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A

Project Study report

On

Training Undertaken at

HDFC Standard Life Insurance Company LimitedOn

A Comparative Analysis of the Services of HDFC Standard Life Insurance Company with its Major

Competitors

Submitted in partial fulfillment for the

Award of degree of

Master Of Business Administration

Submitted By: - Submitted To:-SUBHAM ARORA Dr. PANKAJ GUPTAMBA ,Third semester

2011-2013

PREFACE

Practical Research project report is one of the major components for any

professional course as M.B.A the real place where a professional is tested is the

field. as per stipulation of Rajasthan Technical University, kota.

I had undergone a research project report at “HDFC Standard Life Insurance Company Limited titled “A Comparative Analysis of the Services of HDFC Standard Life Insurance Company with its Major Competitors”

It was a good exposure for me to undergo training in such a company.I was able to

get familiarized with the field component that will help me in building my future

career.

Research project report in HDFC Standard Life Insurance Company Limited.It gave me knowledge about the Indian insurance market.

It helps me know about growing insurance industry in India.

For this project Jaipur and its adjoining areas were selected as focused areas.

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Acknowledgement

I express my sincere thanks to my project guide MR. SHAILESH JAIN, SENIOR PUBLIC RELATION OPERATION MANAGER (HDFC LIFE) for guiding me right from the inception till the successful completion of the project.

I sincerely acknowledgement him for extending his valuable guidance, support for literature, critical reviews of project and the report and above all the moral support she had provided to me with all stages of this project.

I would also like to thank the supporting staff of APEX INSTITUTE OF MANAGEMENT AND SCIENCE for their help and cooperation throughout my project.

(Signature of student)

SUBHAM ARORA

3

EXECUTIVE SUMMARYHDFC Standard Life insurance is the oldest life insurance company in the world. It is the

largest insurer in the UK and is the 28th largest company in the world. In India, the company

is marketing life insurance products and unit linked investment plans. From my research at

HDFC LIFE, I found that the company has a lot of competition from other private insurers

like ICICI, Aviva, Birla Sun Life and Tata AIG. It also faces competition from LIC. To

compete effectively HDFC SLIC could launch cheaper and more reasonable products with

small premiums and short policy terms (the number of year’s premium is to be paid). The

ideal premium would be between Rs. 5000 – Rs. 25000 and an ideal policy term would be

10 – 20 years.

HDFC must advertise regularly and create brand value for its products and services. Most of

its competitors like Aviva, ICICI, Max, Reliance and LIC use television advertisements to

promote their products. The Indian consumer has a false perception about insurance – they

feel that it would not benefit them if they do not live through the policy term. Nowadays

however, most policies are unit linked plans where a customer is benefited even if their

death does not occur during the policy term. This message should be conveyed to potential

customers so that they readily invest in insurance.

Family responsibilities and high returns are the two main reasons people invest in

insurance. Optimum returns of 16 – 20 % must be provided to consumers to keep them

interested in purchasing insurance.

On the whole HDFC standard life insurance is a good place to work at. Every new recruit is

provided with extensive training on unit linked funds, financial instruments and the products

of HDFC. This training enables an advisor/sales manager to market the policies better.

HDFC was ranked 13 in the Best Places to Work survey. The company should try to create

awareness about itself in India. In the global market it is already very popular. With an

improvement in the sales techniques used, a fair bit of advertising and modifications to the

existing product portfolio, HDFC would be all set to capture the insurance market in India as

it has around the globe.

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Table of Contents

1. Introduction to the Industry

2. Introduction to the Organization

3. Research Methodology

3.1 Title of the Study

3.2 Duration of the Project

3.3 Objective of Study

3.4 Type of Research

3.5 Sample Size and method of selecting sample

3.6 Scope of Study

3.7 Limitation of Study

4. Facts and Findings

5. Analysis and Interpretation

6. SWOT

7. Conclusion

8. Recommendation and Suggestions

9. Appendix

10. Bibliography

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CHAPTER I

INDIAN INSURANCE INDUSTRY

“AN OVERVIEW”

6

THE INSURANCE INDUSTRY IN INDIA

AN OVERVIEW

Insurance is a federal subject in India and has a history dating back to 1818. Life

and general insurance in India is still a nascent sector with huge potential for various

global players with the life insurance premiums accounting to 2.5% of the country's

GDP while general insurance premiums to 0.65% of India's GDP. [1]. The Insurance

sector in India has gone through a number of phases and changes, particularly in

the recent years when the Govt. of India in 1999 opened up the insurance sector by

allowing private companies to solicit insurance and also allowing FDI up to 26%.

