Invstmnt Patrn of Senior Citizn

8/8/2019 Invstmnt Patrn of Senior Citizn

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A

PROJECT REPORT

ON

INVESTMENT PATTERN OF SENIOR CITIZENS

PACIFIC INSTITUTE OF MANAGEMENT

FOR THE PARTIAL FULLFILLMENT OF THE REQUIREMENT FOR

MASTER OF BUSINESS ADMINISTRATION

(2008-2009)

Under the guidance of Submitted By

Mr Dhiraj Jain Garima Sankhla

M.B.A (Part-II)


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CONTENT

Discriptions

1. Acknowledgement

2. Preface

3. Executive summary

4. Chapter:- 1

Industry Profile

5. Chapter:- 2

Company Profile6. Chapter :- 3

Research Methodology

7. Chapter:- 4

Data Interpretation

8. Chapter:- 5

Conclusions, Suggestions & Limitations

9. Chapter:- 6 Questionnaire

10. Chapter:- 7 Bibliography


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Acknowledgement

Research project in M.B.A. curriculum is very important step in the ladder of M.B.A.It provide a real aspect to this degree. So it is my privilege to thank my university to

include research project in M.B.A. program.

Now I take the opportunity to acknowledge those who have made their corporation

during the course of my research. I wish to express my sincere gratitude toward

them.

I am extremely grateful & thankful to Mr. Dhiraj Jain for his scholastic guidance

advice, encouragement, valuable suggestion and keen interest given through the

conduct of this study.

I take this opportunity of expressing my profound gratitude to my perspicacious and

versatile teacher G.M.K. Madnani sir who has been content source of inspiration to

me.

I thank all my friends for their kind cooperation.

Gari

ma Sankhla


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Preface

This project is done during the fourth semester of Master of Business

administration programmed.

Although this project is not a direct interface with the industry but a deep one, it

was quite knowledgeable to undertake this research project.

The objective behind the research project in M.B.A. programs to get through with

congruency between theoretical learning in the college premise and the actual

practices of management in real corporate world. The topic of research project is

To study the Investment pattern f senior citizens.

In this project I have tried to study what are the investment avenues in which they

are interested in, which are factors affecting their investment decision. I have

studied the buying behavior of senior citizens regarding their investments, how they

take decision, what motivates them to invest etc.


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EXECUTIVE SUMMARY

Indian Economy Is Growing at a Rapid Pace and service industry is now

becoming the essence of economy. The study is related to service industry. The

project undertaken is study of investment pattern of senior citizen.

Investment pattern is related to the buying behavior. I have taken a

particular segment (senior citizen) which is altogether different segment and

behave in a different manner. I have first met some senior citizen to understand

them, how they are differing from other segment.

Then I designed the research that what should be the process that would

lead to the achievement of result. Research design is of exploratory type, the data

was collected through survey method of data collection. I have use a detailed

questionnaire along with interviewing technique. I have designed in both English

and Hindi language to ease the respondent. The sample size was 70 respondents

and the sampling technique was convenience sampling. The data was collectedthrough various parts of Udaipur City. Due to their less ability of answering the

questions, I have interviewed them also.

After conducting the survey analyzed the data with the help of charts and graph.

I have find out the overall ranking of responses on 5 point rating scale and then

only I was able to get conclusions and accordingly give the suggestions. These

include:

Products should be designed with small amount of monthly installment.

In insurance, some critical illness plans for senior citizens should be

designed.

Agents should take responsibilities to deposit the money.


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Staff attitude should be more courteous and respectful toward he senior

citizens.

Tie ups should be mad with some senior citizens clubs and associations.

Formalities should be reduced to ease the senior citizens.

CRM can be applied to make them more familiar with the company.

From the research conducted:

It can be said that that senior citizen give priority to brand name (fame and

reliability) and services provided by them.

Banks and post offices are the first choice of them.

F.D.s and M.I.S. are most popular avenues among senior citizens.


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Chapter :- 1

INTRODUCTION


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INTRODUCTION

Indian economy is growing at a rapid pace and service industry is now

becoming the essence of economy. Investment avenues provide money flow in

economy. to be a market leader, it is necessary to understand the buying behavior

of customer to tap them and make them loyal customer.

For any brand acceptance by customers, their priority and brand loyalty is

base for increase in market share and presence in market. So it is important for

investment companies & for me as a student of marketing, to understand the

buying behavior of customers. My research is concentrated on senior citizens.

How they invest ?

Why they invest ?When do they invest ?

From whom do they purchase?

What motivates them to make investment?

What is the base of their investment decision and brand choice? Etc.


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Investment

Investment is the employment of funds on assets with the aim of earning

income or capital appreciation. Investment has two attributes namely time and

risk. The risk is undertaken with a view to reap some return from the investment.

Financial investment is the allocation of money to assets that are expected to

yield some gain over a period of time. It is an exchange OF financial claims such

as stocks and bonds for money. They are expected to yield some gain over a

period of time .It is an exchange of financial claim such as stocks & bonds for

money. They are expected to yield returns and experience capital growth over the

years.


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Investment objectives

The main objectives are increasing the rate of return & reducing the risk.

Other objectives like safety, liquidity and inflation can be considered as subsidiary

objectives.

Return-

Investor always expects a good rate of return from their investments. Rate ofreturn could be defined as the total income the investor receives during the holding

period stated as a percentage of the purchasing price at the beginning of the holding

period.

Risk-

Risk of holding securities is related with the probability of actual return

becoming less than the expected return. An investment whose rate of return varies

widely from period to period is risky than whose return that does not change much.

Every investor likes to reduce the risk of his investment by proper combination of

different securities.

Liquidity-

Marketability of the investment provides liquidity to the investment. the liquidity

depends upon the marketing & trading facility. If a portion of the investment could be

converted into case without much loss of time, it would help the investor meet the

emergencies.


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Hedge against inflation-Since their inflation in almost all the economy, the rate of return should ensure

a cover against the inflation .The return rare should higher than the rate of inflation.

Safety

The selected investment avenue should be under the legal & regulatory frame

work. If it is not under the legal frame work, it is difficult to represent the grievances, if

any.

