private players in recent years the data will
reflect-
CH - 3) RESEARCH METHODOLOGY
33
RESEARCH DESIGN-
COMPARITIVE STUDY- A comparative study has been undertaken to compare the traditional Plans of Reliance Life Insurance with that of Bajaj Allianz life insurance
DATA TYPE
INTRODUCTION - Any organization whether big or small private or public needs different type of information to know its popularity I have gathered secondary data and primary data and collected information from the combination of these two data
PRIMARY DATA - Primary data collection method was decided for observing working of the company and approaching the customers directly face to face A great care was taken while collecting the primary data to answer that it is relevant accurate current and unbiased
SECONDARY DATA - Secondary data collection method was used by referring to various websites books and newspapers for collecting information regarding the project under study Secondary data consist of the information that already exists somewhere else for some another purpose
SAMPLING TECHNIQUES-
SAMPLE SIZE- A sample size of 50 was taken to be analyzed
SAMPLE LOCATION-Various sectors of Kamla Nagar Civil lines Mukherji Nagar Model Town and selected areas of Delhi
SAMPLING PROCESS - Convenient sampling was used to overcome the time and money constraints that could have been faced by us while collecting the data The customers were contacted face to face directly and also by way of telephonic conversation with them
ANALYTICAL TOOLS - The data collected were arranged accordingly and statistical tools like bar graphs and pie-charts were used to analyze and present the data
RESEARCH INSTRUMENT USED-
34
SAMPLING MEDIA - Printed questionnaires consisting several questions were asked to have an idea of customers view about Reliance Life Insurance plans followed by personal questions
FIELD WORK - Rigorous field work was undertaken to locate the interested and potential respondents to fulfill the objectives of the study
THE PRIMARY OBJECTIVEOF THE STUDY -
The primary objective of the research study is to have a detailed analysis of Reliance Life Insurance bringing in focus the future prospects of the (Anil Dhirubhai Ambani group) with relevance to the customer perception regarding the various plans and products offered by Reliance Life Insurance
31) DATA ANALYSIS AND INTERPRETATION
35
PERSONAL DETAILS
1) AGE a) 18-30b) 31-50c) 51-65
AGE NO OF RESPONDENTS PERCENTAGE
18-30 21 42
31-50 19 38
51-65 10 20
TOTAL 50 100
INTERPRETATION-The bar graph reveals that 42 of the respondents belong to the age group of 18-30 years 38 lies in the age group of 31-50 years and 20 of them lie in the age group of 51-65 years
2) OCCUPATION
4238
20
05
1015202530354045
NO
O
F
RE
SP
ON
DE
NT
S
18 to 30 31 to 50 51 to 65
AGE (in year)
AGE WISE CLASSIFICATION
36
a) Serviceb) Businessc) Professiond) Housewifee) Retired
OPTION NO OF RESPONDENTS PERCENTAGE
Service 16 32
Business 14 28
Profession 5 10
Housewife 8 16
Retired 7 14
TOTAL 50 100
INTERPRETATION-The above bar graph reveals that 32 of the total respondents were servicemen 28 of them belonged to the business class 10 were professionals 16 were housewives and 14 of the total respondents fall in the retired category
3) INCOME
32
28
10
16
14
0
5
10
15
20
25
30
35
Service Business Profession Housewife Retired
OCCUPATION
OCCUPATION WISE CLASSIFICATION
37
a) 150000-300000
b) 300000-500000
c) Above 500000
OPTION NO OF RESPONDENTS PERCENTAGE
150000-300000 24 48
300000-500000 14 28
Above 500000 12 24
TOTAL 50 100
INTERPRETATION-The above bar graph reveals that out of the total respondents 48 lie in the income group of 150000-300000 28 of the total respondents belonged to the income group of 300000-500000 and 24 lie in the income group of people earning an income of above Rs 500000pa
4828 24
01020304050
N O
OF
RE
SP
ON
DE
NT
S
150000-300000
300000-500000
ABOVE500000
INCOME (in RS)
INCOME WISE CLASSIFICATION
38
4) FAMILY MEMBERS
a) 2b) 3c) 4d) Above 4
OPTION NO OF RESPONDENT PERCENTAGE
2 11 22
3 9 18
4 24 48
Above 4 6 12
TOTAL 50 100
INTERPRETATION The above bar graph shows that 22 of the total respondents had a family of 2 members 18 of them had 3 family members 48 of them had 4 family members and 12 of them had the no of family members above 4
Q1 Where do you prefer to invest
22 18
48
120
1020304050
No
o
f re
spo
nd
ents
2 3 4 Above 4
No of family members
MEMBER WISE CLASSIFICATION
39
a) fixed deposits
b) stock
c) mutual funds
d) insurance
e) others
Option No of respondents Percentage
Fixed deposits 5 10
Stock 10 20
Mutual fund 10 20
Insurance 18 36
others 7 14
TOTAL 50 100
Interpretation The above pie chart shows that out of 50 respondents 10 preferred to invest in fixed deposits 20 in stocks 20 in mutual funds 36 in insurance and 14 in others like property gold etc
Q2 What are your priorities for investment
40
a) protecting your family against pre-mature death
b) wealth creation
c) retirement needs
d) child education and marriage
e) protect income against disability sickness or critical illness
Option No of respondents Percentage
Protecting your family against pre mature death
10 20
Wealth creation 14 28
Retirement needs 5 10
Child education and marriage 7 14
Protect income against disability sickness or critical illness
14 28
TOTAL 50 100
Interpretation The above pie chart shows that out of 50 respondents 20 of them invest for protecting their family against premature death 28 for creating wealth 10 for meeting their future retirement needs 14 for child education amp marriage and 28 for protection against disability and sickness
Q3 What is your main motive behind investing in life insurance
41
a) tax benefit
b) savings
c) risk cover
Option No of respondents Percentage
Tax benefits 27 54
Savings 5 10
Risk cover 18 36
TOTAL 50 100
Interpretation The above pie chart shows that out of the sample respondents 54 have tax benefit 10 have savings and 36 have risk cover as their main motive for making an investment in life
Q4 What kind of investment do you prefer
42
a) high risk high gain
b) low risk low gain
c) moderate
d) vary times to times
Option No of respondents Percentage
High risk high gain 8 16
Low risk low gain 5 10
Moderate 12 24
Vary times to times 25 50
TOTAL 50 100
Interpretation The above pie chart shows that out of 50 respondents 16 preferred high risk- high gain form of investment 10 preferred low risk- low gain form of investment 24 preferred moderate investment and 50 preferred varied form of investment
43
Q5Are you interested to invest in Traditional Plans
a) YES
b) NO
Option No of respondents Percentage
YES 36 72
NO 14 28
TOTAL 50 100
Interpretation The above pie chart shows that 72 of the respondents preferred to invest in Traditional Plans
44
Q6 What is your level of annual investmenta) below 20000
b) 20000-40000
c) above 40000
Option No of respondents Percentage
Below 20000 41 82
20000-40000 7 14
Above 40000 2 4
TOTAL 50 100
Interpretation The above pie chart shows that 82 of the respondents are willing to invest below Rs 20000 per annum 14 of them want to invest within Rs 20000 per annum to Rs 40000 and 4 wanted to invest over and above Rs 40000
45
Q7 What factors would you consider most important before choosing an insurance policy
a) publicity of the company
b) reputation of the company
c) quality of life advisors
d) after sales-supporting of the company
Option No of respondents Percentage
Publicity of the co 5 20
Reputation of the co 25 50
Quality of life advisors 10 10
After sale-services 10 20
TOTAL 50 100
Interpretation out of the sample respondents 20 considers publicity of the company 50 considers reputation of the company 10 considers quality of life advisors and 20 considers after sales support of the company as the most important factor for choosing an insurance company
46
Q8 Which life insurance company would you prefer the most to invest ina) reliance life insurance (RLIC)
b) Bajaj Allianz life insurance
Option No of respondents Percentage
RLIC 21 42
BAJAJ ALLIANZ 29 58
TOTAL 50 100
Interpretation Out of 50 respondents 42 preferred to invest in reliance life insurance over 58 of the respondents who prefer to invest in Bajaj Allianz life insurance
47
Q9 If reliance life insurance then which particular plan you would like to invest ina) Reliance Term Plan
b) Reliance Whole Life Plan
c) Reliance Endowment Plan
d) Reliance Special Endowment Plan
Option No of respondents Percentage
Reliance term plan 6 2858
Reliance whole life plan 3 1428
Reliance endowment plan 9 4286
Reliance special endowment plan 3 1428
TOTAL 21 100
Interpretation Out of 21 respondents 2858 preferred to invest in term plan 1428 in whole life plan 4286 in endowment plan and 1428 of them preferred to invest in special endowment plan of reliance life insurance
48
Q10 If Bajaj Allianz life insurance then which particular plan you would like to invest in
I ENDOWMENT PLAN a) Bajaj Allianz Invest Gain
b) Bajaj Allianz save Care Economy SP
c) Bajaj Allianz life time care
d) Bajaj Allianz Super Saver plan
II MONEY BACK PLAN i Bajaj Allianz Cash Gain plan
Option No of respondents Percentage
Invest gain plan 3 1035
Save care economy SP 6 2069
Life time care 7 2415
Super saver plan 3 1035
Cash gain plan 10 3446
TOTAL 29 100
Interpretation Out of 29 respondents 1035 of them plan to invest in Bajaj Allianz- Invest Gain 2069 wish to invest in Bajaj Allianz save Care Economy SP 2415 want to invest in Bajaj Allianz life time care 1035 in Bajaj Allianz Super Saver plan and 3446 prefer to invest in Bajaj Allianz Cash Gain plan
49
32) SIGNIFICANCE OF STUDY
Life insurance is one of the most rapidly growing sectors in India The main reason
behind the growth can attributed to the high population density improving economical
condition improving education level and improving awareness Due to these factors there
is still huge scope for growth in this sector Like any other business when the
opportunities are present everybody tends to enter the industries This growth hence
fetches the new competitors as well as new strategies from existing players To sustain in
any competitive industry the organization must adapt to existing strategies and adopt
new ones This study will focus on the analysis of Reliance Life Insurance in comparison
with the present scenario of Bajaj Allianz Life Insurance with respect to the Traditional
Plans of both the companyrsquos This will mainly cover the following aspects
To know about the awareness and popularity of various Traditional Plans offered
by Reliance Life Insurance and Bajaj Allianz Life Insurance
How Reliance Life Insurance can develop and sustain a good distribution
network
These will provide it benefit both in terms of better market coverage as well as better
penetration
50
33) SCOPE OF THE STUDY
1) This helps in finding out vast potential of insurance company
2) The study was conducted in National Capital Region (NCR) only
3) The number of respondents to be surveyed can be improved
4) This study was conducted by comparing the performances amp products of three private
amp government insurance players in insurance industry
5) This study was conducted to analyze the market stand of Reliance life insurance
Company limited and Bajaj Allianz Life Insurance Company Limited of India insurance
companies
6) This study is done to eliminate all the myths which people have in their minds
regarding Insurance Sector
51
34) OBJECTIVES
To have a detailed understanding of Reliance Life Insurance and Bajaj Allianz Life Insurance
To find out various reasons considered while investing in policies
To get knowledge about the market exposure and future prospects about Reliance Life Insurance
To know the perception of the consumers about the life insurance
To analyze the Traditional plans of Reliance Life Insurance and compare it with Bajaj Allianz
To know about the brand awareness of Reliance Life Insurance its customer preferences over Bajaj Allianz in the market
To study a proper knowledge about the life insurance industry
To understand the consumer choice while investing in policies
52
CHAPTER 4
DISCUSSION AND FINDINGS OF THE STUDY
FINDINGS OF THE STUDY RECOMMENDATION AND SUGGESTIONS CONCLUSION LIMITATIONS BIBLIOGRAPHY ANNEXUREQUESTIONNAIRE
53
41) FINDINGS OF THE STUDY
1) The survey reveals that still a large proportion of population is interested to invest in other forms of investment other than insurance as still most of them are unaware about the importance of insurance in their life
2) Basically people make varied form of investment for creating wealth to protect their families against pre-mature death and to protect income against disability sickness or critical illness
3) The main motive of the individuals investing is receives benefits US 1010D People generally consider insurance as a tax saving device
4) Mostly people prefer time to time form of investment as they are not willing to take high degree of risk
5) 72 of the respondents are preferred to invest in Traditional Plans
6) Most of the people prefer to make an annual investment up to a maximum of Rs20 000 per annum
7) When the product is like life insurance reputation of the company publicity of the company amp after sale services of the company matters a lot This means that people would choose that insurance company only where the quality of life advisors is satisfactory
8) Most people prefer to invest in Bajaj Allianz Life Insurance as compared to making an investment in Reliance Life Insurance
9) The most preferable Traditional plan of Reliance Life Insurance is Endowment Plan
10) The most preferable plan of Bajaj Allianz Life Insurance co is Cash Gain Plan
54
42) SUGGESTIONS amp RECOMMENDATIONS
Based on the observations of the study some suggestions for the organization are made as
follows
1) Quality of advisors is also as important as the quantity Thus company should go
mainly for qualified professionals
2) Company should increase its budget on publicity so that awareness can be increased
3) Clarity and transparency should be provided to the customer regarding various
products
4) Training sessions should be planned in advance so that schedule can be provided to
the advisor in advance
5) Apart from the Brand Positioning in urban area a strategy should be adopted by
Reliance to make its brand also near to middle level or high aspirant people because they
are the main source of the business in India
6) Awareness Camp to the sub urban area should be focused by Reliance
7) Some innovative technique or product is required in order to attract the consumer
43) LITERATURE REVIEW
55
1) Robi Elenekave has explained in detail why various retirement plans and pension plans donrsquot give the desired returns The main difficulty is the use of incorrect method for calculations done to find out the return on investment This is primarily due to wrong assumptions The study provides information about the various precautions which need to be considered before planning so that the desired results can be achieved
2) Another paper provides insight about how various financial sectors invest in bond market The study was how the different players investment different instruments according to the risk appetite and desired rate of return The study shows that life insurance sector mainly invests in government bond which are low return and low risk instrument The investment in government bond it shows that life insurance companies are more conservative in investment
3) K Subhash has presented the history of Indiarsquos life insurance industry in three stages before independence after independence and post liberalization which not only provides information but also help in analyzing the impact of these major changes The authors have also discussed the huge potential which exists in the rural India The insurance company must realize the importance of rural sector because the future lies there The author commented about the increasing share of private player in the existing market This confirms the availability of opportunity in this sector The paper also provides the importance of professional and focused approach which was given no importance
4) Tapen Sinha has discussed the various challenges and opportunities in the insurance market One of the very important factors which have been discussed in the study is the importance of developing new and better products As the scenario changes the need of an individual also changes so any organization must understand and fulfill these needs The new product development requires constant research so organization must also focus on it
5) Roger G Ibbotson discusses how financial planners and advisors have recently started to recognize that human capital must be taken into account when building optimal portfolios for individual investors Any investorrsquos human capital has a unique mortality risk However life insurance in its forms can hedge against this mortality risk Thus human capital affects both the optimal asset allocation and the optimal demand for life insurance This paper provides a unified framework based on human capital in order to enable individual investors to make both decisions jointly
6) Rakesh Niraj study tells how the flow of information in any organization is important For any organization to grow the flow of information must be good both upwards as well as ownwards The proper flow of information will also ensure proper flow of good and services from organization to customer and proper flow of information from customer to organization The information from customers will help the organization in providing better goods and services to the customer For the above purpose organization must ensure good channel partner who can provide the organization with correct feedback Hence it becomes very important for any organization to acquire good channel partners
56
7) Stephen P Robbins has discussed how group dynamics works in any organization The success of any organization depends on the success of its various teams and how these teams work together The book provides various techniques which can be used by any organization to get result from the team effort The conflict resolution is a major task in any group Various techniques which the organization can use in conflict resolution are also discussed Another important aspect covered is the importance of leadership in the organization The various forms of leadership have been discussed and the kinds of leadership which can be effective in particular situations are also discussed
8) R Wayne Mondy has discussed the importance of training and development in any organization The training provides skills to perform the current job where as the development involve learning beyond present need The various type of training are discussed which can be used according to the requirement Training and development are not only important for better performance of an individual but it also gives satisfaction The major factors which influence training and development are found to be management support commitment of trainee and trainer complexity of the organization The process of developing good training plans is also provided In another part author has discussed the importance of right man for right job The compensation strategies are also given which are very crucial for ant industry
9) Philip Kotler has discussed the importance of channels partners Better the channel partners better will be the delivery model Detailed discussion about how to design the channel structure so that all the requirements could be fulfilled is provided The various issues faced by the organization while managing the channels are also given When an organization has more than one channel it becomes very important that all the channels should be integrated in such a way that the organization get the best out of all At times due to the conflicting benefit of the different channels the conflict arise so various strategies to manage these issues is also discussed in the chapter
10) Michael J Etzel has written about the marketing of services The marketing of services is different from the goods because of the characteristic of service like intangibility inseparability heterogeneity etc Brief about pricing strategies is also given in case of services The authors have also given the impact of technological development on the services marketing The author has also given the importance of brand and after sales support in case of services as perception of the customers plays an important role In other part of the book the authors has described the importance of distribution channels and designing of the same A channel partner should be consider as partner according to discussion The legal complications associated with channels are also discussed These complications are necessary to take into the consideration while managing the channels The conflicting interest of channels both horizontally and vertically are also taken into the consideration
57
11) Boone has discussed about the importance of personal financial planning The concept of time value of money has also been elaborated The importance of creating and implementing budget is given under money management The other important concepts for financial planning like credit management and understanding taxes are also explained In one section the authors have discussed the importance of investment and what should be the major considerations while making any investment The considerations include the risk associated with the investment return on the investment etc The importance and benefits of life insurance has also been given The discussion also includes various legal aspects associated with life insurance The overview of retirement planning is also given which includes importance and benefit of retirement planning Various tools for proper retirement planning are also discussed
58
44) CONCLUSION
1) The customers are very much sensitive towards their investment They would like to invest only in that insurance company which enjoys good public image along with quality good services
2) The result of the survey conducted shows that Bajaj Allianz Life Insurance is the leader in life insurance industry but Reliance Life Insurance and other private players are giving it a close competition
3) The motive of the people behind investing in life insurance is the tax benefits that they would receive under sec 80C and 1010D
4) In Life Insurance industry the after sales support of the company is as important as the quality of life advisors
59
45) LIMITATIONS
There were some limitations faced during the study as discussed below
Since the study was taken for two months so there was a constraint of time and effort
The study was limited only to some of the Delhi regions so the results may be biased
Questionnaire was given to 125 people however only 50 responded to it which is very small for such type of study
The biasness of consumer or responses error cannot be eliminated
Most of the people are not aware about the Importance and the necessity of insurance in their life
Adverse perception of the people towards insurance sector- People consider insurance as a tax saving device
Lack of awareness about the earning opportunity in the insurance sector
60
46) BIBLIOGRAPHY
wwwreliancelifeinsurancecom
wwwadagroupcom
wwwirdacom
wwwbajajallianzlifeinsurancecom
wwwallianzbajajcom
47) ANNEXURE
61
QUESTIONNAIRE
A comparative analysis of consumer perception regarding Traditional plans of Reliance Life Insurance with that of Bajaj Allianz Life Insurance
NAME ___________________________
PERSONAL DETAILS
1) AGE_________________
1) OCCUPATION______________
2) INCOME___________________
3) FAMILY MEMBERS_________
Q1 Where do you prefer to investa) Fixed deposits b) Stock c) Mutual funds d) Insurance e) Others
Q2 What are your priorities for investmenta) Protecting your family against pre-mature death b) Wealth creation c) Retirement needs d) Child education and marriage e) Protect income against disability sickness or critical illness
Q3 What is your main motive behind investing in life insurancea) Tax benefit b) Savings c) Risk cover
Q4 What kind of investment do you prefera) High risk high gain b) Low risk low gain c) Moderate d) Vary times to times
62
Q5Are you interested to invest in Traditional Plansa) Yes b) No
Q6 What is your level of annual investmenta) below 20000 b) 20000-40000 c) above 40000
Q7 What factors would you consider most important before choosing an insurance company
a) publicity of the company b) reputation of the company c) quality of life advisors d) after sales-supporting of the company
Q8 Which life insurance company would you prefer the most to invest ina) Reliance life insurance b) Bajaj Allianz life insurance
Q9 If reliance life insurance then which particular plan you would like to invest ina) Reliance Term Plan b) Reliance Whole Life Plan c) Reliance Endowment Plan d) Reliance Special Endowment Plan
Q10 If Bajaj Allianz life insurance then which particular plan you would like to invest in
I ENDOWMENT PLAN
a) Bajaj Allianz Invest Gain
b) Bajaj Allianz save Care Economy SP
c) Bajaj Allianz life time care
d) Bajaj Allianz Super Saver plan
II MONEY BACK PLAN
a) Bajaj Allianz Cash Gain plan
63
64
- COMPANY PROFILE
- ABOUT RELIANCE LIFE INSURANCE
- HISTORY
- Reliance Capital Limited announced the launch of its life insurance business on February 1 2006 This was after obtaining the required regulatory approvals from the Registrar Of Companies and the Insurance Regulatory and Development Authority
- It was in August 2005 that the ball was set rolling when Reliance Capital Limited the financial arm of Reliance ndash Anil Dhirubhai Ambani Group (ADAG) ndash announced the requisition of 100 shareholding in AMP Sanmar Life Insurance Company Limited and the formal transfer of shares took place in October 2005 The company will issue all policy contracts under the Reliance Life Insurance Company limited name All the existing policy contracts also stand transferred to the Reliance Life Insurance entity with all the original contractual terms and commitments intact
- CORE VALUES
- Reliance Life Insurance Company Limited has some core values which are listed as follows
- Vision bull To be the first choice insurer for customers bull To be the preferred employer for staff in the insurance industry bull To be the number one insurer for creating shareholder value
- Mission As a responsible customer focused market leader we will strive to understand the insurance needs of the consumers and translate it into affordable products that deliver value for money
- 12) TRADITIONAL PLANS OF THE COMPANY
- 12A )TRADITIONAL PLAN OF RELIANCE LIFE INSURANCE-
- Life insurance products are designed to suit the requirements of customers Fundamentally the product provide for
- In every product to a certain degree risk cover is imperative for it to fall under the category of insurance Based on the coverage of the product the premiums are calculated and the customer pays accordingly In order to suggest the right product it is essential for an agent to understand the requirements of the customer well
- The traditional plans of the company have the following features-
- Fixed Tenure
- Potential for better returns
- Transparency
- Flexibility in investment
- Flexibility to invest more
- Flexibility to skip the premium
- Flexibility to choose the cover
- High liquidity
- Age term and sum assured decide the amount of premium
- Top- ups and switches are not allowed
- Reliance Life Insurance Company Limited has offered 9
- 1) Reliance term plan-
- 2) Reliance Whole Life Plan -
- 3) Reliance Endowment Plan -
- 4) Reliance Special Endowment Plan -
- 13) INDUSTRY PROFILE
- MEANING OF INSURANCE
- Insurance may be described as a social device to reduce or eliminate risk of loss to life and property Insurance is a collective bearing of risk Insurance is a financial device to spread the risks and losses of few people among a large number of people as people prefer small fixed liability instead of big uncertain and changing liability
- Insurance can be defined as a ldquolegal contract between two parties whereby one party called insurer undertakes to pay a fixed amount of money on the happening of a particular event which may be certain or uncertainrdquo The other party called insured pays in exchange a fixed sum known as premium
- Insurance is desired to safeguard oneself and onersquos family against possible losses on account of risks and perils It provides financial compensation for the losses suffered due to the happening of any unforeseen events
- IMPORTANCE OF INSURANCE
- Insurance services play predominant role in the process of financial Intermediary Today insurance industry is one of the most growing sectors in India There is lot of potential in the Indian Insurance Industry
- There are many issues which require study The scope of the study of Insurance industry of India would be very great as there are ongoing Developments in the industry after the opening of the sector
- Right now the insurance industry has great opportunities in a country like India or China which huge population Also the penetration of insurance in India is very low in both life and non-life segment so there is lot potential to be tapped Before starting the discussion on insurance industry and related issues we have to start with the basics of insurance So first we understand what is insurance How the word lsquoinsurancersquo is different from the word lsquoassurancersquo Etc
- HISTORY OF INSURANCE
- The concept of insurance is believed to have emerged almost 4500 years ago in the ancient land of Babylonia where traders used to bear risk of the carvan by giving loans which were later repaid with interest when the goods arrived safely
- The concept of insurance as we know today took shape in 1688 at a place called Lloydrsquos Coffee House in London where risk bearers used to meet to transact business This coffee house became so popular that Lloydrsquos became the one of the first modern insurance companies by the end of the eighteenth century
- Marine insurance companies came into existence by the end of the eighteenth century These companies were empowered to write fire and life insurance as well as marine The Great Fire of London in 1966 caused huge loss of property and life With a view to providing fire insurance facilities
- Dr Nicholas Barbon set up in 1967 the first fire insurance company known as the Fire office
- Life insurance in its modern form came to India from England in 1818 The Oriental Life Insurance Company was the first insurance company to be set up in India to help the widows of European community The insurance companies which came into existence between 1818 and 1869 treated
- Indian lives as subnormal and charged an extra premium of 15 to 20 per cent The first Indian insurance company the Bombay Mutual Life
- Assurance Society came into existence in 1870 to cover Indian lives at normal rates
- The Insurance Act 1938 the first comprehensive legislation governing both life and non-life branches of insurance were enacted to provide strict state control over insurance business This amended insurance Act looked into investments expenditure and management of these companies
- By the mid- 1950s there were 154 Indian insurers 16 foreign insurers and 75 provident societies carrying on life insurance business in India Insurance business flourished and so did scams irregularities and dubious investment practices by scores of companies As a result the government decided to nationalize the life assurance business in India The Life Insurance
- Corporation of India (LIC) was set up in 1956 The nationalization of life insurance was followed by general insurance in 1972
- MEANING OF LIFE INSURANCE
- There are three parties in a life insurance transaction the insurer the insured and the owner of the policy (policyholder) although the owner and the insured are often the same person
- Another important person involved in a life insurance policy is the beneficiary The beneficiary is the person or persons who will receive the policy proceeds upon the death of the insured
- Life insurance may be divided into two basic classes ndash term and permanent
- HISTORY OF LIFE INSURANCE
- Risk protection has been a primary goal of humans and institutions throughout history Protecting against risk is what insurance is all about
- Over 5000 years ago in China insurance was seen as a preventative measure against piracy on the sea Piracy in fact was so prevalent that as a way of spreading the risk a number of ships would carry a portion of another ships cargo so that if one ship was captured the entire shipment would not be lost
- In another part of the world nearly 4500 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
- Life insurance came about a little later in ancient Rome where burial clubs were formed to cover the funeral expenses of its members as well as help survivors monetarily With Romes fall around 450 AD most of the concepts of insurance were abandoned but aspects of it did continue through the Middle Ages particularly with merchant and artisan guilds These provided forms of member insurance covering risks like fire flood theft disability death and even imprisonment
- During the feudal period early forms of insurance ebbed with the decline of travel and long-distance trade But during the 14th to 16th centuries transportation commerce and insurance would again reemerge
- And similar to ancient Rome burial societies were formed in the Buddhist period to help families build houses and to protect widows and children
- Modern Insurance
- Illegal almost everywhere else in Europe life insurance in England was vigorously promoted in the three decades following the Glorious Revolution of 1688 The type of insurance we see today owes its roots to 17th century England Lloyds of London or as they were known then Lloyds Coffee House was the location where merchants ship owners and underwriters met to discuss and transact business deals
- While serving as a means of risk-avoidance life insurance also appealed strongly to the gambling instincts of Englands burgeoning middle class
- Gambling was so rampant in fact that when newspapers published names of prominent people who were seriously ill bets were placed at Lloydrsquos on their anticipated dates of death Reacting against such practices 79 merchant underwriters broke away in 1769 and two years later formed a ldquoNew Lloydrsquos Coffee Houserdquo that became known as the ldquoreal Lloydrsquosrdquo Making wagers on peoples deaths ceased in 1774 when parliament forbade the practice
- Insurance moves to America
- The US insurance industry was built on the British model The year 1735 saw the birth of the first insurance company in the American colonies in
- Charleston SC The Presbyterian Synod of Philadelphia in 1759 sponsored the first life insurance corporation in America for the benefit of ministers and their dependents And the first life insurance policy for the general public in the United States was issued in Philadelphia on May 22 1761
- But it wasnt until 80 years later (after 1840) that life insurance really tookoff in a big way The key to its success was reducing the opposition from religious groups
- In 1835 the infamous New York fire drew peoples 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
- With the creation of the automobile public liability insurance which first made its appearance in the 1880s gained importance and acceptance
- More advancement was made to insurance during the process of industrialization In 1897 the British government passed the Workmens Compensation Act which made it mandatory for a company to insure its employees against industrial accidents
- During 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 most labor 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
- BENEFITS OF LIFE INSURANCE
- 1) Risk cover -Life Insurance contracts allow an individual to have a risk cover against any unfortunate event of the future
- 2) Tax Deduction -Under section 80C of the Income Tax Act of 1961 one can get tax deduction on premiums up to one lakh rupees Life Insurance policies thus decrease the total taxable income of an individual
- 3) Loans -An individual can easily access loans from different financial institutions by pledging his insurance policies
- 4) Retirement Planning -What had provided protection against the financial consequences of premature death may now be used to help them enjoy their retirement years
- 5) Educational Needs -Similar to retirement planning the cash values that flow from ones life insurance schemes can be utilized for educational needs of the insurer or his children
- The Life Insurance Industry has an enviable track record among public sector units It has a Consistent profit and dividend paying record accompanied by a steady growth in its financial resources Through investments in the Government sector and socially- oriented sectors the Industry has contributed immensely to the nations development The industry is recognized as one of the largest financial Institutions in the country The ventures initiated by the industry in the areas of Mutual Fund
- Housing Finance has done exceedingly well in recent years To protect the countrys foreign exchange reserves the reinsurance arrangement are so organized that maximum retention is made possible within the country while at the same time protecting interests of the policy holders
- 22) CURRENT SCENARIO OF RELIANCE LIFE INSURANCE
- RLIC offers wide range of innovative life insurance products targeted at individuals and groups It offers need based products that caters to four distinct segments namely protection child retirement and investment plans RLIC is committed to emerge as a transnational Life Insurer of global scale and standard
- CH - 3) RESEARCH METHODOLOGY
- RESEARCH DESIGN-
- SAMPLING TECHNIQUES-
- THE PRIMARY OBJECTIVEOF THE STUDY-
- 34) OBJECTIVES
- 7) Some innovative technique or product is required in order to attract the consumer
- 45) LIMITATIONS
- 46) BIBLIOGRAPHY
-
Reliance Capital Limited announced the launch of its life insurance business on February 1 2006 This was after obtaining the required regulatory approvals from the Registrar Of Companies and the Insurance Regulatory and Development Authority
It was in August 2005 that the ball was set rolling when Reliance Capital Limited the financial arm of Reliance ndash Anil Dhirubhai Ambani Group (ADAG) ndash announced the requisition of 100 shareholding in AMP Sanmar Life Insurance Company Limited and the formal transfer of shares took place in October 2005 The company will issue all policy contracts under the Reliance Life Insurance Company limited name All the existing policy contracts also stand transferred to the Reliance Life Insurance entity with all the original contractual terms and commitments intact
A Reliance Capital company
Reliance started from scratch only to become Indiarsquos
largest private sector company in ~40 years
1966 1971-72 1977 1985 1992 1993
Birth of Reliance ndash
First Textile Mill at Naroda
Birth of Reliance ndash
First Textile Mill at Naroda
Launch of lsquoOnly Vimalrsquo brand
Launch of lsquoOnly Vimalrsquo brand
Sales Cross 4000 CrBecomes Largestprivate sector Co inIndia
Sales Cross 4000 CrBecomes Largestprivate sector Co inIndia
Launch of 1st
IPO for general public- start of a
trend
Launch of 1st
IPO for general public- start of a
trend
Total Assets cross 1000 Cr
Total Assets cross 1000 Cr
Twin IPOs receive 1million applications
Twin IPOs receive 1million applications
The Story of Growth First corporate in Asia to issues
50 and 100 yrs bond in US debt market
First corporate in Asia to issues
50 and 100 yrs bond in US debt market
1997 1998
Total assetscross 35000 CrRevenues cross
14000 Cr
Total assetscross 35000 CrRevenues cross
14000 Cr
8
A Reliance Capital company
2000 2000 2001 2003 2005 2006-07
Group Profits cross 2500 Cr
Revenues cross 20000 Cr
Total Assets cross 50000 Cr
Group Profits cross 2500 Cr
Revenues cross 20000 Cr
Total Assets cross 50000 Cr
Reliance Communication plans announced
Reliance Communication plans announced
Reliance Life Insurance rank 6th at 930 Cr
Reliance Life Insurance rank 6th at 930 Cr
Group revenues cross 60000 Cr
Largest Business group
in India
Group revenues cross 60000 Cr
Largest Business group
in India
Controlling stake in BSES (Reliance
Energy)Largest mobile
services co in India
Controlling stake in BSES (Reliance
Energy)Largest mobile
services co in India
ADA Group formedAMP Sanmar acquired and renamed Reliance
Life Insurance
ADA Group formedAMP Sanmar acquired and renamed Reliance
Life Insurance
And the journeyBecame the 1st
company to cross 1 million policy mark in 2 years of operations
Became the 1st
company to cross 1 million policy mark in 2 years of operations
Sep 2007 2007
Reliance became only the second National Insurance player to get ISO 9001-2000
Reliance became only the second National Insurance player to get ISO 9001-2000
A Reliance Capital company
Be the Change
2008 2008 2008 2007-08 2008-09
Reliance MF becomes 1st
AMC to cross
100000 Cr
Reliance MF becomes 1st
AMC to cross
100000 Cr
RCOM crosses 50 million customers
RCOM crosses 50 million customers
A total of more than 2000 Branches on anvil in the fiscal year
A total of more than 2000 Branches on anvil in the fiscal year
Continueshellip
RLIC jumps to 4th position
with 2750 Cr
RLIC jumps to 4th position
with 2750 Cr
Crosses 2million policies
Crosses 2million policies
9
SWOT ANALYSIS
STRENGTHS
Dedicated Employees Well Efficient Management Strong and popular brand name Adaptability to changes Goodwill of the company Transparency in service
WEAKNESS
Lack of good services
Lack of awareness about insurance among people
Less coverage in Rural Areas
Lack of credibility among the people because Reliance life insurance being a
private player
OPPORTUNITIES
Fast growing economy
Increasing per ndashcapita income in India
Saving behavior
High growth of Traditional industry
THREATS
Arrival of new entrants in the insurance industry
Cut throat competition within the industry
10
CORE VALUES
Reliance Life Insurance Company Limited has some core values which are listed as follows
1) Result Oriented2) Performance Driven3) Customer Focused4) Learning and Development Oriented5) Employee Centric6) Informal and Fun
1 B COMPANY PROFILE OF BAJAJ ALLIANZ LIFE INSURANCE
11
Bajaj Allianz Life Insurance Company limited is a joint venture between two leading conglomerates Bajaj Auto limited and Allianz AG company whose total asset value is of Rs 5900000 cr Bajaj whose wealth as of now is Rs 8000 cr group in India 55 years of experience 4th largest group in the world Above 15000 employees largest 2 amp 3 wheeler manufacture in India Allianz established in 1890 who has 115 years of experience in financial year
Bajaj Auto is one of the most trusted name is Indian auto for over 55 years At Bajaj Allianz customer delight is our guiding principle Ensuring world-class solutions by offering customized products with transparent benefits supported by best technology is our business philosophy
Notwithstanding the recession and a volatile stock market Bajaj Allianz life insurance posted a profit of Rs 45 cr for financial year 2009 against a loss of Rs 16 cr in the previous year
The company new business premium fell to Rs 4491 cr in the year against Rs 6674 cr recorded in the last year
We have been able to make a profit of profit of Rs 45 cr even in these difficult times Our new business premium declined by 30 to Rs 4491 cr because the stock market declined and we didnrsquot open any new office in FY 09rdquo Bajaj Allianz country manager and Bajaj Allianz life insurance CEO kamesh Goyal said
Bajaj Allianz Life Insurance has around 1200 offices and the company would not increase the number this year too Goyal said
The companyrsquos renewal premium grew by more than 100 to Rs 6133 cr in the 2008-2009 as compared to Rs 3051 cr in the previous fiscal year he saidIn the year Bajaj Allianz life insurance issued 29 lakh policies which were the second largest in the industry
Vision bull To be the first choice insurer for customers bull To be the preferred employer for staff in the insurance industry bull To be the number one insurer for creating shareholder value
MissionAs a responsible customer focused market leader we will strive to understand the insurance needs of the consumers and translate it into affordable products that deliver value for money
12) TRADITIONAL PLANS OF THE COMPANY
12
12A )TRADITIONAL PLAN OF RELIANCE LIFE INSURANCE -
Life insurance products are designed to suit the requirements of customers Fundamentally the product provide for
Risk cover
Investment
Health cover
In every product to a certain degree risk cover is imperative for it to fall under the category of insurance Based on the coverage of the product the premiums are calculated and the customer pays accordingly In order to suggest the right product it is essential for an agent to understand the requirements of the customer well
The traditional plans of the company have the following features- Fixed Tenure Potential for better returns Transparency Flexibility in investment Flexibility to invest more Flexibility to skip the premium Flexibility to choose the cover High liquidity Age term and sum assured decide the amount of premium Top- ups and switches are not allowed
Reliance Life Insurance Company Limited has offered 9Traditional plans to the customers which are listed as follows1) Reliance Term Plan2) Reliance Whole Life Plan3) Reliance Endowment Plan4) Reliance Special Endowment Plan5) Reliance Cash Flow Plan6) Reliance Credit Guardian Plan7) Reliance Special Credit Guardian PlanEach of the above traditional plans is discussed as follows
1) Reliance term plan-This insurance policy is designed for those who only want life cover for the protection of their family and do not wish to save for themselves It can also be useful to business firms that wish to provide financial security to their business against the sudden loss of partners or valuable manpower Since there is no saving element or bonus provision the premium is very lowHence this is a high-risk plan with a low premium
13
1048729 Features -a) Purely a term planb) Entry age minimum 18 years and maximum 65 yearc) Maximum premium paying term is 30 yeard) Loan facility NAe) Maturity amount = Sum assured
2) Reliance Whole Life Plan -This insurance policy is designed for people who do not wish to avail of any benefits themselves but wish to create an immediate estate to protect their family by availing of insurance cover on their life at a very low cost
1048729 Features -a) It is a whole life insurance policy with profitsb) Low cost life coverc) Maturity age is 85 year or 99 years last birthday as chosend) Maturity amount = Sum assured + Vested bonuse) Tax benefit is available
3) Reliance Endowment Plan -Reliance Life Insurancersquos Reliance Endowment Plan is the key to all your financial needs It is an inexpensive and easy way to protect you your family or your businessIn a nutshell this plan will keep you financially prepared for all the special occasions in your life - your daughterrsquos wedding your childrsquos university education or even a new office for your business - by eliminating the burden that a shortage of money createsIn the event of your untimely death Reliance Endowment Plan will also assist your loved ones through this difficult time by the financial support that it providesReliance Endowment Plan also gives you the additional benefit of participating in the companyrsquos profits which you will receive at the end of the policy period
1048729 Features -a) Entry age minimum is 5 year and maximum 65 yearb) Maturity age minimum is 18 year and maximum 75 yearc) Minimum premium paying term is 5 year and maximum 35 year in case of regular and in case of single 15 yeard) Minimum sum assured is Rs 25000 or as determined by the minimum premiume) Maximum sum assured is Rs 5 00000 (entry age below 18 years and no limit for entry age 18 and above)f) Premium mode annual half yearly quarterly and monthly (by salary deduction only)g) Loan up to 90 of the surrender value of the policyh) Maturity amount = Guaranteed sum assured + Reversionary bonus
4) Reliance Special Endowment Plan -
14
This insurance policy is designed for people who wish to combine savings with extended security The unique feature of this policy is that life protection continues for five years after you have stopped the payment of premium Payment of sum assured at the end of premium paying term and extension of life cover thereafter for the full sum assured for a period of 5 years are characteristics of the policyThis plan also participates in the profits
1048729 Features -a) Entry age minimum 12 year and maximum 65 yearb) Minimum sum assured is Rs 25000c) Minimum premium paying term is 10 year and maximum 40 yeard) Unique feature of this policy is that five year life protection continues after you have stopped the payment of premiume) Tax benefit is availablef) Under this policy bonus is compounded yearlyg) Loan facility is availableh) Maturity amount = Full sum assured before maturity date +Vested bonus at the time of maturity date
15
12 B) TRADITIONAL PLANS OF BAJAJ ALLIANZ LIFE INSURANCE
I ENDOWMENT PLAN
Saving plan which offer bonuses are excellent long term plan with complete safety Our products offer additional benefits which include 4 times life cover at a little extra cost limited premium payment terms and compounded reversionary bonuses making it a very good long term investment
1 Bajaj Allianz Invest GainInvest Gain is a specially designed plan that offers a unique combination of benefits that help you develop a sound financial portfolio for your family
4 Times Life Cover at a little extra cost
Limited premium payment option available
Additional Benefits
a) Accidental Death Benefit and Disability Benefit b) Critical Illness Benefit and Hospital Cash Benefit c) Family Income Benefit In case of death or accidental total permanent disability of insured all future premiums are waived and 1 of the sum assured is paid monthly
Invest Gain Save Care Economy SP Life Time Care
Super Saver
16
2 Bajaj Allianz save Care Economy SP
A One-time payment Investment plan that provides for savings with high risk cover for 10 years and also participates in the profits of the company It offers you high risk cover with easy liquidity and high returns
a) A single premium endowment plan that participates in the profitsb) 10 year Investment planc) Benefits payable on maturityc) Loans available
17
3 Bajaj Allianz life time care
A whole life plan which provides survival benefits at the age of 80 thereby making sure you are financially secure at the time when you need it the most Additional Benefits
a) Accidental Death Cover and Disability Cover b) Critical Illness Cover and Hospital Cash Cover c) Waiver of Premium Benefit
4Bajaj Allianz Super Saver plan
Bajaj Allianz Super Saver is a regular premium endowment plan which helps you save regular amounts for a safer tomorrow It also provides you with extra benefits of Guaranteed Additions to your sum assured at the end of each policy year
18
II MONEY BACK PLAN
Money back plans are Traditional Insurance plans that provide the investor with returns at regular stages of life
CashGain
1)Bajaj Allianz Cash Gain plan
A Money back plan which guarantees 125 payout + bonuses
Quadruple life cover
5 easy payouts which give upto 125 + bonuses
Additional Benefitsa) Accidental Death Benefit and Disability Benefitb) Critical Illness Benefit and Hospital Cash Benefitc) Family Income Benefit In case of death or accidental total permanent disability of insured all future premiums are waived and 1 of the sum assured is paid monthly
19
20
13) INDUSTRY PROFILE
MEANING OF INSURANCE
Insurance may be described as a social device to reduce or eliminate risk of loss to life and property Insurance is a collective bearing of risk Insurance is a financial device to spread the risks and losses of few people among a large number of people as people prefer small fixed liability instead of big uncertain and changing liability
Insurance can be defined as a ldquolegal contract between two parties whereby one party called insurer undertakes to pay a fixed amount of money on the happening of a particular event which may be certain or uncertainrdquo The other party called insured pays in exchange a fixed sum known as premiumInsurance is desired to safeguard oneself and onersquos family against possible losses on account of risks and perils It provides financial compensation for the losses suffered due to the happening of any unforeseen events
IMPORTANCE OF INSURANCE
Insurance constitutes one of the major segments of the financial marketInsurance services play predominant role in the process of financial Intermediary Today insurance industry is one of the most growing sectors in India There is lot of potential in the Indian Insurance Industry
There are many issues which require study The scope of the study of Insurance industry of India would be very great as there are ongoing Developments in the industry after the opening of the sectorOne of the major issues is the effects on LIC after the entry of private players in the market Though market share of LIC has been affected it has improved in terms of efficiency
There are number of other hot topics like penetration of Health Insurance Rural marketing of insurance new distribution channels new product ranges insurance brokersrsquo regulation incentive scheme of development officers of LIC etc So it offers lot of scope for studying the insurance industryRight now the insurance industry has great opportunities in a country like India or China which huge population Also the penetration of insurance in India is very low in both life and non-life segment so there is lot potential to be tapped Before starting the discussion on insurance industry and related issues we have to start with the basics of insurance So first we understand what is insurance How the word lsquoinsurancersquo is different from the word lsquoassurancersquo Etc
21
HISTORY OF INSURANCE
The concept of insurance is believed to have emerged almost 4500 years ago in the ancient land of Babylonia where traders used to bear risk of the carvan by giving loans which were later repaid with interest when the goods arrived safely
The concept of insurance as we know today took shape in 1688 at a place called Lloydrsquos Coffee House in London where risk bearers used to meet to transact business This coffee house became so popular that Lloydrsquos became the one of the first modern insurance companies by the end of the eighteenth centuryMarine insurance companies came into existence by the end of the eighteenth century These companies were empowered to write fire and life insurance as well as marine The Great Fire of London in 1966 caused huge loss of property and life With a view to providing fire insurance facilitiesDr Nicholas Barbon set up in 1967 the first fire insurance company known as the Fire office
Life insurance in its modern form came to India from England in 1818 The Oriental Life Insurance Company was the first insurance company to be set up in India to help the widows of European community The insurance companies which came into existence between 1818 and 1869 treatedIndian lives as subnormal and charged an extra premium of 15 to 20 per cent The first Indian insurance company the Bombay Mutual LifeAssurance Society came into existence in 1870 to cover Indian lives at normal rates
The Insurance Act 1938 the first comprehensive legislation governing both life and non-life branches of insurance were enacted to provide strict state control over insurance business This amended insurance Act looked into investments expenditure and management of these companiesBy the mid- 1950s there were 154 Indian insurers 16 foreign insurers and 75 provident societies carrying on life insurance business in India Insurance business flourished and so did scams irregularities and dubious investment practices by scores of companies As a result the government decided to nationalize the life assurance business in India The Life InsuranceCorporation of India (LIC) was set up in 1956 The nationalization of life insurance was followed by general insurance in 1972
22
MEANING OF LIFE INSURANCE
There are three parties in a life insurance transaction the insurer the insured and the owner of the policy (policyholder) although the owner and the insured are often the same person
Another important person involved in a life insurance policy is the beneficiary The beneficiary is the person or persons who will receive the policy proceeds upon the death of the insured
Life insurance may be divided into two basic classes ndash term and permanent
Term life insurance provides for life insurance coverage for a specified term of years for a specified premium The policy does not accumulate cash value
Permanent life insurance is life insurance that remains in force until the policy matures unless the owner fails to pay the premium when due
Whole life insurance provides for a level premium and a cash value table included in the policy guaranteed by the company The primary advantages of whole life are guaranteed death benefits guaranteed cash values fixed and known annual premiums and mortality and expense charges will not reduce the cash value shown in the policy
Universal life insurance (UL) is a relatively new insurance product intended to provide permanent insurance coverage with greater flexibility in premium payment and the potential for a higher internal rate of return A universal life policy includes a cash account Premiums increase the cash account If you want insurance protection only and not a savings and investment product buy a term life insurance policy
If you want to buy a whole life universal life or other cash value policy plan to hold it for at least 15 years Canceling these policies after only a few years can more than double your life insurance costs
23
HISTORY OF LIFE INSURANCE
Risk protection has been a primary goal of humans and institutions throughout history Protecting against risk is what insurance is all aboutOver 5000 years ago in China insurance was seen as a preventative measure against piracy on the sea Piracy in fact was so prevalent that as a way of spreading the risk a number of ships would carry a portion of another ships cargo so that if one ship was captured the entire shipment would not be lostIn another part of the world nearly 4500 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
Life insurance came about a little later in ancient Rome where burial clubs were formed to cover the funeral expenses of its members as well as help survivors monetarily With Romes fall around 450 AD most of the concepts of insurance were abandoned but aspects of it did continue through the Middle Ages particularly with merchant and artisan guilds These provided forms of member insurance covering risks like fire flood theft disability death and even imprisonment
During the feudal period early forms of insurance ebbed with the decline of travel and long-distance trade But during the 14th to 16th centuries transportation commerce and insurance would again reemergeInsurance in India can be traced back to the Vedas For instance yogakshema the name of Life Insurance Corporation of Indias 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
And similar to ancient Rome burial societies were formed in the Buddhist period to help families build houses and to protect widows and children
Modern InsuranceIllegal almost everywhere else in Europe life insurance in England was vigorously promoted in the three decades following the Glorious Revolution of 1688 The type of insurance we see today owes its roots to 17th century England Lloyds of London or as they were known then Lloyds Coffee House was the location where merchants ship owners and underwriters met to discuss and transact business dealsWhile serving as a means of risk-avoidance life insurance also appealed strongly to the gambling instincts of Englands burgeoning middle classGambling was so rampant in fact that when newspapers published names of prominent people who were seriously ill bets were placed at Lloydrsquos on their anticipated dates of death Reacting against such practices 79 merchant underwriters broke away in 1769 and
24
two years later formed a ldquoNew Lloydrsquos Coffee Houserdquo that became known as the ldquoreal Lloydrsquosrdquo Making wagers on peoples deaths ceased in 1774 when parliament forbade the practice
Insurance moves to AmericaThe US insurance industry was built on the British model The year 1735 saw the birth of the first insurance company in the American colonies inCharleston SC The Presbyterian Synod of Philadelphia in 1759 sponsored the first life insurance corporation in America for the benefit of ministers and their dependents And the first life insurance policy for the general public in the United States was issued in Philadelphia on May 22 1761But it wasnt until 80 years later (after 1840) that life insurance really tookoff in a big way The key to its success was reducing the opposition from religious groups
In 1835 the infamous New York fire drew peoples 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
With the creation of the automobile public liability insurance which first made its appearance in the 1880s gained importance and acceptanceMore advancement was made to insurance during the process of industrialization In 1897 the British government passed the Workmens Compensation Act which made it mandatory for a company to insure its employees against industrial accidents
During 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 most labor 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
25
BENEFITS OF LIFE INSURANCE
1) Risk cover -Life Insurance contracts allow an individual to have a risk cover against any unfortunate event of the future
2) Tax Deduction -Under section 80C of the Income Tax Act of 1961 one can get tax deduction on premiums up to one lakh rupees Life Insurance policies thus decrease the total taxable income of an individual
3) Loans -An individual can easily access loans from different financial institutions by pledging his insurance policies
4) Retirement Planning -What had provided protection against the financial consequences of premature death may now be used to help them enjoy their retirement yearsMoreover the cash value can be used as an additional income in the old age
5) Educational Needs -Similar to retirement planning the cash values that flow from ones life insurance schemes can be utilized for educational needs of the insurer or his children
26
ROLE OF LIFE INSURANCE IN THE GROWTH OF THE ECONOMY
The Life Insurance Industry has an enviable track record among public sector units It has a Consistent profit and dividend paying record accompanied by a steady growth in its financial resources Through investments in the Government sector and socially- oriented sectors the Industry has contributed immensely to the nations development The industry is recognized as one of the largest financial Institutions in the country The ventures initiated by the industry in the areas of Mutual Fund
Housing Finance has done exceedingly well in recent years To protect the countrys foreign exchange reserves the reinsurance arrangement are so organized that maximum retention is made possible within the country while at the same time protecting interests of the policy holders
27
ROLE OF IRDA
MISSION
ldquoTo protect the interests of the policyholders to regulate promote
and ensure orderly growth of the insurance industry and for matters
connected therewith or incidental theretordquo
The Insurance Act 1938 had provided for setting up of the Controller of Insurance to act
as a strong and powerful supervisory and regulatory authority for insurance Post
nationalization the role of Controller of Insurance diminished considerably in
significance since the Government owned the insurance companies But the scenario
changed with the private and foreign companies foraying in to the insurance sector This
necessitated the need for a strong independent and autonomous Insurance Regulatory
Authority was felt As the enacting of legislation would have taken time the then
Government constituted through a Government resolution an Interim Insurance
Regulatory Authority pending the enactment of a comprehensive legislation
The Insurance Regulatory and Development Authority Act 1999 is an act to provide for
the establishment of an Authority to protect the interests of holders of insurance policies
to regulate promote and ensure orderly growth of the insurance industry and for matters
connected therewith or incidental thereto and further to amend the Insurance Act 1938
the Life Insurance Corporation Act 1956 and the General insurance Business
(Nationalization) Act 1972 to end the monopoly of the Life Insurance Corporation of
India (for life insurance business) and General Insurance Corporation and its subsidiaries
(for general insurance business) The act extends to the whole of India and will come
into force on such date as the Central Government may by notification in the Official
Gazette specify Different dates may be appointed for different provisions of this Act
28
The Act has defined certain terms some of the most important ones are as follows
Appointed day means the date on which the Authority is established under the act
Authority means the established under this Act Interim Insurance Regulatory Authority
means the Insurance Regulatory Authority set up by the Central Government through
Resolution No 17(2) 94-lns-V dated the 23rd January 1996
Words and expressions used and not defined in this Act but defined in the Insurance Act
1938 or the Life Insurance Corporation Act 1956 or the General Insurance Business
(Nationalization) Act 1972 shall have the meanings respectively assigned to them in
those Acts A new definition of Indian Insurance Company has been inserted Indian
insurance company means any insurer being a company
(a) Which is formed and registered under the Companies Act 1956
(b) in which the aggregate holdings of equity shares by a foreign company either by
itself or through its subsidiary companies or its nominees do not exceed twenty-six
percent paid up capital in such Indian insurance company
(c) Whose sole purpose is to carry on life insurance business general insurance business
or re-insurance business
29
CURRENT SCENERIO
21) CURRENT SCENERIO OF THE INSURANCE INDUSTRY
With largest number of life insurance policies in force in the world insurance happens to be a mega opportunity in India Itrsquos a business growing at the rate of 15-20 per cent annually and presently is of the order of Rs 450 billion Together with banking services it adds about 7 per cent to the countryrsquos GDP Gross premium collection is nearly 2 per cent of GDP and funds available with LIC for investment are 8 per cent of GDP
Yet nearly 80 percent of Indian population is without life insurance cover while health insurance and non-life insurance continues to be below international standards And this part of the population is also subject to weak social security and pension systems with hardly any old age income security This it is an indicator that growth potential for the insurance sector is immense A well-develop and evolved insurance sector is needed for economic development as it provides long term funds for infrastructure development and at the same time strengthens the risk taking ability It is estimated that over the next ten years India would require investments of the order of one trillion US dollar The insurance sector to some extent can enable investment in infrastructure development to sustain economic growth of the country Insurance is a federal subject in India There are two legislation that govern the sector - The Insurance Act-1938 and The IRDA Act-1999
In India insurance is generally considered as a tax-saving device instead of its other implied long term financial benefits Indian people are prone to investing in properties and gold followed by bank deposits They selectively invest in shares also but the percentage is very small Even to this day Life Insurance Corporation of India dominates India insurance sector With the entry of private sector players backed by foreign expertise Indian insurance market has become more vibrant Business is becoming increasingly vulnerable due to wide variety of risk particularly after September 11 2001 disaster in which twin tower located in the hearts of New York city were crashed by terrorist attack resulting in loss of 6000 human lives as well as financial loss to the extent of $45 billion The impact of this terrorist attack has created new horizon of risk to the business world today
However rapid changes in the global economy development of technology and e-business already gathered momentum Increased dependency on technology has originated new risks that have resulted in well-published incidents Computer hackers obtaining credit card information from visa and Power-Gen the love bug virus cyber extortion web content liability professional errors and omissions computers and other crimes and activities such as terrorism kidnapping and companyrsquos executive and extortion of money commercial liability etc have significant impact on business resulting in extreme financial loss commercial embarrassment or regulatory implications
Corporation insurancerisk managers under the circumstances have to demand increasingly complex insurance products They have to be more attentive and
30
knowledgeable about emerging risks how those risks are managed effectively and efficiently and how they could ultimately affect a companyrsquos financial situation and therefore its position in the market place In short how such risks are managed and can give to an insured a competitive advantage
In the changing times adoption of e-commerce into business models the integration of web-based communication and data transfer capabilities into the business operations and leveraging of advanced network and technology architecture for maximum benefit are the new horizon of the risks For the corporate insurancerisks managers these new exposure-cyber-risks-can lead to cyber losses widening the interpretation of what constitute insure property damage particularly as it relates to information technology and dataAll the while organizations are tremendous pressure to reduce expenses and increase profit margin and cannot afford to suffer a property loss of business interruption due to any cause (risk) How a company identifies quantifies qualifies and manages these new risks exposure in addition to the well-known tradition risks is becoming an important factor in creating shareholders value This often means changing the way Everyone in the organization have to think about risk
Insurance managers are seeing price levels (premium) continue to rise-albeit modestly-in todayrsquos primarily commercial property and reinsurance markets They are demanding that insurers improve their risk assessment and quantification offerings so that an insured may avail the benefit in cost (premium rate) on account of well-managed riskThe good news for insurance managers is that as the economy evolves insurers are increasingly matching that evaluation with new products services and capabilities due to opening up the insurance market to the private players
Insurers who are truly listening to their customers and striving to be more in tune with their needs are responding to the fast changing corporate insurance and risk management landscape They are listening to their customers They are making fresh approaches to address the new challenges faced by insured organization by designing the new products as per the needs Insurers are providing value added services to insured to protect the value created by the business
Insurers are increasingly required to develop and expand their information technology platforms to ensure that the vast amount of data they collect about their customers Insurancerisk portfolio can easily and seamlessly be transformed into valuable risk management information To help their customers insurers should make better-informed decisions They must be able to swiftly deliver this data to their customers (insured) anywhere in the world Insurer are also discovering that risk assessment have to be customized to meet policyholdersrsquo new exposures and needs The insurance industry is stepping up and addressing these challenges in several different ways
31
22) CURRENT SCENARIO OF RELIANCE LIFE INSURANCE
RLIC offers wide range of innovative life insurance products targeted at individuals and groups It offers need based products that caters to four distinct segments namely protection child retirement and investment plans RLIC is committed to emerge as a
transnational Life Insurer of global scale and standard
Reliance Life Insurance Company Limited (RLIC) is amongst the fastest growing life insurance companies in India It is also amongst the top four private sector life insurance companies in India (As on FY 2008-2009)
As on March 31 2009 RLIC has an annualized premium of Rs 30 billion with a market share of 103 It has leapfrogged on the growth path and has reached the 4 million policy mark in a short span of within 3 years RLIC has a strong distribution network of 1145 branches with more than 149000 agents
32
Insurancersquos Market Share in Comparison of Other Private company
If we look at the status of Reliance Life Insurancersquos market share in comparison of other
private company in comparison of premium earned-
If we talk the growth of Insurance industryrsquos private players in recent years the data will
reflect-
CH - 3) RESEARCH METHODOLOGY
33
RESEARCH DESIGN-
COMPARITIVE STUDY- A comparative study has been undertaken to compare the traditional Plans of Reliance Life Insurance with that of Bajaj Allianz life insurance
DATA TYPE
INTRODUCTION - Any organization whether big or small private or public needs different type of information to know its popularity I have gathered secondary data and primary data and collected information from the combination of these two data
PRIMARY DATA - Primary data collection method was decided for observing working of the company and approaching the customers directly face to face A great care was taken while collecting the primary data to answer that it is relevant accurate current and unbiased
SECONDARY DATA - Secondary data collection method was used by referring to various websites books and newspapers for collecting information regarding the project under study Secondary data consist of the information that already exists somewhere else for some another purpose
SAMPLING TECHNIQUES-
SAMPLE SIZE- A sample size of 50 was taken to be analyzed
SAMPLE LOCATION-Various sectors of Kamla Nagar Civil lines Mukherji Nagar Model Town and selected areas of Delhi
SAMPLING PROCESS - Convenient sampling was used to overcome the time and money constraints that could have been faced by us while collecting the data The customers were contacted face to face directly and also by way of telephonic conversation with them
ANALYTICAL TOOLS - The data collected were arranged accordingly and statistical tools like bar graphs and pie-charts were used to analyze and present the data
RESEARCH INSTRUMENT USED-
34
SAMPLING MEDIA - Printed questionnaires consisting several questions were asked to have an idea of customers view about Reliance Life Insurance plans followed by personal questions
FIELD WORK - Rigorous field work was undertaken to locate the interested and potential respondents to fulfill the objectives of the study
THE PRIMARY OBJECTIVEOF THE STUDY -
The primary objective of the research study is to have a detailed analysis of Reliance Life Insurance bringing in focus the future prospects of the (Anil Dhirubhai Ambani group) with relevance to the customer perception regarding the various plans and products offered by Reliance Life Insurance
31) DATA ANALYSIS AND INTERPRETATION
35
PERSONAL DETAILS
1) AGE a) 18-30b) 31-50c) 51-65
AGE NO OF RESPONDENTS PERCENTAGE
18-30 21 42
31-50 19 38
51-65 10 20
TOTAL 50 100
INTERPRETATION-The bar graph reveals that 42 of the respondents belong to the age group of 18-30 years 38 lies in the age group of 31-50 years and 20 of them lie in the age group of 51-65 years
2) OCCUPATION
4238
20
05
1015202530354045
NO
O
F
RE
SP
ON
DE
NT
S
18 to 30 31 to 50 51 to 65
AGE (in year)
AGE WISE CLASSIFICATION
36
a) Serviceb) Businessc) Professiond) Housewifee) Retired
OPTION NO OF RESPONDENTS PERCENTAGE
Service 16 32
Business 14 28
Profession 5 10
Housewife 8 16
Retired 7 14
TOTAL 50 100
INTERPRETATION-The above bar graph reveals that 32 of the total respondents were servicemen 28 of them belonged to the business class 10 were professionals 16 were housewives and 14 of the total respondents fall in the retired category
3) INCOME
32
28
10
16
14
0
5
10
15
20
25
30
35
Service Business Profession Housewife Retired
OCCUPATION
OCCUPATION WISE CLASSIFICATION
37
a) 150000-300000
b) 300000-500000
c) Above 500000
OPTION NO OF RESPONDENTS PERCENTAGE
150000-300000 24 48
300000-500000 14 28
Above 500000 12 24
TOTAL 50 100
INTERPRETATION-The above bar graph reveals that out of the total respondents 48 lie in the income group of 150000-300000 28 of the total respondents belonged to the income group of 300000-500000 and 24 lie in the income group of people earning an income of above Rs 500000pa
4828 24
01020304050
N O
OF
RE
SP
ON
DE
NT
S
150000-300000
300000-500000
ABOVE500000
INCOME (in RS)
INCOME WISE CLASSIFICATION
38
4) FAMILY MEMBERS
a) 2b) 3c) 4d) Above 4
OPTION NO OF RESPONDENT PERCENTAGE
2 11 22
3 9 18
4 24 48
Above 4 6 12
TOTAL 50 100
INTERPRETATION The above bar graph shows that 22 of the total respondents had a family of 2 members 18 of them had 3 family members 48 of them had 4 family members and 12 of them had the no of family members above 4
Q1 Where do you prefer to invest
22 18
48
120
1020304050
No
o
f re
spo
nd
ents
2 3 4 Above 4
No of family members
MEMBER WISE CLASSIFICATION
39
a) fixed deposits
b) stock
c) mutual funds
d) insurance
e) others
Option No of respondents Percentage
Fixed deposits 5 10
Stock 10 20
Mutual fund 10 20
Insurance 18 36
others 7 14
TOTAL 50 100
Interpretation The above pie chart shows that out of 50 respondents 10 preferred to invest in fixed deposits 20 in stocks 20 in mutual funds 36 in insurance and 14 in others like property gold etc
Q2 What are your priorities for investment
40
a) protecting your family against pre-mature death
b) wealth creation
c) retirement needs
d) child education and marriage
e) protect income against disability sickness or critical illness
Option No of respondents Percentage
Protecting your family against pre mature death
10 20
Wealth creation 14 28
Retirement needs 5 10
Child education and marriage 7 14
Protect income against disability sickness or critical illness
14 28
TOTAL 50 100
Interpretation The above pie chart shows that out of 50 respondents 20 of them invest for protecting their family against premature death 28 for creating wealth 10 for meeting their future retirement needs 14 for child education amp marriage and 28 for protection against disability and sickness
Q3 What is your main motive behind investing in life insurance
41
a) tax benefit
b) savings
c) risk cover
Option No of respondents Percentage
Tax benefits 27 54
Savings 5 10
Risk cover 18 36
TOTAL 50 100
Interpretation The above pie chart shows that out of the sample respondents 54 have tax benefit 10 have savings and 36 have risk cover as their main motive for making an investment in life
Q4 What kind of investment do you prefer
42
a) high risk high gain
b) low risk low gain
c) moderate
d) vary times to times
Option No of respondents Percentage
High risk high gain 8 16
Low risk low gain 5 10
Moderate 12 24
Vary times to times 25 50
TOTAL 50 100
Interpretation The above pie chart shows that out of 50 respondents 16 preferred high risk- high gain form of investment 10 preferred low risk- low gain form of investment 24 preferred moderate investment and 50 preferred varied form of investment
43
Q5Are you interested to invest in Traditional Plans
a) YES
b) NO
Option No of respondents Percentage
YES 36 72
NO 14 28
TOTAL 50 100
Interpretation The above pie chart shows that 72 of the respondents preferred to invest in Traditional Plans
44
Q6 What is your level of annual investmenta) below 20000
b) 20000-40000
c) above 40000
Option No of respondents Percentage
Below 20000 41 82
20000-40000 7 14
Above 40000 2 4
TOTAL 50 100
Interpretation The above pie chart shows that 82 of the respondents are willing to invest below Rs 20000 per annum 14 of them want to invest within Rs 20000 per annum to Rs 40000 and 4 wanted to invest over and above Rs 40000
45
Q7 What factors would you consider most important before choosing an insurance policy
a) publicity of the company
b) reputation of the company
c) quality of life advisors
d) after sales-supporting of the company
Option No of respondents Percentage
Publicity of the co 5 20
Reputation of the co 25 50
Quality of life advisors 10 10
After sale-services 10 20
TOTAL 50 100
Interpretation out of the sample respondents 20 considers publicity of the company 50 considers reputation of the company 10 considers quality of life advisors and 20 considers after sales support of the company as the most important factor for choosing an insurance company
46
Q8 Which life insurance company would you prefer the most to invest ina) reliance life insurance (RLIC)
b) Bajaj Allianz life insurance
Option No of respondents Percentage
RLIC 21 42
BAJAJ ALLIANZ 29 58
TOTAL 50 100
Interpretation Out of 50 respondents 42 preferred to invest in reliance life insurance over 58 of the respondents who prefer to invest in Bajaj Allianz life insurance
47
Q9 If reliance life insurance then which particular plan you would like to invest ina) Reliance Term Plan
b) Reliance Whole Life Plan
c) Reliance Endowment Plan
d) Reliance Special Endowment Plan
Option No of respondents Percentage
Reliance term plan 6 2858
Reliance whole life plan 3 1428
Reliance endowment plan 9 4286
Reliance special endowment plan 3 1428
TOTAL 21 100
Interpretation Out of 21 respondents 2858 preferred to invest in term plan 1428 in whole life plan 4286 in endowment plan and 1428 of them preferred to invest in special endowment plan of reliance life insurance
48
Q10 If Bajaj Allianz life insurance then which particular plan you would like to invest in
I ENDOWMENT PLAN a) Bajaj Allianz Invest Gain
b) Bajaj Allianz save Care Economy SP
c) Bajaj Allianz life time care
d) Bajaj Allianz Super Saver plan
II MONEY BACK PLAN i Bajaj Allianz Cash Gain plan
Option No of respondents Percentage
Invest gain plan 3 1035
Save care economy SP 6 2069
Life time care 7 2415
Super saver plan 3 1035
Cash gain plan 10 3446
TOTAL 29 100
Interpretation Out of 29 respondents 1035 of them plan to invest in Bajaj Allianz- Invest Gain 2069 wish to invest in Bajaj Allianz save Care Economy SP 2415 want to invest in Bajaj Allianz life time care 1035 in Bajaj Allianz Super Saver plan and 3446 prefer to invest in Bajaj Allianz Cash Gain plan
49
32) SIGNIFICANCE OF STUDY
Life insurance is one of the most rapidly growing sectors in India The main reason
behind the growth can attributed to the high population density improving economical
condition improving education level and improving awareness Due to these factors there
is still huge scope for growth in this sector Like any other business when the
opportunities are present everybody tends to enter the industries This growth hence
fetches the new competitors as well as new strategies from existing players To sustain in
any competitive industry the organization must adapt to existing strategies and adopt
new ones This study will focus on the analysis of Reliance Life Insurance in comparison
with the present scenario of Bajaj Allianz Life Insurance with respect to the Traditional
Plans of both the companyrsquos This will mainly cover the following aspects
To know about the awareness and popularity of various Traditional Plans offered
by Reliance Life Insurance and Bajaj Allianz Life Insurance
How Reliance Life Insurance can develop and sustain a good distribution
network
These will provide it benefit both in terms of better market coverage as well as better
penetration
50
33) SCOPE OF THE STUDY
1) This helps in finding out vast potential of insurance company
2) The study was conducted in National Capital Region (NCR) only
3) The number of respondents to be surveyed can be improved
4) This study was conducted by comparing the performances amp products of three private
amp government insurance players in insurance industry
5) This study was conducted to analyze the market stand of Reliance life insurance
Company limited and Bajaj Allianz Life Insurance Company Limited of India insurance
companies
6) This study is done to eliminate all the myths which people have in their minds
regarding Insurance Sector
51
34) OBJECTIVES
To have a detailed understanding of Reliance Life Insurance and Bajaj Allianz Life Insurance
To find out various reasons considered while investing in policies
To get knowledge about the market exposure and future prospects about Reliance Life Insurance
To know the perception of the consumers about the life insurance
To analyze the Traditional plans of Reliance Life Insurance and compare it with Bajaj Allianz
To know about the brand awareness of Reliance Life Insurance its customer preferences over Bajaj Allianz in the market
To study a proper knowledge about the life insurance industry
To understand the consumer choice while investing in policies
52
CHAPTER 4
DISCUSSION AND FINDINGS OF THE STUDY
FINDINGS OF THE STUDY RECOMMENDATION AND SUGGESTIONS CONCLUSION LIMITATIONS BIBLIOGRAPHY ANNEXUREQUESTIONNAIRE
53
41) FINDINGS OF THE STUDY
1) The survey reveals that still a large proportion of population is interested to invest in other forms of investment other than insurance as still most of them are unaware about the importance of insurance in their life
2) Basically people make varied form of investment for creating wealth to protect their families against pre-mature death and to protect income against disability sickness or critical illness
3) The main motive of the individuals investing is receives benefits US 1010D People generally consider insurance as a tax saving device
4) Mostly people prefer time to time form of investment as they are not willing to take high degree of risk
5) 72 of the respondents are preferred to invest in Traditional Plans
6) Most of the people prefer to make an annual investment up to a maximum of Rs20 000 per annum
7) When the product is like life insurance reputation of the company publicity of the company amp after sale services of the company matters a lot This means that people would choose that insurance company only where the quality of life advisors is satisfactory
8) Most people prefer to invest in Bajaj Allianz Life Insurance as compared to making an investment in Reliance Life Insurance
9) The most preferable Traditional plan of Reliance Life Insurance is Endowment Plan
10) The most preferable plan of Bajaj Allianz Life Insurance co is Cash Gain Plan
54
42) SUGGESTIONS amp RECOMMENDATIONS
Based on the observations of the study some suggestions for the organization are made as
follows
1) Quality of advisors is also as important as the quantity Thus company should go
mainly for qualified professionals
2) Company should increase its budget on publicity so that awareness can be increased
3) Clarity and transparency should be provided to the customer regarding various
products
4) Training sessions should be planned in advance so that schedule can be provided to
the advisor in advance
5) Apart from the Brand Positioning in urban area a strategy should be adopted by
Reliance to make its brand also near to middle level or high aspirant people because they
are the main source of the business in India
6) Awareness Camp to the sub urban area should be focused by Reliance
7) Some innovative technique or product is required in order to attract the consumer
43) LITERATURE REVIEW
55
1) Robi Elenekave has explained in detail why various retirement plans and pension plans donrsquot give the desired returns The main difficulty is the use of incorrect method for calculations done to find out the return on investment This is primarily due to wrong assumptions The study provides information about the various precautions which need to be considered before planning so that the desired results can be achieved
2) Another paper provides insight about how various financial sectors invest in bond market The study was how the different players investment different instruments according to the risk appetite and desired rate of return The study shows that life insurance sector mainly invests in government bond which are low return and low risk instrument The investment in government bond it shows that life insurance companies are more conservative in investment
3) K Subhash has presented the history of Indiarsquos life insurance industry in three stages before independence after independence and post liberalization which not only provides information but also help in analyzing the impact of these major changes The authors have also discussed the huge potential which exists in the rural India The insurance company must realize the importance of rural sector because the future lies there The author commented about the increasing share of private player in the existing market This confirms the availability of opportunity in this sector The paper also provides the importance of professional and focused approach which was given no importance
4) Tapen Sinha has discussed the various challenges and opportunities in the insurance market One of the very important factors which have been discussed in the study is the importance of developing new and better products As the scenario changes the need of an individual also changes so any organization must understand and fulfill these needs The new product development requires constant research so organization must also focus on it
5) Roger G Ibbotson discusses how financial planners and advisors have recently started to recognize that human capital must be taken into account when building optimal portfolios for individual investors Any investorrsquos human capital has a unique mortality risk However life insurance in its forms can hedge against this mortality risk Thus human capital affects both the optimal asset allocation and the optimal demand for life insurance This paper provides a unified framework based on human capital in order to enable individual investors to make both decisions jointly
6) Rakesh Niraj study tells how the flow of information in any organization is important For any organization to grow the flow of information must be good both upwards as well as ownwards The proper flow of information will also ensure proper flow of good and services from organization to customer and proper flow of information from customer to organization The information from customers will help the organization in providing better goods and services to the customer For the above purpose organization must ensure good channel partner who can provide the organization with correct feedback Hence it becomes very important for any organization to acquire good channel partners
56
7) Stephen P Robbins has discussed how group dynamics works in any organization The success of any organization depends on the success of its various teams and how these teams work together The book provides various techniques which can be used by any organization to get result from the team effort The conflict resolution is a major task in any group Various techniques which the organization can use in conflict resolution are also discussed Another important aspect covered is the importance of leadership in the organization The various forms of leadership have been discussed and the kinds of leadership which can be effective in particular situations are also discussed
8) R Wayne Mondy has discussed the importance of training and development in any organization The training provides skills to perform the current job where as the development involve learning beyond present need The various type of training are discussed which can be used according to the requirement Training and development are not only important for better performance of an individual but it also gives satisfaction The major factors which influence training and development are found to be management support commitment of trainee and trainer complexity of the organization The process of developing good training plans is also provided In another part author has discussed the importance of right man for right job The compensation strategies are also given which are very crucial for ant industry
9) Philip Kotler has discussed the importance of channels partners Better the channel partners better will be the delivery model Detailed discussion about how to design the channel structure so that all the requirements could be fulfilled is provided The various issues faced by the organization while managing the channels are also given When an organization has more than one channel it becomes very important that all the channels should be integrated in such a way that the organization get the best out of all At times due to the conflicting benefit of the different channels the conflict arise so various strategies to manage these issues is also discussed in the chapter
10) Michael J Etzel has written about the marketing of services The marketing of services is different from the goods because of the characteristic of service like intangibility inseparability heterogeneity etc Brief about pricing strategies is also given in case of services The authors have also given the impact of technological development on the services marketing The author has also given the importance of brand and after sales support in case of services as perception of the customers plays an important role In other part of the book the authors has described the importance of distribution channels and designing of the same A channel partner should be consider as partner according to discussion The legal complications associated with channels are also discussed These complications are necessary to take into the consideration while managing the channels The conflicting interest of channels both horizontally and vertically are also taken into the consideration
57
11) Boone has discussed about the importance of personal financial planning The concept of time value of money has also been elaborated The importance of creating and implementing budget is given under money management The other important concepts for financial planning like credit management and understanding taxes are also explained In one section the authors have discussed the importance of investment and what should be the major considerations while making any investment The considerations include the risk associated with the investment return on the investment etc The importance and benefits of life insurance has also been given The discussion also includes various legal aspects associated with life insurance The overview of retirement planning is also given which includes importance and benefit of retirement planning Various tools for proper retirement planning are also discussed
58
44) CONCLUSION
1) The customers are very much sensitive towards their investment They would like to invest only in that insurance company which enjoys good public image along with quality good services
2) The result of the survey conducted shows that Bajaj Allianz Life Insurance is the leader in life insurance industry but Reliance Life Insurance and other private players are giving it a close competition
3) The motive of the people behind investing in life insurance is the tax benefits that they would receive under sec 80C and 1010D
4) In Life Insurance industry the after sales support of the company is as important as the quality of life advisors
59
45) LIMITATIONS
There were some limitations faced during the study as discussed below
Since the study was taken for two months so there was a constraint of time and effort
The study was limited only to some of the Delhi regions so the results may be biased
Questionnaire was given to 125 people however only 50 responded to it which is very small for such type of study
The biasness of consumer or responses error cannot be eliminated
Most of the people are not aware about the Importance and the necessity of insurance in their life
Adverse perception of the people towards insurance sector- People consider insurance as a tax saving device
Lack of awareness about the earning opportunity in the insurance sector
60
46) BIBLIOGRAPHY
wwwreliancelifeinsurancecom
wwwadagroupcom
wwwirdacom
wwwbajajallianzlifeinsurancecom
wwwallianzbajajcom
47) ANNEXURE
61
QUESTIONNAIRE
A comparative analysis of consumer perception regarding Traditional plans of Reliance Life Insurance with that of Bajaj Allianz Life Insurance
NAME ___________________________
PERSONAL DETAILS
1) AGE_________________
1) OCCUPATION______________
2) INCOME___________________
3) FAMILY MEMBERS_________
Q1 Where do you prefer to investa) Fixed deposits b) Stock c) Mutual funds d) Insurance e) Others
Q2 What are your priorities for investmenta) Protecting your family against pre-mature death b) Wealth creation c) Retirement needs d) Child education and marriage e) Protect income against disability sickness or critical illness
Q3 What is your main motive behind investing in life insurancea) Tax benefit b) Savings c) Risk cover
Q4 What kind of investment do you prefera) High risk high gain b) Low risk low gain c) Moderate d) Vary times to times
62
Q5Are you interested to invest in Traditional Plansa) Yes b) No
Q6 What is your level of annual investmenta) below 20000 b) 20000-40000 c) above 40000
Q7 What factors would you consider most important before choosing an insurance company
a) publicity of the company b) reputation of the company c) quality of life advisors d) after sales-supporting of the company
Q8 Which life insurance company would you prefer the most to invest ina) Reliance life insurance b) Bajaj Allianz life insurance
Q9 If reliance life insurance then which particular plan you would like to invest ina) Reliance Term Plan b) Reliance Whole Life Plan c) Reliance Endowment Plan d) Reliance Special Endowment Plan
Q10 If Bajaj Allianz life insurance then which particular plan you would like to invest in
I ENDOWMENT PLAN
a) Bajaj Allianz Invest Gain
b) Bajaj Allianz save Care Economy SP
c) Bajaj Allianz life time care
d) Bajaj Allianz Super Saver plan
II MONEY BACK PLAN
a) Bajaj Allianz Cash Gain plan
63
64
- COMPANY PROFILE
- ABOUT RELIANCE LIFE INSURANCE
- HISTORY
- Reliance Capital Limited announced the launch of its life insurance business on February 1 2006 This was after obtaining the required regulatory approvals from the Registrar Of Companies and the Insurance Regulatory and Development Authority
- It was in August 2005 that the ball was set rolling when Reliance Capital Limited the financial arm of Reliance ndash Anil Dhirubhai Ambani Group (ADAG) ndash announced the requisition of 100 shareholding in AMP Sanmar Life Insurance Company Limited and the formal transfer of shares took place in October 2005 The company will issue all policy contracts under the Reliance Life Insurance Company limited name All the existing policy contracts also stand transferred to the Reliance Life Insurance entity with all the original contractual terms and commitments intact
- CORE VALUES
- Reliance Life Insurance Company Limited has some core values which are listed as follows
- Vision bull To be the first choice insurer for customers bull To be the preferred employer for staff in the insurance industry bull To be the number one insurer for creating shareholder value
- Mission As a responsible customer focused market leader we will strive to understand the insurance needs of the consumers and translate it into affordable products that deliver value for money
- 12) TRADITIONAL PLANS OF THE COMPANY
- 12A )TRADITIONAL PLAN OF RELIANCE LIFE INSURANCE-
- Life insurance products are designed to suit the requirements of customers Fundamentally the product provide for
- In every product to a certain degree risk cover is imperative for it to fall under the category of insurance Based on the coverage of the product the premiums are calculated and the customer pays accordingly In order to suggest the right product it is essential for an agent to understand the requirements of the customer well
- The traditional plans of the company have the following features-
- Fixed Tenure
- Potential for better returns
- Transparency
- Flexibility in investment
- Flexibility to invest more
- Flexibility to skip the premium
- Flexibility to choose the cover
- High liquidity
- Age term and sum assured decide the amount of premium
- Top- ups and switches are not allowed
- Reliance Life Insurance Company Limited has offered 9
- 1) Reliance term plan-
- 2) Reliance Whole Life Plan -
- 3) Reliance Endowment Plan -
- 4) Reliance Special Endowment Plan -
- 13) INDUSTRY PROFILE
- MEANING OF INSURANCE
- Insurance may be described as a social device to reduce or eliminate risk of loss to life and property Insurance is a collective bearing of risk Insurance is a financial device to spread the risks and losses of few people among a large number of people as people prefer small fixed liability instead of big uncertain and changing liability
- Insurance can be defined as a ldquolegal contract between two parties whereby one party called insurer undertakes to pay a fixed amount of money on the happening of a particular event which may be certain or uncertainrdquo The other party called insured pays in exchange a fixed sum known as premium
- Insurance is desired to safeguard oneself and onersquos family against possible losses on account of risks and perils It provides financial compensation for the losses suffered due to the happening of any unforeseen events
- IMPORTANCE OF INSURANCE
- Insurance services play predominant role in the process of financial Intermediary Today insurance industry is one of the most growing sectors in India There is lot of potential in the Indian Insurance Industry
- There are many issues which require study The scope of the study of Insurance industry of India would be very great as there are ongoing Developments in the industry after the opening of the sector
- Right now the insurance industry has great opportunities in a country like India or China which huge population Also the penetration of insurance in India is very low in both life and non-life segment so there is lot potential to be tapped Before starting the discussion on insurance industry and related issues we have to start with the basics of insurance So first we understand what is insurance How the word lsquoinsurancersquo is different from the word lsquoassurancersquo Etc
- HISTORY OF INSURANCE
- The concept of insurance is believed to have emerged almost 4500 years ago in the ancient land of Babylonia where traders used to bear risk of the carvan by giving loans which were later repaid with interest when the goods arrived safely
- The concept of insurance as we know today took shape in 1688 at a place called Lloydrsquos Coffee House in London where risk bearers used to meet to transact business This coffee house became so popular that Lloydrsquos became the one of the first modern insurance companies by the end of the eighteenth century
- Marine insurance companies came into existence by the end of the eighteenth century These companies were empowered to write fire and life insurance as well as marine The Great Fire of London in 1966 caused huge loss of property and life With a view to providing fire insurance facilities
- Dr Nicholas Barbon set up in 1967 the first fire insurance company known as the Fire office
- Life insurance in its modern form came to India from England in 1818 The Oriental Life Insurance Company was the first insurance company to be set up in India to help the widows of European community The insurance companies which came into existence between 1818 and 1869 treated
- Indian lives as subnormal and charged an extra premium of 15 to 20 per cent The first Indian insurance company the Bombay Mutual Life
- Assurance Society came into existence in 1870 to cover Indian lives at normal rates
- The Insurance Act 1938 the first comprehensive legislation governing both life and non-life branches of insurance were enacted to provide strict state control over insurance business This amended insurance Act looked into investments expenditure and management of these companies
- By the mid- 1950s there were 154 Indian insurers 16 foreign insurers and 75 provident societies carrying on life insurance business in India Insurance business flourished and so did scams irregularities and dubious investment practices by scores of companies As a result the government decided to nationalize the life assurance business in India The Life Insurance
- Corporation of India (LIC) was set up in 1956 The nationalization of life insurance was followed by general insurance in 1972
- MEANING OF LIFE INSURANCE
- There are three parties in a life insurance transaction the insurer the insured and the owner of the policy (policyholder) although the owner and the insured are often the same person
- Another important person involved in a life insurance policy is the beneficiary The beneficiary is the person or persons who will receive the policy proceeds upon the death of the insured
- Life insurance may be divided into two basic classes ndash term and permanent
- HISTORY OF LIFE INSURANCE
- Risk protection has been a primary goal of humans and institutions throughout history Protecting against risk is what insurance is all about
- Over 5000 years ago in China insurance was seen as a preventative measure against piracy on the sea Piracy in fact was so prevalent that as a way of spreading the risk a number of ships would carry a portion of another ships cargo so that if one ship was captured the entire shipment would not be lost
- In another part of the world nearly 4500 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
- Life insurance came about a little later in ancient Rome where burial clubs were formed to cover the funeral expenses of its members as well as help survivors monetarily With Romes fall around 450 AD most of the concepts of insurance were abandoned but aspects of it did continue through the Middle Ages particularly with merchant and artisan guilds These provided forms of member insurance covering risks like fire flood theft disability death and even imprisonment
- During the feudal period early forms of insurance ebbed with the decline of travel and long-distance trade But during the 14th to 16th centuries transportation commerce and insurance would again reemerge
- And similar to ancient Rome burial societies were formed in the Buddhist period to help families build houses and to protect widows and children
- Modern Insurance
- Illegal almost everywhere else in Europe life insurance in England was vigorously promoted in the three decades following the Glorious Revolution of 1688 The type of insurance we see today owes its roots to 17th century England Lloyds of London or as they were known then Lloyds Coffee House was the location where merchants ship owners and underwriters met to discuss and transact business deals
- While serving as a means of risk-avoidance life insurance also appealed strongly to the gambling instincts of Englands burgeoning middle class
- Gambling was so rampant in fact that when newspapers published names of prominent people who were seriously ill bets were placed at Lloydrsquos on their anticipated dates of death Reacting against such practices 79 merchant underwriters broke away in 1769 and two years later formed a ldquoNew Lloydrsquos Coffee Houserdquo that became known as the ldquoreal Lloydrsquosrdquo Making wagers on peoples deaths ceased in 1774 when parliament forbade the practice
- Insurance moves to America
- The US insurance industry was built on the British model The year 1735 saw the birth of the first insurance company in the American colonies in
- Charleston SC The Presbyterian Synod of Philadelphia in 1759 sponsored the first life insurance corporation in America for the benefit of ministers and their dependents And the first life insurance policy for the general public in the United States was issued in Philadelphia on May 22 1761
- But it wasnt until 80 years later (after 1840) that life insurance really tookoff in a big way The key to its success was reducing the opposition from religious groups
- In 1835 the infamous New York fire drew peoples 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
- With the creation of the automobile public liability insurance which first made its appearance in the 1880s gained importance and acceptance
- More advancement was made to insurance during the process of industrialization In 1897 the British government passed the Workmens Compensation Act which made it mandatory for a company to insure its employees against industrial accidents
- During 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 most labor 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
- BENEFITS OF LIFE INSURANCE
- 1) Risk cover -Life Insurance contracts allow an individual to have a risk cover against any unfortunate event of the future
- 2) Tax Deduction -Under section 80C of the Income Tax Act of 1961 one can get tax deduction on premiums up to one lakh rupees Life Insurance policies thus decrease the total taxable income of an individual
- 3) Loans -An individual can easily access loans from different financial institutions by pledging his insurance policies
- 4) Retirement Planning -What had provided protection against the financial consequences of premature death may now be used to help them enjoy their retirement years
- 5) Educational Needs -Similar to retirement planning the cash values that flow from ones life insurance schemes can be utilized for educational needs of the insurer or his children
- The Life Insurance Industry has an enviable track record among public sector units It has a Consistent profit and dividend paying record accompanied by a steady growth in its financial resources Through investments in the Government sector and socially- oriented sectors the Industry has contributed immensely to the nations development The industry is recognized as one of the largest financial Institutions in the country The ventures initiated by the industry in the areas of Mutual Fund
- Housing Finance has done exceedingly well in recent years To protect the countrys foreign exchange reserves the reinsurance arrangement are so organized that maximum retention is made possible within the country while at the same time protecting interests of the policy holders
- 22) CURRENT SCENARIO OF RELIANCE LIFE INSURANCE
- RLIC offers wide range of innovative life insurance products targeted at individuals and groups It offers need based products that caters to four distinct segments namely protection child retirement and investment plans RLIC is committed to emerge as a transnational Life Insurer of global scale and standard
- CH - 3) RESEARCH METHODOLOGY
- RESEARCH DESIGN-
- SAMPLING TECHNIQUES-
- THE PRIMARY OBJECTIVEOF THE STUDY-
- 34) OBJECTIVES
- 7) Some innovative technique or product is required in order to attract the consumer
- 45) LIMITATIONS
- 46) BIBLIOGRAPHY
-
A Reliance Capital company
2000 2000 2001 2003 2005 2006-07
Group Profits cross 2500 Cr
Revenues cross 20000 Cr
Total Assets cross 50000 Cr
Group Profits cross 2500 Cr
Revenues cross 20000 Cr
Total Assets cross 50000 Cr
Reliance Communication plans announced
Reliance Communication plans announced
Reliance Life Insurance rank 6th at 930 Cr
Reliance Life Insurance rank 6th at 930 Cr
Group revenues cross 60000 Cr
Largest Business group
in India
Group revenues cross 60000 Cr
Largest Business group
in India
Controlling stake in BSES (Reliance
Energy)Largest mobile
services co in India
Controlling stake in BSES (Reliance
Energy)Largest mobile
services co in India
ADA Group formedAMP Sanmar acquired and renamed Reliance
Life Insurance
ADA Group formedAMP Sanmar acquired and renamed Reliance
Life Insurance
And the journeyBecame the 1st
company to cross 1 million policy mark in 2 years of operations
Became the 1st
company to cross 1 million policy mark in 2 years of operations
Sep 2007 2007
Reliance became only the second National Insurance player to get ISO 9001-2000
Reliance became only the second National Insurance player to get ISO 9001-2000
A Reliance Capital company
Be the Change
2008 2008 2008 2007-08 2008-09
Reliance MF becomes 1st
AMC to cross
100000 Cr
Reliance MF becomes 1st
AMC to cross
100000 Cr
RCOM crosses 50 million customers
RCOM crosses 50 million customers
A total of more than 2000 Branches on anvil in the fiscal year
A total of more than 2000 Branches on anvil in the fiscal year
Continueshellip
RLIC jumps to 4th position
with 2750 Cr
RLIC jumps to 4th position
with 2750 Cr
Crosses 2million policies
Crosses 2million policies
9
SWOT ANALYSIS
STRENGTHS
Dedicated Employees Well Efficient Management Strong and popular brand name Adaptability to changes Goodwill of the company Transparency in service
WEAKNESS
Lack of good services
Lack of awareness about insurance among people
Less coverage in Rural Areas
Lack of credibility among the people because Reliance life insurance being a
private player
OPPORTUNITIES
Fast growing economy
Increasing per ndashcapita income in India
Saving behavior
High growth of Traditional industry
THREATS
Arrival of new entrants in the insurance industry
Cut throat competition within the industry
10
CORE VALUES
Reliance Life Insurance Company Limited has some core values which are listed as follows
1) Result Oriented2) Performance Driven3) Customer Focused4) Learning and Development Oriented5) Employee Centric6) Informal and Fun
1 B COMPANY PROFILE OF BAJAJ ALLIANZ LIFE INSURANCE
11
Bajaj Allianz Life Insurance Company limited is a joint venture between two leading conglomerates Bajaj Auto limited and Allianz AG company whose total asset value is of Rs 5900000 cr Bajaj whose wealth as of now is Rs 8000 cr group in India 55 years of experience 4th largest group in the world Above 15000 employees largest 2 amp 3 wheeler manufacture in India Allianz established in 1890 who has 115 years of experience in financial year
Bajaj Auto is one of the most trusted name is Indian auto for over 55 years At Bajaj Allianz customer delight is our guiding principle Ensuring world-class solutions by offering customized products with transparent benefits supported by best technology is our business philosophy
Notwithstanding the recession and a volatile stock market Bajaj Allianz life insurance posted a profit of Rs 45 cr for financial year 2009 against a loss of Rs 16 cr in the previous year
The company new business premium fell to Rs 4491 cr in the year against Rs 6674 cr recorded in the last year
We have been able to make a profit of profit of Rs 45 cr even in these difficult times Our new business premium declined by 30 to Rs 4491 cr because the stock market declined and we didnrsquot open any new office in FY 09rdquo Bajaj Allianz country manager and Bajaj Allianz life insurance CEO kamesh Goyal said
Bajaj Allianz Life Insurance has around 1200 offices and the company would not increase the number this year too Goyal said
The companyrsquos renewal premium grew by more than 100 to Rs 6133 cr in the 2008-2009 as compared to Rs 3051 cr in the previous fiscal year he saidIn the year Bajaj Allianz life insurance issued 29 lakh policies which were the second largest in the industry
Vision bull To be the first choice insurer for customers bull To be the preferred employer for staff in the insurance industry bull To be the number one insurer for creating shareholder value
MissionAs a responsible customer focused market leader we will strive to understand the insurance needs of the consumers and translate it into affordable products that deliver value for money
12) TRADITIONAL PLANS OF THE COMPANY
12
12A )TRADITIONAL PLAN OF RELIANCE LIFE INSURANCE -
Life insurance products are designed to suit the requirements of customers Fundamentally the product provide for
Risk cover
Investment
Health cover
In every product to a certain degree risk cover is imperative for it to fall under the category of insurance Based on the coverage of the product the premiums are calculated and the customer pays accordingly In order to suggest the right product it is essential for an agent to understand the requirements of the customer well
The traditional plans of the company have the following features- Fixed Tenure Potential for better returns Transparency Flexibility in investment Flexibility to invest more Flexibility to skip the premium Flexibility to choose the cover High liquidity Age term and sum assured decide the amount of premium Top- ups and switches are not allowed
Reliance Life Insurance Company Limited has offered 9Traditional plans to the customers which are listed as follows1) Reliance Term Plan2) Reliance Whole Life Plan3) Reliance Endowment Plan4) Reliance Special Endowment Plan5) Reliance Cash Flow Plan6) Reliance Credit Guardian Plan7) Reliance Special Credit Guardian PlanEach of the above traditional plans is discussed as follows
1) Reliance term plan-This insurance policy is designed for those who only want life cover for the protection of their family and do not wish to save for themselves It can also be useful to business firms that wish to provide financial security to their business against the sudden loss of partners or valuable manpower Since there is no saving element or bonus provision the premium is very lowHence this is a high-risk plan with a low premium
13
1048729 Features -a) Purely a term planb) Entry age minimum 18 years and maximum 65 yearc) Maximum premium paying term is 30 yeard) Loan facility NAe) Maturity amount = Sum assured
2) Reliance Whole Life Plan -This insurance policy is designed for people who do not wish to avail of any benefits themselves but wish to create an immediate estate to protect their family by availing of insurance cover on their life at a very low cost
1048729 Features -a) It is a whole life insurance policy with profitsb) Low cost life coverc) Maturity age is 85 year or 99 years last birthday as chosend) Maturity amount = Sum assured + Vested bonuse) Tax benefit is available
3) Reliance Endowment Plan -Reliance Life Insurancersquos Reliance Endowment Plan is the key to all your financial needs It is an inexpensive and easy way to protect you your family or your businessIn a nutshell this plan will keep you financially prepared for all the special occasions in your life - your daughterrsquos wedding your childrsquos university education or even a new office for your business - by eliminating the burden that a shortage of money createsIn the event of your untimely death Reliance Endowment Plan will also assist your loved ones through this difficult time by the financial support that it providesReliance Endowment Plan also gives you the additional benefit of participating in the companyrsquos profits which you will receive at the end of the policy period
1048729 Features -a) Entry age minimum is 5 year and maximum 65 yearb) Maturity age minimum is 18 year and maximum 75 yearc) Minimum premium paying term is 5 year and maximum 35 year in case of regular and in case of single 15 yeard) Minimum sum assured is Rs 25000 or as determined by the minimum premiume) Maximum sum assured is Rs 5 00000 (entry age below 18 years and no limit for entry age 18 and above)f) Premium mode annual half yearly quarterly and monthly (by salary deduction only)g) Loan up to 90 of the surrender value of the policyh) Maturity amount = Guaranteed sum assured + Reversionary bonus
4) Reliance Special Endowment Plan -
14
This insurance policy is designed for people who wish to combine savings with extended security The unique feature of this policy is that life protection continues for five years after you have stopped the payment of premium Payment of sum assured at the end of premium paying term and extension of life cover thereafter for the full sum assured for a period of 5 years are characteristics of the policyThis plan also participates in the profits
1048729 Features -a) Entry age minimum 12 year and maximum 65 yearb) Minimum sum assured is Rs 25000c) Minimum premium paying term is 10 year and maximum 40 yeard) Unique feature of this policy is that five year life protection continues after you have stopped the payment of premiume) Tax benefit is availablef) Under this policy bonus is compounded yearlyg) Loan facility is availableh) Maturity amount = Full sum assured before maturity date +Vested bonus at the time of maturity date
15
12 B) TRADITIONAL PLANS OF BAJAJ ALLIANZ LIFE INSURANCE
I ENDOWMENT PLAN
Saving plan which offer bonuses are excellent long term plan with complete safety Our products offer additional benefits which include 4 times life cover at a little extra cost limited premium payment terms and compounded reversionary bonuses making it a very good long term investment
1 Bajaj Allianz Invest GainInvest Gain is a specially designed plan that offers a unique combination of benefits that help you develop a sound financial portfolio for your family
4 Times Life Cover at a little extra cost
Limited premium payment option available
Additional Benefits
a) Accidental Death Benefit and Disability Benefit b) Critical Illness Benefit and Hospital Cash Benefit c) Family Income Benefit In case of death or accidental total permanent disability of insured all future premiums are waived and 1 of the sum assured is paid monthly
Invest Gain Save Care Economy SP Life Time Care
Super Saver
16
2 Bajaj Allianz save Care Economy SP
A One-time payment Investment plan that provides for savings with high risk cover for 10 years and also participates in the profits of the company It offers you high risk cover with easy liquidity and high returns
a) A single premium endowment plan that participates in the profitsb) 10 year Investment planc) Benefits payable on maturityc) Loans available
17
3 Bajaj Allianz life time care
A whole life plan which provides survival benefits at the age of 80 thereby making sure you are financially secure at the time when you need it the most Additional Benefits
a) Accidental Death Cover and Disability Cover b) Critical Illness Cover and Hospital Cash Cover c) Waiver of Premium Benefit
4Bajaj Allianz Super Saver plan
Bajaj Allianz Super Saver is a regular premium endowment plan which helps you save regular amounts for a safer tomorrow It also provides you with extra benefits of Guaranteed Additions to your sum assured at the end of each policy year
18
II MONEY BACK PLAN
Money back plans are Traditional Insurance plans that provide the investor with returns at regular stages of life
CashGain
1)Bajaj Allianz Cash Gain plan
A Money back plan which guarantees 125 payout + bonuses
Quadruple life cover
5 easy payouts which give upto 125 + bonuses
Additional Benefitsa) Accidental Death Benefit and Disability Benefitb) Critical Illness Benefit and Hospital Cash Benefitc) Family Income Benefit In case of death or accidental total permanent disability of insured all future premiums are waived and 1 of the sum assured is paid monthly
19
20
13) INDUSTRY PROFILE
MEANING OF INSURANCE
Insurance may be described as a social device to reduce or eliminate risk of loss to life and property Insurance is a collective bearing of risk Insurance is a financial device to spread the risks and losses of few people among a large number of people as people prefer small fixed liability instead of big uncertain and changing liability
Insurance can be defined as a ldquolegal contract between two parties whereby one party called insurer undertakes to pay a fixed amount of money on the happening of a particular event which may be certain or uncertainrdquo The other party called insured pays in exchange a fixed sum known as premiumInsurance is desired to safeguard oneself and onersquos family against possible losses on account of risks and perils It provides financial compensation for the losses suffered due to the happening of any unforeseen events
IMPORTANCE OF INSURANCE
Insurance constitutes one of the major segments of the financial marketInsurance services play predominant role in the process of financial Intermediary Today insurance industry is one of the most growing sectors in India There is lot of potential in the Indian Insurance Industry
There are many issues which require study The scope of the study of Insurance industry of India would be very great as there are ongoing Developments in the industry after the opening of the sectorOne of the major issues is the effects on LIC after the entry of private players in the market Though market share of LIC has been affected it has improved in terms of efficiency
There are number of other hot topics like penetration of Health Insurance Rural marketing of insurance new distribution channels new product ranges insurance brokersrsquo regulation incentive scheme of development officers of LIC etc So it offers lot of scope for studying the insurance industryRight now the insurance industry has great opportunities in a country like India or China which huge population Also the penetration of insurance in India is very low in both life and non-life segment so there is lot potential to be tapped Before starting the discussion on insurance industry and related issues we have to start with the basics of insurance So first we understand what is insurance How the word lsquoinsurancersquo is different from the word lsquoassurancersquo Etc
21
HISTORY OF INSURANCE
The concept of insurance is believed to have emerged almost 4500 years ago in the ancient land of Babylonia where traders used to bear risk of the carvan by giving loans which were later repaid with interest when the goods arrived safely
The concept of insurance as we know today took shape in 1688 at a place called Lloydrsquos Coffee House in London where risk bearers used to meet to transact business This coffee house became so popular that Lloydrsquos became the one of the first modern insurance companies by the end of the eighteenth centuryMarine insurance companies came into existence by the end of the eighteenth century These companies were empowered to write fire and life insurance as well as marine The Great Fire of London in 1966 caused huge loss of property and life With a view to providing fire insurance facilitiesDr Nicholas Barbon set up in 1967 the first fire insurance company known as the Fire office
Life insurance in its modern form came to India from England in 1818 The Oriental Life Insurance Company was the first insurance company to be set up in India to help the widows of European community The insurance companies which came into existence between 1818 and 1869 treatedIndian lives as subnormal and charged an extra premium of 15 to 20 per cent The first Indian insurance company the Bombay Mutual LifeAssurance Society came into existence in 1870 to cover Indian lives at normal rates
The Insurance Act 1938 the first comprehensive legislation governing both life and non-life branches of insurance were enacted to provide strict state control over insurance business This amended insurance Act looked into investments expenditure and management of these companiesBy the mid- 1950s there were 154 Indian insurers 16 foreign insurers and 75 provident societies carrying on life insurance business in India Insurance business flourished and so did scams irregularities and dubious investment practices by scores of companies As a result the government decided to nationalize the life assurance business in India The Life InsuranceCorporation of India (LIC) was set up in 1956 The nationalization of life insurance was followed by general insurance in 1972
22
MEANING OF LIFE INSURANCE
There are three parties in a life insurance transaction the insurer the insured and the owner of the policy (policyholder) although the owner and the insured are often the same person
Another important person involved in a life insurance policy is the beneficiary The beneficiary is the person or persons who will receive the policy proceeds upon the death of the insured
Life insurance may be divided into two basic classes ndash term and permanent
Term life insurance provides for life insurance coverage for a specified term of years for a specified premium The policy does not accumulate cash value
Permanent life insurance is life insurance that remains in force until the policy matures unless the owner fails to pay the premium when due
Whole life insurance provides for a level premium and a cash value table included in the policy guaranteed by the company The primary advantages of whole life are guaranteed death benefits guaranteed cash values fixed and known annual premiums and mortality and expense charges will not reduce the cash value shown in the policy
Universal life insurance (UL) is a relatively new insurance product intended to provide permanent insurance coverage with greater flexibility in premium payment and the potential for a higher internal rate of return A universal life policy includes a cash account Premiums increase the cash account If you want insurance protection only and not a savings and investment product buy a term life insurance policy
If you want to buy a whole life universal life or other cash value policy plan to hold it for at least 15 years Canceling these policies after only a few years can more than double your life insurance costs
23
HISTORY OF LIFE INSURANCE
Risk protection has been a primary goal of humans and institutions throughout history Protecting against risk is what insurance is all aboutOver 5000 years ago in China insurance was seen as a preventative measure against piracy on the sea Piracy in fact was so prevalent that as a way of spreading the risk a number of ships would carry a portion of another ships cargo so that if one ship was captured the entire shipment would not be lostIn another part of the world nearly 4500 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
Life insurance came about a little later in ancient Rome where burial clubs were formed to cover the funeral expenses of its members as well as help survivors monetarily With Romes fall around 450 AD most of the concepts of insurance were abandoned but aspects of it did continue through the Middle Ages particularly with merchant and artisan guilds These provided forms of member insurance covering risks like fire flood theft disability death and even imprisonment
During the feudal period early forms of insurance ebbed with the decline of travel and long-distance trade But during the 14th to 16th centuries transportation commerce and insurance would again reemergeInsurance in India can be traced back to the Vedas For instance yogakshema the name of Life Insurance Corporation of Indias 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
And similar to ancient Rome burial societies were formed in the Buddhist period to help families build houses and to protect widows and children
Modern InsuranceIllegal almost everywhere else in Europe life insurance in England was vigorously promoted in the three decades following the Glorious Revolution of 1688 The type of insurance we see today owes its roots to 17th century England Lloyds of London or as they were known then Lloyds Coffee House was the location where merchants ship owners and underwriters met to discuss and transact business dealsWhile serving as a means of risk-avoidance life insurance also appealed strongly to the gambling instincts of Englands burgeoning middle classGambling was so rampant in fact that when newspapers published names of prominent people who were seriously ill bets were placed at Lloydrsquos on their anticipated dates of death Reacting against such practices 79 merchant underwriters broke away in 1769 and
24
two years later formed a ldquoNew Lloydrsquos Coffee Houserdquo that became known as the ldquoreal Lloydrsquosrdquo Making wagers on peoples deaths ceased in 1774 when parliament forbade the practice
Insurance moves to AmericaThe US insurance industry was built on the British model The year 1735 saw the birth of the first insurance company in the American colonies inCharleston SC The Presbyterian Synod of Philadelphia in 1759 sponsored the first life insurance corporation in America for the benefit of ministers and their dependents And the first life insurance policy for the general public in the United States was issued in Philadelphia on May 22 1761But it wasnt until 80 years later (after 1840) that life insurance really tookoff in a big way The key to its success was reducing the opposition from religious groups
In 1835 the infamous New York fire drew peoples 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
With the creation of the automobile public liability insurance which first made its appearance in the 1880s gained importance and acceptanceMore advancement was made to insurance during the process of industrialization In 1897 the British government passed the Workmens Compensation Act which made it mandatory for a company to insure its employees against industrial accidents
During 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 most labor 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
25
BENEFITS OF LIFE INSURANCE
1) Risk cover -Life Insurance contracts allow an individual to have a risk cover against any unfortunate event of the future
2) Tax Deduction -Under section 80C of the Income Tax Act of 1961 one can get tax deduction on premiums up to one lakh rupees Life Insurance policies thus decrease the total taxable income of an individual
3) Loans -An individual can easily access loans from different financial institutions by pledging his insurance policies
4) Retirement Planning -What had provided protection against the financial consequences of premature death may now be used to help them enjoy their retirement yearsMoreover the cash value can be used as an additional income in the old age
5) Educational Needs -Similar to retirement planning the cash values that flow from ones life insurance schemes can be utilized for educational needs of the insurer or his children
26
ROLE OF LIFE INSURANCE IN THE GROWTH OF THE ECONOMY
The Life Insurance Industry has an enviable track record among public sector units It has a Consistent profit and dividend paying record accompanied by a steady growth in its financial resources Through investments in the Government sector and socially- oriented sectors the Industry has contributed immensely to the nations development The industry is recognized as one of the largest financial Institutions in the country The ventures initiated by the industry in the areas of Mutual Fund
Housing Finance has done exceedingly well in recent years To protect the countrys foreign exchange reserves the reinsurance arrangement are so organized that maximum retention is made possible within the country while at the same time protecting interests of the policy holders
27
ROLE OF IRDA
MISSION
ldquoTo protect the interests of the policyholders to regulate promote
and ensure orderly growth of the insurance industry and for matters
connected therewith or incidental theretordquo
The Insurance Act 1938 had provided for setting up of the Controller of Insurance to act
as a strong and powerful supervisory and regulatory authority for insurance Post
nationalization the role of Controller of Insurance diminished considerably in
significance since the Government owned the insurance companies But the scenario
changed with the private and foreign companies foraying in to the insurance sector This
necessitated the need for a strong independent and autonomous Insurance Regulatory
Authority was felt As the enacting of legislation would have taken time the then
Government constituted through a Government resolution an Interim Insurance
Regulatory Authority pending the enactment of a comprehensive legislation
The Insurance Regulatory and Development Authority Act 1999 is an act to provide for
the establishment of an Authority to protect the interests of holders of insurance policies
to regulate promote and ensure orderly growth of the insurance industry and for matters
connected therewith or incidental thereto and further to amend the Insurance Act 1938
the Life Insurance Corporation Act 1956 and the General insurance Business
(Nationalization) Act 1972 to end the monopoly of the Life Insurance Corporation of
India (for life insurance business) and General Insurance Corporation and its subsidiaries
(for general insurance business) The act extends to the whole of India and will come
into force on such date as the Central Government may by notification in the Official
Gazette specify Different dates may be appointed for different provisions of this Act
28
The Act has defined certain terms some of the most important ones are as follows
Appointed day means the date on which the Authority is established under the act
Authority means the established under this Act Interim Insurance Regulatory Authority
means the Insurance Regulatory Authority set up by the Central Government through
Resolution No 17(2) 94-lns-V dated the 23rd January 1996
Words and expressions used and not defined in this Act but defined in the Insurance Act
1938 or the Life Insurance Corporation Act 1956 or the General Insurance Business
(Nationalization) Act 1972 shall have the meanings respectively assigned to them in
those Acts A new definition of Indian Insurance Company has been inserted Indian
insurance company means any insurer being a company
(a) Which is formed and registered under the Companies Act 1956
(b) in which the aggregate holdings of equity shares by a foreign company either by
itself or through its subsidiary companies or its nominees do not exceed twenty-six
percent paid up capital in such Indian insurance company
(c) Whose sole purpose is to carry on life insurance business general insurance business
or re-insurance business
29
CURRENT SCENERIO
21) CURRENT SCENERIO OF THE INSURANCE INDUSTRY
With largest number of life insurance policies in force in the world insurance happens to be a mega opportunity in India Itrsquos a business growing at the rate of 15-20 per cent annually and presently is of the order of Rs 450 billion Together with banking services it adds about 7 per cent to the countryrsquos GDP Gross premium collection is nearly 2 per cent of GDP and funds available with LIC for investment are 8 per cent of GDP
Yet nearly 80 percent of Indian population is without life insurance cover while health insurance and non-life insurance continues to be below international standards And this part of the population is also subject to weak social security and pension systems with hardly any old age income security This it is an indicator that growth potential for the insurance sector is immense A well-develop and evolved insurance sector is needed for economic development as it provides long term funds for infrastructure development and at the same time strengthens the risk taking ability It is estimated that over the next ten years India would require investments of the order of one trillion US dollar The insurance sector to some extent can enable investment in infrastructure development to sustain economic growth of the country Insurance is a federal subject in India There are two legislation that govern the sector - The Insurance Act-1938 and The IRDA Act-1999
In India insurance is generally considered as a tax-saving device instead of its other implied long term financial benefits Indian people are prone to investing in properties and gold followed by bank deposits They selectively invest in shares also but the percentage is very small Even to this day Life Insurance Corporation of India dominates India insurance sector With the entry of private sector players backed by foreign expertise Indian insurance market has become more vibrant Business is becoming increasingly vulnerable due to wide variety of risk particularly after September 11 2001 disaster in which twin tower located in the hearts of New York city were crashed by terrorist attack resulting in loss of 6000 human lives as well as financial loss to the extent of $45 billion The impact of this terrorist attack has created new horizon of risk to the business world today
However rapid changes in the global economy development of technology and e-business already gathered momentum Increased dependency on technology has originated new risks that have resulted in well-published incidents Computer hackers obtaining credit card information from visa and Power-Gen the love bug virus cyber extortion web content liability professional errors and omissions computers and other crimes and activities such as terrorism kidnapping and companyrsquos executive and extortion of money commercial liability etc have significant impact on business resulting in extreme financial loss commercial embarrassment or regulatory implications
Corporation insurancerisk managers under the circumstances have to demand increasingly complex insurance products They have to be more attentive and
30
knowledgeable about emerging risks how those risks are managed effectively and efficiently and how they could ultimately affect a companyrsquos financial situation and therefore its position in the market place In short how such risks are managed and can give to an insured a competitive advantage
In the changing times adoption of e-commerce into business models the integration of web-based communication and data transfer capabilities into the business operations and leveraging of advanced network and technology architecture for maximum benefit are the new horizon of the risks For the corporate insurancerisks managers these new exposure-cyber-risks-can lead to cyber losses widening the interpretation of what constitute insure property damage particularly as it relates to information technology and dataAll the while organizations are tremendous pressure to reduce expenses and increase profit margin and cannot afford to suffer a property loss of business interruption due to any cause (risk) How a company identifies quantifies qualifies and manages these new risks exposure in addition to the well-known tradition risks is becoming an important factor in creating shareholders value This often means changing the way Everyone in the organization have to think about risk
Insurance managers are seeing price levels (premium) continue to rise-albeit modestly-in todayrsquos primarily commercial property and reinsurance markets They are demanding that insurers improve their risk assessment and quantification offerings so that an insured may avail the benefit in cost (premium rate) on account of well-managed riskThe good news for insurance managers is that as the economy evolves insurers are increasingly matching that evaluation with new products services and capabilities due to opening up the insurance market to the private players
Insurers who are truly listening to their customers and striving to be more in tune with their needs are responding to the fast changing corporate insurance and risk management landscape They are listening to their customers They are making fresh approaches to address the new challenges faced by insured organization by designing the new products as per the needs Insurers are providing value added services to insured to protect the value created by the business
Insurers are increasingly required to develop and expand their information technology platforms to ensure that the vast amount of data they collect about their customers Insurancerisk portfolio can easily and seamlessly be transformed into valuable risk management information To help their customers insurers should make better-informed decisions They must be able to swiftly deliver this data to their customers (insured) anywhere in the world Insurer are also discovering that risk assessment have to be customized to meet policyholdersrsquo new exposures and needs The insurance industry is stepping up and addressing these challenges in several different ways
31
22) CURRENT SCENARIO OF RELIANCE LIFE INSURANCE
RLIC offers wide range of innovative life insurance products targeted at individuals and groups It offers need based products that caters to four distinct segments namely protection child retirement and investment plans RLIC is committed to emerge as a
transnational Life Insurer of global scale and standard
Reliance Life Insurance Company Limited (RLIC) is amongst the fastest growing life insurance companies in India It is also amongst the top four private sector life insurance companies in India (As on FY 2008-2009)
As on March 31 2009 RLIC has an annualized premium of Rs 30 billion with a market share of 103 It has leapfrogged on the growth path and has reached the 4 million policy mark in a short span of within 3 years RLIC has a strong distribution network of 1145 branches with more than 149000 agents
32
Insurancersquos Market Share in Comparison of Other Private company
If we look at the status of Reliance Life Insurancersquos market share in comparison of other
private company in comparison of premium earned-
If we talk the growth of Insurance industryrsquos private players in recent years the data will
reflect-
CH - 3) RESEARCH METHODOLOGY
33
RESEARCH DESIGN-
COMPARITIVE STUDY- A comparative study has been undertaken to compare the traditional Plans of Reliance Life Insurance with that of Bajaj Allianz life insurance
DATA TYPE
INTRODUCTION - Any organization whether big or small private or public needs different type of information to know its popularity I have gathered secondary data and primary data and collected information from the combination of these two data
PRIMARY DATA - Primary data collection method was decided for observing working of the company and approaching the customers directly face to face A great care was taken while collecting the primary data to answer that it is relevant accurate current and unbiased
SECONDARY DATA - Secondary data collection method was used by referring to various websites books and newspapers for collecting information regarding the project under study Secondary data consist of the information that already exists somewhere else for some another purpose
SAMPLING TECHNIQUES-
SAMPLE SIZE- A sample size of 50 was taken to be analyzed
SAMPLE LOCATION-Various sectors of Kamla Nagar Civil lines Mukherji Nagar Model Town and selected areas of Delhi
SAMPLING PROCESS - Convenient sampling was used to overcome the time and money constraints that could have been faced by us while collecting the data The customers were contacted face to face directly and also by way of telephonic conversation with them
ANALYTICAL TOOLS - The data collected were arranged accordingly and statistical tools like bar graphs and pie-charts were used to analyze and present the data
RESEARCH INSTRUMENT USED-
34
SAMPLING MEDIA - Printed questionnaires consisting several questions were asked to have an idea of customers view about Reliance Life Insurance plans followed by personal questions
FIELD WORK - Rigorous field work was undertaken to locate the interested and potential respondents to fulfill the objectives of the study
THE PRIMARY OBJECTIVEOF THE STUDY -
The primary objective of the research study is to have a detailed analysis of Reliance Life Insurance bringing in focus the future prospects of the (Anil Dhirubhai Ambani group) with relevance to the customer perception regarding the various plans and products offered by Reliance Life Insurance
31) DATA ANALYSIS AND INTERPRETATION
35
PERSONAL DETAILS
1) AGE a) 18-30b) 31-50c) 51-65
AGE NO OF RESPONDENTS PERCENTAGE
18-30 21 42
31-50 19 38
51-65 10 20
TOTAL 50 100
INTERPRETATION-The bar graph reveals that 42 of the respondents belong to the age group of 18-30 years 38 lies in the age group of 31-50 years and 20 of them lie in the age group of 51-65 years
2) OCCUPATION
4238
20
05
1015202530354045
NO
O
F
RE
SP
ON
DE
NT
S
18 to 30 31 to 50 51 to 65
AGE (in year)
AGE WISE CLASSIFICATION
36
a) Serviceb) Businessc) Professiond) Housewifee) Retired
OPTION NO OF RESPONDENTS PERCENTAGE
Service 16 32
Business 14 28
Profession 5 10
Housewife 8 16
Retired 7 14
TOTAL 50 100
INTERPRETATION-The above bar graph reveals that 32 of the total respondents were servicemen 28 of them belonged to the business class 10 were professionals 16 were housewives and 14 of the total respondents fall in the retired category
3) INCOME
32
28
10
16
14
0
5
10
15
20
25
30
35
Service Business Profession Housewife Retired
OCCUPATION
OCCUPATION WISE CLASSIFICATION
37
a) 150000-300000
b) 300000-500000
c) Above 500000
OPTION NO OF RESPONDENTS PERCENTAGE
150000-300000 24 48
300000-500000 14 28
Above 500000 12 24
TOTAL 50 100
INTERPRETATION-The above bar graph reveals that out of the total respondents 48 lie in the income group of 150000-300000 28 of the total respondents belonged to the income group of 300000-500000 and 24 lie in the income group of people earning an income of above Rs 500000pa
4828 24
01020304050
N O
OF
RE
SP
ON
DE
NT
S
150000-300000
300000-500000
ABOVE500000
INCOME (in RS)
INCOME WISE CLASSIFICATION
38
4) FAMILY MEMBERS
a) 2b) 3c) 4d) Above 4
OPTION NO OF RESPONDENT PERCENTAGE
2 11 22
3 9 18
4 24 48
Above 4 6 12
TOTAL 50 100
INTERPRETATION The above bar graph shows that 22 of the total respondents had a family of 2 members 18 of them had 3 family members 48 of them had 4 family members and 12 of them had the no of family members above 4
Q1 Where do you prefer to invest
22 18
48
120
1020304050
No
o
f re
spo
nd
ents
2 3 4 Above 4
No of family members
MEMBER WISE CLASSIFICATION
39
a) fixed deposits
b) stock
c) mutual funds
d) insurance
e) others
Option No of respondents Percentage
Fixed deposits 5 10
Stock 10 20
Mutual fund 10 20
Insurance 18 36
others 7 14
TOTAL 50 100
Interpretation The above pie chart shows that out of 50 respondents 10 preferred to invest in fixed deposits 20 in stocks 20 in mutual funds 36 in insurance and 14 in others like property gold etc
Q2 What are your priorities for investment
40
a) protecting your family against pre-mature death
b) wealth creation
c) retirement needs
d) child education and marriage
e) protect income against disability sickness or critical illness
Option No of respondents Percentage
Protecting your family against pre mature death
10 20
Wealth creation 14 28
Retirement needs 5 10
Child education and marriage 7 14
Protect income against disability sickness or critical illness
14 28
TOTAL 50 100
Interpretation The above pie chart shows that out of 50 respondents 20 of them invest for protecting their family against premature death 28 for creating wealth 10 for meeting their future retirement needs 14 for child education amp marriage and 28 for protection against disability and sickness
Q3 What is your main motive behind investing in life insurance
41
a) tax benefit
b) savings
c) risk cover
Option No of respondents Percentage
Tax benefits 27 54
Savings 5 10
Risk cover 18 36
TOTAL 50 100
Interpretation The above pie chart shows that out of the sample respondents 54 have tax benefit 10 have savings and 36 have risk cover as their main motive for making an investment in life
Q4 What kind of investment do you prefer
42
a) high risk high gain
b) low risk low gain
c) moderate
d) vary times to times
Option No of respondents Percentage
High risk high gain 8 16
Low risk low gain 5 10
Moderate 12 24
Vary times to times 25 50
TOTAL 50 100
Interpretation The above pie chart shows that out of 50 respondents 16 preferred high risk- high gain form of investment 10 preferred low risk- low gain form of investment 24 preferred moderate investment and 50 preferred varied form of investment
43
Q5Are you interested to invest in Traditional Plans
a) YES
b) NO
Option No of respondents Percentage
YES 36 72
NO 14 28
TOTAL 50 100
Interpretation The above pie chart shows that 72 of the respondents preferred to invest in Traditional Plans
44
Q6 What is your level of annual investmenta) below 20000
b) 20000-40000
c) above 40000
Option No of respondents Percentage
Below 20000 41 82
20000-40000 7 14
Above 40000 2 4
TOTAL 50 100
Interpretation The above pie chart shows that 82 of the respondents are willing to invest below Rs 20000 per annum 14 of them want to invest within Rs 20000 per annum to Rs 40000 and 4 wanted to invest over and above Rs 40000
45
Q7 What factors would you consider most important before choosing an insurance policy
a) publicity of the company
b) reputation of the company
c) quality of life advisors
d) after sales-supporting of the company
Option No of respondents Percentage
Publicity of the co 5 20
Reputation of the co 25 50
Quality of life advisors 10 10
After sale-services 10 20
TOTAL 50 100
Interpretation out of the sample respondents 20 considers publicity of the company 50 considers reputation of the company 10 considers quality of life advisors and 20 considers after sales support of the company as the most important factor for choosing an insurance company
46
Q8 Which life insurance company would you prefer the most to invest ina) reliance life insurance (RLIC)
b) Bajaj Allianz life insurance
Option No of respondents Percentage
RLIC 21 42
BAJAJ ALLIANZ 29 58
TOTAL 50 100
Interpretation Out of 50 respondents 42 preferred to invest in reliance life insurance over 58 of the respondents who prefer to invest in Bajaj Allianz life insurance
47
Q9 If reliance life insurance then which particular plan you would like to invest ina) Reliance Term Plan
b) Reliance Whole Life Plan
c) Reliance Endowment Plan
d) Reliance Special Endowment Plan
Option No of respondents Percentage
Reliance term plan 6 2858
Reliance whole life plan 3 1428
Reliance endowment plan 9 4286
Reliance special endowment plan 3 1428
TOTAL 21 100
Interpretation Out of 21 respondents 2858 preferred to invest in term plan 1428 in whole life plan 4286 in endowment plan and 1428 of them preferred to invest in special endowment plan of reliance life insurance
48
Q10 If Bajaj Allianz life insurance then which particular plan you would like to invest in
I ENDOWMENT PLAN a) Bajaj Allianz Invest Gain
b) Bajaj Allianz save Care Economy SP
c) Bajaj Allianz life time care
d) Bajaj Allianz Super Saver plan
II MONEY BACK PLAN i Bajaj Allianz Cash Gain plan
Option No of respondents Percentage
Invest gain plan 3 1035
Save care economy SP 6 2069
Life time care 7 2415
Super saver plan 3 1035
Cash gain plan 10 3446
TOTAL 29 100
Interpretation Out of 29 respondents 1035 of them plan to invest in Bajaj Allianz- Invest Gain 2069 wish to invest in Bajaj Allianz save Care Economy SP 2415 want to invest in Bajaj Allianz life time care 1035 in Bajaj Allianz Super Saver plan and 3446 prefer to invest in Bajaj Allianz Cash Gain plan
49
32) SIGNIFICANCE OF STUDY
Life insurance is one of the most rapidly growing sectors in India The main reason
behind the growth can attributed to the high population density improving economical
condition improving education level and improving awareness Due to these factors there
is still huge scope for growth in this sector Like any other business when the
opportunities are present everybody tends to enter the industries This growth hence
fetches the new competitors as well as new strategies from existing players To sustain in
any competitive industry the organization must adapt to existing strategies and adopt
new ones This study will focus on the analysis of Reliance Life Insurance in comparison
with the present scenario of Bajaj Allianz Life Insurance with respect to the Traditional
Plans of both the companyrsquos This will mainly cover the following aspects
To know about the awareness and popularity of various Traditional Plans offered
by Reliance Life Insurance and Bajaj Allianz Life Insurance
How Reliance Life Insurance can develop and sustain a good distribution
network
These will provide it benefit both in terms of better market coverage as well as better
penetration
50
33) SCOPE OF THE STUDY
1) This helps in finding out vast potential of insurance company
2) The study was conducted in National Capital Region (NCR) only
3) The number of respondents to be surveyed can be improved
4) This study was conducted by comparing the performances amp products of three private
amp government insurance players in insurance industry
5) This study was conducted to analyze the market stand of Reliance life insurance
Company limited and Bajaj Allianz Life Insurance Company Limited of India insurance
companies
6) This study is done to eliminate all the myths which people have in their minds
regarding Insurance Sector
51
34) OBJECTIVES
To have a detailed understanding of Reliance Life Insurance and Bajaj Allianz Life Insurance
To find out various reasons considered while investing in policies
To get knowledge about the market exposure and future prospects about Reliance Life Insurance
To know the perception of the consumers about the life insurance
To analyze the Traditional plans of Reliance Life Insurance and compare it with Bajaj Allianz
To know about the brand awareness of Reliance Life Insurance its customer preferences over Bajaj Allianz in the market
To study a proper knowledge about the life insurance industry
To understand the consumer choice while investing in policies
52
CHAPTER 4
DISCUSSION AND FINDINGS OF THE STUDY
FINDINGS OF THE STUDY RECOMMENDATION AND SUGGESTIONS CONCLUSION LIMITATIONS BIBLIOGRAPHY ANNEXUREQUESTIONNAIRE
53
41) FINDINGS OF THE STUDY
1) The survey reveals that still a large proportion of population is interested to invest in other forms of investment other than insurance as still most of them are unaware about the importance of insurance in their life
2) Basically people make varied form of investment for creating wealth to protect their families against pre-mature death and to protect income against disability sickness or critical illness
3) The main motive of the individuals investing is receives benefits US 1010D People generally consider insurance as a tax saving device
4) Mostly people prefer time to time form of investment as they are not willing to take high degree of risk
5) 72 of the respondents are preferred to invest in Traditional Plans
6) Most of the people prefer to make an annual investment up to a maximum of Rs20 000 per annum
7) When the product is like life insurance reputation of the company publicity of the company amp after sale services of the company matters a lot This means that people would choose that insurance company only where the quality of life advisors is satisfactory
8) Most people prefer to invest in Bajaj Allianz Life Insurance as compared to making an investment in Reliance Life Insurance
9) The most preferable Traditional plan of Reliance Life Insurance is Endowment Plan
10) The most preferable plan of Bajaj Allianz Life Insurance co is Cash Gain Plan
54
42) SUGGESTIONS amp RECOMMENDATIONS
Based on the observations of the study some suggestions for the organization are made as
follows
1) Quality of advisors is also as important as the quantity Thus company should go
mainly for qualified professionals
2) Company should increase its budget on publicity so that awareness can be increased
3) Clarity and transparency should be provided to the customer regarding various
products
4) Training sessions should be planned in advance so that schedule can be provided to
the advisor in advance
5) Apart from the Brand Positioning in urban area a strategy should be adopted by
Reliance to make its brand also near to middle level or high aspirant people because they
are the main source of the business in India
6) Awareness Camp to the sub urban area should be focused by Reliance
7) Some innovative technique or product is required in order to attract the consumer
43) LITERATURE REVIEW
55
1) Robi Elenekave has explained in detail why various retirement plans and pension plans donrsquot give the desired returns The main difficulty is the use of incorrect method for calculations done to find out the return on investment This is primarily due to wrong assumptions The study provides information about the various precautions which need to be considered before planning so that the desired results can be achieved
2) Another paper provides insight about how various financial sectors invest in bond market The study was how the different players investment different instruments according to the risk appetite and desired rate of return The study shows that life insurance sector mainly invests in government bond which are low return and low risk instrument The investment in government bond it shows that life insurance companies are more conservative in investment
3) K Subhash has presented the history of Indiarsquos life insurance industry in three stages before independence after independence and post liberalization which not only provides information but also help in analyzing the impact of these major changes The authors have also discussed the huge potential which exists in the rural India The insurance company must realize the importance of rural sector because the future lies there The author commented about the increasing share of private player in the existing market This confirms the availability of opportunity in this sector The paper also provides the importance of professional and focused approach which was given no importance
4) Tapen Sinha has discussed the various challenges and opportunities in the insurance market One of the very important factors which have been discussed in the study is the importance of developing new and better products As the scenario changes the need of an individual also changes so any organization must understand and fulfill these needs The new product development requires constant research so organization must also focus on it
5) Roger G Ibbotson discusses how financial planners and advisors have recently started to recognize that human capital must be taken into account when building optimal portfolios for individual investors Any investorrsquos human capital has a unique mortality risk However life insurance in its forms can hedge against this mortality risk Thus human capital affects both the optimal asset allocation and the optimal demand for life insurance This paper provides a unified framework based on human capital in order to enable individual investors to make both decisions jointly
6) Rakesh Niraj study tells how the flow of information in any organization is important For any organization to grow the flow of information must be good both upwards as well as ownwards The proper flow of information will also ensure proper flow of good and services from organization to customer and proper flow of information from customer to organization The information from customers will help the organization in providing better goods and services to the customer For the above purpose organization must ensure good channel partner who can provide the organization with correct feedback Hence it becomes very important for any organization to acquire good channel partners
56
7) Stephen P Robbins has discussed how group dynamics works in any organization The success of any organization depends on the success of its various teams and how these teams work together The book provides various techniques which can be used by any organization to get result from the team effort The conflict resolution is a major task in any group Various techniques which the organization can use in conflict resolution are also discussed Another important aspect covered is the importance of leadership in the organization The various forms of leadership have been discussed and the kinds of leadership which can be effective in particular situations are also discussed
8) R Wayne Mondy has discussed the importance of training and development in any organization The training provides skills to perform the current job where as the development involve learning beyond present need The various type of training are discussed which can be used according to the requirement Training and development are not only important for better performance of an individual but it also gives satisfaction The major factors which influence training and development are found to be management support commitment of trainee and trainer complexity of the organization The process of developing good training plans is also provided In another part author has discussed the importance of right man for right job The compensation strategies are also given which are very crucial for ant industry
9) Philip Kotler has discussed the importance of channels partners Better the channel partners better will be the delivery model Detailed discussion about how to design the channel structure so that all the requirements could be fulfilled is provided The various issues faced by the organization while managing the channels are also given When an organization has more than one channel it becomes very important that all the channels should be integrated in such a way that the organization get the best out of all At times due to the conflicting benefit of the different channels the conflict arise so various strategies to manage these issues is also discussed in the chapter
10) Michael J Etzel has written about the marketing of services The marketing of services is different from the goods because of the characteristic of service like intangibility inseparability heterogeneity etc Brief about pricing strategies is also given in case of services The authors have also given the impact of technological development on the services marketing The author has also given the importance of brand and after sales support in case of services as perception of the customers plays an important role In other part of the book the authors has described the importance of distribution channels and designing of the same A channel partner should be consider as partner according to discussion The legal complications associated with channels are also discussed These complications are necessary to take into the consideration while managing the channels The conflicting interest of channels both horizontally and vertically are also taken into the consideration
57
11) Boone has discussed about the importance of personal financial planning The concept of time value of money has also been elaborated The importance of creating and implementing budget is given under money management The other important concepts for financial planning like credit management and understanding taxes are also explained In one section the authors have discussed the importance of investment and what should be the major considerations while making any investment The considerations include the risk associated with the investment return on the investment etc The importance and benefits of life insurance has also been given The discussion also includes various legal aspects associated with life insurance The overview of retirement planning is also given which includes importance and benefit of retirement planning Various tools for proper retirement planning are also discussed
58
44) CONCLUSION
1) The customers are very much sensitive towards their investment They would like to invest only in that insurance company which enjoys good public image along with quality good services
2) The result of the survey conducted shows that Bajaj Allianz Life Insurance is the leader in life insurance industry but Reliance Life Insurance and other private players are giving it a close competition
3) The motive of the people behind investing in life insurance is the tax benefits that they would receive under sec 80C and 1010D
4) In Life Insurance industry the after sales support of the company is as important as the quality of life advisors
59
45) LIMITATIONS
There were some limitations faced during the study as discussed below
Since the study was taken for two months so there was a constraint of time and effort
The study was limited only to some of the Delhi regions so the results may be biased
Questionnaire was given to 125 people however only 50 responded to it which is very small for such type of study
The biasness of consumer or responses error cannot be eliminated
Most of the people are not aware about the Importance and the necessity of insurance in their life
Adverse perception of the people towards insurance sector- People consider insurance as a tax saving device
Lack of awareness about the earning opportunity in the insurance sector
60
46) BIBLIOGRAPHY
wwwreliancelifeinsurancecom
wwwadagroupcom
wwwirdacom
wwwbajajallianzlifeinsurancecom
wwwallianzbajajcom
47) ANNEXURE
61
QUESTIONNAIRE
A comparative analysis of consumer perception regarding Traditional plans of Reliance Life Insurance with that of Bajaj Allianz Life Insurance
NAME ___________________________
PERSONAL DETAILS
1) AGE_________________
1) OCCUPATION______________
2) INCOME___________________
3) FAMILY MEMBERS_________
Q1 Where do you prefer to investa) Fixed deposits b) Stock c) Mutual funds d) Insurance e) Others
Q2 What are your priorities for investmenta) Protecting your family against pre-mature death b) Wealth creation c) Retirement needs d) Child education and marriage e) Protect income against disability sickness or critical illness
Q3 What is your main motive behind investing in life insurancea) Tax benefit b) Savings c) Risk cover
Q4 What kind of investment do you prefera) High risk high gain b) Low risk low gain c) Moderate d) Vary times to times
62
Q5Are you interested to invest in Traditional Plansa) Yes b) No
Q6 What is your level of annual investmenta) below 20000 b) 20000-40000 c) above 40000
Q7 What factors would you consider most important before choosing an insurance company
a) publicity of the company b) reputation of the company c) quality of life advisors d) after sales-supporting of the company
Q8 Which life insurance company would you prefer the most to invest ina) Reliance life insurance b) Bajaj Allianz life insurance
Q9 If reliance life insurance then which particular plan you would like to invest ina) Reliance Term Plan b) Reliance Whole Life Plan c) Reliance Endowment Plan d) Reliance Special Endowment Plan
Q10 If Bajaj Allianz life insurance then which particular plan you would like to invest in
I ENDOWMENT PLAN
a) Bajaj Allianz Invest Gain
b) Bajaj Allianz save Care Economy SP
c) Bajaj Allianz life time care
d) Bajaj Allianz Super Saver plan
II MONEY BACK PLAN
a) Bajaj Allianz Cash Gain plan
63
64
- COMPANY PROFILE
- ABOUT RELIANCE LIFE INSURANCE
- HISTORY
- Reliance Capital Limited announced the launch of its life insurance business on February 1 2006 This was after obtaining the required regulatory approvals from the Registrar Of Companies and the Insurance Regulatory and Development Authority
- It was in August 2005 that the ball was set rolling when Reliance Capital Limited the financial arm of Reliance ndash Anil Dhirubhai Ambani Group (ADAG) ndash announced the requisition of 100 shareholding in AMP Sanmar Life Insurance Company Limited and the formal transfer of shares took place in October 2005 The company will issue all policy contracts under the Reliance Life Insurance Company limited name All the existing policy contracts also stand transferred to the Reliance Life Insurance entity with all the original contractual terms and commitments intact
- CORE VALUES
- Reliance Life Insurance Company Limited has some core values which are listed as follows
- Vision bull To be the first choice insurer for customers bull To be the preferred employer for staff in the insurance industry bull To be the number one insurer for creating shareholder value
- Mission As a responsible customer focused market leader we will strive to understand the insurance needs of the consumers and translate it into affordable products that deliver value for money
- 12) TRADITIONAL PLANS OF THE COMPANY
- 12A )TRADITIONAL PLAN OF RELIANCE LIFE INSURANCE-
- Life insurance products are designed to suit the requirements of customers Fundamentally the product provide for
- In every product to a certain degree risk cover is imperative for it to fall under the category of insurance Based on the coverage of the product the premiums are calculated and the customer pays accordingly In order to suggest the right product it is essential for an agent to understand the requirements of the customer well
- The traditional plans of the company have the following features-
- Fixed Tenure
- Potential for better returns
- Transparency
- Flexibility in investment
- Flexibility to invest more
- Flexibility to skip the premium
- Flexibility to choose the cover
- High liquidity
- Age term and sum assured decide the amount of premium
- Top- ups and switches are not allowed
- Reliance Life Insurance Company Limited has offered 9
- 1) Reliance term plan-
- 2) Reliance Whole Life Plan -
- 3) Reliance Endowment Plan -
- 4) Reliance Special Endowment Plan -
- 13) INDUSTRY PROFILE
- MEANING OF INSURANCE
- Insurance may be described as a social device to reduce or eliminate risk of loss to life and property Insurance is a collective bearing of risk Insurance is a financial device to spread the risks and losses of few people among a large number of people as people prefer small fixed liability instead of big uncertain and changing liability
- Insurance can be defined as a ldquolegal contract between two parties whereby one party called insurer undertakes to pay a fixed amount of money on the happening of a particular event which may be certain or uncertainrdquo The other party called insured pays in exchange a fixed sum known as premium
- Insurance is desired to safeguard oneself and onersquos family against possible losses on account of risks and perils It provides financial compensation for the losses suffered due to the happening of any unforeseen events
- IMPORTANCE OF INSURANCE
- Insurance services play predominant role in the process of financial Intermediary Today insurance industry is one of the most growing sectors in India There is lot of potential in the Indian Insurance Industry
- There are many issues which require study The scope of the study of Insurance industry of India would be very great as there are ongoing Developments in the industry after the opening of the sector
- Right now the insurance industry has great opportunities in a country like India or China which huge population Also the penetration of insurance in India is very low in both life and non-life segment so there is lot potential to be tapped Before starting the discussion on insurance industry and related issues we have to start with the basics of insurance So first we understand what is insurance How the word lsquoinsurancersquo is different from the word lsquoassurancersquo Etc
- HISTORY OF INSURANCE
- The concept of insurance is believed to have emerged almost 4500 years ago in the ancient land of Babylonia where traders used to bear risk of the carvan by giving loans which were later repaid with interest when the goods arrived safely
- The concept of insurance as we know today took shape in 1688 at a place called Lloydrsquos Coffee House in London where risk bearers used to meet to transact business This coffee house became so popular that Lloydrsquos became the one of the first modern insurance companies by the end of the eighteenth century
- Marine insurance companies came into existence by the end of the eighteenth century These companies were empowered to write fire and life insurance as well as marine The Great Fire of London in 1966 caused huge loss of property and life With a view to providing fire insurance facilities
- Dr Nicholas Barbon set up in 1967 the first fire insurance company known as the Fire office
- Life insurance in its modern form came to India from England in 1818 The Oriental Life Insurance Company was the first insurance company to be set up in India to help the widows of European community The insurance companies which came into existence between 1818 and 1869 treated
- Indian lives as subnormal and charged an extra premium of 15 to 20 per cent The first Indian insurance company the Bombay Mutual Life
- Assurance Society came into existence in 1870 to cover Indian lives at normal rates
- The Insurance Act 1938 the first comprehensive legislation governing both life and non-life branches of insurance were enacted to provide strict state control over insurance business This amended insurance Act looked into investments expenditure and management of these companies
- By the mid- 1950s there were 154 Indian insurers 16 foreign insurers and 75 provident societies carrying on life insurance business in India Insurance business flourished and so did scams irregularities and dubious investment practices by scores of companies As a result the government decided to nationalize the life assurance business in India The Life Insurance
- Corporation of India (LIC) was set up in 1956 The nationalization of life insurance was followed by general insurance in 1972
- MEANING OF LIFE INSURANCE
- There are three parties in a life insurance transaction the insurer the insured and the owner of the policy (policyholder) although the owner and the insured are often the same person
- Another important person involved in a life insurance policy is the beneficiary The beneficiary is the person or persons who will receive the policy proceeds upon the death of the insured
- Life insurance may be divided into two basic classes ndash term and permanent
- HISTORY OF LIFE INSURANCE
- Risk protection has been a primary goal of humans and institutions throughout history Protecting against risk is what insurance is all about
- Over 5000 years ago in China insurance was seen as a preventative measure against piracy on the sea Piracy in fact was so prevalent that as a way of spreading the risk a number of ships would carry a portion of another ships cargo so that if one ship was captured the entire shipment would not be lost
- In another part of the world nearly 4500 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
- Life insurance came about a little later in ancient Rome where burial clubs were formed to cover the funeral expenses of its members as well as help survivors monetarily With Romes fall around 450 AD most of the concepts of insurance were abandoned but aspects of it did continue through the Middle Ages particularly with merchant and artisan guilds These provided forms of member insurance covering risks like fire flood theft disability death and even imprisonment
- During the feudal period early forms of insurance ebbed with the decline of travel and long-distance trade But during the 14th to 16th centuries transportation commerce and insurance would again reemerge
- And similar to ancient Rome burial societies were formed in the Buddhist period to help families build houses and to protect widows and children
- Modern Insurance
- Illegal almost everywhere else in Europe life insurance in England was vigorously promoted in the three decades following the Glorious Revolution of 1688 The type of insurance we see today owes its roots to 17th century England Lloyds of London or as they were known then Lloyds Coffee House was the location where merchants ship owners and underwriters met to discuss and transact business deals
- While serving as a means of risk-avoidance life insurance also appealed strongly to the gambling instincts of Englands burgeoning middle class
- Gambling was so rampant in fact that when newspapers published names of prominent people who were seriously ill bets were placed at Lloydrsquos on their anticipated dates of death Reacting against such practices 79 merchant underwriters broke away in 1769 and two years later formed a ldquoNew Lloydrsquos Coffee Houserdquo that became known as the ldquoreal Lloydrsquosrdquo Making wagers on peoples deaths ceased in 1774 when parliament forbade the practice
- Insurance moves to America
- The US insurance industry was built on the British model The year 1735 saw the birth of the first insurance company in the American colonies in
- Charleston SC The Presbyterian Synod of Philadelphia in 1759 sponsored the first life insurance corporation in America for the benefit of ministers and their dependents And the first life insurance policy for the general public in the United States was issued in Philadelphia on May 22 1761
- But it wasnt until 80 years later (after 1840) that life insurance really tookoff in a big way The key to its success was reducing the opposition from religious groups
- In 1835 the infamous New York fire drew peoples 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
- With the creation of the automobile public liability insurance which first made its appearance in the 1880s gained importance and acceptance
- More advancement was made to insurance during the process of industrialization In 1897 the British government passed the Workmens Compensation Act which made it mandatory for a company to insure its employees against industrial accidents
- During 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 most labor 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
- BENEFITS OF LIFE INSURANCE
- 1) Risk cover -Life Insurance contracts allow an individual to have a risk cover against any unfortunate event of the future
- 2) Tax Deduction -Under section 80C of the Income Tax Act of 1961 one can get tax deduction on premiums up to one lakh rupees Life Insurance policies thus decrease the total taxable income of an individual
- 3) Loans -An individual can easily access loans from different financial institutions by pledging his insurance policies
- 4) Retirement Planning -What had provided protection against the financial consequences of premature death may now be used to help them enjoy their retirement years
- 5) Educational Needs -Similar to retirement planning the cash values that flow from ones life insurance schemes can be utilized for educational needs of the insurer or his children
- The Life Insurance Industry has an enviable track record among public sector units It has a Consistent profit and dividend paying record accompanied by a steady growth in its financial resources Through investments in the Government sector and socially- oriented sectors the Industry has contributed immensely to the nations development The industry is recognized as one of the largest financial Institutions in the country The ventures initiated by the industry in the areas of Mutual Fund
- Housing Finance has done exceedingly well in recent years To protect the countrys foreign exchange reserves the reinsurance arrangement are so organized that maximum retention is made possible within the country while at the same time protecting interests of the policy holders
- 22) CURRENT SCENARIO OF RELIANCE LIFE INSURANCE
- RLIC offers wide range of innovative life insurance products targeted at individuals and groups It offers need based products that caters to four distinct segments namely protection child retirement and investment plans RLIC is committed to emerge as a transnational Life Insurer of global scale and standard
- CH - 3) RESEARCH METHODOLOGY
- RESEARCH DESIGN-
- SAMPLING TECHNIQUES-
- THE PRIMARY OBJECTIVEOF THE STUDY-
- 34) OBJECTIVES
- 7) Some innovative technique or product is required in order to attract the consumer
- 45) LIMITATIONS
- 46) BIBLIOGRAPHY
-
SWOT ANALYSIS
STRENGTHS
Dedicated Employees Well Efficient Management Strong and popular brand name Adaptability to changes Goodwill of the company Transparency in service
WEAKNESS
Lack of good services
Lack of awareness about insurance among people
Less coverage in Rural Areas
Lack of credibility among the people because Reliance life insurance being a
private player
OPPORTUNITIES
Fast growing economy
Increasing per ndashcapita income in India
Saving behavior
High growth of Traditional industry
THREATS
Arrival of new entrants in the insurance industry
Cut throat competition within the industry
10
CORE VALUES
Reliance Life Insurance Company Limited has some core values which are listed as follows
1) Result Oriented2) Performance Driven3) Customer Focused4) Learning and Development Oriented5) Employee Centric6) Informal and Fun
1 B COMPANY PROFILE OF BAJAJ ALLIANZ LIFE INSURANCE
11
Bajaj Allianz Life Insurance Company limited is a joint venture between two leading conglomerates Bajaj Auto limited and Allianz AG company whose total asset value is of Rs 5900000 cr Bajaj whose wealth as of now is Rs 8000 cr group in India 55 years of experience 4th largest group in the world Above 15000 employees largest 2 amp 3 wheeler manufacture in India Allianz established in 1890 who has 115 years of experience in financial year
Bajaj Auto is one of the most trusted name is Indian auto for over 55 years At Bajaj Allianz customer delight is our guiding principle Ensuring world-class solutions by offering customized products with transparent benefits supported by best technology is our business philosophy
Notwithstanding the recession and a volatile stock market Bajaj Allianz life insurance posted a profit of Rs 45 cr for financial year 2009 against a loss of Rs 16 cr in the previous year
The company new business premium fell to Rs 4491 cr in the year against Rs 6674 cr recorded in the last year
We have been able to make a profit of profit of Rs 45 cr even in these difficult times Our new business premium declined by 30 to Rs 4491 cr because the stock market declined and we didnrsquot open any new office in FY 09rdquo Bajaj Allianz country manager and Bajaj Allianz life insurance CEO kamesh Goyal said
Bajaj Allianz Life Insurance has around 1200 offices and the company would not increase the number this year too Goyal said
The companyrsquos renewal premium grew by more than 100 to Rs 6133 cr in the 2008-2009 as compared to Rs 3051 cr in the previous fiscal year he saidIn the year Bajaj Allianz life insurance issued 29 lakh policies which were the second largest in the industry
Vision bull To be the first choice insurer for customers bull To be the preferred employer for staff in the insurance industry bull To be the number one insurer for creating shareholder value
MissionAs a responsible customer focused market leader we will strive to understand the insurance needs of the consumers and translate it into affordable products that deliver value for money
12) TRADITIONAL PLANS OF THE COMPANY
12
12A )TRADITIONAL PLAN OF RELIANCE LIFE INSURANCE -
Life insurance products are designed to suit the requirements of customers Fundamentally the product provide for
Risk cover
Investment
Health cover
In every product to a certain degree risk cover is imperative for it to fall under the category of insurance Based on the coverage of the product the premiums are calculated and the customer pays accordingly In order to suggest the right product it is essential for an agent to understand the requirements of the customer well
The traditional plans of the company have the following features- Fixed Tenure Potential for better returns Transparency Flexibility in investment Flexibility to invest more Flexibility to skip the premium Flexibility to choose the cover High liquidity Age term and sum assured decide the amount of premium Top- ups and switches are not allowed
Reliance Life Insurance Company Limited has offered 9Traditional plans to the customers which are listed as follows1) Reliance Term Plan2) Reliance Whole Life Plan3) Reliance Endowment Plan4) Reliance Special Endowment Plan5) Reliance Cash Flow Plan6) Reliance Credit Guardian Plan7) Reliance Special Credit Guardian PlanEach of the above traditional plans is discussed as follows
1) Reliance term plan-This insurance policy is designed for those who only want life cover for the protection of their family and do not wish to save for themselves It can also be useful to business firms that wish to provide financial security to their business against the sudden loss of partners or valuable manpower Since there is no saving element or bonus provision the premium is very lowHence this is a high-risk plan with a low premium
13
1048729 Features -a) Purely a term planb) Entry age minimum 18 years and maximum 65 yearc) Maximum premium paying term is 30 yeard) Loan facility NAe) Maturity amount = Sum assured
2) Reliance Whole Life Plan -This insurance policy is designed for people who do not wish to avail of any benefits themselves but wish to create an immediate estate to protect their family by availing of insurance cover on their life at a very low cost
1048729 Features -a) It is a whole life insurance policy with profitsb) Low cost life coverc) Maturity age is 85 year or 99 years last birthday as chosend) Maturity amount = Sum assured + Vested bonuse) Tax benefit is available
3) Reliance Endowment Plan -Reliance Life Insurancersquos Reliance Endowment Plan is the key to all your financial needs It is an inexpensive and easy way to protect you your family or your businessIn a nutshell this plan will keep you financially prepared for all the special occasions in your life - your daughterrsquos wedding your childrsquos university education or even a new office for your business - by eliminating the burden that a shortage of money createsIn the event of your untimely death Reliance Endowment Plan will also assist your loved ones through this difficult time by the financial support that it providesReliance Endowment Plan also gives you the additional benefit of participating in the companyrsquos profits which you will receive at the end of the policy period
1048729 Features -a) Entry age minimum is 5 year and maximum 65 yearb) Maturity age minimum is 18 year and maximum 75 yearc) Minimum premium paying term is 5 year and maximum 35 year in case of regular and in case of single 15 yeard) Minimum sum assured is Rs 25000 or as determined by the minimum premiume) Maximum sum assured is Rs 5 00000 (entry age below 18 years and no limit for entry age 18 and above)f) Premium mode annual half yearly quarterly and monthly (by salary deduction only)g) Loan up to 90 of the surrender value of the policyh) Maturity amount = Guaranteed sum assured + Reversionary bonus
4) Reliance Special Endowment Plan -
14
This insurance policy is designed for people who wish to combine savings with extended security The unique feature of this policy is that life protection continues for five years after you have stopped the payment of premium Payment of sum assured at the end of premium paying term and extension of life cover thereafter for the full sum assured for a period of 5 years are characteristics of the policyThis plan also participates in the profits
1048729 Features -a) Entry age minimum 12 year and maximum 65 yearb) Minimum sum assured is Rs 25000c) Minimum premium paying term is 10 year and maximum 40 yeard) Unique feature of this policy is that five year life protection continues after you have stopped the payment of premiume) Tax benefit is availablef) Under this policy bonus is compounded yearlyg) Loan facility is availableh) Maturity amount = Full sum assured before maturity date +Vested bonus at the time of maturity date
15
12 B) TRADITIONAL PLANS OF BAJAJ ALLIANZ LIFE INSURANCE
I ENDOWMENT PLAN
Saving plan which offer bonuses are excellent long term plan with complete safety Our products offer additional benefits which include 4 times life cover at a little extra cost limited premium payment terms and compounded reversionary bonuses making it a very good long term investment
1 Bajaj Allianz Invest GainInvest Gain is a specially designed plan that offers a unique combination of benefits that help you develop a sound financial portfolio for your family
4 Times Life Cover at a little extra cost
Limited premium payment option available
Additional Benefits
a) Accidental Death Benefit and Disability Benefit b) Critical Illness Benefit and Hospital Cash Benefit c) Family Income Benefit In case of death or accidental total permanent disability of insured all future premiums are waived and 1 of the sum assured is paid monthly
Invest Gain Save Care Economy SP Life Time Care
Super Saver
16
2 Bajaj Allianz save Care Economy SP
A One-time payment Investment plan that provides for savings with high risk cover for 10 years and also participates in the profits of the company It offers you high risk cover with easy liquidity and high returns
a) A single premium endowment plan that participates in the profitsb) 10 year Investment planc) Benefits payable on maturityc) Loans available
17
3 Bajaj Allianz life time care
A whole life plan which provides survival benefits at the age of 80 thereby making sure you are financially secure at the time when you need it the most Additional Benefits
a) Accidental Death Cover and Disability Cover b) Critical Illness Cover and Hospital Cash Cover c) Waiver of Premium Benefit
4Bajaj Allianz Super Saver plan
Bajaj Allianz Super Saver is a regular premium endowment plan which helps you save regular amounts for a safer tomorrow It also provides you with extra benefits of Guaranteed Additions to your sum assured at the end of each policy year
18
II MONEY BACK PLAN
Money back plans are Traditional Insurance plans that provide the investor with returns at regular stages of life
CashGain
1)Bajaj Allianz Cash Gain plan
A Money back plan which guarantees 125 payout + bonuses
Quadruple life cover
5 easy payouts which give upto 125 + bonuses
Additional Benefitsa) Accidental Death Benefit and Disability Benefitb) Critical Illness Benefit and Hospital Cash Benefitc) Family Income Benefit In case of death or accidental total permanent disability of insured all future premiums are waived and 1 of the sum assured is paid monthly
19
20
13) INDUSTRY PROFILE
MEANING OF INSURANCE
Insurance may be described as a social device to reduce or eliminate risk of loss to life and property Insurance is a collective bearing of risk Insurance is a financial device to spread the risks and losses of few people among a large number of people as people prefer small fixed liability instead of big uncertain and changing liability
Insurance can be defined as a ldquolegal contract between two parties whereby one party called insurer undertakes to pay a fixed amount of money on the happening of a particular event which may be certain or uncertainrdquo The other party called insured pays in exchange a fixed sum known as premiumInsurance is desired to safeguard oneself and onersquos family against possible losses on account of risks and perils It provides financial compensation for the losses suffered due to the happening of any unforeseen events
IMPORTANCE OF INSURANCE
Insurance constitutes one of the major segments of the financial marketInsurance services play predominant role in the process of financial Intermediary Today insurance industry is one of the most growing sectors in India There is lot of potential in the Indian Insurance Industry
There are many issues which require study The scope of the study of Insurance industry of India would be very great as there are ongoing Developments in the industry after the opening of the sectorOne of the major issues is the effects on LIC after the entry of private players in the market Though market share of LIC has been affected it has improved in terms of efficiency
There are number of other hot topics like penetration of Health Insurance Rural marketing of insurance new distribution channels new product ranges insurance brokersrsquo regulation incentive scheme of development officers of LIC etc So it offers lot of scope for studying the insurance industryRight now the insurance industry has great opportunities in a country like India or China which huge population Also the penetration of insurance in India is very low in both life and non-life segment so there is lot potential to be tapped Before starting the discussion on insurance industry and related issues we have to start with the basics of insurance So first we understand what is insurance How the word lsquoinsurancersquo is different from the word lsquoassurancersquo Etc
21
HISTORY OF INSURANCE
The concept of insurance is believed to have emerged almost 4500 years ago in the ancient land of Babylonia where traders used to bear risk of the carvan by giving loans which were later repaid with interest when the goods arrived safely
The concept of insurance as we know today took shape in 1688 at a place called Lloydrsquos Coffee House in London where risk bearers used to meet to transact business This coffee house became so popular that Lloydrsquos became the one of the first modern insurance companies by the end of the eighteenth centuryMarine insurance companies came into existence by the end of the eighteenth century These companies were empowered to write fire and life insurance as well as marine The Great Fire of London in 1966 caused huge loss of property and life With a view to providing fire insurance facilitiesDr Nicholas Barbon set up in 1967 the first fire insurance company known as the Fire office
Life insurance in its modern form came to India from England in 1818 The Oriental Life Insurance Company was the first insurance company to be set up in India to help the widows of European community The insurance companies which came into existence between 1818 and 1869 treatedIndian lives as subnormal and charged an extra premium of 15 to 20 per cent The first Indian insurance company the Bombay Mutual LifeAssurance Society came into existence in 1870 to cover Indian lives at normal rates
The Insurance Act 1938 the first comprehensive legislation governing both life and non-life branches of insurance were enacted to provide strict state control over insurance business This amended insurance Act looked into investments expenditure and management of these companiesBy the mid- 1950s there were 154 Indian insurers 16 foreign insurers and 75 provident societies carrying on life insurance business in India Insurance business flourished and so did scams irregularities and dubious investment practices by scores of companies As a result the government decided to nationalize the life assurance business in India The Life InsuranceCorporation of India (LIC) was set up in 1956 The nationalization of life insurance was followed by general insurance in 1972
22
MEANING OF LIFE INSURANCE
There are three parties in a life insurance transaction the insurer the insured and the owner of the policy (policyholder) although the owner and the insured are often the same person
Another important person involved in a life insurance policy is the beneficiary The beneficiary is the person or persons who will receive the policy proceeds upon the death of the insured
Life insurance may be divided into two basic classes ndash term and permanent
Term life insurance provides for life insurance coverage for a specified term of years for a specified premium The policy does not accumulate cash value
Permanent life insurance is life insurance that remains in force until the policy matures unless the owner fails to pay the premium when due
Whole life insurance provides for a level premium and a cash value table included in the policy guaranteed by the company The primary advantages of whole life are guaranteed death benefits guaranteed cash values fixed and known annual premiums and mortality and expense charges will not reduce the cash value shown in the policy
Universal life insurance (UL) is a relatively new insurance product intended to provide permanent insurance coverage with greater flexibility in premium payment and the potential for a higher internal rate of return A universal life policy includes a cash account Premiums increase the cash account If you want insurance protection only and not a savings and investment product buy a term life insurance policy
If you want to buy a whole life universal life or other cash value policy plan to hold it for at least 15 years Canceling these policies after only a few years can more than double your life insurance costs
23
HISTORY OF LIFE INSURANCE
Risk protection has been a primary goal of humans and institutions throughout history Protecting against risk is what insurance is all aboutOver 5000 years ago in China insurance was seen as a preventative measure against piracy on the sea Piracy in fact was so prevalent that as a way of spreading the risk a number of ships would carry a portion of another ships cargo so that if one ship was captured the entire shipment would not be lostIn another part of the world nearly 4500 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
Life insurance came about a little later in ancient Rome where burial clubs were formed to cover the funeral expenses of its members as well as help survivors monetarily With Romes fall around 450 AD most of the concepts of insurance were abandoned but aspects of it did continue through the Middle Ages particularly with merchant and artisan guilds These provided forms of member insurance covering risks like fire flood theft disability death and even imprisonment
During the feudal period early forms of insurance ebbed with the decline of travel and long-distance trade But during the 14th to 16th centuries transportation commerce and insurance would again reemergeInsurance in India can be traced back to the Vedas For instance yogakshema the name of Life Insurance Corporation of Indias 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
And similar to ancient Rome burial societies were formed in the Buddhist period to help families build houses and to protect widows and children
Modern InsuranceIllegal almost everywhere else in Europe life insurance in England was vigorously promoted in the three decades following the Glorious Revolution of 1688 The type of insurance we see today owes its roots to 17th century England Lloyds of London or as they were known then Lloyds Coffee House was the location where merchants ship owners and underwriters met to discuss and transact business dealsWhile serving as a means of risk-avoidance life insurance also appealed strongly to the gambling instincts of Englands burgeoning middle classGambling was so rampant in fact that when newspapers published names of prominent people who were seriously ill bets were placed at Lloydrsquos on their anticipated dates of death Reacting against such practices 79 merchant underwriters broke away in 1769 and
24
two years later formed a ldquoNew Lloydrsquos Coffee Houserdquo that became known as the ldquoreal Lloydrsquosrdquo Making wagers on peoples deaths ceased in 1774 when parliament forbade the practice
Insurance moves to AmericaThe US insurance industry was built on the British model The year 1735 saw the birth of the first insurance company in the American colonies inCharleston SC The Presbyterian Synod of Philadelphia in 1759 sponsored the first life insurance corporation in America for the benefit of ministers and their dependents And the first life insurance policy for the general public in the United States was issued in Philadelphia on May 22 1761But it wasnt until 80 years later (after 1840) that life insurance really tookoff in a big way The key to its success was reducing the opposition from religious groups
In 1835 the infamous New York fire drew peoples 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
With the creation of the automobile public liability insurance which first made its appearance in the 1880s gained importance and acceptanceMore advancement was made to insurance during the process of industrialization In 1897 the British government passed the Workmens Compensation Act which made it mandatory for a company to insure its employees against industrial accidents
During 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 most labor 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
25
BENEFITS OF LIFE INSURANCE
1) Risk cover -Life Insurance contracts allow an individual to have a risk cover against any unfortunate event of the future
2) Tax Deduction -Under section 80C of the Income Tax Act of 1961 one can get tax deduction on premiums up to one lakh rupees Life Insurance policies thus decrease the total taxable income of an individual
3) Loans -An individual can easily access loans from different financial institutions by pledging his insurance policies
4) Retirement Planning -What had provided protection against the financial consequences of premature death may now be used to help them enjoy their retirement yearsMoreover the cash value can be used as an additional income in the old age
5) Educational Needs -Similar to retirement planning the cash values that flow from ones life insurance schemes can be utilized for educational needs of the insurer or his children
26
ROLE OF LIFE INSURANCE IN THE GROWTH OF THE ECONOMY
The Life Insurance Industry has an enviable track record among public sector units It has a Consistent profit and dividend paying record accompanied by a steady growth in its financial resources Through investments in the Government sector and socially- oriented sectors the Industry has contributed immensely to the nations development The industry is recognized as one of the largest financial Institutions in the country The ventures initiated by the industry in the areas of Mutual Fund
Housing Finance has done exceedingly well in recent years To protect the countrys foreign exchange reserves the reinsurance arrangement are so organized that maximum retention is made possible within the country while at the same time protecting interests of the policy holders
27
ROLE OF IRDA
MISSION
ldquoTo protect the interests of the policyholders to regulate promote
and ensure orderly growth of the insurance industry and for matters
connected therewith or incidental theretordquo
The Insurance Act 1938 had provided for setting up of the Controller of Insurance to act
as a strong and powerful supervisory and regulatory authority for insurance Post
nationalization the role of Controller of Insurance diminished considerably in
significance since the Government owned the insurance companies But the scenario
changed with the private and foreign companies foraying in to the insurance sector This
necessitated the need for a strong independent and autonomous Insurance Regulatory
Authority was felt As the enacting of legislation would have taken time the then
Government constituted through a Government resolution an Interim Insurance
Regulatory Authority pending the enactment of a comprehensive legislation
The Insurance Regulatory and Development Authority Act 1999 is an act to provide for
the establishment of an Authority to protect the interests of holders of insurance policies
to regulate promote and ensure orderly growth of the insurance industry and for matters
connected therewith or incidental thereto and further to amend the Insurance Act 1938
the Life Insurance Corporation Act 1956 and the General insurance Business
(Nationalization) Act 1972 to end the monopoly of the Life Insurance Corporation of
India (for life insurance business) and General Insurance Corporation and its subsidiaries
(for general insurance business) The act extends to the whole of India and will come
into force on such date as the Central Government may by notification in the Official
Gazette specify Different dates may be appointed for different provisions of this Act
28
The Act has defined certain terms some of the most important ones are as follows
Appointed day means the date on which the Authority is established under the act
Authority means the established under this Act Interim Insurance Regulatory Authority
means the Insurance Regulatory Authority set up by the Central Government through
Resolution No 17(2) 94-lns-V dated the 23rd January 1996
Words and expressions used and not defined in this Act but defined in the Insurance Act
1938 or the Life Insurance Corporation Act 1956 or the General Insurance Business
(Nationalization) Act 1972 shall have the meanings respectively assigned to them in
those Acts A new definition of Indian Insurance Company has been inserted Indian
insurance company means any insurer being a company
(a) Which is formed and registered under the Companies Act 1956
(b) in which the aggregate holdings of equity shares by a foreign company either by
itself or through its subsidiary companies or its nominees do not exceed twenty-six
percent paid up capital in such Indian insurance company
(c) Whose sole purpose is to carry on life insurance business general insurance business
or re-insurance business
29
CURRENT SCENERIO
21) CURRENT SCENERIO OF THE INSURANCE INDUSTRY
With largest number of life insurance policies in force in the world insurance happens to be a mega opportunity in India Itrsquos a business growing at the rate of 15-20 per cent annually and presently is of the order of Rs 450 billion Together with banking services it adds about 7 per cent to the countryrsquos GDP Gross premium collection is nearly 2 per cent of GDP and funds available with LIC for investment are 8 per cent of GDP
Yet nearly 80 percent of Indian population is without life insurance cover while health insurance and non-life insurance continues to be below international standards And this part of the population is also subject to weak social security and pension systems with hardly any old age income security This it is an indicator that growth potential for the insurance sector is immense A well-develop and evolved insurance sector is needed for economic development as it provides long term funds for infrastructure development and at the same time strengthens the risk taking ability It is estimated that over the next ten years India would require investments of the order of one trillion US dollar The insurance sector to some extent can enable investment in infrastructure development to sustain economic growth of the country Insurance is a federal subject in India There are two legislation that govern the sector - The Insurance Act-1938 and The IRDA Act-1999
In India insurance is generally considered as a tax-saving device instead of its other implied long term financial benefits Indian people are prone to investing in properties and gold followed by bank deposits They selectively invest in shares also but the percentage is very small Even to this day Life Insurance Corporation of India dominates India insurance sector With the entry of private sector players backed by foreign expertise Indian insurance market has become more vibrant Business is becoming increasingly vulnerable due to wide variety of risk particularly after September 11 2001 disaster in which twin tower located in the hearts of New York city were crashed by terrorist attack resulting in loss of 6000 human lives as well as financial loss to the extent of $45 billion The impact of this terrorist attack has created new horizon of risk to the business world today
However rapid changes in the global economy development of technology and e-business already gathered momentum Increased dependency on technology has originated new risks that have resulted in well-published incidents Computer hackers obtaining credit card information from visa and Power-Gen the love bug virus cyber extortion web content liability professional errors and omissions computers and other crimes and activities such as terrorism kidnapping and companyrsquos executive and extortion of money commercial liability etc have significant impact on business resulting in extreme financial loss commercial embarrassment or regulatory implications
Corporation insurancerisk managers under the circumstances have to demand increasingly complex insurance products They have to be more attentive and
30
knowledgeable about emerging risks how those risks are managed effectively and efficiently and how they could ultimately affect a companyrsquos financial situation and therefore its position in the market place In short how such risks are managed and can give to an insured a competitive advantage
In the changing times adoption of e-commerce into business models the integration of web-based communication and data transfer capabilities into the business operations and leveraging of advanced network and technology architecture for maximum benefit are the new horizon of the risks For the corporate insurancerisks managers these new exposure-cyber-risks-can lead to cyber losses widening the interpretation of what constitute insure property damage particularly as it relates to information technology and dataAll the while organizations are tremendous pressure to reduce expenses and increase profit margin and cannot afford to suffer a property loss of business interruption due to any cause (risk) How a company identifies quantifies qualifies and manages these new risks exposure in addition to the well-known tradition risks is becoming an important factor in creating shareholders value This often means changing the way Everyone in the organization have to think about risk
Insurance managers are seeing price levels (premium) continue to rise-albeit modestly-in todayrsquos primarily commercial property and reinsurance markets They are demanding that insurers improve their risk assessment and quantification offerings so that an insured may avail the benefit in cost (premium rate) on account of well-managed riskThe good news for insurance managers is that as the economy evolves insurers are increasingly matching that evaluation with new products services and capabilities due to opening up the insurance market to the private players
Insurers who are truly listening to their customers and striving to be more in tune with their needs are responding to the fast changing corporate insurance and risk management landscape They are listening to their customers They are making fresh approaches to address the new challenges faced by insured organization by designing the new products as per the needs Insurers are providing value added services to insured to protect the value created by the business
Insurers are increasingly required to develop and expand their information technology platforms to ensure that the vast amount of data they collect about their customers Insurancerisk portfolio can easily and seamlessly be transformed into valuable risk management information To help their customers insurers should make better-informed decisions They must be able to swiftly deliver this data to their customers (insured) anywhere in the world Insurer are also discovering that risk assessment have to be customized to meet policyholdersrsquo new exposures and needs The insurance industry is stepping up and addressing these challenges in several different ways
31
22) CURRENT SCENARIO OF RELIANCE LIFE INSURANCE
RLIC offers wide range of innovative life insurance products targeted at individuals and groups It offers need based products that caters to four distinct segments namely protection child retirement and investment plans RLIC is committed to emerge as a
transnational Life Insurer of global scale and standard
Reliance Life Insurance Company Limited (RLIC) is amongst the fastest growing life insurance companies in India It is also amongst the top four private sector life insurance companies in India (As on FY 2008-2009)
As on March 31 2009 RLIC has an annualized premium of Rs 30 billion with a market share of 103 It has leapfrogged on the growth path and has reached the 4 million policy mark in a short span of within 3 years RLIC has a strong distribution network of 1145 branches with more than 149000 agents
32
Insurancersquos Market Share in Comparison of Other Private company
If we look at the status of Reliance Life Insurancersquos market share in comparison of other
private company in comparison of premium earned-
If we talk the growth of Insurance industryrsquos private players in recent years the data will
reflect-
CH - 3) RESEARCH METHODOLOGY
33
RESEARCH DESIGN-
COMPARITIVE STUDY- A comparative study has been undertaken to compare the traditional Plans of Reliance Life Insurance with that of Bajaj Allianz life insurance
DATA TYPE
INTRODUCTION - Any organization whether big or small private or public needs different type of information to know its popularity I have gathered secondary data and primary data and collected information from the combination of these two data
PRIMARY DATA - Primary data collection method was decided for observing working of the company and approaching the customers directly face to face A great care was taken while collecting the primary data to answer that it is relevant accurate current and unbiased
SECONDARY DATA - Secondary data collection method was used by referring to various websites books and newspapers for collecting information regarding the project under study Secondary data consist of the information that already exists somewhere else for some another purpose
SAMPLING TECHNIQUES-
SAMPLE SIZE- A sample size of 50 was taken to be analyzed
SAMPLE LOCATION-Various sectors of Kamla Nagar Civil lines Mukherji Nagar Model Town and selected areas of Delhi
SAMPLING PROCESS - Convenient sampling was used to overcome the time and money constraints that could have been faced by us while collecting the data The customers were contacted face to face directly and also by way of telephonic conversation with them
ANALYTICAL TOOLS - The data collected were arranged accordingly and statistical tools like bar graphs and pie-charts were used to analyze and present the data
RESEARCH INSTRUMENT USED-
34
SAMPLING MEDIA - Printed questionnaires consisting several questions were asked to have an idea of customers view about Reliance Life Insurance plans followed by personal questions
FIELD WORK - Rigorous field work was undertaken to locate the interested and potential respondents to fulfill the objectives of the study
THE PRIMARY OBJECTIVEOF THE STUDY -
The primary objective of the research study is to have a detailed analysis of Reliance Life Insurance bringing in focus the future prospects of the (Anil Dhirubhai Ambani group) with relevance to the customer perception regarding the various plans and products offered by Reliance Life Insurance
31) DATA ANALYSIS AND INTERPRETATION
35
PERSONAL DETAILS
1) AGE a) 18-30b) 31-50c) 51-65
AGE NO OF RESPONDENTS PERCENTAGE
18-30 21 42
31-50 19 38
51-65 10 20
TOTAL 50 100
INTERPRETATION-The bar graph reveals that 42 of the respondents belong to the age group of 18-30 years 38 lies in the age group of 31-50 years and 20 of them lie in the age group of 51-65 years
2) OCCUPATION
4238
20
05
1015202530354045
NO
O
F
RE
SP
ON
DE
NT
S
18 to 30 31 to 50 51 to 65
AGE (in year)
AGE WISE CLASSIFICATION
36
a) Serviceb) Businessc) Professiond) Housewifee) Retired
OPTION NO OF RESPONDENTS PERCENTAGE
Service 16 32
Business 14 28
Profession 5 10
Housewife 8 16
Retired 7 14
TOTAL 50 100
INTERPRETATION-The above bar graph reveals that 32 of the total respondents were servicemen 28 of them belonged to the business class 10 were professionals 16 were housewives and 14 of the total respondents fall in the retired category
3) INCOME
32
28
10
16
14
0
5
10
15
20
25
30
35
Service Business Profession Housewife Retired
OCCUPATION
OCCUPATION WISE CLASSIFICATION
37
a) 150000-300000
b) 300000-500000
c) Above 500000
OPTION NO OF RESPONDENTS PERCENTAGE
150000-300000 24 48
300000-500000 14 28
Above 500000 12 24
TOTAL 50 100
INTERPRETATION-The above bar graph reveals that out of the total respondents 48 lie in the income group of 150000-300000 28 of the total respondents belonged to the income group of 300000-500000 and 24 lie in the income group of people earning an income of above Rs 500000pa
4828 24
01020304050
N O
OF
RE
SP
ON
DE
NT
S
150000-300000
300000-500000
ABOVE500000
INCOME (in RS)
INCOME WISE CLASSIFICATION
38
4) FAMILY MEMBERS
a) 2b) 3c) 4d) Above 4
OPTION NO OF RESPONDENT PERCENTAGE
2 11 22
3 9 18
4 24 48
Above 4 6 12
TOTAL 50 100
INTERPRETATION The above bar graph shows that 22 of the total respondents had a family of 2 members 18 of them had 3 family members 48 of them had 4 family members and 12 of them had the no of family members above 4
Q1 Where do you prefer to invest
22 18
48
120
1020304050
No
o
f re
spo
nd
ents
2 3 4 Above 4
No of family members
MEMBER WISE CLASSIFICATION
39
a) fixed deposits
b) stock
c) mutual funds
d) insurance
e) others
Option No of respondents Percentage
Fixed deposits 5 10
Stock 10 20
Mutual fund 10 20
Insurance 18 36
others 7 14
TOTAL 50 100
Interpretation The above pie chart shows that out of 50 respondents 10 preferred to invest in fixed deposits 20 in stocks 20 in mutual funds 36 in insurance and 14 in others like property gold etc
Q2 What are your priorities for investment
40
a) protecting your family against pre-mature death
b) wealth creation
c) retirement needs
d) child education and marriage
e) protect income against disability sickness or critical illness
Option No of respondents Percentage
Protecting your family against pre mature death
10 20
Wealth creation 14 28
Retirement needs 5 10
Child education and marriage 7 14
Protect income against disability sickness or critical illness
14 28
TOTAL 50 100
Interpretation The above pie chart shows that out of 50 respondents 20 of them invest for protecting their family against premature death 28 for creating wealth 10 for meeting their future retirement needs 14 for child education amp marriage and 28 for protection against disability and sickness
Q3 What is your main motive behind investing in life insurance
41
a) tax benefit
b) savings
c) risk cover
Option No of respondents Percentage
Tax benefits 27 54
Savings 5 10
Risk cover 18 36
TOTAL 50 100
Interpretation The above pie chart shows that out of the sample respondents 54 have tax benefit 10 have savings and 36 have risk cover as their main motive for making an investment in life
Q4 What kind of investment do you prefer
42
a) high risk high gain
b) low risk low gain
c) moderate
d) vary times to times
Option No of respondents Percentage
High risk high gain 8 16
Low risk low gain 5 10
Moderate 12 24
Vary times to times 25 50
TOTAL 50 100
Interpretation The above pie chart shows that out of 50 respondents 16 preferred high risk- high gain form of investment 10 preferred low risk- low gain form of investment 24 preferred moderate investment and 50 preferred varied form of investment
43
Q5Are you interested to invest in Traditional Plans
a) YES
b) NO
Option No of respondents Percentage
YES 36 72
NO 14 28
TOTAL 50 100
Interpretation The above pie chart shows that 72 of the respondents preferred to invest in Traditional Plans
44
Q6 What is your level of annual investmenta) below 20000
b) 20000-40000
c) above 40000
Option No of respondents Percentage
Below 20000 41 82
20000-40000 7 14
Above 40000 2 4
TOTAL 50 100
Interpretation The above pie chart shows that 82 of the respondents are willing to invest below Rs 20000 per annum 14 of them want to invest within Rs 20000 per annum to Rs 40000 and 4 wanted to invest over and above Rs 40000
45
Q7 What factors would you consider most important before choosing an insurance policy
a) publicity of the company
b) reputation of the company
c) quality of life advisors
d) after sales-supporting of the company
Option No of respondents Percentage
Publicity of the co 5 20
Reputation of the co 25 50
Quality of life advisors 10 10
After sale-services 10 20
TOTAL 50 100
Interpretation out of the sample respondents 20 considers publicity of the company 50 considers reputation of the company 10 considers quality of life advisors and 20 considers after sales support of the company as the most important factor for choosing an insurance company
46
Q8 Which life insurance company would you prefer the most to invest ina) reliance life insurance (RLIC)
b) Bajaj Allianz life insurance
Option No of respondents Percentage
RLIC 21 42
BAJAJ ALLIANZ 29 58
TOTAL 50 100
Interpretation Out of 50 respondents 42 preferred to invest in reliance life insurance over 58 of the respondents who prefer to invest in Bajaj Allianz life insurance
47
Q9 If reliance life insurance then which particular plan you would like to invest ina) Reliance Term Plan
b) Reliance Whole Life Plan
c) Reliance Endowment Plan
d) Reliance Special Endowment Plan
Option No of respondents Percentage
Reliance term plan 6 2858
Reliance whole life plan 3 1428
Reliance endowment plan 9 4286
Reliance special endowment plan 3 1428
TOTAL 21 100
Interpretation Out of 21 respondents 2858 preferred to invest in term plan 1428 in whole life plan 4286 in endowment plan and 1428 of them preferred to invest in special endowment plan of reliance life insurance
48
Q10 If Bajaj Allianz life insurance then which particular plan you would like to invest in
I ENDOWMENT PLAN a) Bajaj Allianz Invest Gain
b) Bajaj Allianz save Care Economy SP
c) Bajaj Allianz life time care
d) Bajaj Allianz Super Saver plan
II MONEY BACK PLAN i Bajaj Allianz Cash Gain plan
Option No of respondents Percentage
Invest gain plan 3 1035
Save care economy SP 6 2069
Life time care 7 2415
Super saver plan 3 1035
Cash gain plan 10 3446
TOTAL 29 100
Interpretation Out of 29 respondents 1035 of them plan to invest in Bajaj Allianz- Invest Gain 2069 wish to invest in Bajaj Allianz save Care Economy SP 2415 want to invest in Bajaj Allianz life time care 1035 in Bajaj Allianz Super Saver plan and 3446 prefer to invest in Bajaj Allianz Cash Gain plan
49
32) SIGNIFICANCE OF STUDY
Life insurance is one of the most rapidly growing sectors in India The main reason
behind the growth can attributed to the high population density improving economical
condition improving education level and improving awareness Due to these factors there
is still huge scope for growth in this sector Like any other business when the
opportunities are present everybody tends to enter the industries This growth hence
fetches the new competitors as well as new strategies from existing players To sustain in
any competitive industry the organization must adapt to existing strategies and adopt
new ones This study will focus on the analysis of Reliance Life Insurance in comparison
with the present scenario of Bajaj Allianz Life Insurance with respect to the Traditional
Plans of both the companyrsquos This will mainly cover the following aspects
To know about the awareness and popularity of various Traditional Plans offered
by Reliance Life Insurance and Bajaj Allianz Life Insurance
How Reliance Life Insurance can develop and sustain a good distribution
network
These will provide it benefit both in terms of better market coverage as well as better
penetration
50
33) SCOPE OF THE STUDY
1) This helps in finding out vast potential of insurance company
2) The study was conducted in National Capital Region (NCR) only
3) The number of respondents to be surveyed can be improved
4) This study was conducted by comparing the performances amp products of three private
amp government insurance players in insurance industry
5) This study was conducted to analyze the market stand of Reliance life insurance
Company limited and Bajaj Allianz Life Insurance Company Limited of India insurance
companies
6) This study is done to eliminate all the myths which people have in their minds
regarding Insurance Sector
51
34) OBJECTIVES
To have a detailed understanding of Reliance Life Insurance and Bajaj Allianz Life Insurance
To find out various reasons considered while investing in policies
To get knowledge about the market exposure and future prospects about Reliance Life Insurance
To know the perception of the consumers about the life insurance
To analyze the Traditional plans of Reliance Life Insurance and compare it with Bajaj Allianz
To know about the brand awareness of Reliance Life Insurance its customer preferences over Bajaj Allianz in the market
To study a proper knowledge about the life insurance industry
To understand the consumer choice while investing in policies
52
CHAPTER 4
DISCUSSION AND FINDINGS OF THE STUDY
FINDINGS OF THE STUDY RECOMMENDATION AND SUGGESTIONS CONCLUSION LIMITATIONS BIBLIOGRAPHY ANNEXUREQUESTIONNAIRE
53
41) FINDINGS OF THE STUDY
1) The survey reveals that still a large proportion of population is interested to invest in other forms of investment other than insurance as still most of them are unaware about the importance of insurance in their life
2) Basically people make varied form of investment for creating wealth to protect their families against pre-mature death and to protect income against disability sickness or critical illness
3) The main motive of the individuals investing is receives benefits US 1010D People generally consider insurance as a tax saving device
4) Mostly people prefer time to time form of investment as they are not willing to take high degree of risk
5) 72 of the respondents are preferred to invest in Traditional Plans
6) Most of the people prefer to make an annual investment up to a maximum of Rs20 000 per annum
7) When the product is like life insurance reputation of the company publicity of the company amp after sale services of the company matters a lot This means that people would choose that insurance company only where the quality of life advisors is satisfactory
8) Most people prefer to invest in Bajaj Allianz Life Insurance as compared to making an investment in Reliance Life Insurance
9) The most preferable Traditional plan of Reliance Life Insurance is Endowment Plan
10) The most preferable plan of Bajaj Allianz Life Insurance co is Cash Gain Plan
54
42) SUGGESTIONS amp RECOMMENDATIONS
Based on the observations of the study some suggestions for the organization are made as
follows
1) Quality of advisors is also as important as the quantity Thus company should go
mainly for qualified professionals
2) Company should increase its budget on publicity so that awareness can be increased
3) Clarity and transparency should be provided to the customer regarding various
products
4) Training sessions should be planned in advance so that schedule can be provided to
the advisor in advance
5) Apart from the Brand Positioning in urban area a strategy should be adopted by
Reliance to make its brand also near to middle level or high aspirant people because they
are the main source of the business in India
6) Awareness Camp to the sub urban area should be focused by Reliance
7) Some innovative technique or product is required in order to attract the consumer
43) LITERATURE REVIEW
55
1) Robi Elenekave has explained in detail why various retirement plans and pension plans donrsquot give the desired returns The main difficulty is the use of incorrect method for calculations done to find out the return on investment This is primarily due to wrong assumptions The study provides information about the various precautions which need to be considered before planning so that the desired results can be achieved
2) Another paper provides insight about how various financial sectors invest in bond market The study was how the different players investment different instruments according to the risk appetite and desired rate of return The study shows that life insurance sector mainly invests in government bond which are low return and low risk instrument The investment in government bond it shows that life insurance companies are more conservative in investment
3) K Subhash has presented the history of Indiarsquos life insurance industry in three stages before independence after independence and post liberalization which not only provides information but also help in analyzing the impact of these major changes The authors have also discussed the huge potential which exists in the rural India The insurance company must realize the importance of rural sector because the future lies there The author commented about the increasing share of private player in the existing market This confirms the availability of opportunity in this sector The paper also provides the importance of professional and focused approach which was given no importance
4) Tapen Sinha has discussed the various challenges and opportunities in the insurance market One of the very important factors which have been discussed in the study is the importance of developing new and better products As the scenario changes the need of an individual also changes so any organization must understand and fulfill these needs The new product development requires constant research so organization must also focus on it
5) Roger G Ibbotson discusses how financial planners and advisors have recently started to recognize that human capital must be taken into account when building optimal portfolios for individual investors Any investorrsquos human capital has a unique mortality risk However life insurance in its forms can hedge against this mortality risk Thus human capital affects both the optimal asset allocation and the optimal demand for life insurance This paper provides a unified framework based on human capital in order to enable individual investors to make both decisions jointly
6) Rakesh Niraj study tells how the flow of information in any organization is important For any organization to grow the flow of information must be good both upwards as well as ownwards The proper flow of information will also ensure proper flow of good and services from organization to customer and proper flow of information from customer to organization The information from customers will help the organization in providing better goods and services to the customer For the above purpose organization must ensure good channel partner who can provide the organization with correct feedback Hence it becomes very important for any organization to acquire good channel partners
56
7) Stephen P Robbins has discussed how group dynamics works in any organization The success of any organization depends on the success of its various teams and how these teams work together The book provides various techniques which can be used by any organization to get result from the team effort The conflict resolution is a major task in any group Various techniques which the organization can use in conflict resolution are also discussed Another important aspect covered is the importance of leadership in the organization The various forms of leadership have been discussed and the kinds of leadership which can be effective in particular situations are also discussed
8) R Wayne Mondy has discussed the importance of training and development in any organization The training provides skills to perform the current job where as the development involve learning beyond present need The various type of training are discussed which can be used according to the requirement Training and development are not only important for better performance of an individual but it also gives satisfaction The major factors which influence training and development are found to be management support commitment of trainee and trainer complexity of the organization The process of developing good training plans is also provided In another part author has discussed the importance of right man for right job The compensation strategies are also given which are very crucial for ant industry
9) Philip Kotler has discussed the importance of channels partners Better the channel partners better will be the delivery model Detailed discussion about how to design the channel structure so that all the requirements could be fulfilled is provided The various issues faced by the organization while managing the channels are also given When an organization has more than one channel it becomes very important that all the channels should be integrated in such a way that the organization get the best out of all At times due to the conflicting benefit of the different channels the conflict arise so various strategies to manage these issues is also discussed in the chapter
10) Michael J Etzel has written about the marketing of services The marketing of services is different from the goods because of the characteristic of service like intangibility inseparability heterogeneity etc Brief about pricing strategies is also given in case of services The authors have also given the impact of technological development on the services marketing The author has also given the importance of brand and after sales support in case of services as perception of the customers plays an important role In other part of the book the authors has described the importance of distribution channels and designing of the same A channel partner should be consider as partner according to discussion The legal complications associated with channels are also discussed These complications are necessary to take into the consideration while managing the channels The conflicting interest of channels both horizontally and vertically are also taken into the consideration
57
11) Boone has discussed about the importance of personal financial planning The concept of time value of money has also been elaborated The importance of creating and implementing budget is given under money management The other important concepts for financial planning like credit management and understanding taxes are also explained In one section the authors have discussed the importance of investment and what should be the major considerations while making any investment The considerations include the risk associated with the investment return on the investment etc The importance and benefits of life insurance has also been given The discussion also includes various legal aspects associated with life insurance The overview of retirement planning is also given which includes importance and benefit of retirement planning Various tools for proper retirement planning are also discussed
58
44) CONCLUSION
1) The customers are very much sensitive towards their investment They would like to invest only in that insurance company which enjoys good public image along with quality good services
2) The result of the survey conducted shows that Bajaj Allianz Life Insurance is the leader in life insurance industry but Reliance Life Insurance and other private players are giving it a close competition
3) The motive of the people behind investing in life insurance is the tax benefits that they would receive under sec 80C and 1010D
4) In Life Insurance industry the after sales support of the company is as important as the quality of life advisors
59
45) LIMITATIONS
There were some limitations faced during the study as discussed below
Since the study was taken for two months so there was a constraint of time and effort
The study was limited only to some of the Delhi regions so the results may be biased
Questionnaire was given to 125 people however only 50 responded to it which is very small for such type of study
The biasness of consumer or responses error cannot be eliminated
Most of the people are not aware about the Importance and the necessity of insurance in their life
Adverse perception of the people towards insurance sector- People consider insurance as a tax saving device
Lack of awareness about the earning opportunity in the insurance sector
60
46) BIBLIOGRAPHY
wwwreliancelifeinsurancecom
wwwadagroupcom
wwwirdacom
wwwbajajallianzlifeinsurancecom
wwwallianzbajajcom
47) ANNEXURE
61
QUESTIONNAIRE
A comparative analysis of consumer perception regarding Traditional plans of Reliance Life Insurance with that of Bajaj Allianz Life Insurance
NAME ___________________________
PERSONAL DETAILS
1) AGE_________________
1) OCCUPATION______________
2) INCOME___________________
3) FAMILY MEMBERS_________
Q1 Where do you prefer to investa) Fixed deposits b) Stock c) Mutual funds d) Insurance e) Others
Q2 What are your priorities for investmenta) Protecting your family against pre-mature death b) Wealth creation c) Retirement needs d) Child education and marriage e) Protect income against disability sickness or critical illness
Q3 What is your main motive behind investing in life insurancea) Tax benefit b) Savings c) Risk cover
Q4 What kind of investment do you prefera) High risk high gain b) Low risk low gain c) Moderate d) Vary times to times
62
Q5Are you interested to invest in Traditional Plansa) Yes b) No
Q6 What is your level of annual investmenta) below 20000 b) 20000-40000 c) above 40000
Q7 What factors would you consider most important before choosing an insurance company
a) publicity of the company b) reputation of the company c) quality of life advisors d) after sales-supporting of the company
Q8 Which life insurance company would you prefer the most to invest ina) Reliance life insurance b) Bajaj Allianz life insurance
Q9 If reliance life insurance then which particular plan you would like to invest ina) Reliance Term Plan b) Reliance Whole Life Plan c) Reliance Endowment Plan d) Reliance Special Endowment Plan
Q10 If Bajaj Allianz life insurance then which particular plan you would like to invest in
I ENDOWMENT PLAN
a) Bajaj Allianz Invest Gain
b) Bajaj Allianz save Care Economy SP
c) Bajaj Allianz life time care
d) Bajaj Allianz Super Saver plan
II MONEY BACK PLAN
a) Bajaj Allianz Cash Gain plan
63
64
- COMPANY PROFILE
- ABOUT RELIANCE LIFE INSURANCE
- HISTORY
- Reliance Capital Limited announced the launch of its life insurance business on February 1 2006 This was after obtaining the required regulatory approvals from the Registrar Of Companies and the Insurance Regulatory and Development Authority
- It was in August 2005 that the ball was set rolling when Reliance Capital Limited the financial arm of Reliance ndash Anil Dhirubhai Ambani Group (ADAG) ndash announced the requisition of 100 shareholding in AMP Sanmar Life Insurance Company Limited and the formal transfer of shares took place in October 2005 The company will issue all policy contracts under the Reliance Life Insurance Company limited name All the existing policy contracts also stand transferred to the Reliance Life Insurance entity with all the original contractual terms and commitments intact
- CORE VALUES
- Reliance Life Insurance Company Limited has some core values which are listed as follows
- Vision bull To be the first choice insurer for customers bull To be the preferred employer for staff in the insurance industry bull To be the number one insurer for creating shareholder value
- Mission As a responsible customer focused market leader we will strive to understand the insurance needs of the consumers and translate it into affordable products that deliver value for money
- 12) TRADITIONAL PLANS OF THE COMPANY
- 12A )TRADITIONAL PLAN OF RELIANCE LIFE INSURANCE-
- Life insurance products are designed to suit the requirements of customers Fundamentally the product provide for
- In every product to a certain degree risk cover is imperative for it to fall under the category of insurance Based on the coverage of the product the premiums are calculated and the customer pays accordingly In order to suggest the right product it is essential for an agent to understand the requirements of the customer well
- The traditional plans of the company have the following features-
- Fixed Tenure
- Potential for better returns
- Transparency
- Flexibility in investment
- Flexibility to invest more
- Flexibility to skip the premium
- Flexibility to choose the cover
- High liquidity
- Age term and sum assured decide the amount of premium
- Top- ups and switches are not allowed
- Reliance Life Insurance Company Limited has offered 9
- 1) Reliance term plan-
- 2) Reliance Whole Life Plan -
- 3) Reliance Endowment Plan -
- 4) Reliance Special Endowment Plan -
- 13) INDUSTRY PROFILE
- MEANING OF INSURANCE
- Insurance may be described as a social device to reduce or eliminate risk of loss to life and property Insurance is a collective bearing of risk Insurance is a financial device to spread the risks and losses of few people among a large number of people as people prefer small fixed liability instead of big uncertain and changing liability
- Insurance can be defined as a ldquolegal contract between two parties whereby one party called insurer undertakes to pay a fixed amount of money on the happening of a particular event which may be certain or uncertainrdquo The other party called insured pays in exchange a fixed sum known as premium
- Insurance is desired to safeguard oneself and onersquos family against possible losses on account of risks and perils It provides financial compensation for the losses suffered due to the happening of any unforeseen events
- IMPORTANCE OF INSURANCE
- Insurance services play predominant role in the process of financial Intermediary Today insurance industry is one of the most growing sectors in India There is lot of potential in the Indian Insurance Industry
- There are many issues which require study The scope of the study of Insurance industry of India would be very great as there are ongoing Developments in the industry after the opening of the sector
- Right now the insurance industry has great opportunities in a country like India or China which huge population Also the penetration of insurance in India is very low in both life and non-life segment so there is lot potential to be tapped Before starting the discussion on insurance industry and related issues we have to start with the basics of insurance So first we understand what is insurance How the word lsquoinsurancersquo is different from the word lsquoassurancersquo Etc
- HISTORY OF INSURANCE
- The concept of insurance is believed to have emerged almost 4500 years ago in the ancient land of Babylonia where traders used to bear risk of the carvan by giving loans which were later repaid with interest when the goods arrived safely
- The concept of insurance as we know today took shape in 1688 at a place called Lloydrsquos Coffee House in London where risk bearers used to meet to transact business This coffee house became so popular that Lloydrsquos became the one of the first modern insurance companies by the end of the eighteenth century
- Marine insurance companies came into existence by the end of the eighteenth century These companies were empowered to write fire and life insurance as well as marine The Great Fire of London in 1966 caused huge loss of property and life With a view to providing fire insurance facilities
- Dr Nicholas Barbon set up in 1967 the first fire insurance company known as the Fire office
- Life insurance in its modern form came to India from England in 1818 The Oriental Life Insurance Company was the first insurance company to be set up in India to help the widows of European community The insurance companies which came into existence between 1818 and 1869 treated
- Indian lives as subnormal and charged an extra premium of 15 to 20 per cent The first Indian insurance company the Bombay Mutual Life
- Assurance Society came into existence in 1870 to cover Indian lives at normal rates
- The Insurance Act 1938 the first comprehensive legislation governing both life and non-life branches of insurance were enacted to provide strict state control over insurance business This amended insurance Act looked into investments expenditure and management of these companies
- By the mid- 1950s there were 154 Indian insurers 16 foreign insurers and 75 provident societies carrying on life insurance business in India Insurance business flourished and so did scams irregularities and dubious investment practices by scores of companies As a result the government decided to nationalize the life assurance business in India The Life Insurance
- Corporation of India (LIC) was set up in 1956 The nationalization of life insurance was followed by general insurance in 1972
- MEANING OF LIFE INSURANCE
- There are three parties in a life insurance transaction the insurer the insured and the owner of the policy (policyholder) although the owner and the insured are often the same person
- Another important person involved in a life insurance policy is the beneficiary The beneficiary is the person or persons who will receive the policy proceeds upon the death of the insured
- Life insurance may be divided into two basic classes ndash term and permanent
- HISTORY OF LIFE INSURANCE
- Risk protection has been a primary goal of humans and institutions throughout history Protecting against risk is what insurance is all about
- Over 5000 years ago in China insurance was seen as a preventative measure against piracy on the sea Piracy in fact was so prevalent that as a way of spreading the risk a number of ships would carry a portion of another ships cargo so that if one ship was captured the entire shipment would not be lost
- In another part of the world nearly 4500 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
- Life insurance came about a little later in ancient Rome where burial clubs were formed to cover the funeral expenses of its members as well as help survivors monetarily With Romes fall around 450 AD most of the concepts of insurance were abandoned but aspects of it did continue through the Middle Ages particularly with merchant and artisan guilds These provided forms of member insurance covering risks like fire flood theft disability death and even imprisonment
- During the feudal period early forms of insurance ebbed with the decline of travel and long-distance trade But during the 14th to 16th centuries transportation commerce and insurance would again reemerge
- And similar to ancient Rome burial societies were formed in the Buddhist period to help families build houses and to protect widows and children
- Modern Insurance
- Illegal almost everywhere else in Europe life insurance in England was vigorously promoted in the three decades following the Glorious Revolution of 1688 The type of insurance we see today owes its roots to 17th century England Lloyds of London or as they were known then Lloyds Coffee House was the location where merchants ship owners and underwriters met to discuss and transact business deals
- While serving as a means of risk-avoidance life insurance also appealed strongly to the gambling instincts of Englands burgeoning middle class
- Gambling was so rampant in fact that when newspapers published names of prominent people who were seriously ill bets were placed at Lloydrsquos on their anticipated dates of death Reacting against such practices 79 merchant underwriters broke away in 1769 and two years later formed a ldquoNew Lloydrsquos Coffee Houserdquo that became known as the ldquoreal Lloydrsquosrdquo Making wagers on peoples deaths ceased in 1774 when parliament forbade the practice
- Insurance moves to America
- The US insurance industry was built on the British model The year 1735 saw the birth of the first insurance company in the American colonies in
- Charleston SC The Presbyterian Synod of Philadelphia in 1759 sponsored the first life insurance corporation in America for the benefit of ministers and their dependents And the first life insurance policy for the general public in the United States was issued in Philadelphia on May 22 1761
- But it wasnt until 80 years later (after 1840) that life insurance really tookoff in a big way The key to its success was reducing the opposition from religious groups
- In 1835 the infamous New York fire drew peoples 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
- With the creation of the automobile public liability insurance which first made its appearance in the 1880s gained importance and acceptance
- More advancement was made to insurance during the process of industrialization In 1897 the British government passed the Workmens Compensation Act which made it mandatory for a company to insure its employees against industrial accidents
- During 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 most labor 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
- BENEFITS OF LIFE INSURANCE
- 1) Risk cover -Life Insurance contracts allow an individual to have a risk cover against any unfortunate event of the future
- 2) Tax Deduction -Under section 80C of the Income Tax Act of 1961 one can get tax deduction on premiums up to one lakh rupees Life Insurance policies thus decrease the total taxable income of an individual
- 3) Loans -An individual can easily access loans from different financial institutions by pledging his insurance policies
- 4) Retirement Planning -What had provided protection against the financial consequences of premature death may now be used to help them enjoy their retirement years
- 5) Educational Needs -Similar to retirement planning the cash values that flow from ones life insurance schemes can be utilized for educational needs of the insurer or his children
- The Life Insurance Industry has an enviable track record among public sector units It has a Consistent profit and dividend paying record accompanied by a steady growth in its financial resources Through investments in the Government sector and socially- oriented sectors the Industry has contributed immensely to the nations development The industry is recognized as one of the largest financial Institutions in the country The ventures initiated by the industry in the areas of Mutual Fund
- Housing Finance has done exceedingly well in recent years To protect the countrys foreign exchange reserves the reinsurance arrangement are so organized that maximum retention is made possible within the country while at the same time protecting interests of the policy holders
- 22) CURRENT SCENARIO OF RELIANCE LIFE INSURANCE
- RLIC offers wide range of innovative life insurance products targeted at individuals and groups It offers need based products that caters to four distinct segments namely protection child retirement and investment plans RLIC is committed to emerge as a transnational Life Insurer of global scale and standard
- CH - 3) RESEARCH METHODOLOGY
- RESEARCH DESIGN-
- SAMPLING TECHNIQUES-
- THE PRIMARY OBJECTIVEOF THE STUDY-
- 34) OBJECTIVES
- 7) Some innovative technique or product is required in order to attract the consumer
- 45) LIMITATIONS
- 46) BIBLIOGRAPHY
-
CORE VALUES
Reliance Life Insurance Company Limited has some core values which are listed as follows
1) Result Oriented2) Performance Driven3) Customer Focused4) Learning and Development Oriented5) Employee Centric6) Informal and Fun
1 B COMPANY PROFILE OF BAJAJ ALLIANZ LIFE INSURANCE
11
Bajaj Allianz Life Insurance Company limited is a joint venture between two leading conglomerates Bajaj Auto limited and Allianz AG company whose total asset value is of Rs 5900000 cr Bajaj whose wealth as of now is Rs 8000 cr group in India 55 years of experience 4th largest group in the world Above 15000 employees largest 2 amp 3 wheeler manufacture in India Allianz established in 1890 who has 115 years of experience in financial year
Bajaj Auto is one of the most trusted name is Indian auto for over 55 years At Bajaj Allianz customer delight is our guiding principle Ensuring world-class solutions by offering customized products with transparent benefits supported by best technology is our business philosophy
Notwithstanding the recession and a volatile stock market Bajaj Allianz life insurance posted a profit of Rs 45 cr for financial year 2009 against a loss of Rs 16 cr in the previous year
The company new business premium fell to Rs 4491 cr in the year against Rs 6674 cr recorded in the last year
We have been able to make a profit of profit of Rs 45 cr even in these difficult times Our new business premium declined by 30 to Rs 4491 cr because the stock market declined and we didnrsquot open any new office in FY 09rdquo Bajaj Allianz country manager and Bajaj Allianz life insurance CEO kamesh Goyal said
Bajaj Allianz Life Insurance has around 1200 offices and the company would not increase the number this year too Goyal said
The companyrsquos renewal premium grew by more than 100 to Rs 6133 cr in the 2008-2009 as compared to Rs 3051 cr in the previous fiscal year he saidIn the year Bajaj Allianz life insurance issued 29 lakh policies which were the second largest in the industry
Vision bull To be the first choice insurer for customers bull To be the preferred employer for staff in the insurance industry bull To be the number one insurer for creating shareholder value
MissionAs a responsible customer focused market leader we will strive to understand the insurance needs of the consumers and translate it into affordable products that deliver value for money
12) TRADITIONAL PLANS OF THE COMPANY
12
12A )TRADITIONAL PLAN OF RELIANCE LIFE INSURANCE -
Life insurance products are designed to suit the requirements of customers Fundamentally the product provide for
Risk cover
Investment
Health cover
In every product to a certain degree risk cover is imperative for it to fall under the category of insurance Based on the coverage of the product the premiums are calculated and the customer pays accordingly In order to suggest the right product it is essential for an agent to understand the requirements of the customer well
The traditional plans of the company have the following features- Fixed Tenure Potential for better returns Transparency Flexibility in investment Flexibility to invest more Flexibility to skip the premium Flexibility to choose the cover High liquidity Age term and sum assured decide the amount of premium Top- ups and switches are not allowed
Reliance Life Insurance Company Limited has offered 9Traditional plans to the customers which are listed as follows1) Reliance Term Plan2) Reliance Whole Life Plan3) Reliance Endowment Plan4) Reliance Special Endowment Plan5) Reliance Cash Flow Plan6) Reliance Credit Guardian Plan7) Reliance Special Credit Guardian PlanEach of the above traditional plans is discussed as follows
1) Reliance term plan-This insurance policy is designed for those who only want life cover for the protection of their family and do not wish to save for themselves It can also be useful to business firms that wish to provide financial security to their business against the sudden loss of partners or valuable manpower Since there is no saving element or bonus provision the premium is very lowHence this is a high-risk plan with a low premium
13
1048729 Features -a) Purely a term planb) Entry age minimum 18 years and maximum 65 yearc) Maximum premium paying term is 30 yeard) Loan facility NAe) Maturity amount = Sum assured
2) Reliance Whole Life Plan -This insurance policy is designed for people who do not wish to avail of any benefits themselves but wish to create an immediate estate to protect their family by availing of insurance cover on their life at a very low cost
1048729 Features -a) It is a whole life insurance policy with profitsb) Low cost life coverc) Maturity age is 85 year or 99 years last birthday as chosend) Maturity amount = Sum assured + Vested bonuse) Tax benefit is available
3) Reliance Endowment Plan -Reliance Life Insurancersquos Reliance Endowment Plan is the key to all your financial needs It is an inexpensive and easy way to protect you your family or your businessIn a nutshell this plan will keep you financially prepared for all the special occasions in your life - your daughterrsquos wedding your childrsquos university education or even a new office for your business - by eliminating the burden that a shortage of money createsIn the event of your untimely death Reliance Endowment Plan will also assist your loved ones through this difficult time by the financial support that it providesReliance Endowment Plan also gives you the additional benefit of participating in the companyrsquos profits which you will receive at the end of the policy period
1048729 Features -a) Entry age minimum is 5 year and maximum 65 yearb) Maturity age minimum is 18 year and maximum 75 yearc) Minimum premium paying term is 5 year and maximum 35 year in case of regular and in case of single 15 yeard) Minimum sum assured is Rs 25000 or as determined by the minimum premiume) Maximum sum assured is Rs 5 00000 (entry age below 18 years and no limit for entry age 18 and above)f) Premium mode annual half yearly quarterly and monthly (by salary deduction only)g) Loan up to 90 of the surrender value of the policyh) Maturity amount = Guaranteed sum assured + Reversionary bonus
4) Reliance Special Endowment Plan -
14
This insurance policy is designed for people who wish to combine savings with extended security The unique feature of this policy is that life protection continues for five years after you have stopped the payment of premium Payment of sum assured at the end of premium paying term and extension of life cover thereafter for the full sum assured for a period of 5 years are characteristics of the policyThis plan also participates in the profits
1048729 Features -a) Entry age minimum 12 year and maximum 65 yearb) Minimum sum assured is Rs 25000c) Minimum premium paying term is 10 year and maximum 40 yeard) Unique feature of this policy is that five year life protection continues after you have stopped the payment of premiume) Tax benefit is availablef) Under this policy bonus is compounded yearlyg) Loan facility is availableh) Maturity amount = Full sum assured before maturity date +Vested bonus at the time of maturity date
15
12 B) TRADITIONAL PLANS OF BAJAJ ALLIANZ LIFE INSURANCE
I ENDOWMENT PLAN
Saving plan which offer bonuses are excellent long term plan with complete safety Our products offer additional benefits which include 4 times life cover at a little extra cost limited premium payment terms and compounded reversionary bonuses making it a very good long term investment
1 Bajaj Allianz Invest GainInvest Gain is a specially designed plan that offers a unique combination of benefits that help you develop a sound financial portfolio for your family
4 Times Life Cover at a little extra cost
Limited premium payment option available
Additional Benefits
a) Accidental Death Benefit and Disability Benefit b) Critical Illness Benefit and Hospital Cash Benefit c) Family Income Benefit In case of death or accidental total permanent disability of insured all future premiums are waived and 1 of the sum assured is paid monthly
Invest Gain Save Care Economy SP Life Time Care
Super Saver
16
2 Bajaj Allianz save Care Economy SP
A One-time payment Investment plan that provides for savings with high risk cover for 10 years and also participates in the profits of the company It offers you high risk cover with easy liquidity and high returns
a) A single premium endowment plan that participates in the profitsb) 10 year Investment planc) Benefits payable on maturityc) Loans available
17
3 Bajaj Allianz life time care
A whole life plan which provides survival benefits at the age of 80 thereby making sure you are financially secure at the time when you need it the most Additional Benefits
a) Accidental Death Cover and Disability Cover b) Critical Illness Cover and Hospital Cash Cover c) Waiver of Premium Benefit
4Bajaj Allianz Super Saver plan
Bajaj Allianz Super Saver is a regular premium endowment plan which helps you save regular amounts for a safer tomorrow It also provides you with extra benefits of Guaranteed Additions to your sum assured at the end of each policy year
18
II MONEY BACK PLAN
Money back plans are Traditional Insurance plans that provide the investor with returns at regular stages of life
CashGain
1)Bajaj Allianz Cash Gain plan
A Money back plan which guarantees 125 payout + bonuses
Quadruple life cover
5 easy payouts which give upto 125 + bonuses
Additional Benefitsa) Accidental Death Benefit and Disability Benefitb) Critical Illness Benefit and Hospital Cash Benefitc) Family Income Benefit In case of death or accidental total permanent disability of insured all future premiums are waived and 1 of the sum assured is paid monthly
19
20
13) INDUSTRY PROFILE
MEANING OF INSURANCE
Insurance may be described as a social device to reduce or eliminate risk of loss to life and property Insurance is a collective bearing of risk Insurance is a financial device to spread the risks and losses of few people among a large number of people as people prefer small fixed liability instead of big uncertain and changing liability
Insurance can be defined as a ldquolegal contract between two parties whereby one party called insurer undertakes to pay a fixed amount of money on the happening of a particular event which may be certain or uncertainrdquo The other party called insured pays in exchange a fixed sum known as premiumInsurance is desired to safeguard oneself and onersquos family against possible losses on account of risks and perils It provides financial compensation for the losses suffered due to the happening of any unforeseen events
IMPORTANCE OF INSURANCE
Insurance constitutes one of the major segments of the financial marketInsurance services play predominant role in the process of financial Intermediary Today insurance industry is one of the most growing sectors in India There is lot of potential in the Indian Insurance Industry
There are many issues which require study The scope of the study of Insurance industry of India would be very great as there are ongoing Developments in the industry after the opening of the sectorOne of the major issues is the effects on LIC after the entry of private players in the market Though market share of LIC has been affected it has improved in terms of efficiency
There are number of other hot topics like penetration of Health Insurance Rural marketing of insurance new distribution channels new product ranges insurance brokersrsquo regulation incentive scheme of development officers of LIC etc So it offers lot of scope for studying the insurance industryRight now the insurance industry has great opportunities in a country like India or China which huge population Also the penetration of insurance in India is very low in both life and non-life segment so there is lot potential to be tapped Before starting the discussion on insurance industry and related issues we have to start with the basics of insurance So first we understand what is insurance How the word lsquoinsurancersquo is different from the word lsquoassurancersquo Etc
21
HISTORY OF INSURANCE
The concept of insurance is believed to have emerged almost 4500 years ago in the ancient land of Babylonia where traders used to bear risk of the carvan by giving loans which were later repaid with interest when the goods arrived safely
The concept of insurance as we know today took shape in 1688 at a place called Lloydrsquos Coffee House in London where risk bearers used to meet to transact business This coffee house became so popular that Lloydrsquos became the one of the first modern insurance companies by the end of the eighteenth centuryMarine insurance companies came into existence by the end of the eighteenth century These companies were empowered to write fire and life insurance as well as marine The Great Fire of London in 1966 caused huge loss of property and life With a view to providing fire insurance facilitiesDr Nicholas Barbon set up in 1967 the first fire insurance company known as the Fire office
Life insurance in its modern form came to India from England in 1818 The Oriental Life Insurance Company was the first insurance company to be set up in India to help the widows of European community The insurance companies which came into existence between 1818 and 1869 treatedIndian lives as subnormal and charged an extra premium of 15 to 20 per cent The first Indian insurance company the Bombay Mutual LifeAssurance Society came into existence in 1870 to cover Indian lives at normal rates
The Insurance Act 1938 the first comprehensive legislation governing both life and non-life branches of insurance were enacted to provide strict state control over insurance business This amended insurance Act looked into investments expenditure and management of these companiesBy the mid- 1950s there were 154 Indian insurers 16 foreign insurers and 75 provident societies carrying on life insurance business in India Insurance business flourished and so did scams irregularities and dubious investment practices by scores of companies As a result the government decided to nationalize the life assurance business in India The Life InsuranceCorporation of India (LIC) was set up in 1956 The nationalization of life insurance was followed by general insurance in 1972
22
MEANING OF LIFE INSURANCE
There are three parties in a life insurance transaction the insurer the insured and the owner of the policy (policyholder) although the owner and the insured are often the same person
Another important person involved in a life insurance policy is the beneficiary The beneficiary is the person or persons who will receive the policy proceeds upon the death of the insured
Life insurance may be divided into two basic classes ndash term and permanent
Term life insurance provides for life insurance coverage for a specified term of years for a specified premium The policy does not accumulate cash value
Permanent life insurance is life insurance that remains in force until the policy matures unless the owner fails to pay the premium when due
Whole life insurance provides for a level premium and a cash value table included in the policy guaranteed by the company The primary advantages of whole life are guaranteed death benefits guaranteed cash values fixed and known annual premiums and mortality and expense charges will not reduce the cash value shown in the policy
Universal life insurance (UL) is a relatively new insurance product intended to provide permanent insurance coverage with greater flexibility in premium payment and the potential for a higher internal rate of return A universal life policy includes a cash account Premiums increase the cash account If you want insurance protection only and not a savings and investment product buy a term life insurance policy
If you want to buy a whole life universal life or other cash value policy plan to hold it for at least 15 years Canceling these policies after only a few years can more than double your life insurance costs
23
HISTORY OF LIFE INSURANCE
Risk protection has been a primary goal of humans and institutions throughout history Protecting against risk is what insurance is all aboutOver 5000 years ago in China insurance was seen as a preventative measure against piracy on the sea Piracy in fact was so prevalent that as a way of spreading the risk a number of ships would carry a portion of another ships cargo so that if one ship was captured the entire shipment would not be lostIn another part of the world nearly 4500 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
Life insurance came about a little later in ancient Rome where burial clubs were formed to cover the funeral expenses of its members as well as help survivors monetarily With Romes fall around 450 AD most of the concepts of insurance were abandoned but aspects of it did continue through the Middle Ages particularly with merchant and artisan guilds These provided forms of member insurance covering risks like fire flood theft disability death and even imprisonment
During the feudal period early forms of insurance ebbed with the decline of travel and long-distance trade But during the 14th to 16th centuries transportation commerce and insurance would again reemergeInsurance in India can be traced back to the Vedas For instance yogakshema the name of Life Insurance Corporation of Indias 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
And similar to ancient Rome burial societies were formed in the Buddhist period to help families build houses and to protect widows and children
Modern InsuranceIllegal almost everywhere else in Europe life insurance in England was vigorously promoted in the three decades following the Glorious Revolution of 1688 The type of insurance we see today owes its roots to 17th century England Lloyds of London or as they were known then Lloyds Coffee House was the location where merchants ship owners and underwriters met to discuss and transact business dealsWhile serving as a means of risk-avoidance life insurance also appealed strongly to the gambling instincts of Englands burgeoning middle classGambling was so rampant in fact that when newspapers published names of prominent people who were seriously ill bets were placed at Lloydrsquos on their anticipated dates of death Reacting against such practices 79 merchant underwriters broke away in 1769 and
24
two years later formed a ldquoNew Lloydrsquos Coffee Houserdquo that became known as the ldquoreal Lloydrsquosrdquo Making wagers on peoples deaths ceased in 1774 when parliament forbade the practice
Insurance moves to AmericaThe US insurance industry was built on the British model The year 1735 saw the birth of the first insurance company in the American colonies inCharleston SC The Presbyterian Synod of Philadelphia in 1759 sponsored the first life insurance corporation in America for the benefit of ministers and their dependents And the first life insurance policy for the general public in the United States was issued in Philadelphia on May 22 1761But it wasnt until 80 years later (after 1840) that life insurance really tookoff in a big way The key to its success was reducing the opposition from religious groups
In 1835 the infamous New York fire drew peoples 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
With the creation of the automobile public liability insurance which first made its appearance in the 1880s gained importance and acceptanceMore advancement was made to insurance during the process of industrialization In 1897 the British government passed the Workmens Compensation Act which made it mandatory for a company to insure its employees against industrial accidents
During 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 most labor 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
25
BENEFITS OF LIFE INSURANCE
1) Risk cover -Life Insurance contracts allow an individual to have a risk cover against any unfortunate event of the future
2) Tax Deduction -Under section 80C of the Income Tax Act of 1961 one can get tax deduction on premiums up to one lakh rupees Life Insurance policies thus decrease the total taxable income of an individual
3) Loans -An individual can easily access loans from different financial institutions by pledging his insurance policies
4) Retirement Planning -What had provided protection against the financial consequences of premature death may now be used to help them enjoy their retirement yearsMoreover the cash value can be used as an additional income in the old age
5) Educational Needs -Similar to retirement planning the cash values that flow from ones life insurance schemes can be utilized for educational needs of the insurer or his children
26
ROLE OF LIFE INSURANCE IN THE GROWTH OF THE ECONOMY
The Life Insurance Industry has an enviable track record among public sector units It has a Consistent profit and dividend paying record accompanied by a steady growth in its financial resources Through investments in the Government sector and socially- oriented sectors the Industry has contributed immensely to the nations development The industry is recognized as one of the largest financial Institutions in the country The ventures initiated by the industry in the areas of Mutual Fund
Housing Finance has done exceedingly well in recent years To protect the countrys foreign exchange reserves the reinsurance arrangement are so organized that maximum retention is made possible within the country while at the same time protecting interests of the policy holders
27
ROLE OF IRDA
MISSION
ldquoTo protect the interests of the policyholders to regulate promote
and ensure orderly growth of the insurance industry and for matters
connected therewith or incidental theretordquo
The Insurance Act 1938 had provided for setting up of the Controller of Insurance to act
as a strong and powerful supervisory and regulatory authority for insurance Post
nationalization the role of Controller of Insurance diminished considerably in
significance since the Government owned the insurance companies But the scenario
changed with the private and foreign companies foraying in to the insurance sector This
necessitated the need for a strong independent and autonomous Insurance Regulatory
Authority was felt As the enacting of legislation would have taken time the then
Government constituted through a Government resolution an Interim Insurance
Regulatory Authority pending the enactment of a comprehensive legislation
The Insurance Regulatory and Development Authority Act 1999 is an act to provide for
the establishment of an Authority to protect the interests of holders of insurance policies
to regulate promote and ensure orderly growth of the insurance industry and for matters
connected therewith or incidental thereto and further to amend the Insurance Act 1938
the Life Insurance Corporation Act 1956 and the General insurance Business
(Nationalization) Act 1972 to end the monopoly of the Life Insurance Corporation of
India (for life insurance business) and General Insurance Corporation and its subsidiaries
(for general insurance business) The act extends to the whole of India and will come
into force on such date as the Central Government may by notification in the Official
Gazette specify Different dates may be appointed for different provisions of this Act
28
The Act has defined certain terms some of the most important ones are as follows
Appointed day means the date on which the Authority is established under the act
Authority means the established under this Act Interim Insurance Regulatory Authority
means the Insurance Regulatory Authority set up by the Central Government through
Resolution No 17(2) 94-lns-V dated the 23rd January 1996
Words and expressions used and not defined in this Act but defined in the Insurance Act
1938 or the Life Insurance Corporation Act 1956 or the General Insurance Business
(Nationalization) Act 1972 shall have the meanings respectively assigned to them in
those Acts A new definition of Indian Insurance Company has been inserted Indian
insurance company means any insurer being a company
(a) Which is formed and registered under the Companies Act 1956
(b) in which the aggregate holdings of equity shares by a foreign company either by
itself or through its subsidiary companies or its nominees do not exceed twenty-six
percent paid up capital in such Indian insurance company
(c) Whose sole purpose is to carry on life insurance business general insurance business
or re-insurance business
29
CURRENT SCENERIO
21) CURRENT SCENERIO OF THE INSURANCE INDUSTRY
With largest number of life insurance policies in force in the world insurance happens to be a mega opportunity in India Itrsquos a business growing at the rate of 15-20 per cent annually and presently is of the order of Rs 450 billion Together with banking services it adds about 7 per cent to the countryrsquos GDP Gross premium collection is nearly 2 per cent of GDP and funds available with LIC for investment are 8 per cent of GDP
Yet nearly 80 percent of Indian population is without life insurance cover while health insurance and non-life insurance continues to be below international standards And this part of the population is also subject to weak social security and pension systems with hardly any old age income security This it is an indicator that growth potential for the insurance sector is immense A well-develop and evolved insurance sector is needed for economic development as it provides long term funds for infrastructure development and at the same time strengthens the risk taking ability It is estimated that over the next ten years India would require investments of the order of one trillion US dollar The insurance sector to some extent can enable investment in infrastructure development to sustain economic growth of the country Insurance is a federal subject in India There are two legislation that govern the sector - The Insurance Act-1938 and The IRDA Act-1999
In India insurance is generally considered as a tax-saving device instead of its other implied long term financial benefits Indian people are prone to investing in properties and gold followed by bank deposits They selectively invest in shares also but the percentage is very small Even to this day Life Insurance Corporation of India dominates India insurance sector With the entry of private sector players backed by foreign expertise Indian insurance market has become more vibrant Business is becoming increasingly vulnerable due to wide variety of risk particularly after September 11 2001 disaster in which twin tower located in the hearts of New York city were crashed by terrorist attack resulting in loss of 6000 human lives as well as financial loss to the extent of $45 billion The impact of this terrorist attack has created new horizon of risk to the business world today
However rapid changes in the global economy development of technology and e-business already gathered momentum Increased dependency on technology has originated new risks that have resulted in well-published incidents Computer hackers obtaining credit card information from visa and Power-Gen the love bug virus cyber extortion web content liability professional errors and omissions computers and other crimes and activities such as terrorism kidnapping and companyrsquos executive and extortion of money commercial liability etc have significant impact on business resulting in extreme financial loss commercial embarrassment or regulatory implications
Corporation insurancerisk managers under the circumstances have to demand increasingly complex insurance products They have to be more attentive and
30
knowledgeable about emerging risks how those risks are managed effectively and efficiently and how they could ultimately affect a companyrsquos financial situation and therefore its position in the market place In short how such risks are managed and can give to an insured a competitive advantage
In the changing times adoption of e-commerce into business models the integration of web-based communication and data transfer capabilities into the business operations and leveraging of advanced network and technology architecture for maximum benefit are the new horizon of the risks For the corporate insurancerisks managers these new exposure-cyber-risks-can lead to cyber losses widening the interpretation of what constitute insure property damage particularly as it relates to information technology and dataAll the while organizations are tremendous pressure to reduce expenses and increase profit margin and cannot afford to suffer a property loss of business interruption due to any cause (risk) How a company identifies quantifies qualifies and manages these new risks exposure in addition to the well-known tradition risks is becoming an important factor in creating shareholders value This often means changing the way Everyone in the organization have to think about risk
Insurance managers are seeing price levels (premium) continue to rise-albeit modestly-in todayrsquos primarily commercial property and reinsurance markets They are demanding that insurers improve their risk assessment and quantification offerings so that an insured may avail the benefit in cost (premium rate) on account of well-managed riskThe good news for insurance managers is that as the economy evolves insurers are increasingly matching that evaluation with new products services and capabilities due to opening up the insurance market to the private players
Insurers who are truly listening to their customers and striving to be more in tune with their needs are responding to the fast changing corporate insurance and risk management landscape They are listening to their customers They are making fresh approaches to address the new challenges faced by insured organization by designing the new products as per the needs Insurers are providing value added services to insured to protect the value created by the business
Insurers are increasingly required to develop and expand their information technology platforms to ensure that the vast amount of data they collect about their customers Insurancerisk portfolio can easily and seamlessly be transformed into valuable risk management information To help their customers insurers should make better-informed decisions They must be able to swiftly deliver this data to their customers (insured) anywhere in the world Insurer are also discovering that risk assessment have to be customized to meet policyholdersrsquo new exposures and needs The insurance industry is stepping up and addressing these challenges in several different ways
31
22) CURRENT SCENARIO OF RELIANCE LIFE INSURANCE
RLIC offers wide range of innovative life insurance products targeted at individuals and groups It offers need based products that caters to four distinct segments namely protection child retirement and investment plans RLIC is committed to emerge as a
transnational Life Insurer of global scale and standard
Reliance Life Insurance Company Limited (RLIC) is amongst the fastest growing life insurance companies in India It is also amongst the top four private sector life insurance companies in India (As on FY 2008-2009)
As on March 31 2009 RLIC has an annualized premium of Rs 30 billion with a market share of 103 It has leapfrogged on the growth path and has reached the 4 million policy mark in a short span of within 3 years RLIC has a strong distribution network of 1145 branches with more than 149000 agents
32
Insurancersquos Market Share in Comparison of Other Private company
If we look at the status of Reliance Life Insurancersquos market share in comparison of other
private company in comparison of premium earned-
If we talk the growth of Insurance industryrsquos private players in recent years the data will
reflect-
CH - 3) RESEARCH METHODOLOGY
33
RESEARCH DESIGN-
COMPARITIVE STUDY- A comparative study has been undertaken to compare the traditional Plans of Reliance Life Insurance with that of Bajaj Allianz life insurance
DATA TYPE
INTRODUCTION - Any organization whether big or small private or public needs different type of information to know its popularity I have gathered secondary data and primary data and collected information from the combination of these two data
PRIMARY DATA - Primary data collection method was decided for observing working of the company and approaching the customers directly face to face A great care was taken while collecting the primary data to answer that it is relevant accurate current and unbiased
SECONDARY DATA - Secondary data collection method was used by referring to various websites books and newspapers for collecting information regarding the project under study Secondary data consist of the information that already exists somewhere else for some another purpose
SAMPLING TECHNIQUES-
SAMPLE SIZE- A sample size of 50 was taken to be analyzed
SAMPLE LOCATION-Various sectors of Kamla Nagar Civil lines Mukherji Nagar Model Town and selected areas of Delhi
SAMPLING PROCESS - Convenient sampling was used to overcome the time and money constraints that could have been faced by us while collecting the data The customers were contacted face to face directly and also by way of telephonic conversation with them
ANALYTICAL TOOLS - The data collected were arranged accordingly and statistical tools like bar graphs and pie-charts were used to analyze and present the data
RESEARCH INSTRUMENT USED-
34
SAMPLING MEDIA - Printed questionnaires consisting several questions were asked to have an idea of customers view about Reliance Life Insurance plans followed by personal questions
FIELD WORK - Rigorous field work was undertaken to locate the interested and potential respondents to fulfill the objectives of the study
THE PRIMARY OBJECTIVEOF THE STUDY -
The primary objective of the research study is to have a detailed analysis of Reliance Life Insurance bringing in focus the future prospects of the (Anil Dhirubhai Ambani group) with relevance to the customer perception regarding the various plans and products offered by Reliance Life Insurance
31) DATA ANALYSIS AND INTERPRETATION
35
PERSONAL DETAILS
1) AGE a) 18-30b) 31-50c) 51-65
AGE NO OF RESPONDENTS PERCENTAGE
18-30 21 42
31-50 19 38
51-65 10 20
TOTAL 50 100
INTERPRETATION-The bar graph reveals that 42 of the respondents belong to the age group of 18-30 years 38 lies in the age group of 31-50 years and 20 of them lie in the age group of 51-65 years
2) OCCUPATION
4238
20
05
1015202530354045
NO
O
F
RE
SP
ON
DE
NT
S
18 to 30 31 to 50 51 to 65
AGE (in year)
AGE WISE CLASSIFICATION
36
a) Serviceb) Businessc) Professiond) Housewifee) Retired
OPTION NO OF RESPONDENTS PERCENTAGE
Service 16 32
Business 14 28
Profession 5 10
Housewife 8 16
Retired 7 14
TOTAL 50 100
INTERPRETATION-The above bar graph reveals that 32 of the total respondents were servicemen 28 of them belonged to the business class 10 were professionals 16 were housewives and 14 of the total respondents fall in the retired category
3) INCOME
32
28
10
16
14
0
5
10
15
20
25
30
35
Service Business Profession Housewife Retired
OCCUPATION
OCCUPATION WISE CLASSIFICATION
37
a) 150000-300000
b) 300000-500000
c) Above 500000
OPTION NO OF RESPONDENTS PERCENTAGE
150000-300000 24 48
300000-500000 14 28
Above 500000 12 24
TOTAL 50 100
INTERPRETATION-The above bar graph reveals that out of the total respondents 48 lie in the income group of 150000-300000 28 of the total respondents belonged to the income group of 300000-500000 and 24 lie in the income group of people earning an income of above Rs 500000pa
4828 24
01020304050
N O
OF
RE
SP
ON
DE
NT
S
150000-300000
300000-500000
ABOVE500000
INCOME (in RS)
INCOME WISE CLASSIFICATION
38
4) FAMILY MEMBERS
a) 2b) 3c) 4d) Above 4
OPTION NO OF RESPONDENT PERCENTAGE
2 11 22
3 9 18
4 24 48
Above 4 6 12
TOTAL 50 100
INTERPRETATION The above bar graph shows that 22 of the total respondents had a family of 2 members 18 of them had 3 family members 48 of them had 4 family members and 12 of them had the no of family members above 4
Q1 Where do you prefer to invest
22 18
48
120
1020304050
No
o
f re
spo
nd
ents
2 3 4 Above 4
No of family members
MEMBER WISE CLASSIFICATION
39
a) fixed deposits
b) stock
c) mutual funds
d) insurance
e) others
Option No of respondents Percentage
Fixed deposits 5 10
Stock 10 20
Mutual fund 10 20
Insurance 18 36
others 7 14
TOTAL 50 100
Interpretation The above pie chart shows that out of 50 respondents 10 preferred to invest in fixed deposits 20 in stocks 20 in mutual funds 36 in insurance and 14 in others like property gold etc
Q2 What are your priorities for investment
40
a) protecting your family against pre-mature death
b) wealth creation
c) retirement needs
d) child education and marriage
e) protect income against disability sickness or critical illness
Option No of respondents Percentage
Protecting your family against pre mature death
10 20
Wealth creation 14 28
Retirement needs 5 10
Child education and marriage 7 14
Protect income against disability sickness or critical illness
14 28
TOTAL 50 100
Interpretation The above pie chart shows that out of 50 respondents 20 of them invest for protecting their family against premature death 28 for creating wealth 10 for meeting their future retirement needs 14 for child education amp marriage and 28 for protection against disability and sickness
Q3 What is your main motive behind investing in life insurance
41
a) tax benefit
b) savings
c) risk cover
Option No of respondents Percentage
Tax benefits 27 54
Savings 5 10
Risk cover 18 36
TOTAL 50 100
Interpretation The above pie chart shows that out of the sample respondents 54 have tax benefit 10 have savings and 36 have risk cover as their main motive for making an investment in life
Q4 What kind of investment do you prefer
42
a) high risk high gain
b) low risk low gain
c) moderate
d) vary times to times
Option No of respondents Percentage
High risk high gain 8 16
Low risk low gain 5 10
Moderate 12 24
Vary times to times 25 50
TOTAL 50 100
Interpretation The above pie chart shows that out of 50 respondents 16 preferred high risk- high gain form of investment 10 preferred low risk- low gain form of investment 24 preferred moderate investment and 50 preferred varied form of investment
43
Q5Are you interested to invest in Traditional Plans
a) YES
b) NO
Option No of respondents Percentage
YES 36 72
NO 14 28
TOTAL 50 100
Interpretation The above pie chart shows that 72 of the respondents preferred to invest in Traditional Plans
44
Q6 What is your level of annual investmenta) below 20000
b) 20000-40000
c) above 40000
Option No of respondents Percentage
Below 20000 41 82
20000-40000 7 14
Above 40000 2 4
TOTAL 50 100
Interpretation The above pie chart shows that 82 of the respondents are willing to invest below Rs 20000 per annum 14 of them want to invest within Rs 20000 per annum to Rs 40000 and 4 wanted to invest over and above Rs 40000
45
Q7 What factors would you consider most important before choosing an insurance policy
a) publicity of the company
b) reputation of the company
c) quality of life advisors
d) after sales-supporting of the company
Option No of respondents Percentage
Publicity of the co 5 20
Reputation of the co 25 50
Quality of life advisors 10 10
After sale-services 10 20
TOTAL 50 100
Interpretation out of the sample respondents 20 considers publicity of the company 50 considers reputation of the company 10 considers quality of life advisors and 20 considers after sales support of the company as the most important factor for choosing an insurance company
46
Q8 Which life insurance company would you prefer the most to invest ina) reliance life insurance (RLIC)
b) Bajaj Allianz life insurance
Option No of respondents Percentage
RLIC 21 42
BAJAJ ALLIANZ 29 58
TOTAL 50 100
Interpretation Out of 50 respondents 42 preferred to invest in reliance life insurance over 58 of the respondents who prefer to invest in Bajaj Allianz life insurance
47
Q9 If reliance life insurance then which particular plan you would like to invest ina) Reliance Term Plan
b) Reliance Whole Life Plan
c) Reliance Endowment Plan
d) Reliance Special Endowment Plan
Option No of respondents Percentage
Reliance term plan 6 2858
Reliance whole life plan 3 1428
Reliance endowment plan 9 4286
Reliance special endowment plan 3 1428
TOTAL 21 100
Interpretation Out of 21 respondents 2858 preferred to invest in term plan 1428 in whole life plan 4286 in endowment plan and 1428 of them preferred to invest in special endowment plan of reliance life insurance
48
Q10 If Bajaj Allianz life insurance then which particular plan you would like to invest in
I ENDOWMENT PLAN a) Bajaj Allianz Invest Gain
b) Bajaj Allianz save Care Economy SP
c) Bajaj Allianz life time care
d) Bajaj Allianz Super Saver plan
II MONEY BACK PLAN i Bajaj Allianz Cash Gain plan
Option No of respondents Percentage
Invest gain plan 3 1035
Save care economy SP 6 2069
Life time care 7 2415
Super saver plan 3 1035
Cash gain plan 10 3446
TOTAL 29 100
Interpretation Out of 29 respondents 1035 of them plan to invest in Bajaj Allianz- Invest Gain 2069 wish to invest in Bajaj Allianz save Care Economy SP 2415 want to invest in Bajaj Allianz life time care 1035 in Bajaj Allianz Super Saver plan and 3446 prefer to invest in Bajaj Allianz Cash Gain plan
49
32) SIGNIFICANCE OF STUDY
Life insurance is one of the most rapidly growing sectors in India The main reason
behind the growth can attributed to the high population density improving economical
condition improving education level and improving awareness Due to these factors there
is still huge scope for growth in this sector Like any other business when the
opportunities are present everybody tends to enter the industries This growth hence
fetches the new competitors as well as new strategies from existing players To sustain in
any competitive industry the organization must adapt to existing strategies and adopt
new ones This study will focus on the analysis of Reliance Life Insurance in comparison