Ever since, the Indian insurance sector is considered as a booming market with

every other global insurance company wanting to have a lion's share. Currently, the

largest life insurance company in India is still owned by the government

With the largest number of life insurance policies in force in the world, Insurance

happens to be a mega opportunity in India. It’s a business growing at the rate of 15-

20 per cent annually and presently is of the order of Rs 1560.41 billion (for the

financial year 2006 – 2007). Together with banking services, it adds about 7% to the

country’s Gross Domestic Product (GDP). The gross premium collection is nearly

2% of GDP and funds available with LIC for investments are 8% of the GDP.

A well-developed and evolved insurance sector is needed for economic

development as it provides long term funds for infrastructure development and

strengthens the risk taking ability of individuals. It is estimated that over the next ten years

India would require investments of the order of one trillion US dollars. The Insurance sector,

to some extent, can enable investments in infrastructure development to sustain the

economic growth of the country. (Source: www.indiacore.com)

7

INSURANCE INDUSTRY AND ITS CHRACTERISTICS

Nature of the Industry

Goods and services. The insurance industry provides protection against financial losses

resulting from a variety of perils. By purchasing insurance policies, individuals and

businesses can receive reimbursement for losses due to car accidents, theft of property,

and fire and storm damage; medical expenses; and loss of income due to disability or death.

Industry organization. The insurance industry consists mainly of insurance carriers (or

insurers) and insurance agencies and brokerages. In general, insurance carriers are large

companies that provide insurance and assume the risks covered by the policy. Insurance

agencies and brokerages sell insurance policies for the carriers. While some of these

establishments are directly affiliated with a particular insurer and sell only that carrier’s

policies, many are independent and are thus free to market the policies of a variety of

insurance carriers. In addition to supporting these two primary components, the insurance

industry includes establishments that provide other insurance-related services, such as

claims adjustment or third-party administration of insurance and pension funds.

These other insurance industry establishments also include a number of independent

organizations that provide a wide array of insurance-related services to carriers and their

clients. One such service is the processing of claims forms for medical practitioners. Other

services include loss prevention and risk management. Also, insurance companies

sometimes hire independent claims adjusters to investigate accidents and claims for

property damage and to assign a dollar estimate to the claim.

Insurance carriers assume the risk associated with annuities and insurance policies and

assign premiums to be paid for the policies. In the policy, the carrier states the length and

conditions of the agreement, exactly which losses it will provide compensation for, and how

8

much will be awarded. The premium charged for the policy is based primarily on the amount

to be awarded in case of loss, as well as the likelihood that the insurance carrier will actually

have to pay. In order to be able to compensate policyholders for their losses, insurance

companies invest the money they receive in premiums, building up a portfolio of financial

assets and income-producing real estate which can then be used to pay off any future

claims that may be brought. There are two basic types of insurance carriers: primary and

reinsurance. Primary carriers are responsible for the initial underwriting of insurance policies

and annuities, while reinsurance carriers assume all or part of the risk associated with the

existing insurance policies originally underwritten by other insurance carriers.

Primary insurance carriers offer a variety of insurance policies. Life insurance provides

financial protection to beneficiaries—usually spouses and dependent children—upon the

death of the insured. Disability insurance supplies a preset income to an insured person who

is unable to work due to injury or illness, and health insurance pays the expenses resulting

from accidents and illness. An annuity (a contract or a group of contracts that furnishes a

periodic income at regular intervals for a specified period) provides a steady income during

retirement for the remainder of one’s life. Property-casualty insurance protects against loss

or damage to property resulting from hazards such as fire, theft, and natural disasters.

Liability insurance shields policyholders from financial responsibility for injuries to others or

for damage to other people’s property. Most policies, such as automobile and homeowner’s

insurance, combine both property-casualty and liability coverage. Companies that

underwrite this kind of insurance are called property-casualty carriers.