Investment Alternatives-

The problem of surplus gives rise to the question of where to invest at present,

a wide variety of investment avenues is open to the investors to suit their needs &

nature. Knowledge about the different avenues enables the investor to choose

investment intelligently. The required level of return & the risk tolerance level decide

the choice of the investor. The financial securities may be negotiable or non-

negotiable.


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Negotiable securities

Equity shares-

Equity shares are commonly referred to common stock or ordinary shares. Share

capital of a company is divided into a number of small units of equal value called

shares. The stock market classifies shares into growth shares, income shares,

defensive shares, cyclical shares & speculative shares.

Growth Shares-

The stocks that have higher rate of growth than the industrial growth

rate in profitability are referred to as growth shares.

Income shares-

The stocks belong to companies that have comparatively stable

operation & limited growth opportunities.

Defensive shares-

Defensive shares are relatively unaffected by the market movements.

Cyclical shares

The business cycle affects the cyclical shares. The upward &

downward movements of the business cycle affect the business prospects of

certain companies and their stock prices.

Speculative shares-

Shares that have lot of speculative trading in them are referred to as

speculative shares.


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Preference shares

Preference shares are no longer regarded as inferior to the equity capital.

High tax paying investors prefer to subscribe to the preference shares .The

biggest advantage is the tax-exempt status of the preference shares divided.

Bonds-

Bonds are similar to the debenture but they are issued by the public sector

undertaking. The value of the bond in the market depends upon the interest rate and

the maturity.

VIPs & KVPs -

These are saving certificates issued by the post office with the name indira-

vikas patra and kisaan vikas patra .

Govt. securities-

The securities issued by the central, state govt. Quasi govt. agencies are

know as govt. securities or gilt edged securities.

Money Market securities-

Money Market securities Have very short-term maturity say less than a year.

Common money market instruments are :

Treasury Bills

Commercial Paper

Certificate of deposit


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Non Negotiable securities

Deposits-

Deposit earn fixed rate of return. Even though bank deposits resemble fixed

income securities they are not negotiable instruments. Some of the deposits are

dealt subsequently.

Bank deposits-

It is the simple investment avenue open for the investors. He has to open an

account and deposits the money. Traditionally the banks offered current account,

saving account. The deposits in the banks are considered to be safe because of the

R.B.I. regulation.

Post office deposits-

Like the banks, post office also office fixed deposits facility and monthly

income scheme for the retired.

NBFC deposits-

In recent years there has been a significant increase in the importance of non-

banking financial companies in the process of financial intermediation. The NBFC

comes under the purview of the RBI.


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Tax sheltered savings scheme-

Tax sheltered savings scheme are of great importance to the investors in the

tax paying Category the tax sheltered savings scheme offer tax relief to those who

participate in their schemes according to the income tax laws. The important tax

sheltered savings schemes are

Public provident fund

National saving scheme

National saving certificate vlll series


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Life Insurance-

Life Insurance is an agreement between the person insured and the

insured .under the term of a life insurance. Contract the insured against to a

beneficiary in exchange for premium payments.

Usually the insurance contract provides for the payments of and

amount on the date of maturity or at specified dates at periodic internals , or in

the event of unfortunate death , if it occurs earlier . Life insurance is universally

acknowledged as a tool to eliminate risk, replace uncertainty with certainty.

And ensure timely aid for the civilized worlds partial solution to the financial

solution to the financial problems caused by death.

Mutual funds-

Investment companies or investment trusts obtain funds from large

number of investors through sale of units. The funds collected from investors

are plays Real assets ed under professional managements for the benefit of

the investors mutual funds are broadly classified into open ended scheme andclose ended scheme

Gold and silver-

For ages gold and silver have been considered as from of investment.

They is considered as best hedge against inflation. This is a favorite from of

investment amongst the rural and semi-urban population .beside, investors

tend to invest in jewellery instead of pure gold.


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Real Estate-

The real estate market offers a high returns to the investors. The word

real estate means land buildings. There is normal notion that the price of the

real estate has increased by more then 12% over the past ten years. The

population growth and the exodus of people towards the urban cities have

made the prices to increase manifold reasons for investing in real estate are-

High capital appreciation.

Availability of loans for the construction of houses.

Tax rebate is given to the interest paid on housing loan.

The possession of a house given an investor a psychologically secure feeling

and a standing among his friends and relatives.

Art-

Paintings are the most sought after form of art .The prices in the art

market are raising and this rise is expected to continue. The trend in market

today is you invest in young upcoming painters whose prices will soar over

the years.

Antiques-

In Western countries investment in antiques is more common that in

India. The antique is an object of historical interest. It may be a coin,sculpture, manuscript or any other object of olden days. The owner of the

antique has to register himself with Archeological society of India.


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SENIOR CITIZENS SAVINGS SCHEME:

Government of India has decided to operate the scheme through all

branches of Public Sector Banks which are operating PPF Scheme, 1968.

Eligibility-

(i) An individual who has attained the age of 60 years and above on the

date of opening of an account.

(ii) who has attained the age of 55 years or more but less than 60 years andwho has retired on superannuation or otherwise on the date of opening an

account.

(iii) who has retired at any time before the commencement of these rules

and attained the age of 55 years or more on the date of opening of an

account,

(iv) The retired personnel of Defense Services (excluding civilian Defense

employees) irrespective of the above age limits subject to fulfillment of other

specified conditions.

NRI-

NRI's are not eligible to open an account under these rules.

HUF-

Hindu Undivided Family is also not eligible to open an account under these rules.


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Salient features-

Any depositor may open an account at any deposit office by making an

application in Form A along with the amount of deposit in multiple of one

thousand rupees, along with age proof.

A depositor may operate more than one account subject to the condition that

deposits in all accounts taken together shall not exceed the maximum limit

of Rs.15 lakh and provided that deposits by depositors shall be restricted to

the retirement benefits of Rupees fifteen lakh whichever is lower.

A depositor may open the account in individual capacity or jointly with spouse.

Deposits and withdrawals-

There shall be only one deposit in the account in multiple of one thousand

rupees not exceeding rupees fifteen lakhs.