with the present scenario of Bajaj Allianz Life Insurance with respect to the Traditional
Plans of both the companyrsquos This will mainly cover the following aspects
To know about the awareness and popularity of various Traditional Plans offered
by Reliance Life Insurance and Bajaj Allianz Life Insurance
How Reliance Life Insurance can develop and sustain a good distribution
network
These will provide it benefit both in terms of better market coverage as well as better
penetration
50
33) SCOPE OF THE STUDY
1) This helps in finding out vast potential of insurance company
2) The study was conducted in National Capital Region (NCR) only
3) The number of respondents to be surveyed can be improved
4) This study was conducted by comparing the performances amp products of three private
amp government insurance players in insurance industry
5) This study was conducted to analyze the market stand of Reliance life insurance
Company limited and Bajaj Allianz Life Insurance Company Limited of India insurance
companies
6) This study is done to eliminate all the myths which people have in their minds
regarding Insurance Sector
51
34) OBJECTIVES
To have a detailed understanding of Reliance Life Insurance and Bajaj Allianz Life Insurance
To find out various reasons considered while investing in policies
To get knowledge about the market exposure and future prospects about Reliance Life Insurance
To know the perception of the consumers about the life insurance
To analyze the Traditional plans of Reliance Life Insurance and compare it with Bajaj Allianz
To know about the brand awareness of Reliance Life Insurance its customer preferences over Bajaj Allianz in the market
To study a proper knowledge about the life insurance industry
To understand the consumer choice while investing in policies
52
CHAPTER 4
DISCUSSION AND FINDINGS OF THE STUDY
FINDINGS OF THE STUDY RECOMMENDATION AND SUGGESTIONS CONCLUSION LIMITATIONS BIBLIOGRAPHY ANNEXUREQUESTIONNAIRE
53
41) FINDINGS OF THE STUDY
1) The survey reveals that still a large proportion of population is interested to invest in other forms of investment other than insurance as still most of them are unaware about the importance of insurance in their life
2) Basically people make varied form of investment for creating wealth to protect their families against pre-mature death and to protect income against disability sickness or critical illness
3) The main motive of the individuals investing is receives benefits US 1010D People generally consider insurance as a tax saving device
4) Mostly people prefer time to time form of investment as they are not willing to take high degree of risk
5) 72 of the respondents are preferred to invest in Traditional Plans
6) Most of the people prefer to make an annual investment up to a maximum of Rs20 000 per annum
7) When the product is like life insurance reputation of the company publicity of the company amp after sale services of the company matters a lot This means that people would choose that insurance company only where the quality of life advisors is satisfactory
8) Most people prefer to invest in Bajaj Allianz Life Insurance as compared to making an investment in Reliance Life Insurance
9) The most preferable Traditional plan of Reliance Life Insurance is Endowment Plan
10) The most preferable plan of Bajaj Allianz Life Insurance co is Cash Gain Plan
54
42) SUGGESTIONS amp RECOMMENDATIONS
Based on the observations of the study some suggestions for the organization are made as
follows
1) Quality of advisors is also as important as the quantity Thus company should go
mainly for qualified professionals
2) Company should increase its budget on publicity so that awareness can be increased
3) Clarity and transparency should be provided to the customer regarding various
products
4) Training sessions should be planned in advance so that schedule can be provided to
the advisor in advance
5) Apart from the Brand Positioning in urban area a strategy should be adopted by
Reliance to make its brand also near to middle level or high aspirant people because they
are the main source of the business in India
6) Awareness Camp to the sub urban area should be focused by Reliance
7) Some innovative technique or product is required in order to attract the consumer
43) LITERATURE REVIEW
55
1) Robi Elenekave has explained in detail why various retirement plans and pension plans donrsquot give the desired returns The main difficulty is the use of incorrect method for calculations done to find out the return on investment This is primarily due to wrong assumptions The study provides information about the various precautions which need to be considered before planning so that the desired results can be achieved
2) Another paper provides insight about how various financial sectors invest in bond market The study was how the different players investment different instruments according to the risk appetite and desired rate of return The study shows that life insurance sector mainly invests in government bond which are low return and low risk instrument The investment in government bond it shows that life insurance companies are more conservative in investment
3) K Subhash has presented the history of Indiarsquos life insurance industry in three stages before independence after independence and post liberalization which not only provides information but also help in analyzing the impact of these major changes The authors have also discussed the huge potential which exists in the rural India The insurance company must realize the importance of rural sector because the future lies there The author commented about the increasing share of private player in the existing market This confirms the availability of opportunity in this sector The paper also provides the importance of professional and focused approach which was given no importance
4) Tapen Sinha has discussed the various challenges and opportunities in the insurance market One of the very important factors which have been discussed in the study is the importance of developing new and better products As the scenario changes the need of an individual also changes so any organization must understand and fulfill these needs The new product development requires constant research so organization must also focus on it
5) Roger G Ibbotson discusses how financial planners and advisors have recently started to recognize that human capital must be taken into account when building optimal portfolios for individual investors Any investorrsquos human capital has a unique mortality risk However life insurance in its forms can hedge against this mortality risk Thus human capital affects both the optimal asset allocation and the optimal demand for life insurance This paper provides a unified framework based on human capital in order to enable individual investors to make both decisions jointly
6) Rakesh Niraj study tells how the flow of information in any organization is important For any organization to grow the flow of information must be good both upwards as well as ownwards The proper flow of information will also ensure proper flow of good and services from organization to customer and proper flow of information from customer to organization The information from customers will help the organization in providing better goods and services to the customer For the above purpose organization must ensure good channel partner who can provide the organization with correct feedback Hence it becomes very important for any organization to acquire good channel partners
56
7) Stephen P Robbins has discussed how group dynamics works in any organization The success of any organization depends on the success of its various teams and how these teams work together The book provides various techniques which can be used by any organization to get result from the team effort The conflict resolution is a major task in any group Various techniques which the organization can use in conflict resolution are also discussed Another important aspect covered is the importance of leadership in the organization The various forms of leadership have been discussed and the kinds of leadership which can be effective in particular situations are also discussed
8) R Wayne Mondy has discussed the importance of training and development in any organization The training provides skills to perform the current job where as the development involve learning beyond present need The various type of training are discussed which can be used according to the requirement Training and development are not only important for better performance of an individual but it also gives satisfaction The major factors which influence training and development are found to be management support commitment of trainee and trainer complexity of the organization The process of developing good training plans is also provided In another part author has discussed the importance of right man for right job The compensation strategies are also given which are very crucial for ant industry
9) Philip Kotler has discussed the importance of channels partners Better the channel partners better will be the delivery model Detailed discussion about how to design the channel structure so that all the requirements could be fulfilled is provided The various issues faced by the organization while managing the channels are also given When an organization has more than one channel it becomes very important that all the channels should be integrated in such a way that the organization get the best out of all At times due to the conflicting benefit of the different channels the conflict arise so various strategies to manage these issues is also discussed in the chapter
10) Michael J Etzel has written about the marketing of services The marketing of services is different from the goods because of the characteristic of service like intangibility inseparability heterogeneity etc Brief about pricing strategies is also given in case of services The authors have also given the impact of technological development on the services marketing The author has also given the importance of brand and after sales support in case of services as perception of the customers plays an important role In other part of the book the authors has described the importance of distribution channels and designing of the same A channel partner should be consider as partner according to discussion The legal complications associated with channels are also discussed These complications are necessary to take into the consideration while managing the channels The conflicting interest of channels both horizontally and vertically are also taken into the consideration
57
11) Boone has discussed about the importance of personal financial planning The concept of time value of money has also been elaborated The importance of creating and implementing budget is given under money management The other important concepts for financial planning like credit management and understanding taxes are also explained In one section the authors have discussed the importance of investment and what should be the major considerations while making any investment The considerations include the risk associated with the investment return on the investment etc The importance and benefits of life insurance has also been given The discussion also includes various legal aspects associated with life insurance The overview of retirement planning is also given which includes importance and benefit of retirement planning Various tools for proper retirement planning are also discussed
58
44) CONCLUSION
1) The customers are very much sensitive towards their investment They would like to invest only in that insurance company which enjoys good public image along with quality good services
2) The result of the survey conducted shows that Bajaj Allianz Life Insurance is the leader in life insurance industry but Reliance Life Insurance and other private players are giving it a close competition
3) The motive of the people behind investing in life insurance is the tax benefits that they would receive under sec 80C and 1010D
4) In Life Insurance industry the after sales support of the company is as important as the quality of life advisors
59
45) LIMITATIONS
There were some limitations faced during the study as discussed below
Since the study was taken for two months so there was a constraint of time and effort
The study was limited only to some of the Delhi regions so the results may be biased
Questionnaire was given to 125 people however only 50 responded to it which is very small for such type of study
The biasness of consumer or responses error cannot be eliminated
Most of the people are not aware about the Importance and the necessity of insurance in their life
Adverse perception of the people towards insurance sector- People consider insurance as a tax saving device
Lack of awareness about the earning opportunity in the insurance sector
60
46) BIBLIOGRAPHY
wwwreliancelifeinsurancecom
wwwadagroupcom
wwwirdacom
wwwbajajallianzlifeinsurancecom
wwwallianzbajajcom
47) ANNEXURE
61
QUESTIONNAIRE
A comparative analysis of consumer perception regarding Traditional plans of Reliance Life Insurance with that of Bajaj Allianz Life Insurance
NAME ___________________________
PERSONAL DETAILS
1) AGE_________________
1) OCCUPATION______________
2) INCOME___________________
3) FAMILY MEMBERS_________
Q1 Where do you prefer to investa) Fixed deposits b) Stock c) Mutual funds d) Insurance e) Others
Q2 What are your priorities for investmenta) Protecting your family against pre-mature death b) Wealth creation c) Retirement needs d) Child education and marriage e) Protect income against disability sickness or critical illness
Q3 What is your main motive behind investing in life insurancea) Tax benefit b) Savings c) Risk cover
Q4 What kind of investment do you prefera) High risk high gain b) Low risk low gain c) Moderate d) Vary times to times
62
Q5Are you interested to invest in Traditional Plansa) Yes b) No
Q6 What is your level of annual investmenta) below 20000 b) 20000-40000 c) above 40000
Q7 What factors would you consider most important before choosing an insurance company
a) publicity of the company b) reputation of the company c) quality of life advisors d) after sales-supporting of the company
Q8 Which life insurance company would you prefer the most to invest ina) Reliance life insurance b) Bajaj Allianz life insurance
Q9 If reliance life insurance then which particular plan you would like to invest ina) Reliance Term Plan b) Reliance Whole Life Plan c) Reliance Endowment Plan d) Reliance Special Endowment Plan
Q10 If Bajaj Allianz life insurance then which particular plan you would like to invest in
I ENDOWMENT PLAN
a) Bajaj Allianz Invest Gain
b) Bajaj Allianz save Care Economy SP
c) Bajaj Allianz life time care
d) Bajaj Allianz Super Saver plan
II MONEY BACK PLAN
a) Bajaj Allianz Cash Gain plan
63
64
- COMPANY PROFILE
- ABOUT RELIANCE LIFE INSURANCE
- HISTORY
- Reliance Capital Limited announced the launch of its life insurance business on February 1 2006 This was after obtaining the required regulatory approvals from the Registrar Of Companies and the Insurance Regulatory and Development Authority
- It was in August 2005 that the ball was set rolling when Reliance Capital Limited the financial arm of Reliance ndash Anil Dhirubhai Ambani Group (ADAG) ndash announced the requisition of 100 shareholding in AMP Sanmar Life Insurance Company Limited and the formal transfer of shares took place in October 2005 The company will issue all policy contracts under the Reliance Life Insurance Company limited name All the existing policy contracts also stand transferred to the Reliance Life Insurance entity with all the original contractual terms and commitments intact
- CORE VALUES
- Reliance Life Insurance Company Limited has some core values which are listed as follows
- Vision bull To be the first choice insurer for customers bull To be the preferred employer for staff in the insurance industry bull To be the number one insurer for creating shareholder value
- Mission As a responsible customer focused market leader we will strive to understand the insurance needs of the consumers and translate it into affordable products that deliver value for money
- 12) TRADITIONAL PLANS OF THE COMPANY
- 12A )TRADITIONAL PLAN OF RELIANCE LIFE INSURANCE-
- Life insurance products are designed to suit the requirements of customers Fundamentally the product provide for
- In every product to a certain degree risk cover is imperative for it to fall under the category of insurance Based on the coverage of the product the premiums are calculated and the customer pays accordingly In order to suggest the right product it is essential for an agent to understand the requirements of the customer well
- The traditional plans of the company have the following features-
- Fixed Tenure
- Potential for better returns
- Transparency
- Flexibility in investment
- Flexibility to invest more
- Flexibility to skip the premium
- Flexibility to choose the cover
- High liquidity
- Age term and sum assured decide the amount of premium
- Top- ups and switches are not allowed
- Reliance Life Insurance Company Limited has offered 9
- 1) Reliance term plan-
- 2) Reliance Whole Life Plan -
- 3) Reliance Endowment Plan -
- 4) Reliance Special Endowment Plan -
- 13) INDUSTRY PROFILE
- MEANING OF INSURANCE
- Insurance may be described as a social device to reduce or eliminate risk of loss to life and property Insurance is a collective bearing of risk Insurance is a financial device to spread the risks and losses of few people among a large number of people as people prefer small fixed liability instead of big uncertain and changing liability
- Insurance can be defined as a ldquolegal contract between two parties whereby one party called insurer undertakes to pay a fixed amount of money on the happening of a particular event which may be certain or uncertainrdquo The other party called insured pays in exchange a fixed sum known as premium
- Insurance is desired to safeguard oneself and onersquos family against possible losses on account of risks and perils It provides financial compensation for the losses suffered due to the happening of any unforeseen events
- IMPORTANCE OF INSURANCE
- Insurance services play predominant role in the process of financial Intermediary Today insurance industry is one of the most growing sectors in India There is lot of potential in the Indian Insurance Industry
- There are many issues which require study The scope of the study of Insurance industry of India would be very great as there are ongoing Developments in the industry after the opening of the sector
- Right now the insurance industry has great opportunities in a country like India or China which huge population Also the penetration of insurance in India is very low in both life and non-life segment so there is lot potential to be tapped Before starting the discussion on insurance industry and related issues we have to start with the basics of insurance So first we understand what is insurance How the word lsquoinsurancersquo is different from the word lsquoassurancersquo Etc
- HISTORY OF INSURANCE
- The concept of insurance is believed to have emerged almost 4500 years ago in the ancient land of Babylonia where traders used to bear risk of the carvan by giving loans which were later repaid with interest when the goods arrived safely
- The concept of insurance as we know today took shape in 1688 at a place called Lloydrsquos Coffee House in London where risk bearers used to meet to transact business This coffee house became so popular that Lloydrsquos became the one of the first modern insurance companies by the end of the eighteenth century
- Marine insurance companies came into existence by the end of the eighteenth century These companies were empowered to write fire and life insurance as well as marine The Great Fire of London in 1966 caused huge loss of property and life With a view to providing fire insurance facilities
- Dr Nicholas Barbon set up in 1967 the first fire insurance company known as the Fire office
- Life insurance in its modern form came to India from England in 1818 The Oriental Life Insurance Company was the first insurance company to be set up in India to help the widows of European community The insurance companies which came into existence between 1818 and 1869 treated
- Indian lives as subnormal and charged an extra premium of 15 to 20 per cent The first Indian insurance company the Bombay Mutual Life
- Assurance Society came into existence in 1870 to cover Indian lives at normal rates
- The Insurance Act 1938 the first comprehensive legislation governing both life and non-life branches of insurance were enacted to provide strict state control over insurance business This amended insurance Act looked into investments expenditure and management of these companies
- By the mid- 1950s there were 154 Indian insurers 16 foreign insurers and 75 provident societies carrying on life insurance business in India Insurance business flourished and so did scams irregularities and dubious investment practices by scores of companies As a result the government decided to nationalize the life assurance business in India The Life Insurance
- Corporation of India (LIC) was set up in 1956 The nationalization of life insurance was followed by general insurance in 1972
- MEANING OF LIFE INSURANCE
- There are three parties in a life insurance transaction the insurer the insured and the owner of the policy (policyholder) although the owner and the insured are often the same person
- Another important person involved in a life insurance policy is the beneficiary The beneficiary is the person or persons who will receive the policy proceeds upon the death of the insured
- Life insurance may be divided into two basic classes ndash term and permanent
- HISTORY OF LIFE INSURANCE
- Risk protection has been a primary goal of humans and institutions throughout history Protecting against risk is what insurance is all about
- Over 5000 years ago in China insurance was seen as a preventative measure against piracy on the sea Piracy in fact was so prevalent that as a way of spreading the risk a number of ships would carry a portion of another ships cargo so that if one ship was captured the entire shipment would not be lost
- In another part of the world nearly 4500 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
- Life insurance came about a little later in ancient Rome where burial clubs were formed to cover the funeral expenses of its members as well as help survivors monetarily With Romes fall around 450 AD most of the concepts of insurance were abandoned but aspects of it did continue through the Middle Ages particularly with merchant and artisan guilds These provided forms of member insurance covering risks like fire flood theft disability death and even imprisonment
- During the feudal period early forms of insurance ebbed with the decline of travel and long-distance trade But during the 14th to 16th centuries transportation commerce and insurance would again reemerge
- And similar to ancient Rome burial societies were formed in the Buddhist period to help families build houses and to protect widows and children
- Modern Insurance
- Illegal almost everywhere else in Europe life insurance in England was vigorously promoted in the three decades following the Glorious Revolution of 1688 The type of insurance we see today owes its roots to 17th century England Lloyds of London or as they were known then Lloyds Coffee House was the location where merchants ship owners and underwriters met to discuss and transact business deals
- While serving as a means of risk-avoidance life insurance also appealed strongly to the gambling instincts of Englands burgeoning middle class
- Gambling was so rampant in fact that when newspapers published names of prominent people who were seriously ill bets were placed at Lloydrsquos on their anticipated dates of death Reacting against such practices 79 merchant underwriters broke away in 1769 and two years later formed a ldquoNew Lloydrsquos Coffee Houserdquo that became known as the ldquoreal Lloydrsquosrdquo Making wagers on peoples deaths ceased in 1774 when parliament forbade the practice
- Insurance moves to America
- The US insurance industry was built on the British model The year 1735 saw the birth of the first insurance company in the American colonies in
- Charleston SC The Presbyterian Synod of Philadelphia in 1759 sponsored the first life insurance corporation in America for the benefit of ministers and their dependents And the first life insurance policy for the general public in the United States was issued in Philadelphia on May 22 1761
- But it wasnt until 80 years later (after 1840) that life insurance really tookoff in a big way The key to its success was reducing the opposition from religious groups
- In 1835 the infamous New York fire drew peoples 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
- With the creation of the automobile public liability insurance which first made its appearance in the 1880s gained importance and acceptance
- More advancement was made to insurance during the process of industrialization In 1897 the British government passed the Workmens Compensation Act which made it mandatory for a company to insure its employees against industrial accidents
- During 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 most labor 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
- BENEFITS OF LIFE INSURANCE
- 1) Risk cover -Life Insurance contracts allow an individual to have a risk cover against any unfortunate event of the future
- 2) Tax Deduction -Under section 80C of the Income Tax Act of 1961 one can get tax deduction on premiums up to one lakh rupees Life Insurance policies thus decrease the total taxable income of an individual
- 3) Loans -An individual can easily access loans from different financial institutions by pledging his insurance policies
- 4) Retirement Planning -What had provided protection against the financial consequences of premature death may now be used to help them enjoy their retirement years
- 5) Educational Needs -Similar to retirement planning the cash values that flow from ones life insurance schemes can be utilized for educational needs of the insurer or his children
- The Life Insurance Industry has an enviable track record among public sector units It has a Consistent profit and dividend paying record accompanied by a steady growth in its financial resources Through investments in the Government sector and socially- oriented sectors the Industry has contributed immensely to the nations development The industry is recognized as one of the largest financial Institutions in the country The ventures initiated by the industry in the areas of Mutual Fund
- Housing Finance has done exceedingly well in recent years To protect the countrys foreign exchange reserves the reinsurance arrangement are so organized that maximum retention is made possible within the country while at the same time protecting interests of the policy holders
- 22) CURRENT SCENARIO OF RELIANCE LIFE INSURANCE
- RLIC offers wide range of innovative life insurance products targeted at individuals and groups It offers need based products that caters to four distinct segments namely protection child retirement and investment plans RLIC is committed to emerge as a transnational Life Insurer of global scale and standard
- CH - 3) RESEARCH METHODOLOGY
- RESEARCH DESIGN-
- SAMPLING TECHNIQUES-
- THE PRIMARY OBJECTIVEOF THE STUDY-
- 34) OBJECTIVES
- 7) Some innovative technique or product is required in order to attract the consumer
- 45) LIMITATIONS
- 46) BIBLIOGRAPHY
-
Bajaj Allianz Life Insurance Company limited is a joint venture between two leading conglomerates Bajaj Auto limited and Allianz AG company whose total asset value is of Rs 5900000 cr Bajaj whose wealth as of now is Rs 8000 cr group in India 55 years of experience 4th largest group in the world Above 15000 employees largest 2 amp 3 wheeler manufacture in India Allianz established in 1890 who has 115 years of experience in financial year
Bajaj Auto is one of the most trusted name is Indian auto for over 55 years At Bajaj Allianz customer delight is our guiding principle Ensuring world-class solutions by offering customized products with transparent benefits supported by best technology is our business philosophy
Notwithstanding the recession and a volatile stock market Bajaj Allianz life insurance posted a profit of Rs 45 cr for financial year 2009 against a loss of Rs 16 cr in the previous year
The company new business premium fell to Rs 4491 cr in the year against Rs 6674 cr recorded in the last year
We have been able to make a profit of profit of Rs 45 cr even in these difficult times Our new business premium declined by 30 to Rs 4491 cr because the stock market declined and we didnrsquot open any new office in FY 09rdquo Bajaj Allianz country manager and Bajaj Allianz life insurance CEO kamesh Goyal said
Bajaj Allianz Life Insurance has around 1200 offices and the company would not increase the number this year too Goyal said
The companyrsquos renewal premium grew by more than 100 to Rs 6133 cr in the 2008-2009 as compared to Rs 3051 cr in the previous fiscal year he saidIn the year Bajaj Allianz life insurance issued 29 lakh policies which were the second largest in the industry
Vision bull To be the first choice insurer for customers bull To be the preferred employer for staff in the insurance industry bull To be the number one insurer for creating shareholder value
MissionAs a responsible customer focused market leader we will strive to understand the insurance needs of the consumers and translate it into affordable products that deliver value for money
12) TRADITIONAL PLANS OF THE COMPANY
12
12A )TRADITIONAL PLAN OF RELIANCE LIFE INSURANCE -
Life insurance products are designed to suit the requirements of customers Fundamentally the product provide for
Risk cover
Investment
Health cover
In every product to a certain degree risk cover is imperative for it to fall under the category of insurance Based on the coverage of the product the premiums are calculated and the customer pays accordingly In order to suggest the right product it is essential for an agent to understand the requirements of the customer well
The traditional plans of the company have the following features- Fixed Tenure Potential for better returns Transparency Flexibility in investment Flexibility to invest more Flexibility to skip the premium Flexibility to choose the cover High liquidity Age term and sum assured decide the amount of premium Top- ups and switches are not allowed
Reliance Life Insurance Company Limited has offered 9Traditional plans to the customers which are listed as follows1) Reliance Term Plan2) Reliance Whole Life Plan3) Reliance Endowment Plan4) Reliance Special Endowment Plan5) Reliance Cash Flow Plan6) Reliance Credit Guardian Plan7) Reliance Special Credit Guardian PlanEach of the above traditional plans is discussed as follows
1) Reliance term plan-This insurance policy is designed for those who only want life cover for the protection of their family and do not wish to save for themselves It can also be useful to business firms that wish to provide financial security to their business against the sudden loss of partners or valuable manpower Since there is no saving element or bonus provision the premium is very lowHence this is a high-risk plan with a low premium
13
1048729 Features -a) Purely a term planb) Entry age minimum 18 years and maximum 65 yearc) Maximum premium paying term is 30 yeard) Loan facility NAe) Maturity amount = Sum assured
2) Reliance Whole Life Plan -This insurance policy is designed for people who do not wish to avail of any benefits themselves but wish to create an immediate estate to protect their family by availing of insurance cover on their life at a very low cost
1048729 Features -a) It is a whole life insurance policy with profitsb) Low cost life coverc) Maturity age is 85 year or 99 years last birthday as chosend) Maturity amount = Sum assured + Vested bonuse) Tax benefit is available
3) Reliance Endowment Plan -Reliance Life Insurancersquos Reliance Endowment Plan is the key to all your financial needs It is an inexpensive and easy way to protect you your family or your businessIn a nutshell this plan will keep you financially prepared for all the special occasions in your life - your daughterrsquos wedding your childrsquos university education or even a new office for your business - by eliminating the burden that a shortage of money createsIn the event of your untimely death Reliance Endowment Plan will also assist your loved ones through this difficult time by the financial support that it providesReliance Endowment Plan also gives you the additional benefit of participating in the companyrsquos profits which you will receive at the end of the policy period
1048729 Features -a) Entry age minimum is 5 year and maximum 65 yearb) Maturity age minimum is 18 year and maximum 75 yearc) Minimum premium paying term is 5 year and maximum 35 year in case of regular and in case of single 15 yeard) Minimum sum assured is Rs 25000 or as determined by the minimum premiume) Maximum sum assured is Rs 5 00000 (entry age below 18 years and no limit for entry age 18 and above)f) Premium mode annual half yearly quarterly and monthly (by salary deduction only)g) Loan up to 90 of the surrender value of the policyh) Maturity amount = Guaranteed sum assured + Reversionary bonus
4) Reliance Special Endowment Plan -
14
This insurance policy is designed for people who wish to combine savings with extended security The unique feature of this policy is that life protection continues for five years after you have stopped the payment of premium Payment of sum assured at the end of premium paying term and extension of life cover thereafter for the full sum assured for a period of 5 years are characteristics of the policyThis plan also participates in the profits
1048729 Features -a) Entry age minimum 12 year and maximum 65 yearb) Minimum sum assured is Rs 25000c) Minimum premium paying term is 10 year and maximum 40 yeard) Unique feature of this policy is that five year life protection continues after you have stopped the payment of premiume) Tax benefit is availablef) Under this policy bonus is compounded yearlyg) Loan facility is availableh) Maturity amount = Full sum assured before maturity date +Vested bonus at the time of maturity date
15
12 B) TRADITIONAL PLANS OF BAJAJ ALLIANZ LIFE INSURANCE
I ENDOWMENT PLAN
Saving plan which offer bonuses are excellent long term plan with complete safety Our products offer additional benefits which include 4 times life cover at a little extra cost limited premium payment terms and compounded reversionary bonuses making it a very good long term investment
1 Bajaj Allianz Invest GainInvest Gain is a specially designed plan that offers a unique combination of benefits that help you develop a sound financial portfolio for your family
4 Times Life Cover at a little extra cost
Limited premium payment option available
Additional Benefits
a) Accidental Death Benefit and Disability Benefit b) Critical Illness Benefit and Hospital Cash Benefit c) Family Income Benefit In case of death or accidental total permanent disability of insured all future premiums are waived and 1 of the sum assured is paid monthly
Invest Gain Save Care Economy SP Life Time Care
Super Saver
16
2 Bajaj Allianz save Care Economy SP
A One-time payment Investment plan that provides for savings with high risk cover for 10 years and also participates in the profits of the company It offers you high risk cover with easy liquidity and high returns
a) A single premium endowment plan that participates in the profitsb) 10 year Investment planc) Benefits payable on maturityc) Loans available
17
3 Bajaj Allianz life time care
A whole life plan which provides survival benefits at the age of 80 thereby making sure you are financially secure at the time when you need it the most Additional Benefits
a) Accidental Death Cover and Disability Cover b) Critical Illness Cover and Hospital Cash Cover c) Waiver of Premium Benefit
4Bajaj Allianz Super Saver plan
Bajaj Allianz Super Saver is a regular premium endowment plan which helps you save regular amounts for a safer tomorrow It also provides you with extra benefits of Guaranteed Additions to your sum assured at the end of each policy year
18
II MONEY BACK PLAN
Money back plans are Traditional Insurance plans that provide the investor with returns at regular stages of life
CashGain
1)Bajaj Allianz Cash Gain plan
A Money back plan which guarantees 125 payout + bonuses
Quadruple life cover
5 easy payouts which give upto 125 + bonuses
Additional Benefitsa) Accidental Death Benefit and Disability Benefitb) Critical Illness Benefit and Hospital Cash Benefitc) Family Income Benefit In case of death or accidental total permanent disability of insured all future premiums are waived and 1 of the sum assured is paid monthly
19
20
13) INDUSTRY PROFILE
MEANING OF INSURANCE
Insurance may be described as a social device to reduce or eliminate risk of loss to life and property Insurance is a collective bearing of risk Insurance is a financial device to spread the risks and losses of few people among a large number of people as people prefer small fixed liability instead of big uncertain and changing liability
Insurance can be defined as a ldquolegal contract between two parties whereby one party called insurer undertakes to pay a fixed amount of money on the happening of a particular event which may be certain or uncertainrdquo The other party called insured pays in exchange a fixed sum known as premiumInsurance is desired to safeguard oneself and onersquos family against possible losses on account of risks and perils It provides financial compensation for the losses suffered due to the happening of any unforeseen events
IMPORTANCE OF INSURANCE
Insurance constitutes one of the major segments of the financial marketInsurance services play predominant role in the process of financial Intermediary Today insurance industry is one of the most growing sectors in India There is lot of potential in the Indian Insurance Industry
There are many issues which require study The scope of the study of Insurance industry of India would be very great as there are ongoing Developments in the industry after the opening of the sectorOne of the major issues is the effects on LIC after the entry of private players in the market Though market share of LIC has been affected it has improved in terms of efficiency
There are number of other hot topics like penetration of Health Insurance Rural marketing of insurance new distribution channels new product ranges insurance brokersrsquo regulation incentive scheme of development officers of LIC etc So it offers lot of scope for studying the insurance industryRight now the insurance industry has great opportunities in a country like India or China which huge population Also the penetration of insurance in India is very low in both life and non-life segment so there is lot potential to be tapped Before starting the discussion on insurance industry and related issues we have to start with the basics of insurance So first we understand what is insurance How the word lsquoinsurancersquo is different from the word lsquoassurancersquo Etc
21
HISTORY OF INSURANCE
The concept of insurance is believed to have emerged almost 4500 years ago in the ancient land of Babylonia where traders used to bear risk of the carvan by giving loans which were later repaid with interest when the goods arrived safely
The concept of insurance as we know today took shape in 1688 at a place called Lloydrsquos Coffee House in London where risk bearers used to meet to transact business This coffee house became so popular that Lloydrsquos became the one of the first modern insurance companies by the end of the eighteenth centuryMarine insurance companies came into existence by the end of the eighteenth century These companies were empowered to write fire and life insurance as well as marine The Great Fire of London in 1966 caused huge loss of property and life With a view to providing fire insurance facilitiesDr Nicholas Barbon set up in 1967 the first fire insurance company known as the Fire office
Life insurance in its modern form came to India from England in 1818 The Oriental Life Insurance Company was the first insurance company to be set up in India to help the widows of European community The insurance companies which came into existence between 1818 and 1869 treatedIndian lives as subnormal and charged an extra premium of 15 to 20 per cent The first Indian insurance company the Bombay Mutual LifeAssurance Society came into existence in 1870 to cover Indian lives at normal rates
The Insurance Act 1938 the first comprehensive legislation governing both life and non-life branches of insurance were enacted to provide strict state control over insurance business This amended insurance Act looked into investments expenditure and management of these companiesBy the mid- 1950s there were 154 Indian insurers 16 foreign insurers and 75 provident societies carrying on life insurance business in India Insurance business flourished and so did scams irregularities and dubious investment practices by scores of companies As a result the government decided to nationalize the life assurance business in India The Life InsuranceCorporation of India (LIC) was set up in 1956 The nationalization of life insurance was followed by general insurance in 1972
22
MEANING OF LIFE INSURANCE
There are three parties in a life insurance transaction the insurer the insured and the owner of the policy (policyholder) although the owner and the insured are often the same person
Another important person involved in a life insurance policy is the beneficiary The beneficiary is the person or persons who will receive the policy proceeds upon the death of the insured
Life insurance may be divided into two basic classes ndash term and permanent
Term life insurance provides for life insurance coverage for a specified term of years for a specified premium The policy does not accumulate cash value
Permanent life insurance is life insurance that remains in force until the policy matures unless the owner fails to pay the premium when due
Whole life insurance provides for a level premium and a cash value table included in the policy guaranteed by the company The primary advantages of whole life are guaranteed death benefits guaranteed cash values fixed and known annual premiums and mortality and expense charges will not reduce the cash value shown in the policy
Universal life insurance (UL) is a relatively new insurance product intended to provide permanent insurance coverage with greater flexibility in premium payment and the potential for a higher internal rate of return A universal life policy includes a cash account Premiums increase the cash account If you want insurance protection only and not a savings and investment product buy a term life insurance policy
If you want to buy a whole life universal life or other cash value policy plan to hold it for at least 15 years Canceling these policies after only a few years can more than double your life insurance costs
23
HISTORY OF LIFE INSURANCE
Risk protection has been a primary goal of humans and institutions throughout history Protecting against risk is what insurance is all aboutOver 5000 years ago in China insurance was seen as a preventative measure against piracy on the sea Piracy in fact was so prevalent that as a way of spreading the risk a number of ships would carry a portion of another ships cargo so that if one ship was captured the entire shipment would not be lostIn another part of the world nearly 4500 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
Life insurance came about a little later in ancient Rome where burial clubs were formed to cover the funeral expenses of its members as well as help survivors monetarily With Romes fall around 450 AD most of the concepts of insurance were abandoned but aspects of it did continue through the Middle Ages particularly with merchant and artisan guilds These provided forms of member insurance covering risks like fire flood theft disability death and even imprisonment
During the feudal period early forms of insurance ebbed with the decline of travel and long-distance trade But during the 14th to 16th centuries transportation commerce and insurance would again reemergeInsurance in India can be traced back to the Vedas For instance yogakshema the name of Life Insurance Corporation of Indias 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
And similar to ancient Rome burial societies were formed in the Buddhist period to help families build houses and to protect widows and children
Modern InsuranceIllegal almost everywhere else in Europe life insurance in England was vigorously promoted in the three decades following the Glorious Revolution of 1688 The type of insurance we see today owes its roots to 17th century England Lloyds of London or as they were known then Lloyds Coffee House was the location where merchants ship owners and underwriters met to discuss and transact business dealsWhile serving as a means of risk-avoidance life insurance also appealed strongly to the gambling instincts of Englands burgeoning middle classGambling was so rampant in fact that when newspapers published names of prominent people who were seriously ill bets were placed at Lloydrsquos on their anticipated dates of death Reacting against such practices 79 merchant underwriters broke away in 1769 and
24
two years later formed a ldquoNew Lloydrsquos Coffee Houserdquo that became known as the ldquoreal Lloydrsquosrdquo Making wagers on peoples deaths ceased in 1774 when parliament forbade the practice
Insurance moves to AmericaThe US insurance industry was built on the British model The year 1735 saw the birth of the first insurance company in the American colonies inCharleston SC The Presbyterian Synod of Philadelphia in 1759 sponsored the first life insurance corporation in America for the benefit of ministers and their dependents And the first life insurance policy for the general public in the United States was issued in Philadelphia on May 22 1761But it wasnt until 80 years later (after 1840) that life insurance really tookoff in a big way The key to its success was reducing the opposition from religious groups
In 1835 the infamous New York fire drew peoples 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
With the creation of the automobile public liability insurance which first made its appearance in the 1880s gained importance and acceptanceMore advancement was made to insurance during the process of industrialization In 1897 the British government passed the Workmens Compensation Act which made it mandatory for a company to insure its employees against industrial accidents
During 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 most labor 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
25
BENEFITS OF LIFE INSURANCE
1) Risk cover -Life Insurance contracts allow an individual to have a risk cover against any unfortunate event of the future
2) Tax Deduction -Under section 80C of the Income Tax Act of 1961 one can get tax deduction on premiums up to one lakh rupees Life Insurance policies thus decrease the total taxable income of an individual
3) Loans -An individual can easily access loans from different financial institutions by pledging his insurance policies
4) Retirement Planning -What had provided protection against the financial consequences of premature death may now be used to help them enjoy their retirement yearsMoreover the cash value can be used as an additional income in the old age
5) Educational Needs -Similar to retirement planning the cash values that flow from ones life insurance schemes can be utilized for educational needs of the insurer or his children
26
ROLE OF LIFE INSURANCE IN THE GROWTH OF THE ECONOMY
The Life Insurance Industry has an enviable track record among public sector units It has a Consistent profit and dividend paying record accompanied by a steady growth in its financial resources Through investments in the Government sector and socially- oriented sectors the Industry has contributed immensely to the nations development The industry is recognized as one of the largest financial Institutions in the country The ventures initiated by the industry in the areas of Mutual Fund
Housing Finance has done exceedingly well in recent years To protect the countrys foreign exchange reserves the reinsurance arrangement are so organized that maximum retention is made possible within the country while at the same time protecting interests of the policy holders
27
ROLE OF IRDA
MISSION
ldquoTo protect the interests of the policyholders to regulate promote
and ensure orderly growth of the insurance industry and for matters
connected therewith or incidental theretordquo
The Insurance Act 1938 had provided for setting up of the Controller of Insurance to act
as a strong and powerful supervisory and regulatory authority for insurance Post
nationalization the role of Controller of Insurance diminished considerably in
significance since the Government owned the insurance companies But the scenario
changed with the private and foreign companies foraying in to the insurance sector This
necessitated the need for a strong independent and autonomous Insurance Regulatory
Authority was felt As the enacting of legislation would have taken time the then
Government constituted through a Government resolution an Interim Insurance
Regulatory Authority pending the enactment of a comprehensive legislation
The Insurance Regulatory and Development Authority Act 1999 is an act to provide for
the establishment of an Authority to protect the interests of holders of insurance policies
to regulate promote and ensure orderly growth of the insurance industry and for matters
connected therewith or incidental thereto and further to amend the Insurance Act 1938
the Life Insurance Corporation Act 1956 and the General insurance Business
(Nationalization) Act 1972 to end the monopoly of the Life Insurance Corporation of
India (for life insurance business) and General Insurance Corporation and its subsidiaries
(for general insurance business) The act extends to the whole of India and will come
into force on such date as the Central Government may by notification in the Official
Gazette specify Different dates may be appointed for different provisions of this Act
28
The Act has defined certain terms some of the most important ones are as follows
Appointed day means the date on which the Authority is established under the act
Authority means the established under this Act Interim Insurance Regulatory Authority
means the Insurance Regulatory Authority set up by the Central Government through
Resolution No 17(2) 94-lns-V dated the 23rd January 1996
Words and expressions used and not defined in this Act but defined in the Insurance Act
1938 or the Life Insurance Corporation Act 1956 or the General Insurance Business
(Nationalization) Act 1972 shall have the meanings respectively assigned to them in
those Acts A new definition of Indian Insurance Company has been inserted Indian
insurance company means any insurer being a company
(a) Which is formed and registered under the Companies Act 1956
(b) in which the aggregate holdings of equity shares by a foreign company either by
itself or through its subsidiary companies or its nominees do not exceed twenty-six
percent paid up capital in such Indian insurance company
(c) Whose sole purpose is to carry on life insurance business general insurance business
or re-insurance business
29
CURRENT SCENERIO
21) CURRENT SCENERIO OF THE INSURANCE INDUSTRY
With largest number of life insurance policies in force in the world insurance happens to be a mega opportunity in India Itrsquos a business growing at the rate of 15-20 per cent annually and presently is of the order of Rs 450 billion Together with banking services it adds about 7 per cent to the countryrsquos GDP Gross premium collection is nearly 2 per cent of GDP and funds available with LIC for investment are 8 per cent of GDP
Yet nearly 80 percent of Indian population is without life insurance cover while health insurance and non-life insurance continues to be below international standards And this part of the population is also subject to weak social security and pension systems with hardly any old age income security This it is an indicator that growth potential for the insurance sector is immense A well-develop and evolved insurance sector is needed for economic development as it provides long term funds for infrastructure development and at the same time strengthens the risk taking ability It is estimated that over the next ten years India would require investments of the order of one trillion US dollar The insurance sector to some extent can enable investment in infrastructure development to sustain economic growth of the country Insurance is a federal subject in India There are two legislation that govern the sector - The Insurance Act-1938 and The IRDA Act-1999
In India insurance is generally considered as a tax-saving device instead of its other implied long term financial benefits Indian people are prone to investing in properties and gold followed by bank deposits They selectively invest in shares also but the percentage is very small Even to this day Life Insurance Corporation of India dominates India insurance sector With the entry of private sector players backed by foreign expertise Indian insurance market has become more vibrant Business is becoming increasingly vulnerable due to wide variety of risk particularly after September 11 2001 disaster in which twin tower located in the hearts of New York city were crashed by terrorist attack resulting in loss of 6000 human lives as well as financial loss to the extent of $45 billion The impact of this terrorist attack has created new horizon of risk to the business world today
However rapid changes in the global economy development of technology and e-business already gathered momentum Increased dependency on technology has originated new risks that have resulted in well-published incidents Computer hackers obtaining credit card information from visa and Power-Gen the love bug virus cyber extortion web content liability professional errors and omissions computers and other crimes and activities such as terrorism kidnapping and companyrsquos executive and extortion of money commercial liability etc have significant impact on business resulting in extreme financial loss commercial embarrassment or regulatory implications
Corporation insurancerisk managers under the circumstances have to demand increasingly complex insurance products They have to be more attentive and
30
knowledgeable about emerging risks how those risks are managed effectively and efficiently and how they could ultimately affect a companyrsquos financial situation and therefore its position in the market place In short how such risks are managed and can give to an insured a competitive advantage
In the changing times adoption of e-commerce into business models the integration of web-based communication and data transfer capabilities into the business operations and leveraging of advanced network and technology architecture for maximum benefit are the new horizon of the risks For the corporate insurancerisks managers these new exposure-cyber-risks-can lead to cyber losses widening the interpretation of what constitute insure property damage particularly as it relates to information technology and dataAll the while organizations are tremendous pressure to reduce expenses and increase profit margin and cannot afford to suffer a property loss of business interruption due to any cause (risk) How a company identifies quantifies qualifies and manages these new risks exposure in addition to the well-known tradition risks is becoming an important factor in creating shareholders value This often means changing the way Everyone in the organization have to think about risk
Insurance managers are seeing price levels (premium) continue to rise-albeit modestly-in todayrsquos primarily commercial property and reinsurance markets They are demanding that insurers improve their risk assessment and quantification offerings so that an insured may avail the benefit in cost (premium rate) on account of well-managed riskThe good news for insurance managers is that as the economy evolves insurers are increasingly matching that evaluation with new products services and capabilities due to opening up the insurance market to the private players
Insurers who are truly listening to their customers and striving to be more in tune with their needs are responding to the fast changing corporate insurance and risk management landscape They are listening to their customers They are making fresh approaches to address the new challenges faced by insured organization by designing the new products as per the needs Insurers are providing value added services to insured to protect the value created by the business
Insurers are increasingly required to develop and expand their information technology platforms to ensure that the vast amount of data they collect about their customers Insurancerisk portfolio can easily and seamlessly be transformed into valuable risk management information To help their customers insurers should make better-informed decisions They must be able to swiftly deliver this data to their customers (insured) anywhere in the world Insurer are also discovering that risk assessment have to be customized to meet policyholdersrsquo new exposures and needs The insurance industry is stepping up and addressing these challenges in several different ways
31
22) CURRENT SCENARIO OF RELIANCE LIFE INSURANCE
RLIC offers wide range of innovative life insurance products targeted at individuals and groups It offers need based products that caters to four distinct segments namely protection child retirement and investment plans RLIC is committed to emerge as a
transnational Life Insurer of global scale and standard
Reliance Life Insurance Company Limited (RLIC) is amongst the fastest growing life insurance companies in India It is also amongst the top four private sector life insurance companies in India (As on FY 2008-2009)
As on March 31 2009 RLIC has an annualized premium of Rs 30 billion with a market share of 103 It has leapfrogged on the growth path and has reached the 4 million policy mark in a short span of within 3 years RLIC has a strong distribution network of 1145 branches with more than 149000 agents
32
Insurancersquos Market Share in Comparison of Other Private company
If we look at the status of Reliance Life Insurancersquos market share in comparison of other
private company in comparison of premium earned-
If we talk the growth of Insurance industryrsquos private players in recent years the data will
reflect-
CH - 3) RESEARCH METHODOLOGY
33
RESEARCH DESIGN-
COMPARITIVE STUDY- A comparative study has been undertaken to compare the traditional Plans of Reliance Life Insurance with that of Bajaj Allianz life insurance
DATA TYPE
INTRODUCTION - Any organization whether big or small private or public needs different type of information to know its popularity I have gathered secondary data and primary data and collected information from the combination of these two data
PRIMARY DATA - Primary data collection method was decided for observing working of the company and approaching the customers directly face to face A great care was taken while collecting the primary data to answer that it is relevant accurate current and unbiased
SECONDARY DATA - Secondary data collection method was used by referring to various websites books and newspapers for collecting information regarding the project under study Secondary data consist of the information that already exists somewhere else for some another purpose
SAMPLING TECHNIQUES-
SAMPLE SIZE- A sample size of 50 was taken to be analyzed
SAMPLE LOCATION-Various sectors of Kamla Nagar Civil lines Mukherji Nagar Model Town and selected areas of Delhi
SAMPLING PROCESS - Convenient sampling was used to overcome the time and money constraints that could have been faced by us while collecting the data The customers were contacted face to face directly and also by way of telephonic conversation with them
ANALYTICAL TOOLS - The data collected were arranged accordingly and statistical tools like bar graphs and pie-charts were used to analyze and present the data
RESEARCH INSTRUMENT USED-
34
SAMPLING MEDIA - Printed questionnaires consisting several questions were asked to have an idea of customers view about Reliance Life Insurance plans followed by personal questions
FIELD WORK - Rigorous field work was undertaken to locate the interested and potential respondents to fulfill the objectives of the study
THE PRIMARY OBJECTIVEOF THE STUDY -
The primary objective of the research study is to have a detailed analysis of Reliance Life Insurance bringing in focus the future prospects of the (Anil Dhirubhai Ambani group) with relevance to the customer perception regarding the various plans and products offered by Reliance Life Insurance
31) DATA ANALYSIS AND INTERPRETATION
35
PERSONAL DETAILS
1) AGE a) 18-30b) 31-50c) 51-65
AGE NO OF RESPONDENTS PERCENTAGE
18-30 21 42
31-50 19 38
51-65 10 20
TOTAL 50 100
INTERPRETATION-The bar graph reveals that 42 of the respondents belong to the age group of 18-30 years 38 lies in the age group of 31-50 years and 20 of them lie in the age group of 51-65 years
2) OCCUPATION
4238
20
05
1015202530354045
NO
O
F
RE
SP
ON
DE
NT
S
18 to 30 31 to 50 51 to 65
AGE (in year)
AGE WISE CLASSIFICATION
36
a) Serviceb) Businessc) Professiond) Housewifee) Retired
OPTION NO OF RESPONDENTS PERCENTAGE
Service 16 32
Business 14 28
Profession 5 10
Housewife 8 16
Retired 7 14
TOTAL 50 100
INTERPRETATION-The above bar graph reveals that 32 of the total respondents were servicemen 28 of them belonged to the business class 10 were professionals 16 were housewives and 14 of the total respondents fall in the retired category
3) INCOME
32
28
10
16
14
0
5
10
15
20
25
30
35
Service Business Profession Housewife Retired
OCCUPATION
OCCUPATION WISE CLASSIFICATION
37
a) 150000-300000
b) 300000-500000
c) Above 500000
OPTION NO OF RESPONDENTS PERCENTAGE
150000-300000 24 48
300000-500000 14 28
Above 500000 12 24
TOTAL 50 100
INTERPRETATION-The above bar graph reveals that out of the total respondents 48 lie in the income group of 150000-300000 28 of the total respondents belonged to the income group of 300000-500000 and 24 lie in the income group of people earning an income of above Rs 500000pa
4828 24
01020304050
N O
OF
RE
SP
ON
DE
NT
S
150000-300000
300000-500000
ABOVE500000
INCOME (in RS)
INCOME WISE CLASSIFICATION
38
4) FAMILY MEMBERS
a) 2b) 3c) 4d) Above 4
OPTION NO OF RESPONDENT PERCENTAGE
2 11 22
3 9 18
4 24 48
Above 4 6 12
TOTAL 50 100
INTERPRETATION The above bar graph shows that 22 of the total respondents had a family of 2 members 18 of them had 3 family members 48 of them had 4 family members and 12 of them had the no of family members above 4
Q1 Where do you prefer to invest
22 18
48
120
1020304050
No
o
f re
spo
nd
ents
2 3 4 Above 4
No of family members
MEMBER WISE CLASSIFICATION
39
a) fixed deposits
b) stock
c) mutual funds
d) insurance
e) others
Option No of respondents Percentage
Fixed deposits 5 10
Stock 10 20
Mutual fund 10 20
Insurance 18 36
others 7 14
TOTAL 50 100
Interpretation The above pie chart shows that out of 50 respondents 10 preferred to invest in fixed deposits 20 in stocks 20 in mutual funds 36 in insurance and 14 in others like property gold etc
Q2 What are your priorities for investment
40
a) protecting your family against pre-mature death
b) wealth creation
c) retirement needs
d) child education and marriage
e) protect income against disability sickness or critical illness
Option No of respondents Percentage
Protecting your family against pre mature death
10 20
Wealth creation 14 28
Retirement needs 5 10
Child education and marriage 7 14
Protect income against disability sickness or critical illness
14 28
TOTAL 50 100
Interpretation The above pie chart shows that out of 50 respondents 20 of them invest for protecting their family against premature death 28 for creating wealth 10 for meeting their future retirement needs 14 for child education amp marriage and 28 for protection against disability and sickness
Q3 What is your main motive behind investing in life insurance
41
a) tax benefit
b) savings
c) risk cover
Option No of respondents Percentage
Tax benefits 27 54
Savings 5 10
Risk cover 18 36
TOTAL 50 100
Interpretation The above pie chart shows that out of the sample respondents 54 have tax benefit 10 have savings and 36 have risk cover as their main motive for making an investment in life
Q4 What kind of investment do you prefer
42
a) high risk high gain
b) low risk low gain
c) moderate
d) vary times to times
Option No of respondents Percentage
High risk high gain 8 16
Low risk low gain 5 10
Moderate 12 24
Vary times to times 25 50
TOTAL 50 100
Interpretation The above pie chart shows that out of 50 respondents 16 preferred high risk- high gain form of investment 10 preferred low risk- low gain form of investment 24 preferred moderate investment and 50 preferred varied form of investment
43
Q5Are you interested to invest in Traditional Plans
a) YES
b) NO
Option No of respondents Percentage
YES 36 72
NO 14 28
TOTAL 50 100
Interpretation The above pie chart shows that 72 of the respondents preferred to invest in Traditional Plans
44
Q6 What is your level of annual investmenta) below 20000
b) 20000-40000
c) above 40000
Option No of respondents Percentage
Below 20000 41 82
20000-40000 7 14
Above 40000 2 4
TOTAL 50 100
Interpretation The above pie chart shows that 82 of the respondents are willing to invest below Rs 20000 per annum 14 of them want to invest within Rs 20000 per annum to Rs 40000 and 4 wanted to invest over and above Rs 40000
45
Q7 What factors would you consider most important before choosing an insurance policy
a) publicity of the company
b) reputation of the company
c) quality of life advisors
d) after sales-supporting of the company
Option No of respondents Percentage
Publicity of the co 5 20
Reputation of the co 25 50
Quality of life advisors 10 10
After sale-services 10 20
TOTAL 50 100
Interpretation out of the sample respondents 20 considers publicity of the company 50 considers reputation of the company 10 considers quality of life advisors and 20 considers after sales support of the company as the most important factor for choosing an insurance company
46
Q8 Which life insurance company would you prefer the most to invest ina) reliance life insurance (RLIC)
b) Bajaj Allianz life insurance
Option No of respondents Percentage
RLIC 21 42
BAJAJ ALLIANZ 29 58
TOTAL 50 100
Interpretation Out of 50 respondents 42 preferred to invest in reliance life insurance over 58 of the respondents who prefer to invest in Bajaj Allianz life insurance
47
Q9 If reliance life insurance then which particular plan you would like to invest ina) Reliance Term Plan
b) Reliance Whole Life Plan
c) Reliance Endowment Plan
d) Reliance Special Endowment Plan
Option No of respondents Percentage
Reliance term plan 6 2858
Reliance whole life plan 3 1428
Reliance endowment plan 9 4286
Reliance special endowment plan 3 1428
TOTAL 21 100
Interpretation Out of 21 respondents 2858 preferred to invest in term plan 1428 in whole life plan 4286 in endowment plan and 1428 of them preferred to invest in special endowment plan of reliance life insurance
48
Q10 If Bajaj Allianz life insurance then which particular plan you would like to invest in
I ENDOWMENT PLAN a) Bajaj Allianz Invest Gain
b) Bajaj Allianz save Care Economy SP
c) Bajaj Allianz life time care
d) Bajaj Allianz Super Saver plan
II MONEY BACK PLAN i Bajaj Allianz Cash Gain plan
Option No of respondents Percentage
Invest gain plan 3 1035
Save care economy SP 6 2069
Life time care 7 2415
Super saver plan 3 1035
Cash gain plan 10 3446
TOTAL 29 100
Interpretation Out of 29 respondents 1035 of them plan to invest in Bajaj Allianz- Invest Gain 2069 wish to invest in Bajaj Allianz save Care Economy SP 2415 want to invest in Bajaj Allianz life time care 1035 in Bajaj Allianz Super Saver plan and 3446 prefer to invest in Bajaj Allianz Cash Gain plan
49
32) SIGNIFICANCE OF STUDY
Life insurance is one of the most rapidly growing sectors in India The main reason
behind the growth can attributed to the high population density improving economical
condition improving education level and improving awareness Due to these factors there
is still huge scope for growth in this sector Like any other business when the
opportunities are present everybody tends to enter the industries This growth hence
fetches the new competitors as well as new strategies from existing players To sustain in
any competitive industry the organization must adapt to existing strategies and adopt
new ones This study will focus on the analysis of Reliance Life Insurance in comparison
with the present scenario of Bajaj Allianz Life Insurance with respect to the Traditional
Plans of both the companyrsquos This will mainly cover the following aspects
To know about the awareness and popularity of various Traditional Plans offered
by Reliance Life Insurance and Bajaj Allianz Life Insurance
How Reliance Life Insurance can develop and sustain a good distribution
network
These will provide it benefit both in terms of better market coverage as well as better
penetration
50
33) SCOPE OF THE STUDY
1) This helps in finding out vast potential of insurance company
2) The study was conducted in National Capital Region (NCR) only
3) The number of respondents to be surveyed can be improved
4) This study was conducted by comparing the performances amp products of three private
amp government insurance players in insurance industry
5) This study was conducted to analyze the market stand of Reliance life insurance
Company limited and Bajaj Allianz Life Insurance Company Limited of India insurance
companies
6) This study is done to eliminate all the myths which people have in their minds
regarding Insurance Sector
51
34) OBJECTIVES
To have a detailed understanding of Reliance Life Insurance and Bajaj Allianz Life Insurance
To find out various reasons considered while investing in policies
To get knowledge about the market exposure and future prospects about Reliance Life Insurance
To know the perception of the consumers about the life insurance
To analyze the Traditional plans of Reliance Life Insurance and compare it with Bajaj Allianz
To know about the brand awareness of Reliance Life Insurance its customer preferences over Bajaj Allianz in the market
To study a proper knowledge about the life insurance industry
To understand the consumer choice while investing in policies
52
CHAPTER 4
DISCUSSION AND FINDINGS OF THE STUDY
FINDINGS OF THE STUDY RECOMMENDATION AND SUGGESTIONS CONCLUSION LIMITATIONS BIBLIOGRAPHY ANNEXUREQUESTIONNAIRE
53
41) FINDINGS OF THE STUDY
1) The survey reveals that still a large proportion of population is interested to invest in other forms of investment other than insurance as still most of them are unaware about the importance of insurance in their life
2) Basically people make varied form of investment for creating wealth to protect their families against pre-mature death and to protect income against disability sickness or critical illness
3) The main motive of the individuals investing is receives benefits US 1010D People generally consider insurance as a tax saving device
4) Mostly people prefer time to time form of investment as they are not willing to take high degree of risk
5) 72 of the respondents are preferred to invest in Traditional Plans
6) Most of the people prefer to make an annual investment up to a maximum of Rs20 000 per annum
7) When the product is like life insurance reputation of the company publicity of the company amp after sale services of the company matters a lot This means that people would choose that insurance company only where the quality of life advisors is satisfactory
8) Most people prefer to invest in Bajaj Allianz Life Insurance as compared to making an investment in Reliance Life Insurance
9) The most preferable Traditional plan of Reliance Life Insurance is Endowment Plan
10) The most preferable plan of Bajaj Allianz Life Insurance co is Cash Gain Plan
54
42) SUGGESTIONS amp RECOMMENDATIONS
Based on the observations of the study some suggestions for the organization are made as
follows
1) Quality of advisors is also as important as the quantity Thus company should go
mainly for qualified professionals
2) Company should increase its budget on publicity so that awareness can be increased
3) Clarity and transparency should be provided to the customer regarding various
products
4) Training sessions should be planned in advance so that schedule can be provided to
the advisor in advance
5) Apart from the Brand Positioning in urban area a strategy should be adopted by
Reliance to make its brand also near to middle level or high aspirant people because they
are the main source of the business in India
6) Awareness Camp to the sub urban area should be focused by Reliance
7) Some innovative technique or product is required in order to attract the consumer
43) LITERATURE REVIEW
55
1) Robi Elenekave has explained in detail why various retirement plans and pension plans donrsquot give the desired returns The main difficulty is the use of incorrect method for calculations done to find out the return on investment This is primarily due to wrong assumptions The study provides information about the various precautions which need to be considered before planning so that the desired results can be achieved
2) Another paper provides insight about how various financial sectors invest in bond market The study was how the different players investment different instruments according to the risk appetite and desired rate of return The study shows that life insurance sector mainly invests in government bond which are low return and low risk instrument The investment in government bond it shows that life insurance companies are more conservative in investment
3) K Subhash has presented the history of Indiarsquos life insurance industry in three stages before independence after independence and post liberalization which not only provides information but also help in analyzing the impact of these major changes The authors have also discussed the huge potential which exists in the rural India The insurance company must realize the importance of rural sector because the future lies there The author commented about the increasing share of private player in the existing market This confirms the availability of opportunity in this sector The paper also provides the importance of professional and focused approach which was given no importance
4) Tapen Sinha has discussed the various challenges and opportunities in the insurance market One of the very important factors which have been discussed in the study is the importance of developing new and better products As the scenario changes the need of an individual also changes so any organization must understand and fulfill these needs The new product development requires constant research so organization must also focus on it
5) Roger G Ibbotson discusses how financial planners and advisors have recently started to recognize that human capital must be taken into account when building optimal portfolios for individual investors Any investorrsquos human capital has a unique mortality risk However life insurance in its forms can hedge against this mortality risk Thus human capital affects both the optimal asset allocation and the optimal demand for life insurance This paper provides a unified framework based on human capital in order to enable individual investors to make both decisions jointly
6) Rakesh Niraj study tells how the flow of information in any organization is important For any organization to grow the flow of information must be good both upwards as well as ownwards The proper flow of information will also ensure proper flow of good and services from organization to customer and proper flow of information from customer to organization The information from customers will help the organization in providing better goods and services to the customer For the above purpose organization must ensure good channel partner who can provide the organization with correct feedback Hence it becomes very important for any organization to acquire good channel partners
56
7) Stephen P Robbins has discussed how group dynamics works in any organization The success of any organization depends on the success of its various teams and how these teams work together The book provides various techniques which can be used by any organization to get result from the team effort The conflict resolution is a major task in any group Various techniques which the organization can use in conflict resolution are also discussed Another important aspect covered is the importance of leadership in the organization The various forms of leadership have been discussed and the kinds of leadership which can be effective in particular situations are also discussed
8) R Wayne Mondy has discussed the importance of training and development in any organization The training provides skills to perform the current job where as the development involve learning beyond present need The various type of training are discussed which can be used according to the requirement Training and development are not only important for better performance of an individual but it also gives satisfaction The major factors which influence training and development are found to be management support commitment of trainee and trainer complexity of the organization The process of developing good training plans is also provided In another part author has discussed the importance of right man for right job The compensation strategies are also given which are very crucial for ant industry
9) Philip Kotler has discussed the importance of channels partners Better the channel partners better will be the delivery model Detailed discussion about how to design the channel structure so that all the requirements could be fulfilled is provided The various issues faced by the organization while managing the channels are also given When an organization has more than one channel it becomes very important that all the channels should be integrated in such a way that the organization get the best out of all At times due to the conflicting benefit of the different channels the conflict arise so various strategies to manage these issues is also discussed in the chapter
10) Michael J Etzel has written about the marketing of services The marketing of services is different from the goods because of the characteristic of service like intangibility inseparability heterogeneity etc Brief about pricing strategies is also given in case of services The authors have also given the impact of technological development on the services marketing The author has also given the importance of brand and after sales support in case of services as perception of the customers plays an important role In other part of the book the authors has described the importance of distribution channels and designing of the same A channel partner should be consider as partner according to discussion The legal complications associated with channels are also discussed These complications are necessary to take into the consideration while managing the channels The conflicting interest of channels both horizontally and vertically are also taken into the consideration
57
11) Boone has discussed about the importance of personal financial planning The concept of time value of money has also been elaborated The importance of creating and implementing budget is given under money management The other important concepts for financial planning like credit management and understanding taxes are also explained In one section the authors have discussed the importance of investment and what should be the major considerations while making any investment The considerations include the risk associated with the investment return on the investment etc The importance and benefits of life insurance has also been given The discussion also includes various legal aspects associated with life insurance The overview of retirement planning is also given which includes importance and benefit of retirement planning Various tools for proper retirement planning are also discussed
58
44) CONCLUSION
1) The customers are very much sensitive towards their investment They would like to invest only in that insurance company which enjoys good public image along with quality good services
2) The result of the survey conducted shows that Bajaj Allianz Life Insurance is the leader in life insurance industry but Reliance Life Insurance and other private players are giving it a close competition
3) The motive of the people behind investing in life insurance is the tax benefits that they would receive under sec 80C and 1010D
4) In Life Insurance industry the after sales support of the company is as important as the quality of life advisors
59
45) LIMITATIONS
There were some limitations faced during the study as discussed below
Since the study was taken for two months so there was a constraint of time and effort
The study was limited only to some of the Delhi regions so the results may be biased
Questionnaire was given to 125 people however only 50 responded to it which is very small for such type of study
The biasness of consumer or responses error cannot be eliminated
Most of the people are not aware about the Importance and the necessity of insurance in their life
Adverse perception of the people towards insurance sector- People consider insurance as a tax saving device
Lack of awareness about the earning opportunity in the insurance sector
60
46) BIBLIOGRAPHY
wwwreliancelifeinsurancecom
wwwadagroupcom
wwwirdacom
wwwbajajallianzlifeinsurancecom
wwwallianzbajajcom
47) ANNEXURE
61
QUESTIONNAIRE
A comparative analysis of consumer perception regarding Traditional plans of Reliance Life Insurance with that of Bajaj Allianz Life Insurance
NAME ___________________________
PERSONAL DETAILS
1) AGE_________________
1) OCCUPATION______________
2) INCOME___________________
3) FAMILY MEMBERS_________
Q1 Where do you prefer to investa) Fixed deposits b) Stock c) Mutual funds d) Insurance e) Others
Q2 What are your priorities for investmenta) Protecting your family against pre-mature death b) Wealth creation c) Retirement needs d) Child education and marriage e) Protect income against disability sickness or critical illness
Q3 What is your main motive behind investing in life insurancea) Tax benefit b) Savings c) Risk cover
Q4 What kind of investment do you prefera) High risk high gain b) Low risk low gain c) Moderate d) Vary times to times
62
Q5Are you interested to invest in Traditional Plansa) Yes b) No
Q6 What is your level of annual investmenta) below 20000 b) 20000-40000 c) above 40000
Q7 What factors would you consider most important before choosing an insurance company
a) publicity of the company b) reputation of the company c) quality of life advisors d) after sales-supporting of the company
Q8 Which life insurance company would you prefer the most to invest ina) Reliance life insurance b) Bajaj Allianz life insurance
Q9 If reliance life insurance then which particular plan you would like to invest ina) Reliance Term Plan b) Reliance Whole Life Plan c) Reliance Endowment Plan d) Reliance Special Endowment Plan
Q10 If Bajaj Allianz life insurance then which particular plan you would like to invest in
I ENDOWMENT PLAN
a) Bajaj Allianz Invest Gain
b) Bajaj Allianz save Care Economy SP
c) Bajaj Allianz life time care
d) Bajaj Allianz Super Saver plan
II MONEY BACK PLAN
a) Bajaj Allianz Cash Gain plan
63
64
- COMPANY PROFILE
- ABOUT RELIANCE LIFE INSURANCE
- HISTORY
- Reliance Capital Limited announced the launch of its life insurance business on February 1 2006 This was after obtaining the required regulatory approvals from the Registrar Of Companies and the Insurance Regulatory and Development Authority
- It was in August 2005 that the ball was set rolling when Reliance Capital Limited the financial arm of Reliance ndash Anil Dhirubhai Ambani Group (ADAG) ndash announced the requisition of 100 shareholding in AMP Sanmar Life Insurance Company Limited and the formal transfer of shares took place in October 2005 The company will issue all policy contracts under the Reliance Life Insurance Company limited name All the existing policy contracts also stand transferred to the Reliance Life Insurance entity with all the original contractual terms and commitments intact
- CORE VALUES
- Reliance Life Insurance Company Limited has some core values which are listed as follows
- Vision bull To be the first choice insurer for customers bull To be the preferred employer for staff in the insurance industry bull To be the number one insurer for creating shareholder value
- Mission As a responsible customer focused market leader we will strive to understand the insurance needs of the consumers and translate it into affordable products that deliver value for money
- 12) TRADITIONAL PLANS OF THE COMPANY
- 12A )TRADITIONAL PLAN OF RELIANCE LIFE INSURANCE-
- Life insurance products are designed to suit the requirements of customers Fundamentally the product provide for
- In every product to a certain degree risk cover is imperative for it to fall under the category of insurance Based on the coverage of the product the premiums are calculated and the customer pays accordingly In order to suggest the right product it is essential for an agent to understand the requirements of the customer well
- The traditional plans of the company have the following features-
- Fixed Tenure
- Potential for better returns
- Transparency
- Flexibility in investment
- Flexibility to invest more
- Flexibility to skip the premium
- Flexibility to choose the cover
- High liquidity
- Age term and sum assured decide the amount of premium
- Top- ups and switches are not allowed
- Reliance Life Insurance Company Limited has offered 9
- 1) Reliance term plan-
- 2) Reliance Whole Life Plan -
- 3) Reliance Endowment Plan -
- 4) Reliance Special Endowment Plan -
- 13) INDUSTRY PROFILE
- MEANING OF INSURANCE
- Insurance may be described as a social device to reduce or eliminate risk of loss to life and property Insurance is a collective bearing of risk Insurance is a financial device to spread the risks and losses of few people among a large number of people as people prefer small fixed liability instead of big uncertain and changing liability
- Insurance can be defined as a ldquolegal contract between two parties whereby one party called insurer undertakes to pay a fixed amount of money on the happening of a particular event which may be certain or uncertainrdquo The other party called insured pays in exchange a fixed sum known as premium
- Insurance is desired to safeguard oneself and onersquos family against possible losses on account of risks and perils It provides financial compensation for the losses suffered due to the happening of any unforeseen events
- IMPORTANCE OF INSURANCE
- Insurance services play predominant role in the process of financial Intermediary Today insurance industry is one of the most growing sectors in India There is lot of potential in the Indian Insurance Industry
- There are many issues which require study The scope of the study of Insurance industry of India would be very great as there are ongoing Developments in the industry after the opening of the sector
- Right now the insurance industry has great opportunities in a country like India or China which huge population Also the penetration of insurance in India is very low in both life and non-life segment so there is lot potential to be tapped Before starting the discussion on insurance industry and related issues we have to start with the basics of insurance So first we understand what is insurance How the word lsquoinsurancersquo is different from the word lsquoassurancersquo Etc
- HISTORY OF INSURANCE
- The concept of insurance is believed to have emerged almost 4500 years ago in the ancient land of Babylonia where traders used to bear risk of the carvan by giving loans which were later repaid with interest when the goods arrived safely
- The concept of insurance as we know today took shape in 1688 at a place called Lloydrsquos Coffee House in London where risk bearers used to meet to transact business This coffee house became so popular that Lloydrsquos became the one of the first modern insurance companies by the end of the eighteenth century
- Marine insurance companies came into existence by the end of the eighteenth century These companies were empowered to write fire and life insurance as well as marine The Great Fire of London in 1966 caused huge loss of property and life With a view to providing fire insurance facilities
- Dr Nicholas Barbon set up in 1967 the first fire insurance company known as the Fire office
- Life insurance in its modern form came to India from England in 1818 The Oriental Life Insurance Company was the first insurance company to be set up in India to help the widows of European community The insurance companies which came into existence between 1818 and 1869 treated
- Indian lives as subnormal and charged an extra premium of 15 to 20 per cent The first Indian insurance company the Bombay Mutual Life
- Assurance Society came into existence in 1870 to cover Indian lives at normal rates
- The Insurance Act 1938 the first comprehensive legislation governing both life and non-life branches of insurance were enacted to provide strict state control over insurance business This amended insurance Act looked into investments expenditure and management of these companies
- By the mid- 1950s there were 154 Indian insurers 16 foreign insurers and 75 provident societies carrying on life insurance business in India Insurance business flourished and so did scams irregularities and dubious investment practices by scores of companies As a result the government decided to nationalize the life assurance business in India The Life Insurance
- Corporation of India (LIC) was set up in 1956 The nationalization of life insurance was followed by general insurance in 1972
- MEANING OF LIFE INSURANCE
- There are three parties in a life insurance transaction the insurer the insured and the owner of the policy (policyholder) although the owner and the insured are often the same person
- Another important person involved in a life insurance policy is the beneficiary The beneficiary is the person or persons who will receive the policy proceeds upon the death of the insured
- Life insurance may be divided into two basic classes ndash term and permanent
- HISTORY OF LIFE INSURANCE
- Risk protection has been a primary goal of humans and institutions throughout history Protecting against risk is what insurance is all about
- Over 5000 years ago in China insurance was seen as a preventative measure against piracy on the sea Piracy in fact was so prevalent that as a way of spreading the risk a number of ships would carry a portion of another ships cargo so that if one ship was captured the entire shipment would not be lost
- In another part of the world nearly 4500 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
- Life insurance came about a little later in ancient Rome where burial clubs were formed to cover the funeral expenses of its members as well as help survivors monetarily With Romes fall around 450 AD most of the concepts of insurance were abandoned but aspects of it did continue through the Middle Ages particularly with merchant and artisan guilds These provided forms of member insurance covering risks like fire flood theft disability death and even imprisonment
- During the feudal period early forms of insurance ebbed with the decline of travel and long-distance trade But during the 14th to 16th centuries transportation commerce and insurance would again reemerge
- And similar to ancient Rome burial societies were formed in the Buddhist period to help families build houses and to protect widows and children
- Modern Insurance
- Illegal almost everywhere else in Europe life insurance in England was vigorously promoted in the three decades following the Glorious Revolution of 1688 The type of insurance we see today owes its roots to 17th century England Lloyds of London or as they were known then Lloyds Coffee House was the location where merchants ship owners and underwriters met to discuss and transact business deals
- While serving as a means of risk-avoidance life insurance also appealed strongly to the gambling instincts of Englands burgeoning middle class
- Gambling was so rampant in fact that when newspapers published names of prominent people who were seriously ill bets were placed at Lloydrsquos on their anticipated dates of death Reacting against such practices 79 merchant underwriters broke away in 1769 and two years later formed a ldquoNew Lloydrsquos Coffee Houserdquo that became known as the ldquoreal Lloydrsquosrdquo Making wagers on peoples deaths ceased in 1774 when parliament forbade the practice
- Insurance moves to America
- The US insurance industry was built on the British model The year 1735 saw the birth of the first insurance company in the American colonies in
- Charleston SC The Presbyterian Synod of Philadelphia in 1759 sponsored the first life insurance corporation in America for the benefit of ministers and their dependents And the first life insurance policy for the general public in the United States was issued in Philadelphia on May 22 1761
- But it wasnt until 80 years later (after 1840) that life insurance really tookoff in a big way The key to its success was reducing the opposition from religious groups
- In 1835 the infamous New York fire drew peoples 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
- With the creation of the automobile public liability insurance which first made its appearance in the 1880s gained importance and acceptance
- More advancement was made to insurance during the process of industrialization In 1897 the British government passed the Workmens Compensation Act which made it mandatory for a company to insure its employees against industrial accidents
- During 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 most labor 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
- BENEFITS OF LIFE INSURANCE
- 1) Risk cover -Life Insurance contracts allow an individual to have a risk cover against any unfortunate event of the future
- 2) Tax Deduction -Under section 80C of the Income Tax Act of 1961 one can get tax deduction on premiums up to one lakh rupees Life Insurance policies thus decrease the total taxable income of an individual
- 3) Loans -An individual can easily access loans from different financial institutions by pledging his insurance policies
- 4) Retirement Planning -What had provided protection against the financial consequences of premature death may now be used to help them enjoy their retirement years
- 5) Educational Needs -Similar to retirement planning the cash values that flow from ones life insurance schemes can be utilized for educational needs of the insurer or his children
- The Life Insurance Industry has an enviable track record among public sector units It has a Consistent profit and dividend paying record accompanied by a steady growth in its financial resources Through investments in the Government sector and socially- oriented sectors the Industry has contributed immensely to the nations development The industry is recognized as one of the largest financial Institutions in the country The ventures initiated by the industry in the areas of Mutual Fund
- Housing Finance has done exceedingly well in recent years To protect the countrys foreign exchange reserves the reinsurance arrangement are so organized that maximum retention is made possible within the country while at the same time protecting interests of the policy holders
- 22) CURRENT SCENARIO OF RELIANCE LIFE INSURANCE
- RLIC offers wide range of innovative life insurance products targeted at individuals and groups It offers need based products that caters to four distinct segments namely protection child retirement and investment plans RLIC is committed to emerge as a transnational Life Insurer of global scale and standard
- CH - 3) RESEARCH METHODOLOGY
- RESEARCH DESIGN-
- SAMPLING TECHNIQUES-
- THE PRIMARY OBJECTIVEOF THE STUDY-
- 34) OBJECTIVES
- 7) Some innovative technique or product is required in order to attract the consumer
- 45) LIMITATIONS
- 46) BIBLIOGRAPHY
-
12A )TRADITIONAL PLAN OF RELIANCE LIFE INSURANCE -
Life insurance products are designed to suit the requirements of customers Fundamentally the product provide for
Risk cover
Investment
Health cover
In every product to a certain degree risk cover is imperative for it to fall under the category of insurance Based on the coverage of the product the premiums are calculated and the customer pays accordingly In order to suggest the right product it is essential for an agent to understand the requirements of the customer well
The traditional plans of the company have the following features- Fixed Tenure Potential for better returns Transparency Flexibility in investment Flexibility to invest more Flexibility to skip the premium Flexibility to choose the cover High liquidity Age term and sum assured decide the amount of premium Top- ups and switches are not allowed
Reliance Life Insurance Company Limited has offered 9Traditional plans to the customers which are listed as follows1) Reliance Term Plan2) Reliance Whole Life Plan3) Reliance Endowment Plan4) Reliance Special Endowment Plan5) Reliance Cash Flow Plan6) Reliance Credit Guardian Plan7) Reliance Special Credit Guardian PlanEach of the above traditional plans is discussed as follows
1) Reliance term plan-This insurance policy is designed for those who only want life cover for the protection of their family and do not wish to save for themselves It can also be useful to business firms that wish to provide financial security to their business against the sudden loss of partners or valuable manpower Since there is no saving element or bonus provision the premium is very lowHence this is a high-risk plan with a low premium
13
1048729 Features -a) Purely a term planb) Entry age minimum 18 years and maximum 65 yearc) Maximum premium paying term is 30 yeard) Loan facility NAe) Maturity amount = Sum assured
2) Reliance Whole Life Plan -This insurance policy is designed for people who do not wish to avail of any benefits themselves but wish to create an immediate estate to protect their family by availing of insurance cover on their life at a very low cost
1048729 Features -a) It is a whole life insurance policy with profitsb) Low cost life coverc) Maturity age is 85 year or 99 years last birthday as chosend) Maturity amount = Sum assured + Vested bonuse) Tax benefit is available
3) Reliance Endowment Plan -Reliance Life Insurancersquos Reliance Endowment Plan is the key to all your financial needs It is an inexpensive and easy way to protect you your family or your businessIn a nutshell this plan will keep you financially prepared for all the special occasions in your life - your daughterrsquos wedding your childrsquos university education or even a new office for your business - by eliminating the burden that a shortage of money createsIn the event of your untimely death Reliance Endowment Plan will also assist your loved ones through this difficult time by the financial support that it providesReliance Endowment Plan also gives you the additional benefit of participating in the companyrsquos profits which you will receive at the end of the policy period
1048729 Features -a) Entry age minimum is 5 year and maximum 65 yearb) Maturity age minimum is 18 year and maximum 75 yearc) Minimum premium paying term is 5 year and maximum 35 year in case of regular and in case of single 15 yeard) Minimum sum assured is Rs 25000 or as determined by the minimum premiume) Maximum sum assured is Rs 5 00000 (entry age below 18 years and no limit for entry age 18 and above)f) Premium mode annual half yearly quarterly and monthly (by salary deduction only)g) Loan up to 90 of the surrender value of the policyh) Maturity amount = Guaranteed sum assured + Reversionary bonus
4) Reliance Special Endowment Plan -
14
This insurance policy is designed for people who wish to combine savings with extended security The unique feature of this policy is that life protection continues for five years after you have stopped the payment of premium Payment of sum assured at the end of premium paying term and extension of life cover thereafter for the full sum assured for a period of 5 years are characteristics of the policyThis plan also participates in the profits
1048729 Features -a) Entry age minimum 12 year and maximum 65 yearb) Minimum sum assured is Rs 25000c) Minimum premium paying term is 10 year and maximum 40 yeard) Unique feature of this policy is that five year life protection continues after you have stopped the payment of premiume) Tax benefit is availablef) Under this policy bonus is compounded yearlyg) Loan facility is availableh) Maturity amount = Full sum assured before maturity date +Vested bonus at the time of maturity date
15
12 B) TRADITIONAL PLANS OF BAJAJ ALLIANZ LIFE INSURANCE
I ENDOWMENT PLAN
Saving plan which offer bonuses are excellent long term plan with complete safety Our products offer additional benefits which include 4 times life cover at a little extra cost limited premium payment terms and compounded reversionary bonuses making it a very good long term investment
1 Bajaj Allianz Invest GainInvest Gain is a specially designed plan that offers a unique combination of benefits that help you develop a sound financial portfolio for your family
4 Times Life Cover at a little extra cost
Limited premium payment option available
Additional Benefits
a) Accidental Death Benefit and Disability Benefit b) Critical Illness Benefit and Hospital Cash Benefit c) Family Income Benefit In case of death or accidental total permanent disability of insured all future premiums are waived and 1 of the sum assured is paid monthly
Invest Gain Save Care Economy SP Life Time Care
Super Saver
16
2 Bajaj Allianz save Care Economy SP
A One-time payment Investment plan that provides for savings with high risk cover for 10 years and also participates in the profits of the company It offers you high risk cover with easy liquidity and high returns
a) A single premium endowment plan that participates in the profitsb) 10 year Investment planc) Benefits payable on maturityc) Loans available
17
3 Bajaj Allianz life time care
A whole life plan which provides survival benefits at the age of 80 thereby making sure you are financially secure at the time when you need it the most Additional Benefits
a) Accidental Death Cover and Disability Cover b) Critical Illness Cover and Hospital Cash Cover c) Waiver of Premium Benefit
4Bajaj Allianz Super Saver plan
Bajaj Allianz Super Saver is a regular premium endowment plan which helps you save regular amounts for a safer tomorrow It also provides you with extra benefits of Guaranteed Additions to your sum assured at the end of each policy year
18
II MONEY BACK PLAN
Money back plans are Traditional Insurance plans that provide the investor with returns at regular stages of life
CashGain
1)Bajaj Allianz Cash Gain plan
A Money back plan which guarantees 125 payout + bonuses
Quadruple life cover
5 easy payouts which give upto 125 + bonuses
Additional Benefitsa) Accidental Death Benefit and Disability Benefitb) Critical Illness Benefit and Hospital Cash Benefitc) Family Income Benefit In case of death or accidental total permanent disability of insured all future premiums are waived and 1 of the sum assured is paid monthly
19
20
13) INDUSTRY PROFILE
MEANING OF INSURANCE
Insurance may be described as a social device to reduce or eliminate risk of loss to life and property Insurance is a collective bearing of risk Insurance is a financial device to spread the risks and losses of few people among a large number of people as people prefer small fixed liability instead of big uncertain and changing liability
Insurance can be defined as a ldquolegal contract between two parties whereby one party called insurer undertakes to pay a fixed amount of money on the happening of a particular event which may be certain or uncertainrdquo The other party called insured pays in exchange a fixed sum known as premiumInsurance is desired to safeguard oneself and onersquos family against possible losses on account of risks and perils It provides financial compensation for the losses suffered due to the happening of any unforeseen events
IMPORTANCE OF INSURANCE
Insurance constitutes one of the major segments of the financial marketInsurance services play predominant role in the process of financial Intermediary Today insurance industry is one of the most growing sectors in India There is lot of potential in the Indian Insurance Industry
There are many issues which require study The scope of the study of Insurance industry of India would be very great as there are ongoing Developments in the industry after the opening of the sectorOne of the major issues is the effects on LIC after the entry of private players in the market Though market share of LIC has been affected it has improved in terms of efficiency
There are number of other hot topics like penetration of Health Insurance Rural marketing of insurance new distribution channels new product ranges insurance brokersrsquo regulation incentive scheme of development officers of LIC etc So it offers lot of scope for studying the insurance industryRight now the insurance industry has great opportunities in a country like India or China which huge population Also the penetration of insurance in India is very low in both life and non-life segment so there is lot potential to be tapped Before starting the discussion on insurance industry and related issues we have to start with the basics of insurance So first we understand what is insurance How the word lsquoinsurancersquo is different from the word lsquoassurancersquo Etc
21
HISTORY OF INSURANCE
The concept of insurance is believed to have emerged almost 4500 years ago in the ancient land of Babylonia where traders used to bear risk of the carvan by giving loans which were later repaid with interest when the goods arrived safely
The concept of insurance as we know today took shape in 1688 at a place called Lloydrsquos Coffee House in London where risk bearers used to meet to transact business This coffee house became so popular that Lloydrsquos became the one of the first modern insurance companies by the end of the eighteenth centuryMarine insurance companies came into existence by the end of the eighteenth century These companies were empowered to write fire and life insurance as well as marine The Great Fire of London in 1966 caused huge loss of property and life With a view to providing fire insurance facilitiesDr Nicholas Barbon set up in 1967 the first fire insurance company known as the Fire office
Life insurance in its modern form came to India from England in 1818 The Oriental Life Insurance Company was the first insurance company to be set up in India to help the widows of European community The insurance companies which came into existence between 1818 and 1869 treatedIndian lives as subnormal and charged an extra premium of 15 to 20 per cent The first Indian insurance company the Bombay Mutual LifeAssurance Society came into existence in 1870 to cover Indian lives at normal rates
The Insurance Act 1938 the first comprehensive legislation governing both life and non-life branches of insurance were enacted to provide strict state control over insurance business This amended insurance Act looked into investments expenditure and management of these companiesBy the mid- 1950s there were 154 Indian insurers 16 foreign insurers and 75 provident societies carrying on life insurance business in India Insurance business flourished and so did scams irregularities and dubious investment practices by scores of companies As a result the government decided to nationalize the life assurance business in India The Life InsuranceCorporation of India (LIC) was set up in 1956 The nationalization of life insurance was followed by general insurance in 1972
22
MEANING OF LIFE INSURANCE
There are three parties in a life insurance transaction the insurer the insured and the owner of the policy (policyholder) although the owner and the insured are often the same person
Another important person involved in a life insurance policy is the beneficiary The beneficiary is the person or persons who will receive the policy proceeds upon the death of the insured
Life insurance may be divided into two basic classes ndash term and permanent
Term life insurance provides for life insurance coverage for a specified term of years for a specified premium The policy does not accumulate cash value
Permanent life insurance is life insurance that remains in force until the policy matures unless the owner fails to pay the premium when due
Whole life insurance provides for a level premium and a cash value table included in the policy guaranteed by the company The primary advantages of whole life are guaranteed death benefits guaranteed cash values fixed and known annual premiums and mortality and expense charges will not reduce the cash value shown in the policy
Universal life insurance (UL) is a relatively new insurance product intended to provide permanent insurance coverage with greater flexibility in premium payment and the potential for a higher internal rate of return A universal life policy includes a cash account Premiums increase the cash account If you want insurance protection only and not a savings and investment product buy a term life insurance policy
If you want to buy a whole life universal life or other cash value policy plan to hold it for at least 15 years Canceling these policies after only a few years can more than double your life insurance costs
23
HISTORY OF LIFE INSURANCE
Risk protection has been a primary goal of humans and institutions throughout history Protecting against risk is what insurance is all aboutOver 5000 years ago in China insurance was seen as a preventative measure against piracy on the sea Piracy in fact was so prevalent that as a way of spreading the risk a number of ships would carry a portion of another ships cargo so that if one ship was captured the entire shipment would not be lostIn another part of the world nearly 4500 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
Life insurance came about a little later in ancient Rome where burial clubs were formed to cover the funeral expenses of its members as well as help survivors monetarily With Romes fall around 450 AD most of the concepts of insurance were abandoned but aspects of it did continue through the Middle Ages particularly with merchant and artisan guilds These provided forms of member insurance covering risks like fire flood theft disability death and even imprisonment
During the feudal period early forms of insurance ebbed with the decline of travel and long-distance trade But during the 14th to 16th centuries transportation commerce and insurance would again reemergeInsurance in India can be traced back to the Vedas For instance yogakshema the name of Life Insurance Corporation of Indias 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
And similar to ancient Rome burial societies were formed in the Buddhist period to help families build houses and to protect widows and children
Modern InsuranceIllegal almost everywhere else in Europe life insurance in England was vigorously promoted in the three decades following the Glorious Revolution of 1688 The type of insurance we see today owes its roots to 17th century England Lloyds of London or as they were known then Lloyds Coffee House was the location where merchants ship owners and underwriters met to discuss and transact business dealsWhile serving as a means of risk-avoidance life insurance also appealed strongly to the gambling instincts of Englands burgeoning middle classGambling was so rampant in fact that when newspapers published names of prominent people who were seriously ill bets were placed at Lloydrsquos on their anticipated dates of death Reacting against such practices 79 merchant underwriters broke away in 1769 and
24
two years later formed a ldquoNew Lloydrsquos Coffee Houserdquo that became known as the ldquoreal Lloydrsquosrdquo Making wagers on peoples deaths ceased in 1774 when parliament forbade the practice
Insurance moves to AmericaThe US insurance industry was built on the British model The year 1735 saw the birth of the first insurance company in the American colonies inCharleston SC The Presbyterian Synod of Philadelphia in 1759 sponsored the first life insurance corporation in America for the benefit of ministers and their dependents And the first life insurance policy for the general public in the United States was issued in Philadelphia on May 22 1761But it wasnt until 80 years later (after 1840) that life insurance really tookoff in a big way The key to its success was reducing the opposition from religious groups
In 1835 the infamous New York fire drew peoples 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
With the creation of the automobile public liability insurance which first made its appearance in the 1880s gained importance and acceptanceMore advancement was made to insurance during the process of industrialization In 1897 the British government passed the Workmens Compensation Act which made it mandatory for a company to insure its employees against industrial accidents
During 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 most labor 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
25
BENEFITS OF LIFE INSURANCE
1) Risk cover -Life Insurance contracts allow an individual to have a risk cover against any unfortunate event of the future
2) Tax Deduction -Under section 80C of the Income Tax Act of 1961 one can get tax deduction on premiums up to one lakh rupees Life Insurance policies thus decrease the total taxable income of an individual
3) Loans -An individual can easily access loans from different financial institutions by pledging his insurance policies
4) Retirement Planning -What had provided protection against the financial consequences of premature death may now be used to help them enjoy their retirement yearsMoreover the cash value can be used as an additional income in the old age
5) Educational Needs -Similar to retirement planning the cash values that flow from ones life insurance schemes can be utilized for educational needs of the insurer or his children
26
ROLE OF LIFE INSURANCE IN THE GROWTH OF THE ECONOMY
The Life Insurance Industry has an enviable track record among public sector units It has a Consistent profit and dividend paying record accompanied by a steady growth in its financial resources Through investments in the Government sector and socially- oriented sectors the Industry has contributed immensely to the nations development The industry is recognized as one of the largest financial Institutions in the country The ventures initiated by the industry in the areas of Mutual Fund
Housing Finance has done exceedingly well in recent years To protect the countrys foreign exchange reserves the reinsurance arrangement are so organized that maximum retention is made possible within the country while at the same time protecting interests of the policy holders
27
ROLE OF IRDA
MISSION
ldquoTo protect the interests of the policyholders to regulate promote
and ensure orderly growth of the insurance industry and for matters
connected therewith or incidental theretordquo
The Insurance Act 1938 had provided for setting up of the Controller of Insurance to act
as a strong and powerful supervisory and regulatory authority for insurance Post
nationalization the role of Controller of Insurance diminished considerably in
significance since the Government owned the insurance companies But the scenario
changed with the private and foreign companies foraying in to the insurance sector This
necessitated the need for a strong independent and autonomous Insurance Regulatory
Authority was felt As the enacting of legislation would have taken time the then
Government constituted through a Government resolution an Interim Insurance
Regulatory Authority pending the enactment of a comprehensive legislation
The Insurance Regulatory and Development Authority Act 1999 is an act to provide for
the establishment of an Authority to protect the interests of holders of insurance policies
to regulate promote and ensure orderly growth of the insurance industry and for matters
connected therewith or incidental thereto and further to amend the Insurance Act 1938
the Life Insurance Corporation Act 1956 and the General insurance Business
(Nationalization) Act 1972 to end the monopoly of the Life Insurance Corporation of
India (for life insurance business) and General Insurance Corporation and its subsidiaries
(for general insurance business) The act extends to the whole of India and will come
into force on such date as the Central Government may by notification in the Official
Gazette specify Different dates may be appointed for different provisions of this Act
28
The Act has defined certain terms some of the most important ones are as follows
Appointed day means the date on which the Authority is established under the act
Authority means the established under this Act Interim Insurance Regulatory Authority
means the Insurance Regulatory Authority set up by the Central Government through
Resolution No 17(2) 94-lns-V dated the 23rd January 1996
Words and expressions used and not defined in this Act but defined in the Insurance Act
1938 or the Life Insurance Corporation Act 1956 or the General Insurance Business
(Nationalization) Act 1972 shall have the meanings respectively assigned to them in
those Acts A new definition of Indian Insurance Company has been inserted Indian
insurance company means any insurer being a company
(a) Which is formed and registered under the Companies Act 1956
(b) in which the aggregate holdings of equity shares by a foreign company either by
itself or through its subsidiary companies or its nominees do not exceed twenty-six
percent paid up capital in such Indian insurance company
(c) Whose sole purpose is to carry on life insurance business general insurance business
or re-insurance business
29
CURRENT SCENERIO
21) CURRENT SCENERIO OF THE INSURANCE INDUSTRY
With largest number of life insurance policies in force in the world insurance happens to be a mega opportunity in India Itrsquos a business growing at the rate of 15-20 per cent annually and presently is of the order of Rs 450 billion Together with banking services it adds about 7 per cent to the countryrsquos GDP Gross premium collection is nearly 2 per cent of GDP and funds available with LIC for investment are 8 per cent of GDP
Yet nearly 80 percent of Indian population is without life insurance cover while health insurance and non-life insurance continues to be below international standards And this part of the population is also subject to weak social security and pension systems with hardly any old age income security This it is an indicator that growth potential for the insurance sector is immense A well-develop and evolved insurance sector is needed for economic development as it provides long term funds for infrastructure development and at the same time strengthens the risk taking ability It is estimated that over the next ten years India would require investments of the order of one trillion US dollar The insurance sector to some extent can enable investment in infrastructure development to sustain economic growth of the country Insurance is a federal subject in India There are two legislation that govern the sector - The Insurance Act-1938 and The IRDA Act-1999
In India insurance is generally considered as a tax-saving device instead of its other implied long term financial benefits Indian people are prone to investing in properties and gold followed by bank deposits They selectively invest in shares also but the percentage is very small Even to this day Life Insurance Corporation of India dominates India insurance sector With the entry of private sector players backed by foreign expertise Indian insurance market has become more vibrant Business is becoming increasingly vulnerable due to wide variety of risk particularly after September 11 2001 disaster in which twin tower located in the hearts of New York city were crashed by terrorist attack resulting in loss of 6000 human lives as well as financial loss to the extent of $45 billion The impact of this terrorist attack has created new horizon of risk to the business world today
However rapid changes in the global economy development of technology and e-business already gathered momentum Increased dependency on technology has originated new risks that have resulted in well-published incidents Computer hackers obtaining credit card information from visa and Power-Gen the love bug virus cyber extortion web content liability professional errors and omissions computers and other crimes and activities such as terrorism kidnapping and companyrsquos executive and extortion of money commercial liability etc have significant impact on business resulting in extreme financial loss commercial embarrassment or regulatory implications
Corporation insurancerisk managers under the circumstances have to demand increasingly complex insurance products They have to be more attentive and
30
knowledgeable about emerging risks how those risks are managed effectively and efficiently and how they could ultimately affect a companyrsquos financial situation and therefore its position in the market place In short how such risks are managed and can give to an insured a competitive advantage
In the changing times adoption of e-commerce into business models the integration of web-based communication and data transfer capabilities into the business operations and leveraging of advanced network and technology architecture for maximum benefit are the new horizon of the risks For the corporate insurancerisks managers these new exposure-cyber-risks-can lead to cyber losses widening the interpretation of what constitute insure property damage particularly as it relates to information technology and dataAll the while organizations are tremendous pressure to reduce expenses and increase profit margin and cannot afford to suffer a property loss of business interruption due to any cause (risk) How a company identifies quantifies qualifies and manages these new risks exposure in addition to the well-known tradition risks is becoming an important factor in creating shareholders value This often means changing the way Everyone in the organization have to think about risk
Insurance managers are seeing price levels (premium) continue to rise-albeit modestly-in todayrsquos primarily commercial property and reinsurance markets They are demanding that insurers improve their risk assessment and quantification offerings so that an insured may avail the benefit in cost (premium rate) on account of well-managed riskThe good news for insurance managers is that as the economy evolves insurers are increasingly matching that evaluation with new products services and capabilities due to opening up the insurance market to the private players
Insurers who are truly listening to their customers and striving to be more in tune with their needs are responding to the fast changing corporate insurance and risk management landscape They are listening to their customers They are making fresh approaches to address the new challenges faced by insured organization by designing the new products as per the needs Insurers are providing value added services to insured to protect the value created by the business
Insurers are increasingly required to develop and expand their information technology platforms to ensure that the vast amount of data they collect about their customers Insurancerisk portfolio can easily and seamlessly be transformed into valuable risk management information To help their customers insurers should make better-informed decisions They must be able to swiftly deliver this data to their customers (insured) anywhere in the world Insurer are also discovering that risk assessment have to be customized to meet policyholdersrsquo new exposures and needs The insurance industry is stepping up and addressing these challenges in several different ways
31
22) CURRENT SCENARIO OF RELIANCE LIFE INSURANCE
RLIC offers wide range of innovative life insurance products targeted at individuals and groups It offers need based products that caters to four distinct segments namely protection child retirement and investment plans RLIC is committed to emerge as a
transnational Life Insurer of global scale and standard
Reliance Life Insurance Company Limited (RLIC) is amongst the fastest growing life insurance companies in India It is also amongst the top four private sector life insurance companies in India (As on FY 2008-2009)
As on March 31 2009 RLIC has an annualized premium of Rs 30 billion with a market share of 103 It has leapfrogged on the growth path and has reached the 4 million policy mark in a short span of within 3 years RLIC has a strong distribution network of 1145 branches with more than 149000 agents
32
Insurancersquos Market Share in Comparison of Other Private company
If we look at the status of Reliance Life Insurancersquos market share in comparison of other
private company in comparison of premium earned-
If we talk the growth of Insurance industryrsquos private players in recent years the data will
reflect-
CH - 3) RESEARCH METHODOLOGY
33
RESEARCH DESIGN-
COMPARITIVE STUDY- A comparative study has been undertaken to compare the traditional Plans of Reliance Life Insurance with that of Bajaj Allianz life insurance
DATA TYPE
INTRODUCTION - Any organization whether big or small private or public needs different type of information to know its popularity I have gathered secondary data and primary data and collected information from the combination of these two data
PRIMARY DATA - Primary data collection method was decided for observing working of the company and approaching the customers directly face to face A great care was taken while collecting the primary data to answer that it is relevant accurate current and unbiased
SECONDARY DATA - Secondary data collection method was used by referring to various websites books and newspapers for collecting information regarding the project under study Secondary data consist of the information that already exists somewhere else for some another purpose
SAMPLING TECHNIQUES-
SAMPLE SIZE- A sample size of 50 was taken to be analyzed
SAMPLE LOCATION-Various sectors of Kamla Nagar Civil lines Mukherji Nagar Model Town and selected areas of Delhi
SAMPLING PROCESS - Convenient sampling was used to overcome the time and money constraints that could have been faced by us while collecting the data The customers were contacted face to face directly and also by way of telephonic conversation with them
ANALYTICAL TOOLS - The data collected were arranged accordingly and statistical tools like bar graphs and pie-charts were used to analyze and present the data
RESEARCH INSTRUMENT USED-
34
SAMPLING MEDIA - Printed questionnaires consisting several questions were asked to have an idea of customers view about Reliance Life Insurance plans followed by personal questions
FIELD WORK - Rigorous field work was undertaken to locate the interested and potential respondents to fulfill the objectives of the study
THE PRIMARY OBJECTIVEOF THE STUDY -
The primary objective of the research study is to have a detailed analysis of Reliance Life Insurance bringing in focus the future prospects of the (Anil Dhirubhai Ambani group) with relevance to the customer perception regarding the various plans and products offered by Reliance Life Insurance
31) DATA ANALYSIS AND INTERPRETATION
35
PERSONAL DETAILS
1) AGE a) 18-30b) 31-50c) 51-65
AGE NO OF RESPONDENTS PERCENTAGE
18-30 21 42
31-50 19 38
51-65 10 20
TOTAL 50 100
INTERPRETATION-The bar graph reveals that 42 of the respondents belong to the age group of 18-30 years 38 lies in the age group of 31-50 years and 20 of them lie in the age group of 51-65 years
2) OCCUPATION
4238
20
05
1015202530354045
NO
O
F
RE
SP
ON
DE
NT
S
18 to 30 31 to 50 51 to 65
AGE (in year)
AGE WISE CLASSIFICATION
36
a) Serviceb) Businessc) Professiond) Housewifee) Retired
OPTION NO OF RESPONDENTS PERCENTAGE
Service 16 32
Business 14 28
Profession 5 10
Housewife 8 16
Retired 7 14
TOTAL 50 100
INTERPRETATION-The above bar graph reveals that 32 of the total respondents were servicemen 28 of them belonged to the business class 10 were professionals 16 were housewives and 14 of the total respondents fall in the retired category
3) INCOME
32
28
10
16
14
0
5
10
15
20
25
30
35
Service Business Profession Housewife Retired
OCCUPATION
OCCUPATION WISE CLASSIFICATION
37
a) 150000-300000
b) 300000-500000
c) Above 500000
OPTION NO OF RESPONDENTS PERCENTAGE
150000-300000 24 48
300000-500000 14 28
Above 500000 12 24
TOTAL 50 100
INTERPRETATION-The above bar graph reveals that out of the total respondents 48 lie in the income group of 150000-300000 28 of the total respondents belonged to the income group of 300000-500000 and 24 lie in the income group of people earning an income of above Rs 500000pa
4828 24
01020304050
N O
OF
RE
SP
ON
DE
NT
S
150000-300000
300000-500000
ABOVE500000
INCOME (in RS)
INCOME WISE CLASSIFICATION
38
4) FAMILY MEMBERS
a) 2b) 3c) 4d) Above 4
OPTION NO OF RESPONDENT PERCENTAGE
2 11 22
3 9 18
4 24 48
Above 4 6 12
TOTAL 50 100
INTERPRETATION The above bar graph shows that 22 of the total respondents had a family of 2 members 18 of them had 3 family members 48 of them had 4 family members and 12 of them had the no of family members above 4
Q1 Where do you prefer to invest
22 18
48
120
1020304050
No
o
f re
spo
nd
ents
2 3 4 Above 4
No of family members
MEMBER WISE CLASSIFICATION
39
a) fixed deposits
b) stock
c) mutual funds
d) insurance
e) others
Option No of respondents Percentage
Fixed deposits 5 10
Stock 10 20
Mutual fund 10 20
Insurance 18 36
others 7 14
TOTAL 50 100
Interpretation The above pie chart shows that out of 50 respondents 10 preferred to invest in fixed deposits 20 in stocks 20 in mutual funds 36 in insurance and 14 in others like property gold etc
Q2 What are your priorities for investment
40
a) protecting your family against pre-mature death
b) wealth creation
c) retirement needs
d) child education and marriage
e) protect income against disability sickness or critical illness
Option No of respondents Percentage
Protecting your family against pre mature death
10 20
Wealth creation 14 28
Retirement needs 5 10
Child education and marriage 7 14
Protect income against disability sickness or critical illness
14 28
TOTAL 50 100
Interpretation The above pie chart shows that out of 50 respondents 20 of them invest for protecting their family against premature death 28 for creating wealth 10 for meeting their future retirement needs 14 for child education amp marriage and 28 for protection against disability and sickness
Q3 What is your main motive behind investing in life insurance
41
a) tax benefit
b) savings
c) risk cover
Option No of respondents Percentage
Tax benefits 27 54
Savings 5 10
Risk cover 18 36
TOTAL 50 100
Interpretation The above pie chart shows that out of the sample respondents 54 have tax benefit 10 have savings and 36 have risk cover as their main motive for making an investment in life
Q4 What kind of investment do you prefer
42
a) high risk high gain
b) low risk low gain
c) moderate
d) vary times to times
Option No of respondents Percentage
High risk high gain 8 16
Low risk low gain 5 10
Moderate 12 24
Vary times to times 25 50
TOTAL 50 100
Interpretation The above pie chart shows that out of 50 respondents 16 preferred high risk- high gain form of investment 10 preferred low risk- low gain form of investment 24 preferred moderate investment and 50 preferred varied form of investment
43
Q5Are you interested to invest in Traditional Plans
a) YES
b) NO
Option No of respondents Percentage
YES 36 72
NO 14 28
TOTAL 50 100
Interpretation The above pie chart shows that 72 of the respondents preferred to invest in Traditional Plans
44
Q6 What is your level of annual investmenta) below 20000
b) 20000-40000
c) above 40000
Option No of respondents Percentage
Below 20000 41 82
20000-40000 7 14
Above 40000 2 4
TOTAL 50 100
Interpretation The above pie chart shows that 82 of the respondents are willing to invest below Rs 20000 per annum 14 of them want to invest within Rs 20000 per annum to Rs 40000 and 4 wanted to invest over and above Rs 40000
45
Q7 What factors would you consider most important before choosing an insurance policy
a) publicity of the company
b) reputation of the company
c) quality of life advisors
d) after sales-supporting of the company
Option No of respondents Percentage
Publicity of the co 5 20
Reputation of the co 25 50
Quality of life advisors 10 10
After sale-services 10 20
TOTAL 50 100
Interpretation out of the sample respondents 20 considers publicity of the company 50 considers reputation of the company 10 considers quality of life advisors and 20 considers after sales support of the company as the most important factor for choosing an insurance company
46
Q8 Which life insurance company would you prefer the most to invest ina) reliance life insurance (RLIC)
b) Bajaj Allianz life insurance
Option No of respondents Percentage
RLIC 21 42
BAJAJ ALLIANZ 29 58
TOTAL 50 100
Interpretation Out of 50 respondents 42 preferred to invest in reliance life insurance over 58 of the respondents who prefer to invest in Bajaj Allianz life insurance
47
Q9 If reliance life insurance then which particular plan you would like to invest ina) Reliance Term Plan
b) Reliance Whole Life Plan
c) Reliance Endowment Plan
d) Reliance Special Endowment Plan
Option No of respondents Percentage
Reliance term plan 6 2858
Reliance whole life plan 3 1428
Reliance endowment plan 9 4286
Reliance special endowment plan 3 1428
TOTAL 21 100
Interpretation Out of 21 respondents 2858 preferred to invest in term plan 1428 in whole life plan 4286 in endowment plan and 1428 of them preferred to invest in special endowment plan of reliance life insurance
48
Q10 If Bajaj Allianz life insurance then which particular plan you would like to invest in
I ENDOWMENT PLAN a) Bajaj Allianz Invest Gain
b) Bajaj Allianz save Care Economy SP
c) Bajaj Allianz life time care
d) Bajaj Allianz Super Saver plan
II MONEY BACK PLAN i Bajaj Allianz Cash Gain plan
Option No of respondents Percentage
Invest gain plan 3 1035
Save care economy SP 6 2069
Life time care 7 2415
Super saver plan 3 1035
Cash gain plan 10 3446
TOTAL 29 100
Interpretation Out of 29 respondents 1035 of them plan to invest in Bajaj Allianz- Invest Gain 2069 wish to invest in Bajaj Allianz save Care Economy SP 2415 want to invest in Bajaj Allianz life time care 1035 in Bajaj Allianz Super Saver plan and 3446 prefer to invest in Bajaj Allianz Cash Gain plan
49
32) SIGNIFICANCE OF STUDY
Life insurance is one of the most rapidly growing sectors in India The main reason
behind the growth can attributed to the high population density improving economical
condition improving education level and improving awareness Due to these factors there
is still huge scope for growth in this sector Like any other business when the
opportunities are present everybody tends to enter the industries This growth hence
fetches the new competitors as well as new strategies from existing players To sustain in
any competitive industry the organization must adapt to existing strategies and adopt
new ones This study will focus on the analysis of Reliance Life Insurance in comparison
with the present scenario of Bajaj Allianz Life Insurance with respect to the Traditional
Plans of both the companyrsquos This will mainly cover the following aspects
To know about the awareness and popularity of various Traditional Plans offered
by Reliance Life Insurance and Bajaj Allianz Life Insurance
How Reliance Life Insurance can develop and sustain a good distribution
network
These will provide it benefit both in terms of better market coverage as well as better
penetration
50
33) SCOPE OF THE STUDY
1) This helps in finding out vast potential of insurance company
2) The study was conducted in National Capital Region (NCR) only
3) The number of respondents to be surveyed can be improved
4) This study was conducted by comparing the performances amp products of three private
amp government insurance players in insurance industry
5) This study was conducted to analyze the market stand of Reliance life insurance
Company limited and Bajaj Allianz Life Insurance Company Limited of India insurance
companies
6) This study is done to eliminate all the myths which people have in their minds
regarding Insurance Sector
51
34) OBJECTIVES
To have a detailed understanding of Reliance Life Insurance and Bajaj Allianz Life Insurance
To find out various reasons considered while investing in policies
To get knowledge about the market exposure and future prospects about Reliance Life Insurance
To know the perception of the consumers about the life insurance
To analyze the Traditional plans of Reliance Life Insurance and compare it with Bajaj Allianz
To know about the brand awareness of Reliance Life Insurance its customer preferences over Bajaj Allianz in the market
To study a proper knowledge about the life insurance industry
To understand the consumer choice while investing in policies
52
CHAPTER 4
DISCUSSION AND FINDINGS OF THE STUDY
FINDINGS OF THE STUDY RECOMMENDATION AND SUGGESTIONS CONCLUSION LIMITATIONS BIBLIOGRAPHY ANNEXUREQUESTIONNAIRE
53
41) FINDINGS OF THE STUDY
1) The survey reveals that still a large proportion of population is interested to invest in other forms of investment other than insurance as still most of them are unaware about the importance of insurance in their life
2) Basically people make varied form of investment for creating wealth to protect their families against pre-mature death and to protect income against disability sickness or critical illness
3) The main motive of the individuals investing is receives benefits US 1010D People generally consider insurance as a tax saving device
4) Mostly people prefer time to time form of investment as they are not willing to take high degree of risk
5) 72 of the respondents are preferred to invest in Traditional Plans
6) Most of the people prefer to make an annual investment up to a maximum of Rs20 000 per annum
7) When the product is like life insurance reputation of the company publicity of the company amp after sale services of the company matters a lot This means that people would choose that insurance company only where the quality of life advisors is satisfactory
8) Most people prefer to invest in Bajaj Allianz Life Insurance as compared to making an investment in Reliance Life Insurance
9) The most preferable Traditional plan of Reliance Life Insurance is Endowment Plan
10) The most preferable plan of Bajaj Allianz Life Insurance co is Cash Gain Plan
54
42) SUGGESTIONS amp RECOMMENDATIONS
Based on the observations of the study some suggestions for the organization are made as
follows
1) Quality of advisors is also as important as the quantity Thus company should go
mainly for qualified professionals
2) Company should increase its budget on publicity so that awareness can be increased
3) Clarity and transparency should be provided to the customer regarding various
products
4) Training sessions should be planned in advance so that schedule can be provided to
the advisor in advance
5) Apart from the Brand Positioning in urban area a strategy should be adopted by
Reliance to make its brand also near to middle level or high aspirant people because they
are the main source of the business in India
6) Awareness Camp to the sub urban area should be focused by Reliance
7) Some innovative technique or product is required in order to attract the consumer
43) LITERATURE REVIEW
55
1) Robi Elenekave has explained in detail why various retirement plans and pension plans donrsquot give the desired returns The main difficulty is the use of incorrect method for calculations done to find out the return on investment This is primarily due to wrong assumptions The study provides information about the various precautions which need to be considered before planning so that the desired results can be achieved
2) Another paper provides insight about how various financial sectors invest in bond market The study was how the different players investment different instruments according to the risk appetite and desired rate of return The study shows that life insurance sector mainly invests in government bond which are low return and low risk instrument The investment in government bond it shows that life insurance companies are more conservative in investment
3) K Subhash has presented the history of Indiarsquos life insurance industry in three stages before independence after independence and post liberalization which not only provides information but also help in analyzing the impact of these major changes The authors have also discussed the huge potential which exists in the rural India The insurance company must realize the importance of rural sector because the future lies there The author commented about the increasing share of private player in the existing market This confirms the availability of opportunity in this sector The paper also provides the importance of professional and focused approach which was given no importance
4) Tapen Sinha has discussed the various challenges and opportunities in the insurance market One of the very important factors which have been discussed in the study is the importance of developing new and better products As the scenario changes the need of an individual also changes so any organization must understand and fulfill these needs The new product development requires constant research so organization must also focus on it
5) Roger G Ibbotson discusses how financial planners and advisors have recently started to recognize that human capital must be taken into account when building optimal portfolios for individual investors Any investorrsquos human capital has a unique mortality risk However life insurance in its forms can hedge against this mortality risk Thus human capital affects both the optimal asset allocation and the optimal demand for life insurance This paper provides a unified framework based on human capital in order to enable individual investors to make both decisions jointly
6) Rakesh Niraj study tells how the flow of information in any organization is important For any organization to grow the flow of information must be good both upwards as well as ownwards The proper flow of information will also ensure proper flow of good and services from organization to customer and proper flow of information from customer to organization The information from customers will help the organization in providing better goods and services to the customer For the above purpose organization must ensure good channel partner who can provide the organization with correct feedback Hence it becomes very important for any organization to acquire good channel partners
56
7) Stephen P Robbins has discussed how group dynamics works in any organization The success of any organization depends on the success of its various teams and how these teams work together The book provides various techniques which can be used by any organization to get result from the team effort The conflict resolution is a major task in any group Various techniques which the organization can use in conflict resolution are also discussed Another important aspect covered is the importance of leadership in the organization The various forms of leadership have been discussed and the kinds of leadership which can be effective in particular situations are also discussed
8) R Wayne Mondy has discussed the importance of training and development in any organization The training provides skills to perform the current job where as the development involve learning beyond present need The various type of training are discussed which can be used according to the requirement Training and development are not only important for better performance of an individual but it also gives satisfaction The major factors which influence training and development are found to be management support commitment of trainee and trainer complexity of the organization The process of developing good training plans is also provided In another part author has discussed the importance of right man for right job The compensation strategies are also given which are very crucial for ant industry
9) Philip Kotler has discussed the importance of channels partners Better the channel partners better will be the delivery model Detailed discussion about how to design the channel structure so that all the requirements could be fulfilled is provided The various issues faced by the organization while managing the channels are also given When an organization has more than one channel it becomes very important that all the channels should be integrated in such a way that the organization get the best out of all At times due to the conflicting benefit of the different channels the conflict arise so various strategies to manage these issues is also discussed in the chapter
10) Michael J Etzel has written about the marketing of services The marketing of services is different from the goods because of the characteristic of service like intangibility inseparability heterogeneity etc Brief about pricing strategies is also given in case of services The authors have also given the impact of technological development on the services marketing The author has also given the importance of brand and after sales support in case of services as perception of the customers plays an important role In other part of the book the authors has described the importance of distribution channels and designing of the same A channel partner should be consider as partner according to discussion The legal complications associated with channels are also discussed These complications are necessary to take into the consideration while managing the channels The conflicting interest of channels both horizontally and vertically are also taken into the consideration
57
11) Boone has discussed about the importance of personal financial planning The concept of time value of money has also been elaborated The importance of creating and implementing budget is given under money management The other important concepts for financial planning like credit management and understanding taxes are also explained In one section the authors have discussed the importance of investment and what should be the major considerations while making any investment The considerations include the risk associated with the investment return on the investment etc The importance and benefits of life insurance has also been given The discussion also includes various legal aspects associated with life insurance The overview of retirement planning is also given which includes importance and benefit of retirement planning Various tools for proper retirement planning are also discussed
58
44) CONCLUSION
1) The customers are very much sensitive towards their investment They would like to invest only in that insurance company which enjoys good public image along with quality good services
2) The result of the survey conducted shows that Bajaj Allianz Life Insurance is the leader in life insurance industry but Reliance Life Insurance and other private players are giving it a close competition
3) The motive of the people behind investing in life insurance is the tax benefits that they would receive under sec 80C and 1010D
4) In Life Insurance industry the after sales support of the company is as important as the quality of life advisors
59
45) LIMITATIONS
There were some limitations faced during the study as discussed below
Since the study was taken for two months so there was a constraint of time and effort
The study was limited only to some of the Delhi regions so the results may be biased
Questionnaire was given to 125 people however only 50 responded to it which is very small for such type of study
The biasness of consumer or responses error cannot be eliminated
Most of the people are not aware about the Importance and the necessity of insurance in their life
Adverse perception of the people towards insurance sector- People consider insurance as a tax saving device
Lack of awareness about the earning opportunity in the insurance sector
60
46) BIBLIOGRAPHY
wwwreliancelifeinsurancecom
wwwadagroupcom
wwwirdacom
wwwbajajallianzlifeinsurancecom
wwwallianzbajajcom
47) ANNEXURE
61
QUESTIONNAIRE
A comparative analysis of consumer perception regarding Traditional plans of Reliance Life Insurance with that of Bajaj Allianz Life Insurance
NAME ___________________________
PERSONAL DETAILS
1) AGE_________________
1) OCCUPATION______________
2) INCOME___________________
3) FAMILY MEMBERS_________
Q1 Where do you prefer to investa) Fixed deposits b) Stock c) Mutual funds d) Insurance e) Others
Q2 What are your priorities for investmenta) Protecting your family against pre-mature death b) Wealth creation c) Retirement needs d) Child education and marriage e) Protect income against disability sickness or critical illness
Q3 What is your main motive behind investing in life insurancea) Tax benefit b) Savings c) Risk cover
Q4 What kind of investment do you prefera) High risk high gain b) Low risk low gain c) Moderate d) Vary times to times
62
Q5Are you interested to invest in Traditional Plansa) Yes b) No
Q6 What is your level of annual investmenta) below 20000 b) 20000-40000 c) above 40000
Q7 What factors would you consider most important before choosing an insurance company
a) publicity of the company b) reputation of the company c) quality of life advisors d) after sales-supporting of the company
Q8 Which life insurance company would you prefer the most to invest ina) Reliance life insurance b) Bajaj Allianz life insurance
Q9 If reliance life insurance then which particular plan you would like to invest ina) Reliance Term Plan b) Reliance Whole Life Plan c) Reliance Endowment Plan d) Reliance Special Endowment Plan
Q10 If Bajaj Allianz life insurance then which particular plan you would like to invest in
I ENDOWMENT PLAN
a) Bajaj Allianz Invest Gain
b) Bajaj Allianz save Care Economy SP
c) Bajaj Allianz life time care
d) Bajaj Allianz Super Saver plan
II MONEY BACK PLAN
a) Bajaj Allianz Cash Gain plan
63
64
- COMPANY PROFILE
- ABOUT RELIANCE LIFE INSURANCE
- HISTORY
- Reliance Capital Limited announced the launch of its life insurance business on February 1 2006 This was after obtaining the required regulatory approvals from the Registrar Of Companies and the Insurance Regulatory and Development Authority
- It was in August 2005 that the ball was set rolling when Reliance Capital Limited the financial arm of Reliance ndash Anil Dhirubhai Ambani Group (ADAG) ndash announced the requisition of 100 shareholding in AMP Sanmar Life Insurance Company Limited and the formal transfer of shares took place in October 2005 The company will issue all policy contracts under the Reliance Life Insurance Company limited name All the existing policy contracts also stand transferred to the Reliance Life Insurance entity with all the original contractual terms and commitments intact
- CORE VALUES
- Reliance Life Insurance Company Limited has some core values which are listed as follows
- Vision bull To be the first choice insurer for customers bull To be the preferred employer for staff in the insurance industry bull To be the number one insurer for creating shareholder value
- Mission As a responsible customer focused market leader we will strive to understand the insurance needs of the consumers and translate it into affordable products that deliver value for money
- 12) TRADITIONAL PLANS OF THE COMPANY
- 12A )TRADITIONAL PLAN OF RELIANCE LIFE INSURANCE-
- Life insurance products are designed to suit the requirements of customers Fundamentally the product provide for
- In every product to a certain degree risk cover is imperative for it to fall under the category of insurance Based on the coverage of the product the premiums are calculated and the customer pays accordingly In order to suggest the right product it is essential for an agent to understand the requirements of the customer well
- The traditional plans of the company have the following features-
- Fixed Tenure
- Potential for better returns
- Transparency
- Flexibility in investment
- Flexibility to invest more
- Flexibility to skip the premium
- Flexibility to choose the cover
- High liquidity
- Age term and sum assured decide the amount of premium
- Top- ups and switches are not allowed
- Reliance Life Insurance Company Limited has offered 9
- 1) Reliance term plan-
- 2) Reliance Whole Life Plan -
- 3) Reliance Endowment Plan -
- 4) Reliance Special Endowment Plan -
- 13) INDUSTRY PROFILE
- MEANING OF INSURANCE
- Insurance may be described as a social device to reduce or eliminate risk of loss to life and property Insurance is a collective bearing of risk Insurance is a financial device to spread the risks and losses of few people among a large number of people as people prefer small fixed liability instead of big uncertain and changing liability
- Insurance can be defined as a ldquolegal contract between two parties whereby one party called insurer undertakes to pay a fixed amount of money on the happening of a particular event which may be certain or uncertainrdquo The other party called insured pays in exchange a fixed sum known as premium
- Insurance is desired to safeguard oneself and onersquos family against possible losses on account of risks and perils It provides financial compensation for the losses suffered due to the happening of any unforeseen events
- IMPORTANCE OF INSURANCE
- Insurance services play predominant role in the process of financial Intermediary Today insurance industry is one of the most growing sectors in India There is lot of potential in the Indian Insurance Industry
- There are many issues which require study The scope of the study of Insurance industry of India would be very great as there are ongoing Developments in the industry after the opening of the sector
- Right now the insurance industry has great opportunities in a country like India or China which huge population Also the penetration of insurance in India is very low in both life and non-life segment so there is lot potential to be tapped Before starting the discussion on insurance industry and related issues we have to start with the basics of insurance So first we understand what is insurance How the word lsquoinsurancersquo is different from the word lsquoassurancersquo Etc
- HISTORY OF INSURANCE
- The concept of insurance is believed to have emerged almost 4500 years ago in the ancient land of Babylonia where traders used to bear risk of the carvan by giving loans which were later repaid with interest when the goods arrived safely
- The concept of insurance as we know today took shape in 1688 at a place called Lloydrsquos Coffee House in London where risk bearers used to meet to transact business This coffee house became so popular that Lloydrsquos became the one of the first modern insurance companies by the end of the eighteenth century
- Marine insurance companies came into existence by the end of the eighteenth century These companies were empowered to write fire and life insurance as well as marine The Great Fire of London in 1966 caused huge loss of property and life With a view to providing fire insurance facilities
- Dr Nicholas Barbon set up in 1967 the first fire insurance company known as the Fire office
- Life insurance in its modern form came to India from England in 1818 The Oriental Life Insurance Company was the first insurance company to be set up in India to help the widows of European community The insurance companies which came into existence between 1818 and 1869 treated
- Indian lives as subnormal and charged an extra premium of 15 to 20 per cent The first Indian insurance company the Bombay Mutual Life
- Assurance Society came into existence in 1870 to cover Indian lives at normal rates
- The Insurance Act 1938 the first comprehensive legislation governing both life and non-life branches of insurance were enacted to provide strict state control over insurance business This amended insurance Act looked into investments expenditure and management of these companies
- By the mid- 1950s there were 154 Indian insurers 16 foreign insurers and 75 provident societies carrying on life insurance business in India Insurance business flourished and so did scams irregularities and dubious investment practices by scores of companies As a result the government decided to nationalize the life assurance business in India The Life Insurance
- Corporation of India (LIC) was set up in 1956 The nationalization of life insurance was followed by general insurance in 1972
- MEANING OF LIFE INSURANCE
- There are three parties in a life insurance transaction the insurer the insured and the owner of the policy (policyholder) although the owner and the insured are often the same person
- Another important person involved in a life insurance policy is the beneficiary The beneficiary is the person or persons who will receive the policy proceeds upon the death of the insured
- Life insurance may be divided into two basic classes ndash term and permanent
- HISTORY OF LIFE INSURANCE
- Risk protection has been a primary goal of humans and institutions throughout history Protecting against risk is what insurance is all about
- Over 5000 years ago in China insurance was seen as a preventative measure against piracy on the sea Piracy in fact was so prevalent that as a way of spreading the risk a number of ships would carry a portion of another ships cargo so that if one ship was captured the entire shipment would not be lost
- In another part of the world nearly 4500 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
- Life insurance came about a little later in ancient Rome where burial clubs were formed to cover the funeral expenses of its members as well as help survivors monetarily With Romes fall around 450 AD most of the concepts of insurance were abandoned but aspects of it did continue through the Middle Ages particularly with merchant and artisan guilds These provided forms of member insurance covering risks like fire flood theft disability death and even imprisonment
- During the feudal period early forms of insurance ebbed with the decline of travel and long-distance trade But during the 14th to 16th centuries transportation commerce and insurance would again reemerge
- And similar to ancient Rome burial societies were formed in the Buddhist period to help families build houses and to protect widows and children
- Modern Insurance
- Illegal almost everywhere else in Europe life insurance in England was vigorously promoted in the three decades following the Glorious Revolution of 1688 The type of insurance we see today owes its roots to 17th century England Lloyds of London or as they were known then Lloyds Coffee House was the location where merchants ship owners and underwriters met to discuss and transact business deals
- While serving as a means of risk-avoidance life insurance also appealed strongly to the gambling instincts of Englands burgeoning middle class
- Gambling was so rampant in fact that when newspapers published names of prominent people who were seriously ill bets were placed at Lloydrsquos on their anticipated dates of death Reacting against such practices 79 merchant underwriters broke away in 1769 and two years later formed a ldquoNew Lloydrsquos Coffee Houserdquo that became known as the ldquoreal Lloydrsquosrdquo Making wagers on peoples deaths ceased in 1774 when parliament forbade the practice
- Insurance moves to America
- The US insurance industry was built on the British model The year 1735 saw the birth of the first insurance company in the American colonies in
- Charleston SC The Presbyterian Synod of Philadelphia in 1759 sponsored the first life insurance corporation in America for the benefit of ministers and their dependents And the first life insurance policy for the general public in the United States was issued in Philadelphia on May 22 1761
- But it wasnt until 80 years later (after 1840) that life insurance really tookoff in a big way The key to its success was reducing the opposition from religious groups
- In 1835 the infamous New York fire drew peoples 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
- With the creation of the automobile public liability insurance which first made its appearance in the 1880s gained importance and acceptance
- More advancement was made to insurance during the process of industrialization In 1897 the British government passed the Workmens Compensation Act which made it mandatory for a company to insure its employees against industrial accidents
- During 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 most labor 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
- BENEFITS OF LIFE INSURANCE
- 1) Risk cover -Life Insurance contracts allow an individual to have a risk cover against any unfortunate event of the future
- 2) Tax Deduction -Under section 80C of the Income Tax Act of 1961 one can get tax deduction on premiums up to one lakh rupees Life Insurance policies thus decrease the total taxable income of an individual
- 3) Loans -An individual can easily access loans from different financial institutions by pledging his insurance policies
- 4) Retirement Planning -What had provided protection against the financial consequences of premature death may now be used to help them enjoy their retirement years
- 5) Educational Needs -Similar to retirement planning the cash values that flow from ones life insurance schemes can be utilized for educational needs of the insurer or his children
- The Life Insurance Industry has an enviable track record among public sector units It has a Consistent profit and dividend paying record accompanied by a steady growth in its financial resources Through investments in the Government sector and socially- oriented sectors the Industry has contributed immensely to the nations development The industry is recognized as one of the largest financial Institutions in the country The ventures initiated by the industry in the areas of Mutual Fund
- Housing Finance has done exceedingly well in recent years To protect the countrys foreign exchange reserves the reinsurance arrangement are so organized that maximum retention is made possible within the country while at the same time protecting interests of the policy holders
- 22) CURRENT SCENARIO OF RELIANCE LIFE INSURANCE
- RLIC offers wide range of innovative life insurance products targeted at individuals and groups It offers need based products that caters to four distinct segments namely protection child retirement and investment plans RLIC is committed to emerge as a transnational Life Insurer of global scale and standard
- CH - 3) RESEARCH METHODOLOGY
- RESEARCH DESIGN-
- SAMPLING TECHNIQUES-
- THE PRIMARY OBJECTIVEOF THE STUDY-
- 34) OBJECTIVES
- 7) Some innovative technique or product is required in order to attract the consumer
- 45) LIMITATIONS
- 46) BIBLIOGRAPHY
-
1048729 Features -a) Purely a term planb) Entry age minimum 18 years and maximum 65 yearc) Maximum premium paying term is 30 yeard) Loan facility NAe) Maturity amount = Sum assured
2) Reliance Whole Life Plan -This insurance policy is designed for people who do not wish to avail of any benefits themselves but wish to create an immediate estate to protect their family by availing of insurance cover on their life at a very low cost
1048729 Features -a) It is a whole life insurance policy with profitsb) Low cost life coverc) Maturity age is 85 year or 99 years last birthday as chosend) Maturity amount = Sum assured + Vested bonuse) Tax benefit is available
3) Reliance Endowment Plan -Reliance Life Insurancersquos Reliance Endowment Plan is the key to all your financial needs It is an inexpensive and easy way to protect you your family or your businessIn a nutshell this plan will keep you financially prepared for all the special occasions in your life - your daughterrsquos wedding your childrsquos university education or even a new office for your business - by eliminating the burden that a shortage of money createsIn the event of your untimely death Reliance Endowment Plan will also assist your loved ones through this difficult time by the financial support that it providesReliance Endowment Plan also gives you the additional benefit of participating in the companyrsquos profits which you will receive at the end of the policy period
1048729 Features -a) Entry age minimum is 5 year and maximum 65 yearb) Maturity age minimum is 18 year and maximum 75 yearc) Minimum premium paying term is 5 year and maximum 35 year in case of regular and in case of single 15 yeard) Minimum sum assured is Rs 25000 or as determined by the minimum premiume) Maximum sum assured is Rs 5 00000 (entry age below 18 years and no limit for entry age 18 and above)f) Premium mode annual half yearly quarterly and monthly (by salary deduction only)g) Loan up to 90 of the surrender value of the policyh) Maturity amount = Guaranteed sum assured + Reversionary bonus
4) Reliance Special Endowment Plan -
14
This insurance policy is designed for people who wish to combine savings with extended security The unique feature of this policy is that life protection continues for five years after you have stopped the payment of premium Payment of sum assured at the end of premium paying term and extension of life cover thereafter for the full sum assured for a period of 5 years are characteristics of the policyThis plan also participates in the profits
1048729 Features -a) Entry age minimum 12 year and maximum 65 yearb) Minimum sum assured is Rs 25000c) Minimum premium paying term is 10 year and maximum 40 yeard) Unique feature of this policy is that five year life protection continues after you have stopped the payment of premiume) Tax benefit is availablef) Under this policy bonus is compounded yearlyg) Loan facility is availableh) Maturity amount = Full sum assured before maturity date +Vested bonus at the time of maturity date
15
12 B) TRADITIONAL PLANS OF BAJAJ ALLIANZ LIFE INSURANCE
I ENDOWMENT PLAN
Saving plan which offer bonuses are excellent long term plan with complete safety Our products offer additional benefits which include 4 times life cover at a little extra cost limited premium payment terms and compounded reversionary bonuses making it a very good long term investment
1 Bajaj Allianz Invest GainInvest Gain is a specially designed plan that offers a unique combination of benefits that help you develop a sound financial portfolio for your family
4 Times Life Cover at a little extra cost
Limited premium payment option available
Additional Benefits
a) Accidental Death Benefit and Disability Benefit b) Critical Illness Benefit and Hospital Cash Benefit c) Family Income Benefit In case of death or accidental total permanent disability of insured all future premiums are waived and 1 of the sum assured is paid monthly
Invest Gain Save Care Economy SP Life Time Care
Super Saver
16
2 Bajaj Allianz save Care Economy SP
A One-time payment Investment plan that provides for savings with high risk cover for 10 years and also participates in the profits of the company It offers you high risk cover with easy liquidity and high returns
a) A single premium endowment plan that participates in the profitsb) 10 year Investment planc) Benefits payable on maturityc) Loans available
17
3 Bajaj Allianz life time care
A whole life plan which provides survival benefits at the age of 80 thereby making sure you are financially secure at the time when you need it the most Additional Benefits
a) Accidental Death Cover and Disability Cover b) Critical Illness Cover and Hospital Cash Cover c) Waiver of Premium Benefit
4Bajaj Allianz Super Saver plan
Bajaj Allianz Super Saver is a regular premium endowment plan which helps you save regular amounts for a safer tomorrow It also provides you with extra benefits of Guaranteed Additions to your sum assured at the end of each policy year
18
II MONEY BACK PLAN
Money back plans are Traditional Insurance plans that provide the investor with returns at regular stages of life
CashGain
1)Bajaj Allianz Cash Gain plan
A Money back plan which guarantees 125 payout + bonuses
Quadruple life cover
5 easy payouts which give upto 125 + bonuses
Additional Benefitsa) Accidental Death Benefit and Disability Benefitb) Critical Illness Benefit and Hospital Cash Benefitc) Family Income Benefit In case of death or accidental total permanent disability of insured all future premiums are waived and 1 of the sum assured is paid monthly
19
20
13) INDUSTRY PROFILE
MEANING OF INSURANCE
Insurance may be described as a social device to reduce or eliminate risk of loss to life and property Insurance is a collective bearing of risk Insurance is a financial device to spread the risks and losses of few people among a large number of people as people prefer small fixed liability instead of big uncertain and changing liability
Insurance can be defined as a ldquolegal contract between two parties whereby one party called insurer undertakes to pay a fixed amount of money on the happening of a particular event which may be certain or uncertainrdquo The other party called insured pays in exchange a fixed sum known as premiumInsurance is desired to safeguard oneself and onersquos family against possible losses on account of risks and perils It provides financial compensation for the losses suffered due to the happening of any unforeseen events
IMPORTANCE OF INSURANCE
Insurance constitutes one of the major segments of the financial marketInsurance services play predominant role in the process of financial Intermediary Today insurance industry is one of the most growing sectors in India There is lot of potential in the Indian Insurance Industry
There are many issues which require study The scope of the study of Insurance industry of India would be very great as there are ongoing Developments in the industry after the opening of the sectorOne of the major issues is the effects on LIC after the entry of private players in the market Though market share of LIC has been affected it has improved in terms of efficiency
There are number of other hot topics like penetration of Health Insurance Rural marketing of insurance new distribution channels new product ranges insurance brokersrsquo regulation incentive scheme of development officers of LIC etc So it offers lot of scope for studying the insurance industryRight now the insurance industry has great opportunities in a country like India or China which huge population Also the penetration of insurance in India is very low in both life and non-life segment so there is lot potential to be tapped Before starting the discussion on insurance industry and related issues we have to start with the basics of insurance So first we understand what is insurance How the word lsquoinsurancersquo is different from the word lsquoassurancersquo Etc
21
HISTORY OF INSURANCE
The concept of insurance is believed to have emerged almost 4500 years ago in the ancient land of Babylonia where traders used to bear risk of the carvan by giving loans which were later repaid with interest when the goods arrived safely
The concept of insurance as we know today took shape in 1688 at a place called Lloydrsquos Coffee House in London where risk bearers used to meet to transact business This coffee house became so popular that Lloydrsquos became the one of the first modern insurance companies by the end of the eighteenth centuryMarine insurance companies came into existence by the end of the eighteenth century These companies were empowered to write fire and life insurance as well as marine The Great Fire of London in 1966 caused huge loss of property and life With a view to providing fire insurance facilitiesDr Nicholas Barbon set up in 1967 the first fire insurance company known as the Fire office
Life insurance in its modern form came to India from England in 1818 The Oriental Life Insurance Company was the first insurance company to be set up in India to help the widows of European community The insurance companies which came into existence between 1818 and 1869 treatedIndian lives as subnormal and charged an extra premium of 15 to 20 per cent The first Indian insurance company the Bombay Mutual LifeAssurance Society came into existence in 1870 to cover Indian lives at normal rates
The Insurance Act 1938 the first comprehensive legislation governing both life and non-life branches of insurance were enacted to provide strict state control over insurance business This amended insurance Act looked into investments expenditure and management of these companiesBy the mid- 1950s there were 154 Indian insurers 16 foreign insurers and 75 provident societies carrying on life insurance business in India Insurance business flourished and so did scams irregularities and dubious investment practices by scores of companies As a result the government decided to nationalize the life assurance business in India The Life InsuranceCorporation of India (LIC) was set up in 1956 The nationalization of life insurance was followed by general insurance in 1972
22
MEANING OF LIFE INSURANCE
There are three parties in a life insurance transaction the insurer the insured and the owner of the policy (policyholder) although the owner and the insured are often the same person
Another important person involved in a life insurance policy is the beneficiary The beneficiary is the person or persons who will receive the policy proceeds upon the death of the insured
Life insurance may be divided into two basic classes ndash term and permanent
Term life insurance provides for life insurance coverage for a specified term of years for a specified premium The policy does not accumulate cash value
Permanent life insurance is life insurance that remains in force until the policy matures unless the owner fails to pay the premium when due
Whole life insurance provides for a level premium and a cash value table included in the policy guaranteed by the company The primary advantages of whole life are guaranteed death benefits guaranteed cash values fixed and known annual premiums and mortality and expense charges will not reduce the cash value shown in the policy
Universal life insurance (UL) is a relatively new insurance product intended to provide permanent insurance coverage with greater flexibility in premium payment and the potential for a higher internal rate of return A universal life policy includes a cash account Premiums increase the cash account If you want insurance protection only and not a savings and investment product buy a term life insurance policy
If you want to buy a whole life universal life or other cash value policy plan to hold it for at least 15 years Canceling these policies after only a few years can more than double your life insurance costs
23
HISTORY OF LIFE INSURANCE
Risk protection has been a primary goal of humans and institutions throughout history Protecting against risk is what insurance is all aboutOver 5000 years ago in China insurance was seen as a preventative measure against piracy on the sea Piracy in fact was so prevalent that as a way of spreading the risk a number of ships would carry a portion of another ships cargo so that if one ship was captured the entire shipment would not be lostIn another part of the world nearly 4500 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
Life insurance came about a little later in ancient Rome where burial clubs were formed to cover the funeral expenses of its members as well as help survivors monetarily With Romes fall around 450 AD most of the concepts of insurance were abandoned but aspects of it did continue through the Middle Ages particularly with merchant and artisan guilds These provided forms of member insurance covering risks like fire flood theft disability death and even imprisonment
During the feudal period early forms of insurance ebbed with the decline of travel and long-distance trade But during the 14th to 16th centuries transportation commerce and insurance would again reemergeInsurance in India can be traced back to the Vedas For instance yogakshema the name of Life Insurance Corporation of Indias 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
And similar to ancient Rome burial societies were formed in the Buddhist period to help families build houses and to protect widows and children
Modern InsuranceIllegal almost everywhere else in Europe life insurance in England was vigorously promoted in the three decades following the Glorious Revolution of 1688 The type of insurance we see today owes its roots to 17th century England Lloyds of London or as they were known then Lloyds Coffee House was the location where merchants ship owners and underwriters met to discuss and transact business dealsWhile serving as a means of risk-avoidance life insurance also appealed strongly to the gambling instincts of Englands burgeoning middle classGambling was so rampant in fact that when newspapers published names of prominent people who were seriously ill bets were placed at Lloydrsquos on their anticipated dates of death Reacting against such practices 79 merchant underwriters broke away in 1769 and
24
two years later formed a ldquoNew Lloydrsquos Coffee Houserdquo that became known as the ldquoreal Lloydrsquosrdquo Making wagers on peoples deaths ceased in 1774 when parliament forbade the practice
Insurance moves to AmericaThe US insurance industry was built on the British model The year 1735 saw the birth of the first insurance company in the American colonies inCharleston SC The Presbyterian Synod of Philadelphia in 1759 sponsored the first life insurance corporation in America for the benefit of ministers and their dependents And the first life insurance policy for the general public in the United States was issued in Philadelphia on May 22 1761But it wasnt until 80 years later (after 1840) that life insurance really tookoff in a big way The key to its success was reducing the opposition from religious groups
In 1835 the infamous New York fire drew peoples 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
With the creation of the automobile public liability insurance which first made its appearance in the 1880s gained importance and acceptanceMore advancement was made to insurance during the process of industrialization In 1897 the British government passed the Workmens Compensation Act which made it mandatory for a company to insure its employees against industrial accidents
During 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 most labor 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
25
BENEFITS OF LIFE INSURANCE
1) Risk cover -Life Insurance contracts allow an individual to have a risk cover against any unfortunate event of the future
2) Tax Deduction -Under section 80C of the Income Tax Act of 1961 one can get tax deduction on premiums up to one lakh rupees Life Insurance policies thus decrease the total taxable income of an individual
3) Loans -An individual can easily access loans from different financial institutions by pledging his insurance policies
4) Retirement Planning -What had provided protection against the financial consequences of premature death may now be used to help them enjoy their retirement yearsMoreover the cash value can be used as an additional income in the old age
5) Educational Needs -Similar to retirement planning the cash values that flow from ones life insurance schemes can be utilized for educational needs of the insurer or his children
26
ROLE OF LIFE INSURANCE IN THE GROWTH OF THE ECONOMY
The Life Insurance Industry has an enviable track record among public sector units It has a Consistent profit and dividend paying record accompanied by a steady growth in its financial resources Through investments in the Government sector and socially- oriented sectors the Industry has contributed immensely to the nations development The industry is recognized as one of the largest financial Institutions in the country The ventures initiated by the industry in the areas of Mutual Fund
Housing Finance has done exceedingly well in recent years To protect the countrys foreign exchange reserves the reinsurance arrangement are so organized that maximum retention is made possible within the country while at the same time protecting interests of the policy holders
27
ROLE OF IRDA
MISSION
ldquoTo protect the interests of the policyholders to regulate promote
and ensure orderly growth of the insurance industry and for matters
connected therewith or incidental theretordquo
The Insurance Act 1938 had provided for setting up of the Controller of Insurance to act
as a strong and powerful supervisory and regulatory authority for insurance Post
nationalization the role of Controller of Insurance diminished considerably in
significance since the Government owned the insurance companies But the scenario
changed with the private and foreign companies foraying in to the insurance sector This
necessitated the need for a strong independent and autonomous Insurance Regulatory
Authority was felt As the enacting of legislation would have taken time the then
Government constituted through a Government resolution an Interim Insurance
Regulatory Authority pending the enactment of a comprehensive legislation
The Insurance Regulatory and Development Authority Act 1999 is an act to provide for
the establishment of an Authority to protect the interests of holders of insurance policies
to regulate promote and ensure orderly growth of the insurance industry and for matters
connected therewith or incidental thereto and further to amend the Insurance Act 1938
the Life Insurance Corporation Act 1956 and the General insurance Business
(Nationalization) Act 1972 to end the monopoly of the Life Insurance Corporation of
India (for life insurance business) and General Insurance Corporation and its subsidiaries
(for general insurance business) The act extends to the whole of India and will come
into force on such date as the Central Government may by notification in the Official
Gazette specify Different dates may be appointed for different provisions of this Act
28
The Act has defined certain terms some of the most important ones are as follows
Appointed day means the date on which the Authority is established under the act
Authority means the established under this Act Interim Insurance Regulatory Authority
means the Insurance Regulatory Authority set up by the Central Government through
Resolution No 17(2) 94-lns-V dated the 23rd January 1996
Words and expressions used and not defined in this Act but defined in the Insurance Act
1938 or the Life Insurance Corporation Act 1956 or the General Insurance Business
(Nationalization) Act 1972 shall have the meanings respectively assigned to them in
those Acts A new definition of Indian Insurance Company has been inserted Indian
insurance company means any insurer being a company
(a) Which is formed and registered under the Companies Act 1956
(b) in which the aggregate holdings of equity shares by a foreign company either by
itself or through its subsidiary companies or its nominees do not exceed twenty-six
percent paid up capital in such Indian insurance company
(c) Whose sole purpose is to carry on life insurance business general insurance business
or re-insurance business
29
CURRENT SCENERIO
21) CURRENT SCENERIO OF THE INSURANCE INDUSTRY
With largest number of life insurance policies in force in the world insurance happens to be a mega opportunity in India Itrsquos a business growing at the rate of 15-20 per cent annually and presently is of the order of Rs 450 billion Together with banking services it adds about 7 per cent to the countryrsquos GDP Gross premium collection is nearly 2 per cent of GDP and funds available with LIC for investment are 8 per cent of GDP
Yet nearly 80 percent of Indian population is without life insurance cover while health insurance and non-life insurance continues to be below international standards And this part of the population is also subject to weak social security and pension systems with hardly any old age income security This it is an indicator that growth potential for the insurance sector is immense A well-develop and evolved insurance sector is needed for economic development as it provides long term funds for infrastructure development and at the same time strengthens the risk taking ability It is estimated that over the next ten years India would require investments of the order of one trillion US dollar The insurance sector to some extent can enable investment in infrastructure development to sustain economic growth of the country Insurance is a federal subject in India There are two legislation that govern the sector - The Insurance Act-1938 and The IRDA Act-1999
In India insurance is generally considered as a tax-saving device instead of its other implied long term financial benefits Indian people are prone to investing in properties and gold followed by bank deposits They selectively invest in shares also but the percentage is very small Even to this day Life Insurance Corporation of India dominates India insurance sector With the entry of private sector players backed by foreign expertise Indian insurance market has become more vibrant Business is becoming increasingly vulnerable due to wide variety of risk particularly after September 11 2001 disaster in which twin tower located in the hearts of New York city were crashed by terrorist attack resulting in loss of 6000 human lives as well as financial loss to the extent of $45 billion The impact of this terrorist attack has created new horizon of risk to the business world today
However rapid changes in the global economy development of technology and e-business already gathered momentum Increased dependency on technology has originated new risks that have resulted in well-published incidents Computer hackers obtaining credit card information from visa and Power-Gen the love bug virus cyber extortion web content liability professional errors and omissions computers and other crimes and activities such as terrorism kidnapping and companyrsquos executive and extortion of money commercial liability etc have significant impact on business resulting in extreme financial loss commercial embarrassment or regulatory implications
Corporation insurancerisk managers under the circumstances have to demand increasingly complex insurance products They have to be more attentive and
30
knowledgeable about emerging risks how those risks are managed effectively and efficiently and how they could ultimately affect a companyrsquos financial situation and therefore its position in the market place In short how such risks are managed and can give to an insured a competitive advantage
In the changing times adoption of e-commerce into business models the integration of web-based communication and data transfer capabilities into the business operations and leveraging of advanced network and technology architecture for maximum benefit are the new horizon of the risks For the corporate insurancerisks managers these new exposure-cyber-risks-can lead to cyber losses widening the interpretation of what constitute insure property damage particularly as it relates to information technology and dataAll the while organizations are tremendous pressure to reduce expenses and increase profit margin and cannot afford to suffer a property loss of business interruption due to any cause (risk) How a company identifies quantifies qualifies and manages these new risks exposure in addition to the well-known tradition risks is becoming an important factor in creating shareholders value This often means changing the way Everyone in the organization have to think about risk
Insurance managers are seeing price levels (premium) continue to rise-albeit modestly-in todayrsquos primarily commercial property and reinsurance markets They are demanding that insurers improve their risk assessment and quantification offerings so that an insured may avail the benefit in cost (premium rate) on account of well-managed riskThe good news for insurance managers is that as the economy evolves insurers are increasingly matching that evaluation with new products services and capabilities due to opening up the insurance market to the private players
Insurers who are truly listening to their customers and striving to be more in tune with their needs are responding to the fast changing corporate insurance and risk management landscape They are listening to their customers They are making fresh approaches to address the new challenges faced by insured organization by designing the new products as per the needs Insurers are providing value added services to insured to protect the value created by the business
Insurers are increasingly required to develop and expand their information technology platforms to ensure that the vast amount of data they collect about their customers Insurancerisk portfolio can easily and seamlessly be transformed into valuable risk management information To help their customers insurers should make better-informed decisions They must be able to swiftly deliver this data to their customers (insured) anywhere in the world Insurer are also discovering that risk assessment have to be customized to meet policyholdersrsquo new exposures and needs The insurance industry is stepping up and addressing these challenges in several different ways
31
22) CURRENT SCENARIO OF RELIANCE LIFE INSURANCE
RLIC offers wide range of innovative life insurance products targeted at individuals and groups It offers need based products that caters to four distinct segments namely protection child retirement and investment plans RLIC is committed to emerge as a
transnational Life Insurer of global scale and standard
Reliance Life Insurance Company Limited (RLIC) is amongst the fastest growing life insurance companies in India It is also amongst the top four private sector life insurance companies in India (As on FY 2008-2009)
As on March 31 2009 RLIC has an annualized premium of Rs 30 billion with a market share of 103 It has leapfrogged on the growth path and has reached the 4 million policy mark in a short span of within 3 years RLIC has a strong distribution network of 1145 branches with more than 149000 agents
32
Insurancersquos Market Share in Comparison of Other Private company
If we look at the status of Reliance Life Insurancersquos market share in comparison of other
private company in comparison of premium earned-
If we talk the growth of Insurance industryrsquos private players in recent years the data will
reflect-
CH - 3) RESEARCH METHODOLOGY
33
RESEARCH DESIGN-
COMPARITIVE STUDY- A comparative study has been undertaken to compare the traditional Plans of Reliance Life Insurance with that of Bajaj Allianz life insurance
DATA TYPE
INTRODUCTION - Any organization whether big or small private or public needs different type of information to know its popularity I have gathered secondary data and primary data and collected information from the combination of these two data
PRIMARY DATA - Primary data collection method was decided for observing working of the company and approaching the customers directly face to face A great care was taken while collecting the primary data to answer that it is relevant accurate current and unbiased
SECONDARY DATA - Secondary data collection method was used by referring to various websites books and newspapers for collecting information regarding the project under study Secondary data consist of the information that already exists somewhere else for some another purpose
SAMPLING TECHNIQUES-
SAMPLE SIZE- A sample size of 50 was taken to be analyzed
SAMPLE LOCATION-Various sectors of Kamla Nagar Civil lines Mukherji Nagar Model Town and selected areas of Delhi
SAMPLING PROCESS - Convenient sampling was used to overcome the time and money constraints that could have been faced by us while collecting the data The customers were contacted face to face directly and also by way of telephonic conversation with them
ANALYTICAL TOOLS - The data collected were arranged accordingly and statistical tools like bar graphs and pie-charts were used to analyze and present the data
RESEARCH INSTRUMENT USED-
34
SAMPLING MEDIA - Printed questionnaires consisting several questions were asked to have an idea of customers view about Reliance Life Insurance plans followed by personal questions
FIELD WORK - Rigorous field work was undertaken to locate the interested and potential respondents to fulfill the objectives of the study
THE PRIMARY OBJECTIVEOF THE STUDY -
The primary objective of the research study is to have a detailed analysis of Reliance Life Insurance bringing in focus the future prospects of the (Anil Dhirubhai Ambani group) with relevance to the customer perception regarding the various plans and products offered by Reliance Life Insurance
31) DATA ANALYSIS AND INTERPRETATION
35
PERSONAL DETAILS
1) AGE a) 18-30b) 31-50c) 51-65
AGE NO OF RESPONDENTS PERCENTAGE
18-30 21 42
31-50 19 38
51-65 10 20
TOTAL 50 100
INTERPRETATION-The bar graph reveals that 42 of the respondents belong to the age group of 18-30 years 38 lies in the age group of 31-50 years and 20 of them lie in the age group of 51-65 years
2) OCCUPATION
4238
20
05
1015202530354045
NO
O
F
RE
SP
ON
DE
NT
S
18 to 30 31 to 50 51 to 65
AGE (in year)
AGE WISE CLASSIFICATION
36
a) Serviceb) Businessc) Professiond) Housewifee) Retired
OPTION NO OF RESPONDENTS PERCENTAGE
Service 16 32
Business 14 28
Profession 5 10
Housewife 8 16
Retired 7 14
TOTAL 50 100
INTERPRETATION-The above bar graph reveals that 32 of the total respondents were servicemen 28 of them belonged to the business class 10 were professionals 16 were housewives and 14 of the total respondents fall in the retired category
3) INCOME
32
28
10
16
14
0
5
10
15
20
25
30
35
Service Business Profession Housewife Retired
OCCUPATION
OCCUPATION WISE CLASSIFICATION
37
a) 150000-300000
b) 300000-500000
c) Above 500000
OPTION NO OF RESPONDENTS PERCENTAGE
150000-300000 24 48
300000-500000 14 28
Above 500000 12 24
TOTAL 50 100
INTERPRETATION-The above bar graph reveals that out of the total respondents 48 lie in the income group of 150000-300000 28 of the total respondents belonged to the income group of 300000-500000 and 24 lie in the income group of people earning an income of above Rs 500000pa
4828 24
01020304050
N O
OF
RE
SP
ON
DE
NT
S
150000-300000
300000-500000
ABOVE500000
INCOME (in RS)
INCOME WISE CLASSIFICATION
38
4) FAMILY MEMBERS
a) 2b) 3c) 4d) Above 4
OPTION NO OF RESPONDENT PERCENTAGE
2 11 22
3 9 18
4 24 48
Above 4 6 12
TOTAL 50 100
INTERPRETATION The above bar graph shows that 22 of the total respondents had a family of 2 members 18 of them had 3 family members 48 of them had 4 family members and 12 of them had the no of family members above 4
Q1 Where do you prefer to invest
22 18
48
120
1020304050
No
o
f re
spo
nd
ents
2 3 4 Above 4
No of family members
MEMBER WISE CLASSIFICATION
39
a) fixed deposits
b) stock
c) mutual funds
d) insurance
e) others
Option No of respondents Percentage
Fixed deposits 5 10
Stock 10 20
Mutual fund 10 20
Insurance 18 36
others 7 14
TOTAL 50 100
Interpretation The above pie chart shows that out of 50 respondents 10 preferred to invest in fixed deposits 20 in stocks 20 in mutual funds 36 in insurance and 14 in others like property gold etc
Q2 What are your priorities for investment
40
a) protecting your family against pre-mature death
b) wealth creation
c) retirement needs
d) child education and marriage
e) protect income against disability sickness or critical illness
Option No of respondents Percentage
Protecting your family against pre mature death
10 20
Wealth creation 14 28
Retirement needs 5 10
Child education and marriage 7 14
Protect income against disability sickness or critical illness
14 28
TOTAL 50 100
Interpretation The above pie chart shows that out of 50 respondents 20 of them invest for protecting their family against premature death 28 for creating wealth 10 for meeting their future retirement needs 14 for child education amp marriage and 28 for protection against disability and sickness
Q3 What is your main motive behind investing in life insurance
41
a) tax benefit
b) savings
c) risk cover
Option No of respondents Percentage
Tax benefits 27 54
Savings 5 10
Risk cover 18 36
TOTAL 50 100
Interpretation The above pie chart shows that out of the sample respondents 54 have tax benefit 10 have savings and 36 have risk cover as their main motive for making an investment in life
Q4 What kind of investment do you prefer
42
a) high risk high gain
b) low risk low gain
c) moderate
d) vary times to times
Option No of respondents Percentage
High risk high gain 8 16
Low risk low gain 5 10
Moderate 12 24
Vary times to times 25 50
TOTAL 50 100
Interpretation The above pie chart shows that out of 50 respondents 16 preferred high risk- high gain form of investment 10 preferred low risk- low gain form of investment 24 preferred moderate investment and 50 preferred varied form of investment
43
Q5Are you interested to invest in Traditional Plans
a) YES
b) NO
Option No of respondents Percentage
YES 36 72
NO 14 28
TOTAL 50 100
Interpretation The above pie chart shows that 72 of the respondents preferred to invest in Traditional Plans
44
Q6 What is your level of annual investmenta) below 20000
b) 20000-40000
c) above 40000
Option No of respondents Percentage
Below 20000 41 82
20000-40000 7 14
Above 40000 2 4
TOTAL 50 100
Interpretation The above pie chart shows that 82 of the respondents are willing to invest below Rs 20000 per annum 14 of them want to invest within Rs 20000 per annum to Rs 40000 and 4 wanted to invest over and above Rs 40000
45
Q7 What factors would you consider most important before choosing an insurance policy
a) publicity of the company
b) reputation of the company
c) quality of life advisors
d) after sales-supporting of the company
Option No of respondents Percentage
Publicity of the co 5 20
Reputation of the co 25 50
Quality of life advisors 10 10
After sale-services 10 20
TOTAL 50 100
Interpretation out of the sample respondents 20 considers publicity of the company 50 considers reputation of the company 10 considers quality of life advisors and 20 considers after sales support of the company as the most important factor for choosing an insurance company
46
Q8 Which life insurance company would you prefer the most to invest ina) reliance life insurance (RLIC)
b) Bajaj Allianz life insurance
Option No of respondents Percentage
RLIC 21 42
BAJAJ ALLIANZ 29 58
TOTAL 50 100
Interpretation Out of 50 respondents 42 preferred to invest in reliance life insurance over 58 of the respondents who prefer to invest in Bajaj Allianz life insurance
47
Q9 If reliance life insurance then which particular plan you would like to invest ina) Reliance Term Plan
b) Reliance Whole Life Plan
c) Reliance Endowment Plan
d) Reliance Special Endowment Plan
Option No of respondents Percentage
Reliance term plan 6 2858
Reliance whole life plan 3 1428
Reliance endowment plan 9 4286
Reliance special endowment plan 3 1428
TOTAL 21 100
Interpretation Out of 21 respondents 2858 preferred to invest in term plan 1428 in whole life plan 4286 in endowment plan and 1428 of them preferred to invest in special endowment plan of reliance life insurance
48
Q10 If Bajaj Allianz life insurance then which particular plan you would like to invest in
I ENDOWMENT PLAN a) Bajaj Allianz Invest Gain
b) Bajaj Allianz save Care Economy SP
c) Bajaj Allianz life time care
d) Bajaj Allianz Super Saver plan
II MONEY BACK PLAN i Bajaj Allianz Cash Gain plan
Option No of respondents Percentage
Invest gain plan 3 1035
Save care economy SP 6 2069
Life time care 7 2415
Super saver plan 3 1035
Cash gain plan 10 3446
TOTAL 29 100
Interpretation Out of 29 respondents 1035 of them plan to invest in Bajaj Allianz- Invest Gain 2069 wish to invest in Bajaj Allianz save Care Economy SP 2415 want to invest in Bajaj Allianz life time care 1035 in Bajaj Allianz Super Saver plan and 3446 prefer to invest in Bajaj Allianz Cash Gain plan
49
32) SIGNIFICANCE OF STUDY
Life insurance is one of the most rapidly growing sectors in India The main reason
behind the growth can attributed to the high population density improving economical
condition improving education level and improving awareness Due to these factors there
is still huge scope for growth in this sector Like any other business when the
opportunities are present everybody tends to enter the industries This growth hence
fetches the new competitors as well as new strategies from existing players To sustain in
any competitive industry the organization must adapt to existing strategies and adopt
new ones This study will focus on the analysis of Reliance Life Insurance in comparison
with the present scenario of Bajaj Allianz Life Insurance with respect to the Traditional
Plans of both the companyrsquos This will mainly cover the following aspects
To know about the awareness and popularity of various Traditional Plans offered
by Reliance Life Insurance and Bajaj Allianz Life Insurance
How Reliance Life Insurance can develop and sustain a good distribution
network
These will provide it benefit both in terms of better market coverage as well as better
penetration
50
33) SCOPE OF THE STUDY
1) This helps in finding out vast potential of insurance company
2) The study was conducted in National Capital Region (NCR) only
3) The number of respondents to be surveyed can be improved
4) This study was conducted by comparing the performances amp products of three private
amp government insurance players in insurance industry
5) This study was conducted to analyze the market stand of Reliance life insurance
Company limited and Bajaj Allianz Life Insurance Company Limited of India insurance
companies
6) This study is done to eliminate all the myths which people have in their minds
regarding Insurance Sector
51
34) OBJECTIVES
To have a detailed understanding of Reliance Life Insurance and Bajaj Allianz Life Insurance
To find out various reasons considered while investing in policies
To get knowledge about the market exposure and future prospects about Reliance Life Insurance
To know the perception of the consumers about the life insurance
To analyze the Traditional plans of Reliance Life Insurance and compare it with Bajaj Allianz
To know about the brand awareness of Reliance Life Insurance its customer preferences over Bajaj Allianz in the market
To study a proper knowledge about the life insurance industry
To understand the consumer choice while investing in policies
52
CHAPTER 4
DISCUSSION AND FINDINGS OF THE STUDY
FINDINGS OF THE STUDY RECOMMENDATION AND SUGGESTIONS CONCLUSION LIMITATIONS BIBLIOGRAPHY ANNEXUREQUESTIONNAIRE
53
41) FINDINGS OF THE STUDY
1) The survey reveals that still a large proportion of population is interested to invest in other forms of investment other than insurance as still most of them are unaware about the importance of insurance in their life
2) Basically people make varied form of investment for creating wealth to protect their families against pre-mature death and to protect income against disability sickness or critical illness
3) The main motive of the individuals investing is receives benefits US 1010D People generally consider insurance as a tax saving device
4) Mostly people prefer time to time form of investment as they are not willing to take high degree of risk
5) 72 of the respondents are preferred to invest in Traditional Plans
6) Most of the people prefer to make an annual investment up to a maximum of Rs20 000 per annum
7) When the product is like life insurance reputation of the company publicity of the company amp after sale services of the company matters a lot This means that people would choose that insurance company only where the quality of life advisors is satisfactory
8) Most people prefer to invest in Bajaj Allianz Life Insurance as compared to making an investment in Reliance Life Insurance
9) The most preferable Traditional plan of Reliance Life Insurance is Endowment Plan
10) The most preferable plan of Bajaj Allianz Life Insurance co is Cash Gain Plan
54
42) SUGGESTIONS amp RECOMMENDATIONS
Based on the observations of the study some suggestions for the organization are made as
follows
1) Quality of advisors is also as important as the quantity Thus company should go
mainly for qualified professionals
2) Company should increase its budget on publicity so that awareness can be increased
3) Clarity and transparency should be provided to the customer regarding various
products
4) Training sessions should be planned in advance so that schedule can be provided to
the advisor in advance
5) Apart from the Brand Positioning in urban area a strategy should be adopted by
Reliance to make its brand also near to middle level or high aspirant people because they
are the main source of the business in India
6) Awareness Camp to the sub urban area should be focused by Reliance
7) Some innovative technique or product is required in order to attract the consumer
43) LITERATURE REVIEW
55
1) Robi Elenekave has explained in detail why various retirement plans and pension plans donrsquot give the desired returns The main difficulty is the use of incorrect method for calculations done to find out the return on investment This is primarily due to wrong assumptions The study provides information about the various precautions which need to be considered before planning so that the desired results can be achieved
2) Another paper provides insight about how various financial sectors invest in bond market The study was how the different players investment different instruments according to the risk appetite and desired rate of return The study shows that life insurance sector mainly invests in government bond which are low return and low risk instrument The investment in government bond it shows that life insurance companies are more conservative in investment
3) K Subhash has presented the history of Indiarsquos life insurance industry in three stages before independence after independence and post liberalization which not only provides information but also help in analyzing the impact of these major changes The authors have also discussed the huge potential which exists in the rural India The insurance company must realize the importance of rural sector because the future lies there The author commented about the increasing share of private player in the existing market This confirms the availability of opportunity in this sector The paper also provides the importance of professional and focused approach which was given no importance
4) Tapen Sinha has discussed the various challenges and opportunities in the insurance market One of the very important factors which have been discussed in the study is the importance of developing new and better products As the scenario changes the need of an individual also changes so any organization must understand and fulfill these needs The new product development requires constant research so organization must also focus on it
5) Roger G Ibbotson discusses how financial planners and advisors have recently started to recognize that human capital must be taken into account when building optimal portfolios for individual investors Any investorrsquos human capital has a unique mortality risk However life insurance in its forms can hedge against this mortality risk Thus human capital affects both the optimal asset allocation and the optimal demand for life insurance This paper provides a unified framework based on human capital in order to enable individual investors to make both decisions jointly
6) Rakesh Niraj study tells how the flow of information in any organization is important For any organization to grow the flow of information must be good both upwards as well as ownwards The proper flow of information will also ensure proper flow of good and services from organization to customer and proper flow of information from customer to organization The information from customers will help the organization in providing better goods and services to the customer For the above purpose organization must ensure good channel partner who can provide the organization with correct feedback Hence it becomes very important for any organization to acquire good channel partners
56
7) Stephen P Robbins has discussed how group dynamics works in any organization The success of any organization depends on the success of its various teams and how these teams work together The book provides various techniques which can be used by any organization to get result from the team effort The conflict resolution is a major task in any group Various techniques which the organization can use in conflict resolution are also discussed Another important aspect covered is the importance of leadership in the organization The various forms of leadership have been discussed and the kinds of leadership which can be effective in particular situations are also discussed
8) R Wayne Mondy has discussed the importance of training and development in any organization The training provides skills to perform the current job where as the development involve learning beyond present need The various type of training are discussed which can be used according to the requirement Training and development are not only important for better performance of an individual but it also gives satisfaction The major factors which influence training and development are found to be management support commitment of trainee and trainer complexity of the organization The process of developing good training plans is also provided In another part author has discussed the importance of right man for right job The compensation strategies are also given which are very crucial for ant industry
9) Philip Kotler has discussed the importance of channels partners Better the channel partners better will be the delivery model Detailed discussion about how to design the channel structure so that all the requirements could be fulfilled is provided The various issues faced by the organization while managing the channels are also given When an organization has more than one channel it becomes very important that all the channels should be integrated in such a way that the organization get the best out of all At times due to the conflicting benefit of the different channels the conflict arise so various strategies to manage these issues is also discussed in the chapter
10) Michael J Etzel has written about the marketing of services The marketing of services is different from the goods because of the characteristic of service like intangibility inseparability heterogeneity etc Brief about pricing strategies is also given in case of services The authors have also given the impact of technological development on the services marketing The author has also given the importance of brand and after sales support in case of services as perception of the customers plays an important role In other part of the book the authors has described the importance of distribution channels and designing of the same A channel partner should be consider as partner according to discussion The legal complications associated with channels are also discussed These complications are necessary to take into the consideration while managing the channels The conflicting interest of channels both horizontally and vertically are also taken into the consideration
57
11) Boone has discussed about the importance of personal financial planning The concept of time value of money has also been elaborated The importance of creating and implementing budget is given under money management The other important concepts for financial planning like credit management and understanding taxes are also explained In one section the authors have discussed the importance of investment and what should be the major considerations while making any investment The considerations include the risk associated with the investment return on the investment etc The importance and benefits of life insurance has also been given The discussion also includes various legal aspects associated with life insurance The overview of retirement planning is also given which includes importance and benefit of retirement planning Various tools for proper retirement planning are also discussed
58
44) CONCLUSION
1) The customers are very much sensitive towards their investment They would like to invest only in that insurance company which enjoys good public image along with quality good services
2) The result of the survey conducted shows that Bajaj Allianz Life Insurance is the leader in life insurance industry but Reliance Life Insurance and other private players are giving it a close competition
3) The motive of the people behind investing in life insurance is the tax benefits that they would receive under sec 80C and 1010D
4) In Life Insurance industry the after sales support of the company is as important as the quality of life advisors
59
45) LIMITATIONS
There were some limitations faced during the study as discussed below
Since the study was taken for two months so there was a constraint of time and effort
The study was limited only to some of the Delhi regions so the results may be biased
Questionnaire was given to 125 people however only 50 responded to it which is very small for such type of study
The biasness of consumer or responses error cannot be eliminated
Most of the people are not aware about the Importance and the necessity of insurance in their life
Adverse perception of the people towards insurance sector- People consider insurance as a tax saving device
Lack of awareness about the earning opportunity in the insurance sector
60
46) BIBLIOGRAPHY
wwwreliancelifeinsurancecom
wwwadagroupcom
wwwirdacom
wwwbajajallianzlifeinsurancecom
wwwallianzbajajcom
47) ANNEXURE
61
QUESTIONNAIRE
A comparative analysis of consumer perception regarding Traditional plans of Reliance Life Insurance with that of Bajaj Allianz Life Insurance
NAME ___________________________
PERSONAL DETAILS
1) AGE_________________
1) OCCUPATION______________
2) INCOME___________________
3) FAMILY MEMBERS_________
Q1 Where do you prefer to investa) Fixed deposits b) Stock c) Mutual funds d) Insurance e) Others
Q2 What are your priorities for investmenta) Protecting your family against pre-mature death b) Wealth creation c) Retirement needs d) Child education and marriage e) Protect income against disability sickness or critical illness
Q3 What is your main motive behind investing in life insurancea) Tax benefit b) Savings c) Risk cover
Q4 What kind of investment do you prefera) High risk high gain b) Low risk low gain c) Moderate d) Vary times to times
62
Q5Are you interested to invest in Traditional Plansa) Yes b) No
Q6 What is your level of annual investmenta) below 20000 b) 20000-40000 c) above 40000
Q7 What factors would you consider most important before choosing an insurance company
a) publicity of the company b) reputation of the company c) quality of life advisors d) after sales-supporting of the company
Q8 Which life insurance company would you prefer the most to invest ina) Reliance life insurance b) Bajaj Allianz life insurance
Q9 If reliance life insurance then which particular plan you would like to invest ina) Reliance Term Plan b) Reliance Whole Life Plan c) Reliance Endowment Plan d) Reliance Special Endowment Plan
Q10 If Bajaj Allianz life insurance then which particular plan you would like to invest in
I ENDOWMENT PLAN
a) Bajaj Allianz Invest Gain
b) Bajaj Allianz save Care Economy SP
c) Bajaj Allianz life time care
d) Bajaj Allianz Super Saver plan
II MONEY BACK PLAN
a) Bajaj Allianz Cash Gain plan
63
64
- COMPANY PROFILE
- ABOUT RELIANCE LIFE INSURANCE
- HISTORY
- Reliance Capital Limited announced the launch of its life insurance business on February 1 2006 This was after obtaining the required regulatory approvals from the Registrar Of Companies and the Insurance Regulatory and Development Authority
- It was in August 2005 that the ball was set rolling when Reliance Capital Limited the financial arm of Reliance ndash Anil Dhirubhai Ambani Group (ADAG) ndash announced the requisition of 100 shareholding in AMP Sanmar Life Insurance Company Limited and the formal transfer of shares took place in October 2005 The company will issue all policy contracts under the Reliance Life Insurance Company limited name All the existing policy contracts also stand transferred to the Reliance Life Insurance entity with all the original contractual terms and commitments intact
- CORE VALUES
- Reliance Life Insurance Company Limited has some core values which are listed as follows
- Vision bull To be the first choice insurer for customers bull To be the preferred employer for staff in the insurance industry bull To be the number one insurer for creating shareholder value
- Mission As a responsible customer focused market leader we will strive to understand the insurance needs of the consumers and translate it into affordable products that deliver value for money
- 12) TRADITIONAL PLANS OF THE COMPANY
- 12A )TRADITIONAL PLAN OF RELIANCE LIFE INSURANCE-
- Life insurance products are designed to suit the requirements of customers Fundamentally the product provide for
- In every product to a certain degree risk cover is imperative for it to fall under the category of insurance Based on the coverage of the product the premiums are calculated and the customer pays accordingly In order to suggest the right product it is essential for an agent to understand the requirements of the customer well
- The traditional plans of the company have the following features-
- Fixed Tenure
- Potential for better returns
- Transparency
- Flexibility in investment
- Flexibility to invest more
- Flexibility to skip the premium
- Flexibility to choose the cover
- High liquidity
- Age term and sum assured decide the amount of premium
- Top- ups and switches are not allowed
- Reliance Life Insurance Company Limited has offered 9
- 1) Reliance term plan-
- 2) Reliance Whole Life Plan -
- 3) Reliance Endowment Plan -
- 4) Reliance Special Endowment Plan -
- 13) INDUSTRY PROFILE
- MEANING OF INSURANCE
- Insurance may be described as a social device to reduce or eliminate risk of loss to life and property Insurance is a collective bearing of risk Insurance is a financial device to spread the risks and losses of few people among a large number of people as people prefer small fixed liability instead of big uncertain and changing liability
- Insurance can be defined as a ldquolegal contract between two parties whereby one party called insurer undertakes to pay a fixed amount of money on the happening of a particular event which may be certain or uncertainrdquo The other party called insured pays in exchange a fixed sum known as premium
- Insurance is desired to safeguard oneself and onersquos family against possible losses on account of risks and perils It provides financial compensation for the losses suffered due to the happening of any unforeseen events
- IMPORTANCE OF INSURANCE
- Insurance services play predominant role in the process of financial Intermediary Today insurance industry is one of the most growing sectors in India There is lot of potential in the Indian Insurance Industry
- There are many issues which require study The scope of the study of Insurance industry of India would be very great as there are ongoing Developments in the industry after the opening of the sector
- Right now the insurance industry has great opportunities in a country like India or China which huge population Also the penetration of insurance in India is very low in both life and non-life segment so there is lot potential to be tapped Before starting the discussion on insurance industry and related issues we have to start with the basics of insurance So first we understand what is insurance How the word lsquoinsurancersquo is different from the word lsquoassurancersquo Etc
- HISTORY OF INSURANCE
- The concept of insurance is believed to have emerged almost 4500 years ago in the ancient land of Babylonia where traders used to bear risk of the carvan by giving loans which were later repaid with interest when the goods arrived safely
- The concept of insurance as we know today took shape in 1688 at a place called Lloydrsquos Coffee House in London where risk bearers used to meet to transact business This coffee house became so popular that Lloydrsquos became the one of the first modern insurance companies by the end of the eighteenth century
- Marine insurance companies came into existence by the end of the eighteenth century These companies were empowered to write fire and life insurance as well as marine The Great Fire of London in 1966 caused huge loss of property and life With a view to providing fire insurance facilities
- Dr Nicholas Barbon set up in 1967 the first fire insurance company known as the Fire office
- Life insurance in its modern form came to India from England in 1818 The Oriental Life Insurance Company was the first insurance company to be set up in India to help the widows of European community The insurance companies which came into existence between 1818 and 1869 treated
- Indian lives as subnormal and charged an extra premium of 15 to 20 per cent The first Indian insurance company the Bombay Mutual Life
- Assurance Society came into existence in 1870 to cover Indian lives at normal rates
- The Insurance Act 1938 the first comprehensive legislation governing both life and non-life branches of insurance were enacted to provide strict state control over insurance business This amended insurance Act looked into investments expenditure and management of these companies
- By the mid- 1950s there were 154 Indian insurers 16 foreign insurers and 75 provident societies carrying on life insurance business in India Insurance business flourished and so did scams irregularities and dubious investment practices by scores of companies As a result the government decided to nationalize the life assurance business in India The Life Insurance
- Corporation of India (LIC) was set up in 1956 The nationalization of life insurance was followed by general insurance in 1972
- MEANING OF LIFE INSURANCE
- There are three parties in a life insurance transaction the insurer the insured and the owner of the policy (policyholder) although the owner and the insured are often the same person
- Another important person involved in a life insurance policy is the beneficiary The beneficiary is the person or persons who will receive the policy proceeds upon the death of the insured
- Life insurance may be divided into two basic classes ndash term and permanent
- HISTORY OF LIFE INSURANCE
- Risk protection has been a primary goal of humans and institutions throughout history Protecting against risk is what insurance is all about
- Over 5000 years ago in China insurance was seen as a preventative measure against piracy on the sea Piracy in fact was so prevalent that as a way of spreading the risk a number of ships would carry a portion of another ships cargo so that if one ship was captured the entire shipment would not be lost
- In another part of the world nearly 4500 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
- Life insurance came about a little later in ancient Rome where burial clubs were formed to cover the funeral expenses of its members as well as help survivors monetarily With Romes fall around 450 AD most of the concepts of insurance were abandoned but aspects of it did continue through the Middle Ages particularly with merchant and artisan guilds These provided forms of member insurance covering risks like fire flood theft disability death and even imprisonment
- During the feudal period early forms of insurance ebbed with the decline of travel and long-distance trade But during the 14th to 16th centuries transportation commerce and insurance would again reemerge
- And similar to ancient Rome burial societies were formed in the Buddhist period to help families build houses and to protect widows and children
- Modern Insurance
- Illegal almost everywhere else in Europe life insurance in England was vigorously promoted in the three decades following the Glorious Revolution of 1688 The type of insurance we see today owes its roots to 17th century England Lloyds of London or as they were known then Lloyds Coffee House was the location where merchants ship owners and underwriters met to discuss and transact business deals
- While serving as a means of risk-avoidance life insurance also appealed strongly to the gambling instincts of Englands burgeoning middle class
- Gambling was so rampant in fact that when newspapers published names of prominent people who were seriously ill bets were placed at Lloydrsquos on their anticipated dates of death Reacting against such practices 79 merchant underwriters broke away in 1769 and two years later formed a ldquoNew Lloydrsquos Coffee Houserdquo that became known as the ldquoreal Lloydrsquosrdquo Making wagers on peoples deaths ceased in 1774 when parliament forbade the practice
- Insurance moves to America
- The US insurance industry was built on the British model The year 1735 saw the birth of the first insurance company in the American colonies in
- Charleston SC The Presbyterian Synod of Philadelphia in 1759 sponsored the first life insurance corporation in America for the benefit of ministers and their dependents And the first life insurance policy for the general public in the United States was issued in Philadelphia on May 22 1761
- But it wasnt until 80 years later (after 1840) that life insurance really tookoff in a big way The key to its success was reducing the opposition from religious groups
- In 1835 the infamous New York fire drew peoples 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
- With the creation of the automobile public liability insurance which first made its appearance in the 1880s gained importance and acceptance
- More advancement was made to insurance during the process of industrialization In 1897 the British government passed the Workmens Compensation Act which made it mandatory for a company to insure its employees against industrial accidents
- During 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 most labor 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
- BENEFITS OF LIFE INSURANCE
- 1) Risk cover -Life Insurance contracts allow an individual to have a risk cover against any unfortunate event of the future
- 2) Tax Deduction -Under section 80C of the Income Tax Act of 1961 one can get tax deduction on premiums up to one lakh rupees Life Insurance policies thus decrease the total taxable income of an individual
- 3) Loans -An individual can easily access loans from different financial institutions by pledging his insurance policies
- 4) Retirement Planning -What had provided protection against the financial consequences of premature death may now be used to help them enjoy their retirement years
- 5) Educational Needs -Similar to retirement planning the cash values that flow from ones life insurance schemes can be utilized for educational needs of the insurer or his children
- The Life Insurance Industry has an enviable track record among public sector units It has a Consistent profit and dividend paying record accompanied by a steady growth in its financial resources Through investments in the Government sector and socially- oriented sectors the Industry has contributed immensely to the nations development The industry is recognized as one of the largest financial Institutions in the country The ventures initiated by the industry in the areas of Mutual Fund
- Housing Finance has done exceedingly well in recent years To protect the countrys foreign exchange reserves the reinsurance arrangement are so organized that maximum retention is made possible within the country while at the same time protecting interests of the policy holders
- 22) CURRENT SCENARIO OF RELIANCE LIFE INSURANCE
- RLIC offers wide range of innovative life insurance products targeted at individuals and groups It offers need based products that caters to four distinct segments namely protection child retirement and investment plans RLIC is committed to emerge as a transnational Life Insurer of global scale and standard
- CH - 3) RESEARCH METHODOLOGY
- RESEARCH DESIGN-
- SAMPLING TECHNIQUES-
- THE PRIMARY OBJECTIVEOF THE STUDY-
- 34) OBJECTIVES
- 7) Some innovative technique or product is required in order to attract the consumer
- 45) LIMITATIONS
- 46) BIBLIOGRAPHY
-
This insurance policy is designed for people who wish to combine savings with extended security The unique feature of this policy is that life protection continues for five years after you have stopped the payment of premium Payment of sum assured at the end of premium paying term and extension of life cover thereafter for the full sum assured for a period of 5 years are characteristics of the policyThis plan also participates in the profits
1048729 Features -a) Entry age minimum 12 year and maximum 65 yearb) Minimum sum assured is Rs 25000c) Minimum premium paying term is 10 year and maximum 40 yeard) Unique feature of this policy is that five year life protection continues after you have stopped the payment of premiume) Tax benefit is availablef) Under this policy bonus is compounded yearlyg) Loan facility is availableh) Maturity amount = Full sum assured before maturity date +Vested bonus at the time of maturity date
15
12 B) TRADITIONAL PLANS OF BAJAJ ALLIANZ LIFE INSURANCE
I ENDOWMENT PLAN
Saving plan which offer bonuses are excellent long term plan with complete safety Our products offer additional benefits which include 4 times life cover at a little extra cost limited premium payment terms and compounded reversionary bonuses making it a very good long term investment
1 Bajaj Allianz Invest GainInvest Gain is a specially designed plan that offers a unique combination of benefits that help you develop a sound financial portfolio for your family
4 Times Life Cover at a little extra cost
Limited premium payment option available
Additional Benefits
a) Accidental Death Benefit and Disability Benefit b) Critical Illness Benefit and Hospital Cash Benefit c) Family Income Benefit In case of death or accidental total permanent disability of insured all future premiums are waived and 1 of the sum assured is paid monthly
Invest Gain Save Care Economy SP Life Time Care
Super Saver
16
2 Bajaj Allianz save Care Economy SP
A One-time payment Investment plan that provides for savings with high risk cover for 10 years and also participates in the profits of the company It offers you high risk cover with easy liquidity and high returns
a) A single premium endowment plan that participates in the profitsb) 10 year Investment planc) Benefits payable on maturityc) Loans available
17
3 Bajaj Allianz life time care
A whole life plan which provides survival benefits at the age of 80 thereby making sure you are financially secure at the time when you need it the most Additional Benefits
a) Accidental Death Cover and Disability Cover b) Critical Illness Cover and Hospital Cash Cover c) Waiver of Premium Benefit
4Bajaj Allianz Super Saver plan
Bajaj Allianz Super Saver is a regular premium endowment plan which helps you save regular amounts for a safer tomorrow It also provides you with extra benefits of Guaranteed Additions to your sum assured at the end of each policy year
18
II MONEY BACK PLAN
Money back plans are Traditional Insurance plans that provide the investor with returns at regular stages of life
CashGain
1)Bajaj Allianz Cash Gain plan
A Money back plan which guarantees 125 payout + bonuses
Quadruple life cover
5 easy payouts which give upto 125 + bonuses
Additional Benefitsa) Accidental Death Benefit and Disability Benefitb) Critical Illness Benefit and Hospital Cash Benefitc) Family Income Benefit In case of death or accidental total permanent disability of insured all future premiums are waived and 1 of the sum assured is paid monthly
19
20
13) INDUSTRY PROFILE
MEANING OF INSURANCE
Insurance may be described as a social device to reduce or eliminate risk of loss to life and property Insurance is a collective bearing of risk Insurance is a financial device to spread the risks and losses of few people among a large number of people as people prefer small fixed liability instead of big uncertain and changing liability
Insurance can be defined as a ldquolegal contract between two parties whereby one party called insurer undertakes to pay a fixed amount of money on the happening of a particular event which may be certain or uncertainrdquo The other party called insured pays in exchange a fixed sum known as premiumInsurance is desired to safeguard oneself and onersquos family against possible losses on account of risks and perils It provides financial compensation for the losses suffered due to the happening of any unforeseen events
IMPORTANCE OF INSURANCE
Insurance constitutes one of the major segments of the financial marketInsurance services play predominant role in the process of financial Intermediary Today insurance industry is one of the most growing sectors in India There is lot of potential in the Indian Insurance Industry
There are many issues which require study The scope of the study of Insurance industry of India would be very great as there are ongoing Developments in the industry after the opening of the sectorOne of the major issues is the effects on LIC after the entry of private players in the market Though market share of LIC has been affected it has improved in terms of efficiency
There are number of other hot topics like penetration of Health Insurance Rural marketing of insurance new distribution channels new product ranges insurance brokersrsquo regulation incentive scheme of development officers of LIC etc So it offers lot of scope for studying the insurance industryRight now the insurance industry has great opportunities in a country like India or China which huge population Also the penetration of insurance in India is very low in both life and non-life segment so there is lot potential to be tapped Before starting the discussion on insurance industry and related issues we have to start with the basics of insurance So first we understand what is insurance How the word lsquoinsurancersquo is different from the word lsquoassurancersquo Etc
21
HISTORY OF INSURANCE
The concept of insurance is believed to have emerged almost 4500 years ago in the ancient land of Babylonia where traders used to bear risk of the carvan by giving loans which were later repaid with interest when the goods arrived safely
The concept of insurance as we know today took shape in 1688 at a place called Lloydrsquos Coffee House in London where risk bearers used to meet to transact business This coffee house became so popular that Lloydrsquos became the one of the first modern insurance companies by the end of the eighteenth centuryMarine insurance companies came into existence by the end of the eighteenth century These companies were empowered to write fire and life insurance as well as marine The Great Fire of London in 1966 caused huge loss of property and life With a view to providing fire insurance facilitiesDr Nicholas Barbon set up in 1967 the first fire insurance company known as the Fire office
Life insurance in its modern form came to India from England in 1818 The Oriental Life Insurance Company was the first insurance company to be set up in India to help the widows of European community The insurance companies which came into existence between 1818 and 1869 treatedIndian lives as subnormal and charged an extra premium of 15 to 20 per cent The first Indian insurance company the Bombay Mutual LifeAssurance Society came into existence in 1870 to cover Indian lives at normal rates
The Insurance Act 1938 the first comprehensive legislation governing both life and non-life branches of insurance were enacted to provide strict state control over insurance business This amended insurance Act looked into investments expenditure and management of these companiesBy the mid- 1950s there were 154 Indian insurers 16 foreign insurers and 75 provident societies carrying on life insurance business in India Insurance business flourished and so did scams irregularities and dubious investment practices by scores of companies As a result the government decided to nationalize the life assurance business in India The Life InsuranceCorporation of India (LIC) was set up in 1956 The nationalization of life insurance was followed by general insurance in 1972
22
MEANING OF LIFE INSURANCE
There are three parties in a life insurance transaction the insurer the insured and the owner of the policy (policyholder) although the owner and the insured are often the same person
Another important person involved in a life insurance policy is the beneficiary The beneficiary is the person or persons who will receive the policy proceeds upon the death of the insured
Life insurance may be divided into two basic classes ndash term and permanent
Term life insurance provides for life insurance coverage for a specified term of years for a specified premium The policy does not accumulate cash value
Permanent life insurance is life insurance that remains in force until the policy matures unless the owner fails to pay the premium when due
Whole life insurance provides for a level premium and a cash value table included in the policy guaranteed by the company The primary advantages of whole life are guaranteed death benefits guaranteed cash values fixed and known annual premiums and mortality and expense charges will not reduce the cash value shown in the policy
Universal life insurance (UL) is a relatively new insurance product intended to provide permanent insurance coverage with greater flexibility in premium payment and the potential for a higher internal rate of return A universal life policy includes a cash account Premiums increase the cash account If you want insurance protection only and not a savings and investment product buy a term life insurance policy
If you want to buy a whole life universal life or other cash value policy plan to hold it for at least 15 years Canceling these policies after only a few years can more than double your life insurance costs
23
HISTORY OF LIFE INSURANCE
Risk protection has been a primary goal of humans and institutions throughout history Protecting against risk is what insurance is all aboutOver 5000 years ago in China insurance was seen as a preventative measure against piracy on the sea Piracy in fact was so prevalent that as a way of spreading the risk a number of ships would carry a portion of another ships cargo so that if one ship was captured the entire shipment would not be lostIn another part of the world nearly 4500 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
Life insurance came about a little later in ancient Rome where burial clubs were formed to cover the funeral expenses of its members as well as help survivors monetarily With Romes fall around 450 AD most of the concepts of insurance were abandoned but aspects of it did continue through the Middle Ages particularly with merchant and artisan guilds These provided forms of member insurance covering risks like fire flood theft disability death and even imprisonment
During the feudal period early forms of insurance ebbed with the decline of travel and long-distance trade But during the 14th to 16th centuries transportation commerce and insurance would again reemergeInsurance in India can be traced back to the Vedas For instance yogakshema the name of Life Insurance Corporation of Indias 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
And similar to ancient Rome burial societies were formed in the Buddhist period to help families build houses and to protect widows and children
Modern InsuranceIllegal almost everywhere else in Europe life insurance in England was vigorously promoted in the three decades following the Glorious Revolution of 1688 The type of insurance we see today owes its roots to 17th century England Lloyds of London or as they were known then Lloyds Coffee House was the location where merchants ship owners and underwriters met to discuss and transact business dealsWhile serving as a means of risk-avoidance life insurance also appealed strongly to the gambling instincts of Englands burgeoning middle classGambling was so rampant in fact that when newspapers published names of prominent people who were seriously ill bets were placed at Lloydrsquos on their anticipated dates of death Reacting against such practices 79 merchant underwriters broke away in 1769 and
24
two years later formed a ldquoNew Lloydrsquos Coffee Houserdquo that became known as the ldquoreal Lloydrsquosrdquo Making wagers on peoples deaths ceased in 1774 when parliament forbade the practice
Insurance moves to AmericaThe US insurance industry was built on the British model The year 1735 saw the birth of the first insurance company in the American colonies inCharleston SC The Presbyterian Synod of Philadelphia in 1759 sponsored the first life insurance corporation in America for the benefit of ministers and their dependents And the first life insurance policy for the general public in the United States was issued in Philadelphia on May 22 1761But it wasnt until 80 years later (after 1840) that life insurance really tookoff in a big way The key to its success was reducing the opposition from religious groups
In 1835 the infamous New York fire drew peoples 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
With the creation of the automobile public liability insurance which first made its appearance in the 1880s gained importance and acceptanceMore advancement was made to insurance during the process of industrialization In 1897 the British government passed the Workmens Compensation Act which made it mandatory for a company to insure its employees against industrial accidents
During 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 most labor 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
25
BENEFITS OF LIFE INSURANCE
1) Risk cover -Life Insurance contracts allow an individual to have a risk cover against any unfortunate event of the future
2) Tax Deduction -Under section 80C of the Income Tax Act of 1961 one can get tax deduction on premiums up to one lakh rupees Life Insurance policies thus decrease the total taxable income of an individual
3) Loans -An individual can easily access loans from different financial institutions by pledging his insurance policies
4) Retirement Planning -What had provided protection against the financial consequences of premature death may now be used to help them enjoy their retirement yearsMoreover the cash value can be used as an additional income in the old age
5) Educational Needs -Similar to retirement planning the cash values that flow from ones life insurance schemes can be utilized for educational needs of the insurer or his children
26
ROLE OF LIFE INSURANCE IN THE GROWTH OF THE ECONOMY
The Life Insurance Industry has an enviable track record among public sector units It has a Consistent profit and dividend paying record accompanied by a steady growth in its financial resources Through investments in the Government sector and socially- oriented sectors the Industry has contributed immensely to the nations development The industry is recognized as one of the largest financial Institutions in the country The ventures initiated by the industry in the areas of Mutual Fund
Housing Finance has done exceedingly well in recent years To protect the countrys foreign exchange reserves the reinsurance arrangement are so organized that maximum retention is made possible within the country while at the same time protecting interests of the policy holders
27
ROLE OF IRDA
MISSION
ldquoTo protect the interests of the policyholders to regulate promote
and ensure orderly growth of the insurance industry and for matters
connected therewith or incidental theretordquo
The Insurance Act 1938 had provided for setting up of the Controller of Insurance to act
as a strong and powerful supervisory and regulatory authority for insurance Post
nationalization the role of Controller of Insurance diminished considerably in
significance since the Government owned the insurance companies But the scenario
changed with the private and foreign companies foraying in to the insurance sector This
necessitated the need for a strong independent and autonomous Insurance Regulatory
Authority was felt As the enacting of legislation would have taken time the then
Government constituted through a Government resolution an Interim Insurance
Regulatory Authority pending the enactment of a comprehensive legislation
The Insurance Regulatory and Development Authority Act 1999 is an act to provide for
the establishment of an Authority to protect the interests of holders of insurance policies
to regulate promote and ensure orderly growth of the insurance industry and for matters
connected therewith or incidental thereto and further to amend the Insurance Act 1938
the Life Insurance Corporation Act 1956 and the General insurance Business
(Nationalization) Act 1972 to end the monopoly of the Life Insurance Corporation of
India (for life insurance business) and General Insurance Corporation and its subsidiaries
(for general insurance business) The act extends to the whole of India and will come
into force on such date as the Central Government may by notification in the Official
Gazette specify Different dates may be appointed for different provisions of this Act
28
The Act has defined certain terms some of the most important ones are as follows
Appointed day means the date on which the Authority is established under the act
Authority means the established under this Act Interim Insurance Regulatory Authority
means the Insurance Regulatory Authority set up by the Central Government through
Resolution No 17(2) 94-lns-V dated the 23rd January 1996
Words and expressions used and not defined in this Act but defined in the Insurance Act
1938 or the Life Insurance Corporation Act 1956 or the General Insurance Business
(Nationalization) Act 1972 shall have the meanings respectively assigned to them in
those Acts A new definition of Indian Insurance Company has been inserted Indian
insurance company means any insurer being a company
(a) Which is formed and registered under the Companies Act 1956
(b) in which the aggregate holdings of equity shares by a foreign company either by
itself or through its subsidiary companies or its nominees do not exceed twenty-six
percent paid up capital in such Indian insurance company
(c) Whose sole purpose is to carry on life insurance business general insurance business
or re-insurance business
29
CURRENT SCENERIO
21) CURRENT SCENERIO OF THE INSURANCE INDUSTRY
With largest number of life insurance policies in force in the world insurance happens to be a mega opportunity in India Itrsquos a business growing at the rate of 15-20 per cent annually and presently is of the order of Rs 450 billion Together with banking services it adds about 7 per cent to the countryrsquos GDP Gross premium collection is nearly 2 per cent of GDP and funds available with LIC for investment are 8 per cent of GDP
Yet nearly 80 percent of Indian population is without life insurance cover while health insurance and non-life insurance continues to be below international standards And this part of the population is also subject to weak social security and pension systems with hardly any old age income security This it is an indicator that growth potential for the insurance sector is immense A well-develop and evolved insurance sector is needed for economic development as it provides long term funds for infrastructure development and at the same time strengthens the risk taking ability It is estimated that over the next ten years India would require investments of the order of one trillion US dollar The insurance sector to some extent can enable investment in infrastructure development to sustain economic growth of the country Insurance is a federal subject in India There are two legislation that govern the sector - The Insurance Act-1938 and The IRDA Act-1999
In India insurance is generally considered as a tax-saving device instead of its other implied long term financial benefits Indian people are prone to investing in properties and gold followed by bank deposits They selectively invest in shares also but the percentage is very small Even to this day Life Insurance Corporation of India dominates India insurance sector With the entry of private sector players backed by foreign expertise Indian insurance market has become more vibrant Business is becoming increasingly vulnerable due to wide variety of risk particularly after September 11 2001 disaster in which twin tower located in the hearts of New York city were crashed by terrorist attack resulting in loss of 6000 human lives as well as financial loss to the extent of $45 billion The impact of this terrorist attack has created new horizon of risk to the business world today
However rapid changes in the global economy development of technology and e-business already gathered momentum Increased dependency on technology has originated new risks that have resulted in well-published incidents Computer hackers obtaining credit card information from visa and Power-Gen the love bug virus cyber extortion web content liability professional errors and omissions computers and other crimes and activities such as terrorism kidnapping and companyrsquos executive and extortion of money commercial liability etc have significant impact on business resulting in extreme financial loss commercial embarrassment or regulatory implications
Corporation insurancerisk managers under the circumstances have to demand increasingly complex insurance products They have to be more attentive and
30
knowledgeable about emerging risks how those risks are managed effectively and efficiently and how they could ultimately affect a companyrsquos financial situation and therefore its position in the market place In short how such risks are managed and can give to an insured a competitive advantage
In the changing times adoption of e-commerce into business models the integration of web-based communication and data transfer capabilities into the business operations and leveraging of advanced network and technology architecture for maximum benefit are the new horizon of the risks For the corporate insurancerisks managers these new exposure-cyber-risks-can lead to cyber losses widening the interpretation of what constitute insure property damage particularly as it relates to information technology and dataAll the while organizations are tremendous pressure to reduce expenses and increase profit margin and cannot afford to suffer a property loss of business interruption due to any cause (risk) How a company identifies quantifies qualifies and manages these new risks exposure in addition to the well-known tradition risks is becoming an important factor in creating shareholders value This often means changing the way Everyone in the organization have to think about risk
Insurance managers are seeing price levels (premium) continue to rise-albeit modestly-in todayrsquos primarily commercial property and reinsurance markets They are demanding that insurers improve their risk assessment and quantification offerings so that an insured may avail the benefit in cost (premium rate) on account of well-managed riskThe good news for insurance managers is that as the economy evolves insurers are increasingly matching that evaluation with new products services and capabilities due to opening up the insurance market to the private players
Insurers who are truly listening to their customers and striving to be more in tune with their needs are responding to the fast changing corporate insurance and risk management landscape They are listening to their customers They are making fresh approaches to address the new challenges faced by insured organization by designing the new products as per the needs Insurers are providing value added services to insured to protect the value created by the business
Insurers are increasingly required to develop and expand their information technology platforms to ensure that the vast amount of data they collect about their customers Insurancerisk portfolio can easily and seamlessly be transformed into valuable risk management information To help their customers insurers should make better-informed decisions They must be able to swiftly deliver this data to their customers (insured) anywhere in the world Insurer are also discovering that risk assessment have to be customized to meet policyholdersrsquo new exposures and needs The insurance industry is stepping up and addressing these challenges in several different ways
31
22) CURRENT SCENARIO OF RELIANCE LIFE INSURANCE
RLIC offers wide range of innovative life insurance products targeted at individuals and groups It offers need based products that caters to four distinct segments namely protection child retirement and investment plans RLIC is committed to emerge as a
transnational Life Insurer of global scale and standard
Reliance Life Insurance Company Limited (RLIC) is amongst the fastest growing life insurance companies in India It is also amongst the top four private sector life insurance companies in India (As on FY 2008-2009)
As on March 31 2009 RLIC has an annualized premium of Rs 30 billion with a market share of 103 It has leapfrogged on the growth path and has reached the 4 million policy mark in a short span of within 3 years RLIC has a strong distribution network of 1145 branches with more than 149000 agents
32
Insurancersquos Market Share in Comparison of Other Private company
If we look at the status of Reliance Life Insurancersquos market share in comparison of other
private company in comparison of premium earned-
If we talk the growth of Insurance industryrsquos private players in recent years the data will
reflect-
CH - 3) RESEARCH METHODOLOGY
33
RESEARCH DESIGN-
COMPARITIVE STUDY- A comparative study has been undertaken to compare the traditional Plans of Reliance Life Insurance with that of Bajaj Allianz life insurance
DATA TYPE
INTRODUCTION - Any organization whether big or small private or public needs different type of information to know its popularity I have gathered secondary data and primary data and collected information from the combination of these two data
PRIMARY DATA - Primary data collection method was decided for observing working of the company and approaching the customers directly face to face A great care was taken while collecting the primary data to answer that it is relevant accurate current and unbiased
SECONDARY DATA - Secondary data collection method was used by referring to various websites books and newspapers for collecting information regarding the project under study Secondary data consist of the information that already exists somewhere else for some another purpose
SAMPLING TECHNIQUES-
SAMPLE SIZE- A sample size of 50 was taken to be analyzed
SAMPLE LOCATION-Various sectors of Kamla Nagar Civil lines Mukherji Nagar Model Town and selected areas of Delhi
SAMPLING PROCESS - Convenient sampling was used to overcome the time and money constraints that could have been faced by us while collecting the data The customers were contacted face to face directly and also by way of telephonic conversation with them
ANALYTICAL TOOLS - The data collected were arranged accordingly and statistical tools like bar graphs and pie-charts were used to analyze and present the data
RESEARCH INSTRUMENT USED-
34
SAMPLING MEDIA - Printed questionnaires consisting several questions were asked to have an idea of customers view about Reliance Life Insurance plans followed by personal questions
FIELD WORK - Rigorous field work was undertaken to locate the interested and potential respondents to fulfill the objectives of the study
THE PRIMARY OBJECTIVEOF THE STUDY -
The primary objective of the research study is to have a detailed analysis of Reliance Life Insurance bringing in focus the future prospects of the (Anil Dhirubhai Ambani group) with relevance to the customer perception regarding the various plans and products offered by Reliance Life Insurance
31) DATA ANALYSIS AND INTERPRETATION
35
PERSONAL DETAILS
1) AGE a) 18-30b) 31-50c) 51-65
AGE NO OF RESPONDENTS PERCENTAGE
18-30 21 42
31-50 19 38
51-65 10 20
TOTAL 50 100
INTERPRETATION-The bar graph reveals that 42 of the respondents belong to the age group of 18-30 years 38 lies in the age group of 31-50 years and 20 of them lie in the age group of 51-65 years
2) OCCUPATION
4238
20
05
1015202530354045
NO
O
F
RE
SP
ON
DE
NT
S
18 to 30 31 to 50 51 to 65
AGE (in year)
AGE WISE CLASSIFICATION
36
a) Serviceb) Businessc) Professiond) Housewifee) Retired
OPTION NO OF RESPONDENTS PERCENTAGE
Service 16 32
Business 14 28
Profession 5 10
Housewife 8 16
Retired 7 14
TOTAL 50 100
INTERPRETATION-The above bar graph reveals that 32 of the total respondents were servicemen 28 of them belonged to the business class 10 were professionals 16 were housewives and 14 of the total respondents fall in the retired category
3) INCOME
32
28
10
16
14
0
5
10
15
20
25
30
35
Service Business Profession Housewife Retired
OCCUPATION
OCCUPATION WISE CLASSIFICATION
37
a) 150000-300000
b) 300000-500000
c) Above 500000
OPTION NO OF RESPONDENTS PERCENTAGE
150000-300000 24 48
300000-500000 14 28
Above 500000 12 24
TOTAL 50 100
INTERPRETATION-The above bar graph reveals that out of the total respondents 48 lie in the income group of 150000-300000 28 of the total respondents belonged to the income group of 300000-500000 and 24 lie in the income group of people earning an income of above Rs 500000pa
4828 24
01020304050
N O
OF
RE
SP
ON
DE
NT
S
150000-300000
300000-500000
ABOVE500000
INCOME (in RS)
INCOME WISE CLASSIFICATION
38
4) FAMILY MEMBERS
a) 2b) 3c) 4d) Above 4
OPTION NO OF RESPONDENT PERCENTAGE
2 11 22
3 9 18
4 24 48
Above 4 6 12
TOTAL 50 100
INTERPRETATION The above bar graph shows that 22 of the total respondents had a family of 2 members 18 of them had 3 family members 48 of them had 4 family members and 12 of them had the no of family members above 4
Q1 Where do you prefer to invest
22 18
48
120
1020304050
No
o
f re
spo
nd
ents
2 3 4 Above 4
No of family members
MEMBER WISE CLASSIFICATION
39
a) fixed deposits
b) stock
c) mutual funds
d) insurance
e) others
Option No of respondents Percentage
Fixed deposits 5 10
Stock 10 20
Mutual fund 10 20
Insurance 18 36
others 7 14
TOTAL 50 100
Interpretation The above pie chart shows that out of 50 respondents 10 preferred to invest in fixed deposits 20 in stocks 20 in mutual funds 36 in insurance and 14 in others like property gold etc
Q2 What are your priorities for investment
40
a) protecting your family against pre-mature death
b) wealth creation
c) retirement needs
d) child education and marriage
e) protect income against disability sickness or critical illness
Option No of respondents Percentage
Protecting your family against pre mature death
10 20
Wealth creation 14 28
Retirement needs 5 10
Child education and marriage 7 14
Protect income against disability sickness or critical illness
14 28
TOTAL 50 100
Interpretation The above pie chart shows that out of 50 respondents 20 of them invest for protecting their family against premature death 28 for creating wealth 10 for meeting their future retirement needs 14 for child education amp marriage and 28 for protection against disability and sickness
Q3 What is your main motive behind investing in life insurance
41
a) tax benefit
b) savings
c) risk cover
Option No of respondents Percentage
Tax benefits 27 54
Savings 5 10
Risk cover 18 36
TOTAL 50 100
Interpretation The above pie chart shows that out of the sample respondents 54 have tax benefit 10 have savings and 36 have risk cover as their main motive for making an investment in life
Q4 What kind of investment do you prefer
42
a) high risk high gain
b) low risk low gain
c) moderate
d) vary times to times
Option No of respondents Percentage
High risk high gain 8 16
Low risk low gain 5 10
Moderate 12 24
Vary times to times 25 50
TOTAL 50 100
Interpretation The above pie chart shows that out of 50 respondents 16 preferred high risk- high gain form of investment 10 preferred low risk- low gain form of investment 24 preferred moderate investment and 50 preferred varied form of investment
43
Q5Are you interested to invest in Traditional Plans
a) YES
b) NO
Option No of respondents Percentage
YES 36 72
NO 14 28
TOTAL 50 100
Interpretation The above pie chart shows that 72 of the respondents preferred to invest in Traditional Plans
44
Q6 What is your level of annual investmenta) below 20000
b) 20000-40000
c) above 40000
Option No of respondents Percentage
Below 20000 41 82
20000-40000 7 14
Above 40000 2 4
TOTAL 50 100
Interpretation The above pie chart shows that 82 of the respondents are willing to invest below Rs 20000 per annum 14 of them want to invest within Rs 20000 per annum to Rs 40000 and 4 wanted to invest over and above Rs 40000
45
Q7 What factors would you consider most important before choosing an insurance policy
a) publicity of the company
b) reputation of the company
c) quality of life advisors
d) after sales-supporting of the company
Option No of respondents Percentage
Publicity of the co 5 20
Reputation of the co 25 50
Quality of life advisors 10 10
After sale-services 10 20
TOTAL 50 100
Interpretation out of the sample respondents 20 considers publicity of the company 50 considers reputation of the company 10 considers quality of life advisors and 20 considers after sales support of the company as the most important factor for choosing an insurance company
46
Q8 Which life insurance company would you prefer the most to invest ina) reliance life insurance (RLIC)
b) Bajaj Allianz life insurance
Option No of respondents Percentage
RLIC 21 42
BAJAJ ALLIANZ 29 58
TOTAL 50 100
Interpretation Out of 50 respondents 42 preferred to invest in reliance life insurance over 58 of the respondents who prefer to invest in Bajaj Allianz life insurance
47
Q9 If reliance life insurance then which particular plan you would like to invest ina) Reliance Term Plan
b) Reliance Whole Life Plan
c) Reliance Endowment Plan
d) Reliance Special Endowment Plan
Option No of respondents Percentage
Reliance term plan 6 2858
Reliance whole life plan 3 1428
Reliance endowment plan 9 4286
Reliance special endowment plan 3 1428
TOTAL 21 100
Interpretation Out of 21 respondents 2858 preferred to invest in term plan 1428 in whole life plan 4286 in endowment plan and 1428 of them preferred to invest in special endowment plan of reliance life insurance
48
Q10 If Bajaj Allianz life insurance then which particular plan you would like to invest in
I ENDOWMENT PLAN a) Bajaj Allianz Invest Gain
b) Bajaj Allianz save Care Economy SP
c) Bajaj Allianz life time care
d) Bajaj Allianz Super Saver plan
II MONEY BACK PLAN i Bajaj Allianz Cash Gain plan
Option No of respondents Percentage
Invest gain plan 3 1035
Save care economy SP 6 2069
Life time care 7 2415
Super saver plan 3 1035
Cash gain plan 10 3446
TOTAL 29 100
Interpretation Out of 29 respondents 1035 of them plan to invest in Bajaj Allianz- Invest Gain 2069 wish to invest in Bajaj Allianz save Care Economy SP 2415 want to invest in Bajaj Allianz life time care 1035 in Bajaj Allianz Super Saver plan and 3446 prefer to invest in Bajaj Allianz Cash Gain plan
49
32) SIGNIFICANCE OF STUDY
Life insurance is one of the most rapidly growing sectors in India The main reason
behind the growth can attributed to the high population density improving economical
condition improving education level and improving awareness Due to these factors there
is still huge scope for growth in this sector Like any other business when the
opportunities are present everybody tends to enter the industries This growth hence
fetches the new competitors as well as new strategies from existing players To sustain in
any competitive industry the organization must adapt to existing strategies and adopt
new ones This study will focus on the analysis of Reliance Life Insurance in comparison
with the present scenario of Bajaj Allianz Life Insurance with respect to the Traditional
Plans of both the companyrsquos This will mainly cover the following aspects
To know about the awareness and popularity of various Traditional Plans offered
by Reliance Life Insurance and Bajaj Allianz Life Insurance
How Reliance Life Insurance can develop and sustain a good distribution
network
These will provide it benefit both in terms of better market coverage as well as better
penetration
50
33) SCOPE OF THE STUDY
1) This helps in finding out vast potential of insurance company
2) The study was conducted in National Capital Region (NCR) only
3) The number of respondents to be surveyed can be improved
4) This study was conducted by comparing the performances amp products of three private
amp government insurance players in insurance industry
5) This study was conducted to analyze the market stand of Reliance life insurance
Company limited and Bajaj Allianz Life Insurance Company Limited of India insurance
companies
6) This study is done to eliminate all the myths which people have in their minds
regarding Insurance Sector
51
34) OBJECTIVES
To have a detailed understanding of Reliance Life Insurance and Bajaj Allianz Life Insurance
To find out various reasons considered while investing in policies
To get knowledge about the market exposure and future prospects about Reliance Life Insurance
To know the perception of the consumers about the life insurance
To analyze the Traditional plans of Reliance Life Insurance and compare it with Bajaj Allianz
To know about the brand awareness of Reliance Life Insurance its customer preferences over Bajaj Allianz in the market
To study a proper knowledge about the life insurance industry
To understand the consumer choice while investing in policies
52
CHAPTER 4
DISCUSSION AND FINDINGS OF THE STUDY
FINDINGS OF THE STUDY RECOMMENDATION AND SUGGESTIONS CONCLUSION LIMITATIONS BIBLIOGRAPHY ANNEXUREQUESTIONNAIRE
53
41) FINDINGS OF THE STUDY
1) The survey reveals that still a large proportion of population is interested to invest in other forms of investment other than insurance as still most of them are unaware about the importance of insurance in their life
2) Basically people make varied form of investment for creating wealth to protect their families against pre-mature death and to protect income against disability sickness or critical illness
3) The main motive of the individuals investing is receives benefits US 1010D People generally consider insurance as a tax saving device
4) Mostly people prefer time to time form of investment as they are not willing to take high degree of risk
5) 72 of the respondents are preferred to invest in Traditional Plans
6) Most of the people prefer to make an annual investment up to a maximum of Rs20 000 per annum
7) When the product is like life insurance reputation of the company publicity of the company amp after sale services of the company matters a lot This means that people would choose that insurance company only where the quality of life advisors is satisfactory
8) Most people prefer to invest in Bajaj Allianz Life Insurance as compared to making an investment in Reliance Life Insurance
9) The most preferable Traditional plan of Reliance Life Insurance is Endowment Plan
10) The most preferable plan of Bajaj Allianz Life Insurance co is Cash Gain Plan
54
42) SUGGESTIONS amp RECOMMENDATIONS
Based on the observations of the study some suggestions for the organization are made as
follows
1) Quality of advisors is also as important as the quantity Thus company should go
mainly for qualified professionals
2) Company should increase its budget on publicity so that awareness can be increased
3) Clarity and transparency should be provided to the customer regarding various
products
4) Training sessions should be planned in advance so that schedule can be provided to
the advisor in advance
5) Apart from the Brand Positioning in urban area a strategy should be adopted by
Reliance to make its brand also near to middle level or high aspirant people because they
are the main source of the business in India
6) Awareness Camp to the sub urban area should be focused by Reliance
7) Some innovative technique or product is required in order to attract the consumer
43) LITERATURE REVIEW
55
1) Robi Elenekave has explained in detail why various retirement plans and pension plans donrsquot give the desired returns The main difficulty is the use of incorrect method for calculations done to find out the return on investment This is primarily due to wrong assumptions The study provides information about the various precautions which need to be considered before planning so that the desired results can be achieved
2) Another paper provides insight about how various financial sectors invest in bond market The study was how the different players investment different instruments according to the risk appetite and desired rate of return The study shows that life insurance sector mainly invests in government bond which are low return and low risk instrument The investment in government bond it shows that life insurance companies are more conservative in investment
3) K Subhash has presented the history of Indiarsquos life insurance industry in three stages before independence after independence and post liberalization which not only provides information but also help in analyzing the impact of these major changes The authors have also discussed the huge potential which exists in the rural India The insurance company must realize the importance of rural sector because the future lies there The author commented about the increasing share of private player in the existing market This confirms the availability of opportunity in this sector The paper also provides the importance of professional and focused approach which was given no importance
4) Tapen Sinha has discussed the various challenges and opportunities in the insurance market One of the very important factors which have been discussed in the study is the importance of developing new and better products As the scenario changes the need of an individual also changes so any organization must understand and fulfill these needs The new product development requires constant research so organization must also focus on it
5) Roger G Ibbotson discusses how financial planners and advisors have recently started to recognize that human capital must be taken into account when building optimal portfolios for individual investors Any investorrsquos human capital has a unique mortality risk However life insurance in its forms can hedge against this mortality risk Thus human capital affects both the optimal asset allocation and the optimal demand for life insurance This paper provides a unified framework based on human capital in order to enable individual investors to make both decisions jointly
6) Rakesh Niraj study tells how the flow of information in any organization is important For any organization to grow the flow of information must be good both upwards as well as ownwards The proper flow of information will also ensure proper flow of good and services from organization to customer and proper flow of information from customer to organization The information from customers will help the organization in providing better goods and services to the customer For the above purpose organization must ensure good channel partner who can provide the organization with correct feedback Hence it becomes very important for any organization to acquire good channel partners
56
7) Stephen P Robbins has discussed how group dynamics works in any organization The success of any organization depends on the success of its various teams and how these teams work together The book provides various techniques which can be used by any organization to get result from the team effort The conflict resolution is a major task in any group Various techniques which the organization can use in conflict resolution are also discussed Another important aspect covered is the importance of leadership in the organization The various forms of leadership have been discussed and the kinds of leadership which can be effective in particular situations are also discussed
8) R Wayne Mondy has discussed the importance of training and development in any organization The training provides skills to perform the current job where as the development involve learning beyond present need The various type of training are discussed which can be used according to the requirement Training and development are not only important for better performance of an individual but it also gives satisfaction The major factors which influence training and development are found to be management support commitment of trainee and trainer complexity of the organization The process of developing good training plans is also provided In another part author has discussed the importance of right man for right job The compensation strategies are also given which are very crucial for ant industry
9) Philip Kotler has discussed the importance of channels partners Better the channel partners better will be the delivery model Detailed discussion about how to design the channel structure so that all the requirements could be fulfilled is provided The various issues faced by the organization while managing the channels are also given When an organization has more than one channel it becomes very important that all the channels should be integrated in such a way that the organization get the best out of all At times due to the conflicting benefit of the different channels the conflict arise so various strategies to manage these issues is also discussed in the chapter
10) Michael J Etzel has written about the marketing of services The marketing of services is different from the goods because of the characteristic of service like intangibility inseparability heterogeneity etc Brief about pricing strategies is also given in case of services The authors have also given the impact of technological development on the services marketing The author has also given the importance of brand and after sales support in case of services as perception of the customers plays an important role In other part of the book the authors has described the importance of distribution channels and designing of the same A channel partner should be consider as partner according to discussion The legal complications associated with channels are also discussed These complications are necessary to take into the consideration while managing the channels The conflicting interest of channels both horizontally and vertically are also taken into the consideration
57
11) Boone has discussed about the importance of personal financial planning The concept of time value of money has also been elaborated The importance of creating and implementing budget is given under money management The other important concepts for financial planning like credit management and understanding taxes are also explained In one section the authors have discussed the importance of investment and what should be the major considerations while making any investment The considerations include the risk associated with the investment return on the investment etc The importance and benefits of life insurance has also been given The discussion also includes various legal aspects associated with life insurance The overview of retirement planning is also given which includes importance and benefit of retirement planning Various tools for proper retirement planning are also discussed
58
44) CONCLUSION
1) The customers are very much sensitive towards their investment They would like to invest only in that insurance company which enjoys good public image along with quality good services
2) The result of the survey conducted shows that Bajaj Allianz Life Insurance is the leader in life insurance industry but Reliance Life Insurance and other private players are giving it a close competition
3) The motive of the people behind investing in life insurance is the tax benefits that they would receive under sec 80C and 1010D
4) In Life Insurance industry the after sales support of the company is as important as the quality of life advisors
59
45) LIMITATIONS
There were some limitations faced during the study as discussed below
Since the study was taken for two months so there was a constraint of time and effort
The study was limited only to some of the Delhi regions so the results may be biased
Questionnaire was given to 125 people however only 50 responded to it which is very small for such type of study
The biasness of consumer or responses error cannot be eliminated
Most of the people are not aware about the Importance and the necessity of insurance in their life
Adverse perception of the people towards insurance sector- People consider insurance as a tax saving device
Lack of awareness about the earning opportunity in the insurance sector
60
46) BIBLIOGRAPHY
wwwreliancelifeinsurancecom
wwwadagroupcom
wwwirdacom
wwwbajajallianzlifeinsurancecom
wwwallianzbajajcom
47) ANNEXURE
61
QUESTIONNAIRE
A comparative analysis of consumer perception regarding Traditional plans of Reliance Life Insurance with that of Bajaj Allianz Life Insurance
NAME ___________________________
PERSONAL DETAILS
1) AGE_________________
1) OCCUPATION______________
2) INCOME___________________
3) FAMILY MEMBERS_________
Q1 Where do you prefer to investa) Fixed deposits b) Stock c) Mutual funds d) Insurance e) Others
Q2 What are your priorities for investmenta) Protecting your family against pre-mature death b) Wealth creation c) Retirement needs d) Child education and marriage e) Protect income against disability sickness or critical illness
Q3 What is your main motive behind investing in life insurancea) Tax benefit b) Savings c) Risk cover
Q4 What kind of investment do you prefera) High risk high gain b) Low risk low gain c) Moderate d) Vary times to times
62
Q5Are you interested to invest in Traditional Plansa) Yes b) No
Q6 What is your level of annual investmenta) below 20000 b) 20000-40000 c) above 40000
Q7 What factors would you consider most important before choosing an insurance company
a) publicity of the company b) reputation of the company c) quality of life advisors d) after sales-supporting of the company
Q8 Which life insurance company would you prefer the most to invest ina) Reliance life insurance b) Bajaj Allianz life insurance
Q9 If reliance life insurance then which particular plan you would like to invest ina) Reliance Term Plan b) Reliance Whole Life Plan c) Reliance Endowment Plan d) Reliance Special Endowment Plan
Q10 If Bajaj Allianz life insurance then which particular plan you would like to invest in
I ENDOWMENT PLAN
a) Bajaj Allianz Invest Gain
b) Bajaj Allianz save Care Economy SP
c) Bajaj Allianz life time care
d) Bajaj Allianz Super Saver plan
II MONEY BACK PLAN
a) Bajaj Allianz Cash Gain plan
63
64
- COMPANY PROFILE
- ABOUT RELIANCE LIFE INSURANCE
- HISTORY
- Reliance Capital Limited announced the launch of its life insurance business on February 1 2006 This was after obtaining the required regulatory approvals from the Registrar Of Companies and the Insurance Regulatory and Development Authority
- It was in August 2005 that the ball was set rolling when Reliance Capital Limited the financial arm of Reliance ndash Anil Dhirubhai Ambani Group (ADAG) ndash announced the requisition of 100 shareholding in AMP Sanmar Life Insurance Company Limited and the formal transfer of shares took place in October 2005 The company will issue all policy contracts under the Reliance Life Insurance Company limited name All the existing policy contracts also stand transferred to the Reliance Life Insurance entity with all the original contractual terms and commitments intact
- CORE VALUES
- Reliance Life Insurance Company Limited has some core values which are listed as follows
- Vision bull To be the first choice insurer for customers bull To be the preferred employer for staff in the insurance industry bull To be the number one insurer for creating shareholder value
- Mission As a responsible customer focused market leader we will strive to understand the insurance needs of the consumers and translate it into affordable products that deliver value for money
- 12) TRADITIONAL PLANS OF THE COMPANY
- 12A )TRADITIONAL PLAN OF RELIANCE LIFE INSURANCE-
- Life insurance products are designed to suit the requirements of customers Fundamentally the product provide for
- In every product to a certain degree risk cover is imperative for it to fall under the category of insurance Based on the coverage of the product the premiums are calculated and the customer pays accordingly In order to suggest the right product it is essential for an agent to understand the requirements of the customer well
- The traditional plans of the company have the following features-
- Fixed Tenure
- Potential for better returns
- Transparency
- Flexibility in investment
- Flexibility to invest more
- Flexibility to skip the premium
- Flexibility to choose the cover
- High liquidity
- Age term and sum assured decide the amount of premium
- Top- ups and switches are not allowed
- Reliance Life Insurance Company Limited has offered 9
- 1) Reliance term plan-
- 2) Reliance Whole Life Plan -
- 3) Reliance Endowment Plan -
- 4) Reliance Special Endowment Plan -
- 13) INDUSTRY PROFILE
- MEANING OF INSURANCE
- Insurance may be described as a social device to reduce or eliminate risk of loss to life and property Insurance is a collective bearing of risk Insurance is a financial device to spread the risks and losses of few people among a large number of people as people prefer small fixed liability instead of big uncertain and changing liability
- Insurance can be defined as a ldquolegal contract between two parties whereby one party called insurer undertakes to pay a fixed amount of money on the happening of a particular event which may be certain or uncertainrdquo The other party called insured pays in exchange a fixed sum known as premium
- Insurance is desired to safeguard oneself and onersquos family against possible losses on account of risks and perils It provides financial compensation for the losses suffered due to the happening of any unforeseen events
- IMPORTANCE OF INSURANCE
- Insurance services play predominant role in the process of financial Intermediary Today insurance industry is one of the most growing sectors in India There is lot of potential in the Indian Insurance Industry
- There are many issues which require study The scope of the study of Insurance industry of India would be very great as there are ongoing Developments in the industry after the opening of the sector
- Right now the insurance industry has great opportunities in a country like India or China which huge population Also the penetration of insurance in India is very low in both life and non-life segment so there is lot potential to be tapped Before starting the discussion on insurance industry and related issues we have to start with the basics of insurance So first we understand what is insurance How the word lsquoinsurancersquo is different from the word lsquoassurancersquo Etc
- HISTORY OF INSURANCE
- The concept of insurance is believed to have emerged almost 4500 years ago in the ancient land of Babylonia where traders used to bear risk of the carvan by giving loans which were later repaid with interest when the goods arrived safely
- The concept of insurance as we know today took shape in 1688 at a place called Lloydrsquos Coffee House in London where risk bearers used to meet to transact business This coffee house became so popular that Lloydrsquos became the one of the first modern insurance companies by the end of the eighteenth century
- Marine insurance companies came into existence by the end of the eighteenth century These companies were empowered to write fire and life insurance as well as marine The Great Fire of London in 1966 caused huge loss of property and life With a view to providing fire insurance facilities
- Dr Nicholas Barbon set up in 1967 the first fire insurance company known as the Fire office
- Life insurance in its modern form came to India from England in 1818 The Oriental Life Insurance Company was the first insurance company to be set up in India to help the widows of European community The insurance companies which came into existence between 1818 and 1869 treated
- Indian lives as subnormal and charged an extra premium of 15 to 20 per cent The first Indian insurance company the Bombay Mutual Life
- Assurance Society came into existence in 1870 to cover Indian lives at normal rates
- The Insurance Act 1938 the first comprehensive legislation governing both life and non-life branches of insurance were enacted to provide strict state control over insurance business This amended insurance Act looked into investments expenditure and management of these companies
- By the mid- 1950s there were 154 Indian insurers 16 foreign insurers and 75 provident societies carrying on life insurance business in India Insurance business flourished and so did scams irregularities and dubious investment practices by scores of companies As a result the government decided to nationalize the life assurance business in India The Life Insurance
- Corporation of India (LIC) was set up in 1956 The nationalization of life insurance was followed by general insurance in 1972
- MEANING OF LIFE INSURANCE
- There are three parties in a life insurance transaction the insurer the insured and the owner of the policy (policyholder) although the owner and the insured are often the same person
- Another important person involved in a life insurance policy is the beneficiary The beneficiary is the person or persons who will receive the policy proceeds upon the death of the insured
- Life insurance may be divided into two basic classes ndash term and permanent
- HISTORY OF LIFE INSURANCE
- Risk protection has been a primary goal of humans and institutions throughout history Protecting against risk is what insurance is all about
- Over 5000 years ago in China insurance was seen as a preventative measure against piracy on the sea Piracy in fact was so prevalent that as a way of spreading the risk a number of ships would carry a portion of another ships cargo so that if one ship was captured the entire shipment would not be lost
- In another part of the world nearly 4500 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
- Life insurance came about a little later in ancient Rome where burial clubs were formed to cover the funeral expenses of its members as well as help survivors monetarily With Romes fall around 450 AD most of the concepts of insurance were abandoned but aspects of it did continue through the Middle Ages particularly with merchant and artisan guilds These provided forms of member insurance covering risks like fire flood theft disability death and even imprisonment
- During the feudal period early forms of insurance ebbed with the decline of travel and long-distance trade But during the 14th to 16th centuries transportation commerce and insurance would again reemerge
- And similar to ancient Rome burial societies were formed in the Buddhist period to help families build houses and to protect widows and children
- Modern Insurance
- Illegal almost everywhere else in Europe life insurance in England was vigorously promoted in the three decades following the Glorious Revolution of 1688 The type of insurance we see today owes its roots to 17th century England Lloyds of London or as they were known then Lloyds Coffee House was the location where merchants ship owners and underwriters met to discuss and transact business deals
- While serving as a means of risk-avoidance life insurance also appealed strongly to the gambling instincts of Englands burgeoning middle class
- Gambling was so rampant in fact that when newspapers published names of prominent people who were seriously ill bets were placed at Lloydrsquos on their anticipated dates of death Reacting against such practices 79 merchant underwriters broke away in 1769 and two years later formed a ldquoNew Lloydrsquos Coffee Houserdquo that became known as the ldquoreal Lloydrsquosrdquo Making wagers on peoples deaths ceased in 1774 when parliament forbade the practice
- Insurance moves to America
- The US insurance industry was built on the British model The year 1735 saw the birth of the first insurance company in the American colonies in
- Charleston SC The Presbyterian Synod of Philadelphia in 1759 sponsored the first life insurance corporation in America for the benefit of ministers and their dependents And the first life insurance policy for the general public in the United States was issued in Philadelphia on May 22 1761
- But it wasnt until 80 years later (after 1840) that life insurance really tookoff in a big way The key to its success was reducing the opposition from religious groups
- In 1835 the infamous New York fire drew peoples 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
- With the creation of the automobile public liability insurance which first made its appearance in the 1880s gained importance and acceptance
- More advancement was made to insurance during the process of industrialization In 1897 the British government passed the Workmens Compensation Act which made it mandatory for a company to insure its employees against industrial accidents
- During 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 most labor 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
- BENEFITS OF LIFE INSURANCE
- 1) Risk cover -Life Insurance contracts allow an individual to have a risk cover against any unfortunate event of the future
- 2) Tax Deduction -Under section 80C of the Income Tax Act of 1961 one can get tax deduction on premiums up to one lakh rupees Life Insurance policies thus decrease the total taxable income of an individual
- 3) Loans -An individual can easily access loans from different financial institutions by pledging his insurance policies
- 4) Retirement Planning -What had provided protection against the financial consequences of premature death may now be used to help them enjoy their retirement years
- 5) Educational Needs -Similar to retirement planning the cash values that flow from ones life insurance schemes can be utilized for educational needs of the insurer or his children
- The Life Insurance Industry has an enviable track record among public sector units It has a Consistent profit and dividend paying record accompanied by a steady growth in its financial resources Through investments in the Government sector and socially- oriented sectors the Industry has contributed immensely to the nations development The industry is recognized as one of the largest financial Institutions in the country The ventures initiated by the industry in the areas of Mutual Fund
- Housing Finance has done exceedingly well in recent years To protect the countrys foreign exchange reserves the reinsurance arrangement are so organized that maximum retention is made possible within the country while at the same time protecting interests of the policy holders
- 22) CURRENT SCENARIO OF RELIANCE LIFE INSURANCE
- RLIC offers wide range of innovative life insurance products targeted at individuals and groups It offers need based products that caters to four distinct segments namely protection child retirement and investment plans RLIC is committed to emerge as a transnational Life Insurer of global scale and standard
- CH - 3) RESEARCH METHODOLOGY
- RESEARCH DESIGN-
- SAMPLING TECHNIQUES-
- THE PRIMARY OBJECTIVEOF THE STUDY-
- 34) OBJECTIVES
- 7) Some innovative technique or product is required in order to attract the consumer
- 45) LIMITATIONS
- 46) BIBLIOGRAPHY
-
12 B) TRADITIONAL PLANS OF BAJAJ ALLIANZ LIFE INSURANCE
I ENDOWMENT PLAN
Saving plan which offer bonuses are excellent long term plan with complete safety Our products offer additional benefits which include 4 times life cover at a little extra cost limited premium payment terms and compounded reversionary bonuses making it a very good long term investment
1 Bajaj Allianz Invest GainInvest Gain is a specially designed plan that offers a unique combination of benefits that help you develop a sound financial portfolio for your family
4 Times Life Cover at a little extra cost
Limited premium payment option available
Additional Benefits
a) Accidental Death Benefit and Disability Benefit b) Critical Illness Benefit and Hospital Cash Benefit c) Family Income Benefit In case of death or accidental total permanent disability of insured all future premiums are waived and 1 of the sum assured is paid monthly
Invest Gain Save Care Economy SP Life Time Care
Super Saver
16
2 Bajaj Allianz save Care Economy SP
A One-time payment Investment plan that provides for savings with high risk cover for 10 years and also participates in the profits of the company It offers you high risk cover with easy liquidity and high returns
a) A single premium endowment plan that participates in the profitsb) 10 year Investment planc) Benefits payable on maturityc) Loans available
17
3 Bajaj Allianz life time care
A whole life plan which provides survival benefits at the age of 80 thereby making sure you are financially secure at the time when you need it the most Additional Benefits
a) Accidental Death Cover and Disability Cover b) Critical Illness Cover and Hospital Cash Cover c) Waiver of Premium Benefit
4Bajaj Allianz Super Saver plan
Bajaj Allianz Super Saver is a regular premium endowment plan which helps you save regular amounts for a safer tomorrow It also provides you with extra benefits of Guaranteed Additions to your sum assured at the end of each policy year
18
II MONEY BACK PLAN
Money back plans are Traditional Insurance plans that provide the investor with returns at regular stages of life
CashGain
1)Bajaj Allianz Cash Gain plan
A Money back plan which guarantees 125 payout + bonuses
Quadruple life cover
5 easy payouts which give upto 125 + bonuses
Additional Benefitsa) Accidental Death Benefit and Disability Benefitb) Critical Illness Benefit and Hospital Cash Benefitc) Family Income Benefit In case of death or accidental total permanent disability of insured all future premiums are waived and 1 of the sum assured is paid monthly