Some insurance policies cover groups of people, ranging from a few to thousands of

individuals. These policies usually are issued to employers for the benefit of their employees

or to unions, professional associations, or other membership organizations for the benefit of

their members. Among the most common policies of this nature are group life and health

plans. Insurance carriers also underwrite a variety of specialized types of insurance, such as

real-estate title insurance, employee surety and fidelity bonding, and medical malpractice

insurance.

Other organizations in the industry are formed by groups of insurance companies, to

perform functions that would result in a duplication of effort if each company carried them

out individually. For example, service organizations are supported by insurance companies

to provide loss statistics, which the companies use to set their rates.

9

Recent developments. Congressional legislation now allows insurance carriers and other

financial institutions, such as banks and securities firms, to sell one another’s products.

More insurance carriers now sell financial products such as securities, mutual funds, and

various retirement plans. This approach is most common in life insurance companies that

already sold annuities, but property and casualty companies also are increasingly selling a

wider range of financial products. In order to expand into one another’s markets, insurance

carriers, banks, and securities firms have engaged in numerous mergers, allowing the

merging companies access to each other's client base and geographical markets.

Insurance carriers have discovered that the Internet can be a powerful tool for reaching

potential and existing customers. Most carriers use the Internet simply to post company

information, such as sales brochures and product information, financial statements, and a

list of local agents. However, an increasing number of carriers are starting to expand their

Web sites to enable customers to access online account and billing information, and some

carriers even allow claims to be submitted online. Many carriers also provide insurance

quotes online based on the information submitted by customers on their Internet sites. In

fact, some carriers will allow customers to purchase policies through the Internet without

ever speaking to a live agent.

In addition to individual carrier-sponsored Internet sites, several “lead-generating” sites have

emerged. These sites allow potential customers to input information about their insurance

policy needs. For a fee, the sites forward customer information to a number of insurance

companies, which review the information and, if they decide to take on the policy, contact

the customer with an offer. This practice gives consumers the freedom to accept the best

rate.

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Working Conditions

Hours. Many workers in the insurance industry—especially those in administrative support

positions—work a 5-day, 40-hour week. Those in executive and managerial occupations

often put in more than 40 hours. There are several occupations in the insurance industry

where workers may work irregular hours outside of office settings. Those working in sales

jobs need to be available for their clients at all times. This accommodation may result in

these individuals working 50 to 60 hours per week. Also, call centers operate 24 hours a

day, 7 days a week, so some of their employees must work evening and weekend shifts.

The irregular business hours in the insurance industry provide some workers with the

opportunity for part-time work. Part-time employees make up 8 percent of the workforce.

Work environment. Insurance employees working in sales jobs often visit prospective and

existing customers’ homes and places of business to market new products and provide

services. Others working in the industry may need to frequently leave the office to inspect

damaged property, and at times can be away from home for days, traveling to the scene of

a disaster—such as a tornado, flood, or hurricane—to work with affected policyholders and

government officials.

A small, but increasing, number of insurance employees spend most of their time on the

telephone working in call centers, answering questions and providing information to

prospective clients or current policyholders. These jobs may include selling insurance, taking

claims information, or answering medical questions.

As would be expected in an industry dominated by office and sales employees, the

incidence of occupational injuries and illnesses among insurance workers is low. In 2006,

only 1.3 cases per 100 full-time workers were reported among insurance carriers, while just

0.7 cases per 100 full-time workers were reported among agents and brokers. These figures

compare with an average of 4.4 for all private industry.

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Employment

The insurance industry had about 2.3 million wage and salary jobs in 2006. Insurance

carriers accounted for 62 percent of jobs, while insurance agencies, brokerages, and

providers of other insurance-related services accounted for 38 percent of jobs.

The majority of establishments in the insurance industry were small; however, a few large

establishments accounted for many of the jobs in this industry. Insurance carriers tend to be

large establishments, often employing 250 or more workers, whereas agencies and

brokerages tend to be much smaller, frequently employing fewer than 20 workers (chart 1).

Many insurance carriers’ home and regional offices are situated near large urban centers.