No withdrawal shall be permitted under these rules before the expiry of a

period of five years from the date of opening of an account.

Mode of Deposit-

The deposit under these rules may be made :

(a) In cash, if the amount of deposit is less than rupees one lakh.

(b) By cheque or demand draft drawn in favour of the depositor and

endorsed in favour of the deposit office.


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Maturity-

The deposit made at the time of opening of account shall be paid by the

concerned deposit office after the expiry of five years from the date of opening of

the account on production of the passbook accompanied by a written application

(withdrawal form) Form E.

In case the depositor does not close the account on maturity and also does

not extend the account, the account will be treated as matured and the depositor

will be entitled to interest at the rate applicable to the deposits under post office

savings account during the post maturity period.

Death of the depositor-

In case of death of the depositor before maturity the account shall be closedand deposit refunded on application in Form F along with interest to the nominee orlegal heirs in case the nominee has also expired or nomination was not made asper rules.

If the total amount including interest payable is up to rupees one lakh it may

be paid to the legal heirs on production of (i) letter of indemnity (ii) an affidavit (iii) a

letter of disclaimer on affidavit (iv) a certificate of death of the depositor on

stamped paper in the form as in Annexure to Form F.

Premature closure of Account-


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On an application in Form E the depositor may be permitted to withdraw the

deposit and close the account at any time after the expiry of one year from the date

of opening of the account subject to the following conditions:-

(a) In case the account is closed after the expiry of one year but before the

expiry of two years from the date of opening of the account, an amount equal to

one and half percent of the deposit shall be deducted and the balance paid to the

depositor.

(b) In case the account is closed on or after the expiry of two years from the

date of opening of the account, an amount equal to one percent of the deposit shall

be deducted and balance paid to the depositor.

Transfer of Account

A depositor may apply on Form G for transfer of his account from one

deposit office to another in case of change of residence.

SPECIAL DEPOSIT SCHEME FOR SENIOR CITIZEN


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1.1 For all term deposits (domestic/NRE), from Senior Citizens of age 60

years and above, regardless of size of deposits, an additional interest of 0.5 per

cent over the normal rate of interest will be payable on maturity periods of one year

and above. This will be applicable for fresh term deposits and renewals.

1.2 Verification of Age: For the purpose of verification of age, at the time

of opening a new term deposit account of a Senior Citizen, the branches should

satisfy about the age by verifying any of the following documents :-

i. Secondary School Leaving Certificate indicating date of birth,

ii. LIC Policy,

iii. Voters Identity Card,

iv. Pension Payment Order,

v. Birth Certificate issued by the competent authority,

vi. Passport, or

vii. Any other document acceptable to the branches.

1.3 Renewal of Accounts of Senior Citizens

Once the age of a Senior Citizen is verified for accepting a term deposit

under this special scheme, bank shall not seek proof of age for renewal of the

deposit or for accepting subsequent term deposits from the same depositor under

this special scheme.

1.4 Treatment of Joint Depositors


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For term deposits from Senior Citizens jointly, with other person below the

age of sixty years, under this special scheme, it has to be ensured that the name of

the Senior Citizen is noted as the first name in the application for such deposits.

1.5 Automatic Transfer to Nominee

For this special deposit scheme for Senior Citizens, there will be automatic

transfer of deposits to the nominees of such depositors in the event of death of the

depositor.

1.6 Eligibility for Members of Staff

Branches may pay additional interest to our retired staff members, who are

senior citizens on their fresh term deposits and on renewals of existing term

deposits as follows:

Period of DepositNormal Staff

Privilege

As a Senior

Citizen

Total extra

interest

180 days to less

than 3 years1% 0.25% 1.25%

3 years and above 1% 0.50% 1.50%

There is no restriction in regard to the minimum amount. However, the amount of

maximum deposit shall not exceed


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CHAPTER: 2

INDUSTRY PROFILE

HISTORY


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Life Insurance in its present form came to Indian from the United Kingdom

with the establishment of a British firm Oriental Life Insurance Company in Calcutta

in 1818 followed by Bombay Life Assurance Company 1823. The Indian Life

Assurance Companies Act. 1912 was the first statutory measure to regulate life

Insurance business.

In the 1938, earlier legislation was consolidated and amended by the

Insurance Act. 1938, with comprehensive provision aimed at exercising effective

control over the activities of insurers. The main concern was to protect the interests

of the insuring public.

The Act was amended in 1950 resulting in far-reaching changes in the

insurance sector. By 1956, 154 Indian insurers. 16 foreign insurers and 75

provident societies were carrying on life insurance business in the country.

In January 1956, in keeping with the then prevailing political and economical

philosophy of socialism, 245 Indian and foreign insurance and provident societies

operating in Indian were taken over by the Central Government by an Act ofParliament, the Life insurance Corporation Act 1956. The LIC, with a capital of Rs.

5 crores was set up September that year.

Privatization in 1990s


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As part of the wide ranging economic reforms initiated in 1991, the

structure of the Insurance sector was examined by a committee headed by Mr. R.

N. Malhotra. The committee's recomendation to open up the sector to private

sector participation was implemented by the Government in 2000. The key element

in the reform process was the participation of overseas insurance companies,

through restricted to 26 percent of the capital.

With the Insurance Regulatory and Development Authority Act, 1999 (IRDA)

formally coming into force, the insurance industry was opened up for private sector

participation.

The main objective of setting up the IRDA was to project the interests of

Policy holders and to regulate, promote and ensured orderly development of the

insurance industry.

Over four decades the industry has been a State monopoly. Till date the LIC

has insured over 120 million individuals and has a vast sales network of over 7 lakh

insurance agents. The industry is witnessing an upsurge in consumer awareness,

building immense and unavoidable pressure among the players.

Indian is a market of mainly small policies. The average annual life premiumis less than the equivalent of $ 100 Indian is also marked by a very low insurance

penetration rate. Although no authentic statistics is available, a rough estimate is

that only 20 percent of the insurable population is insured.