19
20
13) INDUSTRY PROFILE
MEANING OF INSURANCE
Insurance may be described as a social device to reduce or eliminate risk of loss to life and property Insurance is a collective bearing of risk Insurance is a financial device to spread the risks and losses of few people among a large number of people as people prefer small fixed liability instead of big uncertain and changing liability
Insurance can be defined as a ldquolegal contract between two parties whereby one party called insurer undertakes to pay a fixed amount of money on the happening of a particular event which may be certain or uncertainrdquo The other party called insured pays in exchange a fixed sum known as premiumInsurance is desired to safeguard oneself and onersquos family against possible losses on account of risks and perils It provides financial compensation for the losses suffered due to the happening of any unforeseen events
IMPORTANCE OF INSURANCE
Insurance constitutes one of the major segments of the financial marketInsurance services play predominant role in the process of financial Intermediary Today insurance industry is one of the most growing sectors in India There is lot of potential in the Indian Insurance Industry
There are many issues which require study The scope of the study of Insurance industry of India would be very great as there are ongoing Developments in the industry after the opening of the sectorOne of the major issues is the effects on LIC after the entry of private players in the market Though market share of LIC has been affected it has improved in terms of efficiency
There are number of other hot topics like penetration of Health Insurance Rural marketing of insurance new distribution channels new product ranges insurance brokersrsquo regulation incentive scheme of development officers of LIC etc So it offers lot of scope for studying the insurance industryRight now the insurance industry has great opportunities in a country like India or China which huge population Also the penetration of insurance in India is very low in both life and non-life segment so there is lot potential to be tapped Before starting the discussion on insurance industry and related issues we have to start with the basics of insurance So first we understand what is insurance How the word lsquoinsurancersquo is different from the word lsquoassurancersquo Etc
21
HISTORY OF INSURANCE
The concept of insurance is believed to have emerged almost 4500 years ago in the ancient land of Babylonia where traders used to bear risk of the carvan by giving loans which were later repaid with interest when the goods arrived safely
The concept of insurance as we know today took shape in 1688 at a place called Lloydrsquos Coffee House in London where risk bearers used to meet to transact business This coffee house became so popular that Lloydrsquos became the one of the first modern insurance companies by the end of the eighteenth centuryMarine insurance companies came into existence by the end of the eighteenth century These companies were empowered to write fire and life insurance as well as marine The Great Fire of London in 1966 caused huge loss of property and life With a view to providing fire insurance facilitiesDr Nicholas Barbon set up in 1967 the first fire insurance company known as the Fire office
Life insurance in its modern form came to India from England in 1818 The Oriental Life Insurance Company was the first insurance company to be set up in India to help the widows of European community The insurance companies which came into existence between 1818 and 1869 treatedIndian lives as subnormal and charged an extra premium of 15 to 20 per cent The first Indian insurance company the Bombay Mutual LifeAssurance Society came into existence in 1870 to cover Indian lives at normal rates
The Insurance Act 1938 the first comprehensive legislation governing both life and non-life branches of insurance were enacted to provide strict state control over insurance business This amended insurance Act looked into investments expenditure and management of these companiesBy the mid- 1950s there were 154 Indian insurers 16 foreign insurers and 75 provident societies carrying on life insurance business in India Insurance business flourished and so did scams irregularities and dubious investment practices by scores of companies As a result the government decided to nationalize the life assurance business in India The Life InsuranceCorporation of India (LIC) was set up in 1956 The nationalization of life insurance was followed by general insurance in 1972
22
MEANING OF LIFE INSURANCE
There are three parties in a life insurance transaction the insurer the insured and the owner of the policy (policyholder) although the owner and the insured are often the same person
Another important person involved in a life insurance policy is the beneficiary The beneficiary is the person or persons who will receive the policy proceeds upon the death of the insured
Life insurance may be divided into two basic classes ndash term and permanent
Term life insurance provides for life insurance coverage for a specified term of years for a specified premium The policy does not accumulate cash value
Permanent life insurance is life insurance that remains in force until the policy matures unless the owner fails to pay the premium when due
Whole life insurance provides for a level premium and a cash value table included in the policy guaranteed by the company The primary advantages of whole life are guaranteed death benefits guaranteed cash values fixed and known annual premiums and mortality and expense charges will not reduce the cash value shown in the policy
Universal life insurance (UL) is a relatively new insurance product intended to provide permanent insurance coverage with greater flexibility in premium payment and the potential for a higher internal rate of return A universal life policy includes a cash account Premiums increase the cash account If you want insurance protection only and not a savings and investment product buy a term life insurance policy
If you want to buy a whole life universal life or other cash value policy plan to hold it for at least 15 years Canceling these policies after only a few years can more than double your life insurance costs
23
HISTORY OF LIFE INSURANCE
Risk protection has been a primary goal of humans and institutions throughout history Protecting against risk is what insurance is all aboutOver 5000 years ago in China insurance was seen as a preventative measure against piracy on the sea Piracy in fact was so prevalent that as a way of spreading the risk a number of ships would carry a portion of another ships cargo so that if one ship was captured the entire shipment would not be lostIn another part of the world nearly 4500 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
Life insurance came about a little later in ancient Rome where burial clubs were formed to cover the funeral expenses of its members as well as help survivors monetarily With Romes fall around 450 AD most of the concepts of insurance were abandoned but aspects of it did continue through the Middle Ages particularly with merchant and artisan guilds These provided forms of member insurance covering risks like fire flood theft disability death and even imprisonment
During the feudal period early forms of insurance ebbed with the decline of travel and long-distance trade But during the 14th to 16th centuries transportation commerce and insurance would again reemergeInsurance in India can be traced back to the Vedas For instance yogakshema the name of Life Insurance Corporation of Indias 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
And similar to ancient Rome burial societies were formed in the Buddhist period to help families build houses and to protect widows and children
Modern InsuranceIllegal almost everywhere else in Europe life insurance in England was vigorously promoted in the three decades following the Glorious Revolution of 1688 The type of insurance we see today owes its roots to 17th century England Lloyds of London or as they were known then Lloyds Coffee House was the location where merchants ship owners and underwriters met to discuss and transact business dealsWhile serving as a means of risk-avoidance life insurance also appealed strongly to the gambling instincts of Englands burgeoning middle classGambling was so rampant in fact that when newspapers published names of prominent people who were seriously ill bets were placed at Lloydrsquos on their anticipated dates of death Reacting against such practices 79 merchant underwriters broke away in 1769 and
24
two years later formed a ldquoNew Lloydrsquos Coffee Houserdquo that became known as the ldquoreal Lloydrsquosrdquo Making wagers on peoples deaths ceased in 1774 when parliament forbade the practice
Insurance moves to AmericaThe US insurance industry was built on the British model The year 1735 saw the birth of the first insurance company in the American colonies inCharleston SC The Presbyterian Synod of Philadelphia in 1759 sponsored the first life insurance corporation in America for the benefit of ministers and their dependents And the first life insurance policy for the general public in the United States was issued in Philadelphia on May 22 1761But it wasnt until 80 years later (after 1840) that life insurance really tookoff in a big way The key to its success was reducing the opposition from religious groups
In 1835 the infamous New York fire drew peoples 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
With the creation of the automobile public liability insurance which first made its appearance in the 1880s gained importance and acceptanceMore advancement was made to insurance during the process of industrialization In 1897 the British government passed the Workmens Compensation Act which made it mandatory for a company to insure its employees against industrial accidents
During 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 most labor 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
25
BENEFITS OF LIFE INSURANCE
1) Risk cover -Life Insurance contracts allow an individual to have a risk cover against any unfortunate event of the future
2) Tax Deduction -Under section 80C of the Income Tax Act of 1961 one can get tax deduction on premiums up to one lakh rupees Life Insurance policies thus decrease the total taxable income of an individual
3) Loans -An individual can easily access loans from different financial institutions by pledging his insurance policies
4) Retirement Planning -What had provided protection against the financial consequences of premature death may now be used to help them enjoy their retirement yearsMoreover the cash value can be used as an additional income in the old age
5) Educational Needs -Similar to retirement planning the cash values that flow from ones life insurance schemes can be utilized for educational needs of the insurer or his children
26
ROLE OF LIFE INSURANCE IN THE GROWTH OF THE ECONOMY
The Life Insurance Industry has an enviable track record among public sector units It has a Consistent profit and dividend paying record accompanied by a steady growth in its financial resources Through investments in the Government sector and socially- oriented sectors the Industry has contributed immensely to the nations development The industry is recognized as one of the largest financial Institutions in the country The ventures initiated by the industry in the areas of Mutual Fund
Housing Finance has done exceedingly well in recent years To protect the countrys foreign exchange reserves the reinsurance arrangement are so organized that maximum retention is made possible within the country while at the same time protecting interests of the policy holders
27
ROLE OF IRDA
MISSION
ldquoTo protect the interests of the policyholders to regulate promote
and ensure orderly growth of the insurance industry and for matters
connected therewith or incidental theretordquo
The Insurance Act 1938 had provided for setting up of the Controller of Insurance to act
as a strong and powerful supervisory and regulatory authority for insurance Post
nationalization the role of Controller of Insurance diminished considerably in
significance since the Government owned the insurance companies But the scenario
changed with the private and foreign companies foraying in to the insurance sector This
necessitated the need for a strong independent and autonomous Insurance Regulatory
Authority was felt As the enacting of legislation would have taken time the then
Government constituted through a Government resolution an Interim Insurance
Regulatory Authority pending the enactment of a comprehensive legislation
The Insurance Regulatory and Development Authority Act 1999 is an act to provide for
the establishment of an Authority to protect the interests of holders of insurance policies
to regulate promote and ensure orderly growth of the insurance industry and for matters
connected therewith or incidental thereto and further to amend the Insurance Act 1938
the Life Insurance Corporation Act 1956 and the General insurance Business
(Nationalization) Act 1972 to end the monopoly of the Life Insurance Corporation of
India (for life insurance business) and General Insurance Corporation and its subsidiaries
(for general insurance business) The act extends to the whole of India and will come
into force on such date as the Central Government may by notification in the Official
Gazette specify Different dates may be appointed for different provisions of this Act
28
The Act has defined certain terms some of the most important ones are as follows
Appointed day means the date on which the Authority is established under the act
Authority means the established under this Act Interim Insurance Regulatory Authority
means the Insurance Regulatory Authority set up by the Central Government through
Resolution No 17(2) 94-lns-V dated the 23rd January 1996
Words and expressions used and not defined in this Act but defined in the Insurance Act
1938 or the Life Insurance Corporation Act 1956 or the General Insurance Business
(Nationalization) Act 1972 shall have the meanings respectively assigned to them in
those Acts A new definition of Indian Insurance Company has been inserted Indian
insurance company means any insurer being a company
(a) Which is formed and registered under the Companies Act 1956
(b) in which the aggregate holdings of equity shares by a foreign company either by
itself or through its subsidiary companies or its nominees do not exceed twenty-six
percent paid up capital in such Indian insurance company
(c) Whose sole purpose is to carry on life insurance business general insurance business
or re-insurance business
29
CURRENT SCENERIO
21) CURRENT SCENERIO OF THE INSURANCE INDUSTRY
With largest number of life insurance policies in force in the world insurance happens to be a mega opportunity in India Itrsquos a business growing at the rate of 15-20 per cent annually and presently is of the order of Rs 450 billion Together with banking services it adds about 7 per cent to the countryrsquos GDP Gross premium collection is nearly 2 per cent of GDP and funds available with LIC for investment are 8 per cent of GDP
Yet nearly 80 percent of Indian population is without life insurance cover while health insurance and non-life insurance continues to be below international standards And this part of the population is also subject to weak social security and pension systems with hardly any old age income security This it is an indicator that growth potential for the insurance sector is immense A well-develop and evolved insurance sector is needed for economic development as it provides long term funds for infrastructure development and at the same time strengthens the risk taking ability It is estimated that over the next ten years India would require investments of the order of one trillion US dollar The insurance sector to some extent can enable investment in infrastructure development to sustain economic growth of the country Insurance is a federal subject in India There are two legislation that govern the sector - The Insurance Act-1938 and The IRDA Act-1999
In India insurance is generally considered as a tax-saving device instead of its other implied long term financial benefits Indian people are prone to investing in properties and gold followed by bank deposits They selectively invest in shares also but the percentage is very small Even to this day Life Insurance Corporation of India dominates India insurance sector With the entry of private sector players backed by foreign expertise Indian insurance market has become more vibrant Business is becoming increasingly vulnerable due to wide variety of risk particularly after September 11 2001 disaster in which twin tower located in the hearts of New York city were crashed by terrorist attack resulting in loss of 6000 human lives as well as financial loss to the extent of $45 billion The impact of this terrorist attack has created new horizon of risk to the business world today
However rapid changes in the global economy development of technology and e-business already gathered momentum Increased dependency on technology has originated new risks that have resulted in well-published incidents Computer hackers obtaining credit card information from visa and Power-Gen the love bug virus cyber extortion web content liability professional errors and omissions computers and other crimes and activities such as terrorism kidnapping and companyrsquos executive and extortion of money commercial liability etc have significant impact on business resulting in extreme financial loss commercial embarrassment or regulatory implications
Corporation insurancerisk managers under the circumstances have to demand increasingly complex insurance products They have to be more attentive and
30
knowledgeable about emerging risks how those risks are managed effectively and efficiently and how they could ultimately affect a companyrsquos financial situation and therefore its position in the market place In short how such risks are managed and can give to an insured a competitive advantage
In the changing times adoption of e-commerce into business models the integration of web-based communication and data transfer capabilities into the business operations and leveraging of advanced network and technology architecture for maximum benefit are the new horizon of the risks For the corporate insurancerisks managers these new exposure-cyber-risks-can lead to cyber losses widening the interpretation of what constitute insure property damage particularly as it relates to information technology and dataAll the while organizations are tremendous pressure to reduce expenses and increase profit margin and cannot afford to suffer a property loss of business interruption due to any cause (risk) How a company identifies quantifies qualifies and manages these new risks exposure in addition to the well-known tradition risks is becoming an important factor in creating shareholders value This often means changing the way Everyone in the organization have to think about risk
Insurance managers are seeing price levels (premium) continue to rise-albeit modestly-in todayrsquos primarily commercial property and reinsurance markets They are demanding that insurers improve their risk assessment and quantification offerings so that an insured may avail the benefit in cost (premium rate) on account of well-managed riskThe good news for insurance managers is that as the economy evolves insurers are increasingly matching that evaluation with new products services and capabilities due to opening up the insurance market to the private players
Insurers who are truly listening to their customers and striving to be more in tune with their needs are responding to the fast changing corporate insurance and risk management landscape They are listening to their customers They are making fresh approaches to address the new challenges faced by insured organization by designing the new products as per the needs Insurers are providing value added services to insured to protect the value created by the business
Insurers are increasingly required to develop and expand their information technology platforms to ensure that the vast amount of data they collect about their customers Insurancerisk portfolio can easily and seamlessly be transformed into valuable risk management information To help their customers insurers should make better-informed decisions They must be able to swiftly deliver this data to their customers (insured) anywhere in the world Insurer are also discovering that risk assessment have to be customized to meet policyholdersrsquo new exposures and needs The insurance industry is stepping up and addressing these challenges in several different ways
31
22) CURRENT SCENARIO OF RELIANCE LIFE INSURANCE
RLIC offers wide range of innovative life insurance products targeted at individuals and groups It offers need based products that caters to four distinct segments namely protection child retirement and investment plans RLIC is committed to emerge as a
transnational Life Insurer of global scale and standard
Reliance Life Insurance Company Limited (RLIC) is amongst the fastest growing life insurance companies in India It is also amongst the top four private sector life insurance companies in India (As on FY 2008-2009)
As on March 31 2009 RLIC has an annualized premium of Rs 30 billion with a market share of 103 It has leapfrogged on the growth path and has reached the 4 million policy mark in a short span of within 3 years RLIC has a strong distribution network of 1145 branches with more than 149000 agents
32
Insurancersquos Market Share in Comparison of Other Private company
If we look at the status of Reliance Life Insurancersquos market share in comparison of other
private company in comparison of premium earned-
If we talk the growth of Insurance industryrsquos private players in recent years the data will
reflect-
CH - 3) RESEARCH METHODOLOGY
33
RESEARCH DESIGN-
COMPARITIVE STUDY- A comparative study has been undertaken to compare the traditional Plans of Reliance Life Insurance with that of Bajaj Allianz life insurance
DATA TYPE
INTRODUCTION - Any organization whether big or small private or public needs different type of information to know its popularity I have gathered secondary data and primary data and collected information from the combination of these two data
PRIMARY DATA - Primary data collection method was decided for observing working of the company and approaching the customers directly face to face A great care was taken while collecting the primary data to answer that it is relevant accurate current and unbiased
SECONDARY DATA - Secondary data collection method was used by referring to various websites books and newspapers for collecting information regarding the project under study Secondary data consist of the information that already exists somewhere else for some another purpose
SAMPLING TECHNIQUES-
SAMPLE SIZE- A sample size of 50 was taken to be analyzed
SAMPLE LOCATION-Various sectors of Kamla Nagar Civil lines Mukherji Nagar Model Town and selected areas of Delhi
SAMPLING PROCESS - Convenient sampling was used to overcome the time and money constraints that could have been faced by us while collecting the data The customers were contacted face to face directly and also by way of telephonic conversation with them
ANALYTICAL TOOLS - The data collected were arranged accordingly and statistical tools like bar graphs and pie-charts were used to analyze and present the data
RESEARCH INSTRUMENT USED-
34
SAMPLING MEDIA - Printed questionnaires consisting several questions were asked to have an idea of customers view about Reliance Life Insurance plans followed by personal questions
FIELD WORK - Rigorous field work was undertaken to locate the interested and potential respondents to fulfill the objectives of the study
THE PRIMARY OBJECTIVEOF THE STUDY -
The primary objective of the research study is to have a detailed analysis of Reliance Life Insurance bringing in focus the future prospects of the (Anil Dhirubhai Ambani group) with relevance to the customer perception regarding the various plans and products offered by Reliance Life Insurance
31) DATA ANALYSIS AND INTERPRETATION
35
PERSONAL DETAILS
1) AGE a) 18-30b) 31-50c) 51-65
AGE NO OF RESPONDENTS PERCENTAGE
18-30 21 42
31-50 19 38
51-65 10 20
TOTAL 50 100
INTERPRETATION-The bar graph reveals that 42 of the respondents belong to the age group of 18-30 years 38 lies in the age group of 31-50 years and 20 of them lie in the age group of 51-65 years
2) OCCUPATION
4238
20
05
1015202530354045
NO
O
F
RE
SP
ON
DE
NT
S
18 to 30 31 to 50 51 to 65
AGE (in year)
AGE WISE CLASSIFICATION
36
a) Serviceb) Businessc) Professiond) Housewifee) Retired
OPTION NO OF RESPONDENTS PERCENTAGE
Service 16 32
Business 14 28
Profession 5 10
Housewife 8 16
Retired 7 14
TOTAL 50 100
INTERPRETATION-The above bar graph reveals that 32 of the total respondents were servicemen 28 of them belonged to the business class 10 were professionals 16 were housewives and 14 of the total respondents fall in the retired category
3) INCOME
32
28
10
16
14
0
5
10
15
20
25
30
35
Service Business Profession Housewife Retired
OCCUPATION
OCCUPATION WISE CLASSIFICATION
37
a) 150000-300000
b) 300000-500000
c) Above 500000
OPTION NO OF RESPONDENTS PERCENTAGE
150000-300000 24 48
300000-500000 14 28
Above 500000 12 24
TOTAL 50 100
INTERPRETATION-The above bar graph reveals that out of the total respondents 48 lie in the income group of 150000-300000 28 of the total respondents belonged to the income group of 300000-500000 and 24 lie in the income group of people earning an income of above Rs 500000pa
4828 24
01020304050
N O
OF
RE
SP
ON
DE
NT
S
150000-300000
300000-500000
ABOVE500000
INCOME (in RS)
INCOME WISE CLASSIFICATION
38
4) FAMILY MEMBERS
a) 2b) 3c) 4d) Above 4
OPTION NO OF RESPONDENT PERCENTAGE
2 11 22
3 9 18
4 24 48
Above 4 6 12
TOTAL 50 100
INTERPRETATION The above bar graph shows that 22 of the total respondents had a family of 2 members 18 of them had 3 family members 48 of them had 4 family members and 12 of them had the no of family members above 4
Q1 Where do you prefer to invest
22 18
48
120
1020304050
No
o
f re
spo
nd
ents
2 3 4 Above 4
No of family members
MEMBER WISE CLASSIFICATION
39
a) fixed deposits
b) stock
c) mutual funds
d) insurance
e) others
Option No of respondents Percentage
Fixed deposits 5 10
Stock 10 20
Mutual fund 10 20
Insurance 18 36
others 7 14
TOTAL 50 100
Interpretation The above pie chart shows that out of 50 respondents 10 preferred to invest in fixed deposits 20 in stocks 20 in mutual funds 36 in insurance and 14 in others like property gold etc
Q2 What are your priorities for investment
40
a) protecting your family against pre-mature death
b) wealth creation
c) retirement needs
d) child education and marriage
e) protect income against disability sickness or critical illness
Option No of respondents Percentage
Protecting your family against pre mature death
10 20
Wealth creation 14 28
Retirement needs 5 10
Child education and marriage 7 14
Protect income against disability sickness or critical illness
14 28
TOTAL 50 100
Interpretation The above pie chart shows that out of 50 respondents 20 of them invest for protecting their family against premature death 28 for creating wealth 10 for meeting their future retirement needs 14 for child education amp marriage and 28 for protection against disability and sickness
Q3 What is your main motive behind investing in life insurance
41
a) tax benefit
b) savings
c) risk cover
Option No of respondents Percentage
Tax benefits 27 54
Savings 5 10
Risk cover 18 36
TOTAL 50 100
Interpretation The above pie chart shows that out of the sample respondents 54 have tax benefit 10 have savings and 36 have risk cover as their main motive for making an investment in life
Q4 What kind of investment do you prefer
42
a) high risk high gain
b) low risk low gain
c) moderate
d) vary times to times
Option No of respondents Percentage
High risk high gain 8 16
Low risk low gain 5 10
Moderate 12 24
Vary times to times 25 50
TOTAL 50 100
Interpretation The above pie chart shows that out of 50 respondents 16 preferred high risk- high gain form of investment 10 preferred low risk- low gain form of investment 24 preferred moderate investment and 50 preferred varied form of investment
43
Q5Are you interested to invest in Traditional Plans
a) YES
b) NO
Option No of respondents Percentage
YES 36 72
NO 14 28
TOTAL 50 100
Interpretation The above pie chart shows that 72 of the respondents preferred to invest in Traditional Plans
44
Q6 What is your level of annual investmenta) below 20000
b) 20000-40000
c) above 40000
Option No of respondents Percentage
Below 20000 41 82
20000-40000 7 14
Above 40000 2 4
TOTAL 50 100
Interpretation The above pie chart shows that 82 of the respondents are willing to invest below Rs 20000 per annum 14 of them want to invest within Rs 20000 per annum to Rs 40000 and 4 wanted to invest over and above Rs 40000
45
Q7 What factors would you consider most important before choosing an insurance policy
a) publicity of the company
b) reputation of the company
c) quality of life advisors
d) after sales-supporting of the company
Option No of respondents Percentage
Publicity of the co 5 20
Reputation of the co 25 50
Quality of life advisors 10 10
After sale-services 10 20
TOTAL 50 100
Interpretation out of the sample respondents 20 considers publicity of the company 50 considers reputation of the company 10 considers quality of life advisors and 20 considers after sales support of the company as the most important factor for choosing an insurance company
46
Q8 Which life insurance company would you prefer the most to invest ina) reliance life insurance (RLIC)
b) Bajaj Allianz life insurance
Option No of respondents Percentage
RLIC 21 42
BAJAJ ALLIANZ 29 58
TOTAL 50 100
Interpretation Out of 50 respondents 42 preferred to invest in reliance life insurance over 58 of the respondents who prefer to invest in Bajaj Allianz life insurance
47
Q9 If reliance life insurance then which particular plan you would like to invest ina) Reliance Term Plan
b) Reliance Whole Life Plan
c) Reliance Endowment Plan
d) Reliance Special Endowment Plan
Option No of respondents Percentage
Reliance term plan 6 2858
Reliance whole life plan 3 1428
Reliance endowment plan 9 4286
Reliance special endowment plan 3 1428
TOTAL 21 100
Interpretation Out of 21 respondents 2858 preferred to invest in term plan 1428 in whole life plan 4286 in endowment plan and 1428 of them preferred to invest in special endowment plan of reliance life insurance
48
Q10 If Bajaj Allianz life insurance then which particular plan you would like to invest in
I ENDOWMENT PLAN a) Bajaj Allianz Invest Gain
b) Bajaj Allianz save Care Economy SP
c) Bajaj Allianz life time care
d) Bajaj Allianz Super Saver plan
II MONEY BACK PLAN i Bajaj Allianz Cash Gain plan
Option No of respondents Percentage
Invest gain plan 3 1035
Save care economy SP 6 2069
Life time care 7 2415
Super saver plan 3 1035
Cash gain plan 10 3446
TOTAL 29 100
Interpretation Out of 29 respondents 1035 of them plan to invest in Bajaj Allianz- Invest Gain 2069 wish to invest in Bajaj Allianz save Care Economy SP 2415 want to invest in Bajaj Allianz life time care 1035 in Bajaj Allianz Super Saver plan and 3446 prefer to invest in Bajaj Allianz Cash Gain plan
49
32) SIGNIFICANCE OF STUDY
Life insurance is one of the most rapidly growing sectors in India The main reason
behind the growth can attributed to the high population density improving economical
condition improving education level and improving awareness Due to these factors there
is still huge scope for growth in this sector Like any other business when the
opportunities are present everybody tends to enter the industries This growth hence
fetches the new competitors as well as new strategies from existing players To sustain in
any competitive industry the organization must adapt to existing strategies and adopt
new ones This study will focus on the analysis of Reliance Life Insurance in comparison
with the present scenario of Bajaj Allianz Life Insurance with respect to the Traditional
Plans of both the companyrsquos This will mainly cover the following aspects
To know about the awareness and popularity of various Traditional Plans offered
by Reliance Life Insurance and Bajaj Allianz Life Insurance
How Reliance Life Insurance can develop and sustain a good distribution
network
These will provide it benefit both in terms of better market coverage as well as better
penetration
50
33) SCOPE OF THE STUDY
1) This helps in finding out vast potential of insurance company
2) The study was conducted in National Capital Region (NCR) only
3) The number of respondents to be surveyed can be improved
4) This study was conducted by comparing the performances amp products of three private
amp government insurance players in insurance industry
5) This study was conducted to analyze the market stand of Reliance life insurance
Company limited and Bajaj Allianz Life Insurance Company Limited of India insurance
companies
6) This study is done to eliminate all the myths which people have in their minds
regarding Insurance Sector
51
34) OBJECTIVES
To have a detailed understanding of Reliance Life Insurance and Bajaj Allianz Life Insurance
To find out various reasons considered while investing in policies
To get knowledge about the market exposure and future prospects about Reliance Life Insurance
To know the perception of the consumers about the life insurance
To analyze the Traditional plans of Reliance Life Insurance and compare it with Bajaj Allianz
To know about the brand awareness of Reliance Life Insurance its customer preferences over Bajaj Allianz in the market
To study a proper knowledge about the life insurance industry
To understand the consumer choice while investing in policies
52
CHAPTER 4
DISCUSSION AND FINDINGS OF THE STUDY
FINDINGS OF THE STUDY RECOMMENDATION AND SUGGESTIONS CONCLUSION LIMITATIONS BIBLIOGRAPHY ANNEXUREQUESTIONNAIRE
53
41) FINDINGS OF THE STUDY
1) The survey reveals that still a large proportion of population is interested to invest in other forms of investment other than insurance as still most of them are unaware about the importance of insurance in their life
2) Basically people make varied form of investment for creating wealth to protect their families against pre-mature death and to protect income against disability sickness or critical illness
3) The main motive of the individuals investing is receives benefits US 1010D People generally consider insurance as a tax saving device
4) Mostly people prefer time to time form of investment as they are not willing to take high degree of risk
5) 72 of the respondents are preferred to invest in Traditional Plans
6) Most of the people prefer to make an annual investment up to a maximum of Rs20 000 per annum
7) When the product is like life insurance reputation of the company publicity of the company amp after sale services of the company matters a lot This means that people would choose that insurance company only where the quality of life advisors is satisfactory
8) Most people prefer to invest in Bajaj Allianz Life Insurance as compared to making an investment in Reliance Life Insurance
9) The most preferable Traditional plan of Reliance Life Insurance is Endowment Plan
10) The most preferable plan of Bajaj Allianz Life Insurance co is Cash Gain Plan
54
42) SUGGESTIONS amp RECOMMENDATIONS
Based on the observations of the study some suggestions for the organization are made as
follows
1) Quality of advisors is also as important as the quantity Thus company should go
mainly for qualified professionals
2) Company should increase its budget on publicity so that awareness can be increased
3) Clarity and transparency should be provided to the customer regarding various
products
4) Training sessions should be planned in advance so that schedule can be provided to
the advisor in advance
5) Apart from the Brand Positioning in urban area a strategy should be adopted by
Reliance to make its brand also near to middle level or high aspirant people because they
are the main source of the business in India
6) Awareness Camp to the sub urban area should be focused by Reliance
7) Some innovative technique or product is required in order to attract the consumer
43) LITERATURE REVIEW
55
1) Robi Elenekave has explained in detail why various retirement plans and pension plans donrsquot give the desired returns The main difficulty is the use of incorrect method for calculations done to find out the return on investment This is primarily due to wrong assumptions The study provides information about the various precautions which need to be considered before planning so that the desired results can be achieved
2) Another paper provides insight about how various financial sectors invest in bond market The study was how the different players investment different instruments according to the risk appetite and desired rate of return The study shows that life insurance sector mainly invests in government bond which are low return and low risk instrument The investment in government bond it shows that life insurance companies are more conservative in investment
3) K Subhash has presented the history of Indiarsquos life insurance industry in three stages before independence after independence and post liberalization which not only provides information but also help in analyzing the impact of these major changes The authors have also discussed the huge potential which exists in the rural India The insurance company must realize the importance of rural sector because the future lies there The author commented about the increasing share of private player in the existing market This confirms the availability of opportunity in this sector The paper also provides the importance of professional and focused approach which was given no importance
4) Tapen Sinha has discussed the various challenges and opportunities in the insurance market One of the very important factors which have been discussed in the study is the importance of developing new and better products As the scenario changes the need of an individual also changes so any organization must understand and fulfill these needs The new product development requires constant research so organization must also focus on it
5) Roger G Ibbotson discusses how financial planners and advisors have recently started to recognize that human capital must be taken into account when building optimal portfolios for individual investors Any investorrsquos human capital has a unique mortality risk However life insurance in its forms can hedge against this mortality risk Thus human capital affects both the optimal asset allocation and the optimal demand for life insurance This paper provides a unified framework based on human capital in order to enable individual investors to make both decisions jointly
6) Rakesh Niraj study tells how the flow of information in any organization is important For any organization to grow the flow of information must be good both upwards as well as ownwards The proper flow of information will also ensure proper flow of good and services from organization to customer and proper flow of information from customer to organization The information from customers will help the organization in providing better goods and services to the customer For the above purpose organization must ensure good channel partner who can provide the organization with correct feedback Hence it becomes very important for any organization to acquire good channel partners
56
7) Stephen P Robbins has discussed how group dynamics works in any organization The success of any organization depends on the success of its various teams and how these teams work together The book provides various techniques which can be used by any organization to get result from the team effort The conflict resolution is a major task in any group Various techniques which the organization can use in conflict resolution are also discussed Another important aspect covered is the importance of leadership in the organization The various forms of leadership have been discussed and the kinds of leadership which can be effective in particular situations are also discussed
8) R Wayne Mondy has discussed the importance of training and development in any organization The training provides skills to perform the current job where as the development involve learning beyond present need The various type of training are discussed which can be used according to the requirement Training and development are not only important for better performance of an individual but it also gives satisfaction The major factors which influence training and development are found to be management support commitment of trainee and trainer complexity of the organization The process of developing good training plans is also provided In another part author has discussed the importance of right man for right job The compensation strategies are also given which are very crucial for ant industry
9) Philip Kotler has discussed the importance of channels partners Better the channel partners better will be the delivery model Detailed discussion about how to design the channel structure so that all the requirements could be fulfilled is provided The various issues faced by the organization while managing the channels are also given When an organization has more than one channel it becomes very important that all the channels should be integrated in such a way that the organization get the best out of all At times due to the conflicting benefit of the different channels the conflict arise so various strategies to manage these issues is also discussed in the chapter
10) Michael J Etzel has written about the marketing of services The marketing of services is different from the goods because of the characteristic of service like intangibility inseparability heterogeneity etc Brief about pricing strategies is also given in case of services The authors have also given the impact of technological development on the services marketing The author has also given the importance of brand and after sales support in case of services as perception of the customers plays an important role In other part of the book the authors has described the importance of distribution channels and designing of the same A channel partner should be consider as partner according to discussion The legal complications associated with channels are also discussed These complications are necessary to take into the consideration while managing the channels The conflicting interest of channels both horizontally and vertically are also taken into the consideration
57
11) Boone has discussed about the importance of personal financial planning The concept of time value of money has also been elaborated The importance of creating and implementing budget is given under money management The other important concepts for financial planning like credit management and understanding taxes are also explained In one section the authors have discussed the importance of investment and what should be the major considerations while making any investment The considerations include the risk associated with the investment return on the investment etc The importance and benefits of life insurance has also been given The discussion also includes various legal aspects associated with life insurance The overview of retirement planning is also given which includes importance and benefit of retirement planning Various tools for proper retirement planning are also discussed
58
44) CONCLUSION
1) The customers are very much sensitive towards their investment They would like to invest only in that insurance company which enjoys good public image along with quality good services
2) The result of the survey conducted shows that Bajaj Allianz Life Insurance is the leader in life insurance industry but Reliance Life Insurance and other private players are giving it a close competition
3) The motive of the people behind investing in life insurance is the tax benefits that they would receive under sec 80C and 1010D
4) In Life Insurance industry the after sales support of the company is as important as the quality of life advisors
59
45) LIMITATIONS
There were some limitations faced during the study as discussed below
Since the study was taken for two months so there was a constraint of time and effort
The study was limited only to some of the Delhi regions so the results may be biased
Questionnaire was given to 125 people however only 50 responded to it which is very small for such type of study
The biasness of consumer or responses error cannot be eliminated
Most of the people are not aware about the Importance and the necessity of insurance in their life
Adverse perception of the people towards insurance sector- People consider insurance as a tax saving device
Lack of awareness about the earning opportunity in the insurance sector
60
46) BIBLIOGRAPHY
wwwreliancelifeinsurancecom
wwwadagroupcom
wwwirdacom
wwwbajajallianzlifeinsurancecom
wwwallianzbajajcom
47) ANNEXURE
61
QUESTIONNAIRE
A comparative analysis of consumer perception regarding Traditional plans of Reliance Life Insurance with that of Bajaj Allianz Life Insurance
NAME ___________________________
PERSONAL DETAILS
1) AGE_________________
1) OCCUPATION______________
2) INCOME___________________
3) FAMILY MEMBERS_________
Q1 Where do you prefer to investa) Fixed deposits b) Stock c) Mutual funds d) Insurance e) Others
Q2 What are your priorities for investmenta) Protecting your family against pre-mature death b) Wealth creation c) Retirement needs d) Child education and marriage e) Protect income against disability sickness or critical illness
Q3 What is your main motive behind investing in life insurancea) Tax benefit b) Savings c) Risk cover
Q4 What kind of investment do you prefera) High risk high gain b) Low risk low gain c) Moderate d) Vary times to times
62
Q5Are you interested to invest in Traditional Plansa) Yes b) No
Q6 What is your level of annual investmenta) below 20000 b) 20000-40000 c) above 40000
Q7 What factors would you consider most important before choosing an insurance company
a) publicity of the company b) reputation of the company c) quality of life advisors d) after sales-supporting of the company
Q8 Which life insurance company would you prefer the most to invest ina) Reliance life insurance b) Bajaj Allianz life insurance
Q9 If reliance life insurance then which particular plan you would like to invest ina) Reliance Term Plan b) Reliance Whole Life Plan c) Reliance Endowment Plan d) Reliance Special Endowment Plan
Q10 If Bajaj Allianz life insurance then which particular plan you would like to invest in
I ENDOWMENT PLAN
a) Bajaj Allianz Invest Gain
b) Bajaj Allianz save Care Economy SP
c) Bajaj Allianz life time care
d) Bajaj Allianz Super Saver plan
II MONEY BACK PLAN
a) Bajaj Allianz Cash Gain plan
63
64
- COMPANY PROFILE
- ABOUT RELIANCE LIFE INSURANCE
- HISTORY
- Reliance Capital Limited announced the launch of its life insurance business on February 1 2006 This was after obtaining the required regulatory approvals from the Registrar Of Companies and the Insurance Regulatory and Development Authority
- It was in August 2005 that the ball was set rolling when Reliance Capital Limited the financial arm of Reliance ndash Anil Dhirubhai Ambani Group (ADAG) ndash announced the requisition of 100 shareholding in AMP Sanmar Life Insurance Company Limited and the formal transfer of shares took place in October 2005 The company will issue all policy contracts under the Reliance Life Insurance Company limited name All the existing policy contracts also stand transferred to the Reliance Life Insurance entity with all the original contractual terms and commitments intact
- CORE VALUES
- Reliance Life Insurance Company Limited has some core values which are listed as follows
- Vision bull To be the first choice insurer for customers bull To be the preferred employer for staff in the insurance industry bull To be the number one insurer for creating shareholder value
- Mission As a responsible customer focused market leader we will strive to understand the insurance needs of the consumers and translate it into affordable products that deliver value for money
- 12) TRADITIONAL PLANS OF THE COMPANY
- 12A )TRADITIONAL PLAN OF RELIANCE LIFE INSURANCE-
- Life insurance products are designed to suit the requirements of customers Fundamentally the product provide for
- In every product to a certain degree risk cover is imperative for it to fall under the category of insurance Based on the coverage of the product the premiums are calculated and the customer pays accordingly In order to suggest the right product it is essential for an agent to understand the requirements of the customer well
- The traditional plans of the company have the following features-
- Fixed Tenure
- Potential for better returns
- Transparency
- Flexibility in investment
- Flexibility to invest more
- Flexibility to skip the premium
- Flexibility to choose the cover
- High liquidity
- Age term and sum assured decide the amount of premium
- Top- ups and switches are not allowed
- Reliance Life Insurance Company Limited has offered 9
- 1) Reliance term plan-
- 2) Reliance Whole Life Plan -
- 3) Reliance Endowment Plan -
- 4) Reliance Special Endowment Plan -
- 13) INDUSTRY PROFILE
- MEANING OF INSURANCE
- Insurance may be described as a social device to reduce or eliminate risk of loss to life and property Insurance is a collective bearing of risk Insurance is a financial device to spread the risks and losses of few people among a large number of people as people prefer small fixed liability instead of big uncertain and changing liability
- Insurance can be defined as a ldquolegal contract between two parties whereby one party called insurer undertakes to pay a fixed amount of money on the happening of a particular event which may be certain or uncertainrdquo The other party called insured pays in exchange a fixed sum known as premium
- Insurance is desired to safeguard oneself and onersquos family against possible losses on account of risks and perils It provides financial compensation for the losses suffered due to the happening of any unforeseen events
- IMPORTANCE OF INSURANCE
- Insurance services play predominant role in the process of financial Intermediary Today insurance industry is one of the most growing sectors in India There is lot of potential in the Indian Insurance Industry
- There are many issues which require study The scope of the study of Insurance industry of India would be very great as there are ongoing Developments in the industry after the opening of the sector
- Right now the insurance industry has great opportunities in a country like India or China which huge population Also the penetration of insurance in India is very low in both life and non-life segment so there is lot potential to be tapped Before starting the discussion on insurance industry and related issues we have to start with the basics of insurance So first we understand what is insurance How the word lsquoinsurancersquo is different from the word lsquoassurancersquo Etc
- HISTORY OF INSURANCE
- The concept of insurance is believed to have emerged almost 4500 years ago in the ancient land of Babylonia where traders used to bear risk of the carvan by giving loans which were later repaid with interest when the goods arrived safely
- The concept of insurance as we know today took shape in 1688 at a place called Lloydrsquos Coffee House in London where risk bearers used to meet to transact business This coffee house became so popular that Lloydrsquos became the one of the first modern insurance companies by the end of the eighteenth century
- Marine insurance companies came into existence by the end of the eighteenth century These companies were empowered to write fire and life insurance as well as marine The Great Fire of London in 1966 caused huge loss of property and life With a view to providing fire insurance facilities
- Dr Nicholas Barbon set up in 1967 the first fire insurance company known as the Fire office
- Life insurance in its modern form came to India from England in 1818 The Oriental Life Insurance Company was the first insurance company to be set up in India to help the widows of European community The insurance companies which came into existence between 1818 and 1869 treated
- Indian lives as subnormal and charged an extra premium of 15 to 20 per cent The first Indian insurance company the Bombay Mutual Life
- Assurance Society came into existence in 1870 to cover Indian lives at normal rates
- The Insurance Act 1938 the first comprehensive legislation governing both life and non-life branches of insurance were enacted to provide strict state control over insurance business This amended insurance Act looked into investments expenditure and management of these companies
- By the mid- 1950s there were 154 Indian insurers 16 foreign insurers and 75 provident societies carrying on life insurance business in India Insurance business flourished and so did scams irregularities and dubious investment practices by scores of companies As a result the government decided to nationalize the life assurance business in India The Life Insurance
- Corporation of India (LIC) was set up in 1956 The nationalization of life insurance was followed by general insurance in 1972
- MEANING OF LIFE INSURANCE
- There are three parties in a life insurance transaction the insurer the insured and the owner of the policy (policyholder) although the owner and the insured are often the same person
- Another important person involved in a life insurance policy is the beneficiary The beneficiary is the person or persons who will receive the policy proceeds upon the death of the insured
- Life insurance may be divided into two basic classes ndash term and permanent
- HISTORY OF LIFE INSURANCE
- Risk protection has been a primary goal of humans and institutions throughout history Protecting against risk is what insurance is all about
- Over 5000 years ago in China insurance was seen as a preventative measure against piracy on the sea Piracy in fact was so prevalent that as a way of spreading the risk a number of ships would carry a portion of another ships cargo so that if one ship was captured the entire shipment would not be lost
- In another part of the world nearly 4500 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
- Life insurance came about a little later in ancient Rome where burial clubs were formed to cover the funeral expenses of its members as well as help survivors monetarily With Romes fall around 450 AD most of the concepts of insurance were abandoned but aspects of it did continue through the Middle Ages particularly with merchant and artisan guilds These provided forms of member insurance covering risks like fire flood theft disability death and even imprisonment
- During the feudal period early forms of insurance ebbed with the decline of travel and long-distance trade But during the 14th to 16th centuries transportation commerce and insurance would again reemerge
- And similar to ancient Rome burial societies were formed in the Buddhist period to help families build houses and to protect widows and children
- Modern Insurance
- Illegal almost everywhere else in Europe life insurance in England was vigorously promoted in the three decades following the Glorious Revolution of 1688 The type of insurance we see today owes its roots to 17th century England Lloyds of London or as they were known then Lloyds Coffee House was the location where merchants ship owners and underwriters met to discuss and transact business deals
- While serving as a means of risk-avoidance life insurance also appealed strongly to the gambling instincts of Englands burgeoning middle class
- Gambling was so rampant in fact that when newspapers published names of prominent people who were seriously ill bets were placed at Lloydrsquos on their anticipated dates of death Reacting against such practices 79 merchant underwriters broke away in 1769 and two years later formed a ldquoNew Lloydrsquos Coffee Houserdquo that became known as the ldquoreal Lloydrsquosrdquo Making wagers on peoples deaths ceased in 1774 when parliament forbade the practice
- Insurance moves to America
- The US insurance industry was built on the British model The year 1735 saw the birth of the first insurance company in the American colonies in
- Charleston SC The Presbyterian Synod of Philadelphia in 1759 sponsored the first life insurance corporation in America for the benefit of ministers and their dependents And the first life insurance policy for the general public in the United States was issued in Philadelphia on May 22 1761
- But it wasnt until 80 years later (after 1840) that life insurance really tookoff in a big way The key to its success was reducing the opposition from religious groups
- In 1835 the infamous New York fire drew peoples 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
- With the creation of the automobile public liability insurance which first made its appearance in the 1880s gained importance and acceptance
- More advancement was made to insurance during the process of industrialization In 1897 the British government passed the Workmens Compensation Act which made it mandatory for a company to insure its employees against industrial accidents
- During 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 most labor 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
- BENEFITS OF LIFE INSURANCE
- 1) Risk cover -Life Insurance contracts allow an individual to have a risk cover against any unfortunate event of the future
- 2) Tax Deduction -Under section 80C of the Income Tax Act of 1961 one can get tax deduction on premiums up to one lakh rupees Life Insurance policies thus decrease the total taxable income of an individual
- 3) Loans -An individual can easily access loans from different financial institutions by pledging his insurance policies
- 4) Retirement Planning -What had provided protection against the financial consequences of premature death may now be used to help them enjoy their retirement years
- 5) Educational Needs -Similar to retirement planning the cash values that flow from ones life insurance schemes can be utilized for educational needs of the insurer or his children
- The Life Insurance Industry has an enviable track record among public sector units It has a Consistent profit and dividend paying record accompanied by a steady growth in its financial resources Through investments in the Government sector and socially- oriented sectors the Industry has contributed immensely to the nations development The industry is recognized as one of the largest financial Institutions in the country The ventures initiated by the industry in the areas of Mutual Fund
- Housing Finance has done exceedingly well in recent years To protect the countrys foreign exchange reserves the reinsurance arrangement are so organized that maximum retention is made possible within the country while at the same time protecting interests of the policy holders
- 22) CURRENT SCENARIO OF RELIANCE LIFE INSURANCE
- RLIC offers wide range of innovative life insurance products targeted at individuals and groups It offers need based products that caters to four distinct segments namely protection child retirement and investment plans RLIC is committed to emerge as a transnational Life Insurer of global scale and standard
- CH - 3) RESEARCH METHODOLOGY
- RESEARCH DESIGN-
- SAMPLING TECHNIQUES-
- THE PRIMARY OBJECTIVEOF THE STUDY-
- 34) OBJECTIVES
- 7) Some innovative technique or product is required in order to attract the consumer
- 45) LIMITATIONS
- 46) BIBLIOGRAPHY
-
2 Bajaj Allianz save Care Economy SP
A One-time payment Investment plan that provides for savings with high risk cover for 10 years and also participates in the profits of the company It offers you high risk cover with easy liquidity and high returns
a) A single premium endowment plan that participates in the profitsb) 10 year Investment planc) Benefits payable on maturityc) Loans available
17
3 Bajaj Allianz life time care
A whole life plan which provides survival benefits at the age of 80 thereby making sure you are financially secure at the time when you need it the most Additional Benefits
a) Accidental Death Cover and Disability Cover b) Critical Illness Cover and Hospital Cash Cover c) Waiver of Premium Benefit
4Bajaj Allianz Super Saver plan
Bajaj Allianz Super Saver is a regular premium endowment plan which helps you save regular amounts for a safer tomorrow It also provides you with extra benefits of Guaranteed Additions to your sum assured at the end of each policy year
18
II MONEY BACK PLAN
Money back plans are Traditional Insurance plans that provide the investor with returns at regular stages of life
CashGain
1)Bajaj Allianz Cash Gain plan
A Money back plan which guarantees 125 payout + bonuses
Quadruple life cover
5 easy payouts which give upto 125 + bonuses
Additional Benefitsa) Accidental Death Benefit and Disability Benefitb) Critical Illness Benefit and Hospital Cash Benefitc) Family Income Benefit In case of death or accidental total permanent disability of insured all future premiums are waived and 1 of the sum assured is paid monthly
19
20
13) INDUSTRY PROFILE
MEANING OF INSURANCE
Insurance may be described as a social device to reduce or eliminate risk of loss to life and property Insurance is a collective bearing of risk Insurance is a financial device to spread the risks and losses of few people among a large number of people as people prefer small fixed liability instead of big uncertain and changing liability
Insurance can be defined as a ldquolegal contract between two parties whereby one party called insurer undertakes to pay a fixed amount of money on the happening of a particular event which may be certain or uncertainrdquo The other party called insured pays in exchange a fixed sum known as premiumInsurance is desired to safeguard oneself and onersquos family against possible losses on account of risks and perils It provides financial compensation for the losses suffered due to the happening of any unforeseen events
IMPORTANCE OF INSURANCE
Insurance constitutes one of the major segments of the financial marketInsurance services play predominant role in the process of financial Intermediary Today insurance industry is one of the most growing sectors in India There is lot of potential in the Indian Insurance Industry
There are many issues which require study The scope of the study of Insurance industry of India would be very great as there are ongoing Developments in the industry after the opening of the sectorOne of the major issues is the effects on LIC after the entry of private players in the market Though market share of LIC has been affected it has improved in terms of efficiency
There are number of other hot topics like penetration of Health Insurance Rural marketing of insurance new distribution channels new product ranges insurance brokersrsquo regulation incentive scheme of development officers of LIC etc So it offers lot of scope for studying the insurance industryRight now the insurance industry has great opportunities in a country like India or China which huge population Also the penetration of insurance in India is very low in both life and non-life segment so there is lot potential to be tapped Before starting the discussion on insurance industry and related issues we have to start with the basics of insurance So first we understand what is insurance How the word lsquoinsurancersquo is different from the word lsquoassurancersquo Etc
21
HISTORY OF INSURANCE
The concept of insurance is believed to have emerged almost 4500 years ago in the ancient land of Babylonia where traders used to bear risk of the carvan by giving loans which were later repaid with interest when the goods arrived safely
The concept of insurance as we know today took shape in 1688 at a place called Lloydrsquos Coffee House in London where risk bearers used to meet to transact business This coffee house became so popular that Lloydrsquos became the one of the first modern insurance companies by the end of the eighteenth centuryMarine insurance companies came into existence by the end of the eighteenth century These companies were empowered to write fire and life insurance as well as marine The Great Fire of London in 1966 caused huge loss of property and life With a view to providing fire insurance facilitiesDr Nicholas Barbon set up in 1967 the first fire insurance company known as the Fire office
Life insurance in its modern form came to India from England in 1818 The Oriental Life Insurance Company was the first insurance company to be set up in India to help the widows of European community The insurance companies which came into existence between 1818 and 1869 treatedIndian lives as subnormal and charged an extra premium of 15 to 20 per cent The first Indian insurance company the Bombay Mutual LifeAssurance Society came into existence in 1870 to cover Indian lives at normal rates
The Insurance Act 1938 the first comprehensive legislation governing both life and non-life branches of insurance were enacted to provide strict state control over insurance business This amended insurance Act looked into investments expenditure and management of these companiesBy the mid- 1950s there were 154 Indian insurers 16 foreign insurers and 75 provident societies carrying on life insurance business in India Insurance business flourished and so did scams irregularities and dubious investment practices by scores of companies As a result the government decided to nationalize the life assurance business in India The Life InsuranceCorporation of India (LIC) was set up in 1956 The nationalization of life insurance was followed by general insurance in 1972
22
MEANING OF LIFE INSURANCE
There are three parties in a life insurance transaction the insurer the insured and the owner of the policy (policyholder) although the owner and the insured are often the same person
Another important person involved in a life insurance policy is the beneficiary The beneficiary is the person or persons who will receive the policy proceeds upon the death of the insured
Life insurance may be divided into two basic classes ndash term and permanent
Term life insurance provides for life insurance coverage for a specified term of years for a specified premium The policy does not accumulate cash value
Permanent life insurance is life insurance that remains in force until the policy matures unless the owner fails to pay the premium when due
Whole life insurance provides for a level premium and a cash value table included in the policy guaranteed by the company The primary advantages of whole life are guaranteed death benefits guaranteed cash values fixed and known annual premiums and mortality and expense charges will not reduce the cash value shown in the policy
Universal life insurance (UL) is a relatively new insurance product intended to provide permanent insurance coverage with greater flexibility in premium payment and the potential for a higher internal rate of return A universal life policy includes a cash account Premiums increase the cash account If you want insurance protection only and not a savings and investment product buy a term life insurance policy
If you want to buy a whole life universal life or other cash value policy plan to hold it for at least 15 years Canceling these policies after only a few years can more than double your life insurance costs
23
HISTORY OF LIFE INSURANCE
Risk protection has been a primary goal of humans and institutions throughout history Protecting against risk is what insurance is all aboutOver 5000 years ago in China insurance was seen as a preventative measure against piracy on the sea Piracy in fact was so prevalent that as a way of spreading the risk a number of ships would carry a portion of another ships cargo so that if one ship was captured the entire shipment would not be lostIn another part of the world nearly 4500 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
Life insurance came about a little later in ancient Rome where burial clubs were formed to cover the funeral expenses of its members as well as help survivors monetarily With Romes fall around 450 AD most of the concepts of insurance were abandoned but aspects of it did continue through the Middle Ages particularly with merchant and artisan guilds These provided forms of member insurance covering risks like fire flood theft disability death and even imprisonment
During the feudal period early forms of insurance ebbed with the decline of travel and long-distance trade But during the 14th to 16th centuries transportation commerce and insurance would again reemergeInsurance in India can be traced back to the Vedas For instance yogakshema the name of Life Insurance Corporation of Indias 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
And similar to ancient Rome burial societies were formed in the Buddhist period to help families build houses and to protect widows and children
Modern InsuranceIllegal almost everywhere else in Europe life insurance in England was vigorously promoted in the three decades following the Glorious Revolution of 1688 The type of insurance we see today owes its roots to 17th century England Lloyds of London or as they were known then Lloyds Coffee House was the location where merchants ship owners and underwriters met to discuss and transact business dealsWhile serving as a means of risk-avoidance life insurance also appealed strongly to the gambling instincts of Englands burgeoning middle classGambling was so rampant in fact that when newspapers published names of prominent people who were seriously ill bets were placed at Lloydrsquos on their anticipated dates of death Reacting against such practices 79 merchant underwriters broke away in 1769 and
24
two years later formed a ldquoNew Lloydrsquos Coffee Houserdquo that became known as the ldquoreal Lloydrsquosrdquo Making wagers on peoples deaths ceased in 1774 when parliament forbade the practice
Insurance moves to AmericaThe US insurance industry was built on the British model The year 1735 saw the birth of the first insurance company in the American colonies inCharleston SC The Presbyterian Synod of Philadelphia in 1759 sponsored the first life insurance corporation in America for the benefit of ministers and their dependents And the first life insurance policy for the general public in the United States was issued in Philadelphia on May 22 1761But it wasnt until 80 years later (after 1840) that life insurance really tookoff in a big way The key to its success was reducing the opposition from religious groups
In 1835 the infamous New York fire drew peoples 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
With the creation of the automobile public liability insurance which first made its appearance in the 1880s gained importance and acceptanceMore advancement was made to insurance during the process of industrialization In 1897 the British government passed the Workmens Compensation Act which made it mandatory for a company to insure its employees against industrial accidents
During 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 most labor 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
25
BENEFITS OF LIFE INSURANCE
1) Risk cover -Life Insurance contracts allow an individual to have a risk cover against any unfortunate event of the future
2) Tax Deduction -Under section 80C of the Income Tax Act of 1961 one can get tax deduction on premiums up to one lakh rupees Life Insurance policies thus decrease the total taxable income of an individual
3) Loans -An individual can easily access loans from different financial institutions by pledging his insurance policies
4) Retirement Planning -What had provided protection against the financial consequences of premature death may now be used to help them enjoy their retirement yearsMoreover the cash value can be used as an additional income in the old age
5) Educational Needs -Similar to retirement planning the cash values that flow from ones life insurance schemes can be utilized for educational needs of the insurer or his children
26
ROLE OF LIFE INSURANCE IN THE GROWTH OF THE ECONOMY
The Life Insurance Industry has an enviable track record among public sector units It has a Consistent profit and dividend paying record accompanied by a steady growth in its financial resources Through investments in the Government sector and socially- oriented sectors the Industry has contributed immensely to the nations development The industry is recognized as one of the largest financial Institutions in the country The ventures initiated by the industry in the areas of Mutual Fund
Housing Finance has done exceedingly well in recent years To protect the countrys foreign exchange reserves the reinsurance arrangement are so organized that maximum retention is made possible within the country while at the same time protecting interests of the policy holders
27
ROLE OF IRDA
MISSION
ldquoTo protect the interests of the policyholders to regulate promote
and ensure orderly growth of the insurance industry and for matters
connected therewith or incidental theretordquo
The Insurance Act 1938 had provided for setting up of the Controller of Insurance to act
as a strong and powerful supervisory and regulatory authority for insurance Post
nationalization the role of Controller of Insurance diminished considerably in
significance since the Government owned the insurance companies But the scenario
changed with the private and foreign companies foraying in to the insurance sector This
necessitated the need for a strong independent and autonomous Insurance Regulatory
Authority was felt As the enacting of legislation would have taken time the then
Government constituted through a Government resolution an Interim Insurance
Regulatory Authority pending the enactment of a comprehensive legislation
The Insurance Regulatory and Development Authority Act 1999 is an act to provide for
the establishment of an Authority to protect the interests of holders of insurance policies
to regulate promote and ensure orderly growth of the insurance industry and for matters
connected therewith or incidental thereto and further to amend the Insurance Act 1938
the Life Insurance Corporation Act 1956 and the General insurance Business
(Nationalization) Act 1972 to end the monopoly of the Life Insurance Corporation of
India (for life insurance business) and General Insurance Corporation and its subsidiaries
(for general insurance business) The act extends to the whole of India and will come
into force on such date as the Central Government may by notification in the Official
Gazette specify Different dates may be appointed for different provisions of this Act
28
The Act has defined certain terms some of the most important ones are as follows
Appointed day means the date on which the Authority is established under the act
Authority means the established under this Act Interim Insurance Regulatory Authority
means the Insurance Regulatory Authority set up by the Central Government through
Resolution No 17(2) 94-lns-V dated the 23rd January 1996
Words and expressions used and not defined in this Act but defined in the Insurance Act
1938 or the Life Insurance Corporation Act 1956 or the General Insurance Business
(Nationalization) Act 1972 shall have the meanings respectively assigned to them in
those Acts A new definition of Indian Insurance Company has been inserted Indian
insurance company means any insurer being a company
(a) Which is formed and registered under the Companies Act 1956
(b) in which the aggregate holdings of equity shares by a foreign company either by
itself or through its subsidiary companies or its nominees do not exceed twenty-six
percent paid up capital in such Indian insurance company
(c) Whose sole purpose is to carry on life insurance business general insurance business
or re-insurance business
29
CURRENT SCENERIO
21) CURRENT SCENERIO OF THE INSURANCE INDUSTRY
With largest number of life insurance policies in force in the world insurance happens to be a mega opportunity in India Itrsquos a business growing at the rate of 15-20 per cent annually and presently is of the order of Rs 450 billion Together with banking services it adds about 7 per cent to the countryrsquos GDP Gross premium collection is nearly 2 per cent of GDP and funds available with LIC for investment are 8 per cent of GDP
Yet nearly 80 percent of Indian population is without life insurance cover while health insurance and non-life insurance continues to be below international standards And this part of the population is also subject to weak social security and pension systems with hardly any old age income security This it is an indicator that growth potential for the insurance sector is immense A well-develop and evolved insurance sector is needed for economic development as it provides long term funds for infrastructure development and at the same time strengthens the risk taking ability It is estimated that over the next ten years India would require investments of the order of one trillion US dollar The insurance sector to some extent can enable investment in infrastructure development to sustain economic growth of the country Insurance is a federal subject in India There are two legislation that govern the sector - The Insurance Act-1938 and The IRDA Act-1999
In India insurance is generally considered as a tax-saving device instead of its other implied long term financial benefits Indian people are prone to investing in properties and gold followed by bank deposits They selectively invest in shares also but the percentage is very small Even to this day Life Insurance Corporation of India dominates India insurance sector With the entry of private sector players backed by foreign expertise Indian insurance market has become more vibrant Business is becoming increasingly vulnerable due to wide variety of risk particularly after September 11 2001 disaster in which twin tower located in the hearts of New York city were crashed by terrorist attack resulting in loss of 6000 human lives as well as financial loss to the extent of $45 billion The impact of this terrorist attack has created new horizon of risk to the business world today
However rapid changes in the global economy development of technology and e-business already gathered momentum Increased dependency on technology has originated new risks that have resulted in well-published incidents Computer hackers obtaining credit card information from visa and Power-Gen the love bug virus cyber extortion web content liability professional errors and omissions computers and other crimes and activities such as terrorism kidnapping and companyrsquos executive and extortion of money commercial liability etc have significant impact on business resulting in extreme financial loss commercial embarrassment or regulatory implications
Corporation insurancerisk managers under the circumstances have to demand increasingly complex insurance products They have to be more attentive and
30
knowledgeable about emerging risks how those risks are managed effectively and efficiently and how they could ultimately affect a companyrsquos financial situation and therefore its position in the market place In short how such risks are managed and can give to an insured a competitive advantage
In the changing times adoption of e-commerce into business models the integration of web-based communication and data transfer capabilities into the business operations and leveraging of advanced network and technology architecture for maximum benefit are the new horizon of the risks For the corporate insurancerisks managers these new exposure-cyber-risks-can lead to cyber losses widening the interpretation of what constitute insure property damage particularly as it relates to information technology and dataAll the while organizations are tremendous pressure to reduce expenses and increase profit margin and cannot afford to suffer a property loss of business interruption due to any cause (risk) How a company identifies quantifies qualifies and manages these new risks exposure in addition to the well-known tradition risks is becoming an important factor in creating shareholders value This often means changing the way Everyone in the organization have to think about risk
Insurance managers are seeing price levels (premium) continue to rise-albeit modestly-in todayrsquos primarily commercial property and reinsurance markets They are demanding that insurers improve their risk assessment and quantification offerings so that an insured may avail the benefit in cost (premium rate) on account of well-managed riskThe good news for insurance managers is that as the economy evolves insurers are increasingly matching that evaluation with new products services and capabilities due to opening up the insurance market to the private players
Insurers who are truly listening to their customers and striving to be more in tune with their needs are responding to the fast changing corporate insurance and risk management landscape They are listening to their customers They are making fresh approaches to address the new challenges faced by insured organization by designing the new products as per the needs Insurers are providing value added services to insured to protect the value created by the business
Insurers are increasingly required to develop and expand their information technology platforms to ensure that the vast amount of data they collect about their customers Insurancerisk portfolio can easily and seamlessly be transformed into valuable risk management information To help their customers insurers should make better-informed decisions They must be able to swiftly deliver this data to their customers (insured) anywhere in the world Insurer are also discovering that risk assessment have to be customized to meet policyholdersrsquo new exposures and needs The insurance industry is stepping up and addressing these challenges in several different ways
31
22) CURRENT SCENARIO OF RELIANCE LIFE INSURANCE
RLIC offers wide range of innovative life insurance products targeted at individuals and groups It offers need based products that caters to four distinct segments namely protection child retirement and investment plans RLIC is committed to emerge as a
transnational Life Insurer of global scale and standard
Reliance Life Insurance Company Limited (RLIC) is amongst the fastest growing life insurance companies in India It is also amongst the top four private sector life insurance companies in India (As on FY 2008-2009)
As on March 31 2009 RLIC has an annualized premium of Rs 30 billion with a market share of 103 It has leapfrogged on the growth path and has reached the 4 million policy mark in a short span of within 3 years RLIC has a strong distribution network of 1145 branches with more than 149000 agents
32
Insurancersquos Market Share in Comparison of Other Private company
If we look at the status of Reliance Life Insurancersquos market share in comparison of other
private company in comparison of premium earned-
If we talk the growth of Insurance industryrsquos private players in recent years the data will
reflect-
CH - 3) RESEARCH METHODOLOGY
33
RESEARCH DESIGN-
COMPARITIVE STUDY- A comparative study has been undertaken to compare the traditional Plans of Reliance Life Insurance with that of Bajaj Allianz life insurance
DATA TYPE
INTRODUCTION - Any organization whether big or small private or public needs different type of information to know its popularity I have gathered secondary data and primary data and collected information from the combination of these two data
PRIMARY DATA - Primary data collection method was decided for observing working of the company and approaching the customers directly face to face A great care was taken while collecting the primary data to answer that it is relevant accurate current and unbiased
SECONDARY DATA - Secondary data collection method was used by referring to various websites books and newspapers for collecting information regarding the project under study Secondary data consist of the information that already exists somewhere else for some another purpose
SAMPLING TECHNIQUES-
SAMPLE SIZE- A sample size of 50 was taken to be analyzed
SAMPLE LOCATION-Various sectors of Kamla Nagar Civil lines Mukherji Nagar Model Town and selected areas of Delhi
SAMPLING PROCESS - Convenient sampling was used to overcome the time and money constraints that could have been faced by us while collecting the data The customers were contacted face to face directly and also by way of telephonic conversation with them
ANALYTICAL TOOLS - The data collected were arranged accordingly and statistical tools like bar graphs and pie-charts were used to analyze and present the data
RESEARCH INSTRUMENT USED-
34
SAMPLING MEDIA - Printed questionnaires consisting several questions were asked to have an idea of customers view about Reliance Life Insurance plans followed by personal questions
FIELD WORK - Rigorous field work was undertaken to locate the interested and potential respondents to fulfill the objectives of the study
THE PRIMARY OBJECTIVEOF THE STUDY -
The primary objective of the research study is to have a detailed analysis of Reliance Life Insurance bringing in focus the future prospects of the (Anil Dhirubhai Ambani group) with relevance to the customer perception regarding the various plans and products offered by Reliance Life Insurance
31) DATA ANALYSIS AND INTERPRETATION
35
PERSONAL DETAILS
1) AGE a) 18-30b) 31-50c) 51-65
AGE NO OF RESPONDENTS PERCENTAGE
18-30 21 42
31-50 19 38
51-65 10 20
TOTAL 50 100
INTERPRETATION-The bar graph reveals that 42 of the respondents belong to the age group of 18-30 years 38 lies in the age group of 31-50 years and 20 of them lie in the age group of 51-65 years
2) OCCUPATION
4238
20
05
1015202530354045
NO
O
F
RE
SP
ON
DE
NT
S
18 to 30 31 to 50 51 to 65
AGE (in year)
AGE WISE CLASSIFICATION
36
a) Serviceb) Businessc) Professiond) Housewifee) Retired
OPTION NO OF RESPONDENTS PERCENTAGE
Service 16 32
Business 14 28
Profession 5 10
Housewife 8 16
Retired 7 14
TOTAL 50 100
INTERPRETATION-The above bar graph reveals that 32 of the total respondents were servicemen 28 of them belonged to the business class 10 were professionals 16 were housewives and 14 of the total respondents fall in the retired category
3) INCOME
32
28
10
16
14
0
5
10
15
20
25
30
35
Service Business Profession Housewife Retired
OCCUPATION
OCCUPATION WISE CLASSIFICATION
37
a) 150000-300000
b) 300000-500000
c) Above 500000
OPTION NO OF RESPONDENTS PERCENTAGE
150000-300000 24 48
300000-500000 14 28
Above 500000 12 24
TOTAL 50 100
INTERPRETATION-The above bar graph reveals that out of the total respondents 48 lie in the income group of 150000-300000 28 of the total respondents belonged to the income group of 300000-500000 and 24 lie in the income group of people earning an income of above Rs 500000pa
4828 24
01020304050
N O
OF
RE
SP
ON
DE
NT
S
150000-300000
300000-500000
ABOVE500000
INCOME (in RS)
INCOME WISE CLASSIFICATION
38
4) FAMILY MEMBERS
a) 2b) 3c) 4d) Above 4
OPTION NO OF RESPONDENT PERCENTAGE
2 11 22
3 9 18
4 24 48
Above 4 6 12
TOTAL 50 100
INTERPRETATION The above bar graph shows that 22 of the total respondents had a family of 2 members 18 of them had 3 family members 48 of them had 4 family members and 12 of them had the no of family members above 4
Q1 Where do you prefer to invest
22 18
48
120
1020304050
No
o
f re
spo
nd
ents
2 3 4 Above 4
No of family members
MEMBER WISE CLASSIFICATION
39
a) fixed deposits
b) stock
c) mutual funds
d) insurance
e) others
Option No of respondents Percentage
Fixed deposits 5 10
Stock 10 20
Mutual fund 10 20
Insurance 18 36
others 7 14
TOTAL 50 100
Interpretation The above pie chart shows that out of 50 respondents 10 preferred to invest in fixed deposits 20 in stocks 20 in mutual funds 36 in insurance and 14 in others like property gold etc
Q2 What are your priorities for investment
40
a) protecting your family against pre-mature death
b) wealth creation
c) retirement needs
d) child education and marriage
e) protect income against disability sickness or critical illness
Option No of respondents Percentage
Protecting your family against pre mature death
10 20
Wealth creation 14 28
Retirement needs 5 10
Child education and marriage 7 14
Protect income against disability sickness or critical illness
14 28
TOTAL 50 100
Interpretation The above pie chart shows that out of 50 respondents 20 of them invest for protecting their family against premature death 28 for creating wealth 10 for meeting their future retirement needs 14 for child education amp marriage and 28 for protection against disability and sickness
Q3 What is your main motive behind investing in life insurance
41
a) tax benefit
b) savings
c) risk cover
Option No of respondents Percentage
Tax benefits 27 54
Savings 5 10
Risk cover 18 36
TOTAL 50 100
Interpretation The above pie chart shows that out of the sample respondents 54 have tax benefit 10 have savings and 36 have risk cover as their main motive for making an investment in life
Q4 What kind of investment do you prefer
42
a) high risk high gain
b) low risk low gain
c) moderate
d) vary times to times
Option No of respondents Percentage
High risk high gain 8 16
Low risk low gain 5 10
Moderate 12 24
Vary times to times 25 50
TOTAL 50 100
Interpretation The above pie chart shows that out of 50 respondents 16 preferred high risk- high gain form of investment 10 preferred low risk- low gain form of investment 24 preferred moderate investment and 50 preferred varied form of investment
43
Q5Are you interested to invest in Traditional Plans
a) YES
b) NO
Option No of respondents Percentage
YES 36 72
NO 14 28
TOTAL 50 100
Interpretation The above pie chart shows that 72 of the respondents preferred to invest in Traditional Plans
44
Q6 What is your level of annual investmenta) below 20000
b) 20000-40000
c) above 40000
Option No of respondents Percentage
Below 20000 41 82
20000-40000 7 14
Above 40000 2 4
TOTAL 50 100
Interpretation The above pie chart shows that 82 of the respondents are willing to invest below Rs 20000 per annum 14 of them want to invest within Rs 20000 per annum to Rs 40000 and 4 wanted to invest over and above Rs 40000
45
Q7 What factors would you consider most important before choosing an insurance policy
a) publicity of the company
b) reputation of the company
c) quality of life advisors
d) after sales-supporting of the company
Option No of respondents Percentage
Publicity of the co 5 20
Reputation of the co 25 50
Quality of life advisors 10 10
After sale-services 10 20
TOTAL 50 100
Interpretation out of the sample respondents 20 considers publicity of the company 50 considers reputation of the company 10 considers quality of life advisors and 20 considers after sales support of the company as the most important factor for choosing an insurance company
46
Q8 Which life insurance company would you prefer the most to invest ina) reliance life insurance (RLIC)
b) Bajaj Allianz life insurance
Option No of respondents Percentage
RLIC 21 42
BAJAJ ALLIANZ 29 58
TOTAL 50 100
Interpretation Out of 50 respondents 42 preferred to invest in reliance life insurance over 58 of the respondents who prefer to invest in Bajaj Allianz life insurance
47
Q9 If reliance life insurance then which particular plan you would like to invest ina) Reliance Term Plan
b) Reliance Whole Life Plan
c) Reliance Endowment Plan
d) Reliance Special Endowment Plan
Option No of respondents Percentage
Reliance term plan 6 2858
Reliance whole life plan 3 1428
Reliance endowment plan 9 4286
Reliance special endowment plan 3 1428
TOTAL 21 100
Interpretation Out of 21 respondents 2858 preferred to invest in term plan 1428 in whole life plan 4286 in endowment plan and 1428 of them preferred to invest in special endowment plan of reliance life insurance
48
Q10 If Bajaj Allianz life insurance then which particular plan you would like to invest in
I ENDOWMENT PLAN a) Bajaj Allianz Invest Gain
b) Bajaj Allianz save Care Economy SP
c) Bajaj Allianz life time care
d) Bajaj Allianz Super Saver plan
II MONEY BACK PLAN i Bajaj Allianz Cash Gain plan
Option No of respondents Percentage
Invest gain plan 3 1035
Save care economy SP 6 2069
Life time care 7 2415
Super saver plan 3 1035
Cash gain plan 10 3446
TOTAL 29 100
Interpretation Out of 29 respondents 1035 of them plan to invest in Bajaj Allianz- Invest Gain 2069 wish to invest in Bajaj Allianz save Care Economy SP 2415 want to invest in Bajaj Allianz life time care 1035 in Bajaj Allianz Super Saver plan and 3446 prefer to invest in Bajaj Allianz Cash Gain plan
49
32) SIGNIFICANCE OF STUDY
Life insurance is one of the most rapidly growing sectors in India The main reason
behind the growth can attributed to the high population density improving economical
condition improving education level and improving awareness Due to these factors there
is still huge scope for growth in this sector Like any other business when the
opportunities are present everybody tends to enter the industries This growth hence
fetches the new competitors as well as new strategies from existing players To sustain in
any competitive industry the organization must adapt to existing strategies and adopt
new ones This study will focus on the analysis of Reliance Life Insurance in comparison
with the present scenario of Bajaj Allianz Life Insurance with respect to the Traditional
Plans of both the companyrsquos This will mainly cover the following aspects
To know about the awareness and popularity of various Traditional Plans offered
by Reliance Life Insurance and Bajaj Allianz Life Insurance
How Reliance Life Insurance can develop and sustain a good distribution
network
These will provide it benefit both in terms of better market coverage as well as better
penetration
50
33) SCOPE OF THE STUDY
1) This helps in finding out vast potential of insurance company
2) The study was conducted in National Capital Region (NCR) only
3) The number of respondents to be surveyed can be improved
4) This study was conducted by comparing the performances amp products of three private
amp government insurance players in insurance industry
5) This study was conducted to analyze the market stand of Reliance life insurance
Company limited and Bajaj Allianz Life Insurance Company Limited of India insurance
companies
6) This study is done to eliminate all the myths which people have in their minds
regarding Insurance Sector
51
34) OBJECTIVES
To have a detailed understanding of Reliance Life Insurance and Bajaj Allianz Life Insurance
To find out various reasons considered while investing in policies
To get knowledge about the market exposure and future prospects about Reliance Life Insurance
To know the perception of the consumers about the life insurance
To analyze the Traditional plans of Reliance Life Insurance and compare it with Bajaj Allianz
To know about the brand awareness of Reliance Life Insurance its customer preferences over Bajaj Allianz in the market
To study a proper knowledge about the life insurance industry
To understand the consumer choice while investing in policies
52
CHAPTER 4
DISCUSSION AND FINDINGS OF THE STUDY
FINDINGS OF THE STUDY RECOMMENDATION AND SUGGESTIONS CONCLUSION LIMITATIONS BIBLIOGRAPHY ANNEXUREQUESTIONNAIRE
53
41) FINDINGS OF THE STUDY
1) The survey reveals that still a large proportion of population is interested to invest in other forms of investment other than insurance as still most of them are unaware about the importance of insurance in their life
2) Basically people make varied form of investment for creating wealth to protect their families against pre-mature death and to protect income against disability sickness or critical illness
3) The main motive of the individuals investing is receives benefits US 1010D People generally consider insurance as a tax saving device
4) Mostly people prefer time to time form of investment as they are not willing to take high degree of risk
5) 72 of the respondents are preferred to invest in Traditional Plans
6) Most of the people prefer to make an annual investment up to a maximum of Rs20 000 per annum
7) When the product is like life insurance reputation of the company publicity of the company amp after sale services of the company matters a lot This means that people would choose that insurance company only where the quality of life advisors is satisfactory
8) Most people prefer to invest in Bajaj Allianz Life Insurance as compared to making an investment in Reliance Life Insurance
9) The most preferable Traditional plan of Reliance Life Insurance is Endowment Plan
10) The most preferable plan of Bajaj Allianz Life Insurance co is Cash Gain Plan
54
42) SUGGESTIONS amp RECOMMENDATIONS
Based on the observations of the study some suggestions for the organization are made as
follows
1) Quality of advisors is also as important as the quantity Thus company should go
mainly for qualified professionals
2) Company should increase its budget on publicity so that awareness can be increased
3) Clarity and transparency should be provided to the customer regarding various
products
4) Training sessions should be planned in advance so that schedule can be provided to
the advisor in advance
5) Apart from the Brand Positioning in urban area a strategy should be adopted by
Reliance to make its brand also near to middle level or high aspirant people because they
are the main source of the business in India
6) Awareness Camp to the sub urban area should be focused by Reliance
7) Some innovative technique or product is required in order to attract the consumer
43) LITERATURE REVIEW
55
1) Robi Elenekave has explained in detail why various retirement plans and pension plans donrsquot give the desired returns The main difficulty is the use of incorrect method for calculations done to find out the return on investment This is primarily due to wrong assumptions The study provides information about the various precautions which need to be considered before planning so that the desired results can be achieved
2) Another paper provides insight about how various financial sectors invest in bond market The study was how the different players investment different instruments according to the risk appetite and desired rate of return The study shows that life insurance sector mainly invests in government bond which are low return and low risk instrument The investment in government bond it shows that life insurance companies are more conservative in investment
3) K Subhash has presented the history of Indiarsquos life insurance industry in three stages before independence after independence and post liberalization which not only provides information but also help in analyzing the impact of these major changes The authors have also discussed the huge potential which exists in the rural India The insurance company must realize the importance of rural sector because the future lies there The author commented about the increasing share of private player in the existing market This confirms the availability of opportunity in this sector The paper also provides the importance of professional and focused approach which was given no importance
4) Tapen Sinha has discussed the various challenges and opportunities in the insurance market One of the very important factors which have been discussed in the study is the importance of developing new and better products As the scenario changes the need of an individual also changes so any organization must understand and fulfill these needs The new product development requires constant research so organization must also focus on it
5) Roger G Ibbotson discusses how financial planners and advisors have recently started to recognize that human capital must be taken into account when building optimal portfolios for individual investors Any investorrsquos human capital has a unique mortality risk However life insurance in its forms can hedge against this mortality risk Thus human capital affects both the optimal asset allocation and the optimal demand for life insurance This paper provides a unified framework based on human capital in order to enable individual investors to make both decisions jointly
6) Rakesh Niraj study tells how the flow of information in any organization is important For any organization to grow the flow of information must be good both upwards as well as ownwards The proper flow of information will also ensure proper flow of good and services from organization to customer and proper flow of information from customer to organization The information from customers will help the organization in providing better goods and services to the customer For the above purpose organization must ensure good channel partner who can provide the organization with correct feedback Hence it becomes very important for any organization to acquire good channel partners
56
7) Stephen P Robbins has discussed how group dynamics works in any organization The success of any organization depends on the success of its various teams and how these teams work together The book provides various techniques which can be used by any organization to get result from the team effort The conflict resolution is a major task in any group Various techniques which the organization can use in conflict resolution are also discussed Another important aspect covered is the importance of leadership in the organization The various forms of leadership have been discussed and the kinds of leadership which can be effective in particular situations are also discussed
8) R Wayne Mondy has discussed the importance of training and development in any organization The training provides skills to perform the current job where as the development involve learning beyond present need The various type of training are discussed which can be used according to the requirement Training and development are not only important for better performance of an individual but it also gives satisfaction The major factors which influence training and development are found to be management support commitment of trainee and trainer complexity of the organization The process of developing good training plans is also provided In another part author has discussed the importance of right man for right job The compensation strategies are also given which are very crucial for ant industry
9) Philip Kotler has discussed the importance of channels partners Better the channel partners better will be the delivery model Detailed discussion about how to design the channel structure so that all the requirements could be fulfilled is provided The various issues faced by the organization while managing the channels are also given When an organization has more than one channel it becomes very important that all the channels should be integrated in such a way that the organization get the best out of all At times due to the conflicting benefit of the different channels the conflict arise so various strategies to manage these issues is also discussed in the chapter
10) Michael J Etzel has written about the marketing of services The marketing of services is different from the goods because of the characteristic of service like intangibility inseparability heterogeneity etc Brief about pricing strategies is also given in case of services The authors have also given the impact of technological development on the services marketing The author has also given the importance of brand and after sales support in case of services as perception of the customers plays an important role In other part of the book the authors has described the importance of distribution channels and designing of the same A channel partner should be consider as partner according to discussion The legal complications associated with channels are also discussed These complications are necessary to take into the consideration while managing the channels The conflicting interest of channels both horizontally and vertically are also taken into the consideration
57
11) Boone has discussed about the importance of personal financial planning The concept of time value of money has also been elaborated The importance of creating and implementing budget is given under money management The other important concepts for financial planning like credit management and understanding taxes are also explained In one section the authors have discussed the importance of investment and what should be the major considerations while making any investment The considerations include the risk associated with the investment return on the investment etc The importance and benefits of life insurance has also been given The discussion also includes various legal aspects associated with life insurance The overview of retirement planning is also given which includes importance and benefit of retirement planning Various tools for proper retirement planning are also discussed
58
44) CONCLUSION
1) The customers are very much sensitive towards their investment They would like to invest only in that insurance company which enjoys good public image along with quality good services
2) The result of the survey conducted shows that Bajaj Allianz Life Insurance is the leader in life insurance industry but Reliance Life Insurance and other private players are giving it a close competition
3) The motive of the people behind investing in life insurance is the tax benefits that they would receive under sec 80C and 1010D
4) In Life Insurance industry the after sales support of the company is as important as the quality of life advisors
59
45) LIMITATIONS
There were some limitations faced during the study as discussed below
Since the study was taken for two months so there was a constraint of time and effort
The study was limited only to some of the Delhi regions so the results may be biased
Questionnaire was given to 125 people however only 50 responded to it which is very small for such type of study
The biasness of consumer or responses error cannot be eliminated
Most of the people are not aware about the Importance and the necessity of insurance in their life
Adverse perception of the people towards insurance sector- People consider insurance as a tax saving device
Lack of awareness about the earning opportunity in the insurance sector
60
46) BIBLIOGRAPHY
wwwreliancelifeinsurancecom
wwwadagroupcom
wwwirdacom
wwwbajajallianzlifeinsurancecom
wwwallianzbajajcom
47) ANNEXURE
61
QUESTIONNAIRE
A comparative analysis of consumer perception regarding Traditional plans of Reliance Life Insurance with that of Bajaj Allianz Life Insurance
NAME ___________________________
PERSONAL DETAILS
1) AGE_________________
1) OCCUPATION______________
2) INCOME___________________
3) FAMILY MEMBERS_________
Q1 Where do you prefer to investa) Fixed deposits b) Stock c) Mutual funds d) Insurance e) Others
Q2 What are your priorities for investmenta) Protecting your family against pre-mature death b) Wealth creation c) Retirement needs d) Child education and marriage e) Protect income against disability sickness or critical illness
Q3 What is your main motive behind investing in life insurancea) Tax benefit b) Savings c) Risk cover
Q4 What kind of investment do you prefera) High risk high gain b) Low risk low gain c) Moderate d) Vary times to times
62
Q5Are you interested to invest in Traditional Plansa) Yes b) No
Q6 What is your level of annual investmenta) below 20000 b) 20000-40000 c) above 40000
Q7 What factors would you consider most important before choosing an insurance company
a) publicity of the company b) reputation of the company c) quality of life advisors d) after sales-supporting of the company
Q8 Which life insurance company would you prefer the most to invest ina) Reliance life insurance b) Bajaj Allianz life insurance
Q9 If reliance life insurance then which particular plan you would like to invest ina) Reliance Term Plan b) Reliance Whole Life Plan c) Reliance Endowment Plan d) Reliance Special Endowment Plan
Q10 If Bajaj Allianz life insurance then which particular plan you would like to invest in
I ENDOWMENT PLAN
a) Bajaj Allianz Invest Gain
b) Bajaj Allianz save Care Economy SP
c) Bajaj Allianz life time care
d) Bajaj Allianz Super Saver plan
II MONEY BACK PLAN
a) Bajaj Allianz Cash Gain plan
63
64
- COMPANY PROFILE
- ABOUT RELIANCE LIFE INSURANCE
- HISTORY
- Reliance Capital Limited announced the launch of its life insurance business on February 1 2006 This was after obtaining the required regulatory approvals from the Registrar Of Companies and the Insurance Regulatory and Development Authority
- It was in August 2005 that the ball was set rolling when Reliance Capital Limited the financial arm of Reliance ndash Anil Dhirubhai Ambani Group (ADAG) ndash announced the requisition of 100 shareholding in AMP Sanmar Life Insurance Company Limited and the formal transfer of shares took place in October 2005 The company will issue all policy contracts under the Reliance Life Insurance Company limited name All the existing policy contracts also stand transferred to the Reliance Life Insurance entity with all the original contractual terms and commitments intact
- CORE VALUES
- Reliance Life Insurance Company Limited has some core values which are listed as follows
- Vision bull To be the first choice insurer for customers bull To be the preferred employer for staff in the insurance industry bull To be the number one insurer for creating shareholder value
- Mission As a responsible customer focused market leader we will strive to understand the insurance needs of the consumers and translate it into affordable products that deliver value for money
- 12) TRADITIONAL PLANS OF THE COMPANY
- 12A )TRADITIONAL PLAN OF RELIANCE LIFE INSURANCE-
- Life insurance products are designed to suit the requirements of customers Fundamentally the product provide for
- In every product to a certain degree risk cover is imperative for it to fall under the category of insurance Based on the coverage of the product the premiums are calculated and the customer pays accordingly In order to suggest the right product it is essential for an agent to understand the requirements of the customer well
- The traditional plans of the company have the following features-
- Fixed Tenure
- Potential for better returns
- Transparency
- Flexibility in investment
- Flexibility to invest more
- Flexibility to skip the premium
- Flexibility to choose the cover
- High liquidity
- Age term and sum assured decide the amount of premium
- Top- ups and switches are not allowed
- Reliance Life Insurance Company Limited has offered 9
- 1) Reliance term plan-
- 2) Reliance Whole Life Plan -
- 3) Reliance Endowment Plan -
- 4) Reliance Special Endowment Plan -
- 13) INDUSTRY PROFILE
- MEANING OF INSURANCE
- Insurance may be described as a social device to reduce or eliminate risk of loss to life and property Insurance is a collective bearing of risk Insurance is a financial device to spread the risks and losses of few people among a large number of people as people prefer small fixed liability instead of big uncertain and changing liability
- Insurance can be defined as a ldquolegal contract between two parties whereby one party called insurer undertakes to pay a fixed amount of money on the happening of a particular event which may be certain or uncertainrdquo The other party called insured pays in exchange a fixed sum known as premium
- Insurance is desired to safeguard oneself and onersquos family against possible losses on account of risks and perils It provides financial compensation for the losses suffered due to the happening of any unforeseen events
- IMPORTANCE OF INSURANCE
- Insurance services play predominant role in the process of financial Intermediary Today insurance industry is one of the most growing sectors in India There is lot of potential in the Indian Insurance Industry
- There are many issues which require study The scope of the study of Insurance industry of India would be very great as there are ongoing Developments in the industry after the opening of the sector
- Right now the insurance industry has great opportunities in a country like India or China which huge population Also the penetration of insurance in India is very low in both life and non-life segment so there is lot potential to be tapped Before starting the discussion on insurance industry and related issues we have to start with the basics of insurance So first we understand what is insurance How the word lsquoinsurancersquo is different from the word lsquoassurancersquo Etc
- HISTORY OF INSURANCE
- The concept of insurance is believed to have emerged almost 4500 years ago in the ancient land of Babylonia where traders used to bear risk of the carvan by giving loans which were later repaid with interest when the goods arrived safely
- The concept of insurance as we know today took shape in 1688 at a place called Lloydrsquos Coffee House in London where risk bearers used to meet to transact business This coffee house became so popular that Lloydrsquos became the one of the first modern insurance companies by the end of the eighteenth century
- Marine insurance companies came into existence by the end of the eighteenth century These companies were empowered to write fire and life insurance as well as marine The Great Fire of London in 1966 caused huge loss of property and life With a view to providing fire insurance facilities
- Dr Nicholas Barbon set up in 1967 the first fire insurance company known as the Fire office
- Life insurance in its modern form came to India from England in 1818 The Oriental Life Insurance Company was the first insurance company to be set up in India to help the widows of European community The insurance companies which came into existence between 1818 and 1869 treated
- Indian lives as subnormal and charged an extra premium of 15 to 20 per cent The first Indian insurance company the Bombay Mutual Life
- Assurance Society came into existence in 1870 to cover Indian lives at normal rates
- The Insurance Act 1938 the first comprehensive legislation governing both life and non-life branches of insurance were enacted to provide strict state control over insurance business This amended insurance Act looked into investments expenditure and management of these companies
- By the mid- 1950s there were 154 Indian insurers 16 foreign insurers and 75 provident societies carrying on life insurance business in India Insurance business flourished and so did scams irregularities and dubious investment practices by scores of companies As a result the government decided to nationalize the life assurance business in India The Life Insurance
- Corporation of India (LIC) was set up in 1956 The nationalization of life insurance was followed by general insurance in 1972
- MEANING OF LIFE INSURANCE
- There are three parties in a life insurance transaction the insurer the insured and the owner of the policy (policyholder) although the owner and the insured are often the same person
- Another important person involved in a life insurance policy is the beneficiary The beneficiary is the person or persons who will receive the policy proceeds upon the death of the insured
- Life insurance may be divided into two basic classes ndash term and permanent
- HISTORY OF LIFE INSURANCE
- Risk protection has been a primary goal of humans and institutions throughout history Protecting against risk is what insurance is all about
- Over 5000 years ago in China insurance was seen as a preventative measure against piracy on the sea Piracy in fact was so prevalent that as a way of spreading the risk a number of ships would carry a portion of another ships cargo so that if one ship was captured the entire shipment would not be lost
- In another part of the world nearly 4500 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
- Life insurance came about a little later in ancient Rome where burial clubs were formed to cover the funeral expenses of its members as well as help survivors monetarily With Romes fall around 450 AD most of the concepts of insurance were abandoned but aspects of it did continue through the Middle Ages particularly with merchant and artisan guilds These provided forms of member insurance covering risks like fire flood theft disability death and even imprisonment
- During the feudal period early forms of insurance ebbed with the decline of travel and long-distance trade But during the 14th to 16th centuries transportation commerce and insurance would again reemerge
- And similar to ancient Rome burial societies were formed in the Buddhist period to help families build houses and to protect widows and children
- Modern Insurance
- Illegal almost everywhere else in Europe life insurance in England was vigorously promoted in the three decades following the Glorious Revolution of 1688 The type of insurance we see today owes its roots to 17th century England Lloyds of London or as they were known then Lloyds Coffee House was the location where merchants ship owners and underwriters met to discuss and transact business deals
- While serving as a means of risk-avoidance life insurance also appealed strongly to the gambling instincts of Englands burgeoning middle class
- Gambling was so rampant in fact that when newspapers published names of prominent people who were seriously ill bets were placed at Lloydrsquos on their anticipated dates of death Reacting against such practices 79 merchant underwriters broke away in 1769 and two years later formed a ldquoNew Lloydrsquos Coffee Houserdquo that became known as the ldquoreal Lloydrsquosrdquo Making wagers on peoples deaths ceased in 1774 when parliament forbade the practice
- Insurance moves to America
- The US insurance industry was built on the British model The year 1735 saw the birth of the first insurance company in the American colonies in
- Charleston SC The Presbyterian Synod of Philadelphia in 1759 sponsored the first life insurance corporation in America for the benefit of ministers and their dependents And the first life insurance policy for the general public in the United States was issued in Philadelphia on May 22 1761
- But it wasnt until 80 years later (after 1840) that life insurance really tookoff in a big way The key to its success was reducing the opposition from religious groups
- In 1835 the infamous New York fire drew peoples 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
- With the creation of the automobile public liability insurance which first made its appearance in the 1880s gained importance and acceptance
- More advancement was made to insurance during the process of industrialization In 1897 the British government passed the Workmens Compensation Act which made it mandatory for a company to insure its employees against industrial accidents
- During 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 most labor 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
- BENEFITS OF LIFE INSURANCE
- 1) Risk cover -Life Insurance contracts allow an individual to have a risk cover against any unfortunate event of the future
- 2) Tax Deduction -Under section 80C of the Income Tax Act of 1961 one can get tax deduction on premiums up to one lakh rupees Life Insurance policies thus decrease the total taxable income of an individual
- 3) Loans -An individual can easily access loans from different financial institutions by pledging his insurance policies
- 4) Retirement Planning -What had provided protection against the financial consequences of premature death may now be used to help them enjoy their retirement years
- 5) Educational Needs -Similar to retirement planning the cash values that flow from ones life insurance schemes can be utilized for educational needs of the insurer or his children
- The Life Insurance Industry has an enviable track record among public sector units It has a Consistent profit and dividend paying record accompanied by a steady growth in its financial resources Through investments in the Government sector and socially- oriented sectors the Industry has contributed immensely to the nations development The industry is recognized as one of the largest financial Institutions in the country The ventures initiated by the industry in the areas of Mutual Fund
- Housing Finance has done exceedingly well in recent years To protect the countrys foreign exchange reserves the reinsurance arrangement are so organized that maximum retention is made possible within the country while at the same time protecting interests of the policy holders
- 22) CURRENT SCENARIO OF RELIANCE LIFE INSURANCE
- RLIC offers wide range of innovative life insurance products targeted at individuals and groups It offers need based products that caters to four distinct segments namely protection child retirement and investment plans RLIC is committed to emerge as a transnational Life Insurer of global scale and standard
- CH - 3) RESEARCH METHODOLOGY
- RESEARCH DESIGN-
- SAMPLING TECHNIQUES-
- THE PRIMARY OBJECTIVEOF THE STUDY-
- 34) OBJECTIVES
- 7) Some innovative technique or product is required in order to attract the consumer
- 45) LIMITATIONS
- 46) BIBLIOGRAPHY
-
3 Bajaj Allianz life time care
A whole life plan which provides survival benefits at the age of 80 thereby making sure you are financially secure at the time when you need it the most Additional Benefits
a) Accidental Death Cover and Disability Cover b) Critical Illness Cover and Hospital Cash Cover c) Waiver of Premium Benefit
4Bajaj Allianz Super Saver plan
Bajaj Allianz Super Saver is a regular premium endowment plan which helps you save regular amounts for a safer tomorrow It also provides you with extra benefits of Guaranteed Additions to your sum assured at the end of each policy year
18
II MONEY BACK PLAN
Money back plans are Traditional Insurance plans that provide the investor with returns at regular stages of life
CashGain
1)Bajaj Allianz Cash Gain plan
A Money back plan which guarantees 125 payout + bonuses
Quadruple life cover
5 easy payouts which give upto 125 + bonuses
Additional Benefitsa) Accidental Death Benefit and Disability Benefitb) Critical Illness Benefit and Hospital Cash Benefitc) Family Income Benefit In case of death or accidental total permanent disability of insured all future premiums are waived and 1 of the sum assured is paid monthly
19
20
13) INDUSTRY PROFILE
MEANING OF INSURANCE
Insurance may be described as a social device to reduce or eliminate risk of loss to life and property Insurance is a collective bearing of risk Insurance is a financial device to spread the risks and losses of few people among a large number of people as people prefer small fixed liability instead of big uncertain and changing liability
Insurance can be defined as a ldquolegal contract between two parties whereby one party called insurer undertakes to pay a fixed amount of money on the happening of a particular event which may be certain or uncertainrdquo The other party called insured pays in exchange a fixed sum known as premiumInsurance is desired to safeguard oneself and onersquos family against possible losses on account of risks and perils It provides financial compensation for the losses suffered due to the happening of any unforeseen events
IMPORTANCE OF INSURANCE
Insurance constitutes one of the major segments of the financial marketInsurance services play predominant role in the process of financial Intermediary Today insurance industry is one of the most growing sectors in India There is lot of potential in the Indian Insurance Industry
There are many issues which require study The scope of the study of Insurance industry of India would be very great as there are ongoing Developments in the industry after the opening of the sectorOne of the major issues is the effects on LIC after the entry of private players in the market Though market share of LIC has been affected it has improved in terms of efficiency
There are number of other hot topics like penetration of Health Insurance Rural marketing of insurance new distribution channels new product ranges insurance brokersrsquo regulation incentive scheme of development officers of LIC etc So it offers lot of scope for studying the insurance industryRight now the insurance industry has great opportunities in a country like India or China which huge population Also the penetration of insurance in India is very low in both life and non-life segment so there is lot potential to be tapped Before starting the discussion on insurance industry and related issues we have to start with the basics of insurance So first we understand what is insurance How the word lsquoinsurancersquo is different from the word lsquoassurancersquo Etc
21
HISTORY OF INSURANCE
The concept of insurance is believed to have emerged almost 4500 years ago in the ancient land of Babylonia where traders used to bear risk of the carvan by giving loans which were later repaid with interest when the goods arrived safely
The concept of insurance as we know today took shape in 1688 at a place called Lloydrsquos Coffee House in London where risk bearers used to meet to transact business This coffee house became so popular that Lloydrsquos became the one of the first modern insurance companies by the end of the eighteenth centuryMarine insurance companies came into existence by the end of the eighteenth century These companies were empowered to write fire and life insurance as well as marine The Great Fire of London in 1966 caused huge loss of property and life With a view to providing fire insurance facilitiesDr Nicholas Barbon set up in 1967 the first fire insurance company known as the Fire office
Life insurance in its modern form came to India from England in 1818 The Oriental Life Insurance Company was the first insurance company to be set up in India to help the widows of European community The insurance companies which came into existence between 1818 and 1869 treatedIndian lives as subnormal and charged an extra premium of 15 to 20 per cent The first Indian insurance company the Bombay Mutual LifeAssurance Society came into existence in 1870 to cover Indian lives at normal rates
The Insurance Act 1938 the first comprehensive legislation governing both life and non-life branches of insurance were enacted to provide strict state control over insurance business This amended insurance Act looked into investments expenditure and management of these companiesBy the mid- 1950s there were 154 Indian insurers 16 foreign insurers and 75 provident societies carrying on life insurance business in India Insurance business flourished and so did scams irregularities and dubious investment practices by scores of companies As a result the government decided to nationalize the life assurance business in India The Life InsuranceCorporation of India (LIC) was set up in 1956 The nationalization of life insurance was followed by general insurance in 1972
22
MEANING OF LIFE INSURANCE
There are three parties in a life insurance transaction the insurer the insured and the owner of the policy (policyholder) although the owner and the insured are often the same person
Another important person involved in a life insurance policy is the beneficiary The beneficiary is the person or persons who will receive the policy proceeds upon the death of the insured
Life insurance may be divided into two basic classes ndash term and permanent
Term life insurance provides for life insurance coverage for a specified term of years for a specified premium The policy does not accumulate cash value
Permanent life insurance is life insurance that remains in force until the policy matures unless the owner fails to pay the premium when due
Whole life insurance provides for a level premium and a cash value table included in the policy guaranteed by the company The primary advantages of whole life are guaranteed death benefits guaranteed cash values fixed and known annual premiums and mortality and expense charges will not reduce the cash value shown in the policy
Universal life insurance (UL) is a relatively new insurance product intended to provide permanent insurance coverage with greater flexibility in premium payment and the potential for a higher internal rate of return A universal life policy includes a cash account Premiums increase the cash account If you want insurance protection only and not a savings and investment product buy a term life insurance policy
If you want to buy a whole life universal life or other cash value policy plan to hold it for at least 15 years Canceling these policies after only a few years can more than double your life insurance costs
23
HISTORY OF LIFE INSURANCE
Risk protection has been a primary goal of humans and institutions throughout history Protecting against risk is what insurance is all aboutOver 5000 years ago in China insurance was seen as a preventative measure against piracy on the sea Piracy in fact was so prevalent that as a way of spreading the risk a number of ships would carry a portion of another ships cargo so that if one ship was captured the entire shipment would not be lostIn another part of the world nearly 4500 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
Life insurance came about a little later in ancient Rome where burial clubs were formed to cover the funeral expenses of its members as well as help survivors monetarily With Romes fall around 450 AD most of the concepts of insurance were abandoned but aspects of it did continue through the Middle Ages particularly with merchant and artisan guilds These provided forms of member insurance covering risks like fire flood theft disability death and even imprisonment
During the feudal period early forms of insurance ebbed with the decline of travel and long-distance trade But during the 14th to 16th centuries transportation commerce and insurance would again reemergeInsurance in India can be traced back to the Vedas For instance yogakshema the name of Life Insurance Corporation of Indias 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
And similar to ancient Rome burial societies were formed in the Buddhist period to help families build houses and to protect widows and children
Modern InsuranceIllegal almost everywhere else in Europe life insurance in England was vigorously promoted in the three decades following the Glorious Revolution of 1688 The type of insurance we see today owes its roots to 17th century England Lloyds of London or as they were known then Lloyds Coffee House was the location where merchants ship owners and underwriters met to discuss and transact business dealsWhile serving as a means of risk-avoidance life insurance also appealed strongly to the gambling instincts of Englands burgeoning middle classGambling was so rampant in fact that when newspapers published names of prominent people who were seriously ill bets were placed at Lloydrsquos on their anticipated dates of death Reacting against such practices 79 merchant underwriters broke away in 1769 and
24
two years later formed a ldquoNew Lloydrsquos Coffee Houserdquo that became known as the ldquoreal Lloydrsquosrdquo Making wagers on peoples deaths ceased in 1774 when parliament forbade the practice
Insurance moves to AmericaThe US insurance industry was built on the British model The year 1735 saw the birth of the first insurance company in the American colonies inCharleston SC The Presbyterian Synod of Philadelphia in 1759 sponsored the first life insurance corporation in America for the benefit of ministers and their dependents And the first life insurance policy for the general public in the United States was issued in Philadelphia on May 22 1761But it wasnt until 80 years later (after 1840) that life insurance really tookoff in a big way The key to its success was reducing the opposition from religious groups
In 1835 the infamous New York fire drew peoples 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
With the creation of the automobile public liability insurance which first made its appearance in the 1880s gained importance and acceptanceMore advancement was made to insurance during the process of industrialization In 1897 the British government passed the Workmens Compensation Act which made it mandatory for a company to insure its employees against industrial accidents
During 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 most labor 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
25
BENEFITS OF LIFE INSURANCE
1) Risk cover -Life Insurance contracts allow an individual to have a risk cover against any unfortunate event of the future
2) Tax Deduction -Under section 80C of the Income Tax Act of 1961 one can get tax deduction on premiums up to one lakh rupees Life Insurance policies thus decrease the total taxable income of an individual
3) Loans -An individual can easily access loans from different financial institutions by pledging his insurance policies
4) Retirement Planning -What had provided protection against the financial consequences of premature death may now be used to help them enjoy their retirement yearsMoreover the cash value can be used as an additional income in the old age
5) Educational Needs -Similar to retirement planning the cash values that flow from ones life insurance schemes can be utilized for educational needs of the insurer or his children
26
ROLE OF LIFE INSURANCE IN THE GROWTH OF THE ECONOMY
The Life Insurance Industry has an enviable track record among public sector units It has a Consistent profit and dividend paying record accompanied by a steady growth in its financial resources Through investments in the Government sector and socially- oriented sectors the Industry has contributed immensely to the nations development The industry is recognized as one of the largest financial Institutions in the country The ventures initiated by the industry in the areas of Mutual Fund
Housing Finance has done exceedingly well in recent years To protect the countrys foreign exchange reserves the reinsurance arrangement are so organized that maximum retention is made possible within the country while at the same time protecting interests of the policy holders
27
ROLE OF IRDA
MISSION
ldquoTo protect the interests of the policyholders to regulate promote
and ensure orderly growth of the insurance industry and for matters
connected therewith or incidental theretordquo
The Insurance Act 1938 had provided for setting up of the Controller of Insurance to act
as a strong and powerful supervisory and regulatory authority for insurance Post
nationalization the role of Controller of Insurance diminished considerably in
significance since the Government owned the insurance companies But the scenario
changed with the private and foreign companies foraying in to the insurance sector This
necessitated the need for a strong independent and autonomous Insurance Regulatory
Authority was felt As the enacting of legislation would have taken time the then
Government constituted through a Government resolution an Interim Insurance
Regulatory Authority pending the enactment of a comprehensive legislation
The Insurance Regulatory and Development Authority Act 1999 is an act to provide for
the establishment of an Authority to protect the interests of holders of insurance policies
to regulate promote and ensure orderly growth of the insurance industry and for matters
connected therewith or incidental thereto and further to amend the Insurance Act 1938
the Life Insurance Corporation Act 1956 and the General insurance Business
(Nationalization) Act 1972 to end the monopoly of the Life Insurance Corporation of
India (for life insurance business) and General Insurance Corporation and its subsidiaries
(for general insurance business) The act extends to the whole of India and will come
into force on such date as the Central Government may by notification in the Official
Gazette specify Different dates may be appointed for different provisions of this Act
28
The Act has defined certain terms some of the most important ones are as follows
Appointed day means the date on which the Authority is established under the act
Authority means the established under this Act Interim Insurance Regulatory Authority
means the Insurance Regulatory Authority set up by the Central Government through
Resolution No 17(2) 94-lns-V dated the 23rd January 1996
Words and expressions used and not defined in this Act but defined in the Insurance Act
1938 or the Life Insurance Corporation Act 1956 or the General Insurance Business
(Nationalization) Act 1972 shall have the meanings respectively assigned to them in
those Acts A new definition of Indian Insurance Company has been inserted Indian
insurance company means any insurer being a company
(a) Which is formed and registered under the Companies Act 1956
(b) in which the aggregate holdings of equity shares by a foreign company either by
itself or through its subsidiary companies or its nominees do not exceed twenty-six
percent paid up capital in such Indian insurance company
(c) Whose sole purpose is to carry on life insurance business general insurance business
or re-insurance business
29
CURRENT SCENERIO
21) CURRENT SCENERIO OF THE INSURANCE INDUSTRY
With largest number of life insurance policies in force in the world insurance happens to be a mega opportunity in India Itrsquos a business growing at the rate of 15-20 per cent annually and presently is of the order of Rs 450 billion Together with banking services it adds about 7 per cent to the countryrsquos GDP Gross premium collection is nearly 2 per cent of GDP and funds available with LIC for investment are 8 per cent of GDP
Yet nearly 80 percent of Indian population is without life insurance cover while health insurance and non-life insurance continues to be below international standards And this part of the population is also subject to weak social security and pension systems with hardly any old age income security This it is an indicator that growth potential for the insurance sector is immense A well-develop and evolved insurance sector is needed for economic development as it provides long term funds for infrastructure development and at the same time strengthens the risk taking ability It is estimated that over the next ten years India would require investments of the order of one trillion US dollar The insurance sector to some extent can enable investment in infrastructure development to sustain economic growth of the country Insurance is a federal subject in India There are two legislation that govern the sector - The Insurance Act-1938 and The IRDA Act-1999
In India insurance is generally considered as a tax-saving device instead of its other implied long term financial benefits Indian people are prone to investing in properties and gold followed by bank deposits They selectively invest in shares also but the percentage is very small Even to this day Life Insurance Corporation of India dominates India insurance sector With the entry of private sector players backed by foreign expertise Indian insurance market has become more vibrant Business is becoming increasingly vulnerable due to wide variety of risk particularly after September 11 2001 disaster in which twin tower located in the hearts of New York city were crashed by terrorist attack resulting in loss of 6000 human lives as well as financial loss to the extent of $45 billion The impact of this terrorist attack has created new horizon of risk to the business world today
However rapid changes in the global economy development of technology and e-business already gathered momentum Increased dependency on technology has originated new risks that have resulted in well-published incidents Computer hackers obtaining credit card information from visa and Power-Gen the love bug virus cyber extortion web content liability professional errors and omissions computers and other crimes and activities such as terrorism kidnapping and companyrsquos executive and extortion of money commercial liability etc have significant impact on business resulting in extreme financial loss commercial embarrassment or regulatory implications
Corporation insurancerisk managers under the circumstances have to demand increasingly complex insurance products They have to be more attentive and
30
knowledgeable about emerging risks how those risks are managed effectively and efficiently and how they could ultimately affect a companyrsquos financial situation and therefore its position in the market place In short how such risks are managed and can give to an insured a competitive advantage
In the changing times adoption of e-commerce into business models the integration of web-based communication and data transfer capabilities into the business operations and leveraging of advanced network and technology architecture for maximum benefit are the new horizon of the risks For the corporate insurancerisks managers these new exposure-cyber-risks-can lead to cyber losses widening the interpretation of what constitute insure property damage particularly as it relates to information technology and dataAll the while organizations are tremendous pressure to reduce expenses and increase profit margin and cannot afford to suffer a property loss of business interruption due to any cause (risk) How a company identifies quantifies qualifies and manages these new risks exposure in addition to the well-known tradition risks is becoming an important factor in creating shareholders value This often means changing the way Everyone in the organization have to think about risk
Insurance managers are seeing price levels (premium) continue to rise-albeit modestly-in todayrsquos primarily commercial property and reinsurance markets They are demanding that insurers improve their risk assessment and quantification offerings so that an insured may avail the benefit in cost (premium rate) on account of well-managed riskThe good news for insurance managers is that as the economy evolves insurers are increasingly matching that evaluation with new products services and capabilities due to opening up the insurance market to the private players
Insurers who are truly listening to their customers and striving to be more in tune with their needs are responding to the fast changing corporate insurance and risk management landscape They are listening to their customers They are making fresh approaches to address the new challenges faced by insured organization by designing the new products as per the needs Insurers are providing value added services to insured to protect the value created by the business
Insurers are increasingly required to develop and expand their information technology platforms to ensure that the vast amount of data they collect about their customers Insurancerisk portfolio can easily and seamlessly be transformed into valuable risk management information To help their customers insurers should make better-informed decisions They must be able to swiftly deliver this data to their customers (insured) anywhere in the world Insurer are also discovering that risk assessment have to be customized to meet policyholdersrsquo new exposures and needs The insurance industry is stepping up and addressing these challenges in several different ways
31
22) CURRENT SCENARIO OF RELIANCE LIFE INSURANCE
RLIC offers wide range of innovative life insurance products targeted at individuals and groups It offers need based products that caters to four distinct segments namely protection child retirement and investment plans RLIC is committed to emerge as a
transnational Life Insurer of global scale and standard
Reliance Life Insurance Company Limited (RLIC) is amongst the fastest growing life insurance companies in India It is also amongst the top four private sector life insurance companies in India (As on FY 2008-2009)
As on March 31 2009 RLIC has an annualized premium of Rs 30 billion with a market share of 103 It has leapfrogged on the growth path and has reached the 4 million policy mark in a short span of within 3 years RLIC has a strong distribution network of 1145 branches with more than 149000 agents
32
Insurancersquos Market Share in Comparison of Other Private company
If we look at the status of Reliance Life Insurancersquos market share in comparison of other
private company in comparison of premium earned-
If we talk the growth of Insurance industryrsquos private players in recent years the data will
reflect-
CH - 3) RESEARCH METHODOLOGY
33
RESEARCH DESIGN-
COMPARITIVE STUDY- A comparative study has been undertaken to compare the traditional Plans of Reliance Life Insurance with that of Bajaj Allianz life insurance
DATA TYPE
INTRODUCTION - Any organization whether big or small private or public needs different type of information to know its popularity I have gathered secondary data and primary data and collected information from the combination of these two data
PRIMARY DATA - Primary data collection method was decided for observing working of the company and approaching the customers directly face to face A great care was taken while collecting the primary data to answer that it is relevant accurate current and unbiased
SECONDARY DATA - Secondary data collection method was used by referring to various websites books and newspapers for collecting information regarding the project under study Secondary data consist of the information that already exists somewhere else for some another purpose
SAMPLING TECHNIQUES-
SAMPLE SIZE- A sample size of 50 was taken to be analyzed
SAMPLE LOCATION-Various sectors of Kamla Nagar Civil lines Mukherji Nagar Model Town and selected areas of Delhi
SAMPLING PROCESS - Convenient sampling was used to overcome the time and money constraints that could have been faced by us while collecting the data The customers were contacted face to face directly and also by way of telephonic conversation with them
ANALYTICAL TOOLS - The data collected were arranged accordingly and statistical tools like bar graphs and pie-charts were used to analyze and present the data
RESEARCH INSTRUMENT USED-
34
SAMPLING MEDIA - Printed questionnaires consisting several questions were asked to have an idea of customers view about Reliance Life Insurance plans followed by personal questions
FIELD WORK - Rigorous field work was undertaken to locate the interested and potential respondents to fulfill the objectives of the study
THE PRIMARY OBJECTIVEOF THE STUDY -
The primary objective of the research study is to have a detailed analysis of Reliance Life Insurance bringing in focus the future prospects of the (Anil Dhirubhai Ambani group) with relevance to the customer perception regarding the various plans and products offered by Reliance Life Insurance
31) DATA ANALYSIS AND INTERPRETATION
35
PERSONAL DETAILS
1) AGE a) 18-30b) 31-50c) 51-65
AGE NO OF RESPONDENTS PERCENTAGE
18-30 21 42
31-50 19 38
51-65 10 20
TOTAL 50 100
INTERPRETATION-The bar graph reveals that 42 of the respondents belong to the age group of 18-30 years 38 lies in the age group of 31-50 years and 20 of them lie in the age group of 51-65 years
2) OCCUPATION
4238
20
05
1015202530354045
NO
O
F
RE
SP
ON
DE
NT
S
18 to 30 31 to 50 51 to 65
AGE (in year)
AGE WISE CLASSIFICATION
36
a) Serviceb) Businessc) Professiond) Housewifee) Retired
OPTION NO OF RESPONDENTS PERCENTAGE
Service 16 32
Business 14 28
Profession 5 10
Housewife 8 16
Retired 7 14
TOTAL 50 100
INTERPRETATION-The above bar graph reveals that 32 of the total respondents were servicemen 28 of them belonged to the business class 10 were professionals 16 were housewives and 14 of the total respondents fall in the retired category
3) INCOME
32
28
10
16
14
0
5
10
15
20
25
30
35
Service Business Profession Housewife Retired
OCCUPATION
OCCUPATION WISE CLASSIFICATION
37
a) 150000-300000
b) 300000-500000
c) Above 500000
OPTION NO OF RESPONDENTS PERCENTAGE
150000-300000 24 48
300000-500000 14 28
Above 500000 12 24
TOTAL 50 100
INTERPRETATION-The above bar graph reveals that out of the total respondents 48 lie in the income group of 150000-300000 28 of the total respondents belonged to the income group of 300000-500000 and 24 lie in the income group of people earning an income of above Rs 500000pa
4828 24
01020304050
N O
OF
RE
SP
ON
DE
NT
S
150000-300000
300000-500000
ABOVE500000
INCOME (in RS)
INCOME WISE CLASSIFICATION
38
4) FAMILY MEMBERS
a) 2b) 3c) 4d) Above 4
OPTION NO OF RESPONDENT PERCENTAGE
2 11 22
3 9 18
4 24 48
Above 4 6 12
TOTAL 50 100
INTERPRETATION The above bar graph shows that 22 of the total respondents had a family of 2 members 18 of them had 3 family members 48 of them had 4 family members and 12 of them had the no of family members above 4
Q1 Where do you prefer to invest
22 18
48
120
1020304050
No
o
f re
spo
nd
ents
2 3 4 Above 4
No of family members
MEMBER WISE CLASSIFICATION
39
a) fixed deposits
b) stock
c) mutual funds
d) insurance
e) others
Option No of respondents Percentage
Fixed deposits 5 10
Stock 10 20
Mutual fund 10 20
Insurance 18 36
others 7 14
TOTAL 50 100
Interpretation The above pie chart shows that out of 50 respondents 10 preferred to invest in fixed deposits 20 in stocks 20 in mutual funds 36 in insurance and 14 in others like property gold etc
Q2 What are your priorities for investment
40
a) protecting your family against pre-mature death
b) wealth creation
c) retirement needs
d) child education and marriage
e) protect income against disability sickness or critical illness
Option No of respondents Percentage
Protecting your family against pre mature death
10 20
Wealth creation 14 28
Retirement needs 5 10
Child education and marriage 7 14
Protect income against disability sickness or critical illness
14 28
TOTAL 50 100
Interpretation The above pie chart shows that out of 50 respondents 20 of them invest for protecting their family against premature death 28 for creating wealth 10 for meeting their future retirement needs 14 for child education amp marriage and 28 for protection against disability and sickness
Q3 What is your main motive behind investing in life insurance
41
a) tax benefit
b) savings
c) risk cover
Option No of respondents Percentage
Tax benefits 27 54
Savings 5 10
Risk cover 18 36
TOTAL 50 100
Interpretation The above pie chart shows that out of the sample respondents 54 have tax benefit 10 have savings and 36 have risk cover as their main motive for making an investment in life
Q4 What kind of investment do you prefer
42
a) high risk high gain
b) low risk low gain
c) moderate
d) vary times to times
Option No of respondents Percentage
High risk high gain 8 16
Low risk low gain 5 10
Moderate 12 24
Vary times to times 25 50
TOTAL 50 100
Interpretation The above pie chart shows that out of 50 respondents 16 preferred high risk- high gain form of investment 10 preferred low risk- low gain form of investment 24 preferred moderate investment and 50 preferred varied form of investment
43
Q5Are you interested to invest in Traditional Plans
a) YES
b) NO
Option No of respondents Percentage
YES 36 72
NO 14 28
TOTAL 50 100
Interpretation The above pie chart shows that 72 of the respondents preferred to invest in Traditional Plans
44
Q6 What is your level of annual investmenta) below 20000
b) 20000-40000
c) above 40000
Option No of respondents Percentage
Below 20000 41 82
20000-40000 7 14
Above 40000 2 4
TOTAL 50 100
Interpretation The above pie chart shows that 82 of the respondents are willing to invest below Rs 20000 per annum 14 of them want to invest within Rs 20000 per annum to Rs 40000 and 4 wanted to invest over and above Rs 40000
45
Q7 What factors would you consider most important before choosing an insurance policy
a) publicity of the company
b) reputation of the company
c) quality of life advisors
d) after sales-supporting of the company
Option No of respondents Percentage
Publicity of the co 5 20
Reputation of the co 25 50
Quality of life advisors 10 10
After sale-services 10 20
TOTAL 50 100
Interpretation out of the sample respondents 20 considers publicity of the company 50 considers reputation of the company 10 considers quality of life advisors and 20 considers after sales support of the company as the most important factor for choosing an insurance company
46
Q8 Which life insurance company would you prefer the most to invest ina) reliance life insurance (RLIC)
b) Bajaj Allianz life insurance
Option No of respondents Percentage
RLIC 21 42
BAJAJ ALLIANZ 29 58
TOTAL 50 100
Interpretation Out of 50 respondents 42 preferred to invest in reliance life insurance over 58 of the respondents who prefer to invest in Bajaj Allianz life insurance
47
Q9 If reliance life insurance then which particular plan you would like to invest ina) Reliance Term Plan
b) Reliance Whole Life Plan
c) Reliance Endowment Plan
d) Reliance Special Endowment Plan
Option No of respondents Percentage
Reliance term plan 6 2858
Reliance whole life plan 3 1428
Reliance endowment plan 9 4286
Reliance special endowment plan 3 1428
TOTAL 21 100
Interpretation Out of 21 respondents 2858 preferred to invest in term plan 1428 in whole life plan 4286 in endowment plan and 1428 of them preferred to invest in special endowment plan of reliance life insurance
48
Q10 If Bajaj Allianz life insurance then which particular plan you would like to invest in
I ENDOWMENT PLAN a) Bajaj Allianz Invest Gain
b) Bajaj Allianz save Care Economy SP
c) Bajaj Allianz life time care
d) Bajaj Allianz Super Saver plan
II MONEY BACK PLAN i Bajaj Allianz Cash Gain plan
Option No of respondents Percentage
Invest gain plan 3 1035
Save care economy SP 6 2069
Life time care 7 2415
Super saver plan 3 1035
Cash gain plan 10 3446
TOTAL 29 100
Interpretation Out of 29 respondents 1035 of them plan to invest in Bajaj Allianz- Invest Gain 2069 wish to invest in Bajaj Allianz save Care Economy SP 2415 want to invest in Bajaj Allianz life time care 1035 in Bajaj Allianz Super Saver plan and 3446 prefer to invest in Bajaj Allianz Cash Gain plan
49
32) SIGNIFICANCE OF STUDY
Life insurance is one of the most rapidly growing sectors in India The main reason
behind the growth can attributed to the high population density improving economical
condition improving education level and improving awareness Due to these factors there
is still huge scope for growth in this sector Like any other business when the
opportunities are present everybody tends to enter the industries This growth hence
fetches the new competitors as well as new strategies from existing players To sustain in
any competitive industry the organization must adapt to existing strategies and adopt
new ones This study will focus on the analysis of Reliance Life Insurance in comparison
with the present scenario of Bajaj Allianz Life Insurance with respect to the Traditional
Plans of both the companyrsquos This will mainly cover the following aspects
To know about the awareness and popularity of various Traditional Plans offered
by Reliance Life Insurance and Bajaj Allianz Life Insurance
How Reliance Life Insurance can develop and sustain a good distribution
network
These will provide it benefit both in terms of better market coverage as well as better
penetration
50
33) SCOPE OF THE STUDY
1) This helps in finding out vast potential of insurance company
2) The study was conducted in National Capital Region (NCR) only
3) The number of respondents to be surveyed can be improved
4) This study was conducted by comparing the performances amp products of three private
amp government insurance players in insurance industry
5) This study was conducted to analyze the market stand of Reliance life insurance
Company limited and Bajaj Allianz Life Insurance Company Limited of India insurance
companies
6) This study is done to eliminate all the myths which people have in their minds
regarding Insurance Sector
51
34) OBJECTIVES
To have a detailed understanding of Reliance Life Insurance and Bajaj Allianz Life Insurance
To find out various reasons considered while investing in policies
To get knowledge about the market exposure and future prospects about Reliance Life Insurance
To know the perception of the consumers about the life insurance
To analyze the Traditional plans of Reliance Life Insurance and compare it with Bajaj Allianz
To know about the brand awareness of Reliance Life Insurance its customer preferences over Bajaj Allianz in the market
To study a proper knowledge about the life insurance industry
To understand the consumer choice while investing in policies
52
CHAPTER 4
DISCUSSION AND FINDINGS OF THE STUDY
FINDINGS OF THE STUDY RECOMMENDATION AND SUGGESTIONS CONCLUSION LIMITATIONS BIBLIOGRAPHY ANNEXUREQUESTIONNAIRE
53
41) FINDINGS OF THE STUDY
1) The survey reveals that still a large proportion of population is interested to invest in other forms of investment other than insurance as still most of them are unaware about the importance of insurance in their life
2) Basically people make varied form of investment for creating wealth to protect their families against pre-mature death and to protect income against disability sickness or critical illness
3) The main motive of the individuals investing is receives benefits US 1010D People generally consider insurance as a tax saving device
4) Mostly people prefer time to time form of investment as they are not willing to take high degree of risk
5) 72 of the respondents are preferred to invest in Traditional Plans
6) Most of the people prefer to make an annual investment up to a maximum of Rs20 000 per annum
7) When the product is like life insurance reputation of the company publicity of the company amp after sale services of the company matters a lot This means that people would choose that insurance company only where the quality of life advisors is satisfactory
8) Most people prefer to invest in Bajaj Allianz Life Insurance as compared to making an investment in Reliance Life Insurance
9) The most preferable Traditional plan of Reliance Life Insurance is Endowment Plan
10) The most preferable plan of Bajaj Allianz Life Insurance co is Cash Gain Plan
54
42) SUGGESTIONS amp RECOMMENDATIONS
Based on the observations of the study some suggestions for the organization are made as
follows
1) Quality of advisors is also as important as the quantity Thus company should go
mainly for qualified professionals
2) Company should increase its budget on publicity so that awareness can be increased
3) Clarity and transparency should be provided to the customer regarding various
products
4) Training sessions should be planned in advance so that schedule can be provided to
the advisor in advance
5) Apart from the Brand Positioning in urban area a strategy should be adopted by
Reliance to make its brand also near to middle level or high aspirant people because they
are the main source of the business in India
6) Awareness Camp to the sub urban area should be focused by Reliance
7) Some innovative technique or product is required in order to attract the consumer
43) LITERATURE REVIEW
55
1) Robi Elenekave has explained in detail why various retirement plans and pension plans donrsquot give the desired returns The main difficulty is the use of incorrect method for calculations done to find out the return on investment This is primarily due to wrong assumptions The study provides information about the various precautions which need to be considered before planning so that the desired results can be achieved
2) Another paper provides insight about how various financial sectors invest in bond market The study was how the different players investment different instruments according to the risk appetite and desired rate of return The study shows that life insurance sector mainly invests in government bond which are low return and low risk instrument The investment in government bond it shows that life insurance companies are more conservative in investment
3) K Subhash has presented the history of Indiarsquos life insurance industry in three stages before independence after independence and post liberalization which not only provides information but also help in analyzing the impact of these major changes The authors have also discussed the huge potential which exists in the rural India The insurance company must realize the importance of rural sector because the future lies there The author commented about the increasing share of private player in the existing market This confirms the availability of opportunity in this sector The paper also provides the importance of professional and focused approach which was given no importance
4) Tapen Sinha has discussed the various challenges and opportunities in the insurance market One of the very important factors which have been discussed in the study is the importance of developing new and better products As the scenario changes the need of an individual also changes so any organization must understand and fulfill these needs The new product development requires constant research so organization must also focus on it
5) Roger G Ibbotson discusses how financial planners and advisors have recently started to recognize that human capital must be taken into account when building optimal portfolios for individual investors Any investorrsquos human capital has a unique mortality risk However life insurance in its forms can hedge against this mortality risk Thus human capital affects both the optimal asset allocation and the optimal demand for life insurance This paper provides a unified framework based on human capital in order to enable individual investors to make both decisions jointly
6) Rakesh Niraj study tells how the flow of information in any organization is important For any organization to grow the flow of information must be good both upwards as well as ownwards The proper flow of information will also ensure proper flow of good and services from organization to customer and proper flow of information from customer to organization The information from customers will help the organization in providing better goods and services to the customer For the above purpose organization must ensure good channel partner who can provide the organization with correct feedback Hence it becomes very important for any organization to acquire good channel partners
56
7) Stephen P Robbins has discussed how group dynamics works in any organization The success of any organization depends on the success of its various teams and how these teams work together The book provides various techniques which can be used by any organization to get result from the team effort The conflict resolution is a major task in any group Various techniques which the organization can use in conflict resolution are also discussed Another important aspect covered is the importance of leadership in the organization The various forms of leadership have been discussed and the kinds of leadership which can be effective in particular situations are also discussed
8) R Wayne Mondy has discussed the importance of training and development in any organization The training provides skills to perform the current job where as the development involve learning beyond present need The various type of training are discussed which can be used according to the requirement Training and development are not only important for better performance of an individual but it also gives satisfaction The major factors which influence training and development are found to be management support commitment of trainee and trainer complexity of the organization The process of developing good training plans is also provided In another part author has discussed the importance of right man for right job The compensation strategies are also given which are very crucial for ant industry
9) Philip Kotler has discussed the importance of channels partners Better the channel partners better will be the delivery model Detailed discussion about how to design the channel structure so that all the requirements could be fulfilled is provided The various issues faced by the organization while managing the channels are also given When an organization has more than one channel it becomes very important that all the channels should be integrated in such a way that the organization get the best out of all At times due to the conflicting benefit of the different channels the conflict arise so various strategies to manage these issues is also discussed in the chapter
10) Michael J Etzel has written about the marketing of services The marketing of services is different from the goods because of the characteristic of service like intangibility inseparability heterogeneity etc Brief about pricing strategies is also given in case of services The authors have also given the impact of technological development on the services marketing The author has also given the importance of brand and after sales support in case of services as perception of the customers plays an important role In other part of the book the authors has described the importance of distribution channels and designing of the same A channel partner should be consider as partner according to discussion The legal complications associated with channels are also discussed These complications are necessary to take into the consideration while managing the channels The conflicting interest of channels both horizontally and vertically are also taken into the consideration
57
11) Boone has discussed about the importance of personal financial planning The concept of time value of money has also been elaborated The importance of creating and implementing budget is given under money management The other important concepts for financial planning like credit management and understanding taxes are also explained In one section the authors have discussed the importance of investment and what should be the major considerations while making any investment The considerations include the risk associated with the investment return on the investment etc The importance and benefits of life insurance has also been given The discussion also includes various legal aspects associated with life insurance The overview of retirement planning is also given which includes importance and benefit of retirement planning Various tools for proper retirement planning are also discussed
58
44) CONCLUSION
1) The customers are very much sensitive towards their investment They would like to invest only in that insurance company which enjoys good public image along with quality good services
2) The result of the survey conducted shows that Bajaj Allianz Life Insurance is the leader in life insurance industry but Reliance Life Insurance and other private players are giving it a close competition
3) The motive of the people behind investing in life insurance is the tax benefits that they would receive under sec 80C and 1010D
4) In Life Insurance industry the after sales support of the company is as important as the quality of life advisors
59
45) LIMITATIONS
There were some limitations faced during the study as discussed below
Since the study was taken for two months so there was a constraint of time and effort
The study was limited only to some of the Delhi regions so the results may be biased
Questionnaire was given to 125 people however only 50 responded to it which is very small for such type of study
The biasness of consumer or responses error cannot be eliminated
Most of the people are not aware about the Importance and the necessity of insurance in their life
Adverse perception of the people towards insurance sector- People consider insurance as a tax saving device
Lack of awareness about the earning opportunity in the insurance sector
60
46) BIBLIOGRAPHY
wwwreliancelifeinsurancecom
wwwadagroupcom
wwwirdacom
wwwbajajallianzlifeinsurancecom
wwwallianzbajajcom
47) ANNEXURE
61
QUESTIONNAIRE
A comparative analysis of consumer perception regarding Traditional plans of Reliance Life Insurance with that of Bajaj Allianz Life Insurance
NAME ___________________________
PERSONAL DETAILS
1) AGE_________________
1) OCCUPATION______________
2) INCOME___________________
3) FAMILY MEMBERS_________
Q1 Where do you prefer to investa) Fixed deposits b) Stock c) Mutual funds d) Insurance e) Others
Q2 What are your priorities for investmenta) Protecting your family against pre-mature death b) Wealth creation c) Retirement needs d) Child education and marriage e) Protect income against disability sickness or critical illness
Q3 What is your main motive behind investing in life insurancea) Tax benefit b) Savings c) Risk cover
Q4 What kind of investment do you prefera) High risk high gain b) Low risk low gain c) Moderate d) Vary times to times
62
Q5Are you interested to invest in Traditional Plansa) Yes b) No
Q6 What is your level of annual investmenta) below 20000 b) 20000-40000 c) above 40000
Q7 What factors would you consider most important before choosing an insurance company
a) publicity of the company b) reputation of the company c) quality of life advisors d) after sales-supporting of the company
Q8 Which life insurance company would you prefer the most to invest ina) Reliance life insurance b) Bajaj Allianz life insurance
Q9 If reliance life insurance then which particular plan you would like to invest ina) Reliance Term Plan b) Reliance Whole Life Plan c) Reliance Endowment Plan d) Reliance Special Endowment Plan
Q10 If Bajaj Allianz life insurance then which particular plan you would like to invest in
I ENDOWMENT PLAN
a) Bajaj Allianz Invest Gain
b) Bajaj Allianz save Care Economy SP
c) Bajaj Allianz life time care
d) Bajaj Allianz Super Saver plan
II MONEY BACK PLAN
a) Bajaj Allianz Cash Gain plan
63
64
- COMPANY PROFILE
- ABOUT RELIANCE LIFE INSURANCE
- HISTORY
- Reliance Capital Limited announced the launch of its life insurance business on February 1 2006 This was after obtaining the required regulatory approvals from the Registrar Of Companies and the Insurance Regulatory and Development Authority
- It was in August 2005 that the ball was set rolling when Reliance Capital Limited the financial arm of Reliance ndash Anil Dhirubhai Ambani Group (ADAG) ndash announced the requisition of 100 shareholding in AMP Sanmar Life Insurance Company Limited and the formal transfer of shares took place in October 2005 The company will issue all policy contracts under the Reliance Life Insurance Company limited name All the existing policy contracts also stand transferred to the Reliance Life Insurance entity with all the original contractual terms and commitments intact
- CORE VALUES
- Reliance Life Insurance Company Limited has some core values which are listed as follows
- Vision bull To be the first choice insurer for customers bull To be the preferred employer for staff in the insurance industry bull To be the number one insurer for creating shareholder value
- Mission As a responsible customer focused market leader we will strive to understand the insurance needs of the consumers and translate it into affordable products that deliver value for money
- 12) TRADITIONAL PLANS OF THE COMPANY
- 12A )TRADITIONAL PLAN OF RELIANCE LIFE INSURANCE-
- Life insurance products are designed to suit the requirements of customers Fundamentally the product provide for
- In every product to a certain degree risk cover is imperative for it to fall under the category of insurance Based on the coverage of the product the premiums are calculated and the customer pays accordingly In order to suggest the right product it is essential for an agent to understand the requirements of the customer well
- The traditional plans of the company have the following features-
- Fixed Tenure
- Potential for better returns
- Transparency
- Flexibility in investment
- Flexibility to invest more
- Flexibility to skip the premium
- Flexibility to choose the cover
- High liquidity
- Age term and sum assured decide the amount of premium
- Top- ups and switches are not allowed
- Reliance Life Insurance Company Limited has offered 9
- 1) Reliance term plan-
- 2) Reliance Whole Life Plan -
- 3) Reliance Endowment Plan -
- 4) Reliance Special Endowment Plan -
- 13) INDUSTRY PROFILE
- MEANING OF INSURANCE
- Insurance may be described as a social device to reduce or eliminate risk of loss to life and property Insurance is a collective bearing of risk Insurance is a financial device to spread the risks and losses of few people among a large number of people as people prefer small fixed liability instead of big uncertain and changing liability
- Insurance can be defined as a ldquolegal contract between two parties whereby one party called insurer undertakes to pay a fixed amount of money on the happening of a particular event which may be certain or uncertainrdquo The other party called insured pays in exchange a fixed sum known as premium
- Insurance is desired to safeguard oneself and onersquos family against possible losses on account of risks and perils It provides financial compensation for the losses suffered due to the happening of any unforeseen events
- IMPORTANCE OF INSURANCE
- Insurance services play predominant role in the process of financial Intermediary Today insurance industry is one of the most growing sectors in India There is lot of potential in the Indian Insurance Industry
- There are many issues which require study The scope of the study of Insurance industry of India would be very great as there are ongoing Developments in the industry after the opening of the sector
- Right now the insurance industry has great opportunities in a country like India or China which huge population Also the penetration of insurance in India is very low in both life and non-life segment so there is lot potential to be tapped Before starting the discussion on insurance industry and related issues we have to start with the basics of insurance So first we understand what is insurance How the word lsquoinsurancersquo is different from the word lsquoassurancersquo Etc
- HISTORY OF INSURANCE
- The concept of insurance is believed to have emerged almost 4500 years ago in the ancient land of Babylonia where traders used to bear risk of the carvan by giving loans which were later repaid with interest when the goods arrived safely
- The concept of insurance as we know today took shape in 1688 at a place called Lloydrsquos Coffee House in London where risk bearers used to meet to transact business This coffee house became so popular that Lloydrsquos became the one of the first modern insurance companies by the end of the eighteenth century
- Marine insurance companies came into existence by the end of the eighteenth century These companies were empowered to write fire and life insurance as well as marine The Great Fire of London in 1966 caused huge loss of property and life With a view to providing fire insurance facilities
- Dr Nicholas Barbon set up in 1967 the first fire insurance company known as the Fire office
- Life insurance in its modern form came to India from England in 1818 The Oriental Life Insurance Company was the first insurance company to be set up in India to help the widows of European community The insurance companies which came into existence between 1818 and 1869 treated
- Indian lives as subnormal and charged an extra premium of 15 to 20 per cent The first Indian insurance company the Bombay Mutual Life
- Assurance Society came into existence in 1870 to cover Indian lives at normal rates
- The Insurance Act 1938 the first comprehensive legislation governing both life and non-life branches of insurance were enacted to provide strict state control over insurance business This amended insurance Act looked into investments expenditure and management of these companies
- By the mid- 1950s there were 154 Indian insurers 16 foreign insurers and 75 provident societies carrying on life insurance business in India Insurance business flourished and so did scams irregularities and dubious investment practices by scores of companies As a result the government decided to nationalize the life assurance business in India The Life Insurance
- Corporation of India (LIC) was set up in 1956 The nationalization of life insurance was followed by general insurance in 1972
- MEANING OF LIFE INSURANCE
- There are three parties in a life insurance transaction the insurer the insured and the owner of the policy (policyholder) although the owner and the insured are often the same person
- Another important person involved in a life insurance policy is the beneficiary The beneficiary is the person or persons who will receive the policy proceeds upon the death of the insured
- Life insurance may be divided into two basic classes ndash term and permanent
- HISTORY OF LIFE INSURANCE
- Risk protection has been a primary goal of humans and institutions throughout history Protecting against risk is what insurance is all about
- Over 5000 years ago in China insurance was seen as a preventative measure against piracy on the sea Piracy in fact was so prevalent that as a way of spreading the risk a number of ships would carry a portion of another ships cargo so that if one ship was captured the entire shipment would not be lost
- In another part of the world nearly 4500 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
- Life insurance came about a little later in ancient Rome where burial clubs were formed to cover the funeral expenses of its members as well as help survivors monetarily With Romes fall around 450 AD most of the concepts of insurance were abandoned but aspects of it did continue through the Middle Ages particularly with merchant and artisan guilds These provided forms of member insurance covering risks like fire flood theft disability death and even imprisonment
- During the feudal period early forms of insurance ebbed with the decline of travel and long-distance trade But during the 14th to 16th centuries transportation commerce and insurance would again reemerge
- And similar to ancient Rome burial societies were formed in the Buddhist period to help families build houses and to protect widows and children
- Modern Insurance
- Illegal almost everywhere else in Europe life insurance in England was vigorously promoted in the three decades following the Glorious Revolution of 1688 The type of insurance we see today owes its roots to 17th century England Lloyds of London or as they were known then Lloyds Coffee House was the location where merchants ship owners and underwriters met to discuss and transact business deals
- While serving as a means of risk-avoidance life insurance also appealed strongly to the gambling instincts of Englands burgeoning middle class
- Gambling was so rampant in fact that when newspapers published names of prominent people who were seriously ill bets were placed at Lloydrsquos on their anticipated dates of death Reacting against such practices 79 merchant underwriters broke away in 1769 and two years later formed a ldquoNew Lloydrsquos Coffee Houserdquo that became known as the ldquoreal Lloydrsquosrdquo Making wagers on peoples deaths ceased in 1774 when parliament forbade the practice
- Insurance moves to America
- The US insurance industry was built on the British model The year 1735 saw the birth of the first insurance company in the American colonies in
- Charleston SC The Presbyterian Synod of Philadelphia in 1759 sponsored the first life insurance corporation in America for the benefit of ministers and their dependents And the first life insurance policy for the general public in the United States was issued in Philadelphia on May 22 1761
- But it wasnt until 80 years later (after 1840) that life insurance really tookoff in a big way The key to its success was reducing the opposition from religious groups
- In 1835 the infamous New York fire drew peoples 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
- With the creation of the automobile public liability insurance which first made its appearance in the 1880s gained importance and acceptance
- More advancement was made to insurance during the process of industrialization In 1897 the British government passed the Workmens Compensation Act which made it mandatory for a company to insure its employees against industrial accidents
- During 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 most labor 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
- BENEFITS OF LIFE INSURANCE
- 1) Risk cover -Life Insurance contracts allow an individual to have a risk cover against any unfortunate event of the future
- 2) Tax Deduction -Under section 80C of the Income Tax Act of 1961 one can get tax deduction on premiums up to one lakh rupees Life Insurance policies thus decrease the total taxable income of an individual
- 3) Loans -An individual can easily access loans from different financial institutions by pledging his insurance policies
- 4) Retirement Planning -What had provided protection against the financial consequences of premature death may now be used to help them enjoy their retirement years
- 5) Educational Needs -Similar to retirement planning the cash values that flow from ones life insurance schemes can be utilized for educational needs of the insurer or his children
- The Life Insurance Industry has an enviable track record among public sector units It has a Consistent profit and dividend paying record accompanied by a steady growth in its financial resources Through investments in the Government sector and socially- oriented sectors the Industry has contributed immensely to the nations development The industry is recognized as one of the largest financial Institutions in the country The ventures initiated by the industry in the areas of Mutual Fund
- Housing Finance has done exceedingly well in recent years To protect the countrys foreign exchange reserves the reinsurance arrangement are so organized that maximum retention is made possible within the country while at the same time protecting interests of the policy holders
- 22) CURRENT SCENARIO OF RELIANCE LIFE INSURANCE
- RLIC offers wide range of innovative life insurance products targeted at individuals and groups It offers need based products that caters to four distinct segments namely protection child retirement and investment plans RLIC is committed to emerge as a transnational Life Insurer of global scale and standard
- CH - 3) RESEARCH METHODOLOGY
- RESEARCH DESIGN-
- SAMPLING TECHNIQUES-
- THE PRIMARY OBJECTIVEOF THE STUDY-
- 34) OBJECTIVES
- 7) Some innovative technique or product is required in order to attract the consumer
- 45) LIMITATIONS
- 46) BIBLIOGRAPHY
-
II MONEY BACK PLAN
Money back plans are Traditional Insurance plans that provide the investor with returns at regular stages of life
CashGain
1)Bajaj Allianz Cash Gain plan
A Money back plan which guarantees 125 payout + bonuses
Quadruple life cover
5 easy payouts which give upto 125 + bonuses
Additional Benefitsa) Accidental Death Benefit and Disability Benefitb) Critical Illness Benefit and Hospital Cash Benefitc) Family Income Benefit In case of death or accidental total permanent disability of insured all future premiums are waived and 1 of the sum assured is paid monthly
19
20
13) INDUSTRY PROFILE
MEANING OF INSURANCE
Insurance may be described as a social device to reduce or eliminate risk of loss to life and property Insurance is a collective bearing of risk Insurance is a financial device to spread the risks and losses of few people among a large number of people as people prefer small fixed liability instead of big uncertain and changing liability
Insurance can be defined as a ldquolegal contract between two parties whereby one party called insurer undertakes to pay a fixed amount of money on the happening of a particular event which may be certain or uncertainrdquo The other party called insured pays in exchange a fixed sum known as premiumInsurance is desired to safeguard oneself and onersquos family against possible losses on account of risks and perils It provides financial compensation for the losses suffered due to the happening of any unforeseen events
IMPORTANCE OF INSURANCE
Insurance constitutes one of the major segments of the financial marketInsurance services play predominant role in the process of financial Intermediary Today insurance industry is one of the most growing sectors in India There is lot of potential in the Indian Insurance Industry
There are many issues which require study The scope of the study of Insurance industry of India would be very great as there are ongoing Developments in the industry after the opening of the sectorOne of the major issues is the effects on LIC after the entry of private players in the market Though market share of LIC has been affected it has improved in terms of efficiency
There are number of other hot topics like penetration of Health Insurance Rural marketing of insurance new distribution channels new product ranges insurance brokersrsquo regulation incentive scheme of development officers of LIC etc So it offers lot of scope for studying the insurance industryRight now the insurance industry has great opportunities in a country like India or China which huge population Also the penetration of insurance in India is very low in both life and non-life segment so there is lot potential to be tapped Before starting the discussion on insurance industry and related issues we have to start with the basics of insurance So first we understand what is insurance How the word lsquoinsurancersquo is different from the word lsquoassurancersquo Etc
21
HISTORY OF INSURANCE
The concept of insurance is believed to have emerged almost 4500 years ago in the ancient land of Babylonia where traders used to bear risk of the carvan by giving loans which were later repaid with interest when the goods arrived safely
The concept of insurance as we know today took shape in 1688 at a place called Lloydrsquos Coffee House in London where risk bearers used to meet to transact business This coffee house became so popular that Lloydrsquos became the one of the first modern insurance companies by the end of the eighteenth centuryMarine insurance companies came into existence by the end of the eighteenth century These companies were empowered to write fire and life insurance as well as marine The Great Fire of London in 1966 caused huge loss of property and life With a view to providing fire insurance facilitiesDr Nicholas Barbon set up in 1967 the first fire insurance company known as the Fire office
Life insurance in its modern form came to India from England in 1818 The Oriental Life Insurance Company was the first insurance company to be set up in India to help the widows of European community The insurance companies which came into existence between 1818 and 1869 treatedIndian lives as subnormal and charged an extra premium of 15 to 20 per cent The first Indian insurance company the Bombay Mutual LifeAssurance Society came into existence in 1870 to cover Indian lives at normal rates
The Insurance Act 1938 the first comprehensive legislation governing both life and non-life branches of insurance were enacted to provide strict state control over insurance business This amended insurance Act looked into investments expenditure and management of these companiesBy the mid- 1950s there were 154 Indian insurers 16 foreign insurers and 75 provident societies carrying on life insurance business in India Insurance business flourished and so did scams irregularities and dubious investment practices by scores of companies As a result the government decided to nationalize the life assurance business in India The Life InsuranceCorporation of India (LIC) was set up in 1956 The nationalization of life insurance was followed by general insurance in 1972
22
MEANING OF LIFE INSURANCE
There are three parties in a life insurance transaction the insurer the insured and the owner of the policy (policyholder) although the owner and the insured are often the same person
Another important person involved in a life insurance policy is the beneficiary The beneficiary is the person or persons who will receive the policy proceeds upon the death of the insured
Life insurance may be divided into two basic classes ndash term and permanent
Term life insurance provides for life insurance coverage for a specified term of years for a specified premium The policy does not accumulate cash value
Permanent life insurance is life insurance that remains in force until the policy matures unless the owner fails to pay the premium when due
Whole life insurance provides for a level premium and a cash value table included in the policy guaranteed by the company The primary advantages of whole life are guaranteed death benefits guaranteed cash values fixed and known annual premiums and mortality and expense charges will not reduce the cash value shown in the policy
Universal life insurance (UL) is a relatively new insurance product intended to provide permanent insurance coverage with greater flexibility in premium payment and the potential for a higher internal rate of return A universal life policy includes a cash account Premiums increase the cash account If you want insurance protection only and not a savings and investment product buy a term life insurance policy
If you want to buy a whole life universal life or other cash value policy plan to hold it for at least 15 years Canceling these policies after only a few years can more than double your life insurance costs
23
HISTORY OF LIFE INSURANCE
Risk protection has been a primary goal of humans and institutions throughout history Protecting against risk is what insurance is all aboutOver 5000 years ago in China insurance was seen as a preventative measure against piracy on the sea Piracy in fact was so prevalent that as a way of spreading the risk a number of ships would carry a portion of another ships cargo so that if one ship was captured the entire shipment would not be lostIn another part of the world nearly 4500 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
Life insurance came about a little later in ancient Rome where burial clubs were formed to cover the funeral expenses of its members as well as help survivors monetarily With Romes fall around 450 AD most of the concepts of insurance were abandoned but aspects of it did continue through the Middle Ages particularly with merchant and artisan guilds These provided forms of member insurance covering risks like fire flood theft disability death and even imprisonment
During the feudal period early forms of insurance ebbed with the decline of travel and long-distance trade But during the 14th to 16th centuries transportation commerce and insurance would again reemergeInsurance in India can be traced back to the Vedas For instance yogakshema the name of Life Insurance Corporation of Indias 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
And similar to ancient Rome burial societies were formed in the Buddhist period to help families build houses and to protect widows and children
Modern InsuranceIllegal almost everywhere else in Europe life insurance in England was vigorously promoted in the three decades following the Glorious Revolution of 1688 The type of insurance we see today owes its roots to 17th century England Lloyds of London or as they were known then Lloyds Coffee House was the location where merchants ship owners and underwriters met to discuss and transact business dealsWhile serving as a means of risk-avoidance life insurance also appealed strongly to the gambling instincts of Englands burgeoning middle classGambling was so rampant in fact that when newspapers published names of prominent people who were seriously ill bets were placed at Lloydrsquos on their anticipated dates of death Reacting against such practices 79 merchant underwriters broke away in 1769 and
24
two years later formed a ldquoNew Lloydrsquos Coffee Houserdquo that became known as the ldquoreal Lloydrsquosrdquo Making wagers on peoples deaths ceased in 1774 when parliament forbade the practice
Insurance moves to AmericaThe US insurance industry was built on the British model The year 1735 saw the birth of the first insurance company in the American colonies inCharleston SC The Presbyterian Synod of Philadelphia in 1759 sponsored the first life insurance corporation in America for the benefit of ministers and their dependents And the first life insurance policy for the general public in the United States was issued in Philadelphia on May 22 1761But it wasnt until 80 years later (after 1840) that life insurance really tookoff in a big way The key to its success was reducing the opposition from religious groups
In 1835 the infamous New York fire drew peoples 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
With the creation of the automobile public liability insurance which first made its appearance in the 1880s gained importance and acceptanceMore advancement was made to insurance during the process of industrialization In 1897 the British government passed the Workmens Compensation Act which made it mandatory for a company to insure its employees against industrial accidents
During 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 most labor 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
25
BENEFITS OF LIFE INSURANCE
1) Risk cover -Life Insurance contracts allow an individual to have a risk cover against any unfortunate event of the future
2) Tax Deduction -Under section 80C of the Income Tax Act of 1961 one can get tax deduction on premiums up to one lakh rupees Life Insurance policies thus decrease the total taxable income of an individual
3) Loans -An individual can easily access loans from different financial institutions by pledging his insurance policies
4) Retirement Planning -What had provided protection against the financial consequences of premature death may now be used to help them enjoy their retirement yearsMoreover the cash value can be used as an additional income in the old age
5) Educational Needs -Similar to retirement planning the cash values that flow from ones life insurance schemes can be utilized for educational needs of the insurer or his children
26
ROLE OF LIFE INSURANCE IN THE GROWTH OF THE ECONOMY
The Life Insurance Industry has an enviable track record among public sector units It has a Consistent profit and dividend paying record accompanied by a steady growth in its financial resources Through investments in the Government sector and socially- oriented sectors the Industry has contributed immensely to the nations development The industry is recognized as one of the largest financial Institutions in the country The ventures initiated by the industry in the areas of Mutual Fund
Housing Finance has done exceedingly well in recent years To protect the countrys foreign exchange reserves the reinsurance arrangement are so organized that maximum retention is made possible within the country while at the same time protecting interests of the policy holders
27
ROLE OF IRDA
MISSION
ldquoTo protect the interests of the policyholders to regulate promote
and ensure orderly growth of the insurance industry and for matters
connected therewith or incidental theretordquo
The Insurance Act 1938 had provided for setting up of the Controller of Insurance to act
as a strong and powerful supervisory and regulatory authority for insurance Post
nationalization the role of Controller of Insurance diminished considerably in
significance since the Government owned the insurance companies But the scenario
changed with the private and foreign companies foraying in to the insurance sector This
necessitated the need for a strong independent and autonomous Insurance Regulatory
Authority was felt As the enacting of legislation would have taken time the then
Government constituted through a Government resolution an Interim Insurance
Regulatory Authority pending the enactment of a comprehensive legislation
The Insurance Regulatory and Development Authority Act 1999 is an act to provide for
the establishment of an Authority to protect the interests of holders of insurance policies
to regulate promote and ensure orderly growth of the insurance industry and for matters
connected therewith or incidental thereto and further to amend the Insurance Act 1938
the Life Insurance Corporation Act 1956 and the General insurance Business
(Nationalization) Act 1972 to end the monopoly of the Life Insurance Corporation of
India (for life insurance business) and General Insurance Corporation and its subsidiaries
(for general insurance business) The act extends to the whole of India and will come
into force on such date as the Central Government may by notification in the Official
Gazette specify Different dates may be appointed for different provisions of this Act
28
The Act has defined certain terms some of the most important ones are as follows
Appointed day means the date on which the Authority is established under the act
Authority means the established under this Act Interim Insurance Regulatory Authority
means the Insurance Regulatory Authority set up by the Central Government through
Resolution No 17(2) 94-lns-V dated the 23rd January 1996
Words and expressions used and not defined in this Act but defined in the Insurance Act
1938 or the Life Insurance Corporation Act 1956 or the General Insurance Business
(Nationalization) Act 1972 shall have the meanings respectively assigned to them in
those Acts A new definition of Indian Insurance Company has been inserted Indian
insurance company means any insurer being a company
(a) Which is formed and registered under the Companies Act 1956
(b) in which the aggregate holdings of equity shares by a foreign company either by
itself or through its subsidiary companies or its nominees do not exceed twenty-six
percent paid up capital in such Indian insurance company
(c) Whose sole purpose is to carry on life insurance business general insurance business
or re-insurance business
29
CURRENT SCENERIO
21) CURRENT SCENERIO OF THE INSURANCE INDUSTRY
With largest number of life insurance policies in force in the world insurance happens to be a mega opportunity in India Itrsquos a business growing at the rate of 15-20 per cent annually and presently is of the order of Rs 450 billion Together with banking services it adds about 7 per cent to the countryrsquos GDP Gross premium collection is nearly 2 per cent of GDP and funds available with LIC for investment are 8 per cent of GDP
Yet nearly 80 percent of Indian population is without life insurance cover while health insurance and non-life insurance continues to be below international standards And this part of the population is also subject to weak social security and pension systems with hardly any old age income security This it is an indicator that growth potential for the insurance sector is immense A well-develop and evolved insurance sector is needed for economic development as it provides long term funds for infrastructure development and at the same time strengthens the risk taking ability It is estimated that over the next ten years India would require investments of the order of one trillion US dollar The insurance sector to some extent can enable investment in infrastructure development to sustain economic growth of the country Insurance is a federal subject in India There are two legislation that govern the sector - The Insurance Act-1938 and The IRDA Act-1999
In India insurance is generally considered as a tax-saving device instead of its other implied long term financial benefits Indian people are prone to investing in properties and gold followed by bank deposits They selectively invest in shares also but the percentage is very small Even to this day Life Insurance Corporation of India dominates India insurance sector With the entry of private sector players backed by foreign expertise Indian insurance market has become more vibrant Business is becoming increasingly vulnerable due to wide variety of risk particularly after September 11 2001 disaster in which twin tower located in the hearts of New York city were crashed by terrorist attack resulting in loss of 6000 human lives as well as financial loss to the extent of $45 billion The impact of this terrorist attack has created new horizon of risk to the business world today
However rapid changes in the global economy development of technology and e-business already gathered momentum Increased dependency on technology has originated new risks that have resulted in well-published incidents Computer hackers obtaining credit card information from visa and Power-Gen the love bug virus cyber extortion web content liability professional errors and omissions computers and other crimes and activities such as terrorism kidnapping and companyrsquos executive and extortion of money commercial liability etc have significant impact on business resulting in extreme financial loss commercial embarrassment or regulatory implications
Corporation insurancerisk managers under the circumstances have to demand increasingly complex insurance products They have to be more attentive and
30
knowledgeable about emerging risks how those risks are managed effectively and efficiently and how they could ultimately affect a companyrsquos financial situation and therefore its position in the market place In short how such risks are managed and can give to an insured a competitive advantage
In the changing times adoption of e-commerce into business models the integration of web-based communication and data transfer capabilities into the business operations and leveraging of advanced network and technology architecture for maximum benefit are the new horizon of the risks For the corporate insurancerisks managers these new exposure-cyber-risks-can lead to cyber losses widening the interpretation of what constitute insure property damage particularly as it relates to information technology and dataAll the while organizations are tremendous pressure to reduce expenses and increase profit margin and cannot afford to suffer a property loss of business interruption due to any cause (risk) How a company identifies quantifies qualifies and manages these new risks exposure in addition to the well-known tradition risks is becoming an important factor in creating shareholders value This often means changing the way Everyone in the organization have to think about risk
Insurance managers are seeing price levels (premium) continue to rise-albeit modestly-in todayrsquos primarily commercial property and reinsurance markets They are demanding that insurers improve their risk assessment and quantification offerings so that an insured may avail the benefit in cost (premium rate) on account of well-managed riskThe good news for insurance managers is that as the economy evolves insurers are increasingly matching that evaluation with new products services and capabilities due to opening up the insurance market to the private players
Insurers who are truly listening to their customers and striving to be more in tune with their needs are responding to the fast changing corporate insurance and risk management landscape They are listening to their customers They are making fresh approaches to address the new challenges faced by insured organization by designing the new products as per the needs Insurers are providing value added services to insured to protect the value created by the business
Insurers are increasingly required to develop and expand their information technology platforms to ensure that the vast amount of data they collect about their customers Insurancerisk portfolio can easily and seamlessly be transformed into valuable risk management information To help their customers insurers should make better-informed decisions They must be able to swiftly deliver this data to their customers (insured) anywhere in the world Insurer are also discovering that risk assessment have to be customized to meet policyholdersrsquo new exposures and needs The insurance industry is stepping up and addressing these challenges in several different ways
31
22) CURRENT SCENARIO OF RELIANCE LIFE INSURANCE
RLIC offers wide range of innovative life insurance products targeted at individuals and groups It offers need based products that caters to four distinct segments namely protection child retirement and investment plans RLIC is committed to emerge as a
transnational Life Insurer of global scale and standard
Reliance Life Insurance Company Limited (RLIC) is amongst the fastest growing life insurance companies in India It is also amongst the top four private sector life insurance companies in India (As on FY 2008-2009)
As on March 31 2009 RLIC has an annualized premium of Rs 30 billion with a market share of 103 It has leapfrogged on the growth path and has reached the 4 million policy mark in a short span of within 3 years RLIC has a strong distribution network of 1145 branches with more than 149000 agents
32
Insurancersquos Market Share in Comparison of Other Private company
If we look at the status of Reliance Life Insurancersquos market share in comparison of other
private company in comparison of premium earned-
If we talk the growth of Insurance industryrsquos private players in recent years the data will
reflect-
CH - 3) RESEARCH METHODOLOGY
33
RESEARCH DESIGN-
COMPARITIVE STUDY- A comparative study has been undertaken to compare the traditional Plans of Reliance Life Insurance with that of Bajaj Allianz life insurance
DATA TYPE
INTRODUCTION - Any organization whether big or small private or public needs different type of information to know its popularity I have gathered secondary data and primary data and collected information from the combination of these two data
PRIMARY DATA - Primary data collection method was decided for observing working of the company and approaching the customers directly face to face A great care was taken while collecting the primary data to answer that it is relevant accurate current and unbiased
SECONDARY DATA - Secondary data collection method was used by referring to various websites books and newspapers for collecting information regarding the project under study Secondary data consist of the information that already exists somewhere else for some another purpose
SAMPLING TECHNIQUES-
SAMPLE SIZE- A sample size of 50 was taken to be analyzed
SAMPLE LOCATION-Various sectors of Kamla Nagar Civil lines Mukherji Nagar Model Town and selected areas of Delhi
SAMPLING PROCESS - Convenient sampling was used to overcome the time and money constraints that could have been faced by us while collecting the data The customers were contacted face to face directly and also by way of telephonic conversation with them
ANALYTICAL TOOLS - The data collected were arranged accordingly and statistical tools like bar graphs and pie-charts were used to analyze and present the data
RESEARCH INSTRUMENT USED-
34
SAMPLING MEDIA - Printed questionnaires consisting several questions were asked to have an idea of customers view about Reliance Life Insurance plans followed by personal questions
FIELD WORK - Rigorous field work was undertaken to locate the interested and potential respondents to fulfill the objectives of the study
THE PRIMARY OBJECTIVEOF THE STUDY -
The primary objective of the research study is to have a detailed analysis of Reliance Life Insurance bringing in focus the future prospects of the (Anil Dhirubhai Ambani group) with relevance to the customer perception regarding the various plans and products offered by Reliance Life Insurance
31) DATA ANALYSIS AND INTERPRETATION
35
PERSONAL DETAILS
1) AGE a) 18-30b) 31-50c) 51-65
AGE NO OF RESPONDENTS PERCENTAGE
18-30 21 42
31-50 19 38
51-65 10 20
TOTAL 50 100
INTERPRETATION-The bar graph reveals that 42 of the respondents belong to the age group of 18-30 years 38 lies in the age group of 31-50 years and 20 of them lie in the age group of 51-65 years
2) OCCUPATION
4238
20
05
1015202530354045
NO
O
F
RE
SP
ON
DE
NT
S
18 to 30 31 to 50 51 to 65
AGE (in year)
AGE WISE CLASSIFICATION
36
a) Serviceb) Businessc) Professiond) Housewifee) Retired
OPTION NO OF RESPONDENTS PERCENTAGE
Service 16 32
Business 14 28
Profession 5 10
Housewife 8 16
Retired 7 14
TOTAL 50 100
INTERPRETATION-The above bar graph reveals that 32 of the total respondents were servicemen 28 of them belonged to the business class 10 were professionals 16 were housewives and 14 of the total respondents fall in the retired category
3) INCOME
32
28
10
16
14
0
5
10
15
20
25
30
35
Service Business Profession Housewife Retired
OCCUPATION
OCCUPATION WISE CLASSIFICATION
37
a) 150000-300000
b) 300000-500000
c) Above 500000
OPTION NO OF RESPONDENTS PERCENTAGE
150000-300000 24 48
300000-500000 14 28
Above 500000 12 24
TOTAL 50 100
INTERPRETATION-The above bar graph reveals that out of the total respondents 48 lie in the income group of 150000-300000 28 of the total respondents belonged to the income group of 300000-500000 and 24 lie in the income group of people earning an income of above Rs 500000pa
4828 24
01020304050
N O
OF
RE
SP
ON
DE
NT
S
150000-300000
300000-500000
ABOVE500000
INCOME (in RS)
INCOME WISE CLASSIFICATION
38
4) FAMILY MEMBERS
a) 2b) 3c) 4d) Above 4
OPTION NO OF RESPONDENT PERCENTAGE
2 11 22
3 9 18
4 24 48
Above 4 6 12
TOTAL 50 100
INTERPRETATION The above bar graph shows that 22 of the total respondents had a family of 2 members 18 of them had 3 family members 48 of them had 4 family members and 12 of them had the no of family members above 4
Q1 Where do you prefer to invest
22 18
48
120
1020304050
No
o
f re
spo
nd
ents
2 3 4 Above 4
No of family members
MEMBER WISE CLASSIFICATION
39
a) fixed deposits
b) stock
c) mutual funds
d) insurance
e) others
Option No of respondents Percentage
Fixed deposits 5 10
Stock 10 20
Mutual fund 10 20
Insurance 18 36
others 7 14
TOTAL 50 100
Interpretation The above pie chart shows that out of 50 respondents 10 preferred to invest in fixed deposits 20 in stocks 20 in mutual funds 36 in insurance and 14 in others like property gold etc
Q2 What are your priorities for investment
40
a) protecting your family against pre-mature death
b) wealth creation
c) retirement needs
d) child education and marriage
e) protect income against disability sickness or critical illness
Option No of respondents Percentage
Protecting your family against pre mature death
10 20
Wealth creation 14 28
Retirement needs 5 10
Child education and marriage 7 14
Protect income against disability sickness or critical illness
14 28
TOTAL 50 100
Interpretation The above pie chart shows that out of 50 respondents 20 of them invest for protecting their family against premature death 28 for creating wealth 10 for meeting their future retirement needs 14 for child education amp marriage and 28 for protection against disability and sickness
Q3 What is your main motive behind investing in life insurance
41
a) tax benefit
b) savings
c) risk cover
Option No of respondents Percentage
Tax benefits 27 54
Savings 5 10
Risk cover 18 36
TOTAL 50 100
Interpretation The above pie chart shows that out of the sample respondents 54 have tax benefit 10 have savings and 36 have risk cover as their main motive for making an investment in life
Q4 What kind of investment do you prefer
42
a) high risk high gain
b) low risk low gain
c) moderate
d) vary times to times
Option No of respondents Percentage
High risk high gain 8 16
Low risk low gain 5 10
Moderate 12 24
Vary times to times 25 50
TOTAL 50 100
Interpretation The above pie chart shows that out of 50 respondents 16 preferred high risk- high gain form of investment 10 preferred low risk- low gain form of investment 24 preferred moderate investment and 50 preferred varied form of investment
43
Q5Are you interested to invest in Traditional Plans
a) YES
b) NO
Option No of respondents Percentage
YES 36 72
NO 14 28
TOTAL 50 100
Interpretation The above pie chart shows that 72 of the respondents preferred to invest in Traditional Plans
44
Q6 What is your level of annual investmenta) below 20000
b) 20000-40000
c) above 40000
Option No of respondents Percentage
Below 20000 41 82
20000-40000 7 14
Above 40000 2 4
TOTAL 50 100
Interpretation The above pie chart shows that 82 of the respondents are willing to invest below Rs 20000 per annum 14 of them want to invest within Rs 20000 per annum to Rs 40000 and 4 wanted to invest over and above Rs 40000
45
Q7 What factors would you consider most important before choosing an insurance policy
a) publicity of the company
b) reputation of the company
c) quality of life advisors
d) after sales-supporting of the company
Option No of respondents Percentage
Publicity of the co 5 20
Reputation of the co 25 50
Quality of life advisors 10 10
After sale-services 10 20
TOTAL 50 100
Interpretation out of the sample respondents 20 considers publicity of the company 50 considers reputation of the company 10 considers quality of life advisors and 20 considers after sales support of the company as the most important factor for choosing an insurance company
46
Q8 Which life insurance company would you prefer the most to invest ina) reliance life insurance (RLIC)
b) Bajaj Allianz life insurance
Option No of respondents Percentage
RLIC 21 42
BAJAJ ALLIANZ 29 58
TOTAL 50 100
Interpretation Out of 50 respondents 42 preferred to invest in reliance life insurance over 58 of the respondents who prefer to invest in Bajaj Allianz life insurance
47
Q9 If reliance life insurance then which particular plan you would like to invest ina) Reliance Term Plan
b) Reliance Whole Life Plan
c) Reliance Endowment Plan
d) Reliance Special Endowment Plan
Option No of respondents Percentage
Reliance term plan 6 2858
Reliance whole life plan 3 1428
Reliance endowment plan 9 4286
Reliance special endowment plan 3 1428
TOTAL 21 100
Interpretation Out of 21 respondents 2858 preferred to invest in term plan 1428 in whole life plan 4286 in endowment plan and 1428 of them preferred to invest in special endowment plan of reliance life insurance
48
Q10 If Bajaj Allianz life insurance then which particular plan you would like to invest in
I ENDOWMENT PLAN a) Bajaj Allianz Invest Gain
b) Bajaj Allianz save Care Economy SP
c) Bajaj Allianz life time care
d) Bajaj Allianz Super Saver plan
II MONEY BACK PLAN i Bajaj Allianz Cash Gain plan
Option No of respondents Percentage
Invest gain plan 3 1035
Save care economy SP 6 2069
Life time care 7 2415
Super saver plan 3 1035
Cash gain plan 10 3446
TOTAL 29 100
Interpretation Out of 29 respondents 1035 of them plan to invest in Bajaj Allianz- Invest Gain 2069 wish to invest in Bajaj Allianz save Care Economy SP 2415 want to invest in Bajaj Allianz life time care 1035 in Bajaj Allianz Super Saver plan and 3446 prefer to invest in Bajaj Allianz Cash Gain plan
49
32) SIGNIFICANCE OF STUDY
Life insurance is one of the most rapidly growing sectors in India The main reason
behind the growth can attributed to the high population density improving economical
condition improving education level and improving awareness Due to these factors there
is still huge scope for growth in this sector Like any other business when the
opportunities are present everybody tends to enter the industries This growth hence
fetches the new competitors as well as new strategies from existing players To sustain in
any competitive industry the organization must adapt to existing strategies and adopt
new ones This study will focus on the analysis of Reliance Life Insurance in comparison
with the present scenario of Bajaj Allianz Life Insurance with respect to the Traditional
Plans of both the companyrsquos This will mainly cover the following aspects
To know about the awareness and popularity of various Traditional Plans offered
by Reliance Life Insurance and Bajaj Allianz Life Insurance
How Reliance Life Insurance can develop and sustain a good distribution
network
These will provide it benefit both in terms of better market coverage as well as better
penetration
50
33) SCOPE OF THE STUDY
1) This helps in finding out vast potential of insurance company
2) The study was conducted in National Capital Region (NCR) only
3) The number of respondents to be surveyed can be improved
4) This study was conducted by comparing the performances amp products of three private
amp government insurance players in insurance industry
5) This study was conducted to analyze the market stand of Reliance life insurance
Company limited and Bajaj Allianz Life Insurance Company Limited of India insurance
companies
6) This study is done to eliminate all the myths which people have in their minds
regarding Insurance Sector
51
34) OBJECTIVES
To have a detailed understanding of Reliance Life Insurance and Bajaj Allianz Life Insurance
To find out various reasons considered while investing in policies
To get knowledge about the market exposure and future prospects about Reliance Life Insurance
To know the perception of the consumers about the life insurance
To analyze the Traditional plans of Reliance Life Insurance and compare it with Bajaj Allianz
To know about the brand awareness of Reliance Life Insurance its customer preferences over Bajaj Allianz in the market
To study a proper knowledge about the life insurance industry
To understand the consumer choice while investing in policies
52
CHAPTER 4
DISCUSSION AND FINDINGS OF THE STUDY
FINDINGS OF THE STUDY RECOMMENDATION AND SUGGESTIONS CONCLUSION LIMITATIONS BIBLIOGRAPHY ANNEXUREQUESTIONNAIRE
53
41) FINDINGS OF THE STUDY
1) The survey reveals that still a large proportion of population is interested to invest in other forms of investment other than insurance as still most of them are unaware about the importance of insurance in their life
2) Basically people make varied form of investment for creating wealth to protect their families against pre-mature death and to protect income against disability sickness or critical illness
3) The main motive of the individuals investing is receives benefits US 1010D People generally consider insurance as a tax saving device
4) Mostly people prefer time to time form of investment as they are not willing to take high degree of risk
5) 72 of the respondents are preferred to invest in Traditional Plans
6) Most of the people prefer to make an annual investment up to a maximum of Rs20 000 per annum
7) When the product is like life insurance reputation of the company publicity of the company amp after sale services of the company matters a lot This means that people would choose that insurance company only where the quality of life advisors is satisfactory
8) Most people prefer to invest in Bajaj Allianz Life Insurance as compared to making an investment in Reliance Life Insurance
9) The most preferable Traditional plan of Reliance Life Insurance is Endowment Plan
10) The most preferable plan of Bajaj Allianz Life Insurance co is Cash Gain Plan
54
42) SUGGESTIONS amp RECOMMENDATIONS
Based on the observations of the study some suggestions for the organization are made as
follows
1) Quality of advisors is also as important as the quantity Thus company should go
mainly for qualified professionals
2) Company should increase its budget on publicity so that awareness can be increased
3) Clarity and transparency should be provided to the customer regarding various
products
4) Training sessions should be planned in advance so that schedule can be provided to
the advisor in advance
5) Apart from the Brand Positioning in urban area a strategy should be adopted by
Reliance to make its brand also near to middle level or high aspirant people because they
are the main source of the business in India
6) Awareness Camp to the sub urban area should be focused by Reliance
7) Some innovative technique or product is required in order to attract the consumer
43) LITERATURE REVIEW
55
1) Robi Elenekave has explained in detail why various retirement plans and pension plans donrsquot give the desired returns The main difficulty is the use of incorrect method for calculations done to find out the return on investment This is primarily due to wrong assumptions The study provides information about the various precautions which need to be considered before planning so that the desired results can be achieved
2) Another paper provides insight about how various financial sectors invest in bond market The study was how the different players investment different instruments according to the risk appetite and desired rate of return The study shows that life insurance sector mainly invests in government bond which are low return and low risk instrument The investment in government bond it shows that life insurance companies are more conservative in investment
3) K Subhash has presented the history of Indiarsquos life insurance industry in three stages before independence after independence and post liberalization which not only provides information but also help in analyzing the impact of these major changes The authors have also discussed the huge potential which exists in the rural India The insurance company must realize the importance of rural sector because the future lies there The author commented about the increasing share of private player in the existing market This confirms the availability of opportunity in this sector The paper also provides the importance of professional and focused approach which was given no importance
4) Tapen Sinha has discussed the various challenges and opportunities in the insurance market One of the very important factors which have been discussed in the study is the importance of developing new and better products As the scenario changes the need of an individual also changes so any organization must understand and fulfill these needs The new product development requires constant research so organization must also focus on it
5) Roger G Ibbotson discusses how financial planners and advisors have recently started to recognize that human capital must be taken into account when building optimal portfolios for individual investors Any investorrsquos human capital has a unique mortality risk However life insurance in its forms can hedge against this mortality risk Thus human capital affects both the optimal asset allocation and the optimal demand for life insurance This paper provides a unified framework based on human capital in order to enable individual investors to make both decisions jointly
6) Rakesh Niraj study tells how the flow of information in any organization is important For any organization to grow the flow of information must be good both upwards as well as ownwards The proper flow of information will also ensure proper flow of good and services from organization to customer and proper flow of information from customer to organization The information from customers will help the organization in providing better goods and services to the customer For the above purpose organization must ensure good channel partner who can provide the organization with correct feedback Hence it becomes very important for any organization to acquire good channel partners
56
7) Stephen P Robbins has discussed how group dynamics works in any organization The success of any organization depends on the success of its various teams and how these teams work together The book provides various techniques which can be used by any organization to get result from the team effort The conflict resolution is a major task in any group Various techniques which the organization can use in conflict resolution are also discussed Another important aspect covered is the importance of leadership in the organization The various forms of leadership have been discussed and the kinds of leadership which can be effective in particular situations are also discussed
8) R Wayne Mondy has discussed the importance of training and development in any organization The training provides skills to perform the current job where as the development involve learning beyond present need The various type of training are discussed which can be used according to the requirement Training and development are not only important for better performance of an individual but it also gives satisfaction The major factors which influence training and development are found to be management support commitment of trainee and trainer complexity of the organization The process of developing good training plans is also provided In another part author has discussed the importance of right man for right job The compensation strategies are also given which are very crucial for ant industry
9) Philip Kotler has discussed the importance of channels partners Better the channel partners better will be the delivery model Detailed discussion about how to design the channel structure so that all the requirements could be fulfilled is provided The various issues faced by the organization while managing the channels are also given When an organization has more than one channel it becomes very important that all the channels should be integrated in such a way that the organization get the best out of all At times due to the conflicting benefit of the different channels the conflict arise so various strategies to manage these issues is also discussed in the chapter
10) Michael J Etzel has written about the marketing of services The marketing of services is different from the goods because of the characteristic of service like intangibility inseparability heterogeneity etc Brief about pricing strategies is also given in case of services The authors have also given the impact of technological development on the services marketing The author has also given the importance of brand and after sales support in case of services as perception of the customers plays an important role In other part of the book the authors has described the importance of distribution channels and designing of the same A channel partner should be consider as partner according to discussion The legal complications associated with channels are also discussed These complications are necessary to take into the consideration while managing the channels The conflicting interest of channels both horizontally and vertically are also taken into the consideration
57
11) Boone has discussed about the importance of personal financial planning The concept of time value of money has also been elaborated The importance of creating and implementing budget is given under money management The other important concepts for financial planning like credit management and understanding taxes are also explained In one section the authors have discussed the importance of investment and what should be the major considerations while making any investment The considerations include the risk associated with the investment return on the investment etc The importance and benefits of life insurance has also been given The discussion also includes various legal aspects associated with life insurance The overview of retirement planning is also given which includes importance and benefit of retirement planning Various tools for proper retirement planning are also discussed
58
44) CONCLUSION
1) The customers are very much sensitive towards their investment They would like to invest only in that insurance company which enjoys good public image along with quality good services
2) The result of the survey conducted shows that Bajaj Allianz Life Insurance is the leader in life insurance industry but Reliance Life Insurance and other private players are giving it a close competition
3) The motive of the people behind investing in life insurance is the tax benefits that they would receive under sec 80C and 1010D
4) In Life Insurance industry the after sales support of the company is as important as the quality of life advisors
59
45) LIMITATIONS
There were some limitations faced during the study as discussed below
Since the study was taken for two months so there was a constraint of time and effort
The study was limited only to some of the Delhi regions so the results may be biased
Questionnaire was given to 125 people however only 50 responded to it which is very small for such type of study
The biasness of consumer or responses error cannot be eliminated
Most of the people are not aware about the Importance and the necessity of insurance in their life
Adverse perception of the people towards insurance sector- People consider insurance as a tax saving device
Lack of awareness about the earning opportunity in the insurance sector
60
46) BIBLIOGRAPHY
wwwreliancelifeinsurancecom
wwwadagroupcom
wwwirdacom
wwwbajajallianzlifeinsurancecom
wwwallianzbajajcom
47) ANNEXURE
61
QUESTIONNAIRE
A comparative analysis of consumer perception regarding Traditional plans of Reliance Life Insurance with that of Bajaj Allianz Life Insurance
NAME ___________________________
PERSONAL DETAILS
1) AGE_________________
1) OCCUPATION______________
2) INCOME___________________
3) FAMILY MEMBERS_________
Q1 Where do you prefer to investa) Fixed deposits b) Stock c) Mutual funds d) Insurance e) Others
Q2 What are your priorities for investmenta) Protecting your family against pre-mature death b) Wealth creation c) Retirement needs d) Child education and marriage e) Protect income against disability sickness or critical illness
Q3 What is your main motive behind investing in life insurancea) Tax benefit b) Savings c) Risk cover
Q4 What kind of investment do you prefera) High risk high gain b) Low risk low gain c) Moderate d) Vary times to times
62
Q5Are you interested to invest in Traditional Plansa) Yes b) No
Q6 What is your level of annual investmenta) below 20000 b) 20000-40000 c) above 40000
Q7 What factors would you consider most important before choosing an insurance company
a) publicity of the company b) reputation of the company c) quality of life advisors d) after sales-supporting of the company
Q8 Which life insurance company would you prefer the most to invest ina) Reliance life insurance b) Bajaj Allianz life insurance
Q9 If reliance life insurance then which particular plan you would like to invest ina) Reliance Term Plan b) Reliance Whole Life Plan c) Reliance Endowment Plan d) Reliance Special Endowment Plan
Q10 If Bajaj Allianz life insurance then which particular plan you would like to invest in
I ENDOWMENT PLAN
a) Bajaj Allianz Invest Gain
b) Bajaj Allianz save Care Economy SP
c) Bajaj Allianz life time care
d) Bajaj Allianz Super Saver plan
II MONEY BACK PLAN
a) Bajaj Allianz Cash Gain plan
63
64
- COMPANY PROFILE
- ABOUT RELIANCE LIFE INSURANCE
- HISTORY
- Reliance Capital Limited announced the launch of its life insurance business on February 1 2006 This was after obtaining the required regulatory approvals from the Registrar Of Companies and the Insurance Regulatory and Development Authority
- It was in August 2005 that the ball was set rolling when Reliance Capital Limited the financial arm of Reliance ndash Anil Dhirubhai Ambani Group (ADAG) ndash announced the requisition of 100 shareholding in AMP Sanmar Life Insurance Company Limited and the formal transfer of shares took place in October 2005 The company will issue all policy contracts under the Reliance Life Insurance Company limited name All the existing policy contracts also stand transferred to the Reliance Life Insurance entity with all the original contractual terms and commitments intact
- CORE VALUES
- Reliance Life Insurance Company Limited has some core values which are listed as follows
- Vision bull To be the first choice insurer for customers bull To be the preferred employer for staff in the insurance industry bull To be the number one insurer for creating shareholder value
- Mission As a responsible customer focused market leader we will strive to understand the insurance needs of the consumers and translate it into affordable products that deliver value for money
- 12) TRADITIONAL PLANS OF THE COMPANY
- 12A )TRADITIONAL PLAN OF RELIANCE LIFE INSURANCE-
- Life insurance products are designed to suit the requirements of customers Fundamentally the product provide for
- In every product to a certain degree risk cover is imperative for it to fall under the category of insurance Based on the coverage of the product the premiums are calculated and the customer pays accordingly In order to suggest the right product it is essential for an agent to understand the requirements of the customer well
- The traditional plans of the company have the following features-
- Fixed Tenure
- Potential for better returns
- Transparency
- Flexibility in investment
- Flexibility to invest more
- Flexibility to skip the premium
- Flexibility to choose the cover
- High liquidity
- Age term and sum assured decide the amount of premium
- Top- ups and switches are not allowed
- Reliance Life Insurance Company Limited has offered 9
- 1) Reliance term plan-
- 2) Reliance Whole Life Plan -
- 3) Reliance Endowment Plan -
- 4) Reliance Special Endowment Plan -
- 13) INDUSTRY PROFILE
- MEANING OF INSURANCE
- Insurance may be described as a social device to reduce or eliminate risk of loss to life and property Insurance is a collective bearing of risk Insurance is a financial device to spread the risks and losses of few people among a large number of people as people prefer small fixed liability instead of big uncertain and changing liability
- Insurance can be defined as a ldquolegal contract between two parties whereby one party called insurer undertakes to pay a fixed amount of money on the happening of a particular event which may be certain or uncertainrdquo The other party called insured pays in exchange a fixed sum known as premium
- Insurance is desired to safeguard oneself and onersquos family against possible losses on account of risks and perils It provides financial compensation for the losses suffered due to the happening of any unforeseen events
- IMPORTANCE OF INSURANCE
- Insurance services play predominant role in the process of financial Intermediary Today insurance industry is one of the most growing sectors in India There is lot of potential in the Indian Insurance Industry
- There are many issues which require study The scope of the study of Insurance industry of India would be very great as there are ongoing Developments in the industry after the opening of the sector
- Right now the insurance industry has great opportunities in a country like India or China which huge population Also the penetration of insurance in India is very low in both life and non-life segment so there is lot potential to be tapped Before starting the discussion on insurance industry and related issues we have to start with the basics of insurance So first we understand what is insurance How the word lsquoinsurancersquo is different from the word lsquoassurancersquo Etc
- HISTORY OF INSURANCE
- The concept of insurance is believed to have emerged almost 4500 years ago in the ancient land of Babylonia where traders used to bear risk of the carvan by giving loans which were later repaid with interest when the goods arrived safely
- The concept of insurance as we know today took shape in 1688 at a place called Lloydrsquos Coffee House in London where risk bearers used to meet to transact business This coffee house became so popular that Lloydrsquos became the one of the first modern insurance companies by the end of the eighteenth century
- Marine insurance companies came into existence by the end of the eighteenth century These companies were empowered to write fire and life insurance as well as marine The Great Fire of London in 1966 caused huge loss of property and life With a view to providing fire insurance facilities
- Dr Nicholas Barbon set up in 1967 the first fire insurance company known as the Fire office
- Life insurance in its modern form came to India from England in 1818 The Oriental Life Insurance Company was the first insurance company to be set up in India to help the widows of European community The insurance companies which came into existence between 1818 and 1869 treated
- Indian lives as subnormal and charged an extra premium of 15 to 20 per cent The first Indian insurance company the Bombay Mutual Life
- Assurance Society came into existence in 1870 to cover Indian lives at normal rates
- The Insurance Act 1938 the first comprehensive legislation governing both life and non-life branches of insurance were enacted to provide strict state control over insurance business This amended insurance Act looked into investments expenditure and management of these companies
- By the mid- 1950s there were 154 Indian insurers 16 foreign insurers and 75 provident societies carrying on life insurance business in India Insurance business flourished and so did scams irregularities and dubious investment practices by scores of companies As a result the government decided to nationalize the life assurance business in India The Life Insurance
- Corporation of India (LIC) was set up in 1956 The nationalization of life insurance was followed by general insurance in 1972
- MEANING OF LIFE INSURANCE
- There are three parties in a life insurance transaction the insurer the insured and the owner of the policy (policyholder) although the owner and the insured are often the same person
- Another important person involved in a life insurance policy is the beneficiary The beneficiary is the person or persons who will receive the policy proceeds upon the death of the insured
- Life insurance may be divided into two basic classes ndash term and permanent
- HISTORY OF LIFE INSURANCE
- Risk protection has been a primary goal of humans and institutions throughout history Protecting against risk is what insurance is all about
- Over 5000 years ago in China insurance was seen as a preventative measure against piracy on the sea Piracy in fact was so prevalent that as a way of spreading the risk a number of ships would carry a portion of another ships cargo so that if one ship was captured the entire shipment would not be lost
- In another part of the world nearly 4500 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
- Life insurance came about a little later in ancient Rome where burial clubs were formed to cover the funeral expenses of its members as well as help survivors monetarily With Romes fall around 450 AD most of the concepts of insurance were abandoned but aspects of it did continue through the Middle Ages particularly with merchant and artisan guilds These provided forms of member insurance covering risks like fire flood theft disability death and even imprisonment
- During the feudal period early forms of insurance ebbed with the decline of travel and long-distance trade But during the 14th to 16th centuries transportation commerce and insurance would again reemerge
- And similar to ancient Rome burial societies were formed in the Buddhist period to help families build houses and to protect widows and children
- Modern Insurance
- Illegal almost everywhere else in Europe life insurance in England was vigorously promoted in the three decades following the Glorious Revolution of 1688 The type of insurance we see today owes its roots to 17th century England Lloyds of London or as they were known then Lloyds Coffee House was the location where merchants ship owners and underwriters met to discuss and transact business deals
- While serving as a means of risk-avoidance life insurance also appealed strongly to the gambling instincts of Englands burgeoning middle class
- Gambling was so rampant in fact that when newspapers published names of prominent people who were seriously ill bets were placed at Lloydrsquos on their anticipated dates of death Reacting against such practices 79 merchant underwriters broke away in 1769 and two years later formed a ldquoNew Lloydrsquos Coffee Houserdquo that became known as the ldquoreal Lloydrsquosrdquo Making wagers on peoples deaths ceased in 1774 when parliament forbade the practice
- Insurance moves to America
- The US insurance industry was built on the British model The year 1735 saw the birth of the first insurance company in the American colonies in
- Charleston SC The Presbyterian Synod of Philadelphia in 1759 sponsored the first life insurance corporation in America for the benefit of ministers and their dependents And the first life insurance policy for the general public in the United States was issued in Philadelphia on May 22 1761
- But it wasnt until 80 years later (after 1840) that life insurance really tookoff in a big way The key to its success was reducing the opposition from religious groups
- In 1835 the infamous New York fire drew peoples 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
- With the creation of the automobile public liability insurance which first made its appearance in the 1880s gained importance and acceptance
- More advancement was made to insurance during the process of industrialization In 1897 the British government passed the Workmens Compensation Act which made it mandatory for a company to insure its employees against industrial accidents
- During 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 most labor 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
- BENEFITS OF LIFE INSURANCE
- 1) Risk cover -Life Insurance contracts allow an individual to have a risk cover against any unfortunate event of the future
- 2) Tax Deduction -Under section 80C of the Income Tax Act of 1961 one can get tax deduction on premiums up to one lakh rupees Life Insurance policies thus decrease the total taxable income of an individual
- 3) Loans -An individual can easily access loans from different financial institutions by pledging his insurance policies
- 4) Retirement Planning -What had provided protection against the financial consequences of premature death may now be used to help them enjoy their retirement years
- 5) Educational Needs -Similar to retirement planning the cash values that flow from ones life insurance schemes can be utilized for educational needs of the insurer or his children
- The Life Insurance Industry has an enviable track record among public sector units It has a Consistent profit and dividend paying record accompanied by a steady growth in its financial resources Through investments in the Government sector and socially- oriented sectors the Industry has contributed immensely to the nations development The industry is recognized as one of the largest financial Institutions in the country The ventures initiated by the industry in the areas of Mutual Fund
- Housing Finance has done exceedingly well in recent years To protect the countrys foreign exchange reserves the reinsurance arrangement are so organized that maximum retention is made possible within the country while at the same time protecting interests of the policy holders
- 22) CURRENT SCENARIO OF RELIANCE LIFE INSURANCE
- RLIC offers wide range of innovative life insurance products targeted at individuals and groups It offers need based products that caters to four distinct segments namely protection child retirement and investment plans RLIC is committed to emerge as a transnational Life Insurer of global scale and standard
- CH - 3) RESEARCH METHODOLOGY
- RESEARCH DESIGN-
- SAMPLING TECHNIQUES-
- THE PRIMARY OBJECTIVEOF THE STUDY-
- 34) OBJECTIVES
- 7) Some innovative technique or product is required in order to attract the consumer
- 45) LIMITATIONS
- 46) BIBLIOGRAPHY
-
20
13) INDUSTRY PROFILE
MEANING OF INSURANCE
Insurance may be described as a social device to reduce or eliminate risk of loss to life and property Insurance is a collective bearing of risk Insurance is a financial device to spread the risks and losses of few people among a large number of people as people prefer small fixed liability instead of big uncertain and changing liability
Insurance can be defined as a ldquolegal contract between two parties whereby one party called insurer undertakes to pay a fixed amount of money on the happening of a particular event which may be certain or uncertainrdquo The other party called insured pays in exchange a fixed sum known as premiumInsurance is desired to safeguard oneself and onersquos family against possible losses on account of risks and perils It provides financial compensation for the losses suffered due to the happening of any unforeseen events
IMPORTANCE OF INSURANCE
Insurance constitutes one of the major segments of the financial marketInsurance services play predominant role in the process of financial Intermediary Today insurance industry is one of the most growing sectors in India There is lot of potential in the Indian Insurance Industry
There are many issues which require study The scope of the study of Insurance industry of India would be very great as there are ongoing Developments in the industry after the opening of the sectorOne of the major issues is the effects on LIC after the entry of private players in the market Though market share of LIC has been affected it has improved in terms of efficiency
There are number of other hot topics like penetration of Health Insurance Rural marketing of insurance new distribution channels new product ranges insurance brokersrsquo regulation incentive scheme of development officers of LIC etc So it offers lot of scope for studying the insurance industryRight now the insurance industry has great opportunities in a country like India or China which huge population Also the penetration of insurance in India is very low in both life and non-life segment so there is lot potential to be tapped Before starting the discussion on insurance industry and related issues we have to start with the basics of insurance So first we understand what is insurance How the word lsquoinsurancersquo is different from the word lsquoassurancersquo Etc
21
HISTORY OF INSURANCE
The concept of insurance is believed to have emerged almost 4500 years ago in the ancient land of Babylonia where traders used to bear risk of the carvan by giving loans which were later repaid with interest when the goods arrived safely
The concept of insurance as we know today took shape in 1688 at a place called Lloydrsquos Coffee House in London where risk bearers used to meet to transact business This coffee house became so popular that Lloydrsquos became the one of the first modern insurance companies by the end of the eighteenth centuryMarine insurance companies came into existence by the end of the eighteenth century These companies were empowered to write fire and life insurance as well as marine The Great Fire of London in 1966 caused huge loss of property and life With a view to providing fire insurance facilitiesDr Nicholas Barbon set up in 1967 the first fire insurance company known as the Fire office
Life insurance in its modern form came to India from England in 1818 The Oriental Life Insurance Company was the first insurance company to be set up in India to help the widows of European community The insurance companies which came into existence between 1818 and 1869 treatedIndian lives as subnormal and charged an extra premium of 15 to 20 per cent The first Indian insurance company the Bombay Mutual LifeAssurance Society came into existence in 1870 to cover Indian lives at normal rates
The Insurance Act 1938 the first comprehensive legislation governing both life and non-life branches of insurance were enacted to provide strict state control over insurance business This amended insurance Act looked into investments expenditure and management of these companiesBy the mid- 1950s there were 154 Indian insurers 16 foreign insurers and 75 provident societies carrying on life insurance business in India Insurance business flourished and so did scams irregularities and dubious investment practices by scores of companies As a result the government decided to nationalize the life assurance business in India The Life InsuranceCorporation of India (LIC) was set up in 1956 The nationalization of life insurance was followed by general insurance in 1972
22
MEANING OF LIFE INSURANCE
There are three parties in a life insurance transaction the insurer the insured and the owner of the policy (policyholder) although the owner and the insured are often the same person
Another important person involved in a life insurance policy is the beneficiary The beneficiary is the person or persons who will receive the policy proceeds upon the death of the insured
Life insurance may be divided into two basic classes ndash term and permanent
Term life insurance provides for life insurance coverage for a specified term of years for a specified premium The policy does not accumulate cash value
Permanent life insurance is life insurance that remains in force until the policy matures unless the owner fails to pay the premium when due
Whole life insurance provides for a level premium and a cash value table included in the policy guaranteed by the company The primary advantages of whole life are guaranteed death benefits guaranteed cash values fixed and known annual premiums and mortality and expense charges will not reduce the cash value shown in the policy
Universal life insurance (UL) is a relatively new insurance product intended to provide permanent insurance coverage with greater flexibility in premium payment and the potential for a higher internal rate of return A universal life policy includes a cash account Premiums increase the cash account If you want insurance protection only and not a savings and investment product buy a term life insurance policy
If you want to buy a whole life universal life or other cash value policy plan to hold it for at least 15 years Canceling these policies after only a few years can more than double your life insurance costs
23
HISTORY OF LIFE INSURANCE
Risk protection has been a primary goal of humans and institutions throughout history Protecting against risk is what insurance is all aboutOver 5000 years ago in China insurance was seen as a preventative measure against piracy on the sea Piracy in fact was so prevalent that as a way of spreading the risk a number of ships would carry a portion of another ships cargo so that if one ship was captured the entire shipment would not be lostIn another part of the world nearly 4500 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
Life insurance came about a little later in ancient Rome where burial clubs were formed to cover the funeral expenses of its members as well as help survivors monetarily With Romes fall around 450 AD most of the concepts of insurance were abandoned but aspects of it did continue through the Middle Ages particularly with merchant and artisan guilds These provided forms of member insurance covering risks like fire flood theft disability death and even imprisonment
During the feudal period early forms of insurance ebbed with the decline of travel and long-distance trade But during the 14th to 16th centuries transportation commerce and insurance would again reemergeInsurance in India can be traced back to the Vedas For instance yogakshema the name of Life Insurance Corporation of Indias 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
And similar to ancient Rome burial societies were formed in the Buddhist period to help families build houses and to protect widows and children
Modern InsuranceIllegal almost everywhere else in Europe life insurance in England was vigorously promoted in the three decades following the Glorious Revolution of 1688 The type of insurance we see today owes its roots to 17th century England Lloyds of London or as they were known then Lloyds Coffee House was the location where merchants ship owners and underwriters met to discuss and transact business dealsWhile serving as a means of risk-avoidance life insurance also appealed strongly to the gambling instincts of Englands burgeoning middle classGambling was so rampant in fact that when newspapers published names of prominent people who were seriously ill bets were placed at Lloydrsquos on their anticipated dates of death Reacting against such practices 79 merchant underwriters broke away in 1769 and
24
two years later formed a ldquoNew Lloydrsquos Coffee Houserdquo that became known as the ldquoreal Lloydrsquosrdquo Making wagers on peoples deaths ceased in 1774 when parliament forbade the practice
Insurance moves to AmericaThe US insurance industry was built on the British model The year 1735 saw the birth of the first insurance company in the American colonies inCharleston SC The Presbyterian Synod of Philadelphia in 1759 sponsored the first life insurance corporation in America for the benefit of ministers and their dependents And the first life insurance policy for the general public in the United States was issued in Philadelphia on May 22 1761But it wasnt until 80 years later (after 1840) that life insurance really tookoff in a big way The key to its success was reducing the opposition from religious groups
In 1835 the infamous New York fire drew peoples 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
With the creation of the automobile public liability insurance which first made its appearance in the 1880s gained importance and acceptanceMore advancement was made to insurance during the process of industrialization In 1897 the British government passed the Workmens Compensation Act which made it mandatory for a company to insure its employees against industrial accidents
During 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 most labor 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
25
BENEFITS OF LIFE INSURANCE
1) Risk cover -Life Insurance contracts allow an individual to have a risk cover against any unfortunate event of the future
2) Tax Deduction -Under section 80C of the Income Tax Act of 1961 one can get tax deduction on premiums up to one lakh rupees Life Insurance policies thus decrease the total taxable income of an individual
3) Loans -An individual can easily access loans from different financial institutions by pledging his insurance policies
4) Retirement Planning -What had provided protection against the financial consequences of premature death may now be used to help them enjoy their retirement yearsMoreover the cash value can be used as an additional income in the old age
5) Educational Needs -Similar to retirement planning the cash values that flow from ones life insurance schemes can be utilized for educational needs of the insurer or his children
26
ROLE OF LIFE INSURANCE IN THE GROWTH OF THE ECONOMY
The Life Insurance Industry has an enviable track record among public sector units It has a Consistent profit and dividend paying record accompanied by a steady growth in its financial resources Through investments in the Government sector and socially- oriented sectors the Industry has contributed immensely to the nations development The industry is recognized as one of the largest financial Institutions in the country The ventures initiated by the industry in the areas of Mutual Fund
Housing Finance has done exceedingly well in recent years To protect the countrys foreign exchange reserves the reinsurance arrangement are so organized that maximum retention is made possible within the country while at the same time protecting interests of the policy holders
27
ROLE OF IRDA
MISSION
ldquoTo protect the interests of the policyholders to regulate promote
and ensure orderly growth of the insurance industry and for matters
connected therewith or incidental theretordquo
The Insurance Act 1938 had provided for setting up of the Controller of Insurance to act
as a strong and powerful supervisory and regulatory authority for insurance Post
nationalization the role of Controller of Insurance diminished considerably in
significance since the Government owned the insurance companies But the scenario
changed with the private and foreign companies foraying in to the insurance sector This
necessitated the need for a strong independent and autonomous Insurance Regulatory
Authority was felt As the enacting of legislation would have taken time the then
Government constituted through a Government resolution an Interim Insurance
Regulatory Authority pending the enactment of a comprehensive legislation
The Insurance Regulatory and Development Authority Act 1999 is an act to provide for
the establishment of an Authority to protect the interests of holders of insurance policies
to regulate promote and ensure orderly growth of the insurance industry and for matters
connected therewith or incidental thereto and further to amend the Insurance Act 1938
the Life Insurance Corporation Act 1956 and the General insurance Business
(Nationalization) Act 1972 to end the monopoly of the Life Insurance Corporation of
India (for life insurance business) and General Insurance Corporation and its subsidiaries
(for general insurance business) The act extends to the whole of India and will come
into force on such date as the Central Government may by notification in the Official
Gazette specify Different dates may be appointed for different provisions of this Act
28
The Act has defined certain terms some of the most important ones are as follows
Appointed day means the date on which the Authority is established under the act
Authority means the established under this Act Interim Insurance Regulatory Authority
means the Insurance Regulatory Authority set up by the Central Government through
Resolution No 17(2) 94-lns-V dated the 23rd January 1996
Words and expressions used and not defined in this Act but defined in the Insurance Act
1938 or the Life Insurance Corporation Act 1956 or the General Insurance Business
(Nationalization) Act 1972 shall have the meanings respectively assigned to them in
those Acts A new definition of Indian Insurance Company has been inserted Indian
insurance company means any insurer being a company
(a) Which is formed and registered under the Companies Act 1956
(b) in which the aggregate holdings of equity shares by a foreign company either by
itself or through its subsidiary companies or its nominees do not exceed twenty-six
percent paid up capital in such Indian insurance company
(c) Whose sole purpose is to carry on life insurance business general insurance business
or re-insurance business
29
CURRENT SCENERIO
21) CURRENT SCENERIO OF THE INSURANCE INDUSTRY
With largest number of life insurance policies in force in the world insurance happens to be a mega opportunity in India Itrsquos a business growing at the rate of 15-20 per cent annually and presently is of the order of Rs 450 billion Together with banking services it adds about 7 per cent to the countryrsquos GDP Gross premium collection is nearly 2 per cent of GDP and funds available with LIC for investment are 8 per cent of GDP
Yet nearly 80 percent of Indian population is without life insurance cover while health insurance and non-life insurance continues to be below international standards And this part of the population is also subject to weak social security and pension systems with hardly any old age income security This it is an indicator that growth potential for the insurance sector is immense A well-develop and evolved insurance sector is needed for economic development as it provides long term funds for infrastructure development and at the same time strengthens the risk taking ability It is estimated that over the next ten years India would require investments of the order of one trillion US dollar The insurance sector to some extent can enable investment in infrastructure development to sustain economic growth of the country Insurance is a federal subject in India There are two legislation that govern the sector - The Insurance Act-1938 and The IRDA Act-1999
In India insurance is generally considered as a tax-saving device instead of its other implied long term financial benefits Indian people are prone to investing in properties and gold followed by bank deposits They selectively invest in shares also but the percentage is very small Even to this day Life Insurance Corporation of India dominates India insurance sector With the entry of private sector players backed by foreign expertise Indian insurance market has become more vibrant Business is becoming increasingly vulnerable due to wide variety of risk particularly after September 11 2001 disaster in which twin tower located in the hearts of New York city were crashed by terrorist attack resulting in loss of 6000 human lives as well as financial loss to the extent of $45 billion The impact of this terrorist attack has created new horizon of risk to the business world today
However rapid changes in the global economy development of technology and e-business already gathered momentum Increased dependency on technology has originated new risks that have resulted in well-published incidents Computer hackers obtaining credit card information from visa and Power-Gen the love bug virus cyber extortion web content liability professional errors and omissions computers and other crimes and activities such as terrorism kidnapping and companyrsquos executive and extortion of money commercial liability etc have significant impact on business resulting in extreme financial loss commercial embarrassment or regulatory implications
Corporation insurancerisk managers under the circumstances have to demand increasingly complex insurance products They have to be more attentive and
30
knowledgeable about emerging risks how those risks are managed effectively and efficiently and how they could ultimately affect a companyrsquos financial situation and therefore its position in the market place In short how such risks are managed and can give to an insured a competitive advantage
In the changing times adoption of e-commerce into business models the integration of web-based communication and data transfer capabilities into the business operations and leveraging of advanced network and technology architecture for maximum benefit are the new horizon of the risks For the corporate insurancerisks managers these new exposure-cyber-risks-can lead to cyber losses widening the interpretation of what constitute insure property damage particularly as it relates to information technology and dataAll the while organizations are tremendous pressure to reduce expenses and increase profit margin and cannot afford to suffer a property loss of business interruption due to any cause (risk) How a company identifies quantifies qualifies and manages these new risks exposure in addition to the well-known tradition risks is becoming an important factor in creating shareholders value This often means changing the way Everyone in the organization have to think about risk
Insurance managers are seeing price levels (premium) continue to rise-albeit modestly-in todayrsquos primarily commercial property and reinsurance markets They are demanding that insurers improve their risk assessment and quantification offerings so that an insured may avail the benefit in cost (premium rate) on account of well-managed riskThe good news for insurance managers is that as the economy evolves insurers are increasingly matching that evaluation with new products services and capabilities due to opening up the insurance market to the private players
Insurers who are truly listening to their customers and striving to be more in tune with their needs are responding to the fast changing corporate insurance and risk management landscape They are listening to their customers They are making fresh approaches to address the new challenges faced by insured organization by designing the new products as per the needs Insurers are providing value added services to insured to protect the value created by the business
Insurers are increasingly required to develop and expand their information technology platforms to ensure that the vast amount of data they collect about their customers Insurancerisk portfolio can easily and seamlessly be transformed into valuable risk management information To help their customers insurers should make better-informed decisions They must be able to swiftly deliver this data to their customers (insured) anywhere in the world Insurer are also discovering that risk assessment have to be customized to meet policyholdersrsquo new exposures and needs The insurance industry is stepping up and addressing these challenges in several different ways
31
22) CURRENT SCENARIO OF RELIANCE LIFE INSURANCE
RLIC offers wide range of innovative life insurance products targeted at individuals and groups It offers need based products that caters to four distinct segments namely protection child retirement and investment plans RLIC is committed to emerge as a
transnational Life Insurer of global scale and standard
Reliance Life Insurance Company Limited (RLIC) is amongst the fastest growing life insurance companies in India It is also amongst the top four private sector life insurance companies in India (As on FY 2008-2009)
As on March 31 2009 RLIC has an annualized premium of Rs 30 billion with a market share of 103 It has leapfrogged on the growth path and has reached the 4 million policy mark in a short span of within 3 years RLIC has a strong distribution network of 1145 branches with more than 149000 agents
32
Insurancersquos Market Share in Comparison of Other Private company
If we look at the status of Reliance Life Insurancersquos market share in comparison of other
private company in comparison of premium earned-
If we talk the growth of Insurance industryrsquos private players in recent years the data will
reflect-
CH - 3) RESEARCH METHODOLOGY
33
RESEARCH DESIGN-
COMPARITIVE STUDY- A comparative study has been undertaken to compare the traditional Plans of Reliance Life Insurance with that of Bajaj Allianz life insurance
DATA TYPE
INTRODUCTION - Any organization whether big or small private or public needs different type of information to know its popularity I have gathered secondary data and primary data and collected information from the combination of these two data
PRIMARY DATA - Primary data collection method was decided for observing working of the company and approaching the customers directly face to face A great care was taken while collecting the primary data to answer that it is relevant accurate current and unbiased
SECONDARY DATA - Secondary data collection method was used by referring to various websites books and newspapers for collecting information regarding the project under study Secondary data consist of the information that already exists somewhere else for some another purpose
SAMPLING TECHNIQUES-
SAMPLE SIZE- A sample size of 50 was taken to be analyzed
SAMPLE LOCATION-Various sectors of Kamla Nagar Civil lines Mukherji Nagar Model Town and selected areas of Delhi
SAMPLING PROCESS - Convenient sampling was used to overcome the time and money constraints that could have been faced by us while collecting the data The customers were contacted face to face directly and also by way of telephonic conversation with them
ANALYTICAL TOOLS - The data collected were arranged accordingly and statistical tools like bar graphs and pie-charts were used to analyze and present the data
RESEARCH INSTRUMENT USED-
34
SAMPLING MEDIA - Printed questionnaires consisting several questions were asked to have an idea of customers view about Reliance Life Insurance plans followed by personal questions
FIELD WORK - Rigorous field work was undertaken to locate the interested and potential respondents to fulfill the objectives of the study
THE PRIMARY OBJECTIVEOF THE STUDY -
The primary objective of the research study is to have a detailed analysis of Reliance Life Insurance bringing in focus the future prospects of the (Anil Dhirubhai Ambani group) with relevance to the customer perception regarding the various plans and products offered by Reliance Life Insurance
31) DATA ANALYSIS AND INTERPRETATION
35
PERSONAL DETAILS
1) AGE a) 18-30b) 31-50c) 51-65
AGE NO OF RESPONDENTS PERCENTAGE
18-30 21 42
31-50 19 38
51-65 10 20
TOTAL 50 100
INTERPRETATION-The bar graph reveals that 42 of the respondents belong to the age group of 18-30 years 38 lies in the age group of 31-50 years and 20 of them lie in the age group of 51-65 years
2) OCCUPATION
4238
20
05
1015202530354045
NO
O
F
RE
SP
ON
DE
NT
S
18 to 30 31 to 50 51 to 65
AGE (in year)
AGE WISE CLASSIFICATION
36
a) Serviceb) Businessc) Professiond) Housewifee) Retired
OPTION NO OF RESPONDENTS PERCENTAGE
Service 16 32
Business 14 28
Profession 5 10
Housewife 8 16
Retired 7 14
TOTAL 50 100
INTERPRETATION-The above bar graph reveals that 32 of the total respondents were servicemen 28 of them belonged to the business class 10 were professionals 16 were housewives and 14 of the total respondents fall in the retired category
3) INCOME
32
28
10
16
14
0
5
10
15
20
25
30
35
Service Business Profession Housewife Retired
OCCUPATION
OCCUPATION WISE CLASSIFICATION
37
a) 150000-300000
b) 300000-500000
c) Above 500000
OPTION NO OF RESPONDENTS PERCENTAGE
150000-300000 24 48
300000-500000 14 28
Above 500000 12 24
TOTAL 50 100
INTERPRETATION-The above bar graph reveals that out of the total respondents 48 lie in the income group of 150000-300000 28 of the total respondents belonged to the income group of 300000-500000 and 24 lie in the income group of people earning an income of above Rs 500000pa
4828 24
01020304050
N O
OF
RE
SP
ON
DE
NT
S
150000-300000
300000-500000
ABOVE500000
INCOME (in RS)
INCOME WISE CLASSIFICATION
38
4) FAMILY MEMBERS
a) 2b) 3c) 4d) Above 4
OPTION NO OF RESPONDENT PERCENTAGE
2 11 22
3 9 18
4 24 48
Above 4 6 12
TOTAL 50 100
INTERPRETATION The above bar graph shows that 22 of the total respondents had a family of 2 members 18 of them had 3 family members 48 of them had 4 family members and 12 of them had the no of family members above 4
Q1 Where do you prefer to invest
22 18
48
120
1020304050
No
o
f re
spo
nd
ents
2 3 4 Above 4
No of family members
MEMBER WISE CLASSIFICATION
39
a) fixed deposits
b) stock
c) mutual funds
d) insurance
e) others
Option No of respondents Percentage
Fixed deposits 5 10
Stock 10 20
Mutual fund 10 20
Insurance 18 36
others 7 14
TOTAL 50 100
Interpretation The above pie chart shows that out of 50 respondents 10 preferred to invest in fixed deposits 20 in stocks 20 in mutual funds 36 in insurance and 14 in others like property gold etc
Q2 What are your priorities for investment
40
a) protecting your family against pre-mature death
b) wealth creation
c) retirement needs
d) child education and marriage
e) protect income against disability sickness or critical illness
Option No of respondents Percentage
Protecting your family against pre mature death
10 20
Wealth creation 14 28
Retirement needs 5 10
Child education and marriage 7 14
Protect income against disability sickness or critical illness
14 28
TOTAL 50 100
Interpretation The above pie chart shows that out of 50 respondents 20 of them invest for protecting their family against premature death 28 for creating wealth 10 for meeting their future retirement needs 14 for child education amp marriage and 28 for protection against disability and sickness
Q3 What is your main motive behind investing in life insurance
41
a) tax benefit
b) savings
c) risk cover
Option No of respondents Percentage
Tax benefits 27 54
Savings 5 10
Risk cover 18 36
TOTAL 50 100
Interpretation The above pie chart shows that out of the sample respondents 54 have tax benefit 10 have savings and 36 have risk cover as their main motive for making an investment in life
Q4 What kind of investment do you prefer
42
a) high risk high gain
b) low risk low gain
c) moderate
d) vary times to times
Option No of respondents Percentage
High risk high gain 8 16
Low risk low gain 5 10
Moderate 12 24
Vary times to times 25 50
TOTAL 50 100
Interpretation The above pie chart shows that out of 50 respondents 16 preferred high risk- high gain form of investment 10 preferred low risk- low gain form of investment 24 preferred moderate investment and 50 preferred varied form of investment
43
Q5Are you interested to invest in Traditional Plans
a) YES
b) NO
Option No of respondents Percentage
YES 36 72
NO 14 28
TOTAL 50 100
Interpretation The above pie chart shows that 72 of the respondents preferred to invest in Traditional Plans
44
Q6 What is your level of annual investmenta) below 20000
b) 20000-40000
c) above 40000
Option No of respondents Percentage
Below 20000 41 82
20000-40000 7 14
Above 40000 2 4
TOTAL 50 100
Interpretation The above pie chart shows that 82 of the respondents are willing to invest below Rs 20000 per annum 14 of them want to invest within Rs 20000 per annum to Rs 40000 and 4 wanted to invest over and above Rs 40000
45
Q7 What factors would you consider most important before choosing an insurance policy
a) publicity of the company
b) reputation of the company
c) quality of life advisors
d) after sales-supporting of the company
Option No of respondents Percentage
Publicity of the co 5 20
Reputation of the co 25 50
Quality of life advisors 10 10
After sale-services 10 20
TOTAL 50 100
Interpretation out of the sample respondents 20 considers publicity of the company 50 considers reputation of the company 10 considers quality of life advisors and 20 considers after sales support of the company as the most important factor for choosing an insurance company
46
Q8 Which life insurance company would you prefer the most to invest ina) reliance life insurance (RLIC)
b) Bajaj Allianz life insurance
Option No of respondents Percentage
RLIC 21 42
BAJAJ ALLIANZ 29 58
TOTAL 50 100
Interpretation Out of 50 respondents 42 preferred to invest in reliance life insurance over 58 of the respondents who prefer to invest in Bajaj Allianz life insurance
47
Q9 If reliance life insurance then which particular plan you would like to invest ina) Reliance Term Plan
b) Reliance Whole Life Plan
c) Reliance Endowment Plan
d) Reliance Special Endowment Plan
Option No of respondents Percentage
Reliance term plan 6 2858
Reliance whole life plan 3 1428
Reliance endowment plan 9 4286
Reliance special endowment plan 3 1428
TOTAL 21 100
Interpretation Out of 21 respondents 2858 preferred to invest in term plan 1428 in whole life plan 4286 in endowment plan and 1428 of them preferred to invest in special endowment plan of reliance life insurance
48
Q10 If Bajaj Allianz life insurance then which particular plan you would like to invest in
I ENDOWMENT PLAN a) Bajaj Allianz Invest Gain
b) Bajaj Allianz save Care Economy SP
c) Bajaj Allianz life time care
d) Bajaj Allianz Super Saver plan
II MONEY BACK PLAN i Bajaj Allianz Cash Gain plan
Option No of respondents Percentage
Invest gain plan 3 1035
Save care economy SP 6 2069
Life time care 7 2415
Super saver plan 3 1035
Cash gain plan 10 3446
TOTAL 29 100
Interpretation Out of 29 respondents 1035 of them plan to invest in Bajaj Allianz- Invest Gain 2069 wish to invest in Bajaj Allianz save Care Economy SP 2415 want to invest in Bajaj Allianz life time care 1035 in Bajaj Allianz Super Saver plan and 3446 prefer to invest in Bajaj Allianz Cash Gain plan
49
32) SIGNIFICANCE OF STUDY
Life insurance is one of the most rapidly growing sectors in India The main reason
behind the growth can attributed to the high population density improving economical
condition improving education level and improving awareness Due to these factors there
is still huge scope for growth in this sector Like any other business when the
opportunities are present everybody tends to enter the industries This growth hence
fetches the new competitors as well as new strategies from existing players To sustain in
any competitive industry the organization must adapt to existing strategies and adopt
new ones This study will focus on the analysis of Reliance Life Insurance in comparison
with the present scenario of Bajaj Allianz Life Insurance with respect to the Traditional
Plans of both the companyrsquos This will mainly cover the following aspects
To know about the awareness and popularity of various Traditional Plans offered
by Reliance Life Insurance and Bajaj Allianz Life Insurance
How Reliance Life Insurance can develop and sustain a good distribution
network
These will provide it benefit both in terms of better market coverage as well as better
penetration
50
33) SCOPE OF THE STUDY
1) This helps in finding out vast potential of insurance company
2) The study was conducted in National Capital Region (NCR) only
3) The number of respondents to be surveyed can be improved
4) This study was conducted by comparing the performances amp products of three private
amp government insurance players in insurance industry
5) This study was conducted to analyze the market stand of Reliance life insurance
Company limited and Bajaj Allianz Life Insurance Company Limited of India insurance
companies
6) This study is done to eliminate all the myths which people have in their minds
regarding Insurance Sector
51
34) OBJECTIVES
To have a detailed understanding of Reliance Life Insurance and Bajaj Allianz Life Insurance
To find out various reasons considered while investing in policies
To get knowledge about the market exposure and future prospects about Reliance Life Insurance
To know the perception of the consumers about the life insurance
To analyze the Traditional plans of Reliance Life Insurance and compare it with Bajaj Allianz
To know about the brand awareness of Reliance Life Insurance its customer preferences over Bajaj Allianz in the market
To study a proper knowledge about the life insurance industry
To understand the consumer choice while investing in policies
52
CHAPTER 4
DISCUSSION AND FINDINGS OF THE STUDY
FINDINGS OF THE STUDY RECOMMENDATION AND SUGGESTIONS CONCLUSION LIMITATIONS BIBLIOGRAPHY ANNEXUREQUESTIONNAIRE
53
41) FINDINGS OF THE STUDY
1) The survey reveals that still a large proportion of population is interested to invest in other forms of investment other than insurance as still most of them are unaware about the importance of insurance in their life
2) Basically people make varied form of investment for creating wealth to protect their families against pre-mature death and to protect income against disability sickness or critical illness
3) The main motive of the individuals investing is receives benefits US 1010D People generally consider insurance as a tax saving device
4) Mostly people prefer time to time form of investment as they are not willing to take high degree of risk
5) 72 of the respondents are preferred to invest in Traditional Plans
6) Most of the people prefer to make an annual investment up to a maximum of Rs20 000 per annum
7) When the product is like life insurance reputation of the company publicity of the company amp after sale services of the company matters a lot This means that people would choose that insurance company only where the quality of life advisors is satisfactory
8) Most people prefer to invest in Bajaj Allianz Life Insurance as compared to making an investment in Reliance Life Insurance
9) The most preferable Traditional plan of Reliance Life Insurance is Endowment Plan
10) The most preferable plan of Bajaj Allianz Life Insurance co is Cash Gain Plan
54
42) SUGGESTIONS amp RECOMMENDATIONS
Based on the observations of the study some suggestions for the organization are made as
follows
1) Quality of advisors is also as important as the quantity Thus company should go
mainly for qualified professionals
2) Company should increase its budget on publicity so that awareness can be increased
3) Clarity and transparency should be provided to the customer regarding various
products
4) Training sessions should be planned in advance so that schedule can be provided to
the advisor in advance
5) Apart from the Brand Positioning in urban area a strategy should be adopted by
Reliance to make its brand also near to middle level or high aspirant people because they
are the main source of the business in India
6) Awareness Camp to the sub urban area should be focused by Reliance
7) Some innovative technique or product is required in order to attract the consumer
43) LITERATURE REVIEW
55
1) Robi Elenekave has explained in detail why various retirement plans and pension plans donrsquot give the desired returns The main difficulty is the use of incorrect method for calculations done to find out the return on investment This is primarily due to wrong assumptions The study provides information about the various precautions which need to be considered before planning so that the desired results can be achieved
2) Another paper provides insight about how various financial sectors invest in bond market The study was how the different players investment different instruments according to the risk appetite and desired rate of return The study shows that life insurance sector mainly invests in government bond which are low return and low risk instrument The investment in government bond it shows that life insurance companies are more conservative in investment
3) K Subhash has presented the history of Indiarsquos life insurance industry in three stages before independence after independence and post liberalization which not only provides information but also help in analyzing the impact of these major changes The authors have also discussed the huge potential which exists in the rural India The insurance company must realize the importance of rural sector because the future lies there The author commented about the increasing share of private player in the existing market This confirms the availability of opportunity in this sector The paper also provides the importance of professional and focused approach which was given no importance
4) Tapen Sinha has discussed the various challenges and opportunities in the insurance market One of the very important factors which have been discussed in the study is the importance of developing new and better products As the scenario changes the need of an individual also changes so any organization must understand and fulfill these needs The new product development requires constant research so organization must also focus on it
5) Roger G Ibbotson discusses how financial planners and advisors have recently started to recognize that human capital must be taken into account when building optimal portfolios for individual investors Any investorrsquos human capital has a unique mortality risk However life insurance in its forms can hedge against this mortality risk Thus human capital affects both the optimal asset allocation and the optimal demand for life insurance This paper provides a unified framework based on human capital in order to enable individual investors to make both decisions jointly
6) Rakesh Niraj study tells how the flow of information in any organization is important For any organization to grow the flow of information must be good both upwards as well as ownwards The proper flow of information will also ensure proper flow of good and services from organization to customer and proper flow of information from customer to organization The information from customers will help the organization in providing better goods and services to the customer For the above purpose organization must ensure good channel partner who can provide the organization with correct feedback Hence it becomes very important for any organization to acquire good channel partners
56
7) Stephen P Robbins has discussed how group dynamics works in any organization The success of any organization depends on the success of its various teams and how these teams work together The book provides various techniques which can be used by any organization to get result from the team effort The conflict resolution is a major task in any group Various techniques which the organization can use in conflict resolution are also discussed Another important aspect covered is the importance of leadership in the organization The various forms of leadership have been discussed and the kinds of leadership which can be effective in particular situations are also discussed
8) R Wayne Mondy has discussed the importance of training and development in any organization The training provides skills to perform the current job where as the development involve learning beyond present need The various type of training are discussed which can be used according to the requirement Training and development are not only important for better performance of an individual but it also gives satisfaction The major factors which influence training and development are found to be management support commitment of trainee and trainer complexity of the organization The process of developing good training plans is also provided In another part author has discussed the importance of right man for right job The compensation strategies are also given which are very crucial for ant industry
9) Philip Kotler has discussed the importance of channels partners Better the channel partners better will be the delivery model Detailed discussion about how to design the channel structure so that all the requirements could be fulfilled is provided The various issues faced by the organization while managing the channels are also given When an organization has more than one channel it becomes very important that all the channels should be integrated in such a way that the organization get the best out of all At times due to the conflicting benefit of the different channels the conflict arise so various strategies to manage these issues is also discussed in the chapter
10) Michael J Etzel has written about the marketing of services The marketing of services is different from the goods because of the characteristic of service like intangibility inseparability heterogeneity etc Brief about pricing strategies is also given in case of services The authors have also given the impact of technological development on the services marketing The author has also given the importance of brand and after sales support in case of services as perception of the customers plays an important role In other part of the book the authors has described the importance of distribution channels and designing of the same A channel partner should be consider as partner according to discussion The legal complications associated with channels are also discussed These complications are necessary to take into the consideration while managing the channels The conflicting interest of channels both horizontally and vertically are also taken into the consideration
57
11) Boone has discussed about the importance of personal financial planning The concept of time value of money has also been elaborated The importance of creating and implementing budget is given under money management The other important concepts for financial planning like credit management and understanding taxes are also explained In one section the authors have discussed the importance of investment and what should be the major considerations while making any investment The considerations include the risk associated with the investment return on the investment etc The importance and benefits of life insurance has also been given The discussion also includes various legal aspects associated with life insurance The overview of retirement planning is also given which includes importance and benefit of retirement planning Various tools for proper retirement planning are also discussed
58
44) CONCLUSION
1) The customers are very much sensitive towards their investment They would like to invest only in that insurance company which enjoys good public image along with quality good services
2) The result of the survey conducted shows that Bajaj Allianz Life Insurance is the leader in life insurance industry but Reliance Life Insurance and other private players are giving it a close competition
3) The motive of the people behind investing in life insurance is the tax benefits that they would receive under sec 80C and 1010D
4) In Life Insurance industry the after sales support of the company is as important as the quality of life advisors
59
45) LIMITATIONS
There were some limitations faced during the study as discussed below
Since the study was taken for two months so there was a constraint of time and effort
The study was limited only to some of the Delhi regions so the results may be biased
Questionnaire was given to 125 people however only 50 responded to it which is very small for such type of study
The biasness of consumer or responses error cannot be eliminated
Most of the people are not aware about the Importance and the necessity of insurance in their life
Adverse perception of the people towards insurance sector- People consider insurance as a tax saving device
Lack of awareness about the earning opportunity in the insurance sector
60
46) BIBLIOGRAPHY
wwwreliancelifeinsurancecom
wwwadagroupcom
wwwirdacom
wwwbajajallianzlifeinsurancecom
wwwallianzbajajcom
47) ANNEXURE
61
QUESTIONNAIRE
A comparative analysis of consumer perception regarding Traditional plans of Reliance Life Insurance with that of Bajaj Allianz Life Insurance
NAME ___________________________
PERSONAL DETAILS
1) AGE_________________
1) OCCUPATION______________
2) INCOME___________________
3) FAMILY MEMBERS_________
Q1 Where do you prefer to investa) Fixed deposits b) Stock c) Mutual funds d) Insurance e) Others
Q2 What are your priorities for investmenta) Protecting your family against pre-mature death b) Wealth creation c) Retirement needs d) Child education and marriage e) Protect income against disability sickness or critical illness
Q3 What is your main motive behind investing in life insurancea) Tax benefit b) Savings c) Risk cover
Q4 What kind of investment do you prefera) High risk high gain b) Low risk low gain c) Moderate d) Vary times to times
62
Q5Are you interested to invest in Traditional Plansa) Yes b) No
Q6 What is your level of annual investmenta) below 20000 b) 20000-40000 c) above 40000
Q7 What factors would you consider most important before choosing an insurance company
a) publicity of the company b) reputation of the company c) quality of life advisors d) after sales-supporting of the company
Q8 Which life insurance company would you prefer the most to invest ina) Reliance life insurance b) Bajaj Allianz life insurance
Q9 If reliance life insurance then which particular plan you would like to invest ina) Reliance Term Plan b) Reliance Whole Life Plan c) Reliance Endowment Plan d) Reliance Special Endowment Plan
Q10 If Bajaj Allianz life insurance then which particular plan you would like to invest in
I ENDOWMENT PLAN
a) Bajaj Allianz Invest Gain
b) Bajaj Allianz save Care Economy SP
c) Bajaj Allianz life time care
d) Bajaj Allianz Super Saver plan
II MONEY BACK PLAN
a) Bajaj Allianz Cash Gain plan
63
64
- COMPANY PROFILE
- ABOUT RELIANCE LIFE INSURANCE
- HISTORY
- Reliance Capital Limited announced the launch of its life insurance business on February 1 2006 This was after obtaining the required regulatory approvals from the Registrar Of Companies and the Insurance Regulatory and Development Authority
- It was in August 2005 that the ball was set rolling when Reliance Capital Limited the financial arm of Reliance ndash Anil Dhirubhai Ambani Group (ADAG) ndash announced the requisition of 100 shareholding in AMP Sanmar Life Insurance Company Limited and the formal transfer of shares took place in October 2005 The company will issue all policy contracts under the Reliance Life Insurance Company limited name All the existing policy contracts also stand transferred to the Reliance Life Insurance entity with all the original contractual terms and commitments intact
- CORE VALUES
- Reliance Life Insurance Company Limited has some core values which are listed as follows
- Vision bull To be the first choice insurer for customers bull To be the preferred employer for staff in the insurance industry bull To be the number one insurer for creating shareholder value
- Mission As a responsible customer focused market leader we will strive to understand the insurance needs of the consumers and translate it into affordable products that deliver value for money
- 12) TRADITIONAL PLANS OF THE COMPANY
- 12A )TRADITIONAL PLAN OF RELIANCE LIFE INSURANCE-
- Life insurance products are designed to suit the requirements of customers Fundamentally the product provide for
- In every product to a certain degree risk cover is imperative for it to fall under the category of insurance Based on the coverage of the product the premiums are calculated and the customer pays accordingly In order to suggest the right product it is essential for an agent to understand the requirements of the customer well
- The traditional plans of the company have the following features-
- Fixed Tenure
- Potential for better returns
- Transparency
- Flexibility in investment
- Flexibility to invest more
- Flexibility to skip the premium
- Flexibility to choose the cover
- High liquidity
- Age term and sum assured decide the amount of premium
- Top- ups and switches are not allowed
- Reliance Life Insurance Company Limited has offered 9
- 1) Reliance term plan-
- 2) Reliance Whole Life Plan -
- 3) Reliance Endowment Plan -
- 4) Reliance Special Endowment Plan -
- 13) INDUSTRY PROFILE
- MEANING OF INSURANCE
- Insurance may be described as a social device to reduce or eliminate risk of loss to life and property Insurance is a collective bearing of risk Insurance is a financial device to spread the risks and losses of few people among a large number of people as people prefer small fixed liability instead of big uncertain and changing liability
- Insurance can be defined as a ldquolegal contract between two parties whereby one party called insurer undertakes to pay a fixed amount of money on the happening of a particular event which may be certain or uncertainrdquo The other party called insured pays in exchange a fixed sum known as premium
- Insurance is desired to safeguard oneself and onersquos family against possible losses on account of risks and perils It provides financial compensation for the losses suffered due to the happening of any unforeseen events
- IMPORTANCE OF INSURANCE
- Insurance services play predominant role in the process of financial Intermediary Today insurance industry is one of the most growing sectors in India There is lot of potential in the Indian Insurance Industry
- There are many issues which require study The scope of the study of Insurance industry of India would be very great as there are ongoing Developments in the industry after the opening of the sector
- Right now the insurance industry has great opportunities in a country like India or China which huge population Also the penetration of insurance in India is very low in both life and non-life segment so there is lot potential to be tapped Before starting the discussion on insurance industry and related issues we have to start with the basics of insurance So first we understand what is insurance How the word lsquoinsurancersquo is different from the word lsquoassurancersquo Etc
- HISTORY OF INSURANCE
- The concept of insurance is believed to have emerged almost 4500 years ago in the ancient land of Babylonia where traders used to bear risk of the carvan by giving loans which were later repaid with interest when the goods arrived safely
- The concept of insurance as we know today took shape in 1688 at a place called Lloydrsquos Coffee House in London where risk bearers used to meet to transact business This coffee house became so popular that Lloydrsquos became the one of the first modern insurance companies by the end of the eighteenth century
- Marine insurance companies came into existence by the end of the eighteenth century These companies were empowered to write fire and life insurance as well as marine The Great Fire of London in 1966 caused huge loss of property and life With a view to providing fire insurance facilities
- Dr Nicholas Barbon set up in 1967 the first fire insurance company known as the Fire office