Insurance workers who deal directly with the public are located throughout the country.

Almost all of those working in sales work out of local company offices or independent

agencies. Many others in the industry work for independent firms in small cities and towns

throughout the country.

Occupations in the Industry

About 44 percent of insurance workers are in office and administrative support jobs such as

those found in every industry (table 1). Many office and administrative support positions in

the insurance industry, however, require skills and knowledge unique to the industry. About

29 percent of insurance workers are in management or business and financial operations

occupations. About 16 percent of wage and salary employees in the industry are sales

workers, selling policies to individuals and businesses. Several others are employed in

computer and mathematical science occupations.

Office and administrative support occupations. Office and administrative support

occupations in this industry include secretaries, typists, word processors, bookkeepers, and

other clerical workers. Secretaries and administrative assistants perform routine clerical and

administrative functions such as drafting correspondence, scheduling appointments,

organizing and maintaining paper and electronic files, or providing information to callers.

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Bookkeeping, accounting, and auditing clerks handle all financial transactions and

recordkeeping for an insurance company. They compute, classify, update, and record

numerical data to keep financial records complete and accurate. Insurance claims and

policy processing clerks process new policies, modifications to existing policies, and claims

forms. They review applications for completeness, compile data on policy changes, and

verify the accuracy of insurance company records. Customer service representatives have

duties similar to insurance claims and policy processing clerks, except they work directly

with customers by processing insurance policy applications, changes, and cancellations

over the phone. They may also process claims and sell new policies to existing clients.

These workers recently are taking on increased responsibilities in insurance offices, such as

handling most of the continuing contact with clients. A growing number of customer service

representatives work in call centers that are open 24 hours a day, 7 days a week, where

they answer clients’ questions, update policy information, and provide potential clients with

information regarding the types of policies the company issues.

Management, business, and financial operations occupations. Top executives direct the

operations of an independent insurance agency, brokerage, or a large insurance carrier.

Marketing managers direct carriers’ development of new types of policies that might appeal

to the public and strategies for selling them to customers. Sales managers direct the

activities of the sales workers in local sales offices of insurance carriers and independent

agencies. They sell insurance products, work with clients, and supervise staff. Other

managers who work in their companies' home offices are in charge of functions such as

actuarial calculations, policy issuance, accounting, and investments.

Claims adjusters, appraisers, examiners, and investigators decide whether claims are

covered by the customer’s policy, estimate and confirm payment, and, when necessary,

investigate the circumstances surrounding a claim. Claims adjusters work for property and

liability insurance carriers or for independent adjusting firms. They inspect property damage,

estimate how much it will cost to repair, and determine the extent of the insurance

company’s liability; in some cases, they may help the claimant receive assistance quickly in

order to prevent further damage and begin repairs. Adjusters plan and schedule the work

required to process claims, which may include interviewing the claimant and witnesses and

consulting police and hospital records. In some property-casualty companies, claims

adjusters are called claims examiners, but in other companies, a claims examiner’s primary

job is to review claims to ensure that proper guidelines have been followed. Only

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occasionally—especially when disasters suddenly increase the volume of claims—do these

examiners aid adjusters with complicated claims.

In the offices of life and health insurance carriers, claims examiners are the counterparts of

the claims adjuster who works in a property and casualty insurance firm. Examiners in the

health insurance carriers review health-related claims to see whether the costs are

reasonable based on the diagnosis. Examiners check claim applications for completeness

and accuracy, interview medical specialists, and consult policy files to verify information on a

claim. Claims examiners in the life insurance carriers review causes of death and also may

review new applications for life insurance to make sure that the applicants have no serious

illnesses that would prevent them from qualifying for insurance.

Insurance investigators handle claims in which companies suspect fraudulent or criminal

activity, such as suspicious fires, questionable workers’ disability claims, difficult-to-explain

accidents, and dubious medical treatment. Investigators usually perform database searches

on suspects to determine whether they have a history of attempted or successful insurance

fraud. Then, the investigators may visit claimants and witnesses to obtain a recorded

statement, take photographs, inspect facilities, and conduct surveillance on suspects.

Investigators often consult with legal counsel and are sometimes called to testify as expert

witnesses in court cases.