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What is Insurance

The business of insurance is related to the protection of the economic valueof assets. Every asset has a value. The assets would have been created through

the effort of the owner. The assets are valuable to the owner, because he expects

to get some benefit from it. The benefit may be an income or some thing else. It is

a benefit because it meets some of his needs. In the case of factory or a cow, the

product generated by is sold and income generated. In the case of the motorcar, it

provides comfort and convenience in transportation. There is no direct income.

Every asset is expected to last for a certain period of time during which it will

perform. After, that the benefit may not be available. There is a lifetime for a

machine in a factory or a cow or a motorcar. None of them will last forever. The

owner is aware of this and he can so manage his affairs that by the end of that

period or life time, a substitute is made available Thus, he make sure that the value

or income is not lost. However the assets may get lost earlier. An accident or some

other unfortunate event may destroy it or make it nonfunctional. In that case the

owner and those driving benefit and the planned substitute there from, would be

deprived of the benefit and the planned substitute would not have been ready.

There is an adverse or unpleasant situation. Insurance is a mechanism that helps

to reduce the effect of such adverse situation.


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Need of Life Insurance

Life Insurance provides risk cover which no other investment option

offers. It provides full protection against risk of death. Risks and uncertainties are

part of life's great adventure -- accident, illness, theft, natural disaster - they're allbuilt into the working of the Universe, waiting to happen.

Encourages and forces compulsory savings as the saved money

cannot be withdrawn and premium has to be paid regularly.

Provides loan to tie over a temporary difficult phase and is also

acceptable as security for a commercial loan.

Provides tax benefits to policyholders.

Hedges risk against uncertainty.

Perceptions behind taking life insurance

protection

investment

future expenses

retirement planning


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Protection

In case we are worried about the well being of your loved ones and wish that

they are adequately provided for and that their lives are not affected, even when

you are not around, choose a plan which gives maximum returns in case of death.Whole Life policies, term plans should be your choice.

Investment

I can have plans which combine the security of a life insurance policy with

the opportunity of enjoying high returns on your investments. You can even market-

linked returns without market risks compromising the protection of your family.

Choose from the Savings and Investment plans offered by companies. You can

choose from higher risk plans which invest in equities or moderate risk plans which

invest in fixed income securities or very low risk investments in cash and call

money markets.

Future expenses

Depending on what youre future foreseeable expenses are- marriage,

house, childrens education, vacation you can select from the policies.

For future expenses related to children there are host of Children related policies.

LIC has Jeevan Balya, Jeevan Sukanya, Komal Jeevan etc.while ICICI Prudential

has various Smart Kid plans.

For other expenses, Savings, Investment, Money Back Plans would be appropriate.


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Retirement planning

Retirement plans provide solutions to combine investment and insurance.

They are designed to maintain your lifestyle needs for as long as you live and

ensure peace of mind. It provides an income (i.e., pension/annuity) for your entirelife from your chosen date of retirement. This annuity is a guaranteed amount,

guaranteed at the time of vesting (i.e., commencement of annuity).

Market Penetration

Market penetration is an important concept in business planning and

development. You must consider the types of businesses and the numbers of

businesses in your geographic location in when determining your strategy for

market penetration.

Market penetration must be looked at in terms of the business base in your

geographic area. You need to first determine the revenue you must generate and

then look at the businesses within your area that can support these revenue

projections. A good market penetration strategy is one that considers your

geographic business base and revenue projections in conjunction with one another.

Market penetration here I consider that market capture by different life

insurance company in Udaipur. Also we see that most of people take which

company plan.


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How much insurance we need

This will depend on:

Your life stage and your needs

The wealth, income and expense levels of your dependents

Their significant foreseeable expenses

The inheritance you would leave them, and

The lifestyle you want to provide for them.

Advantages of Life Insurance

Even so, a comparison with other form of savings will show that life insurance hasthe following advantages.

In the event of death, the settlement is easy. The heirs can collect the

moneys quicker, because of the facility of nomination and assignment. The

facility of nomination is now available foe some bank account.

There is a certain amount of compulsion to go through the plan of saving. In

other form, if one changes the original plan of saving, there is no loss. In

insurance, there is a loss.

Creditors cannot claim the life insurance moneys. They can be protected

against attachments by courts.

There are tax benefits, both in income tax and in capital gains.

Marketability and liquidity are better. A life insurance policy is property and

can be transferred or mortgaged. Loans can be raised against the policy.


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Role of Insurance in Economic Development

For economies development, investment is necessary. Investment is made

out of savings. A life insurance company is a major instrument for the

mobilization of savings of people, particularly from the middle and lower

income groups. These savings are channeled into investment for economic

growth.

As on 31.3.2002,the total investment of LIC exceed rs.245, 000 corers, of

which more than rs.130, 000 corers were directly in government related

securities, more than rs.12000crores in hosing loan and Rs.4000 corers in

water supply and sewerage systems.

The LIC is not an exception. All good life insurance companies have huge

funds, accumulated through the payment of small amount of premia of

individual . These funds are invested in ways that contributed substantially

for the economic development of the countries in which they do business.

A life insurance company will have large funds. These amounts are collectedby way of premiums. Every premium represents a risk that is covered by that

premium. In effect, therefore, these vast amounts represent pooling of risks.

These funds are collected and held in trust for the benefit of the

policyholders.

Without insurance, trade and commerce will find it difficult to face the impact of

major perils like fire, earthquake, floods, etc.

PRESENT MARKET SCENARIO


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The government of India liberalized the insurance sector in March 2000 with

the passage of the Insurance Regulatory and development authority (IRDA) Bill,

lifting all entry restrictions for private players and allowing foreign players to enter

the market with some limits on direct foreign ownership. Under the currentguideline, there is a 26 percent equity cap for foreign partners in an insurance

company. There is a proposal to increase this limit to 49 percent. Premium rates of

most general insurance policies come under the purview of the government

appointed Tariff Advisory committee.

The opening up of the sector is likely to lead to greater spread and

deepening of insurance in India and this may also include restructuring and

revitalizing of the public sector companies. A host of private insurance companies

opening in both life and non-life segments have started selling their insurance

policies since 2001.