- Life insurance in its modern form came to India from England in 1818 The Oriental Life Insurance Company was the first insurance company to be set up in India to help the widows of European community The insurance companies which came into existence between 1818 and 1869 treated
- Indian lives as subnormal and charged an extra premium of 15 to 20 per cent The first Indian insurance company the Bombay Mutual Life
- Assurance Society came into existence in 1870 to cover Indian lives at normal rates
- The Insurance Act 1938 the first comprehensive legislation governing both life and non-life branches of insurance were enacted to provide strict state control over insurance business This amended insurance Act looked into investments expenditure and management of these companies
- By the mid- 1950s there were 154 Indian insurers 16 foreign insurers and 75 provident societies carrying on life insurance business in India Insurance business flourished and so did scams irregularities and dubious investment practices by scores of companies As a result the government decided to nationalize the life assurance business in India The Life Insurance
- Corporation of India (LIC) was set up in 1956 The nationalization of life insurance was followed by general insurance in 1972
- MEANING OF LIFE INSURANCE
- There are three parties in a life insurance transaction the insurer the insured and the owner of the policy (policyholder) although the owner and the insured are often the same person
- Another important person involved in a life insurance policy is the beneficiary The beneficiary is the person or persons who will receive the policy proceeds upon the death of the insured
- Life insurance may be divided into two basic classes ndash term and permanent
- HISTORY OF LIFE INSURANCE
- Risk protection has been a primary goal of humans and institutions throughout history Protecting against risk is what insurance is all about
- Over 5000 years ago in China insurance was seen as a preventative measure against piracy on the sea Piracy in fact was so prevalent that as a way of spreading the risk a number of ships would carry a portion of another ships cargo so that if one ship was captured the entire shipment would not be lost
- In another part of the world nearly 4500 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
- Life insurance came about a little later in ancient Rome where burial clubs were formed to cover the funeral expenses of its members as well as help survivors monetarily With Romes fall around 450 AD most of the concepts of insurance were abandoned but aspects of it did continue through the Middle Ages particularly with merchant and artisan guilds These provided forms of member insurance covering risks like fire flood theft disability death and even imprisonment
- During the feudal period early forms of insurance ebbed with the decline of travel and long-distance trade But during the 14th to 16th centuries transportation commerce and insurance would again reemerge
- And similar to ancient Rome burial societies were formed in the Buddhist period to help families build houses and to protect widows and children
- Modern Insurance
- Illegal almost everywhere else in Europe life insurance in England was vigorously promoted in the three decades following the Glorious Revolution of 1688 The type of insurance we see today owes its roots to 17th century England Lloyds of London or as they were known then Lloyds Coffee House was the location where merchants ship owners and underwriters met to discuss and transact business deals
- While serving as a means of risk-avoidance life insurance also appealed strongly to the gambling instincts of Englands burgeoning middle class
- Gambling was so rampant in fact that when newspapers published names of prominent people who were seriously ill bets were placed at Lloydrsquos on their anticipated dates of death Reacting against such practices 79 merchant underwriters broke away in 1769 and two years later formed a ldquoNew Lloydrsquos Coffee Houserdquo that became known as the ldquoreal Lloydrsquosrdquo Making wagers on peoples deaths ceased in 1774 when parliament forbade the practice
- Insurance moves to America
- The US insurance industry was built on the British model The year 1735 saw the birth of the first insurance company in the American colonies in
- Charleston SC The Presbyterian Synod of Philadelphia in 1759 sponsored the first life insurance corporation in America for the benefit of ministers and their dependents And the first life insurance policy for the general public in the United States was issued in Philadelphia on May 22 1761
- But it wasnt until 80 years later (after 1840) that life insurance really tookoff in a big way The key to its success was reducing the opposition from religious groups
- In 1835 the infamous New York fire drew peoples 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
- With the creation of the automobile public liability insurance which first made its appearance in the 1880s gained importance and acceptance
- More advancement was made to insurance during the process of industrialization In 1897 the British government passed the Workmens Compensation Act which made it mandatory for a company to insure its employees against industrial accidents
- During 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 most labor 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
- BENEFITS OF LIFE INSURANCE
- 1) Risk cover -Life Insurance contracts allow an individual to have a risk cover against any unfortunate event of the future
- 2) Tax Deduction -Under section 80C of the Income Tax Act of 1961 one can get tax deduction on premiums up to one lakh rupees Life Insurance policies thus decrease the total taxable income of an individual
- 3) Loans -An individual can easily access loans from different financial institutions by pledging his insurance policies
- 4) Retirement Planning -What had provided protection against the financial consequences of premature death may now be used to help them enjoy their retirement years
- 5) Educational Needs -Similar to retirement planning the cash values that flow from ones life insurance schemes can be utilized for educational needs of the insurer or his children
- The Life Insurance Industry has an enviable track record among public sector units It has a Consistent profit and dividend paying record accompanied by a steady growth in its financial resources Through investments in the Government sector and socially- oriented sectors the Industry has contributed immensely to the nations development The industry is recognized as one of the largest financial Institutions in the country The ventures initiated by the industry in the areas of Mutual Fund
- Housing Finance has done exceedingly well in recent years To protect the countrys foreign exchange reserves the reinsurance arrangement are so organized that maximum retention is made possible within the country while at the same time protecting interests of the policy holders
- 22) CURRENT SCENARIO OF RELIANCE LIFE INSURANCE
- RLIC offers wide range of innovative life insurance products targeted at individuals and groups It offers need based products that caters to four distinct segments namely protection child retirement and investment plans RLIC is committed to emerge as a transnational Life Insurer of global scale and standard
- CH - 3) RESEARCH METHODOLOGY
- RESEARCH DESIGN-
- SAMPLING TECHNIQUES-
- THE PRIMARY OBJECTIVEOF THE STUDY-
- 34) OBJECTIVES
- 7) Some innovative technique or product is required in order to attract the consumer
- 45) LIMITATIONS
- 46) BIBLIOGRAPHY
-
13) INDUSTRY PROFILE
MEANING OF INSURANCE
Insurance may be described as a social device to reduce or eliminate risk of loss to life and property Insurance is a collective bearing of risk Insurance is a financial device to spread the risks and losses of few people among a large number of people as people prefer small fixed liability instead of big uncertain and changing liability
Insurance can be defined as a ldquolegal contract between two parties whereby one party called insurer undertakes to pay a fixed amount of money on the happening of a particular event which may be certain or uncertainrdquo The other party called insured pays in exchange a fixed sum known as premiumInsurance is desired to safeguard oneself and onersquos family against possible losses on account of risks and perils It provides financial compensation for the losses suffered due to the happening of any unforeseen events
IMPORTANCE OF INSURANCE
Insurance constitutes one of the major segments of the financial marketInsurance services play predominant role in the process of financial Intermediary Today insurance industry is one of the most growing sectors in India There is lot of potential in the Indian Insurance Industry
There are many issues which require study The scope of the study of Insurance industry of India would be very great as there are ongoing Developments in the industry after the opening of the sectorOne of the major issues is the effects on LIC after the entry of private players in the market Though market share of LIC has been affected it has improved in terms of efficiency
There are number of other hot topics like penetration of Health Insurance Rural marketing of insurance new distribution channels new product ranges insurance brokersrsquo regulation incentive scheme of development officers of LIC etc So it offers lot of scope for studying the insurance industryRight now the insurance industry has great opportunities in a country like India or China which huge population Also the penetration of insurance in India is very low in both life and non-life segment so there is lot potential to be tapped Before starting the discussion on insurance industry and related issues we have to start with the basics of insurance So first we understand what is insurance How the word lsquoinsurancersquo is different from the word lsquoassurancersquo Etc
21
HISTORY OF INSURANCE
The concept of insurance is believed to have emerged almost 4500 years ago in the ancient land of Babylonia where traders used to bear risk of the carvan by giving loans which were later repaid with interest when the goods arrived safely
The concept of insurance as we know today took shape in 1688 at a place called Lloydrsquos Coffee House in London where risk bearers used to meet to transact business This coffee house became so popular that Lloydrsquos became the one of the first modern insurance companies by the end of the eighteenth centuryMarine insurance companies came into existence by the end of the eighteenth century These companies were empowered to write fire and life insurance as well as marine The Great Fire of London in 1966 caused huge loss of property and life With a view to providing fire insurance facilitiesDr Nicholas Barbon set up in 1967 the first fire insurance company known as the Fire office
Life insurance in its modern form came to India from England in 1818 The Oriental Life Insurance Company was the first insurance company to be set up in India to help the widows of European community The insurance companies which came into existence between 1818 and 1869 treatedIndian lives as subnormal and charged an extra premium of 15 to 20 per cent The first Indian insurance company the Bombay Mutual LifeAssurance Society came into existence in 1870 to cover Indian lives at normal rates
The Insurance Act 1938 the first comprehensive legislation governing both life and non-life branches of insurance were enacted to provide strict state control over insurance business This amended insurance Act looked into investments expenditure and management of these companiesBy the mid- 1950s there were 154 Indian insurers 16 foreign insurers and 75 provident societies carrying on life insurance business in India Insurance business flourished and so did scams irregularities and dubious investment practices by scores of companies As a result the government decided to nationalize the life assurance business in India The Life InsuranceCorporation of India (LIC) was set up in 1956 The nationalization of life insurance was followed by general insurance in 1972
22
MEANING OF LIFE INSURANCE
There are three parties in a life insurance transaction the insurer the insured and the owner of the policy (policyholder) although the owner and the insured are often the same person
Another important person involved in a life insurance policy is the beneficiary The beneficiary is the person or persons who will receive the policy proceeds upon the death of the insured
Life insurance may be divided into two basic classes ndash term and permanent
Term life insurance provides for life insurance coverage for a specified term of years for a specified premium The policy does not accumulate cash value
Permanent life insurance is life insurance that remains in force until the policy matures unless the owner fails to pay the premium when due
Whole life insurance provides for a level premium and a cash value table included in the policy guaranteed by the company The primary advantages of whole life are guaranteed death benefits guaranteed cash values fixed and known annual premiums and mortality and expense charges will not reduce the cash value shown in the policy
Universal life insurance (UL) is a relatively new insurance product intended to provide permanent insurance coverage with greater flexibility in premium payment and the potential for a higher internal rate of return A universal life policy includes a cash account Premiums increase the cash account If you want insurance protection only and not a savings and investment product buy a term life insurance policy
If you want to buy a whole life universal life or other cash value policy plan to hold it for at least 15 years Canceling these policies after only a few years can more than double your life insurance costs
23
HISTORY OF LIFE INSURANCE
Risk protection has been a primary goal of humans and institutions throughout history Protecting against risk is what insurance is all aboutOver 5000 years ago in China insurance was seen as a preventative measure against piracy on the sea Piracy in fact was so prevalent that as a way of spreading the risk a number of ships would carry a portion of another ships cargo so that if one ship was captured the entire shipment would not be lostIn another part of the world nearly 4500 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
Life insurance came about a little later in ancient Rome where burial clubs were formed to cover the funeral expenses of its members as well as help survivors monetarily With Romes fall around 450 AD most of the concepts of insurance were abandoned but aspects of it did continue through the Middle Ages particularly with merchant and artisan guilds These provided forms of member insurance covering risks like fire flood theft disability death and even imprisonment
During the feudal period early forms of insurance ebbed with the decline of travel and long-distance trade But during the 14th to 16th centuries transportation commerce and insurance would again reemergeInsurance in India can be traced back to the Vedas For instance yogakshema the name of Life Insurance Corporation of Indias 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
And similar to ancient Rome burial societies were formed in the Buddhist period to help families build houses and to protect widows and children
Modern InsuranceIllegal almost everywhere else in Europe life insurance in England was vigorously promoted in the three decades following the Glorious Revolution of 1688 The type of insurance we see today owes its roots to 17th century England Lloyds of London or as they were known then Lloyds Coffee House was the location where merchants ship owners and underwriters met to discuss and transact business dealsWhile serving as a means of risk-avoidance life insurance also appealed strongly to the gambling instincts of Englands burgeoning middle classGambling was so rampant in fact that when newspapers published names of prominent people who were seriously ill bets were placed at Lloydrsquos on their anticipated dates of death Reacting against such practices 79 merchant underwriters broke away in 1769 and
24
two years later formed a ldquoNew Lloydrsquos Coffee Houserdquo that became known as the ldquoreal Lloydrsquosrdquo Making wagers on peoples deaths ceased in 1774 when parliament forbade the practice
Insurance moves to AmericaThe US insurance industry was built on the British model The year 1735 saw the birth of the first insurance company in the American colonies inCharleston SC The Presbyterian Synod of Philadelphia in 1759 sponsored the first life insurance corporation in America for the benefit of ministers and their dependents And the first life insurance policy for the general public in the United States was issued in Philadelphia on May 22 1761But it wasnt until 80 years later (after 1840) that life insurance really tookoff in a big way The key to its success was reducing the opposition from religious groups
In 1835 the infamous New York fire drew peoples 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
With the creation of the automobile public liability insurance which first made its appearance in the 1880s gained importance and acceptanceMore advancement was made to insurance during the process of industrialization In 1897 the British government passed the Workmens Compensation Act which made it mandatory for a company to insure its employees against industrial accidents
During 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 most labor 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
25
BENEFITS OF LIFE INSURANCE
1) Risk cover -Life Insurance contracts allow an individual to have a risk cover against any unfortunate event of the future
2) Tax Deduction -Under section 80C of the Income Tax Act of 1961 one can get tax deduction on premiums up to one lakh rupees Life Insurance policies thus decrease the total taxable income of an individual
3) Loans -An individual can easily access loans from different financial institutions by pledging his insurance policies
4) Retirement Planning -What had provided protection against the financial consequences of premature death may now be used to help them enjoy their retirement yearsMoreover the cash value can be used as an additional income in the old age
5) Educational Needs -Similar to retirement planning the cash values that flow from ones life insurance schemes can be utilized for educational needs of the insurer or his children
26
ROLE OF LIFE INSURANCE IN THE GROWTH OF THE ECONOMY
The Life Insurance Industry has an enviable track record among public sector units It has a Consistent profit and dividend paying record accompanied by a steady growth in its financial resources Through investments in the Government sector and socially- oriented sectors the Industry has contributed immensely to the nations development The industry is recognized as one of the largest financial Institutions in the country The ventures initiated by the industry in the areas of Mutual Fund
Housing Finance has done exceedingly well in recent years To protect the countrys foreign exchange reserves the reinsurance arrangement are so organized that maximum retention is made possible within the country while at the same time protecting interests of the policy holders
27
ROLE OF IRDA
MISSION
ldquoTo protect the interests of the policyholders to regulate promote
and ensure orderly growth of the insurance industry and for matters
connected therewith or incidental theretordquo
The Insurance Act 1938 had provided for setting up of the Controller of Insurance to act
as a strong and powerful supervisory and regulatory authority for insurance Post
nationalization the role of Controller of Insurance diminished considerably in
significance since the Government owned the insurance companies But the scenario
changed with the private and foreign companies foraying in to the insurance sector This
necessitated the need for a strong independent and autonomous Insurance Regulatory
Authority was felt As the enacting of legislation would have taken time the then
Government constituted through a Government resolution an Interim Insurance
Regulatory Authority pending the enactment of a comprehensive legislation
The Insurance Regulatory and Development Authority Act 1999 is an act to provide for
the establishment of an Authority to protect the interests of holders of insurance policies
to regulate promote and ensure orderly growth of the insurance industry and for matters
connected therewith or incidental thereto and further to amend the Insurance Act 1938
the Life Insurance Corporation Act 1956 and the General insurance Business
(Nationalization) Act 1972 to end the monopoly of the Life Insurance Corporation of
India (for life insurance business) and General Insurance Corporation and its subsidiaries
(for general insurance business) The act extends to the whole of India and will come
into force on such date as the Central Government may by notification in the Official
Gazette specify Different dates may be appointed for different provisions of this Act
28
The Act has defined certain terms some of the most important ones are as follows
Appointed day means the date on which the Authority is established under the act
Authority means the established under this Act Interim Insurance Regulatory Authority
means the Insurance Regulatory Authority set up by the Central Government through
Resolution No 17(2) 94-lns-V dated the 23rd January 1996
Words and expressions used and not defined in this Act but defined in the Insurance Act
1938 or the Life Insurance Corporation Act 1956 or the General Insurance Business
(Nationalization) Act 1972 shall have the meanings respectively assigned to them in
those Acts A new definition of Indian Insurance Company has been inserted Indian
insurance company means any insurer being a company
(a) Which is formed and registered under the Companies Act 1956
(b) in which the aggregate holdings of equity shares by a foreign company either by
itself or through its subsidiary companies or its nominees do not exceed twenty-six
percent paid up capital in such Indian insurance company
(c) Whose sole purpose is to carry on life insurance business general insurance business
or re-insurance business
29
CURRENT SCENERIO
21) CURRENT SCENERIO OF THE INSURANCE INDUSTRY
With largest number of life insurance policies in force in the world insurance happens to be a mega opportunity in India Itrsquos a business growing at the rate of 15-20 per cent annually and presently is of the order of Rs 450 billion Together with banking services it adds about 7 per cent to the countryrsquos GDP Gross premium collection is nearly 2 per cent of GDP and funds available with LIC for investment are 8 per cent of GDP
Yet nearly 80 percent of Indian population is without life insurance cover while health insurance and non-life insurance continues to be below international standards And this part of the population is also subject to weak social security and pension systems with hardly any old age income security This it is an indicator that growth potential for the insurance sector is immense A well-develop and evolved insurance sector is needed for economic development as it provides long term funds for infrastructure development and at the same time strengthens the risk taking ability It is estimated that over the next ten years India would require investments of the order of one trillion US dollar The insurance sector to some extent can enable investment in infrastructure development to sustain economic growth of the country Insurance is a federal subject in India There are two legislation that govern the sector - The Insurance Act-1938 and The IRDA Act-1999
In India insurance is generally considered as a tax-saving device instead of its other implied long term financial benefits Indian people are prone to investing in properties and gold followed by bank deposits They selectively invest in shares also but the percentage is very small Even to this day Life Insurance Corporation of India dominates India insurance sector With the entry of private sector players backed by foreign expertise Indian insurance market has become more vibrant Business is becoming increasingly vulnerable due to wide variety of risk particularly after September 11 2001 disaster in which twin tower located in the hearts of New York city were crashed by terrorist attack resulting in loss of 6000 human lives as well as financial loss to the extent of $45 billion The impact of this terrorist attack has created new horizon of risk to the business world today
However rapid changes in the global economy development of technology and e-business already gathered momentum Increased dependency on technology has originated new risks that have resulted in well-published incidents Computer hackers obtaining credit card information from visa and Power-Gen the love bug virus cyber extortion web content liability professional errors and omissions computers and other crimes and activities such as terrorism kidnapping and companyrsquos executive and extortion of money commercial liability etc have significant impact on business resulting in extreme financial loss commercial embarrassment or regulatory implications
Corporation insurancerisk managers under the circumstances have to demand increasingly complex insurance products They have to be more attentive and
30
knowledgeable about emerging risks how those risks are managed effectively and efficiently and how they could ultimately affect a companyrsquos financial situation and therefore its position in the market place In short how such risks are managed and can give to an insured a competitive advantage
In the changing times adoption of e-commerce into business models the integration of web-based communication and data transfer capabilities into the business operations and leveraging of advanced network and technology architecture for maximum benefit are the new horizon of the risks For the corporate insurancerisks managers these new exposure-cyber-risks-can lead to cyber losses widening the interpretation of what constitute insure property damage particularly as it relates to information technology and dataAll the while organizations are tremendous pressure to reduce expenses and increase profit margin and cannot afford to suffer a property loss of business interruption due to any cause (risk) How a company identifies quantifies qualifies and manages these new risks exposure in addition to the well-known tradition risks is becoming an important factor in creating shareholders value This often means changing the way Everyone in the organization have to think about risk
Insurance managers are seeing price levels (premium) continue to rise-albeit modestly-in todayrsquos primarily commercial property and reinsurance markets They are demanding that insurers improve their risk assessment and quantification offerings so that an insured may avail the benefit in cost (premium rate) on account of well-managed riskThe good news for insurance managers is that as the economy evolves insurers are increasingly matching that evaluation with new products services and capabilities due to opening up the insurance market to the private players
Insurers who are truly listening to their customers and striving to be more in tune with their needs are responding to the fast changing corporate insurance and risk management landscape They are listening to their customers They are making fresh approaches to address the new challenges faced by insured organization by designing the new products as per the needs Insurers are providing value added services to insured to protect the value created by the business
Insurers are increasingly required to develop and expand their information technology platforms to ensure that the vast amount of data they collect about their customers Insurancerisk portfolio can easily and seamlessly be transformed into valuable risk management information To help their customers insurers should make better-informed decisions They must be able to swiftly deliver this data to their customers (insured) anywhere in the world Insurer are also discovering that risk assessment have to be customized to meet policyholdersrsquo new exposures and needs The insurance industry is stepping up and addressing these challenges in several different ways
31
22) CURRENT SCENARIO OF RELIANCE LIFE INSURANCE
RLIC offers wide range of innovative life insurance products targeted at individuals and groups It offers need based products that caters to four distinct segments namely protection child retirement and investment plans RLIC is committed to emerge as a
transnational Life Insurer of global scale and standard
Reliance Life Insurance Company Limited (RLIC) is amongst the fastest growing life insurance companies in India It is also amongst the top four private sector life insurance companies in India (As on FY 2008-2009)
As on March 31 2009 RLIC has an annualized premium of Rs 30 billion with a market share of 103 It has leapfrogged on the growth path and has reached the 4 million policy mark in a short span of within 3 years RLIC has a strong distribution network of 1145 branches with more than 149000 agents
32
Insurancersquos Market Share in Comparison of Other Private company
If we look at the status of Reliance Life Insurancersquos market share in comparison of other
private company in comparison of premium earned-
If we talk the growth of Insurance industryrsquos private players in recent years the data will
reflect-
CH - 3) RESEARCH METHODOLOGY
33
RESEARCH DESIGN-
COMPARITIVE STUDY- A comparative study has been undertaken to compare the traditional Plans of Reliance Life Insurance with that of Bajaj Allianz life insurance
DATA TYPE
INTRODUCTION - Any organization whether big or small private or public needs different type of information to know its popularity I have gathered secondary data and primary data and collected information from the combination of these two data
PRIMARY DATA - Primary data collection method was decided for observing working of the company and approaching the customers directly face to face A great care was taken while collecting the primary data to answer that it is relevant accurate current and unbiased
SECONDARY DATA - Secondary data collection method was used by referring to various websites books and newspapers for collecting information regarding the project under study Secondary data consist of the information that already exists somewhere else for some another purpose
SAMPLING TECHNIQUES-
SAMPLE SIZE- A sample size of 50 was taken to be analyzed
SAMPLE LOCATION-Various sectors of Kamla Nagar Civil lines Mukherji Nagar Model Town and selected areas of Delhi
SAMPLING PROCESS - Convenient sampling was used to overcome the time and money constraints that could have been faced by us while collecting the data The customers were contacted face to face directly and also by way of telephonic conversation with them
ANALYTICAL TOOLS - The data collected were arranged accordingly and statistical tools like bar graphs and pie-charts were used to analyze and present the data
RESEARCH INSTRUMENT USED-
34
SAMPLING MEDIA - Printed questionnaires consisting several questions were asked to have an idea of customers view about Reliance Life Insurance plans followed by personal questions
FIELD WORK - Rigorous field work was undertaken to locate the interested and potential respondents to fulfill the objectives of the study
THE PRIMARY OBJECTIVEOF THE STUDY -
The primary objective of the research study is to have a detailed analysis of Reliance Life Insurance bringing in focus the future prospects of the (Anil Dhirubhai Ambani group) with relevance to the customer perception regarding the various plans and products offered by Reliance Life Insurance
31) DATA ANALYSIS AND INTERPRETATION
35
PERSONAL DETAILS
1) AGE a) 18-30b) 31-50c) 51-65
AGE NO OF RESPONDENTS PERCENTAGE
18-30 21 42
31-50 19 38
51-65 10 20
TOTAL 50 100
INTERPRETATION-The bar graph reveals that 42 of the respondents belong to the age group of 18-30 years 38 lies in the age group of 31-50 years and 20 of them lie in the age group of 51-65 years
2) OCCUPATION
4238
20
05
1015202530354045
NO
O
F
RE
SP
ON
DE
NT
S
18 to 30 31 to 50 51 to 65
AGE (in year)
AGE WISE CLASSIFICATION
36
a) Serviceb) Businessc) Professiond) Housewifee) Retired
OPTION NO OF RESPONDENTS PERCENTAGE
Service 16 32
Business 14 28
Profession 5 10
Housewife 8 16
Retired 7 14
TOTAL 50 100
INTERPRETATION-The above bar graph reveals that 32 of the total respondents were servicemen 28 of them belonged to the business class 10 were professionals 16 were housewives and 14 of the total respondents fall in the retired category
3) INCOME
32
28
10
16
14
0
5
10
15
20
25
30
35
Service Business Profession Housewife Retired
OCCUPATION
OCCUPATION WISE CLASSIFICATION
37
a) 150000-300000
b) 300000-500000
c) Above 500000
OPTION NO OF RESPONDENTS PERCENTAGE
150000-300000 24 48
300000-500000 14 28
Above 500000 12 24
TOTAL 50 100
INTERPRETATION-The above bar graph reveals that out of the total respondents 48 lie in the income group of 150000-300000 28 of the total respondents belonged to the income group of 300000-500000 and 24 lie in the income group of people earning an income of above Rs 500000pa
4828 24
01020304050
N O
OF
RE
SP
ON
DE
NT
S
150000-300000
300000-500000
ABOVE500000
INCOME (in RS)
INCOME WISE CLASSIFICATION
38
4) FAMILY MEMBERS
a) 2b) 3c) 4d) Above 4
OPTION NO OF RESPONDENT PERCENTAGE
2 11 22
3 9 18
4 24 48
Above 4 6 12
TOTAL 50 100
INTERPRETATION The above bar graph shows that 22 of the total respondents had a family of 2 members 18 of them had 3 family members 48 of them had 4 family members and 12 of them had the no of family members above 4
Q1 Where do you prefer to invest
22 18
48
120
1020304050
No
o
f re
spo
nd
ents
2 3 4 Above 4
No of family members
MEMBER WISE CLASSIFICATION
39
a) fixed deposits
b) stock
c) mutual funds
d) insurance
e) others
Option No of respondents Percentage
Fixed deposits 5 10
Stock 10 20
Mutual fund 10 20
Insurance 18 36
others 7 14
TOTAL 50 100
Interpretation The above pie chart shows that out of 50 respondents 10 preferred to invest in fixed deposits 20 in stocks 20 in mutual funds 36 in insurance and 14 in others like property gold etc
Q2 What are your priorities for investment
40
a) protecting your family against pre-mature death
b) wealth creation
c) retirement needs
d) child education and marriage
e) protect income against disability sickness or critical illness
Option No of respondents Percentage
Protecting your family against pre mature death
10 20
Wealth creation 14 28
Retirement needs 5 10
Child education and marriage 7 14
Protect income against disability sickness or critical illness
14 28
TOTAL 50 100
Interpretation The above pie chart shows that out of 50 respondents 20 of them invest for protecting their family against premature death 28 for creating wealth 10 for meeting their future retirement needs 14 for child education amp marriage and 28 for protection against disability and sickness
Q3 What is your main motive behind investing in life insurance
41
a) tax benefit
b) savings
c) risk cover
Option No of respondents Percentage
Tax benefits 27 54
Savings 5 10
Risk cover 18 36
TOTAL 50 100
Interpretation The above pie chart shows that out of the sample respondents 54 have tax benefit 10 have savings and 36 have risk cover as their main motive for making an investment in life
Q4 What kind of investment do you prefer
42
a) high risk high gain
b) low risk low gain
c) moderate
d) vary times to times
Option No of respondents Percentage
High risk high gain 8 16
Low risk low gain 5 10
Moderate 12 24
Vary times to times 25 50
TOTAL 50 100
Interpretation The above pie chart shows that out of 50 respondents 16 preferred high risk- high gain form of investment 10 preferred low risk- low gain form of investment 24 preferred moderate investment and 50 preferred varied form of investment
43
Q5Are you interested to invest in Traditional Plans
a) YES
b) NO
Option No of respondents Percentage
YES 36 72
NO 14 28
TOTAL 50 100
Interpretation The above pie chart shows that 72 of the respondents preferred to invest in Traditional Plans
44
Q6 What is your level of annual investmenta) below 20000
b) 20000-40000
c) above 40000
Option No of respondents Percentage
Below 20000 41 82
20000-40000 7 14
Above 40000 2 4
TOTAL 50 100
Interpretation The above pie chart shows that 82 of the respondents are willing to invest below Rs 20000 per annum 14 of them want to invest within Rs 20000 per annum to Rs 40000 and 4 wanted to invest over and above Rs 40000
45
Q7 What factors would you consider most important before choosing an insurance policy
a) publicity of the company
b) reputation of the company
c) quality of life advisors
d) after sales-supporting of the company
Option No of respondents Percentage
Publicity of the co 5 20
Reputation of the co 25 50
Quality of life advisors 10 10
After sale-services 10 20
TOTAL 50 100
Interpretation out of the sample respondents 20 considers publicity of the company 50 considers reputation of the company 10 considers quality of life advisors and 20 considers after sales support of the company as the most important factor for choosing an insurance company
46
Q8 Which life insurance company would you prefer the most to invest ina) reliance life insurance (RLIC)
b) Bajaj Allianz life insurance
Option No of respondents Percentage
RLIC 21 42
BAJAJ ALLIANZ 29 58
TOTAL 50 100
Interpretation Out of 50 respondents 42 preferred to invest in reliance life insurance over 58 of the respondents who prefer to invest in Bajaj Allianz life insurance
47
Q9 If reliance life insurance then which particular plan you would like to invest ina) Reliance Term Plan
b) Reliance Whole Life Plan
c) Reliance Endowment Plan
d) Reliance Special Endowment Plan
Option No of respondents Percentage
Reliance term plan 6 2858
Reliance whole life plan 3 1428
Reliance endowment plan 9 4286
Reliance special endowment plan 3 1428
TOTAL 21 100
Interpretation Out of 21 respondents 2858 preferred to invest in term plan 1428 in whole life plan 4286 in endowment plan and 1428 of them preferred to invest in special endowment plan of reliance life insurance
48
Q10 If Bajaj Allianz life insurance then which particular plan you would like to invest in
I ENDOWMENT PLAN a) Bajaj Allianz Invest Gain
b) Bajaj Allianz save Care Economy SP
c) Bajaj Allianz life time care
d) Bajaj Allianz Super Saver plan
II MONEY BACK PLAN i Bajaj Allianz Cash Gain plan
Option No of respondents Percentage
Invest gain plan 3 1035
Save care economy SP 6 2069
Life time care 7 2415
Super saver plan 3 1035
Cash gain plan 10 3446
TOTAL 29 100
Interpretation Out of 29 respondents 1035 of them plan to invest in Bajaj Allianz- Invest Gain 2069 wish to invest in Bajaj Allianz save Care Economy SP 2415 want to invest in Bajaj Allianz life time care 1035 in Bajaj Allianz Super Saver plan and 3446 prefer to invest in Bajaj Allianz Cash Gain plan
49
32) SIGNIFICANCE OF STUDY
Life insurance is one of the most rapidly growing sectors in India The main reason
behind the growth can attributed to the high population density improving economical
condition improving education level and improving awareness Due to these factors there
is still huge scope for growth in this sector Like any other business when the
opportunities are present everybody tends to enter the industries This growth hence
fetches the new competitors as well as new strategies from existing players To sustain in
any competitive industry the organization must adapt to existing strategies and adopt
new ones This study will focus on the analysis of Reliance Life Insurance in comparison
with the present scenario of Bajaj Allianz Life Insurance with respect to the Traditional
Plans of both the companyrsquos This will mainly cover the following aspects
To know about the awareness and popularity of various Traditional Plans offered
by Reliance Life Insurance and Bajaj Allianz Life Insurance
How Reliance Life Insurance can develop and sustain a good distribution
network
These will provide it benefit both in terms of better market coverage as well as better
penetration
50
33) SCOPE OF THE STUDY
1) This helps in finding out vast potential of insurance company
2) The study was conducted in National Capital Region (NCR) only
3) The number of respondents to be surveyed can be improved
4) This study was conducted by comparing the performances amp products of three private
amp government insurance players in insurance industry
5) This study was conducted to analyze the market stand of Reliance life insurance
Company limited and Bajaj Allianz Life Insurance Company Limited of India insurance
companies
6) This study is done to eliminate all the myths which people have in their minds
regarding Insurance Sector
51
34) OBJECTIVES
To have a detailed understanding of Reliance Life Insurance and Bajaj Allianz Life Insurance
To find out various reasons considered while investing in policies
To get knowledge about the market exposure and future prospects about Reliance Life Insurance
To know the perception of the consumers about the life insurance
To analyze the Traditional plans of Reliance Life Insurance and compare it with Bajaj Allianz
To know about the brand awareness of Reliance Life Insurance its customer preferences over Bajaj Allianz in the market
To study a proper knowledge about the life insurance industry
To understand the consumer choice while investing in policies
52
CHAPTER 4
DISCUSSION AND FINDINGS OF THE STUDY
FINDINGS OF THE STUDY RECOMMENDATION AND SUGGESTIONS CONCLUSION LIMITATIONS BIBLIOGRAPHY ANNEXUREQUESTIONNAIRE
53
41) FINDINGS OF THE STUDY
1) The survey reveals that still a large proportion of population is interested to invest in other forms of investment other than insurance as still most of them are unaware about the importance of insurance in their life
2) Basically people make varied form of investment for creating wealth to protect their families against pre-mature death and to protect income against disability sickness or critical illness
3) The main motive of the individuals investing is receives benefits US 1010D People generally consider insurance as a tax saving device
4) Mostly people prefer time to time form of investment as they are not willing to take high degree of risk
5) 72 of the respondents are preferred to invest in Traditional Plans
6) Most of the people prefer to make an annual investment up to a maximum of Rs20 000 per annum
7) When the product is like life insurance reputation of the company publicity of the company amp after sale services of the company matters a lot This means that people would choose that insurance company only where the quality of life advisors is satisfactory
8) Most people prefer to invest in Bajaj Allianz Life Insurance as compared to making an investment in Reliance Life Insurance
9) The most preferable Traditional plan of Reliance Life Insurance is Endowment Plan
10) The most preferable plan of Bajaj Allianz Life Insurance co is Cash Gain Plan
54
42) SUGGESTIONS amp RECOMMENDATIONS
Based on the observations of the study some suggestions for the organization are made as
follows
1) Quality of advisors is also as important as the quantity Thus company should go
mainly for qualified professionals
2) Company should increase its budget on publicity so that awareness can be increased
3) Clarity and transparency should be provided to the customer regarding various
products
4) Training sessions should be planned in advance so that schedule can be provided to
the advisor in advance
5) Apart from the Brand Positioning in urban area a strategy should be adopted by
Reliance to make its brand also near to middle level or high aspirant people because they
are the main source of the business in India
6) Awareness Camp to the sub urban area should be focused by Reliance
7) Some innovative technique or product is required in order to attract the consumer
43) LITERATURE REVIEW
55
1) Robi Elenekave has explained in detail why various retirement plans and pension plans donrsquot give the desired returns The main difficulty is the use of incorrect method for calculations done to find out the return on investment This is primarily due to wrong assumptions The study provides information about the various precautions which need to be considered before planning so that the desired results can be achieved
2) Another paper provides insight about how various financial sectors invest in bond market The study was how the different players investment different instruments according to the risk appetite and desired rate of return The study shows that life insurance sector mainly invests in government bond which are low return and low risk instrument The investment in government bond it shows that life insurance companies are more conservative in investment
3) K Subhash has presented the history of Indiarsquos life insurance industry in three stages before independence after independence and post liberalization which not only provides information but also help in analyzing the impact of these major changes The authors have also discussed the huge potential which exists in the rural India The insurance company must realize the importance of rural sector because the future lies there The author commented about the increasing share of private player in the existing market This confirms the availability of opportunity in this sector The paper also provides the importance of professional and focused approach which was given no importance
4) Tapen Sinha has discussed the various challenges and opportunities in the insurance market One of the very important factors which have been discussed in the study is the importance of developing new and better products As the scenario changes the need of an individual also changes so any organization must understand and fulfill these needs The new product development requires constant research so organization must also focus on it
5) Roger G Ibbotson discusses how financial planners and advisors have recently started to recognize that human capital must be taken into account when building optimal portfolios for individual investors Any investorrsquos human capital has a unique mortality risk However life insurance in its forms can hedge against this mortality risk Thus human capital affects both the optimal asset allocation and the optimal demand for life insurance This paper provides a unified framework based on human capital in order to enable individual investors to make both decisions jointly
6) Rakesh Niraj study tells how the flow of information in any organization is important For any organization to grow the flow of information must be good both upwards as well as ownwards The proper flow of information will also ensure proper flow of good and services from organization to customer and proper flow of information from customer to organization The information from customers will help the organization in providing better goods and services to the customer For the above purpose organization must ensure good channel partner who can provide the organization with correct feedback Hence it becomes very important for any organization to acquire good channel partners
56
7) Stephen P Robbins has discussed how group dynamics works in any organization The success of any organization depends on the success of its various teams and how these teams work together The book provides various techniques which can be used by any organization to get result from the team effort The conflict resolution is a major task in any group Various techniques which the organization can use in conflict resolution are also discussed Another important aspect covered is the importance of leadership in the organization The various forms of leadership have been discussed and the kinds of leadership which can be effective in particular situations are also discussed
8) R Wayne Mondy has discussed the importance of training and development in any organization The training provides skills to perform the current job where as the development involve learning beyond present need The various type of training are discussed which can be used according to the requirement Training and development are not only important for better performance of an individual but it also gives satisfaction The major factors which influence training and development are found to be management support commitment of trainee and trainer complexity of the organization The process of developing good training plans is also provided In another part author has discussed the importance of right man for right job The compensation strategies are also given which are very crucial for ant industry
9) Philip Kotler has discussed the importance of channels partners Better the channel partners better will be the delivery model Detailed discussion about how to design the channel structure so that all the requirements could be fulfilled is provided The various issues faced by the organization while managing the channels are also given When an organization has more than one channel it becomes very important that all the channels should be integrated in such a way that the organization get the best out of all At times due to the conflicting benefit of the different channels the conflict arise so various strategies to manage these issues is also discussed in the chapter
10) Michael J Etzel has written about the marketing of services The marketing of services is different from the goods because of the characteristic of service like intangibility inseparability heterogeneity etc Brief about pricing strategies is also given in case of services The authors have also given the impact of technological development on the services marketing The author has also given the importance of brand and after sales support in case of services as perception of the customers plays an important role In other part of the book the authors has described the importance of distribution channels and designing of the same A channel partner should be consider as partner according to discussion The legal complications associated with channels are also discussed These complications are necessary to take into the consideration while managing the channels The conflicting interest of channels both horizontally and vertically are also taken into the consideration
57
11) Boone has discussed about the importance of personal financial planning The concept of time value of money has also been elaborated The importance of creating and implementing budget is given under money management The other important concepts for financial planning like credit management and understanding taxes are also explained In one section the authors have discussed the importance of investment and what should be the major considerations while making any investment The considerations include the risk associated with the investment return on the investment etc The importance and benefits of life insurance has also been given The discussion also includes various legal aspects associated with life insurance The overview of retirement planning is also given which includes importance and benefit of retirement planning Various tools for proper retirement planning are also discussed
58
44) CONCLUSION
1) The customers are very much sensitive towards their investment They would like to invest only in that insurance company which enjoys good public image along with quality good services
2) The result of the survey conducted shows that Bajaj Allianz Life Insurance is the leader in life insurance industry but Reliance Life Insurance and other private players are giving it a close competition
3) The motive of the people behind investing in life insurance is the tax benefits that they would receive under sec 80C and 1010D
4) In Life Insurance industry the after sales support of the company is as important as the quality of life advisors
59
45) LIMITATIONS
There were some limitations faced during the study as discussed below
Since the study was taken for two months so there was a constraint of time and effort
The study was limited only to some of the Delhi regions so the results may be biased
Questionnaire was given to 125 people however only 50 responded to it which is very small for such type of study
The biasness of consumer or responses error cannot be eliminated
Most of the people are not aware about the Importance and the necessity of insurance in their life
Adverse perception of the people towards insurance sector- People consider insurance as a tax saving device
Lack of awareness about the earning opportunity in the insurance sector
60
46) BIBLIOGRAPHY
wwwreliancelifeinsurancecom
wwwadagroupcom
wwwirdacom
wwwbajajallianzlifeinsurancecom
wwwallianzbajajcom
47) ANNEXURE
61
QUESTIONNAIRE
A comparative analysis of consumer perception regarding Traditional plans of Reliance Life Insurance with that of Bajaj Allianz Life Insurance
NAME ___________________________
PERSONAL DETAILS
1) AGE_________________
1) OCCUPATION______________
2) INCOME___________________
3) FAMILY MEMBERS_________
Q1 Where do you prefer to investa) Fixed deposits b) Stock c) Mutual funds d) Insurance e) Others
Q2 What are your priorities for investmenta) Protecting your family against pre-mature death b) Wealth creation c) Retirement needs d) Child education and marriage e) Protect income against disability sickness or critical illness
Q3 What is your main motive behind investing in life insurancea) Tax benefit b) Savings c) Risk cover
Q4 What kind of investment do you prefera) High risk high gain b) Low risk low gain c) Moderate d) Vary times to times
62
Q5Are you interested to invest in Traditional Plansa) Yes b) No
Q6 What is your level of annual investmenta) below 20000 b) 20000-40000 c) above 40000
Q7 What factors would you consider most important before choosing an insurance company
a) publicity of the company b) reputation of the company c) quality of life advisors d) after sales-supporting of the company
Q8 Which life insurance company would you prefer the most to invest ina) Reliance life insurance b) Bajaj Allianz life insurance
Q9 If reliance life insurance then which particular plan you would like to invest ina) Reliance Term Plan b) Reliance Whole Life Plan c) Reliance Endowment Plan d) Reliance Special Endowment Plan
Q10 If Bajaj Allianz life insurance then which particular plan you would like to invest in
I ENDOWMENT PLAN
a) Bajaj Allianz Invest Gain
b) Bajaj Allianz save Care Economy SP
c) Bajaj Allianz life time care
d) Bajaj Allianz Super Saver plan
II MONEY BACK PLAN
a) Bajaj Allianz Cash Gain plan
63
64
- COMPANY PROFILE
- ABOUT RELIANCE LIFE INSURANCE
- HISTORY
- Reliance Capital Limited announced the launch of its life insurance business on February 1 2006 This was after obtaining the required regulatory approvals from the Registrar Of Companies and the Insurance Regulatory and Development Authority
- It was in August 2005 that the ball was set rolling when Reliance Capital Limited the financial arm of Reliance ndash Anil Dhirubhai Ambani Group (ADAG) ndash announced the requisition of 100 shareholding in AMP Sanmar Life Insurance Company Limited and the formal transfer of shares took place in October 2005 The company will issue all policy contracts under the Reliance Life Insurance Company limited name All the existing policy contracts also stand transferred to the Reliance Life Insurance entity with all the original contractual terms and commitments intact
- CORE VALUES
- Reliance Life Insurance Company Limited has some core values which are listed as follows
- Vision bull To be the first choice insurer for customers bull To be the preferred employer for staff in the insurance industry bull To be the number one insurer for creating shareholder value
- Mission As a responsible customer focused market leader we will strive to understand the insurance needs of the consumers and translate it into affordable products that deliver value for money
- 12) TRADITIONAL PLANS OF THE COMPANY
- 12A )TRADITIONAL PLAN OF RELIANCE LIFE INSURANCE-
- Life insurance products are designed to suit the requirements of customers Fundamentally the product provide for
- In every product to a certain degree risk cover is imperative for it to fall under the category of insurance Based on the coverage of the product the premiums are calculated and the customer pays accordingly In order to suggest the right product it is essential for an agent to understand the requirements of the customer well
- The traditional plans of the company have the following features-
- Fixed Tenure
- Potential for better returns
- Transparency
- Flexibility in investment
- Flexibility to invest more
- Flexibility to skip the premium
- Flexibility to choose the cover
- High liquidity
- Age term and sum assured decide the amount of premium
- Top- ups and switches are not allowed
- Reliance Life Insurance Company Limited has offered 9
- 1) Reliance term plan-
- 2) Reliance Whole Life Plan -
- 3) Reliance Endowment Plan -
- 4) Reliance Special Endowment Plan -
- 13) INDUSTRY PROFILE
- MEANING OF INSURANCE
- Insurance may be described as a social device to reduce or eliminate risk of loss to life and property Insurance is a collective bearing of risk Insurance is a financial device to spread the risks and losses of few people among a large number of people as people prefer small fixed liability instead of big uncertain and changing liability
- Insurance can be defined as a ldquolegal contract between two parties whereby one party called insurer undertakes to pay a fixed amount of money on the happening of a particular event which may be certain or uncertainrdquo The other party called insured pays in exchange a fixed sum known as premium
- Insurance is desired to safeguard oneself and onersquos family against possible losses on account of risks and perils It provides financial compensation for the losses suffered due to the happening of any unforeseen events
- IMPORTANCE OF INSURANCE
- Insurance services play predominant role in the process of financial Intermediary Today insurance industry is one of the most growing sectors in India There is lot of potential in the Indian Insurance Industry
- There are many issues which require study The scope of the study of Insurance industry of India would be very great as there are ongoing Developments in the industry after the opening of the sector
- Right now the insurance industry has great opportunities in a country like India or China which huge population Also the penetration of insurance in India is very low in both life and non-life segment so there is lot potential to be tapped Before starting the discussion on insurance industry and related issues we have to start with the basics of insurance So first we understand what is insurance How the word lsquoinsurancersquo is different from the word lsquoassurancersquo Etc
- HISTORY OF INSURANCE
- The concept of insurance is believed to have emerged almost 4500 years ago in the ancient land of Babylonia where traders used to bear risk of the carvan by giving loans which were later repaid with interest when the goods arrived safely
- The concept of insurance as we know today took shape in 1688 at a place called Lloydrsquos Coffee House in London where risk bearers used to meet to transact business This coffee house became so popular that Lloydrsquos became the one of the first modern insurance companies by the end of the eighteenth century
- Marine insurance companies came into existence by the end of the eighteenth century These companies were empowered to write fire and life insurance as well as marine The Great Fire of London in 1966 caused huge loss of property and life With a view to providing fire insurance facilities
- Dr Nicholas Barbon set up in 1967 the first fire insurance company known as the Fire office
- Life insurance in its modern form came to India from England in 1818 The Oriental Life Insurance Company was the first insurance company to be set up in India to help the widows of European community The insurance companies which came into existence between 1818 and 1869 treated
- Indian lives as subnormal and charged an extra premium of 15 to 20 per cent The first Indian insurance company the Bombay Mutual Life
- Assurance Society came into existence in 1870 to cover Indian lives at normal rates
- The Insurance Act 1938 the first comprehensive legislation governing both life and non-life branches of insurance were enacted to provide strict state control over insurance business This amended insurance Act looked into investments expenditure and management of these companies
- By the mid- 1950s there were 154 Indian insurers 16 foreign insurers and 75 provident societies carrying on life insurance business in India Insurance business flourished and so did scams irregularities and dubious investment practices by scores of companies As a result the government decided to nationalize the life assurance business in India The Life Insurance
- Corporation of India (LIC) was set up in 1956 The nationalization of life insurance was followed by general insurance in 1972
- MEANING OF LIFE INSURANCE
- There are three parties in a life insurance transaction the insurer the insured and the owner of the policy (policyholder) although the owner and the insured are often the same person
- Another important person involved in a life insurance policy is the beneficiary The beneficiary is the person or persons who will receive the policy proceeds upon the death of the insured
- Life insurance may be divided into two basic classes ndash term and permanent
- HISTORY OF LIFE INSURANCE
- Risk protection has been a primary goal of humans and institutions throughout history Protecting against risk is what insurance is all about
- Over 5000 years ago in China insurance was seen as a preventative measure against piracy on the sea Piracy in fact was so prevalent that as a way of spreading the risk a number of ships would carry a portion of another ships cargo so that if one ship was captured the entire shipment would not be lost
- In another part of the world nearly 4500 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
- Life insurance came about a little later in ancient Rome where burial clubs were formed to cover the funeral expenses of its members as well as help survivors monetarily With Romes fall around 450 AD most of the concepts of insurance were abandoned but aspects of it did continue through the Middle Ages particularly with merchant and artisan guilds These provided forms of member insurance covering risks like fire flood theft disability death and even imprisonment
- During the feudal period early forms of insurance ebbed with the decline of travel and long-distance trade But during the 14th to 16th centuries transportation commerce and insurance would again reemerge
- And similar to ancient Rome burial societies were formed in the Buddhist period to help families build houses and to protect widows and children
- Modern Insurance
- Illegal almost everywhere else in Europe life insurance in England was vigorously promoted in the three decades following the Glorious Revolution of 1688 The type of insurance we see today owes its roots to 17th century England Lloyds of London or as they were known then Lloyds Coffee House was the location where merchants ship owners and underwriters met to discuss and transact business deals
- While serving as a means of risk-avoidance life insurance also appealed strongly to the gambling instincts of Englands burgeoning middle class
- Gambling was so rampant in fact that when newspapers published names of prominent people who were seriously ill bets were placed at Lloydrsquos on their anticipated dates of death Reacting against such practices 79 merchant underwriters broke away in 1769 and two years later formed a ldquoNew Lloydrsquos Coffee Houserdquo that became known as the ldquoreal Lloydrsquosrdquo Making wagers on peoples deaths ceased in 1774 when parliament forbade the practice
- Insurance moves to America
- The US insurance industry was built on the British model The year 1735 saw the birth of the first insurance company in the American colonies in
- Charleston SC The Presbyterian Synod of Philadelphia in 1759 sponsored the first life insurance corporation in America for the benefit of ministers and their dependents And the first life insurance policy for the general public in the United States was issued in Philadelphia on May 22 1761
- But it wasnt until 80 years later (after 1840) that life insurance really tookoff in a big way The key to its success was reducing the opposition from religious groups
- In 1835 the infamous New York fire drew peoples 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
- With the creation of the automobile public liability insurance which first made its appearance in the 1880s gained importance and acceptance
- More advancement was made to insurance during the process of industrialization In 1897 the British government passed the Workmens Compensation Act which made it mandatory for a company to insure its employees against industrial accidents
- During 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 most labor 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
- BENEFITS OF LIFE INSURANCE
- 1) Risk cover -Life Insurance contracts allow an individual to have a risk cover against any unfortunate event of the future
- 2) Tax Deduction -Under section 80C of the Income Tax Act of 1961 one can get tax deduction on premiums up to one lakh rupees Life Insurance policies thus decrease the total taxable income of an individual
- 3) Loans -An individual can easily access loans from different financial institutions by pledging his insurance policies
- 4) Retirement Planning -What had provided protection against the financial consequences of premature death may now be used to help them enjoy their retirement years
- 5) Educational Needs -Similar to retirement planning the cash values that flow from ones life insurance schemes can be utilized for educational needs of the insurer or his children
- The Life Insurance Industry has an enviable track record among public sector units It has a Consistent profit and dividend paying record accompanied by a steady growth in its financial resources Through investments in the Government sector and socially- oriented sectors the Industry has contributed immensely to the nations development The industry is recognized as one of the largest financial Institutions in the country The ventures initiated by the industry in the areas of Mutual Fund
- Housing Finance has done exceedingly well in recent years To protect the countrys foreign exchange reserves the reinsurance arrangement are so organized that maximum retention is made possible within the country while at the same time protecting interests of the policy holders
- 22) CURRENT SCENARIO OF RELIANCE LIFE INSURANCE
- RLIC offers wide range of innovative life insurance products targeted at individuals and groups It offers need based products that caters to four distinct segments namely protection child retirement and investment plans RLIC is committed to emerge as a transnational Life Insurer of global scale and standard
- CH - 3) RESEARCH METHODOLOGY
- RESEARCH DESIGN-
- SAMPLING TECHNIQUES-
- THE PRIMARY OBJECTIVEOF THE STUDY-
- 34) OBJECTIVES
- 7) Some innovative technique or product is required in order to attract the consumer
- 45) LIMITATIONS
- 46) BIBLIOGRAPHY
-
HISTORY OF INSURANCE
The concept of insurance is believed to have emerged almost 4500 years ago in the ancient land of Babylonia where traders used to bear risk of the carvan by giving loans which were later repaid with interest when the goods arrived safely
The concept of insurance as we know today took shape in 1688 at a place called Lloydrsquos Coffee House in London where risk bearers used to meet to transact business This coffee house became so popular that Lloydrsquos became the one of the first modern insurance companies by the end of the eighteenth centuryMarine insurance companies came into existence by the end of the eighteenth century These companies were empowered to write fire and life insurance as well as marine The Great Fire of London in 1966 caused huge loss of property and life With a view to providing fire insurance facilitiesDr Nicholas Barbon set up in 1967 the first fire insurance company known as the Fire office
Life insurance in its modern form came to India from England in 1818 The Oriental Life Insurance Company was the first insurance company to be set up in India to help the widows of European community The insurance companies which came into existence between 1818 and 1869 treatedIndian lives as subnormal and charged an extra premium of 15 to 20 per cent The first Indian insurance company the Bombay Mutual LifeAssurance Society came into existence in 1870 to cover Indian lives at normal rates
The Insurance Act 1938 the first comprehensive legislation governing both life and non-life branches of insurance were enacted to provide strict state control over insurance business This amended insurance Act looked into investments expenditure and management of these companiesBy the mid- 1950s there were 154 Indian insurers 16 foreign insurers and 75 provident societies carrying on life insurance business in India Insurance business flourished and so did scams irregularities and dubious investment practices by scores of companies As a result the government decided to nationalize the life assurance business in India The Life InsuranceCorporation of India (LIC) was set up in 1956 The nationalization of life insurance was followed by general insurance in 1972
22
MEANING OF LIFE INSURANCE
There are three parties in a life insurance transaction the insurer the insured and the owner of the policy (policyholder) although the owner and the insured are often the same person
Another important person involved in a life insurance policy is the beneficiary The beneficiary is the person or persons who will receive the policy proceeds upon the death of the insured
Life insurance may be divided into two basic classes ndash term and permanent
Term life insurance provides for life insurance coverage for a specified term of years for a specified premium The policy does not accumulate cash value
Permanent life insurance is life insurance that remains in force until the policy matures unless the owner fails to pay the premium when due
Whole life insurance provides for a level premium and a cash value table included in the policy guaranteed by the company The primary advantages of whole life are guaranteed death benefits guaranteed cash values fixed and known annual premiums and mortality and expense charges will not reduce the cash value shown in the policy
Universal life insurance (UL) is a relatively new insurance product intended to provide permanent insurance coverage with greater flexibility in premium payment and the potential for a higher internal rate of return A universal life policy includes a cash account Premiums increase the cash account If you want insurance protection only and not a savings and investment product buy a term life insurance policy
If you want to buy a whole life universal life or other cash value policy plan to hold it for at least 15 years Canceling these policies after only a few years can more than double your life insurance costs
23
HISTORY OF LIFE INSURANCE
Risk protection has been a primary goal of humans and institutions throughout history Protecting against risk is what insurance is all aboutOver 5000 years ago in China insurance was seen as a preventative measure against piracy on the sea Piracy in fact was so prevalent that as a way of spreading the risk a number of ships would carry a portion of another ships cargo so that if one ship was captured the entire shipment would not be lostIn another part of the world nearly 4500 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
Life insurance came about a little later in ancient Rome where burial clubs were formed to cover the funeral expenses of its members as well as help survivors monetarily With Romes fall around 450 AD most of the concepts of insurance were abandoned but aspects of it did continue through the Middle Ages particularly with merchant and artisan guilds These provided forms of member insurance covering risks like fire flood theft disability death and even imprisonment
During the feudal period early forms of insurance ebbed with the decline of travel and long-distance trade But during the 14th to 16th centuries transportation commerce and insurance would again reemergeInsurance in India can be traced back to the Vedas For instance yogakshema the name of Life Insurance Corporation of Indias 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
And similar to ancient Rome burial societies were formed in the Buddhist period to help families build houses and to protect widows and children
Modern InsuranceIllegal almost everywhere else in Europe life insurance in England was vigorously promoted in the three decades following the Glorious Revolution of 1688 The type of insurance we see today owes its roots to 17th century England Lloyds of London or as they were known then Lloyds Coffee House was the location where merchants ship owners and underwriters met to discuss and transact business dealsWhile serving as a means of risk-avoidance life insurance also appealed strongly to the gambling instincts of Englands burgeoning middle classGambling was so rampant in fact that when newspapers published names of prominent people who were seriously ill bets were placed at Lloydrsquos on their anticipated dates of death Reacting against such practices 79 merchant underwriters broke away in 1769 and
24
two years later formed a ldquoNew Lloydrsquos Coffee Houserdquo that became known as the ldquoreal Lloydrsquosrdquo Making wagers on peoples deaths ceased in 1774 when parliament forbade the practice
Insurance moves to AmericaThe US insurance industry was built on the British model The year 1735 saw the birth of the first insurance company in the American colonies inCharleston SC The Presbyterian Synod of Philadelphia in 1759 sponsored the first life insurance corporation in America for the benefit of ministers and their dependents And the first life insurance policy for the general public in the United States was issued in Philadelphia on May 22 1761But it wasnt until 80 years later (after 1840) that life insurance really tookoff in a big way The key to its success was reducing the opposition from religious groups
In 1835 the infamous New York fire drew peoples 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
With the creation of the automobile public liability insurance which first made its appearance in the 1880s gained importance and acceptanceMore advancement was made to insurance during the process of industrialization In 1897 the British government passed the Workmens Compensation Act which made it mandatory for a company to insure its employees against industrial accidents
During 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 most labor 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
25
BENEFITS OF LIFE INSURANCE
1) Risk cover -Life Insurance contracts allow an individual to have a risk cover against any unfortunate event of the future
2) Tax Deduction -Under section 80C of the Income Tax Act of 1961 one can get tax deduction on premiums up to one lakh rupees Life Insurance policies thus decrease the total taxable income of an individual
3) Loans -An individual can easily access loans from different financial institutions by pledging his insurance policies
4) Retirement Planning -What had provided protection against the financial consequences of premature death may now be used to help them enjoy their retirement yearsMoreover the cash value can be used as an additional income in the old age
5) Educational Needs -Similar to retirement planning the cash values that flow from ones life insurance schemes can be utilized for educational needs of the insurer or his children
26
ROLE OF LIFE INSURANCE IN THE GROWTH OF THE ECONOMY
The Life Insurance Industry has an enviable track record among public sector units It has a Consistent profit and dividend paying record accompanied by a steady growth in its financial resources Through investments in the Government sector and socially- oriented sectors the Industry has contributed immensely to the nations development The industry is recognized as one of the largest financial Institutions in the country The ventures initiated by the industry in the areas of Mutual Fund
Housing Finance has done exceedingly well in recent years To protect the countrys foreign exchange reserves the reinsurance arrangement are so organized that maximum retention is made possible within the country while at the same time protecting interests of the policy holders
27
ROLE OF IRDA
MISSION
ldquoTo protect the interests of the policyholders to regulate promote
and ensure orderly growth of the insurance industry and for matters
connected therewith or incidental theretordquo
The Insurance Act 1938 had provided for setting up of the Controller of Insurance to act
as a strong and powerful supervisory and regulatory authority for insurance Post
nationalization the role of Controller of Insurance diminished considerably in
significance since the Government owned the insurance companies But the scenario
changed with the private and foreign companies foraying in to the insurance sector This
necessitated the need for a strong independent and autonomous Insurance Regulatory
Authority was felt As the enacting of legislation would have taken time the then
Government constituted through a Government resolution an Interim Insurance
Regulatory Authority pending the enactment of a comprehensive legislation
The Insurance Regulatory and Development Authority Act 1999 is an act to provide for
the establishment of an Authority to protect the interests of holders of insurance policies
to regulate promote and ensure orderly growth of the insurance industry and for matters
connected therewith or incidental thereto and further to amend the Insurance Act 1938
the Life Insurance Corporation Act 1956 and the General insurance Business
(Nationalization) Act 1972 to end the monopoly of the Life Insurance Corporation of
India (for life insurance business) and General Insurance Corporation and its subsidiaries
(for general insurance business) The act extends to the whole of India and will come
into force on such date as the Central Government may by notification in the Official
Gazette specify Different dates may be appointed for different provisions of this Act
28
The Act has defined certain terms some of the most important ones are as follows
Appointed day means the date on which the Authority is established under the act
Authority means the established under this Act Interim Insurance Regulatory Authority
means the Insurance Regulatory Authority set up by the Central Government through
Resolution No 17(2) 94-lns-V dated the 23rd January 1996
Words and expressions used and not defined in this Act but defined in the Insurance Act
1938 or the Life Insurance Corporation Act 1956 or the General Insurance Business
(Nationalization) Act 1972 shall have the meanings respectively assigned to them in
those Acts A new definition of Indian Insurance Company has been inserted Indian
insurance company means any insurer being a company
(a) Which is formed and registered under the Companies Act 1956
(b) in which the aggregate holdings of equity shares by a foreign company either by
itself or through its subsidiary companies or its nominees do not exceed twenty-six
percent paid up capital in such Indian insurance company
(c) Whose sole purpose is to carry on life insurance business general insurance business
or re-insurance business
29
CURRENT SCENERIO
21) CURRENT SCENERIO OF THE INSURANCE INDUSTRY
With largest number of life insurance policies in force in the world insurance happens to be a mega opportunity in India Itrsquos a business growing at the rate of 15-20 per cent annually and presently is of the order of Rs 450 billion Together with banking services it adds about 7 per cent to the countryrsquos GDP Gross premium collection is nearly 2 per cent of GDP and funds available with LIC for investment are 8 per cent of GDP
Yet nearly 80 percent of Indian population is without life insurance cover while health insurance and non-life insurance continues to be below international standards And this part of the population is also subject to weak social security and pension systems with hardly any old age income security This it is an indicator that growth potential for the insurance sector is immense A well-develop and evolved insurance sector is needed for economic development as it provides long term funds for infrastructure development and at the same time strengthens the risk taking ability It is estimated that over the next ten years India would require investments of the order of one trillion US dollar The insurance sector to some extent can enable investment in infrastructure development to sustain economic growth of the country Insurance is a federal subject in India There are two legislation that govern the sector - The Insurance Act-1938 and The IRDA Act-1999
In India insurance is generally considered as a tax-saving device instead of its other implied long term financial benefits Indian people are prone to investing in properties and gold followed by bank deposits They selectively invest in shares also but the percentage is very small Even to this day Life Insurance Corporation of India dominates India insurance sector With the entry of private sector players backed by foreign expertise Indian insurance market has become more vibrant Business is becoming increasingly vulnerable due to wide variety of risk particularly after September 11 2001 disaster in which twin tower located in the hearts of New York city were crashed by terrorist attack resulting in loss of 6000 human lives as well as financial loss to the extent of $45 billion The impact of this terrorist attack has created new horizon of risk to the business world today
However rapid changes in the global economy development of technology and e-business already gathered momentum Increased dependency on technology has originated new risks that have resulted in well-published incidents Computer hackers obtaining credit card information from visa and Power-Gen the love bug virus cyber extortion web content liability professional errors and omissions computers and other crimes and activities such as terrorism kidnapping and companyrsquos executive and extortion of money commercial liability etc have significant impact on business resulting in extreme financial loss commercial embarrassment or regulatory implications
Corporation insurancerisk managers under the circumstances have to demand increasingly complex insurance products They have to be more attentive and
30
knowledgeable about emerging risks how those risks are managed effectively and efficiently and how they could ultimately affect a companyrsquos financial situation and therefore its position in the market place In short how such risks are managed and can give to an insured a competitive advantage
In the changing times adoption of e-commerce into business models the integration of web-based communication and data transfer capabilities into the business operations and leveraging of advanced network and technology architecture for maximum benefit are the new horizon of the risks For the corporate insurancerisks managers these new exposure-cyber-risks-can lead to cyber losses widening the interpretation of what constitute insure property damage particularly as it relates to information technology and dataAll the while organizations are tremendous pressure to reduce expenses and increase profit margin and cannot afford to suffer a property loss of business interruption due to any cause (risk) How a company identifies quantifies qualifies and manages these new risks exposure in addition to the well-known tradition risks is becoming an important factor in creating shareholders value This often means changing the way Everyone in the organization have to think about risk
Insurance managers are seeing price levels (premium) continue to rise-albeit modestly-in todayrsquos primarily commercial property and reinsurance markets They are demanding that insurers improve their risk assessment and quantification offerings so that an insured may avail the benefit in cost (premium rate) on account of well-managed riskThe good news for insurance managers is that as the economy evolves insurers are increasingly matching that evaluation with new products services and capabilities due to opening up the insurance market to the private players
Insurers who are truly listening to their customers and striving to be more in tune with their needs are responding to the fast changing corporate insurance and risk management landscape They are listening to their customers They are making fresh approaches to address the new challenges faced by insured organization by designing the new products as per the needs Insurers are providing value added services to insured to protect the value created by the business
Insurers are increasingly required to develop and expand their information technology platforms to ensure that the vast amount of data they collect about their customers Insurancerisk portfolio can easily and seamlessly be transformed into valuable risk management information To help their customers insurers should make better-informed decisions They must be able to swiftly deliver this data to their customers (insured) anywhere in the world Insurer are also discovering that risk assessment have to be customized to meet policyholdersrsquo new exposures and needs The insurance industry is stepping up and addressing these challenges in several different ways
31
22) CURRENT SCENARIO OF RELIANCE LIFE INSURANCE
RLIC offers wide range of innovative life insurance products targeted at individuals and groups It offers need based products that caters to four distinct segments namely protection child retirement and investment plans RLIC is committed to emerge as a
transnational Life Insurer of global scale and standard
Reliance Life Insurance Company Limited (RLIC) is amongst the fastest growing life insurance companies in India It is also amongst the top four private sector life insurance companies in India (As on FY 2008-2009)
As on March 31 2009 RLIC has an annualized premium of Rs 30 billion with a market share of 103 It has leapfrogged on the growth path and has reached the 4 million policy mark in a short span of within 3 years RLIC has a strong distribution network of 1145 branches with more than 149000 agents
32
Insurancersquos Market Share in Comparison of Other Private company
If we look at the status of Reliance Life Insurancersquos market share in comparison of other
private company in comparison of premium earned-
If we talk the growth of Insurance industryrsquos private players in recent years the data will
reflect-
CH - 3) RESEARCH METHODOLOGY
33
RESEARCH DESIGN-
COMPARITIVE STUDY- A comparative study has been undertaken to compare the traditional Plans of Reliance Life Insurance with that of Bajaj Allianz life insurance
DATA TYPE
INTRODUCTION - Any organization whether big or small private or public needs different type of information to know its popularity I have gathered secondary data and primary data and collected information from the combination of these two data
PRIMARY DATA - Primary data collection method was decided for observing working of the company and approaching the customers directly face to face A great care was taken while collecting the primary data to answer that it is relevant accurate current and unbiased
SECONDARY DATA - Secondary data collection method was used by referring to various websites books and newspapers for collecting information regarding the project under study Secondary data consist of the information that already exists somewhere else for some another purpose
SAMPLING TECHNIQUES-
SAMPLE SIZE- A sample size of 50 was taken to be analyzed
SAMPLE LOCATION-Various sectors of Kamla Nagar Civil lines Mukherji Nagar Model Town and selected areas of Delhi
SAMPLING PROCESS - Convenient sampling was used to overcome the time and money constraints that could have been faced by us while collecting the data The customers were contacted face to face directly and also by way of telephonic conversation with them
ANALYTICAL TOOLS - The data collected were arranged accordingly and statistical tools like bar graphs and pie-charts were used to analyze and present the data
RESEARCH INSTRUMENT USED-
34
SAMPLING MEDIA - Printed questionnaires consisting several questions were asked to have an idea of customers view about Reliance Life Insurance plans followed by personal questions
FIELD WORK - Rigorous field work was undertaken to locate the interested and potential respondents to fulfill the objectives of the study
THE PRIMARY OBJECTIVEOF THE STUDY -
The primary objective of the research study is to have a detailed analysis of Reliance Life Insurance bringing in focus the future prospects of the (Anil Dhirubhai Ambani group) with relevance to the customer perception regarding the various plans and products offered by Reliance Life Insurance
31) DATA ANALYSIS AND INTERPRETATION
35
PERSONAL DETAILS
1) AGE a) 18-30b) 31-50c) 51-65
AGE NO OF RESPONDENTS PERCENTAGE
18-30 21 42
31-50 19 38
51-65 10 20
TOTAL 50 100
INTERPRETATION-The bar graph reveals that 42 of the respondents belong to the age group of 18-30 years 38 lies in the age group of 31-50 years and 20 of them lie in the age group of 51-65 years
2) OCCUPATION
4238
20
05
1015202530354045
NO
O
F
RE
SP
ON
DE
NT
S
18 to 30 31 to 50 51 to 65
AGE (in year)
AGE WISE CLASSIFICATION
36
a) Serviceb) Businessc) Professiond) Housewifee) Retired
OPTION NO OF RESPONDENTS PERCENTAGE
Service 16 32
Business 14 28
Profession 5 10
Housewife 8 16
Retired 7 14
TOTAL 50 100
INTERPRETATION-The above bar graph reveals that 32 of the total respondents were servicemen 28 of them belonged to the business class 10 were professionals 16 were housewives and 14 of the total respondents fall in the retired category
3) INCOME
32
28
10
16
14
0
5
10
15
20
25
30
35
Service Business Profession Housewife Retired
OCCUPATION
OCCUPATION WISE CLASSIFICATION
37
a) 150000-300000
b) 300000-500000
c) Above 500000
OPTION NO OF RESPONDENTS PERCENTAGE
150000-300000 24 48
300000-500000 14 28
Above 500000 12 24
TOTAL 50 100
INTERPRETATION-The above bar graph reveals that out of the total respondents 48 lie in the income group of 150000-300000 28 of the total respondents belonged to the income group of 300000-500000 and 24 lie in the income group of people earning an income of above Rs 500000pa
4828 24
01020304050
N O
OF
RE
SP
ON
DE
NT
S
150000-300000
300000-500000
ABOVE500000
INCOME (in RS)
INCOME WISE CLASSIFICATION
38
4) FAMILY MEMBERS
a) 2b) 3c) 4d) Above 4
OPTION NO OF RESPONDENT PERCENTAGE
2 11 22
3 9 18
4 24 48
Above 4 6 12
TOTAL 50 100
INTERPRETATION The above bar graph shows that 22 of the total respondents had a family of 2 members 18 of them had 3 family members 48 of them had 4 family members and 12 of them had the no of family members above 4
Q1 Where do you prefer to invest
22 18
48
120
1020304050
No
o
f re
spo
nd
ents
2 3 4 Above 4
No of family members
MEMBER WISE CLASSIFICATION
39
a) fixed deposits
b) stock
c) mutual funds
d) insurance
e) others
Option No of respondents Percentage
Fixed deposits 5 10
Stock 10 20
Mutual fund 10 20
Insurance 18 36
others 7 14
TOTAL 50 100
Interpretation The above pie chart shows that out of 50 respondents 10 preferred to invest in fixed deposits 20 in stocks 20 in mutual funds 36 in insurance and 14 in others like property gold etc
Q2 What are your priorities for investment
40
a) protecting your family against pre-mature death
b) wealth creation
c) retirement needs
d) child education and marriage
e) protect income against disability sickness or critical illness
Option No of respondents Percentage
Protecting your family against pre mature death
10 20
Wealth creation 14 28
Retirement needs 5 10
Child education and marriage 7 14
Protect income against disability sickness or critical illness
14 28
TOTAL 50 100
Interpretation The above pie chart shows that out of 50 respondents 20 of them invest for protecting their family against premature death 28 for creating wealth 10 for meeting their future retirement needs 14 for child education amp marriage and 28 for protection against disability and sickness
Q3 What is your main motive behind investing in life insurance
41
a) tax benefit
b) savings
c) risk cover
Option No of respondents Percentage
Tax benefits 27 54
Savings 5 10
Risk cover 18 36
TOTAL 50 100
Interpretation The above pie chart shows that out of the sample respondents 54 have tax benefit 10 have savings and 36 have risk cover as their main motive for making an investment in life
Q4 What kind of investment do you prefer
42
a) high risk high gain
b) low risk low gain
c) moderate
d) vary times to times
Option No of respondents Percentage
High risk high gain 8 16
Low risk low gain 5 10
Moderate 12 24
Vary times to times 25 50
TOTAL 50 100
Interpretation The above pie chart shows that out of 50 respondents 16 preferred high risk- high gain form of investment 10 preferred low risk- low gain form of investment 24 preferred moderate investment and 50 preferred varied form of investment
43
Q5Are you interested to invest in Traditional Plans
a) YES
b) NO
Option No of respondents Percentage
YES 36 72
NO 14 28
TOTAL 50 100
Interpretation The above pie chart shows that 72 of the respondents preferred to invest in Traditional Plans
44
Q6 What is your level of annual investmenta) below 20000
b) 20000-40000
c) above 40000
Option No of respondents Percentage
Below 20000 41 82
20000-40000 7 14
Above 40000 2 4
TOTAL 50 100
Interpretation The above pie chart shows that 82 of the respondents are willing to invest below Rs 20000 per annum 14 of them want to invest within Rs 20000 per annum to Rs 40000 and 4 wanted to invest over and above Rs 40000
45
Q7 What factors would you consider most important before choosing an insurance policy
a) publicity of the company
b) reputation of the company
c) quality of life advisors
d) after sales-supporting of the company
Option No of respondents Percentage
Publicity of the co 5 20
Reputation of the co 25 50
Quality of life advisors 10 10
After sale-services 10 20
TOTAL 50 100
Interpretation out of the sample respondents 20 considers publicity of the company 50 considers reputation of the company 10 considers quality of life advisors and 20 considers after sales support of the company as the most important factor for choosing an insurance company
46
Q8 Which life insurance company would you prefer the most to invest ina) reliance life insurance (RLIC)
b) Bajaj Allianz life insurance
Option No of respondents Percentage
RLIC 21 42
BAJAJ ALLIANZ 29 58
TOTAL 50 100
Interpretation Out of 50 respondents 42 preferred to invest in reliance life insurance over 58 of the respondents who prefer to invest in Bajaj Allianz life insurance
47
Q9 If reliance life insurance then which particular plan you would like to invest ina) Reliance Term Plan
b) Reliance Whole Life Plan
c) Reliance Endowment Plan
d) Reliance Special Endowment Plan
Option No of respondents Percentage
Reliance term plan 6 2858
Reliance whole life plan 3 1428
Reliance endowment plan 9 4286
Reliance special endowment plan 3 1428
TOTAL 21 100
Interpretation Out of 21 respondents 2858 preferred to invest in term plan 1428 in whole life plan 4286 in endowment plan and 1428 of them preferred to invest in special endowment plan of reliance life insurance
48
Q10 If Bajaj Allianz life insurance then which particular plan you would like to invest in
I ENDOWMENT PLAN a) Bajaj Allianz Invest Gain
b) Bajaj Allianz save Care Economy SP
c) Bajaj Allianz life time care
d) Bajaj Allianz Super Saver plan
II MONEY BACK PLAN i Bajaj Allianz Cash Gain plan
Option No of respondents Percentage
Invest gain plan 3 1035
Save care economy SP 6 2069
Life time care 7 2415
Super saver plan 3 1035
Cash gain plan 10 3446
TOTAL 29 100
Interpretation Out of 29 respondents 1035 of them plan to invest in Bajaj Allianz- Invest Gain 2069 wish to invest in Bajaj Allianz save Care Economy SP 2415 want to invest in Bajaj Allianz life time care 1035 in Bajaj Allianz Super Saver plan and 3446 prefer to invest in Bajaj Allianz Cash Gain plan
49
32) SIGNIFICANCE OF STUDY
Life insurance is one of the most rapidly growing sectors in India The main reason
behind the growth can attributed to the high population density improving economical
condition improving education level and improving awareness Due to these factors there
is still huge scope for growth in this sector Like any other business when the
opportunities are present everybody tends to enter the industries This growth hence
fetches the new competitors as well as new strategies from existing players To sustain in
any competitive industry the organization must adapt to existing strategies and adopt
new ones This study will focus on the analysis of Reliance Life Insurance in comparison
with the present scenario of Bajaj Allianz Life Insurance with respect to the Traditional
Plans of both the companyrsquos This will mainly cover the following aspects
To know about the awareness and popularity of various Traditional Plans offered
by Reliance Life Insurance and Bajaj Allianz Life Insurance
How Reliance Life Insurance can develop and sustain a good distribution
network
These will provide it benefit both in terms of better market coverage as well as better
penetration
50
33) SCOPE OF THE STUDY
1) This helps in finding out vast potential of insurance company
2) The study was conducted in National Capital Region (NCR) only
3) The number of respondents to be surveyed can be improved
4) This study was conducted by comparing the performances amp products of three private
amp government insurance players in insurance industry
5) This study was conducted to analyze the market stand of Reliance life insurance
Company limited and Bajaj Allianz Life Insurance Company Limited of India insurance
companies
6) This study is done to eliminate all the myths which people have in their minds
regarding Insurance Sector
51
34) OBJECTIVES
To have a detailed understanding of Reliance Life Insurance and Bajaj Allianz Life Insurance
To find out various reasons considered while investing in policies
To get knowledge about the market exposure and future prospects about Reliance Life Insurance
To know the perception of the consumers about the life insurance
To analyze the Traditional plans of Reliance Life Insurance and compare it with Bajaj Allianz
To know about the brand awareness of Reliance Life Insurance its customer preferences over Bajaj Allianz in the market
To study a proper knowledge about the life insurance industry
To understand the consumer choice while investing in policies
52
CHAPTER 4
DISCUSSION AND FINDINGS OF THE STUDY
FINDINGS OF THE STUDY RECOMMENDATION AND SUGGESTIONS CONCLUSION LIMITATIONS BIBLIOGRAPHY ANNEXUREQUESTIONNAIRE
53
41) FINDINGS OF THE STUDY
1) The survey reveals that still a large proportion of population is interested to invest in other forms of investment other than insurance as still most of them are unaware about the importance of insurance in their life
2) Basically people make varied form of investment for creating wealth to protect their families against pre-mature death and to protect income against disability sickness or critical illness
3) The main motive of the individuals investing is receives benefits US 1010D People generally consider insurance as a tax saving device
4) Mostly people prefer time to time form of investment as they are not willing to take high degree of risk
5) 72 of the respondents are preferred to invest in Traditional Plans
6) Most of the people prefer to make an annual investment up to a maximum of Rs20 000 per annum
7) When the product is like life insurance reputation of the company publicity of the company amp after sale services of the company matters a lot This means that people would choose that insurance company only where the quality of life advisors is satisfactory
8) Most people prefer to invest in Bajaj Allianz Life Insurance as compared to making an investment in Reliance Life Insurance
9) The most preferable Traditional plan of Reliance Life Insurance is Endowment Plan
10) The most preferable plan of Bajaj Allianz Life Insurance co is Cash Gain Plan
54
42) SUGGESTIONS amp RECOMMENDATIONS
Based on the observations of the study some suggestions for the organization are made as
follows
1) Quality of advisors is also as important as the quantity Thus company should go
mainly for qualified professionals
2) Company should increase its budget on publicity so that awareness can be increased
3) Clarity and transparency should be provided to the customer regarding various
products
4) Training sessions should be planned in advance so that schedule can be provided to
the advisor in advance
5) Apart from the Brand Positioning in urban area a strategy should be adopted by
Reliance to make its brand also near to middle level or high aspirant people because they
are the main source of the business in India
6) Awareness Camp to the sub urban area should be focused by Reliance
7) Some innovative technique or product is required in order to attract the consumer
43) LITERATURE REVIEW
55
1) Robi Elenekave has explained in detail why various retirement plans and pension plans donrsquot give the desired returns The main difficulty is the use of incorrect method for calculations done to find out the return on investment This is primarily due to wrong assumptions The study provides information about the various precautions which need to be considered before planning so that the desired results can be achieved
2) Another paper provides insight about how various financial sectors invest in bond market The study was how the different players investment different instruments according to the risk appetite and desired rate of return The study shows that life insurance sector mainly invests in government bond which are low return and low risk instrument The investment in government bond it shows that life insurance companies are more conservative in investment
3) K Subhash has presented the history of Indiarsquos life insurance industry in three stages before independence after independence and post liberalization which not only provides information but also help in analyzing the impact of these major changes The authors have also discussed the huge potential which exists in the rural India The insurance company must realize the importance of rural sector because the future lies there The author commented about the increasing share of private player in the existing market This confirms the availability of opportunity in this sector The paper also provides the importance of professional and focused approach which was given no importance
4) Tapen Sinha has discussed the various challenges and opportunities in the insurance market One of the very important factors which have been discussed in the study is the importance of developing new and better products As the scenario changes the need of an individual also changes so any organization must understand and fulfill these needs The new product development requires constant research so organization must also focus on it
5) Roger G Ibbotson discusses how financial planners and advisors have recently started to recognize that human capital must be taken into account when building optimal portfolios for individual investors Any investorrsquos human capital has a unique mortality risk However life insurance in its forms can hedge against this mortality risk Thus human capital affects both the optimal asset allocation and the optimal demand for life insurance This paper provides a unified framework based on human capital in order to enable individual investors to make both decisions jointly
6) Rakesh Niraj study tells how the flow of information in any organization is important For any organization to grow the flow of information must be good both upwards as well as ownwards The proper flow of information will also ensure proper flow of good and services from organization to customer and proper flow of information from customer to organization The information from customers will help the organization in providing better goods and services to the customer For the above purpose organization must ensure good channel partner who can provide the organization with correct feedback Hence it becomes very important for any organization to acquire good channel partners
56
7) Stephen P Robbins has discussed how group dynamics works in any organization The success of any organization depends on the success of its various teams and how these teams work together The book provides various techniques which can be used by any organization to get result from the team effort The conflict resolution is a major task in any group Various techniques which the organization can use in conflict resolution are also discussed Another important aspect covered is the importance of leadership in the organization The various forms of leadership have been discussed and the kinds of leadership which can be effective in particular situations are also discussed
8) R Wayne Mondy has discussed the importance of training and development in any organization The training provides skills to perform the current job where as the development involve learning beyond present need The various type of training are discussed which can be used according to the requirement Training and development are not only important for better performance of an individual but it also gives satisfaction The major factors which influence training and development are found to be management support commitment of trainee and trainer complexity of the organization The process of developing good training plans is also provided In another part author has discussed the importance of right man for right job The compensation strategies are also given which are very crucial for ant industry
9) Philip Kotler has discussed the importance of channels partners Better the channel partners better will be the delivery model Detailed discussion about how to design the channel structure so that all the requirements could be fulfilled is provided The various issues faced by the organization while managing the channels are also given When an organization has more than one channel it becomes very important that all the channels should be integrated in such a way that the organization get the best out of all At times due to the conflicting benefit of the different channels the conflict arise so various strategies to manage these issues is also discussed in the chapter
10) Michael J Etzel has written about the marketing of services The marketing of services is different from the goods because of the characteristic of service like intangibility inseparability heterogeneity etc Brief about pricing strategies is also given in case of services The authors have also given the impact of technological development on the services marketing The author has also given the importance of brand and after sales support in case of services as perception of the customers plays an important role In other part of the book the authors has described the importance of distribution channels and designing of the same A channel partner should be consider as partner according to discussion The legal complications associated with channels are also discussed These complications are necessary to take into the consideration while managing the channels The conflicting interest of channels both horizontally and vertically are also taken into the consideration
57
11) Boone has discussed about the importance of personal financial planning The concept of time value of money has also been elaborated The importance of creating and implementing budget is given under money management The other important concepts for financial planning like credit management and understanding taxes are also explained In one section the authors have discussed the importance of investment and what should be the major considerations while making any investment The considerations include the risk associated with the investment return on the investment etc The importance and benefits of life insurance has also been given The discussion also includes various legal aspects associated with life insurance The overview of retirement planning is also given which includes importance and benefit of retirement planning Various tools for proper retirement planning are also discussed
58
44) CONCLUSION
1) The customers are very much sensitive towards their investment They would like to invest only in that insurance company which enjoys good public image along with quality good services
2) The result of the survey conducted shows that Bajaj Allianz Life Insurance is the leader in life insurance industry but Reliance Life Insurance and other private players are giving it a close competition
3) The motive of the people behind investing in life insurance is the tax benefits that they would receive under sec 80C and 1010D
4) In Life Insurance industry the after sales support of the company is as important as the quality of life advisors
59
45) LIMITATIONS
There were some limitations faced during the study as discussed below
Since the study was taken for two months so there was a constraint of time and effort
The study was limited only to some of the Delhi regions so the results may be biased
Questionnaire was given to 125 people however only 50 responded to it which is very small for such type of study
The biasness of consumer or responses error cannot be eliminated
Most of the people are not aware about the Importance and the necessity of insurance in their life
Adverse perception of the people towards insurance sector- People consider insurance as a tax saving device
Lack of awareness about the earning opportunity in the insurance sector
60
46) BIBLIOGRAPHY
wwwreliancelifeinsurancecom
wwwadagroupcom
wwwirdacom
wwwbajajallianzlifeinsurancecom
wwwallianzbajajcom
47) ANNEXURE
61
QUESTIONNAIRE
A comparative analysis of consumer perception regarding Traditional plans of Reliance Life Insurance with that of Bajaj Allianz Life Insurance
NAME ___________________________
PERSONAL DETAILS
1) AGE_________________
1) OCCUPATION______________
2) INCOME___________________
3) FAMILY MEMBERS_________
Q1 Where do you prefer to investa) Fixed deposits b) Stock c) Mutual funds d) Insurance e) Others
Q2 What are your priorities for investmenta) Protecting your family against pre-mature death b) Wealth creation c) Retirement needs d) Child education and marriage e) Protect income against disability sickness or critical illness
Q3 What is your main motive behind investing in life insurancea) Tax benefit b) Savings c) Risk cover
Q4 What kind of investment do you prefera) High risk high gain b) Low risk low gain c) Moderate d) Vary times to times
62
Q5Are you interested to invest in Traditional Plansa) Yes b) No
Q6 What is your level of annual investmenta) below 20000 b) 20000-40000 c) above 40000
Q7 What factors would you consider most important before choosing an insurance company
a) publicity of the company b) reputation of the company c) quality of life advisors d) after sales-supporting of the company
Q8 Which life insurance company would you prefer the most to invest ina) Reliance life insurance b) Bajaj Allianz life insurance
Q9 If reliance life insurance then which particular plan you would like to invest ina) Reliance Term Plan b) Reliance Whole Life Plan c) Reliance Endowment Plan d) Reliance Special Endowment Plan
Q10 If Bajaj Allianz life insurance then which particular plan you would like to invest in
I ENDOWMENT PLAN
a) Bajaj Allianz Invest Gain
b) Bajaj Allianz save Care Economy SP
c) Bajaj Allianz life time care
d) Bajaj Allianz Super Saver plan
II MONEY BACK PLAN
a) Bajaj Allianz Cash Gain plan
63
64
- COMPANY PROFILE
- ABOUT RELIANCE LIFE INSURANCE
- HISTORY
- Reliance Capital Limited announced the launch of its life insurance business on February 1 2006 This was after obtaining the required regulatory approvals from the Registrar Of Companies and the Insurance Regulatory and Development Authority
- It was in August 2005 that the ball was set rolling when Reliance Capital Limited the financial arm of Reliance ndash Anil Dhirubhai Ambani Group (ADAG) ndash announced the requisition of 100 shareholding in AMP Sanmar Life Insurance Company Limited and the formal transfer of shares took place in October 2005 The company will issue all policy contracts under the Reliance Life Insurance Company limited name All the existing policy contracts also stand transferred to the Reliance Life Insurance entity with all the original contractual terms and commitments intact
- CORE VALUES
- Reliance Life Insurance Company Limited has some core values which are listed as follows
- Vision bull To be the first choice insurer for customers bull To be the preferred employer for staff in the insurance industry bull To be the number one insurer for creating shareholder value
- Mission As a responsible customer focused market leader we will strive to understand the insurance needs of the consumers and translate it into affordable products that deliver value for money
- 12) TRADITIONAL PLANS OF THE COMPANY
- 12A )TRADITIONAL PLAN OF RELIANCE LIFE INSURANCE-
- Life insurance products are designed to suit the requirements of customers Fundamentally the product provide for
- In every product to a certain degree risk cover is imperative for it to fall under the category of insurance Based on the coverage of the product the premiums are calculated and the customer pays accordingly In order to suggest the right product it is essential for an agent to understand the requirements of the customer well
- The traditional plans of the company have the following features-
- Fixed Tenure
- Potential for better returns
- Transparency
- Flexibility in investment
- Flexibility to invest more
- Flexibility to skip the premium
- Flexibility to choose the cover
- High liquidity
- Age term and sum assured decide the amount of premium
- Top- ups and switches are not allowed
- Reliance Life Insurance Company Limited has offered 9
- 1) Reliance term plan-
- 2) Reliance Whole Life Plan -
- 3) Reliance Endowment Plan -
- 4) Reliance Special Endowment Plan -
- 13) INDUSTRY PROFILE
- MEANING OF INSURANCE
- Insurance may be described as a social device to reduce or eliminate risk of loss to life and property Insurance is a collective bearing of risk Insurance is a financial device to spread the risks and losses of few people among a large number of people as people prefer small fixed liability instead of big uncertain and changing liability
- Insurance can be defined as a ldquolegal contract between two parties whereby one party called insurer undertakes to pay a fixed amount of money on the happening of a particular event which may be certain or uncertainrdquo The other party called insured pays in exchange a fixed sum known as premium
- Insurance is desired to safeguard oneself and onersquos family against possible losses on account of risks and perils It provides financial compensation for the losses suffered due to the happening of any unforeseen events
- IMPORTANCE OF INSURANCE
- Insurance services play predominant role in the process of financial Intermediary Today insurance industry is one of the most growing sectors in India There is lot of potential in the Indian Insurance Industry
- There are many issues which require study The scope of the study of Insurance industry of India would be very great as there are ongoing Developments in the industry after the opening of the sector
- Right now the insurance industry has great opportunities in a country like India or China which huge population Also the penetration of insurance in India is very low in both life and non-life segment so there is lot potential to be tapped Before starting the discussion on insurance industry and related issues we have to start with the basics of insurance So first we understand what is insurance How the word lsquoinsurancersquo is different from the word lsquoassurancersquo Etc
- HISTORY OF INSURANCE
- The concept of insurance is believed to have emerged almost 4500 years ago in the ancient land of Babylonia where traders used to bear risk of the carvan by giving loans which were later repaid with interest when the goods arrived safely
- The concept of insurance as we know today took shape in 1688 at a place called Lloydrsquos Coffee House in London where risk bearers used to meet to transact business This coffee house became so popular that Lloydrsquos became the one of the first modern insurance companies by the end of the eighteenth century
- Marine insurance companies came into existence by the end of the eighteenth century These companies were empowered to write fire and life insurance as well as marine The Great Fire of London in 1966 caused huge loss of property and life With a view to providing fire insurance facilities
- Dr Nicholas Barbon set up in 1967 the first fire insurance company known as the Fire office
- Life insurance in its modern form came to India from England in 1818 The Oriental Life Insurance Company was the first insurance company to be set up in India to help the widows of European community The insurance companies which came into existence between 1818 and 1869 treated
- Indian lives as subnormal and charged an extra premium of 15 to 20 per cent The first Indian insurance company the Bombay Mutual Life
- Assurance Society came into existence in 1870 to cover Indian lives at normal rates
- The Insurance Act 1938 the first comprehensive legislation governing both life and non-life branches of insurance were enacted to provide strict state control over insurance business This amended insurance Act looked into investments expenditure and management of these companies
- By the mid- 1950s there were 154 Indian insurers 16 foreign insurers and 75 provident societies carrying on life insurance business in India Insurance business flourished and so did scams irregularities and dubious investment practices by scores of companies As a result the government decided to nationalize the life assurance business in India The Life Insurance
- Corporation of India (LIC) was set up in 1956 The nationalization of life insurance was followed by general insurance in 1972
- MEANING OF LIFE INSURANCE
- There are three parties in a life insurance transaction the insurer the insured and the owner of the policy (policyholder) although the owner and the insured are often the same person
- Another important person involved in a life insurance policy is the beneficiary The beneficiary is the person or persons who will receive the policy proceeds upon the death of the insured
- Life insurance may be divided into two basic classes ndash term and permanent
- HISTORY OF LIFE INSURANCE
- Risk protection has been a primary goal of humans and institutions throughout history Protecting against risk is what insurance is all about
- Over 5000 years ago in China insurance was seen as a preventative measure against piracy on the sea Piracy in fact was so prevalent that as a way of spreading the risk a number of ships would carry a portion of another ships cargo so that if one ship was captured the entire shipment would not be lost
- In another part of the world nearly 4500 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
- Life insurance came about a little later in ancient Rome where burial clubs were formed to cover the funeral expenses of its members as well as help survivors monetarily With Romes fall around 450 AD most of the concepts of insurance were abandoned but aspects of it did continue through the Middle Ages particularly with merchant and artisan guilds These provided forms of member insurance covering risks like fire flood theft disability death and even imprisonment
- During the feudal period early forms of insurance ebbed with the decline of travel and long-distance trade But during the 14th to 16th centuries transportation commerce and insurance would again reemerge
- And similar to ancient Rome burial societies were formed in the Buddhist period to help families build houses and to protect widows and children
- Modern Insurance
- Illegal almost everywhere else in Europe life insurance in England was vigorously promoted in the three decades following the Glorious Revolution of 1688 The type of insurance we see today owes its roots to 17th century England Lloyds of London or as they were known then Lloyds Coffee House was the location where merchants ship owners and underwriters met to discuss and transact business deals
- While serving as a means of risk-avoidance life insurance also appealed strongly to the gambling instincts of Englands burgeoning middle class
- Gambling was so rampant in fact that when newspapers published names of prominent people who were seriously ill bets were placed at Lloydrsquos on their anticipated dates of death Reacting against such practices 79 merchant underwriters broke away in 1769 and two years later formed a ldquoNew Lloydrsquos Coffee Houserdquo that became known as the ldquoreal Lloydrsquosrdquo Making wagers on peoples deaths ceased in 1774 when parliament forbade the practice
- Insurance moves to America
- The US insurance industry was built on the British model The year 1735 saw the birth of the first insurance company in the American colonies in
- Charleston SC The Presbyterian Synod of Philadelphia in 1759 sponsored the first life insurance corporation in America for the benefit of ministers and their dependents And the first life insurance policy for the general public in the United States was issued in Philadelphia on May 22 1761
- But it wasnt until 80 years later (after 1840) that life insurance really tookoff in a big way The key to its success was reducing the opposition from religious groups
- In 1835 the infamous New York fire drew peoples 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
- With the creation of the automobile public liability insurance which first made its appearance in the 1880s gained importance and acceptance
- More advancement was made to insurance during the process of industrialization In 1897 the British government passed the Workmens Compensation Act which made it mandatory for a company to insure its employees against industrial accidents
- During 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 most labor 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
- BENEFITS OF LIFE INSURANCE
- 1) Risk cover -Life Insurance contracts allow an individual to have a risk cover against any unfortunate event of the future
- 2) Tax Deduction -Under section 80C of the Income Tax Act of 1961 one can get tax deduction on premiums up to one lakh rupees Life Insurance policies thus decrease the total taxable income of an individual
- 3) Loans -An individual can easily access loans from different financial institutions by pledging his insurance policies
- 4) Retirement Planning -What had provided protection against the financial consequences of premature death may now be used to help them enjoy their retirement years
- 5) Educational Needs -Similar to retirement planning the cash values that flow from ones life insurance schemes can be utilized for educational needs of the insurer or his children
- The Life Insurance Industry has an enviable track record among public sector units It has a Consistent profit and dividend paying record accompanied by a steady growth in its financial resources Through investments in the Government sector and socially- oriented sectors the Industry has contributed immensely to the nations development The industry is recognized as one of the largest financial Institutions in the country The ventures initiated by the industry in the areas of Mutual Fund
- Housing Finance has done exceedingly well in recent years To protect the countrys foreign exchange reserves the reinsurance arrangement are so organized that maximum retention is made possible within the country while at the same time protecting interests of the policy holders
- 22) CURRENT SCENARIO OF RELIANCE LIFE INSURANCE
- RLIC offers wide range of innovative life insurance products targeted at individuals and groups It offers need based products that caters to four distinct segments namely protection child retirement and investment plans RLIC is committed to emerge as a transnational Life Insurer of global scale and standard
- CH - 3) RESEARCH METHODOLOGY
- RESEARCH DESIGN-
- SAMPLING TECHNIQUES-
- THE PRIMARY OBJECTIVEOF THE STUDY-
- 34) OBJECTIVES
- 7) Some innovative technique or product is required in order to attract the consumer
- 45) LIMITATIONS
- 46) BIBLIOGRAPHY
-
MEANING OF LIFE INSURANCE
There are three parties in a life insurance transaction the insurer the insured and the owner of the policy (policyholder) although the owner and the insured are often the same person
Another important person involved in a life insurance policy is the beneficiary The beneficiary is the person or persons who will receive the policy proceeds upon the death of the insured
Life insurance may be divided into two basic classes ndash term and permanent
Term life insurance provides for life insurance coverage for a specified term of years for a specified premium The policy does not accumulate cash value
Permanent life insurance is life insurance that remains in force until the policy matures unless the owner fails to pay the premium when due
Whole life insurance provides for a level premium and a cash value table included in the policy guaranteed by the company The primary advantages of whole life are guaranteed death benefits guaranteed cash values fixed and known annual premiums and mortality and expense charges will not reduce the cash value shown in the policy
Universal life insurance (UL) is a relatively new insurance product intended to provide permanent insurance coverage with greater flexibility in premium payment and the potential for a higher internal rate of return A universal life policy includes a cash account Premiums increase the cash account If you want insurance protection only and not a savings and investment product buy a term life insurance policy
If you want to buy a whole life universal life or other cash value policy plan to hold it for at least 15 years Canceling these policies after only a few years can more than double your life insurance costs
23
HISTORY OF LIFE INSURANCE
Risk protection has been a primary goal of humans and institutions throughout history Protecting against risk is what insurance is all aboutOver 5000 years ago in China insurance was seen as a preventative measure against piracy on the sea Piracy in fact was so prevalent that as a way of spreading the risk a number of ships would carry a portion of another ships cargo so that if one ship was captured the entire shipment would not be lostIn another part of the world nearly 4500 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
Life insurance came about a little later in ancient Rome where burial clubs were formed to cover the funeral expenses of its members as well as help survivors monetarily With Romes fall around 450 AD most of the concepts of insurance were abandoned but aspects of it did continue through the Middle Ages particularly with merchant and artisan guilds These provided forms of member insurance covering risks like fire flood theft disability death and even imprisonment
During the feudal period early forms of insurance ebbed with the decline of travel and long-distance trade But during the 14th to 16th centuries transportation commerce and insurance would again reemergeInsurance in India can be traced back to the Vedas For instance yogakshema the name of Life Insurance Corporation of Indias 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
And similar to ancient Rome burial societies were formed in the Buddhist period to help families build houses and to protect widows and children
Modern InsuranceIllegal almost everywhere else in Europe life insurance in England was vigorously promoted in the three decades following the Glorious Revolution of 1688 The type of insurance we see today owes its roots to 17th century England Lloyds of London or as they were known then Lloyds Coffee House was the location where merchants ship owners and underwriters met to discuss and transact business dealsWhile serving as a means of risk-avoidance life insurance also appealed strongly to the gambling instincts of Englands burgeoning middle classGambling was so rampant in fact that when newspapers published names of prominent people who were seriously ill bets were placed at Lloydrsquos on their anticipated dates of death Reacting against such practices 79 merchant underwriters broke away in 1769 and
24
two years later formed a ldquoNew Lloydrsquos Coffee Houserdquo that became known as the ldquoreal Lloydrsquosrdquo Making wagers on peoples deaths ceased in 1774 when parliament forbade the practice
Insurance moves to AmericaThe US insurance industry was built on the British model The year 1735 saw the birth of the first insurance company in the American colonies inCharleston SC The Presbyterian Synod of Philadelphia in 1759 sponsored the first life insurance corporation in America for the benefit of ministers and their dependents And the first life insurance policy for the general public in the United States was issued in Philadelphia on May 22 1761But it wasnt until 80 years later (after 1840) that life insurance really tookoff in a big way The key to its success was reducing the opposition from religious groups
In 1835 the infamous New York fire drew peoples 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
With the creation of the automobile public liability insurance which first made its appearance in the 1880s gained importance and acceptanceMore advancement was made to insurance during the process of industrialization In 1897 the British government passed the Workmens Compensation Act which made it mandatory for a company to insure its employees against industrial accidents
During 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 most labor 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
25
BENEFITS OF LIFE INSURANCE
1) Risk cover -Life Insurance contracts allow an individual to have a risk cover against any unfortunate event of the future
2) Tax Deduction -Under section 80C of the Income Tax Act of 1961 one can get tax deduction on premiums up to one lakh rupees Life Insurance policies thus decrease the total taxable income of an individual
3) Loans -An individual can easily access loans from different financial institutions by pledging his insurance policies
4) Retirement Planning -What had provided protection against the financial consequences of premature death may now be used to help them enjoy their retirement yearsMoreover the cash value can be used as an additional income in the old age
5) Educational Needs -Similar to retirement planning the cash values that flow from ones life insurance schemes can be utilized for educational needs of the insurer or his children
26
ROLE OF LIFE INSURANCE IN THE GROWTH OF THE ECONOMY
The Life Insurance Industry has an enviable track record among public sector units It has a Consistent profit and dividend paying record accompanied by a steady growth in its financial resources Through investments in the Government sector and socially- oriented sectors the Industry has contributed immensely to the nations development The industry is recognized as one of the largest financial Institutions in the country The ventures initiated by the industry in the areas of Mutual Fund
Housing Finance has done exceedingly well in recent years To protect the countrys foreign exchange reserves the reinsurance arrangement are so organized that maximum retention is made possible within the country while at the same time protecting interests of the policy holders
27
ROLE OF IRDA
MISSION
ldquoTo protect the interests of the policyholders to regulate promote
and ensure orderly growth of the insurance industry and for matters
connected therewith or incidental theretordquo
The Insurance Act 1938 had provided for setting up of the Controller of Insurance to act
as a strong and powerful supervisory and regulatory authority for insurance Post
nationalization the role of Controller of Insurance diminished considerably in
significance since the Government owned the insurance companies But the scenario
changed with the private and foreign companies foraying in to the insurance sector This
necessitated the need for a strong independent and autonomous Insurance Regulatory
Authority was felt As the enacting of legislation would have taken time the then
Government constituted through a Government resolution an Interim Insurance
Regulatory Authority pending the enactment of a comprehensive legislation
The Insurance Regulatory and Development Authority Act 1999 is an act to provide for
the establishment of an Authority to protect the interests of holders of insurance policies
to regulate promote and ensure orderly growth of the insurance industry and for matters
connected therewith or incidental thereto and further to amend the Insurance Act 1938
the Life Insurance Corporation Act 1956 and the General insurance Business
(Nationalization) Act 1972 to end the monopoly of the Life Insurance Corporation of
India (for life insurance business) and General Insurance Corporation and its subsidiaries
(for general insurance business) The act extends to the whole of India and will come
into force on such date as the Central Government may by notification in the Official
Gazette specify Different dates may be appointed for different provisions of this Act
28
The Act has defined certain terms some of the most important ones are as follows
Appointed day means the date on which the Authority is established under the act
Authority means the established under this Act Interim Insurance Regulatory Authority
means the Insurance Regulatory Authority set up by the Central Government through
Resolution No 17(2) 94-lns-V dated the 23rd January 1996
Words and expressions used and not defined in this Act but defined in the Insurance Act
1938 or the Life Insurance Corporation Act 1956 or the General Insurance Business
(Nationalization) Act 1972 shall have the meanings respectively assigned to them in
those Acts A new definition of Indian Insurance Company has been inserted Indian
insurance company means any insurer being a company
(a) Which is formed and registered under the Companies Act 1956
(b) in which the aggregate holdings of equity shares by a foreign company either by
itself or through its subsidiary companies or its nominees do not exceed twenty-six
percent paid up capital in such Indian insurance company
(c) Whose sole purpose is to carry on life insurance business general insurance business
or re-insurance business
29
CURRENT SCENERIO
21) CURRENT SCENERIO OF THE INSURANCE INDUSTRY
With largest number of life insurance policies in force in the world insurance happens to be a mega opportunity in India Itrsquos a business growing at the rate of 15-20 per cent annually and presently is of the order of Rs 450 billion Together with banking services it adds about 7 per cent to the countryrsquos GDP Gross premium collection is nearly 2 per cent of GDP and funds available with LIC for investment are 8 per cent of GDP
Yet nearly 80 percent of Indian population is without life insurance cover while health insurance and non-life insurance continues to be below international standards And this part of the population is also subject to weak social security and pension systems with hardly any old age income security This it is an indicator that growth potential for the insurance sector is immense A well-develop and evolved insurance sector is needed for economic development as it provides long term funds for infrastructure development and at the same time strengthens the risk taking ability It is estimated that over the next ten years India would require investments of the order of one trillion US dollar The insurance sector to some extent can enable investment in infrastructure development to sustain economic growth of the country Insurance is a federal subject in India There are two legislation that govern the sector - The Insurance Act-1938 and The IRDA Act-1999
In India insurance is generally considered as a tax-saving device instead of its other implied long term financial benefits Indian people are prone to investing in properties and gold followed by bank deposits They selectively invest in shares also but the percentage is very small Even to this day Life Insurance Corporation of India dominates India insurance sector With the entry of private sector players backed by foreign expertise Indian insurance market has become more vibrant Business is becoming increasingly vulnerable due to wide variety of risk particularly after September 11 2001 disaster in which twin tower located in the hearts of New York city were crashed by terrorist attack resulting in loss of 6000 human lives as well as financial loss to the extent of $45 billion The impact of this terrorist attack has created new horizon of risk to the business world today
However rapid changes in the global economy development of technology and e-business already gathered momentum Increased dependency on technology has originated new risks that have resulted in well-published incidents Computer hackers obtaining credit card information from visa and Power-Gen the love bug virus cyber extortion web content liability professional errors and omissions computers and other crimes and activities such as terrorism kidnapping and companyrsquos executive and extortion of money commercial liability etc have significant impact on business resulting in extreme financial loss commercial embarrassment or regulatory implications
Corporation insurancerisk managers under the circumstances have to demand increasingly complex insurance products They have to be more attentive and
30
knowledgeable about emerging risks how those risks are managed effectively and efficiently and how they could ultimately affect a companyrsquos financial situation and therefore its position in the market place In short how such risks are managed and can give to an insured a competitive advantage
In the changing times adoption of e-commerce into business models the integration of web-based communication and data transfer capabilities into the business operations and leveraging of advanced network and technology architecture for maximum benefit are the new horizon of the risks For the corporate insurancerisks managers these new exposure-cyber-risks-can lead to cyber losses widening the interpretation of what constitute insure property damage particularly as it relates to information technology and dataAll the while organizations are tremendous pressure to reduce expenses and increase profit margin and cannot afford to suffer a property loss of business interruption due to any cause (risk) How a company identifies quantifies qualifies and manages these new risks exposure in addition to the well-known tradition risks is becoming an important factor in creating shareholders value This often means changing the way Everyone in the organization have to think about risk
Insurance managers are seeing price levels (premium) continue to rise-albeit modestly-in todayrsquos primarily commercial property and reinsurance markets They are demanding that insurers improve their risk assessment and quantification offerings so that an insured may avail the benefit in cost (premium rate) on account of well-managed riskThe good news for insurance managers is that as the economy evolves insurers are increasingly matching that evaluation with new products services and capabilities due to opening up the insurance market to the private players
Insurers who are truly listening to their customers and striving to be more in tune with their needs are responding to the fast changing corporate insurance and risk management landscape They are listening to their customers They are making fresh approaches to address the new challenges faced by insured organization by designing the new products as per the needs Insurers are providing value added services to insured to protect the value created by the business
Insurers are increasingly required to develop and expand their information technology platforms to ensure that the vast amount of data they collect about their customers Insurancerisk portfolio can easily and seamlessly be transformed into valuable risk management information To help their customers insurers should make better-informed decisions They must be able to swiftly deliver this data to their customers (insured) anywhere in the world Insurer are also discovering that risk assessment have to be customized to meet policyholdersrsquo new exposures and needs The insurance industry is stepping up and addressing these challenges in several different ways
31
22) CURRENT SCENARIO OF RELIANCE LIFE INSURANCE
RLIC offers wide range of innovative life insurance products targeted at individuals and groups It offers need based products that caters to four distinct segments namely protection child retirement and investment plans RLIC is committed to emerge as a
transnational Life Insurer of global scale and standard
Reliance Life Insurance Company Limited (RLIC) is amongst the fastest growing life insurance companies in India It is also amongst the top four private sector life insurance companies in India (As on FY 2008-2009)
As on March 31 2009 RLIC has an annualized premium of Rs 30 billion with a market share of 103 It has leapfrogged on the growth path and has reached the 4 million policy mark in a short span of within 3 years RLIC has a strong distribution network of 1145 branches with more than 149000 agents
32
Insurancersquos Market Share in Comparison of Other Private company
If we look at the status of Reliance Life Insurancersquos market share in comparison of other
private company in comparison of premium earned-
If we talk the growth of Insurance industryrsquos private players in recent years the data will
reflect-
CH - 3) RESEARCH METHODOLOGY
33
RESEARCH DESIGN-
COMPARITIVE STUDY- A comparative study has been undertaken to compare the traditional Plans of Reliance Life Insurance with that of Bajaj Allianz life insurance
DATA TYPE
INTRODUCTION - Any organization whether big or small private or public needs different type of information to know its popularity I have gathered secondary data and primary data and collected information from the combination of these two data
PRIMARY DATA - Primary data collection method was decided for observing working of the company and approaching the customers directly face to face A great care was taken while collecting the primary data to answer that it is relevant accurate current and unbiased
SECONDARY DATA - Secondary data collection method was used by referring to various websites books and newspapers for collecting information regarding the project under study Secondary data consist of the information that already exists somewhere else for some another purpose
SAMPLING TECHNIQUES-
SAMPLE SIZE- A sample size of 50 was taken to be analyzed
SAMPLE LOCATION-Various sectors of Kamla Nagar Civil lines Mukherji Nagar Model Town and selected areas of Delhi
SAMPLING PROCESS - Convenient sampling was used to overcome the time and money constraints that could have been faced by us while collecting the data The customers were contacted face to face directly and also by way of telephonic conversation with them
ANALYTICAL TOOLS - The data collected were arranged accordingly and statistical tools like bar graphs and pie-charts were used to analyze and present the data
RESEARCH INSTRUMENT USED-
34
SAMPLING MEDIA - Printed questionnaires consisting several questions were asked to have an idea of customers view about Reliance Life Insurance plans followed by personal questions
FIELD WORK - Rigorous field work was undertaken to locate the interested and potential respondents to fulfill the objectives of the study
THE PRIMARY OBJECTIVEOF THE STUDY -
The primary objective of the research study is to have a detailed analysis of Reliance Life Insurance bringing in focus the future prospects of the (Anil Dhirubhai Ambani group) with relevance to the customer perception regarding the various plans and products offered by Reliance Life Insurance
31) DATA ANALYSIS AND INTERPRETATION
35
PERSONAL DETAILS
1) AGE a) 18-30b) 31-50c) 51-65
AGE NO OF RESPONDENTS PERCENTAGE
18-30 21 42
31-50 19 38
51-65 10 20
TOTAL 50 100
INTERPRETATION-The bar graph reveals that 42 of the respondents belong to the age group of 18-30 years 38 lies in the age group of 31-50 years and 20 of them lie in the age group of 51-65 years
2) OCCUPATION
4238
20
05
1015202530354045
NO
O
F
RE
SP
ON
DE
NT
S
18 to 30 31 to 50 51 to 65
AGE (in year)
AGE WISE CLASSIFICATION
36
a) Serviceb) Businessc) Professiond) Housewifee) Retired
OPTION NO OF RESPONDENTS PERCENTAGE
Service 16 32
Business 14 28
Profession 5 10
Housewife 8 16
Retired 7 14
TOTAL 50 100
INTERPRETATION-The above bar graph reveals that 32 of the total respondents were servicemen 28 of them belonged to the business class 10 were professionals 16 were housewives and 14 of the total respondents fall in the retired category
3) INCOME
32
28
10
16
14
0
5
10
15
20
25
30
35
Service Business Profession Housewife Retired
OCCUPATION
OCCUPATION WISE CLASSIFICATION
37
a) 150000-300000
b) 300000-500000
c) Above 500000
OPTION NO OF RESPONDENTS PERCENTAGE
150000-300000 24 48
300000-500000 14 28
Above 500000 12 24
TOTAL 50 100
INTERPRETATION-The above bar graph reveals that out of the total respondents 48 lie in the income group of 150000-300000 28 of the total respondents belonged to the income group of 300000-500000 and 24 lie in the income group of people earning an income of above Rs 500000pa
4828 24
01020304050
N O
OF
RE
SP
ON
DE
NT
S
150000-300000
300000-500000
ABOVE500000
INCOME (in RS)
INCOME WISE CLASSIFICATION
38
4) FAMILY MEMBERS
a) 2b) 3c) 4d) Above 4
OPTION NO OF RESPONDENT PERCENTAGE
2 11 22
3 9 18
4 24 48
Above 4 6 12
TOTAL 50 100
INTERPRETATION The above bar graph shows that 22 of the total respondents had a family of 2 members 18 of them had 3 family members 48 of them had 4 family members and 12 of them had the no of family members above 4
Q1 Where do you prefer to invest
22 18
48
120
1020304050
No
o
f re
spo
nd
ents
2 3 4 Above 4
No of family members
MEMBER WISE CLASSIFICATION
39
a) fixed deposits
b) stock
c) mutual funds
d) insurance
e) others
Option No of respondents Percentage
Fixed deposits 5 10
Stock 10 20
Mutual fund 10 20
Insurance 18 36
others 7 14
TOTAL 50 100
Interpretation The above pie chart shows that out of 50 respondents 10 preferred to invest in fixed deposits 20 in stocks 20 in mutual funds 36 in insurance and 14 in others like property gold etc
Q2 What are your priorities for investment
40
a) protecting your family against pre-mature death
b) wealth creation
c) retirement needs
d) child education and marriage
e) protect income against disability sickness or critical illness
Option No of respondents Percentage
Protecting your family against pre mature death
10 20
Wealth creation 14 28
Retirement needs 5 10
Child education and marriage 7 14
Protect income against disability sickness or critical illness
14 28
TOTAL 50 100
Interpretation The above pie chart shows that out of 50 respondents 20 of them invest for protecting their family against premature death 28 for creating wealth 10 for meeting their future retirement needs 14 for child education amp marriage and 28 for protection against disability and sickness
Q3 What is your main motive behind investing in life insurance
41
a) tax benefit
b) savings
c) risk cover
Option No of respondents Percentage
Tax benefits 27 54
Savings 5 10
Risk cover 18 36
TOTAL 50 100
Interpretation The above pie chart shows that out of the sample respondents 54 have tax benefit 10 have savings and 36 have risk cover as their main motive for making an investment in life
Q4 What kind of investment do you prefer
42
a) high risk high gain
b) low risk low gain
c) moderate
d) vary times to times
Option No of respondents Percentage
High risk high gain 8 16
Low risk low gain 5 10
Moderate 12 24
Vary times to times 25 50
TOTAL 50 100
Interpretation The above pie chart shows that out of 50 respondents 16 preferred high risk- high gain form of investment 10 preferred low risk- low gain form of investment 24 preferred moderate investment and 50 preferred varied form of investment
43
Q5Are you interested to invest in Traditional Plans
a) YES
b) NO
Option No of respondents Percentage
YES 36 72
NO 14 28
TOTAL 50 100
Interpretation The above pie chart shows that 72 of the respondents preferred to invest in Traditional Plans
44
Q6 What is your level of annual investmenta) below 20000
b) 20000-40000
c) above 40000
Option No of respondents Percentage
Below 20000 41 82
20000-40000 7 14
Above 40000 2 4
TOTAL 50 100
Interpretation The above pie chart shows that 82 of the respondents are willing to invest below Rs 20000 per annum 14 of them want to invest within Rs 20000 per annum to Rs 40000 and 4 wanted to invest over and above Rs 40000
45
Q7 What factors would you consider most important before choosing an insurance policy
a) publicity of the company
b) reputation of the company
c) quality of life advisors
d) after sales-supporting of the company
Option No of respondents Percentage
Publicity of the co 5 20
Reputation of the co 25 50
Quality of life advisors 10 10
After sale-services 10 20
TOTAL 50 100
Interpretation out of the sample respondents 20 considers publicity of the company 50 considers reputation of the company 10 considers quality of life advisors and 20 considers after sales support of the company as the most important factor for choosing an insurance company
46
Q8 Which life insurance company would you prefer the most to invest ina) reliance life insurance (RLIC)
b) Bajaj Allianz life insurance
Option No of respondents Percentage
RLIC 21 42
BAJAJ ALLIANZ 29 58
TOTAL 50 100
Interpretation Out of 50 respondents 42 preferred to invest in reliance life insurance over 58 of the respondents who prefer to invest in Bajaj Allianz life insurance
47
Q9 If reliance life insurance then which particular plan you would like to invest ina) Reliance Term Plan
b) Reliance Whole Life Plan
c) Reliance Endowment Plan
d) Reliance Special Endowment Plan
Option No of respondents Percentage
Reliance term plan 6 2858
Reliance whole life plan 3 1428
Reliance endowment plan 9 4286
Reliance special endowment plan 3 1428
TOTAL 21 100
Interpretation Out of 21 respondents 2858 preferred to invest in term plan 1428 in whole life plan 4286 in endowment plan and 1428 of them preferred to invest in special endowment plan of reliance life insurance
48
Q10 If Bajaj Allianz life insurance then which particular plan you would like to invest in
I ENDOWMENT PLAN a) Bajaj Allianz Invest Gain
b) Bajaj Allianz save Care Economy SP
c) Bajaj Allianz life time care
d) Bajaj Allianz Super Saver plan
II MONEY BACK PLAN i Bajaj Allianz Cash Gain plan
Option No of respondents Percentage
Invest gain plan 3 1035
Save care economy SP 6 2069
Life time care 7 2415
Super saver plan 3 1035
Cash gain plan 10 3446
TOTAL 29 100
Interpretation Out of 29 respondents 1035 of them plan to invest in Bajaj Allianz- Invest Gain 2069 wish to invest in Bajaj Allianz save Care Economy SP 2415 want to invest in Bajaj Allianz life time care 1035 in Bajaj Allianz Super Saver plan and 3446 prefer to invest in Bajaj Allianz Cash Gain plan
49
32) SIGNIFICANCE OF STUDY
Life insurance is one of the most rapidly growing sectors in India The main reason
behind the growth can attributed to the high population density improving economical
condition improving education level and improving awareness Due to these factors there
is still huge scope for growth in this sector Like any other business when the
opportunities are present everybody tends to enter the industries This growth hence
fetches the new competitors as well as new strategies from existing players To sustain in
any competitive industry the organization must adapt to existing strategies and adopt
new ones This study will focus on the analysis of Reliance Life Insurance in comparison
with the present scenario of Bajaj Allianz Life Insurance with respect to the Traditional
Plans of both the companyrsquos This will mainly cover the following aspects
To know about the awareness and popularity of various Traditional Plans offered
by Reliance Life Insurance and Bajaj Allianz Life Insurance
How Reliance Life Insurance can develop and sustain a good distribution
network
These will provide it benefit both in terms of better market coverage as well as better
penetration
50
33) SCOPE OF THE STUDY
1) This helps in finding out vast potential of insurance company
2) The study was conducted in National Capital Region (NCR) only
3) The number of respondents to be surveyed can be improved
4) This study was conducted by comparing the performances amp products of three private
amp government insurance players in insurance industry
5) This study was conducted to analyze the market stand of Reliance life insurance
Company limited and Bajaj Allianz Life Insurance Company Limited of India insurance
companies
6) This study is done to eliminate all the myths which people have in their minds
regarding Insurance Sector
51
34) OBJECTIVES
To have a detailed understanding of Reliance Life Insurance and Bajaj Allianz Life Insurance
To find out various reasons considered while investing in policies
To get knowledge about the market exposure and future prospects about Reliance Life Insurance
To know the perception of the consumers about the life insurance
To analyze the Traditional plans of Reliance Life Insurance and compare it with Bajaj Allianz
To know about the brand awareness of Reliance Life Insurance its customer preferences over Bajaj Allianz in the market
To study a proper knowledge about the life insurance industry
To understand the consumer choice while investing in policies
52
CHAPTER 4
DISCUSSION AND FINDINGS OF THE STUDY
FINDINGS OF THE STUDY RECOMMENDATION AND SUGGESTIONS CONCLUSION LIMITATIONS BIBLIOGRAPHY ANNEXUREQUESTIONNAIRE
53
41) FINDINGS OF THE STUDY
1) The survey reveals that still a large proportion of population is interested to invest in other forms of investment other than insurance as still most of them are unaware about the importance of insurance in their life
2) Basically people make varied form of investment for creating wealth to protect their families against pre-mature death and to protect income against disability sickness or critical illness
3) The main motive of the individuals investing is receives benefits US 1010D People generally consider insurance as a tax saving device
4) Mostly people prefer time to time form of investment as they are not willing to take high degree of risk
5) 72 of the respondents are preferred to invest in Traditional Plans
6) Most of the people prefer to make an annual investment up to a maximum of Rs20 000 per annum
7) When the product is like life insurance reputation of the company publicity of the company amp after sale services of the company matters a lot This means that people would choose that insurance company only where the quality of life advisors is satisfactory
8) Most people prefer to invest in Bajaj Allianz Life Insurance as compared to making an investment in Reliance Life Insurance
9) The most preferable Traditional plan of Reliance Life Insurance is Endowment Plan
10) The most preferable plan of Bajaj Allianz Life Insurance co is Cash Gain Plan
54
42) SUGGESTIONS amp RECOMMENDATIONS
Based on the observations of the study some suggestions for the organization are made as
follows
1) Quality of advisors is also as important as the quantity Thus company should go
mainly for qualified professionals
2) Company should increase its budget on publicity so that awareness can be increased
3) Clarity and transparency should be provided to the customer regarding various
products
4) Training sessions should be planned in advance so that schedule can be provided to
the advisor in advance
5) Apart from the Brand Positioning in urban area a strategy should be adopted by
Reliance to make its brand also near to middle level or high aspirant people because they
are the main source of the business in India
6) Awareness Camp to the sub urban area should be focused by Reliance
7) Some innovative technique or product is required in order to attract the consumer
43) LITERATURE REVIEW
55
1) Robi Elenekave has explained in detail why various retirement plans and pension plans donrsquot give the desired returns The main difficulty is the use of incorrect method for calculations done to find out the return on investment This is primarily due to wrong assumptions The study provides information about the various precautions which need to be considered before planning so that the desired results can be achieved
2) Another paper provides insight about how various financial sectors invest in bond market The study was how the different players investment different instruments according to the risk appetite and desired rate of return The study shows that life insurance sector mainly invests in government bond which are low return and low risk instrument The investment in government bond it shows that life insurance companies are more conservative in investment
3) K Subhash has presented the history of Indiarsquos life insurance industry in three stages before independence after independence and post liberalization which not only provides information but also help in analyzing the impact of these major changes The authors have also discussed the huge potential which exists in the rural India The insurance company must realize the importance of rural sector because the future lies there The author commented about the increasing share of private player in the existing market This confirms the availability of opportunity in this sector The paper also provides the importance of professional and focused approach which was given no importance
4) Tapen Sinha has discussed the various challenges and opportunities in the insurance market One of the very important factors which have been discussed in the study is the importance of developing new and better products As the scenario changes the need of an individual also changes so any organization must understand and fulfill these needs The new product development requires constant research so organization must also focus on it
5) Roger G Ibbotson discusses how financial planners and advisors have recently started to recognize that human capital must be taken into account when building optimal portfolios for individual investors Any investorrsquos human capital has a unique mortality risk However life insurance in its forms can hedge against this mortality risk Thus human capital affects both the optimal asset allocation and the optimal demand for life insurance This paper provides a unified framework based on human capital in order to enable individual investors to make both decisions jointly
6) Rakesh Niraj study tells how the flow of information in any organization is important For any organization to grow the flow of information must be good both upwards as well as ownwards The proper flow of information will also ensure proper flow of good and services from organization to customer and proper flow of information from customer to organization The information from customers will help the organization in providing better goods and services to the customer For the above purpose organization must ensure good channel partner who can provide the organization with correct feedback Hence it becomes very important for any organization to acquire good channel partners
56
7) Stephen P Robbins has discussed how group dynamics works in any organization The success of any organization depends on the success of its various teams and how these teams work together The book provides various techniques which can be used by any organization to get result from the team effort The conflict resolution is a major task in any group Various techniques which the organization can use in conflict resolution are also discussed Another important aspect covered is the importance of leadership in the organization The various forms of leadership have been discussed and the kinds of leadership which can be effective in particular situations are also discussed
8) R Wayne Mondy has discussed the importance of training and development in any organization The training provides skills to perform the current job where as the development involve learning beyond present need The various type of training are discussed which can be used according to the requirement Training and development are not only important for better performance of an individual but it also gives satisfaction The major factors which influence training and development are found to be management support commitment of trainee and trainer complexity of the organization The process of developing good training plans is also provided In another part author has discussed the importance of right man for right job The compensation strategies are also given which are very crucial for ant industry
9) Philip Kotler has discussed the importance of channels partners Better the channel partners better will be the delivery model Detailed discussion about how to design the channel structure so that all the requirements could be fulfilled is provided The various issues faced by the organization while managing the channels are also given When an organization has more than one channel it becomes very important that all the channels should be integrated in such a way that the organization get the best out of all At times due to the conflicting benefit of the different channels the conflict arise so various strategies to manage these issues is also discussed in the chapter
10) Michael J Etzel has written about the marketing of services The marketing of services is different from the goods because of the characteristic of service like intangibility inseparability heterogeneity etc Brief about pricing strategies is also given in case of services The authors have also given the impact of technological development on the services marketing The author has also given the importance of brand and after sales support in case of services as perception of the customers plays an important role In other part of the book the authors has described the importance of distribution channels and designing of the same A channel partner should be consider as partner according to discussion The legal complications associated with channels are also discussed These complications are necessary to take into the consideration while managing the channels The conflicting interest of channels both horizontally and vertically are also taken into the consideration
57
11) Boone has discussed about the importance of personal financial planning The concept of time value of money has also been elaborated The importance of creating and implementing budget is given under money management The other important concepts for financial planning like credit management and understanding taxes are also explained In one section the authors have discussed the importance of investment and what should be the major considerations while making any investment The considerations include the risk associated with the investment return on the investment etc The importance and benefits of life insurance has also been given The discussion also includes various legal aspects associated with life insurance The overview of retirement planning is also given which includes importance and benefit of retirement planning Various tools for proper retirement planning are also discussed
58
44) CONCLUSION
1) The customers are very much sensitive towards their investment They would like to invest only in that insurance company which enjoys good public image along with quality good services
2) The result of the survey conducted shows that Bajaj Allianz Life Insurance is the leader in life insurance industry but Reliance Life Insurance and other private players are giving it a close competition
3) The motive of the people behind investing in life insurance is the tax benefits that they would receive under sec 80C and 1010D
4) In Life Insurance industry the after sales support of the company is as important as the quality of life advisors
59
45) LIMITATIONS
There were some limitations faced during the study as discussed below
Since the study was taken for two months so there was a constraint of time and effort
The study was limited only to some of the Delhi regions so the results may be biased
Questionnaire was given to 125 people however only 50 responded to it which is very small for such type of study
The biasness of consumer or responses error cannot be eliminated
Most of the people are not aware about the Importance and the necessity of insurance in their life
Adverse perception of the people towards insurance sector- People consider insurance as a tax saving device
Lack of awareness about the earning opportunity in the insurance sector
60
46) BIBLIOGRAPHY
wwwreliancelifeinsurancecom
wwwadagroupcom
wwwirdacom
wwwbajajallianzlifeinsurancecom
wwwallianzbajajcom
47) ANNEXURE
61
QUESTIONNAIRE
A comparative analysis of consumer perception regarding Traditional plans of Reliance Life Insurance with that of Bajaj Allianz Life Insurance
NAME ___________________________
PERSONAL DETAILS
1) AGE_________________
1) OCCUPATION______________
2) INCOME___________________
3) FAMILY MEMBERS_________
Q1 Where do you prefer to investa) Fixed deposits b) Stock c) Mutual funds d) Insurance e) Others
Q2 What are your priorities for investmenta) Protecting your family against pre-mature death b) Wealth creation c) Retirement needs d) Child education and marriage e) Protect income against disability sickness or critical illness
Q3 What is your main motive behind investing in life insurancea) Tax benefit b) Savings c) Risk cover
Q4 What kind of investment do you prefera) High risk high gain b) Low risk low gain c) Moderate d) Vary times to times
62
Q5Are you interested to invest in Traditional Plansa) Yes b) No
Q6 What is your level of annual investmenta) below 20000 b) 20000-40000 c) above 40000
Q7 What factors would you consider most important before choosing an insurance company
a) publicity of the company b) reputation of the company c) quality of life advisors d) after sales-supporting of the company
Q8 Which life insurance company would you prefer the most to invest ina) Reliance life insurance b) Bajaj Allianz life insurance
Q9 If reliance life insurance then which particular plan you would like to invest ina) Reliance Term Plan b) Reliance Whole Life Plan c) Reliance Endowment Plan d) Reliance Special Endowment Plan
Q10 If Bajaj Allianz life insurance then which particular plan you would like to invest in
I ENDOWMENT PLAN
a) Bajaj Allianz Invest Gain
b) Bajaj Allianz save Care Economy SP
c) Bajaj Allianz life time care
d) Bajaj Allianz Super Saver plan
II MONEY BACK PLAN
a) Bajaj Allianz Cash Gain plan
63
64
- COMPANY PROFILE
- ABOUT RELIANCE LIFE INSURANCE
- HISTORY
- Reliance Capital Limited announced the launch of its life insurance business on February 1 2006 This was after obtaining the required regulatory approvals from the Registrar Of Companies and the Insurance Regulatory and Development Authority
- It was in August 2005 that the ball was set rolling when Reliance Capital Limited the financial arm of Reliance ndash Anil Dhirubhai Ambani Group (ADAG) ndash announced the requisition of 100 shareholding in AMP Sanmar Life Insurance Company Limited and the formal transfer of shares took place in October 2005 The company will issue all policy contracts under the Reliance Life Insurance Company limited name All the existing policy contracts also stand transferred to the Reliance Life Insurance entity with all the original contractual terms and commitments intact
- CORE VALUES
- Reliance Life Insurance Company Limited has some core values which are listed as follows
- Vision bull To be the first choice insurer for customers bull To be the preferred employer for staff in the insurance industry bull To be the number one insurer for creating shareholder value
- Mission As a responsible customer focused market leader we will strive to understand the insurance needs of the consumers and translate it into affordable products that deliver value for money
- 12) TRADITIONAL PLANS OF THE COMPANY
- 12A )TRADITIONAL PLAN OF RELIANCE LIFE INSURANCE-
- Life insurance products are designed to suit the requirements of customers Fundamentally the product provide for
- In every product to a certain degree risk cover is imperative for it to fall under the category of insurance Based on the coverage of the product the premiums are calculated and the customer pays accordingly In order to suggest the right product it is essential for an agent to understand the requirements of the customer well
- The traditional plans of the company have the following features-
- Fixed Tenure
- Potential for better returns
- Transparency
- Flexibility in investment
- Flexibility to invest more
- Flexibility to skip the premium
- Flexibility to choose the cover
- High liquidity
- Age term and sum assured decide the amount of premium
- Top- ups and switches are not allowed
- Reliance Life Insurance Company Limited has offered 9
- 1) Reliance term plan-
- 2) Reliance Whole Life Plan -
- 3) Reliance Endowment Plan -
- 4) Reliance Special Endowment Plan -
- 13) INDUSTRY PROFILE
- MEANING OF INSURANCE
- Insurance may be described as a social device to reduce or eliminate risk of loss to life and property Insurance is a collective bearing of risk Insurance is a financial device to spread the risks and losses of few people among a large number of people as people prefer small fixed liability instead of big uncertain and changing liability
- Insurance can be defined as a ldquolegal contract between two parties whereby one party called insurer undertakes to pay a fixed amount of money on the happening of a particular event which may be certain or uncertainrdquo The other party called insured pays in exchange a fixed sum known as premium
- Insurance is desired to safeguard oneself and onersquos family against possible losses on account of risks and perils It provides financial compensation for the losses suffered due to the happening of any unforeseen events
- IMPORTANCE OF INSURANCE
- Insurance services play predominant role in the process of financial Intermediary Today insurance industry is one of the most growing sectors in India There is lot of potential in the Indian Insurance Industry
- There are many issues which require study The scope of the study of Insurance industry of India would be very great as there are ongoing Developments in the industry after the opening of the sector
- Right now the insurance industry has great opportunities in a country like India or China which huge population Also the penetration of insurance in India is very low in both life and non-life segment so there is lot potential to be tapped Before starting the discussion on insurance industry and related issues we have to start with the basics of insurance So first we understand what is insurance How the word lsquoinsurancersquo is different from the word lsquoassurancersquo Etc
- HISTORY OF INSURANCE
- The concept of insurance is believed to have emerged almost 4500 years ago in the ancient land of Babylonia where traders used to bear risk of the carvan by giving loans which were later repaid with interest when the goods arrived safely
- The concept of insurance as we know today took shape in 1688 at a place called Lloydrsquos Coffee House in London where risk bearers used to meet to transact business This coffee house became so popular that Lloydrsquos became the one of the first modern insurance companies by the end of the eighteenth century
- Marine insurance companies came into existence by the end of the eighteenth century These companies were empowered to write fire and life insurance as well as marine The Great Fire of London in 1966 caused huge loss of property and life With a view to providing fire insurance facilities
- Dr Nicholas Barbon set up in 1967 the first fire insurance company known as the Fire office
- Life insurance in its modern form came to India from England in 1818 The Oriental Life Insurance Company was the first insurance company to be set up in India to help the widows of European community The insurance companies which came into existence between 1818 and 1869 treated
- Indian lives as subnormal and charged an extra premium of 15 to 20 per cent The first Indian insurance company the Bombay Mutual Life
- Assurance Society came into existence in 1870 to cover Indian lives at normal rates
- The Insurance Act 1938 the first comprehensive legislation governing both life and non-life branches of insurance were enacted to provide strict state control over insurance business This amended insurance Act looked into investments expenditure and management of these companies
- By the mid- 1950s there were 154 Indian insurers 16 foreign insurers and 75 provident societies carrying on life insurance business in India Insurance business flourished and so did scams irregularities and dubious investment practices by scores of companies As a result the government decided to nationalize the life assurance business in India The Life Insurance
- Corporation of India (LIC) was set up in 1956 The nationalization of life insurance was followed by general insurance in 1972
- MEANING OF LIFE INSURANCE
- There are three parties in a life insurance transaction the insurer the insured and the owner of the policy (policyholder) although the owner and the insured are often the same person
- Another important person involved in a life insurance policy is the beneficiary The beneficiary is the person or persons who will receive the policy proceeds upon the death of the insured
- Life insurance may be divided into two basic classes ndash term and permanent
- HISTORY OF LIFE INSURANCE
- Risk protection has been a primary goal of humans and institutions throughout history Protecting against risk is what insurance is all about
- Over 5000 years ago in China insurance was seen as a preventative measure against piracy on the sea Piracy in fact was so prevalent that as a way of spreading the risk a number of ships would carry a portion of another ships cargo so that if one ship was captured the entire shipment would not be lost
- In another part of the world nearly 4500 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
- Life insurance came about a little later in ancient Rome where burial clubs were formed to cover the funeral expenses of its members as well as help survivors monetarily With Romes fall around 450 AD most of the concepts of insurance were abandoned but aspects of it did continue through the Middle Ages particularly with merchant and artisan guilds These provided forms of member insurance covering risks like fire flood theft disability death and even imprisonment
- During the feudal period early forms of insurance ebbed with the decline of travel and long-distance trade But during the 14th to 16th centuries transportation commerce and insurance would again reemerge
- And similar to ancient Rome burial societies were formed in the Buddhist period to help families build houses and to protect widows and children
- Modern Insurance
- Illegal almost everywhere else in Europe life insurance in England was vigorously promoted in the three decades following the Glorious Revolution of 1688 The type of insurance we see today owes its roots to 17th century England Lloyds of London or as they were known then Lloyds Coffee House was the location where merchants ship owners and underwriters met to discuss and transact business deals
- While serving as a means of risk-avoidance life insurance also appealed strongly to the gambling instincts of Englands burgeoning middle class
- Gambling was so rampant in fact that when newspapers published names of prominent people who were seriously ill bets were placed at Lloydrsquos on their anticipated dates of death Reacting against such practices 79 merchant underwriters broke away in 1769 and two years later formed a ldquoNew Lloydrsquos Coffee Houserdquo that became known as the ldquoreal Lloydrsquosrdquo Making wagers on peoples deaths ceased in 1774 when parliament forbade the practice
- Insurance moves to America
- The US insurance industry was built on the British model The year 1735 saw the birth of the first insurance company in the American colonies in
- Charleston SC The Presbyterian Synod of Philadelphia in 1759 sponsored the first life insurance corporation in America for the benefit of ministers and their dependents And the first life insurance policy for the general public in the United States was issued in Philadelphia on May 22 1761
- But it wasnt until 80 years later (after 1840) that life insurance really tookoff in a big way The key to its success was reducing the opposition from religious groups
- In 1835 the infamous New York fire drew peoples 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
- With the creation of the automobile public liability insurance which first made its appearance in the 1880s gained importance and acceptance
- More advancement was made to insurance during the process of industrialization In 1897 the British government passed the Workmens Compensation Act which made it mandatory for a company to insure its employees against industrial accidents
- During 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 most labor 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
- BENEFITS OF LIFE INSURANCE
- 1) Risk cover -Life Insurance contracts allow an individual to have a risk cover against any unfortunate event of the future
- 2) Tax Deduction -Under section 80C of the Income Tax Act of 1961 one can get tax deduction on premiums up to one lakh rupees Life Insurance policies thus decrease the total taxable income of an individual
- 3) Loans -An individual can easily access loans from different financial institutions by pledging his insurance policies
- 4) Retirement Planning -What had provided protection against the financial consequences of premature death may now be used to help them enjoy their retirement years
- 5) Educational Needs -Similar to retirement planning the cash values that flow from ones life insurance schemes can be utilized for educational needs of the insurer or his children
- The Life Insurance Industry has an enviable track record among public sector units It has a Consistent profit and dividend paying record accompanied by a steady growth in its financial resources Through investments in the Government sector and socially- oriented sectors the Industry has contributed immensely to the nations development The industry is recognized as one of the largest financial Institutions in the country The ventures initiated by the industry in the areas of Mutual Fund
- Housing Finance has done exceedingly well in recent years To protect the countrys foreign exchange reserves the reinsurance arrangement are so organized that maximum retention is made possible within the country while at the same time protecting interests of the policy holders
- 22) CURRENT SCENARIO OF RELIANCE LIFE INSURANCE
- RLIC offers wide range of innovative life insurance products targeted at individuals and groups It offers need based products that caters to four distinct segments namely protection child retirement and investment plans RLIC is committed to emerge as a transnational Life Insurer of global scale and standard
- CH - 3) RESEARCH METHODOLOGY
- RESEARCH DESIGN-
- SAMPLING TECHNIQUES-
- THE PRIMARY OBJECTIVEOF THE STUDY-
- 34) OBJECTIVES
- 7) Some innovative technique or product is required in order to attract the consumer
- 45) LIMITATIONS
- 46) BIBLIOGRAPHY
-
HISTORY OF LIFE INSURANCE
Risk protection has been a primary goal of humans and institutions throughout history Protecting against risk is what insurance is all aboutOver 5000 years ago in China insurance was seen as a preventative measure against piracy on the sea Piracy in fact was so prevalent that as a way of spreading the risk a number of ships would carry a portion of another ships cargo so that if one ship was captured the entire shipment would not be lostIn another part of the world nearly 4500 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
Life insurance came about a little later in ancient Rome where burial clubs were formed to cover the funeral expenses of its members as well as help survivors monetarily With Romes fall around 450 AD most of the concepts of insurance were abandoned but aspects of it did continue through the Middle Ages particularly with merchant and artisan guilds These provided forms of member insurance covering risks like fire flood theft disability death and even imprisonment
During the feudal period early forms of insurance ebbed with the decline of travel and long-distance trade But during the 14th to 16th centuries transportation commerce and insurance would again reemergeInsurance in India can be traced back to the Vedas For instance yogakshema the name of Life Insurance Corporation of Indias 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
And similar to ancient Rome burial societies were formed in the Buddhist period to help families build houses and to protect widows and children
Modern InsuranceIllegal almost everywhere else in Europe life insurance in England was vigorously promoted in the three decades following the Glorious Revolution of 1688 The type of insurance we see today owes its roots to 17th century England Lloyds of London or as they were known then Lloyds Coffee House was the location where merchants ship owners and underwriters met to discuss and transact business dealsWhile serving as a means of risk-avoidance life insurance also appealed strongly to the gambling instincts of Englands burgeoning middle classGambling was so rampant in fact that when newspapers published names of prominent people who were seriously ill bets were placed at Lloydrsquos on their anticipated dates of death Reacting against such practices 79 merchant underwriters broke away in 1769 and
24
two years later formed a ldquoNew Lloydrsquos Coffee Houserdquo that became known as the ldquoreal Lloydrsquosrdquo Making wagers on peoples deaths ceased in 1774 when parliament forbade the practice
Insurance moves to AmericaThe US insurance industry was built on the British model The year 1735 saw the birth of the first insurance company in the American colonies inCharleston SC The Presbyterian Synod of Philadelphia in 1759 sponsored the first life insurance corporation in America for the benefit of ministers and their dependents And the first life insurance policy for the general public in the United States was issued in Philadelphia on May 22 1761But it wasnt until 80 years later (after 1840) that life insurance really tookoff in a big way The key to its success was reducing the opposition from religious groups
In 1835 the infamous New York fire drew peoples 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
With the creation of the automobile public liability insurance which first made its appearance in the 1880s gained importance and acceptanceMore advancement was made to insurance during the process of industrialization In 1897 the British government passed the Workmens Compensation Act which made it mandatory for a company to insure its employees against industrial accidents
During 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 most labor 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
25
BENEFITS OF LIFE INSURANCE
1) Risk cover -Life Insurance contracts allow an individual to have a risk cover against any unfortunate event of the future
2) Tax Deduction -Under section 80C of the Income Tax Act of 1961 one can get tax deduction on premiums up to one lakh rupees Life Insurance policies thus decrease the total taxable income of an individual
3) Loans -An individual can easily access loans from different financial institutions by pledging his insurance policies
4) Retirement Planning -What had provided protection against the financial consequences of premature death may now be used to help them enjoy their retirement yearsMoreover the cash value can be used as an additional income in the old age
5) Educational Needs -Similar to retirement planning the cash values that flow from ones life insurance schemes can be utilized for educational needs of the insurer or his children
26
ROLE OF LIFE INSURANCE IN THE GROWTH OF THE ECONOMY
The Life Insurance Industry has an enviable track record among public sector units It has a Consistent profit and dividend paying record accompanied by a steady growth in its financial resources Through investments in the Government sector and socially- oriented sectors the Industry has contributed immensely to the nations development The industry is recognized as one of the largest financial Institutions in the country The ventures initiated by the industry in the areas of Mutual Fund
Housing Finance has done exceedingly well in recent years To protect the countrys foreign exchange reserves the reinsurance arrangement are so organized that maximum retention is made possible within the country while at the same time protecting interests of the policy holders
27
ROLE OF IRDA
MISSION
ldquoTo protect the interests of the policyholders to regulate promote
and ensure orderly growth of the insurance industry and for matters
connected therewith or incidental theretordquo
The Insurance Act 1938 had provided for setting up of the Controller of Insurance to act
as a strong and powerful supervisory and regulatory authority for insurance Post
nationalization the role of Controller of Insurance diminished considerably in
significance since the Government owned the insurance companies But the scenario
changed with the private and foreign companies foraying in to the insurance sector This
necessitated the need for a strong independent and autonomous Insurance Regulatory
Authority was felt As the enacting of legislation would have taken time the then
Government constituted through a Government resolution an Interim Insurance
Regulatory Authority pending the enactment of a comprehensive legislation
The Insurance Regulatory and Development Authority Act 1999 is an act to provide for
the establishment of an Authority to protect the interests of holders of insurance policies
to regulate promote and ensure orderly growth of the insurance industry and for matters
connected therewith or incidental thereto and further to amend the Insurance Act 1938
the Life Insurance Corporation Act 1956 and the General insurance Business
(Nationalization) Act 1972 to end the monopoly of the Life Insurance Corporation of
India (for life insurance business) and General Insurance Corporation and its subsidiaries
(for general insurance business) The act extends to the whole of India and will come
into force on such date as the Central Government may by notification in the Official
Gazette specify Different dates may be appointed for different provisions of this Act
28
The Act has defined certain terms some of the most important ones are as follows
Appointed day means the date on which the Authority is established under the act
Authority means the established under this Act Interim Insurance Regulatory Authority
means the Insurance Regulatory Authority set up by the Central Government through
Resolution No 17(2) 94-lns-V dated the 23rd January 1996
Words and expressions used and not defined in this Act but defined in the Insurance Act
1938 or the Life Insurance Corporation Act 1956 or the General Insurance Business
(Nationalization) Act 1972 shall have the meanings respectively assigned to them in
those Acts A new definition of Indian Insurance Company has been inserted Indian
insurance company means any insurer being a company
(a) Which is formed and registered under the Companies Act 1956
(b) in which the aggregate holdings of equity shares by a foreign company either by
itself or through its subsidiary companies or its nominees do not exceed twenty-six
percent paid up capital in such Indian insurance company
(c) Whose sole purpose is to carry on life insurance business general insurance business
or re-insurance business
29
CURRENT SCENERIO
21) CURRENT SCENERIO OF THE INSURANCE INDUSTRY
With largest number of life insurance policies in force in the world insurance happens to be a mega opportunity in India Itrsquos a business growing at the rate of 15-20 per cent annually and presently is of the order of Rs 450 billion Together with banking services it adds about 7 per cent to the countryrsquos GDP Gross premium collection is nearly 2 per cent of GDP and funds available with LIC for investment are 8 per cent of GDP
Yet nearly 80 percent of Indian population is without life insurance cover while health insurance and non-life insurance continues to be below international standards And this part of the population is also subject to weak social security and pension systems with hardly any old age income security This it is an indicator that growth potential for the insurance sector is immense A well-develop and evolved insurance sector is needed for economic development as it provides long term funds for infrastructure development and at the same time strengthens the risk taking ability It is estimated that over the next ten years India would require investments of the order of one trillion US dollar The insurance sector to some extent can enable investment in infrastructure development to sustain economic growth of the country Insurance is a federal subject in India There are two legislation that govern the sector - The Insurance Act-1938 and The IRDA Act-1999
In India insurance is generally considered as a tax-saving device instead of its other implied long term financial benefits Indian people are prone to investing in properties and gold followed by bank deposits They selectively invest in shares also but the percentage is very small Even to this day Life Insurance Corporation of India dominates India insurance sector With the entry of private sector players backed by foreign expertise Indian insurance market has become more vibrant Business is becoming increasingly vulnerable due to wide variety of risk particularly after September 11 2001 disaster in which twin tower located in the hearts of New York city were crashed by terrorist attack resulting in loss of 6000 human lives as well as financial loss to the extent of $45 billion The impact of this terrorist attack has created new horizon of risk to the business world today
However rapid changes in the global economy development of technology and e-business already gathered momentum Increased dependency on technology has originated new risks that have resulted in well-published incidents Computer hackers obtaining credit card information from visa and Power-Gen the love bug virus cyber extortion web content liability professional errors and omissions computers and other crimes and activities such as terrorism kidnapping and companyrsquos executive and extortion of money commercial liability etc have significant impact on business resulting in extreme financial loss commercial embarrassment or regulatory implications
Corporation insurancerisk managers under the circumstances have to demand increasingly complex insurance products They have to be more attentive and
30
knowledgeable about emerging risks how those risks are managed effectively and efficiently and how they could ultimately affect a companyrsquos financial situation and therefore its position in the market place In short how such risks are managed and can give to an insured a competitive advantage
In the changing times adoption of e-commerce into business models the integration of web-based communication and data transfer capabilities into the business operations and leveraging of advanced network and technology architecture for maximum benefit are the new horizon of the risks For the corporate insurancerisks managers these new exposure-cyber-risks-can lead to cyber losses widening the interpretation of what constitute insure property damage particularly as it relates to information technology and dataAll the while organizations are tremendous pressure to reduce expenses and increase profit margin and cannot afford to suffer a property loss of business interruption due to any cause (risk) How a company identifies quantifies qualifies and manages these new risks exposure in addition to the well-known tradition risks is becoming an important factor in creating shareholders value This often means changing the way Everyone in the organization have to think about risk
Insurance managers are seeing price levels (premium) continue to rise-albeit modestly-in todayrsquos primarily commercial property and reinsurance markets They are demanding that insurers improve their risk assessment and quantification offerings so that an insured may avail the benefit in cost (premium rate) on account of well-managed riskThe good news for insurance managers is that as the economy evolves insurers are increasingly matching that evaluation with new products services and capabilities due to opening up the insurance market to the private players
Insurers who are truly listening to their customers and striving to be more in tune with their needs are responding to the fast changing corporate insurance and risk management landscape They are listening to their customers They are making fresh approaches to address the new challenges faced by insured organization by designing the new products as per the needs Insurers are providing value added services to insured to protect the value created by the business
Insurers are increasingly required to develop and expand their information technology platforms to ensure that the vast amount of data they collect about their customers Insurancerisk portfolio can easily and seamlessly be transformed into valuable risk management information To help their customers insurers should make better-informed decisions They must be able to swiftly deliver this data to their customers (insured) anywhere in the world Insurer are also discovering that risk assessment have to be customized to meet policyholdersrsquo new exposures and needs The insurance industry is stepping up and addressing these challenges in several different ways
31
22) CURRENT SCENARIO OF RELIANCE LIFE INSURANCE
RLIC offers wide range of innovative life insurance products targeted at individuals and groups It offers need based products that caters to four distinct segments namely protection child retirement and investment plans RLIC is committed to emerge as a
transnational Life Insurer of global scale and standard
Reliance Life Insurance Company Limited (RLIC) is amongst the fastest growing life insurance companies in India It is also amongst the top four private sector life insurance companies in India (As on FY 2008-2009)
As on March 31 2009 RLIC has an annualized premium of Rs 30 billion with a market share of 103 It has leapfrogged on the growth path and has reached the 4 million policy mark in a short span of within 3 years RLIC has a strong distribution network of 1145 branches with more than 149000 agents
32
Insurancersquos Market Share in Comparison of Other Private company
If we look at the status of Reliance Life Insurancersquos market share in comparison of other
private company in comparison of premium earned-
If we talk the growth of Insurance industryrsquos private players in recent years the data will
reflect-
CH - 3) RESEARCH METHODOLOGY
33
RESEARCH DESIGN-
COMPARITIVE STUDY- A comparative study has been undertaken to compare the traditional Plans of Reliance Life Insurance with that of Bajaj Allianz life insurance
DATA TYPE
INTRODUCTION - Any organization whether big or small private or public needs different type of information to know its popularity I have gathered secondary data and primary data and collected information from the combination of these two data
PRIMARY DATA - Primary data collection method was decided for observing working of the company and approaching the customers directly face to face A great care was taken while collecting the primary data to answer that it is relevant accurate current and unbiased
SECONDARY DATA - Secondary data collection method was used by referring to various websites books and newspapers for collecting information regarding the project under study Secondary data consist of the information that already exists somewhere else for some another purpose
SAMPLING TECHNIQUES-
SAMPLE SIZE- A sample size of 50 was taken to be analyzed
SAMPLE LOCATION-Various sectors of Kamla Nagar Civil lines Mukherji Nagar Model Town and selected areas of Delhi
SAMPLING PROCESS - Convenient sampling was used to overcome the time and money constraints that could have been faced by us while collecting the data The customers were contacted face to face directly and also by way of telephonic conversation with them
ANALYTICAL TOOLS - The data collected were arranged accordingly and statistical tools like bar graphs and pie-charts were used to analyze and present the data
RESEARCH INSTRUMENT USED-
34
SAMPLING MEDIA - Printed questionnaires consisting several questions were asked to have an idea of customers view about Reliance Life Insurance plans followed by personal questions
FIELD WORK - Rigorous field work was undertaken to locate the interested and potential respondents to fulfill the objectives of the study
THE PRIMARY OBJECTIVEOF THE STUDY -
The primary objective of the research study is to have a detailed analysis of Reliance Life Insurance bringing in focus the future prospects of the (Anil Dhirubhai Ambani group) with relevance to the customer perception regarding the various plans and products offered by Reliance Life Insurance
31) DATA ANALYSIS AND INTERPRETATION
35
PERSONAL DETAILS
1) AGE a) 18-30b) 31-50c) 51-65
AGE NO OF RESPONDENTS PERCENTAGE
18-30 21 42
31-50 19 38
51-65 10 20
TOTAL 50 100
INTERPRETATION-The bar graph reveals that 42 of the respondents belong to the age group of 18-30 years 38 lies in the age group of 31-50 years and 20 of them lie in the age group of 51-65 years
2) OCCUPATION
4238
20
05
1015202530354045
NO
O
F
RE
SP
ON
DE
NT
S
18 to 30 31 to 50 51 to 65
AGE (in year)
AGE WISE CLASSIFICATION
36
a) Serviceb) Businessc) Professiond) Housewifee) Retired
OPTION NO OF RESPONDENTS PERCENTAGE
Service 16 32
Business 14 28
Profession 5 10
Housewife 8 16
Retired 7 14
TOTAL 50 100
INTERPRETATION-The above bar graph reveals that 32 of the total respondents were servicemen 28 of them belonged to the business class 10 were professionals 16 were housewives and 14 of the total respondents fall in the retired category
3) INCOME
32
28
10
16
14
0
5
10
15
20
25
30
35
Service Business Profession Housewife Retired
OCCUPATION
OCCUPATION WISE CLASSIFICATION
37
a) 150000-300000
b) 300000-500000
c) Above 500000
OPTION NO OF RESPONDENTS PERCENTAGE
150000-300000 24 48
300000-500000 14 28
Above 500000 12 24
TOTAL 50 100
INTERPRETATION-The above bar graph reveals that out of the total respondents 48 lie in the income group of 150000-300000 28 of the total respondents belonged to the income group of 300000-500000 and 24 lie in the income group of people earning an income of above Rs 500000pa
4828 24
01020304050
N O
OF
RE
SP
ON
DE
NT
S
150000-300000
300000-500000
ABOVE500000
INCOME (in RS)
INCOME WISE CLASSIFICATION
38
4) FAMILY MEMBERS
a) 2b) 3c) 4d) Above 4
OPTION NO OF RESPONDENT PERCENTAGE
2 11 22
3 9 18
4 24 48
Above 4 6 12
TOTAL 50 100
INTERPRETATION The above bar graph shows that 22 of the total respondents had a family of 2 members 18 of them had 3 family members 48 of them had 4 family members and 12 of them had the no of family members above 4
Q1 Where do you prefer to invest
22 18
48
120
1020304050
No
o
f re
spo
nd
ents
2 3 4 Above 4
No of family members
MEMBER WISE CLASSIFICATION
39
a) fixed deposits
b) stock
c) mutual funds
d) insurance
e) others
Option No of respondents Percentage
Fixed deposits 5 10
Stock 10 20
Mutual fund 10 20
Insurance 18 36
others 7 14
TOTAL 50 100
Interpretation The above pie chart shows that out of 50 respondents 10 preferred to invest in fixed deposits 20 in stocks 20 in mutual funds 36 in insurance and 14 in others like property gold etc
Q2 What are your priorities for investment
40
a) protecting your family against pre-mature death
b) wealth creation
c) retirement needs
d) child education and marriage
e) protect income against disability sickness or critical illness
Option No of respondents Percentage
Protecting your family against pre mature death
10 20
Wealth creation 14 28
Retirement needs 5 10
Child education and marriage 7 14
Protect income against disability sickness or critical illness
14 28
TOTAL 50 100
Interpretation The above pie chart shows that out of 50 respondents 20 of them invest for protecting their family against premature death 28 for creating wealth 10 for meeting their future retirement needs 14 for child education amp marriage and 28 for protection against disability and sickness
Q3 What is your main motive behind investing in life insurance
41
a) tax benefit
b) savings
c) risk cover
Option No of respondents Percentage
Tax benefits 27 54
Savings 5 10
Risk cover 18 36
TOTAL 50 100
Interpretation The above pie chart shows that out of the sample respondents 54 have tax benefit 10 have savings and 36 have risk cover as their main motive for making an investment in life
Q4 What kind of investment do you prefer
42
a) high risk high gain
b) low risk low gain
c) moderate
d) vary times to times
Option No of respondents Percentage
High risk high gain 8 16
Low risk low gain 5 10
Moderate 12 24
Vary times to times 25 50
TOTAL 50 100
Interpretation The above pie chart shows that out of 50 respondents 16 preferred high risk- high gain form of investment 10 preferred low risk- low gain form of investment 24 preferred moderate investment and 50 preferred varied form of investment
43
Q5Are you interested to invest in Traditional Plans
a) YES
b) NO
Option No of respondents Percentage
YES 36 72
NO 14 28
TOTAL 50 100
Interpretation The above pie chart shows that 72 of the respondents preferred to invest in Traditional Plans
44
Q6 What is your level of annual investmenta) below 20000
b) 20000-40000
c) above 40000
Option No of respondents Percentage
Below 20000 41 82
20000-40000 7 14
Above 40000 2 4
TOTAL 50 100
Interpretation The above pie chart shows that 82 of the respondents are willing to invest below Rs 20000 per annum 14 of them want to invest within Rs 20000 per annum to Rs 40000 and 4 wanted to invest over and above Rs 40000
45
Q7 What factors would you consider most important before choosing an insurance policy
a) publicity of the company
b) reputation of the company
c) quality of life advisors
d) after sales-supporting of the company
Option No of respondents Percentage
Publicity of the co 5 20
Reputation of the co 25 50
Quality of life advisors 10 10
After sale-services 10 20
TOTAL 50 100
Interpretation out of the sample respondents 20 considers publicity of the company 50 considers reputation of the company 10 considers quality of life advisors and 20 considers after sales support of the company as the most important factor for choosing an insurance company
46
Q8 Which life insurance company would you prefer the most to invest ina) reliance life insurance (RLIC)
b) Bajaj Allianz life insurance
Option No of respondents Percentage
RLIC 21 42
BAJAJ ALLIANZ 29 58
TOTAL 50 100
Interpretation Out of 50 respondents 42 preferred to invest in reliance life insurance over 58 of the respondents who prefer to invest in Bajaj Allianz life insurance
47
Q9 If reliance life insurance then which particular plan you would like to invest ina) Reliance Term Plan
b) Reliance Whole Life Plan
c) Reliance Endowment Plan
d) Reliance Special Endowment Plan
Option No of respondents Percentage
Reliance term plan 6 2858
Reliance whole life plan 3 1428
Reliance endowment plan 9 4286
Reliance special endowment plan 3 1428
TOTAL 21 100
Interpretation Out of 21 respondents 2858 preferred to invest in term plan 1428 in whole life plan 4286 in endowment plan and 1428 of them preferred to invest in special endowment plan of reliance life insurance
48
Q10 If Bajaj Allianz life insurance then which particular plan you would like to invest in
I ENDOWMENT PLAN a) Bajaj Allianz Invest Gain
b) Bajaj Allianz save Care Economy SP
c) Bajaj Allianz life time care
d) Bajaj Allianz Super Saver plan
II MONEY BACK PLAN i Bajaj Allianz Cash Gain plan
Option No of respondents Percentage
Invest gain plan 3 1035
Save care economy SP 6 2069
Life time care 7 2415
Super saver plan 3 1035
Cash gain plan 10 3446
TOTAL 29 100
Interpretation Out of 29 respondents 1035 of them plan to invest in Bajaj Allianz- Invest Gain 2069 wish to invest in Bajaj Allianz save Care Economy SP 2415 want to invest in Bajaj Allianz life time care 1035 in Bajaj Allianz Super Saver plan and 3446 prefer to invest in Bajaj Allianz Cash Gain plan
49
32) SIGNIFICANCE OF STUDY
Life insurance is one of the most rapidly growing sectors in India The main reason
behind the growth can attributed to the high population density improving economical
condition improving education level and improving awareness Due to these factors there
is still huge scope for growth in this sector Like any other business when the
opportunities are present everybody tends to enter the industries This growth hence
fetches the new competitors as well as new strategies from existing players To sustain in
any competitive industry the organization must adapt to existing strategies and adopt
new ones This study will focus on the analysis of Reliance Life Insurance in comparison
with the present scenario of Bajaj Allianz Life Insurance with respect to the Traditional
Plans of both the companyrsquos This will mainly cover the following aspects
To know about the awareness and popularity of various Traditional Plans offered
by Reliance Life Insurance and Bajaj Allianz Life Insurance
How Reliance Life Insurance can develop and sustain a good distribution
network
These will provide it benefit both in terms of better market coverage as well as better
penetration
50
33) SCOPE OF THE STUDY
1) This helps in finding out vast potential of insurance company
2) The study was conducted in National Capital Region (NCR) only
3) The number of respondents to be surveyed can be improved
4) This study was conducted by comparing the performances amp products of three private
amp government insurance players in insurance industry
5) This study was conducted to analyze the market stand of Reliance life insurance
Company limited and Bajaj Allianz Life Insurance Company Limited of India insurance
companies
6) This study is done to eliminate all the myths which people have in their minds
regarding Insurance Sector
51
34) OBJECTIVES
To have a detailed understanding of Reliance Life Insurance and Bajaj Allianz Life Insurance
To find out various reasons considered while investing in policies
To get knowledge about the market exposure and future prospects about Reliance Life Insurance
To know the perception of the consumers about the life insurance
To analyze the Traditional plans of Reliance Life Insurance and compare it with Bajaj Allianz
To know about the brand awareness of Reliance Life Insurance its customer preferences over Bajaj Allianz in the market
To study a proper knowledge about the life insurance industry
To understand the consumer choice while investing in policies
52
CHAPTER 4
DISCUSSION AND FINDINGS OF THE STUDY
FINDINGS OF THE STUDY RECOMMENDATION AND SUGGESTIONS CONCLUSION LIMITATIONS BIBLIOGRAPHY ANNEXUREQUESTIONNAIRE
53
41) FINDINGS OF THE STUDY
1) The survey reveals that still a large proportion of population is interested to invest in other forms of investment other than insurance as still most of them are unaware about the importance of insurance in their life
2) Basically people make varied form of investment for creating wealth to protect their families against pre-mature death and to protect income against disability sickness or critical illness
3) The main motive of the individuals investing is receives benefits US 1010D People generally consider insurance as a tax saving device
4) Mostly people prefer time to time form of investment as they are not willing to take high degree of risk
5) 72 of the respondents are preferred to invest in Traditional Plans
6) Most of the people prefer to make an annual investment up to a maximum of Rs20 000 per annum
7) When the product is like life insurance reputation of the company publicity of the company amp after sale services of the company matters a lot This means that people would choose that insurance company only where the quality of life advisors is satisfactory
8) Most people prefer to invest in Bajaj Allianz Life Insurance as compared to making an investment in Reliance Life Insurance
9) The most preferable Traditional plan of Reliance Life Insurance is Endowment Plan
10) The most preferable plan of Bajaj Allianz Life Insurance co is Cash Gain Plan
54
42) SUGGESTIONS amp RECOMMENDATIONS
Based on the observations of the study some suggestions for the organization are made as
follows
1) Quality of advisors is also as important as the quantity Thus company should go
mainly for qualified professionals
2) Company should increase its budget on publicity so that awareness can be increased
3) Clarity and transparency should be provided to the customer regarding various
products
4) Training sessions should be planned in advance so that schedule can be provided to
the advisor in advance
5) Apart from the Brand Positioning in urban area a strategy should be adopted by
Reliance to make its brand also near to middle level or high aspirant people because they
are the main source of the business in India
6) Awareness Camp to the sub urban area should be focused by Reliance
7) Some innovative technique or product is required in order to attract the consumer
43) LITERATURE REVIEW
55
1) Robi Elenekave has explained in detail why various retirement plans and pension plans donrsquot give the desired returns The main difficulty is the use of incorrect method for calculations done to find out the return on investment This is primarily due to wrong assumptions The study provides information about the various precautions which need to be considered before planning so that the desired results can be achieved
2) Another paper provides insight about how various financial sectors invest in bond market The study was how the different players investment different instruments according to the risk appetite and desired rate of return The study shows that life insurance sector mainly invests in government bond which are low return and low risk instrument The investment in government bond it shows that life insurance companies are more conservative in investment
3) K Subhash has presented the history of Indiarsquos life insurance industry in three stages before independence after independence and post liberalization which not only provides information but also help in analyzing the impact of these major changes The authors have also discussed the huge potential which exists in the rural India The insurance company must realize the importance of rural sector because the future lies there The author commented about the increasing share of private player in the existing market This confirms the availability of opportunity in this sector The paper also provides the importance of professional and focused approach which was given no importance
4) Tapen Sinha has discussed the various challenges and opportunities in the insurance market One of the very important factors which have been discussed in the study is the importance of developing new and better products As the scenario changes the need of an individual also changes so any organization must understand and fulfill these needs The new product development requires constant research so organization must also focus on it
5) Roger G Ibbotson discusses how financial planners and advisors have recently started to recognize that human capital must be taken into account when building optimal portfolios for individual investors Any investorrsquos human capital has a unique mortality risk However life insurance in its forms can hedge against this mortality risk Thus human capital affects both the optimal asset allocation and the optimal demand for life insurance This paper provides a unified framework based on human capital in order to enable individual investors to make both decisions jointly
6) Rakesh Niraj study tells how the flow of information in any organization is important For any organization to grow the flow of information must be good both upwards as well as ownwards The proper flow of information will also ensure proper flow of good and services from organization to customer and proper flow of information from customer to organization The information from customers will help the organization in providing better goods and services to the customer For the above purpose organization must ensure good channel partner who can provide the organization with correct feedback Hence it becomes very important for any organization to acquire good channel partners
56
7) Stephen P Robbins has discussed how group dynamics works in any organization The success of any organization depends on the success of its various teams and how these teams work together The book provides various techniques which can be used by any organization to get result from the team effort The conflict resolution is a major task in any group Various techniques which the organization can use in conflict resolution are also discussed Another important aspect covered is the importance of leadership in the organization The various forms of leadership have been discussed and the kinds of leadership which can be effective in particular situations are also discussed
8) R Wayne Mondy has discussed the importance of training and development in any organization The training provides skills to perform the current job where as the development involve learning beyond present need The various type of training are discussed which can be used according to the requirement Training and development are not only important for better performance of an individual but it also gives satisfaction The major factors which influence training and development are found to be management support commitment of trainee and trainer complexity of the organization The process of developing good training plans is also provided In another part author has discussed the importance of right man for right job The compensation strategies are also given which are very crucial for ant industry
9) Philip Kotler has discussed the importance of channels partners Better the channel partners better will be the delivery model Detailed discussion about how to design the channel structure so that all the requirements could be fulfilled is provided The various issues faced by the organization while managing the channels are also given When an organization has more than one channel it becomes very important that all the channels should be integrated in such a way that the organization get the best out of all At times due to the conflicting benefit of the different channels the conflict arise so various strategies to manage these issues is also discussed in the chapter
10) Michael J Etzel has written about the marketing of services The marketing of services is different from the goods because of the characteristic of service like intangibility inseparability heterogeneity etc Brief about pricing strategies is also given in case of services The authors have also given the impact of technological development on the services marketing The author has also given the importance of brand and after sales support in case of services as perception of the customers plays an important role In other part of the book the authors has described the importance of distribution channels and designing of the same A channel partner should be consider as partner according to discussion The legal complications associated with channels are also discussed These complications are necessary to take into the consideration while managing the channels The conflicting interest of channels both horizontally and vertically are also taken into the consideration
57
11) Boone has discussed about the importance of personal financial planning The concept of time value of money has also been elaborated The importance of creating and implementing budget is given under money management The other important concepts for financial planning like credit management and understanding taxes are also explained In one section the authors have discussed the importance of investment and what should be the major considerations while making any investment The considerations include the risk associated with the investment return on the investment etc The importance and benefits of life insurance has also been given The discussion also includes various legal aspects associated with life insurance The overview of retirement planning is also given which includes importance and benefit of retirement planning Various tools for proper retirement planning are also discussed
58
44) CONCLUSION
1) The customers are very much sensitive towards their investment They would like to invest only in that insurance company which enjoys good public image along with quality good services
2) The result of the survey conducted shows that Bajaj Allianz Life Insurance is the leader in life insurance industry but Reliance Life Insurance and other private players are giving it a close competition
3) The motive of the people behind investing in life insurance is the tax benefits that they would receive under sec 80C and 1010D
4) In Life Insurance industry the after sales support of the company is as important as the quality of life advisors
59
45) LIMITATIONS
There were some limitations faced during the study as discussed below
Since the study was taken for two months so there was a constraint of time and effort
The study was limited only to some of the Delhi regions so the results may be biased
Questionnaire was given to 125 people however only 50 responded to it which is very small for such type of study
The biasness of consumer or responses error cannot be eliminated
Most of the people are not aware about the Importance and the necessity of insurance in their life
Adverse perception of the people towards insurance sector- People consider insurance as a tax saving device
Lack of awareness about the earning opportunity in the insurance sector
60
46) BIBLIOGRAPHY
wwwreliancelifeinsurancecom
wwwadagroupcom
wwwirdacom
wwwbajajallianzlifeinsurancecom
wwwallianzbajajcom
47) ANNEXURE
61
QUESTIONNAIRE
A comparative analysis of consumer perception regarding Traditional plans of Reliance Life Insurance with that of Bajaj Allianz Life Insurance
NAME ___________________________
PERSONAL DETAILS
1) AGE_________________
1) OCCUPATION______________
2) INCOME___________________
3) FAMILY MEMBERS_________
Q1 Where do you prefer to investa) Fixed deposits b) Stock c) Mutual funds d) Insurance e) Others
Q2 What are your priorities for investmenta) Protecting your family against pre-mature death b) Wealth creation c) Retirement needs d) Child education and marriage e) Protect income against disability sickness or critical illness
Q3 What is your main motive behind investing in life insurancea) Tax benefit b) Savings c) Risk cover
Q4 What kind of investment do you prefera) High risk high gain b) Low risk low gain c) Moderate d) Vary times to times
62
Q5Are you interested to invest in Traditional Plansa) Yes b) No
Q6 What is your level of annual investmenta) below 20000 b) 20000-40000 c) above 40000
Q7 What factors would you consider most important before choosing an insurance company
a) publicity of the company b) reputation of the company c) quality of life advisors d) after sales-supporting of the company
Q8 Which life insurance company would you prefer the most to invest ina) Reliance life insurance b) Bajaj Allianz life insurance
Q9 If reliance life insurance then which particular plan you would like to invest ina) Reliance Term Plan b) Reliance Whole Life Plan c) Reliance Endowment Plan d) Reliance Special Endowment Plan
Q10 If Bajaj Allianz life insurance then which particular plan you would like to invest in
I ENDOWMENT PLAN
a) Bajaj Allianz Invest Gain
b) Bajaj Allianz save Care Economy SP
c) Bajaj Allianz life time care
d) Bajaj Allianz Super Saver plan
II MONEY BACK PLAN
a) Bajaj Allianz Cash Gain plan
63
64
- COMPANY PROFILE
- ABOUT RELIANCE LIFE INSURANCE
- HISTORY
- Reliance Capital Limited announced the launch of its life insurance business on February 1 2006 This was after obtaining the required regulatory approvals from the Registrar Of Companies and the Insurance Regulatory and Development Authority
- It was in August 2005 that the ball was set rolling when Reliance Capital Limited the financial arm of Reliance ndash Anil Dhirubhai Ambani Group (ADAG) ndash announced the requisition of 100 shareholding in AMP Sanmar Life Insurance Company Limited and the formal transfer of shares took place in October 2005 The company will issue all policy contracts under the Reliance Life Insurance Company limited name All the existing policy contracts also stand transferred to the Reliance Life Insurance entity with all the original contractual terms and commitments intact
- CORE VALUES
- Reliance Life Insurance Company Limited has some core values which are listed as follows
- Vision bull To be the first choice insurer for customers bull To be the preferred employer for staff in the insurance industry bull To be the number one insurer for creating shareholder value
- Mission As a responsible customer focused market leader we will strive to understand the insurance needs of the consumers and translate it into affordable products that deliver value for money
- 12) TRADITIONAL PLANS OF THE COMPANY
- 12A )TRADITIONAL PLAN OF RELIANCE LIFE INSURANCE-
- Life insurance products are designed to suit the requirements of customers Fundamentally the product provide for
- In every product to a certain degree risk cover is imperative for it to fall under the category of insurance Based on the coverage of the product the premiums are calculated and the customer pays accordingly In order to suggest the right product it is essential for an agent to understand the requirements of the customer well
- The traditional plans of the company have the following features-
- Fixed Tenure
- Potential for better returns
- Transparency
- Flexibility in investment
- Flexibility to invest more
- Flexibility to skip the premium
- Flexibility to choose the cover
- High liquidity
- Age term and sum assured decide the amount of premium
- Top- ups and switches are not allowed
- Reliance Life Insurance Company Limited has offered 9
- 1) Reliance term plan-
- 2) Reliance Whole Life Plan -
- 3) Reliance Endowment Plan -
- 4) Reliance Special Endowment Plan -
- 13) INDUSTRY PROFILE
- MEANING OF INSURANCE
- Insurance may be described as a social device to reduce or eliminate risk of loss to life and property Insurance is a collective bearing of risk Insurance is a financial device to spread the risks and losses of few people among a large number of people as people prefer small fixed liability instead of big uncertain and changing liability
- Insurance can be defined as a ldquolegal contract between two parties whereby one party called insurer undertakes to pay a fixed amount of money on the happening of a particular event which may be certain or uncertainrdquo The other party called insured pays in exchange a fixed sum known as premium
- Insurance is desired to safeguard oneself and onersquos family against possible losses on account of risks and perils It provides financial compensation for the losses suffered due to the happening of any unforeseen events
- IMPORTANCE OF INSURANCE
- Insurance services play predominant role in the process of financial Intermediary Today insurance industry is one of the most growing sectors in India There is lot of potential in the Indian Insurance Industry
- There are many issues which require study The scope of the study of Insurance industry of India would be very great as there are ongoing Developments in the industry after the opening of the sector
- Right now the insurance industry has great opportunities in a country like India or China which huge population Also the penetration of insurance in India is very low in both life and non-life segment so there is lot potential to be tapped Before starting the discussion on insurance industry and related issues we have to start with the basics of insurance So first we understand what is insurance How the word lsquoinsurancersquo is different from the word lsquoassurancersquo Etc
- HISTORY OF INSURANCE
- The concept of insurance is believed to have emerged almost 4500 years ago in the ancient land of Babylonia where traders used to bear risk of the carvan by giving loans which were later repaid with interest when the goods arrived safely
- The concept of insurance as we know today took shape in 1688 at a place called Lloydrsquos Coffee House in London where risk bearers used to meet to transact business This coffee house became so popular that Lloydrsquos became the one of the first modern insurance companies by the end of the eighteenth century
- Marine insurance companies came into existence by the end of the eighteenth century These companies were empowered to write fire and life insurance as well as marine The Great Fire of London in 1966 caused huge loss of property and life With a view to providing fire insurance facilities
- Dr Nicholas Barbon set up in 1967 the first fire insurance company known as the Fire office
- Life insurance in its modern form came to India from England in 1818 The Oriental Life Insurance Company was the first insurance company to be set up in India to help the widows of European community The insurance companies which came into existence between 1818 and 1869 treated
- Indian lives as subnormal and charged an extra premium of 15 to 20 per cent The first Indian insurance company the Bombay Mutual Life
- Assurance Society came into existence in 1870 to cover Indian lives at normal rates
- The Insurance Act 1938 the first comprehensive legislation governing both life and non-life branches of insurance were enacted to provide strict state control over insurance business This amended insurance Act looked into investments expenditure and management of these companies
- By the mid- 1950s there were 154 Indian insurers 16 foreign insurers and 75 provident societies carrying on life insurance business in India Insurance business flourished and so did scams irregularities and dubious investment practices by scores of companies As a result the government decided to nationalize the life assurance business in India The Life Insurance
- Corporation of India (LIC) was set up in 1956 The nationalization of life insurance was followed by general insurance in 1972
- MEANING OF LIFE INSURANCE
- There are three parties in a life insurance transaction the insurer the insured and the owner of the policy (policyholder) although the owner and the insured are often the same person
- Another important person involved in a life insurance policy is the beneficiary The beneficiary is the person or persons who will receive the policy proceeds upon the death of the insured
- Life insurance may be divided into two basic classes ndash term and permanent
- HISTORY OF LIFE INSURANCE
- Risk protection has been a primary goal of humans and institutions throughout history Protecting against risk is what insurance is all about
- Over 5000 years ago in China insurance was seen as a preventative measure against piracy on the sea Piracy in fact was so prevalent that as a way of spreading the risk a number of ships would carry a portion of another ships cargo so that if one ship was captured the entire shipment would not be lost
- In another part of the world nearly 4500 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
- Life insurance came about a little later in ancient Rome where burial clubs were formed to cover the funeral expenses of its members as well as help survivors monetarily With Romes fall around 450 AD most of the concepts of insurance were abandoned but aspects of it did continue through the Middle Ages particularly with merchant and artisan guilds These provided forms of member insurance covering risks like fire flood theft disability death and even imprisonment
- During the feudal period early forms of insurance ebbed with the decline of travel and long-distance trade But during the 14th to 16th centuries transportation commerce and insurance would again reemerge
- And similar to ancient Rome burial societies were formed in the Buddhist period to help families build houses and to protect widows and children
- Modern Insurance
- Illegal almost everywhere else in Europe life insurance in England was vigorously promoted in the three decades following the Glorious Revolution of 1688 The type of insurance we see today owes its roots to 17th century England Lloyds of London or as they were known then Lloyds Coffee House was the location where merchants ship owners and underwriters met to discuss and transact business deals
- While serving as a means of risk-avoidance life insurance also appealed strongly to the gambling instincts of Englands burgeoning middle class
- Gambling was so rampant in fact that when newspapers published names of prominent people who were seriously ill bets were placed at Lloydrsquos on their anticipated dates of death Reacting against such practices 79 merchant underwriters broke away in 1769 and two years later formed a ldquoNew Lloydrsquos Coffee Houserdquo that became known as the ldquoreal Lloydrsquosrdquo Making wagers on peoples deaths ceased in 1774 when parliament forbade the practice
- Insurance moves to America
- The US insurance industry was built on the British model The year 1735 saw the birth of the first insurance company in the American colonies in
- Charleston SC The Presbyterian Synod of Philadelphia in 1759 sponsored the first life insurance corporation in America for the benefit of ministers and their dependents And the first life insurance policy for the general public in the United States was issued in Philadelphia on May 22 1761
- But it wasnt until 80 years later (after 1840) that life insurance really tookoff in a big way The key to its success was reducing the opposition from religious groups
- In 1835 the infamous New York fire drew peoples 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
- With the creation of the automobile public liability insurance which first made its appearance in the 1880s gained importance and acceptance
- More advancement was made to insurance during the process of industrialization In 1897 the British government passed the Workmens Compensation Act which made it mandatory for a company to insure its employees against industrial accidents
- During 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 most labor 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
- BENEFITS OF LIFE INSURANCE
- 1) Risk cover -Life Insurance contracts allow an individual to have a risk cover against any unfortunate event of the future
- 2) Tax Deduction -Under section 80C of the Income Tax Act of 1961 one can get tax deduction on premiums up to one lakh rupees Life Insurance policies thus decrease the total taxable income of an individual
- 3) Loans -An individual can easily access loans from different financial institutions by pledging his insurance policies
- 4) Retirement Planning -What had provided protection against the financial consequences of premature death may now be used to help them enjoy their retirement years
- 5) Educational Needs -Similar to retirement planning the cash values that flow from ones life insurance schemes can be utilized for educational needs of the insurer or his children
- The Life Insurance Industry has an enviable track record among public sector units It has a Consistent profit and dividend paying record accompanied by a steady growth in its financial resources Through investments in the Government sector and socially- oriented sectors the Industry has contributed immensely to the nations development The industry is recognized as one of the largest financial Institutions in the country The ventures initiated by the industry in the areas of Mutual Fund
- Housing Finance has done exceedingly well in recent years To protect the countrys foreign exchange reserves the reinsurance arrangement are so organized that maximum retention is made possible within the country while at the same time protecting interests of the policy holders
- 22) CURRENT SCENARIO OF RELIANCE LIFE INSURANCE
- RLIC offers wide range of innovative life insurance products targeted at individuals and groups It offers need based products that caters to four distinct segments namely protection child retirement and investment plans RLIC is committed to emerge as a transnational Life Insurer of global scale and standard
- CH - 3) RESEARCH METHODOLOGY
- RESEARCH DESIGN-
- SAMPLING TECHNIQUES-
- THE PRIMARY OBJECTIVEOF THE STUDY-
- 34) OBJECTIVES
- 7) Some innovative technique or product is required in order to attract the consumer
- 45) LIMITATIONS
- 46) BIBLIOGRAPHY
-
two years later formed a ldquoNew Lloydrsquos Coffee Houserdquo that became known as the ldquoreal Lloydrsquosrdquo Making wagers on peoples deaths ceased in 1774 when parliament forbade the practice
Insurance moves to AmericaThe US insurance industry was built on the British model The year 1735 saw the birth of the first insurance company in the American colonies inCharleston SC The Presbyterian Synod of Philadelphia in 1759 sponsored the first life insurance corporation in America for the benefit of ministers and their dependents And the first life insurance policy for the general public in the United States was issued in Philadelphia on May 22 1761But it wasnt until 80 years later (after 1840) that life insurance really tookoff in a big way The key to its success was reducing the opposition from religious groups
In 1835 the infamous New York fire drew peoples 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
With the creation of the automobile public liability insurance which first made its appearance in the 1880s gained importance and acceptanceMore advancement was made to insurance during the process of industrialization In 1897 the British government passed the Workmens Compensation Act which made it mandatory for a company to insure its employees against industrial accidents
During 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 most labor 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
25
BENEFITS OF LIFE INSURANCE
1) Risk cover -Life Insurance contracts allow an individual to have a risk cover against any unfortunate event of the future
2) Tax Deduction -Under section 80C of the Income Tax Act of 1961 one can get tax deduction on premiums up to one lakh rupees Life Insurance policies thus decrease the total taxable income of an individual
3) Loans -An individual can easily access loans from different financial institutions by pledging his insurance policies
4) Retirement Planning -What had provided protection against the financial consequences of premature death may now be used to help them enjoy their retirement yearsMoreover the cash value can be used as an additional income in the old age
5) Educational Needs -Similar to retirement planning the cash values that flow from ones life insurance schemes can be utilized for educational needs of the insurer or his children
26
ROLE OF LIFE INSURANCE IN THE GROWTH OF THE ECONOMY
The Life Insurance Industry has an enviable track record among public sector units It has a Consistent profit and dividend paying record accompanied by a steady growth in its financial resources Through investments in the Government sector and socially- oriented sectors the Industry has contributed immensely to the nations development The industry is recognized as one of the largest financial Institutions in the country The ventures initiated by the industry in the areas of Mutual Fund
Housing Finance has done exceedingly well in recent years To protect the countrys foreign exchange reserves the reinsurance arrangement are so organized that maximum retention is made possible within the country while at the same time protecting interests of the policy holders
27
ROLE OF IRDA
MISSION
ldquoTo protect the interests of the policyholders to regulate promote
and ensure orderly growth of the insurance industry and for matters
connected therewith or incidental theretordquo
The Insurance Act 1938 had provided for setting up of the Controller of Insurance to act
as a strong and powerful supervisory and regulatory authority for insurance Post
nationalization the role of Controller of Insurance diminished considerably in
significance since the Government owned the insurance companies But the scenario
changed with the private and foreign companies foraying in to the insurance sector This
necessitated the need for a strong independent and autonomous Insurance Regulatory
Authority was felt As the enacting of legislation would have taken time the then
Government constituted through a Government resolution an Interim Insurance
Regulatory Authority pending the enactment of a comprehensive legislation
The Insurance Regulatory and Development Authority Act 1999 is an act to provide for
the establishment of an Authority to protect the interests of holders of insurance policies
to regulate promote and ensure orderly growth of the insurance industry and for matters
connected therewith or incidental thereto and further to amend the Insurance Act 1938
the Life Insurance Corporation Act 1956 and the General insurance Business
(Nationalization) Act 1972 to end the monopoly of the Life Insurance Corporation of
India (for life insurance business) and General Insurance Corporation and its subsidiaries
(for general insurance business) The act extends to the whole of India and will come
into force on such date as the Central Government may by notification in the Official
Gazette specify Different dates may be appointed for different provisions of this Act
28
The Act has defined certain terms some of the most important ones are as follows
Appointed day means the date on which the Authority is established under the act
Authority means the established under this Act Interim Insurance Regulatory Authority
means the Insurance Regulatory Authority set up by the Central Government through
Resolution No 17(2) 94-lns-V dated the 23rd January 1996
Words and expressions used and not defined in this Act but defined in the Insurance Act
1938 or the Life Insurance Corporation Act 1956 or the General Insurance Business
(Nationalization) Act 1972 shall have the meanings respectively assigned to them in
those Acts A new definition of Indian Insurance Company has been inserted Indian
insurance company means any insurer being a company
(a) Which is formed and registered under the Companies Act 1956
(b) in which the aggregate holdings of equity shares by a foreign company either by
itself or through its subsidiary companies or its nominees do not exceed twenty-six
percent paid up capital in such Indian insurance company
(c) Whose sole purpose is to carry on life insurance business general insurance business
or re-insurance business
29
CURRENT SCENERIO
21) CURRENT SCENERIO OF THE INSURANCE INDUSTRY
With largest number of life insurance policies in force in the world insurance happens to be a mega opportunity in India Itrsquos a business growing at the rate of 15-20 per cent annually and presently is of the order of Rs 450 billion Together with banking services it adds about 7 per cent to the countryrsquos GDP Gross premium collection is nearly 2 per cent of GDP and funds available with LIC for investment are 8 per cent of GDP
Yet nearly 80 percent of Indian population is without life insurance cover while health insurance and non-life insurance continues to be below international standards And this part of the population is also subject to weak social security and pension systems with hardly any old age income security This it is an indicator that growth potential for the insurance sector is immense A well-develop and evolved insurance sector is needed for economic development as it provides long term funds for infrastructure development and at the same time strengthens the risk taking ability It is estimated that over the next ten years India would require investments of the order of one trillion US dollar The insurance sector to some extent can enable investment in infrastructure development to sustain economic growth of the country Insurance is a federal subject in India There are two legislation that govern the sector - The Insurance Act-1938 and The IRDA Act-1999
In India insurance is generally considered as a tax-saving device instead of its other implied long term financial benefits Indian people are prone to investing in properties and gold followed by bank deposits They selectively invest in shares also but the percentage is very small Even to this day Life Insurance Corporation of India dominates India insurance sector With the entry of private sector players backed by foreign expertise Indian insurance market has become more vibrant Business is becoming increasingly vulnerable due to wide variety of risk particularly after September 11 2001 disaster in which twin tower located in the hearts of New York city were crashed by terrorist attack resulting in loss of 6000 human lives as well as financial loss to the extent of $45 billion The impact of this terrorist attack has created new horizon of risk to the business world today
However rapid changes in the global economy development of technology and e-business already gathered momentum Increased dependency on technology has originated new risks that have resulted in well-published incidents Computer hackers obtaining credit card information from visa and Power-Gen the love bug virus cyber extortion web content liability professional errors and omissions computers and other crimes and activities such as terrorism kidnapping and companyrsquos executive and extortion of money commercial liability etc have significant impact on business resulting in extreme financial loss commercial embarrassment or regulatory implications
Corporation insurancerisk managers under the circumstances have to demand increasingly complex insurance products They have to be more attentive and
30
knowledgeable about emerging risks how those risks are managed effectively and efficiently and how they could ultimately affect a companyrsquos financial situation and therefore its position in the market place In short how such risks are managed and can give to an insured a competitive advantage
In the changing times adoption of e-commerce into business models the integration of web-based communication and data transfer capabilities into the business operations and leveraging of advanced network and technology architecture for maximum benefit are the new horizon of the risks For the corporate insurancerisks managers these new exposure-cyber-risks-can lead to cyber losses widening the interpretation of what constitute insure property damage particularly as it relates to information technology and dataAll the while organizations are tremendous pressure to reduce expenses and increase profit margin and cannot afford to suffer a property loss of business interruption due to any cause (risk) How a company identifies quantifies qualifies and manages these new risks exposure in addition to the well-known tradition risks is becoming an important factor in creating shareholders value This often means changing the way Everyone in the organization have to think about risk
Insurance managers are seeing price levels (premium) continue to rise-albeit modestly-in todayrsquos primarily commercial property and reinsurance markets They are demanding that insurers improve their risk assessment and quantification offerings so that an insured may avail the benefit in cost (premium rate) on account of well-managed riskThe good news for insurance managers is that as the economy evolves insurers are increasingly matching that evaluation with new products services and capabilities due to opening up the insurance market to the private players
Insurers who are truly listening to their customers and striving to be more in tune with their needs are responding to the fast changing corporate insurance and risk management landscape They are listening to their customers They are making fresh approaches to address the new challenges faced by insured organization by designing the new products as per the needs Insurers are providing value added services to insured to protect the value created by the business
Insurers are increasingly required to develop and expand their information technology platforms to ensure that the vast amount of data they collect about their customers Insurancerisk portfolio can easily and seamlessly be transformed into valuable risk management information To help their customers insurers should make better-informed decisions They must be able to swiftly deliver this data to their customers (insured) anywhere in the world Insurer are also discovering that risk assessment have to be customized to meet policyholdersrsquo new exposures and needs The insurance industry is stepping up and addressing these challenges in several different ways
31
22) CURRENT SCENARIO OF RELIANCE LIFE INSURANCE
RLIC offers wide range of innovative life insurance products targeted at individuals and groups It offers need based products that caters to four distinct segments namely protection child retirement and investment plans RLIC is committed to emerge as a
transnational Life Insurer of global scale and standard
Reliance Life Insurance Company Limited (RLIC) is amongst the fastest growing life insurance companies in India It is also amongst the top four private sector life insurance companies in India (As on FY 2008-2009)
As on March 31 2009 RLIC has an annualized premium of Rs 30 billion with a market share of 103 It has leapfrogged on the growth path and has reached the 4 million policy mark in a short span of within 3 years RLIC has a strong distribution network of 1145 branches with more than 149000 agents
32
Insurancersquos Market Share in Comparison of Other Private company
If we look at the status of Reliance Life Insurancersquos market share in comparison of other
private company in comparison of premium earned-
If we talk the growth of Insurance industryrsquos private players in recent years the data will
reflect-
CH - 3) RESEARCH METHODOLOGY
33
RESEARCH DESIGN-
COMPARITIVE STUDY- A comparative study has been undertaken to compare the traditional Plans of Reliance Life Insurance with that of Bajaj Allianz life insurance
DATA TYPE
INTRODUCTION - Any organization whether big or small private or public needs different type of information to know its popularity I have gathered secondary data and primary data and collected information from the combination of these two data
PRIMARY DATA - Primary data collection method was decided for observing working of the company and approaching the customers directly face to face A great care was taken while collecting the primary data to answer that it is relevant accurate current and unbiased
SECONDARY DATA - Secondary data collection method was used by referring to various websites books and newspapers for collecting information regarding the project under study Secondary data consist of the information that already exists somewhere else for some another purpose
SAMPLING TECHNIQUES-
SAMPLE SIZE- A sample size of 50 was taken to be analyzed
SAMPLE LOCATION-Various sectors of Kamla Nagar Civil lines Mukherji Nagar Model Town and selected areas of Delhi
SAMPLING PROCESS - Convenient sampling was used to overcome the time and money constraints that could have been faced by us while collecting the data The customers were contacted face to face directly and also by way of telephonic conversation with them
ANALYTICAL TOOLS - The data collected were arranged accordingly and statistical tools like bar graphs and pie-charts were used to analyze and present the data
RESEARCH INSTRUMENT USED-
34
SAMPLING MEDIA - Printed questionnaires consisting several questions were asked to have an idea of customers view about Reliance Life Insurance plans followed by personal questions
FIELD WORK - Rigorous field work was undertaken to locate the interested and potential respondents to fulfill the objectives of the study
THE PRIMARY OBJECTIVEOF THE STUDY -
The primary objective of the research study is to have a detailed analysis of Reliance Life Insurance bringing in focus the future prospects of the (Anil Dhirubhai Ambani group) with relevance to the customer perception regarding the various plans and products offered by Reliance Life Insurance
31) DATA ANALYSIS AND INTERPRETATION
35
PERSONAL DETAILS
1) AGE a) 18-30b) 31-50c) 51-65
AGE NO OF RESPONDENTS PERCENTAGE
18-30 21 42
31-50 19 38
51-65 10 20
TOTAL 50 100
INTERPRETATION-The bar graph reveals that 42 of the respondents belong to the age group of 18-30 years 38 lies in the age group of 31-50 years and 20 of them lie in the age group of 51-65 years
2) OCCUPATION
4238
20
05
1015202530354045
NO
O
F
RE
SP
ON
DE
NT
S
18 to 30 31 to 50 51 to 65
AGE (in year)
AGE WISE CLASSIFICATION
36
a) Serviceb) Businessc) Professiond) Housewifee) Retired
OPTION NO OF RESPONDENTS PERCENTAGE
Service 16 32
Business 14 28
Profession 5 10
Housewife 8 16
Retired 7 14
TOTAL 50 100
INTERPRETATION-The above bar graph reveals that 32 of the total respondents were servicemen 28 of them belonged to the business class 10 were professionals 16 were housewives and 14 of the total respondents fall in the retired category
3) INCOME
32
28
10
16
14
0
5
10
15
20
25
30
35
Service Business Profession Housewife Retired
OCCUPATION
OCCUPATION WISE CLASSIFICATION
37
a) 150000-300000
b) 300000-500000
c) Above 500000
OPTION NO OF RESPONDENTS PERCENTAGE
150000-300000 24 48
300000-500000 14 28
Above 500000 12 24
TOTAL 50 100
INTERPRETATION-The above bar graph reveals that out of the total respondents 48 lie in the income group of 150000-300000 28 of the total respondents belonged to the income group of 300000-500000 and 24 lie in the income group of people earning an income of above Rs 500000pa
4828 24
01020304050
N O
OF
RE
SP
ON
DE
NT
S
150000-300000
300000-500000
ABOVE500000
INCOME (in RS)
INCOME WISE CLASSIFICATION
38
4) FAMILY MEMBERS
a) 2b) 3c) 4d) Above 4
OPTION NO OF RESPONDENT PERCENTAGE
2 11 22
3 9 18
4 24 48
Above 4 6 12
TOTAL 50 100
INTERPRETATION The above bar graph shows that 22 of the total respondents had a family of 2 members 18 of them had 3 family members 48 of them had 4 family members and 12 of them had the no of family members above 4
Q1 Where do you prefer to invest
22 18
48
120
1020304050
No
o
f re
spo
nd
ents
2 3 4 Above 4
No of family members
MEMBER WISE CLASSIFICATION
39
a) fixed deposits
b) stock
c) mutual funds
d) insurance
e) others
Option No of respondents Percentage
Fixed deposits 5 10
Stock 10 20
Mutual fund 10 20
Insurance 18 36
others 7 14
TOTAL 50 100
Interpretation The above pie chart shows that out of 50 respondents 10 preferred to invest in fixed deposits 20 in stocks 20 in mutual funds 36 in insurance and 14 in others like property gold etc
Q2 What are your priorities for investment
40
a) protecting your family against pre-mature death
b) wealth creation
c) retirement needs
d) child education and marriage
e) protect income against disability sickness or critical illness
Option No of respondents Percentage
Protecting your family against pre mature death
10 20
Wealth creation 14 28
Retirement needs 5 10
Child education and marriage 7 14
Protect income against disability sickness or critical illness
14 28
TOTAL 50 100
Interpretation The above pie chart shows that out of 50 respondents 20 of them invest for protecting their family against premature death 28 for creating wealth 10 for meeting their future retirement needs 14 for child education amp marriage and 28 for protection against disability and sickness
Q3 What is your main motive behind investing in life insurance
41
a) tax benefit
b) savings
c) risk cover
Option No of respondents Percentage
Tax benefits 27 54
Savings 5 10
Risk cover 18 36
TOTAL 50 100
Interpretation The above pie chart shows that out of the sample respondents 54 have tax benefit 10 have savings and 36 have risk cover as their main motive for making an investment in life
Q4 What kind of investment do you prefer
42
a) high risk high gain
b) low risk low gain
c) moderate
d) vary times to times
Option No of respondents Percentage
High risk high gain 8 16
Low risk low gain 5 10
Moderate 12 24
Vary times to times 25 50
TOTAL 50 100
Interpretation The above pie chart shows that out of 50 respondents 16 preferred high risk- high gain form of investment 10 preferred low risk- low gain form of investment 24 preferred moderate investment and 50 preferred varied form of investment
43
Q5Are you interested to invest in Traditional Plans
a) YES
b) NO
Option No of respondents Percentage
YES 36 72
NO 14 28
TOTAL 50 100
Interpretation The above pie chart shows that 72 of the respondents preferred to invest in Traditional Plans
44
Q6 What is your level of annual investmenta) below 20000
b) 20000-40000
c) above 40000
Option No of respondents Percentage
Below 20000 41 82
20000-40000 7 14
Above 40000 2 4
TOTAL 50 100
Interpretation The above pie chart shows that 82 of the respondents are willing to invest below Rs 20000 per annum 14 of them want to invest within Rs 20000 per annum to Rs 40000 and 4 wanted to invest over and above Rs 40000
45
Q7 What factors would you consider most important before choosing an insurance policy
a) publicity of the company
b) reputation of the company
c) quality of life advisors
d) after sales-supporting of the company
Option No of respondents Percentage
Publicity of the co 5 20
Reputation of the co 25 50
Quality of life advisors 10 10
After sale-services 10 20
TOTAL 50 100
Interpretation out of the sample respondents 20 considers publicity of the company 50 considers reputation of the company 10 considers quality of life advisors and 20 considers after sales support of the company as the most important factor for choosing an insurance company
46
Q8 Which life insurance company would you prefer the most to invest ina) reliance life insurance (RLIC)
b) Bajaj Allianz life insurance
Option No of respondents Percentage
RLIC 21 42
BAJAJ ALLIANZ 29 58
TOTAL 50 100
Interpretation Out of 50 respondents 42 preferred to invest in reliance life insurance over 58 of the respondents who prefer to invest in Bajaj Allianz life insurance
47
Q9 If reliance life insurance then which particular plan you would like to invest ina) Reliance Term Plan
b) Reliance Whole Life Plan
c) Reliance Endowment Plan
d) Reliance Special Endowment Plan
Option No of respondents Percentage
Reliance term plan 6 2858
Reliance whole life plan 3 1428
Reliance endowment plan 9 4286
Reliance special endowment plan 3 1428
TOTAL 21 100
Interpretation Out of 21 respondents 2858 preferred to invest in term plan 1428 in whole life plan 4286 in endowment plan and 1428 of them preferred to invest in special endowment plan of reliance life insurance
48
Q10 If Bajaj Allianz life insurance then which particular plan you would like to invest in
I ENDOWMENT PLAN a) Bajaj Allianz Invest Gain
b) Bajaj Allianz save Care Economy SP
c) Bajaj Allianz life time care
d) Bajaj Allianz Super Saver plan
II MONEY BACK PLAN i Bajaj Allianz Cash Gain plan
Option No of respondents Percentage
Invest gain plan 3 1035
Save care economy SP 6 2069
Life time care 7 2415
Super saver plan 3 1035
Cash gain plan 10 3446
TOTAL 29 100
Interpretation Out of 29 respondents 1035 of them plan to invest in Bajaj Allianz- Invest Gain 2069 wish to invest in Bajaj Allianz save Care Economy SP 2415 want to invest in Bajaj Allianz life time care 1035 in Bajaj Allianz Super Saver plan and 3446 prefer to invest in Bajaj Allianz Cash Gain plan
49
32) SIGNIFICANCE OF STUDY
Life insurance is one of the most rapidly growing sectors in India The main reason
behind the growth can attributed to the high population density improving economical
condition improving education level and improving awareness Due to these factors there
is still huge scope for growth in this sector Like any other business when the
opportunities are present everybody tends to enter the industries This growth hence
fetches the new competitors as well as new strategies from existing players To sustain in
any competitive industry the organization must adapt to existing strategies and adopt
new ones This study will focus on the analysis of Reliance Life Insurance in comparison
with the present scenario of Bajaj Allianz Life Insurance with respect to the Traditional
Plans of both the companyrsquos This will mainly cover the following aspects
To know about the awareness and popularity of various Traditional Plans offered
by Reliance Life Insurance and Bajaj Allianz Life Insurance
How Reliance Life Insurance can develop and sustain a good distribution
network
These will provide it benefit both in terms of better market coverage as well as better
penetration
50
33) SCOPE OF THE STUDY
1) This helps in finding out vast potential of insurance company
2) The study was conducted in National Capital Region (NCR) only
3) The number of respondents to be surveyed can be improved
4) This study was conducted by comparing the performances amp products of three private
amp government insurance players in insurance industry
5) This study was conducted to analyze the market stand of Reliance life insurance
Company limited and Bajaj Allianz Life Insurance Company Limited of India insurance
companies
6) This study is done to eliminate all the myths which people have in their minds
regarding Insurance Sector
51
34) OBJECTIVES
To have a detailed understanding of Reliance Life Insurance and Bajaj Allianz Life Insurance
To find out various reasons considered while investing in policies
To get knowledge about the market exposure and future prospects about Reliance Life Insurance
To know the perception of the consumers about the life insurance
To analyze the Traditional plans of Reliance Life Insurance and compare it with Bajaj Allianz
To know about the brand awareness of Reliance Life Insurance its customer preferences over Bajaj Allianz in the market
To study a proper knowledge about the life insurance industry
To understand the consumer choice while investing in policies
52
CHAPTER 4
DISCUSSION AND FINDINGS OF THE STUDY
FINDINGS OF THE STUDY RECOMMENDATION AND SUGGESTIONS CONCLUSION LIMITATIONS BIBLIOGRAPHY ANNEXUREQUESTIONNAIRE
53
41) FINDINGS OF THE STUDY
1) The survey reveals that still a large proportion of population is interested to invest in other forms of investment other than insurance as still most of them are unaware about the importance of insurance in their life
2) Basically people make varied form of investment for creating wealth to protect their families against pre-mature death and to protect income against disability sickness or critical illness
3) The main motive of the individuals investing is receives benefits US 1010D People generally consider insurance as a tax saving device
4) Mostly people prefer time to time form of investment as they are not willing to take high degree of risk
5) 72 of the respondents are preferred to invest in Traditional Plans
6) Most of the people prefer to make an annual investment up to a maximum of Rs20 000 per annum
7) When the product is like life insurance reputation of the company publicity of the company amp after sale services of the company matters a lot This means that people would choose that insurance company only where the quality of life advisors is satisfactory
8) Most people prefer to invest in Bajaj Allianz Life Insurance as compared to making an investment in Reliance Life Insurance
9) The most preferable Traditional plan of Reliance Life Insurance is Endowment Plan
10) The most preferable plan of Bajaj Allianz Life Insurance co is Cash Gain Plan
54
42) SUGGESTIONS amp RECOMMENDATIONS
Based on the observations of the study some suggestions for the organization are made as
follows
1) Quality of advisors is also as important as the quantity Thus company should go
mainly for qualified professionals
2) Company should increase its budget on publicity so that awareness can be increased
3) Clarity and transparency should be provided to the customer regarding various
products
4) Training sessions should be planned in advance so that schedule can be provided to
the advisor in advance
5) Apart from the Brand Positioning in urban area a strategy should be adopted by
Reliance to make its brand also near to middle level or high aspirant people because they
are the main source of the business in India
6) Awareness Camp to the sub urban area should be focused by Reliance
7) Some innovative technique or product is required in order to attract the consumer
43) LITERATURE REVIEW
55
1) Robi Elenekave has explained in detail why various retirement plans and pension plans donrsquot give the desired returns The main difficulty is the use of incorrect method for calculations done to find out the return on investment This is primarily due to wrong assumptions The study provides information about the various precautions which need to be considered before planning so that the desired results can be achieved
2) Another paper provides insight about how various financial sectors invest in bond market The study was how the different players investment different instruments according to the risk appetite and desired rate of return The study shows that life insurance sector mainly invests in government bond which are low return and low risk instrument The investment in government bond it shows that life insurance companies are more conservative in investment
3) K Subhash has presented the history of Indiarsquos life insurance industry in three stages before independence after independence and post liberalization which not only provides information but also help in analyzing the impact of these major changes The authors have also discussed the huge potential which exists in the rural India The insurance company must realize the importance of rural sector because the future lies there The author commented about the increasing share of private player in the existing market This confirms the availability of opportunity in this sector The paper also provides the importance of professional and focused approach which was given no importance
4) Tapen Sinha has discussed the various challenges and opportunities in the insurance market One of the very important factors which have been discussed in the study is the importance of developing new and better products As the scenario changes the need of an individual also changes so any organization must understand and fulfill these needs The new product development requires constant research so organization must also focus on it
5) Roger G Ibbotson discusses how financial planners and advisors have recently started to recognize that human capital must be taken into account when building optimal portfolios for individual investors Any investorrsquos human capital has a unique mortality risk However life insurance in its forms can hedge against this mortality risk Thus human capital affects both the optimal asset allocation and the optimal demand for life insurance This paper provides a unified framework based on human capital in order to enable individual investors to make both decisions jointly
6) Rakesh Niraj study tells how the flow of information in any organization is important For any organization to grow the flow of information must be good both upwards as well as ownwards The proper flow of information will also ensure proper flow of good and services from organization to customer and proper flow of information from customer to organization The information from customers will help the organization in providing better goods and services to the customer For the above purpose organization must ensure good channel partner who can provide the organization with correct feedback Hence it becomes very important for any organization to acquire good channel partners
56
7) Stephen P Robbins has discussed how group dynamics works in any organization The success of any organization depends on the success of its various teams and how these teams work together The book provides various techniques which can be used by any organization to get result from the team effort The conflict resolution is a major task in any group Various techniques which the organization can use in conflict resolution are also discussed Another important aspect covered is the importance of leadership in the organization The various forms of leadership have been discussed and the kinds of leadership which can be effective in particular situations are also discussed
8) R Wayne Mondy has discussed the importance of training and development in any organization The training provides skills to perform the current job where as the development involve learning beyond present need The various type of training are discussed which can be used according to the requirement Training and development are not only important for better performance of an individual but it also gives satisfaction The major factors which influence training and development are found to be management support commitment of trainee and trainer complexity of the organization The process of developing good training plans is also provided In another part author has discussed the importance of right man for right job The compensation strategies are also given which are very crucial for ant industry
9) Philip Kotler has discussed the importance of channels partners Better the channel partners better will be the delivery model Detailed discussion about how to design the channel structure so that all the requirements could be fulfilled is provided The various issues faced by the organization while managing the channels are also given When an organization has more than one channel it becomes very important that all the channels should be integrated in such a way that the organization get the best out of all At times due to the conflicting benefit of the different channels the conflict arise so various strategies to manage these issues is also discussed in the chapter
10) Michael J Etzel has written about the marketing of services The marketing of services is different from the goods because of the characteristic of service like intangibility inseparability heterogeneity etc Brief about pricing strategies is also given in case of services The authors have also given the impact of technological development on the services marketing The author has also given the importance of brand and after sales support in case of services as perception of the customers plays an important role In other part of the book the authors has described the importance of distribution channels and designing of the same A channel partner should be consider as partner according to discussion The legal complications associated with channels are also discussed These complications are necessary to take into the consideration while managing the channels The conflicting interest of channels both horizontally and vertically are also taken into the consideration
57
11) Boone has discussed about the importance of personal financial planning The concept of time value of money has also been elaborated The importance of creating and implementing budget is given under money management The other important concepts for financial planning like credit management and understanding taxes are also explained In one section the authors have discussed the importance of investment and what should be the major considerations while making any investment The considerations include the risk associated with the investment return on the investment etc The importance and benefits of life insurance has also been given The discussion also includes various legal aspects associated with life insurance The overview of retirement planning is also given which includes importance and benefit of retirement planning Various tools for proper retirement planning are also discussed
58
44) CONCLUSION
1) The customers are very much sensitive towards their investment They would like to invest only in that insurance company which enjoys good public image along with quality good services
2) The result of the survey conducted shows that Bajaj Allianz Life Insurance is the leader in life insurance industry but Reliance Life Insurance and other private players are giving it a close competition
3) The motive of the people behind investing in life insurance is the tax benefits that they would receive under sec 80C and 1010D
4) In Life Insurance industry the after sales support of the company is as important as the quality of life advisors
59
45) LIMITATIONS
There were some limitations faced during the study as discussed below
Since the study was taken for two months so there was a constraint of time and effort
The study was limited only to some of the Delhi regions so the results may be biased
Questionnaire was given to 125 people however only 50 responded to it which is very small for such type of study
The biasness of consumer or responses error cannot be eliminated
Most of the people are not aware about the Importance and the necessity of insurance in their life
Adverse perception of the people towards insurance sector- People consider insurance as a tax saving device
Lack of awareness about the earning opportunity in the insurance sector
60
46) BIBLIOGRAPHY
wwwreliancelifeinsurancecom
wwwadagroupcom
wwwirdacom
wwwbajajallianzlifeinsurancecom
wwwallianzbajajcom
47) ANNEXURE
61
QUESTIONNAIRE
A comparative analysis of consumer perception regarding Traditional plans of Reliance Life Insurance with that of Bajaj Allianz Life Insurance
NAME ___________________________
PERSONAL DETAILS
1) AGE_________________
1) OCCUPATION______________
2) INCOME___________________
3) FAMILY MEMBERS_________
Q1 Where do you prefer to investa) Fixed deposits b) Stock c) Mutual funds d) Insurance e) Others
Q2 What are your priorities for investmenta) Protecting your family against pre-mature death b) Wealth creation c) Retirement needs d) Child education and marriage e) Protect income against disability sickness or critical illness
Q3 What is your main motive behind investing in life insurancea) Tax benefit b) Savings c) Risk cover
Q4 What kind of investment do you prefera) High risk high gain b) Low risk low gain c) Moderate d) Vary times to times
62
Q5Are you interested to invest in Traditional Plansa) Yes b) No
Q6 What is your level of annual investmenta) below 20000 b) 20000-40000 c) above 40000
Q7 What factors would you consider most important before choosing an insurance company
a) publicity of the company b) reputation of the company c) quality of life advisors d) after sales-supporting of the company
Q8 Which life insurance company would you prefer the most to invest ina) Reliance life insurance b) Bajaj Allianz life insurance
Q9 If reliance life insurance then which particular plan you would like to invest ina) Reliance Term Plan b) Reliance Whole Life Plan c) Reliance Endowment Plan d) Reliance Special Endowment Plan
Q10 If Bajaj Allianz life insurance then which particular plan you would like to invest in
I ENDOWMENT PLAN
a) Bajaj Allianz Invest Gain
b) Bajaj Allianz save Care Economy SP
c) Bajaj Allianz life time care
d) Bajaj Allianz Super Saver plan
II MONEY BACK PLAN
a) Bajaj Allianz Cash Gain plan
63
64
- COMPANY PROFILE
- ABOUT RELIANCE LIFE INSURANCE
- HISTORY
- Reliance Capital Limited announced the launch of its life insurance business on February 1 2006 This was after obtaining the required regulatory approvals from the Registrar Of Companies and the Insurance Regulatory and Development Authority
- It was in August 2005 that the ball was set rolling when Reliance Capital Limited the financial arm of Reliance ndash Anil Dhirubhai Ambani Group (ADAG) ndash announced the requisition of 100 shareholding in AMP Sanmar Life Insurance Company Limited and the formal transfer of shares took place in October 2005 The company will issue all policy contracts under the Reliance Life Insurance Company limited name All the existing policy contracts also stand transferred to the Reliance Life Insurance entity with all the original contractual terms and commitments intact
- CORE VALUES
- Reliance Life Insurance Company Limited has some core values which are listed as follows
- Vision bull To be the first choice insurer for customers bull To be the preferred employer for staff in the insurance industry bull To be the number one insurer for creating shareholder value
- Mission As a responsible customer focused market leader we will strive to understand the insurance needs of the consumers and translate it into affordable products that deliver value for money
- 12) TRADITIONAL PLANS OF THE COMPANY
- 12A )TRADITIONAL PLAN OF RELIANCE LIFE INSURANCE-
- Life insurance products are designed to suit the requirements of customers Fundamentally the product provide for
- In every product to a certain degree risk cover is imperative for it to fall under the category of insurance Based on the coverage of the product the premiums are calculated and the customer pays accordingly In order to suggest the right product it is essential for an agent to understand the requirements of the customer well
- The traditional plans of the company have the following features-
- Fixed Tenure
- Potential for better returns
- Transparency
- Flexibility in investment
- Flexibility to invest more
- Flexibility to skip the premium
- Flexibility to choose the cover
- High liquidity
- Age term and sum assured decide the amount of premium
- Top- ups and switches are not allowed
- Reliance Life Insurance Company Limited has offered 9
- 1) Reliance term plan-
- 2) Reliance Whole Life Plan -
- 3) Reliance Endowment Plan -
- 4) Reliance Special Endowment Plan -
- 13) INDUSTRY PROFILE
- MEANING OF INSURANCE
- Insurance may be described as a social device to reduce or eliminate risk of loss to life and property Insurance is a collective bearing of risk Insurance is a financial device to spread the risks and losses of few people among a large number of people as people prefer small fixed liability instead of big uncertain and changing liability
- Insurance can be defined as a ldquolegal contract between two parties whereby one party called insurer undertakes to pay a fixed amount of money on the happening of a particular event which may be certain or uncertainrdquo The other party called insured pays in exchange a fixed sum known as premium
- Insurance is desired to safeguard oneself and onersquos family against possible losses on account of risks and perils It provides financial compensation for the losses suffered due to the happening of any unforeseen events
- IMPORTANCE OF INSURANCE
- Insurance services play predominant role in the process of financial Intermediary Today insurance industry is one of the most growing sectors in India There is lot of potential in the Indian Insurance Industry
- There are many issues which require study The scope of the study of Insurance industry of India would be very great as there are ongoing Developments in the industry after the opening of the sector
- Right now the insurance industry has great opportunities in a country like India or China which huge population Also the penetration of insurance in India is very low in both life and non-life segment so there is lot potential to be tapped Before starting the discussion on insurance industry and related issues we have to start with the basics of insurance So first we understand what is insurance How the word lsquoinsurancersquo is different from the word lsquoassurancersquo Etc
- HISTORY OF INSURANCE
- The concept of insurance is believed to have emerged almost 4500 years ago in the ancient land of Babylonia where traders used to bear risk of the carvan by giving loans which were later repaid with interest when the goods arrived safely
- The concept of insurance as we know today took shape in 1688 at a place called Lloydrsquos Coffee House in London where risk bearers used to meet to transact business This coffee house became so popular that Lloydrsquos became the one of the first modern insurance companies by the end of the eighteenth century
- Marine insurance companies came into existence by the end of the eighteenth century These companies were empowered to write fire and life insurance as well as marine The Great Fire of London in 1966 caused huge loss of property and life With a view to providing fire insurance facilities
- Dr Nicholas Barbon set up in 1967 the first fire insurance company known as the Fire office
- Life insurance in its modern form came to India from England in 1818 The Oriental Life Insurance Company was the first insurance company to be set up in India to help the widows of European community The insurance companies which came into existence between 1818 and 1869 treated
- Indian lives as subnormal and charged an extra premium of 15 to 20 per cent The first Indian insurance company the Bombay Mutual Life
- Assurance Society came into existence in 1870 to cover Indian lives at normal rates
- The Insurance Act 1938 the first comprehensive legislation governing both life and non-life branches of insurance were enacted to provide strict state control over insurance business This amended insurance Act looked into investments expenditure and management of these companies
- By the mid- 1950s there were 154 Indian insurers 16 foreign insurers and 75 provident societies carrying on life insurance business in India Insurance business flourished and so did scams irregularities and dubious investment practices by scores of companies As a result the government decided to nationalize the life assurance business in India The Life Insurance
- Corporation of India (LIC) was set up in 1956 The nationalization of life insurance was followed by general insurance in 1972
- MEANING OF LIFE INSURANCE
- There are three parties in a life insurance transaction the insurer the insured and the owner of the policy (policyholder) although the owner and the insured are often the same person
- Another important person involved in a life insurance policy is the beneficiary The beneficiary is the person or persons who will receive the policy proceeds upon the death of the insured
- Life insurance may be divided into two basic classes ndash term and permanent
- HISTORY OF LIFE INSURANCE
- Risk protection has been a primary goal of humans and institutions throughout history Protecting against risk is what insurance is all about
- Over 5000 years ago in China insurance was seen as a preventative measure against piracy on the sea Piracy in fact was so prevalent that as a way of spreading the risk a number of ships would carry a portion of another ships cargo so that if one ship was captured the entire shipment would not be lost
- In another part of the world nearly 4500 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
- Life insurance came about a little later in ancient Rome where burial clubs were formed to cover the funeral expenses of its members as well as help survivors monetarily With Romes fall around 450 AD most of the concepts of insurance were abandoned but aspects of it did continue through the Middle Ages particularly with merchant and artisan guilds These provided forms of member insurance covering risks like fire flood theft disability death and even imprisonment
- During the feudal period early forms of insurance ebbed with the decline of travel and long-distance trade But during the 14th to 16th centuries transportation commerce and insurance would again reemerge
- And similar to ancient Rome burial societies were formed in the Buddhist period to help families build houses and to protect widows and children
- Modern Insurance
- Illegal almost everywhere else in Europe life insurance in England was vigorously promoted in the three decades following the Glorious Revolution of 1688 The type of insurance we see today owes its roots to 17th century England Lloyds of London or as they were known then Lloyds Coffee House was the location where merchants ship owners and underwriters met to discuss and transact business deals
- While serving as a means of risk-avoidance life insurance also appealed strongly to the gambling instincts of Englands burgeoning middle class
- Gambling was so rampant in fact that when newspapers published names of prominent people who were seriously ill bets were placed at Lloydrsquos on their anticipated dates of death Reacting against such practices 79 merchant underwriters broke away in 1769 and two years later formed a ldquoNew Lloydrsquos Coffee Houserdquo that became known as the ldquoreal Lloydrsquosrdquo Making wagers on peoples deaths ceased in 1774 when parliament forbade the practice
- Insurance moves to America
- The US insurance industry was built on the British model The year 1735 saw the birth of the first insurance company in the American colonies in
- Charleston SC The Presbyterian Synod of Philadelphia in 1759 sponsored the first life insurance corporation in America for the benefit of ministers and their dependents And the first life insurance policy for the general public in the United States was issued in Philadelphia on May 22 1761
- But it wasnt until 80 years later (after 1840) that life insurance really tookoff in a big way The key to its success was reducing the opposition from religious groups
- In 1835 the infamous New York fire drew peoples 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
- With the creation of the automobile public liability insurance which first made its appearance in the 1880s gained importance and acceptance
- More advancement was made to insurance during the process of industrialization In 1897 the British government passed the Workmens Compensation Act which made it mandatory for a company to insure its employees against industrial accidents
- During 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 most labor 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
- BENEFITS OF LIFE INSURANCE
- 1) Risk cover -Life Insurance contracts allow an individual to have a risk cover against any unfortunate event of the future
- 2) Tax Deduction -Under section 80C of the Income Tax Act of 1961 one can get tax deduction on premiums up to one lakh rupees Life Insurance policies thus decrease the total taxable income of an individual
- 3) Loans -An individual can easily access loans from different financial institutions by pledging his insurance policies
- 4) Retirement Planning -What had provided protection against the financial consequences of premature death may now be used to help them enjoy their retirement years
- 5) Educational Needs -Similar to retirement planning the cash values that flow from ones life insurance schemes can be utilized for educational needs of the insurer or his children
- The Life Insurance Industry has an enviable track record among public sector units It has a Consistent profit and dividend paying record accompanied by a steady growth in its financial resources Through investments in the Government sector and socially- oriented sectors the Industry has contributed immensely to the nations development The industry is recognized as one of the largest financial Institutions in the country The ventures initiated by the industry in the areas of Mutual Fund
- Housing Finance has done exceedingly well in recent years To protect the countrys foreign exchange reserves the reinsurance arrangement are so organized that maximum retention is made possible within the country while at the same time protecting interests of the policy holders
- 22) CURRENT SCENARIO OF RELIANCE LIFE INSURANCE
- RLIC offers wide range of innovative life insurance products targeted at individuals and groups It offers need based products that caters to four distinct segments namely protection child retirement and investment plans RLIC is committed to emerge as a transnational Life Insurer of global scale and standard
- CH - 3) RESEARCH METHODOLOGY
- RESEARCH DESIGN-
- SAMPLING TECHNIQUES-
- THE PRIMARY OBJECTIVEOF THE STUDY-
- 34) OBJECTIVES
- 7) Some innovative technique or product is required in order to attract the consumer
- 45) LIMITATIONS
- 46) BIBLIOGRAPHY
-
BENEFITS OF LIFE INSURANCE
1) Risk cover -Life Insurance contracts allow an individual to have a risk cover against any unfortunate event of the future
2) Tax Deduction -Under section 80C of the Income Tax Act of 1961 one can get tax deduction on premiums up to one lakh rupees Life Insurance policies thus decrease the total taxable income of an individual
3) Loans -An individual can easily access loans from different financial institutions by pledging his insurance policies
4) Retirement Planning -What had provided protection against the financial consequences of premature death may now be used to help them enjoy their retirement yearsMoreover the cash value can be used as an additional income in the old age
5) Educational Needs -Similar to retirement planning the cash values that flow from ones life insurance schemes can be utilized for educational needs of the insurer or his children
26
ROLE OF LIFE INSURANCE IN THE GROWTH OF THE ECONOMY
The Life Insurance Industry has an enviable track record among public sector units It has a Consistent profit and dividend paying record accompanied by a steady growth in its financial resources Through investments in the Government sector and socially- oriented sectors the Industry has contributed immensely to the nations development The industry is recognized as one of the largest financial Institutions in the country The ventures initiated by the industry in the areas of Mutual Fund
Housing Finance has done exceedingly well in recent years To protect the countrys foreign exchange reserves the reinsurance arrangement are so organized that maximum retention is made possible within the country while at the same time protecting interests of the policy holders
27
ROLE OF IRDA
MISSION
ldquoTo protect the interests of the policyholders to regulate promote
and ensure orderly growth of the insurance industry and for matters
connected therewith or incidental theretordquo
The Insurance Act 1938 had provided for setting up of the Controller of Insurance to act
as a strong and powerful supervisory and regulatory authority for insurance Post
nationalization the role of Controller of Insurance diminished considerably in
significance since the Government owned the insurance companies But the scenario
changed with the private and foreign companies foraying in to the insurance sector This
necessitated the need for a strong independent and autonomous Insurance Regulatory
Authority was felt As the enacting of legislation would have taken time the then
Government constituted through a Government resolution an Interim Insurance
Regulatory Authority pending the enactment of a comprehensive legislation
The Insurance Regulatory and Development Authority Act 1999 is an act to provide for
the establishment of an Authority to protect the interests of holders of insurance policies
to regulate promote and ensure orderly growth of the insurance industry and for matters
connected therewith or incidental thereto and further to amend the Insurance Act 1938
the Life Insurance Corporation Act 1956 and the General insurance Business
(Nationalization) Act 1972 to end the monopoly of the Life Insurance Corporation of
India (for life insurance business) and General Insurance Corporation and its subsidiaries
(for general insurance business) The act extends to the whole of India and will come
into force on such date as the Central Government may by notification in the Official
Gazette specify Different dates may be appointed for different provisions of this Act
28
The Act has defined certain terms some of the most important ones are as follows
Appointed day means the date on which the Authority is established under the act
Authority means the established under this Act Interim Insurance Regulatory Authority
means the Insurance Regulatory Authority set up by the Central Government through
Resolution No 17(2) 94-lns-V dated the 23rd January 1996
Words and expressions used and not defined in this Act but defined in the Insurance Act
1938 or the Life Insurance Corporation Act 1956 or the General Insurance Business
(Nationalization) Act 1972 shall have the meanings respectively assigned to them in
those Acts A new definition of Indian Insurance Company has been inserted Indian
insurance company means any insurer being a company
(a) Which is formed and registered under the Companies Act 1956
(b) in which the aggregate holdings of equity shares by a foreign company either by
itself or through its subsidiary companies or its nominees do not exceed twenty-six
percent paid up capital in such Indian insurance company
(c) Whose sole purpose is to carry on life insurance business general insurance business
or re-insurance business
29
CURRENT SCENERIO
21) CURRENT SCENERIO OF THE INSURANCE INDUSTRY
With largest number of life insurance policies in force in the world insurance happens to be a mega opportunity in India Itrsquos a business growing at the rate of 15-20 per cent annually and presently is of the order of Rs 450 billion Together with banking services it adds about 7 per cent to the countryrsquos GDP Gross premium collection is nearly 2 per cent of GDP and funds available with LIC for investment are 8 per cent of GDP
Yet nearly 80 percent of Indian population is without life insurance cover while health insurance and non-life insurance continues to be below international standards And this part of the population is also subject to weak social security and pension systems with hardly any old age income security This it is an indicator that growth potential for the insurance sector is immense A well-develop and evolved insurance sector is needed for economic development as it provides long term funds for infrastructure development and at the same time strengthens the risk taking ability It is estimated that over the next ten years India would require investments of the order of one trillion US dollar The insurance sector to some extent can enable investment in infrastructure development to sustain economic growth of the country Insurance is a federal subject in India There are two legislation that govern the sector - The Insurance Act-1938 and The IRDA Act-1999
In India insurance is generally considered as a tax-saving device instead of its other implied long term financial benefits Indian people are prone to investing in properties and gold followed by bank deposits They selectively invest in shares also but the percentage is very small Even to this day Life Insurance Corporation of India dominates India insurance sector With the entry of private sector players backed by foreign expertise Indian insurance market has become more vibrant Business is becoming increasingly vulnerable due to wide variety of risk particularly after September 11 2001 disaster in which twin tower located in the hearts of New York city were crashed by terrorist attack resulting in loss of 6000 human lives as well as financial loss to the extent of $45 billion The impact of this terrorist attack has created new horizon of risk to the business world today
However rapid changes in the global economy development of technology and e-business already gathered momentum Increased dependency on technology has originated new risks that have resulted in well-published incidents Computer hackers obtaining credit card information from visa and Power-Gen the love bug virus cyber extortion web content liability professional errors and omissions computers and other crimes and activities such as terrorism kidnapping and companyrsquos executive and extortion of money commercial liability etc have significant impact on business resulting in extreme financial loss commercial embarrassment or regulatory implications
Corporation insurancerisk managers under the circumstances have to demand increasingly complex insurance products They have to be more attentive and
30
knowledgeable about emerging risks how those risks are managed effectively and efficiently and how they could ultimately affect a companyrsquos financial situation and therefore its position in the market place In short how such risks are managed and can give to an insured a competitive advantage
In the changing times adoption of e-commerce into business models the integration of web-based communication and data transfer capabilities into the business operations and leveraging of advanced network and technology architecture for maximum benefit are the new horizon of the risks For the corporate insurancerisks managers these new exposure-cyber-risks-can lead to cyber losses widening the interpretation of what constitute insure property damage particularly as it relates to information technology and dataAll the while organizations are tremendous pressure to reduce expenses and increase profit margin and cannot afford to suffer a property loss of business interruption due to any cause (risk) How a company identifies quantifies qualifies and manages these new risks exposure in addition to the well-known tradition risks is becoming an important factor in creating shareholders value This often means changing the way Everyone in the organization have to think about risk
Insurance managers are seeing price levels (premium) continue to rise-albeit modestly-in todayrsquos primarily commercial property and reinsurance markets They are demanding that insurers improve their risk assessment and quantification offerings so that an insured may avail the benefit in cost (premium rate) on account of well-managed riskThe good news for insurance managers is that as the economy evolves insurers are increasingly matching that evaluation with new products services and capabilities due to opening up the insurance market to the private players
Insurers who are truly listening to their customers and striving to be more in tune with their needs are responding to the fast changing corporate insurance and risk management landscape They are listening to their customers They are making fresh approaches to address the new challenges faced by insured organization by designing the new products as per the needs Insurers are providing value added services to insured to protect the value created by the business