Auto damage appraisers usually are hired by insurance companies and independent

adjusting firms to inspect the damage to a motor vehicle after an accident and to provide

unbiased estimates of repair cost. Claims adjusters and auto damage appraisers can work

for insurance companies, or they can be independent or public adjusters. Insurance

companies hire independent adjusters to represent their interests while assisting the

insured, whereas public adjusters are hired to represent the insured’s interests against

insurance carriers.

Management analysts, often called loss control representatives in the insurance industry,

assess various risks faced by insurance companies. These workers inspect the business

operations of insurance applicants, analyze historical data regarding workplace injuries and

automobile accidents, and assess the potential for natural hazards, dangerous business

practices, and unsafe workplace conditions that may result in injuries or catastrophic

physical and financial loss. They might then recommend, for example, that a factory add

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safety equipment, that a house be reinforced to withstand environmental catastrophes, or

that incentives be implemented to encourage automobile owners to install air bags in their

cars or take more effective measures to prevent theft. Because the changes they

recommend can greatly reduce the probability of loss, loss control representatives are

increasingly important to both insurance companies and the insured.

Underwriting is another important management and business and financial occupation in

insurance. Underwriters evaluate insurance applications to determine the risk involved in

issuing a policy. They decide whether to accept or reject an application, and they determine

the appropriate premium for each policy.

Sales and related occupations. Insurance sales agents, also referred to as producers,

may work as exclusive agents, or captive agents, selling for one company, or as

independent agents selling for several companies. Through regular contact with clients,

agents are able to update coverage, assist with claims, ensure customer satisfaction, and

obtain referrals. Insurance sales agents may sell many types of insurance, including life,

annuities, property-casualty, health, and disability insurance. Many insurance sales agents

are involved in “cross-selling” or “total account development,” which means that, besides

offering insurance, they have become licensed to sell mutual funds, annuities, and other

securities. These agents usually find their own customers and ensure that the policies sold

meet the specific needs of their policyholders.

Professional and related occupations. The insurance industry employs relatively few

people in professional and related occupations, but they are essential to company

operations. For example, insurance companies’ lawyers defend clients who are sued,

especially when large claims may be involved. These lawyers also review regulations and

policy contracts. Nurses and other medical professionals advise clients on wellness issues

and on medical procedures covered by the company’s managed-care plan. Computer

systems analysts, computer programmers, and computer support specialists are needed to

analyze, design, develop, and program the systems that support the day-to-day operations

of the insurance company.

Actuaries represent a relatively small proportion of employment in the insurance industry,

but they are vital to the industry’s profitability. Actuaries study the probability of an insured

loss and determine premium rates. They must set the rates so that there is a high probability

15

that premiums paid by customers will cover claims, but not so high that their company loses

business to competitors

Table 1. Employment of wage and salary workers in insurance by occupation, 2006

and projected change, 2006-2016.

(Employment in thousands)

Occupation

Employment, 2006

Percent

change,

2006-16Number Percent

All occupations 2,316 100.0 7.4

Management, business, and financial occupations 661 28.6 8.3

General and operations managers 41 1.8 -1.9

Marketing and sales managers 20 0.9 7.2

Computer and information systems managers 14 0.6 5.9

Financial managers 24 1.0 6.6

Claims adjusters, examiners, and investigators 218 9.4 10.8

Insurance appraisers, auto damage 12 0.5 12.0

Human resources, training, and labor relations specialists

28 1.2 10.9

Management analysts 29 1.2 5.4

Accountants and auditors 40 1.7 7.8

Financial analysts 16 0.7 16.9

Insurance underwriters 91 3.9 5.6

Professional and related occupations 258 11.2 8.6

Computer programmers 21 0.9 -15.1

Computer software engineers 28 1.2 24.7

Computer support specialists 19 0.8 6.8

Computer systems analysts 33 1.4 15.5

Actuaries 11 0.5 5.4

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Table 1. Employment of wage and salary workers in insurance by occupation, 2006

and projected change, 2006-2016.