Insurance industry earlier comprised of only two state insurers. Life Insurers

i.e. Life Insurance Corporation of India (LIC) and General Insurance Corporation of

India (GIC). The Insurance Regulatory and development authority (IRDA) issued

the first batches of license in 2001. 19 Companies are existing & 15 companies are

ready to enter in this sector.

Indian Insurance sector touted to record an 18% growth annually.

LIC has the large market share with it.

At present following are the players in the Indian market:

LIFE INSURERS:


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1. BAJAJ ALLIANZ LIFE INSURANCE CO. LTD.

2. BIRLA SUN LIFE INSURANCE CO. LTD.

3. HDFC Standard LIFE INSURANCE CO. LTD.

4. ICICI PRUDENTIAL LIFE INSURANCE CO. LTD.

5. ING VYSYA LIFE INSURANCE CO.PVT. LTD.

6. LIFE INSURANCE CORPORATION OF INDIA.

7. MAX NEW YORK LIFE INSURANCE CO. LTD.

8. METLIFE INDIA INSURANCE CO.PVT. LTD.

9. OM KOTAK MAHINDRA LIFE INSURANCE CO. LTD.

10.SBI LIFE INSURANCE CO. LTD.

11.TATA AIG LIFE INSURANCE CO. LTD.

12.BHARATI AXA LIFE INSURANCE CO.

13.AMP SANMAR LIFE INSURANCE CO.

14.EGON RELIGARE LIFE INSURANCE CO.

15.AVIVA LIFE INSURANCE CO. PVT. LTD


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CHAPTER-3

COMPANY PROFILE

ICICI Prudential Life Insurance


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ICICI Prudential Life Insurance is a joint venture between the ICICI Group and

Prudential plc, of the UK. ICICI started off its operations in 1955 with providing

finance for industrial development, and since then it has diversified into housing

finance, consumer finance, mutual funds to being a Virtual Universal Bank and its

latest venture Life Insurance.

Foreign Partner:

Established in 1848, Prudential plc. of U.K. has grown to be the largest life

insurance and mutual fund company in U.K. Prudential plc. has had its presence in

Asia for the past 75 years catering to over 1 million customers across 11 Asian

countries.

Prudential is the largest life insurance company in the United Kingdom (Source :

S&P's UK Life Financial Digest, 1998).

ICICI and Prudential came together in 1993 to provide mutual fund products in

India and today are the largest private sector mutual fund company in India.

Their latest venture ICICI Prudential Life plans to take care of the insurance needs

at various stages of life.

ICICI Prudential Life Insurance Company is a joint venture between ICICI Bank, a

premier financial powerhouse and Prudential plc, a leading international financial

services group headquartered in the United Kingdom.

ICICI was established in 1955 to lend money for industrial development. Today, it

has diversified into retail banking and is the largest private bank in the country.

Prudential plc was established in 1848 and is presently the largest life insurancecompany in the UK.

ICICI Prudential is curently the No. 1 private life insurer in the country. For the

financial year ended March 31, 2005, the company garnered Rs 1584 crore of new


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business premium for a total sum assured of Rs 13,780 crore and wrote nearly

615,000 policies.

Insurance Products and Services include :

1. Individual Insurance

2. Protection Plans including:

Life Guard (covers life at low cost)

Home Assure (cover home loans of customers)

3. Child Plans (Smartkid Plan providing Education Insurance)

4. Health Solution including:

Health Assure and Health Assure Plus

Cancer Care

5. Group Insurance Plans including

Group Gratuity Plan

Group Superannuation Plan

Group Immediate Annuities

Group Term Plan

6. Rider Options including:

Income Benefit

Accident and Disability benefit


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Critical Illness Benefit

Waiver of Premium


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MANAGEMENT

Board of Directors

The ICICI Prudential Life Insurance Company Limited Board comprises reputed

people from the finance industry both from India and abroad.

Mr. K.V. Kamath, Chariman

Mr. Mark Tucker

Mr. Lalita D. Gupte

Mr. Danny Bardin

Mrs. Kalpana Morparia

Mrs. Chanda KochharMr. M.P. Modi

Mr. R. Narayanan

Mr. Shikha Sharma, Chief Managing Director

Management Team

Ms. Shikha Sharma, Chief Managing Director

Ms. Anita Pai, Chief, Operations & Underwriting

Mr. Puneet Nanda, Investment Head

Mr. Sandeep Batra, Chief Financial Officer & Company Secretary

Mr. Sujit Ganguly

Mr. Shubhro J. Mitra, Chief Human Resources

Mr. Dipen Bhattacharya, Chief Information Technology


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PRODUCT OF ICICI PRU

What Is Human Life?

Insurance Solutions for Individuals

ICICI Prudential Life Insurance offers a range of innovative, customer-centricproducts that meet the needs of customers at every life stage. Its 17 products

can create a customized solution for each policyholder.

Savings Solutions

- Secure Plus is a transparent and feature-packed savings plan that offers 3

levels of protection.

- Cash Plus is a transparent, feature-packed savings plan that others 3 levels of

protection as well as liquidity options.

- Save n Protect is a traditional endowment savings plan that offers life

protection along with adequate returns.

- Cash Bank is an anticipated endowment policy ideal for meeting milestone

expenses like a child's marriage, expenses for a child's higher education or

purchase of an asset.

Protection Solutions

Lifeguard is a protection plan, which otfers life covers at very low cost. It

is available in 3 options - level term assurance, level ternl assurance with return

of premium and single premium.

Child Solutions


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Smart Kid child plans provide guaranteed educational benefits to a child

along with life insurance cover for the parent who purchases the policy. The

policy is designed to provide money at important milestones in the child"s life.

Smart Kid child plan are also available with in unit-linked form - both single

premium and regular premium.

Market-linked Solutions

- Life Link 11 is a single premium Market Linked Insurance Plan that combines

life insurance cover with the opportunity to stay invested in the stock market

-LifeTime 11 offers customers the flexibility and control to customize the policy

to meet the changing needs at different life stages. It offers 3 investment options

Growth Plan, Income Plan and Balanced Plan.