Insurers are increasingly required to develop and expand their information technology platforms to ensure that the vast amount of data they collect about their customers Insurancerisk portfolio can easily and seamlessly be transformed into valuable risk management information To help their customers insurers should make better-informed decisions They must be able to swiftly deliver this data to their customers (insured) anywhere in the world Insurer are also discovering that risk assessment have to be customized to meet policyholdersrsquo new exposures and needs The insurance industry is stepping up and addressing these challenges in several different ways
31
22) CURRENT SCENARIO OF RELIANCE LIFE INSURANCE
RLIC offers wide range of innovative life insurance products targeted at individuals and groups It offers need based products that caters to four distinct segments namely protection child retirement and investment plans RLIC is committed to emerge as a
transnational Life Insurer of global scale and standard
Reliance Life Insurance Company Limited (RLIC) is amongst the fastest growing life insurance companies in India It is also amongst the top four private sector life insurance companies in India (As on FY 2008-2009)
As on March 31 2009 RLIC has an annualized premium of Rs 30 billion with a market share of 103 It has leapfrogged on the growth path and has reached the 4 million policy mark in a short span of within 3 years RLIC has a strong distribution network of 1145 branches with more than 149000 agents
32
Insurancersquos Market Share in Comparison of Other Private company
If we look at the status of Reliance Life Insurancersquos market share in comparison of other
private company in comparison of premium earned-
If we talk the growth of Insurance industryrsquos private players in recent years the data will
reflect-
CH - 3) RESEARCH METHODOLOGY
33
RESEARCH DESIGN-
COMPARITIVE STUDY- A comparative study has been undertaken to compare the traditional Plans of Reliance Life Insurance with that of Bajaj Allianz life insurance
DATA TYPE
INTRODUCTION - Any organization whether big or small private or public needs different type of information to know its popularity I have gathered secondary data and primary data and collected information from the combination of these two data
PRIMARY DATA - Primary data collection method was decided for observing working of the company and approaching the customers directly face to face A great care was taken while collecting the primary data to answer that it is relevant accurate current and unbiased
SECONDARY DATA - Secondary data collection method was used by referring to various websites books and newspapers for collecting information regarding the project under study Secondary data consist of the information that already exists somewhere else for some another purpose
SAMPLING TECHNIQUES-
SAMPLE SIZE- A sample size of 50 was taken to be analyzed
SAMPLE LOCATION-Various sectors of Kamla Nagar Civil lines Mukherji Nagar Model Town and selected areas of Delhi
SAMPLING PROCESS - Convenient sampling was used to overcome the time and money constraints that could have been faced by us while collecting the data The customers were contacted face to face directly and also by way of telephonic conversation with them
ANALYTICAL TOOLS - The data collected were arranged accordingly and statistical tools like bar graphs and pie-charts were used to analyze and present the data
RESEARCH INSTRUMENT USED-
34
SAMPLING MEDIA - Printed questionnaires consisting several questions were asked to have an idea of customers view about Reliance Life Insurance plans followed by personal questions
FIELD WORK - Rigorous field work was undertaken to locate the interested and potential respondents to fulfill the objectives of the study
THE PRIMARY OBJECTIVEOF THE STUDY -
The primary objective of the research study is to have a detailed analysis of Reliance Life Insurance bringing in focus the future prospects of the (Anil Dhirubhai Ambani group) with relevance to the customer perception regarding the various plans and products offered by Reliance Life Insurance
31) DATA ANALYSIS AND INTERPRETATION
35
PERSONAL DETAILS
1) AGE a) 18-30b) 31-50c) 51-65
AGE NO OF RESPONDENTS PERCENTAGE
18-30 21 42
31-50 19 38
51-65 10 20
TOTAL 50 100
INTERPRETATION-The bar graph reveals that 42 of the respondents belong to the age group of 18-30 years 38 lies in the age group of 31-50 years and 20 of them lie in the age group of 51-65 years
2) OCCUPATION
4238
20
05
1015202530354045
NO
O
F
RE
SP
ON
DE
NT
S
18 to 30 31 to 50 51 to 65
AGE (in year)
AGE WISE CLASSIFICATION
36
a) Serviceb) Businessc) Professiond) Housewifee) Retired
OPTION NO OF RESPONDENTS PERCENTAGE
Service 16 32
Business 14 28
Profession 5 10
Housewife 8 16
Retired 7 14
TOTAL 50 100
INTERPRETATION-The above bar graph reveals that 32 of the total respondents were servicemen 28 of them belonged to the business class 10 were professionals 16 were housewives and 14 of the total respondents fall in the retired category
3) INCOME
32
28
10
16
14
0
5
10
15
20
25
30
35
Service Business Profession Housewife Retired
OCCUPATION
OCCUPATION WISE CLASSIFICATION
37
a) 150000-300000
b) 300000-500000
c) Above 500000
OPTION NO OF RESPONDENTS PERCENTAGE
150000-300000 24 48
300000-500000 14 28
Above 500000 12 24
TOTAL 50 100
INTERPRETATION-The above bar graph reveals that out of the total respondents 48 lie in the income group of 150000-300000 28 of the total respondents belonged to the income group of 300000-500000 and 24 lie in the income group of people earning an income of above Rs 500000pa
4828 24
01020304050
N O
OF
RE
SP
ON
DE
NT
S
150000-300000
300000-500000
ABOVE500000
INCOME (in RS)
INCOME WISE CLASSIFICATION
38
4) FAMILY MEMBERS
a) 2b) 3c) 4d) Above 4
OPTION NO OF RESPONDENT PERCENTAGE
2 11 22
3 9 18
4 24 48
Above 4 6 12
TOTAL 50 100
INTERPRETATION The above bar graph shows that 22 of the total respondents had a family of 2 members 18 of them had 3 family members 48 of them had 4 family members and 12 of them had the no of family members above 4
Q1 Where do you prefer to invest
22 18
48
120
1020304050
No
o
f re
spo
nd
ents
2 3 4 Above 4
No of family members
MEMBER WISE CLASSIFICATION
39
a) fixed deposits
b) stock
c) mutual funds
d) insurance
e) others
Option No of respondents Percentage
Fixed deposits 5 10
Stock 10 20
Mutual fund 10 20
Insurance 18 36
others 7 14
TOTAL 50 100
Interpretation The above pie chart shows that out of 50 respondents 10 preferred to invest in fixed deposits 20 in stocks 20 in mutual funds 36 in insurance and 14 in others like property gold etc
Q2 What are your priorities for investment
40
a) protecting your family against pre-mature death
b) wealth creation
c) retirement needs
d) child education and marriage
e) protect income against disability sickness or critical illness
Option No of respondents Percentage
Protecting your family against pre mature death
10 20
Wealth creation 14 28
Retirement needs 5 10
Child education and marriage 7 14
Protect income against disability sickness or critical illness
14 28
TOTAL 50 100
Interpretation The above pie chart shows that out of 50 respondents 20 of them invest for protecting their family against premature death 28 for creating wealth 10 for meeting their future retirement needs 14 for child education amp marriage and 28 for protection against disability and sickness
Q3 What is your main motive behind investing in life insurance
41
a) tax benefit
b) savings
c) risk cover
Option No of respondents Percentage
Tax benefits 27 54
Savings 5 10
Risk cover 18 36
TOTAL 50 100
Interpretation The above pie chart shows that out of the sample respondents 54 have tax benefit 10 have savings and 36 have risk cover as their main motive for making an investment in life
Q4 What kind of investment do you prefer
42
a) high risk high gain
b) low risk low gain
c) moderate
d) vary times to times
Option No of respondents Percentage
High risk high gain 8 16
Low risk low gain 5 10
Moderate 12 24
Vary times to times 25 50
TOTAL 50 100
Interpretation The above pie chart shows that out of 50 respondents 16 preferred high risk- high gain form of investment 10 preferred low risk- low gain form of investment 24 preferred moderate investment and 50 preferred varied form of investment
43
Q5Are you interested to invest in Traditional Plans
a) YES
b) NO
Option No of respondents Percentage
YES 36 72
NO 14 28
TOTAL 50 100
Interpretation The above pie chart shows that 72 of the respondents preferred to invest in Traditional Plans
44
Q6 What is your level of annual investmenta) below 20000
b) 20000-40000
c) above 40000
Option No of respondents Percentage
Below 20000 41 82
20000-40000 7 14
Above 40000 2 4
TOTAL 50 100
Interpretation The above pie chart shows that 82 of the respondents are willing to invest below Rs 20000 per annum 14 of them want to invest within Rs 20000 per annum to Rs 40000 and 4 wanted to invest over and above Rs 40000
45
Q7 What factors would you consider most important before choosing an insurance policy
a) publicity of the company
b) reputation of the company
c) quality of life advisors
d) after sales-supporting of the company
Option No of respondents Percentage
Publicity of the co 5 20
Reputation of the co 25 50
Quality of life advisors 10 10
After sale-services 10 20
TOTAL 50 100
Interpretation out of the sample respondents 20 considers publicity of the company 50 considers reputation of the company 10 considers quality of life advisors and 20 considers after sales support of the company as the most important factor for choosing an insurance company
46
Q8 Which life insurance company would you prefer the most to invest ina) reliance life insurance (RLIC)
b) Bajaj Allianz life insurance
Option No of respondents Percentage
RLIC 21 42
BAJAJ ALLIANZ 29 58
TOTAL 50 100
Interpretation Out of 50 respondents 42 preferred to invest in reliance life insurance over 58 of the respondents who prefer to invest in Bajaj Allianz life insurance
47
Q9 If reliance life insurance then which particular plan you would like to invest ina) Reliance Term Plan
b) Reliance Whole Life Plan
c) Reliance Endowment Plan
d) Reliance Special Endowment Plan
Option No of respondents Percentage
Reliance term plan 6 2858
Reliance whole life plan 3 1428
Reliance endowment plan 9 4286
Reliance special endowment plan 3 1428
TOTAL 21 100
Interpretation Out of 21 respondents 2858 preferred to invest in term plan 1428 in whole life plan 4286 in endowment plan and 1428 of them preferred to invest in special endowment plan of reliance life insurance
48
Q10 If Bajaj Allianz life insurance then which particular plan you would like to invest in
I ENDOWMENT PLAN a) Bajaj Allianz Invest Gain
b) Bajaj Allianz save Care Economy SP
c) Bajaj Allianz life time care
d) Bajaj Allianz Super Saver plan
II MONEY BACK PLAN i Bajaj Allianz Cash Gain plan
Option No of respondents Percentage
Invest gain plan 3 1035
Save care economy SP 6 2069
Life time care 7 2415
Super saver plan 3 1035
Cash gain plan 10 3446
TOTAL 29 100
Interpretation Out of 29 respondents 1035 of them plan to invest in Bajaj Allianz- Invest Gain 2069 wish to invest in Bajaj Allianz save Care Economy SP 2415 want to invest in Bajaj Allianz life time care 1035 in Bajaj Allianz Super Saver plan and 3446 prefer to invest in Bajaj Allianz Cash Gain plan
49
32) SIGNIFICANCE OF STUDY
Life insurance is one of the most rapidly growing sectors in India The main reason
behind the growth can attributed to the high population density improving economical
condition improving education level and improving awareness Due to these factors there
is still huge scope for growth in this sector Like any other business when the
opportunities are present everybody tends to enter the industries This growth hence
fetches the new competitors as well as new strategies from existing players To sustain in
any competitive industry the organization must adapt to existing strategies and adopt
new ones This study will focus on the analysis of Reliance Life Insurance in comparison
with the present scenario of Bajaj Allianz Life Insurance with respect to the Traditional
Plans of both the companyrsquos This will mainly cover the following aspects
To know about the awareness and popularity of various Traditional Plans offered
by Reliance Life Insurance and Bajaj Allianz Life Insurance
How Reliance Life Insurance can develop and sustain a good distribution
network
These will provide it benefit both in terms of better market coverage as well as better
penetration
50
33) SCOPE OF THE STUDY
1) This helps in finding out vast potential of insurance company
2) The study was conducted in National Capital Region (NCR) only
3) The number of respondents to be surveyed can be improved
4) This study was conducted by comparing the performances amp products of three private
amp government insurance players in insurance industry
5) This study was conducted to analyze the market stand of Reliance life insurance
Company limited and Bajaj Allianz Life Insurance Company Limited of India insurance
companies
6) This study is done to eliminate all the myths which people have in their minds
regarding Insurance Sector
51
34) OBJECTIVES
To have a detailed understanding of Reliance Life Insurance and Bajaj Allianz Life Insurance
To find out various reasons considered while investing in policies
To get knowledge about the market exposure and future prospects about Reliance Life Insurance
To know the perception of the consumers about the life insurance
To analyze the Traditional plans of Reliance Life Insurance and compare it with Bajaj Allianz
To know about the brand awareness of Reliance Life Insurance its customer preferences over Bajaj Allianz in the market
To study a proper knowledge about the life insurance industry
To understand the consumer choice while investing in policies
52
CHAPTER 4
DISCUSSION AND FINDINGS OF THE STUDY
FINDINGS OF THE STUDY RECOMMENDATION AND SUGGESTIONS CONCLUSION LIMITATIONS BIBLIOGRAPHY ANNEXUREQUESTIONNAIRE
53
41) FINDINGS OF THE STUDY
1) The survey reveals that still a large proportion of population is interested to invest in other forms of investment other than insurance as still most of them are unaware about the importance of insurance in their life
2) Basically people make varied form of investment for creating wealth to protect their families against pre-mature death and to protect income against disability sickness or critical illness
3) The main motive of the individuals investing is receives benefits US 1010D People generally consider insurance as a tax saving device
4) Mostly people prefer time to time form of investment as they are not willing to take high degree of risk
5) 72 of the respondents are preferred to invest in Traditional Plans
6) Most of the people prefer to make an annual investment up to a maximum of Rs20 000 per annum
7) When the product is like life insurance reputation of the company publicity of the company amp after sale services of the company matters a lot This means that people would choose that insurance company only where the quality of life advisors is satisfactory
8) Most people prefer to invest in Bajaj Allianz Life Insurance as compared to making an investment in Reliance Life Insurance
9) The most preferable Traditional plan of Reliance Life Insurance is Endowment Plan
10) The most preferable plan of Bajaj Allianz Life Insurance co is Cash Gain Plan
54
42) SUGGESTIONS amp RECOMMENDATIONS
Based on the observations of the study some suggestions for the organization are made as
follows
1) Quality of advisors is also as important as the quantity Thus company should go
mainly for qualified professionals
2) Company should increase its budget on publicity so that awareness can be increased
3) Clarity and transparency should be provided to the customer regarding various
products
4) Training sessions should be planned in advance so that schedule can be provided to
the advisor in advance
5) Apart from the Brand Positioning in urban area a strategy should be adopted by
Reliance to make its brand also near to middle level or high aspirant people because they
are the main source of the business in India
6) Awareness Camp to the sub urban area should be focused by Reliance
7) Some innovative technique or product is required in order to attract the consumer
43) LITERATURE REVIEW
55
1) Robi Elenekave has explained in detail why various retirement plans and pension plans donrsquot give the desired returns The main difficulty is the use of incorrect method for calculations done to find out the return on investment This is primarily due to wrong assumptions The study provides information about the various precautions which need to be considered before planning so that the desired results can be achieved
2) Another paper provides insight about how various financial sectors invest in bond market The study was how the different players investment different instruments according to the risk appetite and desired rate of return The study shows that life insurance sector mainly invests in government bond which are low return and low risk instrument The investment in government bond it shows that life insurance companies are more conservative in investment
3) K Subhash has presented the history of Indiarsquos life insurance industry in three stages before independence after independence and post liberalization which not only provides information but also help in analyzing the impact of these major changes The authors have also discussed the huge potential which exists in the rural India The insurance company must realize the importance of rural sector because the future lies there The author commented about the increasing share of private player in the existing market This confirms the availability of opportunity in this sector The paper also provides the importance of professional and focused approach which was given no importance
4) Tapen Sinha has discussed the various challenges and opportunities in the insurance market One of the very important factors which have been discussed in the study is the importance of developing new and better products As the scenario changes the need of an individual also changes so any organization must understand and fulfill these needs The new product development requires constant research so organization must also focus on it
5) Roger G Ibbotson discusses how financial planners and advisors have recently started to recognize that human capital must be taken into account when building optimal portfolios for individual investors Any investorrsquos human capital has a unique mortality risk However life insurance in its forms can hedge against this mortality risk Thus human capital affects both the optimal asset allocation and the optimal demand for life insurance This paper provides a unified framework based on human capital in order to enable individual investors to make both decisions jointly
6) Rakesh Niraj study tells how the flow of information in any organization is important For any organization to grow the flow of information must be good both upwards as well as ownwards The proper flow of information will also ensure proper flow of good and services from organization to customer and proper flow of information from customer to organization The information from customers will help the organization in providing better goods and services to the customer For the above purpose organization must ensure good channel partner who can provide the organization with correct feedback Hence it becomes very important for any organization to acquire good channel partners
56
7) Stephen P Robbins has discussed how group dynamics works in any organization The success of any organization depends on the success of its various teams and how these teams work together The book provides various techniques which can be used by any organization to get result from the team effort The conflict resolution is a major task in any group Various techniques which the organization can use in conflict resolution are also discussed Another important aspect covered is the importance of leadership in the organization The various forms of leadership have been discussed and the kinds of leadership which can be effective in particular situations are also discussed
8) R Wayne Mondy has discussed the importance of training and development in any organization The training provides skills to perform the current job where as the development involve learning beyond present need The various type of training are discussed which can be used according to the requirement Training and development are not only important for better performance of an individual but it also gives satisfaction The major factors which influence training and development are found to be management support commitment of trainee and trainer complexity of the organization The process of developing good training plans is also provided In another part author has discussed the importance of right man for right job The compensation strategies are also given which are very crucial for ant industry
9) Philip Kotler has discussed the importance of channels partners Better the channel partners better will be the delivery model Detailed discussion about how to design the channel structure so that all the requirements could be fulfilled is provided The various issues faced by the organization while managing the channels are also given When an organization has more than one channel it becomes very important that all the channels should be integrated in such a way that the organization get the best out of all At times due to the conflicting benefit of the different channels the conflict arise so various strategies to manage these issues is also discussed in the chapter
10) Michael J Etzel has written about the marketing of services The marketing of services is different from the goods because of the characteristic of service like intangibility inseparability heterogeneity etc Brief about pricing strategies is also given in case of services The authors have also given the impact of technological development on the services marketing The author has also given the importance of brand and after sales support in case of services as perception of the customers plays an important role In other part of the book the authors has described the importance of distribution channels and designing of the same A channel partner should be consider as partner according to discussion The legal complications associated with channels are also discussed These complications are necessary to take into the consideration while managing the channels The conflicting interest of channels both horizontally and vertically are also taken into the consideration
57
11) Boone has discussed about the importance of personal financial planning The concept of time value of money has also been elaborated The importance of creating and implementing budget is given under money management The other important concepts for financial planning like credit management and understanding taxes are also explained In one section the authors have discussed the importance of investment and what should be the major considerations while making any investment The considerations include the risk associated with the investment return on the investment etc The importance and benefits of life insurance has also been given The discussion also includes various legal aspects associated with life insurance The overview of retirement planning is also given which includes importance and benefit of retirement planning Various tools for proper retirement planning are also discussed
58
44) CONCLUSION
1) The customers are very much sensitive towards their investment They would like to invest only in that insurance company which enjoys good public image along with quality good services
2) The result of the survey conducted shows that Bajaj Allianz Life Insurance is the leader in life insurance industry but Reliance Life Insurance and other private players are giving it a close competition
3) The motive of the people behind investing in life insurance is the tax benefits that they would receive under sec 80C and 1010D
4) In Life Insurance industry the after sales support of the company is as important as the quality of life advisors
59
45) LIMITATIONS
There were some limitations faced during the study as discussed below
Since the study was taken for two months so there was a constraint of time and effort
The study was limited only to some of the Delhi regions so the results may be biased
Questionnaire was given to 125 people however only 50 responded to it which is very small for such type of study
The biasness of consumer or responses error cannot be eliminated
Most of the people are not aware about the Importance and the necessity of insurance in their life
Adverse perception of the people towards insurance sector- People consider insurance as a tax saving device
Lack of awareness about the earning opportunity in the insurance sector
60
46) BIBLIOGRAPHY
wwwreliancelifeinsurancecom
wwwadagroupcom
wwwirdacom
wwwbajajallianzlifeinsurancecom
wwwallianzbajajcom
47) ANNEXURE
61
QUESTIONNAIRE
A comparative analysis of consumer perception regarding Traditional plans of Reliance Life Insurance with that of Bajaj Allianz Life Insurance
NAME ___________________________
PERSONAL DETAILS
1) AGE_________________
1) OCCUPATION______________
2) INCOME___________________
3) FAMILY MEMBERS_________
Q1 Where do you prefer to investa) Fixed deposits b) Stock c) Mutual funds d) Insurance e) Others
Q2 What are your priorities for investmenta) Protecting your family against pre-mature death b) Wealth creation c) Retirement needs d) Child education and marriage e) Protect income against disability sickness or critical illness
Q3 What is your main motive behind investing in life insurancea) Tax benefit b) Savings c) Risk cover
Q4 What kind of investment do you prefera) High risk high gain b) Low risk low gain c) Moderate d) Vary times to times
62
Q5Are you interested to invest in Traditional Plansa) Yes b) No
Q6 What is your level of annual investmenta) below 20000 b) 20000-40000 c) above 40000
Q7 What factors would you consider most important before choosing an insurance company
a) publicity of the company b) reputation of the company c) quality of life advisors d) after sales-supporting of the company
Q8 Which life insurance company would you prefer the most to invest ina) Reliance life insurance b) Bajaj Allianz life insurance
Q9 If reliance life insurance then which particular plan you would like to invest ina) Reliance Term Plan b) Reliance Whole Life Plan c) Reliance Endowment Plan d) Reliance Special Endowment Plan
Q10 If Bajaj Allianz life insurance then which particular plan you would like to invest in
I ENDOWMENT PLAN
a) Bajaj Allianz Invest Gain
b) Bajaj Allianz save Care Economy SP
c) Bajaj Allianz life time care
d) Bajaj Allianz Super Saver plan
II MONEY BACK PLAN
a) Bajaj Allianz Cash Gain plan
63
64
- COMPANY PROFILE
- ABOUT RELIANCE LIFE INSURANCE
- HISTORY
- Reliance Capital Limited announced the launch of its life insurance business on February 1 2006 This was after obtaining the required regulatory approvals from the Registrar Of Companies and the Insurance Regulatory and Development Authority
- It was in August 2005 that the ball was set rolling when Reliance Capital Limited the financial arm of Reliance ndash Anil Dhirubhai Ambani Group (ADAG) ndash announced the requisition of 100 shareholding in AMP Sanmar Life Insurance Company Limited and the formal transfer of shares took place in October 2005 The company will issue all policy contracts under the Reliance Life Insurance Company limited name All the existing policy contracts also stand transferred to the Reliance Life Insurance entity with all the original contractual terms and commitments intact
- CORE VALUES
- Reliance Life Insurance Company Limited has some core values which are listed as follows
- Vision bull To be the first choice insurer for customers bull To be the preferred employer for staff in the insurance industry bull To be the number one insurer for creating shareholder value
- Mission As a responsible customer focused market leader we will strive to understand the insurance needs of the consumers and translate it into affordable products that deliver value for money
- 12) TRADITIONAL PLANS OF THE COMPANY
- 12A )TRADITIONAL PLAN OF RELIANCE LIFE INSURANCE-
- Life insurance products are designed to suit the requirements of customers Fundamentally the product provide for
- In every product to a certain degree risk cover is imperative for it to fall under the category of insurance Based on the coverage of the product the premiums are calculated and the customer pays accordingly In order to suggest the right product it is essential for an agent to understand the requirements of the customer well
- The traditional plans of the company have the following features-
- Fixed Tenure
- Potential for better returns
- Transparency
- Flexibility in investment
- Flexibility to invest more
- Flexibility to skip the premium
- Flexibility to choose the cover
- High liquidity
- Age term and sum assured decide the amount of premium
- Top- ups and switches are not allowed
- Reliance Life Insurance Company Limited has offered 9
- 1) Reliance term plan-
- 2) Reliance Whole Life Plan -
- 3) Reliance Endowment Plan -
- 4) Reliance Special Endowment Plan -
- 13) INDUSTRY PROFILE
- MEANING OF INSURANCE
- Insurance may be described as a social device to reduce or eliminate risk of loss to life and property Insurance is a collective bearing of risk Insurance is a financial device to spread the risks and losses of few people among a large number of people as people prefer small fixed liability instead of big uncertain and changing liability
- Insurance can be defined as a ldquolegal contract between two parties whereby one party called insurer undertakes to pay a fixed amount of money on the happening of a particular event which may be certain or uncertainrdquo The other party called insured pays in exchange a fixed sum known as premium
- Insurance is desired to safeguard oneself and onersquos family against possible losses on account of risks and perils It provides financial compensation for the losses suffered due to the happening of any unforeseen events
- IMPORTANCE OF INSURANCE
- Insurance services play predominant role in the process of financial Intermediary Today insurance industry is one of the most growing sectors in India There is lot of potential in the Indian Insurance Industry
- There are many issues which require study The scope of the study of Insurance industry of India would be very great as there are ongoing Developments in the industry after the opening of the sector
- Right now the insurance industry has great opportunities in a country like India or China which huge population Also the penetration of insurance in India is very low in both life and non-life segment so there is lot potential to be tapped Before starting the discussion on insurance industry and related issues we have to start with the basics of insurance So first we understand what is insurance How the word lsquoinsurancersquo is different from the word lsquoassurancersquo Etc
- HISTORY OF INSURANCE
- The concept of insurance is believed to have emerged almost 4500 years ago in the ancient land of Babylonia where traders used to bear risk of the carvan by giving loans which were later repaid with interest when the goods arrived safely
- The concept of insurance as we know today took shape in 1688 at a place called Lloydrsquos Coffee House in London where risk bearers used to meet to transact business This coffee house became so popular that Lloydrsquos became the one of the first modern insurance companies by the end of the eighteenth century
- Marine insurance companies came into existence by the end of the eighteenth century These companies were empowered to write fire and life insurance as well as marine The Great Fire of London in 1966 caused huge loss of property and life With a view to providing fire insurance facilities
- Dr Nicholas Barbon set up in 1967 the first fire insurance company known as the Fire office
- Life insurance in its modern form came to India from England in 1818 The Oriental Life Insurance Company was the first insurance company to be set up in India to help the widows of European community The insurance companies which came into existence between 1818 and 1869 treated
- Indian lives as subnormal and charged an extra premium of 15 to 20 per cent The first Indian insurance company the Bombay Mutual Life
- Assurance Society came into existence in 1870 to cover Indian lives at normal rates
- The Insurance Act 1938 the first comprehensive legislation governing both life and non-life branches of insurance were enacted to provide strict state control over insurance business This amended insurance Act looked into investments expenditure and management of these companies
- By the mid- 1950s there were 154 Indian insurers 16 foreign insurers and 75 provident societies carrying on life insurance business in India Insurance business flourished and so did scams irregularities and dubious investment practices by scores of companies As a result the government decided to nationalize the life assurance business in India The Life Insurance
- Corporation of India (LIC) was set up in 1956 The nationalization of life insurance was followed by general insurance in 1972
- MEANING OF LIFE INSURANCE
- There are three parties in a life insurance transaction the insurer the insured and the owner of the policy (policyholder) although the owner and the insured are often the same person
- Another important person involved in a life insurance policy is the beneficiary The beneficiary is the person or persons who will receive the policy proceeds upon the death of the insured
- Life insurance may be divided into two basic classes ndash term and permanent
- HISTORY OF LIFE INSURANCE
- Risk protection has been a primary goal of humans and institutions throughout history Protecting against risk is what insurance is all about
- Over 5000 years ago in China insurance was seen as a preventative measure against piracy on the sea Piracy in fact was so prevalent that as a way of spreading the risk a number of ships would carry a portion of another ships cargo so that if one ship was captured the entire shipment would not be lost
- In another part of the world nearly 4500 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
- Life insurance came about a little later in ancient Rome where burial clubs were formed to cover the funeral expenses of its members as well as help survivors monetarily With Romes fall around 450 AD most of the concepts of insurance were abandoned but aspects of it did continue through the Middle Ages particularly with merchant and artisan guilds These provided forms of member insurance covering risks like fire flood theft disability death and even imprisonment
- During the feudal period early forms of insurance ebbed with the decline of travel and long-distance trade But during the 14th to 16th centuries transportation commerce and insurance would again reemerge
- And similar to ancient Rome burial societies were formed in the Buddhist period to help families build houses and to protect widows and children
- Modern Insurance
- Illegal almost everywhere else in Europe life insurance in England was vigorously promoted in the three decades following the Glorious Revolution of 1688 The type of insurance we see today owes its roots to 17th century England Lloyds of London or as they were known then Lloyds Coffee House was the location where merchants ship owners and underwriters met to discuss and transact business deals
- While serving as a means of risk-avoidance life insurance also appealed strongly to the gambling instincts of Englands burgeoning middle class
- Gambling was so rampant in fact that when newspapers published names of prominent people who were seriously ill bets were placed at Lloydrsquos on their anticipated dates of death Reacting against such practices 79 merchant underwriters broke away in 1769 and two years later formed a ldquoNew Lloydrsquos Coffee Houserdquo that became known as the ldquoreal Lloydrsquosrdquo Making wagers on peoples deaths ceased in 1774 when parliament forbade the practice
- Insurance moves to America
- The US insurance industry was built on the British model The year 1735 saw the birth of the first insurance company in the American colonies in
- Charleston SC The Presbyterian Synod of Philadelphia in 1759 sponsored the first life insurance corporation in America for the benefit of ministers and their dependents And the first life insurance policy for the general public in the United States was issued in Philadelphia on May 22 1761
- But it wasnt until 80 years later (after 1840) that life insurance really tookoff in a big way The key to its success was reducing the opposition from religious groups
- In 1835 the infamous New York fire drew peoples 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
- With the creation of the automobile public liability insurance which first made its appearance in the 1880s gained importance and acceptance
- More advancement was made to insurance during the process of industrialization In 1897 the British government passed the Workmens Compensation Act which made it mandatory for a company to insure its employees against industrial accidents
- During 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 most labor 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
- BENEFITS OF LIFE INSURANCE
- 1) Risk cover -Life Insurance contracts allow an individual to have a risk cover against any unfortunate event of the future
- 2) Tax Deduction -Under section 80C of the Income Tax Act of 1961 one can get tax deduction on premiums up to one lakh rupees Life Insurance policies thus decrease the total taxable income of an individual
- 3) Loans -An individual can easily access loans from different financial institutions by pledging his insurance policies
- 4) Retirement Planning -What had provided protection against the financial consequences of premature death may now be used to help them enjoy their retirement years
- 5) Educational Needs -Similar to retirement planning the cash values that flow from ones life insurance schemes can be utilized for educational needs of the insurer or his children
- The Life Insurance Industry has an enviable track record among public sector units It has a Consistent profit and dividend paying record accompanied by a steady growth in its financial resources Through investments in the Government sector and socially- oriented sectors the Industry has contributed immensely to the nations development The industry is recognized as one of the largest financial Institutions in the country The ventures initiated by the industry in the areas of Mutual Fund
- Housing Finance has done exceedingly well in recent years To protect the countrys foreign exchange reserves the reinsurance arrangement are so organized that maximum retention is made possible within the country while at the same time protecting interests of the policy holders
- 22) CURRENT SCENARIO OF RELIANCE LIFE INSURANCE
- RLIC offers wide range of innovative life insurance products targeted at individuals and groups It offers need based products that caters to four distinct segments namely protection child retirement and investment plans RLIC is committed to emerge as a transnational Life Insurer of global scale and standard
- CH - 3) RESEARCH METHODOLOGY
- RESEARCH DESIGN-
- SAMPLING TECHNIQUES-
- THE PRIMARY OBJECTIVEOF THE STUDY-
- 34) OBJECTIVES
- 7) Some innovative technique or product is required in order to attract the consumer
- 45) LIMITATIONS
- 46) BIBLIOGRAPHY
-
ROLE OF LIFE INSURANCE IN THE GROWTH OF THE ECONOMY
The Life Insurance Industry has an enviable track record among public sector units It has a Consistent profit and dividend paying record accompanied by a steady growth in its financial resources Through investments in the Government sector and socially- oriented sectors the Industry has contributed immensely to the nations development The industry is recognized as one of the largest financial Institutions in the country The ventures initiated by the industry in the areas of Mutual Fund
Housing Finance has done exceedingly well in recent years To protect the countrys foreign exchange reserves the reinsurance arrangement are so organized that maximum retention is made possible within the country while at the same time protecting interests of the policy holders
27
ROLE OF IRDA
MISSION
ldquoTo protect the interests of the policyholders to regulate promote
and ensure orderly growth of the insurance industry and for matters
connected therewith or incidental theretordquo
The Insurance Act 1938 had provided for setting up of the Controller of Insurance to act
as a strong and powerful supervisory and regulatory authority for insurance Post
nationalization the role of Controller of Insurance diminished considerably in
significance since the Government owned the insurance companies But the scenario
changed with the private and foreign companies foraying in to the insurance sector This
necessitated the need for a strong independent and autonomous Insurance Regulatory
Authority was felt As the enacting of legislation would have taken time the then
Government constituted through a Government resolution an Interim Insurance
Regulatory Authority pending the enactment of a comprehensive legislation
The Insurance Regulatory and Development Authority Act 1999 is an act to provide for
the establishment of an Authority to protect the interests of holders of insurance policies
to regulate promote and ensure orderly growth of the insurance industry and for matters
connected therewith or incidental thereto and further to amend the Insurance Act 1938
the Life Insurance Corporation Act 1956 and the General insurance Business
(Nationalization) Act 1972 to end the monopoly of the Life Insurance Corporation of
India (for life insurance business) and General Insurance Corporation and its subsidiaries
(for general insurance business) The act extends to the whole of India and will come
into force on such date as the Central Government may by notification in the Official
Gazette specify Different dates may be appointed for different provisions of this Act
28
The Act has defined certain terms some of the most important ones are as follows
Appointed day means the date on which the Authority is established under the act
Authority means the established under this Act Interim Insurance Regulatory Authority
means the Insurance Regulatory Authority set up by the Central Government through
Resolution No 17(2) 94-lns-V dated the 23rd January 1996
Words and expressions used and not defined in this Act but defined in the Insurance Act
1938 or the Life Insurance Corporation Act 1956 or the General Insurance Business
(Nationalization) Act 1972 shall have the meanings respectively assigned to them in
those Acts A new definition of Indian Insurance Company has been inserted Indian
insurance company means any insurer being a company
(a) Which is formed and registered under the Companies Act 1956
(b) in which the aggregate holdings of equity shares by a foreign company either by
itself or through its subsidiary companies or its nominees do not exceed twenty-six
percent paid up capital in such Indian insurance company
(c) Whose sole purpose is to carry on life insurance business general insurance business
or re-insurance business
29
CURRENT SCENERIO
21) CURRENT SCENERIO OF THE INSURANCE INDUSTRY
With largest number of life insurance policies in force in the world insurance happens to be a mega opportunity in India Itrsquos a business growing at the rate of 15-20 per cent annually and presently is of the order of Rs 450 billion Together with banking services it adds about 7 per cent to the countryrsquos GDP Gross premium collection is nearly 2 per cent of GDP and funds available with LIC for investment are 8 per cent of GDP
Yet nearly 80 percent of Indian population is without life insurance cover while health insurance and non-life insurance continues to be below international standards And this part of the population is also subject to weak social security and pension systems with hardly any old age income security This it is an indicator that growth potential for the insurance sector is immense A well-develop and evolved insurance sector is needed for economic development as it provides long term funds for infrastructure development and at the same time strengthens the risk taking ability It is estimated that over the next ten years India would require investments of the order of one trillion US dollar The insurance sector to some extent can enable investment in infrastructure development to sustain economic growth of the country Insurance is a federal subject in India There are two legislation that govern the sector - The Insurance Act-1938 and The IRDA Act-1999
In India insurance is generally considered as a tax-saving device instead of its other implied long term financial benefits Indian people are prone to investing in properties and gold followed by bank deposits They selectively invest in shares also but the percentage is very small Even to this day Life Insurance Corporation of India dominates India insurance sector With the entry of private sector players backed by foreign expertise Indian insurance market has become more vibrant Business is becoming increasingly vulnerable due to wide variety of risk particularly after September 11 2001 disaster in which twin tower located in the hearts of New York city were crashed by terrorist attack resulting in loss of 6000 human lives as well as financial loss to the extent of $45 billion The impact of this terrorist attack has created new horizon of risk to the business world today
However rapid changes in the global economy development of technology and e-business already gathered momentum Increased dependency on technology has originated new risks that have resulted in well-published incidents Computer hackers obtaining credit card information from visa and Power-Gen the love bug virus cyber extortion web content liability professional errors and omissions computers and other crimes and activities such as terrorism kidnapping and companyrsquos executive and extortion of money commercial liability etc have significant impact on business resulting in extreme financial loss commercial embarrassment or regulatory implications
Corporation insurancerisk managers under the circumstances have to demand increasingly complex insurance products They have to be more attentive and
30
knowledgeable about emerging risks how those risks are managed effectively and efficiently and how they could ultimately affect a companyrsquos financial situation and therefore its position in the market place In short how such risks are managed and can give to an insured a competitive advantage
In the changing times adoption of e-commerce into business models the integration of web-based communication and data transfer capabilities into the business operations and leveraging of advanced network and technology architecture for maximum benefit are the new horizon of the risks For the corporate insurancerisks managers these new exposure-cyber-risks-can lead to cyber losses widening the interpretation of what constitute insure property damage particularly as it relates to information technology and dataAll the while organizations are tremendous pressure to reduce expenses and increase profit margin and cannot afford to suffer a property loss of business interruption due to any cause (risk) How a company identifies quantifies qualifies and manages these new risks exposure in addition to the well-known tradition risks is becoming an important factor in creating shareholders value This often means changing the way Everyone in the organization have to think about risk
Insurance managers are seeing price levels (premium) continue to rise-albeit modestly-in todayrsquos primarily commercial property and reinsurance markets They are demanding that insurers improve their risk assessment and quantification offerings so that an insured may avail the benefit in cost (premium rate) on account of well-managed riskThe good news for insurance managers is that as the economy evolves insurers are increasingly matching that evaluation with new products services and capabilities due to opening up the insurance market to the private players
Insurers who are truly listening to their customers and striving to be more in tune with their needs are responding to the fast changing corporate insurance and risk management landscape They are listening to their customers They are making fresh approaches to address the new challenges faced by insured organization by designing the new products as per the needs Insurers are providing value added services to insured to protect the value created by the business
Insurers are increasingly required to develop and expand their information technology platforms to ensure that the vast amount of data they collect about their customers Insurancerisk portfolio can easily and seamlessly be transformed into valuable risk management information To help their customers insurers should make better-informed decisions They must be able to swiftly deliver this data to their customers (insured) anywhere in the world Insurer are also discovering that risk assessment have to be customized to meet policyholdersrsquo new exposures and needs The insurance industry is stepping up and addressing these challenges in several different ways
31
22) CURRENT SCENARIO OF RELIANCE LIFE INSURANCE
RLIC offers wide range of innovative life insurance products targeted at individuals and groups It offers need based products that caters to four distinct segments namely protection child retirement and investment plans RLIC is committed to emerge as a
transnational Life Insurer of global scale and standard
Reliance Life Insurance Company Limited (RLIC) is amongst the fastest growing life insurance companies in India It is also amongst the top four private sector life insurance companies in India (As on FY 2008-2009)
As on March 31 2009 RLIC has an annualized premium of Rs 30 billion with a market share of 103 It has leapfrogged on the growth path and has reached the 4 million policy mark in a short span of within 3 years RLIC has a strong distribution network of 1145 branches with more than 149000 agents
32
Insurancersquos Market Share in Comparison of Other Private company
If we look at the status of Reliance Life Insurancersquos market share in comparison of other
private company in comparison of premium earned-
If we talk the growth of Insurance industryrsquos private players in recent years the data will
reflect-
CH - 3) RESEARCH METHODOLOGY
33
RESEARCH DESIGN-
COMPARITIVE STUDY- A comparative study has been undertaken to compare the traditional Plans of Reliance Life Insurance with that of Bajaj Allianz life insurance
DATA TYPE
INTRODUCTION - Any organization whether big or small private or public needs different type of information to know its popularity I have gathered secondary data and primary data and collected information from the combination of these two data
PRIMARY DATA - Primary data collection method was decided for observing working of the company and approaching the customers directly face to face A great care was taken while collecting the primary data to answer that it is relevant accurate current and unbiased
SECONDARY DATA - Secondary data collection method was used by referring to various websites books and newspapers for collecting information regarding the project under study Secondary data consist of the information that already exists somewhere else for some another purpose
SAMPLING TECHNIQUES-
SAMPLE SIZE- A sample size of 50 was taken to be analyzed
SAMPLE LOCATION-Various sectors of Kamla Nagar Civil lines Mukherji Nagar Model Town and selected areas of Delhi
SAMPLING PROCESS - Convenient sampling was used to overcome the time and money constraints that could have been faced by us while collecting the data The customers were contacted face to face directly and also by way of telephonic conversation with them
ANALYTICAL TOOLS - The data collected were arranged accordingly and statistical tools like bar graphs and pie-charts were used to analyze and present the data
RESEARCH INSTRUMENT USED-
34
SAMPLING MEDIA - Printed questionnaires consisting several questions were asked to have an idea of customers view about Reliance Life Insurance plans followed by personal questions
FIELD WORK - Rigorous field work was undertaken to locate the interested and potential respondents to fulfill the objectives of the study
THE PRIMARY OBJECTIVEOF THE STUDY -
The primary objective of the research study is to have a detailed analysis of Reliance Life Insurance bringing in focus the future prospects of the (Anil Dhirubhai Ambani group) with relevance to the customer perception regarding the various plans and products offered by Reliance Life Insurance
31) DATA ANALYSIS AND INTERPRETATION
35
PERSONAL DETAILS
1) AGE a) 18-30b) 31-50c) 51-65
AGE NO OF RESPONDENTS PERCENTAGE
18-30 21 42
31-50 19 38
51-65 10 20
TOTAL 50 100
INTERPRETATION-The bar graph reveals that 42 of the respondents belong to the age group of 18-30 years 38 lies in the age group of 31-50 years and 20 of them lie in the age group of 51-65 years
2) OCCUPATION
4238
20
05
1015202530354045
NO
O
F
RE
SP
ON
DE
NT
S
18 to 30 31 to 50 51 to 65
AGE (in year)
AGE WISE CLASSIFICATION
36
a) Serviceb) Businessc) Professiond) Housewifee) Retired
OPTION NO OF RESPONDENTS PERCENTAGE
Service 16 32
Business 14 28
Profession 5 10
Housewife 8 16
Retired 7 14
TOTAL 50 100
INTERPRETATION-The above bar graph reveals that 32 of the total respondents were servicemen 28 of them belonged to the business class 10 were professionals 16 were housewives and 14 of the total respondents fall in the retired category
3) INCOME
32
28
10
16
14
0
5
10
15
20
25
30
35
Service Business Profession Housewife Retired
OCCUPATION
OCCUPATION WISE CLASSIFICATION
37
a) 150000-300000
b) 300000-500000
c) Above 500000
OPTION NO OF RESPONDENTS PERCENTAGE
150000-300000 24 48
300000-500000 14 28
Above 500000 12 24
TOTAL 50 100
INTERPRETATION-The above bar graph reveals that out of the total respondents 48 lie in the income group of 150000-300000 28 of the total respondents belonged to the income group of 300000-500000 and 24 lie in the income group of people earning an income of above Rs 500000pa
4828 24
01020304050
N O
OF
RE
SP
ON
DE
NT
S
150000-300000
300000-500000
ABOVE500000
INCOME (in RS)
INCOME WISE CLASSIFICATION
38
4) FAMILY MEMBERS
a) 2b) 3c) 4d) Above 4
OPTION NO OF RESPONDENT PERCENTAGE
2 11 22
3 9 18
4 24 48
Above 4 6 12
TOTAL 50 100
INTERPRETATION The above bar graph shows that 22 of the total respondents had a family of 2 members 18 of them had 3 family members 48 of them had 4 family members and 12 of them had the no of family members above 4
Q1 Where do you prefer to invest
22 18
48
120
1020304050
No
o
f re
spo
nd
ents
2 3 4 Above 4
No of family members
MEMBER WISE CLASSIFICATION
39
a) fixed deposits
b) stock
c) mutual funds
d) insurance
e) others
Option No of respondents Percentage
Fixed deposits 5 10
Stock 10 20
Mutual fund 10 20
Insurance 18 36
others 7 14
TOTAL 50 100
Interpretation The above pie chart shows that out of 50 respondents 10 preferred to invest in fixed deposits 20 in stocks 20 in mutual funds 36 in insurance and 14 in others like property gold etc
Q2 What are your priorities for investment
40
a) protecting your family against pre-mature death
b) wealth creation
c) retirement needs
d) child education and marriage
e) protect income against disability sickness or critical illness
Option No of respondents Percentage
Protecting your family against pre mature death
10 20
Wealth creation 14 28
Retirement needs 5 10
Child education and marriage 7 14
Protect income against disability sickness or critical illness
14 28
TOTAL 50 100
Interpretation The above pie chart shows that out of 50 respondents 20 of them invest for protecting their family against premature death 28 for creating wealth 10 for meeting their future retirement needs 14 for child education amp marriage and 28 for protection against disability and sickness
Q3 What is your main motive behind investing in life insurance
41
a) tax benefit
b) savings
c) risk cover
Option No of respondents Percentage
Tax benefits 27 54
Savings 5 10
Risk cover 18 36
TOTAL 50 100
Interpretation The above pie chart shows that out of the sample respondents 54 have tax benefit 10 have savings and 36 have risk cover as their main motive for making an investment in life
Q4 What kind of investment do you prefer
42
a) high risk high gain
b) low risk low gain
c) moderate
d) vary times to times
Option No of respondents Percentage
High risk high gain 8 16
Low risk low gain 5 10
Moderate 12 24
Vary times to times 25 50
TOTAL 50 100
Interpretation The above pie chart shows that out of 50 respondents 16 preferred high risk- high gain form of investment 10 preferred low risk- low gain form of investment 24 preferred moderate investment and 50 preferred varied form of investment
43
Q5Are you interested to invest in Traditional Plans
a) YES
b) NO
Option No of respondents Percentage
YES 36 72
NO 14 28
TOTAL 50 100
Interpretation The above pie chart shows that 72 of the respondents preferred to invest in Traditional Plans
44
Q6 What is your level of annual investmenta) below 20000
b) 20000-40000
c) above 40000
Option No of respondents Percentage
Below 20000 41 82
20000-40000 7 14
Above 40000 2 4
TOTAL 50 100
Interpretation The above pie chart shows that 82 of the respondents are willing to invest below Rs 20000 per annum 14 of them want to invest within Rs 20000 per annum to Rs 40000 and 4 wanted to invest over and above Rs 40000
45
Q7 What factors would you consider most important before choosing an insurance policy
a) publicity of the company
b) reputation of the company
c) quality of life advisors
d) after sales-supporting of the company
Option No of respondents Percentage
Publicity of the co 5 20
Reputation of the co 25 50
Quality of life advisors 10 10
After sale-services 10 20
TOTAL 50 100
Interpretation out of the sample respondents 20 considers publicity of the company 50 considers reputation of the company 10 considers quality of life advisors and 20 considers after sales support of the company as the most important factor for choosing an insurance company
46
Q8 Which life insurance company would you prefer the most to invest ina) reliance life insurance (RLIC)
b) Bajaj Allianz life insurance
Option No of respondents Percentage
RLIC 21 42
BAJAJ ALLIANZ 29 58
TOTAL 50 100
Interpretation Out of 50 respondents 42 preferred to invest in reliance life insurance over 58 of the respondents who prefer to invest in Bajaj Allianz life insurance
47
Q9 If reliance life insurance then which particular plan you would like to invest ina) Reliance Term Plan
b) Reliance Whole Life Plan
c) Reliance Endowment Plan
d) Reliance Special Endowment Plan
Option No of respondents Percentage
Reliance term plan 6 2858
Reliance whole life plan 3 1428
Reliance endowment plan 9 4286
Reliance special endowment plan 3 1428
TOTAL 21 100
Interpretation Out of 21 respondents 2858 preferred to invest in term plan 1428 in whole life plan 4286 in endowment plan and 1428 of them preferred to invest in special endowment plan of reliance life insurance
48
Q10 If Bajaj Allianz life insurance then which particular plan you would like to invest in
I ENDOWMENT PLAN a) Bajaj Allianz Invest Gain
b) Bajaj Allianz save Care Economy SP
c) Bajaj Allianz life time care
d) Bajaj Allianz Super Saver plan
II MONEY BACK PLAN i Bajaj Allianz Cash Gain plan
Option No of respondents Percentage
Invest gain plan 3 1035
Save care economy SP 6 2069
Life time care 7 2415
Super saver plan 3 1035
Cash gain plan 10 3446
TOTAL 29 100
Interpretation Out of 29 respondents 1035 of them plan to invest in Bajaj Allianz- Invest Gain 2069 wish to invest in Bajaj Allianz save Care Economy SP 2415 want to invest in Bajaj Allianz life time care 1035 in Bajaj Allianz Super Saver plan and 3446 prefer to invest in Bajaj Allianz Cash Gain plan
49
32) SIGNIFICANCE OF STUDY
Life insurance is one of the most rapidly growing sectors in India The main reason
behind the growth can attributed to the high population density improving economical
condition improving education level and improving awareness Due to these factors there
is still huge scope for growth in this sector Like any other business when the
opportunities are present everybody tends to enter the industries This growth hence
fetches the new competitors as well as new strategies from existing players To sustain in
any competitive industry the organization must adapt to existing strategies and adopt
new ones This study will focus on the analysis of Reliance Life Insurance in comparison
with the present scenario of Bajaj Allianz Life Insurance with respect to the Traditional
Plans of both the companyrsquos This will mainly cover the following aspects
To know about the awareness and popularity of various Traditional Plans offered
by Reliance Life Insurance and Bajaj Allianz Life Insurance
How Reliance Life Insurance can develop and sustain a good distribution
network
These will provide it benefit both in terms of better market coverage as well as better
penetration
50
33) SCOPE OF THE STUDY
1) This helps in finding out vast potential of insurance company
2) The study was conducted in National Capital Region (NCR) only
3) The number of respondents to be surveyed can be improved
4) This study was conducted by comparing the performances amp products of three private
amp government insurance players in insurance industry
5) This study was conducted to analyze the market stand of Reliance life insurance
Company limited and Bajaj Allianz Life Insurance Company Limited of India insurance
companies
6) This study is done to eliminate all the myths which people have in their minds
regarding Insurance Sector
51
34) OBJECTIVES
To have a detailed understanding of Reliance Life Insurance and Bajaj Allianz Life Insurance
To find out various reasons considered while investing in policies
To get knowledge about the market exposure and future prospects about Reliance Life Insurance
To know the perception of the consumers about the life insurance
To analyze the Traditional plans of Reliance Life Insurance and compare it with Bajaj Allianz
To know about the brand awareness of Reliance Life Insurance its customer preferences over Bajaj Allianz in the market
To study a proper knowledge about the life insurance industry
To understand the consumer choice while investing in policies
52
CHAPTER 4
DISCUSSION AND FINDINGS OF THE STUDY
FINDINGS OF THE STUDY RECOMMENDATION AND SUGGESTIONS CONCLUSION LIMITATIONS BIBLIOGRAPHY ANNEXUREQUESTIONNAIRE
53
41) FINDINGS OF THE STUDY
1) The survey reveals that still a large proportion of population is interested to invest in other forms of investment other than insurance as still most of them are unaware about the importance of insurance in their life
2) Basically people make varied form of investment for creating wealth to protect their families against pre-mature death and to protect income against disability sickness or critical illness
3) The main motive of the individuals investing is receives benefits US 1010D People generally consider insurance as a tax saving device
4) Mostly people prefer time to time form of investment as they are not willing to take high degree of risk
5) 72 of the respondents are preferred to invest in Traditional Plans
6) Most of the people prefer to make an annual investment up to a maximum of Rs20 000 per annum
7) When the product is like life insurance reputation of the company publicity of the company amp after sale services of the company matters a lot This means that people would choose that insurance company only where the quality of life advisors is satisfactory
8) Most people prefer to invest in Bajaj Allianz Life Insurance as compared to making an investment in Reliance Life Insurance
9) The most preferable Traditional plan of Reliance Life Insurance is Endowment Plan
10) The most preferable plan of Bajaj Allianz Life Insurance co is Cash Gain Plan
54
42) SUGGESTIONS amp RECOMMENDATIONS
Based on the observations of the study some suggestions for the organization are made as
follows
1) Quality of advisors is also as important as the quantity Thus company should go
mainly for qualified professionals
2) Company should increase its budget on publicity so that awareness can be increased
3) Clarity and transparency should be provided to the customer regarding various
products
4) Training sessions should be planned in advance so that schedule can be provided to
the advisor in advance
5) Apart from the Brand Positioning in urban area a strategy should be adopted by
Reliance to make its brand also near to middle level or high aspirant people because they
are the main source of the business in India
6) Awareness Camp to the sub urban area should be focused by Reliance
7) Some innovative technique or product is required in order to attract the consumer
43) LITERATURE REVIEW
55
1) Robi Elenekave has explained in detail why various retirement plans and pension plans donrsquot give the desired returns The main difficulty is the use of incorrect method for calculations done to find out the return on investment This is primarily due to wrong assumptions The study provides information about the various precautions which need to be considered before planning so that the desired results can be achieved
2) Another paper provides insight about how various financial sectors invest in bond market The study was how the different players investment different instruments according to the risk appetite and desired rate of return The study shows that life insurance sector mainly invests in government bond which are low return and low risk instrument The investment in government bond it shows that life insurance companies are more conservative in investment
3) K Subhash has presented the history of Indiarsquos life insurance industry in three stages before independence after independence and post liberalization which not only provides information but also help in analyzing the impact of these major changes The authors have also discussed the huge potential which exists in the rural India The insurance company must realize the importance of rural sector because the future lies there The author commented about the increasing share of private player in the existing market This confirms the availability of opportunity in this sector The paper also provides the importance of professional and focused approach which was given no importance
4) Tapen Sinha has discussed the various challenges and opportunities in the insurance market One of the very important factors which have been discussed in the study is the importance of developing new and better products As the scenario changes the need of an individual also changes so any organization must understand and fulfill these needs The new product development requires constant research so organization must also focus on it
5) Roger G Ibbotson discusses how financial planners and advisors have recently started to recognize that human capital must be taken into account when building optimal portfolios for individual investors Any investorrsquos human capital has a unique mortality risk However life insurance in its forms can hedge against this mortality risk Thus human capital affects both the optimal asset allocation and the optimal demand for life insurance This paper provides a unified framework based on human capital in order to enable individual investors to make both decisions jointly
6) Rakesh Niraj study tells how the flow of information in any organization is important For any organization to grow the flow of information must be good both upwards as well as ownwards The proper flow of information will also ensure proper flow of good and services from organization to customer and proper flow of information from customer to organization The information from customers will help the organization in providing better goods and services to the customer For the above purpose organization must ensure good channel partner who can provide the organization with correct feedback Hence it becomes very important for any organization to acquire good channel partners
56
7) Stephen P Robbins has discussed how group dynamics works in any organization The success of any organization depends on the success of its various teams and how these teams work together The book provides various techniques which can be used by any organization to get result from the team effort The conflict resolution is a major task in any group Various techniques which the organization can use in conflict resolution are also discussed Another important aspect covered is the importance of leadership in the organization The various forms of leadership have been discussed and the kinds of leadership which can be effective in particular situations are also discussed
8) R Wayne Mondy has discussed the importance of training and development in any organization The training provides skills to perform the current job where as the development involve learning beyond present need The various type of training are discussed which can be used according to the requirement Training and development are not only important for better performance of an individual but it also gives satisfaction The major factors which influence training and development are found to be management support commitment of trainee and trainer complexity of the organization The process of developing good training plans is also provided In another part author has discussed the importance of right man for right job The compensation strategies are also given which are very crucial for ant industry
9) Philip Kotler has discussed the importance of channels partners Better the channel partners better will be the delivery model Detailed discussion about how to design the channel structure so that all the requirements could be fulfilled is provided The various issues faced by the organization while managing the channels are also given When an organization has more than one channel it becomes very important that all the channels should be integrated in such a way that the organization get the best out of all At times due to the conflicting benefit of the different channels the conflict arise so various strategies to manage these issues is also discussed in the chapter
10) Michael J Etzel has written about the marketing of services The marketing of services is different from the goods because of the characteristic of service like intangibility inseparability heterogeneity etc Brief about pricing strategies is also given in case of services The authors have also given the impact of technological development on the services marketing The author has also given the importance of brand and after sales support in case of services as perception of the customers plays an important role In other part of the book the authors has described the importance of distribution channels and designing of the same A channel partner should be consider as partner according to discussion The legal complications associated with channels are also discussed These complications are necessary to take into the consideration while managing the channels The conflicting interest of channels both horizontally and vertically are also taken into the consideration
57
11) Boone has discussed about the importance of personal financial planning The concept of time value of money has also been elaborated The importance of creating and implementing budget is given under money management The other important concepts for financial planning like credit management and understanding taxes are also explained In one section the authors have discussed the importance of investment and what should be the major considerations while making any investment The considerations include the risk associated with the investment return on the investment etc The importance and benefits of life insurance has also been given The discussion also includes various legal aspects associated with life insurance The overview of retirement planning is also given which includes importance and benefit of retirement planning Various tools for proper retirement planning are also discussed
58
44) CONCLUSION
1) The customers are very much sensitive towards their investment They would like to invest only in that insurance company which enjoys good public image along with quality good services
2) The result of the survey conducted shows that Bajaj Allianz Life Insurance is the leader in life insurance industry but Reliance Life Insurance and other private players are giving it a close competition
3) The motive of the people behind investing in life insurance is the tax benefits that they would receive under sec 80C and 1010D
4) In Life Insurance industry the after sales support of the company is as important as the quality of life advisors
59
45) LIMITATIONS
There were some limitations faced during the study as discussed below
Since the study was taken for two months so there was a constraint of time and effort
The study was limited only to some of the Delhi regions so the results may be biased
Questionnaire was given to 125 people however only 50 responded to it which is very small for such type of study
The biasness of consumer or responses error cannot be eliminated
Most of the people are not aware about the Importance and the necessity of insurance in their life
Adverse perception of the people towards insurance sector- People consider insurance as a tax saving device
Lack of awareness about the earning opportunity in the insurance sector
60
46) BIBLIOGRAPHY
wwwreliancelifeinsurancecom
wwwadagroupcom
wwwirdacom
wwwbajajallianzlifeinsurancecom
wwwallianzbajajcom
47) ANNEXURE
61
QUESTIONNAIRE
A comparative analysis of consumer perception regarding Traditional plans of Reliance Life Insurance with that of Bajaj Allianz Life Insurance
NAME ___________________________
PERSONAL DETAILS
1) AGE_________________
1) OCCUPATION______________
2) INCOME___________________
3) FAMILY MEMBERS_________
Q1 Where do you prefer to investa) Fixed deposits b) Stock c) Mutual funds d) Insurance e) Others
Q2 What are your priorities for investmenta) Protecting your family against pre-mature death b) Wealth creation c) Retirement needs d) Child education and marriage e) Protect income against disability sickness or critical illness
Q3 What is your main motive behind investing in life insurancea) Tax benefit b) Savings c) Risk cover
Q4 What kind of investment do you prefera) High risk high gain b) Low risk low gain c) Moderate d) Vary times to times
62
Q5Are you interested to invest in Traditional Plansa) Yes b) No
Q6 What is your level of annual investmenta) below 20000 b) 20000-40000 c) above 40000
Q7 What factors would you consider most important before choosing an insurance company
a) publicity of the company b) reputation of the company c) quality of life advisors d) after sales-supporting of the company
Q8 Which life insurance company would you prefer the most to invest ina) Reliance life insurance b) Bajaj Allianz life insurance
Q9 If reliance life insurance then which particular plan you would like to invest ina) Reliance Term Plan b) Reliance Whole Life Plan c) Reliance Endowment Plan d) Reliance Special Endowment Plan
Q10 If Bajaj Allianz life insurance then which particular plan you would like to invest in
I ENDOWMENT PLAN
a) Bajaj Allianz Invest Gain
b) Bajaj Allianz save Care Economy SP
c) Bajaj Allianz life time care
d) Bajaj Allianz Super Saver plan
II MONEY BACK PLAN
a) Bajaj Allianz Cash Gain plan
63
64
- COMPANY PROFILE
- ABOUT RELIANCE LIFE INSURANCE
- HISTORY
- Reliance Capital Limited announced the launch of its life insurance business on February 1 2006 This was after obtaining the required regulatory approvals from the Registrar Of Companies and the Insurance Regulatory and Development Authority
- It was in August 2005 that the ball was set rolling when Reliance Capital Limited the financial arm of Reliance ndash Anil Dhirubhai Ambani Group (ADAG) ndash announced the requisition of 100 shareholding in AMP Sanmar Life Insurance Company Limited and the formal transfer of shares took place in October 2005 The company will issue all policy contracts under the Reliance Life Insurance Company limited name All the existing policy contracts also stand transferred to the Reliance Life Insurance entity with all the original contractual terms and commitments intact
- CORE VALUES
- Reliance Life Insurance Company Limited has some core values which are listed as follows
- Vision bull To be the first choice insurer for customers bull To be the preferred employer for staff in the insurance industry bull To be the number one insurer for creating shareholder value
- Mission As a responsible customer focused market leader we will strive to understand the insurance needs of the consumers and translate it into affordable products that deliver value for money
- 12) TRADITIONAL PLANS OF THE COMPANY
- 12A )TRADITIONAL PLAN OF RELIANCE LIFE INSURANCE-
- Life insurance products are designed to suit the requirements of customers Fundamentally the product provide for
- In every product to a certain degree risk cover is imperative for it to fall under the category of insurance Based on the coverage of the product the premiums are calculated and the customer pays accordingly In order to suggest the right product it is essential for an agent to understand the requirements of the customer well
- The traditional plans of the company have the following features-
- Fixed Tenure
- Potential for better returns
- Transparency
- Flexibility in investment
- Flexibility to invest more
- Flexibility to skip the premium
- Flexibility to choose the cover
- High liquidity
- Age term and sum assured decide the amount of premium
- Top- ups and switches are not allowed
- Reliance Life Insurance Company Limited has offered 9
- 1) Reliance term plan-
- 2) Reliance Whole Life Plan -
- 3) Reliance Endowment Plan -
- 4) Reliance Special Endowment Plan -
- 13) INDUSTRY PROFILE
- MEANING OF INSURANCE
- Insurance may be described as a social device to reduce or eliminate risk of loss to life and property Insurance is a collective bearing of risk Insurance is a financial device to spread the risks and losses of few people among a large number of people as people prefer small fixed liability instead of big uncertain and changing liability
- Insurance can be defined as a ldquolegal contract between two parties whereby one party called insurer undertakes to pay a fixed amount of money on the happening of a particular event which may be certain or uncertainrdquo The other party called insured pays in exchange a fixed sum known as premium
- Insurance is desired to safeguard oneself and onersquos family against possible losses on account of risks and perils It provides financial compensation for the losses suffered due to the happening of any unforeseen events
- IMPORTANCE OF INSURANCE
- Insurance services play predominant role in the process of financial Intermediary Today insurance industry is one of the most growing sectors in India There is lot of potential in the Indian Insurance Industry
- There are many issues which require study The scope of the study of Insurance industry of India would be very great as there are ongoing Developments in the industry after the opening of the sector
- Right now the insurance industry has great opportunities in a country like India or China which huge population Also the penetration of insurance in India is very low in both life and non-life segment so there is lot potential to be tapped Before starting the discussion on insurance industry and related issues we have to start with the basics of insurance So first we understand what is insurance How the word lsquoinsurancersquo is different from the word lsquoassurancersquo Etc
- HISTORY OF INSURANCE
- The concept of insurance is believed to have emerged almost 4500 years ago in the ancient land of Babylonia where traders used to bear risk of the carvan by giving loans which were later repaid with interest when the goods arrived safely
- The concept of insurance as we know today took shape in 1688 at a place called Lloydrsquos Coffee House in London where risk bearers used to meet to transact business This coffee house became so popular that Lloydrsquos became the one of the first modern insurance companies by the end of the eighteenth century
- Marine insurance companies came into existence by the end of the eighteenth century These companies were empowered to write fire and life insurance as well as marine The Great Fire of London in 1966 caused huge loss of property and life With a view to providing fire insurance facilities
- Dr Nicholas Barbon set up in 1967 the first fire insurance company known as the Fire office
- Life insurance in its modern form came to India from England in 1818 The Oriental Life Insurance Company was the first insurance company to be set up in India to help the widows of European community The insurance companies which came into existence between 1818 and 1869 treated
- Indian lives as subnormal and charged an extra premium of 15 to 20 per cent The first Indian insurance company the Bombay Mutual Life
- Assurance Society came into existence in 1870 to cover Indian lives at normal rates
- The Insurance Act 1938 the first comprehensive legislation governing both life and non-life branches of insurance were enacted to provide strict state control over insurance business This amended insurance Act looked into investments expenditure and management of these companies
- By the mid- 1950s there were 154 Indian insurers 16 foreign insurers and 75 provident societies carrying on life insurance business in India Insurance business flourished and so did scams irregularities and dubious investment practices by scores of companies As a result the government decided to nationalize the life assurance business in India The Life Insurance
- Corporation of India (LIC) was set up in 1956 The nationalization of life insurance was followed by general insurance in 1972
- MEANING OF LIFE INSURANCE
- There are three parties in a life insurance transaction the insurer the insured and the owner of the policy (policyholder) although the owner and the insured are often the same person
- Another important person involved in a life insurance policy is the beneficiary The beneficiary is the person or persons who will receive the policy proceeds upon the death of the insured
- Life insurance may be divided into two basic classes ndash term and permanent
- HISTORY OF LIFE INSURANCE
- Risk protection has been a primary goal of humans and institutions throughout history Protecting against risk is what insurance is all about
- Over 5000 years ago in China insurance was seen as a preventative measure against piracy on the sea Piracy in fact was so prevalent that as a way of spreading the risk a number of ships would carry a portion of another ships cargo so that if one ship was captured the entire shipment would not be lost
- In another part of the world nearly 4500 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
- Life insurance came about a little later in ancient Rome where burial clubs were formed to cover the funeral expenses of its members as well as help survivors monetarily With Romes fall around 450 AD most of the concepts of insurance were abandoned but aspects of it did continue through the Middle Ages particularly with merchant and artisan guilds These provided forms of member insurance covering risks like fire flood theft disability death and even imprisonment
- During the feudal period early forms of insurance ebbed with the decline of travel and long-distance trade But during the 14th to 16th centuries transportation commerce and insurance would again reemerge
- And similar to ancient Rome burial societies were formed in the Buddhist period to help families build houses and to protect widows and children
- Modern Insurance
- Illegal almost everywhere else in Europe life insurance in England was vigorously promoted in the three decades following the Glorious Revolution of 1688 The type of insurance we see today owes its roots to 17th century England Lloyds of London or as they were known then Lloyds Coffee House was the location where merchants ship owners and underwriters met to discuss and transact business deals
- While serving as a means of risk-avoidance life insurance also appealed strongly to the gambling instincts of Englands burgeoning middle class
- Gambling was so rampant in fact that when newspapers published names of prominent people who were seriously ill bets were placed at Lloydrsquos on their anticipated dates of death Reacting against such practices 79 merchant underwriters broke away in 1769 and two years later formed a ldquoNew Lloydrsquos Coffee Houserdquo that became known as the ldquoreal Lloydrsquosrdquo Making wagers on peoples deaths ceased in 1774 when parliament forbade the practice
- Insurance moves to America
- The US insurance industry was built on the British model The year 1735 saw the birth of the first insurance company in the American colonies in
- Charleston SC The Presbyterian Synod of Philadelphia in 1759 sponsored the first life insurance corporation in America for the benefit of ministers and their dependents And the first life insurance policy for the general public in the United States was issued in Philadelphia on May 22 1761
- But it wasnt until 80 years later (after 1840) that life insurance really tookoff in a big way The key to its success was reducing the opposition from religious groups
- In 1835 the infamous New York fire drew peoples 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
- With the creation of the automobile public liability insurance which first made its appearance in the 1880s gained importance and acceptance
- More advancement was made to insurance during the process of industrialization In 1897 the British government passed the Workmens Compensation Act which made it mandatory for a company to insure its employees against industrial accidents
- During 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 most labor 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
- BENEFITS OF LIFE INSURANCE
- 1) Risk cover -Life Insurance contracts allow an individual to have a risk cover against any unfortunate event of the future
- 2) Tax Deduction -Under section 80C of the Income Tax Act of 1961 one can get tax deduction on premiums up to one lakh rupees Life Insurance policies thus decrease the total taxable income of an individual
- 3) Loans -An individual can easily access loans from different financial institutions by pledging his insurance policies
- 4) Retirement Planning -What had provided protection against the financial consequences of premature death may now be used to help them enjoy their retirement years
- 5) Educational Needs -Similar to retirement planning the cash values that flow from ones life insurance schemes can be utilized for educational needs of the insurer or his children
- The Life Insurance Industry has an enviable track record among public sector units It has a Consistent profit and dividend paying record accompanied by a steady growth in its financial resources Through investments in the Government sector and socially- oriented sectors the Industry has contributed immensely to the nations development The industry is recognized as one of the largest financial Institutions in the country The ventures initiated by the industry in the areas of Mutual Fund
- Housing Finance has done exceedingly well in recent years To protect the countrys foreign exchange reserves the reinsurance arrangement are so organized that maximum retention is made possible within the country while at the same time protecting interests of the policy holders
- 22) CURRENT SCENARIO OF RELIANCE LIFE INSURANCE
- RLIC offers wide range of innovative life insurance products targeted at individuals and groups It offers need based products that caters to four distinct segments namely protection child retirement and investment plans RLIC is committed to emerge as a transnational Life Insurer of global scale and standard
- CH - 3) RESEARCH METHODOLOGY
- RESEARCH DESIGN-
- SAMPLING TECHNIQUES-
- THE PRIMARY OBJECTIVEOF THE STUDY-
- 34) OBJECTIVES
- 7) Some innovative technique or product is required in order to attract the consumer
- 45) LIMITATIONS
- 46) BIBLIOGRAPHY
-
ROLE OF IRDA
MISSION
ldquoTo protect the interests of the policyholders to regulate promote
and ensure orderly growth of the insurance industry and for matters
connected therewith or incidental theretordquo
The Insurance Act 1938 had provided for setting up of the Controller of Insurance to act
as a strong and powerful supervisory and regulatory authority for insurance Post
nationalization the role of Controller of Insurance diminished considerably in
significance since the Government owned the insurance companies But the scenario
changed with the private and foreign companies foraying in to the insurance sector This
necessitated the need for a strong independent and autonomous Insurance Regulatory
Authority was felt As the enacting of legislation would have taken time the then
Government constituted through a Government resolution an Interim Insurance
Regulatory Authority pending the enactment of a comprehensive legislation
The Insurance Regulatory and Development Authority Act 1999 is an act to provide for
the establishment of an Authority to protect the interests of holders of insurance policies
to regulate promote and ensure orderly growth of the insurance industry and for matters
connected therewith or incidental thereto and further to amend the Insurance Act 1938
the Life Insurance Corporation Act 1956 and the General insurance Business
(Nationalization) Act 1972 to end the monopoly of the Life Insurance Corporation of
India (for life insurance business) and General Insurance Corporation and its subsidiaries
(for general insurance business) The act extends to the whole of India and will come
into force on such date as the Central Government may by notification in the Official
Gazette specify Different dates may be appointed for different provisions of this Act
28
The Act has defined certain terms some of the most important ones are as follows
Appointed day means the date on which the Authority is established under the act
Authority means the established under this Act Interim Insurance Regulatory Authority
means the Insurance Regulatory Authority set up by the Central Government through
Resolution No 17(2) 94-lns-V dated the 23rd January 1996
Words and expressions used and not defined in this Act but defined in the Insurance Act
1938 or the Life Insurance Corporation Act 1956 or the General Insurance Business
(Nationalization) Act 1972 shall have the meanings respectively assigned to them in
those Acts A new definition of Indian Insurance Company has been inserted Indian
insurance company means any insurer being a company
(a) Which is formed and registered under the Companies Act 1956
(b) in which the aggregate holdings of equity shares by a foreign company either by
itself or through its subsidiary companies or its nominees do not exceed twenty-six
percent paid up capital in such Indian insurance company
(c) Whose sole purpose is to carry on life insurance business general insurance business
or re-insurance business
29
CURRENT SCENERIO
21) CURRENT SCENERIO OF THE INSURANCE INDUSTRY
With largest number of life insurance policies in force in the world insurance happens to be a mega opportunity in India Itrsquos a business growing at the rate of 15-20 per cent annually and presently is of the order of Rs 450 billion Together with banking services it adds about 7 per cent to the countryrsquos GDP Gross premium collection is nearly 2 per cent of GDP and funds available with LIC for investment are 8 per cent of GDP
Yet nearly 80 percent of Indian population is without life insurance cover while health insurance and non-life insurance continues to be below international standards And this part of the population is also subject to weak social security and pension systems with hardly any old age income security This it is an indicator that growth potential for the insurance sector is immense A well-develop and evolved insurance sector is needed for economic development as it provides long term funds for infrastructure development and at the same time strengthens the risk taking ability It is estimated that over the next ten years India would require investments of the order of one trillion US dollar The insurance sector to some extent can enable investment in infrastructure development to sustain economic growth of the country Insurance is a federal subject in India There are two legislation that govern the sector - The Insurance Act-1938 and The IRDA Act-1999
In India insurance is generally considered as a tax-saving device instead of its other implied long term financial benefits Indian people are prone to investing in properties and gold followed by bank deposits They selectively invest in shares also but the percentage is very small Even to this day Life Insurance Corporation of India dominates India insurance sector With the entry of private sector players backed by foreign expertise Indian insurance market has become more vibrant Business is becoming increasingly vulnerable due to wide variety of risk particularly after September 11 2001 disaster in which twin tower located in the hearts of New York city were crashed by terrorist attack resulting in loss of 6000 human lives as well as financial loss to the extent of $45 billion The impact of this terrorist attack has created new horizon of risk to the business world today
However rapid changes in the global economy development of technology and e-business already gathered momentum Increased dependency on technology has originated new risks that have resulted in well-published incidents Computer hackers obtaining credit card information from visa and Power-Gen the love bug virus cyber extortion web content liability professional errors and omissions computers and other crimes and activities such as terrorism kidnapping and companyrsquos executive and extortion of money commercial liability etc have significant impact on business resulting in extreme financial loss commercial embarrassment or regulatory implications
Corporation insurancerisk managers under the circumstances have to demand increasingly complex insurance products They have to be more attentive and
30
knowledgeable about emerging risks how those risks are managed effectively and efficiently and how they could ultimately affect a companyrsquos financial situation and therefore its position in the market place In short how such risks are managed and can give to an insured a competitive advantage
In the changing times adoption of e-commerce into business models the integration of web-based communication and data transfer capabilities into the business operations and leveraging of advanced network and technology architecture for maximum benefit are the new horizon of the risks For the corporate insurancerisks managers these new exposure-cyber-risks-can lead to cyber losses widening the interpretation of what constitute insure property damage particularly as it relates to information technology and dataAll the while organizations are tremendous pressure to reduce expenses and increase profit margin and cannot afford to suffer a property loss of business interruption due to any cause (risk) How a company identifies quantifies qualifies and manages these new risks exposure in addition to the well-known tradition risks is becoming an important factor in creating shareholders value This often means changing the way Everyone in the organization have to think about risk
Insurance managers are seeing price levels (premium) continue to rise-albeit modestly-in todayrsquos primarily commercial property and reinsurance markets They are demanding that insurers improve their risk assessment and quantification offerings so that an insured may avail the benefit in cost (premium rate) on account of well-managed riskThe good news for insurance managers is that as the economy evolves insurers are increasingly matching that evaluation with new products services and capabilities due to opening up the insurance market to the private players
Insurers who are truly listening to their customers and striving to be more in tune with their needs are responding to the fast changing corporate insurance and risk management landscape They are listening to their customers They are making fresh approaches to address the new challenges faced by insured organization by designing the new products as per the needs Insurers are providing value added services to insured to protect the value created by the business
Insurers are increasingly required to develop and expand their information technology platforms to ensure that the vast amount of data they collect about their customers Insurancerisk portfolio can easily and seamlessly be transformed into valuable risk management information To help their customers insurers should make better-informed decisions They must be able to swiftly deliver this data to their customers (insured) anywhere in the world Insurer are also discovering that risk assessment have to be customized to meet policyholdersrsquo new exposures and needs The insurance industry is stepping up and addressing these challenges in several different ways
31
22) CURRENT SCENARIO OF RELIANCE LIFE INSURANCE
RLIC offers wide range of innovative life insurance products targeted at individuals and groups It offers need based products that caters to four distinct segments namely protection child retirement and investment plans RLIC is committed to emerge as a
transnational Life Insurer of global scale and standard
Reliance Life Insurance Company Limited (RLIC) is amongst the fastest growing life insurance companies in India It is also amongst the top four private sector life insurance companies in India (As on FY 2008-2009)
As on March 31 2009 RLIC has an annualized premium of Rs 30 billion with a market share of 103 It has leapfrogged on the growth path and has reached the 4 million policy mark in a short span of within 3 years RLIC has a strong distribution network of 1145 branches with more than 149000 agents
32
Insurancersquos Market Share in Comparison of Other Private company
If we look at the status of Reliance Life Insurancersquos market share in comparison of other
private company in comparison of premium earned-
If we talk the growth of Insurance industryrsquos private players in recent years the data will
reflect-
CH - 3) RESEARCH METHODOLOGY
33
RESEARCH DESIGN-
COMPARITIVE STUDY- A comparative study has been undertaken to compare the traditional Plans of Reliance Life Insurance with that of Bajaj Allianz life insurance
DATA TYPE
INTRODUCTION - Any organization whether big or small private or public needs different type of information to know its popularity I have gathered secondary data and primary data and collected information from the combination of these two data
PRIMARY DATA - Primary data collection method was decided for observing working of the company and approaching the customers directly face to face A great care was taken while collecting the primary data to answer that it is relevant accurate current and unbiased
SECONDARY DATA - Secondary data collection method was used by referring to various websites books and newspapers for collecting information regarding the project under study Secondary data consist of the information that already exists somewhere else for some another purpose
SAMPLING TECHNIQUES-
SAMPLE SIZE- A sample size of 50 was taken to be analyzed
SAMPLE LOCATION-Various sectors of Kamla Nagar Civil lines Mukherji Nagar Model Town and selected areas of Delhi
SAMPLING PROCESS - Convenient sampling was used to overcome the time and money constraints that could have been faced by us while collecting the data The customers were contacted face to face directly and also by way of telephonic conversation with them
ANALYTICAL TOOLS - The data collected were arranged accordingly and statistical tools like bar graphs and pie-charts were used to analyze and present the data
RESEARCH INSTRUMENT USED-
34
SAMPLING MEDIA - Printed questionnaires consisting several questions were asked to have an idea of customers view about Reliance Life Insurance plans followed by personal questions
FIELD WORK - Rigorous field work was undertaken to locate the interested and potential respondents to fulfill the objectives of the study
THE PRIMARY OBJECTIVEOF THE STUDY -
The primary objective of the research study is to have a detailed analysis of Reliance Life Insurance bringing in focus the future prospects of the (Anil Dhirubhai Ambani group) with relevance to the customer perception regarding the various plans and products offered by Reliance Life Insurance
31) DATA ANALYSIS AND INTERPRETATION
35
PERSONAL DETAILS
1) AGE a) 18-30b) 31-50c) 51-65
AGE NO OF RESPONDENTS PERCENTAGE
18-30 21 42
31-50 19 38
51-65 10 20
TOTAL 50 100
INTERPRETATION-The bar graph reveals that 42 of the respondents belong to the age group of 18-30 years 38 lies in the age group of 31-50 years and 20 of them lie in the age group of 51-65 years
2) OCCUPATION
4238
20
05
1015202530354045
NO
O
F
RE
SP
ON
DE
NT
S
18 to 30 31 to 50 51 to 65
AGE (in year)
AGE WISE CLASSIFICATION
36
a) Serviceb) Businessc) Professiond) Housewifee) Retired
OPTION NO OF RESPONDENTS PERCENTAGE
Service 16 32
Business 14 28
Profession 5 10
Housewife 8 16
Retired 7 14
TOTAL 50 100
INTERPRETATION-The above bar graph reveals that 32 of the total respondents were servicemen 28 of them belonged to the business class 10 were professionals 16 were housewives and 14 of the total respondents fall in the retired category
3) INCOME
32
28
10
16
14
0
5
10
15
20
25
30
35
Service Business Profession Housewife Retired
OCCUPATION
OCCUPATION WISE CLASSIFICATION
37
a) 150000-300000
b) 300000-500000
c) Above 500000
OPTION NO OF RESPONDENTS PERCENTAGE
150000-300000 24 48
300000-500000 14 28
Above 500000 12 24
TOTAL 50 100
INTERPRETATION-The above bar graph reveals that out of the total respondents 48 lie in the income group of 150000-300000 28 of the total respondents belonged to the income group of 300000-500000 and 24 lie in the income group of people earning an income of above Rs 500000pa
4828 24
01020304050
N O
OF
RE
SP
ON
DE
NT
S
150000-300000
300000-500000
ABOVE500000
INCOME (in RS)
INCOME WISE CLASSIFICATION
38
4) FAMILY MEMBERS
a) 2b) 3c) 4d) Above 4
OPTION NO OF RESPONDENT PERCENTAGE
2 11 22
3 9 18
4 24 48
Above 4 6 12
TOTAL 50 100
INTERPRETATION The above bar graph shows that 22 of the total respondents had a family of 2 members 18 of them had 3 family members 48 of them had 4 family members and 12 of them had the no of family members above 4
Q1 Where do you prefer to invest
22 18
48
120
1020304050
No
o
f re
spo
nd
ents
2 3 4 Above 4
No of family members
MEMBER WISE CLASSIFICATION
39
a) fixed deposits
b) stock
c) mutual funds
d) insurance
e) others
Option No of respondents Percentage
Fixed deposits 5 10
Stock 10 20
Mutual fund 10 20
Insurance 18 36
others 7 14
TOTAL 50 100
Interpretation The above pie chart shows that out of 50 respondents 10 preferred to invest in fixed deposits 20 in stocks 20 in mutual funds 36 in insurance and 14 in others like property gold etc
Q2 What are your priorities for investment
40
a) protecting your family against pre-mature death
b) wealth creation
c) retirement needs
d) child education and marriage
e) protect income against disability sickness or critical illness
Option No of respondents Percentage
Protecting your family against pre mature death
10 20
Wealth creation 14 28
Retirement needs 5 10
Child education and marriage 7 14
Protect income against disability sickness or critical illness
14 28
TOTAL 50 100
Interpretation The above pie chart shows that out of 50 respondents 20 of them invest for protecting their family against premature death 28 for creating wealth 10 for meeting their future retirement needs 14 for child education amp marriage and 28 for protection against disability and sickness
Q3 What is your main motive behind investing in life insurance
41
a) tax benefit
b) savings
c) risk cover
Option No of respondents Percentage
Tax benefits 27 54
Savings 5 10
Risk cover 18 36
TOTAL 50 100
Interpretation The above pie chart shows that out of the sample respondents 54 have tax benefit 10 have savings and 36 have risk cover as their main motive for making an investment in life
Q4 What kind of investment do you prefer
42
a) high risk high gain
b) low risk low gain
c) moderate
d) vary times to times
Option No of respondents Percentage
High risk high gain 8 16
Low risk low gain 5 10
Moderate 12 24
Vary times to times 25 50
TOTAL 50 100
Interpretation The above pie chart shows that out of 50 respondents 16 preferred high risk- high gain form of investment 10 preferred low risk- low gain form of investment 24 preferred moderate investment and 50 preferred varied form of investment
43
Q5Are you interested to invest in Traditional Plans
a) YES
b) NO
Option No of respondents Percentage
YES 36 72
NO 14 28
TOTAL 50 100
Interpretation The above pie chart shows that 72 of the respondents preferred to invest in Traditional Plans
44
Q6 What is your level of annual investmenta) below 20000
b) 20000-40000
c) above 40000
Option No of respondents Percentage
Below 20000 41 82
20000-40000 7 14
Above 40000 2 4
TOTAL 50 100
Interpretation The above pie chart shows that 82 of the respondents are willing to invest below Rs 20000 per annum 14 of them want to invest within Rs 20000 per annum to Rs 40000 and 4 wanted to invest over and above Rs 40000
45
Q7 What factors would you consider most important before choosing an insurance policy
a) publicity of the company
b) reputation of the company
c) quality of life advisors
d) after sales-supporting of the company
Option No of respondents Percentage
Publicity of the co 5 20
Reputation of the co 25 50
Quality of life advisors 10 10
After sale-services 10 20
TOTAL 50 100
Interpretation out of the sample respondents 20 considers publicity of the company 50 considers reputation of the company 10 considers quality of life advisors and 20 considers after sales support of the company as the most important factor for choosing an insurance company
46
Q8 Which life insurance company would you prefer the most to invest ina) reliance life insurance (RLIC)
b) Bajaj Allianz life insurance
Option No of respondents Percentage
RLIC 21 42
BAJAJ ALLIANZ 29 58
TOTAL 50 100
Interpretation Out of 50 respondents 42 preferred to invest in reliance life insurance over 58 of the respondents who prefer to invest in Bajaj Allianz life insurance
47
Q9 If reliance life insurance then which particular plan you would like to invest ina) Reliance Term Plan
b) Reliance Whole Life Plan
c) Reliance Endowment Plan
d) Reliance Special Endowment Plan
Option No of respondents Percentage
Reliance term plan 6 2858
Reliance whole life plan 3 1428
Reliance endowment plan 9 4286
Reliance special endowment plan 3 1428
TOTAL 21 100
Interpretation Out of 21 respondents 2858 preferred to invest in term plan 1428 in whole life plan 4286 in endowment plan and 1428 of them preferred to invest in special endowment plan of reliance life insurance
48
Q10 If Bajaj Allianz life insurance then which particular plan you would like to invest in
I ENDOWMENT PLAN a) Bajaj Allianz Invest Gain
b) Bajaj Allianz save Care Economy SP
c) Bajaj Allianz life time care
d) Bajaj Allianz Super Saver plan
II MONEY BACK PLAN i Bajaj Allianz Cash Gain plan
Option No of respondents Percentage
Invest gain plan 3 1035
Save care economy SP 6 2069
Life time care 7 2415
Super saver plan 3 1035
Cash gain plan 10 3446
TOTAL 29 100
Interpretation Out of 29 respondents 1035 of them plan to invest in Bajaj Allianz- Invest Gain 2069 wish to invest in Bajaj Allianz save Care Economy SP 2415 want to invest in Bajaj Allianz life time care 1035 in Bajaj Allianz Super Saver plan and 3446 prefer to invest in Bajaj Allianz Cash Gain plan
49
32) SIGNIFICANCE OF STUDY
Life insurance is one of the most rapidly growing sectors in India The main reason
behind the growth can attributed to the high population density improving economical
condition improving education level and improving awareness Due to these factors there
is still huge scope for growth in this sector Like any other business when the
opportunities are present everybody tends to enter the industries This growth hence
fetches the new competitors as well as new strategies from existing players To sustain in
any competitive industry the organization must adapt to existing strategies and adopt
new ones This study will focus on the analysis of Reliance Life Insurance in comparison
with the present scenario of Bajaj Allianz Life Insurance with respect to the Traditional
Plans of both the companyrsquos This will mainly cover the following aspects
To know about the awareness and popularity of various Traditional Plans offered
by Reliance Life Insurance and Bajaj Allianz Life Insurance
How Reliance Life Insurance can develop and sustain a good distribution
network
These will provide it benefit both in terms of better market coverage as well as better
penetration
50
33) SCOPE OF THE STUDY
1) This helps in finding out vast potential of insurance company
2) The study was conducted in National Capital Region (NCR) only
3) The number of respondents to be surveyed can be improved
4) This study was conducted by comparing the performances amp products of three private
amp government insurance players in insurance industry
5) This study was conducted to analyze the market stand of Reliance life insurance
Company limited and Bajaj Allianz Life Insurance Company Limited of India insurance
companies
6) This study is done to eliminate all the myths which people have in their minds
regarding Insurance Sector
51
34) OBJECTIVES
To have a detailed understanding of Reliance Life Insurance and Bajaj Allianz Life Insurance
To find out various reasons considered while investing in policies
To get knowledge about the market exposure and future prospects about Reliance Life Insurance
To know the perception of the consumers about the life insurance
To analyze the Traditional plans of Reliance Life Insurance and compare it with Bajaj Allianz
To know about the brand awareness of Reliance Life Insurance its customer preferences over Bajaj Allianz in the market
To study a proper knowledge about the life insurance industry
To understand the consumer choice while investing in policies
52
CHAPTER 4
DISCUSSION AND FINDINGS OF THE STUDY
FINDINGS OF THE STUDY RECOMMENDATION AND SUGGESTIONS CONCLUSION LIMITATIONS BIBLIOGRAPHY ANNEXUREQUESTIONNAIRE
53
41) FINDINGS OF THE STUDY
1) The survey reveals that still a large proportion of population is interested to invest in other forms of investment other than insurance as still most of them are unaware about the importance of insurance in their life
2) Basically people make varied form of investment for creating wealth to protect their families against pre-mature death and to protect income against disability sickness or critical illness
3) The main motive of the individuals investing is receives benefits US 1010D People generally consider insurance as a tax saving device
4) Mostly people prefer time to time form of investment as they are not willing to take high degree of risk
5) 72 of the respondents are preferred to invest in Traditional Plans
6) Most of the people prefer to make an annual investment up to a maximum of Rs20 000 per annum
7) When the product is like life insurance reputation of the company publicity of the company amp after sale services of the company matters a lot This means that people would choose that insurance company only where the quality of life advisors is satisfactory
8) Most people prefer to invest in Bajaj Allianz Life Insurance as compared to making an investment in Reliance Life Insurance
9) The most preferable Traditional plan of Reliance Life Insurance is Endowment Plan
10) The most preferable plan of Bajaj Allianz Life Insurance co is Cash Gain Plan
54
42) SUGGESTIONS amp RECOMMENDATIONS
Based on the observations of the study some suggestions for the organization are made as
follows
1) Quality of advisors is also as important as the quantity Thus company should go
mainly for qualified professionals
2) Company should increase its budget on publicity so that awareness can be increased
3) Clarity and transparency should be provided to the customer regarding various
products
4) Training sessions should be planned in advance so that schedule can be provided to
the advisor in advance
5) Apart from the Brand Positioning in urban area a strategy should be adopted by
Reliance to make its brand also near to middle level or high aspirant people because they
are the main source of the business in India
6) Awareness Camp to the sub urban area should be focused by Reliance
7) Some innovative technique or product is required in order to attract the consumer
43) LITERATURE REVIEW
55
1) Robi Elenekave has explained in detail why various retirement plans and pension plans donrsquot give the desired returns The main difficulty is the use of incorrect method for calculations done to find out the return on investment This is primarily due to wrong assumptions The study provides information about the various precautions which need to be considered before planning so that the desired results can be achieved
2) Another paper provides insight about how various financial sectors invest in bond market The study was how the different players investment different instruments according to the risk appetite and desired rate of return The study shows that life insurance sector mainly invests in government bond which are low return and low risk instrument The investment in government bond it shows that life insurance companies are more conservative in investment
3) K Subhash has presented the history of Indiarsquos life insurance industry in three stages before independence after independence and post liberalization which not only provides information but also help in analyzing the impact of these major changes The authors have also discussed the huge potential which exists in the rural India The insurance company must realize the importance of rural sector because the future lies there The author commented about the increasing share of private player in the existing market This confirms the availability of opportunity in this sector The paper also provides the importance of professional and focused approach which was given no importance
4) Tapen Sinha has discussed the various challenges and opportunities in the insurance market One of the very important factors which have been discussed in the study is the importance of developing new and better products As the scenario changes the need of an individual also changes so any organization must understand and fulfill these needs The new product development requires constant research so organization must also focus on it
5) Roger G Ibbotson discusses how financial planners and advisors have recently started to recognize that human capital must be taken into account when building optimal portfolios for individual investors Any investorrsquos human capital has a unique mortality risk However life insurance in its forms can hedge against this mortality risk Thus human capital affects both the optimal asset allocation and the optimal demand for life insurance This paper provides a unified framework based on human capital in order to enable individual investors to make both decisions jointly
6) Rakesh Niraj study tells how the flow of information in any organization is important For any organization to grow the flow of information must be good both upwards as well as ownwards The proper flow of information will also ensure proper flow of good and services from organization to customer and proper flow of information from customer to organization The information from customers will help the organization in providing better goods and services to the customer For the above purpose organization must ensure good channel partner who can provide the organization with correct feedback Hence it becomes very important for any organization to acquire good channel partners
56
7) Stephen P Robbins has discussed how group dynamics works in any organization The success of any organization depends on the success of its various teams and how these teams work together The book provides various techniques which can be used by any organization to get result from the team effort The conflict resolution is a major task in any group Various techniques which the organization can use in conflict resolution are also discussed Another important aspect covered is the importance of leadership in the organization The various forms of leadership have been discussed and the kinds of leadership which can be effective in particular situations are also discussed
8) R Wayne Mondy has discussed the importance of training and development in any organization The training provides skills to perform the current job where as the development involve learning beyond present need The various type of training are discussed which can be used according to the requirement Training and development are not only important for better performance of an individual but it also gives satisfaction The major factors which influence training and development are found to be management support commitment of trainee and trainer complexity of the organization The process of developing good training plans is also provided In another part author has discussed the importance of right man for right job The compensation strategies are also given which are very crucial for ant industry
9) Philip Kotler has discussed the importance of channels partners Better the channel partners better will be the delivery model Detailed discussion about how to design the channel structure so that all the requirements could be fulfilled is provided The various issues faced by the organization while managing the channels are also given When an organization has more than one channel it becomes very important that all the channels should be integrated in such a way that the organization get the best out of all At times due to the conflicting benefit of the different channels the conflict arise so various strategies to manage these issues is also discussed in the chapter
10) Michael J Etzel has written about the marketing of services The marketing of services is different from the goods because of the characteristic of service like intangibility inseparability heterogeneity etc Brief about pricing strategies is also given in case of services The authors have also given the impact of technological development on the services marketing The author has also given the importance of brand and after sales support in case of services as perception of the customers plays an important role In other part of the book the authors has described the importance of distribution channels and designing of the same A channel partner should be consider as partner according to discussion The legal complications associated with channels are also discussed These complications are necessary to take into the consideration while managing the channels The conflicting interest of channels both horizontally and vertically are also taken into the consideration
57
11) Boone has discussed about the importance of personal financial planning The concept of time value of money has also been elaborated The importance of creating and implementing budget is given under money management The other important concepts for financial planning like credit management and understanding taxes are also explained In one section the authors have discussed the importance of investment and what should be the major considerations while making any investment The considerations include the risk associated with the investment return on the investment etc The importance and benefits of life insurance has also been given The discussion also includes various legal aspects associated with life insurance The overview of retirement planning is also given which includes importance and benefit of retirement planning Various tools for proper retirement planning are also discussed
58
44) CONCLUSION
1) The customers are very much sensitive towards their investment They would like to invest only in that insurance company which enjoys good public image along with quality good services
2) The result of the survey conducted shows that Bajaj Allianz Life Insurance is the leader in life insurance industry but Reliance Life Insurance and other private players are giving it a close competition
3) The motive of the people behind investing in life insurance is the tax benefits that they would receive under sec 80C and 1010D
4) In Life Insurance industry the after sales support of the company is as important as the quality of life advisors
59
45) LIMITATIONS
There were some limitations faced during the study as discussed below
Since the study was taken for two months so there was a constraint of time and effort
The study was limited only to some of the Delhi regions so the results may be biased
Questionnaire was given to 125 people however only 50 responded to it which is very small for such type of study
The biasness of consumer or responses error cannot be eliminated
Most of the people are not aware about the Importance and the necessity of insurance in their life
Adverse perception of the people towards insurance sector- People consider insurance as a tax saving device
Lack of awareness about the earning opportunity in the insurance sector
60
46) BIBLIOGRAPHY
wwwreliancelifeinsurancecom
wwwadagroupcom
wwwirdacom
wwwbajajallianzlifeinsurancecom
wwwallianzbajajcom
47) ANNEXURE
61
QUESTIONNAIRE
A comparative analysis of consumer perception regarding Traditional plans of Reliance Life Insurance with that of Bajaj Allianz Life Insurance
NAME ___________________________
PERSONAL DETAILS
1) AGE_________________
1) OCCUPATION______________
2) INCOME___________________
3) FAMILY MEMBERS_________
Q1 Where do you prefer to investa) Fixed deposits b) Stock c) Mutual funds d) Insurance e) Others
Q2 What are your priorities for investmenta) Protecting your family against pre-mature death b) Wealth creation c) Retirement needs d) Child education and marriage e) Protect income against disability sickness or critical illness
Q3 What is your main motive behind investing in life insurancea) Tax benefit b) Savings c) Risk cover
Q4 What kind of investment do you prefera) High risk high gain b) Low risk low gain c) Moderate d) Vary times to times
62
Q5Are you interested to invest in Traditional Plansa) Yes b) No
Q6 What is your level of annual investmenta) below 20000 b) 20000-40000 c) above 40000
Q7 What factors would you consider most important before choosing an insurance company
a) publicity of the company b) reputation of the company c) quality of life advisors d) after sales-supporting of the company
Q8 Which life insurance company would you prefer the most to invest ina) Reliance life insurance b) Bajaj Allianz life insurance
Q9 If reliance life insurance then which particular plan you would like to invest ina) Reliance Term Plan b) Reliance Whole Life Plan c) Reliance Endowment Plan d) Reliance Special Endowment Plan
Q10 If Bajaj Allianz life insurance then which particular plan you would like to invest in
I ENDOWMENT PLAN
a) Bajaj Allianz Invest Gain
b) Bajaj Allianz save Care Economy SP
c) Bajaj Allianz life time care
d) Bajaj Allianz Super Saver plan
II MONEY BACK PLAN
a) Bajaj Allianz Cash Gain plan
63
64
- COMPANY PROFILE
- ABOUT RELIANCE LIFE INSURANCE
- HISTORY
- Reliance Capital Limited announced the launch of its life insurance business on February 1 2006 This was after obtaining the required regulatory approvals from the Registrar Of Companies and the Insurance Regulatory and Development Authority
- It was in August 2005 that the ball was set rolling when Reliance Capital Limited the financial arm of Reliance ndash Anil Dhirubhai Ambani Group (ADAG) ndash announced the requisition of 100 shareholding in AMP Sanmar Life Insurance Company Limited and the formal transfer of shares took place in October 2005 The company will issue all policy contracts under the Reliance Life Insurance Company limited name All the existing policy contracts also stand transferred to the Reliance Life Insurance entity with all the original contractual terms and commitments intact
- CORE VALUES
- Reliance Life Insurance Company Limited has some core values which are listed as follows
- Vision bull To be the first choice insurer for customers bull To be the preferred employer for staff in the insurance industry bull To be the number one insurer for creating shareholder value
- Mission As a responsible customer focused market leader we will strive to understand the insurance needs of the consumers and translate it into affordable products that deliver value for money
- 12) TRADITIONAL PLANS OF THE COMPANY
- 12A )TRADITIONAL PLAN OF RELIANCE LIFE INSURANCE-
- Life insurance products are designed to suit the requirements of customers Fundamentally the product provide for
- In every product to a certain degree risk cover is imperative for it to fall under the category of insurance Based on the coverage of the product the premiums are calculated and the customer pays accordingly In order to suggest the right product it is essential for an agent to understand the requirements of the customer well
- The traditional plans of the company have the following features-
- Fixed Tenure
- Potential for better returns
- Transparency
- Flexibility in investment
- Flexibility to invest more
- Flexibility to skip the premium
- Flexibility to choose the cover
- High liquidity
- Age term and sum assured decide the amount of premium
- Top- ups and switches are not allowed
- Reliance Life Insurance Company Limited has offered 9
- 1) Reliance term plan-
- 2) Reliance Whole Life Plan -
- 3) Reliance Endowment Plan -
- 4) Reliance Special Endowment Plan -
- 13) INDUSTRY PROFILE
- MEANING OF INSURANCE
- Insurance may be described as a social device to reduce or eliminate risk of loss to life and property Insurance is a collective bearing of risk Insurance is a financial device to spread the risks and losses of few people among a large number of people as people prefer small fixed liability instead of big uncertain and changing liability
- Insurance can be defined as a ldquolegal contract between two parties whereby one party called insurer undertakes to pay a fixed amount of money on the happening of a particular event which may be certain or uncertainrdquo The other party called insured pays in exchange a fixed sum known as premium
- Insurance is desired to safeguard oneself and onersquos family against possible losses on account of risks and perils It provides financial compensation for the losses suffered due to the happening of any unforeseen events
- IMPORTANCE OF INSURANCE
- Insurance services play predominant role in the process of financial Intermediary Today insurance industry is one of the most growing sectors in India There is lot of potential in the Indian Insurance Industry
- There are many issues which require study The scope of the study of Insurance industry of India would be very great as there are ongoing Developments in the industry after the opening of the sector
- Right now the insurance industry has great opportunities in a country like India or China which huge population Also the penetration of insurance in India is very low in both life and non-life segment so there is lot potential to be tapped Before starting the discussion on insurance industry and related issues we have to start with the basics of insurance So first we understand what is insurance How the word lsquoinsurancersquo is different from the word lsquoassurancersquo Etc
- HISTORY OF INSURANCE
- The concept of insurance is believed to have emerged almost 4500 years ago in the ancient land of Babylonia where traders used to bear risk of the carvan by giving loans which were later repaid with interest when the goods arrived safely
- The concept of insurance as we know today took shape in 1688 at a place called Lloydrsquos Coffee House in London where risk bearers used to meet to transact business This coffee house became so popular that Lloydrsquos became the one of the first modern insurance companies by the end of the eighteenth century
- Marine insurance companies came into existence by the end of the eighteenth century These companies were empowered to write fire and life insurance as well as marine The Great Fire of London in 1966 caused huge loss of property and life With a view to providing fire insurance facilities
- Dr Nicholas Barbon set up in 1967 the first fire insurance company known as the Fire office
- Life insurance in its modern form came to India from England in 1818 The Oriental Life Insurance Company was the first insurance company to be set up in India to help the widows of European community The insurance companies which came into existence between 1818 and 1869 treated
- Indian lives as subnormal and charged an extra premium of 15 to 20 per cent The first Indian insurance company the Bombay Mutual Life
- Assurance Society came into existence in 1870 to cover Indian lives at normal rates
- The Insurance Act 1938 the first comprehensive legislation governing both life and non-life branches of insurance were enacted to provide strict state control over insurance business This amended insurance Act looked into investments expenditure and management of these companies
- By the mid- 1950s there were 154 Indian insurers 16 foreign insurers and 75 provident societies carrying on life insurance business in India Insurance business flourished and so did scams irregularities and dubious investment practices by scores of companies As a result the government decided to nationalize the life assurance business in India The Life Insurance
- Corporation of India (LIC) was set up in 1956 The nationalization of life insurance was followed by general insurance in 1972
- MEANING OF LIFE INSURANCE
- There are three parties in a life insurance transaction the insurer the insured and the owner of the policy (policyholder) although the owner and the insured are often the same person
- Another important person involved in a life insurance policy is the beneficiary The beneficiary is the person or persons who will receive the policy proceeds upon the death of the insured
- Life insurance may be divided into two basic classes ndash term and permanent
- HISTORY OF LIFE INSURANCE
- Risk protection has been a primary goal of humans and institutions throughout history Protecting against risk is what insurance is all about
- Over 5000 years ago in China insurance was seen as a preventative measure against piracy on the sea Piracy in fact was so prevalent that as a way of spreading the risk a number of ships would carry a portion of another ships cargo so that if one ship was captured the entire shipment would not be lost
- In another part of the world nearly 4500 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
- Life insurance came about a little later in ancient Rome where burial clubs were formed to cover the funeral expenses of its members as well as help survivors monetarily With Romes fall around 450 AD most of the concepts of insurance were abandoned but aspects of it did continue through the Middle Ages particularly with merchant and artisan guilds These provided forms of member insurance covering risks like fire flood theft disability death and even imprisonment
- During the feudal period early forms of insurance ebbed with the decline of travel and long-distance trade But during the 14th to 16th centuries transportation commerce and insurance would again reemerge
- And similar to ancient Rome burial societies were formed in the Buddhist period to help families build houses and to protect widows and children
- Modern Insurance
- Illegal almost everywhere else in Europe life insurance in England was vigorously promoted in the three decades following the Glorious Revolution of 1688 The type of insurance we see today owes its roots to 17th century England Lloyds of London or as they were known then Lloyds Coffee House was the location where merchants ship owners and underwriters met to discuss and transact business deals
- While serving as a means of risk-avoidance life insurance also appealed strongly to the gambling instincts of Englands burgeoning middle class
- Gambling was so rampant in fact that when newspapers published names of prominent people who were seriously ill bets were placed at Lloydrsquos on their anticipated dates of death Reacting against such practices 79 merchant underwriters broke away in 1769 and two years later formed a ldquoNew Lloydrsquos Coffee Houserdquo that became known as the ldquoreal Lloydrsquosrdquo Making wagers on peoples deaths ceased in 1774 when parliament forbade the practice
- Insurance moves to America
- The US insurance industry was built on the British model The year 1735 saw the birth of the first insurance company in the American colonies in
- Charleston SC The Presbyterian Synod of Philadelphia in 1759 sponsored the first life insurance corporation in America for the benefit of ministers and their dependents And the first life insurance policy for the general public in the United States was issued in Philadelphia on May 22 1761
- But it wasnt until 80 years later (after 1840) that life insurance really tookoff in a big way The key to its success was reducing the opposition from religious groups
- In 1835 the infamous New York fire drew peoples 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
- With the creation of the automobile public liability insurance which first made its appearance in the 1880s gained importance and acceptance
- More advancement was made to insurance during the process of industrialization In 1897 the British government passed the Workmens Compensation Act which made it mandatory for a company to insure its employees against industrial accidents
- During 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 most labor 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
- BENEFITS OF LIFE INSURANCE
- 1) Risk cover -Life Insurance contracts allow an individual to have a risk cover against any unfortunate event of the future
- 2) Tax Deduction -Under section 80C of the Income Tax Act of 1961 one can get tax deduction on premiums up to one lakh rupees Life Insurance policies thus decrease the total taxable income of an individual
- 3) Loans -An individual can easily access loans from different financial institutions by pledging his insurance policies
- 4) Retirement Planning -What had provided protection against the financial consequences of premature death may now be used to help them enjoy their retirement years
- 5) Educational Needs -Similar to retirement planning the cash values that flow from ones life insurance schemes can be utilized for educational needs of the insurer or his children
- The Life Insurance Industry has an enviable track record among public sector units It has a Consistent profit and dividend paying record accompanied by a steady growth in its financial resources Through investments in the Government sector and socially- oriented sectors the Industry has contributed immensely to the nations development The industry is recognized as one of the largest financial Institutions in the country The ventures initiated by the industry in the areas of Mutual Fund
- Housing Finance has done exceedingly well in recent years To protect the countrys foreign exchange reserves the reinsurance arrangement are so organized that maximum retention is made possible within the country while at the same time protecting interests of the policy holders
- 22) CURRENT SCENARIO OF RELIANCE LIFE INSURANCE
- RLIC offers wide range of innovative life insurance products targeted at individuals and groups It offers need based products that caters to four distinct segments namely protection child retirement and investment plans RLIC is committed to emerge as a transnational Life Insurer of global scale and standard
- CH - 3) RESEARCH METHODOLOGY
- RESEARCH DESIGN-
- SAMPLING TECHNIQUES-
- THE PRIMARY OBJECTIVEOF THE STUDY-
- 34) OBJECTIVES
- 7) Some innovative technique or product is required in order to attract the consumer
- 45) LIMITATIONS
- 46) BIBLIOGRAPHY
-
The Act has defined certain terms some of the most important ones are as follows
Appointed day means the date on which the Authority is established under the act
Authority means the established under this Act Interim Insurance Regulatory Authority
means the Insurance Regulatory Authority set up by the Central Government through
Resolution No 17(2) 94-lns-V dated the 23rd January 1996
Words and expressions used and not defined in this Act but defined in the Insurance Act
1938 or the Life Insurance Corporation Act 1956 or the General Insurance Business
(Nationalization) Act 1972 shall have the meanings respectively assigned to them in
those Acts A new definition of Indian Insurance Company has been inserted Indian
insurance company means any insurer being a company
(a) Which is formed and registered under the Companies Act 1956
(b) in which the aggregate holdings of equity shares by a foreign company either by
itself or through its subsidiary companies or its nominees do not exceed twenty-six
percent paid up capital in such Indian insurance company
(c) Whose sole purpose is to carry on life insurance business general insurance business
or re-insurance business
29
CURRENT SCENERIO
21) CURRENT SCENERIO OF THE INSURANCE INDUSTRY
With largest number of life insurance policies in force in the world insurance happens to be a mega opportunity in India Itrsquos a business growing at the rate of 15-20 per cent annually and presently is of the order of Rs 450 billion Together with banking services it adds about 7 per cent to the countryrsquos GDP Gross premium collection is nearly 2 per cent of GDP and funds available with LIC for investment are 8 per cent of GDP
Yet nearly 80 percent of Indian population is without life insurance cover while health insurance and non-life insurance continues to be below international standards And this part of the population is also subject to weak social security and pension systems with hardly any old age income security This it is an indicator that growth potential for the insurance sector is immense A well-develop and evolved insurance sector is needed for economic development as it provides long term funds for infrastructure development and at the same time strengthens the risk taking ability It is estimated that over the next ten years India would require investments of the order of one trillion US dollar The insurance sector to some extent can enable investment in infrastructure development to sustain economic growth of the country Insurance is a federal subject in India There are two legislation that govern the sector - The Insurance Act-1938 and The IRDA Act-1999
In India insurance is generally considered as a tax-saving device instead of its other implied long term financial benefits Indian people are prone to investing in properties and gold followed by bank deposits They selectively invest in shares also but the percentage is very small Even to this day Life Insurance Corporation of India dominates India insurance sector With the entry of private sector players backed by foreign expertise Indian insurance market has become more vibrant Business is becoming increasingly vulnerable due to wide variety of risk particularly after September 11 2001 disaster in which twin tower located in the hearts of New York city were crashed by terrorist attack resulting in loss of 6000 human lives as well as financial loss to the extent of $45 billion The impact of this terrorist attack has created new horizon of risk to the business world today
However rapid changes in the global economy development of technology and e-business already gathered momentum Increased dependency on technology has originated new risks that have resulted in well-published incidents Computer hackers obtaining credit card information from visa and Power-Gen the love bug virus cyber extortion web content liability professional errors and omissions computers and other crimes and activities such as terrorism kidnapping and companyrsquos executive and extortion of money commercial liability etc have significant impact on business resulting in extreme financial loss commercial embarrassment or regulatory implications
Corporation insurancerisk managers under the circumstances have to demand increasingly complex insurance products They have to be more attentive and
30
knowledgeable about emerging risks how those risks are managed effectively and efficiently and how they could ultimately affect a companyrsquos financial situation and therefore its position in the market place In short how such risks are managed and can give to an insured a competitive advantage
In the changing times adoption of e-commerce into business models the integration of web-based communication and data transfer capabilities into the business operations and leveraging of advanced network and technology architecture for maximum benefit are the new horizon of the risks For the corporate insurancerisks managers these new exposure-cyber-risks-can lead to cyber losses widening the interpretation of what constitute insure property damage particularly as it relates to information technology and dataAll the while organizations are tremendous pressure to reduce expenses and increase profit margin and cannot afford to suffer a property loss of business interruption due to any cause (risk) How a company identifies quantifies qualifies and manages these new risks exposure in addition to the well-known tradition risks is becoming an important factor in creating shareholders value This often means changing the way Everyone in the organization have to think about risk
Insurance managers are seeing price levels (premium) continue to rise-albeit modestly-in todayrsquos primarily commercial property and reinsurance markets They are demanding that insurers improve their risk assessment and quantification offerings so that an insured may avail the benefit in cost (premium rate) on account of well-managed riskThe good news for insurance managers is that as the economy evolves insurers are increasingly matching that evaluation with new products services and capabilities due to opening up the insurance market to the private players
Insurers who are truly listening to their customers and striving to be more in tune with their needs are responding to the fast changing corporate insurance and risk management landscape They are listening to their customers They are making fresh approaches to address the new challenges faced by insured organization by designing the new products as per the needs Insurers are providing value added services to insured to protect the value created by the business
Insurers are increasingly required to develop and expand their information technology platforms to ensure that the vast amount of data they collect about their customers Insurancerisk portfolio can easily and seamlessly be transformed into valuable risk management information To help their customers insurers should make better-informed decisions They must be able to swiftly deliver this data to their customers (insured) anywhere in the world Insurer are also discovering that risk assessment have to be customized to meet policyholdersrsquo new exposures and needs The insurance industry is stepping up and addressing these challenges in several different ways
31
22) CURRENT SCENARIO OF RELIANCE LIFE INSURANCE
RLIC offers wide range of innovative life insurance products targeted at individuals and groups It offers need based products that caters to four distinct segments namely protection child retirement and investment plans RLIC is committed to emerge as a
transnational Life Insurer of global scale and standard
Reliance Life Insurance Company Limited (RLIC) is amongst the fastest growing life insurance companies in India It is also amongst the top four private sector life insurance companies in India (As on FY 2008-2009)
As on March 31 2009 RLIC has an annualized premium of Rs 30 billion with a market share of 103 It has leapfrogged on the growth path and has reached the 4 million policy mark in a short span of within 3 years RLIC has a strong distribution network of 1145 branches with more than 149000 agents
32
Insurancersquos Market Share in Comparison of Other Private company
If we look at the status of Reliance Life Insurancersquos market share in comparison of other
private company in comparison of premium earned-
If we talk the growth of Insurance industryrsquos private players in recent years the data will
reflect-
CH - 3) RESEARCH METHODOLOGY
33
RESEARCH DESIGN-
COMPARITIVE STUDY- A comparative study has been undertaken to compare the traditional Plans of Reliance Life Insurance with that of Bajaj Allianz life insurance
DATA TYPE
INTRODUCTION - Any organization whether big or small private or public needs different type of information to know its popularity I have gathered secondary data and primary data and collected information from the combination of these two data
PRIMARY DATA - Primary data collection method was decided for observing working of the company and approaching the customers directly face to face A great care was taken while collecting the primary data to answer that it is relevant accurate current and unbiased
SECONDARY DATA - Secondary data collection method was used by referring to various websites books and newspapers for collecting information regarding the project under study Secondary data consist of the information that already exists somewhere else for some another purpose
SAMPLING TECHNIQUES-
SAMPLE SIZE- A sample size of 50 was taken to be analyzed
SAMPLE LOCATION-Various sectors of Kamla Nagar Civil lines Mukherji Nagar Model Town and selected areas of Delhi
SAMPLING PROCESS - Convenient sampling was used to overcome the time and money constraints that could have been faced by us while collecting the data The customers were contacted face to face directly and also by way of telephonic conversation with them
ANALYTICAL TOOLS - The data collected were arranged accordingly and statistical tools like bar graphs and pie-charts were used to analyze and present the data
RESEARCH INSTRUMENT USED-
34
SAMPLING MEDIA - Printed questionnaires consisting several questions were asked to have an idea of customers view about Reliance Life Insurance plans followed by personal questions
FIELD WORK - Rigorous field work was undertaken to locate the interested and potential respondents to fulfill the objectives of the study
THE PRIMARY OBJECTIVEOF THE STUDY -
The primary objective of the research study is to have a detailed analysis of Reliance Life Insurance bringing in focus the future prospects of the (Anil Dhirubhai Ambani group) with relevance to the customer perception regarding the various plans and products offered by Reliance Life Insurance
31) DATA ANALYSIS AND INTERPRETATION
35
PERSONAL DETAILS
1) AGE a) 18-30b) 31-50c) 51-65
AGE NO OF RESPONDENTS PERCENTAGE
18-30 21 42
31-50 19 38
51-65 10 20
TOTAL 50 100
INTERPRETATION-The bar graph reveals that 42 of the respondents belong to the age group of 18-30 years 38 lies in the age group of 31-50 years and 20 of them lie in the age group of 51-65 years
2) OCCUPATION
4238
20
05
1015202530354045
NO
O
F
RE
SP
ON
DE
NT
S
18 to 30 31 to 50 51 to 65
AGE (in year)
AGE WISE CLASSIFICATION
36
a) Serviceb) Businessc) Professiond) Housewifee) Retired
OPTION NO OF RESPONDENTS PERCENTAGE
Service 16 32
Business 14 28
Profession 5 10
Housewife 8 16
Retired 7 14
TOTAL 50 100
INTERPRETATION-The above bar graph reveals that 32 of the total respondents were servicemen 28 of them belonged to the business class 10 were professionals 16 were housewives and 14 of the total respondents fall in the retired category
3) INCOME
32
28
10
16
14
0
5
10
15
20
25
30
35
Service Business Profession Housewife Retired
OCCUPATION
OCCUPATION WISE CLASSIFICATION
37
a) 150000-300000
b) 300000-500000
c) Above 500000
OPTION NO OF RESPONDENTS PERCENTAGE
150000-300000 24 48
300000-500000 14 28
Above 500000 12 24
TOTAL 50 100
INTERPRETATION-The above bar graph reveals that out of the total respondents 48 lie in the income group of 150000-300000 28 of the total respondents belonged to the income group of 300000-500000 and 24 lie in the income group of people earning an income of above Rs 500000pa
4828 24
01020304050
N O
OF
RE
SP
ON
DE
NT
S
150000-300000
300000-500000
ABOVE500000
INCOME (in RS)
INCOME WISE CLASSIFICATION
38
4) FAMILY MEMBERS
a) 2b) 3c) 4d) Above 4
OPTION NO OF RESPONDENT PERCENTAGE
2 11 22
3 9 18
4 24 48
Above 4 6 12
TOTAL 50 100
INTERPRETATION The above bar graph shows that 22 of the total respondents had a family of 2 members 18 of them had 3 family members 48 of them had 4 family members and 12 of them had the no of family members above 4
Q1 Where do you prefer to invest
22 18
48
120
1020304050
No
o
f re
spo
nd
ents
2 3 4 Above 4
No of family members
MEMBER WISE CLASSIFICATION
39
a) fixed deposits
b) stock
c) mutual funds
d) insurance
e) others
Option No of respondents Percentage
Fixed deposits 5 10
Stock 10 20
Mutual fund 10 20
Insurance 18 36
others 7 14
TOTAL 50 100
Interpretation The above pie chart shows that out of 50 respondents 10 preferred to invest in fixed deposits 20 in stocks 20 in mutual funds 36 in insurance and 14 in others like property gold etc
Q2 What are your priorities for investment
40
a) protecting your family against pre-mature death
b) wealth creation
c) retirement needs
d) child education and marriage
e) protect income against disability sickness or critical illness
Option No of respondents Percentage
Protecting your family against pre mature death
10 20
Wealth creation 14 28
Retirement needs 5 10
Child education and marriage 7 14
Protect income against disability sickness or critical illness
14 28
TOTAL 50 100
Interpretation The above pie chart shows that out of 50 respondents 20 of them invest for protecting their family against premature death 28 for creating wealth 10 for meeting their future retirement needs 14 for child education amp marriage and 28 for protection against disability and sickness
Q3 What is your main motive behind investing in life insurance
41
a) tax benefit
b) savings
c) risk cover
Option No of respondents Percentage
Tax benefits 27 54
Savings 5 10
Risk cover 18 36
TOTAL 50 100
Interpretation The above pie chart shows that out of the sample respondents 54 have tax benefit 10 have savings and 36 have risk cover as their main motive for making an investment in life
Q4 What kind of investment do you prefer
42
a) high risk high gain
b) low risk low gain
c) moderate
d) vary times to times
Option No of respondents Percentage
High risk high gain 8 16
Low risk low gain 5 10
Moderate 12 24
Vary times to times 25 50
TOTAL 50 100
Interpretation The above pie chart shows that out of 50 respondents 16 preferred high risk- high gain form of investment 10 preferred low risk- low gain form of investment 24 preferred moderate investment and 50 preferred varied form of investment
43
Q5Are you interested to invest in Traditional Plans
a) YES
b) NO
Option No of respondents Percentage
YES 36 72
NO 14 28
TOTAL 50 100
Interpretation The above pie chart shows that 72 of the respondents preferred to invest in Traditional Plans
44
Q6 What is your level of annual investmenta) below 20000
b) 20000-40000
c) above 40000
Option No of respondents Percentage
Below 20000 41 82
20000-40000 7 14
Above 40000 2 4
TOTAL 50 100
Interpretation The above pie chart shows that 82 of the respondents are willing to invest below Rs 20000 per annum 14 of them want to invest within Rs 20000 per annum to Rs 40000 and 4 wanted to invest over and above Rs 40000
45
Q7 What factors would you consider most important before choosing an insurance policy
a) publicity of the company
b) reputation of the company
c) quality of life advisors
d) after sales-supporting of the company
Option No of respondents Percentage
Publicity of the co 5 20
Reputation of the co 25 50
Quality of life advisors 10 10
After sale-services 10 20
TOTAL 50 100
Interpretation out of the sample respondents 20 considers publicity of the company 50 considers reputation of the company 10 considers quality of life advisors and 20 considers after sales support of the company as the most important factor for choosing an insurance company
46
Q8 Which life insurance company would you prefer the most to invest ina) reliance life insurance (RLIC)
b) Bajaj Allianz life insurance
Option No of respondents Percentage
RLIC 21 42
BAJAJ ALLIANZ 29 58
TOTAL 50 100
Interpretation Out of 50 respondents 42 preferred to invest in reliance life insurance over 58 of the respondents who prefer to invest in Bajaj Allianz life insurance
47
Q9 If reliance life insurance then which particular plan you would like to invest ina) Reliance Term Plan
b) Reliance Whole Life Plan
c) Reliance Endowment Plan
d) Reliance Special Endowment Plan
Option No of respondents Percentage
Reliance term plan 6 2858
Reliance whole life plan 3 1428
Reliance endowment plan 9 4286
Reliance special endowment plan 3 1428
TOTAL 21 100
Interpretation Out of 21 respondents 2858 preferred to invest in term plan 1428 in whole life plan 4286 in endowment plan and 1428 of them preferred to invest in special endowment plan of reliance life insurance
48
Q10 If Bajaj Allianz life insurance then which particular plan you would like to invest in
I ENDOWMENT PLAN a) Bajaj Allianz Invest Gain
b) Bajaj Allianz save Care Economy SP
c) Bajaj Allianz life time care
d) Bajaj Allianz Super Saver plan
II MONEY BACK PLAN i Bajaj Allianz Cash Gain plan
Option No of respondents Percentage
Invest gain plan 3 1035
Save care economy SP 6 2069
Life time care 7 2415
Super saver plan 3 1035
Cash gain plan 10 3446
TOTAL 29 100
Interpretation Out of 29 respondents 1035 of them plan to invest in Bajaj Allianz- Invest Gain 2069 wish to invest in Bajaj Allianz save Care Economy SP 2415 want to invest in Bajaj Allianz life time care 1035 in Bajaj Allianz Super Saver plan and 3446 prefer to invest in Bajaj Allianz Cash Gain plan
49
32) SIGNIFICANCE OF STUDY
Life insurance is one of the most rapidly growing sectors in India The main reason
behind the growth can attributed to the high population density improving economical
condition improving education level and improving awareness Due to these factors there
is still huge scope for growth in this sector Like any other business when the
opportunities are present everybody tends to enter the industries This growth hence
fetches the new competitors as well as new strategies from existing players To sustain in
any competitive industry the organization must adapt to existing strategies and adopt
new ones This study will focus on the analysis of Reliance Life Insurance in comparison
with the present scenario of Bajaj Allianz Life Insurance with respect to the Traditional
Plans of both the companyrsquos This will mainly cover the following aspects
To know about the awareness and popularity of various Traditional Plans offered
by Reliance Life Insurance and Bajaj Allianz Life Insurance
How Reliance Life Insurance can develop and sustain a good distribution
network
These will provide it benefit both in terms of better market coverage as well as better
penetration
50
33) SCOPE OF THE STUDY
1) This helps in finding out vast potential of insurance company
2) The study was conducted in National Capital Region (NCR) only
3) The number of respondents to be surveyed can be improved
4) This study was conducted by comparing the performances amp products of three private
amp government insurance players in insurance industry
5) This study was conducted to analyze the market stand of Reliance life insurance
Company limited and Bajaj Allianz Life Insurance Company Limited of India insurance
companies
6) This study is done to eliminate all the myths which people have in their minds
regarding Insurance Sector
51
34) OBJECTIVES
To have a detailed understanding of Reliance Life Insurance and Bajaj Allianz Life Insurance
To find out various reasons considered while investing in policies
To get knowledge about the market exposure and future prospects about Reliance Life Insurance
To know the perception of the consumers about the life insurance
To analyze the Traditional plans of Reliance Life Insurance and compare it with Bajaj Allianz
To know about the brand awareness of Reliance Life Insurance its customer preferences over Bajaj Allianz in the market
To study a proper knowledge about the life insurance industry
To understand the consumer choice while investing in policies
52
CHAPTER 4
DISCUSSION AND FINDINGS OF THE STUDY
FINDINGS OF THE STUDY RECOMMENDATION AND SUGGESTIONS CONCLUSION LIMITATIONS BIBLIOGRAPHY ANNEXUREQUESTIONNAIRE
53
41) FINDINGS OF THE STUDY
1) The survey reveals that still a large proportion of population is interested to invest in other forms of investment other than insurance as still most of them are unaware about the importance of insurance in their life
2) Basically people make varied form of investment for creating wealth to protect their families against pre-mature death and to protect income against disability sickness or critical illness
3) The main motive of the individuals investing is receives benefits US 1010D People generally consider insurance as a tax saving device
4) Mostly people prefer time to time form of investment as they are not willing to take high degree of risk
5) 72 of the respondents are preferred to invest in Traditional Plans
6) Most of the people prefer to make an annual investment up to a maximum of Rs20 000 per annum
7) When the product is like life insurance reputation of the company publicity of the company amp after sale services of the company matters a lot This means that people would choose that insurance company only where the quality of life advisors is satisfactory
8) Most people prefer to invest in Bajaj Allianz Life Insurance as compared to making an investment in Reliance Life Insurance
9) The most preferable Traditional plan of Reliance Life Insurance is Endowment Plan
10) The most preferable plan of Bajaj Allianz Life Insurance co is Cash Gain Plan
54
42) SUGGESTIONS amp RECOMMENDATIONS
Based on the observations of the study some suggestions for the organization are made as
follows
1) Quality of advisors is also as important as the quantity Thus company should go
mainly for qualified professionals
2) Company should increase its budget on publicity so that awareness can be increased
3) Clarity and transparency should be provided to the customer regarding various
products
4) Training sessions should be planned in advance so that schedule can be provided to
the advisor in advance
5) Apart from the Brand Positioning in urban area a strategy should be adopted by
Reliance to make its brand also near to middle level or high aspirant people because they
are the main source of the business in India
6) Awareness Camp to the sub urban area should be focused by Reliance
7) Some innovative technique or product is required in order to attract the consumer
43) LITERATURE REVIEW
55
1) Robi Elenekave has explained in detail why various retirement plans and pension plans donrsquot give the desired returns The main difficulty is the use of incorrect method for calculations done to find out the return on investment This is primarily due to wrong assumptions The study provides information about the various precautions which need to be considered before planning so that the desired results can be achieved
2) Another paper provides insight about how various financial sectors invest in bond market The study was how the different players investment different instruments according to the risk appetite and desired rate of return The study shows that life insurance sector mainly invests in government bond which are low return and low risk instrument The investment in government bond it shows that life insurance companies are more conservative in investment
3) K Subhash has presented the history of Indiarsquos life insurance industry in three stages before independence after independence and post liberalization which not only provides information but also help in analyzing the impact of these major changes The authors have also discussed the huge potential which exists in the rural India The insurance company must realize the importance of rural sector because the future lies there The author commented about the increasing share of private player in the existing market This confirms the availability of opportunity in this sector The paper also provides the importance of professional and focused approach which was given no importance
4) Tapen Sinha has discussed the various challenges and opportunities in the insurance market One of the very important factors which have been discussed in the study is the importance of developing new and better products As the scenario changes the need of an individual also changes so any organization must understand and fulfill these needs The new product development requires constant research so organization must also focus on it
5) Roger G Ibbotson discusses how financial planners and advisors have recently started to recognize that human capital must be taken into account when building optimal portfolios for individual investors Any investorrsquos human capital has a unique mortality risk However life insurance in its forms can hedge against this mortality risk Thus human capital affects both the optimal asset allocation and the optimal demand for life insurance This paper provides a unified framework based on human capital in order to enable individual investors to make both decisions jointly
6) Rakesh Niraj study tells how the flow of information in any organization is important For any organization to grow the flow of information must be good both upwards as well as ownwards The proper flow of information will also ensure proper flow of good and services from organization to customer and proper flow of information from customer to organization The information from customers will help the organization in providing better goods and services to the customer For the above purpose organization must ensure good channel partner who can provide the organization with correct feedback Hence it becomes very important for any organization to acquire good channel partners
56
7) Stephen P Robbins has discussed how group dynamics works in any organization The success of any organization depends on the success of its various teams and how these teams work together The book provides various techniques which can be used by any organization to get result from the team effort The conflict resolution is a major task in any group Various techniques which the organization can use in conflict resolution are also discussed Another important aspect covered is the importance of leadership in the organization The various forms of leadership have been discussed and the kinds of leadership which can be effective in particular situations are also discussed
8) R Wayne Mondy has discussed the importance of training and development in any organization The training provides skills to perform the current job where as the development involve learning beyond present need The various type of training are discussed which can be used according to the requirement Training and development are not only important for better performance of an individual but it also gives satisfaction The major factors which influence training and development are found to be management support commitment of trainee and trainer complexity of the organization The process of developing good training plans is also provided In another part author has discussed the importance of right man for right job The compensation strategies are also given which are very crucial for ant industry
9) Philip Kotler has discussed the importance of channels partners Better the channel partners better will be the delivery model Detailed discussion about how to design the channel structure so that all the requirements could be fulfilled is provided The various issues faced by the organization while managing the channels are also given When an organization has more than one channel it becomes very important that all the channels should be integrated in such a way that the organization get the best out of all At times due to the conflicting benefit of the different channels the conflict arise so various strategies to manage these issues is also discussed in the chapter
10) Michael J Etzel has written about the marketing of services The marketing of services is different from the goods because of the characteristic of service like intangibility inseparability heterogeneity etc Brief about pricing strategies is also given in case of services The authors have also given the impact of technological development on the services marketing The author has also given the importance of brand and after sales support in case of services as perception of the customers plays an important role In other part of the book the authors has described the importance of distribution channels and designing of the same A channel partner should be consider as partner according to discussion The legal complications associated with channels are also discussed These complications are necessary to take into the consideration while managing the channels The conflicting interest of channels both horizontally and vertically are also taken into the consideration
57
11) Boone has discussed about the importance of personal financial planning The concept of time value of money has also been elaborated The importance of creating and implementing budget is given under money management The other important concepts for financial planning like credit management and understanding taxes are also explained In one section the authors have discussed the importance of investment and what should be the major considerations while making any investment The considerations include the risk associated with the investment return on the investment etc The importance and benefits of life insurance has also been given The discussion also includes various legal aspects associated with life insurance The overview of retirement planning is also given which includes importance and benefit of retirement planning Various tools for proper retirement planning are also discussed
58
44) CONCLUSION
1) The customers are very much sensitive towards their investment They would like to invest only in that insurance company which enjoys good public image along with quality good services
2) The result of the survey conducted shows that Bajaj Allianz Life Insurance is the leader in life insurance industry but Reliance Life Insurance and other private players are giving it a close competition
3) The motive of the people behind investing in life insurance is the tax benefits that they would receive under sec 80C and 1010D
4) In Life Insurance industry the after sales support of the company is as important as the quality of life advisors
59
45) LIMITATIONS
There were some limitations faced during the study as discussed below
Since the study was taken for two months so there was a constraint of time and effort
The study was limited only to some of the Delhi regions so the results may be biased
Questionnaire was given to 125 people however only 50 responded to it which is very small for such type of study
The biasness of consumer or responses error cannot be eliminated
Most of the people are not aware about the Importance and the necessity of insurance in their life
Adverse perception of the people towards insurance sector- People consider insurance as a tax saving device
Lack of awareness about the earning opportunity in the insurance sector
60
46) BIBLIOGRAPHY
wwwreliancelifeinsurancecom
wwwadagroupcom
wwwirdacom
wwwbajajallianzlifeinsurancecom
wwwallianzbajajcom
47) ANNEXURE
61
QUESTIONNAIRE
A comparative analysis of consumer perception regarding Traditional plans of Reliance Life Insurance with that of Bajaj Allianz Life Insurance
NAME ___________________________
PERSONAL DETAILS
1) AGE_________________
1) OCCUPATION______________
2) INCOME___________________
3) FAMILY MEMBERS_________
Q1 Where do you prefer to investa) Fixed deposits b) Stock c) Mutual funds d) Insurance e) Others
Q2 What are your priorities for investmenta) Protecting your family against pre-mature death b) Wealth creation c) Retirement needs d) Child education and marriage e) Protect income against disability sickness or critical illness
Q3 What is your main motive behind investing in life insurancea) Tax benefit b) Savings c) Risk cover
Q4 What kind of investment do you prefera) High risk high gain b) Low risk low gain c) Moderate d) Vary times to times
62
Q5Are you interested to invest in Traditional Plansa) Yes b) No
Q6 What is your level of annual investmenta) below 20000 b) 20000-40000 c) above 40000
Q7 What factors would you consider most important before choosing an insurance company
a) publicity of the company b) reputation of the company c) quality of life advisors d) after sales-supporting of the company
Q8 Which life insurance company would you prefer the most to invest ina) Reliance life insurance b) Bajaj Allianz life insurance
Q9 If reliance life insurance then which particular plan you would like to invest ina) Reliance Term Plan b) Reliance Whole Life Plan c) Reliance Endowment Plan d) Reliance Special Endowment Plan
Q10 If Bajaj Allianz life insurance then which particular plan you would like to invest in
I ENDOWMENT PLAN
a) Bajaj Allianz Invest Gain
b) Bajaj Allianz save Care Economy SP
c) Bajaj Allianz life time care
d) Bajaj Allianz Super Saver plan
II MONEY BACK PLAN
a) Bajaj Allianz Cash Gain plan
63
64
- COMPANY PROFILE
- ABOUT RELIANCE LIFE INSURANCE
- HISTORY
- Reliance Capital Limited announced the launch of its life insurance business on February 1 2006 This was after obtaining the required regulatory approvals from the Registrar Of Companies and the Insurance Regulatory and Development Authority
- It was in August 2005 that the ball was set rolling when Reliance Capital Limited the financial arm of Reliance ndash Anil Dhirubhai Ambani Group (ADAG) ndash announced the requisition of 100 shareholding in AMP Sanmar Life Insurance Company Limited and the formal transfer of shares took place in October 2005 The company will issue all policy contracts under the Reliance Life Insurance Company limited name All the existing policy contracts also stand transferred to the Reliance Life Insurance entity with all the original contractual terms and commitments intact
- CORE VALUES
- Reliance Life Insurance Company Limited has some core values which are listed as follows
- Vision bull To be the first choice insurer for customers bull To be the preferred employer for staff in the insurance industry bull To be the number one insurer for creating shareholder value
- Mission As a responsible customer focused market leader we will strive to understand the insurance needs of the consumers and translate it into affordable products that deliver value for money
- 12) TRADITIONAL PLANS OF THE COMPANY
- 12A )TRADITIONAL PLAN OF RELIANCE LIFE INSURANCE-
- Life insurance products are designed to suit the requirements of customers Fundamentally the product provide for
- In every product to a certain degree risk cover is imperative for it to fall under the category of insurance Based on the coverage of the product the premiums are calculated and the customer pays accordingly In order to suggest the right product it is essential for an agent to understand the requirements of the customer well
- The traditional plans of the company have the following features-
- Fixed Tenure
- Potential for better returns
- Transparency
- Flexibility in investment
- Flexibility to invest more
- Flexibility to skip the premium
- Flexibility to choose the cover
- High liquidity
- Age term and sum assured decide the amount of premium
- Top- ups and switches are not allowed
- Reliance Life Insurance Company Limited has offered 9
- 1) Reliance term plan-
- 2) Reliance Whole Life Plan -
- 3) Reliance Endowment Plan -
- 4) Reliance Special Endowment Plan -
- 13) INDUSTRY PROFILE
- MEANING OF INSURANCE
- Insurance may be described as a social device to reduce or eliminate risk of loss to life and property Insurance is a collective bearing of risk Insurance is a financial device to spread the risks and losses of few people among a large number of people as people prefer small fixed liability instead of big uncertain and changing liability
- Insurance can be defined as a ldquolegal contract between two parties whereby one party called insurer undertakes to pay a fixed amount of money on the happening of a particular event which may be certain or uncertainrdquo The other party called insured pays in exchange a fixed sum known as premium
- Insurance is desired to safeguard oneself and onersquos family against possible losses on account of risks and perils It provides financial compensation for the losses suffered due to the happening of any unforeseen events
- IMPORTANCE OF INSURANCE
- Insurance services play predominant role in the process of financial Intermediary Today insurance industry is one of the most growing sectors in India There is lot of potential in the Indian Insurance Industry
- There are many issues which require study The scope of the study of Insurance industry of India would be very great as there are ongoing Developments in the industry after the opening of the sector
- Right now the insurance industry has great opportunities in a country like India or China which huge population Also the penetration of insurance in India is very low in both life and non-life segment so there is lot potential to be tapped Before starting the discussion on insurance industry and related issues we have to start with the basics of insurance So first we understand what is insurance How the word lsquoinsurancersquo is different from the word lsquoassurancersquo Etc
- HISTORY OF INSURANCE
- The concept of insurance is believed to have emerged almost 4500 years ago in the ancient land of Babylonia where traders used to bear risk of the carvan by giving loans which were later repaid with interest when the goods arrived safely
- The concept of insurance as we know today took shape in 1688 at a place called Lloydrsquos Coffee House in London where risk bearers used to meet to transact business This coffee house became so popular that Lloydrsquos became the one of the first modern insurance companies by the end of the eighteenth century
- Marine insurance companies came into existence by the end of the eighteenth century These companies were empowered to write fire and life insurance as well as marine The Great Fire of London in 1966 caused huge loss of property and life With a view to providing fire insurance facilities
- Dr Nicholas Barbon set up in 1967 the first fire insurance company known as the Fire office
- Life insurance in its modern form came to India from England in 1818 The Oriental Life Insurance Company was the first insurance company to be set up in India to help the widows of European community The insurance companies which came into existence between 1818 and 1869 treated
- Indian lives as subnormal and charged an extra premium of 15 to 20 per cent The first Indian insurance company the Bombay Mutual Life
- Assurance Society came into existence in 1870 to cover Indian lives at normal rates
- The Insurance Act 1938 the first comprehensive legislation governing both life and non-life branches of insurance were enacted to provide strict state control over insurance business This amended insurance Act looked into investments expenditure and management of these companies
- By the mid- 1950s there were 154 Indian insurers 16 foreign insurers and 75 provident societies carrying on life insurance business in India Insurance business flourished and so did scams irregularities and dubious investment practices by scores of companies As a result the government decided to nationalize the life assurance business in India The Life Insurance
- Corporation of India (LIC) was set up in 1956 The nationalization of life insurance was followed by general insurance in 1972
- MEANING OF LIFE INSURANCE
- There are three parties in a life insurance transaction the insurer the insured and the owner of the policy (policyholder) although the owner and the insured are often the same person
- Another important person involved in a life insurance policy is the beneficiary The beneficiary is the person or persons who will receive the policy proceeds upon the death of the insured
- Life insurance may be divided into two basic classes ndash term and permanent
- HISTORY OF LIFE INSURANCE
- Risk protection has been a primary goal of humans and institutions throughout history Protecting against risk is what insurance is all about
- Over 5000 years ago in China insurance was seen as a preventative measure against piracy on the sea Piracy in fact was so prevalent that as a way of spreading the risk a number of ships would carry a portion of another ships cargo so that if one ship was captured the entire shipment would not be lost
- In another part of the world nearly 4500 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
- Life insurance came about a little later in ancient Rome where burial clubs were formed to cover the funeral expenses of its members as well as help survivors monetarily With Romes fall around 450 AD most of the concepts of insurance were abandoned but aspects of it did continue through the Middle Ages particularly with merchant and artisan guilds These provided forms of member insurance covering risks like fire flood theft disability death and even imprisonment
- During the feudal period early forms of insurance ebbed with the decline of travel and long-distance trade But during the 14th to 16th centuries transportation commerce and insurance would again reemerge
- And similar to ancient Rome burial societies were formed in the Buddhist period to help families build houses and to protect widows and children
- Modern Insurance
- Illegal almost everywhere else in Europe life insurance in England was vigorously promoted in the three decades following the Glorious Revolution of 1688 The type of insurance we see today owes its roots to 17th century England Lloyds of London or as they were known then Lloyds Coffee House was the location where merchants ship owners and underwriters met to discuss and transact business deals
- While serving as a means of risk-avoidance life insurance also appealed strongly to the gambling instincts of Englands burgeoning middle class
- Gambling was so rampant in fact that when newspapers published names of prominent people who were seriously ill bets were placed at Lloydrsquos on their anticipated dates of death Reacting against such practices 79 merchant underwriters broke away in 1769 and two years later formed a ldquoNew Lloydrsquos Coffee Houserdquo that became known as the ldquoreal Lloydrsquosrdquo Making wagers on peoples deaths ceased in 1774 when parliament forbade the practice
- Insurance moves to America
- The US insurance industry was built on the British model The year 1735 saw the birth of the first insurance company in the American colonies in
- Charleston SC The Presbyterian Synod of Philadelphia in 1759 sponsored the first life insurance corporation in America for the benefit of ministers and their dependents And the first life insurance policy for the general public in the United States was issued in Philadelphia on May 22 1761
- But it wasnt until 80 years later (after 1840) that life insurance really tookoff in a big way The key to its success was reducing the opposition from religious groups
- In 1835 the infamous New York fire drew peoples 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
- With the creation of the automobile public liability insurance which first made its appearance in the 1880s gained importance and acceptance
- More advancement was made to insurance during the process of industrialization In 1897 the British government passed the Workmens Compensation Act which made it mandatory for a company to insure its employees against industrial accidents
- During 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 most labor 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
- BENEFITS OF LIFE INSURANCE
- 1) Risk cover -Life Insurance contracts allow an individual to have a risk cover against any unfortunate event of the future
- 2) Tax Deduction -Under section 80C of the Income Tax Act of 1961 one can get tax deduction on premiums up to one lakh rupees Life Insurance policies thus decrease the total taxable income of an individual
- 3) Loans -An individual can easily access loans from different financial institutions by pledging his insurance policies
- 4) Retirement Planning -What had provided protection against the financial consequences of premature death may now be used to help them enjoy their retirement years
- 5) Educational Needs -Similar to retirement planning the cash values that flow from ones life insurance schemes can be utilized for educational needs of the insurer or his children
- The Life Insurance Industry has an enviable track record among public sector units It has a Consistent profit and dividend paying record accompanied by a steady growth in its financial resources Through investments in the Government sector and socially- oriented sectors the Industry has contributed immensely to the nations development The industry is recognized as one of the largest financial Institutions in the country The ventures initiated by the industry in the areas of Mutual Fund
- Housing Finance has done exceedingly well in recent years To protect the countrys foreign exchange reserves the reinsurance arrangement are so organized that maximum retention is made possible within the country while at the same time protecting interests of the policy holders
- 22) CURRENT SCENARIO OF RELIANCE LIFE INSURANCE
- RLIC offers wide range of innovative life insurance products targeted at individuals and groups It offers need based products that caters to four distinct segments namely protection child retirement and investment plans RLIC is committed to emerge as a transnational Life Insurer of global scale and standard
- CH - 3) RESEARCH METHODOLOGY
- RESEARCH DESIGN-
- SAMPLING TECHNIQUES-
- THE PRIMARY OBJECTIVEOF THE STUDY-
- 34) OBJECTIVES
- 7) Some innovative technique or product is required in order to attract the consumer
- 45) LIMITATIONS
- 46) BIBLIOGRAPHY
-
CURRENT SCENERIO
21) CURRENT SCENERIO OF THE INSURANCE INDUSTRY
With largest number of life insurance policies in force in the world insurance happens to be a mega opportunity in India Itrsquos a business growing at the rate of 15-20 per cent annually and presently is of the order of Rs 450 billion Together with banking services it adds about 7 per cent to the countryrsquos GDP Gross premium collection is nearly 2 per cent of GDP and funds available with LIC for investment are 8 per cent of GDP
Yet nearly 80 percent of Indian population is without life insurance cover while health insurance and non-life insurance continues to be below international standards And this part of the population is also subject to weak social security and pension systems with hardly any old age income security This it is an indicator that growth potential for the insurance sector is immense A well-develop and evolved insurance sector is needed for economic development as it provides long term funds for infrastructure development and at the same time strengthens the risk taking ability It is estimated that over the next ten years India would require investments of the order of one trillion US dollar The insurance sector to some extent can enable investment in infrastructure development to sustain economic growth of the country Insurance is a federal subject in India There are two legislation that govern the sector - The Insurance Act-1938 and The IRDA Act-1999
In India insurance is generally considered as a tax-saving device instead of its other implied long term financial benefits Indian people are prone to investing in properties and gold followed by bank deposits They selectively invest in shares also but the percentage is very small Even to this day Life Insurance Corporation of India dominates India insurance sector With the entry of private sector players backed by foreign expertise Indian insurance market has become more vibrant Business is becoming increasingly vulnerable due to wide variety of risk particularly after September 11 2001 disaster in which twin tower located in the hearts of New York city were crashed by terrorist attack resulting in loss of 6000 human lives as well as financial loss to the extent of $45 billion The impact of this terrorist attack has created new horizon of risk to the business world today
However rapid changes in the global economy development of technology and e-business already gathered momentum Increased dependency on technology has originated new risks that have resulted in well-published incidents Computer hackers obtaining credit card information from visa and Power-Gen the love bug virus cyber extortion web content liability professional errors and omissions computers and other crimes and activities such as terrorism kidnapping and companyrsquos executive and extortion of money commercial liability etc have significant impact on business resulting in extreme financial loss commercial embarrassment or regulatory implications
Corporation insurancerisk managers under the circumstances have to demand increasingly complex insurance products They have to be more attentive and
30
knowledgeable about emerging risks how those risks are managed effectively and efficiently and how they could ultimately affect a companyrsquos financial situation and therefore its position in the market place In short how such risks are managed and can give to an insured a competitive advantage
In the changing times adoption of e-commerce into business models the integration of web-based communication and data transfer capabilities into the business operations and leveraging of advanced network and technology architecture for maximum benefit are the new horizon of the risks For the corporate insurancerisks managers these new exposure-cyber-risks-can lead to cyber losses widening the interpretation of what constitute insure property damage particularly as it relates to information technology and dataAll the while organizations are tremendous pressure to reduce expenses and increase profit margin and cannot afford to suffer a property loss of business interruption due to any cause (risk) How a company identifies quantifies qualifies and manages these new risks exposure in addition to the well-known tradition risks is becoming an important factor in creating shareholders value This often means changing the way Everyone in the organization have to think about risk
Insurance managers are seeing price levels (premium) continue to rise-albeit modestly-in todayrsquos primarily commercial property and reinsurance markets They are demanding that insurers improve their risk assessment and quantification offerings so that an insured may avail the benefit in cost (premium rate) on account of well-managed riskThe good news for insurance managers is that as the economy evolves insurers are increasingly matching that evaluation with new products services and capabilities due to opening up the insurance market to the private players
Insurers who are truly listening to their customers and striving to be more in tune with their needs are responding to the fast changing corporate insurance and risk management landscape They are listening to their customers They are making fresh approaches to address the new challenges faced by insured organization by designing the new products as per the needs Insurers are providing value added services to insured to protect the value created by the business
Insurers are increasingly required to develop and expand their information technology platforms to ensure that the vast amount of data they collect about their customers Insurancerisk portfolio can easily and seamlessly be transformed into valuable risk management information To help their customers insurers should make better-informed decisions They must be able to swiftly deliver this data to their customers (insured) anywhere in the world Insurer are also discovering that risk assessment have to be customized to meet policyholdersrsquo new exposures and needs The insurance industry is stepping up and addressing these challenges in several different ways
31
22) CURRENT SCENARIO OF RELIANCE LIFE INSURANCE
RLIC offers wide range of innovative life insurance products targeted at individuals and groups It offers need based products that caters to four distinct segments namely protection child retirement and investment plans RLIC is committed to emerge as a
transnational Life Insurer of global scale and standard
Reliance Life Insurance Company Limited (RLIC) is amongst the fastest growing life insurance companies in India It is also amongst the top four private sector life insurance companies in India (As on FY 2008-2009)
As on March 31 2009 RLIC has an annualized premium of Rs 30 billion with a market share of 103 It has leapfrogged on the growth path and has reached the 4 million policy mark in a short span of within 3 years RLIC has a strong distribution network of 1145 branches with more than 149000 agents
32
Insurancersquos Market Share in Comparison of Other Private company
If we look at the status of Reliance Life Insurancersquos market share in comparison of other
private company in comparison of premium earned-
If we talk the growth of Insurance industryrsquos private players in recent years the data will
reflect-
CH - 3) RESEARCH METHODOLOGY
33
RESEARCH DESIGN-
COMPARITIVE STUDY- A comparative study has been undertaken to compare the traditional Plans of Reliance Life Insurance with that of Bajaj Allianz life insurance
DATA TYPE
INTRODUCTION - Any organization whether big or small private or public needs different type of information to know its popularity I have gathered secondary data and primary data and collected information from the combination of these two data
PRIMARY DATA - Primary data collection method was decided for observing working of the company and approaching the customers directly face to face A great care was taken while collecting the primary data to answer that it is relevant accurate current and unbiased
SECONDARY DATA - Secondary data collection method was used by referring to various websites books and newspapers for collecting information regarding the project under study Secondary data consist of the information that already exists somewhere else for some another purpose
SAMPLING TECHNIQUES-
SAMPLE SIZE- A sample size of 50 was taken to be analyzed
SAMPLE LOCATION-Various sectors of Kamla Nagar Civil lines Mukherji Nagar Model Town and selected areas of Delhi
SAMPLING PROCESS - Convenient sampling was used to overcome the time and money constraints that could have been faced by us while collecting the data The customers were contacted face to face directly and also by way of telephonic conversation with them
ANALYTICAL TOOLS - The data collected were arranged accordingly and statistical tools like bar graphs and pie-charts were used to analyze and present the data
RESEARCH INSTRUMENT USED-
34
SAMPLING MEDIA - Printed questionnaires consisting several questions were asked to have an idea of customers view about Reliance Life Insurance plans followed by personal questions
FIELD WORK - Rigorous field work was undertaken to locate the interested and potential respondents to fulfill the objectives of the study
THE PRIMARY OBJECTIVEOF THE STUDY -
The primary objective of the research study is to have a detailed analysis of Reliance Life Insurance bringing in focus the future prospects of the (Anil Dhirubhai Ambani group) with relevance to the customer perception regarding the various plans and products offered by Reliance Life Insurance
31) DATA ANALYSIS AND INTERPRETATION
35
PERSONAL DETAILS
1) AGE a) 18-30b) 31-50c) 51-65
AGE NO OF RESPONDENTS PERCENTAGE
18-30 21 42
31-50 19 38
51-65 10 20
TOTAL 50 100
INTERPRETATION-The bar graph reveals that 42 of the respondents belong to the age group of 18-30 years 38 lies in the age group of 31-50 years and 20 of them lie in the age group of 51-65 years
2) OCCUPATION
4238
20
05
1015202530354045
NO
O
F
RE
SP
ON
DE
NT
S
18 to 30 31 to 50 51 to 65
AGE (in year)
AGE WISE CLASSIFICATION
36
a) Serviceb) Businessc) Professiond) Housewifee) Retired
OPTION NO OF RESPONDENTS PERCENTAGE
Service 16 32
Business 14 28
Profession 5 10
Housewife 8 16
Retired 7 14
TOTAL 50 100
INTERPRETATION-The above bar graph reveals that 32 of the total respondents were servicemen 28 of them belonged to the business class 10 were professionals 16 were housewives and 14 of the total respondents fall in the retired category
3) INCOME
32
28
10
16
14
0
5
10
15
20
25
30
35
Service Business Profession Housewife Retired
OCCUPATION
OCCUPATION WISE CLASSIFICATION
37
a) 150000-300000
b) 300000-500000
c) Above 500000
OPTION NO OF RESPONDENTS PERCENTAGE
150000-300000 24 48
300000-500000 14 28
Above 500000 12 24
TOTAL 50 100
INTERPRETATION-The above bar graph reveals that out of the total respondents 48 lie in the income group of 150000-300000 28 of the total respondents belonged to the income group of 300000-500000 and 24 lie in the income group of people earning an income of above Rs 500000pa
4828 24
01020304050
N O
OF
RE
SP
ON
DE
NT
S
150000-300000
300000-500000
ABOVE500000
INCOME (in RS)
INCOME WISE CLASSIFICATION
38
4) FAMILY MEMBERS
a) 2b) 3c) 4d) Above 4
OPTION NO OF RESPONDENT PERCENTAGE
2 11 22
3 9 18
4 24 48
Above 4 6 12
TOTAL 50 100
INTERPRETATION The above bar graph shows that 22 of the total respondents had a family of 2 members 18 of them had 3 family members 48 of them had 4 family members and 12 of them had the no of family members above 4
Q1 Where do you prefer to invest
22 18
48
120
1020304050
No
o
f re
spo
nd
ents
2 3 4 Above 4
No of family members
MEMBER WISE CLASSIFICATION
39
a) fixed deposits
b) stock
c) mutual funds
d) insurance
e) others
Option No of respondents Percentage
Fixed deposits 5 10
Stock 10 20
Mutual fund 10 20
Insurance 18 36
others 7 14
TOTAL 50 100
Interpretation The above pie chart shows that out of 50 respondents 10 preferred to invest in fixed deposits 20 in stocks 20 in mutual funds 36 in insurance and 14 in others like property gold etc
Q2 What are your priorities for investment
40
a) protecting your family against pre-mature death
b) wealth creation
c) retirement needs
d) child education and marriage
e) protect income against disability sickness or critical illness
Option No of respondents Percentage
Protecting your family against pre mature death
10 20
Wealth creation 14 28
Retirement needs 5 10
Child education and marriage 7 14
Protect income against disability sickness or critical illness
14 28
TOTAL 50 100
Interpretation The above pie chart shows that out of 50 respondents 20 of them invest for protecting their family against premature death 28 for creating wealth 10 for meeting their future retirement needs 14 for child education amp marriage and 28 for protection against disability and sickness
Q3 What is your main motive behind investing in life insurance
41
a) tax benefit
b) savings
c) risk cover
Option No of respondents Percentage
Tax benefits 27 54
Savings 5 10
Risk cover 18 36
TOTAL 50 100
Interpretation The above pie chart shows that out of the sample respondents 54 have tax benefit 10 have savings and 36 have risk cover as their main motive for making an investment in life
Q4 What kind of investment do you prefer
42
a) high risk high gain
b) low risk low gain
c) moderate
d) vary times to times
Option No of respondents Percentage
High risk high gain 8 16
Low risk low gain 5 10
Moderate 12 24
Vary times to times 25 50
TOTAL 50 100
Interpretation The above pie chart shows that out of 50 respondents 16 preferred high risk- high gain form of investment 10 preferred low risk- low gain form of investment 24 preferred moderate investment and 50 preferred varied form of investment
43
Q5Are you interested to invest in Traditional Plans
a) YES
b) NO
Option No of respondents Percentage
YES 36 72
NO 14 28
TOTAL 50 100
Interpretation The above pie chart shows that 72 of the respondents preferred to invest in Traditional Plans
44
Q6 What is your level of annual investmenta) below 20000
b) 20000-40000
c) above 40000
Option No of respondents Percentage
Below 20000 41 82
20000-40000 7 14
Above 40000 2 4
TOTAL 50 100
Interpretation The above pie chart shows that 82 of the respondents are willing to invest below Rs 20000 per annum 14 of them want to invest within Rs 20000 per annum to Rs 40000 and 4 wanted to invest over and above Rs 40000
45
Q7 What factors would you consider most important before choosing an insurance policy
a) publicity of the company
b) reputation of the company
c) quality of life advisors
d) after sales-supporting of the company
Option No of respondents Percentage
Publicity of the co 5 20
Reputation of the co 25 50
Quality of life advisors 10 10
After sale-services 10 20
TOTAL 50 100
Interpretation out of the sample respondents 20 considers publicity of the company 50 considers reputation of the company 10 considers quality of life advisors and 20 considers after sales support of the company as the most important factor for choosing an insurance company
46
Q8 Which life insurance company would you prefer the most to invest ina) reliance life insurance (RLIC)
b) Bajaj Allianz life insurance
Option No of respondents Percentage
RLIC 21 42
BAJAJ ALLIANZ 29 58
TOTAL 50 100
Interpretation Out of 50 respondents 42 preferred to invest in reliance life insurance over 58 of the respondents who prefer to invest in Bajaj Allianz life insurance
47
Q9 If reliance life insurance then which particular plan you would like to invest ina) Reliance Term Plan
b) Reliance Whole Life Plan
c) Reliance Endowment Plan
d) Reliance Special Endowment Plan
Option No of respondents Percentage
Reliance term plan 6 2858
Reliance whole life plan 3 1428
Reliance endowment plan 9 4286
Reliance special endowment plan 3 1428
TOTAL 21 100
Interpretation Out of 21 respondents 2858 preferred to invest in term plan 1428 in whole life plan 4286 in endowment plan and 1428 of them preferred to invest in special endowment plan of reliance life insurance
48
Q10 If Bajaj Allianz life insurance then which particular plan you would like to invest in
I ENDOWMENT PLAN a) Bajaj Allianz Invest Gain
b) Bajaj Allianz save Care Economy SP
c) Bajaj Allianz life time care
d) Bajaj Allianz Super Saver plan
II MONEY BACK PLAN i Bajaj Allianz Cash Gain plan
Option No of respondents Percentage
Invest gain plan 3 1035
Save care economy SP 6 2069
Life time care 7 2415
Super saver plan 3 1035
Cash gain plan 10 3446
TOTAL 29 100
Interpretation Out of 29 respondents 1035 of them plan to invest in Bajaj Allianz- Invest Gain 2069 wish to invest in Bajaj Allianz save Care Economy SP 2415 want to invest in Bajaj Allianz life time care 1035 in Bajaj Allianz Super Saver plan and 3446 prefer to invest in Bajaj Allianz Cash Gain plan
49
32) SIGNIFICANCE OF STUDY
Life insurance is one of the most rapidly growing sectors in India The main reason
behind the growth can attributed to the high population density improving economical
condition improving education level and improving awareness Due to these factors there
is still huge scope for growth in this sector Like any other business when the
opportunities are present everybody tends to enter the industries This growth hence
fetches the new competitors as well as new strategies from existing players To sustain in
any competitive industry the organization must adapt to existing strategies and adopt
new ones This study will focus on the analysis of Reliance Life Insurance in comparison
with the present scenario of Bajaj Allianz Life Insurance with respect to the Traditional
Plans of both the companyrsquos This will mainly cover the following aspects
To know about the awareness and popularity of various Traditional Plans offered
by Reliance Life Insurance and Bajaj Allianz Life Insurance
How Reliance Life Insurance can develop and sustain a good distribution
network
These will provide it benefit both in terms of better market coverage as well as better
penetration
50
33) SCOPE OF THE STUDY
1) This helps in finding out vast potential of insurance company
2) The study was conducted in National Capital Region (NCR) only
3) The number of respondents to be surveyed can be improved
4) This study was conducted by comparing the performances amp products of three private
amp government insurance players in insurance industry
5) This study was conducted to analyze the market stand of Reliance life insurance
Company limited and Bajaj Allianz Life Insurance Company Limited of India insurance
companies
6) This study is done to eliminate all the myths which people have in their minds
regarding Insurance Sector
51
34) OBJECTIVES
To have a detailed understanding of Reliance Life Insurance and Bajaj Allianz Life Insurance
To find out various reasons considered while investing in policies
To get knowledge about the market exposure and future prospects about Reliance Life Insurance
To know the perception of the consumers about the life insurance
To analyze the Traditional plans of Reliance Life Insurance and compare it with Bajaj Allianz
To know about the brand awareness of Reliance Life Insurance its customer preferences over Bajaj Allianz in the market
To study a proper knowledge about the life insurance industry
To understand the consumer choice while investing in policies
52
CHAPTER 4
DISCUSSION AND FINDINGS OF THE STUDY
FINDINGS OF THE STUDY RECOMMENDATION AND SUGGESTIONS CONCLUSION LIMITATIONS BIBLIOGRAPHY ANNEXUREQUESTIONNAIRE
53
41) FINDINGS OF THE STUDY
1) The survey reveals that still a large proportion of population is interested to invest in other forms of investment other than insurance as still most of them are unaware about the importance of insurance in their life
2) Basically people make varied form of investment for creating wealth to protect their families against pre-mature death and to protect income against disability sickness or critical illness
3) The main motive of the individuals investing is receives benefits US 1010D People generally consider insurance as a tax saving device
4) Mostly people prefer time to time form of investment as they are not willing to take high degree of risk
5) 72 of the respondents are preferred to invest in Traditional Plans
6) Most of the people prefer to make an annual investment up to a maximum of Rs20 000 per annum
7) When the product is like life insurance reputation of the company publicity of the company amp after sale services of the company matters a lot This means that people would choose that insurance company only where the quality of life advisors is satisfactory
8) Most people prefer to invest in Bajaj Allianz Life Insurance as compared to making an investment in Reliance Life Insurance
9) The most preferable Traditional plan of Reliance Life Insurance is Endowment Plan
10) The most preferable plan of Bajaj Allianz Life Insurance co is Cash Gain Plan
54
42) SUGGESTIONS amp RECOMMENDATIONS
Based on the observations of the study some suggestions for the organization are made as
follows
1) Quality of advisors is also as important as the quantity Thus company should go
mainly for qualified professionals
2) Company should increase its budget on publicity so that awareness can be increased
3) Clarity and transparency should be provided to the customer regarding various
products
4) Training sessions should be planned in advance so that schedule can be provided to
the advisor in advance
5) Apart from the Brand Positioning in urban area a strategy should be adopted by
Reliance to make its brand also near to middle level or high aspirant people because they
are the main source of the business in India
6) Awareness Camp to the sub urban area should be focused by Reliance
7) Some innovative technique or product is required in order to attract the consumer
43) LITERATURE REVIEW
55
1) Robi Elenekave has explained in detail why various retirement plans and pension plans donrsquot give the desired returns The main difficulty is the use of incorrect method for calculations done to find out the return on investment This is primarily due to wrong assumptions The study provides information about the various precautions which need to be considered before planning so that the desired results can be achieved
2) Another paper provides insight about how various financial sectors invest in bond market The study was how the different players investment different instruments according to the risk appetite and desired rate of return The study shows that life insurance sector mainly invests in government bond which are low return and low risk instrument The investment in government bond it shows that life insurance companies are more conservative in investment
3) K Subhash has presented the history of Indiarsquos life insurance industry in three stages before independence after independence and post liberalization which not only provides information but also help in analyzing the impact of these major changes The authors have also discussed the huge potential which exists in the rural India The insurance company must realize the importance of rural sector because the future lies there The author commented about the increasing share of private player in the existing market This confirms the availability of opportunity in this sector The paper also provides the importance of professional and focused approach which was given no importance
4) Tapen Sinha has discussed the various challenges and opportunities in the insurance market One of the very important factors which have been discussed in the study is the importance of developing new and better products As the scenario changes the need of an individual also changes so any organization must understand and fulfill these needs The new product development requires constant research so organization must also focus on it
5) Roger G Ibbotson discusses how financial planners and advisors have recently started to recognize that human capital must be taken into account when building optimal portfolios for individual investors Any investorrsquos human capital has a unique mortality risk However life insurance in its forms can hedge against this mortality risk Thus human capital affects both the optimal asset allocation and the optimal demand for life insurance This paper provides a unified framework based on human capital in order to enable individual investors to make both decisions jointly
6) Rakesh Niraj study tells how the flow of information in any organization is important For any organization to grow the flow of information must be good both upwards as well as ownwards The proper flow of information will also ensure proper flow of good and services from organization to customer and proper flow of information from customer to organization The information from customers will help the organization in providing better goods and services to the customer For the above purpose organization must ensure good channel partner who can provide the organization with correct feedback Hence it becomes very important for any organization to acquire good channel partners
56
7) Stephen P Robbins has discussed how group dynamics works in any organization The success of any organization depends on the success of its various teams and how these teams work together The book provides various techniques which can be used by any organization to get result from the team effort The conflict resolution is a major task in any group Various techniques which the organization can use in conflict resolution are also discussed Another important aspect covered is the importance of leadership in the organization The various forms of leadership have been discussed and the kinds of leadership which can be effective in particular situations are also discussed
8) R Wayne Mondy has discussed the importance of training and development in any organization The training provides skills to perform the current job where as the development involve learning beyond present need The various type of training are discussed which can be used according to the requirement Training and development are not only important for better performance of an individual but it also gives satisfaction The major factors which influence training and development are found to be management support commitment of trainee and trainer complexity of the organization The process of developing good training plans is also provided In another part author has discussed the importance of right man for right job The compensation strategies are also given which are very crucial for ant industry
9) Philip Kotler has discussed the importance of channels partners Better the channel partners better will be the delivery model Detailed discussion about how to design the channel structure so that all the requirements could be fulfilled is provided The various issues faced by the organization while managing the channels are also given When an organization has more than one channel it becomes very important that all the channels should be integrated in such a way that the organization get the best out of all At times due to the conflicting benefit of the different channels the conflict arise so various strategies to manage these issues is also discussed in the chapter
10) Michael J Etzel has written about the marketing of services The marketing of services is different from the goods because of the characteristic of service like intangibility inseparability heterogeneity etc Brief about pricing strategies is also given in case of services The authors have also given the impact of technological development on the services marketing The author has also given the importance of brand and after sales support in case of services as perception of the customers plays an important role In other part of the book the authors has described the importance of distribution channels and designing of the same A channel partner should be consider as partner according to discussion The legal complications associated with channels are also discussed These complications are necessary to take into the consideration while managing the channels The conflicting interest of channels both horizontally and vertically are also taken into the consideration
57
11) Boone has discussed about the importance of personal financial planning The concept of time value of money has also been elaborated The importance of creating and implementing budget is given under money management The other important concepts for financial planning like credit management and understanding taxes are also explained In one section the authors have discussed the importance of investment and what should be the major considerations while making any investment The considerations include the risk associated with the investment return on the investment etc The importance and benefits of life insurance has also been given The discussion also includes various legal aspects associated with life insurance The overview of retirement planning is also given which includes importance and benefit of retirement planning Various tools for proper retirement planning are also discussed
58
44) CONCLUSION
1) The customers are very much sensitive towards their investment They would like to invest only in that insurance company which enjoys good public image along with quality good services
2) The result of the survey conducted shows that Bajaj Allianz Life Insurance is the leader in life insurance industry but Reliance Life Insurance and other private players are giving it a close competition
3) The motive of the people behind investing in life insurance is the tax benefits that they would receive under sec 80C and 1010D
4) In Life Insurance industry the after sales support of the company is as important as the quality of life advisors
59
45) LIMITATIONS
There were some limitations faced during the study as discussed below
Since the study was taken for two months so there was a constraint of time and effort
The study was limited only to some of the Delhi regions so the results may be biased
Questionnaire was given to 125 people however only 50 responded to it which is very small for such type of study
The biasness of consumer or responses error cannot be eliminated
Most of the people are not aware about the Importance and the necessity of insurance in their life
Adverse perception of the people towards insurance sector- People consider insurance as a tax saving device
Lack of awareness about the earning opportunity in the insurance sector
60
46) BIBLIOGRAPHY
wwwreliancelifeinsurancecom
wwwadagroupcom
wwwirdacom
wwwbajajallianzlifeinsurancecom
wwwallianzbajajcom
47) ANNEXURE
61
QUESTIONNAIRE
A comparative analysis of consumer perception regarding Traditional plans of Reliance Life Insurance with that of Bajaj Allianz Life Insurance
NAME ___________________________
PERSONAL DETAILS
1) AGE_________________
1) OCCUPATION______________
2) INCOME___________________
3) FAMILY MEMBERS_________
Q1 Where do you prefer to investa) Fixed deposits b) Stock c) Mutual funds d) Insurance e) Others
Q2 What are your priorities for investmenta) Protecting your family against pre-mature death b) Wealth creation c) Retirement needs d) Child education and marriage e) Protect income against disability sickness or critical illness
Q3 What is your main motive behind investing in life insurancea) Tax benefit b) Savings c) Risk cover
Q4 What kind of investment do you prefera) High risk high gain b) Low risk low gain c) Moderate d) Vary times to times
62
Q5Are you interested to invest in Traditional Plansa) Yes b) No
Q6 What is your level of annual investmenta) below 20000 b) 20000-40000 c) above 40000
Q7 What factors would you consider most important before choosing an insurance company
a) publicity of the company b) reputation of the company c) quality of life advisors d) after sales-supporting of the company
Q8 Which life insurance company would you prefer the most to invest ina) Reliance life insurance b) Bajaj Allianz life insurance
Q9 If reliance life insurance then which particular plan you would like to invest ina) Reliance Term Plan b) Reliance Whole Life Plan c) Reliance Endowment Plan d) Reliance Special Endowment Plan
Q10 If Bajaj Allianz life insurance then which particular plan you would like to invest in
I ENDOWMENT PLAN
a) Bajaj Allianz Invest Gain
b) Bajaj Allianz save Care Economy SP
c) Bajaj Allianz life time care
d) Bajaj Allianz Super Saver plan
II MONEY BACK PLAN
a) Bajaj Allianz Cash Gain plan
63
64
- COMPANY PROFILE
- ABOUT RELIANCE LIFE INSURANCE
- HISTORY
- Reliance Capital Limited announced the launch of its life insurance business on February 1 2006 This was after obtaining the required regulatory approvals from the Registrar Of Companies and the Insurance Regulatory and Development Authority
- It was in August 2005 that the ball was set rolling when Reliance Capital Limited the financial arm of Reliance ndash Anil Dhirubhai Ambani Group (ADAG) ndash announced the requisition of 100 shareholding in AMP Sanmar Life Insurance Company Limited and the formal transfer of shares took place in October 2005 The company will issue all policy contracts under the Reliance Life Insurance Company limited name All the existing policy contracts also stand transferred to the Reliance Life Insurance entity with all the original contractual terms and commitments intact
- CORE VALUES
- Reliance Life Insurance Company Limited has some core values which are listed as follows
- Vision bull To be the first choice insurer for customers bull To be the preferred employer for staff in the insurance industry bull To be the number one insurer for creating shareholder value
- Mission As a responsible customer focused market leader we will strive to understand the insurance needs of the consumers and translate it into affordable products that deliver value for money
- 12) TRADITIONAL PLANS OF THE COMPANY
- 12A )TRADITIONAL PLAN OF RELIANCE LIFE INSURANCE-
- Life insurance products are designed to suit the requirements of customers Fundamentally the product provide for
- In every product to a certain degree risk cover is imperative for it to fall under the category of insurance Based on the coverage of the product the premiums are calculated and the customer pays accordingly In order to suggest the right product it is essential for an agent to understand the requirements of the customer well
- The traditional plans of the company have the following features-
- Fixed Tenure
- Potential for better returns
- Transparency
- Flexibility in investment
- Flexibility to invest more
- Flexibility to skip the premium
- Flexibility to choose the cover
- High liquidity
- Age term and sum assured decide the amount of premium
- Top- ups and switches are not allowed
- Reliance Life Insurance Company Limited has offered 9
- 1) Reliance term plan-
- 2) Reliance Whole Life Plan -
- 3) Reliance Endowment Plan -
- 4) Reliance Special Endowment Plan -
- 13) INDUSTRY PROFILE
- MEANING OF INSURANCE
- Insurance may be described as a social device to reduce or eliminate risk of loss to life and property Insurance is a collective bearing of risk Insurance is a financial device to spread the risks and losses of few people among a large number of people as people prefer small fixed liability instead of big uncertain and changing liability
- Insurance can be defined as a ldquolegal contract between two parties whereby one party called insurer undertakes to pay a fixed amount of money on the happening of a particular event which may be certain or uncertainrdquo The other party called insured pays in exchange a fixed sum known as premium
- Insurance is desired to safeguard oneself and onersquos family against possible losses on account of risks and perils It provides financial compensation for the losses suffered due to the happening of any unforeseen events
- IMPORTANCE OF INSURANCE
- Insurance services play predominant role in the process of financial Intermediary Today insurance industry is one of the most growing sectors in India There is lot of potential in the Indian Insurance Industry
- There are many issues which require study The scope of the study of Insurance industry of India would be very great as there are ongoing Developments in the industry after the opening of the sector
- Right now the insurance industry has great opportunities in a country like India or China which huge population Also the penetration of insurance in India is very low in both life and non-life segment so there is lot potential to be tapped Before starting the discussion on insurance industry and related issues we have to start with the basics of insurance So first we understand what is insurance How the word lsquoinsurancersquo is different from the word lsquoassurancersquo Etc
- HISTORY OF INSURANCE
- The concept of insurance is believed to have emerged almost 4500 years ago in the ancient land of Babylonia where traders used to bear risk of the carvan by giving loans which were later repaid with interest when the goods arrived safely
- The concept of insurance as we know today took shape in 1688 at a place called Lloydrsquos Coffee House in London where risk bearers used to meet to transact business This coffee house became so popular that Lloydrsquos became the one of the first modern insurance companies by the end of the eighteenth century
- Marine insurance companies came into existence by the end of the eighteenth century These companies were empowered to write fire and life insurance as well as marine The Great Fire of London in 1966 caused huge loss of property and life With a view to providing fire insurance facilities
- Dr Nicholas Barbon set up in 1967 the first fire insurance company known as the Fire office
- Life insurance in its modern form came to India from England in 1818 The Oriental Life Insurance Company was the first insurance company to be set up in India to help the widows of European community The insurance companies which came into existence between 1818 and 1869 treated
- Indian lives as subnormal and charged an extra premium of 15 to 20 per cent The first Indian insurance company the Bombay Mutual Life
- Assurance Society came into existence in 1870 to cover Indian lives at normal rates
- The Insurance Act 1938 the first comprehensive legislation governing both life and non-life branches of insurance were enacted to provide strict state control over insurance business This amended insurance Act looked into investments expenditure and management of these companies
- By the mid- 1950s there were 154 Indian insurers 16 foreign insurers and 75 provident societies carrying on life insurance business in India Insurance business flourished and so did scams irregularities and dubious investment practices by scores of companies As a result the government decided to nationalize the life assurance business in India The Life Insurance
- Corporation of India (LIC) was set up in 1956 The nationalization of life insurance was followed by general insurance in 1972
- MEANING OF LIFE INSURANCE
- There are three parties in a life insurance transaction the insurer the insured and the owner of the policy (policyholder) although the owner and the insured are often the same person
- Another important person involved in a life insurance policy is the beneficiary The beneficiary is the person or persons who will receive the policy proceeds upon the death of the insured
- Life insurance may be divided into two basic classes ndash term and permanent
- HISTORY OF LIFE INSURANCE
- Risk protection has been a primary goal of humans and institutions throughout history Protecting against risk is what insurance is all about
- Over 5000 years ago in China insurance was seen as a preventative measure against piracy on the sea Piracy in fact was so prevalent that as a way of spreading the risk a number of ships would carry a portion of another ships cargo so that if one ship was captured the entire shipment would not be lost
- In another part of the world nearly 4500 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
- Life insurance came about a little later in ancient Rome where burial clubs were formed to cover the funeral expenses of its members as well as help survivors monetarily With Romes fall around 450 AD most of the concepts of insurance were abandoned but aspects of it did continue through the Middle Ages particularly with merchant and artisan guilds These provided forms of member insurance covering risks like fire flood theft disability death and even imprisonment
- During the feudal period early forms of insurance ebbed with the decline of travel and long-distance trade But during the 14th to 16th centuries transportation commerce and insurance would again reemerge
- And similar to ancient Rome burial societies were formed in the Buddhist period to help families build houses and to protect widows and children
- Modern Insurance
- Illegal almost everywhere else in Europe life insurance in England was vigorously promoted in the three decades following the Glorious Revolution of 1688 The type of insurance we see today owes its roots to 17th century England Lloyds of London or as they were known then Lloyds Coffee House was the location where merchants ship owners and underwriters met to discuss and transact business deals
- While serving as a means of risk-avoidance life insurance also appealed strongly to the gambling instincts of Englands burgeoning middle class
- Gambling was so rampant in fact that when newspapers published names of prominent people who were seriously ill bets were placed at Lloydrsquos on their anticipated dates of death Reacting against such practices 79 merchant underwriters broke away in 1769 and two years later formed a ldquoNew Lloydrsquos Coffee Houserdquo that became known as the ldquoreal Lloydrsquosrdquo Making wagers on peoples deaths ceased in 1774 when parliament forbade the practice
- Insurance moves to America
- The US insurance industry was built on the British model The year 1735 saw the birth of the first insurance company in the American colonies in
- Charleston SC The Presbyterian Synod of Philadelphia in 1759 sponsored the first life insurance corporation in America for the benefit of ministers and their dependents And the first life insurance policy for the general public in the United States was issued in Philadelphia on May 22 1761
- But it wasnt until 80 years later (after 1840) that life insurance really tookoff in a big way The key to its success was reducing the opposition from religious groups
- In 1835 the infamous New York fire drew peoples 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
- With the creation of the automobile public liability insurance which first made its appearance in the 1880s gained importance and acceptance
- More advancement was made to insurance during the process of industrialization In 1897 the British government passed the Workmens Compensation Act which made it mandatory for a company to insure its employees against industrial accidents
- During 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 most labor 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
- BENEFITS OF LIFE INSURANCE
- 1) Risk cover -Life Insurance contracts allow an individual to have a risk cover against any unfortunate event of the future
- 2) Tax Deduction -Under section 80C of the Income Tax Act of 1961 one can get tax deduction on premiums up to one lakh rupees Life Insurance policies thus decrease the total taxable income of an individual
- 3) Loans -An individual can easily access loans from different financial institutions by pledging his insurance policies
- 4) Retirement Planning -What had provided protection against the financial consequences of premature death may now be used to help them enjoy their retirement years
- 5) Educational Needs -Similar to retirement planning the cash values that flow from ones life insurance schemes can be utilized for educational needs of the insurer or his children
- The Life Insurance Industry has an enviable track record among public sector units It has a Consistent profit and dividend paying record accompanied by a steady growth in its financial resources Through investments in the Government sector and socially- oriented sectors the Industry has contributed immensely to the nations development The industry is recognized as one of the largest financial Institutions in the country The ventures initiated by the industry in the areas of Mutual Fund
- Housing Finance has done exceedingly well in recent years To protect the countrys foreign exchange reserves the reinsurance arrangement are so organized that maximum retention is made possible within the country while at the same time protecting interests of the policy holders
- 22) CURRENT SCENARIO OF RELIANCE LIFE INSURANCE
- RLIC offers wide range of innovative life insurance products targeted at individuals and groups It offers need based products that caters to four distinct segments namely protection child retirement and investment plans RLIC is committed to emerge as a transnational Life Insurer of global scale and standard
- CH - 3) RESEARCH METHODOLOGY
- RESEARCH DESIGN-
- SAMPLING TECHNIQUES-
- THE PRIMARY OBJECTIVEOF THE STUDY-
- 34) OBJECTIVES
- 7) Some innovative technique or product is required in order to attract the consumer
- 45) LIMITATIONS
- 46) BIBLIOGRAPHY
-
knowledgeable about emerging risks how those risks are managed effectively and efficiently and how they could ultimately affect a companyrsquos financial situation and therefore its position in the market place In short how such risks are managed and can give to an insured a competitive advantage
In the changing times adoption of e-commerce into business models the integration of web-based communication and data transfer capabilities into the business operations and leveraging of advanced network and technology architecture for maximum benefit are the new horizon of the risks For the corporate insurancerisks managers these new exposure-cyber-risks-can lead to cyber losses widening the interpretation of what constitute insure property damage particularly as it relates to information technology and dataAll the while organizations are tremendous pressure to reduce expenses and increase profit margin and cannot afford to suffer a property loss of business interruption due to any cause (risk) How a company identifies quantifies qualifies and manages these new risks exposure in addition to the well-known tradition risks is becoming an important factor in creating shareholders value This often means changing the way Everyone in the organization have to think about risk
Insurance managers are seeing price levels (premium) continue to rise-albeit modestly-in todayrsquos primarily commercial property and reinsurance markets They are demanding that insurers improve their risk assessment and quantification offerings so that an insured may avail the benefit in cost (premium rate) on account of well-managed riskThe good news for insurance managers is that as the economy evolves insurers are increasingly matching that evaluation with new products services and capabilities due to opening up the insurance market to the private players
Insurers who are truly listening to their customers and striving to be more in tune with their needs are responding to the fast changing corporate insurance and risk management landscape They are listening to their customers They are making fresh approaches to address the new challenges faced by insured organization by designing the new products as per the needs Insurers are providing value added services to insured to protect the value created by the business
Insurers are increasingly required to develop and expand their information technology platforms to ensure that the vast amount of data they collect about their customers Insurancerisk portfolio can easily and seamlessly be transformed into valuable risk management information To help their customers insurers should make better-informed decisions They must be able to swiftly deliver this data to their customers (insured) anywhere in the world Insurer are also discovering that risk assessment have to be customized to meet policyholdersrsquo new exposures and needs The insurance industry is stepping up and addressing these challenges in several different ways
31
22) CURRENT SCENARIO OF RELIANCE LIFE INSURANCE
RLIC offers wide range of innovative life insurance products targeted at individuals and groups It offers need based products that caters to four distinct segments namely protection child retirement and investment plans RLIC is committed to emerge as a
transnational Life Insurer of global scale and standard
Reliance Life Insurance Company Limited (RLIC) is amongst the fastest growing life insurance companies in India It is also amongst the top four private sector life insurance companies in India (As on FY 2008-2009)
As on March 31 2009 RLIC has an annualized premium of Rs 30 billion with a market share of 103 It has leapfrogged on the growth path and has reached the 4 million policy mark in a short span of within 3 years RLIC has a strong distribution network of 1145 branches with more than 149000 agents
32
Insurancersquos Market Share in Comparison of Other Private company
If we look at the status of Reliance Life Insurancersquos market share in comparison of other
private company in comparison of premium earned-
If we talk the growth of Insurance industryrsquos private players in recent years the data will
reflect-
CH - 3) RESEARCH METHODOLOGY
33
RESEARCH DESIGN-
COMPARITIVE STUDY- A comparative study has been undertaken to compare the traditional Plans of Reliance Life Insurance with that of Bajaj Allianz life insurance
DATA TYPE
INTRODUCTION - Any organization whether big or small private or public needs different type of information to know its popularity I have gathered secondary data and primary data and collected information from the combination of these two data
PRIMARY DATA - Primary data collection method was decided for observing working of the company and approaching the customers directly face to face A great care was taken while collecting the primary data to answer that it is relevant accurate current and unbiased
SECONDARY DATA - Secondary data collection method was used by referring to various websites books and newspapers for collecting information regarding the project under study Secondary data consist of the information that already exists somewhere else for some another purpose
SAMPLING TECHNIQUES-
SAMPLE SIZE- A sample size of 50 was taken to be analyzed
SAMPLE LOCATION-Various sectors of Kamla Nagar Civil lines Mukherji Nagar Model Town and selected areas of Delhi
SAMPLING PROCESS - Convenient sampling was used to overcome the time and money constraints that could have been faced by us while collecting the data The customers were contacted face to face directly and also by way of telephonic conversation with them
ANALYTICAL TOOLS - The data collected were arranged accordingly and statistical tools like bar graphs and pie-charts were used to analyze and present the data
RESEARCH INSTRUMENT USED-
34
SAMPLING MEDIA - Printed questionnaires consisting several questions were asked to have an idea of customers view about Reliance Life Insurance plans followed by personal questions
FIELD WORK - Rigorous field work was undertaken to locate the interested and potential respondents to fulfill the objectives of the study
THE PRIMARY OBJECTIVEOF THE STUDY -
The primary objective of the research study is to have a detailed analysis of Reliance Life Insurance bringing in focus the future prospects of the (Anil Dhirubhai Ambani group) with relevance to the customer perception regarding the various plans and products offered by Reliance Life Insurance
31) DATA ANALYSIS AND INTERPRETATION
35
PERSONAL DETAILS
1) AGE a) 18-30b) 31-50c) 51-65
AGE NO OF RESPONDENTS PERCENTAGE
18-30 21 42
31-50 19 38
51-65 10 20
TOTAL 50 100
INTERPRETATION-The bar graph reveals that 42 of the respondents belong to the age group of 18-30 years 38 lies in the age group of 31-50 years and 20 of them lie in the age group of 51-65 years
2) OCCUPATION
4238
20
05
1015202530354045
NO
O
F
RE
SP
ON
DE
NT
S
18 to 30 31 to 50 51 to 65
AGE (in year)
AGE WISE CLASSIFICATION
36
a) Serviceb) Businessc) Professiond) Housewifee) Retired
OPTION NO OF RESPONDENTS PERCENTAGE
Service 16 32
Business 14 28
Profession 5 10
Housewife 8 16
Retired 7 14
TOTAL 50 100
INTERPRETATION-The above bar graph reveals that 32 of the total respondents were servicemen 28 of them belonged to the business class 10 were professionals 16 were housewives and 14 of the total respondents fall in the retired category
3) INCOME
32
28
10
16
14
0
5
10
15
20
25
30
35
Service Business Profession Housewife Retired
OCCUPATION
OCCUPATION WISE CLASSIFICATION
37
a) 150000-300000
b) 300000-500000
c) Above 500000
OPTION NO OF RESPONDENTS PERCENTAGE
150000-300000 24 48
300000-500000 14 28
Above 500000 12 24
TOTAL 50 100
INTERPRETATION-The above bar graph reveals that out of the total respondents 48 lie in the income group of 150000-300000 28 of the total respondents belonged to the income group of 300000-500000 and 24 lie in the income group of people earning an income of above Rs 500000pa
4828 24
01020304050
N O
OF
RE
SP
ON
DE
NT
S
150000-300000
300000-500000
ABOVE500000
INCOME (in RS)
INCOME WISE CLASSIFICATION
38
4) FAMILY MEMBERS
a) 2b) 3c) 4d) Above 4
OPTION NO OF RESPONDENT PERCENTAGE
2 11 22
3 9 18
4 24 48
Above 4 6 12
TOTAL 50 100
INTERPRETATION The above bar graph shows that 22 of the total respondents had a family of 2 members 18 of them had 3 family members 48 of them had 4 family members and 12 of them had the no of family members above 4
Q1 Where do you prefer to invest
22 18
48
120
1020304050
No
o
f re
spo
nd
ents
2 3 4 Above 4
No of family members
MEMBER WISE CLASSIFICATION
39
a) fixed deposits
b) stock
c) mutual funds
d) insurance
e) others
Option No of respondents Percentage
Fixed deposits 5 10
Stock 10 20
Mutual fund 10 20
Insurance 18 36
others 7 14
TOTAL 50 100
Interpretation The above pie chart shows that out of 50 respondents 10 preferred to invest in fixed deposits 20 in stocks 20 in mutual funds 36 in insurance and 14 in others like property gold etc
Q2 What are your priorities for investment
40
a) protecting your family against pre-mature death
b) wealth creation
c) retirement needs
d) child education and marriage
e) protect income against disability sickness or critical illness
Option No of respondents Percentage
Protecting your family against pre mature death
10 20
Wealth creation 14 28
Retirement needs 5 10
Child education and marriage 7 14
Protect income against disability sickness or critical illness
14 28
TOTAL 50 100
Interpretation The above pie chart shows that out of 50 respondents 20 of them invest for protecting their family against premature death 28 for creating wealth 10 for meeting their future retirement needs 14 for child education amp marriage and 28 for protection against disability and sickness
Q3 What is your main motive behind investing in life insurance
41
a) tax benefit
b) savings
c) risk cover
Option No of respondents Percentage
Tax benefits 27 54
Savings 5 10
Risk cover 18 36
TOTAL 50 100
Interpretation The above pie chart shows that out of the sample respondents 54 have tax benefit 10 have savings and 36 have risk cover as their main motive for making an investment in life
Q4 What kind of investment do you prefer
42
a) high risk high gain
b) low risk low gain
c) moderate
d) vary times to times
Option No of respondents Percentage
High risk high gain 8 16
Low risk low gain 5 10
Moderate 12 24
Vary times to times 25 50
TOTAL 50 100
Interpretation The above pie chart shows that out of 50 respondents 16 preferred high risk- high gain form of investment 10 preferred low risk- low gain form of investment 24 preferred moderate investment and 50 preferred varied form of investment
43
Q5Are you interested to invest in Traditional Plans
a) YES
b) NO
Option No of respondents Percentage
YES 36 72
NO 14 28
TOTAL 50 100
Interpretation The above pie chart shows that 72 of the respondents preferred to invest in Traditional Plans
44
Q6 What is your level of annual investmenta) below 20000
b) 20000-40000
c) above 40000
Option No of respondents Percentage
Below 20000 41 82
20000-40000 7 14
Above 40000 2 4
TOTAL 50 100
Interpretation The above pie chart shows that 82 of the respondents are willing to invest below Rs 20000 per annum 14 of them want to invest within Rs 20000 per annum to Rs 40000 and 4 wanted to invest over and above Rs 40000
45
Q7 What factors would you consider most important before choosing an insurance policy
a) publicity of the company
b) reputation of the company
c) quality of life advisors
d) after sales-supporting of the company
Option No of respondents Percentage
Publicity of the co 5 20
Reputation of the co 25 50
Quality of life advisors 10 10
After sale-services 10 20
TOTAL 50 100
Interpretation out of the sample respondents 20 considers publicity of the company 50 considers reputation of the company 10 considers quality of life advisors and 20 considers after sales support of the company as the most important factor for choosing an insurance company
46
Q8 Which life insurance company would you prefer the most to invest ina) reliance life insurance (RLIC)
b) Bajaj Allianz life insurance
Option No of respondents Percentage
RLIC 21 42
BAJAJ ALLIANZ 29 58
TOTAL 50 100
Interpretation Out of 50 respondents 42 preferred to invest in reliance life insurance over 58 of the respondents who prefer to invest in Bajaj Allianz life insurance
47
Q9 If reliance life insurance then which particular plan you would like to invest ina) Reliance Term Plan
b) Reliance Whole Life Plan
c) Reliance Endowment Plan
d) Reliance Special Endowment Plan
Option No of respondents Percentage
Reliance term plan 6 2858
Reliance whole life plan 3 1428
Reliance endowment plan 9 4286
Reliance special endowment plan 3 1428
TOTAL 21 100
Interpretation Out of 21 respondents 2858 preferred to invest in term plan 1428 in whole life plan 4286 in endowment plan and 1428 of them preferred to invest in special endowment plan of reliance life insurance
48
Q10 If Bajaj Allianz life insurance then which particular plan you would like to invest in
I ENDOWMENT PLAN a) Bajaj Allianz Invest Gain
b) Bajaj Allianz save Care Economy SP
c) Bajaj Allianz life time care
d) Bajaj Allianz Super Saver plan
II MONEY BACK PLAN i Bajaj Allianz Cash Gain plan
Option No of respondents Percentage
Invest gain plan 3 1035
Save care economy SP 6 2069
Life time care 7 2415
Super saver plan 3 1035
Cash gain plan 10 3446
TOTAL 29 100
Interpretation Out of 29 respondents 1035 of them plan to invest in Bajaj Allianz- Invest Gain 2069 wish to invest in Bajaj Allianz save Care Economy SP 2415 want to invest in Bajaj Allianz life time care 1035 in Bajaj Allianz Super Saver plan and 3446 prefer to invest in Bajaj Allianz Cash Gain plan
49
32) SIGNIFICANCE OF STUDY
Life insurance is one of the most rapidly growing sectors in India The main reason
behind the growth can attributed to the high population density improving economical
condition improving education level and improving awareness Due to these factors there
is still huge scope for growth in this sector Like any other business when the
opportunities are present everybody tends to enter the industries This growth hence
fetches the new competitors as well as new strategies from existing players To sustain in
any competitive industry the organization must adapt to existing strategies and adopt
new ones This study will focus on the analysis of Reliance Life Insurance in comparison
with the present scenario of Bajaj Allianz Life Insurance with respect to the Traditional
Plans of both the companyrsquos This will mainly cover the following aspects
To know about the awareness and popularity of various Traditional Plans offered
by Reliance Life Insurance and Bajaj Allianz Life Insurance
How Reliance Life Insurance can develop and sustain a good distribution
network
These will provide it benefit both in terms of better market coverage as well as better
penetration
50
33) SCOPE OF THE STUDY
1) This helps in finding out vast potential of insurance company
2) The study was conducted in National Capital Region (NCR) only
3) The number of respondents to be surveyed can be improved
4) This study was conducted by comparing the performances amp products of three private
amp government insurance players in insurance industry
5) This study was conducted to analyze the market stand of Reliance life insurance
Company limited and Bajaj Allianz Life Insurance Company Limited of India insurance
companies
6) This study is done to eliminate all the myths which people have in their minds
regarding Insurance Sector
51
34) OBJECTIVES
To have a detailed understanding of Reliance Life Insurance and Bajaj Allianz Life Insurance
To find out various reasons considered while investing in policies
To get knowledge about the market exposure and future prospects about Reliance Life Insurance
To know the perception of the consumers about the life insurance
To analyze the Traditional plans of Reliance Life Insurance and compare it with Bajaj Allianz
To know about the brand awareness of Reliance Life Insurance its customer preferences over Bajaj Allianz in the market
To study a proper knowledge about the life insurance industry
To understand the consumer choice while investing in policies
52
CHAPTER 4
DISCUSSION AND FINDINGS OF THE STUDY
FINDINGS OF THE STUDY RECOMMENDATION AND SUGGESTIONS CONCLUSION LIMITATIONS BIBLIOGRAPHY ANNEXUREQUESTIONNAIRE
53
41) FINDINGS OF THE STUDY
1) The survey reveals that still a large proportion of population is interested to invest in other forms of investment other than insurance as still most of them are unaware about the importance of insurance in their life
2) Basically people make varied form of investment for creating wealth to protect their families against pre-mature death and to protect income against disability sickness or critical illness
3) The main motive of the individuals investing is receives benefits US 1010D People generally consider insurance as a tax saving device
4) Mostly people prefer time to time form of investment as they are not willing to take high degree of risk
5) 72 of the respondents are preferred to invest in Traditional Plans
6) Most of the people prefer to make an annual investment up to a maximum of Rs20 000 per annum
7) When the product is like life insurance reputation of the company publicity of the company amp after sale services of the company matters a lot This means that people would choose that insurance company only where the quality of life advisors is satisfactory
8) Most people prefer to invest in Bajaj Allianz Life Insurance as compared to making an investment in Reliance Life Insurance
9) The most preferable Traditional plan of Reliance Life Insurance is Endowment Plan
10) The most preferable plan of Bajaj Allianz Life Insurance co is Cash Gain Plan
54
42) SUGGESTIONS amp RECOMMENDATIONS
Based on the observations of the study some suggestions for the organization are made as
follows
1) Quality of advisors is also as important as the quantity Thus company should go
mainly for qualified professionals
2) Company should increase its budget on publicity so that awareness can be increased
3) Clarity and transparency should be provided to the customer regarding various
products
4) Training sessions should be planned in advance so that schedule can be provided to
the advisor in advance
5) Apart from the Brand Positioning in urban area a strategy should be adopted by
Reliance to make its brand also near to middle level or high aspirant people because they
are the main source of the business in India
6) Awareness Camp to the sub urban area should be focused by Reliance
7) Some innovative technique or product is required in order to attract the consumer
43) LITERATURE REVIEW
55
1) Robi Elenekave has explained in detail why various retirement plans and pension plans donrsquot give the desired returns The main difficulty is the use of incorrect method for calculations done to find out the return on investment This is primarily due to wrong assumptions The study provides information about the various precautions which need to be considered before planning so that the desired results can be achieved
2) Another paper provides insight about how various financial sectors invest in bond market The study was how the different players investment different instruments according to the risk appetite and desired rate of return The study shows that life insurance sector mainly invests in government bond which are low return and low risk instrument The investment in government bond it shows that life insurance companies are more conservative in investment
3) K Subhash has presented the history of Indiarsquos life insurance industry in three stages before independence after independence and post liberalization which not only provides information but also help in analyzing the impact of these major changes The authors have also discussed the huge potential which exists in the rural India The insurance company must realize the importance of rural sector because the future lies there The author commented about the increasing share of private player in the existing market This confirms the availability of opportunity in this sector The paper also provides the importance of professional and focused approach which was given no importance
4) Tapen Sinha has discussed the various challenges and opportunities in the insurance market One of the very important factors which have been discussed in the study is the importance of developing new and better products As the scenario changes the need of an individual also changes so any organization must understand and fulfill these needs The new product development requires constant research so organization must also focus on it
5) Roger G Ibbotson discusses how financial planners and advisors have recently started to recognize that human capital must be taken into account when building optimal portfolios for individual investors Any investorrsquos human capital has a unique mortality risk However life insurance in its forms can hedge against this mortality risk Thus human capital affects both the optimal asset allocation and the optimal demand for life insurance This paper provides a unified framework based on human capital in order to enable individual investors to make both decisions jointly
6) Rakesh Niraj study tells how the flow of information in any organization is important For any organization to grow the flow of information must be good both upwards as well as ownwards The proper flow of information will also ensure proper flow of good and services from organization to customer and proper flow of information from customer to organization The information from customers will help the organization in providing better goods and services to the customer For the above purpose organization must ensure good channel partner who can provide the organization with correct feedback Hence it becomes very important for any organization to acquire good channel partners
56
7) Stephen P Robbins has discussed how group dynamics works in any organization The success of any organization depends on the success of its various teams and how these teams work together The book provides various techniques which can be used by any organization to get result from the team effort The conflict resolution is a major task in any group Various techniques which the organization can use in conflict resolution are also discussed Another important aspect covered is the importance of leadership in the organization The various forms of leadership have been discussed and the kinds of leadership which can be effective in particular situations are also discussed
8) R Wayne Mondy has discussed the importance of training and development in any organization The training provides skills to perform the current job where as the development involve learning beyond present need The various type of training are discussed which can be used according to the requirement Training and development are not only important for better performance of an individual but it also gives satisfaction The major factors which influence training and development are found to be management support commitment of trainee and trainer complexity of the organization The process of developing good training plans is also provided In another part author has discussed the importance of right man for right job The compensation strategies are also given which are very crucial for ant industry
9) Philip Kotler has discussed the importance of channels partners Better the channel partners better will be the delivery model Detailed discussion about how to design the channel structure so that all the requirements could be fulfilled is provided The various issues faced by the organization while managing the channels are also given When an organization has more than one channel it becomes very important that all the channels should be integrated in such a way that the organization get the best out of all At times due to the conflicting benefit of the different channels the conflict arise so various strategies to manage these issues is also discussed in the chapter
10) Michael J Etzel has written about the marketing of services The marketing of services is different from the goods because of the characteristic of service like intangibility inseparability heterogeneity etc Brief about pricing strategies is also given in case of services The authors have also given the impact of technological development on the services marketing The author has also given the importance of brand and after sales support in case of services as perception of the customers plays an important role In other part of the book the authors has described the importance of distribution channels and designing of the same A channel partner should be consider as partner according to discussion The legal complications associated with channels are also discussed These complications are necessary to take into the consideration while managing the channels The conflicting interest of channels both horizontally and vertically are also taken into the consideration
57
11) Boone has discussed about the importance of personal financial planning The concept of time value of money has also been elaborated The importance of creating and implementing budget is given under money management The other important concepts for financial planning like credit management and understanding taxes are also explained In one section the authors have discussed the importance of investment and what should be the major considerations while making any investment The considerations include the risk associated with the investment return on the investment etc The importance and benefits of life insurance has also been given The discussion also includes various legal aspects associated with life insurance The overview of retirement planning is also given which includes importance and benefit of retirement planning Various tools for proper retirement planning are also discussed
58
44) CONCLUSION
1) The customers are very much sensitive towards their investment They would like to invest only in that insurance company which enjoys good public image along with quality good services
2) The result of the survey conducted shows that Bajaj Allianz Life Insurance is the leader in life insurance industry but Reliance Life Insurance and other private players are giving it a close competition
3) The motive of the people behind investing in life insurance is the tax benefits that they would receive under sec 80C and 1010D
4) In Life Insurance industry the after sales support of the company is as important as the quality of life advisors
59
45) LIMITATIONS
There were some limitations faced during the study as discussed below
Since the study was taken for two months so there was a constraint of time and effort
The study was limited only to some of the Delhi regions so the results may be biased
Questionnaire was given to 125 people however only 50 responded to it which is very small for such type of study
The biasness of consumer or responses error cannot be eliminated
Most of the people are not aware about the Importance and the necessity of insurance in their life
Adverse perception of the people towards insurance sector- People consider insurance as a tax saving device
Lack of awareness about the earning opportunity in the insurance sector
60
46) BIBLIOGRAPHY
wwwreliancelifeinsurancecom
wwwadagroupcom
wwwirdacom
wwwbajajallianzlifeinsurancecom
wwwallianzbajajcom
47) ANNEXURE
61
QUESTIONNAIRE
A comparative analysis of consumer perception regarding Traditional plans of Reliance Life Insurance with that of Bajaj Allianz Life Insurance
NAME ___________________________
PERSONAL DETAILS
1) AGE_________________
1) OCCUPATION______________
2) INCOME___________________
3) FAMILY MEMBERS_________
Q1 Where do you prefer to investa) Fixed deposits b) Stock c) Mutual funds d) Insurance e) Others
Q2 What are your priorities for investmenta) Protecting your family against pre-mature death b) Wealth creation c) Retirement needs d) Child education and marriage e) Protect income against disability sickness or critical illness
Q3 What is your main motive behind investing in life insurancea) Tax benefit b) Savings c) Risk cover
Q4 What kind of investment do you prefera) High risk high gain b) Low risk low gain c) Moderate d) Vary times to times
62
Q5Are you interested to invest in Traditional Plansa) Yes b) No
Q6 What is your level of annual investmenta) below 20000 b) 20000-40000 c) above 40000
Q7 What factors would you consider most important before choosing an insurance company
a) publicity of the company b) reputation of the company c) quality of life advisors d) after sales-supporting of the company
Q8 Which life insurance company would you prefer the most to invest ina) Reliance life insurance b) Bajaj Allianz life insurance
Q9 If reliance life insurance then which particular plan you would like to invest ina) Reliance Term Plan b) Reliance Whole Life Plan c) Reliance Endowment Plan d) Reliance Special Endowment Plan
Q10 If Bajaj Allianz life insurance then which particular plan you would like to invest in
I ENDOWMENT PLAN
a) Bajaj Allianz Invest Gain
b) Bajaj Allianz save Care Economy SP
c) Bajaj Allianz life time care
d) Bajaj Allianz Super Saver plan
II MONEY BACK PLAN
a) Bajaj Allianz Cash Gain plan
63
64
- COMPANY PROFILE
- ABOUT RELIANCE LIFE INSURANCE
- HISTORY
- Reliance Capital Limited announced the launch of its life insurance business on February 1 2006 This was after obtaining the required regulatory approvals from the Registrar Of Companies and the Insurance Regulatory and Development Authority
- It was in August 2005 that the ball was set rolling when Reliance Capital Limited the financial arm of Reliance ndash Anil Dhirubhai Ambani Group (ADAG) ndash announced the requisition of 100 shareholding in AMP Sanmar Life Insurance Company Limited and the formal transfer of shares took place in October 2005 The company will issue all policy contracts under the Reliance Life Insurance Company limited name All the existing policy contracts also stand transferred to the Reliance Life Insurance entity with all the original contractual terms and commitments intact
- CORE VALUES
- Reliance Life Insurance Company Limited has some core values which are listed as follows
- Vision bull To be the first choice insurer for customers bull To be the preferred employer for staff in the insurance industry bull To be the number one insurer for creating shareholder value
- Mission As a responsible customer focused market leader we will strive to understand the insurance needs of the consumers and translate it into affordable products that deliver value for money
- 12) TRADITIONAL PLANS OF THE COMPANY
- 12A )TRADITIONAL PLAN OF RELIANCE LIFE INSURANCE-
- Life insurance products are designed to suit the requirements of customers Fundamentally the product provide for
- In every product to a certain degree risk cover is imperative for it to fall under the category of insurance Based on the coverage of the product the premiums are calculated and the customer pays accordingly In order to suggest the right product it is essential for an agent to understand the requirements of the customer well
- The traditional plans of the company have the following features-
- Fixed Tenure
- Potential for better returns
- Transparency
- Flexibility in investment
- Flexibility to invest more
- Flexibility to skip the premium
- Flexibility to choose the cover
- High liquidity
- Age term and sum assured decide the amount of premium
- Top- ups and switches are not allowed
- Reliance Life Insurance Company Limited has offered 9
- 1) Reliance term plan-
- 2) Reliance Whole Life Plan -
- 3) Reliance Endowment Plan -
- 4) Reliance Special Endowment Plan -
- 13) INDUSTRY PROFILE
- MEANING OF INSURANCE
- Insurance may be described as a social device to reduce or eliminate risk of loss to life and property Insurance is a collective bearing of risk Insurance is a financial device to spread the risks and losses of few people among a large number of people as people prefer small fixed liability instead of big uncertain and changing liability
- Insurance can be defined as a ldquolegal contract between two parties whereby one party called insurer undertakes to pay a fixed amount of money on the happening of a particular event which may be certain or uncertainrdquo The other party called insured pays in exchange a fixed sum known as premium
- Insurance is desired to safeguard oneself and onersquos family against possible losses on account of risks and perils It provides financial compensation for the losses suffered due to the happening of any unforeseen events
- IMPORTANCE OF INSURANCE
- Insurance services play predominant role in the process of financial Intermediary Today insurance industry is one of the most growing sectors in India There is lot of potential in the Indian Insurance Industry
- There are many issues which require study The scope of the study of Insurance industry of India would be very great as there are ongoing Developments in the industry after the opening of the sector
- Right now the insurance industry has great opportunities in a country like India or China which huge population Also the penetration of insurance in India is very low in both life and non-life segment so there is lot potential to be tapped Before starting the discussion on insurance industry and related issues we have to start with the basics of insurance So first we understand what is insurance How the word lsquoinsurancersquo is different from the word lsquoassurancersquo Etc
- HISTORY OF INSURANCE
- The concept of insurance is believed to have emerged almost 4500 years ago in the ancient land of Babylonia where traders used to bear risk of the carvan by giving loans which were later repaid with interest when the goods arrived safely
- The concept of insurance as we know today took shape in 1688 at a place called Lloydrsquos Coffee House in London where risk bearers used to meet to transact business This coffee house became so popular that Lloydrsquos became the one of the first modern insurance companies by the end of the eighteenth century
- Marine insurance companies came into existence by the end of the eighteenth century These companies were empowered to write fire and life insurance as well as marine The Great Fire of London in 1966 caused huge loss of property and life With a view to providing fire insurance facilities
- Dr Nicholas Barbon set up in 1967 the first fire insurance company known as the Fire office
- Life insurance in its modern form came to India from England in 1818 The Oriental Life Insurance Company was the first insurance company to be set up in India to help the widows of European community The insurance companies which came into existence between 1818 and 1869 treated
- Indian lives as subnormal and charged an extra premium of 15 to 20 per cent The first Indian insurance company the Bombay Mutual Life
- Assurance Society came into existence in 1870 to cover Indian lives at normal rates
- The Insurance Act 1938 the first comprehensive legislation governing both life and non-life branches of insurance were enacted to provide strict state control over insurance business This amended insurance Act looked into investments expenditure and management of these companies
- By the mid- 1950s there were 154 Indian insurers 16 foreign insurers and 75 provident societies carrying on life insurance business in India Insurance business flourished and so did scams irregularities and dubious investment practices by scores of companies As a result the government decided to nationalize the life assurance business in India The Life Insurance
- Corporation of India (LIC) was set up in 1956 The nationalization of life insurance was followed by general insurance in 1972
- MEANING OF LIFE INSURANCE
- There are three parties in a life insurance transaction the insurer the insured and the owner of the policy (policyholder) although the owner and the insured are often the same person
- Another important person involved in a life insurance policy is the beneficiary The beneficiary is the person or persons who will receive the policy proceeds upon the death of the insured
- Life insurance may be divided into two basic classes ndash term and permanent
- HISTORY OF LIFE INSURANCE
- Risk protection has been a primary goal of humans and institutions throughout history Protecting against risk is what insurance is all about
- Over 5000 years ago in China insurance was seen as a preventative measure against piracy on the sea Piracy in fact was so prevalent that as a way of spreading the risk a number of ships would carry a portion of another ships cargo so that if one ship was captured the entire shipment would not be lost
- In another part of the world nearly 4500 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
- Life insurance came about a little later in ancient Rome where burial clubs were formed to cover the funeral expenses of its members as well as help survivors monetarily With Romes fall around 450 AD most of the concepts of insurance were abandoned but aspects of it did continue through the Middle Ages particularly with merchant and artisan guilds These provided forms of member insurance covering risks like fire flood theft disability death and even imprisonment
- During the feudal period early forms of insurance ebbed with the decline of travel and long-distance trade But during the 14th to 16th centuries transportation commerce and insurance would again reemerge
- And similar to ancient Rome burial societies were formed in the Buddhist period to help families build houses and to protect widows and children
- Modern Insurance
- Illegal almost everywhere else in Europe life insurance in England was vigorously promoted in the three decades following the Glorious Revolution of 1688 The type of insurance we see today owes its roots to 17th century England Lloyds of London or as they were known then Lloyds Coffee House was the location where merchants ship owners and underwriters met to discuss and transact business deals
- While serving as a means of risk-avoidance life insurance also appealed strongly to the gambling instincts of Englands burgeoning middle class
- Gambling was so rampant in fact that when newspapers published names of prominent people who were seriously ill bets were placed at Lloydrsquos on their anticipated dates of death Reacting against such practices 79 merchant underwriters broke away in 1769 and two years later formed a ldquoNew Lloydrsquos Coffee Houserdquo that became known as the ldquoreal Lloydrsquosrdquo Making wagers on peoples deaths ceased in 1774 when parliament forbade the practice
- Insurance moves to America
- The US insurance industry was built on the British model The year 1735 saw the birth of the first insurance company in the American colonies in
- Charleston SC The Presbyterian Synod of Philadelphia in 1759 sponsored the first life insurance corporation in America for the benefit of ministers and their dependents And the first life insurance policy for the general public in the United States was issued in Philadelphia on May 22 1761
- But it wasnt until 80 years later (after 1840) that life insurance really tookoff in a big way The key to its success was reducing the opposition from religious groups
- In 1835 the infamous New York fire drew peoples 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
- With the creation of the automobile public liability insurance which first made its appearance in the 1880s gained importance and acceptance
- More advancement was made to insurance during the process of industrialization In 1897 the British government passed the Workmens Compensation Act which made it mandatory for a company to insure its employees against industrial accidents
- During 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 most labor 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
- BENEFITS OF LIFE INSURANCE
- 1) Risk cover -Life Insurance contracts allow an individual to have a risk cover against any unfortunate event of the future
- 2) Tax Deduction -Under section 80C of the Income Tax Act of 1961 one can get tax deduction on premiums up to one lakh rupees Life Insurance policies thus decrease the total taxable income of an individual
- 3) Loans -An individual can easily access loans from different financial institutions by pledging his insurance policies
- 4) Retirement Planning -What had provided protection against the financial consequences of premature death may now be used to help them enjoy their retirement years
- 5) Educational Needs -Similar to retirement planning the cash values that flow from ones life insurance schemes can be utilized for educational needs of the insurer or his children
- The Life Insurance Industry has an enviable track record among public sector units It has a Consistent profit and dividend paying record accompanied by a steady growth in its financial resources Through investments in the Government sector and socially- oriented sectors the Industry has contributed immensely to the nations development The industry is recognized as one of the largest financial Institutions in the country The ventures initiated by the industry in the areas of Mutual Fund
- Housing Finance has done exceedingly well in recent years To protect the countrys foreign exchange reserves the reinsurance arrangement are so organized that maximum retention is made possible within the country while at the same time protecting interests of the policy holders
- 22) CURRENT SCENARIO OF RELIANCE LIFE INSURANCE
- RLIC offers wide range of innovative life insurance products targeted at individuals and groups It offers need based products that caters to four distinct segments namely protection child retirement and investment plans RLIC is committed to emerge as a transnational Life Insurer of global scale and standard
- CH - 3) RESEARCH METHODOLOGY
- RESEARCH DESIGN-
- SAMPLING TECHNIQUES-
- THE PRIMARY OBJECTIVEOF THE STUDY-
- 34) OBJECTIVES
- 7) Some innovative technique or product is required in order to attract the consumer
- 45) LIMITATIONS
- 46) BIBLIOGRAPHY
-
22) CURRENT SCENARIO OF RELIANCE LIFE INSURANCE
RLIC offers wide range of innovative life insurance products targeted at individuals and groups It offers need based products that caters to four distinct segments namely protection child retirement and investment plans RLIC is committed to emerge as a
transnational Life Insurer of global scale and standard
Reliance Life Insurance Company Limited (RLIC) is amongst the fastest growing life insurance companies in India It is also amongst the top four private sector life insurance companies in India (As on FY 2008-2009)
As on March 31 2009 RLIC has an annualized premium of Rs 30 billion with a market share of 103 It has leapfrogged on the growth path and has reached the 4 million policy mark in a short span of within 3 years RLIC has a strong distribution network of 1145 branches with more than 149000 agents
32
Insurancersquos Market Share in Comparison of Other Private company
If we look at the status of Reliance Life Insurancersquos market share in comparison of other
private company in comparison of premium earned-
If we talk the growth of Insurance industryrsquos private players in recent years the data will
reflect-
CH - 3) RESEARCH METHODOLOGY
33
RESEARCH DESIGN-
COMPARITIVE STUDY- A comparative study has been undertaken to compare the traditional Plans of Reliance Life Insurance with that of Bajaj Allianz life insurance
DATA TYPE
INTRODUCTION - Any organization whether big or small private or public needs different type of information to know its popularity I have gathered secondary data and primary data and collected information from the combination of these two data
PRIMARY DATA - Primary data collection method was decided for observing working of the company and approaching the customers directly face to face A great care was taken while collecting the primary data to answer that it is relevant accurate current and unbiased
SECONDARY DATA - Secondary data collection method was used by referring to various websites books and newspapers for collecting information regarding the project under study Secondary data consist of the information that already exists somewhere else for some another purpose
SAMPLING TECHNIQUES-
SAMPLE SIZE- A sample size of 50 was taken to be analyzed
SAMPLE LOCATION-Various sectors of Kamla Nagar Civil lines Mukherji Nagar Model Town and selected areas of Delhi
SAMPLING PROCESS - Convenient sampling was used to overcome the time and money constraints that could have been faced by us while collecting the data The customers were contacted face to face directly and also by way of telephonic conversation with them
ANALYTICAL TOOLS - The data collected were arranged accordingly and statistical tools like bar graphs and pie-charts were used to analyze and present the data
RESEARCH INSTRUMENT USED-
34
SAMPLING MEDIA - Printed questionnaires consisting several questions were asked to have an idea of customers view about Reliance Life Insurance plans followed by personal questions
FIELD WORK - Rigorous field work was undertaken to locate the interested and potential respondents to fulfill the objectives of the study
THE PRIMARY OBJECTIVEOF THE STUDY -
The primary objective of the research study is to have a detailed analysis of Reliance Life Insurance bringing in focus the future prospects of the (Anil Dhirubhai Ambani group) with relevance to the customer perception regarding the various plans and products offered by Reliance Life Insurance
31) DATA ANALYSIS AND INTERPRETATION
35
PERSONAL DETAILS
1) AGE a) 18-30b) 31-50c) 51-65
AGE NO OF RESPONDENTS PERCENTAGE
18-30 21 42
31-50 19 38
51-65 10 20
TOTAL 50 100
INTERPRETATION-The bar graph reveals that 42 of the respondents belong to the age group of 18-30 years 38 lies in the age group of 31-50 years and 20 of them lie in the age group of 51-65 years
2) OCCUPATION
4238
20
05
1015202530354045
NO
O
F
RE
SP
ON
DE
NT
S
18 to 30 31 to 50 51 to 65
AGE (in year)
AGE WISE CLASSIFICATION
36
a) Serviceb) Businessc) Professiond) Housewifee) Retired
OPTION NO OF RESPONDENTS PERCENTAGE
Service 16 32
Business 14 28
Profession 5 10
Housewife 8 16
Retired 7 14
TOTAL 50 100
INTERPRETATION-The above bar graph reveals that 32 of the total respondents were servicemen 28 of them belonged to the business class 10 were professionals 16 were housewives and 14 of the total respondents fall in the retired category
3) INCOME
32
28
10
16
14
0
5
10
15
20
25
30
35
Service Business Profession Housewife Retired
OCCUPATION
OCCUPATION WISE CLASSIFICATION
37
a) 150000-300000
b) 300000-500000
c) Above 500000
OPTION NO OF RESPONDENTS PERCENTAGE
150000-300000 24 48
300000-500000 14 28
Above 500000 12 24
TOTAL 50 100
INTERPRETATION-The above bar graph reveals that out of the total respondents 48 lie in the income group of 150000-300000 28 of the total respondents belonged to the income group of 300000-500000 and 24 lie in the income group of people earning an income of above Rs 500000pa
4828 24
01020304050
N O
OF
RE
SP
ON
DE
NT
S
150000-300000
300000-500000
ABOVE500000
INCOME (in RS)
INCOME WISE CLASSIFICATION
38
4) FAMILY MEMBERS
a) 2b) 3c) 4d) Above 4
OPTION NO OF RESPONDENT PERCENTAGE
2 11 22
3 9 18
4 24 48
Above 4 6 12
TOTAL 50 100
INTERPRETATION The above bar graph shows that 22 of the total respondents had a family of 2 members 18 of them had 3 family members 48 of them had 4 family members and 12 of them had the no of family members above 4
Q1 Where do you prefer to invest
22 18
48
120
1020304050
No
o
f re
spo
nd
ents
2 3 4 Above 4
No of family members
MEMBER WISE CLASSIFICATION
39
a) fixed deposits
b) stock
c) mutual funds
d) insurance
e) others
Option No of respondents Percentage
Fixed deposits 5 10
Stock 10 20
Mutual fund 10 20
Insurance 18 36
others 7 14
TOTAL 50 100
Interpretation The above pie chart shows that out of 50 respondents 10 preferred to invest in fixed deposits 20 in stocks 20 in mutual funds 36 in insurance and 14 in others like property gold etc
Q2 What are your priorities for investment
40
a) protecting your family against pre-mature death
b) wealth creation
c) retirement needs
d) child education and marriage
e) protect income against disability sickness or critical illness
Option No of respondents Percentage
Protecting your family against pre mature death
10 20
Wealth creation 14 28
Retirement needs 5 10
Child education and marriage 7 14
Protect income against disability sickness or critical illness
14 28
TOTAL 50 100
Interpretation The above pie chart shows that out of 50 respondents 20 of them invest for protecting their family against premature death 28 for creating wealth 10 for meeting their future retirement needs 14 for child education amp marriage and 28 for protection against disability and sickness
Q3 What is your main motive behind investing in life insurance
41
a) tax benefit
b) savings
c) risk cover
Option No of respondents Percentage
Tax benefits 27 54
Savings 5 10
Risk cover 18 36
TOTAL 50 100
Interpretation The above pie chart shows that out of the sample respondents 54 have tax benefit 10 have savings and 36 have risk cover as their main motive for making an investment in life
Q4 What kind of investment do you prefer
42
a) high risk high gain
b) low risk low gain
c) moderate
d) vary times to times
Option No of respondents Percentage
High risk high gain 8 16
Low risk low gain 5 10
Moderate 12 24
Vary times to times 25 50
TOTAL 50 100
Interpretation The above pie chart shows that out of 50 respondents 16 preferred high risk- high gain form of investment 10 preferred low risk- low gain form of investment 24 preferred moderate investment and 50 preferred varied form of investment
43
Q5Are you interested to invest in Traditional Plans
a) YES
b) NO
Option No of respondents Percentage
YES 36 72
NO 14 28
TOTAL 50 100
Interpretation The above pie chart shows that 72 of the respondents preferred to invest in Traditional Plans
44
Q6 What is your level of annual investmenta) below 20000
b) 20000-40000
c) above 40000
Option No of respondents Percentage
Below 20000 41 82
20000-40000 7 14
Above 40000 2 4
TOTAL 50 100
Interpretation The above pie chart shows that 82 of the respondents are willing to invest below Rs 20000 per annum 14 of them want to invest within Rs 20000 per annum to Rs 40000 and 4 wanted to invest over and above Rs 40000
45
Q7 What factors would you consider most important before choosing an insurance policy
a) publicity of the company
b) reputation of the company
c) quality of life advisors
d) after sales-supporting of the company
Option No of respondents Percentage
Publicity of the co 5 20
Reputation of the co 25 50
Quality of life advisors 10 10
After sale-services 10 20
TOTAL 50 100
Interpretation out of the sample respondents 20 considers publicity of the company 50 considers reputation of the company 10 considers quality of life advisors and 20 considers after sales support of the company as the most important factor for choosing an insurance company
46
Q8 Which life insurance company would you prefer the most to invest ina) reliance life insurance (RLIC)
b) Bajaj Allianz life insurance
Option No of respondents Percentage
RLIC 21 42
BAJAJ ALLIANZ 29 58
TOTAL 50 100
Interpretation Out of 50 respondents 42 preferred to invest in reliance life insurance over 58 of the respondents who prefer to invest in Bajaj Allianz life insurance
47
Q9 If reliance life insurance then which particular plan you would like to invest ina) Reliance Term Plan
b) Reliance Whole Life Plan
c) Reliance Endowment Plan
d) Reliance Special Endowment Plan
Option No of respondents Percentage
Reliance term plan 6 2858
Reliance whole life plan 3 1428
Reliance endowment plan 9 4286
Reliance special endowment plan 3 1428
TOTAL 21 100
Interpretation Out of 21 respondents 2858 preferred to invest in term plan 1428 in whole life plan 4286 in endowment plan and 1428 of them preferred to invest in special endowment plan of reliance life insurance
48
Q10 If Bajaj Allianz life insurance then which particular plan you would like to invest in
I ENDOWMENT PLAN a) Bajaj Allianz Invest Gain
b) Bajaj Allianz save Care Economy SP
c) Bajaj Allianz life time care
d) Bajaj Allianz Super Saver plan
II MONEY BACK PLAN i Bajaj Allianz Cash Gain plan
Option No of respondents Percentage
Invest gain plan 3 1035
Save care economy SP 6 2069
Life time care 7 2415
Super saver plan 3 1035
Cash gain plan 10 3446
TOTAL 29 100
Interpretation Out of 29 respondents 1035 of them plan to invest in Bajaj Allianz- Invest Gain 2069 wish to invest in Bajaj Allianz save Care Economy SP 2415 want to invest in Bajaj Allianz life time care 1035 in Bajaj Allianz Super Saver plan and 3446 prefer to invest in Bajaj Allianz Cash Gain plan
49
32) SIGNIFICANCE OF STUDY
Life insurance is one of the most rapidly growing sectors in India The main reason
behind the growth can attributed to the high population density improving economical
condition improving education level and improving awareness Due to these factors there
is still huge scope for growth in this sector Like any other business when the
opportunities are present everybody tends to enter the industries This growth hence
fetches the new competitors as well as new strategies from existing players To sustain in
any competitive industry the organization must adapt to existing strategies and adopt
new ones This study will focus on the analysis of Reliance Life Insurance in comparison
with the present scenario of Bajaj Allianz Life Insurance with respect to the Traditional
Plans of both the companyrsquos This will mainly cover the following aspects
To know about the awareness and popularity of various Traditional Plans offered
by Reliance Life Insurance and Bajaj Allianz Life Insurance
How Reliance Life Insurance can develop and sustain a good distribution
network
These will provide it benefit both in terms of better market coverage as well as better
penetration
50
33) SCOPE OF THE STUDY
1) This helps in finding out vast potential of insurance company
2) The study was conducted in National Capital Region (NCR) only
3) The number of respondents to be surveyed can be improved
4) This study was conducted by comparing the performances amp products of three private
amp government insurance players in insurance industry
5) This study was conducted to analyze the market stand of Reliance life insurance
Company limited and Bajaj Allianz Life Insurance Company Limited of India insurance
companies
6) This study is done to eliminate all the myths which people have in their minds
regarding Insurance Sector
51
34) OBJECTIVES
To have a detailed understanding of Reliance Life Insurance and Bajaj Allianz Life Insurance
To find out various reasons considered while investing in policies
To get knowledge about the market exposure and future prospects about Reliance Life Insurance
To know the perception of the consumers about the life insurance
To analyze the Traditional plans of Reliance Life Insurance and compare it with Bajaj Allianz
To know about the brand awareness of Reliance Life Insurance its customer preferences over Bajaj Allianz in the market
To study a proper knowledge about the life insurance industry
To understand the consumer choice while investing in policies
52
CHAPTER 4
DISCUSSION AND FINDINGS OF THE STUDY
FINDINGS OF THE STUDY RECOMMENDATION AND SUGGESTIONS CONCLUSION LIMITATIONS BIBLIOGRAPHY ANNEXUREQUESTIONNAIRE
53
41) FINDINGS OF THE STUDY
1) The survey reveals that still a large proportion of population is interested to invest in other forms of investment other than insurance as still most of them are unaware about the importance of insurance in their life
2) Basically people make varied form of investment for creating wealth to protect their families against pre-mature death and to protect income against disability sickness or critical illness
3) The main motive of the individuals investing is receives benefits US 1010D People generally consider insurance as a tax saving device
4) Mostly people prefer time to time form of investment as they are not willing to take high degree of risk
5) 72 of the respondents are preferred to invest in Traditional Plans
6) Most of the people prefer to make an annual investment up to a maximum of Rs20 000 per annum
7) When the product is like life insurance reputation of the company publicity of the company amp after sale services of the company matters a lot This means that people would choose that insurance company only where the quality of life advisors is satisfactory
8) Most people prefer to invest in Bajaj Allianz Life Insurance as compared to making an investment in Reliance Life Insurance
9) The most preferable Traditional plan of Reliance Life Insurance is Endowment Plan
10) The most preferable plan of Bajaj Allianz Life Insurance co is Cash Gain Plan
54
42) SUGGESTIONS amp RECOMMENDATIONS
Based on the observations of the study some suggestions for the organization are made as
follows
1) Quality of advisors is also as important as the quantity Thus company should go
mainly for qualified professionals
2) Company should increase its budget on publicity so that awareness can be increased
3) Clarity and transparency should be provided to the customer regarding various
products
4) Training sessions should be planned in advance so that schedule can be provided to
the advisor in advance
5) Apart from the Brand Positioning in urban area a strategy should be adopted by
Reliance to make its brand also near to middle level or high aspirant people because they
are the main source of the business in India
6) Awareness Camp to the sub urban area should be focused by Reliance
7) Some innovative technique or product is required in order to attract the consumer
43) LITERATURE REVIEW
55
1) Robi Elenekave has explained in detail why various retirement plans and pension plans donrsquot give the desired returns The main difficulty is the use of incorrect method for calculations done to find out the return on investment This is primarily due to wrong assumptions The study provides information about the various precautions which need to be considered before planning so that the desired results can be achieved
2) Another paper provides insight about how various financial sectors invest in bond market The study was how the different players investment different instruments according to the risk appetite and desired rate of return The study shows that life insurance sector mainly invests in government bond which are low return and low risk instrument The investment in government bond it shows that life insurance companies are more conservative in investment
3) K Subhash has presented the history of Indiarsquos life insurance industry in three stages before independence after independence and post liberalization which not only provides information but also help in analyzing the impact of these major changes The authors have also discussed the huge potential which exists in the rural India The insurance company must realize the importance of rural sector because the future lies there The author commented about the increasing share of private player in the existing market This confirms the availability of opportunity in this sector The paper also provides the importance of professional and focused approach which was given no importance
4) Tapen Sinha has discussed the various challenges and opportunities in the insurance market One of the very important factors which have been discussed in the study is the importance of developing new and better products As the scenario changes the need of an individual also changes so any organization must understand and fulfill these needs The new product development requires constant research so organization must also focus on it
5) Roger G Ibbotson discusses how financial planners and advisors have recently started to recognize that human capital must be taken into account when building optimal portfolios for individual investors Any investorrsquos human capital has a unique mortality risk However life insurance in its forms can hedge against this mortality risk Thus human capital affects both the optimal asset allocation and the optimal demand for life insurance This paper provides a unified framework based on human capital in order to enable individual investors to make both decisions jointly
6) Rakesh Niraj study tells how the flow of information in any organization is important For any organization to grow the flow of information must be good both upwards as well as ownwards The proper flow of information will also ensure proper flow of good and services from organization to customer and proper flow of information from customer to organization The information from customers will help the organization in providing better goods and services to the customer For the above purpose organization must ensure good channel partner who can provide the organization with correct feedback Hence it becomes very important for any organization to acquire good channel partners
56
7) Stephen P Robbins has discussed how group dynamics works in any organization The success of any organization depends on the success of its various teams and how these teams work together The book provides various techniques which can be used by any organization to get result from the team effort The conflict resolution is a major task in any group Various techniques which the organization can use in conflict resolution are also discussed Another important aspect covered is the importance of leadership in the organization The various forms of leadership have been discussed and the kinds of leadership which can be effective in particular situations are also discussed
8) R Wayne Mondy has discussed the importance of training and development in any organization The training provides skills to perform the current job where as the development involve learning beyond present need The various type of training are discussed which can be used according to the requirement Training and development are not only important for better performance of an individual but it also gives satisfaction The major factors which influence training and development are found to be management support commitment of trainee and trainer complexity of the organization The process of developing good training plans is also provided In another part author has discussed the importance of right man for right job The compensation strategies are also given which are very crucial for ant industry
9) Philip Kotler has discussed the importance of channels partners Better the channel partners better will be the delivery model Detailed discussion about how to design the channel structure so that all the requirements could be fulfilled is provided The various issues faced by the organization while managing the channels are also given When an organization has more than one channel it becomes very important that all the channels should be integrated in such a way that the organization get the best out of all At times due to the conflicting benefit of the different channels the conflict arise so various strategies to manage these issues is also discussed in the chapter
10) Michael J Etzel has written about the marketing of services The marketing of services is different from the goods because of the characteristic of service like intangibility inseparability heterogeneity etc Brief about pricing strategies is also given in case of services The authors have also given the impact of technological development on the services marketing The author has also given the importance of brand and after sales support in case of services as perception of the customers plays an important role In other part of the book the authors has described the importance of distribution channels and designing of the same A channel partner should be consider as partner according to discussion The legal complications associated with channels are also discussed These complications are necessary to take into the consideration while managing the channels The conflicting interest of channels both horizontally and vertically are also taken into the consideration
57
11) Boone has discussed about the importance of personal financial planning The concept of time value of money has also been elaborated The importance of creating and implementing budget is given under money management The other important concepts for financial planning like credit management and understanding taxes are also explained In one section the authors have discussed the importance of investment and what should be the major considerations while making any investment The considerations include the risk associated with the investment return on the investment etc The importance and benefits of life insurance has also been given The discussion also includes various legal aspects associated with life insurance The overview of retirement planning is also given which includes importance and benefit of retirement planning Various tools for proper retirement planning are also discussed
58
44) CONCLUSION
1) The customers are very much sensitive towards their investment They would like to invest only in that insurance company which enjoys good public image along with quality good services
2) The result of the survey conducted shows that Bajaj Allianz Life Insurance is the leader in life insurance industry but Reliance Life Insurance and other private players are giving it a close competition
3) The motive of the people behind investing in life insurance is the tax benefits that they would receive under sec 80C and 1010D
4) In Life Insurance industry the after sales support of the company is as important as the quality of life advisors
59
45) LIMITATIONS
There were some limitations faced during the study as discussed below
Since the study was taken for two months so there was a constraint of time and effort
The study was limited only to some of the Delhi regions so the results may be biased
Questionnaire was given to 125 people however only 50 responded to it which is very small for such type of study
The biasness of consumer or responses error cannot be eliminated
Most of the people are not aware about the Importance and the necessity of insurance in their life
Adverse perception of the people towards insurance sector- People consider insurance as a tax saving device
Lack of awareness about the earning opportunity in the insurance sector
60
46) BIBLIOGRAPHY
wwwreliancelifeinsurancecom
wwwadagroupcom
wwwirdacom
wwwbajajallianzlifeinsurancecom
wwwallianzbajajcom
47) ANNEXURE
61
QUESTIONNAIRE
A comparative analysis of consumer perception regarding Traditional plans of Reliance Life Insurance with that of Bajaj Allianz Life Insurance
NAME ___________________________
PERSONAL DETAILS
1) AGE_________________
1) OCCUPATION______________
2) INCOME___________________
3) FAMILY MEMBERS_________
Q1 Where do you prefer to investa) Fixed deposits b) Stock c) Mutual funds d) Insurance e) Others
Q2 What are your priorities for investmenta) Protecting your family against pre-mature death b) Wealth creation c) Retirement needs d) Child education and marriage e) Protect income against disability sickness or critical illness
Q3 What is your main motive behind investing in life insurancea) Tax benefit b) Savings c) Risk cover