(Employment in thousands)

Occupation

Employment, 2006

Percent

change,

2006-16

Number Percent

Market research analysts 12 0.5 6.5

Lawyers 12 0.5 5.6

Title examiners, abstractors, and searchers 23 1.0 -5.5

Registered nurses 25 1.1 6.2

Sales and related occupations 367 15.8 14.4

First-line supervisors/managers of non-retail sales workers

18 0.8 3.8

Insurance sales agents 313 13.5 15.7

Office and administrative support occupations 1,009 43.6 4.0

First-line supervisors/managers of office and administrative support workers

62 2.7 -6.0

Billing and posting clerks and machine operators 18 0.8 -2.5

Bookkeeping, accounting, and auditing clerks 47 2.0 8.9

Customer service representatives 266 11.5 19.2

File clerks 15 0.7 -45.3

Receptionists and information clerks 24 1.0 10.0

Executive secretaries and administrative assistants 57 2.4 8.2

Secretaries, except legal, medical, and executive 62 2.7 -1.5

Data entry keyers 22 0.9 -13.5

Insurance claims and policy processing clerks 222 9.6 -2.6

Mail clerks and mail machine operators, except postal service

14 0.6 -21.0

Office clerks, general 106 4.6 7.8

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Table 1. Employment of wage and salary workers in insurance by occupation, 2006

and projected change, 2006-2016.

(Employment in thousands)

Occupation

Employment, 2006

Percent

change,

2006-16

Number Percent

Note: Columns may not add to due to omission of occupations with small employment

Training and Advancement

A few jobs in the insurance industry, especially in office and administrative support

occupations, require no more than a high school diploma. However, employers prefer to hire

workers with a college education for most jobs, including sales, managerial, and

professional jobs. When specialized training is required, it usually is obtained on the job or

through independent study during work or after-work hours. Many insurance companies

expect their employees to take continuing education courses to improve their people skills

and their knowledge of the industry. Opportunities for advancement are relatively good in

the insurance industry.

Office and administrative support occupations. Graduation from high school or a 2-year

postsecondary business program is adequate preparation for most beginning office and

administrative support jobs. Courses in word processing and business math are assets, and

the ability to operate computers is essential. On-the-job training usually is provided for

clerical jobs such as customer service representatives. Because representatives in call

centers must be knowledgeable about insurance products in order to provide advice to

clients, more States are requiring customer service representatives to become licensed.

Several years of experience and training can help beginners advance to higher paying

positions. Office and administrative support workers may also advance to higher paying

claims adjusting positions and entry-level underwriting jobs.

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Management, business, and financial operations occupations. Management, business,

and financial jobs require the same college training as similar jobs in other industries.

Managerial positions usually are filled by promoting college-educated employees from within

the company. However, some companies prefer to hire liberal arts graduates at a lower

cost, and many insurers send them to company schools or enroll them in outside institutes

for professional training. A master’s degree, particularly in business administration or a

related field, is an asset for advancement into higher levels of management.

For beginning underwriting jobs, many insurance companies prefer college graduates who

have a degree in business administration or a related field. As an underwriter’s

career develops, it becomes beneficial to earn one of the voluntary professional

certifications in underwriting. For example, the National Association of Health Underwriters

offers two certification programs: the Registered Health Underwriter (RHU) designation and

the Registered Employee Benefits Consultant (REBC) designation.

The American Institute for Chartered Property-Casualty Underwriters (AICPU) offers the

CPCU program, which includes courses covering a broad range of insurance, risk

management, and general business topics involving both personal and commercial loss

exposures. Earning the CPCU designation requires passing 8 exams, meeting a

requirement of at least three years of insurance experience, and abiding by the AICPU’s and

CPCU Society’s code of professional ethics. In conjunction with the Insurance Institute of

America, the AICPCU offers 22 insurance-related educational programs, including claims,

underwriting, risk management, and reinsurance.

In almost every State, those working as a claims examiner or adjuster must obtain a license.