Retirement Solutions

- ForeverLife is a retirement product targeted at individuals in their thirties.

- Secure Plus Pension is a flexible pension plan that allows one to

select between 3 levels of cover.

-

Market-linked retirement products

- LifeTime Pension 11 is a regular premium market-linked pension plan

- Life Link Pension 11 is a single premium market-linked pension plan.

ICICI Prudential also launched "Salaam Zindagi", a social sector group insurance

policy targeted at the economically underprivileged sections of the society.

Group Insurance Solutions


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ICICI Prudential also offers Group Insurance Solutions for companies

seeking to enhance benefits to their employees.

Group Gratuity Plan:

ICICI Pru"s group gratuity plan helps employers fund their statutory

gratuity obligation in a scientific manner. The plan can also be 32 customized to

structure schemes that can provide benefits beyond the statutory obligations.

Group Superannuation Plan:

ICICI Pru offers a flexible defined contribution superannuation scheme to

provide a retirement kitty for each member ofthe group.

Employees have the option ofchoosingfrom various annuity options or optingfor

a partial commutation ofthe annuity at the time ofretirement

Group Term Plan:

ICICI Pru's flexible group ten solution helps provide affordable cover to

members ofa group. The cover could be uniform or based on designation/rank or

a multiple of salary. The benefit under the policy is paid to the beneficiary

nominated by the member on his/her death.

Flexible Rider Options

ICICI Pru Life offers flexible riders, which can be added to the basic policy

at a marginal cost, depending on the specific needs of the customer.

I. Accident & disability benefit:

[fdeath occurs as the result ofan accident during the tenn ofthe policy,

the beneficiary receives an additional amount equal to the sum assured under the

policy. If the death occurs while traveling in an authorized mass transport

vehicle, the beneficiary will be entitled to twice the sum assured as additional

benefit.

2. Accident benefit:


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This rider option pays the sum assured under the rider on death due to

accident.

3. Critical Illness Benefit:

Protects the insured against financial loss in the event of 9 specified

critical illnesses. Benefits are payable to the insured formedical expenses prior

to death.4. Major Surgical Assistance Benefit:

Provides financial support in the event ofmedical emergencies, ensuring

that benefit are payable to the life assured formedical expenses incurred for

surgical procedures. Cover is offered against 43 different surgical procedures.

5. Income Benefit:

This rider pays the 10% of the sum assured to the nominee every year, till

maturity, in the event of the death of the Life assured. It is

available on Smart Kid, Secure Plus and Cash Plus

6. Waiver of Premium:

In case of total and pennanent disability due to an accident, the premiums

are waived till maturity. This rider is available with

Secure Plus and Cash Plus.


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PROMOTERS

The promoters of ICICI Prudential Life Insurance Company are: ICICI Bank and

Prudential Plc. ICICI and Prudential came together in 1993 to form Prudential

ICICI Asset Management Company, which has today emerged as one of the leading

mutual funds in India. The two companies bring together two of the strongest

financial service brands in Asia, known for their professionalism, excellent quality

of service and long term commitment to their customers.

ICICI Bank has 74% stake in the company, and Prudential Plc. has 26% .

ICICI BANK

ICICI Bank is India's second-largest bank with total assets of about Rs. 132,780

crores at September 30, 2004 and profit after tax of Rs. 873 crores in the half

year ended September 30, 2004 (Rs. 1,637 crores in fiscal 2004).

ICICI Bank has a network of about 540 branches and extension counters anover

1800ATMS.

ICICI Bank offers a wide range of banking products and financial services to

corporate and retail customers through a variety of banking products and

financial services to corporate and retail customers through a variety of delivery

channels and through its specialized subsidiaries and affiliates in the areas of

investment banking, life and non-life insurance, venture capital and asset

management.

ICICI Bank set up its international banking group in fiscal 2002 to cater to the

cross-border needs of clients and leverage on its domestic banking strengths tooffer products internationally.

ICICI Bank currently has subsidiaries in United Kingdom and Canada, branches

in Singapore and Bahrain and representative offices in the United States, China,

United Arab Emirates and Bangladesh.


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ICICI Bank's equity shares are listed in India on the Stock Exchange, Mumbai

and the national Stock Exchange of India Limited and its American Depository

Receipts (ADRs) are listed on the New York Stock Exchange


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Chapter :-3

Research Methodology

RESEARCH METHODOLOGY


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Title- A study of investment pattern of senior citizen.

A. Objectives-

1. To study & analysis the factors influencing pattern of senior citizen.

2. To find out the preference of senior citizen regarding investment.

B. Sample design

Sample size- 70

Sampling technique convenience sampling

Sampling unit customers of udaipur city

C. Tools of data collection

Data was collected through survey method in which questionnaire used

along with interview method.

D. Analysis

Analysis part is done through charts and graphs.


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Chapter :- 4

Data Interpretation

Analysis and interpretation


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1. Income Group

Table 1.1

S.no. IncomeNo. of

RespondentsIn percentage

1. Up to 10,000 39 55.71%

2. 10000 to 20000 21 30%

3 20000 to 30000 06 8.57%

4. 30000 & Above 04 5.71%


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Graph 1

Inco me of the inve

0

10

20

30

40

50

60

up to

10000

10000

to

20000

20000

to

30000

30000

&

above

Incom

No.

ofn

respondents

no. of resp onde

in percentage

Interpretation:-

In my study 55.71% senior citizen were found to be in income group up to

Rs.10000 only 5.71% senior citizen were of high income group.


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2.Education

Table 2.1

S.no Education No. Of Respondents In Percentage

1 Undergraduate 24 34.28%

2 Graduate 22 32%

3 Post-Graduate 20 28.57%

4 Professionals 4 5.71%


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Graph 2.1

2422

20

4

34.2832.42

28.57

5.71

0

5

10

15

20

25

30

35

40

undergraduate graduate post graduate professionals

Interpretation:-


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Almost equal no. of respondent belong to undergraduate , Graduate ,post-

Graduate but only 5.17% senior citizens in my study belong to professional

category , this can be attributed to the fact that before few decade ago

professional courses were not so popular.