Q4 What kind of investment do you prefera) High risk high gain b) Low risk low gain c) Moderate d) Vary times to times
62
Q5Are you interested to invest in Traditional Plansa) Yes b) No
Q6 What is your level of annual investmenta) below 20000 b) 20000-40000 c) above 40000
Q7 What factors would you consider most important before choosing an insurance company
a) publicity of the company b) reputation of the company c) quality of life advisors d) after sales-supporting of the company
Q8 Which life insurance company would you prefer the most to invest ina) Reliance life insurance b) Bajaj Allianz life insurance
Q9 If reliance life insurance then which particular plan you would like to invest ina) Reliance Term Plan b) Reliance Whole Life Plan c) Reliance Endowment Plan d) Reliance Special Endowment Plan
Q10 If Bajaj Allianz life insurance then which particular plan you would like to invest in
I ENDOWMENT PLAN
a) Bajaj Allianz Invest Gain
b) Bajaj Allianz save Care Economy SP
c) Bajaj Allianz life time care
d) Bajaj Allianz Super Saver plan
II MONEY BACK PLAN
a) Bajaj Allianz Cash Gain plan
63
64
- COMPANY PROFILE
- ABOUT RELIANCE LIFE INSURANCE
- HISTORY
- Reliance Capital Limited announced the launch of its life insurance business on February 1 2006 This was after obtaining the required regulatory approvals from the Registrar Of Companies and the Insurance Regulatory and Development Authority
- It was in August 2005 that the ball was set rolling when Reliance Capital Limited the financial arm of Reliance ndash Anil Dhirubhai Ambani Group (ADAG) ndash announced the requisition of 100 shareholding in AMP Sanmar Life Insurance Company Limited and the formal transfer of shares took place in October 2005 The company will issue all policy contracts under the Reliance Life Insurance Company limited name All the existing policy contracts also stand transferred to the Reliance Life Insurance entity with all the original contractual terms and commitments intact
- CORE VALUES
- Reliance Life Insurance Company Limited has some core values which are listed as follows
- Vision bull To be the first choice insurer for customers bull To be the preferred employer for staff in the insurance industry bull To be the number one insurer for creating shareholder value
- Mission As a responsible customer focused market leader we will strive to understand the insurance needs of the consumers and translate it into affordable products that deliver value for money
- 12) TRADITIONAL PLANS OF THE COMPANY
- 12A )TRADITIONAL PLAN OF RELIANCE LIFE INSURANCE-
- Life insurance products are designed to suit the requirements of customers Fundamentally the product provide for
- In every product to a certain degree risk cover is imperative for it to fall under the category of insurance Based on the coverage of the product the premiums are calculated and the customer pays accordingly In order to suggest the right product it is essential for an agent to understand the requirements of the customer well
- The traditional plans of the company have the following features-
- Fixed Tenure
- Potential for better returns
- Transparency
- Flexibility in investment
- Flexibility to invest more
- Flexibility to skip the premium
- Flexibility to choose the cover
- High liquidity
- Age term and sum assured decide the amount of premium
- Top- ups and switches are not allowed
- Reliance Life Insurance Company Limited has offered 9
- 1) Reliance term plan-
- 2) Reliance Whole Life Plan -
- 3) Reliance Endowment Plan -
- 4) Reliance Special Endowment Plan -
- 13) INDUSTRY PROFILE
- MEANING OF INSURANCE
- Insurance may be described as a social device to reduce or eliminate risk of loss to life and property Insurance is a collective bearing of risk Insurance is a financial device to spread the risks and losses of few people among a large number of people as people prefer small fixed liability instead of big uncertain and changing liability
- Insurance can be defined as a ldquolegal contract between two parties whereby one party called insurer undertakes to pay a fixed amount of money on the happening of a particular event which may be certain or uncertainrdquo The other party called insured pays in exchange a fixed sum known as premium
- Insurance is desired to safeguard oneself and onersquos family against possible losses on account of risks and perils It provides financial compensation for the losses suffered due to the happening of any unforeseen events
- IMPORTANCE OF INSURANCE
- Insurance services play predominant role in the process of financial Intermediary Today insurance industry is one of the most growing sectors in India There is lot of potential in the Indian Insurance Industry
- There are many issues which require study The scope of the study of Insurance industry of India would be very great as there are ongoing Developments in the industry after the opening of the sector
- Right now the insurance industry has great opportunities in a country like India or China which huge population Also the penetration of insurance in India is very low in both life and non-life segment so there is lot potential to be tapped Before starting the discussion on insurance industry and related issues we have to start with the basics of insurance So first we understand what is insurance How the word lsquoinsurancersquo is different from the word lsquoassurancersquo Etc
- HISTORY OF INSURANCE
- The concept of insurance is believed to have emerged almost 4500 years ago in the ancient land of Babylonia where traders used to bear risk of the carvan by giving loans which were later repaid with interest when the goods arrived safely
- The concept of insurance as we know today took shape in 1688 at a place called Lloydrsquos Coffee House in London where risk bearers used to meet to transact business This coffee house became so popular that Lloydrsquos became the one of the first modern insurance companies by the end of the eighteenth century
- Marine insurance companies came into existence by the end of the eighteenth century These companies were empowered to write fire and life insurance as well as marine The Great Fire of London in 1966 caused huge loss of property and life With a view to providing fire insurance facilities
- Dr Nicholas Barbon set up in 1967 the first fire insurance company known as the Fire office
- Life insurance in its modern form came to India from England in 1818 The Oriental Life Insurance Company was the first insurance company to be set up in India to help the widows of European community The insurance companies which came into existence between 1818 and 1869 treated
- Indian lives as subnormal and charged an extra premium of 15 to 20 per cent The first Indian insurance company the Bombay Mutual Life
- Assurance Society came into existence in 1870 to cover Indian lives at normal rates
- The Insurance Act 1938 the first comprehensive legislation governing both life and non-life branches of insurance were enacted to provide strict state control over insurance business This amended insurance Act looked into investments expenditure and management of these companies
- By the mid- 1950s there were 154 Indian insurers 16 foreign insurers and 75 provident societies carrying on life insurance business in India Insurance business flourished and so did scams irregularities and dubious investment practices by scores of companies As a result the government decided to nationalize the life assurance business in India The Life Insurance
- Corporation of India (LIC) was set up in 1956 The nationalization of life insurance was followed by general insurance in 1972
- MEANING OF LIFE INSURANCE
- There are three parties in a life insurance transaction the insurer the insured and the owner of the policy (policyholder) although the owner and the insured are often the same person
- Another important person involved in a life insurance policy is the beneficiary The beneficiary is the person or persons who will receive the policy proceeds upon the death of the insured
- Life insurance may be divided into two basic classes ndash term and permanent
- HISTORY OF LIFE INSURANCE
- Risk protection has been a primary goal of humans and institutions throughout history Protecting against risk is what insurance is all about
- Over 5000 years ago in China insurance was seen as a preventative measure against piracy on the sea Piracy in fact was so prevalent that as a way of spreading the risk a number of ships would carry a portion of another ships cargo so that if one ship was captured the entire shipment would not be lost
- In another part of the world nearly 4500 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
- Life insurance came about a little later in ancient Rome where burial clubs were formed to cover the funeral expenses of its members as well as help survivors monetarily With Romes fall around 450 AD most of the concepts of insurance were abandoned but aspects of it did continue through the Middle Ages particularly with merchant and artisan guilds These provided forms of member insurance covering risks like fire flood theft disability death and even imprisonment
- During the feudal period early forms of insurance ebbed with the decline of travel and long-distance trade But during the 14th to 16th centuries transportation commerce and insurance would again reemerge
- And similar to ancient Rome burial societies were formed in the Buddhist period to help families build houses and to protect widows and children
- Modern Insurance
- Illegal almost everywhere else in Europe life insurance in England was vigorously promoted in the three decades following the Glorious Revolution of 1688 The type of insurance we see today owes its roots to 17th century England Lloyds of London or as they were known then Lloyds Coffee House was the location where merchants ship owners and underwriters met to discuss and transact business deals
- While serving as a means of risk-avoidance life insurance also appealed strongly to the gambling instincts of Englands burgeoning middle class
- Gambling was so rampant in fact that when newspapers published names of prominent people who were seriously ill bets were placed at Lloydrsquos on their anticipated dates of death Reacting against such practices 79 merchant underwriters broke away in 1769 and two years later formed a ldquoNew Lloydrsquos Coffee Houserdquo that became known as the ldquoreal Lloydrsquosrdquo Making wagers on peoples deaths ceased in 1774 when parliament forbade the practice
- Insurance moves to America
- The US insurance industry was built on the British model The year 1735 saw the birth of the first insurance company in the American colonies in
- Charleston SC The Presbyterian Synod of Philadelphia in 1759 sponsored the first life insurance corporation in America for the benefit of ministers and their dependents And the first life insurance policy for the general public in the United States was issued in Philadelphia on May 22 1761
- But it wasnt until 80 years later (after 1840) that life insurance really tookoff in a big way The key to its success was reducing the opposition from religious groups
- In 1835 the infamous New York fire drew peoples 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
- With the creation of the automobile public liability insurance which first made its appearance in the 1880s gained importance and acceptance
- More advancement was made to insurance during the process of industrialization In 1897 the British government passed the Workmens Compensation Act which made it mandatory for a company to insure its employees against industrial accidents
- During 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 most labor 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
- BENEFITS OF LIFE INSURANCE
- 1) Risk cover -Life Insurance contracts allow an individual to have a risk cover against any unfortunate event of the future
- 2) Tax Deduction -Under section 80C of the Income Tax Act of 1961 one can get tax deduction on premiums up to one lakh rupees Life Insurance policies thus decrease the total taxable income of an individual
- 3) Loans -An individual can easily access loans from different financial institutions by pledging his insurance policies
- 4) Retirement Planning -What had provided protection against the financial consequences of premature death may now be used to help them enjoy their retirement years
- 5) Educational Needs -Similar to retirement planning the cash values that flow from ones life insurance schemes can be utilized for educational needs of the insurer or his children
- The Life Insurance Industry has an enviable track record among public sector units It has a Consistent profit and dividend paying record accompanied by a steady growth in its financial resources Through investments in the Government sector and socially- oriented sectors the Industry has contributed immensely to the nations development The industry is recognized as one of the largest financial Institutions in the country The ventures initiated by the industry in the areas of Mutual Fund
- Housing Finance has done exceedingly well in recent years To protect the countrys foreign exchange reserves the reinsurance arrangement are so organized that maximum retention is made possible within the country while at the same time protecting interests of the policy holders
- 22) CURRENT SCENARIO OF RELIANCE LIFE INSURANCE
- RLIC offers wide range of innovative life insurance products targeted at individuals and groups It offers need based products that caters to four distinct segments namely protection child retirement and investment plans RLIC is committed to emerge as a transnational Life Insurer of global scale and standard
- CH - 3) RESEARCH METHODOLOGY
- RESEARCH DESIGN-
- SAMPLING TECHNIQUES-
- THE PRIMARY OBJECTIVEOF THE STUDY-
- 34) OBJECTIVES
- 7) Some innovative technique or product is required in order to attract the consumer
- 45) LIMITATIONS
- 46) BIBLIOGRAPHY
-
Insurancersquos Market Share in Comparison of Other Private company
If we look at the status of Reliance Life Insurancersquos market share in comparison of other
private company in comparison of premium earned-
If we talk the growth of Insurance industryrsquos private players in recent years the data will
reflect-
CH - 3) RESEARCH METHODOLOGY
33
RESEARCH DESIGN-
COMPARITIVE STUDY- A comparative study has been undertaken to compare the traditional Plans of Reliance Life Insurance with that of Bajaj Allianz life insurance
DATA TYPE
INTRODUCTION - Any organization whether big or small private or public needs different type of information to know its popularity I have gathered secondary data and primary data and collected information from the combination of these two data
PRIMARY DATA - Primary data collection method was decided for observing working of the company and approaching the customers directly face to face A great care was taken while collecting the primary data to answer that it is relevant accurate current and unbiased
SECONDARY DATA - Secondary data collection method was used by referring to various websites books and newspapers for collecting information regarding the project under study Secondary data consist of the information that already exists somewhere else for some another purpose
SAMPLING TECHNIQUES-
SAMPLE SIZE- A sample size of 50 was taken to be analyzed
SAMPLE LOCATION-Various sectors of Kamla Nagar Civil lines Mukherji Nagar Model Town and selected areas of Delhi
SAMPLING PROCESS - Convenient sampling was used to overcome the time and money constraints that could have been faced by us while collecting the data The customers were contacted face to face directly and also by way of telephonic conversation with them
ANALYTICAL TOOLS - The data collected were arranged accordingly and statistical tools like bar graphs and pie-charts were used to analyze and present the data
RESEARCH INSTRUMENT USED-
34
SAMPLING MEDIA - Printed questionnaires consisting several questions were asked to have an idea of customers view about Reliance Life Insurance plans followed by personal questions
FIELD WORK - Rigorous field work was undertaken to locate the interested and potential respondents to fulfill the objectives of the study
THE PRIMARY OBJECTIVEOF THE STUDY -
The primary objective of the research study is to have a detailed analysis of Reliance Life Insurance bringing in focus the future prospects of the (Anil Dhirubhai Ambani group) with relevance to the customer perception regarding the various plans and products offered by Reliance Life Insurance
31) DATA ANALYSIS AND INTERPRETATION
35
PERSONAL DETAILS
1) AGE a) 18-30b) 31-50c) 51-65
AGE NO OF RESPONDENTS PERCENTAGE
18-30 21 42
31-50 19 38
51-65 10 20
TOTAL 50 100
INTERPRETATION-The bar graph reveals that 42 of the respondents belong to the age group of 18-30 years 38 lies in the age group of 31-50 years and 20 of them lie in the age group of 51-65 years
2) OCCUPATION
4238
20
05
1015202530354045
NO
O
F
RE
SP
ON
DE
NT
S
18 to 30 31 to 50 51 to 65
AGE (in year)
AGE WISE CLASSIFICATION
36
a) Serviceb) Businessc) Professiond) Housewifee) Retired
OPTION NO OF RESPONDENTS PERCENTAGE
Service 16 32
Business 14 28
Profession 5 10
Housewife 8 16
Retired 7 14
TOTAL 50 100
INTERPRETATION-The above bar graph reveals that 32 of the total respondents were servicemen 28 of them belonged to the business class 10 were professionals 16 were housewives and 14 of the total respondents fall in the retired category
3) INCOME
32
28
10
16
14
0
5
10
15
20
25
30
35
Service Business Profession Housewife Retired
OCCUPATION
OCCUPATION WISE CLASSIFICATION
37
a) 150000-300000
b) 300000-500000
c) Above 500000
OPTION NO OF RESPONDENTS PERCENTAGE
150000-300000 24 48
300000-500000 14 28
Above 500000 12 24
TOTAL 50 100
INTERPRETATION-The above bar graph reveals that out of the total respondents 48 lie in the income group of 150000-300000 28 of the total respondents belonged to the income group of 300000-500000 and 24 lie in the income group of people earning an income of above Rs 500000pa
4828 24
01020304050
N O
OF
RE
SP
ON
DE
NT
S
150000-300000
300000-500000
ABOVE500000
INCOME (in RS)
INCOME WISE CLASSIFICATION
38
4) FAMILY MEMBERS
a) 2b) 3c) 4d) Above 4
OPTION NO OF RESPONDENT PERCENTAGE
2 11 22
3 9 18
4 24 48
Above 4 6 12
TOTAL 50 100
INTERPRETATION The above bar graph shows that 22 of the total respondents had a family of 2 members 18 of them had 3 family members 48 of them had 4 family members and 12 of them had the no of family members above 4
Q1 Where do you prefer to invest
22 18
48
120
1020304050
No
o
f re
spo
nd
ents
2 3 4 Above 4
No of family members
MEMBER WISE CLASSIFICATION
39
a) fixed deposits
b) stock
c) mutual funds
d) insurance
e) others
Option No of respondents Percentage
Fixed deposits 5 10
Stock 10 20
Mutual fund 10 20
Insurance 18 36
others 7 14
TOTAL 50 100
Interpretation The above pie chart shows that out of 50 respondents 10 preferred to invest in fixed deposits 20 in stocks 20 in mutual funds 36 in insurance and 14 in others like property gold etc
Q2 What are your priorities for investment
40
a) protecting your family against pre-mature death
b) wealth creation
c) retirement needs
d) child education and marriage
e) protect income against disability sickness or critical illness
Option No of respondents Percentage
Protecting your family against pre mature death
10 20
Wealth creation 14 28
Retirement needs 5 10
Child education and marriage 7 14
Protect income against disability sickness or critical illness
14 28
TOTAL 50 100
Interpretation The above pie chart shows that out of 50 respondents 20 of them invest for protecting their family against premature death 28 for creating wealth 10 for meeting their future retirement needs 14 for child education amp marriage and 28 for protection against disability and sickness
Q3 What is your main motive behind investing in life insurance
41
a) tax benefit
b) savings
c) risk cover
Option No of respondents Percentage
Tax benefits 27 54
Savings 5 10
Risk cover 18 36
TOTAL 50 100
Interpretation The above pie chart shows that out of the sample respondents 54 have tax benefit 10 have savings and 36 have risk cover as their main motive for making an investment in life
Q4 What kind of investment do you prefer
42
a) high risk high gain
b) low risk low gain
c) moderate
d) vary times to times
Option No of respondents Percentage
High risk high gain 8 16
Low risk low gain 5 10
Moderate 12 24
Vary times to times 25 50
TOTAL 50 100
Interpretation The above pie chart shows that out of 50 respondents 16 preferred high risk- high gain form of investment 10 preferred low risk- low gain form of investment 24 preferred moderate investment and 50 preferred varied form of investment
43
Q5Are you interested to invest in Traditional Plans
a) YES
b) NO
Option No of respondents Percentage
YES 36 72
NO 14 28
TOTAL 50 100
Interpretation The above pie chart shows that 72 of the respondents preferred to invest in Traditional Plans
44
Q6 What is your level of annual investmenta) below 20000
b) 20000-40000
c) above 40000
Option No of respondents Percentage
Below 20000 41 82
20000-40000 7 14
Above 40000 2 4
TOTAL 50 100
Interpretation The above pie chart shows that 82 of the respondents are willing to invest below Rs 20000 per annum 14 of them want to invest within Rs 20000 per annum to Rs 40000 and 4 wanted to invest over and above Rs 40000
45
Q7 What factors would you consider most important before choosing an insurance policy
a) publicity of the company
b) reputation of the company
c) quality of life advisors
d) after sales-supporting of the company
Option No of respondents Percentage
Publicity of the co 5 20
Reputation of the co 25 50
Quality of life advisors 10 10
After sale-services 10 20
TOTAL 50 100
Interpretation out of the sample respondents 20 considers publicity of the company 50 considers reputation of the company 10 considers quality of life advisors and 20 considers after sales support of the company as the most important factor for choosing an insurance company
46
Q8 Which life insurance company would you prefer the most to invest ina) reliance life insurance (RLIC)
b) Bajaj Allianz life insurance
Option No of respondents Percentage
RLIC 21 42
BAJAJ ALLIANZ 29 58
TOTAL 50 100
Interpretation Out of 50 respondents 42 preferred to invest in reliance life insurance over 58 of the respondents who prefer to invest in Bajaj Allianz life insurance
47
Q9 If reliance life insurance then which particular plan you would like to invest ina) Reliance Term Plan
b) Reliance Whole Life Plan
c) Reliance Endowment Plan
d) Reliance Special Endowment Plan
Option No of respondents Percentage
Reliance term plan 6 2858
Reliance whole life plan 3 1428
Reliance endowment plan 9 4286
Reliance special endowment plan 3 1428
TOTAL 21 100
Interpretation Out of 21 respondents 2858 preferred to invest in term plan 1428 in whole life plan 4286 in endowment plan and 1428 of them preferred to invest in special endowment plan of reliance life insurance
48
Q10 If Bajaj Allianz life insurance then which particular plan you would like to invest in
I ENDOWMENT PLAN a) Bajaj Allianz Invest Gain
b) Bajaj Allianz save Care Economy SP
c) Bajaj Allianz life time care
d) Bajaj Allianz Super Saver plan
II MONEY BACK PLAN i Bajaj Allianz Cash Gain plan
Option No of respondents Percentage
Invest gain plan 3 1035
Save care economy SP 6 2069
Life time care 7 2415
Super saver plan 3 1035
Cash gain plan 10 3446
TOTAL 29 100
Interpretation Out of 29 respondents 1035 of them plan to invest in Bajaj Allianz- Invest Gain 2069 wish to invest in Bajaj Allianz save Care Economy SP 2415 want to invest in Bajaj Allianz life time care 1035 in Bajaj Allianz Super Saver plan and 3446 prefer to invest in Bajaj Allianz Cash Gain plan
49
32) SIGNIFICANCE OF STUDY
Life insurance is one of the most rapidly growing sectors in India The main reason
behind the growth can attributed to the high population density improving economical
condition improving education level and improving awareness Due to these factors there
is still huge scope for growth in this sector Like any other business when the
opportunities are present everybody tends to enter the industries This growth hence
fetches the new competitors as well as new strategies from existing players To sustain in
any competitive industry the organization must adapt to existing strategies and adopt
new ones This study will focus on the analysis of Reliance Life Insurance in comparison
with the present scenario of Bajaj Allianz Life Insurance with respect to the Traditional
Plans of both the companyrsquos This will mainly cover the following aspects
To know about the awareness and popularity of various Traditional Plans offered
by Reliance Life Insurance and Bajaj Allianz Life Insurance
How Reliance Life Insurance can develop and sustain a good distribution
network
These will provide it benefit both in terms of better market coverage as well as better
penetration
50
33) SCOPE OF THE STUDY
1) This helps in finding out vast potential of insurance company
2) The study was conducted in National Capital Region (NCR) only
3) The number of respondents to be surveyed can be improved
4) This study was conducted by comparing the performances amp products of three private
amp government insurance players in insurance industry
5) This study was conducted to analyze the market stand of Reliance life insurance
Company limited and Bajaj Allianz Life Insurance Company Limited of India insurance
companies
6) This study is done to eliminate all the myths which people have in their minds
regarding Insurance Sector
51
34) OBJECTIVES
To have a detailed understanding of Reliance Life Insurance and Bajaj Allianz Life Insurance
To find out various reasons considered while investing in policies
To get knowledge about the market exposure and future prospects about Reliance Life Insurance
To know the perception of the consumers about the life insurance
To analyze the Traditional plans of Reliance Life Insurance and compare it with Bajaj Allianz
To know about the brand awareness of Reliance Life Insurance its customer preferences over Bajaj Allianz in the market
To study a proper knowledge about the life insurance industry
To understand the consumer choice while investing in policies
52
CHAPTER 4
DISCUSSION AND FINDINGS OF THE STUDY
FINDINGS OF THE STUDY RECOMMENDATION AND SUGGESTIONS CONCLUSION LIMITATIONS BIBLIOGRAPHY ANNEXUREQUESTIONNAIRE
53
41) FINDINGS OF THE STUDY
1) The survey reveals that still a large proportion of population is interested to invest in other forms of investment other than insurance as still most of them are unaware about the importance of insurance in their life
2) Basically people make varied form of investment for creating wealth to protect their families against pre-mature death and to protect income against disability sickness or critical illness
3) The main motive of the individuals investing is receives benefits US 1010D People generally consider insurance as a tax saving device
4) Mostly people prefer time to time form of investment as they are not willing to take high degree of risk
5) 72 of the respondents are preferred to invest in Traditional Plans
6) Most of the people prefer to make an annual investment up to a maximum of Rs20 000 per annum
7) When the product is like life insurance reputation of the company publicity of the company amp after sale services of the company matters a lot This means that people would choose that insurance company only where the quality of life advisors is satisfactory
8) Most people prefer to invest in Bajaj Allianz Life Insurance as compared to making an investment in Reliance Life Insurance
9) The most preferable Traditional plan of Reliance Life Insurance is Endowment Plan
10) The most preferable plan of Bajaj Allianz Life Insurance co is Cash Gain Plan
54
42) SUGGESTIONS amp RECOMMENDATIONS
Based on the observations of the study some suggestions for the organization are made as
follows
1) Quality of advisors is also as important as the quantity Thus company should go
mainly for qualified professionals
2) Company should increase its budget on publicity so that awareness can be increased
3) Clarity and transparency should be provided to the customer regarding various
products
4) Training sessions should be planned in advance so that schedule can be provided to
the advisor in advance
5) Apart from the Brand Positioning in urban area a strategy should be adopted by
Reliance to make its brand also near to middle level or high aspirant people because they
are the main source of the business in India
6) Awareness Camp to the sub urban area should be focused by Reliance
7) Some innovative technique or product is required in order to attract the consumer
43) LITERATURE REVIEW
55
1) Robi Elenekave has explained in detail why various retirement plans and pension plans donrsquot give the desired returns The main difficulty is the use of incorrect method for calculations done to find out the return on investment This is primarily due to wrong assumptions The study provides information about the various precautions which need to be considered before planning so that the desired results can be achieved
2) Another paper provides insight about how various financial sectors invest in bond market The study was how the different players investment different instruments according to the risk appetite and desired rate of return The study shows that life insurance sector mainly invests in government bond which are low return and low risk instrument The investment in government bond it shows that life insurance companies are more conservative in investment
3) K Subhash has presented the history of Indiarsquos life insurance industry in three stages before independence after independence and post liberalization which not only provides information but also help in analyzing the impact of these major changes The authors have also discussed the huge potential which exists in the rural India The insurance company must realize the importance of rural sector because the future lies there The author commented about the increasing share of private player in the existing market This confirms the availability of opportunity in this sector The paper also provides the importance of professional and focused approach which was given no importance
4) Tapen Sinha has discussed the various challenges and opportunities in the insurance market One of the very important factors which have been discussed in the study is the importance of developing new and better products As the scenario changes the need of an individual also changes so any organization must understand and fulfill these needs The new product development requires constant research so organization must also focus on it
5) Roger G Ibbotson discusses how financial planners and advisors have recently started to recognize that human capital must be taken into account when building optimal portfolios for individual investors Any investorrsquos human capital has a unique mortality risk However life insurance in its forms can hedge against this mortality risk Thus human capital affects both the optimal asset allocation and the optimal demand for life insurance This paper provides a unified framework based on human capital in order to enable individual investors to make both decisions jointly
6) Rakesh Niraj study tells how the flow of information in any organization is important For any organization to grow the flow of information must be good both upwards as well as ownwards The proper flow of information will also ensure proper flow of good and services from organization to customer and proper flow of information from customer to organization The information from customers will help the organization in providing better goods and services to the customer For the above purpose organization must ensure good channel partner who can provide the organization with correct feedback Hence it becomes very important for any organization to acquire good channel partners
56
7) Stephen P Robbins has discussed how group dynamics works in any organization The success of any organization depends on the success of its various teams and how these teams work together The book provides various techniques which can be used by any organization to get result from the team effort The conflict resolution is a major task in any group Various techniques which the organization can use in conflict resolution are also discussed Another important aspect covered is the importance of leadership in the organization The various forms of leadership have been discussed and the kinds of leadership which can be effective in particular situations are also discussed
8) R Wayne Mondy has discussed the importance of training and development in any organization The training provides skills to perform the current job where as the development involve learning beyond present need The various type of training are discussed which can be used according to the requirement Training and development are not only important for better performance of an individual but it also gives satisfaction The major factors which influence training and development are found to be management support commitment of trainee and trainer complexity of the organization The process of developing good training plans is also provided In another part author has discussed the importance of right man for right job The compensation strategies are also given which are very crucial for ant industry
9) Philip Kotler has discussed the importance of channels partners Better the channel partners better will be the delivery model Detailed discussion about how to design the channel structure so that all the requirements could be fulfilled is provided The various issues faced by the organization while managing the channels are also given When an organization has more than one channel it becomes very important that all the channels should be integrated in such a way that the organization get the best out of all At times due to the conflicting benefit of the different channels the conflict arise so various strategies to manage these issues is also discussed in the chapter
10) Michael J Etzel has written about the marketing of services The marketing of services is different from the goods because of the characteristic of service like intangibility inseparability heterogeneity etc Brief about pricing strategies is also given in case of services The authors have also given the impact of technological development on the services marketing The author has also given the importance of brand and after sales support in case of services as perception of the customers plays an important role In other part of the book the authors has described the importance of distribution channels and designing of the same A channel partner should be consider as partner according to discussion The legal complications associated with channels are also discussed These complications are necessary to take into the consideration while managing the channels The conflicting interest of channels both horizontally and vertically are also taken into the consideration
57
11) Boone has discussed about the importance of personal financial planning The concept of time value of money has also been elaborated The importance of creating and implementing budget is given under money management The other important concepts for financial planning like credit management and understanding taxes are also explained In one section the authors have discussed the importance of investment and what should be the major considerations while making any investment The considerations include the risk associated with the investment return on the investment etc The importance and benefits of life insurance has also been given The discussion also includes various legal aspects associated with life insurance The overview of retirement planning is also given which includes importance and benefit of retirement planning Various tools for proper retirement planning are also discussed
58
44) CONCLUSION
1) The customers are very much sensitive towards their investment They would like to invest only in that insurance company which enjoys good public image along with quality good services
2) The result of the survey conducted shows that Bajaj Allianz Life Insurance is the leader in life insurance industry but Reliance Life Insurance and other private players are giving it a close competition
3) The motive of the people behind investing in life insurance is the tax benefits that they would receive under sec 80C and 1010D
4) In Life Insurance industry the after sales support of the company is as important as the quality of life advisors
59
45) LIMITATIONS
There were some limitations faced during the study as discussed below
Since the study was taken for two months so there was a constraint of time and effort
The study was limited only to some of the Delhi regions so the results may be biased
Questionnaire was given to 125 people however only 50 responded to it which is very small for such type of study
The biasness of consumer or responses error cannot be eliminated
Most of the people are not aware about the Importance and the necessity of insurance in their life
Adverse perception of the people towards insurance sector- People consider insurance as a tax saving device
Lack of awareness about the earning opportunity in the insurance sector
60
46) BIBLIOGRAPHY
wwwreliancelifeinsurancecom
wwwadagroupcom
wwwirdacom
wwwbajajallianzlifeinsurancecom
wwwallianzbajajcom
47) ANNEXURE
61
QUESTIONNAIRE
A comparative analysis of consumer perception regarding Traditional plans of Reliance Life Insurance with that of Bajaj Allianz Life Insurance
NAME ___________________________
PERSONAL DETAILS
1) AGE_________________
1) OCCUPATION______________
2) INCOME___________________
3) FAMILY MEMBERS_________
Q1 Where do you prefer to investa) Fixed deposits b) Stock c) Mutual funds d) Insurance e) Others
Q2 What are your priorities for investmenta) Protecting your family against pre-mature death b) Wealth creation c) Retirement needs d) Child education and marriage e) Protect income against disability sickness or critical illness
Q3 What is your main motive behind investing in life insurancea) Tax benefit b) Savings c) Risk cover
Q4 What kind of investment do you prefera) High risk high gain b) Low risk low gain c) Moderate d) Vary times to times
62
Q5Are you interested to invest in Traditional Plansa) Yes b) No
Q6 What is your level of annual investmenta) below 20000 b) 20000-40000 c) above 40000
Q7 What factors would you consider most important before choosing an insurance company
a) publicity of the company b) reputation of the company c) quality of life advisors d) after sales-supporting of the company
Q8 Which life insurance company would you prefer the most to invest ina) Reliance life insurance b) Bajaj Allianz life insurance
Q9 If reliance life insurance then which particular plan you would like to invest ina) Reliance Term Plan b) Reliance Whole Life Plan c) Reliance Endowment Plan d) Reliance Special Endowment Plan
Q10 If Bajaj Allianz life insurance then which particular plan you would like to invest in
I ENDOWMENT PLAN
a) Bajaj Allianz Invest Gain
b) Bajaj Allianz save Care Economy SP
c) Bajaj Allianz life time care
d) Bajaj Allianz Super Saver plan
II MONEY BACK PLAN
a) Bajaj Allianz Cash Gain plan
63
64
- COMPANY PROFILE
- ABOUT RELIANCE LIFE INSURANCE
- HISTORY
- Reliance Capital Limited announced the launch of its life insurance business on February 1 2006 This was after obtaining the required regulatory approvals from the Registrar Of Companies and the Insurance Regulatory and Development Authority
- It was in August 2005 that the ball was set rolling when Reliance Capital Limited the financial arm of Reliance ndash Anil Dhirubhai Ambani Group (ADAG) ndash announced the requisition of 100 shareholding in AMP Sanmar Life Insurance Company Limited and the formal transfer of shares took place in October 2005 The company will issue all policy contracts under the Reliance Life Insurance Company limited name All the existing policy contracts also stand transferred to the Reliance Life Insurance entity with all the original contractual terms and commitments intact
- CORE VALUES
- Reliance Life Insurance Company Limited has some core values which are listed as follows
- Vision bull To be the first choice insurer for customers bull To be the preferred employer for staff in the insurance industry bull To be the number one insurer for creating shareholder value
- Mission As a responsible customer focused market leader we will strive to understand the insurance needs of the consumers and translate it into affordable products that deliver value for money
- 12) TRADITIONAL PLANS OF THE COMPANY
- 12A )TRADITIONAL PLAN OF RELIANCE LIFE INSURANCE-
- Life insurance products are designed to suit the requirements of customers Fundamentally the product provide for
- In every product to a certain degree risk cover is imperative for it to fall under the category of insurance Based on the coverage of the product the premiums are calculated and the customer pays accordingly In order to suggest the right product it is essential for an agent to understand the requirements of the customer well
- The traditional plans of the company have the following features-
- Fixed Tenure
- Potential for better returns
- Transparency
- Flexibility in investment
- Flexibility to invest more
- Flexibility to skip the premium
- Flexibility to choose the cover
- High liquidity
- Age term and sum assured decide the amount of premium
- Top- ups and switches are not allowed
- Reliance Life Insurance Company Limited has offered 9
- 1) Reliance term plan-
- 2) Reliance Whole Life Plan -
- 3) Reliance Endowment Plan -
- 4) Reliance Special Endowment Plan -
- 13) INDUSTRY PROFILE
- MEANING OF INSURANCE
- Insurance may be described as a social device to reduce or eliminate risk of loss to life and property Insurance is a collective bearing of risk Insurance is a financial device to spread the risks and losses of few people among a large number of people as people prefer small fixed liability instead of big uncertain and changing liability
- Insurance can be defined as a ldquolegal contract between two parties whereby one party called insurer undertakes to pay a fixed amount of money on the happening of a particular event which may be certain or uncertainrdquo The other party called insured pays in exchange a fixed sum known as premium
- Insurance is desired to safeguard oneself and onersquos family against possible losses on account of risks and perils It provides financial compensation for the losses suffered due to the happening of any unforeseen events
- IMPORTANCE OF INSURANCE
- Insurance services play predominant role in the process of financial Intermediary Today insurance industry is one of the most growing sectors in India There is lot of potential in the Indian Insurance Industry
- There are many issues which require study The scope of the study of Insurance industry of India would be very great as there are ongoing Developments in the industry after the opening of the sector
- Right now the insurance industry has great opportunities in a country like India or China which huge population Also the penetration of insurance in India is very low in both life and non-life segment so there is lot potential to be tapped Before starting the discussion on insurance industry and related issues we have to start with the basics of insurance So first we understand what is insurance How the word lsquoinsurancersquo is different from the word lsquoassurancersquo Etc
- HISTORY OF INSURANCE
- The concept of insurance is believed to have emerged almost 4500 years ago in the ancient land of Babylonia where traders used to bear risk of the carvan by giving loans which were later repaid with interest when the goods arrived safely
- The concept of insurance as we know today took shape in 1688 at a place called Lloydrsquos Coffee House in London where risk bearers used to meet to transact business This coffee house became so popular that Lloydrsquos became the one of the first modern insurance companies by the end of the eighteenth century
- Marine insurance companies came into existence by the end of the eighteenth century These companies were empowered to write fire and life insurance as well as marine The Great Fire of London in 1966 caused huge loss of property and life With a view to providing fire insurance facilities
- Dr Nicholas Barbon set up in 1967 the first fire insurance company known as the Fire office
- Life insurance in its modern form came to India from England in 1818 The Oriental Life Insurance Company was the first insurance company to be set up in India to help the widows of European community The insurance companies which came into existence between 1818 and 1869 treated
- Indian lives as subnormal and charged an extra premium of 15 to 20 per cent The first Indian insurance company the Bombay Mutual Life
- Assurance Society came into existence in 1870 to cover Indian lives at normal rates
- The Insurance Act 1938 the first comprehensive legislation governing both life and non-life branches of insurance were enacted to provide strict state control over insurance business This amended insurance Act looked into investments expenditure and management of these companies
- By the mid- 1950s there were 154 Indian insurers 16 foreign insurers and 75 provident societies carrying on life insurance business in India Insurance business flourished and so did scams irregularities and dubious investment practices by scores of companies As a result the government decided to nationalize the life assurance business in India The Life Insurance
- Corporation of India (LIC) was set up in 1956 The nationalization of life insurance was followed by general insurance in 1972
- MEANING OF LIFE INSURANCE
- There are three parties in a life insurance transaction the insurer the insured and the owner of the policy (policyholder) although the owner and the insured are often the same person
- Another important person involved in a life insurance policy is the beneficiary The beneficiary is the person or persons who will receive the policy proceeds upon the death of the insured
- Life insurance may be divided into two basic classes ndash term and permanent
- HISTORY OF LIFE INSURANCE
- Risk protection has been a primary goal of humans and institutions throughout history Protecting against risk is what insurance is all about
- Over 5000 years ago in China insurance was seen as a preventative measure against piracy on the sea Piracy in fact was so prevalent that as a way of spreading the risk a number of ships would carry a portion of another ships cargo so that if one ship was captured the entire shipment would not be lost
- In another part of the world nearly 4500 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
- Life insurance came about a little later in ancient Rome where burial clubs were formed to cover the funeral expenses of its members as well as help survivors monetarily With Romes fall around 450 AD most of the concepts of insurance were abandoned but aspects of it did continue through the Middle Ages particularly with merchant and artisan guilds These provided forms of member insurance covering risks like fire flood theft disability death and even imprisonment
- During the feudal period early forms of insurance ebbed with the decline of travel and long-distance trade But during the 14th to 16th centuries transportation commerce and insurance would again reemerge
- And similar to ancient Rome burial societies were formed in the Buddhist period to help families build houses and to protect widows and children
- Modern Insurance
- Illegal almost everywhere else in Europe life insurance in England was vigorously promoted in the three decades following the Glorious Revolution of 1688 The type of insurance we see today owes its roots to 17th century England Lloyds of London or as they were known then Lloyds Coffee House was the location where merchants ship owners and underwriters met to discuss and transact business deals
- While serving as a means of risk-avoidance life insurance also appealed strongly to the gambling instincts of Englands burgeoning middle class
- Gambling was so rampant in fact that when newspapers published names of prominent people who were seriously ill bets were placed at Lloydrsquos on their anticipated dates of death Reacting against such practices 79 merchant underwriters broke away in 1769 and two years later formed a ldquoNew Lloydrsquos Coffee Houserdquo that became known as the ldquoreal Lloydrsquosrdquo Making wagers on peoples deaths ceased in 1774 when parliament forbade the practice
- Insurance moves to America
- The US insurance industry was built on the British model The year 1735 saw the birth of the first insurance company in the American colonies in
- Charleston SC The Presbyterian Synod of Philadelphia in 1759 sponsored the first life insurance corporation in America for the benefit of ministers and their dependents And the first life insurance policy for the general public in the United States was issued in Philadelphia on May 22 1761
- But it wasnt until 80 years later (after 1840) that life insurance really tookoff in a big way The key to its success was reducing the opposition from religious groups
- In 1835 the infamous New York fire drew peoples 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
- With the creation of the automobile public liability insurance which first made its appearance in the 1880s gained importance and acceptance
- More advancement was made to insurance during the process of industrialization In 1897 the British government passed the Workmens Compensation Act which made it mandatory for a company to insure its employees against industrial accidents
- During 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 most labor 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
- BENEFITS OF LIFE INSURANCE
- 1) Risk cover -Life Insurance contracts allow an individual to have a risk cover against any unfortunate event of the future
- 2) Tax Deduction -Under section 80C of the Income Tax Act of 1961 one can get tax deduction on premiums up to one lakh rupees Life Insurance policies thus decrease the total taxable income of an individual
- 3) Loans -An individual can easily access loans from different financial institutions by pledging his insurance policies
- 4) Retirement Planning -What had provided protection against the financial consequences of premature death may now be used to help them enjoy their retirement years
- 5) Educational Needs -Similar to retirement planning the cash values that flow from ones life insurance schemes can be utilized for educational needs of the insurer or his children
- The Life Insurance Industry has an enviable track record among public sector units It has a Consistent profit and dividend paying record accompanied by a steady growth in its financial resources Through investments in the Government sector and socially- oriented sectors the Industry has contributed immensely to the nations development The industry is recognized as one of the largest financial Institutions in the country The ventures initiated by the industry in the areas of Mutual Fund
- Housing Finance has done exceedingly well in recent years To protect the countrys foreign exchange reserves the reinsurance arrangement are so organized that maximum retention is made possible within the country while at the same time protecting interests of the policy holders
- 22) CURRENT SCENARIO OF RELIANCE LIFE INSURANCE
- RLIC offers wide range of innovative life insurance products targeted at individuals and groups It offers need based products that caters to four distinct segments namely protection child retirement and investment plans RLIC is committed to emerge as a transnational Life Insurer of global scale and standard
- CH - 3) RESEARCH METHODOLOGY
- RESEARCH DESIGN-
- SAMPLING TECHNIQUES-
- THE PRIMARY OBJECTIVEOF THE STUDY-
- 34) OBJECTIVES
- 7) Some innovative technique or product is required in order to attract the consumer
- 45) LIMITATIONS
- 46) BIBLIOGRAPHY
-
RESEARCH DESIGN-
COMPARITIVE STUDY- A comparative study has been undertaken to compare the traditional Plans of Reliance Life Insurance with that of Bajaj Allianz life insurance
DATA TYPE
INTRODUCTION - Any organization whether big or small private or public needs different type of information to know its popularity I have gathered secondary data and primary data and collected information from the combination of these two data
PRIMARY DATA - Primary data collection method was decided for observing working of the company and approaching the customers directly face to face A great care was taken while collecting the primary data to answer that it is relevant accurate current and unbiased
SECONDARY DATA - Secondary data collection method was used by referring to various websites books and newspapers for collecting information regarding the project under study Secondary data consist of the information that already exists somewhere else for some another purpose
SAMPLING TECHNIQUES-
SAMPLE SIZE- A sample size of 50 was taken to be analyzed
SAMPLE LOCATION-Various sectors of Kamla Nagar Civil lines Mukherji Nagar Model Town and selected areas of Delhi
SAMPLING PROCESS - Convenient sampling was used to overcome the time and money constraints that could have been faced by us while collecting the data The customers were contacted face to face directly and also by way of telephonic conversation with them
ANALYTICAL TOOLS - The data collected were arranged accordingly and statistical tools like bar graphs and pie-charts were used to analyze and present the data
RESEARCH INSTRUMENT USED-
34
SAMPLING MEDIA - Printed questionnaires consisting several questions were asked to have an idea of customers view about Reliance Life Insurance plans followed by personal questions
FIELD WORK - Rigorous field work was undertaken to locate the interested and potential respondents to fulfill the objectives of the study
THE PRIMARY OBJECTIVEOF THE STUDY -
The primary objective of the research study is to have a detailed analysis of Reliance Life Insurance bringing in focus the future prospects of the (Anil Dhirubhai Ambani group) with relevance to the customer perception regarding the various plans and products offered by Reliance Life Insurance
31) DATA ANALYSIS AND INTERPRETATION
35
PERSONAL DETAILS
1) AGE a) 18-30b) 31-50c) 51-65
AGE NO OF RESPONDENTS PERCENTAGE
18-30 21 42
31-50 19 38
51-65 10 20
TOTAL 50 100
INTERPRETATION-The bar graph reveals that 42 of the respondents belong to the age group of 18-30 years 38 lies in the age group of 31-50 years and 20 of them lie in the age group of 51-65 years
2) OCCUPATION
4238
20
05
1015202530354045
NO
O
F
RE
SP
ON
DE
NT
S
18 to 30 31 to 50 51 to 65
AGE (in year)
AGE WISE CLASSIFICATION
36
a) Serviceb) Businessc) Professiond) Housewifee) Retired
OPTION NO OF RESPONDENTS PERCENTAGE
Service 16 32
Business 14 28
Profession 5 10
Housewife 8 16
Retired 7 14
TOTAL 50 100
INTERPRETATION-The above bar graph reveals that 32 of the total respondents were servicemen 28 of them belonged to the business class 10 were professionals 16 were housewives and 14 of the total respondents fall in the retired category
3) INCOME
32
28
10
16
14
0
5
10
15
20
25
30
35
Service Business Profession Housewife Retired
OCCUPATION
OCCUPATION WISE CLASSIFICATION
37
a) 150000-300000
b) 300000-500000
c) Above 500000
OPTION NO OF RESPONDENTS PERCENTAGE
150000-300000 24 48
300000-500000 14 28
Above 500000 12 24
TOTAL 50 100
INTERPRETATION-The above bar graph reveals that out of the total respondents 48 lie in the income group of 150000-300000 28 of the total respondents belonged to the income group of 300000-500000 and 24 lie in the income group of people earning an income of above Rs 500000pa
4828 24
01020304050
N O
OF
RE
SP
ON
DE
NT
S
150000-300000
300000-500000
ABOVE500000
INCOME (in RS)
INCOME WISE CLASSIFICATION
38
4) FAMILY MEMBERS
a) 2b) 3c) 4d) Above 4
OPTION NO OF RESPONDENT PERCENTAGE
2 11 22
3 9 18
4 24 48
Above 4 6 12
TOTAL 50 100
INTERPRETATION The above bar graph shows that 22 of the total respondents had a family of 2 members 18 of them had 3 family members 48 of them had 4 family members and 12 of them had the no of family members above 4
Q1 Where do you prefer to invest
22 18
48
120
1020304050
No
o
f re
spo
nd
ents
2 3 4 Above 4
No of family members
MEMBER WISE CLASSIFICATION
39
a) fixed deposits
b) stock
c) mutual funds
d) insurance
e) others
Option No of respondents Percentage
Fixed deposits 5 10
Stock 10 20
Mutual fund 10 20
Insurance 18 36
others 7 14
TOTAL 50 100
Interpretation The above pie chart shows that out of 50 respondents 10 preferred to invest in fixed deposits 20 in stocks 20 in mutual funds 36 in insurance and 14 in others like property gold etc
Q2 What are your priorities for investment
40
a) protecting your family against pre-mature death
b) wealth creation
c) retirement needs
d) child education and marriage
e) protect income against disability sickness or critical illness
Option No of respondents Percentage
Protecting your family against pre mature death
10 20
Wealth creation 14 28
Retirement needs 5 10
Child education and marriage 7 14
Protect income against disability sickness or critical illness
14 28
TOTAL 50 100
Interpretation The above pie chart shows that out of 50 respondents 20 of them invest for protecting their family against premature death 28 for creating wealth 10 for meeting their future retirement needs 14 for child education amp marriage and 28 for protection against disability and sickness
Q3 What is your main motive behind investing in life insurance
41
a) tax benefit
b) savings
c) risk cover
Option No of respondents Percentage
Tax benefits 27 54
Savings 5 10
Risk cover 18 36
TOTAL 50 100
Interpretation The above pie chart shows that out of the sample respondents 54 have tax benefit 10 have savings and 36 have risk cover as their main motive for making an investment in life
Q4 What kind of investment do you prefer
42
a) high risk high gain
b) low risk low gain
c) moderate
d) vary times to times
Option No of respondents Percentage
High risk high gain 8 16
Low risk low gain 5 10
Moderate 12 24
Vary times to times 25 50
TOTAL 50 100
Interpretation The above pie chart shows that out of 50 respondents 16 preferred high risk- high gain form of investment 10 preferred low risk- low gain form of investment 24 preferred moderate investment and 50 preferred varied form of investment
43
Q5Are you interested to invest in Traditional Plans
a) YES
b) NO
Option No of respondents Percentage
YES 36 72
NO 14 28
TOTAL 50 100
Interpretation The above pie chart shows that 72 of the respondents preferred to invest in Traditional Plans
44
Q6 What is your level of annual investmenta) below 20000
b) 20000-40000
c) above 40000
Option No of respondents Percentage
Below 20000 41 82
20000-40000 7 14
Above 40000 2 4
TOTAL 50 100
Interpretation The above pie chart shows that 82 of the respondents are willing to invest below Rs 20000 per annum 14 of them want to invest within Rs 20000 per annum to Rs 40000 and 4 wanted to invest over and above Rs 40000
45
Q7 What factors would you consider most important before choosing an insurance policy
a) publicity of the company
b) reputation of the company
c) quality of life advisors
d) after sales-supporting of the company
Option No of respondents Percentage
Publicity of the co 5 20
Reputation of the co 25 50
Quality of life advisors 10 10
After sale-services 10 20
TOTAL 50 100
Interpretation out of the sample respondents 20 considers publicity of the company 50 considers reputation of the company 10 considers quality of life advisors and 20 considers after sales support of the company as the most important factor for choosing an insurance company
46
Q8 Which life insurance company would you prefer the most to invest ina) reliance life insurance (RLIC)
b) Bajaj Allianz life insurance
Option No of respondents Percentage
RLIC 21 42
BAJAJ ALLIANZ 29 58
TOTAL 50 100
Interpretation Out of 50 respondents 42 preferred to invest in reliance life insurance over 58 of the respondents who prefer to invest in Bajaj Allianz life insurance
47
Q9 If reliance life insurance then which particular plan you would like to invest ina) Reliance Term Plan
b) Reliance Whole Life Plan
c) Reliance Endowment Plan
d) Reliance Special Endowment Plan
Option No of respondents Percentage
Reliance term plan 6 2858
Reliance whole life plan 3 1428
Reliance endowment plan 9 4286
Reliance special endowment plan 3 1428
TOTAL 21 100
Interpretation Out of 21 respondents 2858 preferred to invest in term plan 1428 in whole life plan 4286 in endowment plan and 1428 of them preferred to invest in special endowment plan of reliance life insurance
48
Q10 If Bajaj Allianz life insurance then which particular plan you would like to invest in
I ENDOWMENT PLAN a) Bajaj Allianz Invest Gain
b) Bajaj Allianz save Care Economy SP
c) Bajaj Allianz life time care
d) Bajaj Allianz Super Saver plan
II MONEY BACK PLAN i Bajaj Allianz Cash Gain plan
Option No of respondents Percentage
Invest gain plan 3 1035
Save care economy SP 6 2069
Life time care 7 2415
Super saver plan 3 1035
Cash gain plan 10 3446
TOTAL 29 100
Interpretation Out of 29 respondents 1035 of them plan to invest in Bajaj Allianz- Invest Gain 2069 wish to invest in Bajaj Allianz save Care Economy SP 2415 want to invest in Bajaj Allianz life time care 1035 in Bajaj Allianz Super Saver plan and 3446 prefer to invest in Bajaj Allianz Cash Gain plan
49
32) SIGNIFICANCE OF STUDY
Life insurance is one of the most rapidly growing sectors in India The main reason
behind the growth can attributed to the high population density improving economical
condition improving education level and improving awareness Due to these factors there
is still huge scope for growth in this sector Like any other business when the
opportunities are present everybody tends to enter the industries This growth hence
fetches the new competitors as well as new strategies from existing players To sustain in
any competitive industry the organization must adapt to existing strategies and adopt
new ones This study will focus on the analysis of Reliance Life Insurance in comparison
with the present scenario of Bajaj Allianz Life Insurance with respect to the Traditional
Plans of both the companyrsquos This will mainly cover the following aspects
To know about the awareness and popularity of various Traditional Plans offered
by Reliance Life Insurance and Bajaj Allianz Life Insurance
How Reliance Life Insurance can develop and sustain a good distribution
network
These will provide it benefit both in terms of better market coverage as well as better
penetration
50
33) SCOPE OF THE STUDY
1) This helps in finding out vast potential of insurance company
2) The study was conducted in National Capital Region (NCR) only
3) The number of respondents to be surveyed can be improved
4) This study was conducted by comparing the performances amp products of three private
amp government insurance players in insurance industry
5) This study was conducted to analyze the market stand of Reliance life insurance
Company limited and Bajaj Allianz Life Insurance Company Limited of India insurance
companies
6) This study is done to eliminate all the myths which people have in their minds
regarding Insurance Sector
51
34) OBJECTIVES
To have a detailed understanding of Reliance Life Insurance and Bajaj Allianz Life Insurance
To find out various reasons considered while investing in policies
To get knowledge about the market exposure and future prospects about Reliance Life Insurance
To know the perception of the consumers about the life insurance
To analyze the Traditional plans of Reliance Life Insurance and compare it with Bajaj Allianz
To know about the brand awareness of Reliance Life Insurance its customer preferences over Bajaj Allianz in the market
To study a proper knowledge about the life insurance industry
To understand the consumer choice while investing in policies
52
CHAPTER 4
DISCUSSION AND FINDINGS OF THE STUDY
FINDINGS OF THE STUDY RECOMMENDATION AND SUGGESTIONS CONCLUSION LIMITATIONS BIBLIOGRAPHY ANNEXUREQUESTIONNAIRE
53
41) FINDINGS OF THE STUDY
1) The survey reveals that still a large proportion of population is interested to invest in other forms of investment other than insurance as still most of them are unaware about the importance of insurance in their life
2) Basically people make varied form of investment for creating wealth to protect their families against pre-mature death and to protect income against disability sickness or critical illness
3) The main motive of the individuals investing is receives benefits US 1010D People generally consider insurance as a tax saving device
4) Mostly people prefer time to time form of investment as they are not willing to take high degree of risk
5) 72 of the respondents are preferred to invest in Traditional Plans
6) Most of the people prefer to make an annual investment up to a maximum of Rs20 000 per annum
7) When the product is like life insurance reputation of the company publicity of the company amp after sale services of the company matters a lot This means that people would choose that insurance company only where the quality of life advisors is satisfactory
8) Most people prefer to invest in Bajaj Allianz Life Insurance as compared to making an investment in Reliance Life Insurance
9) The most preferable Traditional plan of Reliance Life Insurance is Endowment Plan
10) The most preferable plan of Bajaj Allianz Life Insurance co is Cash Gain Plan
54
42) SUGGESTIONS amp RECOMMENDATIONS
Based on the observations of the study some suggestions for the organization are made as
follows
1) Quality of advisors is also as important as the quantity Thus company should go
mainly for qualified professionals
2) Company should increase its budget on publicity so that awareness can be increased
3) Clarity and transparency should be provided to the customer regarding various
products
4) Training sessions should be planned in advance so that schedule can be provided to
the advisor in advance
5) Apart from the Brand Positioning in urban area a strategy should be adopted by
Reliance to make its brand also near to middle level or high aspirant people because they
are the main source of the business in India
6) Awareness Camp to the sub urban area should be focused by Reliance
7) Some innovative technique or product is required in order to attract the consumer
43) LITERATURE REVIEW
55
1) Robi Elenekave has explained in detail why various retirement plans and pension plans donrsquot give the desired returns The main difficulty is the use of incorrect method for calculations done to find out the return on investment This is primarily due to wrong assumptions The study provides information about the various precautions which need to be considered before planning so that the desired results can be achieved
2) Another paper provides insight about how various financial sectors invest in bond market The study was how the different players investment different instruments according to the risk appetite and desired rate of return The study shows that life insurance sector mainly invests in government bond which are low return and low risk instrument The investment in government bond it shows that life insurance companies are more conservative in investment
3) K Subhash has presented the history of Indiarsquos life insurance industry in three stages before independence after independence and post liberalization which not only provides information but also help in analyzing the impact of these major changes The authors have also discussed the huge potential which exists in the rural India The insurance company must realize the importance of rural sector because the future lies there The author commented about the increasing share of private player in the existing market This confirms the availability of opportunity in this sector The paper also provides the importance of professional and focused approach which was given no importance
4) Tapen Sinha has discussed the various challenges and opportunities in the insurance market One of the very important factors which have been discussed in the study is the importance of developing new and better products As the scenario changes the need of an individual also changes so any organization must understand and fulfill these needs The new product development requires constant research so organization must also focus on it
5) Roger G Ibbotson discusses how financial planners and advisors have recently started to recognize that human capital must be taken into account when building optimal portfolios for individual investors Any investorrsquos human capital has a unique mortality risk However life insurance in its forms can hedge against this mortality risk Thus human capital affects both the optimal asset allocation and the optimal demand for life insurance This paper provides a unified framework based on human capital in order to enable individual investors to make both decisions jointly
6) Rakesh Niraj study tells how the flow of information in any organization is important For any organization to grow the flow of information must be good both upwards as well as ownwards The proper flow of information will also ensure proper flow of good and services from organization to customer and proper flow of information from customer to organization The information from customers will help the organization in providing better goods and services to the customer For the above purpose organization must ensure good channel partner who can provide the organization with correct feedback Hence it becomes very important for any organization to acquire good channel partners
56
7) Stephen P Robbins has discussed how group dynamics works in any organization The success of any organization depends on the success of its various teams and how these teams work together The book provides various techniques which can be used by any organization to get result from the team effort The conflict resolution is a major task in any group Various techniques which the organization can use in conflict resolution are also discussed Another important aspect covered is the importance of leadership in the organization The various forms of leadership have been discussed and the kinds of leadership which can be effective in particular situations are also discussed
8) R Wayne Mondy has discussed the importance of training and development in any organization The training provides skills to perform the current job where as the development involve learning beyond present need The various type of training are discussed which can be used according to the requirement Training and development are not only important for better performance of an individual but it also gives satisfaction The major factors which influence training and development are found to be management support commitment of trainee and trainer complexity of the organization The process of developing good training plans is also provided In another part author has discussed the importance of right man for right job The compensation strategies are also given which are very crucial for ant industry
9) Philip Kotler has discussed the importance of channels partners Better the channel partners better will be the delivery model Detailed discussion about how to design the channel structure so that all the requirements could be fulfilled is provided The various issues faced by the organization while managing the channels are also given When an organization has more than one channel it becomes very important that all the channels should be integrated in such a way that the organization get the best out of all At times due to the conflicting benefit of the different channels the conflict arise so various strategies to manage these issues is also discussed in the chapter
10) Michael J Etzel has written about the marketing of services The marketing of services is different from the goods because of the characteristic of service like intangibility inseparability heterogeneity etc Brief about pricing strategies is also given in case of services The authors have also given the impact of technological development on the services marketing The author has also given the importance of brand and after sales support in case of services as perception of the customers plays an important role In other part of the book the authors has described the importance of distribution channels and designing of the same A channel partner should be consider as partner according to discussion The legal complications associated with channels are also discussed These complications are necessary to take into the consideration while managing the channels The conflicting interest of channels both horizontally and vertically are also taken into the consideration
57
11) Boone has discussed about the importance of personal financial planning The concept of time value of money has also been elaborated The importance of creating and implementing budget is given under money management The other important concepts for financial planning like credit management and understanding taxes are also explained In one section the authors have discussed the importance of investment and what should be the major considerations while making any investment The considerations include the risk associated with the investment return on the investment etc The importance and benefits of life insurance has also been given The discussion also includes various legal aspects associated with life insurance The overview of retirement planning is also given which includes importance and benefit of retirement planning Various tools for proper retirement planning are also discussed
58
44) CONCLUSION
1) The customers are very much sensitive towards their investment They would like to invest only in that insurance company which enjoys good public image along with quality good services
2) The result of the survey conducted shows that Bajaj Allianz Life Insurance is the leader in life insurance industry but Reliance Life Insurance and other private players are giving it a close competition
3) The motive of the people behind investing in life insurance is the tax benefits that they would receive under sec 80C and 1010D
4) In Life Insurance industry the after sales support of the company is as important as the quality of life advisors
59
45) LIMITATIONS
There were some limitations faced during the study as discussed below
Since the study was taken for two months so there was a constraint of time and effort
The study was limited only to some of the Delhi regions so the results may be biased
Questionnaire was given to 125 people however only 50 responded to it which is very small for such type of study
The biasness of consumer or responses error cannot be eliminated
Most of the people are not aware about the Importance and the necessity of insurance in their life
Adverse perception of the people towards insurance sector- People consider insurance as a tax saving device
Lack of awareness about the earning opportunity in the insurance sector
60
46) BIBLIOGRAPHY
wwwreliancelifeinsurancecom
wwwadagroupcom
wwwirdacom
wwwbajajallianzlifeinsurancecom
wwwallianzbajajcom
47) ANNEXURE
61
QUESTIONNAIRE
A comparative analysis of consumer perception regarding Traditional plans of Reliance Life Insurance with that of Bajaj Allianz Life Insurance
NAME ___________________________
PERSONAL DETAILS
1) AGE_________________
1) OCCUPATION______________
2) INCOME___________________
3) FAMILY MEMBERS_________
Q1 Where do you prefer to investa) Fixed deposits b) Stock c) Mutual funds d) Insurance e) Others
Q2 What are your priorities for investmenta) Protecting your family against pre-mature death b) Wealth creation c) Retirement needs d) Child education and marriage e) Protect income against disability sickness or critical illness
Q3 What is your main motive behind investing in life insurancea) Tax benefit b) Savings c) Risk cover
Q4 What kind of investment do you prefera) High risk high gain b) Low risk low gain c) Moderate d) Vary times to times
62
Q5Are you interested to invest in Traditional Plansa) Yes b) No
Q6 What is your level of annual investmenta) below 20000 b) 20000-40000 c) above 40000
Q7 What factors would you consider most important before choosing an insurance company
a) publicity of the company b) reputation of the company c) quality of life advisors d) after sales-supporting of the company
Q8 Which life insurance company would you prefer the most to invest ina) Reliance life insurance b) Bajaj Allianz life insurance
Q9 If reliance life insurance then which particular plan you would like to invest ina) Reliance Term Plan b) Reliance Whole Life Plan c) Reliance Endowment Plan d) Reliance Special Endowment Plan
Q10 If Bajaj Allianz life insurance then which particular plan you would like to invest in
I ENDOWMENT PLAN
a) Bajaj Allianz Invest Gain
b) Bajaj Allianz save Care Economy SP
c) Bajaj Allianz life time care
d) Bajaj Allianz Super Saver plan
II MONEY BACK PLAN
a) Bajaj Allianz Cash Gain plan
63
64
- COMPANY PROFILE
- ABOUT RELIANCE LIFE INSURANCE
- HISTORY
- Reliance Capital Limited announced the launch of its life insurance business on February 1 2006 This was after obtaining the required regulatory approvals from the Registrar Of Companies and the Insurance Regulatory and Development Authority
- It was in August 2005 that the ball was set rolling when Reliance Capital Limited the financial arm of Reliance ndash Anil Dhirubhai Ambani Group (ADAG) ndash announced the requisition of 100 shareholding in AMP Sanmar Life Insurance Company Limited and the formal transfer of shares took place in October 2005 The company will issue all policy contracts under the Reliance Life Insurance Company limited name All the existing policy contracts also stand transferred to the Reliance Life Insurance entity with all the original contractual terms and commitments intact
- CORE VALUES
- Reliance Life Insurance Company Limited has some core values which are listed as follows
- Vision bull To be the first choice insurer for customers bull To be the preferred employer for staff in the insurance industry bull To be the number one insurer for creating shareholder value
- Mission As a responsible customer focused market leader we will strive to understand the insurance needs of the consumers and translate it into affordable products that deliver value for money
- 12) TRADITIONAL PLANS OF THE COMPANY
- 12A )TRADITIONAL PLAN OF RELIANCE LIFE INSURANCE-
- Life insurance products are designed to suit the requirements of customers Fundamentally the product provide for
- In every product to a certain degree risk cover is imperative for it to fall under the category of insurance Based on the coverage of the product the premiums are calculated and the customer pays accordingly In order to suggest the right product it is essential for an agent to understand the requirements of the customer well
- The traditional plans of the company have the following features-
- Fixed Tenure
- Potential for better returns
- Transparency
- Flexibility in investment
- Flexibility to invest more
- Flexibility to skip the premium
- Flexibility to choose the cover
- High liquidity
- Age term and sum assured decide the amount of premium
- Top- ups and switches are not allowed
- Reliance Life Insurance Company Limited has offered 9
- 1) Reliance term plan-
- 2) Reliance Whole Life Plan -
- 3) Reliance Endowment Plan -
- 4) Reliance Special Endowment Plan -
- 13) INDUSTRY PROFILE
- MEANING OF INSURANCE
- Insurance may be described as a social device to reduce or eliminate risk of loss to life and property Insurance is a collective bearing of risk Insurance is a financial device to spread the risks and losses of few people among a large number of people as people prefer small fixed liability instead of big uncertain and changing liability
- Insurance can be defined as a ldquolegal contract between two parties whereby one party called insurer undertakes to pay a fixed amount of money on the happening of a particular event which may be certain or uncertainrdquo The other party called insured pays in exchange a fixed sum known as premium
- Insurance is desired to safeguard oneself and onersquos family against possible losses on account of risks and perils It provides financial compensation for the losses suffered due to the happening of any unforeseen events
- IMPORTANCE OF INSURANCE
- Insurance services play predominant role in the process of financial Intermediary Today insurance industry is one of the most growing sectors in India There is lot of potential in the Indian Insurance Industry
- There are many issues which require study The scope of the study of Insurance industry of India would be very great as there are ongoing Developments in the industry after the opening of the sector
- Right now the insurance industry has great opportunities in a country like India or China which huge population Also the penetration of insurance in India is very low in both life and non-life segment so there is lot potential to be tapped Before starting the discussion on insurance industry and related issues we have to start with the basics of insurance So first we understand what is insurance How the word lsquoinsurancersquo is different from the word lsquoassurancersquo Etc
- HISTORY OF INSURANCE
- The concept of insurance is believed to have emerged almost 4500 years ago in the ancient land of Babylonia where traders used to bear risk of the carvan by giving loans which were later repaid with interest when the goods arrived safely
- The concept of insurance as we know today took shape in 1688 at a place called Lloydrsquos Coffee House in London where risk bearers used to meet to transact business This coffee house became so popular that Lloydrsquos became the one of the first modern insurance companies by the end of the eighteenth century
- Marine insurance companies came into existence by the end of the eighteenth century These companies were empowered to write fire and life insurance as well as marine The Great Fire of London in 1966 caused huge loss of property and life With a view to providing fire insurance facilities
- Dr Nicholas Barbon set up in 1967 the first fire insurance company known as the Fire office
- Life insurance in its modern form came to India from England in 1818 The Oriental Life Insurance Company was the first insurance company to be set up in India to help the widows of European community The insurance companies which came into existence between 1818 and 1869 treated
- Indian lives as subnormal and charged an extra premium of 15 to 20 per cent The first Indian insurance company the Bombay Mutual Life
- Assurance Society came into existence in 1870 to cover Indian lives at normal rates
- The Insurance Act 1938 the first comprehensive legislation governing both life and non-life branches of insurance were enacted to provide strict state control over insurance business This amended insurance Act looked into investments expenditure and management of these companies
- By the mid- 1950s there were 154 Indian insurers 16 foreign insurers and 75 provident societies carrying on life insurance business in India Insurance business flourished and so did scams irregularities and dubious investment practices by scores of companies As a result the government decided to nationalize the life assurance business in India The Life Insurance
- Corporation of India (LIC) was set up in 1956 The nationalization of life insurance was followed by general insurance in 1972
- MEANING OF LIFE INSURANCE
- There are three parties in a life insurance transaction the insurer the insured and the owner of the policy (policyholder) although the owner and the insured are often the same person
- Another important person involved in a life insurance policy is the beneficiary The beneficiary is the person or persons who will receive the policy proceeds upon the death of the insured
- Life insurance may be divided into two basic classes ndash term and permanent
- HISTORY OF LIFE INSURANCE
- Risk protection has been a primary goal of humans and institutions throughout history Protecting against risk is what insurance is all about
- Over 5000 years ago in China insurance was seen as a preventative measure against piracy on the sea Piracy in fact was so prevalent that as a way of spreading the risk a number of ships would carry a portion of another ships cargo so that if one ship was captured the entire shipment would not be lost
- In another part of the world nearly 4500 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
- Life insurance came about a little later in ancient Rome where burial clubs were formed to cover the funeral expenses of its members as well as help survivors monetarily With Romes fall around 450 AD most of the concepts of insurance were abandoned but aspects of it did continue through the Middle Ages particularly with merchant and artisan guilds These provided forms of member insurance covering risks like fire flood theft disability death and even imprisonment
- During the feudal period early forms of insurance ebbed with the decline of travel and long-distance trade But during the 14th to 16th centuries transportation commerce and insurance would again reemerge
- And similar to ancient Rome burial societies were formed in the Buddhist period to help families build houses and to protect widows and children
- Modern Insurance
- Illegal almost everywhere else in Europe life insurance in England was vigorously promoted in the three decades following the Glorious Revolution of 1688 The type of insurance we see today owes its roots to 17th century England Lloyds of London or as they were known then Lloyds Coffee House was the location where merchants ship owners and underwriters met to discuss and transact business deals
- While serving as a means of risk-avoidance life insurance also appealed strongly to the gambling instincts of Englands burgeoning middle class
- Gambling was so rampant in fact that when newspapers published names of prominent people who were seriously ill bets were placed at Lloydrsquos on their anticipated dates of death Reacting against such practices 79 merchant underwriters broke away in 1769 and two years later formed a ldquoNew Lloydrsquos Coffee Houserdquo that became known as the ldquoreal Lloydrsquosrdquo Making wagers on peoples deaths ceased in 1774 when parliament forbade the practice
- Insurance moves to America
- The US insurance industry was built on the British model The year 1735 saw the birth of the first insurance company in the American colonies in
- Charleston SC The Presbyterian Synod of Philadelphia in 1759 sponsored the first life insurance corporation in America for the benefit of ministers and their dependents And the first life insurance policy for the general public in the United States was issued in Philadelphia on May 22 1761
- But it wasnt until 80 years later (after 1840) that life insurance really tookoff in a big way The key to its success was reducing the opposition from religious groups
- In 1835 the infamous New York fire drew peoples 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
- With the creation of the automobile public liability insurance which first made its appearance in the 1880s gained importance and acceptance
- More advancement was made to insurance during the process of industrialization In 1897 the British government passed the Workmens Compensation Act which made it mandatory for a company to insure its employees against industrial accidents
- During 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 most labor 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
- BENEFITS OF LIFE INSURANCE
- 1) Risk cover -Life Insurance contracts allow an individual to have a risk cover against any unfortunate event of the future
- 2) Tax Deduction -Under section 80C of the Income Tax Act of 1961 one can get tax deduction on premiums up to one lakh rupees Life Insurance policies thus decrease the total taxable income of an individual
- 3) Loans -An individual can easily access loans from different financial institutions by pledging his insurance policies
- 4) Retirement Planning -What had provided protection against the financial consequences of premature death may now be used to help them enjoy their retirement years
- 5) Educational Needs -Similar to retirement planning the cash values that flow from ones life insurance schemes can be utilized for educational needs of the insurer or his children
- The Life Insurance Industry has an enviable track record among public sector units It has a Consistent profit and dividend paying record accompanied by a steady growth in its financial resources Through investments in the Government sector and socially- oriented sectors the Industry has contributed immensely to the nations development The industry is recognized as one of the largest financial Institutions in the country The ventures initiated by the industry in the areas of Mutual Fund
- Housing Finance has done exceedingly well in recent years To protect the countrys foreign exchange reserves the reinsurance arrangement are so organized that maximum retention is made possible within the country while at the same time protecting interests of the policy holders
- 22) CURRENT SCENARIO OF RELIANCE LIFE INSURANCE
- RLIC offers wide range of innovative life insurance products targeted at individuals and groups It offers need based products that caters to four distinct segments namely protection child retirement and investment plans RLIC is committed to emerge as a transnational Life Insurer of global scale and standard
- CH - 3) RESEARCH METHODOLOGY
- RESEARCH DESIGN-
- SAMPLING TECHNIQUES-
- THE PRIMARY OBJECTIVEOF THE STUDY-
- 34) OBJECTIVES
- 7) Some innovative technique or product is required in order to attract the consumer
- 45) LIMITATIONS
- 46) BIBLIOGRAPHY
-
SAMPLING MEDIA - Printed questionnaires consisting several questions were asked to have an idea of customers view about Reliance Life Insurance plans followed by personal questions
FIELD WORK - Rigorous field work was undertaken to locate the interested and potential respondents to fulfill the objectives of the study
THE PRIMARY OBJECTIVEOF THE STUDY -
The primary objective of the research study is to have a detailed analysis of Reliance Life Insurance bringing in focus the future prospects of the (Anil Dhirubhai Ambani group) with relevance to the customer perception regarding the various plans and products offered by Reliance Life Insurance
31) DATA ANALYSIS AND INTERPRETATION
35
PERSONAL DETAILS
1) AGE a) 18-30b) 31-50c) 51-65
AGE NO OF RESPONDENTS PERCENTAGE
18-30 21 42
31-50 19 38
51-65 10 20
TOTAL 50 100
INTERPRETATION-The bar graph reveals that 42 of the respondents belong to the age group of 18-30 years 38 lies in the age group of 31-50 years and 20 of them lie in the age group of 51-65 years
2) OCCUPATION
4238
20
05
1015202530354045
NO
O
F
RE
SP
ON
DE
NT
S
18 to 30 31 to 50 51 to 65
AGE (in year)
AGE WISE CLASSIFICATION
36
a) Serviceb) Businessc) Professiond) Housewifee) Retired
OPTION NO OF RESPONDENTS PERCENTAGE
Service 16 32
Business 14 28
Profession 5 10
Housewife 8 16
Retired 7 14
TOTAL 50 100
INTERPRETATION-The above bar graph reveals that 32 of the total respondents were servicemen 28 of them belonged to the business class 10 were professionals 16 were housewives and 14 of the total respondents fall in the retired category
3) INCOME
32
28
10
16
14
0
5
10
15
20
25
30
35
Service Business Profession Housewife Retired
OCCUPATION
OCCUPATION WISE CLASSIFICATION
37
a) 150000-300000
b) 300000-500000
c) Above 500000
OPTION NO OF RESPONDENTS PERCENTAGE
150000-300000 24 48
300000-500000 14 28
Above 500000 12 24
TOTAL 50 100
INTERPRETATION-The above bar graph reveals that out of the total respondents 48 lie in the income group of 150000-300000 28 of the total respondents belonged to the income group of 300000-500000 and 24 lie in the income group of people earning an income of above Rs 500000pa
4828 24
01020304050
N O
OF
RE
SP
ON
DE
NT
S
150000-300000
300000-500000
ABOVE500000
INCOME (in RS)
INCOME WISE CLASSIFICATION
38
4) FAMILY MEMBERS
a) 2b) 3c) 4d) Above 4
OPTION NO OF RESPONDENT PERCENTAGE
2 11 22
3 9 18
4 24 48
Above 4 6 12
TOTAL 50 100
INTERPRETATION The above bar graph shows that 22 of the total respondents had a family of 2 members 18 of them had 3 family members 48 of them had 4 family members and 12 of them had the no of family members above 4
Q1 Where do you prefer to invest
22 18
48
120
1020304050
No
o
f re
spo
nd
ents
2 3 4 Above 4
No of family members
MEMBER WISE CLASSIFICATION
39
a) fixed deposits
b) stock
c) mutual funds
d) insurance
e) others
Option No of respondents Percentage
Fixed deposits 5 10
Stock 10 20
Mutual fund 10 20
Insurance 18 36
others 7 14
TOTAL 50 100
Interpretation The above pie chart shows that out of 50 respondents 10 preferred to invest in fixed deposits 20 in stocks 20 in mutual funds 36 in insurance and 14 in others like property gold etc
Q2 What are your priorities for investment
40
a) protecting your family against pre-mature death
b) wealth creation
c) retirement needs
d) child education and marriage
e) protect income against disability sickness or critical illness
Option No of respondents Percentage
Protecting your family against pre mature death
10 20
Wealth creation 14 28
Retirement needs 5 10
Child education and marriage 7 14
Protect income against disability sickness or critical illness
14 28
TOTAL 50 100
Interpretation The above pie chart shows that out of 50 respondents 20 of them invest for protecting their family against premature death 28 for creating wealth 10 for meeting their future retirement needs 14 for child education amp marriage and 28 for protection against disability and sickness
Q3 What is your main motive behind investing in life insurance
41
a) tax benefit
b) savings
c) risk cover
Option No of respondents Percentage
Tax benefits 27 54
Savings 5 10
Risk cover 18 36
TOTAL 50 100
Interpretation The above pie chart shows that out of the sample respondents 54 have tax benefit 10 have savings and 36 have risk cover as their main motive for making an investment in life
Q4 What kind of investment do you prefer
42
a) high risk high gain
b) low risk low gain
c) moderate
d) vary times to times
Option No of respondents Percentage
High risk high gain 8 16
Low risk low gain 5 10
Moderate 12 24
Vary times to times 25 50
TOTAL 50 100
Interpretation The above pie chart shows that out of 50 respondents 16 preferred high risk- high gain form of investment 10 preferred low risk- low gain form of investment 24 preferred moderate investment and 50 preferred varied form of investment
43
Q5Are you interested to invest in Traditional Plans
a) YES
b) NO
Option No of respondents Percentage
YES 36 72
NO 14 28
TOTAL 50 100
Interpretation The above pie chart shows that 72 of the respondents preferred to invest in Traditional Plans
44
Q6 What is your level of annual investmenta) below 20000
b) 20000-40000
c) above 40000
Option No of respondents Percentage
Below 20000 41 82
20000-40000 7 14
Above 40000 2 4
TOTAL 50 100
Interpretation The above pie chart shows that 82 of the respondents are willing to invest below Rs 20000 per annum 14 of them want to invest within Rs 20000 per annum to Rs 40000 and 4 wanted to invest over and above Rs 40000
45
Q7 What factors would you consider most important before choosing an insurance policy
a) publicity of the company
b) reputation of the company
c) quality of life advisors
d) after sales-supporting of the company
Option No of respondents Percentage
Publicity of the co 5 20
Reputation of the co 25 50
Quality of life advisors 10 10
After sale-services 10 20
TOTAL 50 100
Interpretation out of the sample respondents 20 considers publicity of the company 50 considers reputation of the company 10 considers quality of life advisors and 20 considers after sales support of the company as the most important factor for choosing an insurance company
46
Q8 Which life insurance company would you prefer the most to invest ina) reliance life insurance (RLIC)
b) Bajaj Allianz life insurance
Option No of respondents Percentage
RLIC 21 42
BAJAJ ALLIANZ 29 58
TOTAL 50 100
Interpretation Out of 50 respondents 42 preferred to invest in reliance life insurance over 58 of the respondents who prefer to invest in Bajaj Allianz life insurance
47
Q9 If reliance life insurance then which particular plan you would like to invest ina) Reliance Term Plan
b) Reliance Whole Life Plan
c) Reliance Endowment Plan
d) Reliance Special Endowment Plan
Option No of respondents Percentage
Reliance term plan 6 2858
Reliance whole life plan 3 1428
Reliance endowment plan 9 4286
Reliance special endowment plan 3 1428
TOTAL 21 100
Interpretation Out of 21 respondents 2858 preferred to invest in term plan 1428 in whole life plan 4286 in endowment plan and 1428 of them preferred to invest in special endowment plan of reliance life insurance
48
Q10 If Bajaj Allianz life insurance then which particular plan you would like to invest in
I ENDOWMENT PLAN a) Bajaj Allianz Invest Gain
b) Bajaj Allianz save Care Economy SP
c) Bajaj Allianz life time care
d) Bajaj Allianz Super Saver plan
II MONEY BACK PLAN i Bajaj Allianz Cash Gain plan
Option No of respondents Percentage
Invest gain plan 3 1035
Save care economy SP 6 2069
Life time care 7 2415
Super saver plan 3 1035
Cash gain plan 10 3446
TOTAL 29 100
Interpretation Out of 29 respondents 1035 of them plan to invest in Bajaj Allianz- Invest Gain 2069 wish to invest in Bajaj Allianz save Care Economy SP 2415 want to invest in Bajaj Allianz life time care 1035 in Bajaj Allianz Super Saver plan and 3446 prefer to invest in Bajaj Allianz Cash Gain plan
49
32) SIGNIFICANCE OF STUDY
Life insurance is one of the most rapidly growing sectors in India The main reason
behind the growth can attributed to the high population density improving economical
condition improving education level and improving awareness Due to these factors there
is still huge scope for growth in this sector Like any other business when the
opportunities are present everybody tends to enter the industries This growth hence
fetches the new competitors as well as new strategies from existing players To sustain in
any competitive industry the organization must adapt to existing strategies and adopt
new ones This study will focus on the analysis of Reliance Life Insurance in comparison
with the present scenario of Bajaj Allianz Life Insurance with respect to the Traditional
Plans of both the companyrsquos This will mainly cover the following aspects
To know about the awareness and popularity of various Traditional Plans offered
by Reliance Life Insurance and Bajaj Allianz Life Insurance
How Reliance Life Insurance can develop and sustain a good distribution
network
These will provide it benefit both in terms of better market coverage as well as better
penetration
50
33) SCOPE OF THE STUDY
1) This helps in finding out vast potential of insurance company
2) The study was conducted in National Capital Region (NCR) only
3) The number of respondents to be surveyed can be improved
4) This study was conducted by comparing the performances amp products of three private
amp government insurance players in insurance industry
5) This study was conducted to analyze the market stand of Reliance life insurance
Company limited and Bajaj Allianz Life Insurance Company Limited of India insurance
companies
6) This study is done to eliminate all the myths which people have in their minds
regarding Insurance Sector
51
34) OBJECTIVES
To have a detailed understanding of Reliance Life Insurance and Bajaj Allianz Life Insurance
To find out various reasons considered while investing in policies
To get knowledge about the market exposure and future prospects about Reliance Life Insurance
To know the perception of the consumers about the life insurance
To analyze the Traditional plans of Reliance Life Insurance and compare it with Bajaj Allianz
To know about the brand awareness of Reliance Life Insurance its customer preferences over Bajaj Allianz in the market
To study a proper knowledge about the life insurance industry
To understand the consumer choice while investing in policies
52
CHAPTER 4
DISCUSSION AND FINDINGS OF THE STUDY
FINDINGS OF THE STUDY RECOMMENDATION AND SUGGESTIONS CONCLUSION LIMITATIONS BIBLIOGRAPHY ANNEXUREQUESTIONNAIRE
53
41) FINDINGS OF THE STUDY
1) The survey reveals that still a large proportion of population is interested to invest in other forms of investment other than insurance as still most of them are unaware about the importance of insurance in their life
2) Basically people make varied form of investment for creating wealth to protect their families against pre-mature death and to protect income against disability sickness or critical illness
3) The main motive of the individuals investing is receives benefits US 1010D People generally consider insurance as a tax saving device
4) Mostly people prefer time to time form of investment as they are not willing to take high degree of risk
5) 72 of the respondents are preferred to invest in Traditional Plans
6) Most of the people prefer to make an annual investment up to a maximum of Rs20 000 per annum
7) When the product is like life insurance reputation of the company publicity of the company amp after sale services of the company matters a lot This means that people would choose that insurance company only where the quality of life advisors is satisfactory
8) Most people prefer to invest in Bajaj Allianz Life Insurance as compared to making an investment in Reliance Life Insurance
9) The most preferable Traditional plan of Reliance Life Insurance is Endowment Plan
10) The most preferable plan of Bajaj Allianz Life Insurance co is Cash Gain Plan
54
42) SUGGESTIONS amp RECOMMENDATIONS
Based on the observations of the study some suggestions for the organization are made as
follows
1) Quality of advisors is also as important as the quantity Thus company should go
mainly for qualified professionals
2) Company should increase its budget on publicity so that awareness can be increased
3) Clarity and transparency should be provided to the customer regarding various
products
4) Training sessions should be planned in advance so that schedule can be provided to
the advisor in advance
5) Apart from the Brand Positioning in urban area a strategy should be adopted by
Reliance to make its brand also near to middle level or high aspirant people because they
are the main source of the business in India
6) Awareness Camp to the sub urban area should be focused by Reliance
7) Some innovative technique or product is required in order to attract the consumer
43) LITERATURE REVIEW
55
1) Robi Elenekave has explained in detail why various retirement plans and pension plans donrsquot give the desired returns The main difficulty is the use of incorrect method for calculations done to find out the return on investment This is primarily due to wrong assumptions The study provides information about the various precautions which need to be considered before planning so that the desired results can be achieved
2) Another paper provides insight about how various financial sectors invest in bond market The study was how the different players investment different instruments according to the risk appetite and desired rate of return The study shows that life insurance sector mainly invests in government bond which are low return and low risk instrument The investment in government bond it shows that life insurance companies are more conservative in investment
3) K Subhash has presented the history of Indiarsquos life insurance industry in three stages before independence after independence and post liberalization which not only provides information but also help in analyzing the impact of these major changes The authors have also discussed the huge potential which exists in the rural India The insurance company must realize the importance of rural sector because the future lies there The author commented about the increasing share of private player in the existing market This confirms the availability of opportunity in this sector The paper also provides the importance of professional and focused approach which was given no importance
4) Tapen Sinha has discussed the various challenges and opportunities in the insurance market One of the very important factors which have been discussed in the study is the importance of developing new and better products As the scenario changes the need of an individual also changes so any organization must understand and fulfill these needs The new product development requires constant research so organization must also focus on it
5) Roger G Ibbotson discusses how financial planners and advisors have recently started to recognize that human capital must be taken into account when building optimal portfolios for individual investors Any investorrsquos human capital has a unique mortality risk However life insurance in its forms can hedge against this mortality risk Thus human capital affects both the optimal asset allocation and the optimal demand for life insurance This paper provides a unified framework based on human capital in order to enable individual investors to make both decisions jointly
6) Rakesh Niraj study tells how the flow of information in any organization is important For any organization to grow the flow of information must be good both upwards as well as ownwards The proper flow of information will also ensure proper flow of good and services from organization to customer and proper flow of information from customer to organization The information from customers will help the organization in providing better goods and services to the customer For the above purpose organization must ensure good channel partner who can provide the organization with correct feedback Hence it becomes very important for any organization to acquire good channel partners
56
7) Stephen P Robbins has discussed how group dynamics works in any organization The success of any organization depends on the success of its various teams and how these teams work together The book provides various techniques which can be used by any organization to get result from the team effort The conflict resolution is a major task in any group Various techniques which the organization can use in conflict resolution are also discussed Another important aspect covered is the importance of leadership in the organization The various forms of leadership have been discussed and the kinds of leadership which can be effective in particular situations are also discussed
8) R Wayne Mondy has discussed the importance of training and development in any organization The training provides skills to perform the current job where as the development involve learning beyond present need The various type of training are discussed which can be used according to the requirement Training and development are not only important for better performance of an individual but it also gives satisfaction The major factors which influence training and development are found to be management support commitment of trainee and trainer complexity of the organization The process of developing good training plans is also provided In another part author has discussed the importance of right man for right job The compensation strategies are also given which are very crucial for ant industry
9) Philip Kotler has discussed the importance of channels partners Better the channel partners better will be the delivery model Detailed discussion about how to design the channel structure so that all the requirements could be fulfilled is provided The various issues faced by the organization while managing the channels are also given When an organization has more than one channel it becomes very important that all the channels should be integrated in such a way that the organization get the best out of all At times due to the conflicting benefit of the different channels the conflict arise so various strategies to manage these issues is also discussed in the chapter
10) Michael J Etzel has written about the marketing of services The marketing of services is different from the goods because of the characteristic of service like intangibility inseparability heterogeneity etc Brief about pricing strategies is also given in case of services The authors have also given the impact of technological development on the services marketing The author has also given the importance of brand and after sales support in case of services as perception of the customers plays an important role In other part of the book the authors has described the importance of distribution channels and designing of the same A channel partner should be consider as partner according to discussion The legal complications associated with channels are also discussed These complications are necessary to take into the consideration while managing the channels The conflicting interest of channels both horizontally and vertically are also taken into the consideration
57
11) Boone has discussed about the importance of personal financial planning The concept of time value of money has also been elaborated The importance of creating and implementing budget is given under money management The other important concepts for financial planning like credit management and understanding taxes are also explained In one section the authors have discussed the importance of investment and what should be the major considerations while making any investment The considerations include the risk associated with the investment return on the investment etc The importance and benefits of life insurance has also been given The discussion also includes various legal aspects associated with life insurance The overview of retirement planning is also given which includes importance and benefit of retirement planning Various tools for proper retirement planning are also discussed
58
44) CONCLUSION
1) The customers are very much sensitive towards their investment They would like to invest only in that insurance company which enjoys good public image along with quality good services
2) The result of the survey conducted shows that Bajaj Allianz Life Insurance is the leader in life insurance industry but Reliance Life Insurance and other private players are giving it a close competition
3) The motive of the people behind investing in life insurance is the tax benefits that they would receive under sec 80C and 1010D
4) In Life Insurance industry the after sales support of the company is as important as the quality of life advisors
59
45) LIMITATIONS
There were some limitations faced during the study as discussed below
Since the study was taken for two months so there was a constraint of time and effort
The study was limited only to some of the Delhi regions so the results may be biased
Questionnaire was given to 125 people however only 50 responded to it which is very small for such type of study
The biasness of consumer or responses error cannot be eliminated
Most of the people are not aware about the Importance and the necessity of insurance in their life
Adverse perception of the people towards insurance sector- People consider insurance as a tax saving device
Lack of awareness about the earning opportunity in the insurance sector
60
46) BIBLIOGRAPHY
wwwreliancelifeinsurancecom
wwwadagroupcom
wwwirdacom
wwwbajajallianzlifeinsurancecom
wwwallianzbajajcom
47) ANNEXURE
61
QUESTIONNAIRE
A comparative analysis of consumer perception regarding Traditional plans of Reliance Life Insurance with that of Bajaj Allianz Life Insurance
NAME ___________________________
PERSONAL DETAILS
1) AGE_________________
1) OCCUPATION______________
2) INCOME___________________
3) FAMILY MEMBERS_________
Q1 Where do you prefer to investa) Fixed deposits b) Stock c) Mutual funds d) Insurance e) Others
Q2 What are your priorities for investmenta) Protecting your family against pre-mature death b) Wealth creation c) Retirement needs d) Child education and marriage e) Protect income against disability sickness or critical illness
Q3 What is your main motive behind investing in life insurancea) Tax benefit b) Savings c) Risk cover
Q4 What kind of investment do you prefera) High risk high gain b) Low risk low gain c) Moderate d) Vary times to times
62
Q5Are you interested to invest in Traditional Plansa) Yes b) No
Q6 What is your level of annual investmenta) below 20000 b) 20000-40000 c) above 40000
Q7 What factors would you consider most important before choosing an insurance company
a) publicity of the company b) reputation of the company c) quality of life advisors d) after sales-supporting of the company
Q8 Which life insurance company would you prefer the most to invest ina) Reliance life insurance b) Bajaj Allianz life insurance
Q9 If reliance life insurance then which particular plan you would like to invest ina) Reliance Term Plan b) Reliance Whole Life Plan c) Reliance Endowment Plan d) Reliance Special Endowment Plan
Q10 If Bajaj Allianz life insurance then which particular plan you would like to invest in
I ENDOWMENT PLAN
a) Bajaj Allianz Invest Gain
b) Bajaj Allianz save Care Economy SP
c) Bajaj Allianz life time care
d) Bajaj Allianz Super Saver plan
II MONEY BACK PLAN
a) Bajaj Allianz Cash Gain plan
63
64
- COMPANY PROFILE
- ABOUT RELIANCE LIFE INSURANCE
- HISTORY
- Reliance Capital Limited announced the launch of its life insurance business on February 1 2006 This was after obtaining the required regulatory approvals from the Registrar Of Companies and the Insurance Regulatory and Development Authority
- It was in August 2005 that the ball was set rolling when Reliance Capital Limited the financial arm of Reliance ndash Anil Dhirubhai Ambani Group (ADAG) ndash announced the requisition of 100 shareholding in AMP Sanmar Life Insurance Company Limited and the formal transfer of shares took place in October 2005 The company will issue all policy contracts under the Reliance Life Insurance Company limited name All the existing policy contracts also stand transferred to the Reliance Life Insurance entity with all the original contractual terms and commitments intact
- CORE VALUES
- Reliance Life Insurance Company Limited has some core values which are listed as follows
- Vision bull To be the first choice insurer for customers bull To be the preferred employer for staff in the insurance industry bull To be the number one insurer for creating shareholder value
- Mission As a responsible customer focused market leader we will strive to understand the insurance needs of the consumers and translate it into affordable products that deliver value for money
- 12) TRADITIONAL PLANS OF THE COMPANY
- 12A )TRADITIONAL PLAN OF RELIANCE LIFE INSURANCE-
- Life insurance products are designed to suit the requirements of customers Fundamentally the product provide for
- In every product to a certain degree risk cover is imperative for it to fall under the category of insurance Based on the coverage of the product the premiums are calculated and the customer pays accordingly In order to suggest the right product it is essential for an agent to understand the requirements of the customer well
- The traditional plans of the company have the following features-
- Fixed Tenure
- Potential for better returns
- Transparency
- Flexibility in investment
- Flexibility to invest more
- Flexibility to skip the premium
- Flexibility to choose the cover
- High liquidity
- Age term and sum assured decide the amount of premium
- Top- ups and switches are not allowed
- Reliance Life Insurance Company Limited has offered 9
- 1) Reliance term plan-
- 2) Reliance Whole Life Plan -
- 3) Reliance Endowment Plan -
- 4) Reliance Special Endowment Plan -
- 13) INDUSTRY PROFILE
- MEANING OF INSURANCE
- Insurance may be described as a social device to reduce or eliminate risk of loss to life and property Insurance is a collective bearing of risk Insurance is a financial device to spread the risks and losses of few people among a large number of people as people prefer small fixed liability instead of big uncertain and changing liability
- Insurance can be defined as a ldquolegal contract between two parties whereby one party called insurer undertakes to pay a fixed amount of money on the happening of a particular event which may be certain or uncertainrdquo The other party called insured pays in exchange a fixed sum known as premium
- Insurance is desired to safeguard oneself and onersquos family against possible losses on account of risks and perils It provides financial compensation for the losses suffered due to the happening of any unforeseen events
- IMPORTANCE OF INSURANCE
- Insurance services play predominant role in the process of financial Intermediary Today insurance industry is one of the most growing sectors in India There is lot of potential in the Indian Insurance Industry
- There are many issues which require study The scope of the study of Insurance industry of India would be very great as there are ongoing Developments in the industry after the opening of the sector
- Right now the insurance industry has great opportunities in a country like India or China which huge population Also the penetration of insurance in India is very low in both life and non-life segment so there is lot potential to be tapped Before starting the discussion on insurance industry and related issues we have to start with the basics of insurance So first we understand what is insurance How the word lsquoinsurancersquo is different from the word lsquoassurancersquo Etc
- HISTORY OF INSURANCE
- The concept of insurance is believed to have emerged almost 4500 years ago in the ancient land of Babylonia where traders used to bear risk of the carvan by giving loans which were later repaid with interest when the goods arrived safely
- The concept of insurance as we know today took shape in 1688 at a place called Lloydrsquos Coffee House in London where risk bearers used to meet to transact business This coffee house became so popular that Lloydrsquos became the one of the first modern insurance companies by the end of the eighteenth century
- Marine insurance companies came into existence by the end of the eighteenth century These companies were empowered to write fire and life insurance as well as marine The Great Fire of London in 1966 caused huge loss of property and life With a view to providing fire insurance facilities
- Dr Nicholas Barbon set up in 1967 the first fire insurance company known as the Fire office
- Life insurance in its modern form came to India from England in 1818 The Oriental Life Insurance Company was the first insurance company to be set up in India to help the widows of European community The insurance companies which came into existence between 1818 and 1869 treated
- Indian lives as subnormal and charged an extra premium of 15 to 20 per cent The first Indian insurance company the Bombay Mutual Life
- Assurance Society came into existence in 1870 to cover Indian lives at normal rates
- The Insurance Act 1938 the first comprehensive legislation governing both life and non-life branches of insurance were enacted to provide strict state control over insurance business This amended insurance Act looked into investments expenditure and management of these companies
- By the mid- 1950s there were 154 Indian insurers 16 foreign insurers and 75 provident societies carrying on life insurance business in India Insurance business flourished and so did scams irregularities and dubious investment practices by scores of companies As a result the government decided to nationalize the life assurance business in India The Life Insurance
- Corporation of India (LIC) was set up in 1956 The nationalization of life insurance was followed by general insurance in 1972
- MEANING OF LIFE INSURANCE
- There are three parties in a life insurance transaction the insurer the insured and the owner of the policy (policyholder) although the owner and the insured are often the same person
- Another important person involved in a life insurance policy is the beneficiary The beneficiary is the person or persons who will receive the policy proceeds upon the death of the insured
- Life insurance may be divided into two basic classes ndash term and permanent
- HISTORY OF LIFE INSURANCE
- Risk protection has been a primary goal of humans and institutions throughout history Protecting against risk is what insurance is all about
- Over 5000 years ago in China insurance was seen as a preventative measure against piracy on the sea Piracy in fact was so prevalent that as a way of spreading the risk a number of ships would carry a portion of another ships cargo so that if one ship was captured the entire shipment would not be lost
- In another part of the world nearly 4500 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
- Life insurance came about a little later in ancient Rome where burial clubs were formed to cover the funeral expenses of its members as well as help survivors monetarily With Romes fall around 450 AD most of the concepts of insurance were abandoned but aspects of it did continue through the Middle Ages particularly with merchant and artisan guilds These provided forms of member insurance covering risks like fire flood theft disability death and even imprisonment
- During the feudal period early forms of insurance ebbed with the decline of travel and long-distance trade But during the 14th to 16th centuries transportation commerce and insurance would again reemerge
- And similar to ancient Rome burial societies were formed in the Buddhist period to help families build houses and to protect widows and children
- Modern Insurance
- Illegal almost everywhere else in Europe life insurance in England was vigorously promoted in the three decades following the Glorious Revolution of 1688 The type of insurance we see today owes its roots to 17th century England Lloyds of London or as they were known then Lloyds Coffee House was the location where merchants ship owners and underwriters met to discuss and transact business deals
- While serving as a means of risk-avoidance life insurance also appealed strongly to the gambling instincts of Englands burgeoning middle class
- Gambling was so rampant in fact that when newspapers published names of prominent people who were seriously ill bets were placed at Lloydrsquos on their anticipated dates of death Reacting against such practices 79 merchant underwriters broke away in 1769 and two years later formed a ldquoNew Lloydrsquos Coffee Houserdquo that became known as the ldquoreal Lloydrsquosrdquo Making wagers on peoples deaths ceased in 1774 when parliament forbade the practice
- Insurance moves to America
- The US insurance industry was built on the British model The year 1735 saw the birth of the first insurance company in the American colonies in
- Charleston SC The Presbyterian Synod of Philadelphia in 1759 sponsored the first life insurance corporation in America for the benefit of ministers and their dependents And the first life insurance policy for the general public in the United States was issued in Philadelphia on May 22 1761
- But it wasnt until 80 years later (after 1840) that life insurance really tookoff in a big way The key to its success was reducing the opposition from religious groups
- In 1835 the infamous New York fire drew peoples 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
- With the creation of the automobile public liability insurance which first made its appearance in the 1880s gained importance and acceptance
- More advancement was made to insurance during the process of industrialization In 1897 the British government passed the Workmens Compensation Act which made it mandatory for a company to insure its employees against industrial accidents
- During 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 most labor 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
- BENEFITS OF LIFE INSURANCE
- 1) Risk cover -Life Insurance contracts allow an individual to have a risk cover against any unfortunate event of the future
- 2) Tax Deduction -Under section 80C of the Income Tax Act of 1961 one can get tax deduction on premiums up to one lakh rupees Life Insurance policies thus decrease the total taxable income of an individual
- 3) Loans -An individual can easily access loans from different financial institutions by pledging his insurance policies
- 4) Retirement Planning -What had provided protection against the financial consequences of premature death may now be used to help them enjoy their retirement years
- 5) Educational Needs -Similar to retirement planning the cash values that flow from ones life insurance schemes can be utilized for educational needs of the insurer or his children
- The Life Insurance Industry has an enviable track record among public sector units It has a Consistent profit and dividend paying record accompanied by a steady growth in its financial resources Through investments in the Government sector and socially- oriented sectors the Industry has contributed immensely to the nations development The industry is recognized as one of the largest financial Institutions in the country The ventures initiated by the industry in the areas of Mutual Fund
- Housing Finance has done exceedingly well in recent years To protect the countrys foreign exchange reserves the reinsurance arrangement are so organized that maximum retention is made possible within the country while at the same time protecting interests of the policy holders
- 22) CURRENT SCENARIO OF RELIANCE LIFE INSURANCE
- RLIC offers wide range of innovative life insurance products targeted at individuals and groups It offers need based products that caters to four distinct segments namely protection child retirement and investment plans RLIC is committed to emerge as a transnational Life Insurer of global scale and standard
- CH - 3) RESEARCH METHODOLOGY
- RESEARCH DESIGN-
- SAMPLING TECHNIQUES-
- THE PRIMARY OBJECTIVEOF THE STUDY-
- 34) OBJECTIVES
- 7) Some innovative technique or product is required in order to attract the consumer
- 45) LIMITATIONS
- 46) BIBLIOGRAPHY
-
PERSONAL DETAILS
1) AGE a) 18-30b) 31-50c) 51-65
AGE NO OF RESPONDENTS PERCENTAGE
18-30 21 42
31-50 19 38
51-65 10 20
TOTAL 50 100
INTERPRETATION-The bar graph reveals that 42 of the respondents belong to the age group of 18-30 years 38 lies in the age group of 31-50 years and 20 of them lie in the age group of 51-65 years
2) OCCUPATION
4238
20
05
1015202530354045
NO
O
F
RE
SP
ON
DE
NT
S
18 to 30 31 to 50 51 to 65
AGE (in year)
AGE WISE CLASSIFICATION
36
a) Serviceb) Businessc) Professiond) Housewifee) Retired
OPTION NO OF RESPONDENTS PERCENTAGE
Service 16 32
Business 14 28
Profession 5 10
Housewife 8 16
Retired 7 14
TOTAL 50 100
INTERPRETATION-The above bar graph reveals that 32 of the total respondents were servicemen 28 of them belonged to the business class 10 were professionals 16 were housewives and 14 of the total respondents fall in the retired category
3) INCOME
32
28
10
16
14
0
5
10
15
20
25
30
35
Service Business Profession Housewife Retired
OCCUPATION
OCCUPATION WISE CLASSIFICATION
37
a) 150000-300000
b) 300000-500000
c) Above 500000
OPTION NO OF RESPONDENTS PERCENTAGE
150000-300000 24 48
300000-500000 14 28
Above 500000 12 24
TOTAL 50 100
INTERPRETATION-The above bar graph reveals that out of the total respondents 48 lie in the income group of 150000-300000 28 of the total respondents belonged to the income group of 300000-500000 and 24 lie in the income group of people earning an income of above Rs 500000pa
4828 24
01020304050
N O
OF
RE
SP
ON
DE
NT
S
150000-300000
300000-500000
ABOVE500000
INCOME (in RS)
INCOME WISE CLASSIFICATION
38
4) FAMILY MEMBERS
a) 2b) 3c) 4d) Above 4
OPTION NO OF RESPONDENT PERCENTAGE
2 11 22
3 9 18
4 24 48
Above 4 6 12
TOTAL 50 100
INTERPRETATION The above bar graph shows that 22 of the total respondents had a family of 2 members 18 of them had 3 family members 48 of them had 4 family members and 12 of them had the no of family members above 4
Q1 Where do you prefer to invest
22 18
48
120
1020304050
No
o
f re
spo
nd
ents
2 3 4 Above 4
No of family members
MEMBER WISE CLASSIFICATION
39
a) fixed deposits
b) stock
c) mutual funds
d) insurance
e) others
Option No of respondents Percentage
Fixed deposits 5 10
Stock 10 20
Mutual fund 10 20
Insurance 18 36
others 7 14
TOTAL 50 100
Interpretation The above pie chart shows that out of 50 respondents 10 preferred to invest in fixed deposits 20 in stocks 20 in mutual funds 36 in insurance and 14 in others like property gold etc
Q2 What are your priorities for investment
40
a) protecting your family against pre-mature death
b) wealth creation
c) retirement needs
d) child education and marriage
e) protect income against disability sickness or critical illness
Option No of respondents Percentage
Protecting your family against pre mature death
10 20
Wealth creation 14 28
Retirement needs 5 10
Child education and marriage 7 14
Protect income against disability sickness or critical illness
14 28
TOTAL 50 100
Interpretation The above pie chart shows that out of 50 respondents 20 of them invest for protecting their family against premature death 28 for creating wealth 10 for meeting their future retirement needs 14 for child education amp marriage and 28 for protection against disability and sickness
Q3 What is your main motive behind investing in life insurance
41
a) tax benefit
b) savings
c) risk cover
Option No of respondents Percentage
Tax benefits 27 54
Savings 5 10
Risk cover 18 36
TOTAL 50 100
Interpretation The above pie chart shows that out of the sample respondents 54 have tax benefit 10 have savings and 36 have risk cover as their main motive for making an investment in life
Q4 What kind of investment do you prefer
42
a) high risk high gain
b) low risk low gain
c) moderate
d) vary times to times
Option No of respondents Percentage
High risk high gain 8 16
Low risk low gain 5 10
Moderate 12 24
Vary times to times 25 50
TOTAL 50 100
Interpretation The above pie chart shows that out of 50 respondents 16 preferred high risk- high gain form of investment 10 preferred low risk- low gain form of investment 24 preferred moderate investment and 50 preferred varied form of investment
43
Q5Are you interested to invest in Traditional Plans
a) YES
b) NO
Option No of respondents Percentage
YES 36 72
NO 14 28
TOTAL 50 100
Interpretation The above pie chart shows that 72 of the respondents preferred to invest in Traditional Plans
44
Q6 What is your level of annual investmenta) below 20000
b) 20000-40000
c) above 40000
Option No of respondents Percentage
Below 20000 41 82
20000-40000 7 14
Above 40000 2 4
TOTAL 50 100
Interpretation The above pie chart shows that 82 of the respondents are willing to invest below Rs 20000 per annum 14 of them want to invest within Rs 20000 per annum to Rs 40000 and 4 wanted to invest over and above Rs 40000
45
Q7 What factors would you consider most important before choosing an insurance policy
a) publicity of the company
b) reputation of the company
c) quality of life advisors
d) after sales-supporting of the company
Option No of respondents Percentage
Publicity of the co 5 20
Reputation of the co 25 50
Quality of life advisors 10 10
After sale-services 10 20
TOTAL 50 100
Interpretation out of the sample respondents 20 considers publicity of the company 50 considers reputation of the company 10 considers quality of life advisors and 20 considers after sales support of the company as the most important factor for choosing an insurance company
46
Q8 Which life insurance company would you prefer the most to invest ina) reliance life insurance (RLIC)
b) Bajaj Allianz life insurance
Option No of respondents Percentage
RLIC 21 42
BAJAJ ALLIANZ 29 58
TOTAL 50 100
Interpretation Out of 50 respondents 42 preferred to invest in reliance life insurance over 58 of the respondents who prefer to invest in Bajaj Allianz life insurance
47
Q9 If reliance life insurance then which particular plan you would like to invest ina) Reliance Term Plan
b) Reliance Whole Life Plan
c) Reliance Endowment Plan
d) Reliance Special Endowment Plan
Option No of respondents Percentage
Reliance term plan 6 2858
Reliance whole life plan 3 1428
Reliance endowment plan 9 4286
Reliance special endowment plan 3 1428
TOTAL 21 100
Interpretation Out of 21 respondents 2858 preferred to invest in term plan 1428 in whole life plan 4286 in endowment plan and 1428 of them preferred to invest in special endowment plan of reliance life insurance
48
Q10 If Bajaj Allianz life insurance then which particular plan you would like to invest in
I ENDOWMENT PLAN a) Bajaj Allianz Invest Gain
b) Bajaj Allianz save Care Economy SP
c) Bajaj Allianz life time care
d) Bajaj Allianz Super Saver plan
II MONEY BACK PLAN i Bajaj Allianz Cash Gain plan
Option No of respondents Percentage
Invest gain plan 3 1035
Save care economy SP 6 2069
Life time care 7 2415
Super saver plan 3 1035
Cash gain plan 10 3446
TOTAL 29 100
Interpretation Out of 29 respondents 1035 of them plan to invest in Bajaj Allianz- Invest Gain 2069 wish to invest in Bajaj Allianz save Care Economy SP 2415 want to invest in Bajaj Allianz life time care 1035 in Bajaj Allianz Super Saver plan and 3446 prefer to invest in Bajaj Allianz Cash Gain plan
49
32) SIGNIFICANCE OF STUDY
Life insurance is one of the most rapidly growing sectors in India The main reason
behind the growth can attributed to the high population density improving economical
condition improving education level and improving awareness Due to these factors there
is still huge scope for growth in this sector Like any other business when the
opportunities are present everybody tends to enter the industries This growth hence
fetches the new competitors as well as new strategies from existing players To sustain in
any competitive industry the organization must adapt to existing strategies and adopt
new ones This study will focus on the analysis of Reliance Life Insurance in comparison
with the present scenario of Bajaj Allianz Life Insurance with respect to the Traditional
Plans of both the companyrsquos This will mainly cover the following aspects
To know about the awareness and popularity of various Traditional Plans offered
by Reliance Life Insurance and Bajaj Allianz Life Insurance
How Reliance Life Insurance can develop and sustain a good distribution
network
These will provide it benefit both in terms of better market coverage as well as better
penetration
50
33) SCOPE OF THE STUDY
1) This helps in finding out vast potential of insurance company
2) The study was conducted in National Capital Region (NCR) only
3) The number of respondents to be surveyed can be improved
4) This study was conducted by comparing the performances amp products of three private
amp government insurance players in insurance industry
5) This study was conducted to analyze the market stand of Reliance life insurance
Company limited and Bajaj Allianz Life Insurance Company Limited of India insurance
companies
6) This study is done to eliminate all the myths which people have in their minds
regarding Insurance Sector
51
34) OBJECTIVES
To have a detailed understanding of Reliance Life Insurance and Bajaj Allianz Life Insurance
To find out various reasons considered while investing in policies
To get knowledge about the market exposure and future prospects about Reliance Life Insurance
To know the perception of the consumers about the life insurance
To analyze the Traditional plans of Reliance Life Insurance and compare it with Bajaj Allianz
To know about the brand awareness of Reliance Life Insurance its customer preferences over Bajaj Allianz in the market
To study a proper knowledge about the life insurance industry
To understand the consumer choice while investing in policies
52
CHAPTER 4
DISCUSSION AND FINDINGS OF THE STUDY
FINDINGS OF THE STUDY RECOMMENDATION AND SUGGESTIONS CONCLUSION LIMITATIONS BIBLIOGRAPHY ANNEXUREQUESTIONNAIRE
53
41) FINDINGS OF THE STUDY
1) The survey reveals that still a large proportion of population is interested to invest in other forms of investment other than insurance as still most of them are unaware about the importance of insurance in their life
2) Basically people make varied form of investment for creating wealth to protect their families against pre-mature death and to protect income against disability sickness or critical illness
3) The main motive of the individuals investing is receives benefits US 1010D People generally consider insurance as a tax saving device
4) Mostly people prefer time to time form of investment as they are not willing to take high degree of risk
5) 72 of the respondents are preferred to invest in Traditional Plans
6) Most of the people prefer to make an annual investment up to a maximum of Rs20 000 per annum
7) When the product is like life insurance reputation of the company publicity of the company amp after sale services of the company matters a lot This means that people would choose that insurance company only where the quality of life advisors is satisfactory
8) Most people prefer to invest in Bajaj Allianz Life Insurance as compared to making an investment in Reliance Life Insurance
9) The most preferable Traditional plan of Reliance Life Insurance is Endowment Plan
10) The most preferable plan of Bajaj Allianz Life Insurance co is Cash Gain Plan
54
42) SUGGESTIONS amp RECOMMENDATIONS
Based on the observations of the study some suggestions for the organization are made as
follows
1) Quality of advisors is also as important as the quantity Thus company should go
mainly for qualified professionals
2) Company should increase its budget on publicity so that awareness can be increased
3) Clarity and transparency should be provided to the customer regarding various
products
4) Training sessions should be planned in advance so that schedule can be provided to
the advisor in advance
5) Apart from the Brand Positioning in urban area a strategy should be adopted by
Reliance to make its brand also near to middle level or high aspirant people because they
are the main source of the business in India
6) Awareness Camp to the sub urban area should be focused by Reliance
7) Some innovative technique or product is required in order to attract the consumer
43) LITERATURE REVIEW
55
1) Robi Elenekave has explained in detail why various retirement plans and pension plans donrsquot give the desired returns The main difficulty is the use of incorrect method for calculations done to find out the return on investment This is primarily due to wrong assumptions The study provides information about the various precautions which need to be considered before planning so that the desired results can be achieved
2) Another paper provides insight about how various financial sectors invest in bond market The study was how the different players investment different instruments according to the risk appetite and desired rate of return The study shows that life insurance sector mainly invests in government bond which are low return and low risk instrument The investment in government bond it shows that life insurance companies are more conservative in investment
3) K Subhash has presented the history of Indiarsquos life insurance industry in three stages before independence after independence and post liberalization which not only provides information but also help in analyzing the impact of these major changes The authors have also discussed the huge potential which exists in the rural India The insurance company must realize the importance of rural sector because the future lies there The author commented about the increasing share of private player in the existing market This confirms the availability of opportunity in this sector The paper also provides the importance of professional and focused approach which was given no importance
4) Tapen Sinha has discussed the various challenges and opportunities in the insurance market One of the very important factors which have been discussed in the study is the importance of developing new and better products As the scenario changes the need of an individual also changes so any organization must understand and fulfill these needs The new product development requires constant research so organization must also focus on it
5) Roger G Ibbotson discusses how financial planners and advisors have recently started to recognize that human capital must be taken into account when building optimal portfolios for individual investors Any investorrsquos human capital has a unique mortality risk However life insurance in its forms can hedge against this mortality risk Thus human capital affects both the optimal asset allocation and the optimal demand for life insurance This paper provides a unified framework based on human capital in order to enable individual investors to make both decisions jointly
6) Rakesh Niraj study tells how the flow of information in any organization is important For any organization to grow the flow of information must be good both upwards as well as ownwards The proper flow of information will also ensure proper flow of good and services from organization to customer and proper flow of information from customer to organization The information from customers will help the organization in providing better goods and services to the customer For the above purpose organization must ensure good channel partner who can provide the organization with correct feedback Hence it becomes very important for any organization to acquire good channel partners
56
7) Stephen P Robbins has discussed how group dynamics works in any organization The success of any organization depends on the success of its various teams and how these teams work together The book provides various techniques which can be used by any organization to get result from the team effort The conflict resolution is a major task in any group Various techniques which the organization can use in conflict resolution are also discussed Another important aspect covered is the importance of leadership in the organization The various forms of leadership have been discussed and the kinds of leadership which can be effective in particular situations are also discussed
8) R Wayne Mondy has discussed the importance of training and development in any organization The training provides skills to perform the current job where as the development involve learning beyond present need The various type of training are discussed which can be used according to the requirement Training and development are not only important for better performance of an individual but it also gives satisfaction The major factors which influence training and development are found to be management support commitment of trainee and trainer complexity of the organization The process of developing good training plans is also provided In another part author has discussed the importance of right man for right job The compensation strategies are also given which are very crucial for ant industry
9) Philip Kotler has discussed the importance of channels partners Better the channel partners better will be the delivery model Detailed discussion about how to design the channel structure so that all the requirements could be fulfilled is provided The various issues faced by the organization while managing the channels are also given When an organization has more than one channel it becomes very important that all the channels should be integrated in such a way that the organization get the best out of all At times due to the conflicting benefit of the different channels the conflict arise so various strategies to manage these issues is also discussed in the chapter
10) Michael J Etzel has written about the marketing of services The marketing of services is different from the goods because of the characteristic of service like intangibility inseparability heterogeneity etc Brief about pricing strategies is also given in case of services The authors have also given the impact of technological development on the services marketing The author has also given the importance of brand and after sales support in case of services as perception of the customers plays an important role In other part of the book the authors has described the importance of distribution channels and designing of the same A channel partner should be consider as partner according to discussion The legal complications associated with channels are also discussed These complications are necessary to take into the consideration while managing the channels The conflicting interest of channels both horizontally and vertically are also taken into the consideration
57
11) Boone has discussed about the importance of personal financial planning The concept of time value of money has also been elaborated The importance of creating and implementing budget is given under money management The other important concepts for financial planning like credit management and understanding taxes are also explained In one section the authors have discussed the importance of investment and what should be the major considerations while making any investment The considerations include the risk associated with the investment return on the investment etc The importance and benefits of life insurance has also been given The discussion also includes various legal aspects associated with life insurance The overview of retirement planning is also given which includes importance and benefit of retirement planning Various tools for proper retirement planning are also discussed
58
44) CONCLUSION
1) The customers are very much sensitive towards their investment They would like to invest only in that insurance company which enjoys good public image along with quality good services
2) The result of the survey conducted shows that Bajaj Allianz Life Insurance is the leader in life insurance industry but Reliance Life Insurance and other private players are giving it a close competition
3) The motive of the people behind investing in life insurance is the tax benefits that they would receive under sec 80C and 1010D
4) In Life Insurance industry the after sales support of the company is as important as the quality of life advisors
59
45) LIMITATIONS
There were some limitations faced during the study as discussed below
Since the study was taken for two months so there was a constraint of time and effort
The study was limited only to some of the Delhi regions so the results may be biased
Questionnaire was given to 125 people however only 50 responded to it which is very small for such type of study
The biasness of consumer or responses error cannot be eliminated
Most of the people are not aware about the Importance and the necessity of insurance in their life
Adverse perception of the people towards insurance sector- People consider insurance as a tax saving device
Lack of awareness about the earning opportunity in the insurance sector
60
46) BIBLIOGRAPHY
wwwreliancelifeinsurancecom
wwwadagroupcom
wwwirdacom
wwwbajajallianzlifeinsurancecom
wwwallianzbajajcom
47) ANNEXURE
61
QUESTIONNAIRE
A comparative analysis of consumer perception regarding Traditional plans of Reliance Life Insurance with that of Bajaj Allianz Life Insurance
NAME ___________________________
PERSONAL DETAILS
1) AGE_________________
1) OCCUPATION______________
2) INCOME___________________
3) FAMILY MEMBERS_________
Q1 Where do you prefer to investa) Fixed deposits b) Stock c) Mutual funds d) Insurance e) Others
Q2 What are your priorities for investmenta) Protecting your family against pre-mature death b) Wealth creation c) Retirement needs d) Child education and marriage e) Protect income against disability sickness or critical illness
Q3 What is your main motive behind investing in life insurancea) Tax benefit b) Savings c) Risk cover
Q4 What kind of investment do you prefera) High risk high gain b) Low risk low gain c) Moderate d) Vary times to times
62
Q5Are you interested to invest in Traditional Plansa) Yes b) No
Q6 What is your level of annual investmenta) below 20000 b) 20000-40000 c) above 40000
Q7 What factors would you consider most important before choosing an insurance company
a) publicity of the company b) reputation of the company c) quality of life advisors d) after sales-supporting of the company
Q8 Which life insurance company would you prefer the most to invest ina) Reliance life insurance b) Bajaj Allianz life insurance
Q9 If reliance life insurance then which particular plan you would like to invest ina) Reliance Term Plan b) Reliance Whole Life Plan c) Reliance Endowment Plan d) Reliance Special Endowment Plan
Q10 If Bajaj Allianz life insurance then which particular plan you would like to invest in
I ENDOWMENT PLAN
a) Bajaj Allianz Invest Gain
b) Bajaj Allianz save Care Economy SP
c) Bajaj Allianz life time care
d) Bajaj Allianz Super Saver plan
II MONEY BACK PLAN
a) Bajaj Allianz Cash Gain plan
63
64
- COMPANY PROFILE
- ABOUT RELIANCE LIFE INSURANCE
- HISTORY
- Reliance Capital Limited announced the launch of its life insurance business on February 1 2006 This was after obtaining the required regulatory approvals from the Registrar Of Companies and the Insurance Regulatory and Development Authority
- It was in August 2005 that the ball was set rolling when Reliance Capital Limited the financial arm of Reliance ndash Anil Dhirubhai Ambani Group (ADAG) ndash announced the requisition of 100 shareholding in AMP Sanmar Life Insurance Company Limited and the formal transfer of shares took place in October 2005 The company will issue all policy contracts under the Reliance Life Insurance Company limited name All the existing policy contracts also stand transferred to the Reliance Life Insurance entity with all the original contractual terms and commitments intact
- CORE VALUES
- Reliance Life Insurance Company Limited has some core values which are listed as follows
- Vision bull To be the first choice insurer for customers bull To be the preferred employer for staff in the insurance industry bull To be the number one insurer for creating shareholder value
- Mission As a responsible customer focused market leader we will strive to understand the insurance needs of the consumers and translate it into affordable products that deliver value for money
- 12) TRADITIONAL PLANS OF THE COMPANY
- 12A )TRADITIONAL PLAN OF RELIANCE LIFE INSURANCE-
- Life insurance products are designed to suit the requirements of customers Fundamentally the product provide for
- In every product to a certain degree risk cover is imperative for it to fall under the category of insurance Based on the coverage of the product the premiums are calculated and the customer pays accordingly In order to suggest the right product it is essential for an agent to understand the requirements of the customer well
- The traditional plans of the company have the following features-
- Fixed Tenure
- Potential for better returns
- Transparency
- Flexibility in investment
- Flexibility to invest more
- Flexibility to skip the premium
- Flexibility to choose the cover
- High liquidity
- Age term and sum assured decide the amount of premium
- Top- ups and switches are not allowed
- Reliance Life Insurance Company Limited has offered 9
- 1) Reliance term plan-
- 2) Reliance Whole Life Plan -
- 3) Reliance Endowment Plan -
- 4) Reliance Special Endowment Plan -
- 13) INDUSTRY PROFILE
- MEANING OF INSURANCE
- Insurance may be described as a social device to reduce or eliminate risk of loss to life and property Insurance is a collective bearing of risk Insurance is a financial device to spread the risks and losses of few people among a large number of people as people prefer small fixed liability instead of big uncertain and changing liability
- Insurance can be defined as a ldquolegal contract between two parties whereby one party called insurer undertakes to pay a fixed amount of money on the happening of a particular event which may be certain or uncertainrdquo The other party called insured pays in exchange a fixed sum known as premium
- Insurance is desired to safeguard oneself and onersquos family against possible losses on account of risks and perils It provides financial compensation for the losses suffered due to the happening of any unforeseen events
- IMPORTANCE OF INSURANCE
- Insurance services play predominant role in the process of financial Intermediary Today insurance industry is one of the most growing sectors in India There is lot of potential in the Indian Insurance Industry
- There are many issues which require study The scope of the study of Insurance industry of India would be very great as there are ongoing Developments in the industry after the opening of the sector
- Right now the insurance industry has great opportunities in a country like India or China which huge population Also the penetration of insurance in India is very low in both life and non-life segment so there is lot potential to be tapped Before starting the discussion on insurance industry and related issues we have to start with the basics of insurance So first we understand what is insurance How the word lsquoinsurancersquo is different from the word lsquoassurancersquo Etc
- HISTORY OF INSURANCE
- The concept of insurance is believed to have emerged almost 4500 years ago in the ancient land of Babylonia where traders used to bear risk of the carvan by giving loans which were later repaid with interest when the goods arrived safely
- The concept of insurance as we know today took shape in 1688 at a place called Lloydrsquos Coffee House in London where risk bearers used to meet to transact business This coffee house became so popular that Lloydrsquos became the one of the first modern insurance companies by the end of the eighteenth century
- Marine insurance companies came into existence by the end of the eighteenth century These companies were empowered to write fire and life insurance as well as marine The Great Fire of London in 1966 caused huge loss of property and life With a view to providing fire insurance facilities
- Dr Nicholas Barbon set up in 1967 the first fire insurance company known as the Fire office
- Life insurance in its modern form came to India from England in 1818 The Oriental Life Insurance Company was the first insurance company to be set up in India to help the widows of European community The insurance companies which came into existence between 1818 and 1869 treated
- Indian lives as subnormal and charged an extra premium of 15 to 20 per cent The first Indian insurance company the Bombay Mutual Life
- Assurance Society came into existence in 1870 to cover Indian lives at normal rates
- The Insurance Act 1938 the first comprehensive legislation governing both life and non-life branches of insurance were enacted to provide strict state control over insurance business This amended insurance Act looked into investments expenditure and management of these companies
- By the mid- 1950s there were 154 Indian insurers 16 foreign insurers and 75 provident societies carrying on life insurance business in India Insurance business flourished and so did scams irregularities and dubious investment practices by scores of companies As a result the government decided to nationalize the life assurance business in India The Life Insurance
- Corporation of India (LIC) was set up in 1956 The nationalization of life insurance was followed by general insurance in 1972
- MEANING OF LIFE INSURANCE
- There are three parties in a life insurance transaction the insurer the insured and the owner of the policy (policyholder) although the owner and the insured are often the same person
- Another important person involved in a life insurance policy is the beneficiary The beneficiary is the person or persons who will receive the policy proceeds upon the death of the insured
- Life insurance may be divided into two basic classes ndash term and permanent
- HISTORY OF LIFE INSURANCE
- Risk protection has been a primary goal of humans and institutions throughout history Protecting against risk is what insurance is all about
- Over 5000 years ago in China insurance was seen as a preventative measure against piracy on the sea Piracy in fact was so prevalent that as a way of spreading the risk a number of ships would carry a portion of another ships cargo so that if one ship was captured the entire shipment would not be lost
- In another part of the world nearly 4500 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
- Life insurance came about a little later in ancient Rome where burial clubs were formed to cover the funeral expenses of its members as well as help survivors monetarily With Romes fall around 450 AD most of the concepts of insurance were abandoned but aspects of it did continue through the Middle Ages particularly with merchant and artisan guilds These provided forms of member insurance covering risks like fire flood theft disability death and even imprisonment
- During the feudal period early forms of insurance ebbed with the decline of travel and long-distance trade But during the 14th to 16th centuries transportation commerce and insurance would again reemerge
- And similar to ancient Rome burial societies were formed in the Buddhist period to help families build houses and to protect widows and children
- Modern Insurance
- Illegal almost everywhere else in Europe life insurance in England was vigorously promoted in the three decades following the Glorious Revolution of 1688 The type of insurance we see today owes its roots to 17th century England Lloyds of London or as they were known then Lloyds Coffee House was the location where merchants ship owners and underwriters met to discuss and transact business deals
- While serving as a means of risk-avoidance life insurance also appealed strongly to the gambling instincts of Englands burgeoning middle class
- Gambling was so rampant in fact that when newspapers published names of prominent people who were seriously ill bets were placed at Lloydrsquos on their anticipated dates of death Reacting against such practices 79 merchant underwriters broke away in 1769 and two years later formed a ldquoNew Lloydrsquos Coffee Houserdquo that became known as the ldquoreal Lloydrsquosrdquo Making wagers on peoples deaths ceased in 1774 when parliament forbade the practice
- Insurance moves to America
- The US insurance industry was built on the British model The year 1735 saw the birth of the first insurance company in the American colonies in
- Charleston SC The Presbyterian Synod of Philadelphia in 1759 sponsored the first life insurance corporation in America for the benefit of ministers and their dependents And the first life insurance policy for the general public in the United States was issued in Philadelphia on May 22 1761
- But it wasnt until 80 years later (after 1840) that life insurance really tookoff in a big way The key to its success was reducing the opposition from religious groups
- In 1835 the infamous New York fire drew peoples 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
- With the creation of the automobile public liability insurance which first made its appearance in the 1880s gained importance and acceptance
- More advancement was made to insurance during the process of industrialization In 1897 the British government passed the Workmens Compensation Act which made it mandatory for a company to insure its employees against industrial accidents
- During 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 most labor 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
- BENEFITS OF LIFE INSURANCE
- 1) Risk cover -Life Insurance contracts allow an individual to have a risk cover against any unfortunate event of the future
- 2) Tax Deduction -Under section 80C of the Income Tax Act of 1961 one can get tax deduction on premiums up to one lakh rupees Life Insurance policies thus decrease the total taxable income of an individual
- 3) Loans -An individual can easily access loans from different financial institutions by pledging his insurance policies
- 4) Retirement Planning -What had provided protection against the financial consequences of premature death may now be used to help them enjoy their retirement years
- 5) Educational Needs -Similar to retirement planning the cash values that flow from ones life insurance schemes can be utilized for educational needs of the insurer or his children
- The Life Insurance Industry has an enviable track record among public sector units It has a Consistent profit and dividend paying record accompanied by a steady growth in its financial resources Through investments in the Government sector and socially- oriented sectors the Industry has contributed immensely to the nations development The industry is recognized as one of the largest financial Institutions in the country The ventures initiated by the industry in the areas of Mutual Fund
- Housing Finance has done exceedingly well in recent years To protect the countrys foreign exchange reserves the reinsurance arrangement are so organized that maximum retention is made possible within the country while at the same time protecting interests of the policy holders
- 22) CURRENT SCENARIO OF RELIANCE LIFE INSURANCE
- RLIC offers wide range of innovative life insurance products targeted at individuals and groups It offers need based products that caters to four distinct segments namely protection child retirement and investment plans RLIC is committed to emerge as a transnational Life Insurer of global scale and standard
- CH - 3) RESEARCH METHODOLOGY
- RESEARCH DESIGN-
- SAMPLING TECHNIQUES-
- THE PRIMARY OBJECTIVEOF THE STUDY-
- 34) OBJECTIVES
- 7) Some innovative technique or product is required in order to attract the consumer
- 45) LIMITATIONS
- 46) BIBLIOGRAPHY
-
a) Serviceb) Businessc) Professiond) Housewifee) Retired
OPTION NO OF RESPONDENTS PERCENTAGE
Service 16 32
Business 14 28
Profession 5 10
Housewife 8 16
Retired 7 14
TOTAL 50 100
INTERPRETATION-The above bar graph reveals that 32 of the total respondents were servicemen 28 of them belonged to the business class 10 were professionals 16 were housewives and 14 of the total respondents fall in the retired category
3) INCOME
32
28
10
16
14
0
5
10
15
20
25
30
35
Service Business Profession Housewife Retired
OCCUPATION
OCCUPATION WISE CLASSIFICATION
37
a) 150000-300000
b) 300000-500000
c) Above 500000
OPTION NO OF RESPONDENTS PERCENTAGE
150000-300000 24 48
300000-500000 14 28
Above 500000 12 24
TOTAL 50 100
INTERPRETATION-The above bar graph reveals that out of the total respondents 48 lie in the income group of 150000-300000 28 of the total respondents belonged to the income group of 300000-500000 and 24 lie in the income group of people earning an income of above Rs 500000pa
4828 24
01020304050
N O
OF
RE
SP
ON
DE
NT
S
150000-300000
300000-500000
ABOVE500000
INCOME (in RS)
INCOME WISE CLASSIFICATION
38
4) FAMILY MEMBERS
a) 2b) 3c) 4d) Above 4
OPTION NO OF RESPONDENT PERCENTAGE
2 11 22
3 9 18
4 24 48
Above 4 6 12
TOTAL 50 100
INTERPRETATION The above bar graph shows that 22 of the total respondents had a family of 2 members 18 of them had 3 family members 48 of them had 4 family members and 12 of them had the no of family members above 4
Q1 Where do you prefer to invest
22 18
48
120
1020304050
No
o
f re
spo
nd
ents
2 3 4 Above 4
No of family members
MEMBER WISE CLASSIFICATION
39
a) fixed deposits
b) stock
c) mutual funds
d) insurance
e) others
Option No of respondents Percentage
Fixed deposits 5 10
Stock 10 20
Mutual fund 10 20
Insurance 18 36
others 7 14
TOTAL 50 100
Interpretation The above pie chart shows that out of 50 respondents 10 preferred to invest in fixed deposits 20 in stocks 20 in mutual funds 36 in insurance and 14 in others like property gold etc
Q2 What are your priorities for investment
40
a) protecting your family against pre-mature death
b) wealth creation
c) retirement needs
d) child education and marriage
e) protect income against disability sickness or critical illness
Option No of respondents Percentage
Protecting your family against pre mature death
10 20
Wealth creation 14 28
Retirement needs 5 10
Child education and marriage 7 14
Protect income against disability sickness or critical illness
14 28
TOTAL 50 100
Interpretation The above pie chart shows that out of 50 respondents 20 of them invest for protecting their family against premature death 28 for creating wealth 10 for meeting their future retirement needs 14 for child education amp marriage and 28 for protection against disability and sickness
Q3 What is your main motive behind investing in life insurance
41
a) tax benefit
b) savings
c) risk cover
Option No of respondents Percentage
Tax benefits 27 54
Savings 5 10
Risk cover 18 36
TOTAL 50 100
Interpretation The above pie chart shows that out of the sample respondents 54 have tax benefit 10 have savings and 36 have risk cover as their main motive for making an investment in life
Q4 What kind of investment do you prefer
42
a) high risk high gain
b) low risk low gain
c) moderate
d) vary times to times
Option No of respondents Percentage
High risk high gain 8 16
Low risk low gain 5 10
Moderate 12 24
Vary times to times 25 50
TOTAL 50 100
Interpretation The above pie chart shows that out of 50 respondents 16 preferred high risk- high gain form of investment 10 preferred low risk- low gain form of investment 24 preferred moderate investment and 50 preferred varied form of investment
43
Q5Are you interested to invest in Traditional Plans
a) YES
b) NO
Option No of respondents Percentage
YES 36 72
NO 14 28
TOTAL 50 100
Interpretation The above pie chart shows that 72 of the respondents preferred to invest in Traditional Plans
44
Q6 What is your level of annual investmenta) below 20000
b) 20000-40000
c) above 40000
Option No of respondents Percentage
Below 20000 41 82
20000-40000 7 14
Above 40000 2 4
TOTAL 50 100
Interpretation The above pie chart shows that 82 of the respondents are willing to invest below Rs 20000 per annum 14 of them want to invest within Rs 20000 per annum to Rs 40000 and 4 wanted to invest over and above Rs 40000
45
Q7 What factors would you consider most important before choosing an insurance policy
a) publicity of the company
b) reputation of the company
c) quality of life advisors
d) after sales-supporting of the company
Option No of respondents Percentage
Publicity of the co 5 20
Reputation of the co 25 50
Quality of life advisors 10 10
After sale-services 10 20
TOTAL 50 100
Interpretation out of the sample respondents 20 considers publicity of the company 50 considers reputation of the company 10 considers quality of life advisors and 20 considers after sales support of the company as the most important factor for choosing an insurance company
46
Q8 Which life insurance company would you prefer the most to invest ina) reliance life insurance (RLIC)
b) Bajaj Allianz life insurance
Option No of respondents Percentage
RLIC 21 42
BAJAJ ALLIANZ 29 58
TOTAL 50 100
Interpretation Out of 50 respondents 42 preferred to invest in reliance life insurance over 58 of the respondents who prefer to invest in Bajaj Allianz life insurance
47
Q9 If reliance life insurance then which particular plan you would like to invest ina) Reliance Term Plan
b) Reliance Whole Life Plan
c) Reliance Endowment Plan
d) Reliance Special Endowment Plan
Option No of respondents Percentage
Reliance term plan 6 2858
Reliance whole life plan 3 1428
Reliance endowment plan 9 4286
Reliance special endowment plan 3 1428
TOTAL 21 100
Interpretation Out of 21 respondents 2858 preferred to invest in term plan 1428 in whole life plan 4286 in endowment plan and 1428 of them preferred to invest in special endowment plan of reliance life insurance
48
Q10 If Bajaj Allianz life insurance then which particular plan you would like to invest in
I ENDOWMENT PLAN a) Bajaj Allianz Invest Gain
b) Bajaj Allianz save Care Economy SP
c) Bajaj Allianz life time care
d) Bajaj Allianz Super Saver plan
II MONEY BACK PLAN i Bajaj Allianz Cash Gain plan
Option No of respondents Percentage
Invest gain plan 3 1035
Save care economy SP 6 2069
Life time care 7 2415
Super saver plan 3 1035
Cash gain plan 10 3446
TOTAL 29 100
Interpretation Out of 29 respondents 1035 of them plan to invest in Bajaj Allianz- Invest Gain 2069 wish to invest in Bajaj Allianz save Care Economy SP 2415 want to invest in Bajaj Allianz life time care 1035 in Bajaj Allianz Super Saver plan and 3446 prefer to invest in Bajaj Allianz Cash Gain plan
49
32) SIGNIFICANCE OF STUDY
Life insurance is one of the most rapidly growing sectors in India The main reason
behind the growth can attributed to the high population density improving economical
condition improving education level and improving awareness Due to these factors there
is still huge scope for growth in this sector Like any other business when the
opportunities are present everybody tends to enter the industries This growth hence
fetches the new competitors as well as new strategies from existing players To sustain in
any competitive industry the organization must adapt to existing strategies and adopt
new ones This study will focus on the analysis of Reliance Life Insurance in comparison
with the present scenario of Bajaj Allianz Life Insurance with respect to the Traditional
Plans of both the companyrsquos This will mainly cover the following aspects
To know about the awareness and popularity of various Traditional Plans offered
by Reliance Life Insurance and Bajaj Allianz Life Insurance
How Reliance Life Insurance can develop and sustain a good distribution
network
These will provide it benefit both in terms of better market coverage as well as better
penetration
50
33) SCOPE OF THE STUDY
1) This helps in finding out vast potential of insurance company
2) The study was conducted in National Capital Region (NCR) only
3) The number of respondents to be surveyed can be improved
4) This study was conducted by comparing the performances amp products of three private
amp government insurance players in insurance industry
5) This study was conducted to analyze the market stand of Reliance life insurance
Company limited and Bajaj Allianz Life Insurance Company Limited of India insurance
companies
6) This study is done to eliminate all the myths which people have in their minds
regarding Insurance Sector
51
34) OBJECTIVES
To have a detailed understanding of Reliance Life Insurance and Bajaj Allianz Life Insurance
To find out various reasons considered while investing in policies
To get knowledge about the market exposure and future prospects about Reliance Life Insurance
To know the perception of the consumers about the life insurance
To analyze the Traditional plans of Reliance Life Insurance and compare it with Bajaj Allianz
To know about the brand awareness of Reliance Life Insurance its customer preferences over Bajaj Allianz in the market
To study a proper knowledge about the life insurance industry
To understand the consumer choice while investing in policies
52
CHAPTER 4
DISCUSSION AND FINDINGS OF THE STUDY
FINDINGS OF THE STUDY RECOMMENDATION AND SUGGESTIONS CONCLUSION LIMITATIONS BIBLIOGRAPHY ANNEXUREQUESTIONNAIRE
53
41) FINDINGS OF THE STUDY
1) The survey reveals that still a large proportion of population is interested to invest in other forms of investment other than insurance as still most of them are unaware about the importance of insurance in their life
2) Basically people make varied form of investment for creating wealth to protect their families against pre-mature death and to protect income against disability sickness or critical illness
3) The main motive of the individuals investing is receives benefits US 1010D People generally consider insurance as a tax saving device
4) Mostly people prefer time to time form of investment as they are not willing to take high degree of risk
5) 72 of the respondents are preferred to invest in Traditional Plans
6) Most of the people prefer to make an annual investment up to a maximum of Rs20 000 per annum
7) When the product is like life insurance reputation of the company publicity of the company amp after sale services of the company matters a lot This means that people would choose that insurance company only where the quality of life advisors is satisfactory
8) Most people prefer to invest in Bajaj Allianz Life Insurance as compared to making an investment in Reliance Life Insurance
9) The most preferable Traditional plan of Reliance Life Insurance is Endowment Plan
10) The most preferable plan of Bajaj Allianz Life Insurance co is Cash Gain Plan
54
42) SUGGESTIONS amp RECOMMENDATIONS
Based on the observations of the study some suggestions for the organization are made as
follows
1) Quality of advisors is also as important as the quantity Thus company should go
mainly for qualified professionals
2) Company should increase its budget on publicity so that awareness can be increased
3) Clarity and transparency should be provided to the customer regarding various
products
4) Training sessions should be planned in advance so that schedule can be provided to
the advisor in advance
5) Apart from the Brand Positioning in urban area a strategy should be adopted by
Reliance to make its brand also near to middle level or high aspirant people because they
are the main source of the business in India
6) Awareness Camp to the sub urban area should be focused by Reliance
7) Some innovative technique or product is required in order to attract the consumer
43) LITERATURE REVIEW
55
1) Robi Elenekave has explained in detail why various retirement plans and pension plans donrsquot give the desired returns The main difficulty is the use of incorrect method for calculations done to find out the return on investment This is primarily due to wrong assumptions The study provides information about the various precautions which need to be considered before planning so that the desired results can be achieved
2) Another paper provides insight about how various financial sectors invest in bond market The study was how the different players investment different instruments according to the risk appetite and desired rate of return The study shows that life insurance sector mainly invests in government bond which are low return and low risk instrument The investment in government bond it shows that life insurance companies are more conservative in investment
3) K Subhash has presented the history of Indiarsquos life insurance industry in three stages before independence after independence and post liberalization which not only provides information but also help in analyzing the impact of these major changes The authors have also discussed the huge potential which exists in the rural India The insurance company must realize the importance of rural sector because the future lies there The author commented about the increasing share of private player in the existing market This confirms the availability of opportunity in this sector The paper also provides the importance of professional and focused approach which was given no importance
4) Tapen Sinha has discussed the various challenges and opportunities in the insurance market One of the very important factors which have been discussed in the study is the importance of developing new and better products As the scenario changes the need of an individual also changes so any organization must understand and fulfill these needs The new product development requires constant research so organization must also focus on it
5) Roger G Ibbotson discusses how financial planners and advisors have recently started to recognize that human capital must be taken into account when building optimal portfolios for individual investors Any investorrsquos human capital has a unique mortality risk However life insurance in its forms can hedge against this mortality risk Thus human capital affects both the optimal asset allocation and the optimal demand for life insurance This paper provides a unified framework based on human capital in order to enable individual investors to make both decisions jointly
6) Rakesh Niraj study tells how the flow of information in any organization is important For any organization to grow the flow of information must be good both upwards as well as ownwards The proper flow of information will also ensure proper flow of good and services from organization to customer and proper flow of information from customer to organization The information from customers will help the organization in providing better goods and services to the customer For the above purpose organization must ensure good channel partner who can provide the organization with correct feedback Hence it becomes very important for any organization to acquire good channel partners
56
7) Stephen P Robbins has discussed how group dynamics works in any organization The success of any organization depends on the success of its various teams and how these teams work together The book provides various techniques which can be used by any organization to get result from the team effort The conflict resolution is a major task in any group Various techniques which the organization can use in conflict resolution are also discussed Another important aspect covered is the importance of leadership in the organization The various forms of leadership have been discussed and the kinds of leadership which can be effective in particular situations are also discussed
8) R Wayne Mondy has discussed the importance of training and development in any organization The training provides skills to perform the current job where as the development involve learning beyond present need The various type of training are discussed which can be used according to the requirement Training and development are not only important for better performance of an individual but it also gives satisfaction The major factors which influence training and development are found to be management support commitment of trainee and trainer complexity of the organization The process of developing good training plans is also provided In another part author has discussed the importance of right man for right job The compensation strategies are also given which are very crucial for ant industry
9) Philip Kotler has discussed the importance of channels partners Better the channel partners better will be the delivery model Detailed discussion about how to design the channel structure so that all the requirements could be fulfilled is provided The various issues faced by the organization while managing the channels are also given When an organization has more than one channel it becomes very important that all the channels should be integrated in such a way that the organization get the best out of all At times due to the conflicting benefit of the different channels the conflict arise so various strategies to manage these issues is also discussed in the chapter
10) Michael J Etzel has written about the marketing of services The marketing of services is different from the goods because of the characteristic of service like intangibility inseparability heterogeneity etc Brief about pricing strategies is also given in case of services The authors have also given the impact of technological development on the services marketing The author has also given the importance of brand and after sales support in case of services as perception of the customers plays an important role In other part of the book the authors has described the importance of distribution channels and designing of the same A channel partner should be consider as partner according to discussion The legal complications associated with channels are also discussed These complications are necessary to take into the consideration while managing the channels The conflicting interest of channels both horizontally and vertically are also taken into the consideration
57
11) Boone has discussed about the importance of personal financial planning The concept of time value of money has also been elaborated The importance of creating and implementing budget is given under money management The other important concepts for financial planning like credit management and understanding taxes are also explained In one section the authors have discussed the importance of investment and what should be the major considerations while making any investment The considerations include the risk associated with the investment return on the investment etc The importance and benefits of life insurance has also been given The discussion also includes various legal aspects associated with life insurance The overview of retirement planning is also given which includes importance and benefit of retirement planning Various tools for proper retirement planning are also discussed
58
44) CONCLUSION
1) The customers are very much sensitive towards their investment They would like to invest only in that insurance company which enjoys good public image along with quality good services
2) The result of the survey conducted shows that Bajaj Allianz Life Insurance is the leader in life insurance industry but Reliance Life Insurance and other private players are giving it a close competition
3) The motive of the people behind investing in life insurance is the tax benefits that they would receive under sec 80C and 1010D
4) In Life Insurance industry the after sales support of the company is as important as the quality of life advisors
59
45) LIMITATIONS
There were some limitations faced during the study as discussed below
Since the study was taken for two months so there was a constraint of time and effort
The study was limited only to some of the Delhi regions so the results may be biased
Questionnaire was given to 125 people however only 50 responded to it which is very small for such type of study
The biasness of consumer or responses error cannot be eliminated
Most of the people are not aware about the Importance and the necessity of insurance in their life
Adverse perception of the people towards insurance sector- People consider insurance as a tax saving device
Lack of awareness about the earning opportunity in the insurance sector
60
46) BIBLIOGRAPHY
wwwreliancelifeinsurancecom
wwwadagroupcom
wwwirdacom
wwwbajajallianzlifeinsurancecom
wwwallianzbajajcom
47) ANNEXURE
61
QUESTIONNAIRE
A comparative analysis of consumer perception regarding Traditional plans of Reliance Life Insurance with that of Bajaj Allianz Life Insurance
NAME ___________________________
PERSONAL DETAILS
1) AGE_________________
1) OCCUPATION______________
2) INCOME___________________
3) FAMILY MEMBERS_________
Q1 Where do you prefer to investa) Fixed deposits b) Stock c) Mutual funds d) Insurance e) Others
Q2 What are your priorities for investmenta) Protecting your family against pre-mature death b) Wealth creation c) Retirement needs d) Child education and marriage e) Protect income against disability sickness or critical illness
Q3 What is your main motive behind investing in life insurancea) Tax benefit b) Savings c) Risk cover
Q4 What kind of investment do you prefera) High risk high gain b) Low risk low gain c) Moderate d) Vary times to times
62
Q5Are you interested to invest in Traditional Plansa) Yes b) No
Q6 What is your level of annual investmenta) below 20000 b) 20000-40000 c) above 40000
Q7 What factors would you consider most important before choosing an insurance company
a) publicity of the company b) reputation of the company c) quality of life advisors d) after sales-supporting of the company
Q8 Which life insurance company would you prefer the most to invest ina) Reliance life insurance b) Bajaj Allianz life insurance
Q9 If reliance life insurance then which particular plan you would like to invest ina) Reliance Term Plan b) Reliance Whole Life Plan c) Reliance Endowment Plan d) Reliance Special Endowment Plan
Q10 If Bajaj Allianz life insurance then which particular plan you would like to invest in
I ENDOWMENT PLAN
a) Bajaj Allianz Invest Gain
b) Bajaj Allianz save Care Economy SP
c) Bajaj Allianz life time care
d) Bajaj Allianz Super Saver plan
II MONEY BACK PLAN
a) Bajaj Allianz Cash Gain plan
63
64
- COMPANY PROFILE
- ABOUT RELIANCE LIFE INSURANCE
- HISTORY
- Reliance Capital Limited announced the launch of its life insurance business on February 1 2006 This was after obtaining the required regulatory approvals from the Registrar Of Companies and the Insurance Regulatory and Development Authority
- It was in August 2005 that the ball was set rolling when Reliance Capital Limited the financial arm of Reliance ndash Anil Dhirubhai Ambani Group (ADAG) ndash announced the requisition of 100 shareholding in AMP Sanmar Life Insurance Company Limited and the formal transfer of shares took place in October 2005 The company will issue all policy contracts under the Reliance Life Insurance Company limited name All the existing policy contracts also stand transferred to the Reliance Life Insurance entity with all the original contractual terms and commitments intact
- CORE VALUES
- Reliance Life Insurance Company Limited has some core values which are listed as follows
- Vision bull To be the first choice insurer for customers bull To be the preferred employer for staff in the insurance industry bull To be the number one insurer for creating shareholder value
- Mission As a responsible customer focused market leader we will strive to understand the insurance needs of the consumers and translate it into affordable products that deliver value for money
- 12) TRADITIONAL PLANS OF THE COMPANY
- 12A )TRADITIONAL PLAN OF RELIANCE LIFE INSURANCE-
- Life insurance products are designed to suit the requirements of customers Fundamentally the product provide for
- In every product to a certain degree risk cover is imperative for it to fall under the category of insurance Based on the coverage of the product the premiums are calculated and the customer pays accordingly In order to suggest the right product it is essential for an agent to understand the requirements of the customer well
- The traditional plans of the company have the following features-
- Fixed Tenure
- Potential for better returns
- Transparency
- Flexibility in investment
- Flexibility to invest more
- Flexibility to skip the premium
- Flexibility to choose the cover
- High liquidity
- Age term and sum assured decide the amount of premium
- Top- ups and switches are not allowed
- Reliance Life Insurance Company Limited has offered 9
- 1) Reliance term plan-
- 2) Reliance Whole Life Plan -
- 3) Reliance Endowment Plan -
- 4) Reliance Special Endowment Plan -
- 13) INDUSTRY PROFILE
- MEANING OF INSURANCE
- Insurance may be described as a social device to reduce or eliminate risk of loss to life and property Insurance is a collective bearing of risk Insurance is a financial device to spread the risks and losses of few people among a large number of people as people prefer small fixed liability instead of big uncertain and changing liability
- Insurance can be defined as a ldquolegal contract between two parties whereby one party called insurer undertakes to pay a fixed amount of money on the happening of a particular event which may be certain or uncertainrdquo The other party called insured pays in exchange a fixed sum known as premium
- Insurance is desired to safeguard oneself and onersquos family against possible losses on account of risks and perils It provides financial compensation for the losses suffered due to the happening of any unforeseen events
- IMPORTANCE OF INSURANCE
- Insurance services play predominant role in the process of financial Intermediary Today insurance industry is one of the most growing sectors in India There is lot of potential in the Indian Insurance Industry
- There are many issues which require study The scope of the study of Insurance industry of India would be very great as there are ongoing Developments in the industry after the opening of the sector
- Right now the insurance industry has great opportunities in a country like India or China which huge population Also the penetration of insurance in India is very low in both life and non-life segment so there is lot potential to be tapped Before starting the discussion on insurance industry and related issues we have to start with the basics of insurance So first we understand what is insurance How the word lsquoinsurancersquo is different from the word lsquoassurancersquo Etc
- HISTORY OF INSURANCE
- The concept of insurance is believed to have emerged almost 4500 years ago in the ancient land of Babylonia where traders used to bear risk of the carvan by giving loans which were later repaid with interest when the goods arrived safely
- The concept of insurance as we know today took shape in 1688 at a place called Lloydrsquos Coffee House in London where risk bearers used to meet to transact business This coffee house became so popular that Lloydrsquos became the one of the first modern insurance companies by the end of the eighteenth century
- Marine insurance companies came into existence by the end of the eighteenth century These companies were empowered to write fire and life insurance as well as marine The Great Fire of London in 1966 caused huge loss of property and life With a view to providing fire insurance facilities
- Dr Nicholas Barbon set up in 1967 the first fire insurance company known as the Fire office
- Life insurance in its modern form came to India from England in 1818 The Oriental Life Insurance Company was the first insurance company to be set up in India to help the widows of European community The insurance companies which came into existence between 1818 and 1869 treated
- Indian lives as subnormal and charged an extra premium of 15 to 20 per cent The first Indian insurance company the Bombay Mutual Life
- Assurance Society came into existence in 1870 to cover Indian lives at normal rates
- The Insurance Act 1938 the first comprehensive legislation governing both life and non-life branches of insurance were enacted to provide strict state control over insurance business This amended insurance Act looked into investments expenditure and management of these companies
- By the mid- 1950s there were 154 Indian insurers 16 foreign insurers and 75 provident societies carrying on life insurance business in India Insurance business flourished and so did scams irregularities and dubious investment practices by scores of companies As a result the government decided to nationalize the life assurance business in India The Life Insurance
- Corporation of India (LIC) was set up in 1956 The nationalization of life insurance was followed by general insurance in 1972
- MEANING OF LIFE INSURANCE
- There are three parties in a life insurance transaction the insurer the insured and the owner of the policy (policyholder) although the owner and the insured are often the same person
- Another important person involved in a life insurance policy is the beneficiary The beneficiary is the person or persons who will receive the policy proceeds upon the death of the insured
- Life insurance may be divided into two basic classes ndash term and permanent
- HISTORY OF LIFE INSURANCE
- Risk protection has been a primary goal of humans and institutions throughout history Protecting against risk is what insurance is all about
- Over 5000 years ago in China insurance was seen as a preventative measure against piracy on the sea Piracy in fact was so prevalent that as a way of spreading the risk a number of ships would carry a portion of another ships cargo so that if one ship was captured the entire shipment would not be lost
- In another part of the world nearly 4500 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
- Life insurance came about a little later in ancient Rome where burial clubs were formed to cover the funeral expenses of its members as well as help survivors monetarily With Romes fall around 450 AD most of the concepts of insurance were abandoned but aspects of it did continue through the Middle Ages particularly with merchant and artisan guilds These provided forms of member insurance covering risks like fire flood theft disability death and even imprisonment
- During the feudal period early forms of insurance ebbed with the decline of travel and long-distance trade But during the 14th to 16th centuries transportation commerce and insurance would again reemerge
- And similar to ancient Rome burial societies were formed in the Buddhist period to help families build houses and to protect widows and children
- Modern Insurance
- Illegal almost everywhere else in Europe life insurance in England was vigorously promoted in the three decades following the Glorious Revolution of 1688 The type of insurance we see today owes its roots to 17th century England Lloyds of London or as they were known then Lloyds Coffee House was the location where merchants ship owners and underwriters met to discuss and transact business deals
- While serving as a means of risk-avoidance life insurance also appealed strongly to the gambling instincts of Englands burgeoning middle class
- Gambling was so rampant in fact that when newspapers published names of prominent people who were seriously ill bets were placed at Lloydrsquos on their anticipated dates of death Reacting against such practices 79 merchant underwriters broke away in 1769 and two years later formed a ldquoNew Lloydrsquos Coffee Houserdquo that became known as the ldquoreal Lloydrsquosrdquo Making wagers on peoples deaths ceased in 1774 when parliament forbade the practice
- Insurance moves to America
- The US insurance industry was built on the British model The year 1735 saw the birth of the first insurance company in the American colonies in
- Charleston SC The Presbyterian Synod of Philadelphia in 1759 sponsored the first life insurance corporation in America for the benefit of ministers and their dependents And the first life insurance policy for the general public in the United States was issued in Philadelphia on May 22 1761
- But it wasnt until 80 years later (after 1840) that life insurance really tookoff in a big way The key to its success was reducing the opposition from religious groups
- In 1835 the infamous New York fire drew peoples 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
- With the creation of the automobile public liability insurance which first made its appearance in the 1880s gained importance and acceptance
- More advancement was made to insurance during the process of industrialization In 1897 the British government passed the Workmens Compensation Act which made it mandatory for a company to insure its employees against industrial accidents
- During 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 most labor 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
- BENEFITS OF LIFE INSURANCE
- 1) Risk cover -Life Insurance contracts allow an individual to have a risk cover against any unfortunate event of the future
- 2) Tax Deduction -Under section 80C of the Income Tax Act of 1961 one can get tax deduction on premiums up to one lakh rupees Life Insurance policies thus decrease the total taxable income of an individual
- 3) Loans -An individual can easily access loans from different financial institutions by pledging his insurance policies
- 4) Retirement Planning -What had provided protection against the financial consequences of premature death may now be used to help them enjoy their retirement years
- 5) Educational Needs -Similar to retirement planning the cash values that flow from ones life insurance schemes can be utilized for educational needs of the insurer or his children
- The Life Insurance Industry has an enviable track record among public sector units It has a Consistent profit and dividend paying record accompanied by a steady growth in its financial resources Through investments in the Government sector and socially- oriented sectors the Industry has contributed immensely to the nations development The industry is recognized as one of the largest financial Institutions in the country The ventures initiated by the industry in the areas of Mutual Fund
- Housing Finance has done exceedingly well in recent years To protect the countrys foreign exchange reserves the reinsurance arrangement are so organized that maximum retention is made possible within the country while at the same time protecting interests of the policy holders
- 22) CURRENT SCENARIO OF RELIANCE LIFE INSURANCE
- RLIC offers wide range of innovative life insurance products targeted at individuals and groups It offers need based products that caters to four distinct segments namely protection child retirement and investment plans RLIC is committed to emerge as a transnational Life Insurer of global scale and standard
- CH - 3) RESEARCH METHODOLOGY
- RESEARCH DESIGN-
- SAMPLING TECHNIQUES-
- THE PRIMARY OBJECTIVEOF THE STUDY-
- 34) OBJECTIVES
- 7) Some innovative technique or product is required in order to attract the consumer
- 45) LIMITATIONS
- 46) BIBLIOGRAPHY
-
a) 150000-300000
b) 300000-500000
c) Above 500000
OPTION NO OF RESPONDENTS PERCENTAGE
150000-300000 24 48
300000-500000 14 28
Above 500000 12 24
TOTAL 50 100
INTERPRETATION-The above bar graph reveals that out of the total respondents 48 lie in the income group of 150000-300000 28 of the total respondents belonged to the income group of 300000-500000 and 24 lie in the income group of people earning an income of above Rs 500000pa
4828 24
01020304050
N O
OF
RE
SP
ON
DE
NT
S
150000-300000
300000-500000
ABOVE500000
INCOME (in RS)
INCOME WISE CLASSIFICATION
38
4) FAMILY MEMBERS
a) 2b) 3c) 4d) Above 4
OPTION NO OF RESPONDENT PERCENTAGE
2 11 22
3 9 18
4 24 48
Above 4 6 12
TOTAL 50 100
INTERPRETATION The above bar graph shows that 22 of the total respondents had a family of 2 members 18 of them had 3 family members 48 of them had 4 family members and 12 of them had the no of family members above 4
Q1 Where do you prefer to invest
22 18
48
120
1020304050
No
o
f re
spo
nd
ents
2 3 4 Above 4
No of family members
MEMBER WISE CLASSIFICATION
39
a) fixed deposits
b) stock
c) mutual funds
d) insurance
e) others
Option No of respondents Percentage
Fixed deposits 5 10
Stock 10 20
Mutual fund 10 20
Insurance 18 36
others 7 14
TOTAL 50 100
Interpretation The above pie chart shows that out of 50 respondents 10 preferred to invest in fixed deposits 20 in stocks 20 in mutual funds 36 in insurance and 14 in others like property gold etc
Q2 What are your priorities for investment
40
a) protecting your family against pre-mature death
b) wealth creation
c) retirement needs
d) child education and marriage
e) protect income against disability sickness or critical illness
Option No of respondents Percentage
Protecting your family against pre mature death
10 20
Wealth creation 14 28
Retirement needs 5 10
Child education and marriage 7 14
Protect income against disability sickness or critical illness
14 28
TOTAL 50 100
Interpretation The above pie chart shows that out of 50 respondents 20 of them invest for protecting their family against premature death 28 for creating wealth 10 for meeting their future retirement needs 14 for child education amp marriage and 28 for protection against disability and sickness
Q3 What is your main motive behind investing in life insurance
41
a) tax benefit
b) savings
c) risk cover
Option No of respondents Percentage
Tax benefits 27 54
Savings 5 10
Risk cover 18 36
TOTAL 50 100
Interpretation The above pie chart shows that out of the sample respondents 54 have tax benefit 10 have savings and 36 have risk cover as their main motive for making an investment in life
Q4 What kind of investment do you prefer
42
a) high risk high gain
b) low risk low gain
c) moderate
d) vary times to times
Option No of respondents Percentage
High risk high gain 8 16
Low risk low gain 5 10
Moderate 12 24
Vary times to times 25 50
TOTAL 50 100
Interpretation The above pie chart shows that out of 50 respondents 16 preferred high risk- high gain form of investment 10 preferred low risk- low gain form of investment 24 preferred moderate investment and 50 preferred varied form of investment
43
Q5Are you interested to invest in Traditional Plans
a) YES
b) NO
Option No of respondents Percentage
YES 36 72
NO 14 28
TOTAL 50 100
Interpretation The above pie chart shows that 72 of the respondents preferred to invest in Traditional Plans
44
Q6 What is your level of annual investmenta) below 20000
b) 20000-40000
c) above 40000
Option No of respondents Percentage
Below 20000 41 82
20000-40000 7 14
Above 40000 2 4
TOTAL 50 100
Interpretation The above pie chart shows that 82 of the respondents are willing to invest below Rs 20000 per annum 14 of them want to invest within Rs 20000 per annum to Rs 40000 and 4 wanted to invest over and above Rs 40000
45
Q7 What factors would you consider most important before choosing an insurance policy
a) publicity of the company
b) reputation of the company
c) quality of life advisors
d) after sales-supporting of the company
Option No of respondents Percentage
Publicity of the co 5 20
Reputation of the co 25 50
Quality of life advisors 10 10
After sale-services 10 20
TOTAL 50 100
Interpretation out of the sample respondents 20 considers publicity of the company 50 considers reputation of the company 10 considers quality of life advisors and 20 considers after sales support of the company as the most important factor for choosing an insurance company
46
Q8 Which life insurance company would you prefer the most to invest ina) reliance life insurance (RLIC)
b) Bajaj Allianz life insurance
Option No of respondents Percentage
RLIC 21 42
BAJAJ ALLIANZ 29 58
TOTAL 50 100
Interpretation Out of 50 respondents 42 preferred to invest in reliance life insurance over 58 of the respondents who prefer to invest in Bajaj Allianz life insurance
47
Q9 If reliance life insurance then which particular plan you would like to invest ina) Reliance Term Plan
b) Reliance Whole Life Plan
c) Reliance Endowment Plan
d) Reliance Special Endowment Plan
Option No of respondents Percentage
Reliance term plan 6 2858
Reliance whole life plan 3 1428
Reliance endowment plan 9 4286
Reliance special endowment plan 3 1428
TOTAL 21 100
Interpretation Out of 21 respondents 2858 preferred to invest in term plan 1428 in whole life plan 4286 in endowment plan and 1428 of them preferred to invest in special endowment plan of reliance life insurance
48
Q10 If Bajaj Allianz life insurance then which particular plan you would like to invest in
I ENDOWMENT PLAN a) Bajaj Allianz Invest Gain
b) Bajaj Allianz save Care Economy SP
c) Bajaj Allianz life time care
d) Bajaj Allianz Super Saver plan
II MONEY BACK PLAN i Bajaj Allianz Cash Gain plan
Option No of respondents Percentage
Invest gain plan 3 1035
Save care economy SP 6 2069
Life time care 7 2415
Super saver plan 3 1035
Cash gain plan 10 3446
TOTAL 29 100
Interpretation Out of 29 respondents 1035 of them plan to invest in Bajaj Allianz- Invest Gain 2069 wish to invest in Bajaj Allianz save Care Economy SP 2415 want to invest in Bajaj Allianz life time care 1035 in Bajaj Allianz Super Saver plan and 3446 prefer to invest in Bajaj Allianz Cash Gain plan
49
32) SIGNIFICANCE OF STUDY
Life insurance is one of the most rapidly growing sectors in India The main reason
behind the growth can attributed to the high population density improving economical
condition improving education level and improving awareness Due to these factors there
is still huge scope for growth in this sector Like any other business when the
opportunities are present everybody tends to enter the industries This growth hence
fetches the new competitors as well as new strategies from existing players To sustain in
any competitive industry the organization must adapt to existing strategies and adopt
new ones This study will focus on the analysis of Reliance Life Insurance in comparison
with the present scenario of Bajaj Allianz Life Insurance with respect to the Traditional
Plans of both the companyrsquos This will mainly cover the following aspects
To know about the awareness and popularity of various Traditional Plans offered
by Reliance Life Insurance and Bajaj Allianz Life Insurance
How Reliance Life Insurance can develop and sustain a good distribution
network
These will provide it benefit both in terms of better market coverage as well as better
penetration
50
33) SCOPE OF THE STUDY
1) This helps in finding out vast potential of insurance company
2) The study was conducted in National Capital Region (NCR) only
3) The number of respondents to be surveyed can be improved
4) This study was conducted by comparing the performances amp products of three private
amp government insurance players in insurance industry
5) This study was conducted to analyze the market stand of Reliance life insurance
Company limited and Bajaj Allianz Life Insurance Company Limited of India insurance
companies
6) This study is done to eliminate all the myths which people have in their minds
regarding Insurance Sector
51
34) OBJECTIVES
To have a detailed understanding of Reliance Life Insurance and Bajaj Allianz Life Insurance
To find out various reasons considered while investing in policies
To get knowledge about the market exposure and future prospects about Reliance Life Insurance
To know the perception of the consumers about the life insurance
To analyze the Traditional plans of Reliance Life Insurance and compare it with Bajaj Allianz
To know about the brand awareness of Reliance Life Insurance its customer preferences over Bajaj Allianz in the market
To study a proper knowledge about the life insurance industry
To understand the consumer choice while investing in policies
52
CHAPTER 4
DISCUSSION AND FINDINGS OF THE STUDY
FINDINGS OF THE STUDY RECOMMENDATION AND SUGGESTIONS CONCLUSION LIMITATIONS BIBLIOGRAPHY ANNEXUREQUESTIONNAIRE
53
41) FINDINGS OF THE STUDY
1) The survey reveals that still a large proportion of population is interested to invest in other forms of investment other than insurance as still most of them are unaware about the importance of insurance in their life
2) Basically people make varied form of investment for creating wealth to protect their families against pre-mature death and to protect income against disability sickness or critical illness
3) The main motive of the individuals investing is receives benefits US 1010D People generally consider insurance as a tax saving device
4) Mostly people prefer time to time form of investment as they are not willing to take high degree of risk
5) 72 of the respondents are preferred to invest in Traditional Plans
6) Most of the people prefer to make an annual investment up to a maximum of Rs20 000 per annum
7) When the product is like life insurance reputation of the company publicity of the company amp after sale services of the company matters a lot This means that people would choose that insurance company only where the quality of life advisors is satisfactory
8) Most people prefer to invest in Bajaj Allianz Life Insurance as compared to making an investment in Reliance Life Insurance
9) The most preferable Traditional plan of Reliance Life Insurance is Endowment Plan
10) The most preferable plan of Bajaj Allianz Life Insurance co is Cash Gain Plan
54
42) SUGGESTIONS amp RECOMMENDATIONS
Based on the observations of the study some suggestions for the organization are made as
follows
1) Quality of advisors is also as important as the quantity Thus company should go
mainly for qualified professionals
2) Company should increase its budget on publicity so that awareness can be increased
3) Clarity and transparency should be provided to the customer regarding various
products
4) Training sessions should be planned in advance so that schedule can be provided to
the advisor in advance
5) Apart from the Brand Positioning in urban area a strategy should be adopted by
Reliance to make its brand also near to middle level or high aspirant people because they
are the main source of the business in India
6) Awareness Camp to the sub urban area should be focused by Reliance
7) Some innovative technique or product is required in order to attract the consumer
43) LITERATURE REVIEW
55
1) Robi Elenekave has explained in detail why various retirement plans and pension plans donrsquot give the desired returns The main difficulty is the use of incorrect method for calculations done to find out the return on investment This is primarily due to wrong assumptions The study provides information about the various precautions which need to be considered before planning so that the desired results can be achieved
2) Another paper provides insight about how various financial sectors invest in bond market The study was how the different players investment different instruments according to the risk appetite and desired rate of return The study shows that life insurance sector mainly invests in government bond which are low return and low risk instrument The investment in government bond it shows that life insurance companies are more conservative in investment
3) K Subhash has presented the history of Indiarsquos life insurance industry in three stages before independence after independence and post liberalization which not only provides information but also help in analyzing the impact of these major changes The authors have also discussed the huge potential which exists in the rural India The insurance company must realize the importance of rural sector because the future lies there The author commented about the increasing share of private player in the existing market This confirms the availability of opportunity in this sector The paper also provides the importance of professional and focused approach which was given no importance
4) Tapen Sinha has discussed the various challenges and opportunities in the insurance market One of the very important factors which have been discussed in the study is the importance of developing new and better products As the scenario changes the need of an individual also changes so any organization must understand and fulfill these needs The new product development requires constant research so organization must also focus on it
5) Roger G Ibbotson discusses how financial planners and advisors have recently started to recognize that human capital must be taken into account when building optimal portfolios for individual investors Any investorrsquos human capital has a unique mortality risk However life insurance in its forms can hedge against this mortality risk Thus human capital affects both the optimal asset allocation and the optimal demand for life insurance This paper provides a unified framework based on human capital in order to enable individual investors to make both decisions jointly
6) Rakesh Niraj study tells how the flow of information in any organization is important For any organization to grow the flow of information must be good both upwards as well as ownwards The proper flow of information will also ensure proper flow of good and services from organization to customer and proper flow of information from customer to organization The information from customers will help the organization in providing better goods and services to the customer For the above purpose organization must ensure good channel partner who can provide the organization with correct feedback Hence it becomes very important for any organization to acquire good channel partners
56
7) Stephen P Robbins has discussed how group dynamics works in any organization The success of any organization depends on the success of its various teams and how these teams work together The book provides various techniques which can be used by any organization to get result from the team effort The conflict resolution is a major task in any group Various techniques which the organization can use in conflict resolution are also discussed Another important aspect covered is the importance of leadership in the organization The various forms of leadership have been discussed and the kinds of leadership which can be effective in particular situations are also discussed
8) R Wayne Mondy has discussed the importance of training and development in any organization The training provides skills to perform the current job where as the development involve learning beyond present need The various type of training are discussed which can be used according to the requirement Training and development are not only important for better performance of an individual but it also gives satisfaction The major factors which influence training and development are found to be management support commitment of trainee and trainer complexity of the organization The process of developing good training plans is also provided In another part author has discussed the importance of right man for right job The compensation strategies are also given which are very crucial for ant industry
9) Philip Kotler has discussed the importance of channels partners Better the channel partners better will be the delivery model Detailed discussion about how to design the channel structure so that all the requirements could be fulfilled is provided The various issues faced by the organization while managing the channels are also given When an organization has more than one channel it becomes very important that all the channels should be integrated in such a way that the organization get the best out of all At times due to the conflicting benefit of the different channels the conflict arise so various strategies to manage these issues is also discussed in the chapter
10) Michael J Etzel has written about the marketing of services The marketing of services is different from the goods because of the characteristic of service like intangibility inseparability heterogeneity etc Brief about pricing strategies is also given in case of services The authors have also given the impact of technological development on the services marketing The author has also given the importance of brand and after sales support in case of services as perception of the customers plays an important role In other part of the book the authors has described the importance of distribution channels and designing of the same A channel partner should be consider as partner according to discussion The legal complications associated with channels are also discussed These complications are necessary to take into the consideration while managing the channels The conflicting interest of channels both horizontally and vertically are also taken into the consideration
57
11) Boone has discussed about the importance of personal financial planning The concept of time value of money has also been elaborated The importance of creating and implementing budget is given under money management The other important concepts for financial planning like credit management and understanding taxes are also explained In one section the authors have discussed the importance of investment and what should be the major considerations while making any investment The considerations include the risk associated with the investment return on the investment etc The importance and benefits of life insurance has also been given The discussion also includes various legal aspects associated with life insurance The overview of retirement planning is also given which includes importance and benefit of retirement planning Various tools for proper retirement planning are also discussed
58
44) CONCLUSION
1) The customers are very much sensitive towards their investment They would like to invest only in that insurance company which enjoys good public image along with quality good services
2) The result of the survey conducted shows that Bajaj Allianz Life Insurance is the leader in life insurance industry but Reliance Life Insurance and other private players are giving it a close competition
3) The motive of the people behind investing in life insurance is the tax benefits that they would receive under sec 80C and 1010D
4) In Life Insurance industry the after sales support of the company is as important as the quality of life advisors
59
45) LIMITATIONS
There were some limitations faced during the study as discussed below
Since the study was taken for two months so there was a constraint of time and effort
The study was limited only to some of the Delhi regions so the results may be biased
Questionnaire was given to 125 people however only 50 responded to it which is very small for such type of study
The biasness of consumer or responses error cannot be eliminated
Most of the people are not aware about the Importance and the necessity of insurance in their life
Adverse perception of the people towards insurance sector- People consider insurance as a tax saving device
Lack of awareness about the earning opportunity in the insurance sector
60
46) BIBLIOGRAPHY
wwwreliancelifeinsurancecom
wwwadagroupcom
wwwirdacom
wwwbajajallianzlifeinsurancecom
wwwallianzbajajcom
47) ANNEXURE
61
QUESTIONNAIRE
A comparative analysis of consumer perception regarding Traditional plans of Reliance Life Insurance with that of Bajaj Allianz Life Insurance
NAME ___________________________
PERSONAL DETAILS
1) AGE_________________
1) OCCUPATION______________
2) INCOME___________________
3) FAMILY MEMBERS_________
Q1 Where do you prefer to investa) Fixed deposits b) Stock c) Mutual funds d) Insurance e) Others
Q2 What are your priorities for investmenta) Protecting your family against pre-mature death b) Wealth creation c) Retirement needs d) Child education and marriage e) Protect income against disability sickness or critical illness
Q3 What is your main motive behind investing in life insurancea) Tax benefit b) Savings c) Risk cover
Q4 What kind of investment do you prefera) High risk high gain b) Low risk low gain c) Moderate d) Vary times to times
62
Q5Are you interested to invest in Traditional Plansa) Yes b) No
Q6 What is your level of annual investmenta) below 20000 b) 20000-40000 c) above 40000
Q7 What factors would you consider most important before choosing an insurance company
a) publicity of the company b) reputation of the company c) quality of life advisors d) after sales-supporting of the company
Q8 Which life insurance company would you prefer the most to invest ina) Reliance life insurance b) Bajaj Allianz life insurance
Q9 If reliance life insurance then which particular plan you would like to invest ina) Reliance Term Plan b) Reliance Whole Life Plan c) Reliance Endowment Plan d) Reliance Special Endowment Plan
Q10 If Bajaj Allianz life insurance then which particular plan you would like to invest in
I ENDOWMENT PLAN
a) Bajaj Allianz Invest Gain
b) Bajaj Allianz save Care Economy SP
c) Bajaj Allianz life time care
d) Bajaj Allianz Super Saver plan
II MONEY BACK PLAN
a) Bajaj Allianz Cash Gain plan
63
64
- COMPANY PROFILE
- ABOUT RELIANCE LIFE INSURANCE
- HISTORY
- Reliance Capital Limited announced the launch of its life insurance business on February 1 2006 This was after obtaining the required regulatory approvals from the Registrar Of Companies and the Insurance Regulatory and Development Authority
- It was in August 2005 that the ball was set rolling when Reliance Capital Limited the financial arm of Reliance ndash Anil Dhirubhai Ambani Group (ADAG) ndash announced the requisition of 100 shareholding in AMP Sanmar Life Insurance Company Limited and the formal transfer of shares took place in October 2005 The company will issue all policy contracts under the Reliance Life Insurance Company limited name All the existing policy contracts also stand transferred to the Reliance Life Insurance entity with all the original contractual terms and commitments intact
- CORE VALUES
- Reliance Life Insurance Company Limited has some core values which are listed as follows
- Vision bull To be the first choice insurer for customers bull To be the preferred employer for staff in the insurance industry bull To be the number one insurer for creating shareholder value
- Mission As a responsible customer focused market leader we will strive to understand the insurance needs of the consumers and translate it into affordable products that deliver value for money
- 12) TRADITIONAL PLANS OF THE COMPANY
- 12A )TRADITIONAL PLAN OF RELIANCE LIFE INSURANCE-
- Life insurance products are designed to suit the requirements of customers Fundamentally the product provide for
- In every product to a certain degree risk cover is imperative for it to fall under the category of insurance Based on the coverage of the product the premiums are calculated and the customer pays accordingly In order to suggest the right product it is essential for an agent to understand the requirements of the customer well
- The traditional plans of the company have the following features-
- Fixed Tenure
- Potential for better returns
- Transparency
- Flexibility in investment
- Flexibility to invest more
- Flexibility to skip the premium
- Flexibility to choose the cover
- High liquidity
- Age term and sum assured decide the amount of premium
- Top- ups and switches are not allowed
- Reliance Life Insurance Company Limited has offered 9
- 1) Reliance term plan-
- 2) Reliance Whole Life Plan -
- 3) Reliance Endowment Plan -
- 4) Reliance Special Endowment Plan -
- 13) INDUSTRY PROFILE
- MEANING OF INSURANCE
- Insurance may be described as a social device to reduce or eliminate risk of loss to life and property Insurance is a collective bearing of risk Insurance is a financial device to spread the risks and losses of few people among a large number of people as people prefer small fixed liability instead of big uncertain and changing liability
- Insurance can be defined as a ldquolegal contract between two parties whereby one party called insurer undertakes to pay a fixed amount of money on the happening of a particular event which may be certain or uncertainrdquo The other party called insured pays in exchange a fixed sum known as premium
- Insurance is desired to safeguard oneself and onersquos family against possible losses on account of risks and perils It provides financial compensation for the losses suffered due to the happening of any unforeseen events
- IMPORTANCE OF INSURANCE
- Insurance services play predominant role in the process of financial Intermediary Today insurance industry is one of the most growing sectors in India There is lot of potential in the Indian Insurance Industry
- There are many issues which require study The scope of the study of Insurance industry of India would be very great as there are ongoing Developments in the industry after the opening of the sector
- Right now the insurance industry has great opportunities in a country like India or China which huge population Also the penetration of insurance in India is very low in both life and non-life segment so there is lot potential to be tapped Before starting the discussion on insurance industry and related issues we have to start with the basics of insurance So first we understand what is insurance How the word lsquoinsurancersquo is different from the word lsquoassurancersquo Etc
- HISTORY OF INSURANCE
- The concept of insurance is believed to have emerged almost 4500 years ago in the ancient land of Babylonia where traders used to bear risk of the carvan by giving loans which were later repaid with interest when the goods arrived safely
- The concept of insurance as we know today took shape in 1688 at a place called Lloydrsquos Coffee House in London where risk bearers used to meet to transact business This coffee house became so popular that Lloydrsquos became the one of the first modern insurance companies by the end of the eighteenth century
- Marine insurance companies came into existence by the end of the eighteenth century These companies were empowered to write fire and life insurance as well as marine The Great Fire of London in 1966 caused huge loss of property and life With a view to providing fire insurance facilities
- Dr Nicholas Barbon set up in 1967 the first fire insurance company known as the Fire office
- Life insurance in its modern form came to India from England in 1818 The Oriental Life Insurance Company was the first insurance company to be set up in India to help the widows of European community The insurance companies which came into existence between 1818 and 1869 treated
- Indian lives as subnormal and charged an extra premium of 15 to 20 per cent The first Indian insurance company the Bombay Mutual Life
- Assurance Society came into existence in 1870 to cover Indian lives at normal rates
- The Insurance Act 1938 the first comprehensive legislation governing both life and non-life branches of insurance were enacted to provide strict state control over insurance business This amended insurance Act looked into investments expenditure and management of these companies
- By the mid- 1950s there were 154 Indian insurers 16 foreign insurers and 75 provident societies carrying on life insurance business in India Insurance business flourished and so did scams irregularities and dubious investment practices by scores of companies As a result the government decided to nationalize the life assurance business in India The Life Insurance
- Corporation of India (LIC) was set up in 1956 The nationalization of life insurance was followed by general insurance in 1972
- MEANING OF LIFE INSURANCE
- There are three parties in a life insurance transaction the insurer the insured and the owner of the policy (policyholder) although the owner and the insured are often the same person
- Another important person involved in a life insurance policy is the beneficiary The beneficiary is the person or persons who will receive the policy proceeds upon the death of the insured
- Life insurance may be divided into two basic classes ndash term and permanent
- HISTORY OF LIFE INSURANCE
- Risk protection has been a primary goal of humans and institutions throughout history Protecting against risk is what insurance is all about
- Over 5000 years ago in China insurance was seen as a preventative measure against piracy on the sea Piracy in fact was so prevalent that as a way of spreading the risk a number of ships would carry a portion of another ships cargo so that if one ship was captured the entire shipment would not be lost
- In another part of the world nearly 4500 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
- Life insurance came about a little later in ancient Rome where burial clubs were formed to cover the funeral expenses of its members as well as help survivors monetarily With Romes fall around 450 AD most of the concepts of insurance were abandoned but aspects of it did continue through the Middle Ages particularly with merchant and artisan guilds These provided forms of member insurance covering risks like fire flood theft disability death and even imprisonment
- During the feudal period early forms of insurance ebbed with the decline of travel and long-distance trade But during the 14th to 16th centuries transportation commerce and insurance would again reemerge
- And similar to ancient Rome burial societies were formed in the Buddhist period to help families build houses and to protect widows and children
- Modern Insurance
- Illegal almost everywhere else in Europe life insurance in England was vigorously promoted in the three decades following the Glorious Revolution of 1688 The type of insurance we see today owes its roots to 17th century England Lloyds of London or as they were known then Lloyds Coffee House was the location where merchants ship owners and underwriters met to discuss and transact business deals
- While serving as a means of risk-avoidance life insurance also appealed strongly to the gambling instincts of Englands burgeoning middle class
- Gambling was so rampant in fact that when newspapers published names of prominent people who were seriously ill bets were placed at Lloydrsquos on their anticipated dates of death Reacting against such practices 79 merchant underwriters broke away in 1769 and two years later formed a ldquoNew Lloydrsquos Coffee Houserdquo that became known as the ldquoreal Lloydrsquosrdquo Making wagers on peoples deaths ceased in 1774 when parliament forbade the practice
- Insurance moves to America
- The US insurance industry was built on the British model The year 1735 saw the birth of the first insurance company in the American colonies in
- Charleston SC The Presbyterian Synod of Philadelphia in 1759 sponsored the first life insurance corporation in America for the benefit of ministers and their dependents And the first life insurance policy for the general public in the United States was issued in Philadelphia on May 22 1761
- But it wasnt until 80 years later (after 1840) that life insurance really tookoff in a big way The key to its success was reducing the opposition from religious groups
- In 1835 the infamous New York fire drew peoples 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
- With the creation of the automobile public liability insurance which first made its appearance in the 1880s gained importance and acceptance
- More advancement was made to insurance during the process of industrialization In 1897 the British government passed the Workmens Compensation Act which made it mandatory for a company to insure its employees against industrial accidents
- During 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 most labor 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
- BENEFITS OF LIFE INSURANCE
- 1) Risk cover -Life Insurance contracts allow an individual to have a risk cover against any unfortunate event of the future
- 2) Tax Deduction -Under section 80C of the Income Tax Act of 1961 one can get tax deduction on premiums up to one lakh rupees Life Insurance policies thus decrease the total taxable income of an individual
- 3) Loans -An individual can easily access loans from different financial institutions by pledging his insurance policies
- 4) Retirement Planning -What had provided protection against the financial consequences of premature death may now be used to help them enjoy their retirement years
- 5) Educational Needs -Similar to retirement planning the cash values that flow from ones life insurance schemes can be utilized for educational needs of the insurer or his children
- The Life Insurance Industry has an enviable track record among public sector units It has a Consistent profit and dividend paying record accompanied by a steady growth in its financial resources Through investments in the Government sector and socially- oriented sectors the Industry has contributed immensely to the nations development The industry is recognized as one of the largest financial Institutions in the country The ventures initiated by the industry in the areas of Mutual Fund
- Housing Finance has done exceedingly well in recent years To protect the countrys foreign exchange reserves the reinsurance arrangement are so organized that maximum retention is made possible within the country while at the same time protecting interests of the policy holders
- 22) CURRENT SCENARIO OF RELIANCE LIFE INSURANCE
- RLIC offers wide range of innovative life insurance products targeted at individuals and groups It offers need based products that caters to four distinct segments namely protection child retirement and investment plans RLIC is committed to emerge as a transnational Life Insurer of global scale and standard
- CH - 3) RESEARCH METHODOLOGY
- RESEARCH DESIGN-
- SAMPLING TECHNIQUES-
- THE PRIMARY OBJECTIVEOF THE STUDY-
- 34) OBJECTIVES
- 7) Some innovative technique or product is required in order to attract the consumer
- 45) LIMITATIONS
- 46) BIBLIOGRAPHY
-
4) FAMILY MEMBERS
a) 2b) 3c) 4d) Above 4
OPTION NO OF RESPONDENT PERCENTAGE
2 11 22
3 9 18
4 24 48
Above 4 6 12
TOTAL 50 100
INTERPRETATION The above bar graph shows that 22 of the total respondents had a family of 2 members 18 of them had 3 family members 48 of them had 4 family members and 12 of them had the no of family members above 4
Q1 Where do you prefer to invest
22 18
48
120
1020304050
No
o
f re
spo
nd
ents
2 3 4 Above 4
No of family members
MEMBER WISE CLASSIFICATION
39
a) fixed deposits
b) stock
c) mutual funds
d) insurance
e) others
Option No of respondents Percentage
Fixed deposits 5 10
Stock 10 20
Mutual fund 10 20
Insurance 18 36
others 7 14
TOTAL 50 100
Interpretation The above pie chart shows that out of 50 respondents 10 preferred to invest in fixed deposits 20 in stocks 20 in mutual funds 36 in insurance and 14 in others like property gold etc
Q2 What are your priorities for investment
40
a) protecting your family against pre-mature death
b) wealth creation
c) retirement needs
d) child education and marriage
e) protect income against disability sickness or critical illness
Option No of respondents Percentage
Protecting your family against pre mature death
10 20
Wealth creation 14 28
Retirement needs 5 10
Child education and marriage 7 14
Protect income against disability sickness or critical illness
14 28
TOTAL 50 100
Interpretation The above pie chart shows that out of 50 respondents 20 of them invest for protecting their family against premature death 28 for creating wealth 10 for meeting their future retirement needs 14 for child education amp marriage and 28 for protection against disability and sickness
Q3 What is your main motive behind investing in life insurance
41
a) tax benefit
b) savings
c) risk cover
Option No of respondents Percentage
Tax benefits 27 54
Savings 5 10
Risk cover 18 36
TOTAL 50 100
Interpretation The above pie chart shows that out of the sample respondents 54 have tax benefit 10 have savings and 36 have risk cover as their main motive for making an investment in life
Q4 What kind of investment do you prefer
42
a) high risk high gain
b) low risk low gain
c) moderate
d) vary times to times
Option No of respondents Percentage
High risk high gain 8 16
Low risk low gain 5 10
Moderate 12 24
Vary times to times 25 50
TOTAL 50 100
Interpretation The above pie chart shows that out of 50 respondents 16 preferred high risk- high gain form of investment 10 preferred low risk- low gain form of investment 24 preferred moderate investment and 50 preferred varied form of investment
43
Q5Are you interested to invest in Traditional Plans
a) YES
b) NO
Option No of respondents Percentage
YES 36 72
NO 14 28
TOTAL 50 100
Interpretation The above pie chart shows that 72 of the respondents preferred to invest in Traditional Plans
44
Q6 What is your level of annual investmenta) below 20000
b) 20000-40000
c) above 40000
Option No of respondents Percentage
Below 20000 41 82
20000-40000 7 14
Above 40000 2 4
TOTAL 50 100
Interpretation The above pie chart shows that 82 of the respondents are willing to invest below Rs 20000 per annum 14 of them want to invest within Rs 20000 per annum to Rs 40000 and 4 wanted to invest over and above Rs 40000
45
Q7 What factors would you consider most important before choosing an insurance policy
a) publicity of the company
b) reputation of the company
c) quality of life advisors
d) after sales-supporting of the company
Option No of respondents Percentage
Publicity of the co 5 20
Reputation of the co 25 50
Quality of life advisors 10 10
After sale-services 10 20
TOTAL 50 100
Interpretation out of the sample respondents 20 considers publicity of the company 50 considers reputation of the company 10 considers quality of life advisors and 20 considers after sales support of the company as the most important factor for choosing an insurance company
46
Q8 Which life insurance company would you prefer the most to invest ina) reliance life insurance (RLIC)
b) Bajaj Allianz life insurance
Option No of respondents Percentage
RLIC 21 42
BAJAJ ALLIANZ 29 58
TOTAL 50 100
Interpretation Out of 50 respondents 42 preferred to invest in reliance life insurance over 58 of the respondents who prefer to invest in Bajaj Allianz life insurance
47
Q9 If reliance life insurance then which particular plan you would like to invest ina) Reliance Term Plan
b) Reliance Whole Life Plan
c) Reliance Endowment Plan
d) Reliance Special Endowment Plan
Option No of respondents Percentage
Reliance term plan 6 2858
Reliance whole life plan 3 1428
Reliance endowment plan 9 4286
Reliance special endowment plan 3 1428
TOTAL 21 100
Interpretation Out of 21 respondents 2858 preferred to invest in term plan 1428 in whole life plan 4286 in endowment plan and 1428 of them preferred to invest in special endowment plan of reliance life insurance
48
Q10 If Bajaj Allianz life insurance then which particular plan you would like to invest in
I ENDOWMENT PLAN a) Bajaj Allianz Invest Gain
b) Bajaj Allianz save Care Economy SP
c) Bajaj Allianz life time care
d) Bajaj Allianz Super Saver plan
II MONEY BACK PLAN i Bajaj Allianz Cash Gain plan
Option No of respondents Percentage
Invest gain plan 3 1035
Save care economy SP 6 2069
Life time care 7 2415
Super saver plan 3 1035
Cash gain plan 10 3446
TOTAL 29 100
Interpretation Out of 29 respondents 1035 of them plan to invest in Bajaj Allianz- Invest Gain 2069 wish to invest in Bajaj Allianz save Care Economy SP 2415 want to invest in Bajaj Allianz life time care 1035 in Bajaj Allianz Super Saver plan and 3446 prefer to invest in Bajaj Allianz Cash Gain plan
49
32) SIGNIFICANCE OF STUDY
Life insurance is one of the most rapidly growing sectors in India The main reason
behind the growth can attributed to the high population density improving economical
condition improving education level and improving awareness Due to these factors there
is still huge scope for growth in this sector Like any other business when the
opportunities are present everybody tends to enter the industries This growth hence
fetches the new competitors as well as new strategies from existing players To sustain in
any competitive industry the organization must adapt to existing strategies and adopt
new ones This study will focus on the analysis of Reliance Life Insurance in comparison
with the present scenario of Bajaj Allianz Life Insurance with respect to the Traditional
Plans of both the companyrsquos This will mainly cover the following aspects
To know about the awareness and popularity of various Traditional Plans offered
by Reliance Life Insurance and Bajaj Allianz Life Insurance
How Reliance Life Insurance can develop and sustain a good distribution
network
These will provide it benefit both in terms of better market coverage as well as better
penetration
50
33) SCOPE OF THE STUDY
1) This helps in finding out vast potential of insurance company
2) The study was conducted in National Capital Region (NCR) only
3) The number of respondents to be surveyed can be improved
4) This study was conducted by comparing the performances amp products of three private
amp government insurance players in insurance industry
5) This study was conducted to analyze the market stand of Reliance life insurance
Company limited and Bajaj Allianz Life Insurance Company Limited of India insurance
companies
6) This study is done to eliminate all the myths which people have in their minds
regarding Insurance Sector
51
34) OBJECTIVES
To have a detailed understanding of Reliance Life Insurance and Bajaj Allianz Life Insurance
To find out various reasons considered while investing in policies
To get knowledge about the market exposure and future prospects about Reliance Life Insurance
To know the perception of the consumers about the life insurance
To analyze the Traditional plans of Reliance Life Insurance and compare it with Bajaj Allianz
To know about the brand awareness of Reliance Life Insurance its customer preferences over Bajaj Allianz in the market
To study a proper knowledge about the life insurance industry
To understand the consumer choice while investing in policies
52
CHAPTER 4
DISCUSSION AND FINDINGS OF THE STUDY
FINDINGS OF THE STUDY RECOMMENDATION AND SUGGESTIONS CONCLUSION LIMITATIONS BIBLIOGRAPHY ANNEXUREQUESTIONNAIRE
53
41) FINDINGS OF THE STUDY
1) The survey reveals that still a large proportion of population is interested to invest in other forms of investment other than insurance as still most of them are unaware about the importance of insurance in their life
2) Basically people make varied form of investment for creating wealth to protect their families against pre-mature death and to protect income against disability sickness or critical illness
3) The main motive of the individuals investing is receives benefits US 1010D People generally consider insurance as a tax saving device
4) Mostly people prefer time to time form of investment as they are not willing to take high degree of risk
5) 72 of the respondents are preferred to invest in Traditional Plans
6) Most of the people prefer to make an annual investment up to a maximum of Rs20 000 per annum
7) When the product is like life insurance reputation of the company publicity of the company amp after sale services of the company matters a lot This means that people would choose that insurance company only where the quality of life advisors is satisfactory
8) Most people prefer to invest in Bajaj Allianz Life Insurance as compared to making an investment in Reliance Life Insurance
9) The most preferable Traditional plan of Reliance Life Insurance is Endowment Plan
10) The most preferable plan of Bajaj Allianz Life Insurance co is Cash Gain Plan
54
42) SUGGESTIONS amp RECOMMENDATIONS
Based on the observations of the study some suggestions for the organization are made as
follows
1) Quality of advisors is also as important as the quantity Thus company should go
mainly for qualified professionals
2) Company should increase its budget on publicity so that awareness can be increased
3) Clarity and transparency should be provided to the customer regarding various
products
4) Training sessions should be planned in advance so that schedule can be provided to
the advisor in advance
5) Apart from the Brand Positioning in urban area a strategy should be adopted by
Reliance to make its brand also near to middle level or high aspirant people because they
are the main source of the business in India
6) Awareness Camp to the sub urban area should be focused by Reliance
7) Some innovative technique or product is required in order to attract the consumer
43) LITERATURE REVIEW
55
1) Robi Elenekave has explained in detail why various retirement plans and pension plans donrsquot give the desired returns The main difficulty is the use of incorrect method for calculations done to find out the return on investment This is primarily due to wrong assumptions The study provides information about the various precautions which need to be considered before planning so that the desired results can be achieved
2) Another paper provides insight about how various financial sectors invest in bond market The study was how the different players investment different instruments according to the risk appetite and desired rate of return The study shows that life insurance sector mainly invests in government bond which are low return and low risk instrument The investment in government bond it shows that life insurance companies are more conservative in investment
3) K Subhash has presented the history of Indiarsquos life insurance industry in three stages before independence after independence and post liberalization which not only provides information but also help in analyzing the impact of these major changes The authors have also discussed the huge potential which exists in the rural India The insurance company must realize the importance of rural sector because the future lies there The author commented about the increasing share of private player in the existing market This confirms the availability of opportunity in this sector The paper also provides the importance of professional and focused approach which was given no importance
4) Tapen Sinha has discussed the various challenges and opportunities in the insurance market One of the very important factors which have been discussed in the study is the importance of developing new and better products As the scenario changes the need of an individual also changes so any organization must understand and fulfill these needs The new product development requires constant research so organization must also focus on it
5) Roger G Ibbotson discusses how financial planners and advisors have recently started to recognize that human capital must be taken into account when building optimal portfolios for individual investors Any investorrsquos human capital has a unique mortality risk However life insurance in its forms can hedge against this mortality risk Thus human capital affects both the optimal asset allocation and the optimal demand for life insurance This paper provides a unified framework based on human capital in order to enable individual investors to make both decisions jointly
6) Rakesh Niraj study tells how the flow of information in any organization is important For any organization to grow the flow of information must be good both upwards as well as ownwards The proper flow of information will also ensure proper flow of good and services from organization to customer and proper flow of information from customer to organization The information from customers will help the organization in providing better goods and services to the customer For the above purpose organization must ensure good channel partner who can provide the organization with correct feedback Hence it becomes very important for any organization to acquire good channel partners
56
7) Stephen P Robbins has discussed how group dynamics works in any organization The success of any organization depends on the success of its various teams and how these teams work together The book provides various techniques which can be used by any organization to get result from the team effort The conflict resolution is a major task in any group Various techniques which the organization can use in conflict resolution are also discussed Another important aspect covered is the importance of leadership in the organization The various forms of leadership have been discussed and the kinds of leadership which can be effective in particular situations are also discussed
8) R Wayne Mondy has discussed the importance of training and development in any organization The training provides skills to perform the current job where as the development involve learning beyond present need The various type of training are discussed which can be used according to the requirement Training and development are not only important for better performance of an individual but it also gives satisfaction The major factors which influence training and development are found to be management support commitment of trainee and trainer complexity of the organization The process of developing good training plans is also provided In another part author has discussed the importance of right man for right job The compensation strategies are also given which are very crucial for ant industry
9) Philip Kotler has discussed the importance of channels partners Better the channel partners better will be the delivery model Detailed discussion about how to design the channel structure so that all the requirements could be fulfilled is provided The various issues faced by the organization while managing the channels are also given When an organization has more than one channel it becomes very important that all the channels should be integrated in such a way that the organization get the best out of all At times due to the conflicting benefit of the different channels the conflict arise so various strategies to manage these issues is also discussed in the chapter
10) Michael J Etzel has written about the marketing of services The marketing of services is different from the goods because of the characteristic of service like intangibility inseparability heterogeneity etc Brief about pricing strategies is also given in case of services The authors have also given the impact of technological development on the services marketing The author has also given the importance of brand and after sales support in case of services as perception of the customers plays an important role In other part of the book the authors has described the importance of distribution channels and designing of the same A channel partner should be consider as partner according to discussion The legal complications associated with channels are also discussed These complications are necessary to take into the consideration while managing the channels The conflicting interest of channels both horizontally and vertically are also taken into the consideration
57
11) Boone has discussed about the importance of personal financial planning The concept of time value of money has also been elaborated The importance of creating and implementing budget is given under money management The other important concepts for financial planning like credit management and understanding taxes are also explained In one section the authors have discussed the importance of investment and what should be the major considerations while making any investment The considerations include the risk associated with the investment return on the investment etc The importance and benefits of life insurance has also been given The discussion also includes various legal aspects associated with life insurance The overview of retirement planning is also given which includes importance and benefit of retirement planning Various tools for proper retirement planning are also discussed
58
44) CONCLUSION
1) The customers are very much sensitive towards their investment They would like to invest only in that insurance company which enjoys good public image along with quality good services
2) The result of the survey conducted shows that Bajaj Allianz Life Insurance is the leader in life insurance industry but Reliance Life Insurance and other private players are giving it a close competition
3) The motive of the people behind investing in life insurance is the tax benefits that they would receive under sec 80C and 1010D
4) In Life Insurance industry the after sales support of the company is as important as the quality of life advisors
59
45) LIMITATIONS
There were some limitations faced during the study as discussed below
Since the study was taken for two months so there was a constraint of time and effort
The study was limited only to some of the Delhi regions so the results may be biased
Questionnaire was given to 125 people however only 50 responded to it which is very small for such type of study
The biasness of consumer or responses error cannot be eliminated
Most of the people are not aware about the Importance and the necessity of insurance in their life
Adverse perception of the people towards insurance sector- People consider insurance as a tax saving device
Lack of awareness about the earning opportunity in the insurance sector
60
46) BIBLIOGRAPHY
wwwreliancelifeinsurancecom
wwwadagroupcom
wwwirdacom
wwwbajajallianzlifeinsurancecom
wwwallianzbajajcom
47) ANNEXURE
61
QUESTIONNAIRE
A comparative analysis of consumer perception regarding Traditional plans of Reliance Life Insurance with that of Bajaj Allianz Life Insurance
NAME ___________________________
PERSONAL DETAILS
1) AGE_________________
1) OCCUPATION______________
2) INCOME___________________
3) FAMILY MEMBERS_________
Q1 Where do you prefer to investa) Fixed deposits b) Stock c) Mutual funds d) Insurance e) Others
Q2 What are your priorities for investmenta) Protecting your family against pre-mature death b) Wealth creation c) Retirement needs d) Child education and marriage e) Protect income against disability sickness or critical illness
Q3 What is your main motive behind investing in life insurancea) Tax benefit b) Savings c) Risk cover
Q4 What kind of investment do you prefera) High risk high gain b) Low risk low gain c) Moderate d) Vary times to times
62
Q5Are you interested to invest in Traditional Plansa) Yes b) No
Q6 What is your level of annual investmenta) below 20000 b) 20000-40000 c) above 40000
Q7 What factors would you consider most important before choosing an insurance company
a) publicity of the company b) reputation of the company c) quality of life advisors d) after sales-supporting of the company
Q8 Which life insurance company would you prefer the most to invest ina) Reliance life insurance b) Bajaj Allianz life insurance
Q9 If reliance life insurance then which particular plan you would like to invest ina) Reliance Term Plan b) Reliance Whole Life Plan c) Reliance Endowment Plan d) Reliance Special Endowment Plan
Q10 If Bajaj Allianz life insurance then which particular plan you would like to invest in
I ENDOWMENT PLAN
a) Bajaj Allianz Invest Gain
b) Bajaj Allianz save Care Economy SP
c) Bajaj Allianz life time care
d) Bajaj Allianz Super Saver plan
II MONEY BACK PLAN
a) Bajaj Allianz Cash Gain plan
63
64
- COMPANY PROFILE
- ABOUT RELIANCE LIFE INSURANCE
- HISTORY
- Reliance Capital Limited announced the launch of its life insurance business on February 1 2006 This was after obtaining the required regulatory approvals from the Registrar Of Companies and the Insurance Regulatory and Development Authority
- It was in August 2005 that the ball was set rolling when Reliance Capital Limited the financial arm of Reliance ndash Anil Dhirubhai Ambani Group (ADAG) ndash announced the requisition of 100 shareholding in AMP Sanmar Life Insurance Company Limited and the formal transfer of shares took place in October 2005 The company will issue all policy contracts under the Reliance Life Insurance Company limited name All the existing policy contracts also stand transferred to the Reliance Life Insurance entity with all the original contractual terms and commitments intact
- CORE VALUES
- Reliance Life Insurance Company Limited has some core values which are listed as follows
- Vision bull To be the first choice insurer for customers bull To be the preferred employer for staff in the insurance industry bull To be the number one insurer for creating shareholder value
- Mission As a responsible customer focused market leader we will strive to understand the insurance needs of the consumers and translate it into affordable products that deliver value for money
- 12) TRADITIONAL PLANS OF THE COMPANY
- 12A )TRADITIONAL PLAN OF RELIANCE LIFE INSURANCE-
- Life insurance products are designed to suit the requirements of customers Fundamentally the product provide for
- In every product to a certain degree risk cover is imperative for it to fall under the category of insurance Based on the coverage of the product the premiums are calculated and the customer pays accordingly In order to suggest the right product it is essential for an agent to understand the requirements of the customer well
- The traditional plans of the company have the following features-
- Fixed Tenure
- Potential for better returns
- Transparency
- Flexibility in investment
- Flexibility to invest more
- Flexibility to skip the premium
- Flexibility to choose the cover
- High liquidity
- Age term and sum assured decide the amount of premium
- Top- ups and switches are not allowed
- Reliance Life Insurance Company Limited has offered 9
- 1) Reliance term plan-
- 2) Reliance Whole Life Plan -
- 3) Reliance Endowment Plan -
- 4) Reliance Special Endowment Plan -
- 13) INDUSTRY PROFILE
- MEANING OF INSURANCE
- Insurance may be described as a social device to reduce or eliminate risk of loss to life and property Insurance is a collective bearing of risk Insurance is a financial device to spread the risks and losses of few people among a large number of people as people prefer small fixed liability instead of big uncertain and changing liability
- Insurance can be defined as a ldquolegal contract between two parties whereby one party called insurer undertakes to pay a fixed amount of money on the happening of a particular event which may be certain or uncertainrdquo The other party called insured pays in exchange a fixed sum known as premium
- Insurance is desired to safeguard oneself and onersquos family against possible losses on account of risks and perils It provides financial compensation for the losses suffered due to the happening of any unforeseen events
- IMPORTANCE OF INSURANCE
- Insurance services play predominant role in the process of financial Intermediary Today insurance industry is one of the most growing sectors in India There is lot of potential in the Indian Insurance Industry
- There are many issues which require study The scope of the study of Insurance industry of India would be very great as there are ongoing Developments in the industry after the opening of the sector
- Right now the insurance industry has great opportunities in a country like India or China which huge population Also the penetration of insurance in India is very low in both life and non-life segment so there is lot potential to be tapped Before starting the discussion on insurance industry and related issues we have to start with the basics of insurance So first we understand what is insurance How the word lsquoinsurancersquo is different from the word lsquoassurancersquo Etc
- HISTORY OF INSURANCE
- The concept of insurance is believed to have emerged almost 4500 years ago in the ancient land of Babylonia where traders used to bear risk of the carvan by giving loans which were later repaid with interest when the goods arrived safely
- The concept of insurance as we know today took shape in 1688 at a place called Lloydrsquos Coffee House in London where risk bearers used to meet to transact business This coffee house became so popular that Lloydrsquos became the one of the first modern insurance companies by the end of the eighteenth century
- Marine insurance companies came into existence by the end of the eighteenth century These companies were empowered to write fire and life insurance as well as marine The Great Fire of London in 1966 caused huge loss of property and life With a view to providing fire insurance facilities
- Dr Nicholas Barbon set up in 1967 the first fire insurance company known as the Fire office
- Life insurance in its modern form came to India from England in 1818 The Oriental Life Insurance Company was the first insurance company to be set up in India to help the widows of European community The insurance companies which came into existence between 1818 and 1869 treated
- Indian lives as subnormal and charged an extra premium of 15 to 20 per cent The first Indian insurance company the Bombay Mutual Life
- Assurance Society came into existence in 1870 to cover Indian lives at normal rates
- The Insurance Act 1938 the first comprehensive legislation governing both life and non-life branches of insurance were enacted to provide strict state control over insurance business This amended insurance Act looked into investments expenditure and management of these companies
- By the mid- 1950s there were 154 Indian insurers 16 foreign insurers and 75 provident societies carrying on life insurance business in India Insurance business flourished and so did scams irregularities and dubious investment practices by scores of companies As a result the government decided to nationalize the life assurance business in India The Life Insurance
- Corporation of India (LIC) was set up in 1956 The nationalization of life insurance was followed by general insurance in 1972
- MEANING OF LIFE INSURANCE
- There are three parties in a life insurance transaction the insurer the insured and the owner of the policy (policyholder) although the owner and the insured are often the same person
- Another important person involved in a life insurance policy is the beneficiary The beneficiary is the person or persons who will receive the policy proceeds upon the death of the insured
- Life insurance may be divided into two basic classes ndash term and permanent
- HISTORY OF LIFE INSURANCE
- Risk protection has been a primary goal of humans and institutions throughout history Protecting against risk is what insurance is all about
- Over 5000 years ago in China insurance was seen as a preventative measure against piracy on the sea Piracy in fact was so prevalent that as a way of spreading the risk a number of ships would carry a portion of another ships cargo so that if one ship was captured the entire shipment would not be lost
- In another part of the world nearly 4500 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
- Life insurance came about a little later in ancient Rome where burial clubs were formed to cover the funeral expenses of its members as well as help survivors monetarily With Romes fall around 450 AD most of the concepts of insurance were abandoned but aspects of it did continue through the Middle Ages particularly with merchant and artisan guilds These provided forms of member insurance covering risks like fire flood theft disability death and even imprisonment
- During the feudal period early forms of insurance ebbed with the decline of travel and long-distance trade But during the 14th to 16th centuries transportation commerce and insurance would again reemerge
- And similar to ancient Rome burial societies were formed in the Buddhist period to help families build houses and to protect widows and children
- Modern Insurance
- Illegal almost everywhere else in Europe life insurance in England was vigorously promoted in the three decades following the Glorious Revolution of 1688 The type of insurance we see today owes its roots to 17th century England Lloyds of London or as they were known then Lloyds Coffee House was the location where merchants ship owners and underwriters met to discuss and transact business deals
- While serving as a means of risk-avoidance life insurance also appealed strongly to the gambling instincts of Englands burgeoning middle class
- Gambling was so rampant in fact that when newspapers published names of prominent people who were seriously ill bets were placed at Lloydrsquos on their anticipated dates of death Reacting against such practices 79 merchant underwriters broke away in 1769 and two years later formed a ldquoNew Lloydrsquos Coffee Houserdquo that became known as the ldquoreal Lloydrsquosrdquo Making wagers on peoples deaths ceased in 1774 when parliament forbade the practice
- Insurance moves to America
- The US insurance industry was built on the British model The year 1735 saw the birth of the first insurance company in the American colonies in
- Charleston SC The Presbyterian Synod of Philadelphia in 1759 sponsored the first life insurance corporation in America for the benefit of ministers and their dependents And the first life insurance policy for the general public in the United States was issued in Philadelphia on May 22 1761
- But it wasnt until 80 years later (after 1840) that life insurance really tookoff in a big way The key to its success was reducing the opposition from religious groups
- In 1835 the infamous New York fire drew peoples 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
- With the creation of the automobile public liability insurance which first made its appearance in the 1880s gained importance and acceptance
- More advancement was made to insurance during the process of industrialization In 1897 the British government passed the Workmens Compensation Act which made it mandatory for a company to insure its employees against industrial accidents
- During 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 most labor 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
- BENEFITS OF LIFE INSURANCE
- 1) Risk cover -Life Insurance contracts allow an individual to have a risk cover against any unfortunate event of the future
- 2) Tax Deduction -Under section 80C of the Income Tax Act of 1961 one can get tax deduction on premiums up to one lakh rupees Life Insurance policies thus decrease the total taxable income of an individual
- 3) Loans -An individual can easily access loans from different financial institutions by pledging his insurance policies
- 4) Retirement Planning -What had provided protection against the financial consequences of premature death may now be used to help them enjoy their retirement years
- 5) Educational Needs -Similar to retirement planning the cash values that flow from ones life insurance schemes can be utilized for educational needs of the insurer or his children
- The Life Insurance Industry has an enviable track record among public sector units It has a Consistent profit and dividend paying record accompanied by a steady growth in its financial resources Through investments in the Government sector and socially- oriented sectors the Industry has contributed immensely to the nations development The industry is recognized as one of the largest financial Institutions in the country The ventures initiated by the industry in the areas of Mutual Fund
- Housing Finance has done exceedingly well in recent years To protect the countrys foreign exchange reserves the reinsurance arrangement are so organized that maximum retention is made possible within the country while at the same time protecting interests of the policy holders
- 22) CURRENT SCENARIO OF RELIANCE LIFE INSURANCE
- RLIC offers wide range of innovative life insurance products targeted at individuals and groups It offers need based products that caters to four distinct segments namely protection child retirement and investment plans RLIC is committed to emerge as a transnational Life Insurer of global scale and standard
- CH - 3) RESEARCH METHODOLOGY
- RESEARCH DESIGN-
- SAMPLING TECHNIQUES-
- THE PRIMARY OBJECTIVEOF THE STUDY-
- 34) OBJECTIVES
- 7) Some innovative technique or product is required in order to attract the consumer
- 45) LIMITATIONS
- 46) BIBLIOGRAPHY
-
a) fixed deposits
b) stock
c) mutual funds
d) insurance
e) others
Option No of respondents Percentage
Fixed deposits 5 10
Stock 10 20
Mutual fund 10 20
Insurance 18 36
others 7 14
TOTAL 50 100
Interpretation The above pie chart shows that out of 50 respondents 10 preferred to invest in fixed deposits 20 in stocks 20 in mutual funds 36 in insurance and 14 in others like property gold etc
Q2 What are your priorities for investment
40
a) protecting your family against pre-mature death
b) wealth creation
c) retirement needs
d) child education and marriage
e) protect income against disability sickness or critical illness
Option No of respondents Percentage
Protecting your family against pre mature death
10 20
Wealth creation 14 28
Retirement needs 5 10
Child education and marriage 7 14
Protect income against disability sickness or critical illness
14 28
TOTAL 50 100
Interpretation The above pie chart shows that out of 50 respondents 20 of them invest for protecting their family against premature death 28 for creating wealth 10 for meeting their future retirement needs 14 for child education amp marriage and 28 for protection against disability and sickness
Q3 What is your main motive behind investing in life insurance
41
a) tax benefit
b) savings
c) risk cover
Option No of respondents Percentage
Tax benefits 27 54
Savings 5 10
Risk cover 18 36
TOTAL 50 100
Interpretation The above pie chart shows that out of the sample respondents 54 have tax benefit 10 have savings and 36 have risk cover as their main motive for making an investment in life
Q4 What kind of investment do you prefer
42
a) high risk high gain
b) low risk low gain
c) moderate
d) vary times to times
Option No of respondents Percentage
High risk high gain 8 16
Low risk low gain 5 10
Moderate 12 24
Vary times to times 25 50
TOTAL 50 100
Interpretation The above pie chart shows that out of 50 respondents 16 preferred high risk- high gain form of investment 10 preferred low risk- low gain form of investment 24 preferred moderate investment and 50 preferred varied form of investment
43
Q5Are you interested to invest in Traditional Plans
a) YES
b) NO
Option No of respondents Percentage
YES 36 72
NO 14 28
TOTAL 50 100
Interpretation The above pie chart shows that 72 of the respondents preferred to invest in Traditional Plans
44
Q6 What is your level of annual investmenta) below 20000
b) 20000-40000
c) above 40000
Option No of respondents Percentage
Below 20000 41 82
20000-40000 7 14
Above 40000 2 4
TOTAL 50 100
Interpretation The above pie chart shows that 82 of the respondents are willing to invest below Rs 20000 per annum 14 of them want to invest within Rs 20000 per annum to Rs 40000 and 4 wanted to invest over and above Rs 40000
45
Q7 What factors would you consider most important before choosing an insurance policy
a) publicity of the company
b) reputation of the company
c) quality of life advisors
d) after sales-supporting of the company
Option No of respondents Percentage
Publicity of the co 5 20
Reputation of the co 25 50
Quality of life advisors 10 10
After sale-services 10 20
TOTAL 50 100
Interpretation out of the sample respondents 20 considers publicity of the company 50 considers reputation of the company 10 considers quality of life advisors and 20 considers after sales support of the company as the most important factor for choosing an insurance company
46
Q8 Which life insurance company would you prefer the most to invest ina) reliance life insurance (RLIC)
b) Bajaj Allianz life insurance
Option No of respondents Percentage
RLIC 21 42
BAJAJ ALLIANZ 29 58
TOTAL 50 100
Interpretation Out of 50 respondents 42 preferred to invest in reliance life insurance over 58 of the respondents who prefer to invest in Bajaj Allianz life insurance
47
Q9 If reliance life insurance then which particular plan you would like to invest ina) Reliance Term Plan
b) Reliance Whole Life Plan
c) Reliance Endowment Plan
d) Reliance Special Endowment Plan
Option No of respondents Percentage
Reliance term plan 6 2858
Reliance whole life plan 3 1428
Reliance endowment plan 9 4286
Reliance special endowment plan 3 1428
TOTAL 21 100
Interpretation Out of 21 respondents 2858 preferred to invest in term plan 1428 in whole life plan 4286 in endowment plan and 1428 of them preferred to invest in special endowment plan of reliance life insurance
48
Q10 If Bajaj Allianz life insurance then which particular plan you would like to invest in
I ENDOWMENT PLAN a) Bajaj Allianz Invest Gain
b) Bajaj Allianz save Care Economy SP
c) Bajaj Allianz life time care
d) Bajaj Allianz Super Saver plan
II MONEY BACK PLAN i Bajaj Allianz Cash Gain plan
Option No of respondents Percentage
Invest gain plan 3 1035
Save care economy SP 6 2069
Life time care 7 2415
Super saver plan 3 1035
Cash gain plan 10 3446
TOTAL 29 100
Interpretation Out of 29 respondents 1035 of them plan to invest in Bajaj Allianz- Invest Gain 2069 wish to invest in Bajaj Allianz save Care Economy SP 2415 want to invest in Bajaj Allianz life time care 1035 in Bajaj Allianz Super Saver plan and 3446 prefer to invest in Bajaj Allianz Cash Gain plan
49
32) SIGNIFICANCE OF STUDY
Life insurance is one of the most rapidly growing sectors in India The main reason
behind the growth can attributed to the high population density improving economical
condition improving education level and improving awareness Due to these factors there
is still huge scope for growth in this sector Like any other business when the
opportunities are present everybody tends to enter the industries This growth hence
fetches the new competitors as well as new strategies from existing players To sustain in
any competitive industry the organization must adapt to existing strategies and adopt
new ones This study will focus on the analysis of Reliance Life Insurance in comparison
with the present scenario of Bajaj Allianz Life Insurance with respect to the Traditional
Plans of both the companyrsquos This will mainly cover the following aspects
To know about the awareness and popularity of various Traditional Plans offered
by Reliance Life Insurance and Bajaj Allianz Life Insurance
How Reliance Life Insurance can develop and sustain a good distribution
network
These will provide it benefit both in terms of better market coverage as well as better
penetration
50
33) SCOPE OF THE STUDY
1) This helps in finding out vast potential of insurance company
2) The study was conducted in National Capital Region (NCR) only
3) The number of respondents to be surveyed can be improved
4) This study was conducted by comparing the performances amp products of three private
amp government insurance players in insurance industry
5) This study was conducted to analyze the market stand of Reliance life insurance
Company limited and Bajaj Allianz Life Insurance Company Limited of India insurance
companies
6) This study is done to eliminate all the myths which people have in their minds
regarding Insurance Sector
51
34) OBJECTIVES
To have a detailed understanding of Reliance Life Insurance and Bajaj Allianz Life Insurance
To find out various reasons considered while investing in policies
To get knowledge about the market exposure and future prospects about Reliance Life Insurance
To know the perception of the consumers about the life insurance
To analyze the Traditional plans of Reliance Life Insurance and compare it with Bajaj Allianz
To know about the brand awareness of Reliance Life Insurance its customer preferences over Bajaj Allianz in the market
To study a proper knowledge about the life insurance industry
To understand the consumer choice while investing in policies
52
CHAPTER 4
DISCUSSION AND FINDINGS OF THE STUDY
FINDINGS OF THE STUDY RECOMMENDATION AND SUGGESTIONS CONCLUSION LIMITATIONS BIBLIOGRAPHY ANNEXUREQUESTIONNAIRE
53
41) FINDINGS OF THE STUDY
1) The survey reveals that still a large proportion of population is interested to invest in other forms of investment other than insurance as still most of them are unaware about the importance of insurance in their life
2) Basically people make varied form of investment for creating wealth to protect their families against pre-mature death and to protect income against disability sickness or critical illness
3) The main motive of the individuals investing is receives benefits US 1010D People generally consider insurance as a tax saving device
4) Mostly people prefer time to time form of investment as they are not willing to take high degree of risk
5) 72 of the respondents are preferred to invest in Traditional Plans
6) Most of the people prefer to make an annual investment up to a maximum of Rs20 000 per annum
7) When the product is like life insurance reputation of the company publicity of the company amp after sale services of the company matters a lot This means that people would choose that insurance company only where the quality of life advisors is satisfactory
8) Most people prefer to invest in Bajaj Allianz Life Insurance as compared to making an investment in Reliance Life Insurance
9) The most preferable Traditional plan of Reliance Life Insurance is Endowment Plan
10) The most preferable plan of Bajaj Allianz Life Insurance co is Cash Gain Plan
54
42) SUGGESTIONS amp RECOMMENDATIONS
Based on the observations of the study some suggestions for the organization are made as
follows
1) Quality of advisors is also as important as the quantity Thus company should go
mainly for qualified professionals
2) Company should increase its budget on publicity so that awareness can be increased
3) Clarity and transparency should be provided to the customer regarding various
products
4) Training sessions should be planned in advance so that schedule can be provided to
the advisor in advance
5) Apart from the Brand Positioning in urban area a strategy should be adopted by
Reliance to make its brand also near to middle level or high aspirant people because they
are the main source of the business in India
6) Awareness Camp to the sub urban area should be focused by Reliance
7) Some innovative technique or product is required in order to attract the consumer
43) LITERATURE REVIEW
55
1) Robi Elenekave has explained in detail why various retirement plans and pension plans donrsquot give the desired returns The main difficulty is the use of incorrect method for calculations done to find out the return on investment This is primarily due to wrong assumptions The study provides information about the various precautions which need to be considered before planning so that the desired results can be achieved
2) Another paper provides insight about how various financial sectors invest in bond market The study was how the different players investment different instruments according to the risk appetite and desired rate of return The study shows that life insurance sector mainly invests in government bond which are low return and low risk instrument The investment in government bond it shows that life insurance companies are more conservative in investment
3) K Subhash has presented the history of Indiarsquos life insurance industry in three stages before independence after independence and post liberalization which not only provides information but also help in analyzing the impact of these major changes The authors have also discussed the huge potential which exists in the rural India The insurance company must realize the importance of rural sector because the future lies there The author commented about the increasing share of private player in the existing market This confirms the availability of opportunity in this sector The paper also provides the importance of professional and focused approach which was given no importance
4) Tapen Sinha has discussed the various challenges and opportunities in the insurance market One of the very important factors which have been discussed in the study is the importance of developing new and better products As the scenario changes the need of an individual also changes so any organization must understand and fulfill these needs The new product development requires constant research so organization must also focus on it
5) Roger G Ibbotson discusses how financial planners and advisors have recently started to recognize that human capital must be taken into account when building optimal portfolios for individual investors Any investorrsquos human capital has a unique mortality risk However life insurance in its forms can hedge against this mortality risk Thus human capital affects both the optimal asset allocation and the optimal demand for life insurance This paper provides a unified framework based on human capital in order to enable individual investors to make both decisions jointly
6) Rakesh Niraj study tells how the flow of information in any organization is important For any organization to grow the flow of information must be good both upwards as well as ownwards The proper flow of information will also ensure proper flow of good and services from organization to customer and proper flow of information from customer to organization The information from customers will help the organization in providing better goods and services to the customer For the above purpose organization must ensure good channel partner who can provide the organization with correct feedback Hence it becomes very important for any organization to acquire good channel partners
56
7) Stephen P Robbins has discussed how group dynamics works in any organization The success of any organization depends on the success of its various teams and how these teams work together The book provides various techniques which can be used by any organization to get result from the team effort The conflict resolution is a major task in any group Various techniques which the organization can use in conflict resolution are also discussed Another important aspect covered is the importance of leadership in the organization The various forms of leadership have been discussed and the kinds of leadership which can be effective in particular situations are also discussed
8) R Wayne Mondy has discussed the importance of training and development in any organization The training provides skills to perform the current job where as the development involve learning beyond present need The various type of training are discussed which can be used according to the requirement Training and development are not only important for better performance of an individual but it also gives satisfaction The major factors which influence training and development are found to be management support commitment of trainee and trainer complexity of the organization The process of developing good training plans is also provided In another part author has discussed the importance of right man for right job The compensation strategies are also given which are very crucial for ant industry
9) Philip Kotler has discussed the importance of channels partners Better the channel partners better will be the delivery model Detailed discussion about how to design the channel structure so that all the requirements could be fulfilled is provided The various issues faced by the organization while managing the channels are also given When an organization has more than one channel it becomes very important that all the channels should be integrated in such a way that the organization get the best out of all At times due to the conflicting benefit of the different channels the conflict arise so various strategies to manage these issues is also discussed in the chapter
10) Michael J Etzel has written about the marketing of services The marketing of services is different from the goods because of the characteristic of service like intangibility inseparability heterogeneity etc Brief about pricing strategies is also given in case of services The authors have also given the impact of technological development on the services marketing The author has also given the importance of brand and after sales support in case of services as perception of the customers plays an important role In other part of the book the authors has described the importance of distribution channels and designing of the same A channel partner should be consider as partner according to discussion The legal complications associated with channels are also discussed These complications are necessary to take into the consideration while managing the channels The conflicting interest of channels both horizontally and vertically are also taken into the consideration
57
11) Boone has discussed about the importance of personal financial planning The concept of time value of money has also been elaborated The importance of creating and implementing budget is given under money management The other important concepts for financial planning like credit management and understanding taxes are also explained In one section the authors have discussed the importance of investment and what should be the major considerations while making any investment The considerations include the risk associated with the investment return on the investment etc The importance and benefits of life insurance has also been given The discussion also includes various legal aspects associated with life insurance The overview of retirement planning is also given which includes importance and benefit of retirement planning Various tools for proper retirement planning are also discussed
58
44) CONCLUSION
1) The customers are very much sensitive towards their investment They would like to invest only in that insurance company which enjoys good public image along with quality good services
2) The result of the survey conducted shows that Bajaj Allianz Life Insurance is the leader in life insurance industry but Reliance Life Insurance and other private players are giving it a close competition
3) The motive of the people behind investing in life insurance is the tax benefits that they would receive under sec 80C and 1010D
4) In Life Insurance industry the after sales support of the company is as important as the quality of life advisors
59
45) LIMITATIONS
There were some limitations faced during the study as discussed below
Since the study was taken for two months so there was a constraint of time and effort
The study was limited only to some of the Delhi regions so the results may be biased
Questionnaire was given to 125 people however only 50 responded to it which is very small for such type of study
The biasness of consumer or responses error cannot be eliminated
Most of the people are not aware about the Importance and the necessity of insurance in their life
Adverse perception of the people towards insurance sector- People consider insurance as a tax saving device
Lack of awareness about the earning opportunity in the insurance sector
60
46) BIBLIOGRAPHY
wwwreliancelifeinsurancecom
wwwadagroupcom
wwwirdacom
wwwbajajallianzlifeinsurancecom
wwwallianzbajajcom
47) ANNEXURE
61
QUESTIONNAIRE
A comparative analysis of consumer perception regarding Traditional plans of Reliance Life Insurance with that of Bajaj Allianz Life Insurance
NAME ___________________________
PERSONAL DETAILS
1) AGE_________________
1) OCCUPATION______________
2) INCOME___________________
3) FAMILY MEMBERS_________
Q1 Where do you prefer to investa) Fixed deposits b) Stock c) Mutual funds d) Insurance e) Others
Q2 What are your priorities for investmenta) Protecting your family against pre-mature death b) Wealth creation c) Retirement needs d) Child education and marriage e) Protect income against disability sickness or critical illness
Q3 What is your main motive behind investing in life insurancea) Tax benefit b) Savings c) Risk cover
Q4 What kind of investment do you prefera) High risk high gain b) Low risk low gain c) Moderate d) Vary times to times
62
Q5Are you interested to invest in Traditional Plansa) Yes b) No
Q6 What is your level of annual investmenta) below 20000 b) 20000-40000 c) above 40000
Q7 What factors would you consider most important before choosing an insurance company
a) publicity of the company b) reputation of the company c) quality of life advisors d) after sales-supporting of the company
Q8 Which life insurance company would you prefer the most to invest ina) Reliance life insurance b) Bajaj Allianz life insurance
Q9 If reliance life insurance then which particular plan you would like to invest ina) Reliance Term Plan b) Reliance Whole Life Plan c) Reliance Endowment Plan d) Reliance Special Endowment Plan
Q10 If Bajaj Allianz life insurance then which particular plan you would like to invest in
I ENDOWMENT PLAN
a) Bajaj Allianz Invest Gain
b) Bajaj Allianz save Care Economy SP
c) Bajaj Allianz life time care
d) Bajaj Allianz Super Saver plan
II MONEY BACK PLAN
a) Bajaj Allianz Cash Gain plan
63
64
- COMPANY PROFILE
- ABOUT RELIANCE LIFE INSURANCE
- HISTORY
- Reliance Capital Limited announced the launch of its life insurance business on February 1 2006 This was after obtaining the required regulatory approvals from the Registrar Of Companies and the Insurance Regulatory and Development Authority
- It was in August 2005 that the ball was set rolling when Reliance Capital Limited the financial arm of Reliance ndash Anil Dhirubhai Ambani Group (ADAG) ndash announced the requisition of 100 shareholding in AMP Sanmar Life Insurance Company Limited and the formal transfer of shares took place in October 2005 The company will issue all policy contracts under the Reliance Life Insurance Company limited name All the existing policy contracts also stand transferred to the Reliance Life Insurance entity with all the original contractual terms and commitments intact
- CORE VALUES
- Reliance Life Insurance Company Limited has some core values which are listed as follows
- Vision bull To be the first choice insurer for customers bull To be the preferred employer for staff in the insurance industry bull To be the number one insurer for creating shareholder value
- Mission As a responsible customer focused market leader we will strive to understand the insurance needs of the consumers and translate it into affordable products that deliver value for money
- 12) TRADITIONAL PLANS OF THE COMPANY
- 12A )TRADITIONAL PLAN OF RELIANCE LIFE INSURANCE-
- Life insurance products are designed to suit the requirements of customers Fundamentally the product provide for
- In every product to a certain degree risk cover is imperative for it to fall under the category of insurance Based on the coverage of the product the premiums are calculated and the customer pays accordingly In order to suggest the right product it is essential for an agent to understand the requirements of the customer well
- The traditional plans of the company have the following features-
- Fixed Tenure
- Potential for better returns
- Transparency
- Flexibility in investment
- Flexibility to invest more
- Flexibility to skip the premium
- Flexibility to choose the cover
- High liquidity
- Age term and sum assured decide the amount of premium
- Top- ups and switches are not allowed
- Reliance Life Insurance Company Limited has offered 9
- 1) Reliance term plan-
- 2) Reliance Whole Life Plan -
- 3) Reliance Endowment Plan -
- 4) Reliance Special Endowment Plan -
- 13) INDUSTRY PROFILE
- MEANING OF INSURANCE
- Insurance may be described as a social device to reduce or eliminate risk of loss to life and property Insurance is a collective bearing of risk Insurance is a financial device to spread the risks and losses of few people among a large number of people as people prefer small fixed liability instead of big uncertain and changing liability
- Insurance can be defined as a ldquolegal contract between two parties whereby one party called insurer undertakes to pay a fixed amount of money on the happening of a particular event which may be certain or uncertainrdquo The other party called insured pays in exchange a fixed sum known as premium
- Insurance is desired to safeguard oneself and onersquos family against possible losses on account of risks and perils It provides financial compensation for the losses suffered due to the happening of any unforeseen events
- IMPORTANCE OF INSURANCE
- Insurance services play predominant role in the process of financial Intermediary Today insurance industry is one of the most growing sectors in India There is lot of potential in the Indian Insurance Industry
- There are many issues which require study The scope of the study of Insurance industry of India would be very great as there are ongoing Developments in the industry after the opening of the sector
- Right now the insurance industry has great opportunities in a country like India or China which huge population Also the penetration of insurance in India is very low in both life and non-life segment so there is lot potential to be tapped Before starting the discussion on insurance industry and related issues we have to start with the basics of insurance So first we understand what is insurance How the word lsquoinsurancersquo is different from the word lsquoassurancersquo Etc
- HISTORY OF INSURANCE
- The concept of insurance is believed to have emerged almost 4500 years ago in the ancient land of Babylonia where traders used to bear risk of the carvan by giving loans which were later repaid with interest when the goods arrived safely
- The concept of insurance as we know today took shape in 1688 at a place called Lloydrsquos Coffee House in London where risk bearers used to meet to transact business This coffee house became so popular that Lloydrsquos became the one of the first modern insurance companies by the end of the eighteenth century
- Marine insurance companies came into existence by the end of the eighteenth century These companies were empowered to write fire and life insurance as well as marine The Great Fire of London in 1966 caused huge loss of property and life With a view to providing fire insurance facilities
- Dr Nicholas Barbon set up in 1967 the first fire insurance company known as the Fire office
- Life insurance in its modern form came to India from England in 1818 The Oriental Life Insurance Company was the first insurance company to be set up in India to help the widows of European community The insurance companies which came into existence between 1818 and 1869 treated
- Indian lives as subnormal and charged an extra premium of 15 to 20 per cent The first Indian insurance company the Bombay Mutual Life
- Assurance Society came into existence in 1870 to cover Indian lives at normal rates
- The Insurance Act 1938 the first comprehensive legislation governing both life and non-life branches of insurance were enacted to provide strict state control over insurance business This amended insurance Act looked into investments expenditure and management of these companies
- By the mid- 1950s there were 154 Indian insurers 16 foreign insurers and 75 provident societies carrying on life insurance business in India Insurance business flourished and so did scams irregularities and dubious investment practices by scores of companies As a result the government decided to nationalize the life assurance business in India The Life Insurance
- Corporation of India (LIC) was set up in 1956 The nationalization of life insurance was followed by general insurance in 1972
- MEANING OF LIFE INSURANCE
- There are three parties in a life insurance transaction the insurer the insured and the owner of the policy (policyholder) although the owner and the insured are often the same person
- Another important person involved in a life insurance policy is the beneficiary The beneficiary is the person or persons who will receive the policy proceeds upon the death of the insured
- Life insurance may be divided into two basic classes ndash term and permanent
- HISTORY OF LIFE INSURANCE
- Risk protection has been a primary goal of humans and institutions throughout history Protecting against risk is what insurance is all about
- Over 5000 years ago in China insurance was seen as a preventative measure against piracy on the sea Piracy in fact was so prevalent that as a way of spreading the risk a number of ships would carry a portion of another ships cargo so that if one ship was captured the entire shipment would not be lost
- In another part of the world nearly 4500 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
- Life insurance came about a little later in ancient Rome where burial clubs were formed to cover the funeral expenses of its members as well as help survivors monetarily With Romes fall around 450 AD most of the concepts of insurance were abandoned but aspects of it did continue through the Middle Ages particularly with merchant and artisan guilds These provided forms of member insurance covering risks like fire flood theft disability death and even imprisonment
- During the feudal period early forms of insurance ebbed with the decline of travel and long-distance trade But during the 14th to 16th centuries transportation commerce and insurance would again reemerge
- And similar to ancient Rome burial societies were formed in the Buddhist period to help families build houses and to protect widows and children
- Modern Insurance
- Illegal almost everywhere else in Europe life insurance in England was vigorously promoted in the three decades following the Glorious Revolution of 1688 The type of insurance we see today owes its roots to 17th century England Lloyds of London or as they were known then Lloyds Coffee House was the location where merchants ship owners and underwriters met to discuss and transact business deals
- While serving as a means of risk-avoidance life insurance also appealed strongly to the gambling instincts of Englands burgeoning middle class