Licensing requirements for these workers vary by State and can include prelicensing

education or passing a licensing exam. In some cases, professional designations may be

substituted for the exam requirement. Separate or additional requirements may apply to

public adjusters. For example, some States may require public adjusters to file a surety

bond. Often, claims adjusters working for companies can work under the company license

and not need to become licensed themselves. Most companies prefer to hire college

graduates and those with previous experience or who have obtained licensure for claims

adjuster and examiner positions. No specific college major is required, although most

workers in these positions have a business, accounting, engineering, legal, or medical

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background. In addition, many adjusters and examiners choose to pursue certain

certifications and designations to distinguish themselves. Many State licenses and

professional designations require continuing education for renewal. Continuing education is

important because adjusters and examiners must be knowledgeable about changes in the

laws, recent court decisions, and new medical procedures.

Auto damage appraisers typically begin as auto body repairers and then are hired by

insurance companies or independent adjusting firms. Most companies prefer auto damage

appraisers to have formal training, and many vocational colleges offer 2-year programs on

how to estimate and repair damaged vehicles. Some States require them to be licensed,

and certification may be required or preferred. Computer skills also are an important

qualification for many auto damage appraiser positions. As with adjusters and examiners,

continuing education is important for appraisers, because many new car models and repair

techniques are introduced each year.

Licensing requirements to become an insurance investigator may vary among States. Most

insurance companies prefer to hire former law enforcement detectives or private

investigators as insurance investigators. Many experienced claims adjusters or examiners

also can become investigators. Most employers look for individuals with ingenuity and who

are persistent and assertive. Investigators must not be afraid of confrontation, should

communicate well, and should be able to think on their feet. Good interviewing and

interrogation skills also are important and usually are developed in earlier careers in law

enforcement.

Sales and related occupations. Although some employers hire high school graduates with

potential or proven sales ability for entry-level sales positions, most prefer to hire college

graduates.

All insurance sales agents must obtain licenses in the States in which they plan to sell

insurance. In most States, licenses are issued only to applicants who complete specified

courses and pass written examinations covering insurance fundamentals and State

insurance laws. New agents receive training from their employer, either at work or at the

insurance company’s home office. Sometimes, entry-level employees attend company-

sponsored classes to prepare for examinations. The National Alliance for Insurance

Education and Research offers a wide variety of courses in health, life, and property and

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casualty insurance for independent insurance agents. Others study on their own and, as on-

the-job training, accompany experienced agents when they meet with prospective clients.

After obtaining a license, agents must earn continuing education credits throughout their

careers in order to remain licensed insurance sales agents.

Insurance sales agents wishing to sell securities and other financial products must meet

State licensing requirements in these areas. Specifically, they must pass an additional

examination—either the Series 6 or Series 7 licensing exam, both of which are administered

by the Financial Industry Regulatory Authority (FINRA). The Series 6 exam is for individuals

who wish to sell only mutual funds and variable annuities; the Series 7 exam is the main

FINRA series license and qualifies agents as general securities representatives. To

demonstrate further competency in financial planning, many agents also find it worthwhile to

obtain a certified financial planner (CFP) or chartered financial consultant (ChFC)

designation.

Sales workers may advance by handling greater numbers of accounts and more complex

commercial insurance policies. They may also choose to start an independent insurance

agency. Many also obtain related designations such as the CPCU underwriting designation,

offered by the AICPCU.

Professional and related occupations. For actuarial jobs, companies prefer candidates to

have degrees in actuarial science, mathematics, or statistics. However, candidates with

degrees in business, finance, or economics are becoming more common. Actuaries must

pass a series of national examinations to become fully qualified. Completion of all the exams

takes from 5 to 10 years. Some of the exams may be taken while an individual is in college,

but most require extensive home study. Many companies grant study time to their actuarial

students to prepare for the exams.

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Earnings

Industry earnings. Weekly earnings of nonsupervisory workers in the insurance industry

averaged $798 in May 2006, considerably higher than the average of $568 for all private

industry. Earnings of the largest occupations in insurance in May 2006, appear in table 2

Table 2. Median hourly earnings of the largest occupations in insurance, May 2006

Occupation InsuranceAll industries

General and operations managers $53.02 $40.97

Insurance underwriters 25.29 25.17

First-line supervisors/managers of office and administrative support workers

24.36 20.92

Claims adjusters, examiners, and investigators 23.42 24.36

Executive secretaries and administrative assistants 18.70 17.90

Bookkeeping, accounting, and auditing clerks 15.55 14.69

Insurance claims and policy processing clerks 14.97 14.96

Customer service representatives 14.79 13.62

Secretaries, except legal, medical, and executive 12.65 13.20

clerks, general 11.38 11.40

The method by which insurance sales agents are paid varies greatly. Most independent

sales agents own their own businesses and are paid a commission only. Sales agents who

Office are employees of an agency may be paid a salary only, a salary plus commission, or

a salary plus a bonus. An agent’s earnings usually increase rapidly with experience. Many

agencies also pay an agent’s expenses for automobiles and transportation, travel to

conventions, and continuing education.