3. Occupation

Table 3.1

No. Occupation No. Of Respondents In Percentage

1 Business 6 8.57%

2 Retired From Govt. Service 48 68.57%

3 Retired From Pvt. Service 14 20.00%

4 Retired & Currently doingService/Business

4 5.71%


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Graph 3.1

occupation

01020304050607080

Business

Retiredfrom

govt.

services

Retired

from

privatetservices

retiredfr

om

currentlyd

oing

services/bu

siness

occupation

No.ofrespondent

no. of respondents

in percentage


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Interpretation

Mostly senior citizen are retired from Govt. service & they have pension as their

source of income ,only 5.71% senior citizen are currently doing business or

service & having a regular source of income other than income other than

pension.

4 .Tick the option(s) in which you have made your investment

Table -4.1

Particular Investment No. of Respondent In percentage

1 Bank 54 77.14%2 Insurance 21 30.00%3 Post Office 55 78.57%

4 Mutual Fund 6 8.57%

5 Shares 8 11.43%6 Bonds 2 2.85%7 Gold 8 11.42%8 Property 8 11.42%


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Graph 4.1


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Investment avenue of senior citizen

0102030405060708090

Bank

Insurance

Postoffice

Mutualfu

nd

Shares

Bonds

Gold

Property

Investment

No.ofrespondents

no. of respondents

in percentage

Interpretation:-

Most of the respondent has made their investment in either bank or post office or

in both. Almost every one have their investment either in bank or in post office

(traditional investment avenue ) .

It can be attributed to the fact that banks post offices being the tradition avenue are

more established and less risky.

Approx 34% Respondent has made their investment in insurance & all are

previously taken by them. There is less number of respondent who invest in mutual

funds, bonds, shares i.e. securities related avenue, But in spite of general

phenomenon of senior citizen being risk averse , still some people go for it.

5. Have you made changes in last one year?


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Table- 5.1

ParticularNo. Of

RespondentIn Percentage

Yes 18 25.71%

No 52 74%

Graph-5.1


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Changes in investment

0

10

20

30

40

50

60

70

80

no. of respondents in percentage

response

No

.ofrespondents

Yes

No

Interpretation:-

52% respondents have not made any changes in their investment during last one

year. This shows that senior citizen are conservative & now at this age they do not

want to try new avenues.

6. While making investment which of the following factor you consider (on 5

point rating scale)

Table-6.1

Particular 1 2 3 4 5OverallRating


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Liquidity 8 4 19 29 10 3.3

GoodReturns

- 8 20 28 14 3.6

Safety - 6 20 36 4.2

Tax Benefit 22 10 13 15 10 2.72

Interpretation:- Above data shows that main purpose of investment of senior

citizen is safety. On 5 point rating scale safety got 4.2 point which is highest, then

good returns then liquidity then for tax benefit.

In Post Office Avenue MIS is the most popular investment avenue since people

needs to invest a small amount of their monthly pension into MIS as monthly

installment and it is well known.

While making investment in F.D & R.D, they prefer bank over post office. Still

people invest in NSE. But KVP and IVP are very less popular.

In securities bonds although safer than mutual funds or shares, may be less

awareness, or less popular as Investment Avenue.

7. While making investment what frequency of payment you choose.

Table -7.1


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S . No. Particular No.of Respondents In Percentage

1. One Time 20 28.57%

2. Yearly 12 17.14%

3. Half Yearly 2 02.85%

4. Quarterly 8 11.42%

5. Monthly 28 40.00%


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Graph -7.1

Investment frequency

05

101520

2530354045

Onetim

e

yearly

Halfy

early

Quarterly

Monthly

Frequency

No.ofre

spondents

no. of respondents

in percentage

Interpretation:- Above data reveals that most of the senior citizen(40%) adopt

the monthly frequency as installment or they prefer one time investment (approx

29%), This can be attributed to the fact that generally senior citizen get pension

as their monthly income & they get a lump sum amount as gratuity.


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Graph -8.1

Investment sector preference of senior citizen

0

10

20

30

40

50

60

7080

public sector private sector Both according

to reach

investment sector

No.ofrespondents

no. of respondents

in percentage

Interpretation:-

Above figure shows that most of senior citizen invests in public sector as believe

that their money is safe in public sector & safety is main purpose of their

investment . only 31.42% (2.85% pvt. )+ 28.57% in both ) senior citizen have faith

on pvt. Sector for their investment . This may be because before few decade Govt.


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sector was the dominating one & pvt. Sector was not so reliable so these people is

continuing with the same mind set.

9. while making your investment .How you choose the company.(Rank)

Table 9.1

Particular 1 2 3 4 5 Overall

rating

Brand Name 0 02 14 16 38 4.2

Employee

Interaction

8 6 22 22 12 3.3

Services

provided by them

03 07 19 17 24 3.74

Recommendation 39 04 07 20 0 2.11

Interpretation:-

How senior citizens choose the company in which they invest? They ans. This

question in the favor of Brand name And SERVICES PROVIDED BY THEM

on 5 point rating scale Highest points (4.2) are acquire by brand name . This can

be attributed to the fact that by the age of 60s generally people have their rigidmind set & they work in their own way.


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10. What motivates you to invest in particular Investment Avenue?

Table 10.1

S.no Particular No. of

respondentsIn Percentage

1.Friend

4 5.71

2. Relative 10 14.28

3. Advertisement 4 5.71

4. Agents 18 25.71

5.Past

Experience34 48.57


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Graph -10.1

Motivation for investment

0

10

20

30

40

50

60

Frien

d

Relative

s

Advertisements

Agents

PastExperience

motivators

No.ofrespondents

no. of respondents

in percentage

Interpretation: - Above data shows the reveals the same fact that most of the

senior citizen makes their investment according to their past experience and

advertisement have the least contribution, advertisement are the means of

awareness only. Approx 27% people said that agents motivate them to invest

which is at second position but agents need to be more convincing to get their faith

and to convince them.


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11.Are you satisfied with your investment ?