- Gambling was so rampant in fact that when newspapers published names of prominent people who were seriously ill bets were placed at Lloydrsquos on their anticipated dates of death Reacting against such practices 79 merchant underwriters broke away in 1769 and two years later formed a ldquoNew Lloydrsquos Coffee Houserdquo that became known as the ldquoreal Lloydrsquosrdquo Making wagers on peoples deaths ceased in 1774 when parliament forbade the practice
- Insurance moves to America
- The US insurance industry was built on the British model The year 1735 saw the birth of the first insurance company in the American colonies in
- Charleston SC The Presbyterian Synod of Philadelphia in 1759 sponsored the first life insurance corporation in America for the benefit of ministers and their dependents And the first life insurance policy for the general public in the United States was issued in Philadelphia on May 22 1761
- But it wasnt until 80 years later (after 1840) that life insurance really tookoff in a big way The key to its success was reducing the opposition from religious groups
- In 1835 the infamous New York fire drew peoples 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
- With the creation of the automobile public liability insurance which first made its appearance in the 1880s gained importance and acceptance
- More advancement was made to insurance during the process of industrialization In 1897 the British government passed the Workmens Compensation Act which made it mandatory for a company to insure its employees against industrial accidents
- During 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 most labor 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
- BENEFITS OF LIFE INSURANCE
- 1) Risk cover -Life Insurance contracts allow an individual to have a risk cover against any unfortunate event of the future
- 2) Tax Deduction -Under section 80C of the Income Tax Act of 1961 one can get tax deduction on premiums up to one lakh rupees Life Insurance policies thus decrease the total taxable income of an individual
- 3) Loans -An individual can easily access loans from different financial institutions by pledging his insurance policies
- 4) Retirement Planning -What had provided protection against the financial consequences of premature death may now be used to help them enjoy their retirement years
- 5) Educational Needs -Similar to retirement planning the cash values that flow from ones life insurance schemes can be utilized for educational needs of the insurer or his children
- The Life Insurance Industry has an enviable track record among public sector units It has a Consistent profit and dividend paying record accompanied by a steady growth in its financial resources Through investments in the Government sector and socially- oriented sectors the Industry has contributed immensely to the nations development The industry is recognized as one of the largest financial Institutions in the country The ventures initiated by the industry in the areas of Mutual Fund
- Housing Finance has done exceedingly well in recent years To protect the countrys foreign exchange reserves the reinsurance arrangement are so organized that maximum retention is made possible within the country while at the same time protecting interests of the policy holders
- 22) CURRENT SCENARIO OF RELIANCE LIFE INSURANCE
- RLIC offers wide range of innovative life insurance products targeted at individuals and groups It offers need based products that caters to four distinct segments namely protection child retirement and investment plans RLIC is committed to emerge as a transnational Life Insurer of global scale and standard
- CH - 3) RESEARCH METHODOLOGY
- RESEARCH DESIGN-
- SAMPLING TECHNIQUES-
- THE PRIMARY OBJECTIVEOF THE STUDY-
- 34) OBJECTIVES
- 7) Some innovative technique or product is required in order to attract the consumer
- 45) LIMITATIONS
- 46) BIBLIOGRAPHY
-
a) protecting your family against pre-mature death
b) wealth creation
c) retirement needs
d) child education and marriage
e) protect income against disability sickness or critical illness
Option No of respondents Percentage
Protecting your family against pre mature death
10 20
Wealth creation 14 28
Retirement needs 5 10
Child education and marriage 7 14
Protect income against disability sickness or critical illness
14 28
TOTAL 50 100
Interpretation The above pie chart shows that out of 50 respondents 20 of them invest for protecting their family against premature death 28 for creating wealth 10 for meeting their future retirement needs 14 for child education amp marriage and 28 for protection against disability and sickness
Q3 What is your main motive behind investing in life insurance
41
a) tax benefit
b) savings
c) risk cover
Option No of respondents Percentage
Tax benefits 27 54
Savings 5 10
Risk cover 18 36
TOTAL 50 100
Interpretation The above pie chart shows that out of the sample respondents 54 have tax benefit 10 have savings and 36 have risk cover as their main motive for making an investment in life
Q4 What kind of investment do you prefer
42
a) high risk high gain
b) low risk low gain
c) moderate
d) vary times to times
Option No of respondents Percentage
High risk high gain 8 16
Low risk low gain 5 10
Moderate 12 24
Vary times to times 25 50
TOTAL 50 100
Interpretation The above pie chart shows that out of 50 respondents 16 preferred high risk- high gain form of investment 10 preferred low risk- low gain form of investment 24 preferred moderate investment and 50 preferred varied form of investment
43
Q5Are you interested to invest in Traditional Plans
a) YES
b) NO
Option No of respondents Percentage
YES 36 72
NO 14 28
TOTAL 50 100
Interpretation The above pie chart shows that 72 of the respondents preferred to invest in Traditional Plans
44
Q6 What is your level of annual investmenta) below 20000
b) 20000-40000
c) above 40000
Option No of respondents Percentage
Below 20000 41 82
20000-40000 7 14
Above 40000 2 4
TOTAL 50 100
Interpretation The above pie chart shows that 82 of the respondents are willing to invest below Rs 20000 per annum 14 of them want to invest within Rs 20000 per annum to Rs 40000 and 4 wanted to invest over and above Rs 40000
45
Q7 What factors would you consider most important before choosing an insurance policy
a) publicity of the company
b) reputation of the company
c) quality of life advisors
d) after sales-supporting of the company
Option No of respondents Percentage
Publicity of the co 5 20
Reputation of the co 25 50
Quality of life advisors 10 10
After sale-services 10 20
TOTAL 50 100
Interpretation out of the sample respondents 20 considers publicity of the company 50 considers reputation of the company 10 considers quality of life advisors and 20 considers after sales support of the company as the most important factor for choosing an insurance company
46
Q8 Which life insurance company would you prefer the most to invest ina) reliance life insurance (RLIC)
b) Bajaj Allianz life insurance
Option No of respondents Percentage
RLIC 21 42
BAJAJ ALLIANZ 29 58
TOTAL 50 100
Interpretation Out of 50 respondents 42 preferred to invest in reliance life insurance over 58 of the respondents who prefer to invest in Bajaj Allianz life insurance
47
Q9 If reliance life insurance then which particular plan you would like to invest ina) Reliance Term Plan
b) Reliance Whole Life Plan
c) Reliance Endowment Plan
d) Reliance Special Endowment Plan
Option No of respondents Percentage
Reliance term plan 6 2858
Reliance whole life plan 3 1428
Reliance endowment plan 9 4286
Reliance special endowment plan 3 1428
TOTAL 21 100
Interpretation Out of 21 respondents 2858 preferred to invest in term plan 1428 in whole life plan 4286 in endowment plan and 1428 of them preferred to invest in special endowment plan of reliance life insurance
48
Q10 If Bajaj Allianz life insurance then which particular plan you would like to invest in
I ENDOWMENT PLAN a) Bajaj Allianz Invest Gain
b) Bajaj Allianz save Care Economy SP
c) Bajaj Allianz life time care
d) Bajaj Allianz Super Saver plan
II MONEY BACK PLAN i Bajaj Allianz Cash Gain plan
Option No of respondents Percentage
Invest gain plan 3 1035
Save care economy SP 6 2069
Life time care 7 2415
Super saver plan 3 1035
Cash gain plan 10 3446
TOTAL 29 100
Interpretation Out of 29 respondents 1035 of them plan to invest in Bajaj Allianz- Invest Gain 2069 wish to invest in Bajaj Allianz save Care Economy SP 2415 want to invest in Bajaj Allianz life time care 1035 in Bajaj Allianz Super Saver plan and 3446 prefer to invest in Bajaj Allianz Cash Gain plan
49
32) SIGNIFICANCE OF STUDY
Life insurance is one of the most rapidly growing sectors in India The main reason
behind the growth can attributed to the high population density improving economical
condition improving education level and improving awareness Due to these factors there
is still huge scope for growth in this sector Like any other business when the
opportunities are present everybody tends to enter the industries This growth hence
fetches the new competitors as well as new strategies from existing players To sustain in
any competitive industry the organization must adapt to existing strategies and adopt
new ones This study will focus on the analysis of Reliance Life Insurance in comparison
with the present scenario of Bajaj Allianz Life Insurance with respect to the Traditional
Plans of both the companyrsquos This will mainly cover the following aspects
To know about the awareness and popularity of various Traditional Plans offered
by Reliance Life Insurance and Bajaj Allianz Life Insurance
How Reliance Life Insurance can develop and sustain a good distribution
network
These will provide it benefit both in terms of better market coverage as well as better
penetration
50
33) SCOPE OF THE STUDY
1) This helps in finding out vast potential of insurance company
2) The study was conducted in National Capital Region (NCR) only
3) The number of respondents to be surveyed can be improved
4) This study was conducted by comparing the performances amp products of three private
amp government insurance players in insurance industry
5) This study was conducted to analyze the market stand of Reliance life insurance
Company limited and Bajaj Allianz Life Insurance Company Limited of India insurance
companies
6) This study is done to eliminate all the myths which people have in their minds
regarding Insurance Sector
51
34) OBJECTIVES
To have a detailed understanding of Reliance Life Insurance and Bajaj Allianz Life Insurance
To find out various reasons considered while investing in policies
To get knowledge about the market exposure and future prospects about Reliance Life Insurance
To know the perception of the consumers about the life insurance
To analyze the Traditional plans of Reliance Life Insurance and compare it with Bajaj Allianz
To know about the brand awareness of Reliance Life Insurance its customer preferences over Bajaj Allianz in the market
To study a proper knowledge about the life insurance industry
To understand the consumer choice while investing in policies
52
CHAPTER 4
DISCUSSION AND FINDINGS OF THE STUDY
FINDINGS OF THE STUDY RECOMMENDATION AND SUGGESTIONS CONCLUSION LIMITATIONS BIBLIOGRAPHY ANNEXUREQUESTIONNAIRE
53
41) FINDINGS OF THE STUDY
1) The survey reveals that still a large proportion of population is interested to invest in other forms of investment other than insurance as still most of them are unaware about the importance of insurance in their life
2) Basically people make varied form of investment for creating wealth to protect their families against pre-mature death and to protect income against disability sickness or critical illness
3) The main motive of the individuals investing is receives benefits US 1010D People generally consider insurance as a tax saving device
4) Mostly people prefer time to time form of investment as they are not willing to take high degree of risk
5) 72 of the respondents are preferred to invest in Traditional Plans
6) Most of the people prefer to make an annual investment up to a maximum of Rs20 000 per annum
7) When the product is like life insurance reputation of the company publicity of the company amp after sale services of the company matters a lot This means that people would choose that insurance company only where the quality of life advisors is satisfactory
8) Most people prefer to invest in Bajaj Allianz Life Insurance as compared to making an investment in Reliance Life Insurance
9) The most preferable Traditional plan of Reliance Life Insurance is Endowment Plan
10) The most preferable plan of Bajaj Allianz Life Insurance co is Cash Gain Plan
54
42) SUGGESTIONS amp RECOMMENDATIONS
Based on the observations of the study some suggestions for the organization are made as
follows
1) Quality of advisors is also as important as the quantity Thus company should go
mainly for qualified professionals
2) Company should increase its budget on publicity so that awareness can be increased
3) Clarity and transparency should be provided to the customer regarding various
products
4) Training sessions should be planned in advance so that schedule can be provided to
the advisor in advance
5) Apart from the Brand Positioning in urban area a strategy should be adopted by
Reliance to make its brand also near to middle level or high aspirant people because they
are the main source of the business in India
6) Awareness Camp to the sub urban area should be focused by Reliance
7) Some innovative technique or product is required in order to attract the consumer
43) LITERATURE REVIEW
55
1) Robi Elenekave has explained in detail why various retirement plans and pension plans donrsquot give the desired returns The main difficulty is the use of incorrect method for calculations done to find out the return on investment This is primarily due to wrong assumptions The study provides information about the various precautions which need to be considered before planning so that the desired results can be achieved
2) Another paper provides insight about how various financial sectors invest in bond market The study was how the different players investment different instruments according to the risk appetite and desired rate of return The study shows that life insurance sector mainly invests in government bond which are low return and low risk instrument The investment in government bond it shows that life insurance companies are more conservative in investment
3) K Subhash has presented the history of Indiarsquos life insurance industry in three stages before independence after independence and post liberalization which not only provides information but also help in analyzing the impact of these major changes The authors have also discussed the huge potential which exists in the rural India The insurance company must realize the importance of rural sector because the future lies there The author commented about the increasing share of private player in the existing market This confirms the availability of opportunity in this sector The paper also provides the importance of professional and focused approach which was given no importance
4) Tapen Sinha has discussed the various challenges and opportunities in the insurance market One of the very important factors which have been discussed in the study is the importance of developing new and better products As the scenario changes the need of an individual also changes so any organization must understand and fulfill these needs The new product development requires constant research so organization must also focus on it
5) Roger G Ibbotson discusses how financial planners and advisors have recently started to recognize that human capital must be taken into account when building optimal portfolios for individual investors Any investorrsquos human capital has a unique mortality risk However life insurance in its forms can hedge against this mortality risk Thus human capital affects both the optimal asset allocation and the optimal demand for life insurance This paper provides a unified framework based on human capital in order to enable individual investors to make both decisions jointly
6) Rakesh Niraj study tells how the flow of information in any organization is important For any organization to grow the flow of information must be good both upwards as well as ownwards The proper flow of information will also ensure proper flow of good and services from organization to customer and proper flow of information from customer to organization The information from customers will help the organization in providing better goods and services to the customer For the above purpose organization must ensure good channel partner who can provide the organization with correct feedback Hence it becomes very important for any organization to acquire good channel partners
56
7) Stephen P Robbins has discussed how group dynamics works in any organization The success of any organization depends on the success of its various teams and how these teams work together The book provides various techniques which can be used by any organization to get result from the team effort The conflict resolution is a major task in any group Various techniques which the organization can use in conflict resolution are also discussed Another important aspect covered is the importance of leadership in the organization The various forms of leadership have been discussed and the kinds of leadership which can be effective in particular situations are also discussed
8) R Wayne Mondy has discussed the importance of training and development in any organization The training provides skills to perform the current job where as the development involve learning beyond present need The various type of training are discussed which can be used according to the requirement Training and development are not only important for better performance of an individual but it also gives satisfaction The major factors which influence training and development are found to be management support commitment of trainee and trainer complexity of the organization The process of developing good training plans is also provided In another part author has discussed the importance of right man for right job The compensation strategies are also given which are very crucial for ant industry
9) Philip Kotler has discussed the importance of channels partners Better the channel partners better will be the delivery model Detailed discussion about how to design the channel structure so that all the requirements could be fulfilled is provided The various issues faced by the organization while managing the channels are also given When an organization has more than one channel it becomes very important that all the channels should be integrated in such a way that the organization get the best out of all At times due to the conflicting benefit of the different channels the conflict arise so various strategies to manage these issues is also discussed in the chapter
10) Michael J Etzel has written about the marketing of services The marketing of services is different from the goods because of the characteristic of service like intangibility inseparability heterogeneity etc Brief about pricing strategies is also given in case of services The authors have also given the impact of technological development on the services marketing The author has also given the importance of brand and after sales support in case of services as perception of the customers plays an important role In other part of the book the authors has described the importance of distribution channels and designing of the same A channel partner should be consider as partner according to discussion The legal complications associated with channels are also discussed These complications are necessary to take into the consideration while managing the channels The conflicting interest of channels both horizontally and vertically are also taken into the consideration
57
11) Boone has discussed about the importance of personal financial planning The concept of time value of money has also been elaborated The importance of creating and implementing budget is given under money management The other important concepts for financial planning like credit management and understanding taxes are also explained In one section the authors have discussed the importance of investment and what should be the major considerations while making any investment The considerations include the risk associated with the investment return on the investment etc The importance and benefits of life insurance has also been given The discussion also includes various legal aspects associated with life insurance The overview of retirement planning is also given which includes importance and benefit of retirement planning Various tools for proper retirement planning are also discussed
58
44) CONCLUSION
1) The customers are very much sensitive towards their investment They would like to invest only in that insurance company which enjoys good public image along with quality good services
2) The result of the survey conducted shows that Bajaj Allianz Life Insurance is the leader in life insurance industry but Reliance Life Insurance and other private players are giving it a close competition
3) The motive of the people behind investing in life insurance is the tax benefits that they would receive under sec 80C and 1010D
4) In Life Insurance industry the after sales support of the company is as important as the quality of life advisors
59
45) LIMITATIONS
There were some limitations faced during the study as discussed below
Since the study was taken for two months so there was a constraint of time and effort
The study was limited only to some of the Delhi regions so the results may be biased
Questionnaire was given to 125 people however only 50 responded to it which is very small for such type of study
The biasness of consumer or responses error cannot be eliminated
Most of the people are not aware about the Importance and the necessity of insurance in their life
Adverse perception of the people towards insurance sector- People consider insurance as a tax saving device
Lack of awareness about the earning opportunity in the insurance sector
60
46) BIBLIOGRAPHY
wwwreliancelifeinsurancecom
wwwadagroupcom
wwwirdacom
wwwbajajallianzlifeinsurancecom
wwwallianzbajajcom
47) ANNEXURE
61
QUESTIONNAIRE
A comparative analysis of consumer perception regarding Traditional plans of Reliance Life Insurance with that of Bajaj Allianz Life Insurance
NAME ___________________________
PERSONAL DETAILS
1) AGE_________________
1) OCCUPATION______________
2) INCOME___________________
3) FAMILY MEMBERS_________
Q1 Where do you prefer to investa) Fixed deposits b) Stock c) Mutual funds d) Insurance e) Others
Q2 What are your priorities for investmenta) Protecting your family against pre-mature death b) Wealth creation c) Retirement needs d) Child education and marriage e) Protect income against disability sickness or critical illness
Q3 What is your main motive behind investing in life insurancea) Tax benefit b) Savings c) Risk cover
Q4 What kind of investment do you prefera) High risk high gain b) Low risk low gain c) Moderate d) Vary times to times
62
Q5Are you interested to invest in Traditional Plansa) Yes b) No
Q6 What is your level of annual investmenta) below 20000 b) 20000-40000 c) above 40000
Q7 What factors would you consider most important before choosing an insurance company
a) publicity of the company b) reputation of the company c) quality of life advisors d) after sales-supporting of the company
Q8 Which life insurance company would you prefer the most to invest ina) Reliance life insurance b) Bajaj Allianz life insurance
Q9 If reliance life insurance then which particular plan you would like to invest ina) Reliance Term Plan b) Reliance Whole Life Plan c) Reliance Endowment Plan d) Reliance Special Endowment Plan
Q10 If Bajaj Allianz life insurance then which particular plan you would like to invest in
I ENDOWMENT PLAN
a) Bajaj Allianz Invest Gain
b) Bajaj Allianz save Care Economy SP
c) Bajaj Allianz life time care
d) Bajaj Allianz Super Saver plan
II MONEY BACK PLAN
a) Bajaj Allianz Cash Gain plan
63
64
- COMPANY PROFILE
- ABOUT RELIANCE LIFE INSURANCE
- HISTORY
- Reliance Capital Limited announced the launch of its life insurance business on February 1 2006 This was after obtaining the required regulatory approvals from the Registrar Of Companies and the Insurance Regulatory and Development Authority
- It was in August 2005 that the ball was set rolling when Reliance Capital Limited the financial arm of Reliance ndash Anil Dhirubhai Ambani Group (ADAG) ndash announced the requisition of 100 shareholding in AMP Sanmar Life Insurance Company Limited and the formal transfer of shares took place in October 2005 The company will issue all policy contracts under the Reliance Life Insurance Company limited name All the existing policy contracts also stand transferred to the Reliance Life Insurance entity with all the original contractual terms and commitments intact
- CORE VALUES
- Reliance Life Insurance Company Limited has some core values which are listed as follows
- Vision bull To be the first choice insurer for customers bull To be the preferred employer for staff in the insurance industry bull To be the number one insurer for creating shareholder value
- Mission As a responsible customer focused market leader we will strive to understand the insurance needs of the consumers and translate it into affordable products that deliver value for money
- 12) TRADITIONAL PLANS OF THE COMPANY
- 12A )TRADITIONAL PLAN OF RELIANCE LIFE INSURANCE-
- Life insurance products are designed to suit the requirements of customers Fundamentally the product provide for
- In every product to a certain degree risk cover is imperative for it to fall under the category of insurance Based on the coverage of the product the premiums are calculated and the customer pays accordingly In order to suggest the right product it is essential for an agent to understand the requirements of the customer well
- The traditional plans of the company have the following features-
- Fixed Tenure
- Potential for better returns
- Transparency
- Flexibility in investment
- Flexibility to invest more
- Flexibility to skip the premium
- Flexibility to choose the cover
- High liquidity
- Age term and sum assured decide the amount of premium
- Top- ups and switches are not allowed
- Reliance Life Insurance Company Limited has offered 9
- 1) Reliance term plan-
- 2) Reliance Whole Life Plan -
- 3) Reliance Endowment Plan -
- 4) Reliance Special Endowment Plan -
- 13) INDUSTRY PROFILE
- MEANING OF INSURANCE
- Insurance may be described as a social device to reduce or eliminate risk of loss to life and property Insurance is a collective bearing of risk Insurance is a financial device to spread the risks and losses of few people among a large number of people as people prefer small fixed liability instead of big uncertain and changing liability
- Insurance can be defined as a ldquolegal contract between two parties whereby one party called insurer undertakes to pay a fixed amount of money on the happening of a particular event which may be certain or uncertainrdquo The other party called insured pays in exchange a fixed sum known as premium
- Insurance is desired to safeguard oneself and onersquos family against possible losses on account of risks and perils It provides financial compensation for the losses suffered due to the happening of any unforeseen events
- IMPORTANCE OF INSURANCE
- Insurance services play predominant role in the process of financial Intermediary Today insurance industry is one of the most growing sectors in India There is lot of potential in the Indian Insurance Industry
- There are many issues which require study The scope of the study of Insurance industry of India would be very great as there are ongoing Developments in the industry after the opening of the sector
- Right now the insurance industry has great opportunities in a country like India or China which huge population Also the penetration of insurance in India is very low in both life and non-life segment so there is lot potential to be tapped Before starting the discussion on insurance industry and related issues we have to start with the basics of insurance So first we understand what is insurance How the word lsquoinsurancersquo is different from the word lsquoassurancersquo Etc
- HISTORY OF INSURANCE
- The concept of insurance is believed to have emerged almost 4500 years ago in the ancient land of Babylonia where traders used to bear risk of the carvan by giving loans which were later repaid with interest when the goods arrived safely
- The concept of insurance as we know today took shape in 1688 at a place called Lloydrsquos Coffee House in London where risk bearers used to meet to transact business This coffee house became so popular that Lloydrsquos became the one of the first modern insurance companies by the end of the eighteenth century
- Marine insurance companies came into existence by the end of the eighteenth century These companies were empowered to write fire and life insurance as well as marine The Great Fire of London in 1966 caused huge loss of property and life With a view to providing fire insurance facilities
- Dr Nicholas Barbon set up in 1967 the first fire insurance company known as the Fire office
- Life insurance in its modern form came to India from England in 1818 The Oriental Life Insurance Company was the first insurance company to be set up in India to help the widows of European community The insurance companies which came into existence between 1818 and 1869 treated
- Indian lives as subnormal and charged an extra premium of 15 to 20 per cent The first Indian insurance company the Bombay Mutual Life
- Assurance Society came into existence in 1870 to cover Indian lives at normal rates
- The Insurance Act 1938 the first comprehensive legislation governing both life and non-life branches of insurance were enacted to provide strict state control over insurance business This amended insurance Act looked into investments expenditure and management of these companies
- By the mid- 1950s there were 154 Indian insurers 16 foreign insurers and 75 provident societies carrying on life insurance business in India Insurance business flourished and so did scams irregularities and dubious investment practices by scores of companies As a result the government decided to nationalize the life assurance business in India The Life Insurance
- Corporation of India (LIC) was set up in 1956 The nationalization of life insurance was followed by general insurance in 1972
- MEANING OF LIFE INSURANCE
- There are three parties in a life insurance transaction the insurer the insured and the owner of the policy (policyholder) although the owner and the insured are often the same person
- Another important person involved in a life insurance policy is the beneficiary The beneficiary is the person or persons who will receive the policy proceeds upon the death of the insured
- Life insurance may be divided into two basic classes ndash term and permanent
- HISTORY OF LIFE INSURANCE
- Risk protection has been a primary goal of humans and institutions throughout history Protecting against risk is what insurance is all about
- Over 5000 years ago in China insurance was seen as a preventative measure against piracy on the sea Piracy in fact was so prevalent that as a way of spreading the risk a number of ships would carry a portion of another ships cargo so that if one ship was captured the entire shipment would not be lost
- In another part of the world nearly 4500 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
- Life insurance came about a little later in ancient Rome where burial clubs were formed to cover the funeral expenses of its members as well as help survivors monetarily With Romes fall around 450 AD most of the concepts of insurance were abandoned but aspects of it did continue through the Middle Ages particularly with merchant and artisan guilds These provided forms of member insurance covering risks like fire flood theft disability death and even imprisonment
- During the feudal period early forms of insurance ebbed with the decline of travel and long-distance trade But during the 14th to 16th centuries transportation commerce and insurance would again reemerge
- And similar to ancient Rome burial societies were formed in the Buddhist period to help families build houses and to protect widows and children
- Modern Insurance
- Illegal almost everywhere else in Europe life insurance in England was vigorously promoted in the three decades following the Glorious Revolution of 1688 The type of insurance we see today owes its roots to 17th century England Lloyds of London or as they were known then Lloyds Coffee House was the location where merchants ship owners and underwriters met to discuss and transact business deals
- While serving as a means of risk-avoidance life insurance also appealed strongly to the gambling instincts of Englands burgeoning middle class
- Gambling was so rampant in fact that when newspapers published names of prominent people who were seriously ill bets were placed at Lloydrsquos on their anticipated dates of death Reacting against such practices 79 merchant underwriters broke away in 1769 and two years later formed a ldquoNew Lloydrsquos Coffee Houserdquo that became known as the ldquoreal Lloydrsquosrdquo Making wagers on peoples deaths ceased in 1774 when parliament forbade the practice
- Insurance moves to America
- The US insurance industry was built on the British model The year 1735 saw the birth of the first insurance company in the American colonies in
- Charleston SC The Presbyterian Synod of Philadelphia in 1759 sponsored the first life insurance corporation in America for the benefit of ministers and their dependents And the first life insurance policy for the general public in the United States was issued in Philadelphia on May 22 1761
- But it wasnt until 80 years later (after 1840) that life insurance really tookoff in a big way The key to its success was reducing the opposition from religious groups
- In 1835 the infamous New York fire drew peoples 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
- With the creation of the automobile public liability insurance which first made its appearance in the 1880s gained importance and acceptance
- More advancement was made to insurance during the process of industrialization In 1897 the British government passed the Workmens Compensation Act which made it mandatory for a company to insure its employees against industrial accidents
- During 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 most labor 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
- BENEFITS OF LIFE INSURANCE
- 1) Risk cover -Life Insurance contracts allow an individual to have a risk cover against any unfortunate event of the future
- 2) Tax Deduction -Under section 80C of the Income Tax Act of 1961 one can get tax deduction on premiums up to one lakh rupees Life Insurance policies thus decrease the total taxable income of an individual
- 3) Loans -An individual can easily access loans from different financial institutions by pledging his insurance policies
- 4) Retirement Planning -What had provided protection against the financial consequences of premature death may now be used to help them enjoy their retirement years
- 5) Educational Needs -Similar to retirement planning the cash values that flow from ones life insurance schemes can be utilized for educational needs of the insurer or his children
- The Life Insurance Industry has an enviable track record among public sector units It has a Consistent profit and dividend paying record accompanied by a steady growth in its financial resources Through investments in the Government sector and socially- oriented sectors the Industry has contributed immensely to the nations development The industry is recognized as one of the largest financial Institutions in the country The ventures initiated by the industry in the areas of Mutual Fund
- Housing Finance has done exceedingly well in recent years To protect the countrys foreign exchange reserves the reinsurance arrangement are so organized that maximum retention is made possible within the country while at the same time protecting interests of the policy holders
- 22) CURRENT SCENARIO OF RELIANCE LIFE INSURANCE
- RLIC offers wide range of innovative life insurance products targeted at individuals and groups It offers need based products that caters to four distinct segments namely protection child retirement and investment plans RLIC is committed to emerge as a transnational Life Insurer of global scale and standard
- CH - 3) RESEARCH METHODOLOGY
- RESEARCH DESIGN-
- SAMPLING TECHNIQUES-
- THE PRIMARY OBJECTIVEOF THE STUDY-
- 34) OBJECTIVES
- 7) Some innovative technique or product is required in order to attract the consumer
- 45) LIMITATIONS
- 46) BIBLIOGRAPHY
-
a) tax benefit
b) savings
c) risk cover
Option No of respondents Percentage
Tax benefits 27 54
Savings 5 10
Risk cover 18 36
TOTAL 50 100
Interpretation The above pie chart shows that out of the sample respondents 54 have tax benefit 10 have savings and 36 have risk cover as their main motive for making an investment in life
Q4 What kind of investment do you prefer
42
a) high risk high gain
b) low risk low gain
c) moderate
d) vary times to times
Option No of respondents Percentage
High risk high gain 8 16
Low risk low gain 5 10
Moderate 12 24
Vary times to times 25 50
TOTAL 50 100
Interpretation The above pie chart shows that out of 50 respondents 16 preferred high risk- high gain form of investment 10 preferred low risk- low gain form of investment 24 preferred moderate investment and 50 preferred varied form of investment
43
Q5Are you interested to invest in Traditional Plans
a) YES
b) NO
Option No of respondents Percentage
YES 36 72
NO 14 28
TOTAL 50 100
Interpretation The above pie chart shows that 72 of the respondents preferred to invest in Traditional Plans
44
Q6 What is your level of annual investmenta) below 20000
b) 20000-40000
c) above 40000
Option No of respondents Percentage
Below 20000 41 82
20000-40000 7 14
Above 40000 2 4
TOTAL 50 100
Interpretation The above pie chart shows that 82 of the respondents are willing to invest below Rs 20000 per annum 14 of them want to invest within Rs 20000 per annum to Rs 40000 and 4 wanted to invest over and above Rs 40000
45
Q7 What factors would you consider most important before choosing an insurance policy
a) publicity of the company
b) reputation of the company
c) quality of life advisors
d) after sales-supporting of the company
Option No of respondents Percentage
Publicity of the co 5 20
Reputation of the co 25 50
Quality of life advisors 10 10
After sale-services 10 20
TOTAL 50 100
Interpretation out of the sample respondents 20 considers publicity of the company 50 considers reputation of the company 10 considers quality of life advisors and 20 considers after sales support of the company as the most important factor for choosing an insurance company
46
Q8 Which life insurance company would you prefer the most to invest ina) reliance life insurance (RLIC)
b) Bajaj Allianz life insurance
Option No of respondents Percentage
RLIC 21 42
BAJAJ ALLIANZ 29 58
TOTAL 50 100
Interpretation Out of 50 respondents 42 preferred to invest in reliance life insurance over 58 of the respondents who prefer to invest in Bajaj Allianz life insurance
47
Q9 If reliance life insurance then which particular plan you would like to invest ina) Reliance Term Plan
b) Reliance Whole Life Plan
c) Reliance Endowment Plan
d) Reliance Special Endowment Plan
Option No of respondents Percentage
Reliance term plan 6 2858
Reliance whole life plan 3 1428
Reliance endowment plan 9 4286
Reliance special endowment plan 3 1428
TOTAL 21 100
Interpretation Out of 21 respondents 2858 preferred to invest in term plan 1428 in whole life plan 4286 in endowment plan and 1428 of them preferred to invest in special endowment plan of reliance life insurance
48
Q10 If Bajaj Allianz life insurance then which particular plan you would like to invest in
I ENDOWMENT PLAN a) Bajaj Allianz Invest Gain
b) Bajaj Allianz save Care Economy SP
c) Bajaj Allianz life time care
d) Bajaj Allianz Super Saver plan
II MONEY BACK PLAN i Bajaj Allianz Cash Gain plan
Option No of respondents Percentage
Invest gain plan 3 1035
Save care economy SP 6 2069
Life time care 7 2415
Super saver plan 3 1035
Cash gain plan 10 3446
TOTAL 29 100
Interpretation Out of 29 respondents 1035 of them plan to invest in Bajaj Allianz- Invest Gain 2069 wish to invest in Bajaj Allianz save Care Economy SP 2415 want to invest in Bajaj Allianz life time care 1035 in Bajaj Allianz Super Saver plan and 3446 prefer to invest in Bajaj Allianz Cash Gain plan
49
32) SIGNIFICANCE OF STUDY
Life insurance is one of the most rapidly growing sectors in India The main reason
behind the growth can attributed to the high population density improving economical
condition improving education level and improving awareness Due to these factors there
is still huge scope for growth in this sector Like any other business when the
opportunities are present everybody tends to enter the industries This growth hence
fetches the new competitors as well as new strategies from existing players To sustain in
any competitive industry the organization must adapt to existing strategies and adopt
new ones This study will focus on the analysis of Reliance Life Insurance in comparison
with the present scenario of Bajaj Allianz Life Insurance with respect to the Traditional
Plans of both the companyrsquos This will mainly cover the following aspects
To know about the awareness and popularity of various Traditional Plans offered
by Reliance Life Insurance and Bajaj Allianz Life Insurance
How Reliance Life Insurance can develop and sustain a good distribution
network
These will provide it benefit both in terms of better market coverage as well as better
penetration
50
33) SCOPE OF THE STUDY
1) This helps in finding out vast potential of insurance company
2) The study was conducted in National Capital Region (NCR) only
3) The number of respondents to be surveyed can be improved
4) This study was conducted by comparing the performances amp products of three private
amp government insurance players in insurance industry
5) This study was conducted to analyze the market stand of Reliance life insurance
Company limited and Bajaj Allianz Life Insurance Company Limited of India insurance
companies
6) This study is done to eliminate all the myths which people have in their minds
regarding Insurance Sector
51
34) OBJECTIVES
To have a detailed understanding of Reliance Life Insurance and Bajaj Allianz Life Insurance
To find out various reasons considered while investing in policies
To get knowledge about the market exposure and future prospects about Reliance Life Insurance
To know the perception of the consumers about the life insurance
To analyze the Traditional plans of Reliance Life Insurance and compare it with Bajaj Allianz
To know about the brand awareness of Reliance Life Insurance its customer preferences over Bajaj Allianz in the market
To study a proper knowledge about the life insurance industry
To understand the consumer choice while investing in policies
52
CHAPTER 4
DISCUSSION AND FINDINGS OF THE STUDY
FINDINGS OF THE STUDY RECOMMENDATION AND SUGGESTIONS CONCLUSION LIMITATIONS BIBLIOGRAPHY ANNEXUREQUESTIONNAIRE
53
41) FINDINGS OF THE STUDY
1) The survey reveals that still a large proportion of population is interested to invest in other forms of investment other than insurance as still most of them are unaware about the importance of insurance in their life
2) Basically people make varied form of investment for creating wealth to protect their families against pre-mature death and to protect income against disability sickness or critical illness
3) The main motive of the individuals investing is receives benefits US 1010D People generally consider insurance as a tax saving device
4) Mostly people prefer time to time form of investment as they are not willing to take high degree of risk
5) 72 of the respondents are preferred to invest in Traditional Plans
6) Most of the people prefer to make an annual investment up to a maximum of Rs20 000 per annum
7) When the product is like life insurance reputation of the company publicity of the company amp after sale services of the company matters a lot This means that people would choose that insurance company only where the quality of life advisors is satisfactory
8) Most people prefer to invest in Bajaj Allianz Life Insurance as compared to making an investment in Reliance Life Insurance
9) The most preferable Traditional plan of Reliance Life Insurance is Endowment Plan
10) The most preferable plan of Bajaj Allianz Life Insurance co is Cash Gain Plan
54
42) SUGGESTIONS amp RECOMMENDATIONS
Based on the observations of the study some suggestions for the organization are made as
follows
1) Quality of advisors is also as important as the quantity Thus company should go
mainly for qualified professionals
2) Company should increase its budget on publicity so that awareness can be increased
3) Clarity and transparency should be provided to the customer regarding various
products
4) Training sessions should be planned in advance so that schedule can be provided to
the advisor in advance
5) Apart from the Brand Positioning in urban area a strategy should be adopted by
Reliance to make its brand also near to middle level or high aspirant people because they
are the main source of the business in India
6) Awareness Camp to the sub urban area should be focused by Reliance
7) Some innovative technique or product is required in order to attract the consumer
43) LITERATURE REVIEW
55
1) Robi Elenekave has explained in detail why various retirement plans and pension plans donrsquot give the desired returns The main difficulty is the use of incorrect method for calculations done to find out the return on investment This is primarily due to wrong assumptions The study provides information about the various precautions which need to be considered before planning so that the desired results can be achieved
2) Another paper provides insight about how various financial sectors invest in bond market The study was how the different players investment different instruments according to the risk appetite and desired rate of return The study shows that life insurance sector mainly invests in government bond which are low return and low risk instrument The investment in government bond it shows that life insurance companies are more conservative in investment
3) K Subhash has presented the history of Indiarsquos life insurance industry in three stages before independence after independence and post liberalization which not only provides information but also help in analyzing the impact of these major changes The authors have also discussed the huge potential which exists in the rural India The insurance company must realize the importance of rural sector because the future lies there The author commented about the increasing share of private player in the existing market This confirms the availability of opportunity in this sector The paper also provides the importance of professional and focused approach which was given no importance
4) Tapen Sinha has discussed the various challenges and opportunities in the insurance market One of the very important factors which have been discussed in the study is the importance of developing new and better products As the scenario changes the need of an individual also changes so any organization must understand and fulfill these needs The new product development requires constant research so organization must also focus on it
5) Roger G Ibbotson discusses how financial planners and advisors have recently started to recognize that human capital must be taken into account when building optimal portfolios for individual investors Any investorrsquos human capital has a unique mortality risk However life insurance in its forms can hedge against this mortality risk Thus human capital affects both the optimal asset allocation and the optimal demand for life insurance This paper provides a unified framework based on human capital in order to enable individual investors to make both decisions jointly
6) Rakesh Niraj study tells how the flow of information in any organization is important For any organization to grow the flow of information must be good both upwards as well as ownwards The proper flow of information will also ensure proper flow of good and services from organization to customer and proper flow of information from customer to organization The information from customers will help the organization in providing better goods and services to the customer For the above purpose organization must ensure good channel partner who can provide the organization with correct feedback Hence it becomes very important for any organization to acquire good channel partners
56
7) Stephen P Robbins has discussed how group dynamics works in any organization The success of any organization depends on the success of its various teams and how these teams work together The book provides various techniques which can be used by any organization to get result from the team effort The conflict resolution is a major task in any group Various techniques which the organization can use in conflict resolution are also discussed Another important aspect covered is the importance of leadership in the organization The various forms of leadership have been discussed and the kinds of leadership which can be effective in particular situations are also discussed
8) R Wayne Mondy has discussed the importance of training and development in any organization The training provides skills to perform the current job where as the development involve learning beyond present need The various type of training are discussed which can be used according to the requirement Training and development are not only important for better performance of an individual but it also gives satisfaction The major factors which influence training and development are found to be management support commitment of trainee and trainer complexity of the organization The process of developing good training plans is also provided In another part author has discussed the importance of right man for right job The compensation strategies are also given which are very crucial for ant industry
9) Philip Kotler has discussed the importance of channels partners Better the channel partners better will be the delivery model Detailed discussion about how to design the channel structure so that all the requirements could be fulfilled is provided The various issues faced by the organization while managing the channels are also given When an organization has more than one channel it becomes very important that all the channels should be integrated in such a way that the organization get the best out of all At times due to the conflicting benefit of the different channels the conflict arise so various strategies to manage these issues is also discussed in the chapter
10) Michael J Etzel has written about the marketing of services The marketing of services is different from the goods because of the characteristic of service like intangibility inseparability heterogeneity etc Brief about pricing strategies is also given in case of services The authors have also given the impact of technological development on the services marketing The author has also given the importance of brand and after sales support in case of services as perception of the customers plays an important role In other part of the book the authors has described the importance of distribution channels and designing of the same A channel partner should be consider as partner according to discussion The legal complications associated with channels are also discussed These complications are necessary to take into the consideration while managing the channels The conflicting interest of channels both horizontally and vertically are also taken into the consideration
57
11) Boone has discussed about the importance of personal financial planning The concept of time value of money has also been elaborated The importance of creating and implementing budget is given under money management The other important concepts for financial planning like credit management and understanding taxes are also explained In one section the authors have discussed the importance of investment and what should be the major considerations while making any investment The considerations include the risk associated with the investment return on the investment etc The importance and benefits of life insurance has also been given The discussion also includes various legal aspects associated with life insurance The overview of retirement planning is also given which includes importance and benefit of retirement planning Various tools for proper retirement planning are also discussed
58
44) CONCLUSION
1) The customers are very much sensitive towards their investment They would like to invest only in that insurance company which enjoys good public image along with quality good services
2) The result of the survey conducted shows that Bajaj Allianz Life Insurance is the leader in life insurance industry but Reliance Life Insurance and other private players are giving it a close competition
3) The motive of the people behind investing in life insurance is the tax benefits that they would receive under sec 80C and 1010D
4) In Life Insurance industry the after sales support of the company is as important as the quality of life advisors
59
45) LIMITATIONS
There were some limitations faced during the study as discussed below
Since the study was taken for two months so there was a constraint of time and effort
The study was limited only to some of the Delhi regions so the results may be biased
Questionnaire was given to 125 people however only 50 responded to it which is very small for such type of study
The biasness of consumer or responses error cannot be eliminated
Most of the people are not aware about the Importance and the necessity of insurance in their life
Adverse perception of the people towards insurance sector- People consider insurance as a tax saving device
Lack of awareness about the earning opportunity in the insurance sector
60
46) BIBLIOGRAPHY
wwwreliancelifeinsurancecom
wwwadagroupcom
wwwirdacom
wwwbajajallianzlifeinsurancecom
wwwallianzbajajcom
47) ANNEXURE
61
QUESTIONNAIRE
A comparative analysis of consumer perception regarding Traditional plans of Reliance Life Insurance with that of Bajaj Allianz Life Insurance
NAME ___________________________
PERSONAL DETAILS
1) AGE_________________
1) OCCUPATION______________
2) INCOME___________________
3) FAMILY MEMBERS_________
Q1 Where do you prefer to investa) Fixed deposits b) Stock c) Mutual funds d) Insurance e) Others
Q2 What are your priorities for investmenta) Protecting your family against pre-mature death b) Wealth creation c) Retirement needs d) Child education and marriage e) Protect income against disability sickness or critical illness
Q3 What is your main motive behind investing in life insurancea) Tax benefit b) Savings c) Risk cover
Q4 What kind of investment do you prefera) High risk high gain b) Low risk low gain c) Moderate d) Vary times to times
62
Q5Are you interested to invest in Traditional Plansa) Yes b) No
Q6 What is your level of annual investmenta) below 20000 b) 20000-40000 c) above 40000
Q7 What factors would you consider most important before choosing an insurance company
a) publicity of the company b) reputation of the company c) quality of life advisors d) after sales-supporting of the company
Q8 Which life insurance company would you prefer the most to invest ina) Reliance life insurance b) Bajaj Allianz life insurance
Q9 If reliance life insurance then which particular plan you would like to invest ina) Reliance Term Plan b) Reliance Whole Life Plan c) Reliance Endowment Plan d) Reliance Special Endowment Plan
Q10 If Bajaj Allianz life insurance then which particular plan you would like to invest in
I ENDOWMENT PLAN
a) Bajaj Allianz Invest Gain
b) Bajaj Allianz save Care Economy SP
c) Bajaj Allianz life time care
d) Bajaj Allianz Super Saver plan
II MONEY BACK PLAN
a) Bajaj Allianz Cash Gain plan
63
64
- COMPANY PROFILE
- ABOUT RELIANCE LIFE INSURANCE
- HISTORY
- Reliance Capital Limited announced the launch of its life insurance business on February 1 2006 This was after obtaining the required regulatory approvals from the Registrar Of Companies and the Insurance Regulatory and Development Authority
- It was in August 2005 that the ball was set rolling when Reliance Capital Limited the financial arm of Reliance ndash Anil Dhirubhai Ambani Group (ADAG) ndash announced the requisition of 100 shareholding in AMP Sanmar Life Insurance Company Limited and the formal transfer of shares took place in October 2005 The company will issue all policy contracts under the Reliance Life Insurance Company limited name All the existing policy contracts also stand transferred to the Reliance Life Insurance entity with all the original contractual terms and commitments intact
- CORE VALUES
- Reliance Life Insurance Company Limited has some core values which are listed as follows
- Vision bull To be the first choice insurer for customers bull To be the preferred employer for staff in the insurance industry bull To be the number one insurer for creating shareholder value
- Mission As a responsible customer focused market leader we will strive to understand the insurance needs of the consumers and translate it into affordable products that deliver value for money
- 12) TRADITIONAL PLANS OF THE COMPANY
- 12A )TRADITIONAL PLAN OF RELIANCE LIFE INSURANCE-
- Life insurance products are designed to suit the requirements of customers Fundamentally the product provide for
- In every product to a certain degree risk cover is imperative for it to fall under the category of insurance Based on the coverage of the product the premiums are calculated and the customer pays accordingly In order to suggest the right product it is essential for an agent to understand the requirements of the customer well
- The traditional plans of the company have the following features-
- Fixed Tenure
- Potential for better returns
- Transparency
- Flexibility in investment
- Flexibility to invest more
- Flexibility to skip the premium
- Flexibility to choose the cover
- High liquidity
- Age term and sum assured decide the amount of premium
- Top- ups and switches are not allowed
- Reliance Life Insurance Company Limited has offered 9
- 1) Reliance term plan-
- 2) Reliance Whole Life Plan -
- 3) Reliance Endowment Plan -
- 4) Reliance Special Endowment Plan -
- 13) INDUSTRY PROFILE
- MEANING OF INSURANCE
- Insurance may be described as a social device to reduce or eliminate risk of loss to life and property Insurance is a collective bearing of risk Insurance is a financial device to spread the risks and losses of few people among a large number of people as people prefer small fixed liability instead of big uncertain and changing liability
- Insurance can be defined as a ldquolegal contract between two parties whereby one party called insurer undertakes to pay a fixed amount of money on the happening of a particular event which may be certain or uncertainrdquo The other party called insured pays in exchange a fixed sum known as premium
- Insurance is desired to safeguard oneself and onersquos family against possible losses on account of risks and perils It provides financial compensation for the losses suffered due to the happening of any unforeseen events
- IMPORTANCE OF INSURANCE
- Insurance services play predominant role in the process of financial Intermediary Today insurance industry is one of the most growing sectors in India There is lot of potential in the Indian Insurance Industry
- There are many issues which require study The scope of the study of Insurance industry of India would be very great as there are ongoing Developments in the industry after the opening of the sector
- Right now the insurance industry has great opportunities in a country like India or China which huge population Also the penetration of insurance in India is very low in both life and non-life segment so there is lot potential to be tapped Before starting the discussion on insurance industry and related issues we have to start with the basics of insurance So first we understand what is insurance How the word lsquoinsurancersquo is different from the word lsquoassurancersquo Etc
- HISTORY OF INSURANCE
- The concept of insurance is believed to have emerged almost 4500 years ago in the ancient land of Babylonia where traders used to bear risk of the carvan by giving loans which were later repaid with interest when the goods arrived safely
- The concept of insurance as we know today took shape in 1688 at a place called Lloydrsquos Coffee House in London where risk bearers used to meet to transact business This coffee house became so popular that Lloydrsquos became the one of the first modern insurance companies by the end of the eighteenth century
- Marine insurance companies came into existence by the end of the eighteenth century These companies were empowered to write fire and life insurance as well as marine The Great Fire of London in 1966 caused huge loss of property and life With a view to providing fire insurance facilities
- Dr Nicholas Barbon set up in 1967 the first fire insurance company known as the Fire office
- Life insurance in its modern form came to India from England in 1818 The Oriental Life Insurance Company was the first insurance company to be set up in India to help the widows of European community The insurance companies which came into existence between 1818 and 1869 treated
- Indian lives as subnormal and charged an extra premium of 15 to 20 per cent The first Indian insurance company the Bombay Mutual Life
- Assurance Society came into existence in 1870 to cover Indian lives at normal rates
- The Insurance Act 1938 the first comprehensive legislation governing both life and non-life branches of insurance were enacted to provide strict state control over insurance business This amended insurance Act looked into investments expenditure and management of these companies
- By the mid- 1950s there were 154 Indian insurers 16 foreign insurers and 75 provident societies carrying on life insurance business in India Insurance business flourished and so did scams irregularities and dubious investment practices by scores of companies As a result the government decided to nationalize the life assurance business in India The Life Insurance
- Corporation of India (LIC) was set up in 1956 The nationalization of life insurance was followed by general insurance in 1972
- MEANING OF LIFE INSURANCE
- There are three parties in a life insurance transaction the insurer the insured and the owner of the policy (policyholder) although the owner and the insured are often the same person
- Another important person involved in a life insurance policy is the beneficiary The beneficiary is the person or persons who will receive the policy proceeds upon the death of the insured
- Life insurance may be divided into two basic classes ndash term and permanent
- HISTORY OF LIFE INSURANCE
- Risk protection has been a primary goal of humans and institutions throughout history Protecting against risk is what insurance is all about
- Over 5000 years ago in China insurance was seen as a preventative measure against piracy on the sea Piracy in fact was so prevalent that as a way of spreading the risk a number of ships would carry a portion of another ships cargo so that if one ship was captured the entire shipment would not be lost
- In another part of the world nearly 4500 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
- Life insurance came about a little later in ancient Rome where burial clubs were formed to cover the funeral expenses of its members as well as help survivors monetarily With Romes fall around 450 AD most of the concepts of insurance were abandoned but aspects of it did continue through the Middle Ages particularly with merchant and artisan guilds These provided forms of member insurance covering risks like fire flood theft disability death and even imprisonment
- During the feudal period early forms of insurance ebbed with the decline of travel and long-distance trade But during the 14th to 16th centuries transportation commerce and insurance would again reemerge
- And similar to ancient Rome burial societies were formed in the Buddhist period to help families build houses and to protect widows and children
- Modern Insurance
- Illegal almost everywhere else in Europe life insurance in England was vigorously promoted in the three decades following the Glorious Revolution of 1688 The type of insurance we see today owes its roots to 17th century England Lloyds of London or as they were known then Lloyds Coffee House was the location where merchants ship owners and underwriters met to discuss and transact business deals
- While serving as a means of risk-avoidance life insurance also appealed strongly to the gambling instincts of Englands burgeoning middle class
- Gambling was so rampant in fact that when newspapers published names of prominent people who were seriously ill bets were placed at Lloydrsquos on their anticipated dates of death Reacting against such practices 79 merchant underwriters broke away in 1769 and two years later formed a ldquoNew Lloydrsquos Coffee Houserdquo that became known as the ldquoreal Lloydrsquosrdquo Making wagers on peoples deaths ceased in 1774 when parliament forbade the practice
- Insurance moves to America
- The US insurance industry was built on the British model The year 1735 saw the birth of the first insurance company in the American colonies in
- Charleston SC The Presbyterian Synod of Philadelphia in 1759 sponsored the first life insurance corporation in America for the benefit of ministers and their dependents And the first life insurance policy for the general public in the United States was issued in Philadelphia on May 22 1761
- But it wasnt until 80 years later (after 1840) that life insurance really tookoff in a big way The key to its success was reducing the opposition from religious groups
- In 1835 the infamous New York fire drew peoples 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
- With the creation of the automobile public liability insurance which first made its appearance in the 1880s gained importance and acceptance
- More advancement was made to insurance during the process of industrialization In 1897 the British government passed the Workmens Compensation Act which made it mandatory for a company to insure its employees against industrial accidents
- During 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 most labor 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
- BENEFITS OF LIFE INSURANCE
- 1) Risk cover -Life Insurance contracts allow an individual to have a risk cover against any unfortunate event of the future
- 2) Tax Deduction -Under section 80C of the Income Tax Act of 1961 one can get tax deduction on premiums up to one lakh rupees Life Insurance policies thus decrease the total taxable income of an individual
- 3) Loans -An individual can easily access loans from different financial institutions by pledging his insurance policies
- 4) Retirement Planning -What had provided protection against the financial consequences of premature death may now be used to help them enjoy their retirement years
- 5) Educational Needs -Similar to retirement planning the cash values that flow from ones life insurance schemes can be utilized for educational needs of the insurer or his children
- The Life Insurance Industry has an enviable track record among public sector units It has a Consistent profit and dividend paying record accompanied by a steady growth in its financial resources Through investments in the Government sector and socially- oriented sectors the Industry has contributed immensely to the nations development The industry is recognized as one of the largest financial Institutions in the country The ventures initiated by the industry in the areas of Mutual Fund
- Housing Finance has done exceedingly well in recent years To protect the countrys foreign exchange reserves the reinsurance arrangement are so organized that maximum retention is made possible within the country while at the same time protecting interests of the policy holders
- 22) CURRENT SCENARIO OF RELIANCE LIFE INSURANCE
- RLIC offers wide range of innovative life insurance products targeted at individuals and groups It offers need based products that caters to four distinct segments namely protection child retirement and investment plans RLIC is committed to emerge as a transnational Life Insurer of global scale and standard
- CH - 3) RESEARCH METHODOLOGY
- RESEARCH DESIGN-
- SAMPLING TECHNIQUES-
- THE PRIMARY OBJECTIVEOF THE STUDY-
- 34) OBJECTIVES
- 7) Some innovative technique or product is required in order to attract the consumer
- 45) LIMITATIONS
- 46) BIBLIOGRAPHY
-
a) high risk high gain
b) low risk low gain
c) moderate
d) vary times to times
Option No of respondents Percentage
High risk high gain 8 16
Low risk low gain 5 10
Moderate 12 24
Vary times to times 25 50
TOTAL 50 100
Interpretation The above pie chart shows that out of 50 respondents 16 preferred high risk- high gain form of investment 10 preferred low risk- low gain form of investment 24 preferred moderate investment and 50 preferred varied form of investment
43
Q5Are you interested to invest in Traditional Plans
a) YES
b) NO
Option No of respondents Percentage
YES 36 72
NO 14 28
TOTAL 50 100
Interpretation The above pie chart shows that 72 of the respondents preferred to invest in Traditional Plans
44
Q6 What is your level of annual investmenta) below 20000
b) 20000-40000
c) above 40000
Option No of respondents Percentage
Below 20000 41 82
20000-40000 7 14
Above 40000 2 4
TOTAL 50 100
Interpretation The above pie chart shows that 82 of the respondents are willing to invest below Rs 20000 per annum 14 of them want to invest within Rs 20000 per annum to Rs 40000 and 4 wanted to invest over and above Rs 40000
45
Q7 What factors would you consider most important before choosing an insurance policy
a) publicity of the company
b) reputation of the company
c) quality of life advisors
d) after sales-supporting of the company
Option No of respondents Percentage
Publicity of the co 5 20
Reputation of the co 25 50
Quality of life advisors 10 10
After sale-services 10 20
TOTAL 50 100
Interpretation out of the sample respondents 20 considers publicity of the company 50 considers reputation of the company 10 considers quality of life advisors and 20 considers after sales support of the company as the most important factor for choosing an insurance company
46
Q8 Which life insurance company would you prefer the most to invest ina) reliance life insurance (RLIC)
b) Bajaj Allianz life insurance
Option No of respondents Percentage
RLIC 21 42
BAJAJ ALLIANZ 29 58
TOTAL 50 100
Interpretation Out of 50 respondents 42 preferred to invest in reliance life insurance over 58 of the respondents who prefer to invest in Bajaj Allianz life insurance
47
Q9 If reliance life insurance then which particular plan you would like to invest ina) Reliance Term Plan
b) Reliance Whole Life Plan
c) Reliance Endowment Plan
d) Reliance Special Endowment Plan
Option No of respondents Percentage
Reliance term plan 6 2858
Reliance whole life plan 3 1428
Reliance endowment plan 9 4286
Reliance special endowment plan 3 1428
TOTAL 21 100
Interpretation Out of 21 respondents 2858 preferred to invest in term plan 1428 in whole life plan 4286 in endowment plan and 1428 of them preferred to invest in special endowment plan of reliance life insurance
48
Q10 If Bajaj Allianz life insurance then which particular plan you would like to invest in
I ENDOWMENT PLAN a) Bajaj Allianz Invest Gain
b) Bajaj Allianz save Care Economy SP
c) Bajaj Allianz life time care
d) Bajaj Allianz Super Saver plan
II MONEY BACK PLAN i Bajaj Allianz Cash Gain plan
Option No of respondents Percentage
Invest gain plan 3 1035
Save care economy SP 6 2069
Life time care 7 2415
Super saver plan 3 1035
Cash gain plan 10 3446
TOTAL 29 100
Interpretation Out of 29 respondents 1035 of them plan to invest in Bajaj Allianz- Invest Gain 2069 wish to invest in Bajaj Allianz save Care Economy SP 2415 want to invest in Bajaj Allianz life time care 1035 in Bajaj Allianz Super Saver plan and 3446 prefer to invest in Bajaj Allianz Cash Gain plan
49
32) SIGNIFICANCE OF STUDY
Life insurance is one of the most rapidly growing sectors in India The main reason
behind the growth can attributed to the high population density improving economical
condition improving education level and improving awareness Due to these factors there
is still huge scope for growth in this sector Like any other business when the
opportunities are present everybody tends to enter the industries This growth hence
fetches the new competitors as well as new strategies from existing players To sustain in
any competitive industry the organization must adapt to existing strategies and adopt
new ones This study will focus on the analysis of Reliance Life Insurance in comparison
with the present scenario of Bajaj Allianz Life Insurance with respect to the Traditional
Plans of both the companyrsquos This will mainly cover the following aspects
To know about the awareness and popularity of various Traditional Plans offered
by Reliance Life Insurance and Bajaj Allianz Life Insurance
How Reliance Life Insurance can develop and sustain a good distribution
network
These will provide it benefit both in terms of better market coverage as well as better
penetration
50
33) SCOPE OF THE STUDY
1) This helps in finding out vast potential of insurance company
2) The study was conducted in National Capital Region (NCR) only
3) The number of respondents to be surveyed can be improved
4) This study was conducted by comparing the performances amp products of three private
amp government insurance players in insurance industry
5) This study was conducted to analyze the market stand of Reliance life insurance
Company limited and Bajaj Allianz Life Insurance Company Limited of India insurance
companies
6) This study is done to eliminate all the myths which people have in their minds
regarding Insurance Sector
51
34) OBJECTIVES
To have a detailed understanding of Reliance Life Insurance and Bajaj Allianz Life Insurance
To find out various reasons considered while investing in policies
To get knowledge about the market exposure and future prospects about Reliance Life Insurance
To know the perception of the consumers about the life insurance
To analyze the Traditional plans of Reliance Life Insurance and compare it with Bajaj Allianz
To know about the brand awareness of Reliance Life Insurance its customer preferences over Bajaj Allianz in the market
To study a proper knowledge about the life insurance industry
To understand the consumer choice while investing in policies
52
CHAPTER 4
DISCUSSION AND FINDINGS OF THE STUDY
FINDINGS OF THE STUDY RECOMMENDATION AND SUGGESTIONS CONCLUSION LIMITATIONS BIBLIOGRAPHY ANNEXUREQUESTIONNAIRE
53
41) FINDINGS OF THE STUDY
1) The survey reveals that still a large proportion of population is interested to invest in other forms of investment other than insurance as still most of them are unaware about the importance of insurance in their life
2) Basically people make varied form of investment for creating wealth to protect their families against pre-mature death and to protect income against disability sickness or critical illness
3) The main motive of the individuals investing is receives benefits US 1010D People generally consider insurance as a tax saving device
4) Mostly people prefer time to time form of investment as they are not willing to take high degree of risk
5) 72 of the respondents are preferred to invest in Traditional Plans
6) Most of the people prefer to make an annual investment up to a maximum of Rs20 000 per annum
7) When the product is like life insurance reputation of the company publicity of the company amp after sale services of the company matters a lot This means that people would choose that insurance company only where the quality of life advisors is satisfactory
8) Most people prefer to invest in Bajaj Allianz Life Insurance as compared to making an investment in Reliance Life Insurance
9) The most preferable Traditional plan of Reliance Life Insurance is Endowment Plan
10) The most preferable plan of Bajaj Allianz Life Insurance co is Cash Gain Plan
54
42) SUGGESTIONS amp RECOMMENDATIONS
Based on the observations of the study some suggestions for the organization are made as
follows
1) Quality of advisors is also as important as the quantity Thus company should go
mainly for qualified professionals
2) Company should increase its budget on publicity so that awareness can be increased
3) Clarity and transparency should be provided to the customer regarding various
products
4) Training sessions should be planned in advance so that schedule can be provided to
the advisor in advance
5) Apart from the Brand Positioning in urban area a strategy should be adopted by
Reliance to make its brand also near to middle level or high aspirant people because they
are the main source of the business in India
6) Awareness Camp to the sub urban area should be focused by Reliance
7) Some innovative technique or product is required in order to attract the consumer
43) LITERATURE REVIEW
55
1) Robi Elenekave has explained in detail why various retirement plans and pension plans donrsquot give the desired returns The main difficulty is the use of incorrect method for calculations done to find out the return on investment This is primarily due to wrong assumptions The study provides information about the various precautions which need to be considered before planning so that the desired results can be achieved
2) Another paper provides insight about how various financial sectors invest in bond market The study was how the different players investment different instruments according to the risk appetite and desired rate of return The study shows that life insurance sector mainly invests in government bond which are low return and low risk instrument The investment in government bond it shows that life insurance companies are more conservative in investment
3) K Subhash has presented the history of Indiarsquos life insurance industry in three stages before independence after independence and post liberalization which not only provides information but also help in analyzing the impact of these major changes The authors have also discussed the huge potential which exists in the rural India The insurance company must realize the importance of rural sector because the future lies there The author commented about the increasing share of private player in the existing market This confirms the availability of opportunity in this sector The paper also provides the importance of professional and focused approach which was given no importance
4) Tapen Sinha has discussed the various challenges and opportunities in the insurance market One of the very important factors which have been discussed in the study is the importance of developing new and better products As the scenario changes the need of an individual also changes so any organization must understand and fulfill these needs The new product development requires constant research so organization must also focus on it
5) Roger G Ibbotson discusses how financial planners and advisors have recently started to recognize that human capital must be taken into account when building optimal portfolios for individual investors Any investorrsquos human capital has a unique mortality risk However life insurance in its forms can hedge against this mortality risk Thus human capital affects both the optimal asset allocation and the optimal demand for life insurance This paper provides a unified framework based on human capital in order to enable individual investors to make both decisions jointly
6) Rakesh Niraj study tells how the flow of information in any organization is important For any organization to grow the flow of information must be good both upwards as well as ownwards The proper flow of information will also ensure proper flow of good and services from organization to customer and proper flow of information from customer to organization The information from customers will help the organization in providing better goods and services to the customer For the above purpose organization must ensure good channel partner who can provide the organization with correct feedback Hence it becomes very important for any organization to acquire good channel partners
56
7) Stephen P Robbins has discussed how group dynamics works in any organization The success of any organization depends on the success of its various teams and how these teams work together The book provides various techniques which can be used by any organization to get result from the team effort The conflict resolution is a major task in any group Various techniques which the organization can use in conflict resolution are also discussed Another important aspect covered is the importance of leadership in the organization The various forms of leadership have been discussed and the kinds of leadership which can be effective in particular situations are also discussed
8) R Wayne Mondy has discussed the importance of training and development in any organization The training provides skills to perform the current job where as the development involve learning beyond present need The various type of training are discussed which can be used according to the requirement Training and development are not only important for better performance of an individual but it also gives satisfaction The major factors which influence training and development are found to be management support commitment of trainee and trainer complexity of the organization The process of developing good training plans is also provided In another part author has discussed the importance of right man for right job The compensation strategies are also given which are very crucial for ant industry
9) Philip Kotler has discussed the importance of channels partners Better the channel partners better will be the delivery model Detailed discussion about how to design the channel structure so that all the requirements could be fulfilled is provided The various issues faced by the organization while managing the channels are also given When an organization has more than one channel it becomes very important that all the channels should be integrated in such a way that the organization get the best out of all At times due to the conflicting benefit of the different channels the conflict arise so various strategies to manage these issues is also discussed in the chapter
10) Michael J Etzel has written about the marketing of services The marketing of services is different from the goods because of the characteristic of service like intangibility inseparability heterogeneity etc Brief about pricing strategies is also given in case of services The authors have also given the impact of technological development on the services marketing The author has also given the importance of brand and after sales support in case of services as perception of the customers plays an important role In other part of the book the authors has described the importance of distribution channels and designing of the same A channel partner should be consider as partner according to discussion The legal complications associated with channels are also discussed These complications are necessary to take into the consideration while managing the channels The conflicting interest of channels both horizontally and vertically are also taken into the consideration
57
11) Boone has discussed about the importance of personal financial planning The concept of time value of money has also been elaborated The importance of creating and implementing budget is given under money management The other important concepts for financial planning like credit management and understanding taxes are also explained In one section the authors have discussed the importance of investment and what should be the major considerations while making any investment The considerations include the risk associated with the investment return on the investment etc The importance and benefits of life insurance has also been given The discussion also includes various legal aspects associated with life insurance The overview of retirement planning is also given which includes importance and benefit of retirement planning Various tools for proper retirement planning are also discussed
58
44) CONCLUSION
1) The customers are very much sensitive towards their investment They would like to invest only in that insurance company which enjoys good public image along with quality good services
2) The result of the survey conducted shows that Bajaj Allianz Life Insurance is the leader in life insurance industry but Reliance Life Insurance and other private players are giving it a close competition
3) The motive of the people behind investing in life insurance is the tax benefits that they would receive under sec 80C and 1010D
4) In Life Insurance industry the after sales support of the company is as important as the quality of life advisors
59
45) LIMITATIONS
There were some limitations faced during the study as discussed below
Since the study was taken for two months so there was a constraint of time and effort
The study was limited only to some of the Delhi regions so the results may be biased
Questionnaire was given to 125 people however only 50 responded to it which is very small for such type of study
The biasness of consumer or responses error cannot be eliminated
Most of the people are not aware about the Importance and the necessity of insurance in their life
Adverse perception of the people towards insurance sector- People consider insurance as a tax saving device
Lack of awareness about the earning opportunity in the insurance sector
60
46) BIBLIOGRAPHY
wwwreliancelifeinsurancecom
wwwadagroupcom
wwwirdacom
wwwbajajallianzlifeinsurancecom
wwwallianzbajajcom
47) ANNEXURE
61
QUESTIONNAIRE
A comparative analysis of consumer perception regarding Traditional plans of Reliance Life Insurance with that of Bajaj Allianz Life Insurance
NAME ___________________________
PERSONAL DETAILS
1) AGE_________________
1) OCCUPATION______________
2) INCOME___________________
3) FAMILY MEMBERS_________
Q1 Where do you prefer to investa) Fixed deposits b) Stock c) Mutual funds d) Insurance e) Others
Q2 What are your priorities for investmenta) Protecting your family against pre-mature death b) Wealth creation c) Retirement needs d) Child education and marriage e) Protect income against disability sickness or critical illness
Q3 What is your main motive behind investing in life insurancea) Tax benefit b) Savings c) Risk cover
Q4 What kind of investment do you prefera) High risk high gain b) Low risk low gain c) Moderate d) Vary times to times
62
Q5Are you interested to invest in Traditional Plansa) Yes b) No
Q6 What is your level of annual investmenta) below 20000 b) 20000-40000 c) above 40000
Q7 What factors would you consider most important before choosing an insurance company
a) publicity of the company b) reputation of the company c) quality of life advisors d) after sales-supporting of the company
Q8 Which life insurance company would you prefer the most to invest ina) Reliance life insurance b) Bajaj Allianz life insurance
Q9 If reliance life insurance then which particular plan you would like to invest ina) Reliance Term Plan b) Reliance Whole Life Plan c) Reliance Endowment Plan d) Reliance Special Endowment Plan
Q10 If Bajaj Allianz life insurance then which particular plan you would like to invest in
I ENDOWMENT PLAN
a) Bajaj Allianz Invest Gain
b) Bajaj Allianz save Care Economy SP
c) Bajaj Allianz life time care
d) Bajaj Allianz Super Saver plan
II MONEY BACK PLAN
a) Bajaj Allianz Cash Gain plan
63
64
- COMPANY PROFILE
- ABOUT RELIANCE LIFE INSURANCE
- HISTORY
- Reliance Capital Limited announced the launch of its life insurance business on February 1 2006 This was after obtaining the required regulatory approvals from the Registrar Of Companies and the Insurance Regulatory and Development Authority
- It was in August 2005 that the ball was set rolling when Reliance Capital Limited the financial arm of Reliance ndash Anil Dhirubhai Ambani Group (ADAG) ndash announced the requisition of 100 shareholding in AMP Sanmar Life Insurance Company Limited and the formal transfer of shares took place in October 2005 The company will issue all policy contracts under the Reliance Life Insurance Company limited name All the existing policy contracts also stand transferred to the Reliance Life Insurance entity with all the original contractual terms and commitments intact
- CORE VALUES
- Reliance Life Insurance Company Limited has some core values which are listed as follows
- Vision bull To be the first choice insurer for customers bull To be the preferred employer for staff in the insurance industry bull To be the number one insurer for creating shareholder value
- Mission As a responsible customer focused market leader we will strive to understand the insurance needs of the consumers and translate it into affordable products that deliver value for money
- 12) TRADITIONAL PLANS OF THE COMPANY
- 12A )TRADITIONAL PLAN OF RELIANCE LIFE INSURANCE-
- Life insurance products are designed to suit the requirements of customers Fundamentally the product provide for
- In every product to a certain degree risk cover is imperative for it to fall under the category of insurance Based on the coverage of the product the premiums are calculated and the customer pays accordingly In order to suggest the right product it is essential for an agent to understand the requirements of the customer well
- The traditional plans of the company have the following features-
- Fixed Tenure
- Potential for better returns
- Transparency
- Flexibility in investment
- Flexibility to invest more
- Flexibility to skip the premium
- Flexibility to choose the cover
- High liquidity
- Age term and sum assured decide the amount of premium
- Top- ups and switches are not allowed
- Reliance Life Insurance Company Limited has offered 9
- 1) Reliance term plan-
- 2) Reliance Whole Life Plan -
- 3) Reliance Endowment Plan -
- 4) Reliance Special Endowment Plan -
- 13) INDUSTRY PROFILE
- MEANING OF INSURANCE
- Insurance may be described as a social device to reduce or eliminate risk of loss to life and property Insurance is a collective bearing of risk Insurance is a financial device to spread the risks and losses of few people among a large number of people as people prefer small fixed liability instead of big uncertain and changing liability
- Insurance can be defined as a ldquolegal contract between two parties whereby one party called insurer undertakes to pay a fixed amount of money on the happening of a particular event which may be certain or uncertainrdquo The other party called insured pays in exchange a fixed sum known as premium
- Insurance is desired to safeguard oneself and onersquos family against possible losses on account of risks and perils It provides financial compensation for the losses suffered due to the happening of any unforeseen events
- IMPORTANCE OF INSURANCE
- Insurance services play predominant role in the process of financial Intermediary Today insurance industry is one of the most growing sectors in India There is lot of potential in the Indian Insurance Industry
- There are many issues which require study The scope of the study of Insurance industry of India would be very great as there are ongoing Developments in the industry after the opening of the sector
- Right now the insurance industry has great opportunities in a country like India or China which huge population Also the penetration of insurance in India is very low in both life and non-life segment so there is lot potential to be tapped Before starting the discussion on insurance industry and related issues we have to start with the basics of insurance So first we understand what is insurance How the word lsquoinsurancersquo is different from the word lsquoassurancersquo Etc
- HISTORY OF INSURANCE
- The concept of insurance is believed to have emerged almost 4500 years ago in the ancient land of Babylonia where traders used to bear risk of the carvan by giving loans which were later repaid with interest when the goods arrived safely
- The concept of insurance as we know today took shape in 1688 at a place called Lloydrsquos Coffee House in London where risk bearers used to meet to transact business This coffee house became so popular that Lloydrsquos became the one of the first modern insurance companies by the end of the eighteenth century
- Marine insurance companies came into existence by the end of the eighteenth century These companies were empowered to write fire and life insurance as well as marine The Great Fire of London in 1966 caused huge loss of property and life With a view to providing fire insurance facilities
- Dr Nicholas Barbon set up in 1967 the first fire insurance company known as the Fire office
- Life insurance in its modern form came to India from England in 1818 The Oriental Life Insurance Company was the first insurance company to be set up in India to help the widows of European community The insurance companies which came into existence between 1818 and 1869 treated
- Indian lives as subnormal and charged an extra premium of 15 to 20 per cent The first Indian insurance company the Bombay Mutual Life
- Assurance Society came into existence in 1870 to cover Indian lives at normal rates
- The Insurance Act 1938 the first comprehensive legislation governing both life and non-life branches of insurance were enacted to provide strict state control over insurance business This amended insurance Act looked into investments expenditure and management of these companies
- By the mid- 1950s there were 154 Indian insurers 16 foreign insurers and 75 provident societies carrying on life insurance business in India Insurance business flourished and so did scams irregularities and dubious investment practices by scores of companies As a result the government decided to nationalize the life assurance business in India The Life Insurance
- Corporation of India (LIC) was set up in 1956 The nationalization of life insurance was followed by general insurance in 1972
- MEANING OF LIFE INSURANCE
- There are three parties in a life insurance transaction the insurer the insured and the owner of the policy (policyholder) although the owner and the insured are often the same person
- Another important person involved in a life insurance policy is the beneficiary The beneficiary is the person or persons who will receive the policy proceeds upon the death of the insured
- Life insurance may be divided into two basic classes ndash term and permanent
- HISTORY OF LIFE INSURANCE
- Risk protection has been a primary goal of humans and institutions throughout history Protecting against risk is what insurance is all about
- Over 5000 years ago in China insurance was seen as a preventative measure against piracy on the sea Piracy in fact was so prevalent that as a way of spreading the risk a number of ships would carry a portion of another ships cargo so that if one ship was captured the entire shipment would not be lost
- In another part of the world nearly 4500 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
- Life insurance came about a little later in ancient Rome where burial clubs were formed to cover the funeral expenses of its members as well as help survivors monetarily With Romes fall around 450 AD most of the concepts of insurance were abandoned but aspects of it did continue through the Middle Ages particularly with merchant and artisan guilds These provided forms of member insurance covering risks like fire flood theft disability death and even imprisonment
- During the feudal period early forms of insurance ebbed with the decline of travel and long-distance trade But during the 14th to 16th centuries transportation commerce and insurance would again reemerge
- And similar to ancient Rome burial societies were formed in the Buddhist period to help families build houses and to protect widows and children
- Modern Insurance
- Illegal almost everywhere else in Europe life insurance in England was vigorously promoted in the three decades following the Glorious Revolution of 1688 The type of insurance we see today owes its roots to 17th century England Lloyds of London or as they were known then Lloyds Coffee House was the location where merchants ship owners and underwriters met to discuss and transact business deals
- While serving as a means of risk-avoidance life insurance also appealed strongly to the gambling instincts of Englands burgeoning middle class
- Gambling was so rampant in fact that when newspapers published names of prominent people who were seriously ill bets were placed at Lloydrsquos on their anticipated dates of death Reacting against such practices 79 merchant underwriters broke away in 1769 and two years later formed a ldquoNew Lloydrsquos Coffee Houserdquo that became known as the ldquoreal Lloydrsquosrdquo Making wagers on peoples deaths ceased in 1774 when parliament forbade the practice
- Insurance moves to America
- The US insurance industry was built on the British model The year 1735 saw the birth of the first insurance company in the American colonies in
- Charleston SC The Presbyterian Synod of Philadelphia in 1759 sponsored the first life insurance corporation in America for the benefit of ministers and their dependents And the first life insurance policy for the general public in the United States was issued in Philadelphia on May 22 1761
- But it wasnt until 80 years later (after 1840) that life insurance really tookoff in a big way The key to its success was reducing the opposition from religious groups
- In 1835 the infamous New York fire drew peoples 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
- With the creation of the automobile public liability insurance which first made its appearance in the 1880s gained importance and acceptance
- More advancement was made to insurance during the process of industrialization In 1897 the British government passed the Workmens Compensation Act which made it mandatory for a company to insure its employees against industrial accidents
- During 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 most labor 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
- BENEFITS OF LIFE INSURANCE
- 1) Risk cover -Life Insurance contracts allow an individual to have a risk cover against any unfortunate event of the future
- 2) Tax Deduction -Under section 80C of the Income Tax Act of 1961 one can get tax deduction on premiums up to one lakh rupees Life Insurance policies thus decrease the total taxable income of an individual
- 3) Loans -An individual can easily access loans from different financial institutions by pledging his insurance policies
- 4) Retirement Planning -What had provided protection against the financial consequences of premature death may now be used to help them enjoy their retirement years
- 5) Educational Needs -Similar to retirement planning the cash values that flow from ones life insurance schemes can be utilized for educational needs of the insurer or his children
- The Life Insurance Industry has an enviable track record among public sector units It has a Consistent profit and dividend paying record accompanied by a steady growth in its financial resources Through investments in the Government sector and socially- oriented sectors the Industry has contributed immensely to the nations development The industry is recognized as one of the largest financial Institutions in the country The ventures initiated by the industry in the areas of Mutual Fund
- Housing Finance has done exceedingly well in recent years To protect the countrys foreign exchange reserves the reinsurance arrangement are so organized that maximum retention is made possible within the country while at the same time protecting interests of the policy holders
- 22) CURRENT SCENARIO OF RELIANCE LIFE INSURANCE
- RLIC offers wide range of innovative life insurance products targeted at individuals and groups It offers need based products that caters to four distinct segments namely protection child retirement and investment plans RLIC is committed to emerge as a transnational Life Insurer of global scale and standard
- CH - 3) RESEARCH METHODOLOGY
- RESEARCH DESIGN-
- SAMPLING TECHNIQUES-
- THE PRIMARY OBJECTIVEOF THE STUDY-
- 34) OBJECTIVES
- 7) Some innovative technique or product is required in order to attract the consumer
- 45) LIMITATIONS
- 46) BIBLIOGRAPHY
-
Q5Are you interested to invest in Traditional Plans
a) YES
b) NO
Option No of respondents Percentage
YES 36 72
NO 14 28
TOTAL 50 100
Interpretation The above pie chart shows that 72 of the respondents preferred to invest in Traditional Plans
44
Q6 What is your level of annual investmenta) below 20000
b) 20000-40000
c) above 40000
Option No of respondents Percentage
Below 20000 41 82
20000-40000 7 14
Above 40000 2 4
TOTAL 50 100
Interpretation The above pie chart shows that 82 of the respondents are willing to invest below Rs 20000 per annum 14 of them want to invest within Rs 20000 per annum to Rs 40000 and 4 wanted to invest over and above Rs 40000
45
Q7 What factors would you consider most important before choosing an insurance policy
a) publicity of the company
b) reputation of the company
c) quality of life advisors
d) after sales-supporting of the company
Option No of respondents Percentage
Publicity of the co 5 20
Reputation of the co 25 50
Quality of life advisors 10 10
After sale-services 10 20
TOTAL 50 100
Interpretation out of the sample respondents 20 considers publicity of the company 50 considers reputation of the company 10 considers quality of life advisors and 20 considers after sales support of the company as the most important factor for choosing an insurance company
46
Q8 Which life insurance company would you prefer the most to invest ina) reliance life insurance (RLIC)
b) Bajaj Allianz life insurance
Option No of respondents Percentage
RLIC 21 42
BAJAJ ALLIANZ 29 58
TOTAL 50 100
Interpretation Out of 50 respondents 42 preferred to invest in reliance life insurance over 58 of the respondents who prefer to invest in Bajaj Allianz life insurance
47
Q9 If reliance life insurance then which particular plan you would like to invest ina) Reliance Term Plan
b) Reliance Whole Life Plan
c) Reliance Endowment Plan
d) Reliance Special Endowment Plan
Option No of respondents Percentage
Reliance term plan 6 2858
Reliance whole life plan 3 1428
Reliance endowment plan 9 4286
Reliance special endowment plan 3 1428
TOTAL 21 100
Interpretation Out of 21 respondents 2858 preferred to invest in term plan 1428 in whole life plan 4286 in endowment plan and 1428 of them preferred to invest in special endowment plan of reliance life insurance
48
Q10 If Bajaj Allianz life insurance then which particular plan you would like to invest in
I ENDOWMENT PLAN a) Bajaj Allianz Invest Gain
b) Bajaj Allianz save Care Economy SP
c) Bajaj Allianz life time care
d) Bajaj Allianz Super Saver plan
II MONEY BACK PLAN i Bajaj Allianz Cash Gain plan
Option No of respondents Percentage
Invest gain plan 3 1035
Save care economy SP 6 2069
Life time care 7 2415
Super saver plan 3 1035
Cash gain plan 10 3446
TOTAL 29 100
Interpretation Out of 29 respondents 1035 of them plan to invest in Bajaj Allianz- Invest Gain 2069 wish to invest in Bajaj Allianz save Care Economy SP 2415 want to invest in Bajaj Allianz life time care 1035 in Bajaj Allianz Super Saver plan and 3446 prefer to invest in Bajaj Allianz Cash Gain plan
49
32) SIGNIFICANCE OF STUDY
Life insurance is one of the most rapidly growing sectors in India The main reason
behind the growth can attributed to the high population density improving economical
condition improving education level and improving awareness Due to these factors there
is still huge scope for growth in this sector Like any other business when the
opportunities are present everybody tends to enter the industries This growth hence
fetches the new competitors as well as new strategies from existing players To sustain in
any competitive industry the organization must adapt to existing strategies and adopt
new ones This study will focus on the analysis of Reliance Life Insurance in comparison
with the present scenario of Bajaj Allianz Life Insurance with respect to the Traditional
Plans of both the companyrsquos This will mainly cover the following aspects
To know about the awareness and popularity of various Traditional Plans offered
by Reliance Life Insurance and Bajaj Allianz Life Insurance
How Reliance Life Insurance can develop and sustain a good distribution
network
These will provide it benefit both in terms of better market coverage as well as better
penetration
50
33) SCOPE OF THE STUDY
1) This helps in finding out vast potential of insurance company
2) The study was conducted in National Capital Region (NCR) only
3) The number of respondents to be surveyed can be improved
4) This study was conducted by comparing the performances amp products of three private
amp government insurance players in insurance industry
5) This study was conducted to analyze the market stand of Reliance life insurance
Company limited and Bajaj Allianz Life Insurance Company Limited of India insurance
companies
6) This study is done to eliminate all the myths which people have in their minds
regarding Insurance Sector
51
34) OBJECTIVES
To have a detailed understanding of Reliance Life Insurance and Bajaj Allianz Life Insurance
To find out various reasons considered while investing in policies
To get knowledge about the market exposure and future prospects about Reliance Life Insurance
To know the perception of the consumers about the life insurance
To analyze the Traditional plans of Reliance Life Insurance and compare it with Bajaj Allianz
To know about the brand awareness of Reliance Life Insurance its customer preferences over Bajaj Allianz in the market
To study a proper knowledge about the life insurance industry
To understand the consumer choice while investing in policies
52
CHAPTER 4
DISCUSSION AND FINDINGS OF THE STUDY
FINDINGS OF THE STUDY RECOMMENDATION AND SUGGESTIONS CONCLUSION LIMITATIONS BIBLIOGRAPHY ANNEXUREQUESTIONNAIRE
53
41) FINDINGS OF THE STUDY
1) The survey reveals that still a large proportion of population is interested to invest in other forms of investment other than insurance as still most of them are unaware about the importance of insurance in their life
2) Basically people make varied form of investment for creating wealth to protect their families against pre-mature death and to protect income against disability sickness or critical illness
3) The main motive of the individuals investing is receives benefits US 1010D People generally consider insurance as a tax saving device
4) Mostly people prefer time to time form of investment as they are not willing to take high degree of risk
5) 72 of the respondents are preferred to invest in Traditional Plans
6) Most of the people prefer to make an annual investment up to a maximum of Rs20 000 per annum
7) When the product is like life insurance reputation of the company publicity of the company amp after sale services of the company matters a lot This means that people would choose that insurance company only where the quality of life advisors is satisfactory
8) Most people prefer to invest in Bajaj Allianz Life Insurance as compared to making an investment in Reliance Life Insurance
9) The most preferable Traditional plan of Reliance Life Insurance is Endowment Plan
10) The most preferable plan of Bajaj Allianz Life Insurance co is Cash Gain Plan
54
42) SUGGESTIONS amp RECOMMENDATIONS
Based on the observations of the study some suggestions for the organization are made as
follows
1) Quality of advisors is also as important as the quantity Thus company should go
mainly for qualified professionals
2) Company should increase its budget on publicity so that awareness can be increased
3) Clarity and transparency should be provided to the customer regarding various
products
4) Training sessions should be planned in advance so that schedule can be provided to
the advisor in advance
5) Apart from the Brand Positioning in urban area a strategy should be adopted by
Reliance to make its brand also near to middle level or high aspirant people because they
are the main source of the business in India
6) Awareness Camp to the sub urban area should be focused by Reliance
7) Some innovative technique or product is required in order to attract the consumer
43) LITERATURE REVIEW
55
1) Robi Elenekave has explained in detail why various retirement plans and pension plans donrsquot give the desired returns The main difficulty is the use of incorrect method for calculations done to find out the return on investment This is primarily due to wrong assumptions The study provides information about the various precautions which need to be considered before planning so that the desired results can be achieved
2) Another paper provides insight about how various financial sectors invest in bond market The study was how the different players investment different instruments according to the risk appetite and desired rate of return The study shows that life insurance sector mainly invests in government bond which are low return and low risk instrument The investment in government bond it shows that life insurance companies are more conservative in investment
3) K Subhash has presented the history of Indiarsquos life insurance industry in three stages before independence after independence and post liberalization which not only provides information but also help in analyzing the impact of these major changes The authors have also discussed the huge potential which exists in the rural India The insurance company must realize the importance of rural sector because the future lies there The author commented about the increasing share of private player in the existing market This confirms the availability of opportunity in this sector The paper also provides the importance of professional and focused approach which was given no importance
4) Tapen Sinha has discussed the various challenges and opportunities in the insurance market One of the very important factors which have been discussed in the study is the importance of developing new and better products As the scenario changes the need of an individual also changes so any organization must understand and fulfill these needs The new product development requires constant research so organization must also focus on it
5) Roger G Ibbotson discusses how financial planners and advisors have recently started to recognize that human capital must be taken into account when building optimal portfolios for individual investors Any investorrsquos human capital has a unique mortality risk However life insurance in its forms can hedge against this mortality risk Thus human capital affects both the optimal asset allocation and the optimal demand for life insurance This paper provides a unified framework based on human capital in order to enable individual investors to make both decisions jointly
6) Rakesh Niraj study tells how the flow of information in any organization is important For any organization to grow the flow of information must be good both upwards as well as ownwards The proper flow of information will also ensure proper flow of good and services from organization to customer and proper flow of information from customer to organization The information from customers will help the organization in providing better goods and services to the customer For the above purpose organization must ensure good channel partner who can provide the organization with correct feedback Hence it becomes very important for any organization to acquire good channel partners
56
7) Stephen P Robbins has discussed how group dynamics works in any organization The success of any organization depends on the success of its various teams and how these teams work together The book provides various techniques which can be used by any organization to get result from the team effort The conflict resolution is a major task in any group Various techniques which the organization can use in conflict resolution are also discussed Another important aspect covered is the importance of leadership in the organization The various forms of leadership have been discussed and the kinds of leadership which can be effective in particular situations are also discussed
8) R Wayne Mondy has discussed the importance of training and development in any organization The training provides skills to perform the current job where as the development involve learning beyond present need The various type of training are discussed which can be used according to the requirement Training and development are not only important for better performance of an individual but it also gives satisfaction The major factors which influence training and development are found to be management support commitment of trainee and trainer complexity of the organization The process of developing good training plans is also provided In another part author has discussed the importance of right man for right job The compensation strategies are also given which are very crucial for ant industry
9) Philip Kotler has discussed the importance of channels partners Better the channel partners better will be the delivery model Detailed discussion about how to design the channel structure so that all the requirements could be fulfilled is provided The various issues faced by the organization while managing the channels are also given When an organization has more than one channel it becomes very important that all the channels should be integrated in such a way that the organization get the best out of all At times due to the conflicting benefit of the different channels the conflict arise so various strategies to manage these issues is also discussed in the chapter
10) Michael J Etzel has written about the marketing of services The marketing of services is different from the goods because of the characteristic of service like intangibility inseparability heterogeneity etc Brief about pricing strategies is also given in case of services The authors have also given the impact of technological development on the services marketing The author has also given the importance of brand and after sales support in case of services as perception of the customers plays an important role In other part of the book the authors has described the importance of distribution channels and designing of the same A channel partner should be consider as partner according to discussion The legal complications associated with channels are also discussed These complications are necessary to take into the consideration while managing the channels The conflicting interest of channels both horizontally and vertically are also taken into the consideration
57
11) Boone has discussed about the importance of personal financial planning The concept of time value of money has also been elaborated The importance of creating and implementing budget is given under money management The other important concepts for financial planning like credit management and understanding taxes are also explained In one section the authors have discussed the importance of investment and what should be the major considerations while making any investment The considerations include the risk associated with the investment return on the investment etc The importance and benefits of life insurance has also been given The discussion also includes various legal aspects associated with life insurance The overview of retirement planning is also given which includes importance and benefit of retirement planning Various tools for proper retirement planning are also discussed
58
44) CONCLUSION
1) The customers are very much sensitive towards their investment They would like to invest only in that insurance company which enjoys good public image along with quality good services
2) The result of the survey conducted shows that Bajaj Allianz Life Insurance is the leader in life insurance industry but Reliance Life Insurance and other private players are giving it a close competition
3) The motive of the people behind investing in life insurance is the tax benefits that they would receive under sec 80C and 1010D
4) In Life Insurance industry the after sales support of the company is as important as the quality of life advisors
59
45) LIMITATIONS
There were some limitations faced during the study as discussed below
Since the study was taken for two months so there was a constraint of time and effort
The study was limited only to some of the Delhi regions so the results may be biased
Questionnaire was given to 125 people however only 50 responded to it which is very small for such type of study
The biasness of consumer or responses error cannot be eliminated
Most of the people are not aware about the Importance and the necessity of insurance in their life
Adverse perception of the people towards insurance sector- People consider insurance as a tax saving device
Lack of awareness about the earning opportunity in the insurance sector
60
46) BIBLIOGRAPHY
wwwreliancelifeinsurancecom
wwwadagroupcom
wwwirdacom
wwwbajajallianzlifeinsurancecom
wwwallianzbajajcom
47) ANNEXURE
61
QUESTIONNAIRE
A comparative analysis of consumer perception regarding Traditional plans of Reliance Life Insurance with that of Bajaj Allianz Life Insurance
NAME ___________________________
PERSONAL DETAILS
1) AGE_________________
1) OCCUPATION______________
2) INCOME___________________
3) FAMILY MEMBERS_________
Q1 Where do you prefer to investa) Fixed deposits b) Stock c) Mutual funds d) Insurance e) Others
Q2 What are your priorities for investmenta) Protecting your family against pre-mature death b) Wealth creation c) Retirement needs d) Child education and marriage e) Protect income against disability sickness or critical illness
Q3 What is your main motive behind investing in life insurancea) Tax benefit b) Savings c) Risk cover
Q4 What kind of investment do you prefera) High risk high gain b) Low risk low gain c) Moderate d) Vary times to times
62
Q5Are you interested to invest in Traditional Plansa) Yes b) No
Q6 What is your level of annual investmenta) below 20000 b) 20000-40000 c) above 40000
Q7 What factors would you consider most important before choosing an insurance company
a) publicity of the company b) reputation of the company c) quality of life advisors d) after sales-supporting of the company
Q8 Which life insurance company would you prefer the most to invest ina) Reliance life insurance b) Bajaj Allianz life insurance
Q9 If reliance life insurance then which particular plan you would like to invest ina) Reliance Term Plan b) Reliance Whole Life Plan c) Reliance Endowment Plan d) Reliance Special Endowment Plan
Q10 If Bajaj Allianz life insurance then which particular plan you would like to invest in
I ENDOWMENT PLAN
a) Bajaj Allianz Invest Gain
b) Bajaj Allianz save Care Economy SP
c) Bajaj Allianz life time care
d) Bajaj Allianz Super Saver plan
II MONEY BACK PLAN
a) Bajaj Allianz Cash Gain plan
63
64
- COMPANY PROFILE
- ABOUT RELIANCE LIFE INSURANCE
- HISTORY
- Reliance Capital Limited announced the launch of its life insurance business on February 1 2006 This was after obtaining the required regulatory approvals from the Registrar Of Companies and the Insurance Regulatory and Development Authority
- It was in August 2005 that the ball was set rolling when Reliance Capital Limited the financial arm of Reliance ndash Anil Dhirubhai Ambani Group (ADAG) ndash announced the requisition of 100 shareholding in AMP Sanmar Life Insurance Company Limited and the formal transfer of shares took place in October 2005 The company will issue all policy contracts under the Reliance Life Insurance Company limited name All the existing policy contracts also stand transferred to the Reliance Life Insurance entity with all the original contractual terms and commitments intact
- CORE VALUES
- Reliance Life Insurance Company Limited has some core values which are listed as follows
- Vision bull To be the first choice insurer for customers bull To be the preferred employer for staff in the insurance industry bull To be the number one insurer for creating shareholder value
- Mission As a responsible customer focused market leader we will strive to understand the insurance needs of the consumers and translate it into affordable products that deliver value for money
- 12) TRADITIONAL PLANS OF THE COMPANY
- 12A )TRADITIONAL PLAN OF RELIANCE LIFE INSURANCE-
- Life insurance products are designed to suit the requirements of customers Fundamentally the product provide for
- In every product to a certain degree risk cover is imperative for it to fall under the category of insurance Based on the coverage of the product the premiums are calculated and the customer pays accordingly In order to suggest the right product it is essential for an agent to understand the requirements of the customer well
- The traditional plans of the company have the following features-
- Fixed Tenure
- Potential for better returns
- Transparency
- Flexibility in investment
- Flexibility to invest more
- Flexibility to skip the premium
- Flexibility to choose the cover
- High liquidity
- Age term and sum assured decide the amount of premium
- Top- ups and switches are not allowed
- Reliance Life Insurance Company Limited has offered 9
- 1) Reliance term plan-
- 2) Reliance Whole Life Plan -
- 3) Reliance Endowment Plan -
- 4) Reliance Special Endowment Plan -
- 13) INDUSTRY PROFILE
- MEANING OF INSURANCE
- Insurance may be described as a social device to reduce or eliminate risk of loss to life and property Insurance is a collective bearing of risk Insurance is a financial device to spread the risks and losses of few people among a large number of people as people prefer small fixed liability instead of big uncertain and changing liability
- Insurance can be defined as a ldquolegal contract between two parties whereby one party called insurer undertakes to pay a fixed amount of money on the happening of a particular event which may be certain or uncertainrdquo The other party called insured pays in exchange a fixed sum known as premium
- Insurance is desired to safeguard oneself and onersquos family against possible losses on account of risks and perils It provides financial compensation for the losses suffered due to the happening of any unforeseen events
- IMPORTANCE OF INSURANCE
- Insurance services play predominant role in the process of financial Intermediary Today insurance industry is one of the most growing sectors in India There is lot of potential in the Indian Insurance Industry
- There are many issues which require study The scope of the study of Insurance industry of India would be very great as there are ongoing Developments in the industry after the opening of the sector
- Right now the insurance industry has great opportunities in a country like India or China which huge population Also the penetration of insurance in India is very low in both life and non-life segment so there is lot potential to be tapped Before starting the discussion on insurance industry and related issues we have to start with the basics of insurance So first we understand what is insurance How the word lsquoinsurancersquo is different from the word lsquoassurancersquo Etc
- HISTORY OF INSURANCE
- The concept of insurance is believed to have emerged almost 4500 years ago in the ancient land of Babylonia where traders used to bear risk of the carvan by giving loans which were later repaid with interest when the goods arrived safely
- The concept of insurance as we know today took shape in 1688 at a place called Lloydrsquos Coffee House in London where risk bearers used to meet to transact business This coffee house became so popular that Lloydrsquos became the one of the first modern insurance companies by the end of the eighteenth century
- Marine insurance companies came into existence by the end of the eighteenth century These companies were empowered to write fire and life insurance as well as marine The Great Fire of London in 1966 caused huge loss of property and life With a view to providing fire insurance facilities
- Dr Nicholas Barbon set up in 1967 the first fire insurance company known as the Fire office
- Life insurance in its modern form came to India from England in 1818 The Oriental Life Insurance Company was the first insurance company to be set up in India to help the widows of European community The insurance companies which came into existence between 1818 and 1869 treated
- Indian lives as subnormal and charged an extra premium of 15 to 20 per cent The first Indian insurance company the Bombay Mutual Life
- Assurance Society came into existence in 1870 to cover Indian lives at normal rates
- The Insurance Act 1938 the first comprehensive legislation governing both life and non-life branches of insurance were enacted to provide strict state control over insurance business This amended insurance Act looked into investments expenditure and management of these companies
- By the mid- 1950s there were 154 Indian insurers 16 foreign insurers and 75 provident societies carrying on life insurance business in India Insurance business flourished and so did scams irregularities and dubious investment practices by scores of companies As a result the government decided to nationalize the life assurance business in India The Life Insurance
- Corporation of India (LIC) was set up in 1956 The nationalization of life insurance was followed by general insurance in 1972
- MEANING OF LIFE INSURANCE
- There are three parties in a life insurance transaction the insurer the insured and the owner of the policy (policyholder) although the owner and the insured are often the same person
- Another important person involved in a life insurance policy is the beneficiary The beneficiary is the person or persons who will receive the policy proceeds upon the death of the insured
- Life insurance may be divided into two basic classes ndash term and permanent
- HISTORY OF LIFE INSURANCE
- Risk protection has been a primary goal of humans and institutions throughout history Protecting against risk is what insurance is all about
- Over 5000 years ago in China insurance was seen as a preventative measure against piracy on the sea Piracy in fact was so prevalent that as a way of spreading the risk a number of ships would carry a portion of another ships cargo so that if one ship was captured the entire shipment would not be lost
- In another part of the world nearly 4500 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
- Life insurance came about a little later in ancient Rome where burial clubs were formed to cover the funeral expenses of its members as well as help survivors monetarily With Romes fall around 450 AD most of the concepts of insurance were abandoned but aspects of it did continue through the Middle Ages particularly with merchant and artisan guilds These provided forms of member insurance covering risks like fire flood theft disability death and even imprisonment
- During the feudal period early forms of insurance ebbed with the decline of travel and long-distance trade But during the 14th to 16th centuries transportation commerce and insurance would again reemerge
- And similar to ancient Rome burial societies were formed in the Buddhist period to help families build houses and to protect widows and children
- Modern Insurance
- Illegal almost everywhere else in Europe life insurance in England was vigorously promoted in the three decades following the Glorious Revolution of 1688 The type of insurance we see today owes its roots to 17th century England Lloyds of London or as they were known then Lloyds Coffee House was the location where merchants ship owners and underwriters met to discuss and transact business deals
- While serving as a means of risk-avoidance life insurance also appealed strongly to the gambling instincts of Englands burgeoning middle class
- Gambling was so rampant in fact that when newspapers published names of prominent people who were seriously ill bets were placed at Lloydrsquos on their anticipated dates of death Reacting against such practices 79 merchant underwriters broke away in 1769 and two years later formed a ldquoNew Lloydrsquos Coffee Houserdquo that became known as the ldquoreal Lloydrsquosrdquo Making wagers on peoples deaths ceased in 1774 when parliament forbade the practice
- Insurance moves to America
- The US insurance industry was built on the British model The year 1735 saw the birth of the first insurance company in the American colonies in
- Charleston SC The Presbyterian Synod of Philadelphia in 1759 sponsored the first life insurance corporation in America for the benefit of ministers and their dependents And the first life insurance policy for the general public in the United States was issued in Philadelphia on May 22 1761
- But it wasnt until 80 years later (after 1840) that life insurance really tookoff in a big way The key to its success was reducing the opposition from religious groups
- In 1835 the infamous New York fire drew peoples 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
- With the creation of the automobile public liability insurance which first made its appearance in the 1880s gained importance and acceptance
- More advancement was made to insurance during the process of industrialization In 1897 the British government passed the Workmens Compensation Act which made it mandatory for a company to insure its employees against industrial accidents
- During 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 most labor 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
- BENEFITS OF LIFE INSURANCE
- 1) Risk cover -Life Insurance contracts allow an individual to have a risk cover against any unfortunate event of the future
- 2) Tax Deduction -Under section 80C of the Income Tax Act of 1961 one can get tax deduction on premiums up to one lakh rupees Life Insurance policies thus decrease the total taxable income of an individual
- 3) Loans -An individual can easily access loans from different financial institutions by pledging his insurance policies
- 4) Retirement Planning -What had provided protection against the financial consequences of premature death may now be used to help them enjoy their retirement years
- 5) Educational Needs -Similar to retirement planning the cash values that flow from ones life insurance schemes can be utilized for educational needs of the insurer or his children
- The Life Insurance Industry has an enviable track record among public sector units It has a Consistent profit and dividend paying record accompanied by a steady growth in its financial resources Through investments in the Government sector and socially- oriented sectors the Industry has contributed immensely to the nations development The industry is recognized as one of the largest financial Institutions in the country The ventures initiated by the industry in the areas of Mutual Fund
- Housing Finance has done exceedingly well in recent years To protect the countrys foreign exchange reserves the reinsurance arrangement are so organized that maximum retention is made possible within the country while at the same time protecting interests of the policy holders
- 22) CURRENT SCENARIO OF RELIANCE LIFE INSURANCE
- RLIC offers wide range of innovative life insurance products targeted at individuals and groups It offers need based products that caters to four distinct segments namely protection child retirement and investment plans RLIC is committed to emerge as a transnational Life Insurer of global scale and standard
- CH - 3) RESEARCH METHODOLOGY
- RESEARCH DESIGN-
- SAMPLING TECHNIQUES-
- THE PRIMARY OBJECTIVEOF THE STUDY-
- 34) OBJECTIVES
- 7) Some innovative technique or product is required in order to attract the consumer
- 45) LIMITATIONS
- 46) BIBLIOGRAPHY
-
Q6 What is your level of annual investmenta) below 20000
b) 20000-40000
c) above 40000
Option No of respondents Percentage
Below 20000 41 82
20000-40000 7 14
Above 40000 2 4
TOTAL 50 100
Interpretation The above pie chart shows that 82 of the respondents are willing to invest below Rs 20000 per annum 14 of them want to invest within Rs 20000 per annum to Rs 40000 and 4 wanted to invest over and above Rs 40000
45
Q7 What factors would you consider most important before choosing an insurance policy
a) publicity of the company
b) reputation of the company
c) quality of life advisors
d) after sales-supporting of the company
Option No of respondents Percentage
Publicity of the co 5 20
Reputation of the co 25 50
Quality of life advisors 10 10
After sale-services 10 20
TOTAL 50 100
Interpretation out of the sample respondents 20 considers publicity of the company 50 considers reputation of the company 10 considers quality of life advisors and 20 considers after sales support of the company as the most important factor for choosing an insurance company
46
Q8 Which life insurance company would you prefer the most to invest ina) reliance life insurance (RLIC)
b) Bajaj Allianz life insurance
Option No of respondents Percentage
RLIC 21 42
BAJAJ ALLIANZ 29 58
TOTAL 50 100
Interpretation Out of 50 respondents 42 preferred to invest in reliance life insurance over 58 of the respondents who prefer to invest in Bajaj Allianz life insurance
47
Q9 If reliance life insurance then which particular plan you would like to invest ina) Reliance Term Plan
b) Reliance Whole Life Plan
c) Reliance Endowment Plan
d) Reliance Special Endowment Plan
Option No of respondents Percentage
Reliance term plan 6 2858
Reliance whole life plan 3 1428
Reliance endowment plan 9 4286
Reliance special endowment plan 3 1428
TOTAL 21 100
Interpretation Out of 21 respondents 2858 preferred to invest in term plan 1428 in whole life plan 4286 in endowment plan and 1428 of them preferred to invest in special endowment plan of reliance life insurance
48
Q10 If Bajaj Allianz life insurance then which particular plan you would like to invest in
I ENDOWMENT PLAN a) Bajaj Allianz Invest Gain
b) Bajaj Allianz save Care Economy SP
c) Bajaj Allianz life time care
d) Bajaj Allianz Super Saver plan
II MONEY BACK PLAN i Bajaj Allianz Cash Gain plan
Option No of respondents Percentage
Invest gain plan 3 1035
Save care economy SP 6 2069
Life time care 7 2415
Super saver plan 3 1035
Cash gain plan 10 3446
TOTAL 29 100
Interpretation Out of 29 respondents 1035 of them plan to invest in Bajaj Allianz- Invest Gain 2069 wish to invest in Bajaj Allianz save Care Economy SP 2415 want to invest in Bajaj Allianz life time care 1035 in Bajaj Allianz Super Saver plan and 3446 prefer to invest in Bajaj Allianz Cash Gain plan
49
32) SIGNIFICANCE OF STUDY
Life insurance is one of the most rapidly growing sectors in India The main reason
behind the growth can attributed to the high population density improving economical
condition improving education level and improving awareness Due to these factors there
is still huge scope for growth in this sector Like any other business when the
opportunities are present everybody tends to enter the industries This growth hence
fetches the new competitors as well as new strategies from existing players To sustain in
any competitive industry the organization must adapt to existing strategies and adopt
new ones This study will focus on the analysis of Reliance Life Insurance in comparison
with the present scenario of Bajaj Allianz Life Insurance with respect to the Traditional
Plans of both the companyrsquos This will mainly cover the following aspects
To know about the awareness and popularity of various Traditional Plans offered
by Reliance Life Insurance and Bajaj Allianz Life Insurance
How Reliance Life Insurance can develop and sustain a good distribution
network
These will provide it benefit both in terms of better market coverage as well as better
penetration
50
33) SCOPE OF THE STUDY
1) This helps in finding out vast potential of insurance company
2) The study was conducted in National Capital Region (NCR) only
3) The number of respondents to be surveyed can be improved
4) This study was conducted by comparing the performances amp products of three private
amp government insurance players in insurance industry
5) This study was conducted to analyze the market stand of Reliance life insurance
Company limited and Bajaj Allianz Life Insurance Company Limited of India insurance
companies
6) This study is done to eliminate all the myths which people have in their minds
regarding Insurance Sector
51
34) OBJECTIVES
To have a detailed understanding of Reliance Life Insurance and Bajaj Allianz Life Insurance
To find out various reasons considered while investing in policies
To get knowledge about the market exposure and future prospects about Reliance Life Insurance
To know the perception of the consumers about the life insurance
To analyze the Traditional plans of Reliance Life Insurance and compare it with Bajaj Allianz
To know about the brand awareness of Reliance Life Insurance its customer preferences over Bajaj Allianz in the market
To study a proper knowledge about the life insurance industry
To understand the consumer choice while investing in policies
52
CHAPTER 4
DISCUSSION AND FINDINGS OF THE STUDY
FINDINGS OF THE STUDY RECOMMENDATION AND SUGGESTIONS CONCLUSION LIMITATIONS BIBLIOGRAPHY ANNEXUREQUESTIONNAIRE
53
41) FINDINGS OF THE STUDY
1) The survey reveals that still a large proportion of population is interested to invest in other forms of investment other than insurance as still most of them are unaware about the importance of insurance in their life
2) Basically people make varied form of investment for creating wealth to protect their families against pre-mature death and to protect income against disability sickness or critical illness
3) The main motive of the individuals investing is receives benefits US 1010D People generally consider insurance as a tax saving device
4) Mostly people prefer time to time form of investment as they are not willing to take high degree of risk
5) 72 of the respondents are preferred to invest in Traditional Plans
6) Most of the people prefer to make an annual investment up to a maximum of Rs20 000 per annum
7) When the product is like life insurance reputation of the company publicity of the company amp after sale services of the company matters a lot This means that people would choose that insurance company only where the quality of life advisors is satisfactory
8) Most people prefer to invest in Bajaj Allianz Life Insurance as compared to making an investment in Reliance Life Insurance
9) The most preferable Traditional plan of Reliance Life Insurance is Endowment Plan
10) The most preferable plan of Bajaj Allianz Life Insurance co is Cash Gain Plan
54
42) SUGGESTIONS amp RECOMMENDATIONS
Based on the observations of the study some suggestions for the organization are made as
follows
1) Quality of advisors is also as important as the quantity Thus company should go
mainly for qualified professionals
2) Company should increase its budget on publicity so that awareness can be increased
3) Clarity and transparency should be provided to the customer regarding various
products
4) Training sessions should be planned in advance so that schedule can be provided to
the advisor in advance
5) Apart from the Brand Positioning in urban area a strategy should be adopted by
Reliance to make its brand also near to middle level or high aspirant people because they
are the main source of the business in India
6) Awareness Camp to the sub urban area should be focused by Reliance
7) Some innovative technique or product is required in order to attract the consumer
43) LITERATURE REVIEW
55
1) Robi Elenekave has explained in detail why various retirement plans and pension plans donrsquot give the desired returns The main difficulty is the use of incorrect method for calculations done to find out the return on investment This is primarily due to wrong assumptions The study provides information about the various precautions which need to be considered before planning so that the desired results can be achieved
2) Another paper provides insight about how various financial sectors invest in bond market The study was how the different players investment different instruments according to the risk appetite and desired rate of return The study shows that life insurance sector mainly invests in government bond which are low return and low risk instrument The investment in government bond it shows that life insurance companies are more conservative in investment
3) K Subhash has presented the history of Indiarsquos life insurance industry in three stages before independence after independence and post liberalization which not only provides information but also help in analyzing the impact of these major changes The authors have also discussed the huge potential which exists in the rural India The insurance company must realize the importance of rural sector because the future lies there The author commented about the increasing share of private player in the existing market This confirms the availability of opportunity in this sector The paper also provides the importance of professional and focused approach which was given no importance
4) Tapen Sinha has discussed the various challenges and opportunities in the insurance market One of the very important factors which have been discussed in the study is the importance of developing new and better products As the scenario changes the need of an individual also changes so any organization must understand and fulfill these needs The new product development requires constant research so organization must also focus on it
5) Roger G Ibbotson discusses how financial planners and advisors have recently started to recognize that human capital must be taken into account when building optimal portfolios for individual investors Any investorrsquos human capital has a unique mortality risk However life insurance in its forms can hedge against this mortality risk Thus human capital affects both the optimal asset allocation and the optimal demand for life insurance This paper provides a unified framework based on human capital in order to enable individual investors to make both decisions jointly
6) Rakesh Niraj study tells how the flow of information in any organization is important For any organization to grow the flow of information must be good both upwards as well as ownwards The proper flow of information will also ensure proper flow of good and services from organization to customer and proper flow of information from customer to organization The information from customers will help the organization in providing better goods and services to the customer For the above purpose organization must ensure good channel partner who can provide the organization with correct feedback Hence it becomes very important for any organization to acquire good channel partners
56
7) Stephen P Robbins has discussed how group dynamics works in any organization The success of any organization depends on the success of its various teams and how these teams work together The book provides various techniques which can be used by any organization to get result from the team effort The conflict resolution is a major task in any group Various techniques which the organization can use in conflict resolution are also discussed Another important aspect covered is the importance of leadership in the organization The various forms of leadership have been discussed and the kinds of leadership which can be effective in particular situations are also discussed
8) R Wayne Mondy has discussed the importance of training and development in any organization The training provides skills to perform the current job where as the development involve learning beyond present need The various type of training are discussed which can be used according to the requirement Training and development are not only important for better performance of an individual but it also gives satisfaction The major factors which influence training and development are found to be management support commitment of trainee and trainer complexity of the organization The process of developing good training plans is also provided In another part author has discussed the importance of right man for right job The compensation strategies are also given which are very crucial for ant industry
9) Philip Kotler has discussed the importance of channels partners Better the channel partners better will be the delivery model Detailed discussion about how to design the channel structure so that all the requirements could be fulfilled is provided The various issues faced by the organization while managing the channels are also given When an organization has more than one channel it becomes very important that all the channels should be integrated in such a way that the organization get the best out of all At times due to the conflicting benefit of the different channels the conflict arise so various strategies to manage these issues is also discussed in the chapter
10) Michael J Etzel has written about the marketing of services The marketing of services is different from the goods because of the characteristic of service like intangibility inseparability heterogeneity etc Brief about pricing strategies is also given in case of services The authors have also given the impact of technological development on the services marketing The author has also given the importance of brand and after sales support in case of services as perception of the customers plays an important role In other part of the book the authors has described the importance of distribution channels and designing of the same A channel partner should be consider as partner according to discussion The legal complications associated with channels are also discussed These complications are necessary to take into the consideration while managing the channels The conflicting interest of channels both horizontally and vertically are also taken into the consideration
57
11) Boone has discussed about the importance of personal financial planning The concept of time value of money has also been elaborated The importance of creating and implementing budget is given under money management The other important concepts for financial planning like credit management and understanding taxes are also explained In one section the authors have discussed the importance of investment and what should be the major considerations while making any investment The considerations include the risk associated with the investment return on the investment etc The importance and benefits of life insurance has also been given The discussion also includes various legal aspects associated with life insurance The overview of retirement planning is also given which includes importance and benefit of retirement planning Various tools for proper retirement planning are also discussed
58
44) CONCLUSION
1) The customers are very much sensitive towards their investment They would like to invest only in that insurance company which enjoys good public image along with quality good services
2) The result of the survey conducted shows that Bajaj Allianz Life Insurance is the leader in life insurance industry but Reliance Life Insurance and other private players are giving it a close competition
3) The motive of the people behind investing in life insurance is the tax benefits that they would receive under sec 80C and 1010D
4) In Life Insurance industry the after sales support of the company is as important as the quality of life advisors
59
45) LIMITATIONS
There were some limitations faced during the study as discussed below
Since the study was taken for two months so there was a constraint of time and effort
The study was limited only to some of the Delhi regions so the results may be biased
Questionnaire was given to 125 people however only 50 responded to it which is very small for such type of study
The biasness of consumer or responses error cannot be eliminated
Most of the people are not aware about the Importance and the necessity of insurance in their life
Adverse perception of the people towards insurance sector- People consider insurance as a tax saving device
Lack of awareness about the earning opportunity in the insurance sector
60
46) BIBLIOGRAPHY
wwwreliancelifeinsurancecom
wwwadagroupcom
wwwirdacom
wwwbajajallianzlifeinsurancecom
wwwallianzbajajcom
47) ANNEXURE
61
QUESTIONNAIRE
A comparative analysis of consumer perception regarding Traditional plans of Reliance Life Insurance with that of Bajaj Allianz Life Insurance
NAME ___________________________
PERSONAL DETAILS
1) AGE_________________
1) OCCUPATION______________
2) INCOME___________________
3) FAMILY MEMBERS_________
Q1 Where do you prefer to investa) Fixed deposits b) Stock c) Mutual funds d) Insurance e) Others
Q2 What are your priorities for investmenta) Protecting your family against pre-mature death b) Wealth creation c) Retirement needs d) Child education and marriage e) Protect income against disability sickness or critical illness
Q3 What is your main motive behind investing in life insurancea) Tax benefit b) Savings c) Risk cover
Q4 What kind of investment do you prefera) High risk high gain b) Low risk low gain c) Moderate d) Vary times to times
62
Q5Are you interested to invest in Traditional Plansa) Yes b) No
Q6 What is your level of annual investmenta) below 20000 b) 20000-40000 c) above 40000
Q7 What factors would you consider most important before choosing an insurance company
a) publicity of the company b) reputation of the company c) quality of life advisors d) after sales-supporting of the company
Q8 Which life insurance company would you prefer the most to invest ina) Reliance life insurance b) Bajaj Allianz life insurance
Q9 If reliance life insurance then which particular plan you would like to invest ina) Reliance Term Plan b) Reliance Whole Life Plan c) Reliance Endowment Plan d) Reliance Special Endowment Plan
Q10 If Bajaj Allianz life insurance then which particular plan you would like to invest in
I ENDOWMENT PLAN
a) Bajaj Allianz Invest Gain
b) Bajaj Allianz save Care Economy SP
c) Bajaj Allianz life time care
d) Bajaj Allianz Super Saver plan
II MONEY BACK PLAN
a) Bajaj Allianz Cash Gain plan
63
64
- COMPANY PROFILE
- ABOUT RELIANCE LIFE INSURANCE
- HISTORY
- Reliance Capital Limited announced the launch of its life insurance business on February 1 2006 This was after obtaining the required regulatory approvals from the Registrar Of Companies and the Insurance Regulatory and Development Authority
- It was in August 2005 that the ball was set rolling when Reliance Capital Limited the financial arm of Reliance ndash Anil Dhirubhai Ambani Group (ADAG) ndash announced the requisition of 100 shareholding in AMP Sanmar Life Insurance Company Limited and the formal transfer of shares took place in October 2005 The company will issue all policy contracts under the Reliance Life Insurance Company limited name All the existing policy contracts also stand transferred to the Reliance Life Insurance entity with all the original contractual terms and commitments intact
- CORE VALUES
- Reliance Life Insurance Company Limited has some core values which are listed as follows
- Vision bull To be the first choice insurer for customers bull To be the preferred employer for staff in the insurance industry bull To be the number one insurer for creating shareholder value
- Mission As a responsible customer focused market leader we will strive to understand the insurance needs of the consumers and translate it into affordable products that deliver value for money
- 12) TRADITIONAL PLANS OF THE COMPANY
- 12A )TRADITIONAL PLAN OF RELIANCE LIFE INSURANCE-
- Life insurance products are designed to suit the requirements of customers Fundamentally the product provide for
- In every product to a certain degree risk cover is imperative for it to fall under the category of insurance Based on the coverage of the product the premiums are calculated and the customer pays accordingly In order to suggest the right product it is essential for an agent to understand the requirements of the customer well
- The traditional plans of the company have the following features-
- Fixed Tenure
- Potential for better returns
- Transparency
- Flexibility in investment
- Flexibility to invest more
- Flexibility to skip the premium
- Flexibility to choose the cover
- High liquidity
- Age term and sum assured decide the amount of premium
- Top- ups and switches are not allowed
- Reliance Life Insurance Company Limited has offered 9
- 1) Reliance term plan-
- 2) Reliance Whole Life Plan -
- 3) Reliance Endowment Plan -
- 4) Reliance Special Endowment Plan -
- 13) INDUSTRY PROFILE
- MEANING OF INSURANCE
- Insurance may be described as a social device to reduce or eliminate risk of loss to life and property Insurance is a collective bearing of risk Insurance is a financial device to spread the risks and losses of few people among a large number of people as people prefer small fixed liability instead of big uncertain and changing liability
- Insurance can be defined as a ldquolegal contract between two parties whereby one party called insurer undertakes to pay a fixed amount of money on the happening of a particular event which may be certain or uncertainrdquo The other party called insured pays in exchange a fixed sum known as premium
- Insurance is desired to safeguard oneself and onersquos family against possible losses on account of risks and perils It provides financial compensation for the losses suffered due to the happening of any unforeseen events
- IMPORTANCE OF INSURANCE
- Insurance services play predominant role in the process of financial Intermediary Today insurance industry is one of the most growing sectors in India There is lot of potential in the Indian Insurance Industry
- There are many issues which require study The scope of the study of Insurance industry of India would be very great as there are ongoing Developments in the industry after the opening of the sector
- Right now the insurance industry has great opportunities in a country like India or China which huge population Also the penetration of insurance in India is very low in both life and non-life segment so there is lot potential to be tapped Before starting the discussion on insurance industry and related issues we have to start with the basics of insurance So first we understand what is insurance How the word lsquoinsurancersquo is different from the word lsquoassurancersquo Etc
- HISTORY OF INSURANCE
- The concept of insurance is believed to have emerged almost 4500 years ago in the ancient land of Babylonia where traders used to bear risk of the carvan by giving loans which were later repaid with interest when the goods arrived safely
- The concept of insurance as we know today took shape in 1688 at a place called Lloydrsquos Coffee House in London where risk bearers used to meet to transact business This coffee house became so popular that Lloydrsquos became the one of the first modern insurance companies by the end of the eighteenth century
- Marine insurance companies came into existence by the end of the eighteenth century These companies were empowered to write fire and life insurance as well as marine The Great Fire of London in 1966 caused huge loss of property and life With a view to providing fire insurance facilities
- Dr Nicholas Barbon set up in 1967 the first fire insurance company known as the Fire office
- Life insurance in its modern form came to India from England in 1818 The Oriental Life Insurance Company was the first insurance company to be set up in India to help the widows of European community The insurance companies which came into existence between 1818 and 1869 treated
- Indian lives as subnormal and charged an extra premium of 15 to 20 per cent The first Indian insurance company the Bombay Mutual Life
- Assurance Society came into existence in 1870 to cover Indian lives at normal rates
- The Insurance Act 1938 the first comprehensive legislation governing both life and non-life branches of insurance were enacted to provide strict state control over insurance business This amended insurance Act looked into investments expenditure and management of these companies
- By the mid- 1950s there were 154 Indian insurers 16 foreign insurers and 75 provident societies carrying on life insurance business in India Insurance business flourished and so did scams irregularities and dubious investment practices by scores of companies As a result the government decided to nationalize the life assurance business in India The Life Insurance
- Corporation of India (LIC) was set up in 1956 The nationalization of life insurance was followed by general insurance in 1972
- MEANING OF LIFE INSURANCE
- There are three parties in a life insurance transaction the insurer the insured and the owner of the policy (policyholder) although the owner and the insured are often the same person
- Another important person involved in a life insurance policy is the beneficiary The beneficiary is the person or persons who will receive the policy proceeds upon the death of the insured
- Life insurance may be divided into two basic classes ndash term and permanent
- HISTORY OF LIFE INSURANCE
- Risk protection has been a primary goal of humans and institutions throughout history Protecting against risk is what insurance is all about
- Over 5000 years ago in China insurance was seen as a preventative measure against piracy on the sea Piracy in fact was so prevalent that as a way of spreading the risk a number of ships would carry a portion of another ships cargo so that if one ship was captured the entire shipment would not be lost
- In another part of the world nearly 4500 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
- Life insurance came about a little later in ancient Rome where burial clubs were formed to cover the funeral expenses of its members as well as help survivors monetarily With Romes fall around 450 AD most of the concepts of insurance were abandoned but aspects of it did continue through the Middle Ages particularly with merchant and artisan guilds These provided forms of member insurance covering risks like fire flood theft disability death and even imprisonment
- During the feudal period early forms of insurance ebbed with the decline of travel and long-distance trade But during the 14th to 16th centuries transportation commerce and insurance would again reemerge
- And similar to ancient Rome burial societies were formed in the Buddhist period to help families build houses and to protect widows and children
- Modern Insurance
- Illegal almost everywhere else in Europe life insurance in England was vigorously promoted in the three decades following the Glorious Revolution of 1688 The type of insurance we see today owes its roots to 17th century England Lloyds of London or as they were known then Lloyds Coffee House was the location where merchants ship owners and underwriters met to discuss and transact business deals
- While serving as a means of risk-avoidance life insurance also appealed strongly to the gambling instincts of Englands burgeoning middle class
- Gambling was so rampant in fact that when newspapers published names of prominent people who were seriously ill bets were placed at Lloydrsquos on their anticipated dates of death Reacting against such practices 79 merchant underwriters broke away in 1769 and two years later formed a ldquoNew Lloydrsquos Coffee Houserdquo that became known as the ldquoreal Lloydrsquosrdquo Making wagers on peoples deaths ceased in 1774 when parliament forbade the practice
- Insurance moves to America
- The US insurance industry was built on the British model The year 1735 saw the birth of the first insurance company in the American colonies in
- Charleston SC The Presbyterian Synod of Philadelphia in 1759 sponsored the first life insurance corporation in America for the benefit of ministers and their dependents And the first life insurance policy for the general public in the United States was issued in Philadelphia on May 22 1761
- But it wasnt until 80 years later (after 1840) that life insurance really tookoff in a big way The key to its success was reducing the opposition from religious groups
- In 1835 the infamous New York fire drew peoples 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
- With the creation of the automobile public liability insurance which first made its appearance in the 1880s gained importance and acceptance
- More advancement was made to insurance during the process of industrialization In 1897 the British government passed the Workmens Compensation Act which made it mandatory for a company to insure its employees against industrial accidents
- During 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 most labor 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
- BENEFITS OF LIFE INSURANCE
- 1) Risk cover -Life Insurance contracts allow an individual to have a risk cover against any unfortunate event of the future
- 2) Tax Deduction -Under section 80C of the Income Tax Act of 1961 one can get tax deduction on premiums up to one lakh rupees Life Insurance policies thus decrease the total taxable income of an individual
- 3) Loans -An individual can easily access loans from different financial institutions by pledging his insurance policies
- 4) Retirement Planning -What had provided protection against the financial consequences of premature death may now be used to help them enjoy their retirement years
- 5) Educational Needs -Similar to retirement planning the cash values that flow from ones life insurance schemes can be utilized for educational needs of the insurer or his children
- The Life Insurance Industry has an enviable track record among public sector units It has a Consistent profit and dividend paying record accompanied by a steady growth in its financial resources Through investments in the Government sector and socially- oriented sectors the Industry has contributed immensely to the nations development The industry is recognized as one of the largest financial Institutions in the country The ventures initiated by the industry in the areas of Mutual Fund
- Housing Finance has done exceedingly well in recent years To protect the countrys foreign exchange reserves the reinsurance arrangement are so organized that maximum retention is made possible within the country while at the same time protecting interests of the policy holders
- 22) CURRENT SCENARIO OF RELIANCE LIFE INSURANCE
- RLIC offers wide range of innovative life insurance products targeted at individuals and groups It offers need based products that caters to four distinct segments namely protection child retirement and investment plans RLIC is committed to emerge as a transnational Life Insurer of global scale and standard
- CH - 3) RESEARCH METHODOLOGY
- RESEARCH DESIGN-
- SAMPLING TECHNIQUES-
- THE PRIMARY OBJECTIVEOF THE STUDY-
- 34) OBJECTIVES
- 7) Some innovative technique or product is required in order to attract the consumer
- 45) LIMITATIONS
- 46) BIBLIOGRAPHY
-
Q7 What factors would you consider most important before choosing an insurance policy
a) publicity of the company
b) reputation of the company
c) quality of life advisors
d) after sales-supporting of the company
Option No of respondents Percentage
Publicity of the co 5 20
Reputation of the co 25 50
Quality of life advisors 10 10
After sale-services 10 20
TOTAL 50 100
Interpretation out of the sample respondents 20 considers publicity of the company 50 considers reputation of the company 10 considers quality of life advisors and 20 considers after sales support of the company as the most important factor for choosing an insurance company
46
Q8 Which life insurance company would you prefer the most to invest ina) reliance life insurance (RLIC)
b) Bajaj Allianz life insurance
Option No of respondents Percentage
RLIC 21 42
BAJAJ ALLIANZ 29 58
TOTAL 50 100
Interpretation Out of 50 respondents 42 preferred to invest in reliance life insurance over 58 of the respondents who prefer to invest in Bajaj Allianz life insurance
47
Q9 If reliance life insurance then which particular plan you would like to invest ina) Reliance Term Plan
b) Reliance Whole Life Plan
c) Reliance Endowment Plan
d) Reliance Special Endowment Plan
Option No of respondents Percentage
Reliance term plan 6 2858
Reliance whole life plan 3 1428
Reliance endowment plan 9 4286
Reliance special endowment plan 3 1428
TOTAL 21 100
Interpretation Out of 21 respondents 2858 preferred to invest in term plan 1428 in whole life plan 4286 in endowment plan and 1428 of them preferred to invest in special endowment plan of reliance life insurance
48
Q10 If Bajaj Allianz life insurance then which particular plan you would like to invest in
I ENDOWMENT PLAN a) Bajaj Allianz Invest Gain
b) Bajaj Allianz save Care Economy SP
c) Bajaj Allianz life time care
d) Bajaj Allianz Super Saver plan
II MONEY BACK PLAN i Bajaj Allianz Cash Gain plan
Option No of respondents Percentage
Invest gain plan 3 1035
Save care economy SP 6 2069
Life time care 7 2415
Super saver plan 3 1035
Cash gain plan 10 3446
TOTAL 29 100
Interpretation Out of 29 respondents 1035 of them plan to invest in Bajaj Allianz- Invest Gain 2069 wish to invest in Bajaj Allianz save Care Economy SP 2415 want to invest in Bajaj Allianz life time care 1035 in Bajaj Allianz Super Saver plan and 3446 prefer to invest in Bajaj Allianz Cash Gain plan
49
32) SIGNIFICANCE OF STUDY
Life insurance is one of the most rapidly growing sectors in India The main reason
behind the growth can attributed to the high population density improving economical
condition improving education level and improving awareness Due to these factors there
is still huge scope for growth in this sector Like any other business when the
opportunities are present everybody tends to enter the industries This growth hence
fetches the new competitors as well as new strategies from existing players To sustain in
any competitive industry the organization must adapt to existing strategies and adopt
new ones This study will focus on the analysis of Reliance Life Insurance in comparison
with the present scenario of Bajaj Allianz Life Insurance with respect to the Traditional
Plans of both the companyrsquos This will mainly cover the following aspects
To know about the awareness and popularity of various Traditional Plans offered
by Reliance Life Insurance and Bajaj Allianz Life Insurance
How Reliance Life Insurance can develop and sustain a good distribution
network
These will provide it benefit both in terms of better market coverage as well as better
penetration
50
33) SCOPE OF THE STUDY
1) This helps in finding out vast potential of insurance company
2) The study was conducted in National Capital Region (NCR) only
3) The number of respondents to be surveyed can be improved
4) This study was conducted by comparing the performances amp products of three private
amp government insurance players in insurance industry
5) This study was conducted to analyze the market stand of Reliance life insurance
Company limited and Bajaj Allianz Life Insurance Company Limited of India insurance
companies
6) This study is done to eliminate all the myths which people have in their minds
regarding Insurance Sector
51
34) OBJECTIVES
To have a detailed understanding of Reliance Life Insurance and Bajaj Allianz Life Insurance
To find out various reasons considered while investing in policies
To get knowledge about the market exposure and future prospects about Reliance Life Insurance
To know the perception of the consumers about the life insurance
To analyze the Traditional plans of Reliance Life Insurance and compare it with Bajaj Allianz
To know about the brand awareness of Reliance Life Insurance its customer preferences over Bajaj Allianz in the market
To study a proper knowledge about the life insurance industry
To understand the consumer choice while investing in policies
52
CHAPTER 4
DISCUSSION AND FINDINGS OF THE STUDY
FINDINGS OF THE STUDY RECOMMENDATION AND SUGGESTIONS CONCLUSION LIMITATIONS BIBLIOGRAPHY ANNEXUREQUESTIONNAIRE
53
41) FINDINGS OF THE STUDY
1) The survey reveals that still a large proportion of population is interested to invest in other forms of investment other than insurance as still most of them are unaware about the importance of insurance in their life
2) Basically people make varied form of investment for creating wealth to protect their families against pre-mature death and to protect income against disability sickness or critical illness
3) The main motive of the individuals investing is receives benefits US 1010D People generally consider insurance as a tax saving device
4) Mostly people prefer time to time form of investment as they are not willing to take high degree of risk
5) 72 of the respondents are preferred to invest in Traditional Plans
6) Most of the people prefer to make an annual investment up to a maximum of Rs20 000 per annum
7) When the product is like life insurance reputation of the company publicity of the company amp after sale services of the company matters a lot This means that people would choose that insurance company only where the quality of life advisors is satisfactory
8) Most people prefer to invest in Bajaj Allianz Life Insurance as compared to making an investment in Reliance Life Insurance
9) The most preferable Traditional plan of Reliance Life Insurance is Endowment Plan
10) The most preferable plan of Bajaj Allianz Life Insurance co is Cash Gain Plan
54
42) SUGGESTIONS amp RECOMMENDATIONS
Based on the observations of the study some suggestions for the organization are made as
follows
1) Quality of advisors is also as important as the quantity Thus company should go
mainly for qualified professionals
2) Company should increase its budget on publicity so that awareness can be increased
3) Clarity and transparency should be provided to the customer regarding various
products
4) Training sessions should be planned in advance so that schedule can be provided to
the advisor in advance
5) Apart from the Brand Positioning in urban area a strategy should be adopted by
Reliance to make its brand also near to middle level or high aspirant people because they
are the main source of the business in India
6) Awareness Camp to the sub urban area should be focused by Reliance
7) Some innovative technique or product is required in order to attract the consumer
43) LITERATURE REVIEW
55
1) Robi Elenekave has explained in detail why various retirement plans and pension plans donrsquot give the desired returns The main difficulty is the use of incorrect method for calculations done to find out the return on investment This is primarily due to wrong assumptions The study provides information about the various precautions which need to be considered before planning so that the desired results can be achieved
2) Another paper provides insight about how various financial sectors invest in bond market The study was how the different players investment different instruments according to the risk appetite and desired rate of return The study shows that life insurance sector mainly invests in government bond which are low return and low risk instrument The investment in government bond it shows that life insurance companies are more conservative in investment
3) K Subhash has presented the history of Indiarsquos life insurance industry in three stages before independence after independence and post liberalization which not only provides information but also help in analyzing the impact of these major changes The authors have also discussed the huge potential which exists in the rural India The insurance company must realize the importance of rural sector because the future lies there The author commented about the increasing share of private player in the existing market This confirms the availability of opportunity in this sector The paper also provides the importance of professional and focused approach which was given no importance
4) Tapen Sinha has discussed the various challenges and opportunities in the insurance market One of the very important factors which have been discussed in the study is the importance of developing new and better products As the scenario changes the need of an individual also changes so any organization must understand and fulfill these needs The new product development requires constant research so organization must also focus on it
5) Roger G Ibbotson discusses how financial planners and advisors have recently started to recognize that human capital must be taken into account when building optimal portfolios for individual investors Any investorrsquos human capital has a unique mortality risk However life insurance in its forms can hedge against this mortality risk Thus human capital affects both the optimal asset allocation and the optimal demand for life insurance This paper provides a unified framework based on human capital in order to enable individual investors to make both decisions jointly
6) Rakesh Niraj study tells how the flow of information in any organization is important For any organization to grow the flow of information must be good both upwards as well as ownwards The proper flow of information will also ensure proper flow of good and services from organization to customer and proper flow of information from customer to organization The information from customers will help the organization in providing better goods and services to the customer For the above purpose organization must ensure good channel partner who can provide the organization with correct feedback Hence it becomes very important for any organization to acquire good channel partners
56
7) Stephen P Robbins has discussed how group dynamics works in any organization The success of any organization depends on the success of its various teams and how these teams work together The book provides various techniques which can be used by any organization to get result from the team effort The conflict resolution is a major task in any group Various techniques which the organization can use in conflict resolution are also discussed Another important aspect covered is the importance of leadership in the organization The various forms of leadership have been discussed and the kinds of leadership which can be effective in particular situations are also discussed
8) R Wayne Mondy has discussed the importance of training and development in any organization The training provides skills to perform the current job where as the development involve learning beyond present need The various type of training are discussed which can be used according to the requirement Training and development are not only important for better performance of an individual but it also gives satisfaction The major factors which influence training and development are found to be management support commitment of trainee and trainer complexity of the organization The process of developing good training plans is also provided In another part author has discussed the importance of right man for right job The compensation strategies are also given which are very crucial for ant industry
9) Philip Kotler has discussed the importance of channels partners Better the channel partners better will be the delivery model Detailed discussion about how to design the channel structure so that all the requirements could be fulfilled is provided The various issues faced by the organization while managing the channels are also given When an organization has more than one channel it becomes very important that all the channels should be integrated in such a way that the organization get the best out of all At times due to the conflicting benefit of the different channels the conflict arise so various strategies to manage these issues is also discussed in the chapter
10) Michael J Etzel has written about the marketing of services The marketing of services is different from the goods because of the characteristic of service like intangibility inseparability heterogeneity etc Brief about pricing strategies is also given in case of services The authors have also given the impact of technological development on the services marketing The author has also given the importance of brand and after sales support in case of services as perception of the customers plays an important role In other part of the book the authors has described the importance of distribution channels and designing of the same A channel partner should be consider as partner according to discussion The legal complications associated with channels are also discussed These complications are necessary to take into the consideration while managing the channels The conflicting interest of channels both horizontally and vertically are also taken into the consideration
57
11) Boone has discussed about the importance of personal financial planning The concept of time value of money has also been elaborated The importance of creating and implementing budget is given under money management The other important concepts for financial planning like credit management and understanding taxes are also explained In one section the authors have discussed the importance of investment and what should be the major considerations while making any investment The considerations include the risk associated with the investment return on the investment etc The importance and benefits of life insurance has also been given The discussion also includes various legal aspects associated with life insurance The overview of retirement planning is also given which includes importance and benefit of retirement planning Various tools for proper retirement planning are also discussed
58
44) CONCLUSION
1) The customers are very much sensitive towards their investment They would like to invest only in that insurance company which enjoys good public image along with quality good services
2) The result of the survey conducted shows that Bajaj Allianz Life Insurance is the leader in life insurance industry but Reliance Life Insurance and other private players are giving it a close competition
3) The motive of the people behind investing in life insurance is the tax benefits that they would receive under sec 80C and 1010D
4) In Life Insurance industry the after sales support of the company is as important as the quality of life advisors
59
45) LIMITATIONS
There were some limitations faced during the study as discussed below
Since the study was taken for two months so there was a constraint of time and effort
The study was limited only to some of the Delhi regions so the results may be biased
Questionnaire was given to 125 people however only 50 responded to it which is very small for such type of study
The biasness of consumer or responses error cannot be eliminated
Most of the people are not aware about the Importance and the necessity of insurance in their life
Adverse perception of the people towards insurance sector- People consider insurance as a tax saving device
Lack of awareness about the earning opportunity in the insurance sector
60
46) BIBLIOGRAPHY
wwwreliancelifeinsurancecom
wwwadagroupcom
wwwirdacom
wwwbajajallianzlifeinsurancecom
wwwallianzbajajcom
47) ANNEXURE
61
QUESTIONNAIRE
A comparative analysis of consumer perception regarding Traditional plans of Reliance Life Insurance with that of Bajaj Allianz Life Insurance
NAME ___________________________
PERSONAL DETAILS
1) AGE_________________
1) OCCUPATION______________
2) INCOME___________________
3) FAMILY MEMBERS_________
Q1 Where do you prefer to investa) Fixed deposits b) Stock c) Mutual funds d) Insurance e) Others
Q2 What are your priorities for investmenta) Protecting your family against pre-mature death b) Wealth creation c) Retirement needs d) Child education and marriage e) Protect income against disability sickness or critical illness
Q3 What is your main motive behind investing in life insurancea) Tax benefit b) Savings c) Risk cover
Q4 What kind of investment do you prefera) High risk high gain b) Low risk low gain c) Moderate d) Vary times to times
62
Q5Are you interested to invest in Traditional Plansa) Yes b) No
Q6 What is your level of annual investmenta) below 20000 b) 20000-40000 c) above 40000
Q7 What factors would you consider most important before choosing an insurance company
a) publicity of the company b) reputation of the company c) quality of life advisors d) after sales-supporting of the company
Q8 Which life insurance company would you prefer the most to invest ina) Reliance life insurance b) Bajaj Allianz life insurance
Q9 If reliance life insurance then which particular plan you would like to invest ina) Reliance Term Plan b) Reliance Whole Life Plan c) Reliance Endowment Plan d) Reliance Special Endowment Plan
Q10 If Bajaj Allianz life insurance then which particular plan you would like to invest in
I ENDOWMENT PLAN
a) Bajaj Allianz Invest Gain
b) Bajaj Allianz save Care Economy SP
c) Bajaj Allianz life time care
d) Bajaj Allianz Super Saver plan
II MONEY BACK PLAN
a) Bajaj Allianz Cash Gain plan
63
64
- COMPANY PROFILE
- ABOUT RELIANCE LIFE INSURANCE
- HISTORY
- Reliance Capital Limited announced the launch of its life insurance business on February 1 2006 This was after obtaining the required regulatory approvals from the Registrar Of Companies and the Insurance Regulatory and Development Authority
- It was in August 2005 that the ball was set rolling when Reliance Capital Limited the financial arm of Reliance ndash Anil Dhirubhai Ambani Group (ADAG) ndash announced the requisition of 100 shareholding in AMP Sanmar Life Insurance Company Limited and the formal transfer of shares took place in October 2005 The company will issue all policy contracts under the Reliance Life Insurance Company limited name All the existing policy contracts also stand transferred to the Reliance Life Insurance entity with all the original contractual terms and commitments intact
- CORE VALUES
- Reliance Life Insurance Company Limited has some core values which are listed as follows
- Vision bull To be the first choice insurer for customers bull To be the preferred employer for staff in the insurance industry bull To be the number one insurer for creating shareholder value
- Mission As a responsible customer focused market leader we will strive to understand the insurance needs of the consumers and translate it into affordable products that deliver value for money
- 12) TRADITIONAL PLANS OF THE COMPANY
- 12A )TRADITIONAL PLAN OF RELIANCE LIFE INSURANCE-
- Life insurance products are designed to suit the requirements of customers Fundamentally the product provide for
- In every product to a certain degree risk cover is imperative for it to fall under the category of insurance Based on the coverage of the product the premiums are calculated and the customer pays accordingly In order to suggest the right product it is essential for an agent to understand the requirements of the customer well
- The traditional plans of the company have the following features-
- Fixed Tenure
- Potential for better returns
- Transparency
- Flexibility in investment
- Flexibility to invest more
- Flexibility to skip the premium
- Flexibility to choose the cover
- High liquidity
- Age term and sum assured decide the amount of premium
- Top- ups and switches are not allowed
- Reliance Life Insurance Company Limited has offered 9
- 1) Reliance term plan-
- 2) Reliance Whole Life Plan -
- 3) Reliance Endowment Plan -
- 4) Reliance Special Endowment Plan -
- 13) INDUSTRY PROFILE
- MEANING OF INSURANCE
- Insurance may be described as a social device to reduce or eliminate risk of loss to life and property Insurance is a collective bearing of risk Insurance is a financial device to spread the risks and losses of few people among a large number of people as people prefer small fixed liability instead of big uncertain and changing liability
- Insurance can be defined as a ldquolegal contract between two parties whereby one party called insurer undertakes to pay a fixed amount of money on the happening of a particular event which may be certain or uncertainrdquo The other party called insured pays in exchange a fixed sum known as premium
- Insurance is desired to safeguard oneself and onersquos family against possible losses on account of risks and perils It provides financial compensation for the losses suffered due to the happening of any unforeseen events
- IMPORTANCE OF INSURANCE
- Insurance services play predominant role in the process of financial Intermediary Today insurance industry is one of the most growing sectors in India There is lot of potential in the Indian Insurance Industry
- There are many issues which require study The scope of the study of Insurance industry of India would be very great as there are ongoing Developments in the industry after the opening of the sector
- Right now the insurance industry has great opportunities in a country like India or China which huge population Also the penetration of insurance in India is very low in both life and non-life segment so there is lot potential to be tapped Before starting the discussion on insurance industry and related issues we have to start with the basics of insurance So first we understand what is insurance How the word lsquoinsurancersquo is different from the word lsquoassurancersquo Etc
- HISTORY OF INSURANCE
- The concept of insurance is believed to have emerged almost 4500 years ago in the ancient land of Babylonia where traders used to bear risk of the carvan by giving loans which were later repaid with interest when the goods arrived safely
- The concept of insurance as we know today took shape in 1688 at a place called Lloydrsquos Coffee House in London where risk bearers used to meet to transact business This coffee house became so popular that Lloydrsquos became the one of the first modern insurance companies by the end of the eighteenth century
- Marine insurance companies came into existence by the end of the eighteenth century These companies were empowered to write fire and life insurance as well as marine The Great Fire of London in 1966 caused huge loss of property and life With a view to providing fire insurance facilities
- Dr Nicholas Barbon set up in 1967 the first fire insurance company known as the Fire office
- Life insurance in its modern form came to India from England in 1818 The Oriental Life Insurance Company was the first insurance company to be set up in India to help the widows of European community The insurance companies which came into existence between 1818 and 1869 treated
- Indian lives as subnormal and charged an extra premium of 15 to 20 per cent The first Indian insurance company the Bombay Mutual Life
- Assurance Society came into existence in 1870 to cover Indian lives at normal rates
- The Insurance Act 1938 the first comprehensive legislation governing both life and non-life branches of insurance were enacted to provide strict state control over insurance business This amended insurance Act looked into investments expenditure and management of these companies
- By the mid- 1950s there were 154 Indian insurers 16 foreign insurers and 75 provident societies carrying on life insurance business in India Insurance business flourished and so did scams irregularities and dubious investment practices by scores of companies As a result the government decided to nationalize the life assurance business in India The Life Insurance
- Corporation of India (LIC) was set up in 1956 The nationalization of life insurance was followed by general insurance in 1972
- MEANING OF LIFE INSURANCE
- There are three parties in a life insurance transaction the insurer the insured and the owner of the policy (policyholder) although the owner and the insured are often the same person
- Another important person involved in a life insurance policy is the beneficiary The beneficiary is the person or persons who will receive the policy proceeds upon the death of the insured
- Life insurance may be divided into two basic classes ndash term and permanent
- HISTORY OF LIFE INSURANCE
- Risk protection has been a primary goal of humans and institutions throughout history Protecting against risk is what insurance is all about
- Over 5000 years ago in China insurance was seen as a preventative measure against piracy on the sea Piracy in fact was so prevalent that as a way of spreading the risk a number of ships would carry a portion of another ships cargo so that if one ship was captured the entire shipment would not be lost
- In another part of the world nearly 4500 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
- Life insurance came about a little later in ancient Rome where burial clubs were formed to cover the funeral expenses of its members as well as help survivors monetarily With Romes fall around 450 AD most of the concepts of insurance were abandoned but aspects of it did continue through the Middle Ages particularly with merchant and artisan guilds These provided forms of member insurance covering risks like fire flood theft disability death and even imprisonment
- During the feudal period early forms of insurance ebbed with the decline of travel and long-distance trade But during the 14th to 16th centuries transportation commerce and insurance would again reemerge
- And similar to ancient Rome burial societies were formed in the Buddhist period to help families build houses and to protect widows and children
- Modern Insurance
- Illegal almost everywhere else in Europe life insurance in England was vigorously promoted in the three decades following the Glorious Revolution of 1688 The type of insurance we see today owes its roots to 17th century England Lloyds of London or as they were known then Lloyds Coffee House was the location where merchants ship owners and underwriters met to discuss and transact business deals
- While serving as a means of risk-avoidance life insurance also appealed strongly to the gambling instincts of Englands burgeoning middle class
- Gambling was so rampant in fact that when newspapers published names of prominent people who were seriously ill bets were placed at Lloydrsquos on their anticipated dates of death Reacting against such practices 79 merchant underwriters broke away in 1769 and two years later formed a ldquoNew Lloydrsquos Coffee Houserdquo that became known as the ldquoreal Lloydrsquosrdquo Making wagers on peoples deaths ceased in 1774 when parliament forbade the practice
- Insurance moves to America
- The US insurance industry was built on the British model The year 1735 saw the birth of the first insurance company in the American colonies in
- Charleston SC The Presbyterian Synod of Philadelphia in 1759 sponsored the first life insurance corporation in America for the benefit of ministers and their dependents And the first life insurance policy for the general public in the United States was issued in Philadelphia on May 22 1761
- But it wasnt until 80 years later (after 1840) that life insurance really tookoff in a big way The key to its success was reducing the opposition from religious groups
- In 1835 the infamous New York fire drew peoples 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
- With the creation of the automobile public liability insurance which first made its appearance in the 1880s gained importance and acceptance
- More advancement was made to insurance during the process of industrialization In 1897 the British government passed the Workmens Compensation Act which made it mandatory for a company to insure its employees against industrial accidents
- During 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 most labor 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
- BENEFITS OF LIFE INSURANCE
- 1) Risk cover -Life Insurance contracts allow an individual to have a risk cover against any unfortunate event of the future
- 2) Tax Deduction -Under section 80C of the Income Tax Act of 1961 one can get tax deduction on premiums up to one lakh rupees Life Insurance policies thus decrease the total taxable income of an individual
- 3) Loans -An individual can easily access loans from different financial institutions by pledging his insurance policies
- 4) Retirement Planning -What had provided protection against the financial consequences of premature death may now be used to help them enjoy their retirement years
- 5) Educational Needs -Similar to retirement planning the cash values that flow from ones life insurance schemes can be utilized for educational needs of the insurer or his children
- The Life Insurance Industry has an enviable track record among public sector units It has a Consistent profit and dividend paying record accompanied by a steady growth in its financial resources Through investments in the Government sector and socially- oriented sectors the Industry has contributed immensely to the nations development The industry is recognized as one of the largest financial Institutions in the country The ventures initiated by the industry in the areas of Mutual Fund
- Housing Finance has done exceedingly well in recent years To protect the countrys foreign exchange reserves the reinsurance arrangement are so organized that maximum retention is made possible within the country while at the same time protecting interests of the policy holders
- 22) CURRENT SCENARIO OF RELIANCE LIFE INSURANCE
- RLIC offers wide range of innovative life insurance products targeted at individuals and groups It offers need based products that caters to four distinct segments namely protection child retirement and investment plans RLIC is committed to emerge as a transnational Life Insurer of global scale and standard
- CH - 3) RESEARCH METHODOLOGY
- RESEARCH DESIGN-
- SAMPLING TECHNIQUES-
- THE PRIMARY OBJECTIVEOF THE STUDY-
- 34) OBJECTIVES
- 7) Some innovative technique or product is required in order to attract the consumer
- 45) LIMITATIONS
- 46) BIBLIOGRAPHY
-
Q8 Which life insurance company would you prefer the most to invest ina) reliance life insurance (RLIC)
b) Bajaj Allianz life insurance
Option No of respondents Percentage
RLIC 21 42
BAJAJ ALLIANZ 29 58
TOTAL 50 100
Interpretation Out of 50 respondents 42 preferred to invest in reliance life insurance over 58 of the respondents who prefer to invest in Bajaj Allianz life insurance
47
Q9 If reliance life insurance then which particular plan you would like to invest ina) Reliance Term Plan
b) Reliance Whole Life Plan
c) Reliance Endowment Plan
d) Reliance Special Endowment Plan
Option No of respondents Percentage
Reliance term plan 6 2858
Reliance whole life plan 3 1428
Reliance endowment plan 9 4286
Reliance special endowment plan 3 1428
TOTAL 21 100
Interpretation Out of 21 respondents 2858 preferred to invest in term plan 1428 in whole life plan 4286 in endowment plan and 1428 of them preferred to invest in special endowment plan of reliance life insurance
48
Q10 If Bajaj Allianz life insurance then which particular plan you would like to invest in
I ENDOWMENT PLAN a) Bajaj Allianz Invest Gain
b) Bajaj Allianz save Care Economy SP
c) Bajaj Allianz life time care
d) Bajaj Allianz Super Saver plan
II MONEY BACK PLAN i Bajaj Allianz Cash Gain plan
Option No of respondents Percentage
Invest gain plan 3 1035
Save care economy SP 6 2069
Life time care 7 2415
Super saver plan 3 1035
Cash gain plan 10 3446
TOTAL 29 100
Interpretation Out of 29 respondents 1035 of them plan to invest in Bajaj Allianz- Invest Gain 2069 wish to invest in Bajaj Allianz save Care Economy SP 2415 want to invest in Bajaj Allianz life time care 1035 in Bajaj Allianz Super Saver plan and 3446 prefer to invest in Bajaj Allianz Cash Gain plan
49
32) SIGNIFICANCE OF STUDY
Life insurance is one of the most rapidly growing sectors in India The main reason
behind the growth can attributed to the high population density improving economical
condition improving education level and improving awareness Due to these factors there
is still huge scope for growth in this sector Like any other business when the
opportunities are present everybody tends to enter the industries This growth hence
fetches the new competitors as well as new strategies from existing players To sustain in
any competitive industry the organization must adapt to existing strategies and adopt
new ones This study will focus on the analysis of Reliance Life Insurance in comparison
with the present scenario of Bajaj Allianz Life Insurance with respect to the Traditional
Plans of both the companyrsquos This will mainly cover the following aspects
To know about the awareness and popularity of various Traditional Plans offered
by Reliance Life Insurance and Bajaj Allianz Life Insurance
How Reliance Life Insurance can develop and sustain a good distribution
network
These will provide it benefit both in terms of better market coverage as well as better
penetration
50
33) SCOPE OF THE STUDY
1) This helps in finding out vast potential of insurance company
2) The study was conducted in National Capital Region (NCR) only
3) The number of respondents to be surveyed can be improved
4) This study was conducted by comparing the performances amp products of three private
amp government insurance players in insurance industry
5) This study was conducted to analyze the market stand of Reliance life insurance
Company limited and Bajaj Allianz Life Insurance Company Limited of India insurance
companies
6) This study is done to eliminate all the myths which people have in their minds
regarding Insurance Sector
51
34) OBJECTIVES
To have a detailed understanding of Reliance Life Insurance and Bajaj Allianz Life Insurance
To find out various reasons considered while investing in policies
To get knowledge about the market exposure and future prospects about Reliance Life Insurance
To know the perception of the consumers about the life insurance
To analyze the Traditional plans of Reliance Life Insurance and compare it with Bajaj Allianz
To know about the brand awareness of Reliance Life Insurance its customer preferences over Bajaj Allianz in the market
To study a proper knowledge about the life insurance industry
To understand the consumer choice while investing in policies
52
CHAPTER 4
DISCUSSION AND FINDINGS OF THE STUDY
FINDINGS OF THE STUDY RECOMMENDATION AND SUGGESTIONS CONCLUSION LIMITATIONS BIBLIOGRAPHY ANNEXUREQUESTIONNAIRE
53
41) FINDINGS OF THE STUDY
1) The survey reveals that still a large proportion of population is interested to invest in other forms of investment other than insurance as still most of them are unaware about the importance of insurance in their life
2) Basically people make varied form of investment for creating wealth to protect their families against pre-mature death and to protect income against disability sickness or critical illness
3) The main motive of the individuals investing is receives benefits US 1010D People generally consider insurance as a tax saving device
4) Mostly people prefer time to time form of investment as they are not willing to take high degree of risk
5) 72 of the respondents are preferred to invest in Traditional Plans
6) Most of the people prefer to make an annual investment up to a maximum of Rs20 000 per annum
7) When the product is like life insurance reputation of the company publicity of the company amp after sale services of the company matters a lot This means that people would choose that insurance company only where the quality of life advisors is satisfactory
8) Most people prefer to invest in Bajaj Allianz Life Insurance as compared to making an investment in Reliance Life Insurance
9) The most preferable Traditional plan of Reliance Life Insurance is Endowment Plan
10) The most preferable plan of Bajaj Allianz Life Insurance co is Cash Gain Plan
54
42) SUGGESTIONS amp RECOMMENDATIONS
Based on the observations of the study some suggestions for the organization are made as
follows
1) Quality of advisors is also as important as the quantity Thus company should go
mainly for qualified professionals
2) Company should increase its budget on publicity so that awareness can be increased
3) Clarity and transparency should be provided to the customer regarding various
products
4) Training sessions should be planned in advance so that schedule can be provided to
the advisor in advance
5) Apart from the Brand Positioning in urban area a strategy should be adopted by
Reliance to make its brand also near to middle level or high aspirant people because they
are the main source of the business in India
6) Awareness Camp to the sub urban area should be focused by Reliance
7) Some innovative technique or product is required in order to attract the consumer
43) LITERATURE REVIEW
55
1) Robi Elenekave has explained in detail why various retirement plans and pension plans donrsquot give the desired returns The main difficulty is the use of incorrect method for calculations done to find out the return on investment This is primarily due to wrong assumptions The study provides information about the various precautions which need to be considered before planning so that the desired results can be achieved
2) Another paper provides insight about how various financial sectors invest in bond market The study was how the different players investment different instruments according to the risk appetite and desired rate of return The study shows that life insurance sector mainly invests in government bond which are low return and low risk instrument The investment in government bond it shows that life insurance companies are more conservative in investment
3) K Subhash has presented the history of Indiarsquos life insurance industry in three stages before independence after independence and post liberalization which not only provides information but also help in analyzing the impact of these major changes The authors have also discussed the huge potential which exists in the rural India The insurance company must realize the importance of rural sector because the future lies there The author commented about the increasing share of private player in the existing market This confirms the availability of opportunity in this sector The paper also provides the importance of professional and focused approach which was given no importance
4) Tapen Sinha has discussed the various challenges and opportunities in the insurance market One of the very important factors which have been discussed in the study is the importance of developing new and better products As the scenario changes the need of an individual also changes so any organization must understand and fulfill these needs The new product development requires constant research so organization must also focus on it
5) Roger G Ibbotson discusses how financial planners and advisors have recently started to recognize that human capital must be taken into account when building optimal portfolios for individual investors Any investorrsquos human capital has a unique mortality risk However life insurance in its forms can hedge against this mortality risk Thus human capital affects both the optimal asset allocation and the optimal demand for life insurance This paper provides a unified framework based on human capital in order to enable individual investors to make both decisions jointly
6) Rakesh Niraj study tells how the flow of information in any organization is important For any organization to grow the flow of information must be good both upwards as well as ownwards The proper flow of information will also ensure proper flow of good and services from organization to customer and proper flow of information from customer to organization The information from customers will help the organization in providing better goods and services to the customer For the above purpose organization must ensure good channel partner who can provide the organization with correct feedback Hence it becomes very important for any organization to acquire good channel partners
56
7) Stephen P Robbins has discussed how group dynamics works in any organization The success of any organization depends on the success of its various teams and how these teams work together The book provides various techniques which can be used by any organization to get result from the team effort The conflict resolution is a major task in any group Various techniques which the organization can use in conflict resolution are also discussed Another important aspect covered is the importance of leadership in the organization The various forms of leadership have been discussed and the kinds of leadership which can be effective in particular situations are also discussed
8) R Wayne Mondy has discussed the importance of training and development in any organization The training provides skills to perform the current job where as the development involve learning beyond present need The various type of training are discussed which can be used according to the requirement Training and development are not only important for better performance of an individual but it also gives satisfaction The major factors which influence training and development are found to be management support commitment of trainee and trainer complexity of the organization The process of developing good training plans is also provided In another part author has discussed the importance of right man for right job The compensation strategies are also given which are very crucial for ant industry
9) Philip Kotler has discussed the importance of channels partners Better the channel partners better will be the delivery model Detailed discussion about how to design the channel structure so that all the requirements could be fulfilled is provided The various issues faced by the organization while managing the channels are also given When an organization has more than one channel it becomes very important that all the channels should be integrated in such a way that the organization get the best out of all At times due to the conflicting benefit of the different channels the conflict arise so various strategies to manage these issues is also discussed in the chapter
10) Michael J Etzel has written about the marketing of services The marketing of services is different from the goods because of the characteristic of service like intangibility inseparability heterogeneity etc Brief about pricing strategies is also given in case of services The authors have also given the impact of technological development on the services marketing The author has also given the importance of brand and after sales support in case of services as perception of the customers plays an important role In other part of the book the authors has described the importance of distribution channels and designing of the same A channel partner should be consider as partner according to discussion The legal complications associated with channels are also discussed These complications are necessary to take into the consideration while managing the channels The conflicting interest of channels both horizontally and vertically are also taken into the consideration
57
11) Boone has discussed about the importance of personal financial planning The concept of time value of money has also been elaborated The importance of creating and implementing budget is given under money management The other important concepts for financial planning like credit management and understanding taxes are also explained In one section the authors have discussed the importance of investment and what should be the major considerations while making any investment The considerations include the risk associated with the investment return on the investment etc The importance and benefits of life insurance has also been given The discussion also includes various legal aspects associated with life insurance The overview of retirement planning is also given which includes importance and benefit of retirement planning Various tools for proper retirement planning are also discussed
58
44) CONCLUSION
1) The customers are very much sensitive towards their investment They would like to invest only in that insurance company which enjoys good public image along with quality good services
2) The result of the survey conducted shows that Bajaj Allianz Life Insurance is the leader in life insurance industry but Reliance Life Insurance and other private players are giving it a close competition
3) The motive of the people behind investing in life insurance is the tax benefits that they would receive under sec 80C and 1010D
4) In Life Insurance industry the after sales support of the company is as important as the quality of life advisors
59
45) LIMITATIONS
There were some limitations faced during the study as discussed below
Since the study was taken for two months so there was a constraint of time and effort
The study was limited only to some of the Delhi regions so the results may be biased
Questionnaire was given to 125 people however only 50 responded to it which is very small for such type of study
The biasness of consumer or responses error cannot be eliminated
Most of the people are not aware about the Importance and the necessity of insurance in their life
Adverse perception of the people towards insurance sector- People consider insurance as a tax saving device
Lack of awareness about the earning opportunity in the insurance sector
60
46) BIBLIOGRAPHY
wwwreliancelifeinsurancecom
wwwadagroupcom
wwwirdacom
wwwbajajallianzlifeinsurancecom
wwwallianzbajajcom
47) ANNEXURE
61
QUESTIONNAIRE
A comparative analysis of consumer perception regarding Traditional plans of Reliance Life Insurance with that of Bajaj Allianz Life Insurance
NAME ___________________________
PERSONAL DETAILS
1) AGE_________________
1) OCCUPATION______________
2) INCOME___________________
3) FAMILY MEMBERS_________
Q1 Where do you prefer to investa) Fixed deposits b) Stock c) Mutual funds d) Insurance e) Others
Q2 What are your priorities for investmenta) Protecting your family against pre-mature death b) Wealth creation c) Retirement needs d) Child education and marriage e) Protect income against disability sickness or critical illness
Q3 What is your main motive behind investing in life insurancea) Tax benefit b) Savings c) Risk cover
Q4 What kind of investment do you prefera) High risk high gain b) Low risk low gain c) Moderate d) Vary times to times
62
Q5Are you interested to invest in Traditional Plansa) Yes b) No
Q6 What is your level of annual investmenta) below 20000 b) 20000-40000 c) above 40000
Q7 What factors would you consider most important before choosing an insurance company
a) publicity of the company b) reputation of the company c) quality of life advisors d) after sales-supporting of the company
Q8 Which life insurance company would you prefer the most to invest ina) Reliance life insurance b) Bajaj Allianz life insurance
Q9 If reliance life insurance then which particular plan you would like to invest ina) Reliance Term Plan b) Reliance Whole Life Plan c) Reliance Endowment Plan d) Reliance Special Endowment Plan
Q10 If Bajaj Allianz life insurance then which particular plan you would like to invest in
I ENDOWMENT PLAN
a) Bajaj Allianz Invest Gain
b) Bajaj Allianz save Care Economy SP
c) Bajaj Allianz life time care
d) Bajaj Allianz Super Saver plan
II MONEY BACK PLAN
a) Bajaj Allianz Cash Gain plan
63
64
- COMPANY PROFILE
- ABOUT RELIANCE LIFE INSURANCE
- HISTORY
- Reliance Capital Limited announced the launch of its life insurance business on February 1 2006 This was after obtaining the required regulatory approvals from the Registrar Of Companies and the Insurance Regulatory and Development Authority
- It was in August 2005 that the ball was set rolling when Reliance Capital Limited the financial arm of Reliance ndash Anil Dhirubhai Ambani Group (ADAG) ndash announced the requisition of 100 shareholding in AMP Sanmar Life Insurance Company Limited and the formal transfer of shares took place in October 2005 The company will issue all policy contracts under the Reliance Life Insurance Company limited name All the existing policy contracts also stand transferred to the Reliance Life Insurance entity with all the original contractual terms and commitments intact
- CORE VALUES
- Reliance Life Insurance Company Limited has some core values which are listed as follows
- Vision bull To be the first choice insurer for customers bull To be the preferred employer for staff in the insurance industry bull To be the number one insurer for creating shareholder value
- Mission As a responsible customer focused market leader we will strive to understand the insurance needs of the consumers and translate it into affordable products that deliver value for money
- 12) TRADITIONAL PLANS OF THE COMPANY
- 12A )TRADITIONAL PLAN OF RELIANCE LIFE INSURANCE-
- Life insurance products are designed to suit the requirements of customers Fundamentally the product provide for
- In every product to a certain degree risk cover is imperative for it to fall under the category of insurance Based on the coverage of the product the premiums are calculated and the customer pays accordingly In order to suggest the right product it is essential for an agent to understand the requirements of the customer well
- The traditional plans of the company have the following features-
- Fixed Tenure
- Potential for better returns
- Transparency
- Flexibility in investment
- Flexibility to invest more
- Flexibility to skip the premium
- Flexibility to choose the cover
- High liquidity
- Age term and sum assured decide the amount of premium
- Top- ups and switches are not allowed
- Reliance Life Insurance Company Limited has offered 9
- 1) Reliance term plan-
- 2) Reliance Whole Life Plan -
- 3) Reliance Endowment Plan -
- 4) Reliance Special Endowment Plan -
- 13) INDUSTRY PROFILE
- MEANING OF INSURANCE
- Insurance may be described as a social device to reduce or eliminate risk of loss to life and property Insurance is a collective bearing of risk Insurance is a financial device to spread the risks and losses of few people among a large number of people as people prefer small fixed liability instead of big uncertain and changing liability
- Insurance can be defined as a ldquolegal contract between two parties whereby one party called insurer undertakes to pay a fixed amount of money on the happening of a particular event which may be certain or uncertainrdquo The other party called insured pays in exchange a fixed sum known as premium
- Insurance is desired to safeguard oneself and onersquos family against possible losses on account of risks and perils It provides financial compensation for the losses suffered due to the happening of any unforeseen events
- IMPORTANCE OF INSURANCE
- Insurance services play predominant role in the process of financial Intermediary Today insurance industry is one of the most growing sectors in India There is lot of potential in the Indian Insurance Industry
- There are many issues which require study The scope of the study of Insurance industry of India would be very great as there are ongoing Developments in the industry after the opening of the sector
- Right now the insurance industry has great opportunities in a country like India or China which huge population Also the penetration of insurance in India is very low in both life and non-life segment so there is lot potential to be tapped Before starting the discussion on insurance industry and related issues we have to start with the basics of insurance So first we understand what is insurance How the word lsquoinsurancersquo is different from the word lsquoassurancersquo Etc
- HISTORY OF INSURANCE
- The concept of insurance is believed to have emerged almost 4500 years ago in the ancient land of Babylonia where traders used to bear risk of the carvan by giving loans which were later repaid with interest when the goods arrived safely
- The concept of insurance as we know today took shape in 1688 at a place called Lloydrsquos Coffee House in London where risk bearers used to meet to transact business This coffee house became so popular that Lloydrsquos became the one of the first modern insurance companies by the end of the eighteenth century
- Marine insurance companies came into existence by the end of the eighteenth century These companies were empowered to write fire and life insurance as well as marine The Great Fire of London in 1966 caused huge loss of property and life With a view to providing fire insurance facilities
- Dr Nicholas Barbon set up in 1967 the first fire insurance company known as the Fire office
- Life insurance in its modern form came to India from England in 1818 The Oriental Life Insurance Company was the first insurance company to be set up in India to help the widows of European community The insurance companies which came into existence between 1818 and 1869 treated
- Indian lives as subnormal and charged an extra premium of 15 to 20 per cent The first Indian insurance company the Bombay Mutual Life
- Assurance Society came into existence in 1870 to cover Indian lives at normal rates
- The Insurance Act 1938 the first comprehensive legislation governing both life and non-life branches of insurance were enacted to provide strict state control over insurance business This amended insurance Act looked into investments expenditure and management of these companies
- By the mid- 1950s there were 154 Indian insurers 16 foreign insurers and 75 provident societies carrying on life insurance business in India Insurance business flourished and so did scams irregularities and dubious investment practices by scores of companies As a result the government decided to nationalize the life assurance business in India The Life Insurance
- Corporation of India (LIC) was set up in 1956 The nationalization of life insurance was followed by general insurance in 1972
- MEANING OF LIFE INSURANCE
- There are three parties in a life insurance transaction the insurer the insured and the owner of the policy (policyholder) although the owner and the insured are often the same person
- Another important person involved in a life insurance policy is the beneficiary The beneficiary is the person or persons who will receive the policy proceeds upon the death of the insured
- Life insurance may be divided into two basic classes ndash term and permanent
- HISTORY OF LIFE INSURANCE
- Risk protection has been a primary goal of humans and institutions throughout history Protecting against risk is what insurance is all about
- Over 5000 years ago in China insurance was seen as a preventative measure against piracy on the sea Piracy in fact was so prevalent that as a way of spreading the risk a number of ships would carry a portion of another ships cargo so that if one ship was captured the entire shipment would not be lost
- In another part of the world nearly 4500 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
- Life insurance came about a little later in ancient Rome where burial clubs were formed to cover the funeral expenses of its members as well as help survivors monetarily With Romes fall around 450 AD most of the concepts of insurance were abandoned but aspects of it did continue through the Middle Ages particularly with merchant and artisan guilds These provided forms of member insurance covering risks like fire flood theft disability death and even imprisonment
- During the feudal period early forms of insurance ebbed with the decline of travel and long-distance trade But during the 14th to 16th centuries transportation commerce and insurance would again reemerge
- And similar to ancient Rome burial societies were formed in the Buddhist period to help families build houses and to protect widows and children
- Modern Insurance
- Illegal almost everywhere else in Europe life insurance in England was vigorously promoted in the three decades following the Glorious Revolution of 1688 The type of insurance we see today owes its roots to 17th century England Lloyds of London or as they were known then Lloyds Coffee House was the location where merchants ship owners and underwriters met to discuss and transact business deals
- While serving as a means of risk-avoidance life insurance also appealed strongly to the gambling instincts of Englands burgeoning middle class
- Gambling was so rampant in fact that when newspapers published names of prominent people who were seriously ill bets were placed at Lloydrsquos on their anticipated dates of death Reacting against such practices 79 merchant underwriters broke away in 1769 and two years later formed a ldquoNew Lloydrsquos Coffee Houserdquo that became known as the ldquoreal Lloydrsquosrdquo Making wagers on peoples deaths ceased in 1774 when parliament forbade the practice
- Insurance moves to America
- The US insurance industry was built on the British model The year 1735 saw the birth of the first insurance company in the American colonies in
- Charleston SC The Presbyterian Synod of Philadelphia in 1759 sponsored the first life insurance corporation in America for the benefit of ministers and their dependents And the first life insurance policy for the general public in the United States was issued in Philadelphia on May 22 1761
- But it wasnt until 80 years later (after 1840) that life insurance really tookoff in a big way The key to its success was reducing the opposition from religious groups
- In 1835 the infamous New York fire drew peoples 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
- With the creation of the automobile public liability insurance which first made its appearance in the 1880s gained importance and acceptance
- More advancement was made to insurance during the process of industrialization In 1897 the British government passed the Workmens Compensation Act which made it mandatory for a company to insure its employees against industrial accidents
- During 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 most labor 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
- BENEFITS OF LIFE INSURANCE
- 1) Risk cover -Life Insurance contracts allow an individual to have a risk cover against any unfortunate event of the future
- 2) Tax Deduction -Under section 80C of the Income Tax Act of 1961 one can get tax deduction on premiums up to one lakh rupees Life Insurance policies thus decrease the total taxable income of an individual
- 3) Loans -An individual can easily access loans from different financial institutions by pledging his insurance policies
- 4) Retirement Planning -What had provided protection against the financial consequences of premature death may now be used to help them enjoy their retirement years
- 5) Educational Needs -Similar to retirement planning the cash values that flow from ones life insurance schemes can be utilized for educational needs of the insurer or his children
- The Life Insurance Industry has an enviable track record among public sector units It has a Consistent profit and dividend paying record accompanied by a steady growth in its financial resources Through investments in the Government sector and socially- oriented sectors the Industry has contributed immensely to the nations development The industry is recognized as one of the largest financial Institutions in the country The ventures initiated by the industry in the areas of Mutual Fund
- Housing Finance has done exceedingly well in recent years To protect the countrys foreign exchange reserves the reinsurance arrangement are so organized that maximum retention is made possible within the country while at the same time protecting interests of the policy holders
- 22) CURRENT SCENARIO OF RELIANCE LIFE INSURANCE
- RLIC offers wide range of innovative life insurance products targeted at individuals and groups It offers need based products that caters to four distinct segments namely protection child retirement and investment plans RLIC is committed to emerge as a transnational Life Insurer of global scale and standard
- CH - 3) RESEARCH METHODOLOGY
- RESEARCH DESIGN-
- SAMPLING TECHNIQUES-
- THE PRIMARY OBJECTIVEOF THE STUDY-
- 34) OBJECTIVES
- 7) Some innovative technique or product is required in order to attract the consumer
- 45) LIMITATIONS
- 46) BIBLIOGRAPHY
-
Q9 If reliance life insurance then which particular plan you would like to invest ina) Reliance Term Plan
b) Reliance Whole Life Plan
c) Reliance Endowment Plan
d) Reliance Special Endowment Plan
Option No of respondents Percentage
Reliance term plan 6 2858
Reliance whole life plan 3 1428
Reliance endowment plan 9 4286
Reliance special endowment plan 3 1428
TOTAL 21 100
Interpretation Out of 21 respondents 2858 preferred to invest in term plan 1428 in whole life plan 4286 in endowment plan and 1428 of them preferred to invest in special endowment plan of reliance life insurance
48
Q10 If Bajaj Allianz life insurance then which particular plan you would like to invest in
I ENDOWMENT PLAN a) Bajaj Allianz Invest Gain
b) Bajaj Allianz save Care Economy SP
c) Bajaj Allianz life time care
d) Bajaj Allianz Super Saver plan
II MONEY BACK PLAN i Bajaj Allianz Cash Gain plan
Option No of respondents Percentage
Invest gain plan 3 1035
Save care economy SP 6 2069
Life time care 7 2415
Super saver plan 3 1035
Cash gain plan 10 3446
TOTAL 29 100
Interpretation Out of 29 respondents 1035 of them plan to invest in Bajaj Allianz- Invest Gain 2069 wish to invest in Bajaj Allianz save Care Economy SP 2415 want to invest in Bajaj Allianz life time care 1035 in Bajaj Allianz Super Saver plan and 3446 prefer to invest in Bajaj Allianz Cash Gain plan
49
32) SIGNIFICANCE OF STUDY
Life insurance is one of the most rapidly growing sectors in India The main reason
behind the growth can attributed to the high population density improving economical
condition improving education level and improving awareness Due to these factors there
is still huge scope for growth in this sector Like any other business when the
opportunities are present everybody tends to enter the industries This growth hence
fetches the new competitors as well as new strategies from existing players To sustain in
any competitive industry the organization must adapt to existing strategies and adopt
new ones This study will focus on the analysis of Reliance Life Insurance in comparison
with the present scenario of Bajaj Allianz Life Insurance with respect to the Traditional
Plans of both the companyrsquos This will mainly cover the following aspects
To know about the awareness and popularity of various Traditional Plans offered
by Reliance Life Insurance and Bajaj Allianz Life Insurance
How Reliance Life Insurance can develop and sustain a good distribution
network
These will provide it benefit both in terms of better market coverage as well as better
penetration
50
33) SCOPE OF THE STUDY
1) This helps in finding out vast potential of insurance company
2) The study was conducted in National Capital Region (NCR) only
3) The number of respondents to be surveyed can be improved
4) This study was conducted by comparing the performances amp products of three private
amp government insurance players in insurance industry
5) This study was conducted to analyze the market stand of Reliance life insurance
Company limited and Bajaj Allianz Life Insurance Company Limited of India insurance
companies
6) This study is done to eliminate all the myths which people have in their minds
regarding Insurance Sector
51
34) OBJECTIVES
To have a detailed understanding of Reliance Life Insurance and Bajaj Allianz Life Insurance
To find out various reasons considered while investing in policies
To get knowledge about the market exposure and future prospects about Reliance Life Insurance
To know the perception of the consumers about the life insurance
To analyze the Traditional plans of Reliance Life Insurance and compare it with Bajaj Allianz
To know about the brand awareness of Reliance Life Insurance its customer preferences over Bajaj Allianz in the market
To study a proper knowledge about the life insurance industry
To understand the consumer choice while investing in policies
52
CHAPTER 4
DISCUSSION AND FINDINGS OF THE STUDY
FINDINGS OF THE STUDY RECOMMENDATION AND SUGGESTIONS CONCLUSION LIMITATIONS BIBLIOGRAPHY ANNEXUREQUESTIONNAIRE
53
41) FINDINGS OF THE STUDY
1) The survey reveals that still a large proportion of population is interested to invest in other forms of investment other than insurance as still most of them are unaware about the importance of insurance in their life
2) Basically people make varied form of investment for creating wealth to protect their families against pre-mature death and to protect income against disability sickness or critical illness
3) The main motive of the individuals investing is receives benefits US 1010D People generally consider insurance as a tax saving device
4) Mostly people prefer time to time form of investment as they are not willing to take high degree of risk
5) 72 of the respondents are preferred to invest in Traditional Plans
6) Most of the people prefer to make an annual investment up to a maximum of Rs20 000 per annum
7) When the product is like life insurance reputation of the company publicity of the company amp after sale services of the company matters a lot This means that people would choose that insurance company only where the quality of life advisors is satisfactory
8) Most people prefer to invest in Bajaj Allianz Life Insurance as compared to making an investment in Reliance Life Insurance
9) The most preferable Traditional plan of Reliance Life Insurance is Endowment Plan
10) The most preferable plan of Bajaj Allianz Life Insurance co is Cash Gain Plan
54
42) SUGGESTIONS amp RECOMMENDATIONS
Based on the observations of the study some suggestions for the organization are made as
follows
1) Quality of advisors is also as important as the quantity Thus company should go
mainly for qualified professionals
2) Company should increase its budget on publicity so that awareness can be increased
3) Clarity and transparency should be provided to the customer regarding various
products
4) Training sessions should be planned in advance so that schedule can be provided to
the advisor in advance
5) Apart from the Brand Positioning in urban area a strategy should be adopted by
Reliance to make its brand also near to middle level or high aspirant people because they
are the main source of the business in India
6) Awareness Camp to the sub urban area should be focused by Reliance
7) Some innovative technique or product is required in order to attract the consumer
43) LITERATURE REVIEW
55
1) Robi Elenekave has explained in detail why various retirement plans and pension plans donrsquot give the desired returns The main difficulty is the use of incorrect method for calculations done to find out the return on investment This is primarily due to wrong assumptions The study provides information about the various precautions which need to be considered before planning so that the desired results can be achieved
2) Another paper provides insight about how various financial sectors invest in bond market The study was how the different players investment different instruments according to the risk appetite and desired rate of return The study shows that life insurance sector mainly invests in government bond which are low return and low risk instrument The investment in government bond it shows that life insurance companies are more conservative in investment
3) K Subhash has presented the history of Indiarsquos life insurance industry in three stages before independence after independence and post liberalization which not only provides information but also help in analyzing the impact of these major changes The authors have also discussed the huge potential which exists in the rural India The insurance company must realize the importance of rural sector because the future lies there The author commented about the increasing share of private player in the existing market This confirms the availability of opportunity in this sector The paper also provides the importance of professional and focused approach which was given no importance
4) Tapen Sinha has discussed the various challenges and opportunities in the insurance market One of the very important factors which have been discussed in the study is the importance of developing new and better products As the scenario changes the need of an individual also changes so any organization must understand and fulfill these needs The new product development requires constant research so organization must also focus on it
5) Roger G Ibbotson discusses how financial planners and advisors have recently started to recognize that human capital must be taken into account when building optimal portfolios for individual investors Any investorrsquos human capital has a unique mortality risk However life insurance in its forms can hedge against this mortality risk Thus human capital affects both the optimal asset allocation and the optimal demand for life insurance This paper provides a unified framework based on human capital in order to enable individual investors to make both decisions jointly
6) Rakesh Niraj study tells how the flow of information in any organization is important For any organization to grow the flow of information must be good both upwards as well as ownwards The proper flow of information will also ensure proper flow of good and services from organization to customer and proper flow of information from customer to organization The information from customers will help the organization in providing better goods and services to the customer For the above purpose organization must ensure good channel partner who can provide the organization with correct feedback Hence it becomes very important for any organization to acquire good channel partners
56
7) Stephen P Robbins has discussed how group dynamics works in any organization The success of any organization depends on the success of its various teams and how these teams work together The book provides various techniques which can be used by any organization to get result from the team effort The conflict resolution is a major task in any group Various techniques which the organization can use in conflict resolution are also discussed Another important aspect covered is the importance of leadership in the organization The various forms of leadership have been discussed and the kinds of leadership which can be effective in particular situations are also discussed
8) R Wayne Mondy has discussed the importance of training and development in any organization The training provides skills to perform the current job where as the development involve learning beyond present need The various type of training are discussed which can be used according to the requirement Training and development are not only important for better performance of an individual but it also gives satisfaction The major factors which influence training and development are found to be management support commitment of trainee and trainer complexity of the organization The process of developing good training plans is also provided In another part author has discussed the importance of right man for right job The compensation strategies are also given which are very crucial for ant industry
9) Philip Kotler has discussed the importance of channels partners Better the channel partners better will be the delivery model Detailed discussion about how to design the channel structure so that all the requirements could be fulfilled is provided The various issues faced by the organization while managing the channels are also given When an organization has more than one channel it becomes very important that all the channels should be integrated in such a way that the organization get the best out of all At times due to the conflicting benefit of the different channels the conflict arise so various strategies to manage these issues is also discussed in the chapter
10) Michael J Etzel has written about the marketing of services The marketing of services is different from the goods because of the characteristic of service like intangibility inseparability heterogeneity etc Brief about pricing strategies is also given in case of services The authors have also given the impact of technological development on the services marketing The author has also given the importance of brand and after sales support in case of services as perception of the customers plays an important role In other part of the book the authors has described the importance of distribution channels and designing of the same A channel partner should be consider as partner according to discussion The legal complications associated with channels are also discussed These complications are necessary to take into the consideration while managing the channels The conflicting interest of channels both horizontally and vertically are also taken into the consideration
57
11) Boone has discussed about the importance of personal financial planning The concept of time value of money has also been elaborated The importance of creating and implementing budget is given under money management The other important concepts for financial planning like credit management and understanding taxes are also explained In one section the authors have discussed the importance of investment and what should be the major considerations while making any investment The considerations include the risk associated with the investment return on the investment etc The importance and benefits of life insurance has also been given The discussion also includes various legal aspects associated with life insurance The overview of retirement planning is also given which includes importance and benefit of retirement planning Various tools for proper retirement planning are also discussed
58
44) CONCLUSION
1) The customers are very much sensitive towards their investment They would like to invest only in that insurance company which enjoys good public image along with quality good services
2) The result of the survey conducted shows that Bajaj Allianz Life Insurance is the leader in life insurance industry but Reliance Life Insurance and other private players are giving it a close competition
3) The motive of the people behind investing in life insurance is the tax benefits that they would receive under sec 80C and 1010D
4) In Life Insurance industry the after sales support of the company is as important as the quality of life advisors
59
45) LIMITATIONS
There were some limitations faced during the study as discussed below
Since the study was taken for two months so there was a constraint of time and effort
The study was limited only to some of the Delhi regions so the results may be biased
Questionnaire was given to 125 people however only 50 responded to it which is very small for such type of study
The biasness of consumer or responses error cannot be eliminated
Most of the people are not aware about the Importance and the necessity of insurance in their life
Adverse perception of the people towards insurance sector- People consider insurance as a tax saving device
Lack of awareness about the earning opportunity in the insurance sector
60
46) BIBLIOGRAPHY
wwwreliancelifeinsurancecom
wwwadagroupcom
wwwirdacom
wwwbajajallianzlifeinsurancecom
wwwallianzbajajcom
47) ANNEXURE
61
QUESTIONNAIRE
A comparative analysis of consumer perception regarding Traditional plans of Reliance Life Insurance with that of Bajaj Allianz Life Insurance
NAME ___________________________
PERSONAL DETAILS
1) AGE_________________
1) OCCUPATION______________
2) INCOME___________________
3) FAMILY MEMBERS_________
Q1 Where do you prefer to investa) Fixed deposits b) Stock c) Mutual funds d) Insurance e) Others
Q2 What are your priorities for investmenta) Protecting your family against pre-mature death b) Wealth creation c) Retirement needs d) Child education and marriage e) Protect income against disability sickness or critical illness
Q3 What is your main motive behind investing in life insurancea) Tax benefit b) Savings c) Risk cover
Q4 What kind of investment do you prefera) High risk high gain b) Low risk low gain c) Moderate d) Vary times to times
62
Q5Are you interested to invest in Traditional Plansa) Yes b) No
Q6 What is your level of annual investmenta) below 20000 b) 20000-40000 c) above 40000
Q7 What factors would you consider most important before choosing an insurance company
a) publicity of the company b) reputation of the company c) quality of life advisors d) after sales-supporting of the company
Q8 Which life insurance company would you prefer the most to invest ina) Reliance life insurance b) Bajaj Allianz life insurance
Q9 If reliance life insurance then which particular plan you would like to invest ina) Reliance Term Plan b) Reliance Whole Life Plan c) Reliance Endowment Plan d) Reliance Special Endowment Plan
Q10 If Bajaj Allianz life insurance then which particular plan you would like to invest in
I ENDOWMENT PLAN
a) Bajaj Allianz Invest Gain
b) Bajaj Allianz save Care Economy SP
c) Bajaj Allianz life time care
d) Bajaj Allianz Super Saver plan
II MONEY BACK PLAN
a) Bajaj Allianz Cash Gain plan
63
64
- COMPANY PROFILE
- ABOUT RELIANCE LIFE INSURANCE
- HISTORY
- Reliance Capital Limited announced the launch of its life insurance business on February 1 2006 This was after obtaining the required regulatory approvals from the Registrar Of Companies and the Insurance Regulatory and Development Authority
- It was in August 2005 that the ball was set rolling when Reliance Capital Limited the financial arm of Reliance ndash Anil Dhirubhai Ambani Group (ADAG) ndash announced the requisition of 100 shareholding in AMP Sanmar Life Insurance Company Limited and the formal transfer of shares took place in October 2005 The company will issue all policy contracts under the Reliance Life Insurance Company limited name All the existing policy contracts also stand transferred to the Reliance Life Insurance entity with all the original contractual terms and commitments intact
- CORE VALUES
- Reliance Life Insurance Company Limited has some core values which are listed as follows
- Vision bull To be the first choice insurer for customers bull To be the preferred employer for staff in the insurance industry bull To be the number one insurer for creating shareholder value
- Mission As a responsible customer focused market leader we will strive to understand the insurance needs of the consumers and translate it into affordable products that deliver value for money
- 12) TRADITIONAL PLANS OF THE COMPANY
- 12A )TRADITIONAL PLAN OF RELIANCE LIFE INSURANCE-
- Life insurance products are designed to suit the requirements of customers Fundamentally the product provide for
- In every product to a certain degree risk cover is imperative for it to fall under the category of insurance Based on the coverage of the product the premiums are calculated and the customer pays accordingly In order to suggest the right product it is essential for an agent to understand the requirements of the customer well
- The traditional plans of the company have the following features-
- Fixed Tenure
- Potential for better returns
- Transparency
- Flexibility in investment
- Flexibility to invest more
- Flexibility to skip the premium
- Flexibility to choose the cover
- High liquidity
- Age term and sum assured decide the amount of premium
- Top- ups and switches are not allowed
- Reliance Life Insurance Company Limited has offered 9
- 1) Reliance term plan-
- 2) Reliance Whole Life Plan -
- 3) Reliance Endowment Plan -
- 4) Reliance Special Endowment Plan -
- 13) INDUSTRY PROFILE
- MEANING OF INSURANCE
- Insurance may be described as a social device to reduce or eliminate risk of loss to life and property Insurance is a collective bearing of risk Insurance is a financial device to spread the risks and losses of few people among a large number of people as people prefer small fixed liability instead of big uncertain and changing liability
- Insurance can be defined as a ldquolegal contract between two parties whereby one party called insurer undertakes to pay a fixed amount of money on the happening of a particular event which may be certain or uncertainrdquo The other party called insured pays in exchange a fixed sum known as premium
- Insurance is desired to safeguard oneself and onersquos family against possible losses on account of risks and perils It provides financial compensation for the losses suffered due to the happening of any unforeseen events
- IMPORTANCE OF INSURANCE
- Insurance services play predominant role in the process of financial Intermediary Today insurance industry is one of the most growing sectors in India There is lot of potential in the Indian Insurance Industry
- There are many issues which require study The scope of the study of Insurance industry of India would be very great as there are ongoing Developments in the industry after the opening of the sector
- Right now the insurance industry has great opportunities in a country like India or China which huge population Also the penetration of insurance in India is very low in both life and non-life segment so there is lot potential to be tapped Before starting the discussion on insurance industry and related issues we have to start with the basics of insurance So first we understand what is insurance How the word lsquoinsurancersquo is different from the word lsquoassurancersquo Etc
- HISTORY OF INSURANCE
- The concept of insurance is believed to have emerged almost 4500 years ago in the ancient land of Babylonia where traders used to bear risk of the carvan by giving loans which were later repaid with interest when the goods arrived safely
- The concept of insurance as we know today took shape in 1688 at a place called Lloydrsquos Coffee House in London where risk bearers used to meet to transact business This coffee house became so popular that Lloydrsquos became the one of the first modern insurance companies by the end of the eighteenth century
- Marine insurance companies came into existence by the end of the eighteenth century These companies were empowered to write fire and life insurance as well as marine The Great Fire of London in 1966 caused huge loss of property and life With a view to providing fire insurance facilities
- Dr Nicholas Barbon set up in 1967 the first fire insurance company known as the Fire office
- Life insurance in its modern form came to India from England in 1818 The Oriental Life Insurance Company was the first insurance company to be set up in India to help the widows of European community The insurance companies which came into existence between 1818 and 1869 treated
- Indian lives as subnormal and charged an extra premium of 15 to 20 per cent The first Indian insurance company the Bombay Mutual Life
- Assurance Society came into existence in 1870 to cover Indian lives at normal rates
- The Insurance Act 1938 the first comprehensive legislation governing both life and non-life branches of insurance were enacted to provide strict state control over insurance business This amended insurance Act looked into investments expenditure and management of these companies
- By the mid- 1950s there were 154 Indian insurers 16 foreign insurers and 75 provident societies carrying on life insurance business in India Insurance business flourished and so did scams irregularities and dubious investment practices by scores of companies As a result the government decided to nationalize the life assurance business in India The Life Insurance
- Corporation of India (LIC) was set up in 1956 The nationalization of life insurance was followed by general insurance in 1972
- MEANING OF LIFE INSURANCE
- There are three parties in a life insurance transaction the insurer the insured and the owner of the policy (policyholder) although the owner and the insured are often the same person
- Another important person involved in a life insurance policy is the beneficiary The beneficiary is the person or persons who will receive the policy proceeds upon the death of the insured
- Life insurance may be divided into two basic classes ndash term and permanent
- HISTORY OF LIFE INSURANCE
- Risk protection has been a primary goal of humans and institutions throughout history Protecting against risk is what insurance is all about
- Over 5000 years ago in China insurance was seen as a preventative measure against piracy on the sea Piracy in fact was so prevalent that as a way of spreading the risk a number of ships would carry a portion of another ships cargo so that if one ship was captured the entire shipment would not be lost
- In another part of the world nearly 4500 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
- Life insurance came about a little later in ancient Rome where burial clubs were formed to cover the funeral expenses of its members as well as help survivors monetarily With Romes fall around 450 AD most of the concepts of insurance were abandoned but aspects of it did continue through the Middle Ages particularly with merchant and artisan guilds These provided forms of member insurance covering risks like fire flood theft disability death and even imprisonment
- During the feudal period early forms of insurance ebbed with the decline of travel and long-distance trade But during the 14th to 16th centuries transportation commerce and insurance would again reemerge
- And similar to ancient Rome burial societies were formed in the Buddhist period to help families build houses and to protect widows and children
- Modern Insurance
- Illegal almost everywhere else in Europe life insurance in England was vigorously promoted in the three decades following the Glorious Revolution of 1688 The type of insurance we see today owes its roots to 17th century England Lloyds of London or as they were known then Lloyds Coffee House was the location where merchants ship owners and underwriters met to discuss and transact business deals
- While serving as a means of risk-avoidance life insurance also appealed strongly to the gambling instincts of Englands burgeoning middle class
- Gambling was so rampant in fact that when newspapers published names of prominent people who were seriously ill bets were placed at Lloydrsquos on their anticipated dates of death Reacting against such practices 79 merchant underwriters broke away in 1769 and two years later formed a ldquoNew Lloydrsquos Coffee Houserdquo that became known as the ldquoreal Lloydrsquosrdquo Making wagers on peoples deaths ceased in 1774 when parliament forbade the practice
- Insurance moves to America
- The US insurance industry was built on the British model The year 1735 saw the birth of the first insurance company in the American colonies in
- Charleston SC The Presbyterian Synod of Philadelphia in 1759 sponsored the first life insurance corporation in America for the benefit of ministers and their dependents And the first life insurance policy for the general public in the United States was issued in Philadelphia on May 22 1761
- But it wasnt until 80 years later (after 1840) that life insurance really tookoff in a big way The key to its success was reducing the opposition from religious groups
- In 1835 the infamous New York fire drew peoples 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
- With the creation of the automobile public liability insurance which first made its appearance in the 1880s gained importance and acceptance
- More advancement was made to insurance during the process of industrialization In 1897 the British government passed the Workmens Compensation Act which made it mandatory for a company to insure its employees against industrial accidents
- During 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 most labor 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
- BENEFITS OF LIFE INSURANCE
- 1) Risk cover -Life Insurance contracts allow an individual to have a risk cover against any unfortunate event of the future
- 2) Tax Deduction -Under section 80C of the Income Tax Act of 1961 one can get tax deduction on premiums up to one lakh rupees Life Insurance policies thus decrease the total taxable income of an individual
- 3) Loans -An individual can easily access loans from different financial institutions by pledging his insurance policies
- 4) Retirement Planning -What had provided protection against the financial consequences of premature death may now be used to help them enjoy their retirement years
- 5) Educational Needs -Similar to retirement planning the cash values that flow from ones life insurance schemes can be utilized for educational needs of the insurer or his children
- The Life Insurance Industry has an enviable track record among public sector units It has a Consistent profit and dividend paying record accompanied by a steady growth in its financial resources Through investments in the Government sector and socially- oriented sectors the Industry has contributed immensely to the nations development The industry is recognized as one of the largest financial Institutions in the country The ventures initiated by the industry in the areas of Mutual Fund
- Housing Finance has done exceedingly well in recent years To protect the countrys foreign exchange reserves the reinsurance arrangement are so organized that maximum retention is made possible within the country while at the same time protecting interests of the policy holders
- 22) CURRENT SCENARIO OF RELIANCE LIFE INSURANCE
- RLIC offers wide range of innovative life insurance products targeted at individuals and groups It offers need based products that caters to four distinct segments namely protection child retirement and investment plans RLIC is committed to emerge as a transnational Life Insurer of global scale and standard
- CH - 3) RESEARCH METHODOLOGY
- RESEARCH DESIGN-
- SAMPLING TECHNIQUES-
- THE PRIMARY OBJECTIVEOF THE STUDY-
- 34) OBJECTIVES
- 7) Some innovative technique or product is required in order to attract the consumer
- 45) LIMITATIONS
- 46) BIBLIOGRAPHY
-
Q10 If Bajaj Allianz life insurance then which particular plan you would like to invest in
I ENDOWMENT PLAN a) Bajaj Allianz Invest Gain
b) Bajaj Allianz save Care Economy SP
c) Bajaj Allianz life time care
d) Bajaj Allianz Super Saver plan
II MONEY BACK PLAN i Bajaj Allianz Cash Gain plan
Option No of respondents Percentage
Invest gain plan 3 1035
Save care economy SP 6 2069
Life time care 7 2415
Super saver plan 3 1035
Cash gain plan 10 3446
TOTAL 29 100
Interpretation Out of 29 respondents 1035 of them plan to invest in Bajaj Allianz- Invest Gain 2069 wish to invest in Bajaj Allianz save Care Economy SP 2415 want to invest in Bajaj Allianz life time care 1035 in Bajaj Allianz Super Saver plan and 3446 prefer to invest in Bajaj Allianz Cash Gain plan
49
32) SIGNIFICANCE OF STUDY
Life insurance is one of the most rapidly growing sectors in India The main reason
behind the growth can attributed to the high population density improving economical
condition improving education level and improving awareness Due to these factors there
is still huge scope for growth in this sector Like any other business when the
opportunities are present everybody tends to enter the industries This growth hence
fetches the new competitors as well as new strategies from existing players To sustain in
any competitive industry the organization must adapt to existing strategies and adopt
new ones This study will focus on the analysis of Reliance Life Insurance in comparison
with the present scenario of Bajaj Allianz Life Insurance with respect to the Traditional
Plans of both the companyrsquos This will mainly cover the following aspects
To know about the awareness and popularity of various Traditional Plans offered
by Reliance Life Insurance and Bajaj Allianz Life Insurance
How Reliance Life Insurance can develop and sustain a good distribution
network
These will provide it benefit both in terms of better market coverage as well as better
penetration
50
33) SCOPE OF THE STUDY
1) This helps in finding out vast potential of insurance company
2) The study was conducted in National Capital Region (NCR) only
3) The number of respondents to be surveyed can be improved
4) This study was conducted by comparing the performances amp products of three private
amp government insurance players in insurance industry
5) This study was conducted to analyze the market stand of Reliance life insurance
Company limited and Bajaj Allianz Life Insurance Company Limited of India insurance
companies
6) This study is done to eliminate all the myths which people have in their minds
regarding Insurance Sector
51
34) OBJECTIVES
To have a detailed understanding of Reliance Life Insurance and Bajaj Allianz Life Insurance
To find out various reasons considered while investing in policies
To get knowledge about the market exposure and future prospects about Reliance Life Insurance
To know the perception of the consumers about the life insurance
To analyze the Traditional plans of Reliance Life Insurance and compare it with Bajaj Allianz
To know about the brand awareness of Reliance Life Insurance its customer preferences over Bajaj Allianz in the market
To study a proper knowledge about the life insurance industry
To understand the consumer choice while investing in policies
52
CHAPTER 4
DISCUSSION AND FINDINGS OF THE STUDY
FINDINGS OF THE STUDY RECOMMENDATION AND SUGGESTIONS CONCLUSION LIMITATIONS BIBLIOGRAPHY ANNEXUREQUESTIONNAIRE
53
41) FINDINGS OF THE STUDY
1) The survey reveals that still a large proportion of population is interested to invest in other forms of investment other than insurance as still most of them are unaware about the importance of insurance in their life
2) Basically people make varied form of investment for creating wealth to protect their families against pre-mature death and to protect income against disability sickness or critical illness
3) The main motive of the individuals investing is receives benefits US 1010D People generally consider insurance as a tax saving device
4) Mostly people prefer time to time form of investment as they are not willing to take high degree of risk
5) 72 of the respondents are preferred to invest in Traditional Plans
6) Most of the people prefer to make an annual investment up to a maximum of Rs20 000 per annum
7) When the product is like life insurance reputation of the company publicity of the company amp after sale services of the company matters a lot This means that people would choose that insurance company only where the quality of life advisors is satisfactory
8) Most people prefer to invest in Bajaj Allianz Life Insurance as compared to making an investment in Reliance Life Insurance
9) The most preferable Traditional plan of Reliance Life Insurance is Endowment Plan
10) The most preferable plan of Bajaj Allianz Life Insurance co is Cash Gain Plan
54
42) SUGGESTIONS amp RECOMMENDATIONS
Based on the observations of the study some suggestions for the organization are made as
follows
1) Quality of advisors is also as important as the quantity Thus company should go
mainly for qualified professionals
2) Company should increase its budget on publicity so that awareness can be increased
3) Clarity and transparency should be provided to the customer regarding various
products
4) Training sessions should be planned in advance so that schedule can be provided to
the advisor in advance
5) Apart from the Brand Positioning in urban area a strategy should be adopted by
Reliance to make its brand also near to middle level or high aspirant people because they
are the main source of the business in India
6) Awareness Camp to the sub urban area should be focused by Reliance
7) Some innovative technique or product is required in order to attract the consumer
43) LITERATURE REVIEW
55
1) Robi Elenekave has explained in detail why various retirement plans and pension plans donrsquot give the desired returns The main difficulty is the use of incorrect method for calculations done to find out the return on investment This is primarily due to wrong assumptions The study provides information about the various precautions which need to be considered before planning so that the desired results can be achieved
2) Another paper provides insight about how various financial sectors invest in bond market The study was how the different players investment different instruments according to the risk appetite and desired rate of return The study shows that life insurance sector mainly invests in government bond which are low return and low risk instrument The investment in government bond it shows that life insurance companies are more conservative in investment
3) K Subhash has presented the history of Indiarsquos life insurance industry in three stages before independence after independence and post liberalization which not only provides information but also help in analyzing the impact of these major changes The authors have also discussed the huge potential which exists in the rural India The insurance company must realize the importance of rural sector because the future lies there The author commented about the increasing share of private player in the existing market This confirms the availability of opportunity in this sector The paper also provides the importance of professional and focused approach which was given no importance
4) Tapen Sinha has discussed the various challenges and opportunities in the insurance market One of the very important factors which have been discussed in the study is the importance of developing new and better products As the scenario changes the need of an individual also changes so any organization must understand and fulfill these needs The new product development requires constant research so organization must also focus on it
5) Roger G Ibbotson discusses how financial planners and advisors have recently started to recognize that human capital must be taken into account when building optimal portfolios for individual investors Any investorrsquos human capital has a unique mortality risk However life insurance in its forms can hedge against this mortality risk Thus human capital affects both the optimal asset allocation and the optimal demand for life insurance This paper provides a unified framework based on human capital in order to enable individual investors to make both decisions jointly
6) Rakesh Niraj study tells how the flow of information in any organization is important For any organization to grow the flow of information must be good both upwards as well as ownwards The proper flow of information will also ensure proper flow of good and services from organization to customer and proper flow of information from customer to organization The information from customers will help the organization in providing better goods and services to the customer For the above purpose organization must ensure good channel partner who can provide the organization with correct feedback Hence it becomes very important for any organization to acquire good channel partners
56
7) Stephen P Robbins has discussed how group dynamics works in any organization The success of any organization depends on the success of its various teams and how these teams work together The book provides various techniques which can be used by any organization to get result from the team effort The conflict resolution is a major task in any group Various techniques which the organization can use in conflict resolution are also discussed Another important aspect covered is the importance of leadership in the organization The various forms of leadership have been discussed and the kinds of leadership which can be effective in particular situations are also discussed
8) R Wayne Mondy has discussed the importance of training and development in any organization The training provides skills to perform the current job where as the development involve learning beyond present need The various type of training are discussed which can be used according to the requirement Training and development are not only important for better performance of an individual but it also gives satisfaction The major factors which influence training and development are found to be management support commitment of trainee and trainer complexity of the organization The process of developing good training plans is also provided In another part author has discussed the importance of right man for right job The compensation strategies are also given which are very crucial for ant industry
9) Philip Kotler has discussed the importance of channels partners Better the channel partners better will be the delivery model Detailed discussion about how to design the channel structure so that all the requirements could be fulfilled is provided The various issues faced by the organization while managing the channels are also given When an organization has more than one channel it becomes very important that all the channels should be integrated in such a way that the organization get the best out of all At times due to the conflicting benefit of the different channels the conflict arise so various strategies to manage these issues is also discussed in the chapter
10) Michael J Etzel has written about the marketing of services The marketing of services is different from the goods because of the characteristic of service like intangibility inseparability heterogeneity etc Brief about pricing strategies is also given in case of services The authors have also given the impact of technological development on the services marketing The author has also given the importance of brand and after sales support in case of services as perception of the customers plays an important role In other part of the book the authors has described the importance of distribution channels and designing of the same A channel partner should be consider as partner according to discussion The legal complications associated with channels are also discussed These complications are necessary to take into the consideration while managing the channels The conflicting interest of channels both horizontally and vertically are also taken into the consideration
57
11) Boone has discussed about the importance of personal financial planning The concept of time value of money has also been elaborated The importance of creating and implementing budget is given under money management The other important concepts for financial planning like credit management and understanding taxes are also explained In one section the authors have discussed the importance of investment and what should be the major considerations while making any investment The considerations include the risk associated with the investment return on the investment etc The importance and benefits of life insurance has also been given The discussion also includes various legal aspects associated with life insurance The overview of retirement planning is also given which includes importance and benefit of retirement planning Various tools for proper retirement planning are also discussed
58
44) CONCLUSION
1) The customers are very much sensitive towards their investment They would like to invest only in that insurance company which enjoys good public image along with quality good services
2) The result of the survey conducted shows that Bajaj Allianz Life Insurance is the leader in life insurance industry but Reliance Life Insurance and other private players are giving it a close competition
3) The motive of the people behind investing in life insurance is the tax benefits that they would receive under sec 80C and 1010D
4) In Life Insurance industry the after sales support of the company is as important as the quality of life advisors
59
45) LIMITATIONS
There were some limitations faced during the study as discussed below
Since the study was taken for two months so there was a constraint of time and effort
The study was limited only to some of the Delhi regions so the results may be biased
Questionnaire was given to 125 people however only 50 responded to it which is very small for such type of study
The biasness of consumer or responses error cannot be eliminated
Most of the people are not aware about the Importance and the necessity of insurance in their life
Adverse perception of the people towards insurance sector- People consider insurance as a tax saving device
Lack of awareness about the earning opportunity in the insurance sector
60
46) BIBLIOGRAPHY
wwwreliancelifeinsurancecom
wwwadagroupcom
wwwirdacom
wwwbajajallianzlifeinsurancecom
wwwallianzbajajcom
47) ANNEXURE
61
QUESTIONNAIRE
A comparative analysis of consumer perception regarding Traditional plans of Reliance Life Insurance with that of Bajaj Allianz Life Insurance
NAME ___________________________
PERSONAL DETAILS
1) AGE_________________
1) OCCUPATION______________
2) INCOME___________________
3) FAMILY MEMBERS_________
Q1 Where do you prefer to investa) Fixed deposits b) Stock c) Mutual funds d) Insurance e) Others
Q2 What are your priorities for investmenta) Protecting your family against pre-mature death b) Wealth creation c) Retirement needs d) Child education and marriage e) Protect income against disability sickness or critical illness
Q3 What is your main motive behind investing in life insurancea) Tax benefit b) Savings c) Risk cover
Q4 What kind of investment do you prefera) High risk high gain b) Low risk low gain c) Moderate d) Vary times to times
62
Q5Are you interested to invest in Traditional Plansa) Yes b) No
Q6 What is your level of annual investmenta) below 20000 b) 20000-40000 c) above 40000
Q7 What factors would you consider most important before choosing an insurance company
a) publicity of the company b) reputation of the company c) quality of life advisors d) after sales-supporting of the company
Q8 Which life insurance company would you prefer the most to invest ina) Reliance life insurance b) Bajaj Allianz life insurance
Q9 If reliance life insurance then which particular plan you would like to invest ina) Reliance Term Plan b) Reliance Whole Life Plan c) Reliance Endowment Plan d) Reliance Special Endowment Plan
Q10 If Bajaj Allianz life insurance then which particular plan you would like to invest in
I ENDOWMENT PLAN
a) Bajaj Allianz Invest Gain
b) Bajaj Allianz save Care Economy SP
c) Bajaj Allianz life time care
d) Bajaj Allianz Super Saver plan
II MONEY BACK PLAN
a) Bajaj Allianz Cash Gain plan
63
64
- COMPANY PROFILE
- ABOUT RELIANCE LIFE INSURANCE
- HISTORY
- Reliance Capital Limited announced the launch of its life insurance business on February 1 2006 This was after obtaining the required regulatory approvals from the Registrar Of Companies and the Insurance Regulatory and Development Authority
- It was in August 2005 that the ball was set rolling when Reliance Capital Limited the financial arm of Reliance ndash Anil Dhirubhai Ambani Group (ADAG) ndash announced the requisition of 100 shareholding in AMP Sanmar Life Insurance Company Limited and the formal transfer of shares took place in October 2005 The company will issue all policy contracts under the Reliance Life Insurance Company limited name All the existing policy contracts also stand transferred to the Reliance Life Insurance entity with all the original contractual terms and commitments intact
- CORE VALUES
- Reliance Life Insurance Company Limited has some core values which are listed as follows
- Vision bull To be the first choice insurer for customers bull To be the preferred employer for staff in the insurance industry bull To be the number one insurer for creating shareholder value
- Mission As a responsible customer focused market leader we will strive to understand the insurance needs of the consumers and translate it into affordable products that deliver value for money
- 12) TRADITIONAL PLANS OF THE COMPANY
- 12A )TRADITIONAL PLAN OF RELIANCE LIFE INSURANCE-
- Life insurance products are designed to suit the requirements of customers Fundamentally the product provide for
- In every product to a certain degree risk cover is imperative for it to fall under the category of insurance Based on the coverage of the product the premiums are calculated and the customer pays accordingly In order to suggest the right product it is essential for an agent to understand the requirements of the customer well
- The traditional plans of the company have the following features-
- Fixed Tenure
- Potential for better returns
- Transparency
- Flexibility in investment
- Flexibility to invest more
- Flexibility to skip the premium
- Flexibility to choose the cover
- High liquidity
- Age term and sum assured decide the amount of premium
- Top- ups and switches are not allowed
- Reliance Life Insurance Company Limited has offered 9
- 1) Reliance term plan-
- 2) Reliance Whole Life Plan -
- 3) Reliance Endowment Plan -
- 4) Reliance Special Endowment Plan -
- 13) INDUSTRY PROFILE
- MEANING OF INSURANCE
- Insurance may be described as a social device to reduce or eliminate risk of loss to life and property Insurance is a collective bearing of risk Insurance is a financial device to spread the risks and losses of few people among a large number of people as people prefer small fixed liability instead of big uncertain and changing liability
- Insurance can be defined as a ldquolegal contract between two parties whereby one party called insurer undertakes to pay a fixed amount of money on the happening of a particular event which may be certain or uncertainrdquo The other party called insured pays in exchange a fixed sum known as premium
- Insurance is desired to safeguard oneself and onersquos family against possible losses on account of risks and perils It provides financial compensation for the losses suffered due to the happening of any unforeseen events
- IMPORTANCE OF INSURANCE
- Insurance services play predominant role in the process of financial Intermediary Today insurance industry is one of the most growing sectors in India There is lot of potential in the Indian Insurance Industry
- There are many issues which require study The scope of the study of Insurance industry of India would be very great as there are ongoing Developments in the industry after the opening of the sector
- Right now the insurance industry has great opportunities in a country like India or China which huge population Also the penetration of insurance in India is very low in both life and non-life segment so there is lot potential to be tapped Before starting the discussion on insurance industry and related issues we have to start with the basics of insurance So first we understand what is insurance How the word lsquoinsurancersquo is different from the word lsquoassurancersquo Etc
- HISTORY OF INSURANCE
- The concept of insurance is believed to have emerged almost 4500 years ago in the ancient land of Babylonia where traders used to bear risk of the carvan by giving loans which were later repaid with interest when the goods arrived safely
- The concept of insurance as we know today took shape in 1688 at a place called Lloydrsquos Coffee House in London where risk bearers used to meet to transact business This coffee house became so popular that Lloydrsquos became the one of the first modern insurance companies by the end of the eighteenth century
- Marine insurance companies came into existence by the end of the eighteenth century These companies were empowered to write fire and life insurance as well as marine The Great Fire of London in 1966 caused huge loss of property and life With a view to providing fire insurance facilities
- Dr Nicholas Barbon set up in 1967 the first fire insurance company known as the Fire office
- Life insurance in its modern form came to India from England in 1818 The Oriental Life Insurance Company was the first insurance company to be set up in India to help the widows of European community The insurance companies which came into existence between 1818 and 1869 treated
- Indian lives as subnormal and charged an extra premium of 15 to 20 per cent The first Indian insurance company the Bombay Mutual Life
- Assurance Society came into existence in 1870 to cover Indian lives at normal rates
- The Insurance Act 1938 the first comprehensive legislation governing both life and non-life branches of insurance were enacted to provide strict state control over insurance business This amended insurance Act looked into investments expenditure and management of these companies
- By the mid- 1950s there were 154 Indian insurers 16 foreign insurers and 75 provident societies carrying on life insurance business in India Insurance business flourished and so did scams irregularities and dubious investment practices by scores of companies As a result the government decided to nationalize the life assurance business in India The Life Insurance
- Corporation of India (LIC) was set up in 1956 The nationalization of life insurance was followed by general insurance in 1972
- MEANING OF LIFE INSURANCE
- There are three parties in a life insurance transaction the insurer the insured and the owner of the policy (policyholder) although the owner and the insured are often the same person
- Another important person involved in a life insurance policy is the beneficiary The beneficiary is the person or persons who will receive the policy proceeds upon the death of the insured
- Life insurance may be divided into two basic classes ndash term and permanent
- HISTORY OF LIFE INSURANCE
- Risk protection has been a primary goal of humans and institutions throughout history Protecting against risk is what insurance is all about
- Over 5000 years ago in China insurance was seen as a preventative measure against piracy on the sea Piracy in fact was so prevalent that as a way of spreading the risk a number of ships would carry a portion of another ships cargo so that if one ship was captured the entire shipment would not be lost
- In another part of the world nearly 4500 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
- Life insurance came about a little later in ancient Rome where burial clubs were formed to cover the funeral expenses of its members as well as help survivors monetarily With Romes fall around 450 AD most of the concepts of insurance were abandoned but aspects of it did continue through the Middle Ages particularly with merchant and artisan guilds These provided forms of member insurance covering risks like fire flood theft disability death and even imprisonment
- During the feudal period early forms of insurance ebbed with the decline of travel and long-distance trade But during the 14th to 16th centuries transportation commerce and insurance would again reemerge
- And similar to ancient Rome burial societies were formed in the Buddhist period to help families build houses and to protect widows and children
- Modern Insurance
- Illegal almost everywhere else in Europe life insurance in England was vigorously promoted in the three decades following the Glorious Revolution of 1688 The type of insurance we see today owes its roots to 17th century England Lloyds of London or as they were known then Lloyds Coffee House was the location where merchants ship owners and underwriters met to discuss and transact business deals
- While serving as a means of risk-avoidance life insurance also appealed strongly to the gambling instincts of Englands burgeoning middle class
- Gambling was so rampant in fact that when newspapers published names of prominent people who were seriously ill bets were placed at Lloydrsquos on their anticipated dates of death Reacting against such practices 79 merchant underwriters broke away in 1769 and two years later formed a ldquoNew Lloydrsquos Coffee Houserdquo that became known as the ldquoreal Lloydrsquosrdquo Making wagers on peoples deaths ceased in 1774 when parliament forbade the practice
- Insurance moves to America
- The US insurance industry was built on the British model The year 1735 saw the birth of the first insurance company in the American colonies in
- Charleston SC The Presbyterian Synod of Philadelphia in 1759 sponsored the first life insurance corporation in America for the benefit of ministers and their dependents And the first life insurance policy for the general public in the United States was issued in Philadelphia on May 22 1761
- But it wasnt until 80 years later (after 1840) that life insurance really tookoff in a big way The key to its success was reducing the opposition from religious groups
- In 1835 the infamous New York fire drew peoples 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
- With the creation of the automobile public liability insurance which first made its appearance in the 1880s gained importance and acceptance
- More advancement was made to insurance during the process of industrialization In 1897 the British government passed the Workmens Compensation Act which made it mandatory for a company to insure its employees against industrial accidents
- During 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 most labor 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
- BENEFITS OF LIFE INSURANCE
- 1) Risk cover -Life Insurance contracts allow an individual to have a risk cover against any unfortunate event of the future
- 2) Tax Deduction -Under section 80C of the Income Tax Act of 1961 one can get tax deduction on premiums up to one lakh rupees Life Insurance policies thus decrease the total taxable income of an individual
- 3) Loans -An individual can easily access loans from different financial institutions by pledging his insurance policies
- 4) Retirement Planning -What had provided protection against the financial consequences of premature death may now be used to help them enjoy their retirement years
- 5) Educational Needs -Similar to retirement planning the cash values that flow from ones life insurance schemes can be utilized for educational needs of the insurer or his children
- The Life Insurance Industry has an enviable track record among public sector units It has a Consistent profit and dividend paying record accompanied by a steady growth in its financial resources Through investments in the Government sector and socially- oriented sectors the Industry has contributed immensely to the nations development The industry is recognized as one of the largest financial Institutions in the country The ventures initiated by the industry in the areas of Mutual Fund
- Housing Finance has done exceedingly well in recent years To protect the countrys foreign exchange reserves the reinsurance arrangement are so organized that maximum retention is made possible within the country while at the same time protecting interests of the policy holders
- 22) CURRENT SCENARIO OF RELIANCE LIFE INSURANCE
- RLIC offers wide range of innovative life insurance products targeted at individuals and groups It offers need based products that caters to four distinct segments namely protection child retirement and investment plans RLIC is committed to emerge as a transnational Life Insurer of global scale and standard
- CH - 3) RESEARCH METHODOLOGY
- RESEARCH DESIGN-
- SAMPLING TECHNIQUES-
- THE PRIMARY OBJECTIVEOF THE STUDY-
- 34) OBJECTIVES
- 7) Some innovative technique or product is required in order to attract the consumer
- 45) LIMITATIONS
- 46) BIBLIOGRAPHY
-
32) SIGNIFICANCE OF STUDY
Life insurance is one of the most rapidly growing sectors in India The main reason
behind the growth can attributed to the high population density improving economical
condition improving education level and improving awareness Due to these factors there
is still huge scope for growth in this sector Like any other business when the
opportunities are present everybody tends to enter the industries This growth hence
fetches the new competitors as well as new strategies from existing players To sustain in
any competitive industry the organization must adapt to existing strategies and adopt
new ones This study will focus on the analysis of Reliance Life Insurance in comparison
with the present scenario of Bajaj Allianz Life Insurance with respect to the Traditional
Plans of both the companyrsquos This will mainly cover the following aspects
To know about the awareness and popularity of various Traditional Plans offered
by Reliance Life Insurance and Bajaj Allianz Life Insurance
How Reliance Life Insurance can develop and sustain a good distribution
network
These will provide it benefit both in terms of better market coverage as well as better
penetration
50
33) SCOPE OF THE STUDY
1) This helps in finding out vast potential of insurance company
2) The study was conducted in National Capital Region (NCR) only
3) The number of respondents to be surveyed can be improved
4) This study was conducted by comparing the performances amp products of three private
amp government insurance players in insurance industry
5) This study was conducted to analyze the market stand of Reliance life insurance
Company limited and Bajaj Allianz Life Insurance Company Limited of India insurance
companies
6) This study is done to eliminate all the myths which people have in their minds
regarding Insurance Sector
51
34) OBJECTIVES
To have a detailed understanding of Reliance Life Insurance and Bajaj Allianz Life Insurance
To find out various reasons considered while investing in policies
To get knowledge about the market exposure and future prospects about Reliance Life Insurance
To know the perception of the consumers about the life insurance
To analyze the Traditional plans of Reliance Life Insurance and compare it with Bajaj Allianz
To know about the brand awareness of Reliance Life Insurance its customer preferences over Bajaj Allianz in the market
To study a proper knowledge about the life insurance industry
To understand the consumer choice while investing in policies
52
CHAPTER 4
DISCUSSION AND FINDINGS OF THE STUDY
FINDINGS OF THE STUDY RECOMMENDATION AND SUGGESTIONS CONCLUSION LIMITATIONS BIBLIOGRAPHY ANNEXUREQUESTIONNAIRE
53
41) FINDINGS OF THE STUDY
1) The survey reveals that still a large proportion of population is interested to invest in other forms of investment other than insurance as still most of them are unaware about the importance of insurance in their life
2) Basically people make varied form of investment for creating wealth to protect their families against pre-mature death and to protect income against disability sickness or critical illness
3) The main motive of the individuals investing is receives benefits US 1010D People generally consider insurance as a tax saving device
4) Mostly people prefer time to time form of investment as they are not willing to take high degree of risk
5) 72 of the respondents are preferred to invest in Traditional Plans
6) Most of the people prefer to make an annual investment up to a maximum of Rs20 000 per annum
7) When the product is like life insurance reputation of the company publicity of the company amp after sale services of the company matters a lot This means that people would choose that insurance company only where the quality of life advisors is satisfactory
8) Most people prefer to invest in Bajaj Allianz Life Insurance as compared to making an investment in Reliance Life Insurance
9) The most preferable Traditional plan of Reliance Life Insurance is Endowment Plan
10) The most preferable plan of Bajaj Allianz Life Insurance co is Cash Gain Plan
54
42) SUGGESTIONS amp RECOMMENDATIONS
Based on the observations of the study some suggestions for the organization are made as
follows
1) Quality of advisors is also as important as the quantity Thus company should go
mainly for qualified professionals
2) Company should increase its budget on publicity so that awareness can be increased
3) Clarity and transparency should be provided to the customer regarding various
products
4) Training sessions should be planned in advance so that schedule can be provided to
the advisor in advance
5) Apart from the Brand Positioning in urban area a strategy should be adopted by
Reliance to make its brand also near to middle level or high aspirant people because they
are the main source of the business in India
6) Awareness Camp to the sub urban area should be focused by Reliance
7) Some innovative technique or product is required in order to attract the consumer
43) LITERATURE REVIEW
55
1) Robi Elenekave has explained in detail why various retirement plans and pension plans donrsquot give the desired returns The main difficulty is the use of incorrect method for calculations done to find out the return on investment This is primarily due to wrong assumptions The study provides information about the various precautions which need to be considered before planning so that the desired results can be achieved
2) Another paper provides insight about how various financial sectors invest in bond market The study was how the different players investment different instruments according to the risk appetite and desired rate of return The study shows that life insurance sector mainly invests in government bond which are low return and low risk instrument The investment in government bond it shows that life insurance companies are more conservative in investment
3) K Subhash has presented the history of Indiarsquos life insurance industry in three stages before independence after independence and post liberalization which not only provides information but also help in analyzing the impact of these major changes The authors have also discussed the huge potential which exists in the rural India The insurance company must realize the importance of rural sector because the future lies there The author commented about the increasing share of private player in the existing market This confirms the availability of opportunity in this sector The paper also provides the importance of professional and focused approach which was given no importance
4) Tapen Sinha has discussed the various challenges and opportunities in the insurance market One of the very important factors which have been discussed in the study is the importance of developing new and better products As the scenario changes the need of an individual also changes so any organization must understand and fulfill these needs The new product development requires constant research so organization must also focus on it
5) Roger G Ibbotson discusses how financial planners and advisors have recently started to recognize that human capital must be taken into account when building optimal portfolios for individual investors Any investorrsquos human capital has a unique mortality risk However life insurance in its forms can hedge against this mortality risk Thus human capital affects both the optimal asset allocation and the optimal demand for life insurance This paper provides a unified framework based on human capital in order to enable individual investors to make both decisions jointly
6) Rakesh Niraj study tells how the flow of information in any organization is important For any organization to grow the flow of information must be good both upwards as well as ownwards The proper flow of information will also ensure proper flow of good and services from organization to customer and proper flow of information from customer to organization The information from customers will help the organization in providing better goods and services to the customer For the above purpose organization must ensure good channel partner who can provide the organization with correct feedback Hence it becomes very important for any organization to acquire good channel partners
56
7) Stephen P Robbins has discussed how group dynamics works in any organization The success of any organization depends on the success of its various teams and how these teams work together The book provides various techniques which can be used by any organization to get result from the team effort The conflict resolution is a major task in any group Various techniques which the organization can use in conflict resolution are also discussed Another important aspect covered is the importance of leadership in the organization The various forms of leadership have been discussed and the kinds of leadership which can be effective in particular situations are also discussed
8) R Wayne Mondy has discussed the importance of training and development in any organization The training provides skills to perform the current job where as the development involve learning beyond present need The various type of training are discussed which can be used according to the requirement Training and development are not only important for better performance of an individual but it also gives satisfaction The major factors which influence training and development are found to be management support commitment of trainee and trainer complexity of the organization The process of developing good training plans is also provided In another part author has discussed the importance of right man for right job The compensation strategies are also given which are very crucial for ant industry
9) Philip Kotler has discussed the importance of channels partners Better the channel partners better will be the delivery model Detailed discussion about how to design the channel structure so that all the requirements could be fulfilled is provided The various issues faced by the organization while managing the channels are also given When an organization has more than one channel it becomes very important that all the channels should be integrated in such a way that the organization get the best out of all At times due to the conflicting benefit of the different channels the conflict arise so various strategies to manage these issues is also discussed in the chapter
10) Michael J Etzel has written about the marketing of services The marketing of services is different from the goods because of the characteristic of service like intangibility inseparability heterogeneity etc Brief about pricing strategies is also given in case of services The authors have also given the impact of technological development on the services marketing The author has also given the importance of brand and after sales support in case of services as perception of the customers plays an important role In other part of the book the authors has described the importance of distribution channels and designing of the same A channel partner should be consider as partner according to discussion The legal complications associated with channels are also discussed These complications are necessary to take into the consideration while managing the channels The conflicting interest of channels both horizontally and vertically are also taken into the consideration
57