Table 11.1

S.No. Particular No. Respondents In Percentage

1.Very Satisfied

38 54.28%

2. Satisfied 20 28.58%

3. Dissatisfied 9 12.86%

4 Very Dissatisfied 3 4.28%


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Graph -11.1

Satisfaction from investment

0102030405060

Verysatisfied

Satisfied

dissatisfied

Verydiss

atisfied

response

No.ofrespondents

no. of respondents

in percentage

Interpretation:- 54.28% of respondent are very satisfied with the performance of

their investment made and 28.58% said that they are satisfied . In my study .

12.86% senior citizen are dissatisfied with their investment , it means to attract the

senior citizen to invest, pvt. Companies & new investment avenue should prove

themselves more attractive and more reliable ,they should design their product

accordingly because to grab the market which is satisfied with their existing choice,

their competitors should be very good then that of existing one.


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12. Do you want to change your investment?

Table -12.1

S. No. Particular NO .Of Respondents In Percentage

1. Yes 12 17.15%

2. No 58 82.85%

Graph-12.1

Change in investment

010

20

30

40

50

60

70

80

90

no. of respondents in percentage

Response

No.ofrespondents

Yes

No

Interpretation: -82.85% Respondents are satisfied through their investment and

do not want to make any change in their investment . This can be attributed to the

fact that they are conservative in nature and as their almost responsibility are over,

they just invest money for their own safety not for good returns so they do not try

new investment avenue with high return and risk.


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Chapter :- 5

Conclusions, Suggestions


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Conclusions

1. Most of the senior citizens have their income up to 10000/- per month ,it

shows that they can have a small amount of their current monthly income.

2. Most of senior citizen are retired from govt. service means they have regular

source of income, they can easily save , although shall amount, the money for

investment regularly.

3. Most of the senior citizen believes either in one time investment or in monthly

saving so companies should design their product accordingly.

4. Senior citizens have a good and concrete faith in govt.sector and to break this

constraint it is difficult but necessary for the pvt. Companies to tab this

particular segment.

5. Past experience and agents has the largest motivating factor to invest in

,which shows that senior citizen have their own belief and to tab this segment

companies should be fit in their belief in terms and condition.

6. Almost every senior citizen have their investment in either in bank or in post

office or in both which shows that bank and post office have a very strong

base in this segment due to their fame and reliability.

7. Pvt. Sector banks have a great scope but they should prove themselves to be

reliable.


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8. In banks F.D.are the most popular avenue and also there is large scope of

saving a/c in different sector.

9. In post office MIS is most popular scheme which reveals the fact that senior

citizen are saving money monthly but in small amount.

10.Bonds are very less popular.

11.Safety is the main motive of investment.

12.While choosing company most of the senior citizen priorty to brand

name(Reliability & Fame)and services provided by them (like easy deposit of

installments, withdrawals ,ATM,etc.).

13. Senior citizen are satisfied with their present choice of investment and 82.85%

of them do not want to change because either they are satisfied or due to no

surplus money to invest in somewhere else so Pvt. Companies should design

their products very specifically if they want attract senior citizens.


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SUGGESTIONS

1. Bank and other investment companies should design their products, which

require monthly installment payments.

2. Companies should recruit more reliable and reputed person as agents to

attract senior citizens.

3. In insurance some critical illness plans should design for senior citizens.

4. In spite of being conservative some senior citizens still invest in mutual

funds and securities.

5. So companies should make the portfolio with less risky securities to attract.

6. Mutual fund companies should a reliable personality and a personality of

their age in advertisements as brand ambassador to attract senior citizen

towards it.

7. Products should be design with small amount of monthly installment.

8. Services provided by Investment Company should be more prompt.

9. Deposit of installment and withdrawal of money should be made easy.

10.Staff attitude should be more courteous and respectful toward senior citizen.


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11.To increase the awareness level and sales there can be some sort of tie ups

with senior citizens clubs and associations.

12.Deposit and withdrawal formalities should be and simplified to the senior

citizens.

13.Banks and mutual fund companies can have the personal records of senior

citizens like important dates and can apply CRM to make them loyal

customers.


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Chapter :- 6

Questionnaire


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QUESTIONNAIRE

Name: Age :

Address

Education:

A) Undergraduate [ ] B) Graduate [ ]

C) Postgraduate [ ] D) Professional [ ]

From which category you belong:

a) Business [ ]

b) Retired from govt. services [ ]

c) Retired from pvt. Service [ ]

d) Retired and now doing business / service [ ]

Last designation: . Year of retirement:

Income group(monthly)a) up to 10,000 b)10,000 to 20,000

c) 20,000 to 30,000 d) above 30,000

1) Percentage of your income, you put into

investment

2) Tick the option(s), you have make your investment.

a) Banks [ ] b) insurance [ ] c) Post office [ ]

d) Mutual fund [ ] e) Shares [ ] f) Real- estate [ ]

g) Gold [ ] h) Any other [ ]


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3) Have you made changes in your investments in last one year?

A) Yes B) No

4) While making investment which of the following factors you consider.

(Rank them)

Particulars Very low Low Neutral High Very highLiquidity

Good

ReturnsSafety

Tax

benefit

4) While making investment what frequency of payment you choose.

a) One time

b) Yearly

c) Half yearly

d) Quarterly

e) Monthly

5) Generally you make investment in

a) public sector

b) Pvt. Sector

c) Both according to reach

6) While making investment, how you consider the following factors to

choose the company.(rank)


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Particulars Very low low neutral high Very highBrand name

Employee

interaction

Services

provided by them

Recommendatio

n

7) What motivates you to invest in particulars investment avenue;

a) Friends

b) Relatives

c) Advertisements

d) Agents

e) Past experience

8) Are you satisfied with the performance your investments?

a) Very satisfied

b) Satisfied

c) Dissatisfied

d) Very dissatisfied


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BIBLIOGRAPHY

w.w.w. Google.com.

www.iciciprudentiallifeinsurance.com

www.rediff.com

Pandian - Security Analysis
http://www.iciciprudentiallifeinsurance.com/http://www.rediff.com/http://www.iciciprudentiallifeinsurance.com/http://www.rediff.com/

Invstmnt Patrn of Senior Citizn

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