11) Boone has discussed about the importance of personal financial planning The concept of time value of money has also been elaborated The importance of creating and implementing budget is given under money management The other important concepts for financial planning like credit management and understanding taxes are also explained In one section the authors have discussed the importance of investment and what should be the major considerations while making any investment The considerations include the risk associated with the investment return on the investment etc The importance and benefits of life insurance has also been given The discussion also includes various legal aspects associated with life insurance The overview of retirement planning is also given which includes importance and benefit of retirement planning Various tools for proper retirement planning are also discussed
58
44) CONCLUSION
1) The customers are very much sensitive towards their investment They would like to invest only in that insurance company which enjoys good public image along with quality good services
2) The result of the survey conducted shows that Bajaj Allianz Life Insurance is the leader in life insurance industry but Reliance Life Insurance and other private players are giving it a close competition
3) The motive of the people behind investing in life insurance is the tax benefits that they would receive under sec 80C and 1010D
4) In Life Insurance industry the after sales support of the company is as important as the quality of life advisors
59
45) LIMITATIONS
There were some limitations faced during the study as discussed below
Since the study was taken for two months so there was a constraint of time and effort
The study was limited only to some of the Delhi regions so the results may be biased
Questionnaire was given to 125 people however only 50 responded to it which is very small for such type of study
The biasness of consumer or responses error cannot be eliminated
Most of the people are not aware about the Importance and the necessity of insurance in their life
Adverse perception of the people towards insurance sector- People consider insurance as a tax saving device
Lack of awareness about the earning opportunity in the insurance sector
60
46) BIBLIOGRAPHY
wwwreliancelifeinsurancecom
wwwadagroupcom
wwwirdacom
wwwbajajallianzlifeinsurancecom
wwwallianzbajajcom
47) ANNEXURE
61
QUESTIONNAIRE
A comparative analysis of consumer perception regarding Traditional plans of Reliance Life Insurance with that of Bajaj Allianz Life Insurance
NAME ___________________________
PERSONAL DETAILS
1) AGE_________________
1) OCCUPATION______________
2) INCOME___________________
3) FAMILY MEMBERS_________
Q1 Where do you prefer to investa) Fixed deposits b) Stock c) Mutual funds d) Insurance e) Others
Q2 What are your priorities for investmenta) Protecting your family against pre-mature death b) Wealth creation c) Retirement needs d) Child education and marriage e) Protect income against disability sickness or critical illness
Q3 What is your main motive behind investing in life insurancea) Tax benefit b) Savings c) Risk cover
Q4 What kind of investment do you prefera) High risk high gain b) Low risk low gain c) Moderate d) Vary times to times
62
Q5Are you interested to invest in Traditional Plansa) Yes b) No
Q6 What is your level of annual investmenta) below 20000 b) 20000-40000 c) above 40000
Q7 What factors would you consider most important before choosing an insurance company
a) publicity of the company b) reputation of the company c) quality of life advisors d) after sales-supporting of the company
Q8 Which life insurance company would you prefer the most to invest ina) Reliance life insurance b) Bajaj Allianz life insurance
Q9 If reliance life insurance then which particular plan you would like to invest ina) Reliance Term Plan b) Reliance Whole Life Plan c) Reliance Endowment Plan d) Reliance Special Endowment Plan
Q10 If Bajaj Allianz life insurance then which particular plan you would like to invest in
I ENDOWMENT PLAN
a) Bajaj Allianz Invest Gain
b) Bajaj Allianz save Care Economy SP
c) Bajaj Allianz life time care
d) Bajaj Allianz Super Saver plan
II MONEY BACK PLAN
a) Bajaj Allianz Cash Gain plan
63
64
- COMPANY PROFILE
- ABOUT RELIANCE LIFE INSURANCE
- HISTORY
- Reliance Capital Limited announced the launch of its life insurance business on February 1 2006 This was after obtaining the required regulatory approvals from the Registrar Of Companies and the Insurance Regulatory and Development Authority
- It was in August 2005 that the ball was set rolling when Reliance Capital Limited the financial arm of Reliance ndash Anil Dhirubhai Ambani Group (ADAG) ndash announced the requisition of 100 shareholding in AMP Sanmar Life Insurance Company Limited and the formal transfer of shares took place in October 2005 The company will issue all policy contracts under the Reliance Life Insurance Company limited name All the existing policy contracts also stand transferred to the Reliance Life Insurance entity with all the original contractual terms and commitments intact
- CORE VALUES
- Reliance Life Insurance Company Limited has some core values which are listed as follows
- Vision bull To be the first choice insurer for customers bull To be the preferred employer for staff in the insurance industry bull To be the number one insurer for creating shareholder value
- Mission As a responsible customer focused market leader we will strive to understand the insurance needs of the consumers and translate it into affordable products that deliver value for money
- 12) TRADITIONAL PLANS OF THE COMPANY
- 12A )TRADITIONAL PLAN OF RELIANCE LIFE INSURANCE-
- Life insurance products are designed to suit the requirements of customers Fundamentally the product provide for
- In every product to a certain degree risk cover is imperative for it to fall under the category of insurance Based on the coverage of the product the premiums are calculated and the customer pays accordingly In order to suggest the right product it is essential for an agent to understand the requirements of the customer well
- The traditional plans of the company have the following features-
- Fixed Tenure
- Potential for better returns
- Transparency
- Flexibility in investment
- Flexibility to invest more
- Flexibility to skip the premium
- Flexibility to choose the cover
- High liquidity
- Age term and sum assured decide the amount of premium
- Top- ups and switches are not allowed
- Reliance Life Insurance Company Limited has offered 9
- 1) Reliance term plan-
- 2) Reliance Whole Life Plan -
- 3) Reliance Endowment Plan -
- 4) Reliance Special Endowment Plan -
- 13) INDUSTRY PROFILE
- MEANING OF INSURANCE
- Insurance may be described as a social device to reduce or eliminate risk of loss to life and property Insurance is a collective bearing of risk Insurance is a financial device to spread the risks and losses of few people among a large number of people as people prefer small fixed liability instead of big uncertain and changing liability
- Insurance can be defined as a ldquolegal contract between two parties whereby one party called insurer undertakes to pay a fixed amount of money on the happening of a particular event which may be certain or uncertainrdquo The other party called insured pays in exchange a fixed sum known as premium
- Insurance is desired to safeguard oneself and onersquos family against possible losses on account of risks and perils It provides financial compensation for the losses suffered due to the happening of any unforeseen events
- IMPORTANCE OF INSURANCE
- Insurance services play predominant role in the process of financial Intermediary Today insurance industry is one of the most growing sectors in India There is lot of potential in the Indian Insurance Industry
- There are many issues which require study The scope of the study of Insurance industry of India would be very great as there are ongoing Developments in the industry after the opening of the sector
- Right now the insurance industry has great opportunities in a country like India or China which huge population Also the penetration of insurance in India is very low in both life and non-life segment so there is lot potential to be tapped Before starting the discussion on insurance industry and related issues we have to start with the basics of insurance So first we understand what is insurance How the word lsquoinsurancersquo is different from the word lsquoassurancersquo Etc
- HISTORY OF INSURANCE
- The concept of insurance is believed to have emerged almost 4500 years ago in the ancient land of Babylonia where traders used to bear risk of the carvan by giving loans which were later repaid with interest when the goods arrived safely
- The concept of insurance as we know today took shape in 1688 at a place called Lloydrsquos Coffee House in London where risk bearers used to meet to transact business This coffee house became so popular that Lloydrsquos became the one of the first modern insurance companies by the end of the eighteenth century
- Marine insurance companies came into existence by the end of the eighteenth century These companies were empowered to write fire and life insurance as well as marine The Great Fire of London in 1966 caused huge loss of property and life With a view to providing fire insurance facilities
- Dr Nicholas Barbon set up in 1967 the first fire insurance company known as the Fire office
- Life insurance in its modern form came to India from England in 1818 The Oriental Life Insurance Company was the first insurance company to be set up in India to help the widows of European community The insurance companies which came into existence between 1818 and 1869 treated
- Indian lives as subnormal and charged an extra premium of 15 to 20 per cent The first Indian insurance company the Bombay Mutual Life
- Assurance Society came into existence in 1870 to cover Indian lives at normal rates
- The Insurance Act 1938 the first comprehensive legislation governing both life and non-life branches of insurance were enacted to provide strict state control over insurance business This amended insurance Act looked into investments expenditure and management of these companies
- By the mid- 1950s there were 154 Indian insurers 16 foreign insurers and 75 provident societies carrying on life insurance business in India Insurance business flourished and so did scams irregularities and dubious investment practices by scores of companies As a result the government decided to nationalize the life assurance business in India The Life Insurance
- Corporation of India (LIC) was set up in 1956 The nationalization of life insurance was followed by general insurance in 1972
- MEANING OF LIFE INSURANCE
- There are three parties in a life insurance transaction the insurer the insured and the owner of the policy (policyholder) although the owner and the insured are often the same person
- Another important person involved in a life insurance policy is the beneficiary The beneficiary is the person or persons who will receive the policy proceeds upon the death of the insured
- Life insurance may be divided into two basic classes ndash term and permanent
- HISTORY OF LIFE INSURANCE
- Risk protection has been a primary goal of humans and institutions throughout history Protecting against risk is what insurance is all about
- Over 5000 years ago in China insurance was seen as a preventative measure against piracy on the sea Piracy in fact was so prevalent that as a way of spreading the risk a number of ships would carry a portion of another ships cargo so that if one ship was captured the entire shipment would not be lost
- In another part of the world nearly 4500 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
- Life insurance came about a little later in ancient Rome where burial clubs were formed to cover the funeral expenses of its members as well as help survivors monetarily With Romes fall around 450 AD most of the concepts of insurance were abandoned but aspects of it did continue through the Middle Ages particularly with merchant and artisan guilds These provided forms of member insurance covering risks like fire flood theft disability death and even imprisonment
- During the feudal period early forms of insurance ebbed with the decline of travel and long-distance trade But during the 14th to 16th centuries transportation commerce and insurance would again reemerge
- And similar to ancient Rome burial societies were formed in the Buddhist period to help families build houses and to protect widows and children
- Modern Insurance
- Illegal almost everywhere else in Europe life insurance in England was vigorously promoted in the three decades following the Glorious Revolution of 1688 The type of insurance we see today owes its roots to 17th century England Lloyds of London or as they were known then Lloyds Coffee House was the location where merchants ship owners and underwriters met to discuss and transact business deals
- While serving as a means of risk-avoidance life insurance also appealed strongly to the gambling instincts of Englands burgeoning middle class
- Gambling was so rampant in fact that when newspapers published names of prominent people who were seriously ill bets were placed at Lloydrsquos on their anticipated dates of death Reacting against such practices 79 merchant underwriters broke away in 1769 and two years later formed a ldquoNew Lloydrsquos Coffee Houserdquo that became known as the ldquoreal Lloydrsquosrdquo Making wagers on peoples deaths ceased in 1774 when parliament forbade the practice
- Insurance moves to America
- The US insurance industry was built on the British model The year 1735 saw the birth of the first insurance company in the American colonies in
- Charleston SC The Presbyterian Synod of Philadelphia in 1759 sponsored the first life insurance corporation in America for the benefit of ministers and their dependents And the first life insurance policy for the general public in the United States was issued in Philadelphia on May 22 1761
- But it wasnt until 80 years later (after 1840) that life insurance really tookoff in a big way The key to its success was reducing the opposition from religious groups
- In 1835 the infamous New York fire drew peoples 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
- With the creation of the automobile public liability insurance which first made its appearance in the 1880s gained importance and acceptance
- More advancement was made to insurance during the process of industrialization In 1897 the British government passed the Workmens Compensation Act which made it mandatory for a company to insure its employees against industrial accidents
- During 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 most labor 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
- BENEFITS OF LIFE INSURANCE
- 1) Risk cover -Life Insurance contracts allow an individual to have a risk cover against any unfortunate event of the future
- 2) Tax Deduction -Under section 80C of the Income Tax Act of 1961 one can get tax deduction on premiums up to one lakh rupees Life Insurance policies thus decrease the total taxable income of an individual
- 3) Loans -An individual can easily access loans from different financial institutions by pledging his insurance policies
- 4) Retirement Planning -What had provided protection against the financial consequences of premature death may now be used to help them enjoy their retirement years
- 5) Educational Needs -Similar to retirement planning the cash values that flow from ones life insurance schemes can be utilized for educational needs of the insurer or his children
- The Life Insurance Industry has an enviable track record among public sector units It has a Consistent profit and dividend paying record accompanied by a steady growth in its financial resources Through investments in the Government sector and socially- oriented sectors the Industry has contributed immensely to the nations development The industry is recognized as one of the largest financial Institutions in the country The ventures initiated by the industry in the areas of Mutual Fund
- Housing Finance has done exceedingly well in recent years To protect the countrys foreign exchange reserves the reinsurance arrangement are so organized that maximum retention is made possible within the country while at the same time protecting interests of the policy holders
- 22) CURRENT SCENARIO OF RELIANCE LIFE INSURANCE
- RLIC offers wide range of innovative life insurance products targeted at individuals and groups It offers need based products that caters to four distinct segments namely protection child retirement and investment plans RLIC is committed to emerge as a transnational Life Insurer of global scale and standard
- CH - 3) RESEARCH METHODOLOGY
- RESEARCH DESIGN-
- SAMPLING TECHNIQUES-
- THE PRIMARY OBJECTIVEOF THE STUDY-
- 34) OBJECTIVES
- 7) Some innovative technique or product is required in order to attract the consumer
- 45) LIMITATIONS
- 46) BIBLIOGRAPHY
-
33) SCOPE OF THE STUDY
1) This helps in finding out vast potential of insurance company
2) The study was conducted in National Capital Region (NCR) only
3) The number of respondents to be surveyed can be improved
4) This study was conducted by comparing the performances amp products of three private
amp government insurance players in insurance industry
5) This study was conducted to analyze the market stand of Reliance life insurance
Company limited and Bajaj Allianz Life Insurance Company Limited of India insurance
companies
6) This study is done to eliminate all the myths which people have in their minds
regarding Insurance Sector
51
34) OBJECTIVES
To have a detailed understanding of Reliance Life Insurance and Bajaj Allianz Life Insurance
To find out various reasons considered while investing in policies
To get knowledge about the market exposure and future prospects about Reliance Life Insurance
To know the perception of the consumers about the life insurance
To analyze the Traditional plans of Reliance Life Insurance and compare it with Bajaj Allianz
To know about the brand awareness of Reliance Life Insurance its customer preferences over Bajaj Allianz in the market
To study a proper knowledge about the life insurance industry
To understand the consumer choice while investing in policies
52
CHAPTER 4
DISCUSSION AND FINDINGS OF THE STUDY
FINDINGS OF THE STUDY RECOMMENDATION AND SUGGESTIONS CONCLUSION LIMITATIONS BIBLIOGRAPHY ANNEXUREQUESTIONNAIRE
53
41) FINDINGS OF THE STUDY
1) The survey reveals that still a large proportion of population is interested to invest in other forms of investment other than insurance as still most of them are unaware about the importance of insurance in their life
2) Basically people make varied form of investment for creating wealth to protect their families against pre-mature death and to protect income against disability sickness or critical illness
3) The main motive of the individuals investing is receives benefits US 1010D People generally consider insurance as a tax saving device
4) Mostly people prefer time to time form of investment as they are not willing to take high degree of risk
5) 72 of the respondents are preferred to invest in Traditional Plans
6) Most of the people prefer to make an annual investment up to a maximum of Rs20 000 per annum
7) When the product is like life insurance reputation of the company publicity of the company amp after sale services of the company matters a lot This means that people would choose that insurance company only where the quality of life advisors is satisfactory
8) Most people prefer to invest in Bajaj Allianz Life Insurance as compared to making an investment in Reliance Life Insurance
9) The most preferable Traditional plan of Reliance Life Insurance is Endowment Plan
10) The most preferable plan of Bajaj Allianz Life Insurance co is Cash Gain Plan
54
42) SUGGESTIONS amp RECOMMENDATIONS
Based on the observations of the study some suggestions for the organization are made as
follows
1) Quality of advisors is also as important as the quantity Thus company should go
mainly for qualified professionals
2) Company should increase its budget on publicity so that awareness can be increased
3) Clarity and transparency should be provided to the customer regarding various
products
4) Training sessions should be planned in advance so that schedule can be provided to
the advisor in advance
5) Apart from the Brand Positioning in urban area a strategy should be adopted by
Reliance to make its brand also near to middle level or high aspirant people because they
are the main source of the business in India
6) Awareness Camp to the sub urban area should be focused by Reliance
7) Some innovative technique or product is required in order to attract the consumer
43) LITERATURE REVIEW
55
1) Robi Elenekave has explained in detail why various retirement plans and pension plans donrsquot give the desired returns The main difficulty is the use of incorrect method for calculations done to find out the return on investment This is primarily due to wrong assumptions The study provides information about the various precautions which need to be considered before planning so that the desired results can be achieved
2) Another paper provides insight about how various financial sectors invest in bond market The study was how the different players investment different instruments according to the risk appetite and desired rate of return The study shows that life insurance sector mainly invests in government bond which are low return and low risk instrument The investment in government bond it shows that life insurance companies are more conservative in investment
3) K Subhash has presented the history of Indiarsquos life insurance industry in three stages before independence after independence and post liberalization which not only provides information but also help in analyzing the impact of these major changes The authors have also discussed the huge potential which exists in the rural India The insurance company must realize the importance of rural sector because the future lies there The author commented about the increasing share of private player in the existing market This confirms the availability of opportunity in this sector The paper also provides the importance of professional and focused approach which was given no importance
4) Tapen Sinha has discussed the various challenges and opportunities in the insurance market One of the very important factors which have been discussed in the study is the importance of developing new and better products As the scenario changes the need of an individual also changes so any organization must understand and fulfill these needs The new product development requires constant research so organization must also focus on it
5) Roger G Ibbotson discusses how financial planners and advisors have recently started to recognize that human capital must be taken into account when building optimal portfolios for individual investors Any investorrsquos human capital has a unique mortality risk However life insurance in its forms can hedge against this mortality risk Thus human capital affects both the optimal asset allocation and the optimal demand for life insurance This paper provides a unified framework based on human capital in order to enable individual investors to make both decisions jointly
6) Rakesh Niraj study tells how the flow of information in any organization is important For any organization to grow the flow of information must be good both upwards as well as ownwards The proper flow of information will also ensure proper flow of good and services from organization to customer and proper flow of information from customer to organization The information from customers will help the organization in providing better goods and services to the customer For the above purpose organization must ensure good channel partner who can provide the organization with correct feedback Hence it becomes very important for any organization to acquire good channel partners
56
7) Stephen P Robbins has discussed how group dynamics works in any organization The success of any organization depends on the success of its various teams and how these teams work together The book provides various techniques which can be used by any organization to get result from the team effort The conflict resolution is a major task in any group Various techniques which the organization can use in conflict resolution are also discussed Another important aspect covered is the importance of leadership in the organization The various forms of leadership have been discussed and the kinds of leadership which can be effective in particular situations are also discussed
8) R Wayne Mondy has discussed the importance of training and development in any organization The training provides skills to perform the current job where as the development involve learning beyond present need The various type of training are discussed which can be used according to the requirement Training and development are not only important for better performance of an individual but it also gives satisfaction The major factors which influence training and development are found to be management support commitment of trainee and trainer complexity of the organization The process of developing good training plans is also provided In another part author has discussed the importance of right man for right job The compensation strategies are also given which are very crucial for ant industry
9) Philip Kotler has discussed the importance of channels partners Better the channel partners better will be the delivery model Detailed discussion about how to design the channel structure so that all the requirements could be fulfilled is provided The various issues faced by the organization while managing the channels are also given When an organization has more than one channel it becomes very important that all the channels should be integrated in such a way that the organization get the best out of all At times due to the conflicting benefit of the different channels the conflict arise so various strategies to manage these issues is also discussed in the chapter
10) Michael J Etzel has written about the marketing of services The marketing of services is different from the goods because of the characteristic of service like intangibility inseparability heterogeneity etc Brief about pricing strategies is also given in case of services The authors have also given the impact of technological development on the services marketing The author has also given the importance of brand and after sales support in case of services as perception of the customers plays an important role In other part of the book the authors has described the importance of distribution channels and designing of the same A channel partner should be consider as partner according to discussion The legal complications associated with channels are also discussed These complications are necessary to take into the consideration while managing the channels The conflicting interest of channels both horizontally and vertically are also taken into the consideration
57
11) Boone has discussed about the importance of personal financial planning The concept of time value of money has also been elaborated The importance of creating and implementing budget is given under money management The other important concepts for financial planning like credit management and understanding taxes are also explained In one section the authors have discussed the importance of investment and what should be the major considerations while making any investment The considerations include the risk associated with the investment return on the investment etc The importance and benefits of life insurance has also been given The discussion also includes various legal aspects associated with life insurance The overview of retirement planning is also given which includes importance and benefit of retirement planning Various tools for proper retirement planning are also discussed
58
44) CONCLUSION
1) The customers are very much sensitive towards their investment They would like to invest only in that insurance company which enjoys good public image along with quality good services
2) The result of the survey conducted shows that Bajaj Allianz Life Insurance is the leader in life insurance industry but Reliance Life Insurance and other private players are giving it a close competition
3) The motive of the people behind investing in life insurance is the tax benefits that they would receive under sec 80C and 1010D
4) In Life Insurance industry the after sales support of the company is as important as the quality of life advisors
59
45) LIMITATIONS
There were some limitations faced during the study as discussed below
Since the study was taken for two months so there was a constraint of time and effort
The study was limited only to some of the Delhi regions so the results may be biased
Questionnaire was given to 125 people however only 50 responded to it which is very small for such type of study
The biasness of consumer or responses error cannot be eliminated
Most of the people are not aware about the Importance and the necessity of insurance in their life
Adverse perception of the people towards insurance sector- People consider insurance as a tax saving device
Lack of awareness about the earning opportunity in the insurance sector
60
46) BIBLIOGRAPHY
wwwreliancelifeinsurancecom
wwwadagroupcom
wwwirdacom
wwwbajajallianzlifeinsurancecom
wwwallianzbajajcom
47) ANNEXURE
61
QUESTIONNAIRE
A comparative analysis of consumer perception regarding Traditional plans of Reliance Life Insurance with that of Bajaj Allianz Life Insurance
NAME ___________________________
PERSONAL DETAILS
1) AGE_________________
1) OCCUPATION______________
2) INCOME___________________
3) FAMILY MEMBERS_________
Q1 Where do you prefer to investa) Fixed deposits b) Stock c) Mutual funds d) Insurance e) Others
Q2 What are your priorities for investmenta) Protecting your family against pre-mature death b) Wealth creation c) Retirement needs d) Child education and marriage e) Protect income against disability sickness or critical illness
Q3 What is your main motive behind investing in life insurancea) Tax benefit b) Savings c) Risk cover
Q4 What kind of investment do you prefera) High risk high gain b) Low risk low gain c) Moderate d) Vary times to times
62
Q5Are you interested to invest in Traditional Plansa) Yes b) No
Q6 What is your level of annual investmenta) below 20000 b) 20000-40000 c) above 40000
Q7 What factors would you consider most important before choosing an insurance company
a) publicity of the company b) reputation of the company c) quality of life advisors d) after sales-supporting of the company
Q8 Which life insurance company would you prefer the most to invest ina) Reliance life insurance b) Bajaj Allianz life insurance
Q9 If reliance life insurance then which particular plan you would like to invest ina) Reliance Term Plan b) Reliance Whole Life Plan c) Reliance Endowment Plan d) Reliance Special Endowment Plan
Q10 If Bajaj Allianz life insurance then which particular plan you would like to invest in
I ENDOWMENT PLAN
a) Bajaj Allianz Invest Gain
b) Bajaj Allianz save Care Economy SP
c) Bajaj Allianz life time care
d) Bajaj Allianz Super Saver plan
II MONEY BACK PLAN
a) Bajaj Allianz Cash Gain plan
63
64
- COMPANY PROFILE
- ABOUT RELIANCE LIFE INSURANCE
- HISTORY
- Reliance Capital Limited announced the launch of its life insurance business on February 1 2006 This was after obtaining the required regulatory approvals from the Registrar Of Companies and the Insurance Regulatory and Development Authority
- It was in August 2005 that the ball was set rolling when Reliance Capital Limited the financial arm of Reliance ndash Anil Dhirubhai Ambani Group (ADAG) ndash announced the requisition of 100 shareholding in AMP Sanmar Life Insurance Company Limited and the formal transfer of shares took place in October 2005 The company will issue all policy contracts under the Reliance Life Insurance Company limited name All the existing policy contracts also stand transferred to the Reliance Life Insurance entity with all the original contractual terms and commitments intact
- CORE VALUES
- Reliance Life Insurance Company Limited has some core values which are listed as follows
- Vision bull To be the first choice insurer for customers bull To be the preferred employer for staff in the insurance industry bull To be the number one insurer for creating shareholder value
- Mission As a responsible customer focused market leader we will strive to understand the insurance needs of the consumers and translate it into affordable products that deliver value for money
- 12) TRADITIONAL PLANS OF THE COMPANY
- 12A )TRADITIONAL PLAN OF RELIANCE LIFE INSURANCE-
- Life insurance products are designed to suit the requirements of customers Fundamentally the product provide for
- In every product to a certain degree risk cover is imperative for it to fall under the category of insurance Based on the coverage of the product the premiums are calculated and the customer pays accordingly In order to suggest the right product it is essential for an agent to understand the requirements of the customer well
- The traditional plans of the company have the following features-
- Fixed Tenure
- Potential for better returns
- Transparency
- Flexibility in investment
- Flexibility to invest more
- Flexibility to skip the premium
- Flexibility to choose the cover
- High liquidity
- Age term and sum assured decide the amount of premium
- Top- ups and switches are not allowed
- Reliance Life Insurance Company Limited has offered 9
- 1) Reliance term plan-
- 2) Reliance Whole Life Plan -
- 3) Reliance Endowment Plan -
- 4) Reliance Special Endowment Plan -
- 13) INDUSTRY PROFILE
- MEANING OF INSURANCE
- Insurance may be described as a social device to reduce or eliminate risk of loss to life and property Insurance is a collective bearing of risk Insurance is a financial device to spread the risks and losses of few people among a large number of people as people prefer small fixed liability instead of big uncertain and changing liability
- Insurance can be defined as a ldquolegal contract between two parties whereby one party called insurer undertakes to pay a fixed amount of money on the happening of a particular event which may be certain or uncertainrdquo The other party called insured pays in exchange a fixed sum known as premium
- Insurance is desired to safeguard oneself and onersquos family against possible losses on account of risks and perils It provides financial compensation for the losses suffered due to the happening of any unforeseen events
- IMPORTANCE OF INSURANCE
- Insurance services play predominant role in the process of financial Intermediary Today insurance industry is one of the most growing sectors in India There is lot of potential in the Indian Insurance Industry
- There are many issues which require study The scope of the study of Insurance industry of India would be very great as there are ongoing Developments in the industry after the opening of the sector
- Right now the insurance industry has great opportunities in a country like India or China which huge population Also the penetration of insurance in India is very low in both life and non-life segment so there is lot potential to be tapped Before starting the discussion on insurance industry and related issues we have to start with the basics of insurance So first we understand what is insurance How the word lsquoinsurancersquo is different from the word lsquoassurancersquo Etc
- HISTORY OF INSURANCE
- The concept of insurance is believed to have emerged almost 4500 years ago in the ancient land of Babylonia where traders used to bear risk of the carvan by giving loans which were later repaid with interest when the goods arrived safely
- The concept of insurance as we know today took shape in 1688 at a place called Lloydrsquos Coffee House in London where risk bearers used to meet to transact business This coffee house became so popular that Lloydrsquos became the one of the first modern insurance companies by the end of the eighteenth century
- Marine insurance companies came into existence by the end of the eighteenth century These companies were empowered to write fire and life insurance as well as marine The Great Fire of London in 1966 caused huge loss of property and life With a view to providing fire insurance facilities
- Dr Nicholas Barbon set up in 1967 the first fire insurance company known as the Fire office
- Life insurance in its modern form came to India from England in 1818 The Oriental Life Insurance Company was the first insurance company to be set up in India to help the widows of European community The insurance companies which came into existence between 1818 and 1869 treated
- Indian lives as subnormal and charged an extra premium of 15 to 20 per cent The first Indian insurance company the Bombay Mutual Life
- Assurance Society came into existence in 1870 to cover Indian lives at normal rates
- The Insurance Act 1938 the first comprehensive legislation governing both life and non-life branches of insurance were enacted to provide strict state control over insurance business This amended insurance Act looked into investments expenditure and management of these companies
- By the mid- 1950s there were 154 Indian insurers 16 foreign insurers and 75 provident societies carrying on life insurance business in India Insurance business flourished and so did scams irregularities and dubious investment practices by scores of companies As a result the government decided to nationalize the life assurance business in India The Life Insurance
- Corporation of India (LIC) was set up in 1956 The nationalization of life insurance was followed by general insurance in 1972
- MEANING OF LIFE INSURANCE
- There are three parties in a life insurance transaction the insurer the insured and the owner of the policy (policyholder) although the owner and the insured are often the same person
- Another important person involved in a life insurance policy is the beneficiary The beneficiary is the person or persons who will receive the policy proceeds upon the death of the insured
- Life insurance may be divided into two basic classes ndash term and permanent
- HISTORY OF LIFE INSURANCE
- Risk protection has been a primary goal of humans and institutions throughout history Protecting against risk is what insurance is all about
- Over 5000 years ago in China insurance was seen as a preventative measure against piracy on the sea Piracy in fact was so prevalent that as a way of spreading the risk a number of ships would carry a portion of another ships cargo so that if one ship was captured the entire shipment would not be lost
- In another part of the world nearly 4500 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
- Life insurance came about a little later in ancient Rome where burial clubs were formed to cover the funeral expenses of its members as well as help survivors monetarily With Romes fall around 450 AD most of the concepts of insurance were abandoned but aspects of it did continue through the Middle Ages particularly with merchant and artisan guilds These provided forms of member insurance covering risks like fire flood theft disability death and even imprisonment
- During the feudal period early forms of insurance ebbed with the decline of travel and long-distance trade But during the 14th to 16th centuries transportation commerce and insurance would again reemerge
- And similar to ancient Rome burial societies were formed in the Buddhist period to help families build houses and to protect widows and children
- Modern Insurance
- Illegal almost everywhere else in Europe life insurance in England was vigorously promoted in the three decades following the Glorious Revolution of 1688 The type of insurance we see today owes its roots to 17th century England Lloyds of London or as they were known then Lloyds Coffee House was the location where merchants ship owners and underwriters met to discuss and transact business deals
- While serving as a means of risk-avoidance life insurance also appealed strongly to the gambling instincts of Englands burgeoning middle class
- Gambling was so rampant in fact that when newspapers published names of prominent people who were seriously ill bets were placed at Lloydrsquos on their anticipated dates of death Reacting against such practices 79 merchant underwriters broke away in 1769 and two years later formed a ldquoNew Lloydrsquos Coffee Houserdquo that became known as the ldquoreal Lloydrsquosrdquo Making wagers on peoples deaths ceased in 1774 when parliament forbade the practice
- Insurance moves to America
- The US insurance industry was built on the British model The year 1735 saw the birth of the first insurance company in the American colonies in
- Charleston SC The Presbyterian Synod of Philadelphia in 1759 sponsored the first life insurance corporation in America for the benefit of ministers and their dependents And the first life insurance policy for the general public in the United States was issued in Philadelphia on May 22 1761
- But it wasnt until 80 years later (after 1840) that life insurance really tookoff in a big way The key to its success was reducing the opposition from religious groups
- In 1835 the infamous New York fire drew peoples 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
- With the creation of the automobile public liability insurance which first made its appearance in the 1880s gained importance and acceptance
- More advancement was made to insurance during the process of industrialization In 1897 the British government passed the Workmens Compensation Act which made it mandatory for a company to insure its employees against industrial accidents
- During 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 most labor 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
- BENEFITS OF LIFE INSURANCE
- 1) Risk cover -Life Insurance contracts allow an individual to have a risk cover against any unfortunate event of the future
- 2) Tax Deduction -Under section 80C of the Income Tax Act of 1961 one can get tax deduction on premiums up to one lakh rupees Life Insurance policies thus decrease the total taxable income of an individual
- 3) Loans -An individual can easily access loans from different financial institutions by pledging his insurance policies
- 4) Retirement Planning -What had provided protection against the financial consequences of premature death may now be used to help them enjoy their retirement years
- 5) Educational Needs -Similar to retirement planning the cash values that flow from ones life insurance schemes can be utilized for educational needs of the insurer or his children
- The Life Insurance Industry has an enviable track record among public sector units It has a Consistent profit and dividend paying record accompanied by a steady growth in its financial resources Through investments in the Government sector and socially- oriented sectors the Industry has contributed immensely to the nations development The industry is recognized as one of the largest financial Institutions in the country The ventures initiated by the industry in the areas of Mutual Fund
- Housing Finance has done exceedingly well in recent years To protect the countrys foreign exchange reserves the reinsurance arrangement are so organized that maximum retention is made possible within the country while at the same time protecting interests of the policy holders
- 22) CURRENT SCENARIO OF RELIANCE LIFE INSURANCE
- RLIC offers wide range of innovative life insurance products targeted at individuals and groups It offers need based products that caters to four distinct segments namely protection child retirement and investment plans RLIC is committed to emerge as a transnational Life Insurer of global scale and standard
- CH - 3) RESEARCH METHODOLOGY
- RESEARCH DESIGN-
- SAMPLING TECHNIQUES-
- THE PRIMARY OBJECTIVEOF THE STUDY-
- 34) OBJECTIVES
- 7) Some innovative technique or product is required in order to attract the consumer
- 45) LIMITATIONS
- 46) BIBLIOGRAPHY
-
34) OBJECTIVES
To have a detailed understanding of Reliance Life Insurance and Bajaj Allianz Life Insurance
To find out various reasons considered while investing in policies
To get knowledge about the market exposure and future prospects about Reliance Life Insurance
To know the perception of the consumers about the life insurance
To analyze the Traditional plans of Reliance Life Insurance and compare it with Bajaj Allianz
To know about the brand awareness of Reliance Life Insurance its customer preferences over Bajaj Allianz in the market
To study a proper knowledge about the life insurance industry
To understand the consumer choice while investing in policies
52
CHAPTER 4
DISCUSSION AND FINDINGS OF THE STUDY
FINDINGS OF THE STUDY RECOMMENDATION AND SUGGESTIONS CONCLUSION LIMITATIONS BIBLIOGRAPHY ANNEXUREQUESTIONNAIRE
53
41) FINDINGS OF THE STUDY
1) The survey reveals that still a large proportion of population is interested to invest in other forms of investment other than insurance as still most of them are unaware about the importance of insurance in their life
2) Basically people make varied form of investment for creating wealth to protect their families against pre-mature death and to protect income against disability sickness or critical illness
3) The main motive of the individuals investing is receives benefits US 1010D People generally consider insurance as a tax saving device
4) Mostly people prefer time to time form of investment as they are not willing to take high degree of risk
5) 72 of the respondents are preferred to invest in Traditional Plans
6) Most of the people prefer to make an annual investment up to a maximum of Rs20 000 per annum
7) When the product is like life insurance reputation of the company publicity of the company amp after sale services of the company matters a lot This means that people would choose that insurance company only where the quality of life advisors is satisfactory
8) Most people prefer to invest in Bajaj Allianz Life Insurance as compared to making an investment in Reliance Life Insurance
9) The most preferable Traditional plan of Reliance Life Insurance is Endowment Plan
10) The most preferable plan of Bajaj Allianz Life Insurance co is Cash Gain Plan
54
42) SUGGESTIONS amp RECOMMENDATIONS
Based on the observations of the study some suggestions for the organization are made as
follows
1) Quality of advisors is also as important as the quantity Thus company should go
mainly for qualified professionals
2) Company should increase its budget on publicity so that awareness can be increased
3) Clarity and transparency should be provided to the customer regarding various
products
4) Training sessions should be planned in advance so that schedule can be provided to
the advisor in advance
5) Apart from the Brand Positioning in urban area a strategy should be adopted by
Reliance to make its brand also near to middle level or high aspirant people because they
are the main source of the business in India
6) Awareness Camp to the sub urban area should be focused by Reliance
7) Some innovative technique or product is required in order to attract the consumer
43) LITERATURE REVIEW
55
1) Robi Elenekave has explained in detail why various retirement plans and pension plans donrsquot give the desired returns The main difficulty is the use of incorrect method for calculations done to find out the return on investment This is primarily due to wrong assumptions The study provides information about the various precautions which need to be considered before planning so that the desired results can be achieved
2) Another paper provides insight about how various financial sectors invest in bond market The study was how the different players investment different instruments according to the risk appetite and desired rate of return The study shows that life insurance sector mainly invests in government bond which are low return and low risk instrument The investment in government bond it shows that life insurance companies are more conservative in investment
3) K Subhash has presented the history of Indiarsquos life insurance industry in three stages before independence after independence and post liberalization which not only provides information but also help in analyzing the impact of these major changes The authors have also discussed the huge potential which exists in the rural India The insurance company must realize the importance of rural sector because the future lies there The author commented about the increasing share of private player in the existing market This confirms the availability of opportunity in this sector The paper also provides the importance of professional and focused approach which was given no importance
4) Tapen Sinha has discussed the various challenges and opportunities in the insurance market One of the very important factors which have been discussed in the study is the importance of developing new and better products As the scenario changes the need of an individual also changes so any organization must understand and fulfill these needs The new product development requires constant research so organization must also focus on it
5) Roger G Ibbotson discusses how financial planners and advisors have recently started to recognize that human capital must be taken into account when building optimal portfolios for individual investors Any investorrsquos human capital has a unique mortality risk However life insurance in its forms can hedge against this mortality risk Thus human capital affects both the optimal asset allocation and the optimal demand for life insurance This paper provides a unified framework based on human capital in order to enable individual investors to make both decisions jointly
6) Rakesh Niraj study tells how the flow of information in any organization is important For any organization to grow the flow of information must be good both upwards as well as ownwards The proper flow of information will also ensure proper flow of good and services from organization to customer and proper flow of information from customer to organization The information from customers will help the organization in providing better goods and services to the customer For the above purpose organization must ensure good channel partner who can provide the organization with correct feedback Hence it becomes very important for any organization to acquire good channel partners
56
7) Stephen P Robbins has discussed how group dynamics works in any organization The success of any organization depends on the success of its various teams and how these teams work together The book provides various techniques which can be used by any organization to get result from the team effort The conflict resolution is a major task in any group Various techniques which the organization can use in conflict resolution are also discussed Another important aspect covered is the importance of leadership in the organization The various forms of leadership have been discussed and the kinds of leadership which can be effective in particular situations are also discussed
8) R Wayne Mondy has discussed the importance of training and development in any organization The training provides skills to perform the current job where as the development involve learning beyond present need The various type of training are discussed which can be used according to the requirement Training and development are not only important for better performance of an individual but it also gives satisfaction The major factors which influence training and development are found to be management support commitment of trainee and trainer complexity of the organization The process of developing good training plans is also provided In another part author has discussed the importance of right man for right job The compensation strategies are also given which are very crucial for ant industry
9) Philip Kotler has discussed the importance of channels partners Better the channel partners better will be the delivery model Detailed discussion about how to design the channel structure so that all the requirements could be fulfilled is provided The various issues faced by the organization while managing the channels are also given When an organization has more than one channel it becomes very important that all the channels should be integrated in such a way that the organization get the best out of all At times due to the conflicting benefit of the different channels the conflict arise so various strategies to manage these issues is also discussed in the chapter
10) Michael J Etzel has written about the marketing of services The marketing of services is different from the goods because of the characteristic of service like intangibility inseparability heterogeneity etc Brief about pricing strategies is also given in case of services The authors have also given the impact of technological development on the services marketing The author has also given the importance of brand and after sales support in case of services as perception of the customers plays an important role In other part of the book the authors has described the importance of distribution channels and designing of the same A channel partner should be consider as partner according to discussion The legal complications associated with channels are also discussed These complications are necessary to take into the consideration while managing the channels The conflicting interest of channels both horizontally and vertically are also taken into the consideration
57
11) Boone has discussed about the importance of personal financial planning The concept of time value of money has also been elaborated The importance of creating and implementing budget is given under money management The other important concepts for financial planning like credit management and understanding taxes are also explained In one section the authors have discussed the importance of investment and what should be the major considerations while making any investment The considerations include the risk associated with the investment return on the investment etc The importance and benefits of life insurance has also been given The discussion also includes various legal aspects associated with life insurance The overview of retirement planning is also given which includes importance and benefit of retirement planning Various tools for proper retirement planning are also discussed
58
44) CONCLUSION
1) The customers are very much sensitive towards their investment They would like to invest only in that insurance company which enjoys good public image along with quality good services
2) The result of the survey conducted shows that Bajaj Allianz Life Insurance is the leader in life insurance industry but Reliance Life Insurance and other private players are giving it a close competition
3) The motive of the people behind investing in life insurance is the tax benefits that they would receive under sec 80C and 1010D
4) In Life Insurance industry the after sales support of the company is as important as the quality of life advisors
59
45) LIMITATIONS
There were some limitations faced during the study as discussed below
Since the study was taken for two months so there was a constraint of time and effort
The study was limited only to some of the Delhi regions so the results may be biased
Questionnaire was given to 125 people however only 50 responded to it which is very small for such type of study
The biasness of consumer or responses error cannot be eliminated
Most of the people are not aware about the Importance and the necessity of insurance in their life
Adverse perception of the people towards insurance sector- People consider insurance as a tax saving device
Lack of awareness about the earning opportunity in the insurance sector
60
46) BIBLIOGRAPHY
wwwreliancelifeinsurancecom
wwwadagroupcom
wwwirdacom
wwwbajajallianzlifeinsurancecom
wwwallianzbajajcom
47) ANNEXURE
61
QUESTIONNAIRE
A comparative analysis of consumer perception regarding Traditional plans of Reliance Life Insurance with that of Bajaj Allianz Life Insurance
NAME ___________________________
PERSONAL DETAILS
1) AGE_________________
1) OCCUPATION______________
2) INCOME___________________
3) FAMILY MEMBERS_________
Q1 Where do you prefer to investa) Fixed deposits b) Stock c) Mutual funds d) Insurance e) Others
Q2 What are your priorities for investmenta) Protecting your family against pre-mature death b) Wealth creation c) Retirement needs d) Child education and marriage e) Protect income against disability sickness or critical illness
Q3 What is your main motive behind investing in life insurancea) Tax benefit b) Savings c) Risk cover
Q4 What kind of investment do you prefera) High risk high gain b) Low risk low gain c) Moderate d) Vary times to times
62
Q5Are you interested to invest in Traditional Plansa) Yes b) No
Q6 What is your level of annual investmenta) below 20000 b) 20000-40000 c) above 40000
Q7 What factors would you consider most important before choosing an insurance company
a) publicity of the company b) reputation of the company c) quality of life advisors d) after sales-supporting of the company
Q8 Which life insurance company would you prefer the most to invest ina) Reliance life insurance b) Bajaj Allianz life insurance
Q9 If reliance life insurance then which particular plan you would like to invest ina) Reliance Term Plan b) Reliance Whole Life Plan c) Reliance Endowment Plan d) Reliance Special Endowment Plan
Q10 If Bajaj Allianz life insurance then which particular plan you would like to invest in
I ENDOWMENT PLAN
a) Bajaj Allianz Invest Gain
b) Bajaj Allianz save Care Economy SP
c) Bajaj Allianz life time care
d) Bajaj Allianz Super Saver plan
II MONEY BACK PLAN
a) Bajaj Allianz Cash Gain plan
63
64
- COMPANY PROFILE
- ABOUT RELIANCE LIFE INSURANCE
- HISTORY
- Reliance Capital Limited announced the launch of its life insurance business on February 1 2006 This was after obtaining the required regulatory approvals from the Registrar Of Companies and the Insurance Regulatory and Development Authority
- It was in August 2005 that the ball was set rolling when Reliance Capital Limited the financial arm of Reliance ndash Anil Dhirubhai Ambani Group (ADAG) ndash announced the requisition of 100 shareholding in AMP Sanmar Life Insurance Company Limited and the formal transfer of shares took place in October 2005 The company will issue all policy contracts under the Reliance Life Insurance Company limited name All the existing policy contracts also stand transferred to the Reliance Life Insurance entity with all the original contractual terms and commitments intact
- CORE VALUES
- Reliance Life Insurance Company Limited has some core values which are listed as follows
- Vision bull To be the first choice insurer for customers bull To be the preferred employer for staff in the insurance industry bull To be the number one insurer for creating shareholder value
- Mission As a responsible customer focused market leader we will strive to understand the insurance needs of the consumers and translate it into affordable products that deliver value for money
- 12) TRADITIONAL PLANS OF THE COMPANY
- 12A )TRADITIONAL PLAN OF RELIANCE LIFE INSURANCE-
- Life insurance products are designed to suit the requirements of customers Fundamentally the product provide for
- In every product to a certain degree risk cover is imperative for it to fall under the category of insurance Based on the coverage of the product the premiums are calculated and the customer pays accordingly In order to suggest the right product it is essential for an agent to understand the requirements of the customer well
- The traditional plans of the company have the following features-
- Fixed Tenure
- Potential for better returns
- Transparency
- Flexibility in investment
- Flexibility to invest more
- Flexibility to skip the premium
- Flexibility to choose the cover
- High liquidity
- Age term and sum assured decide the amount of premium
- Top- ups and switches are not allowed
- Reliance Life Insurance Company Limited has offered 9
- 1) Reliance term plan-
- 2) Reliance Whole Life Plan -
- 3) Reliance Endowment Plan -
- 4) Reliance Special Endowment Plan -
- 13) INDUSTRY PROFILE
- MEANING OF INSURANCE
- Insurance may be described as a social device to reduce or eliminate risk of loss to life and property Insurance is a collective bearing of risk Insurance is a financial device to spread the risks and losses of few people among a large number of people as people prefer small fixed liability instead of big uncertain and changing liability
- Insurance can be defined as a ldquolegal contract between two parties whereby one party called insurer undertakes to pay a fixed amount of money on the happening of a particular event which may be certain or uncertainrdquo The other party called insured pays in exchange a fixed sum known as premium
- Insurance is desired to safeguard oneself and onersquos family against possible losses on account of risks and perils It provides financial compensation for the losses suffered due to the happening of any unforeseen events
- IMPORTANCE OF INSURANCE
- Insurance services play predominant role in the process of financial Intermediary Today insurance industry is one of the most growing sectors in India There is lot of potential in the Indian Insurance Industry
- There are many issues which require study The scope of the study of Insurance industry of India would be very great as there are ongoing Developments in the industry after the opening of the sector
- Right now the insurance industry has great opportunities in a country like India or China which huge population Also the penetration of insurance in India is very low in both life and non-life segment so there is lot potential to be tapped Before starting the discussion on insurance industry and related issues we have to start with the basics of insurance So first we understand what is insurance How the word lsquoinsurancersquo is different from the word lsquoassurancersquo Etc
- HISTORY OF INSURANCE
- The concept of insurance is believed to have emerged almost 4500 years ago in the ancient land of Babylonia where traders used to bear risk of the carvan by giving loans which were later repaid with interest when the goods arrived safely
- The concept of insurance as we know today took shape in 1688 at a place called Lloydrsquos Coffee House in London where risk bearers used to meet to transact business This coffee house became so popular that Lloydrsquos became the one of the first modern insurance companies by the end of the eighteenth century
- Marine insurance companies came into existence by the end of the eighteenth century These companies were empowered to write fire and life insurance as well as marine The Great Fire of London in 1966 caused huge loss of property and life With a view to providing fire insurance facilities
- Dr Nicholas Barbon set up in 1967 the first fire insurance company known as the Fire office
- Life insurance in its modern form came to India from England in 1818 The Oriental Life Insurance Company was the first insurance company to be set up in India to help the widows of European community The insurance companies which came into existence between 1818 and 1869 treated
- Indian lives as subnormal and charged an extra premium of 15 to 20 per cent The first Indian insurance company the Bombay Mutual Life
- Assurance Society came into existence in 1870 to cover Indian lives at normal rates
- The Insurance Act 1938 the first comprehensive legislation governing both life and non-life branches of insurance were enacted to provide strict state control over insurance business This amended insurance Act looked into investments expenditure and management of these companies
- By the mid- 1950s there were 154 Indian insurers 16 foreign insurers and 75 provident societies carrying on life insurance business in India Insurance business flourished and so did scams irregularities and dubious investment practices by scores of companies As a result the government decided to nationalize the life assurance business in India The Life Insurance
- Corporation of India (LIC) was set up in 1956 The nationalization of life insurance was followed by general insurance in 1972
- MEANING OF LIFE INSURANCE
- There are three parties in a life insurance transaction the insurer the insured and the owner of the policy (policyholder) although the owner and the insured are often the same person
- Another important person involved in a life insurance policy is the beneficiary The beneficiary is the person or persons who will receive the policy proceeds upon the death of the insured
- Life insurance may be divided into two basic classes ndash term and permanent
- HISTORY OF LIFE INSURANCE
- Risk protection has been a primary goal of humans and institutions throughout history Protecting against risk is what insurance is all about
- Over 5000 years ago in China insurance was seen as a preventative measure against piracy on the sea Piracy in fact was so prevalent that as a way of spreading the risk a number of ships would carry a portion of another ships cargo so that if one ship was captured the entire shipment would not be lost
- In another part of the world nearly 4500 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
- Life insurance came about a little later in ancient Rome where burial clubs were formed to cover the funeral expenses of its members as well as help survivors monetarily With Romes fall around 450 AD most of the concepts of insurance were abandoned but aspects of it did continue through the Middle Ages particularly with merchant and artisan guilds These provided forms of member insurance covering risks like fire flood theft disability death and even imprisonment
- During the feudal period early forms of insurance ebbed with the decline of travel and long-distance trade But during the 14th to 16th centuries transportation commerce and insurance would again reemerge
- And similar to ancient Rome burial societies were formed in the Buddhist period to help families build houses and to protect widows and children
- Modern Insurance
- Illegal almost everywhere else in Europe life insurance in England was vigorously promoted in the three decades following the Glorious Revolution of 1688 The type of insurance we see today owes its roots to 17th century England Lloyds of London or as they were known then Lloyds Coffee House was the location where merchants ship owners and underwriters met to discuss and transact business deals
- While serving as a means of risk-avoidance life insurance also appealed strongly to the gambling instincts of Englands burgeoning middle class
- Gambling was so rampant in fact that when newspapers published names of prominent people who were seriously ill bets were placed at Lloydrsquos on their anticipated dates of death Reacting against such practices 79 merchant underwriters broke away in 1769 and two years later formed a ldquoNew Lloydrsquos Coffee Houserdquo that became known as the ldquoreal Lloydrsquosrdquo Making wagers on peoples deaths ceased in 1774 when parliament forbade the practice
- Insurance moves to America
- The US insurance industry was built on the British model The year 1735 saw the birth of the first insurance company in the American colonies in
- Charleston SC The Presbyterian Synod of Philadelphia in 1759 sponsored the first life insurance corporation in America for the benefit of ministers and their dependents And the first life insurance policy for the general public in the United States was issued in Philadelphia on May 22 1761
- But it wasnt until 80 years later (after 1840) that life insurance really tookoff in a big way The key to its success was reducing the opposition from religious groups
- In 1835 the infamous New York fire drew peoples 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
- With the creation of the automobile public liability insurance which first made its appearance in the 1880s gained importance and acceptance
- More advancement was made to insurance during the process of industrialization In 1897 the British government passed the Workmens Compensation Act which made it mandatory for a company to insure its employees against industrial accidents
- During 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 most labor 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
- BENEFITS OF LIFE INSURANCE
- 1) Risk cover -Life Insurance contracts allow an individual to have a risk cover against any unfortunate event of the future
- 2) Tax Deduction -Under section 80C of the Income Tax Act of 1961 one can get tax deduction on premiums up to one lakh rupees Life Insurance policies thus decrease the total taxable income of an individual
- 3) Loans -An individual can easily access loans from different financial institutions by pledging his insurance policies
- 4) Retirement Planning -What had provided protection against the financial consequences of premature death may now be used to help them enjoy their retirement years
- 5) Educational Needs -Similar to retirement planning the cash values that flow from ones life insurance schemes can be utilized for educational needs of the insurer or his children
- The Life Insurance Industry has an enviable track record among public sector units It has a Consistent profit and dividend paying record accompanied by a steady growth in its financial resources Through investments in the Government sector and socially- oriented sectors the Industry has contributed immensely to the nations development The industry is recognized as one of the largest financial Institutions in the country The ventures initiated by the industry in the areas of Mutual Fund
- Housing Finance has done exceedingly well in recent years To protect the countrys foreign exchange reserves the reinsurance arrangement are so organized that maximum retention is made possible within the country while at the same time protecting interests of the policy holders
- 22) CURRENT SCENARIO OF RELIANCE LIFE INSURANCE
- RLIC offers wide range of innovative life insurance products targeted at individuals and groups It offers need based products that caters to four distinct segments namely protection child retirement and investment plans RLIC is committed to emerge as a transnational Life Insurer of global scale and standard
- CH - 3) RESEARCH METHODOLOGY
- RESEARCH DESIGN-
- SAMPLING TECHNIQUES-
- THE PRIMARY OBJECTIVEOF THE STUDY-
- 34) OBJECTIVES
- 7) Some innovative technique or product is required in order to attract the consumer
- 45) LIMITATIONS
- 46) BIBLIOGRAPHY
-
CHAPTER 4
DISCUSSION AND FINDINGS OF THE STUDY
FINDINGS OF THE STUDY RECOMMENDATION AND SUGGESTIONS CONCLUSION LIMITATIONS BIBLIOGRAPHY ANNEXUREQUESTIONNAIRE
53
41) FINDINGS OF THE STUDY
1) The survey reveals that still a large proportion of population is interested to invest in other forms of investment other than insurance as still most of them are unaware about the importance of insurance in their life
2) Basically people make varied form of investment for creating wealth to protect their families against pre-mature death and to protect income against disability sickness or critical illness
3) The main motive of the individuals investing is receives benefits US 1010D People generally consider insurance as a tax saving device
4) Mostly people prefer time to time form of investment as they are not willing to take high degree of risk
5) 72 of the respondents are preferred to invest in Traditional Plans
6) Most of the people prefer to make an annual investment up to a maximum of Rs20 000 per annum
7) When the product is like life insurance reputation of the company publicity of the company amp after sale services of the company matters a lot This means that people would choose that insurance company only where the quality of life advisors is satisfactory
8) Most people prefer to invest in Bajaj Allianz Life Insurance as compared to making an investment in Reliance Life Insurance
9) The most preferable Traditional plan of Reliance Life Insurance is Endowment Plan
10) The most preferable plan of Bajaj Allianz Life Insurance co is Cash Gain Plan
54
42) SUGGESTIONS amp RECOMMENDATIONS
Based on the observations of the study some suggestions for the organization are made as
follows
1) Quality of advisors is also as important as the quantity Thus company should go
mainly for qualified professionals
2) Company should increase its budget on publicity so that awareness can be increased
3) Clarity and transparency should be provided to the customer regarding various
products
4) Training sessions should be planned in advance so that schedule can be provided to
the advisor in advance
5) Apart from the Brand Positioning in urban area a strategy should be adopted by
Reliance to make its brand also near to middle level or high aspirant people because they
are the main source of the business in India
6) Awareness Camp to the sub urban area should be focused by Reliance
7) Some innovative technique or product is required in order to attract the consumer
43) LITERATURE REVIEW
55
1) Robi Elenekave has explained in detail why various retirement plans and pension plans donrsquot give the desired returns The main difficulty is the use of incorrect method for calculations done to find out the return on investment This is primarily due to wrong assumptions The study provides information about the various precautions which need to be considered before planning so that the desired results can be achieved
2) Another paper provides insight about how various financial sectors invest in bond market The study was how the different players investment different instruments according to the risk appetite and desired rate of return The study shows that life insurance sector mainly invests in government bond which are low return and low risk instrument The investment in government bond it shows that life insurance companies are more conservative in investment
3) K Subhash has presented the history of Indiarsquos life insurance industry in three stages before independence after independence and post liberalization which not only provides information but also help in analyzing the impact of these major changes The authors have also discussed the huge potential which exists in the rural India The insurance company must realize the importance of rural sector because the future lies there The author commented about the increasing share of private player in the existing market This confirms the availability of opportunity in this sector The paper also provides the importance of professional and focused approach which was given no importance
4) Tapen Sinha has discussed the various challenges and opportunities in the insurance market One of the very important factors which have been discussed in the study is the importance of developing new and better products As the scenario changes the need of an individual also changes so any organization must understand and fulfill these needs The new product development requires constant research so organization must also focus on it
5) Roger G Ibbotson discusses how financial planners and advisors have recently started to recognize that human capital must be taken into account when building optimal portfolios for individual investors Any investorrsquos human capital has a unique mortality risk However life insurance in its forms can hedge against this mortality risk Thus human capital affects both the optimal asset allocation and the optimal demand for life insurance This paper provides a unified framework based on human capital in order to enable individual investors to make both decisions jointly
6) Rakesh Niraj study tells how the flow of information in any organization is important For any organization to grow the flow of information must be good both upwards as well as ownwards The proper flow of information will also ensure proper flow of good and services from organization to customer and proper flow of information from customer to organization The information from customers will help the organization in providing better goods and services to the customer For the above purpose organization must ensure good channel partner who can provide the organization with correct feedback Hence it becomes very important for any organization to acquire good channel partners
56
7) Stephen P Robbins has discussed how group dynamics works in any organization The success of any organization depends on the success of its various teams and how these teams work together The book provides various techniques which can be used by any organization to get result from the team effort The conflict resolution is a major task in any group Various techniques which the organization can use in conflict resolution are also discussed Another important aspect covered is the importance of leadership in the organization The various forms of leadership have been discussed and the kinds of leadership which can be effective in particular situations are also discussed
8) R Wayne Mondy has discussed the importance of training and development in any organization The training provides skills to perform the current job where as the development involve learning beyond present need The various type of training are discussed which can be used according to the requirement Training and development are not only important for better performance of an individual but it also gives satisfaction The major factors which influence training and development are found to be management support commitment of trainee and trainer complexity of the organization The process of developing good training plans is also provided In another part author has discussed the importance of right man for right job The compensation strategies are also given which are very crucial for ant industry
9) Philip Kotler has discussed the importance of channels partners Better the channel partners better will be the delivery model Detailed discussion about how to design the channel structure so that all the requirements could be fulfilled is provided The various issues faced by the organization while managing the channels are also given When an organization has more than one channel it becomes very important that all the channels should be integrated in such a way that the organization get the best out of all At times due to the conflicting benefit of the different channels the conflict arise so various strategies to manage these issues is also discussed in the chapter
10) Michael J Etzel has written about the marketing of services The marketing of services is different from the goods because of the characteristic of service like intangibility inseparability heterogeneity etc Brief about pricing strategies is also given in case of services The authors have also given the impact of technological development on the services marketing The author has also given the importance of brand and after sales support in case of services as perception of the customers plays an important role In other part of the book the authors has described the importance of distribution channels and designing of the same A channel partner should be consider as partner according to discussion The legal complications associated with channels are also discussed These complications are necessary to take into the consideration while managing the channels The conflicting interest of channels both horizontally and vertically are also taken into the consideration
57
11) Boone has discussed about the importance of personal financial planning The concept of time value of money has also been elaborated The importance of creating and implementing budget is given under money management The other important concepts for financial planning like credit management and understanding taxes are also explained In one section the authors have discussed the importance of investment and what should be the major considerations while making any investment The considerations include the risk associated with the investment return on the investment etc The importance and benefits of life insurance has also been given The discussion also includes various legal aspects associated with life insurance The overview of retirement planning is also given which includes importance and benefit of retirement planning Various tools for proper retirement planning are also discussed
58
44) CONCLUSION
1) The customers are very much sensitive towards their investment They would like to invest only in that insurance company which enjoys good public image along with quality good services
2) The result of the survey conducted shows that Bajaj Allianz Life Insurance is the leader in life insurance industry but Reliance Life Insurance and other private players are giving it a close competition
3) The motive of the people behind investing in life insurance is the tax benefits that they would receive under sec 80C and 1010D
4) In Life Insurance industry the after sales support of the company is as important as the quality of life advisors
59
45) LIMITATIONS
There were some limitations faced during the study as discussed below
Since the study was taken for two months so there was a constraint of time and effort
The study was limited only to some of the Delhi regions so the results may be biased
Questionnaire was given to 125 people however only 50 responded to it which is very small for such type of study
The biasness of consumer or responses error cannot be eliminated
Most of the people are not aware about the Importance and the necessity of insurance in their life
Adverse perception of the people towards insurance sector- People consider insurance as a tax saving device
Lack of awareness about the earning opportunity in the insurance sector
60
46) BIBLIOGRAPHY
wwwreliancelifeinsurancecom
wwwadagroupcom
wwwirdacom
wwwbajajallianzlifeinsurancecom
wwwallianzbajajcom
47) ANNEXURE
61
QUESTIONNAIRE
A comparative analysis of consumer perception regarding Traditional plans of Reliance Life Insurance with that of Bajaj Allianz Life Insurance
NAME ___________________________
PERSONAL DETAILS
1) AGE_________________
1) OCCUPATION______________
2) INCOME___________________
3) FAMILY MEMBERS_________
Q1 Where do you prefer to investa) Fixed deposits b) Stock c) Mutual funds d) Insurance e) Others
Q2 What are your priorities for investmenta) Protecting your family against pre-mature death b) Wealth creation c) Retirement needs d) Child education and marriage e) Protect income against disability sickness or critical illness
Q3 What is your main motive behind investing in life insurancea) Tax benefit b) Savings c) Risk cover
Q4 What kind of investment do you prefera) High risk high gain b) Low risk low gain c) Moderate d) Vary times to times
62
Q5Are you interested to invest in Traditional Plansa) Yes b) No
Q6 What is your level of annual investmenta) below 20000 b) 20000-40000 c) above 40000
Q7 What factors would you consider most important before choosing an insurance company
a) publicity of the company b) reputation of the company c) quality of life advisors d) after sales-supporting of the company
Q8 Which life insurance company would you prefer the most to invest ina) Reliance life insurance b) Bajaj Allianz life insurance
Q9 If reliance life insurance then which particular plan you would like to invest ina) Reliance Term Plan b) Reliance Whole Life Plan c) Reliance Endowment Plan d) Reliance Special Endowment Plan
Q10 If Bajaj Allianz life insurance then which particular plan you would like to invest in
I ENDOWMENT PLAN
a) Bajaj Allianz Invest Gain
b) Bajaj Allianz save Care Economy SP
c) Bajaj Allianz life time care
d) Bajaj Allianz Super Saver plan
II MONEY BACK PLAN
a) Bajaj Allianz Cash Gain plan
63
64
- COMPANY PROFILE
- ABOUT RELIANCE LIFE INSURANCE
- HISTORY
- Reliance Capital Limited announced the launch of its life insurance business on February 1 2006 This was after obtaining the required regulatory approvals from the Registrar Of Companies and the Insurance Regulatory and Development Authority
- It was in August 2005 that the ball was set rolling when Reliance Capital Limited the financial arm of Reliance ndash Anil Dhirubhai Ambani Group (ADAG) ndash announced the requisition of 100 shareholding in AMP Sanmar Life Insurance Company Limited and the formal transfer of shares took place in October 2005 The company will issue all policy contracts under the Reliance Life Insurance Company limited name All the existing policy contracts also stand transferred to the Reliance Life Insurance entity with all the original contractual terms and commitments intact
- CORE VALUES
- Reliance Life Insurance Company Limited has some core values which are listed as follows
- Vision bull To be the first choice insurer for customers bull To be the preferred employer for staff in the insurance industry bull To be the number one insurer for creating shareholder value
- Mission As a responsible customer focused market leader we will strive to understand the insurance needs of the consumers and translate it into affordable products that deliver value for money
- 12) TRADITIONAL PLANS OF THE COMPANY
- 12A )TRADITIONAL PLAN OF RELIANCE LIFE INSURANCE-
- Life insurance products are designed to suit the requirements of customers Fundamentally the product provide for
- In every product to a certain degree risk cover is imperative for it to fall under the category of insurance Based on the coverage of the product the premiums are calculated and the customer pays accordingly In order to suggest the right product it is essential for an agent to understand the requirements of the customer well
- The traditional plans of the company have the following features-
- Fixed Tenure
- Potential for better returns
- Transparency
- Flexibility in investment
- Flexibility to invest more
- Flexibility to skip the premium
- Flexibility to choose the cover
- High liquidity
- Age term and sum assured decide the amount of premium
- Top- ups and switches are not allowed
- Reliance Life Insurance Company Limited has offered 9
- 1) Reliance term plan-
- 2) Reliance Whole Life Plan -
- 3) Reliance Endowment Plan -
- 4) Reliance Special Endowment Plan -
- 13) INDUSTRY PROFILE
- MEANING OF INSURANCE
- Insurance may be described as a social device to reduce or eliminate risk of loss to life and property Insurance is a collective bearing of risk Insurance is a financial device to spread the risks and losses of few people among a large number of people as people prefer small fixed liability instead of big uncertain and changing liability
- Insurance can be defined as a ldquolegal contract between two parties whereby one party called insurer undertakes to pay a fixed amount of money on the happening of a particular event which may be certain or uncertainrdquo The other party called insured pays in exchange a fixed sum known as premium
- Insurance is desired to safeguard oneself and onersquos family against possible losses on account of risks and perils It provides financial compensation for the losses suffered due to the happening of any unforeseen events
- IMPORTANCE OF INSURANCE
- Insurance services play predominant role in the process of financial Intermediary Today insurance industry is one of the most growing sectors in India There is lot of potential in the Indian Insurance Industry
- There are many issues which require study The scope of the study of Insurance industry of India would be very great as there are ongoing Developments in the industry after the opening of the sector
- Right now the insurance industry has great opportunities in a country like India or China which huge population Also the penetration of insurance in India is very low in both life and non-life segment so there is lot potential to be tapped Before starting the discussion on insurance industry and related issues we have to start with the basics of insurance So first we understand what is insurance How the word lsquoinsurancersquo is different from the word lsquoassurancersquo Etc
- HISTORY OF INSURANCE
- The concept of insurance is believed to have emerged almost 4500 years ago in the ancient land of Babylonia where traders used to bear risk of the carvan by giving loans which were later repaid with interest when the goods arrived safely
- The concept of insurance as we know today took shape in 1688 at a place called Lloydrsquos Coffee House in London where risk bearers used to meet to transact business This coffee house became so popular that Lloydrsquos became the one of the first modern insurance companies by the end of the eighteenth century
- Marine insurance companies came into existence by the end of the eighteenth century These companies were empowered to write fire and life insurance as well as marine The Great Fire of London in 1966 caused huge loss of property and life With a view to providing fire insurance facilities
- Dr Nicholas Barbon set up in 1967 the first fire insurance company known as the Fire office
- Life insurance in its modern form came to India from England in 1818 The Oriental Life Insurance Company was the first insurance company to be set up in India to help the widows of European community The insurance companies which came into existence between 1818 and 1869 treated
- Indian lives as subnormal and charged an extra premium of 15 to 20 per cent The first Indian insurance company the Bombay Mutual Life
- Assurance Society came into existence in 1870 to cover Indian lives at normal rates
- The Insurance Act 1938 the first comprehensive legislation governing both life and non-life branches of insurance were enacted to provide strict state control over insurance business This amended insurance Act looked into investments expenditure and management of these companies
- By the mid- 1950s there were 154 Indian insurers 16 foreign insurers and 75 provident societies carrying on life insurance business in India Insurance business flourished and so did scams irregularities and dubious investment practices by scores of companies As a result the government decided to nationalize the life assurance business in India The Life Insurance
- Corporation of India (LIC) was set up in 1956 The nationalization of life insurance was followed by general insurance in 1972
- MEANING OF LIFE INSURANCE
- There are three parties in a life insurance transaction the insurer the insured and the owner of the policy (policyholder) although the owner and the insured are often the same person
- Another important person involved in a life insurance policy is the beneficiary The beneficiary is the person or persons who will receive the policy proceeds upon the death of the insured
- Life insurance may be divided into two basic classes ndash term and permanent
- HISTORY OF LIFE INSURANCE
- Risk protection has been a primary goal of humans and institutions throughout history Protecting against risk is what insurance is all about
- Over 5000 years ago in China insurance was seen as a preventative measure against piracy on the sea Piracy in fact was so prevalent that as a way of spreading the risk a number of ships would carry a portion of another ships cargo so that if one ship was captured the entire shipment would not be lost
- In another part of the world nearly 4500 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
- Life insurance came about a little later in ancient Rome where burial clubs were formed to cover the funeral expenses of its members as well as help survivors monetarily With Romes fall around 450 AD most of the concepts of insurance were abandoned but aspects of it did continue through the Middle Ages particularly with merchant and artisan guilds These provided forms of member insurance covering risks like fire flood theft disability death and even imprisonment
- During the feudal period early forms of insurance ebbed with the decline of travel and long-distance trade But during the 14th to 16th centuries transportation commerce and insurance would again reemerge
- And similar to ancient Rome burial societies were formed in the Buddhist period to help families build houses and to protect widows and children
- Modern Insurance
- Illegal almost everywhere else in Europe life insurance in England was vigorously promoted in the three decades following the Glorious Revolution of 1688 The type of insurance we see today owes its roots to 17th century England Lloyds of London or as they were known then Lloyds Coffee House was the location where merchants ship owners and underwriters met to discuss and transact business deals
- While serving as a means of risk-avoidance life insurance also appealed strongly to the gambling instincts of Englands burgeoning middle class
- Gambling was so rampant in fact that when newspapers published names of prominent people who were seriously ill bets were placed at Lloydrsquos on their anticipated dates of death Reacting against such practices 79 merchant underwriters broke away in 1769 and two years later formed a ldquoNew Lloydrsquos Coffee Houserdquo that became known as the ldquoreal Lloydrsquosrdquo Making wagers on peoples deaths ceased in 1774 when parliament forbade the practice
- Insurance moves to America
- The US insurance industry was built on the British model The year 1735 saw the birth of the first insurance company in the American colonies in
- Charleston SC The Presbyterian Synod of Philadelphia in 1759 sponsored the first life insurance corporation in America for the benefit of ministers and their dependents And the first life insurance policy for the general public in the United States was issued in Philadelphia on May 22 1761
- But it wasnt until 80 years later (after 1840) that life insurance really tookoff in a big way The key to its success was reducing the opposition from religious groups
- In 1835 the infamous New York fire drew peoples 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
- With the creation of the automobile public liability insurance which first made its appearance in the 1880s gained importance and acceptance
- More advancement was made to insurance during the process of industrialization In 1897 the British government passed the Workmens Compensation Act which made it mandatory for a company to insure its employees against industrial accidents
- During 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 most labor 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
- BENEFITS OF LIFE INSURANCE
- 1) Risk cover -Life Insurance contracts allow an individual to have a risk cover against any unfortunate event of the future
- 2) Tax Deduction -Under section 80C of the Income Tax Act of 1961 one can get tax deduction on premiums up to one lakh rupees Life Insurance policies thus decrease the total taxable income of an individual
- 3) Loans -An individual can easily access loans from different financial institutions by pledging his insurance policies
- 4) Retirement Planning -What had provided protection against the financial consequences of premature death may now be used to help them enjoy their retirement years
- 5) Educational Needs -Similar to retirement planning the cash values that flow from ones life insurance schemes can be utilized for educational needs of the insurer or his children
- The Life Insurance Industry has an enviable track record among public sector units It has a Consistent profit and dividend paying record accompanied by a steady growth in its financial resources Through investments in the Government sector and socially- oriented sectors the Industry has contributed immensely to the nations development The industry is recognized as one of the largest financial Institutions in the country The ventures initiated by the industry in the areas of Mutual Fund
- Housing Finance has done exceedingly well in recent years To protect the countrys foreign exchange reserves the reinsurance arrangement are so organized that maximum retention is made possible within the country while at the same time protecting interests of the policy holders
- 22) CURRENT SCENARIO OF RELIANCE LIFE INSURANCE
- RLIC offers wide range of innovative life insurance products targeted at individuals and groups It offers need based products that caters to four distinct segments namely protection child retirement and investment plans RLIC is committed to emerge as a transnational Life Insurer of global scale and standard
- CH - 3) RESEARCH METHODOLOGY
- RESEARCH DESIGN-
- SAMPLING TECHNIQUES-
- THE PRIMARY OBJECTIVEOF THE STUDY-
- 34) OBJECTIVES
- 7) Some innovative technique or product is required in order to attract the consumer
- 45) LIMITATIONS
- 46) BIBLIOGRAPHY
-
41) FINDINGS OF THE STUDY
1) The survey reveals that still a large proportion of population is interested to invest in other forms of investment other than insurance as still most of them are unaware about the importance of insurance in their life
2) Basically people make varied form of investment for creating wealth to protect their families against pre-mature death and to protect income against disability sickness or critical illness
3) The main motive of the individuals investing is receives benefits US 1010D People generally consider insurance as a tax saving device
4) Mostly people prefer time to time form of investment as they are not willing to take high degree of risk
5) 72 of the respondents are preferred to invest in Traditional Plans
6) Most of the people prefer to make an annual investment up to a maximum of Rs20 000 per annum
7) When the product is like life insurance reputation of the company publicity of the company amp after sale services of the company matters a lot This means that people would choose that insurance company only where the quality of life advisors is satisfactory
8) Most people prefer to invest in Bajaj Allianz Life Insurance as compared to making an investment in Reliance Life Insurance
9) The most preferable Traditional plan of Reliance Life Insurance is Endowment Plan
10) The most preferable plan of Bajaj Allianz Life Insurance co is Cash Gain Plan
54
42) SUGGESTIONS amp RECOMMENDATIONS
Based on the observations of the study some suggestions for the organization are made as
follows
1) Quality of advisors is also as important as the quantity Thus company should go
mainly for qualified professionals
2) Company should increase its budget on publicity so that awareness can be increased
3) Clarity and transparency should be provided to the customer regarding various
products
4) Training sessions should be planned in advance so that schedule can be provided to
the advisor in advance
5) Apart from the Brand Positioning in urban area a strategy should be adopted by
Reliance to make its brand also near to middle level or high aspirant people because they
are the main source of the business in India
6) Awareness Camp to the sub urban area should be focused by Reliance
7) Some innovative technique or product is required in order to attract the consumer
43) LITERATURE REVIEW
55
1) Robi Elenekave has explained in detail why various retirement plans and pension plans donrsquot give the desired returns The main difficulty is the use of incorrect method for calculations done to find out the return on investment This is primarily due to wrong assumptions The study provides information about the various precautions which need to be considered before planning so that the desired results can be achieved
2) Another paper provides insight about how various financial sectors invest in bond market The study was how the different players investment different instruments according to the risk appetite and desired rate of return The study shows that life insurance sector mainly invests in government bond which are low return and low risk instrument The investment in government bond it shows that life insurance companies are more conservative in investment
3) K Subhash has presented the history of Indiarsquos life insurance industry in three stages before independence after independence and post liberalization which not only provides information but also help in analyzing the impact of these major changes The authors have also discussed the huge potential which exists in the rural India The insurance company must realize the importance of rural sector because the future lies there The author commented about the increasing share of private player in the existing market This confirms the availability of opportunity in this sector The paper also provides the importance of professional and focused approach which was given no importance
4) Tapen Sinha has discussed the various challenges and opportunities in the insurance market One of the very important factors which have been discussed in the study is the importance of developing new and better products As the scenario changes the need of an individual also changes so any organization must understand and fulfill these needs The new product development requires constant research so organization must also focus on it
5) Roger G Ibbotson discusses how financial planners and advisors have recently started to recognize that human capital must be taken into account when building optimal portfolios for individual investors Any investorrsquos human capital has a unique mortality risk However life insurance in its forms can hedge against this mortality risk Thus human capital affects both the optimal asset allocation and the optimal demand for life insurance This paper provides a unified framework based on human capital in order to enable individual investors to make both decisions jointly
6) Rakesh Niraj study tells how the flow of information in any organization is important For any organization to grow the flow of information must be good both upwards as well as ownwards The proper flow of information will also ensure proper flow of good and services from organization to customer and proper flow of information from customer to organization The information from customers will help the organization in providing better goods and services to the customer For the above purpose organization must ensure good channel partner who can provide the organization with correct feedback Hence it becomes very important for any organization to acquire good channel partners
56
7) Stephen P Robbins has discussed how group dynamics works in any organization The success of any organization depends on the success of its various teams and how these teams work together The book provides various techniques which can be used by any organization to get result from the team effort The conflict resolution is a major task in any group Various techniques which the organization can use in conflict resolution are also discussed Another important aspect covered is the importance of leadership in the organization The various forms of leadership have been discussed and the kinds of leadership which can be effective in particular situations are also discussed
8) R Wayne Mondy has discussed the importance of training and development in any organization The training provides skills to perform the current job where as the development involve learning beyond present need The various type of training are discussed which can be used according to the requirement Training and development are not only important for better performance of an individual but it also gives satisfaction The major factors which influence training and development are found to be management support commitment of trainee and trainer complexity of the organization The process of developing good training plans is also provided In another part author has discussed the importance of right man for right job The compensation strategies are also given which are very crucial for ant industry
9) Philip Kotler has discussed the importance of channels partners Better the channel partners better will be the delivery model Detailed discussion about how to design the channel structure so that all the requirements could be fulfilled is provided The various issues faced by the organization while managing the channels are also given When an organization has more than one channel it becomes very important that all the channels should be integrated in such a way that the organization get the best out of all At times due to the conflicting benefit of the different channels the conflict arise so various strategies to manage these issues is also discussed in the chapter
10) Michael J Etzel has written about the marketing of services The marketing of services is different from the goods because of the characteristic of service like intangibility inseparability heterogeneity etc Brief about pricing strategies is also given in case of services The authors have also given the impact of technological development on the services marketing The author has also given the importance of brand and after sales support in case of services as perception of the customers plays an important role In other part of the book the authors has described the importance of distribution channels and designing of the same A channel partner should be consider as partner according to discussion The legal complications associated with channels are also discussed These complications are necessary to take into the consideration while managing the channels The conflicting interest of channels both horizontally and vertically are also taken into the consideration
57
11) Boone has discussed about the importance of personal financial planning The concept of time value of money has also been elaborated The importance of creating and implementing budget is given under money management The other important concepts for financial planning like credit management and understanding taxes are also explained In one section the authors have discussed the importance of investment and what should be the major considerations while making any investment The considerations include the risk associated with the investment return on the investment etc The importance and benefits of life insurance has also been given The discussion also includes various legal aspects associated with life insurance The overview of retirement planning is also given which includes importance and benefit of retirement planning Various tools for proper retirement planning are also discussed
58
44) CONCLUSION
1) The customers are very much sensitive towards their investment They would like to invest only in that insurance company which enjoys good public image along with quality good services
2) The result of the survey conducted shows that Bajaj Allianz Life Insurance is the leader in life insurance industry but Reliance Life Insurance and other private players are giving it a close competition
3) The motive of the people behind investing in life insurance is the tax benefits that they would receive under sec 80C and 1010D
4) In Life Insurance industry the after sales support of the company is as important as the quality of life advisors
59
45) LIMITATIONS
There were some limitations faced during the study as discussed below
Since the study was taken for two months so there was a constraint of time and effort
The study was limited only to some of the Delhi regions so the results may be biased
Questionnaire was given to 125 people however only 50 responded to it which is very small for such type of study
The biasness of consumer or responses error cannot be eliminated
Most of the people are not aware about the Importance and the necessity of insurance in their life
Adverse perception of the people towards insurance sector- People consider insurance as a tax saving device
Lack of awareness about the earning opportunity in the insurance sector
60
46) BIBLIOGRAPHY
wwwreliancelifeinsurancecom
wwwadagroupcom
wwwirdacom
wwwbajajallianzlifeinsurancecom
wwwallianzbajajcom
47) ANNEXURE
61
QUESTIONNAIRE
A comparative analysis of consumer perception regarding Traditional plans of Reliance Life Insurance with that of Bajaj Allianz Life Insurance
NAME ___________________________
PERSONAL DETAILS
1) AGE_________________
1) OCCUPATION______________
2) INCOME___________________
3) FAMILY MEMBERS_________
Q1 Where do you prefer to investa) Fixed deposits b) Stock c) Mutual funds d) Insurance e) Others
Q2 What are your priorities for investmenta) Protecting your family against pre-mature death b) Wealth creation c) Retirement needs d) Child education and marriage e) Protect income against disability sickness or critical illness
Q3 What is your main motive behind investing in life insurancea) Tax benefit b) Savings c) Risk cover
Q4 What kind of investment do you prefera) High risk high gain b) Low risk low gain c) Moderate d) Vary times to times
62
Q5Are you interested to invest in Traditional Plansa) Yes b) No
Q6 What is your level of annual investmenta) below 20000 b) 20000-40000 c) above 40000
Q7 What factors would you consider most important before choosing an insurance company
a) publicity of the company b) reputation of the company c) quality of life advisors d) after sales-supporting of the company
Q8 Which life insurance company would you prefer the most to invest ina) Reliance life insurance b) Bajaj Allianz life insurance
Q9 If reliance life insurance then which particular plan you would like to invest ina) Reliance Term Plan b) Reliance Whole Life Plan c) Reliance Endowment Plan d) Reliance Special Endowment Plan
Q10 If Bajaj Allianz life insurance then which particular plan you would like to invest in
I ENDOWMENT PLAN
a) Bajaj Allianz Invest Gain
b) Bajaj Allianz save Care Economy SP
c) Bajaj Allianz life time care
d) Bajaj Allianz Super Saver plan
II MONEY BACK PLAN
a) Bajaj Allianz Cash Gain plan
63
64
- COMPANY PROFILE
- ABOUT RELIANCE LIFE INSURANCE
- HISTORY
- Reliance Capital Limited announced the launch of its life insurance business on February 1 2006 This was after obtaining the required regulatory approvals from the Registrar Of Companies and the Insurance Regulatory and Development Authority
- It was in August 2005 that the ball was set rolling when Reliance Capital Limited the financial arm of Reliance ndash Anil Dhirubhai Ambani Group (ADAG) ndash announced the requisition of 100 shareholding in AMP Sanmar Life Insurance Company Limited and the formal transfer of shares took place in October 2005 The company will issue all policy contracts under the Reliance Life Insurance Company limited name All the existing policy contracts also stand transferred to the Reliance Life Insurance entity with all the original contractual terms and commitments intact
- CORE VALUES
- Reliance Life Insurance Company Limited has some core values which are listed as follows
- Vision bull To be the first choice insurer for customers bull To be the preferred employer for staff in the insurance industry bull To be the number one insurer for creating shareholder value
- Mission As a responsible customer focused market leader we will strive to understand the insurance needs of the consumers and translate it into affordable products that deliver value for money
- 12) TRADITIONAL PLANS OF THE COMPANY
- 12A )TRADITIONAL PLAN OF RELIANCE LIFE INSURANCE-
- Life insurance products are designed to suit the requirements of customers Fundamentally the product provide for
- In every product to a certain degree risk cover is imperative for it to fall under the category of insurance Based on the coverage of the product the premiums are calculated and the customer pays accordingly In order to suggest the right product it is essential for an agent to understand the requirements of the customer well
- The traditional plans of the company have the following features-
- Fixed Tenure
- Potential for better returns
- Transparency
- Flexibility in investment
- Flexibility to invest more
- Flexibility to skip the premium
- Flexibility to choose the cover
- High liquidity
- Age term and sum assured decide the amount of premium
- Top- ups and switches are not allowed
- Reliance Life Insurance Company Limited has offered 9
- 1) Reliance term plan-
- 2) Reliance Whole Life Plan -
- 3) Reliance Endowment Plan -
- 4) Reliance Special Endowment Plan -
- 13) INDUSTRY PROFILE
- MEANING OF INSURANCE
- Insurance may be described as a social device to reduce or eliminate risk of loss to life and property Insurance is a collective bearing of risk Insurance is a financial device to spread the risks and losses of few people among a large number of people as people prefer small fixed liability instead of big uncertain and changing liability
- Insurance can be defined as a ldquolegal contract between two parties whereby one party called insurer undertakes to pay a fixed amount of money on the happening of a particular event which may be certain or uncertainrdquo The other party called insured pays in exchange a fixed sum known as premium
- Insurance is desired to safeguard oneself and onersquos family against possible losses on account of risks and perils It provides financial compensation for the losses suffered due to the happening of any unforeseen events
- IMPORTANCE OF INSURANCE
- Insurance services play predominant role in the process of financial Intermediary Today insurance industry is one of the most growing sectors in India There is lot of potential in the Indian Insurance Industry
- There are many issues which require study The scope of the study of Insurance industry of India would be very great as there are ongoing Developments in the industry after the opening of the sector
- Right now the insurance industry has great opportunities in a country like India or China which huge population Also the penetration of insurance in India is very low in both life and non-life segment so there is lot potential to be tapped Before starting the discussion on insurance industry and related issues we have to start with the basics of insurance So first we understand what is insurance How the word lsquoinsurancersquo is different from the word lsquoassurancersquo Etc
- HISTORY OF INSURANCE
- The concept of insurance is believed to have emerged almost 4500 years ago in the ancient land of Babylonia where traders used to bear risk of the carvan by giving loans which were later repaid with interest when the goods arrived safely
- The concept of insurance as we know today took shape in 1688 at a place called Lloydrsquos Coffee House in London where risk bearers used to meet to transact business This coffee house became so popular that Lloydrsquos became the one of the first modern insurance companies by the end of the eighteenth century
- Marine insurance companies came into existence by the end of the eighteenth century These companies were empowered to write fire and life insurance as well as marine The Great Fire of London in 1966 caused huge loss of property and life With a view to providing fire insurance facilities
- Dr Nicholas Barbon set up in 1967 the first fire insurance company known as the Fire office
- Life insurance in its modern form came to India from England in 1818 The Oriental Life Insurance Company was the first insurance company to be set up in India to help the widows of European community The insurance companies which came into existence between 1818 and 1869 treated
- Indian lives as subnormal and charged an extra premium of 15 to 20 per cent The first Indian insurance company the Bombay Mutual Life
- Assurance Society came into existence in 1870 to cover Indian lives at normal rates
- The Insurance Act 1938 the first comprehensive legislation governing both life and non-life branches of insurance were enacted to provide strict state control over insurance business This amended insurance Act looked into investments expenditure and management of these companies
- By the mid- 1950s there were 154 Indian insurers 16 foreign insurers and 75 provident societies carrying on life insurance business in India Insurance business flourished and so did scams irregularities and dubious investment practices by scores of companies As a result the government decided to nationalize the life assurance business in India The Life Insurance
- Corporation of India (LIC) was set up in 1956 The nationalization of life insurance was followed by general insurance in 1972
- MEANING OF LIFE INSURANCE
- There are three parties in a life insurance transaction the insurer the insured and the owner of the policy (policyholder) although the owner and the insured are often the same person
- Another important person involved in a life insurance policy is the beneficiary The beneficiary is the person or persons who will receive the policy proceeds upon the death of the insured
- Life insurance may be divided into two basic classes ndash term and permanent
- HISTORY OF LIFE INSURANCE
- Risk protection has been a primary goal of humans and institutions throughout history Protecting against risk is what insurance is all about
- Over 5000 years ago in China insurance was seen as a preventative measure against piracy on the sea Piracy in fact was so prevalent that as a way of spreading the risk a number of ships would carry a portion of another ships cargo so that if one ship was captured the entire shipment would not be lost
- In another part of the world nearly 4500 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
- Life insurance came about a little later in ancient Rome where burial clubs were formed to cover the funeral expenses of its members as well as help survivors monetarily With Romes fall around 450 AD most of the concepts of insurance were abandoned but aspects of it did continue through the Middle Ages particularly with merchant and artisan guilds These provided forms of member insurance covering risks like fire flood theft disability death and even imprisonment
- During the feudal period early forms of insurance ebbed with the decline of travel and long-distance trade But during the 14th to 16th centuries transportation commerce and insurance would again reemerge
- And similar to ancient Rome burial societies were formed in the Buddhist period to help families build houses and to protect widows and children
- Modern Insurance
- Illegal almost everywhere else in Europe life insurance in England was vigorously promoted in the three decades following the Glorious Revolution of 1688 The type of insurance we see today owes its roots to 17th century England Lloyds of London or as they were known then Lloyds Coffee House was the location where merchants ship owners and underwriters met to discuss and transact business deals
- While serving as a means of risk-avoidance life insurance also appealed strongly to the gambling instincts of Englands burgeoning middle class
- Gambling was so rampant in fact that when newspapers published names of prominent people who were seriously ill bets were placed at Lloydrsquos on their anticipated dates of death Reacting against such practices 79 merchant underwriters broke away in 1769 and two years later formed a ldquoNew Lloydrsquos Coffee Houserdquo that became known as the ldquoreal Lloydrsquosrdquo Making wagers on peoples deaths ceased in 1774 when parliament forbade the practice
- Insurance moves to America
- The US insurance industry was built on the British model The year 1735 saw the birth of the first insurance company in the American colonies in
- Charleston SC The Presbyterian Synod of Philadelphia in 1759 sponsored the first life insurance corporation in America for the benefit of ministers and their dependents And the first life insurance policy for the general public in the United States was issued in Philadelphia on May 22 1761
- But it wasnt until 80 years later (after 1840) that life insurance really tookoff in a big way The key to its success was reducing the opposition from religious groups
- In 1835 the infamous New York fire drew peoples 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
- With the creation of the automobile public liability insurance which first made its appearance in the 1880s gained importance and acceptance
- More advancement was made to insurance during the process of industrialization In 1897 the British government passed the Workmens Compensation Act which made it mandatory for a company to insure its employees against industrial accidents
- During 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 most labor 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
- BENEFITS OF LIFE INSURANCE
- 1) Risk cover -Life Insurance contracts allow an individual to have a risk cover against any unfortunate event of the future
- 2) Tax Deduction -Under section 80C of the Income Tax Act of 1961 one can get tax deduction on premiums up to one lakh rupees Life Insurance policies thus decrease the total taxable income of an individual
- 3) Loans -An individual can easily access loans from different financial institutions by pledging his insurance policies
- 4) Retirement Planning -What had provided protection against the financial consequences of premature death may now be used to help them enjoy their retirement years
- 5) Educational Needs -Similar to retirement planning the cash values that flow from ones life insurance schemes can be utilized for educational needs of the insurer or his children
- The Life Insurance Industry has an enviable track record among public sector units It has a Consistent profit and dividend paying record accompanied by a steady growth in its financial resources Through investments in the Government sector and socially- oriented sectors the Industry has contributed immensely to the nations development The industry is recognized as one of the largest financial Institutions in the country The ventures initiated by the industry in the areas of Mutual Fund
- Housing Finance has done exceedingly well in recent years To protect the countrys foreign exchange reserves the reinsurance arrangement are so organized that maximum retention is made possible within the country while at the same time protecting interests of the policy holders
- 22) CURRENT SCENARIO OF RELIANCE LIFE INSURANCE
- RLIC offers wide range of innovative life insurance products targeted at individuals and groups It offers need based products that caters to four distinct segments namely protection child retirement and investment plans RLIC is committed to emerge as a transnational Life Insurer of global scale and standard
- CH - 3) RESEARCH METHODOLOGY
- RESEARCH DESIGN-
- SAMPLING TECHNIQUES-
- THE PRIMARY OBJECTIVEOF THE STUDY-
- 34) OBJECTIVES
- 7) Some innovative technique or product is required in order to attract the consumer
- 45) LIMITATIONS
- 46) BIBLIOGRAPHY
-
42) SUGGESTIONS amp RECOMMENDATIONS
Based on the observations of the study some suggestions for the organization are made as
follows
1) Quality of advisors is also as important as the quantity Thus company should go
mainly for qualified professionals
2) Company should increase its budget on publicity so that awareness can be increased
3) Clarity and transparency should be provided to the customer regarding various
products
4) Training sessions should be planned in advance so that schedule can be provided to
the advisor in advance
5) Apart from the Brand Positioning in urban area a strategy should be adopted by
Reliance to make its brand also near to middle level or high aspirant people because they
are the main source of the business in India
6) Awareness Camp to the sub urban area should be focused by Reliance
7) Some innovative technique or product is required in order to attract the consumer
43) LITERATURE REVIEW
55
1) Robi Elenekave has explained in detail why various retirement plans and pension plans donrsquot give the desired returns The main difficulty is the use of incorrect method for calculations done to find out the return on investment This is primarily due to wrong assumptions The study provides information about the various precautions which need to be considered before planning so that the desired results can be achieved
2) Another paper provides insight about how various financial sectors invest in bond market The study was how the different players investment different instruments according to the risk appetite and desired rate of return The study shows that life insurance sector mainly invests in government bond which are low return and low risk instrument The investment in government bond it shows that life insurance companies are more conservative in investment
3) K Subhash has presented the history of Indiarsquos life insurance industry in three stages before independence after independence and post liberalization which not only provides information but also help in analyzing the impact of these major changes The authors have also discussed the huge potential which exists in the rural India The insurance company must realize the importance of rural sector because the future lies there The author commented about the increasing share of private player in the existing market This confirms the availability of opportunity in this sector The paper also provides the importance of professional and focused approach which was given no importance
4) Tapen Sinha has discussed the various challenges and opportunities in the insurance market One of the very important factors which have been discussed in the study is the importance of developing new and better products As the scenario changes the need of an individual also changes so any organization must understand and fulfill these needs The new product development requires constant research so organization must also focus on it
5) Roger G Ibbotson discusses how financial planners and advisors have recently started to recognize that human capital must be taken into account when building optimal portfolios for individual investors Any investorrsquos human capital has a unique mortality risk However life insurance in its forms can hedge against this mortality risk Thus human capital affects both the optimal asset allocation and the optimal demand for life insurance This paper provides a unified framework based on human capital in order to enable individual investors to make both decisions jointly
6) Rakesh Niraj study tells how the flow of information in any organization is important For any organization to grow the flow of information must be good both upwards as well as ownwards The proper flow of information will also ensure proper flow of good and services from organization to customer and proper flow of information from customer to organization The information from customers will help the organization in providing better goods and services to the customer For the above purpose organization must ensure good channel partner who can provide the organization with correct feedback Hence it becomes very important for any organization to acquire good channel partners
56
7) Stephen P Robbins has discussed how group dynamics works in any organization The success of any organization depends on the success of its various teams and how these teams work together The book provides various techniques which can be used by any organization to get result from the team effort The conflict resolution is a major task in any group Various techniques which the organization can use in conflict resolution are also discussed Another important aspect covered is the importance of leadership in the organization The various forms of leadership have been discussed and the kinds of leadership which can be effective in particular situations are also discussed
8) R Wayne Mondy has discussed the importance of training and development in any organization The training provides skills to perform the current job where as the development involve learning beyond present need The various type of training are discussed which can be used according to the requirement Training and development are not only important for better performance of an individual but it also gives satisfaction The major factors which influence training and development are found to be management support commitment of trainee and trainer complexity of the organization The process of developing good training plans is also provided In another part author has discussed the importance of right man for right job The compensation strategies are also given which are very crucial for ant industry
9) Philip Kotler has discussed the importance of channels partners Better the channel partners better will be the delivery model Detailed discussion about how to design the channel structure so that all the requirements could be fulfilled is provided The various issues faced by the organization while managing the channels are also given When an organization has more than one channel it becomes very important that all the channels should be integrated in such a way that the organization get the best out of all At times due to the conflicting benefit of the different channels the conflict arise so various strategies to manage these issues is also discussed in the chapter
10) Michael J Etzel has written about the marketing of services The marketing of services is different from the goods because of the characteristic of service like intangibility inseparability heterogeneity etc Brief about pricing strategies is also given in case of services The authors have also given the impact of technological development on the services marketing The author has also given the importance of brand and after sales support in case of services as perception of the customers plays an important role In other part of the book the authors has described the importance of distribution channels and designing of the same A channel partner should be consider as partner according to discussion The legal complications associated with channels are also discussed These complications are necessary to take into the consideration while managing the channels The conflicting interest of channels both horizontally and vertically are also taken into the consideration
57
11) Boone has discussed about the importance of personal financial planning The concept of time value of money has also been elaborated The importance of creating and implementing budget is given under money management The other important concepts for financial planning like credit management and understanding taxes are also explained In one section the authors have discussed the importance of investment and what should be the major considerations while making any investment The considerations include the risk associated with the investment return on the investment etc The importance and benefits of life insurance has also been given The discussion also includes various legal aspects associated with life insurance The overview of retirement planning is also given which includes importance and benefit of retirement planning Various tools for proper retirement planning are also discussed
58
44) CONCLUSION
1) The customers are very much sensitive towards their investment They would like to invest only in that insurance company which enjoys good public image along with quality good services
2) The result of the survey conducted shows that Bajaj Allianz Life Insurance is the leader in life insurance industry but Reliance Life Insurance and other private players are giving it a close competition
3) The motive of the people behind investing in life insurance is the tax benefits that they would receive under sec 80C and 1010D
4) In Life Insurance industry the after sales support of the company is as important as the quality of life advisors
59
45) LIMITATIONS
There were some limitations faced during the study as discussed below
Since the study was taken for two months so there was a constraint of time and effort
The study was limited only to some of the Delhi regions so the results may be biased
Questionnaire was given to 125 people however only 50 responded to it which is very small for such type of study
The biasness of consumer or responses error cannot be eliminated
Most of the people are not aware about the Importance and the necessity of insurance in their life
Adverse perception of the people towards insurance sector- People consider insurance as a tax saving device
Lack of awareness about the earning opportunity in the insurance sector
60
46) BIBLIOGRAPHY
wwwreliancelifeinsurancecom
wwwadagroupcom
wwwirdacom
wwwbajajallianzlifeinsurancecom
wwwallianzbajajcom
47) ANNEXURE
61
QUESTIONNAIRE
A comparative analysis of consumer perception regarding Traditional plans of Reliance Life Insurance with that of Bajaj Allianz Life Insurance
NAME ___________________________
PERSONAL DETAILS
1) AGE_________________
1) OCCUPATION______________
2) INCOME___________________
3) FAMILY MEMBERS_________
Q1 Where do you prefer to investa) Fixed deposits b) Stock c) Mutual funds d) Insurance e) Others
Q2 What are your priorities for investmenta) Protecting your family against pre-mature death b) Wealth creation c) Retirement needs d) Child education and marriage e) Protect income against disability sickness or critical illness
Q3 What is your main motive behind investing in life insurancea) Tax benefit b) Savings c) Risk cover
Q4 What kind of investment do you prefera) High risk high gain b) Low risk low gain c) Moderate d) Vary times to times
62
Q5Are you interested to invest in Traditional Plansa) Yes b) No
Q6 What is your level of annual investmenta) below 20000 b) 20000-40000 c) above 40000
Q7 What factors would you consider most important before choosing an insurance company
a) publicity of the company b) reputation of the company c) quality of life advisors d) after sales-supporting of the company
Q8 Which life insurance company would you prefer the most to invest ina) Reliance life insurance b) Bajaj Allianz life insurance
Q9 If reliance life insurance then which particular plan you would like to invest ina) Reliance Term Plan b) Reliance Whole Life Plan c) Reliance Endowment Plan d) Reliance Special Endowment Plan
Q10 If Bajaj Allianz life insurance then which particular plan you would like to invest in
I ENDOWMENT PLAN
a) Bajaj Allianz Invest Gain
b) Bajaj Allianz save Care Economy SP
c) Bajaj Allianz life time care
d) Bajaj Allianz Super Saver plan
II MONEY BACK PLAN
a) Bajaj Allianz Cash Gain plan
63
64
- COMPANY PROFILE
- ABOUT RELIANCE LIFE INSURANCE
- HISTORY
- Reliance Capital Limited announced the launch of its life insurance business on February 1 2006 This was after obtaining the required regulatory approvals from the Registrar Of Companies and the Insurance Regulatory and Development Authority
- It was in August 2005 that the ball was set rolling when Reliance Capital Limited the financial arm of Reliance ndash Anil Dhirubhai Ambani Group (ADAG) ndash announced the requisition of 100 shareholding in AMP Sanmar Life Insurance Company Limited and the formal transfer of shares took place in October 2005 The company will issue all policy contracts under the Reliance Life Insurance Company limited name All the existing policy contracts also stand transferred to the Reliance Life Insurance entity with all the original contractual terms and commitments intact
- CORE VALUES
- Reliance Life Insurance Company Limited has some core values which are listed as follows
- Vision bull To be the first choice insurer for customers bull To be the preferred employer for staff in the insurance industry bull To be the number one insurer for creating shareholder value
- Mission As a responsible customer focused market leader we will strive to understand the insurance needs of the consumers and translate it into affordable products that deliver value for money
- 12) TRADITIONAL PLANS OF THE COMPANY
- 12A )TRADITIONAL PLAN OF RELIANCE LIFE INSURANCE-
- Life insurance products are designed to suit the requirements of customers Fundamentally the product provide for
- In every product to a certain degree risk cover is imperative for it to fall under the category of insurance Based on the coverage of the product the premiums are calculated and the customer pays accordingly In order to suggest the right product it is essential for an agent to understand the requirements of the customer well
- The traditional plans of the company have the following features-
- Fixed Tenure
- Potential for better returns
- Transparency
- Flexibility in investment
- Flexibility to invest more
- Flexibility to skip the premium
- Flexibility to choose the cover
- High liquidity
- Age term and sum assured decide the amount of premium
- Top- ups and switches are not allowed
- Reliance Life Insurance Company Limited has offered 9
- 1) Reliance term plan-
- 2) Reliance Whole Life Plan -
- 3) Reliance Endowment Plan -
- 4) Reliance Special Endowment Plan -
- 13) INDUSTRY PROFILE
- MEANING OF INSURANCE
- Insurance may be described as a social device to reduce or eliminate risk of loss to life and property Insurance is a collective bearing of risk Insurance is a financial device to spread the risks and losses of few people among a large number of people as people prefer small fixed liability instead of big uncertain and changing liability
- Insurance can be defined as a ldquolegal contract between two parties whereby one party called insurer undertakes to pay a fixed amount of money on the happening of a particular event which may be certain or uncertainrdquo The other party called insured pays in exchange a fixed sum known as premium
- Insurance is desired to safeguard oneself and onersquos family against possible losses on account of risks and perils It provides financial compensation for the losses suffered due to the happening of any unforeseen events
- IMPORTANCE OF INSURANCE
- Insurance services play predominant role in the process of financial Intermediary Today insurance industry is one of the most growing sectors in India There is lot of potential in the Indian Insurance Industry
- There are many issues which require study The scope of the study of Insurance industry of India would be very great as there are ongoing Developments in the industry after the opening of the sector
- Right now the insurance industry has great opportunities in a country like India or China which huge population Also the penetration of insurance in India is very low in both life and non-life segment so there is lot potential to be tapped Before starting the discussion on insurance industry and related issues we have to start with the basics of insurance So first we understand what is insurance How the word lsquoinsurancersquo is different from the word lsquoassurancersquo Etc
- HISTORY OF INSURANCE
- The concept of insurance is believed to have emerged almost 4500 years ago in the ancient land of Babylonia where traders used to bear risk of the carvan by giving loans which were later repaid with interest when the goods arrived safely
- The concept of insurance as we know today took shape in 1688 at a place called Lloydrsquos Coffee House in London where risk bearers used to meet to transact business This coffee house became so popular that Lloydrsquos became the one of the first modern insurance companies by the end of the eighteenth century
- Marine insurance companies came into existence by the end of the eighteenth century These companies were empowered to write fire and life insurance as well as marine The Great Fire of London in 1966 caused huge loss of property and life With a view to providing fire insurance facilities
- Dr Nicholas Barbon set up in 1967 the first fire insurance company known as the Fire office
- Life insurance in its modern form came to India from England in 1818 The Oriental Life Insurance Company was the first insurance company to be set up in India to help the widows of European community The insurance companies which came into existence between 1818 and 1869 treated
- Indian lives as subnormal and charged an extra premium of 15 to 20 per cent The first Indian insurance company the Bombay Mutual Life
- Assurance Society came into existence in 1870 to cover Indian lives at normal rates
- The Insurance Act 1938 the first comprehensive legislation governing both life and non-life branches of insurance were enacted to provide strict state control over insurance business This amended insurance Act looked into investments expenditure and management of these companies
- By the mid- 1950s there were 154 Indian insurers 16 foreign insurers and 75 provident societies carrying on life insurance business in India Insurance business flourished and so did scams irregularities and dubious investment practices by scores of companies As a result the government decided to nationalize the life assurance business in India The Life Insurance
- Corporation of India (LIC) was set up in 1956 The nationalization of life insurance was followed by general insurance in 1972
- MEANING OF LIFE INSURANCE
- There are three parties in a life insurance transaction the insurer the insured and the owner of the policy (policyholder) although the owner and the insured are often the same person
- Another important person involved in a life insurance policy is the beneficiary The beneficiary is the person or persons who will receive the policy proceeds upon the death of the insured
- Life insurance may be divided into two basic classes ndash term and permanent
- HISTORY OF LIFE INSURANCE
- Risk protection has been a primary goal of humans and institutions throughout history Protecting against risk is what insurance is all about
- Over 5000 years ago in China insurance was seen as a preventative measure against piracy on the sea Piracy in fact was so prevalent that as a way of spreading the risk a number of ships would carry a portion of another ships cargo so that if one ship was captured the entire shipment would not be lost
- In another part of the world nearly 4500 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
- Life insurance came about a little later in ancient Rome where burial clubs were formed to cover the funeral expenses of its members as well as help survivors monetarily With Romes fall around 450 AD most of the concepts of insurance were abandoned but aspects of it did continue through the Middle Ages particularly with merchant and artisan guilds These provided forms of member insurance covering risks like fire flood theft disability death and even imprisonment
- During the feudal period early forms of insurance ebbed with the decline of travel and long-distance trade But during the 14th to 16th centuries transportation commerce and insurance would again reemerge
- And similar to ancient Rome burial societies were formed in the Buddhist period to help families build houses and to protect widows and children
- Modern Insurance
- Illegal almost everywhere else in Europe life insurance in England was vigorously promoted in the three decades following the Glorious Revolution of 1688 The type of insurance we see today owes its roots to 17th century England Lloyds of London or as they were known then Lloyds Coffee House was the location where merchants ship owners and underwriters met to discuss and transact business deals
- While serving as a means of risk-avoidance life insurance also appealed strongly to the gambling instincts of Englands burgeoning middle class
- Gambling was so rampant in fact that when newspapers published names of prominent people who were seriously ill bets were placed at Lloydrsquos on their anticipated dates of death Reacting against such practices 79 merchant underwriters broke away in 1769 and two years later formed a ldquoNew Lloydrsquos Coffee Houserdquo that became known as the ldquoreal Lloydrsquosrdquo Making wagers on peoples deaths ceased in 1774 when parliament forbade the practice
- Insurance moves to America
- The US insurance industry was built on the British model The year 1735 saw the birth of the first insurance company in the American colonies in
- Charleston SC The Presbyterian Synod of Philadelphia in 1759 sponsored the first life insurance corporation in America for the benefit of ministers and their dependents And the first life insurance policy for the general public in the United States was issued in Philadelphia on May 22 1761
- But it wasnt until 80 years later (after 1840) that life insurance really tookoff in a big way The key to its success was reducing the opposition from religious groups
- In 1835 the infamous New York fire drew peoples 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
- With the creation of the automobile public liability insurance which first made its appearance in the 1880s gained importance and acceptance
- More advancement was made to insurance during the process of industrialization In 1897 the British government passed the Workmens Compensation Act which made it mandatory for a company to insure its employees against industrial accidents
- During 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 most labor 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
- BENEFITS OF LIFE INSURANCE
- 1) Risk cover -Life Insurance contracts allow an individual to have a risk cover against any unfortunate event of the future
- 2) Tax Deduction -Under section 80C of the Income Tax Act of 1961 one can get tax deduction on premiums up to one lakh rupees Life Insurance policies thus decrease the total taxable income of an individual
- 3) Loans -An individual can easily access loans from different financial institutions by pledging his insurance policies
- 4) Retirement Planning -What had provided protection against the financial consequences of premature death may now be used to help them enjoy their retirement years
- 5) Educational Needs -Similar to retirement planning the cash values that flow from ones life insurance schemes can be utilized for educational needs of the insurer or his children
- The Life Insurance Industry has an enviable track record among public sector units It has a Consistent profit and dividend paying record accompanied by a steady growth in its financial resources Through investments in the Government sector and socially- oriented sectors the Industry has contributed immensely to the nations development The industry is recognized as one of the largest financial Institutions in the country The ventures initiated by the industry in the areas of Mutual Fund
- Housing Finance has done exceedingly well in recent years To protect the countrys foreign exchange reserves the reinsurance arrangement are so organized that maximum retention is made possible within the country while at the same time protecting interests of the policy holders
- 22) CURRENT SCENARIO OF RELIANCE LIFE INSURANCE
- RLIC offers wide range of innovative life insurance products targeted at individuals and groups It offers need based products that caters to four distinct segments namely protection child retirement and investment plans RLIC is committed to emerge as a transnational Life Insurer of global scale and standard
- CH - 3) RESEARCH METHODOLOGY
- RESEARCH DESIGN-
- SAMPLING TECHNIQUES-
- THE PRIMARY OBJECTIVEOF THE STUDY-
- 34) OBJECTIVES
- 7) Some innovative technique or product is required in order to attract the consumer
- 45) LIMITATIONS
- 46) BIBLIOGRAPHY
-
1) Robi Elenekave has explained in detail why various retirement plans and pension plans donrsquot give the desired returns The main difficulty is the use of incorrect method for calculations done to find out the return on investment This is primarily due to wrong assumptions The study provides information about the various precautions which need to be considered before planning so that the desired results can be achieved
2) Another paper provides insight about how various financial sectors invest in bond market The study was how the different players investment different instruments according to the risk appetite and desired rate of return The study shows that life insurance sector mainly invests in government bond which are low return and low risk instrument The investment in government bond it shows that life insurance companies are more conservative in investment
3) K Subhash has presented the history of Indiarsquos life insurance industry in three stages before independence after independence and post liberalization which not only provides information but also help in analyzing the impact of these major changes The authors have also discussed the huge potential which exists in the rural India The insurance company must realize the importance of rural sector because the future lies there The author commented about the increasing share of private player in the existing market This confirms the availability of opportunity in this sector The paper also provides the importance of professional and focused approach which was given no importance
4) Tapen Sinha has discussed the various challenges and opportunities in the insurance market One of the very important factors which have been discussed in the study is the importance of developing new and better products As the scenario changes the need of an individual also changes so any organization must understand and fulfill these needs The new product development requires constant research so organization must also focus on it
5) Roger G Ibbotson discusses how financial planners and advisors have recently started to recognize that human capital must be taken into account when building optimal portfolios for individual investors Any investorrsquos human capital has a unique mortality risk However life insurance in its forms can hedge against this mortality risk Thus human capital affects both the optimal asset allocation and the optimal demand for life insurance This paper provides a unified framework based on human capital in order to enable individual investors to make both decisions jointly
6) Rakesh Niraj study tells how the flow of information in any organization is important For any organization to grow the flow of information must be good both upwards as well as ownwards The proper flow of information will also ensure proper flow of good and services from organization to customer and proper flow of information from customer to organization The information from customers will help the organization in providing better goods and services to the customer For the above purpose organization must ensure good channel partner who can provide the organization with correct feedback Hence it becomes very important for any organization to acquire good channel partners
56
7) Stephen P Robbins has discussed how group dynamics works in any organization The success of any organization depends on the success of its various teams and how these teams work together The book provides various techniques which can be used by any organization to get result from the team effort The conflict resolution is a major task in any group Various techniques which the organization can use in conflict resolution are also discussed Another important aspect covered is the importance of leadership in the organization The various forms of leadership have been discussed and the kinds of leadership which can be effective in particular situations are also discussed
8) R Wayne Mondy has discussed the importance of training and development in any organization The training provides skills to perform the current job where as the development involve learning beyond present need The various type of training are discussed which can be used according to the requirement Training and development are not only important for better performance of an individual but it also gives satisfaction The major factors which influence training and development are found to be management support commitment of trainee and trainer complexity of the organization The process of developing good training plans is also provided In another part author has discussed the importance of right man for right job The compensation strategies are also given which are very crucial for ant industry
9) Philip Kotler has discussed the importance of channels partners Better the channel partners better will be the delivery model Detailed discussion about how to design the channel structure so that all the requirements could be fulfilled is provided The various issues faced by the organization while managing the channels are also given When an organization has more than one channel it becomes very important that all the channels should be integrated in such a way that the organization get the best out of all At times due to the conflicting benefit of the different channels the conflict arise so various strategies to manage these issues is also discussed in the chapter
10) Michael J Etzel has written about the marketing of services The marketing of services is different from the goods because of the characteristic of service like intangibility inseparability heterogeneity etc Brief about pricing strategies is also given in case of services The authors have also given the impact of technological development on the services marketing The author has also given the importance of brand and after sales support in case of services as perception of the customers plays an important role In other part of the book the authors has described the importance of distribution channels and designing of the same A channel partner should be consider as partner according to discussion The legal complications associated with channels are also discussed These complications are necessary to take into the consideration while managing the channels The conflicting interest of channels both horizontally and vertically are also taken into the consideration
57
11) Boone has discussed about the importance of personal financial planning The concept of time value of money has also been elaborated The importance of creating and implementing budget is given under money management The other important concepts for financial planning like credit management and understanding taxes are also explained In one section the authors have discussed the importance of investment and what should be the major considerations while making any investment The considerations include the risk associated with the investment return on the investment etc The importance and benefits of life insurance has also been given The discussion also includes various legal aspects associated with life insurance The overview of retirement planning is also given which includes importance and benefit of retirement planning Various tools for proper retirement planning are also discussed
58
44) CONCLUSION
1) The customers are very much sensitive towards their investment They would like to invest only in that insurance company which enjoys good public image along with quality good services
2) The result of the survey conducted shows that Bajaj Allianz Life Insurance is the leader in life insurance industry but Reliance Life Insurance and other private players are giving it a close competition
3) The motive of the people behind investing in life insurance is the tax benefits that they would receive under sec 80C and 1010D
4) In Life Insurance industry the after sales support of the company is as important as the quality of life advisors
59
45) LIMITATIONS
There were some limitations faced during the study as discussed below
Since the study was taken for two months so there was a constraint of time and effort
The study was limited only to some of the Delhi regions so the results may be biased
Questionnaire was given to 125 people however only 50 responded to it which is very small for such type of study
The biasness of consumer or responses error cannot be eliminated
Most of the people are not aware about the Importance and the necessity of insurance in their life
Adverse perception of the people towards insurance sector- People consider insurance as a tax saving device
Lack of awareness about the earning opportunity in the insurance sector
60
46) BIBLIOGRAPHY
wwwreliancelifeinsurancecom
wwwadagroupcom
wwwirdacom
wwwbajajallianzlifeinsurancecom
wwwallianzbajajcom
47) ANNEXURE
61
QUESTIONNAIRE
A comparative analysis of consumer perception regarding Traditional plans of Reliance Life Insurance with that of Bajaj Allianz Life Insurance
NAME ___________________________
PERSONAL DETAILS
1) AGE_________________
1) OCCUPATION______________
2) INCOME___________________
3) FAMILY MEMBERS_________
Q1 Where do you prefer to investa) Fixed deposits b) Stock c) Mutual funds d) Insurance e) Others
Q2 What are your priorities for investmenta) Protecting your family against pre-mature death b) Wealth creation c) Retirement needs d) Child education and marriage e) Protect income against disability sickness or critical illness
Q3 What is your main motive behind investing in life insurancea) Tax benefit b) Savings c) Risk cover
Q4 What kind of investment do you prefera) High risk high gain b) Low risk low gain c) Moderate d) Vary times to times
62
Q5Are you interested to invest in Traditional Plansa) Yes b) No
Q6 What is your level of annual investmenta) below 20000 b) 20000-40000 c) above 40000
Q7 What factors would you consider most important before choosing an insurance company
a) publicity of the company b) reputation of the company c) quality of life advisors d) after sales-supporting of the company
Q8 Which life insurance company would you prefer the most to invest ina) Reliance life insurance b) Bajaj Allianz life insurance
Q9 If reliance life insurance then which particular plan you would like to invest ina) Reliance Term Plan b) Reliance Whole Life Plan c) Reliance Endowment Plan d) Reliance Special Endowment Plan
Q10 If Bajaj Allianz life insurance then which particular plan you would like to invest in
I ENDOWMENT PLAN
a) Bajaj Allianz Invest Gain
b) Bajaj Allianz save Care Economy SP
c) Bajaj Allianz life time care
d) Bajaj Allianz Super Saver plan
II MONEY BACK PLAN
a) Bajaj Allianz Cash Gain plan
63
64
- COMPANY PROFILE
- ABOUT RELIANCE LIFE INSURANCE
- HISTORY
- Reliance Capital Limited announced the launch of its life insurance business on February 1 2006 This was after obtaining the required regulatory approvals from the Registrar Of Companies and the Insurance Regulatory and Development Authority
- It was in August 2005 that the ball was set rolling when Reliance Capital Limited the financial arm of Reliance ndash Anil Dhirubhai Ambani Group (ADAG) ndash announced the requisition of 100 shareholding in AMP Sanmar Life Insurance Company Limited and the formal transfer of shares took place in October 2005 The company will issue all policy contracts under the Reliance Life Insurance Company limited name All the existing policy contracts also stand transferred to the Reliance Life Insurance entity with all the original contractual terms and commitments intact
- CORE VALUES
- Reliance Life Insurance Company Limited has some core values which are listed as follows
- Vision bull To be the first choice insurer for customers bull To be the preferred employer for staff in the insurance industry bull To be the number one insurer for creating shareholder value
- Mission As a responsible customer focused market leader we will strive to understand the insurance needs of the consumers and translate it into affordable products that deliver value for money
- 12) TRADITIONAL PLANS OF THE COMPANY
- 12A )TRADITIONAL PLAN OF RELIANCE LIFE INSURANCE-
- Life insurance products are designed to suit the requirements of customers Fundamentally the product provide for
- In every product to a certain degree risk cover is imperative for it to fall under the category of insurance Based on the coverage of the product the premiums are calculated and the customer pays accordingly In order to suggest the right product it is essential for an agent to understand the requirements of the customer well
- The traditional plans of the company have the following features-
- Fixed Tenure
- Potential for better returns
- Transparency
- Flexibility in investment
- Flexibility to invest more
- Flexibility to skip the premium
- Flexibility to choose the cover
- High liquidity
- Age term and sum assured decide the amount of premium
- Top- ups and switches are not allowed
- Reliance Life Insurance Company Limited has offered 9
- 1) Reliance term plan-
- 2) Reliance Whole Life Plan -
- 3) Reliance Endowment Plan -
- 4) Reliance Special Endowment Plan -
- 13) INDUSTRY PROFILE
- MEANING OF INSURANCE
- Insurance may be described as a social device to reduce or eliminate risk of loss to life and property Insurance is a collective bearing of risk Insurance is a financial device to spread the risks and losses of few people among a large number of people as people prefer small fixed liability instead of big uncertain and changing liability
- Insurance can be defined as a ldquolegal contract between two parties whereby one party called insurer undertakes to pay a fixed amount of money on the happening of a particular event which may be certain or uncertainrdquo The other party called insured pays in exchange a fixed sum known as premium
- Insurance is desired to safeguard oneself and onersquos family against possible losses on account of risks and perils It provides financial compensation for the losses suffered due to the happening of any unforeseen events
- IMPORTANCE OF INSURANCE
- Insurance services play predominant role in the process of financial Intermediary Today insurance industry is one of the most growing sectors in India There is lot of potential in the Indian Insurance Industry
- There are many issues which require study The scope of the study of Insurance industry of India would be very great as there are ongoing Developments in the industry after the opening of the sector
- Right now the insurance industry has great opportunities in a country like India or China which huge population Also the penetration of insurance in India is very low in both life and non-life segment so there is lot potential to be tapped Before starting the discussion on insurance industry and related issues we have to start with the basics of insurance So first we understand what is insurance How the word lsquoinsurancersquo is different from the word lsquoassurancersquo Etc
- HISTORY OF INSURANCE
- The concept of insurance is believed to have emerged almost 4500 years ago in the ancient land of Babylonia where traders used to bear risk of the carvan by giving loans which were later repaid with interest when the goods arrived safely
- The concept of insurance as we know today took shape in 1688 at a place called Lloydrsquos Coffee House in London where risk bearers used to meet to transact business This coffee house became so popular that Lloydrsquos became the one of the first modern insurance companies by the end of the eighteenth century
- Marine insurance companies came into existence by the end of the eighteenth century These companies were empowered to write fire and life insurance as well as marine The Great Fire of London in 1966 caused huge loss of property and life With a view to providing fire insurance facilities
- Dr Nicholas Barbon set up in 1967 the first fire insurance company known as the Fire office
- Life insurance in its modern form came to India from England in 1818 The Oriental Life Insurance Company was the first insurance company to be set up in India to help the widows of European community The insurance companies which came into existence between 1818 and 1869 treated
- Indian lives as subnormal and charged an extra premium of 15 to 20 per cent The first Indian insurance company the Bombay Mutual Life
- Assurance Society came into existence in 1870 to cover Indian lives at normal rates
- The Insurance Act 1938 the first comprehensive legislation governing both life and non-life branches of insurance were enacted to provide strict state control over insurance business This amended insurance Act looked into investments expenditure and management of these companies
- By the mid- 1950s there were 154 Indian insurers 16 foreign insurers and 75 provident societies carrying on life insurance business in India Insurance business flourished and so did scams irregularities and dubious investment practices by scores of companies As a result the government decided to nationalize the life assurance business in India The Life Insurance
- Corporation of India (LIC) was set up in 1956 The nationalization of life insurance was followed by general insurance in 1972
- MEANING OF LIFE INSURANCE
- There are three parties in a life insurance transaction the insurer the insured and the owner of the policy (policyholder) although the owner and the insured are often the same person
- Another important person involved in a life insurance policy is the beneficiary The beneficiary is the person or persons who will receive the policy proceeds upon the death of the insured
- Life insurance may be divided into two basic classes ndash term and permanent
- HISTORY OF LIFE INSURANCE
- Risk protection has been a primary goal of humans and institutions throughout history Protecting against risk is what insurance is all about
- Over 5000 years ago in China insurance was seen as a preventative measure against piracy on the sea Piracy in fact was so prevalent that as a way of spreading the risk a number of ships would carry a portion of another ships cargo so that if one ship was captured the entire shipment would not be lost
- In another part of the world nearly 4500 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
- Life insurance came about a little later in ancient Rome where burial clubs were formed to cover the funeral expenses of its members as well as help survivors monetarily With Romes fall around 450 AD most of the concepts of insurance were abandoned but aspects of it did continue through the Middle Ages particularly with merchant and artisan guilds These provided forms of member insurance covering risks like fire flood theft disability death and even imprisonment
- During the feudal period early forms of insurance ebbed with the decline of travel and long-distance trade But during the 14th to 16th centuries transportation commerce and insurance would again reemerge
- And similar to ancient Rome burial societies were formed in the Buddhist period to help families build houses and to protect widows and children
- Modern Insurance
- Illegal almost everywhere else in Europe life insurance in England was vigorously promoted in the three decades following the Glorious Revolution of 1688 The type of insurance we see today owes its roots to 17th century England Lloyds of London or as they were known then Lloyds Coffee House was the location where merchants ship owners and underwriters met to discuss and transact business deals
- While serving as a means of risk-avoidance life insurance also appealed strongly to the gambling instincts of Englands burgeoning middle class
- Gambling was so rampant in fact that when newspapers published names of prominent people who were seriously ill bets were placed at Lloydrsquos on their anticipated dates of death Reacting against such practices 79 merchant underwriters broke away in 1769 and two years later formed a ldquoNew Lloydrsquos Coffee Houserdquo that became known as the ldquoreal Lloydrsquosrdquo Making wagers on peoples deaths ceased in 1774 when parliament forbade the practice
- Insurance moves to America
- The US insurance industry was built on the British model The year 1735 saw the birth of the first insurance company in the American colonies in
- Charleston SC The Presbyterian Synod of Philadelphia in 1759 sponsored the first life insurance corporation in America for the benefit of ministers and their dependents And the first life insurance policy for the general public in the United States was issued in Philadelphia on May 22 1761
- But it wasnt until 80 years later (after 1840) that life insurance really tookoff in a big way The key to its success was reducing the opposition from religious groups
- In 1835 the infamous New York fire drew peoples 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
- With the creation of the automobile public liability insurance which first made its appearance in the 1880s gained importance and acceptance
- More advancement was made to insurance during the process of industrialization In 1897 the British government passed the Workmens Compensation Act which made it mandatory for a company to insure its employees against industrial accidents
- During 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 most labor 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
- BENEFITS OF LIFE INSURANCE
- 1) Risk cover -Life Insurance contracts allow an individual to have a risk cover against any unfortunate event of the future
- 2) Tax Deduction -Under section 80C of the Income Tax Act of 1961 one can get tax deduction on premiums up to one lakh rupees Life Insurance policies thus decrease the total taxable income of an individual
- 3) Loans -An individual can easily access loans from different financial institutions by pledging his insurance policies
- 4) Retirement Planning -What had provided protection against the financial consequences of premature death may now be used to help them enjoy their retirement years
- 5) Educational Needs -Similar to retirement planning the cash values that flow from ones life insurance schemes can be utilized for educational needs of the insurer or his children
- The Life Insurance Industry has an enviable track record among public sector units It has a Consistent profit and dividend paying record accompanied by a steady growth in its financial resources Through investments in the Government sector and socially- oriented sectors the Industry has contributed immensely to the nations development The industry is recognized as one of the largest financial Institutions in the country The ventures initiated by the industry in the areas of Mutual Fund
- Housing Finance has done exceedingly well in recent years To protect the countrys foreign exchange reserves the reinsurance arrangement are so organized that maximum retention is made possible within the country while at the same time protecting interests of the policy holders
- 22) CURRENT SCENARIO OF RELIANCE LIFE INSURANCE
- RLIC offers wide range of innovative life insurance products targeted at individuals and groups It offers need based products that caters to four distinct segments namely protection child retirement and investment plans RLIC is committed to emerge as a transnational Life Insurer of global scale and standard
- CH - 3) RESEARCH METHODOLOGY
- RESEARCH DESIGN-
- SAMPLING TECHNIQUES-
- THE PRIMARY OBJECTIVEOF THE STUDY-
- 34) OBJECTIVES
- 7) Some innovative technique or product is required in order to attract the consumer
- 45) LIMITATIONS
- 46) BIBLIOGRAPHY
-
7) Stephen P Robbins has discussed how group dynamics works in any organization The success of any organization depends on the success of its various teams and how these teams work together The book provides various techniques which can be used by any organization to get result from the team effort The conflict resolution is a major task in any group Various techniques which the organization can use in conflict resolution are also discussed Another important aspect covered is the importance of leadership in the organization The various forms of leadership have been discussed and the kinds of leadership which can be effective in particular situations are also discussed
8) R Wayne Mondy has discussed the importance of training and development in any organization The training provides skills to perform the current job where as the development involve learning beyond present need The various type of training are discussed which can be used according to the requirement Training and development are not only important for better performance of an individual but it also gives satisfaction The major factors which influence training and development are found to be management support commitment of trainee and trainer complexity of the organization The process of developing good training plans is also provided In another part author has discussed the importance of right man for right job The compensation strategies are also given which are very crucial for ant industry
9) Philip Kotler has discussed the importance of channels partners Better the channel partners better will be the delivery model Detailed discussion about how to design the channel structure so that all the requirements could be fulfilled is provided The various issues faced by the organization while managing the channels are also given When an organization has more than one channel it becomes very important that all the channels should be integrated in such a way that the organization get the best out of all At times due to the conflicting benefit of the different channels the conflict arise so various strategies to manage these issues is also discussed in the chapter
10) Michael J Etzel has written about the marketing of services The marketing of services is different from the goods because of the characteristic of service like intangibility inseparability heterogeneity etc Brief about pricing strategies is also given in case of services The authors have also given the impact of technological development on the services marketing The author has also given the importance of brand and after sales support in case of services as perception of the customers plays an important role In other part of the book the authors has described the importance of distribution channels and designing of the same A channel partner should be consider as partner according to discussion The legal complications associated with channels are also discussed These complications are necessary to take into the consideration while managing the channels The conflicting interest of channels both horizontally and vertically are also taken into the consideration
57
11) Boone has discussed about the importance of personal financial planning The concept of time value of money has also been elaborated The importance of creating and implementing budget is given under money management The other important concepts for financial planning like credit management and understanding taxes are also explained In one section the authors have discussed the importance of investment and what should be the major considerations while making any investment The considerations include the risk associated with the investment return on the investment etc The importance and benefits of life insurance has also been given The discussion also includes various legal aspects associated with life insurance The overview of retirement planning is also given which includes importance and benefit of retirement planning Various tools for proper retirement planning are also discussed
58
44) CONCLUSION
1) The customers are very much sensitive towards their investment They would like to invest only in that insurance company which enjoys good public image along with quality good services
2) The result of the survey conducted shows that Bajaj Allianz Life Insurance is the leader in life insurance industry but Reliance Life Insurance and other private players are giving it a close competition
3) The motive of the people behind investing in life insurance is the tax benefits that they would receive under sec 80C and 1010D
4) In Life Insurance industry the after sales support of the company is as important as the quality of life advisors
59
45) LIMITATIONS
There were some limitations faced during the study as discussed below
Since the study was taken for two months so there was a constraint of time and effort
The study was limited only to some of the Delhi regions so the results may be biased
Questionnaire was given to 125 people however only 50 responded to it which is very small for such type of study
The biasness of consumer or responses error cannot be eliminated
Most of the people are not aware about the Importance and the necessity of insurance in their life
Adverse perception of the people towards insurance sector- People consider insurance as a tax saving device
Lack of awareness about the earning opportunity in the insurance sector
60
46) BIBLIOGRAPHY
wwwreliancelifeinsurancecom
wwwadagroupcom
wwwirdacom
wwwbajajallianzlifeinsurancecom
wwwallianzbajajcom
47) ANNEXURE
61
QUESTIONNAIRE
A comparative analysis of consumer perception regarding Traditional plans of Reliance Life Insurance with that of Bajaj Allianz Life Insurance
NAME ___________________________
PERSONAL DETAILS
1) AGE_________________
1) OCCUPATION______________
2) INCOME___________________
3) FAMILY MEMBERS_________
Q1 Where do you prefer to investa) Fixed deposits b) Stock c) Mutual funds d) Insurance e) Others
Q2 What are your priorities for investmenta) Protecting your family against pre-mature death b) Wealth creation c) Retirement needs d) Child education and marriage e) Protect income against disability sickness or critical illness
Q3 What is your main motive behind investing in life insurancea) Tax benefit b) Savings c) Risk cover
Q4 What kind of investment do you prefera) High risk high gain b) Low risk low gain c) Moderate d) Vary times to times
62
Q5Are you interested to invest in Traditional Plansa) Yes b) No
Q6 What is your level of annual investmenta) below 20000 b) 20000-40000 c) above 40000
Q7 What factors would you consider most important before choosing an insurance company
a) publicity of the company b) reputation of the company c) quality of life advisors d) after sales-supporting of the company
Q8 Which life insurance company would you prefer the most to invest ina) Reliance life insurance b) Bajaj Allianz life insurance
Q9 If reliance life insurance then which particular plan you would like to invest ina) Reliance Term Plan b) Reliance Whole Life Plan c) Reliance Endowment Plan d) Reliance Special Endowment Plan
Q10 If Bajaj Allianz life insurance then which particular plan you would like to invest in
I ENDOWMENT PLAN
a) Bajaj Allianz Invest Gain
b) Bajaj Allianz save Care Economy SP
c) Bajaj Allianz life time care
d) Bajaj Allianz Super Saver plan
II MONEY BACK PLAN
a) Bajaj Allianz Cash Gain plan
63
64
- COMPANY PROFILE
- ABOUT RELIANCE LIFE INSURANCE
- HISTORY
- Reliance Capital Limited announced the launch of its life insurance business on February 1 2006 This was after obtaining the required regulatory approvals from the Registrar Of Companies and the Insurance Regulatory and Development Authority
- It was in August 2005 that the ball was set rolling when Reliance Capital Limited the financial arm of Reliance ndash Anil Dhirubhai Ambani Group (ADAG) ndash announced the requisition of 100 shareholding in AMP Sanmar Life Insurance Company Limited and the formal transfer of shares took place in October 2005 The company will issue all policy contracts under the Reliance Life Insurance Company limited name All the existing policy contracts also stand transferred to the Reliance Life Insurance entity with all the original contractual terms and commitments intact
- CORE VALUES
- Reliance Life Insurance Company Limited has some core values which are listed as follows
- Vision bull To be the first choice insurer for customers bull To be the preferred employer for staff in the insurance industry bull To be the number one insurer for creating shareholder value
- Mission As a responsible customer focused market leader we will strive to understand the insurance needs of the consumers and translate it into affordable products that deliver value for money
- 12) TRADITIONAL PLANS OF THE COMPANY
- 12A )TRADITIONAL PLAN OF RELIANCE LIFE INSURANCE-
- Life insurance products are designed to suit the requirements of customers Fundamentally the product provide for
- In every product to a certain degree risk cover is imperative for it to fall under the category of insurance Based on the coverage of the product the premiums are calculated and the customer pays accordingly In order to suggest the right product it is essential for an agent to understand the requirements of the customer well
- The traditional plans of the company have the following features-
- Fixed Tenure
- Potential for better returns
- Transparency
- Flexibility in investment
- Flexibility to invest more
- Flexibility to skip the premium
- Flexibility to choose the cover
- High liquidity
- Age term and sum assured decide the amount of premium
- Top- ups and switches are not allowed
- Reliance Life Insurance Company Limited has offered 9
- 1) Reliance term plan-
- 2) Reliance Whole Life Plan -
- 3) Reliance Endowment Plan -
- 4) Reliance Special Endowment Plan -
- 13) INDUSTRY PROFILE
- MEANING OF INSURANCE
- Insurance may be described as a social device to reduce or eliminate risk of loss to life and property Insurance is a collective bearing of risk Insurance is a financial device to spread the risks and losses of few people among a large number of people as people prefer small fixed liability instead of big uncertain and changing liability
- Insurance can be defined as a ldquolegal contract between two parties whereby one party called insurer undertakes to pay a fixed amount of money on the happening of a particular event which may be certain or uncertainrdquo The other party called insured pays in exchange a fixed sum known as premium
- Insurance is desired to safeguard oneself and onersquos family against possible losses on account of risks and perils It provides financial compensation for the losses suffered due to the happening of any unforeseen events
- IMPORTANCE OF INSURANCE
- Insurance services play predominant role in the process of financial Intermediary Today insurance industry is one of the most growing sectors in India There is lot of potential in the Indian Insurance Industry
- There are many issues which require study The scope of the study of Insurance industry of India would be very great as there are ongoing Developments in the industry after the opening of the sector
- Right now the insurance industry has great opportunities in a country like India or China which huge population Also the penetration of insurance in India is very low in both life and non-life segment so there is lot potential to be tapped Before starting the discussion on insurance industry and related issues we have to start with the basics of insurance So first we understand what is insurance How the word lsquoinsurancersquo is different from the word lsquoassurancersquo Etc
- HISTORY OF INSURANCE
- The concept of insurance is believed to have emerged almost 4500 years ago in the ancient land of Babylonia where traders used to bear risk of the carvan by giving loans which were later repaid with interest when the goods arrived safely
- The concept of insurance as we know today took shape in 1688 at a place called Lloydrsquos Coffee House in London where risk bearers used to meet to transact business This coffee house became so popular that Lloydrsquos became the one of the first modern insurance companies by the end of the eighteenth century
- Marine insurance companies came into existence by the end of the eighteenth century These companies were empowered to write fire and life insurance as well as marine The Great Fire of London in 1966 caused huge loss of property and life With a view to providing fire insurance facilities
- Dr Nicholas Barbon set up in 1967 the first fire insurance company known as the Fire office
- Life insurance in its modern form came to India from England in 1818 The Oriental Life Insurance Company was the first insurance company to be set up in India to help the widows of European community The insurance companies which came into existence between 1818 and 1869 treated
- Indian lives as subnormal and charged an extra premium of 15 to 20 per cent The first Indian insurance company the Bombay Mutual Life
- Assurance Society came into existence in 1870 to cover Indian lives at normal rates
- The Insurance Act 1938 the first comprehensive legislation governing both life and non-life branches of insurance were enacted to provide strict state control over insurance business This amended insurance Act looked into investments expenditure and management of these companies
- By the mid- 1950s there were 154 Indian insurers 16 foreign insurers and 75 provident societies carrying on life insurance business in India Insurance business flourished and so did scams irregularities and dubious investment practices by scores of companies As a result the government decided to nationalize the life assurance business in India The Life Insurance
- Corporation of India (LIC) was set up in 1956 The nationalization of life insurance was followed by general insurance in 1972
- MEANING OF LIFE INSURANCE
- There are three parties in a life insurance transaction the insurer the insured and the owner of the policy (policyholder) although the owner and the insured are often the same person
- Another important person involved in a life insurance policy is the beneficiary The beneficiary is the person or persons who will receive the policy proceeds upon the death of the insured
- Life insurance may be divided into two basic classes ndash term and permanent
- HISTORY OF LIFE INSURANCE
- Risk protection has been a primary goal of humans and institutions throughout history Protecting against risk is what insurance is all about
- Over 5000 years ago in China insurance was seen as a preventative measure against piracy on the sea Piracy in fact was so prevalent that as a way of spreading the risk a number of ships would carry a portion of another ships cargo so that if one ship was captured the entire shipment would not be lost
- In another part of the world nearly 4500 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
- Life insurance came about a little later in ancient Rome where burial clubs were formed to cover the funeral expenses of its members as well as help survivors monetarily With Romes fall around 450 AD most of the concepts of insurance were abandoned but aspects of it did continue through the Middle Ages particularly with merchant and artisan guilds These provided forms of member insurance covering risks like fire flood theft disability death and even imprisonment
- During the feudal period early forms of insurance ebbed with the decline of travel and long-distance trade But during the 14th to 16th centuries transportation commerce and insurance would again reemerge
- And similar to ancient Rome burial societies were formed in the Buddhist period to help families build houses and to protect widows and children
- Modern Insurance
- Illegal almost everywhere else in Europe life insurance in England was vigorously promoted in the three decades following the Glorious Revolution of 1688 The type of insurance we see today owes its roots to 17th century England Lloyds of London or as they were known then Lloyds Coffee House was the location where merchants ship owners and underwriters met to discuss and transact business deals
- While serving as a means of risk-avoidance life insurance also appealed strongly to the gambling instincts of Englands burgeoning middle class
- Gambling was so rampant in fact that when newspapers published names of prominent people who were seriously ill bets were placed at Lloydrsquos on their anticipated dates of death Reacting against such practices 79 merchant underwriters broke away in 1769 and two years later formed a ldquoNew Lloydrsquos Coffee Houserdquo that became known as the ldquoreal Lloydrsquosrdquo Making wagers on peoples deaths ceased in 1774 when parliament forbade the practice
- Insurance moves to America
- The US insurance industry was built on the British model The year 1735 saw the birth of the first insurance company in the American colonies in
- Charleston SC The Presbyterian Synod of Philadelphia in 1759 sponsored the first life insurance corporation in America for the benefit of ministers and their dependents And the first life insurance policy for the general public in the United States was issued in Philadelphia on May 22 1761
- But it wasnt until 80 years later (after 1840) that life insurance really tookoff in a big way The key to its success was reducing the opposition from religious groups
- In 1835 the infamous New York fire drew peoples 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
- With the creation of the automobile public liability insurance which first made its appearance in the 1880s gained importance and acceptance
- More advancement was made to insurance during the process of industrialization In 1897 the British government passed the Workmens Compensation Act which made it mandatory for a company to insure its employees against industrial accidents
- During 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 most labor 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
- BENEFITS OF LIFE INSURANCE
- 1) Risk cover -Life Insurance contracts allow an individual to have a risk cover against any unfortunate event of the future
- 2) Tax Deduction -Under section 80C of the Income Tax Act of 1961 one can get tax deduction on premiums up to one lakh rupees Life Insurance policies thus decrease the total taxable income of an individual
- 3) Loans -An individual can easily access loans from different financial institutions by pledging his insurance policies
- 4) Retirement Planning -What had provided protection against the financial consequences of premature death may now be used to help them enjoy their retirement years
- 5) Educational Needs -Similar to retirement planning the cash values that flow from ones life insurance schemes can be utilized for educational needs of the insurer or his children
- The Life Insurance Industry has an enviable track record among public sector units It has a Consistent profit and dividend paying record accompanied by a steady growth in its financial resources Through investments in the Government sector and socially- oriented sectors the Industry has contributed immensely to the nations development The industry is recognized as one of the largest financial Institutions in the country The ventures initiated by the industry in the areas of Mutual Fund
- Housing Finance has done exceedingly well in recent years To protect the countrys foreign exchange reserves the reinsurance arrangement are so organized that maximum retention is made possible within the country while at the same time protecting interests of the policy holders
- 22) CURRENT SCENARIO OF RELIANCE LIFE INSURANCE
- RLIC offers wide range of innovative life insurance products targeted at individuals and groups It offers need based products that caters to four distinct segments namely protection child retirement and investment plans RLIC is committed to emerge as a transnational Life Insurer of global scale and standard
- CH - 3) RESEARCH METHODOLOGY
- RESEARCH DESIGN-
- SAMPLING TECHNIQUES-
- THE PRIMARY OBJECTIVEOF THE STUDY-
- 34) OBJECTIVES
- 7) Some innovative technique or product is required in order to attract the consumer
- 45) LIMITATIONS
- 46) BIBLIOGRAPHY
-
11) Boone has discussed about the importance of personal financial planning The concept of time value of money has also been elaborated The importance of creating and implementing budget is given under money management The other important concepts for financial planning like credit management and understanding taxes are also explained In one section the authors have discussed the importance of investment and what should be the major considerations while making any investment The considerations include the risk associated with the investment return on the investment etc The importance and benefits of life insurance has also been given The discussion also includes various legal aspects associated with life insurance The overview of retirement planning is also given which includes importance and benefit of retirement planning Various tools for proper retirement planning are also discussed
58
44) CONCLUSION
1) The customers are very much sensitive towards their investment They would like to invest only in that insurance company which enjoys good public image along with quality good services
2) The result of the survey conducted shows that Bajaj Allianz Life Insurance is the leader in life insurance industry but Reliance Life Insurance and other private players are giving it a close competition
3) The motive of the people behind investing in life insurance is the tax benefits that they would receive under sec 80C and 1010D
4) In Life Insurance industry the after sales support of the company is as important as the quality of life advisors
59
45) LIMITATIONS
There were some limitations faced during the study as discussed below
Since the study was taken for two months so there was a constraint of time and effort
The study was limited only to some of the Delhi regions so the results may be biased
Questionnaire was given to 125 people however only 50 responded to it which is very small for such type of study
The biasness of consumer or responses error cannot be eliminated
Most of the people are not aware about the Importance and the necessity of insurance in their life
Adverse perception of the people towards insurance sector- People consider insurance as a tax saving device
Lack of awareness about the earning opportunity in the insurance sector
60
46) BIBLIOGRAPHY
wwwreliancelifeinsurancecom
wwwadagroupcom
wwwirdacom
wwwbajajallianzlifeinsurancecom
wwwallianzbajajcom
47) ANNEXURE
61
QUESTIONNAIRE
A comparative analysis of consumer perception regarding Traditional plans of Reliance Life Insurance with that of Bajaj Allianz Life Insurance
NAME ___________________________
PERSONAL DETAILS
1) AGE_________________
1) OCCUPATION______________
2) INCOME___________________
3) FAMILY MEMBERS_________
Q1 Where do you prefer to investa) Fixed deposits b) Stock c) Mutual funds d) Insurance e) Others
Q2 What are your priorities for investmenta) Protecting your family against pre-mature death b) Wealth creation c) Retirement needs d) Child education and marriage e) Protect income against disability sickness or critical illness
Q3 What is your main motive behind investing in life insurancea) Tax benefit b) Savings c) Risk cover
Q4 What kind of investment do you prefera) High risk high gain b) Low risk low gain c) Moderate d) Vary times to times
62
Q5Are you interested to invest in Traditional Plansa) Yes b) No
Q6 What is your level of annual investmenta) below 20000 b) 20000-40000 c) above 40000
Q7 What factors would you consider most important before choosing an insurance company
a) publicity of the company b) reputation of the company c) quality of life advisors d) after sales-supporting of the company
Q8 Which life insurance company would you prefer the most to invest ina) Reliance life insurance b) Bajaj Allianz life insurance
Q9 If reliance life insurance then which particular plan you would like to invest ina) Reliance Term Plan b) Reliance Whole Life Plan c) Reliance Endowment Plan d) Reliance Special Endowment Plan
Q10 If Bajaj Allianz life insurance then which particular plan you would like to invest in
I ENDOWMENT PLAN
a) Bajaj Allianz Invest Gain
b) Bajaj Allianz save Care Economy SP
c) Bajaj Allianz life time care
d) Bajaj Allianz Super Saver plan
II MONEY BACK PLAN
a) Bajaj Allianz Cash Gain plan
63
64
- COMPANY PROFILE
- ABOUT RELIANCE LIFE INSURANCE
- HISTORY
- Reliance Capital Limited announced the launch of its life insurance business on February 1 2006 This was after obtaining the required regulatory approvals from the Registrar Of Companies and the Insurance Regulatory and Development Authority
- It was in August 2005 that the ball was set rolling when Reliance Capital Limited the financial arm of Reliance ndash Anil Dhirubhai Ambani Group (ADAG) ndash announced the requisition of 100 shareholding in AMP Sanmar Life Insurance Company Limited and the formal transfer of shares took place in October 2005 The company will issue all policy contracts under the Reliance Life Insurance Company limited name All the existing policy contracts also stand transferred to the Reliance Life Insurance entity with all the original contractual terms and commitments intact
- CORE VALUES
- Reliance Life Insurance Company Limited has some core values which are listed as follows
- Vision bull To be the first choice insurer for customers bull To be the preferred employer for staff in the insurance industry bull To be the number one insurer for creating shareholder value
- Mission As a responsible customer focused market leader we will strive to understand the insurance needs of the consumers and translate it into affordable products that deliver value for money
- 12) TRADITIONAL PLANS OF THE COMPANY
- 12A )TRADITIONAL PLAN OF RELIANCE LIFE INSURANCE-
- Life insurance products are designed to suit the requirements of customers Fundamentally the product provide for
- In every product to a certain degree risk cover is imperative for it to fall under the category of insurance Based on the coverage of the product the premiums are calculated and the customer pays accordingly In order to suggest the right product it is essential for an agent to understand the requirements of the customer well
- The traditional plans of the company have the following features-
- Fixed Tenure
- Potential for better returns
- Transparency
- Flexibility in investment
- Flexibility to invest more
- Flexibility to skip the premium
- Flexibility to choose the cover
- High liquidity
- Age term and sum assured decide the amount of premium
- Top- ups and switches are not allowed
- Reliance Life Insurance Company Limited has offered 9
- 1) Reliance term plan-
- 2) Reliance Whole Life Plan -
- 3) Reliance Endowment Plan -
- 4) Reliance Special Endowment Plan -
- 13) INDUSTRY PROFILE
- MEANING OF INSURANCE
- Insurance may be described as a social device to reduce or eliminate risk of loss to life and property Insurance is a collective bearing of risk Insurance is a financial device to spread the risks and losses of few people among a large number of people as people prefer small fixed liability instead of big uncertain and changing liability
- Insurance can be defined as a ldquolegal contract between two parties whereby one party called insurer undertakes to pay a fixed amount of money on the happening of a particular event which may be certain or uncertainrdquo The other party called insured pays in exchange a fixed sum known as premium
- Insurance is desired to safeguard oneself and onersquos family against possible losses on account of risks and perils It provides financial compensation for the losses suffered due to the happening of any unforeseen events
- IMPORTANCE OF INSURANCE
- Insurance services play predominant role in the process of financial Intermediary Today insurance industry is one of the most growing sectors in India There is lot of potential in the Indian Insurance Industry
- There are many issues which require study The scope of the study of Insurance industry of India would be very great as there are ongoing Developments in the industry after the opening of the sector
- Right now the insurance industry has great opportunities in a country like India or China which huge population Also the penetration of insurance in India is very low in both life and non-life segment so there is lot potential to be tapped Before starting the discussion on insurance industry and related issues we have to start with the basics of insurance So first we understand what is insurance How the word lsquoinsurancersquo is different from the word lsquoassurancersquo Etc
- HISTORY OF INSURANCE
- The concept of insurance is believed to have emerged almost 4500 years ago in the ancient land of Babylonia where traders used to bear risk of the carvan by giving loans which were later repaid with interest when the goods arrived safely
- The concept of insurance as we know today took shape in 1688 at a place called Lloydrsquos Coffee House in London where risk bearers used to meet to transact business This coffee house became so popular that Lloydrsquos became the one of the first modern insurance companies by the end of the eighteenth century
- Marine insurance companies came into existence by the end of the eighteenth century These companies were empowered to write fire and life insurance as well as marine The Great Fire of London in 1966 caused huge loss of property and life With a view to providing fire insurance facilities
- Dr Nicholas Barbon set up in 1967 the first fire insurance company known as the Fire office
- Life insurance in its modern form came to India from England in 1818 The Oriental Life Insurance Company was the first insurance company to be set up in India to help the widows of European community The insurance companies which came into existence between 1818 and 1869 treated
- Indian lives as subnormal and charged an extra premium of 15 to 20 per cent The first Indian insurance company the Bombay Mutual Life
- Assurance Society came into existence in 1870 to cover Indian lives at normal rates
- The Insurance Act 1938 the first comprehensive legislation governing both life and non-life branches of insurance were enacted to provide strict state control over insurance business This amended insurance Act looked into investments expenditure and management of these companies
- By the mid- 1950s there were 154 Indian insurers 16 foreign insurers and 75 provident societies carrying on life insurance business in India Insurance business flourished and so did scams irregularities and dubious investment practices by scores of companies As a result the government decided to nationalize the life assurance business in India The Life Insurance
- Corporation of India (LIC) was set up in 1956 The nationalization of life insurance was followed by general insurance in 1972
- MEANING OF LIFE INSURANCE
- There are three parties in a life insurance transaction the insurer the insured and the owner of the policy (policyholder) although the owner and the insured are often the same person
- Another important person involved in a life insurance policy is the beneficiary The beneficiary is the person or persons who will receive the policy proceeds upon the death of the insured
- Life insurance may be divided into two basic classes ndash term and permanent
- HISTORY OF LIFE INSURANCE
- Risk protection has been a primary goal of humans and institutions throughout history Protecting against risk is what insurance is all about
- Over 5000 years ago in China insurance was seen as a preventative measure against piracy on the sea Piracy in fact was so prevalent that as a way of spreading the risk a number of ships would carry a portion of another ships cargo so that if one ship was captured the entire shipment would not be lost
- In another part of the world nearly 4500 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
- Life insurance came about a little later in ancient Rome where burial clubs were formed to cover the funeral expenses of its members as well as help survivors monetarily With Romes fall around 450 AD most of the concepts of insurance were abandoned but aspects of it did continue through the Middle Ages particularly with merchant and artisan guilds These provided forms of member insurance covering risks like fire flood theft disability death and even imprisonment
- During the feudal period early forms of insurance ebbed with the decline of travel and long-distance trade But during the 14th to 16th centuries transportation commerce and insurance would again reemerge
- And similar to ancient Rome burial societies were formed in the Buddhist period to help families build houses and to protect widows and children
- Modern Insurance
- Illegal almost everywhere else in Europe life insurance in England was vigorously promoted in the three decades following the Glorious Revolution of 1688 The type of insurance we see today owes its roots to 17th century England Lloyds of London or as they were known then Lloyds Coffee House was the location where merchants ship owners and underwriters met to discuss and transact business deals
- While serving as a means of risk-avoidance life insurance also appealed strongly to the gambling instincts of Englands burgeoning middle class
- Gambling was so rampant in fact that when newspapers published names of prominent people who were seriously ill bets were placed at Lloydrsquos on their anticipated dates of death Reacting against such practices 79 merchant underwriters broke away in 1769 and two years later formed a ldquoNew Lloydrsquos Coffee Houserdquo that became known as the ldquoreal Lloydrsquosrdquo Making wagers on peoples deaths ceased in 1774 when parliament forbade the practice
- Insurance moves to America
- The US insurance industry was built on the British model The year 1735 saw the birth of the first insurance company in the American colonies in
- Charleston SC The Presbyterian Synod of Philadelphia in 1759 sponsored the first life insurance corporation in America for the benefit of ministers and their dependents And the first life insurance policy for the general public in the United States was issued in Philadelphia on May 22 1761
- But it wasnt until 80 years later (after 1840) that life insurance really tookoff in a big way The key to its success was reducing the opposition from religious groups
- In 1835 the infamous New York fire drew peoples 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
- With the creation of the automobile public liability insurance which first made its appearance in the 1880s gained importance and acceptance
- More advancement was made to insurance during the process of industrialization In 1897 the British government passed the Workmens Compensation Act which made it mandatory for a company to insure its employees against industrial accidents
- During 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 most labor 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
- BENEFITS OF LIFE INSURANCE
- 1) Risk cover -Life Insurance contracts allow an individual to have a risk cover against any unfortunate event of the future
- 2) Tax Deduction -Under section 80C of the Income Tax Act of 1961 one can get tax deduction on premiums up to one lakh rupees Life Insurance policies thus decrease the total taxable income of an individual
- 3) Loans -An individual can easily access loans from different financial institutions by pledging his insurance policies
- 4) Retirement Planning -What had provided protection against the financial consequences of premature death may now be used to help them enjoy their retirement years
- 5) Educational Needs -Similar to retirement planning the cash values that flow from ones life insurance schemes can be utilized for educational needs of the insurer or his children
- The Life Insurance Industry has an enviable track record among public sector units It has a Consistent profit and dividend paying record accompanied by a steady growth in its financial resources Through investments in the Government sector and socially- oriented sectors the Industry has contributed immensely to the nations development The industry is recognized as one of the largest financial Institutions in the country The ventures initiated by the industry in the areas of Mutual Fund
- Housing Finance has done exceedingly well in recent years To protect the countrys foreign exchange reserves the reinsurance arrangement are so organized that maximum retention is made possible within the country while at the same time protecting interests of the policy holders
- 22) CURRENT SCENARIO OF RELIANCE LIFE INSURANCE
- RLIC offers wide range of innovative life insurance products targeted at individuals and groups It offers need based products that caters to four distinct segments namely protection child retirement and investment plans RLIC is committed to emerge as a transnational Life Insurer of global scale and standard
- CH - 3) RESEARCH METHODOLOGY
- RESEARCH DESIGN-
- SAMPLING TECHNIQUES-
- THE PRIMARY OBJECTIVEOF THE STUDY-
- 34) OBJECTIVES
- 7) Some innovative technique or product is required in order to attract the consumer
- 45) LIMITATIONS
- 46) BIBLIOGRAPHY
-
44) CONCLUSION
1) The customers are very much sensitive towards their investment They would like to invest only in that insurance company which enjoys good public image along with quality good services
2) The result of the survey conducted shows that Bajaj Allianz Life Insurance is the leader in life insurance industry but Reliance Life Insurance and other private players are giving it a close competition
3) The motive of the people behind investing in life insurance is the tax benefits that they would receive under sec 80C and 1010D
4) In Life Insurance industry the after sales support of the company is as important as the quality of life advisors
59
45) LIMITATIONS
There were some limitations faced during the study as discussed below
Since the study was taken for two months so there was a constraint of time and effort
The study was limited only to some of the Delhi regions so the results may be biased
Questionnaire was given to 125 people however only 50 responded to it which is very small for such type of study
The biasness of consumer or responses error cannot be eliminated
Most of the people are not aware about the Importance and the necessity of insurance in their life
Adverse perception of the people towards insurance sector- People consider insurance as a tax saving device
Lack of awareness about the earning opportunity in the insurance sector
60
46) BIBLIOGRAPHY
wwwreliancelifeinsurancecom
wwwadagroupcom
wwwirdacom
wwwbajajallianzlifeinsurancecom
wwwallianzbajajcom
47) ANNEXURE
61
QUESTIONNAIRE
A comparative analysis of consumer perception regarding Traditional plans of Reliance Life Insurance with that of Bajaj Allianz Life Insurance
NAME ___________________________
PERSONAL DETAILS
1) AGE_________________
1) OCCUPATION______________
2) INCOME___________________
3) FAMILY MEMBERS_________
Q1 Where do you prefer to investa) Fixed deposits b) Stock c) Mutual funds d) Insurance e) Others
Q2 What are your priorities for investmenta) Protecting your family against pre-mature death b) Wealth creation c) Retirement needs d) Child education and marriage e) Protect income against disability sickness or critical illness
Q3 What is your main motive behind investing in life insurancea) Tax benefit b) Savings c) Risk cover
Q4 What kind of investment do you prefera) High risk high gain b) Low risk low gain c) Moderate d) Vary times to times
62
Q5Are you interested to invest in Traditional Plansa) Yes b) No
Q6 What is your level of annual investmenta) below 20000 b) 20000-40000 c) above 40000
Q7 What factors would you consider most important before choosing an insurance company
a) publicity of the company b) reputation of the company c) quality of life advisors d) after sales-supporting of the company
Q8 Which life insurance company would you prefer the most to invest ina) Reliance life insurance b) Bajaj Allianz life insurance
Q9 If reliance life insurance then which particular plan you would like to invest ina) Reliance Term Plan b) Reliance Whole Life Plan c) Reliance Endowment Plan d) Reliance Special Endowment Plan
Q10 If Bajaj Allianz life insurance then which particular plan you would like to invest in
I ENDOWMENT PLAN
a) Bajaj Allianz Invest Gain
b) Bajaj Allianz save Care Economy SP
c) Bajaj Allianz life time care
d) Bajaj Allianz Super Saver plan
II MONEY BACK PLAN
a) Bajaj Allianz Cash Gain plan
63
64
- COMPANY PROFILE
- ABOUT RELIANCE LIFE INSURANCE
- HISTORY
- Reliance Capital Limited announced the launch of its life insurance business on February 1 2006 This was after obtaining the required regulatory approvals from the Registrar Of Companies and the Insurance Regulatory and Development Authority
- It was in August 2005 that the ball was set rolling when Reliance Capital Limited the financial arm of Reliance ndash Anil Dhirubhai Ambani Group (ADAG) ndash announced the requisition of 100 shareholding in AMP Sanmar Life Insurance Company Limited and the formal transfer of shares took place in October 2005 The company will issue all policy contracts under the Reliance Life Insurance Company limited name All the existing policy contracts also stand transferred to the Reliance Life Insurance entity with all the original contractual terms and commitments intact
- CORE VALUES
- Reliance Life Insurance Company Limited has some core values which are listed as follows
- Vision bull To be the first choice insurer for customers bull To be the preferred employer for staff in the insurance industry bull To be the number one insurer for creating shareholder value
- Mission As a responsible customer focused market leader we will strive to understand the insurance needs of the consumers and translate it into affordable products that deliver value for money
- 12) TRADITIONAL PLANS OF THE COMPANY
- 12A )TRADITIONAL PLAN OF RELIANCE LIFE INSURANCE-
- Life insurance products are designed to suit the requirements of customers Fundamentally the product provide for
- In every product to a certain degree risk cover is imperative for it to fall under the category of insurance Based on the coverage of the product the premiums are calculated and the customer pays accordingly In order to suggest the right product it is essential for an agent to understand the requirements of the customer well
- The traditional plans of the company have the following features-
- Fixed Tenure
- Potential for better returns
- Transparency
- Flexibility in investment
- Flexibility to invest more
- Flexibility to skip the premium
- Flexibility to choose the cover
- High liquidity
- Age term and sum assured decide the amount of premium
- Top- ups and switches are not allowed
- Reliance Life Insurance Company Limited has offered 9
- 1) Reliance term plan-
- 2) Reliance Whole Life Plan -
- 3) Reliance Endowment Plan -
- 4) Reliance Special Endowment Plan -
- 13) INDUSTRY PROFILE
- MEANING OF INSURANCE
- Insurance may be described as a social device to reduce or eliminate risk of loss to life and property Insurance is a collective bearing of risk Insurance is a financial device to spread the risks and losses of few people among a large number of people as people prefer small fixed liability instead of big uncertain and changing liability
- Insurance can be defined as a ldquolegal contract between two parties whereby one party called insurer undertakes to pay a fixed amount of money on the happening of a particular event which may be certain or uncertainrdquo The other party called insured pays in exchange a fixed sum known as premium
- Insurance is desired to safeguard oneself and onersquos family against possible losses on account of risks and perils It provides financial compensation for the losses suffered due to the happening of any unforeseen events
- IMPORTANCE OF INSURANCE
- Insurance services play predominant role in the process of financial Intermediary Today insurance industry is one of the most growing sectors in India There is lot of potential in the Indian Insurance Industry
- There are many issues which require study The scope of the study of Insurance industry of India would be very great as there are ongoing Developments in the industry after the opening of the sector
- Right now the insurance industry has great opportunities in a country like India or China which huge population Also the penetration of insurance in India is very low in both life and non-life segment so there is lot potential to be tapped Before starting the discussion on insurance industry and related issues we have to start with the basics of insurance So first we understand what is insurance How the word lsquoinsurancersquo is different from the word lsquoassurancersquo Etc
- HISTORY OF INSURANCE
- The concept of insurance is believed to have emerged almost 4500 years ago in the ancient land of Babylonia where traders used to bear risk of the carvan by giving loans which were later repaid with interest when the goods arrived safely
- The concept of insurance as we know today took shape in 1688 at a place called Lloydrsquos Coffee House in London where risk bearers used to meet to transact business This coffee house became so popular that Lloydrsquos became the one of the first modern insurance companies by the end of the eighteenth century
- Marine insurance companies came into existence by the end of the eighteenth century These companies were empowered to write fire and life insurance as well as marine The Great Fire of London in 1966 caused huge loss of property and life With a view to providing fire insurance facilities
- Dr Nicholas Barbon set up in 1967 the first fire insurance company known as the Fire office
- Life insurance in its modern form came to India from England in 1818 The Oriental Life Insurance Company was the first insurance company to be set up in India to help the widows of European community The insurance companies which came into existence between 1818 and 1869 treated
- Indian lives as subnormal and charged an extra premium of 15 to 20 per cent The first Indian insurance company the Bombay Mutual Life
- Assurance Society came into existence in 1870 to cover Indian lives at normal rates
- The Insurance Act 1938 the first comprehensive legislation governing both life and non-life branches of insurance were enacted to provide strict state control over insurance business This amended insurance Act looked into investments expenditure and management of these companies
- By the mid- 1950s there were 154 Indian insurers 16 foreign insurers and 75 provident societies carrying on life insurance business in India Insurance business flourished and so did scams irregularities and dubious investment practices by scores of companies As a result the government decided to nationalize the life assurance business in India The Life Insurance
- Corporation of India (LIC) was set up in 1956 The nationalization of life insurance was followed by general insurance in 1972
- MEANING OF LIFE INSURANCE
- There are three parties in a life insurance transaction the insurer the insured and the owner of the policy (policyholder) although the owner and the insured are often the same person
- Another important person involved in a life insurance policy is the beneficiary The beneficiary is the person or persons who will receive the policy proceeds upon the death of the insured
- Life insurance may be divided into two basic classes ndash term and permanent
- HISTORY OF LIFE INSURANCE
- Risk protection has been a primary goal of humans and institutions throughout history Protecting against risk is what insurance is all about
- Over 5000 years ago in China insurance was seen as a preventative measure against piracy on the sea Piracy in fact was so prevalent that as a way of spreading the risk a number of ships would carry a portion of another ships cargo so that if one ship was captured the entire shipment would not be lost
- In another part of the world nearly 4500 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
- Life insurance came about a little later in ancient Rome where burial clubs were formed to cover the funeral expenses of its members as well as help survivors monetarily With Romes fall around 450 AD most of the concepts of insurance were abandoned but aspects of it did continue through the Middle Ages particularly with merchant and artisan guilds These provided forms of member insurance covering risks like fire flood theft disability death and even imprisonment
- During the feudal period early forms of insurance ebbed with the decline of travel and long-distance trade But during the 14th to 16th centuries transportation commerce and insurance would again reemerge
- And similar to ancient Rome burial societies were formed in the Buddhist period to help families build houses and to protect widows and children
- Modern Insurance
- Illegal almost everywhere else in Europe life insurance in England was vigorously promoted in the three decades following the Glorious Revolution of 1688 The type of insurance we see today owes its roots to 17th century England Lloyds of London or as they were known then Lloyds Coffee House was the location where merchants ship owners and underwriters met to discuss and transact business deals
- While serving as a means of risk-avoidance life insurance also appealed strongly to the gambling instincts of Englands burgeoning middle class
- Gambling was so rampant in fact that when newspapers published names of prominent people who were seriously ill bets were placed at Lloydrsquos on their anticipated dates of death Reacting against such practices 79 merchant underwriters broke away in 1769 and two years later formed a ldquoNew Lloydrsquos Coffee Houserdquo that became known as the ldquoreal Lloydrsquosrdquo Making wagers on peoples deaths ceased in 1774 when parliament forbade the practice
- Insurance moves to America
- The US insurance industry was built on the British model The year 1735 saw the birth of the first insurance company in the American colonies in
- Charleston SC The Presbyterian Synod of Philadelphia in 1759 sponsored the first life insurance corporation in America for the benefit of ministers and their dependents And the first life insurance policy for the general public in the United States was issued in Philadelphia on May 22 1761
- But it wasnt until 80 years later (after 1840) that life insurance really tookoff in a big way The key to its success was reducing the opposition from religious groups
- In 1835 the infamous New York fire drew peoples 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
- With the creation of the automobile public liability insurance which first made its appearance in the 1880s gained importance and acceptance
- More advancement was made to insurance during the process of industrialization In 1897 the British government passed the Workmens Compensation Act which made it mandatory for a company to insure its employees against industrial accidents
- During 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 most labor 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
- BENEFITS OF LIFE INSURANCE
- 1) Risk cover -Life Insurance contracts allow an individual to have a risk cover against any unfortunate event of the future
- 2) Tax Deduction -Under section 80C of the Income Tax Act of 1961 one can get tax deduction on premiums up to one lakh rupees Life Insurance policies thus decrease the total taxable income of an individual
- 3) Loans -An individual can easily access loans from different financial institutions by pledging his insurance policies
- 4) Retirement Planning -What had provided protection against the financial consequences of premature death may now be used to help them enjoy their retirement years
- 5) Educational Needs -Similar to retirement planning the cash values that flow from ones life insurance schemes can be utilized for educational needs of the insurer or his children
- The Life Insurance Industry has an enviable track record among public sector units It has a Consistent profit and dividend paying record accompanied by a steady growth in its financial resources Through investments in the Government sector and socially- oriented sectors the Industry has contributed immensely to the nations development The industry is recognized as one of the largest financial Institutions in the country The ventures initiated by the industry in the areas of Mutual Fund
- Housing Finance has done exceedingly well in recent years To protect the countrys foreign exchange reserves the reinsurance arrangement are so organized that maximum retention is made possible within the country while at the same time protecting interests of the policy holders
- 22) CURRENT SCENARIO OF RELIANCE LIFE INSURANCE
- RLIC offers wide range of innovative life insurance products targeted at individuals and groups It offers need based products that caters to four distinct segments namely protection child retirement and investment plans RLIC is committed to emerge as a transnational Life Insurer of global scale and standard
- CH - 3) RESEARCH METHODOLOGY
- RESEARCH DESIGN-
- SAMPLING TECHNIQUES-
- THE PRIMARY OBJECTIVEOF THE STUDY-
- 34) OBJECTIVES
- 7) Some innovative technique or product is required in order to attract the consumer
- 45) LIMITATIONS
- 46) BIBLIOGRAPHY
-
45) LIMITATIONS
There were some limitations faced during the study as discussed below
Since the study was taken for two months so there was a constraint of time and effort
The study was limited only to some of the Delhi regions so the results may be biased
Questionnaire was given to 125 people however only 50 responded to it which is very small for such type of study
The biasness of consumer or responses error cannot be eliminated
Most of the people are not aware about the Importance and the necessity of insurance in their life
Adverse perception of the people towards insurance sector- People consider insurance as a tax saving device
Lack of awareness about the earning opportunity in the insurance sector
60
46) BIBLIOGRAPHY
wwwreliancelifeinsurancecom
wwwadagroupcom
wwwirdacom
wwwbajajallianzlifeinsurancecom
wwwallianzbajajcom
47) ANNEXURE
61
QUESTIONNAIRE
A comparative analysis of consumer perception regarding Traditional plans of Reliance Life Insurance with that of Bajaj Allianz Life Insurance
NAME ___________________________
PERSONAL DETAILS
1) AGE_________________
1) OCCUPATION______________
2) INCOME___________________
3) FAMILY MEMBERS_________
Q1 Where do you prefer to investa) Fixed deposits b) Stock c) Mutual funds d) Insurance e) Others
Q2 What are your priorities for investmenta) Protecting your family against pre-mature death b) Wealth creation c) Retirement needs d) Child education and marriage e) Protect income against disability sickness or critical illness
Q3 What is your main motive behind investing in life insurancea) Tax benefit b) Savings c) Risk cover
Q4 What kind of investment do you prefera) High risk high gain b) Low risk low gain c) Moderate d) Vary times to times
62
Q5Are you interested to invest in Traditional Plansa) Yes b) No
Q6 What is your level of annual investmenta) below 20000 b) 20000-40000 c) above 40000
Q7 What factors would you consider most important before choosing an insurance company
a) publicity of the company b) reputation of the company c) quality of life advisors d) after sales-supporting of the company
Q8 Which life insurance company would you prefer the most to invest ina) Reliance life insurance b) Bajaj Allianz life insurance
Q9 If reliance life insurance then which particular plan you would like to invest ina) Reliance Term Plan b) Reliance Whole Life Plan c) Reliance Endowment Plan d) Reliance Special Endowment Plan
Q10 If Bajaj Allianz life insurance then which particular plan you would like to invest in
I ENDOWMENT PLAN
a) Bajaj Allianz Invest Gain
b) Bajaj Allianz save Care Economy SP
c) Bajaj Allianz life time care
d) Bajaj Allianz Super Saver plan
II MONEY BACK PLAN
a) Bajaj Allianz Cash Gain plan
63
64
- COMPANY PROFILE
- ABOUT RELIANCE LIFE INSURANCE
- HISTORY
- Reliance Capital Limited announced the launch of its life insurance business on February 1 2006 This was after obtaining the required regulatory approvals from the Registrar Of Companies and the Insurance Regulatory and Development Authority
- It was in August 2005 that the ball was set rolling when Reliance Capital Limited the financial arm of Reliance ndash Anil Dhirubhai Ambani Group (ADAG) ndash announced the requisition of 100 shareholding in AMP Sanmar Life Insurance Company Limited and the formal transfer of shares took place in October 2005 The company will issue all policy contracts under the Reliance Life Insurance Company limited name All the existing policy contracts also stand transferred to the Reliance Life Insurance entity with all the original contractual terms and commitments intact
- CORE VALUES
- Reliance Life Insurance Company Limited has some core values which are listed as follows
- Vision bull To be the first choice insurer for customers bull To be the preferred employer for staff in the insurance industry bull To be the number one insurer for creating shareholder value
- Mission As a responsible customer focused market leader we will strive to understand the insurance needs of the consumers and translate it into affordable products that deliver value for money
- 12) TRADITIONAL PLANS OF THE COMPANY
- 12A )TRADITIONAL PLAN OF RELIANCE LIFE INSURANCE-
- Life insurance products are designed to suit the requirements of customers Fundamentally the product provide for
- In every product to a certain degree risk cover is imperative for it to fall under the category of insurance Based on the coverage of the product the premiums are calculated and the customer pays accordingly In order to suggest the right product it is essential for an agent to understand the requirements of the customer well
- The traditional plans of the company have the following features-
- Fixed Tenure
- Potential for better returns
- Transparency
- Flexibility in investment
- Flexibility to invest more
- Flexibility to skip the premium
- Flexibility to choose the cover
- High liquidity
- Age term and sum assured decide the amount of premium
- Top- ups and switches are not allowed
- Reliance Life Insurance Company Limited has offered 9
- 1) Reliance term plan-
- 2) Reliance Whole Life Plan -
- 3) Reliance Endowment Plan -
- 4) Reliance Special Endowment Plan -
- 13) INDUSTRY PROFILE
- MEANING OF INSURANCE
- Insurance may be described as a social device to reduce or eliminate risk of loss to life and property Insurance is a collective bearing of risk Insurance is a financial device to spread the risks and losses of few people among a large number of people as people prefer small fixed liability instead of big uncertain and changing liability
- Insurance can be defined as a ldquolegal contract between two parties whereby one party called insurer undertakes to pay a fixed amount of money on the happening of a particular event which may be certain or uncertainrdquo The other party called insured pays in exchange a fixed sum known as premium
- Insurance is desired to safeguard oneself and onersquos family against possible losses on account of risks and perils It provides financial compensation for the losses suffered due to the happening of any unforeseen events
- IMPORTANCE OF INSURANCE
- Insurance services play predominant role in the process of financial Intermediary Today insurance industry is one of the most growing sectors in India There is lot of potential in the Indian Insurance Industry
- There are many issues which require study The scope of the study of Insurance industry of India would be very great as there are ongoing Developments in the industry after the opening of the sector
- Right now the insurance industry has great opportunities in a country like India or China which huge population Also the penetration of insurance in India is very low in both life and non-life segment so there is lot potential to be tapped Before starting the discussion on insurance industry and related issues we have to start with the basics of insurance So first we understand what is insurance How the word lsquoinsurancersquo is different from the word lsquoassurancersquo Etc
- HISTORY OF INSURANCE
- The concept of insurance is believed to have emerged almost 4500 years ago in the ancient land of Babylonia where traders used to bear risk of the carvan by giving loans which were later repaid with interest when the goods arrived safely
- The concept of insurance as we know today took shape in 1688 at a place called Lloydrsquos Coffee House in London where risk bearers used to meet to transact business This coffee house became so popular that Lloydrsquos became the one of the first modern insurance companies by the end of the eighteenth century
- Marine insurance companies came into existence by the end of the eighteenth century These companies were empowered to write fire and life insurance as well as marine The Great Fire of London in 1966 caused huge loss of property and life With a view to providing fire insurance facilities
- Dr Nicholas Barbon set up in 1967 the first fire insurance company known as the Fire office
- Life insurance in its modern form came to India from England in 1818 The Oriental Life Insurance Company was the first insurance company to be set up in India to help the widows of European community The insurance companies which came into existence between 1818 and 1869 treated
- Indian lives as subnormal and charged an extra premium of 15 to 20 per cent The first Indian insurance company the Bombay Mutual Life
- Assurance Society came into existence in 1870 to cover Indian lives at normal rates
- The Insurance Act 1938 the first comprehensive legislation governing both life and non-life branches of insurance were enacted to provide strict state control over insurance business This amended insurance Act looked into investments expenditure and management of these companies
- By the mid- 1950s there were 154 Indian insurers 16 foreign insurers and 75 provident societies carrying on life insurance business in India Insurance business flourished and so did scams irregularities and dubious investment practices by scores of companies As a result the government decided to nationalize the life assurance business in India The Life Insurance
- Corporation of India (LIC) was set up in 1956 The nationalization of life insurance was followed by general insurance in 1972
- MEANING OF LIFE INSURANCE
- There are three parties in a life insurance transaction the insurer the insured and the owner of the policy (policyholder) although the owner and the insured are often the same person
- Another important person involved in a life insurance policy is the beneficiary The beneficiary is the person or persons who will receive the policy proceeds upon the death of the insured
- Life insurance may be divided into two basic classes ndash term and permanent
- HISTORY OF LIFE INSURANCE
- Risk protection has been a primary goal of humans and institutions throughout history Protecting against risk is what insurance is all about
- Over 5000 years ago in China insurance was seen as a preventative measure against piracy on the sea Piracy in fact was so prevalent that as a way of spreading the risk a number of ships would carry a portion of another ships cargo so that if one ship was captured the entire shipment would not be lost
- In another part of the world nearly 4500 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
- Life insurance came about a little later in ancient Rome where burial clubs were formed to cover the funeral expenses of its members as well as help survivors monetarily With Romes fall around 450 AD most of the concepts of insurance were abandoned but aspects of it did continue through the Middle Ages particularly with merchant and artisan guilds These provided forms of member insurance covering risks like fire flood theft disability death and even imprisonment
- During the feudal period early forms of insurance ebbed with the decline of travel and long-distance trade But during the 14th to 16th centuries transportation commerce and insurance would again reemerge
- And similar to ancient Rome burial societies were formed in the Buddhist period to help families build houses and to protect widows and children
- Modern Insurance
- Illegal almost everywhere else in Europe life insurance in England was vigorously promoted in the three decades following the Glorious Revolution of 1688 The type of insurance we see today owes its roots to 17th century England Lloyds of London or as they were known then Lloyds Coffee House was the location where merchants ship owners and underwriters met to discuss and transact business deals
- While serving as a means of risk-avoidance life insurance also appealed strongly to the gambling instincts of Englands burgeoning middle class
- Gambling was so rampant in fact that when newspapers published names of prominent people who were seriously ill bets were placed at Lloydrsquos on their anticipated dates of death Reacting against such practices 79 merchant underwriters broke away in 1769 and two years later formed a ldquoNew Lloydrsquos Coffee Houserdquo that became known as the ldquoreal Lloydrsquosrdquo Making wagers on peoples deaths ceased in 1774 when parliament forbade the practice
- Insurance moves to America
- The US insurance industry was built on the British model The year 1735 saw the birth of the first insurance company in the American colonies in
- Charleston SC The Presbyterian Synod of Philadelphia in 1759 sponsored the first life insurance corporation in America for the benefit of ministers and their dependents And the first life insurance policy for the general public in the United States was issued in Philadelphia on May 22 1761
- But it wasnt until 80 years later (after 1840) that life insurance really tookoff in a big way The key to its success was reducing the opposition from religious groups
- In 1835 the infamous New York fire drew peoples 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
- With the creation of the automobile public liability insurance which first made its appearance in the 1880s gained importance and acceptance
- More advancement was made to insurance during the process of industrialization In 1897 the British government passed the Workmens Compensation Act which made it mandatory for a company to insure its employees against industrial accidents
- During 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 most labor 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
- BENEFITS OF LIFE INSURANCE
- 1) Risk cover -Life Insurance contracts allow an individual to have a risk cover against any unfortunate event of the future
- 2) Tax Deduction -Under section 80C of the Income Tax Act of 1961 one can get tax deduction on premiums up to one lakh rupees Life Insurance policies thus decrease the total taxable income of an individual
- 3) Loans -An individual can easily access loans from different financial institutions by pledging his insurance policies
- 4) Retirement Planning -What had provided protection against the financial consequences of premature death may now be used to help them enjoy their retirement years
- 5) Educational Needs -Similar to retirement planning the cash values that flow from ones life insurance schemes can be utilized for educational needs of the insurer or his children
- The Life Insurance Industry has an enviable track record among public sector units It has a Consistent profit and dividend paying record accompanied by a steady growth in its financial resources Through investments in the Government sector and socially- oriented sectors the Industry has contributed immensely to the nations development The industry is recognized as one of the largest financial Institutions in the country The ventures initiated by the industry in the areas of Mutual Fund
- Housing Finance has done exceedingly well in recent years To protect the countrys foreign exchange reserves the reinsurance arrangement are so organized that maximum retention is made possible within the country while at the same time protecting interests of the policy holders
- 22) CURRENT SCENARIO OF RELIANCE LIFE INSURANCE
- RLIC offers wide range of innovative life insurance products targeted at individuals and groups It offers need based products that caters to four distinct segments namely protection child retirement and investment plans RLIC is committed to emerge as a transnational Life Insurer of global scale and standard
- CH - 3) RESEARCH METHODOLOGY
- RESEARCH DESIGN-
- SAMPLING TECHNIQUES-
- THE PRIMARY OBJECTIVEOF THE STUDY-
- 34) OBJECTIVES
- 7) Some innovative technique or product is required in order to attract the consumer
- 45) LIMITATIONS
- 46) BIBLIOGRAPHY
-
46) BIBLIOGRAPHY
wwwreliancelifeinsurancecom
wwwadagroupcom
wwwirdacom
wwwbajajallianzlifeinsurancecom
wwwallianzbajajcom
47) ANNEXURE
61
QUESTIONNAIRE
A comparative analysis of consumer perception regarding Traditional plans of Reliance Life Insurance with that of Bajaj Allianz Life Insurance
NAME ___________________________
PERSONAL DETAILS
1) AGE_________________
1) OCCUPATION______________
2) INCOME___________________
3) FAMILY MEMBERS_________
Q1 Where do you prefer to investa) Fixed deposits b) Stock c) Mutual funds d) Insurance e) Others
Q2 What are your priorities for investmenta) Protecting your family against pre-mature death b) Wealth creation c) Retirement needs d) Child education and marriage e) Protect income against disability sickness or critical illness
Q3 What is your main motive behind investing in life insurancea) Tax benefit b) Savings c) Risk cover
Q4 What kind of investment do you prefera) High risk high gain b) Low risk low gain c) Moderate d) Vary times to times
62
Q5Are you interested to invest in Traditional Plansa) Yes b) No
Q6 What is your level of annual investmenta) below 20000 b) 20000-40000 c) above 40000
Q7 What factors would you consider most important before choosing an insurance company
a) publicity of the company b) reputation of the company c) quality of life advisors d) after sales-supporting of the company
Q8 Which life insurance company would you prefer the most to invest ina) Reliance life insurance b) Bajaj Allianz life insurance
Q9 If reliance life insurance then which particular plan you would like to invest ina) Reliance Term Plan b) Reliance Whole Life Plan c) Reliance Endowment Plan d) Reliance Special Endowment Plan
Q10 If Bajaj Allianz life insurance then which particular plan you would like to invest in
I ENDOWMENT PLAN
a) Bajaj Allianz Invest Gain
b) Bajaj Allianz save Care Economy SP
c) Bajaj Allianz life time care
d) Bajaj Allianz Super Saver plan
II MONEY BACK PLAN
a) Bajaj Allianz Cash Gain plan
63
64
- COMPANY PROFILE
- ABOUT RELIANCE LIFE INSURANCE
- HISTORY
- Reliance Capital Limited announced the launch of its life insurance business on February 1 2006 This was after obtaining the required regulatory approvals from the Registrar Of Companies and the Insurance Regulatory and Development Authority
- It was in August 2005 that the ball was set rolling when Reliance Capital Limited the financial arm of Reliance ndash Anil Dhirubhai Ambani Group (ADAG) ndash announced the requisition of 100 shareholding in AMP Sanmar Life Insurance Company Limited and the formal transfer of shares took place in October 2005 The company will issue all policy contracts under the Reliance Life Insurance Company limited name All the existing policy contracts also stand transferred to the Reliance Life Insurance entity with all the original contractual terms and commitments intact
- CORE VALUES
- Reliance Life Insurance Company Limited has some core values which are listed as follows
- Vision bull To be the first choice insurer for customers bull To be the preferred employer for staff in the insurance industry bull To be the number one insurer for creating shareholder value
- Mission As a responsible customer focused market leader we will strive to understand the insurance needs of the consumers and translate it into affordable products that deliver value for money
- 12) TRADITIONAL PLANS OF THE COMPANY
- 12A )TRADITIONAL PLAN OF RELIANCE LIFE INSURANCE-
- Life insurance products are designed to suit the requirements of customers Fundamentally the product provide for
- In every product to a certain degree risk cover is imperative for it to fall under the category of insurance Based on the coverage of the product the premiums are calculated and the customer pays accordingly In order to suggest the right product it is essential for an agent to understand the requirements of the customer well
- The traditional plans of the company have the following features-
- Fixed Tenure
- Potential for better returns
- Transparency
- Flexibility in investment
- Flexibility to invest more
- Flexibility to skip the premium
- Flexibility to choose the cover
- High liquidity
- Age term and sum assured decide the amount of premium
- Top- ups and switches are not allowed
- Reliance Life Insurance Company Limited has offered 9
- 1) Reliance term plan-
- 2) Reliance Whole Life Plan -
- 3) Reliance Endowment Plan -
- 4) Reliance Special Endowment Plan -
- 13) INDUSTRY PROFILE
- MEANING OF INSURANCE
- Insurance may be described as a social device to reduce or eliminate risk of loss to life and property Insurance is a collective bearing of risk Insurance is a financial device to spread the risks and losses of few people among a large number of people as people prefer small fixed liability instead of big uncertain and changing liability
- Insurance can be defined as a ldquolegal contract between two parties whereby one party called insurer undertakes to pay a fixed amount of money on the happening of a particular event which may be certain or uncertainrdquo The other party called insured pays in exchange a fixed sum known as premium
- Insurance is desired to safeguard oneself and onersquos family against possible losses on account of risks and perils It provides financial compensation for the losses suffered due to the happening of any unforeseen events
- IMPORTANCE OF INSURANCE
- Insurance services play predominant role in the process of financial Intermediary Today insurance industry is one of the most growing sectors in India There is lot of potential in the Indian Insurance Industry
- There are many issues which require study The scope of the study of Insurance industry of India would be very great as there are ongoing Developments in the industry after the opening of the sector
- Right now the insurance industry has great opportunities in a country like India or China which huge population Also the penetration of insurance in India is very low in both life and non-life segment so there is lot potential to be tapped Before starting the discussion on insurance industry and related issues we have to start with the basics of insurance So first we understand what is insurance How the word lsquoinsurancersquo is different from the word lsquoassurancersquo Etc
- HISTORY OF INSURANCE
- The concept of insurance is believed to have emerged almost 4500 years ago in the ancient land of Babylonia where traders used to bear risk of the carvan by giving loans which were later repaid with interest when the goods arrived safely
- The concept of insurance as we know today took shape in 1688 at a place called Lloydrsquos Coffee House in London where risk bearers used to meet to transact business This coffee house became so popular that Lloydrsquos became the one of the first modern insurance companies by the end of the eighteenth century
- Marine insurance companies came into existence by the end of the eighteenth century These companies were empowered to write fire and life insurance as well as marine The Great Fire of London in 1966 caused huge loss of property and life With a view to providing fire insurance facilities
- Dr Nicholas Barbon set up in 1967 the first fire insurance company known as the Fire office
- Life insurance in its modern form came to India from England in 1818 The Oriental Life Insurance Company was the first insurance company to be set up in India to help the widows of European community The insurance companies which came into existence between 1818 and 1869 treated
- Indian lives as subnormal and charged an extra premium of 15 to 20 per cent The first Indian insurance company the Bombay Mutual Life
- Assurance Society came into existence in 1870 to cover Indian lives at normal rates
- The Insurance Act 1938 the first comprehensive legislation governing both life and non-life branches of insurance were enacted to provide strict state control over insurance business This amended insurance Act looked into investments expenditure and management of these companies
- By the mid- 1950s there were 154 Indian insurers 16 foreign insurers and 75 provident societies carrying on life insurance business in India Insurance business flourished and so did scams irregularities and dubious investment practices by scores of companies As a result the government decided to nationalize the life assurance business in India The Life Insurance
- Corporation of India (LIC) was set up in 1956 The nationalization of life insurance was followed by general insurance in 1972
- MEANING OF LIFE INSURANCE
- There are three parties in a life insurance transaction the insurer the insured and the owner of the policy (policyholder) although the owner and the insured are often the same person
- Another important person involved in a life insurance policy is the beneficiary The beneficiary is the person or persons who will receive the policy proceeds upon the death of the insured
- Life insurance may be divided into two basic classes ndash term and permanent
- HISTORY OF LIFE INSURANCE
- Risk protection has been a primary goal of humans and institutions throughout history Protecting against risk is what insurance is all about
- Over 5000 years ago in China insurance was seen as a preventative measure against piracy on the sea Piracy in fact was so prevalent that as a way of spreading the risk a number of ships would carry a portion of another ships cargo so that if one ship was captured the entire shipment would not be lost
- In another part of the world nearly 4500 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
- Life insurance came about a little later in ancient Rome where burial clubs were formed to cover the funeral expenses of its members as well as help survivors monetarily With Romes fall around 450 AD most of the concepts of insurance were abandoned but aspects of it did continue through the Middle Ages particularly with merchant and artisan guilds These provided forms of member insurance covering risks like fire flood theft disability death and even imprisonment
- During the feudal period early forms of insurance ebbed with the decline of travel and long-distance trade But during the 14th to 16th centuries transportation commerce and insurance would again reemerge
- And similar to ancient Rome burial societies were formed in the Buddhist period to help families build houses and to protect widows and children
- Modern Insurance
- Illegal almost everywhere else in Europe life insurance in England was vigorously promoted in the three decades following the Glorious Revolution of 1688 The type of insurance we see today owes its roots to 17th century England Lloyds of London or as they were known then Lloyds Coffee House was the location where merchants ship owners and underwriters met to discuss and transact business deals
- While serving as a means of risk-avoidance life insurance also appealed strongly to the gambling instincts of Englands burgeoning middle class
- Gambling was so rampant in fact that when newspapers published names of prominent people who were seriously ill bets were placed at Lloydrsquos on their anticipated dates of death Reacting against such practices 79 merchant underwriters broke away in 1769 and two years later formed a ldquoNew Lloydrsquos Coffee Houserdquo that became known as the ldquoreal Lloydrsquosrdquo Making wagers on peoples deaths ceased in 1774 when parliament forbade the practice
- Insurance moves to America
- The US insurance industry was built on the British model The year 1735 saw the birth of the first insurance company in the American colonies in
- Charleston SC The Presbyterian Synod of Philadelphia in 1759 sponsored the first life insurance corporation in America for the benefit of ministers and their dependents And the first life insurance policy for the general public in the United States was issued in Philadelphia on May 22 1761
- But it wasnt until 80 years later (after 1840) that life insurance really tookoff in a big way The key to its success was reducing the opposition from religious groups
- In 1835 the infamous New York fire drew peoples 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
- With the creation of the automobile public liability insurance which first made its appearance in the 1880s gained importance and acceptance
- More advancement was made to insurance during the process of industrialization In 1897 the British government passed the Workmens Compensation Act which made it mandatory for a company to insure its employees against industrial accidents
- During 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 most labor 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
- BENEFITS OF LIFE INSURANCE
- 1) Risk cover -Life Insurance contracts allow an individual to have a risk cover against any unfortunate event of the future
- 2) Tax Deduction -Under section 80C of the Income Tax Act of 1961 one can get tax deduction on premiums up to one lakh rupees Life Insurance policies thus decrease the total taxable income of an individual
- 3) Loans -An individual can easily access loans from different financial institutions by pledging his insurance policies
- 4) Retirement Planning -What had provided protection against the financial consequences of premature death may now be used to help them enjoy their retirement years
- 5) Educational Needs -Similar to retirement planning the cash values that flow from ones life insurance schemes can be utilized for educational needs of the insurer or his children
- The Life Insurance Industry has an enviable track record among public sector units It has a Consistent profit and dividend paying record accompanied by a steady growth in its financial resources Through investments in the Government sector and socially- oriented sectors the Industry has contributed immensely to the nations development The industry is recognized as one of the largest financial Institutions in the country The ventures initiated by the industry in the areas of Mutual Fund
- Housing Finance has done exceedingly well in recent years To protect the countrys foreign exchange reserves the reinsurance arrangement are so organized that maximum retention is made possible within the country while at the same time protecting interests of the policy holders
- 22) CURRENT SCENARIO OF RELIANCE LIFE INSURANCE
- RLIC offers wide range of innovative life insurance products targeted at individuals and groups It offers need based products that caters to four distinct segments namely protection child retirement and investment plans RLIC is committed to emerge as a transnational Life Insurer of global scale and standard
- CH - 3) RESEARCH METHODOLOGY
- RESEARCH DESIGN-
- SAMPLING TECHNIQUES-
- THE PRIMARY OBJECTIVEOF THE STUDY-
- 34) OBJECTIVES
- 7) Some innovative technique or product is required in order to attract the consumer
- 45) LIMITATIONS
- 46) BIBLIOGRAPHY
-
QUESTIONNAIRE
A comparative analysis of consumer perception regarding Traditional plans of Reliance Life Insurance with that of Bajaj Allianz Life Insurance
NAME ___________________________
PERSONAL DETAILS
1) AGE_________________
1) OCCUPATION______________
2) INCOME___________________
3) FAMILY MEMBERS_________
Q1 Where do you prefer to investa) Fixed deposits b) Stock c) Mutual funds d) Insurance e) Others
Q2 What are your priorities for investmenta) Protecting your family against pre-mature death b) Wealth creation c) Retirement needs d) Child education and marriage e) Protect income against disability sickness or critical illness
Q3 What is your main motive behind investing in life insurancea) Tax benefit b) Savings c) Risk cover
Q4 What kind of investment do you prefera) High risk high gain b) Low risk low gain c) Moderate d) Vary times to times
62
Q5Are you interested to invest in Traditional Plansa) Yes b) No
Q6 What is your level of annual investmenta) below 20000 b) 20000-40000 c) above 40000
Q7 What factors would you consider most important before choosing an insurance company
a) publicity of the company b) reputation of the company c) quality of life advisors d) after sales-supporting of the company
Q8 Which life insurance company would you prefer the most to invest ina) Reliance life insurance b) Bajaj Allianz life insurance
Q9 If reliance life insurance then which particular plan you would like to invest ina) Reliance Term Plan b) Reliance Whole Life Plan c) Reliance Endowment Plan d) Reliance Special Endowment Plan
Q10 If Bajaj Allianz life insurance then which particular plan you would like to invest in
I ENDOWMENT PLAN
a) Bajaj Allianz Invest Gain
b) Bajaj Allianz save Care Economy SP
c) Bajaj Allianz life time care
d) Bajaj Allianz Super Saver plan
II MONEY BACK PLAN
a) Bajaj Allianz Cash Gain plan
63
64
- COMPANY PROFILE
- ABOUT RELIANCE LIFE INSURANCE
- HISTORY
- Reliance Capital Limited announced the launch of its life insurance business on February 1 2006 This was after obtaining the required regulatory approvals from the Registrar Of Companies and the Insurance Regulatory and Development Authority
- It was in August 2005 that the ball was set rolling when Reliance Capital Limited the financial arm of Reliance ndash Anil Dhirubhai Ambani Group (ADAG) ndash announced the requisition of 100 shareholding in AMP Sanmar Life Insurance Company Limited and the formal transfer of shares took place in October 2005 The company will issue all policy contracts under the Reliance Life Insurance Company limited name All the existing policy contracts also stand transferred to the Reliance Life Insurance entity with all the original contractual terms and commitments intact
- CORE VALUES
- Reliance Life Insurance Company Limited has some core values which are listed as follows
- Vision bull To be the first choice insurer for customers bull To be the preferred employer for staff in the insurance industry bull To be the number one insurer for creating shareholder value
- Mission As a responsible customer focused market leader we will strive to understand the insurance needs of the consumers and translate it into affordable products that deliver value for money
- 12) TRADITIONAL PLANS OF THE COMPANY
- 12A )TRADITIONAL PLAN OF RELIANCE LIFE INSURANCE-
- Life insurance products are designed to suit the requirements of customers Fundamentally the product provide for
- In every product to a certain degree risk cover is imperative for it to fall under the category of insurance Based on the coverage of the product the premiums are calculated and the customer pays accordingly In order to suggest the right product it is essential for an agent to understand the requirements of the customer well
- The traditional plans of the company have the following features-
- Fixed Tenure
- Potential for better returns
- Transparency
- Flexibility in investment
- Flexibility to invest more
- Flexibility to skip the premium
- Flexibility to choose the cover
- High liquidity
- Age term and sum assured decide the amount of premium
- Top- ups and switches are not allowed
- Reliance Life Insurance Company Limited has offered 9
- 1) Reliance term plan-
- 2) Reliance Whole Life Plan -
- 3) Reliance Endowment Plan -
- 4) Reliance Special Endowment Plan -
- 13) INDUSTRY PROFILE
- MEANING OF INSURANCE
- Insurance may be described as a social device to reduce or eliminate risk of loss to life and property Insurance is a collective bearing of risk Insurance is a financial device to spread the risks and losses of few people among a large number of people as people prefer small fixed liability instead of big uncertain and changing liability
- Insurance can be defined as a ldquolegal contract between two parties whereby one party called insurer undertakes to pay a fixed amount of money on the happening of a particular event which may be certain or uncertainrdquo The other party called insured pays in exchange a fixed sum known as premium
- Insurance is desired to safeguard oneself and onersquos family against possible losses on account of risks and perils It provides financial compensation for the losses suffered due to the happening of any unforeseen events
- IMPORTANCE OF INSURANCE
- Insurance services play predominant role in the process of financial Intermediary Today insurance industry is one of the most growing sectors in India There is lot of potential in the Indian Insurance Industry
- There are many issues which require study The scope of the study of Insurance industry of India would be very great as there are ongoing Developments in the industry after the opening of the sector
- Right now the insurance industry has great opportunities in a country like India or China which huge population Also the penetration of insurance in India is very low in both life and non-life segment so there is lot potential to be tapped Before starting the discussion on insurance industry and related issues we have to start with the basics of insurance So first we understand what is insurance How the word lsquoinsurancersquo is different from the word lsquoassurancersquo Etc
- HISTORY OF INSURANCE
- The concept of insurance is believed to have emerged almost 4500 years ago in the ancient land of Babylonia where traders used to bear risk of the carvan by giving loans which were later repaid with interest when the goods arrived safely
- The concept of insurance as we know today took shape in 1688 at a place called Lloydrsquos Coffee House in London where risk bearers used to meet to transact business This coffee house became so popular that Lloydrsquos became the one of the first modern insurance companies by the end of the eighteenth century
- Marine insurance companies came into existence by the end of the eighteenth century These companies were empowered to write fire and life insurance as well as marine The Great Fire of London in 1966 caused huge loss of property and life With a view to providing fire insurance facilities
- Dr Nicholas Barbon set up in 1967 the first fire insurance company known as the Fire office
- Life insurance in its modern form came to India from England in 1818 The Oriental Life Insurance Company was the first insurance company to be set up in India to help the widows of European community The insurance companies which came into existence between 1818 and 1869 treated
- Indian lives as subnormal and charged an extra premium of 15 to 20 per cent The first Indian insurance company the Bombay Mutual Life
- Assurance Society came into existence in 1870 to cover Indian lives at normal rates
- The Insurance Act 1938 the first comprehensive legislation governing both life and non-life branches of insurance were enacted to provide strict state control over insurance business This amended insurance Act looked into investments expenditure and management of these companies
- By the mid- 1950s there were 154 Indian insurers 16 foreign insurers and 75 provident societies carrying on life insurance business in India Insurance business flourished and so did scams irregularities and dubious investment practices by scores of companies As a result the government decided to nationalize the life assurance business in India The Life Insurance
- Corporation of India (LIC) was set up in 1956 The nationalization of life insurance was followed by general insurance in 1972
- MEANING OF LIFE INSURANCE
- There are three parties in a life insurance transaction the insurer the insured and the owner of the policy (policyholder) although the owner and the insured are often the same person
- Another important person involved in a life insurance policy is the beneficiary The beneficiary is the person or persons who will receive the policy proceeds upon the death of the insured
- Life insurance may be divided into two basic classes ndash term and permanent
- HISTORY OF LIFE INSURANCE
- Risk protection has been a primary goal of humans and institutions throughout history Protecting against risk is what insurance is all about
- Over 5000 years ago in China insurance was seen as a preventative measure against piracy on the sea Piracy in fact was so prevalent that as a way of spreading the risk a number of ships would carry a portion of another ships cargo so that if one ship was captured the entire shipment would not be lost
- In another part of the world nearly 4500 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
- Life insurance came about a little later in ancient Rome where burial clubs were formed to cover the funeral expenses of its members as well as help survivors monetarily With Romes fall around 450 AD most of the concepts of insurance were abandoned but aspects of it did continue through the Middle Ages particularly with merchant and artisan guilds These provided forms of member insurance covering risks like fire flood theft disability death and even imprisonment
- During the feudal period early forms of insurance ebbed with the decline of travel and long-distance trade But during the 14th to 16th centuries transportation commerce and insurance would again reemerge
- And similar to ancient Rome burial societies were formed in the Buddhist period to help families build houses and to protect widows and children
- Modern Insurance
- Illegal almost everywhere else in Europe life insurance in England was vigorously promoted in the three decades following the Glorious Revolution of 1688 The type of insurance we see today owes its roots to 17th century England Lloyds of London or as they were known then Lloyds Coffee House was the location where merchants ship owners and underwriters met to discuss and transact business deals
- While serving as a means of risk-avoidance life insurance also appealed strongly to the gambling instincts of Englands burgeoning middle class
- Gambling was so rampant in fact that when newspapers published names of prominent people who were seriously ill bets were placed at Lloydrsquos on their anticipated dates of death Reacting against such practices 79 merchant underwriters broke away in 1769 and two years later formed a ldquoNew Lloydrsquos Coffee Houserdquo that became known as the ldquoreal Lloydrsquosrdquo Making wagers on peoples deaths ceased in 1774 when parliament forbade the practice
- Insurance moves to America
- The US insurance industry was built on the British model The year 1735 saw the birth of the first insurance company in the American colonies in
- Charleston SC The Presbyterian Synod of Philadelphia in 1759 sponsored the first life insurance corporation in America for the benefit of ministers and their dependents And the first life insurance policy for the general public in the United States was issued in Philadelphia on May 22 1761
- But it wasnt until 80 years later (after 1840) that life insurance really tookoff in a big way The key to its success was reducing the opposition from religious groups
- In 1835 the infamous New York fire drew peoples 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
- With the creation of the automobile public liability insurance which first made its appearance in the 1880s gained importance and acceptance
- More advancement was made to insurance during the process of industrialization In 1897 the British government passed the Workmens Compensation Act which made it mandatory for a company to insure its employees against industrial accidents
- During 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 most labor 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
- BENEFITS OF LIFE INSURANCE
- 1) Risk cover -Life Insurance contracts allow an individual to have a risk cover against any unfortunate event of the future
- 2) Tax Deduction -Under section 80C of the Income Tax Act of 1961 one can get tax deduction on premiums up to one lakh rupees Life Insurance policies thus decrease the total taxable income of an individual
- 3) Loans -An individual can easily access loans from different financial institutions by pledging his insurance policies
- 4) Retirement Planning -What had provided protection against the financial consequences of premature death may now be used to help them enjoy their retirement years
- 5) Educational Needs -Similar to retirement planning the cash values that flow from ones life insurance schemes can be utilized for educational needs of the insurer or his children
- The Life Insurance Industry has an enviable track record among public sector units It has a Consistent profit and dividend paying record accompanied by a steady growth in its financial resources Through investments in the Government sector and socially- oriented sectors the Industry has contributed immensely to the nations development The industry is recognized as one of the largest financial Institutions in the country The ventures initiated by the industry in the areas of Mutual Fund
- Housing Finance has done exceedingly well in recent years To protect the countrys foreign exchange reserves the reinsurance arrangement are so organized that maximum retention is made possible within the country while at the same time protecting interests of the policy holders
- 22) CURRENT SCENARIO OF RELIANCE LIFE INSURANCE
- RLIC offers wide range of innovative life insurance products targeted at individuals and groups It offers need based products that caters to four distinct segments namely protection child retirement and investment plans RLIC is committed to emerge as a transnational Life Insurer of global scale and standard
- CH - 3) RESEARCH METHODOLOGY
- RESEARCH DESIGN-
- SAMPLING TECHNIQUES-
- THE PRIMARY OBJECTIVEOF THE STUDY-
- 34) OBJECTIVES
- 7) Some innovative technique or product is required in order to attract the consumer
- 45) LIMITATIONS
- 46) BIBLIOGRAPHY
-
Q5Are you interested to invest in Traditional Plansa) Yes b) No
Q6 What is your level of annual investmenta) below 20000 b) 20000-40000 c) above 40000
Q7 What factors would you consider most important before choosing an insurance company
a) publicity of the company b) reputation of the company c) quality of life advisors d) after sales-supporting of the company
Q8 Which life insurance company would you prefer the most to invest ina) Reliance life insurance b) Bajaj Allianz life insurance
Q9 If reliance life insurance then which particular plan you would like to invest ina) Reliance Term Plan b) Reliance Whole Life Plan c) Reliance Endowment Plan d) Reliance Special Endowment Plan
Q10 If Bajaj Allianz life insurance then which particular plan you would like to invest in
I ENDOWMENT PLAN
a) Bajaj Allianz Invest Gain
b) Bajaj Allianz save Care Economy SP
c) Bajaj Allianz life time care
d) Bajaj Allianz Super Saver plan
II MONEY BACK PLAN
a) Bajaj Allianz Cash Gain plan
63
64
- COMPANY PROFILE
- ABOUT RELIANCE LIFE INSURANCE
- HISTORY
- Reliance Capital Limited announced the launch of its life insurance business on February 1 2006 This was after obtaining the required regulatory approvals from the Registrar Of Companies and the Insurance Regulatory and Development Authority
- It was in August 2005 that the ball was set rolling when Reliance Capital Limited the financial arm of Reliance ndash Anil Dhirubhai Ambani Group (ADAG) ndash announced the requisition of 100 shareholding in AMP Sanmar Life Insurance Company Limited and the formal transfer of shares took place in October 2005 The company will issue all policy contracts under the Reliance Life Insurance Company limited name All the existing policy contracts also stand transferred to the Reliance Life Insurance entity with all the original contractual terms and commitments intact
- CORE VALUES
- Reliance Life Insurance Company Limited has some core values which are listed as follows
- Vision bull To be the first choice insurer for customers bull To be the preferred employer for staff in the insurance industry bull To be the number one insurer for creating shareholder value
- Mission As a responsible customer focused market leader we will strive to understand the insurance needs of the consumers and translate it into affordable products that deliver value for money
- 12) TRADITIONAL PLANS OF THE COMPANY
- 12A )TRADITIONAL PLAN OF RELIANCE LIFE INSURANCE-
- Life insurance products are designed to suit the requirements of customers Fundamentally the product provide for
- In every product to a certain degree risk cover is imperative for it to fall under the category of insurance Based on the coverage of the product the premiums are calculated and the customer pays accordingly In order to suggest the right product it is essential for an agent to understand the requirements of the customer well
- The traditional plans of the company have the following features-
- Fixed Tenure
- Potential for better returns
- Transparency
- Flexibility in investment
- Flexibility to invest more
- Flexibility to skip the premium
- Flexibility to choose the cover
- High liquidity
- Age term and sum assured decide the amount of premium
- Top- ups and switches are not allowed
- Reliance Life Insurance Company Limited has offered 9
- 1) Reliance term plan-
- 2) Reliance Whole Life Plan -
- 3) Reliance Endowment Plan -
- 4) Reliance Special Endowment Plan -
- 13) INDUSTRY PROFILE
- MEANING OF INSURANCE
- Insurance may be described as a social device to reduce or eliminate risk of loss to life and property Insurance is a collective bearing of risk Insurance is a financial device to spread the risks and losses of few people among a large number of people as people prefer small fixed liability instead of big uncertain and changing liability
- Insurance can be defined as a ldquolegal contract between two parties whereby one party called insurer undertakes to pay a fixed amount of money on the happening of a particular event which may be certain or uncertainrdquo The other party called insured pays in exchange a fixed sum known as premium
- Insurance is desired to safeguard oneself and onersquos family against possible losses on account of risks and perils It provides financial compensation for the losses suffered due to the happening of any unforeseen events
- IMPORTANCE OF INSURANCE
- Insurance services play predominant role in the process of financial Intermediary Today insurance industry is one of the most growing sectors in India There is lot of potential in the Indian Insurance Industry
- There are many issues which require study The scope of the study of Insurance industry of India would be very great as there are ongoing Developments in the industry after the opening of the sector
- Right now the insurance industry has great opportunities in a country like India or China which huge population Also the penetration of insurance in India is very low in both life and non-life segment so there is lot potential to be tapped Before starting the discussion on insurance industry and related issues we have to start with the basics of insurance So first we understand what is insurance How the word lsquoinsurancersquo is different from the word lsquoassurancersquo Etc
- HISTORY OF INSURANCE
- The concept of insurance is believed to have emerged almost 4500 years ago in the ancient land of Babylonia where traders used to bear risk of the carvan by giving loans which were later repaid with interest when the goods arrived safely
- The concept of insurance as we know today took shape in 1688 at a place called Lloydrsquos Coffee House in London where risk bearers used to meet to transact business This coffee house became so popular that Lloydrsquos became the one of the first modern insurance companies by the end of the eighteenth century
- Marine insurance companies came into existence by the end of the eighteenth century These companies were empowered to write fire and life insurance as well as marine The Great Fire of London in 1966 caused huge loss of property and life With a view to providing fire insurance facilities
- Dr Nicholas Barbon set up in 1967 the first fire insurance company known as the Fire office
- Life insurance in its modern form came to India from England in 1818 The Oriental Life Insurance Company was the first insurance company to be set up in India to help the widows of European community The insurance companies which came into existence between 1818 and 1869 treated
- Indian lives as subnormal and charged an extra premium of 15 to 20 per cent The first Indian insurance company the Bombay Mutual Life
- Assurance Society came into existence in 1870 to cover Indian lives at normal rates
- The Insurance Act 1938 the first comprehensive legislation governing both life and non-life branches of insurance were enacted to provide strict state control over insurance business This amended insurance Act looked into investments expenditure and management of these companies
- By the mid- 1950s there were 154 Indian insurers 16 foreign insurers and 75 provident societies carrying on life insurance business in India Insurance business flourished and so did scams irregularities and dubious investment practices by scores of companies As a result the government decided to nationalize the life assurance business in India The Life Insurance
- Corporation of India (LIC) was set up in 1956 The nationalization of life insurance was followed by general insurance in 1972
- MEANING OF LIFE INSURANCE
- There are three parties in a life insurance transaction the insurer the insured and the owner of the policy (policyholder) although the owner and the insured are often the same person
- Another important person involved in a life insurance policy is the beneficiary The beneficiary is the person or persons who will receive the policy proceeds upon the death of the insured
- Life insurance may be divided into two basic classes ndash term and permanent
- HISTORY OF LIFE INSURANCE
- Risk protection has been a primary goal of humans and institutions throughout history Protecting against risk is what insurance is all about
- Over 5000 years ago in China insurance was seen as a preventative measure against piracy on the sea Piracy in fact was so prevalent that as a way of spreading the risk a number of ships would carry a portion of another ships cargo so that if one ship was captured the entire shipment would not be lost
- In another part of the world nearly 4500 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
- Life insurance came about a little later in ancient Rome where burial clubs were formed to cover the funeral expenses of its members as well as help survivors monetarily With Romes fall around 450 AD most of the concepts of insurance were abandoned but aspects of it did continue through the Middle Ages particularly with merchant and artisan guilds These provided forms of member insurance covering risks like fire flood theft disability death and even imprisonment
- During the feudal period early forms of insurance ebbed with the decline of travel and long-distance trade But during the 14th to 16th centuries transportation commerce and insurance would again reemerge
- And similar to ancient Rome burial societies were formed in the Buddhist period to help families build houses and to protect widows and children
- Modern Insurance
- Illegal almost everywhere else in Europe life insurance in England was vigorously promoted in the three decades following the Glorious Revolution of 1688 The type of insurance we see today owes its roots to 17th century England Lloyds of London or as they were known then Lloyds Coffee House was the location where merchants ship owners and underwriters met to discuss and transact business deals
- While serving as a means of risk-avoidance life insurance also appealed strongly to the gambling instincts of Englands burgeoning middle class
- Gambling was so rampant in fact that when newspapers published names of prominent people who were seriously ill bets were placed at Lloydrsquos on their anticipated dates of death Reacting against such practices 79 merchant underwriters broke away in 1769 and two years later formed a ldquoNew Lloydrsquos Coffee Houserdquo that became known as the ldquoreal Lloydrsquosrdquo Making wagers on peoples deaths ceased in 1774 when parliament forbade the practice
- Insurance moves to America
- The US insurance industry was built on the British model The year 1735 saw the birth of the first insurance company in the American colonies in
- Charleston SC The Presbyterian Synod of Philadelphia in 1759 sponsored the first life insurance corporation in America for the benefit of ministers and their dependents And the first life insurance policy for the general public in the United States was issued in Philadelphia on May 22 1761
- But it wasnt until 80 years later (after 1840) that life insurance really tookoff in a big way The key to its success was reducing the opposition from religious groups
- In 1835 the infamous New York fire drew peoples 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
- With the creation of the automobile public liability insurance which first made its appearance in the 1880s gained importance and acceptance
- More advancement was made to insurance during the process of industrialization In 1897 the British government passed the Workmens Compensation Act which made it mandatory for a company to insure its employees against industrial accidents
- During 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 most labor 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
- BENEFITS OF LIFE INSURANCE
- 1) Risk cover -Life Insurance contracts allow an individual to have a risk cover against any unfortunate event of the future
- 2) Tax Deduction -Under section 80C of the Income Tax Act of 1961 one can get tax deduction on premiums up to one lakh rupees Life Insurance policies thus decrease the total taxable income of an individual
- 3) Loans -An individual can easily access loans from different financial institutions by pledging his insurance policies
- 4) Retirement Planning -What had provided protection against the financial consequences of premature death may now be used to help them enjoy their retirement years
- 5) Educational Needs -Similar to retirement planning the cash values that flow from ones life insurance schemes can be utilized for educational needs of the insurer or his children
- The Life Insurance Industry has an enviable track record among public sector units It has a Consistent profit and dividend paying record accompanied by a steady growth in its financial resources Through investments in the Government sector and socially- oriented sectors the Industry has contributed immensely to the nations development The industry is recognized as one of the largest financial Institutions in the country The ventures initiated by the industry in the areas of Mutual Fund
- Housing Finance has done exceedingly well in recent years To protect the countrys foreign exchange reserves the reinsurance arrangement are so organized that maximum retention is made possible within the country while at the same time protecting interests of the policy holders
- 22) CURRENT SCENARIO OF RELIANCE LIFE INSURANCE
- RLIC offers wide range of innovative life insurance products targeted at individuals and groups It offers need based products that caters to four distinct segments namely protection child retirement and investment plans RLIC is committed to emerge as a transnational Life Insurer of global scale and standard
- CH - 3) RESEARCH METHODOLOGY
- RESEARCH DESIGN-
- SAMPLING TECHNIQUES-
- THE PRIMARY OBJECTIVEOF THE STUDY-
- 34) OBJECTIVES
- 7) Some innovative technique or product is required in order to attract the consumer
- 45) LIMITATIONS
- 46) BIBLIOGRAPHY
-
64
- COMPANY PROFILE
- ABOUT RELIANCE LIFE INSURANCE
- HISTORY
- Reliance Capital Limited announced the launch of its life insurance business on February 1 2006 This was after obtaining the required regulatory approvals from the Registrar Of Companies and the Insurance Regulatory and Development Authority
- It was in August 2005 that the ball was set rolling when Reliance Capital Limited the financial arm of Reliance ndash Anil Dhirubhai Ambani Group (ADAG) ndash announced the requisition of 100 shareholding in AMP Sanmar Life Insurance Company Limited and the formal transfer of shares took place in October 2005 The company will issue all policy contracts under the Reliance Life Insurance Company limited name All the existing policy contracts also stand transferred to the Reliance Life Insurance entity with all the original contractual terms and commitments intact
- CORE VALUES
- Reliance Life Insurance Company Limited has some core values which are listed as follows
- Vision bull To be the first choice insurer for customers bull To be the preferred employer for staff in the insurance industry bull To be the number one insurer for creating shareholder value
- Mission As a responsible customer focused market leader we will strive to understand the insurance needs of the consumers and translate it into affordable products that deliver value for money
- 12) TRADITIONAL PLANS OF THE COMPANY
- 12A )TRADITIONAL PLAN OF RELIANCE LIFE INSURANCE-
- Life insurance products are designed to suit the requirements of customers Fundamentally the product provide for
- In every product to a certain degree risk cover is imperative for it to fall under the category of insurance Based on the coverage of the product the premiums are calculated and the customer pays accordingly In order to suggest the right product it is essential for an agent to understand the requirements of the customer well
- The traditional plans of the company have the following features-
- Fixed Tenure
- Potential for better returns
- Transparency
- Flexibility in investment
- Flexibility to invest more
- Flexibility to skip the premium
- Flexibility to choose the cover
- High liquidity
- Age term and sum assured decide the amount of premium
- Top- ups and switches are not allowed
- Reliance Life Insurance Company Limited has offered 9
- 1) Reliance term plan-
- 2) Reliance Whole Life Plan -
- 3) Reliance Endowment Plan -
- 4) Reliance Special Endowment Plan -
- 13) INDUSTRY PROFILE
- MEANING OF INSURANCE
- Insurance may be described as a social device to reduce or eliminate risk of loss to life and property Insurance is a collective bearing of risk Insurance is a financial device to spread the risks and losses of few people among a large number of people as people prefer small fixed liability instead of big uncertain and changing liability
- Insurance can be defined as a ldquolegal contract between two parties whereby one party called insurer undertakes to pay a fixed amount of money on the happening of a particular event which may be certain or uncertainrdquo The other party called insured pays in exchange a fixed sum known as premium
- Insurance is desired to safeguard oneself and onersquos family against possible losses on account of risks and perils It provides financial compensation for the losses suffered due to the happening of any unforeseen events
- IMPORTANCE OF INSURANCE
- Insurance services play predominant role in the process of financial Intermediary Today insurance industry is one of the most growing sectors in India There is lot of potential in the Indian Insurance Industry
- There are many issues which require study The scope of the study of Insurance industry of India would be very great as there are ongoing Developments in the industry after the opening of the sector
- Right now the insurance industry has great opportunities in a country like India or China which huge population Also the penetration of insurance in India is very low in both life and non-life segment so there is lot potential to be tapped Before starting the discussion on insurance industry and related issues we have to start with the basics of insurance So first we understand what is insurance How the word lsquoinsurancersquo is different from the word lsquoassurancersquo Etc
- HISTORY OF INSURANCE
- The concept of insurance is believed to have emerged almost 4500 years ago in the ancient land of Babylonia where traders used to bear risk of the carvan by giving loans which were later repaid with interest when the goods arrived safely
- The concept of insurance as we know today took shape in 1688 at a place called Lloydrsquos Coffee House in London where risk bearers used to meet to transact business This coffee house became so popular that Lloydrsquos became the one of the first modern insurance companies by the end of the eighteenth century
- Marine insurance companies came into existence by the end of the eighteenth century These companies were empowered to write fire and life insurance as well as marine The Great Fire of London in 1966 caused huge loss of property and life With a view to providing fire insurance facilities
- Dr Nicholas Barbon set up in 1967 the first fire insurance company known as the Fire office
- Life insurance in its modern form came to India from England in 1818 The Oriental Life Insurance Company was the first insurance company to be set up in India to help the widows of European community The insurance companies which came into existence between 1818 and 1869 treated
- Indian lives as subnormal and charged an extra premium of 15 to 20 per cent The first Indian insurance company the Bombay Mutual Life
- Assurance Society came into existence in 1870 to cover Indian lives at normal rates
- The Insurance Act 1938 the first comprehensive legislation governing both life and non-life branches of insurance were enacted to provide strict state control over insurance business This amended insurance Act looked into investments expenditure and management of these companies
- By the mid- 1950s there were 154 Indian insurers 16 foreign insurers and 75 provident societies carrying on life insurance business in India Insurance business flourished and so did scams irregularities and dubious investment practices by scores of companies As a result the government decided to nationalize the life assurance business in India The Life Insurance
- Corporation of India (LIC) was set up in 1956 The nationalization of life insurance was followed by general insurance in 1972
- MEANING OF LIFE INSURANCE
- There are three parties in a life insurance transaction the insurer the insured and the owner of the policy (policyholder) although the owner and the insured are often the same person
- Another important person involved in a life insurance policy is the beneficiary The beneficiary is the person or persons who will receive the policy proceeds upon the death of the insured
- Life insurance may be divided into two basic classes ndash term and permanent
- HISTORY OF LIFE INSURANCE
- Risk protection has been a primary goal of humans and institutions throughout history Protecting against risk is what insurance is all about
- Over 5000 years ago in China insurance was seen as a preventative measure against piracy on the sea Piracy in fact was so prevalent that as a way of spreading the risk a number of ships would carry a portion of another ships cargo so that if one ship was captured the entire shipment would not be lost
- In another part of the world nearly 4500 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
- Life insurance came about a little later in ancient Rome where burial clubs were formed to cover the funeral expenses of its members as well as help survivors monetarily With Romes fall around 450 AD most of the concepts of insurance were abandoned but aspects of it did continue through the Middle Ages particularly with merchant and artisan guilds These provided forms of member insurance covering risks like fire flood theft disability death and even imprisonment
- During the feudal period early forms of insurance ebbed with the decline of travel and long-distance trade But during the 14th to 16th centuries transportation commerce and insurance would again reemerge
- And similar to ancient Rome burial societies were formed in the Buddhist period to help families build houses and to protect widows and children
- Modern Insurance
- Illegal almost everywhere else in Europe life insurance in England was vigorously promoted in the three decades following the Glorious Revolution of 1688 The type of insurance we see today owes its roots to 17th century England Lloyds of London or as they were known then Lloyds Coffee House was the location where merchants ship owners and underwriters met to discuss and transact business deals
- While serving as a means of risk-avoidance life insurance also appealed strongly to the gambling instincts of Englands burgeoning middle class
- Gambling was so rampant in fact that when newspapers published names of prominent people who were seriously ill bets were placed at Lloydrsquos on their anticipated dates of death Reacting against such practices 79 merchant underwriters broke away in 1769 and two years later formed a ldquoNew Lloydrsquos Coffee Houserdquo that became known as the ldquoreal Lloydrsquosrdquo Making wagers on peoples deaths ceased in 1774 when parliament forbade the practice
- Insurance moves to America
- The US insurance industry was built on the British model The year 1735 saw the birth of the first insurance company in the American colonies in
- Charleston SC The Presbyterian Synod of Philadelphia in 1759 sponsored the first life insurance corporation in America for the benefit of ministers and their dependents And the first life insurance policy for the general public in the United States was issued in Philadelphia on May 22 1761
- But it wasnt until 80 years later (after 1840) that life insurance really tookoff in a big way The key to its success was reducing the opposition from religious groups
- In 1835 the infamous New York fire drew peoples 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
- With the creation of the automobile public liability insurance which first made its appearance in the 1880s gained importance and acceptance
- More advancement was made to insurance during the process of industrialization In 1897 the British government passed the Workmens Compensation Act which made it mandatory for a company to insure its employees against industrial accidents
- During 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 most labor 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
- BENEFITS OF LIFE INSURANCE
- 1) Risk cover -Life Insurance contracts allow an individual to have a risk cover against any unfortunate event of the future
- 2) Tax Deduction -Under section 80C of the Income Tax Act of 1961 one can get tax deduction on premiums up to one lakh rupees Life Insurance policies thus decrease the total taxable income of an individual
- 3) Loans -An individual can easily access loans from different financial institutions by pledging his insurance policies
- 4) Retirement Planning -What had provided protection against the financial consequences of premature death may now be used to help them enjoy their retirement years
- 5) Educational Needs -Similar to retirement planning the cash values that flow from ones life insurance schemes can be utilized for educational needs of the insurer or his children
- The Life Insurance Industry has an enviable track record among public sector units It has a Consistent profit and dividend paying record accompanied by a steady growth in its financial resources Through investments in the Government sector and socially- oriented sectors the Industry has contributed immensely to the nations development The industry is recognized as one of the largest financial Institutions in the country The ventures initiated by the industry in the areas of Mutual Fund
- Housing Finance has done exceedingly well in recent years To protect the countrys foreign exchange reserves the reinsurance arrangement are so organized that maximum retention is made possible within the country while at the same time protecting interests of the policy holders
- 22) CURRENT SCENARIO OF RELIANCE LIFE INSURANCE
- RLIC offers wide range of innovative life insurance products targeted at individuals and groups It offers need based products that caters to four distinct segments namely protection child retirement and investment plans RLIC is committed to emerge as a transnational Life Insurer of global scale and standard
- CH - 3) RESEARCH METHODOLOGY
- RESEARCH DESIGN-
- SAMPLING TECHNIQUES-
- THE PRIMARY OBJECTIVEOF THE STUDY-
- 34) OBJECTIVES
- 7) Some innovative technique or product is required in order to attract the consumer
- 45) LIMITATIONS
- 46) BIBLIOGRAPHY
-
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