Benefits and union membership. Insurance carriers offer attractive benefits packages, as

is frequently the case with large companies. Yearly bonuses, retirement investment plans,

insurance, and paid vacation often are standard. Insurance agencies, which generally are

smaller, offer less extensive benefits.

22

HISTORICAL PERSPECTIVE

The history of life insurance in India dates back to 1818 when it was conceived as a means

to provide for English Widows. Interestingly in those days a higher premium was charged for

Indian lives than the non - Indian lives, as Indian lives were considered more risky to cover.

The Bombay Mutual Life Insurance Society started its business in 1870. It was the first

company to charge the same premium for both Indian and non-Indian lives.

The Oriental Assurance Company was established in 1880. The General insurance

business in India, on the other hand, can trace its roots to Triton Insurance Company

Limited, the first general insurance company established in the year 1850 in Calcutta by the

British. Till the end of the nineteenth century insurance business was almost entirely in the

hands of overseas companies.

Insurance regulation formally began in India with the passing of the Life Insurance

Companies Act of 1912 and the Provident Fund Act of 1912. Several frauds during the

1920's and 1930's sullied insurance business in India. By 1938 there were 176 insurance

companies.

The first comprehensive legislation was introduced with the Insurance Act of 1938 that

provided strict State Control over the insurance business. The insurance business grew at a

faster pace after independence. Indian companies strengthened their hold on this business

but despite the growth that was witnessed, insurance remained an urban phenomenon.

The Government of India in 1956, brought together over 240 private life insurers and

provident societies under one nationalized monopoly corporation and Life Insurance

Corporation (LIC) was born. Nationalization was justified on the grounds that it would create

the much needed funds for rapid industrialization. This was in conformity with the

Government's chosen path of State led planning and development.

The non-life insurance business continued to thrive with the private sector till 1972. Their

operations were restricted to organized trade and industry in large cities. The general

insurance industry was nationalized in 1972. With this, nearly 107 insurers were

amalgamated and grouped into four companies- National Insurance Company, New India

23

Assurance Company, Oriental Insurance Company and United India Insurance Company.

These were subsidiaries of the General Insurance Company (GIC).

KEY MILESTONES

1912: The Indian Life Assurance Companies Act enacted as the first statute to regulate the

life insurance business.

1928: The Indian Insurance Companies Act enacted to enable the government to collect

statistical information about both life and non-life insurance businesses.

1938: Earlier legislation consolidated and amended by the Insurance Act with the objective

of protecting the interests of the insuring public.

1956: 245 Indian and foreign insurers along with provident societies were taken over by the

central government and nationalized. LIC was formed by an Act of Parliament- LIC Act

1956- with a capital contribution of Rs. 5 crore from the Government of India.

24

INDUSTRY REFORMS

Reforms in the Insurance sector were initiated with the passage of the IRDA Bill in

Parliament in December 1999. The IRDA since its incorporation as a statutory body in April

2000 has fastidiously stuck to its schedule of framing regulations and registering the private

sector insurance companies. Since being set up as an independent statutory body the IRDA

has put in a framework of globally compatible regulations.

The other decision taken simultaneously to provide the supporting systems to the insurance

sector and in particular the life insurance companies was the launch of the IRDA online

service for issue and renewal of licenses to agents. The approval of institutions for imparting

training to agents has also ensured that the insurance companies would have a trained

workforce of insurance agents in place to sell their products

Most of the present day Life Insurance Companies in India are joint ventures between

Indian groups and conglomerates and global insurance companies. The terms of the joint

ventures include a majority stake holding of Indian partner in the JV. The life insurance

deals include a detail information guide to the customer from the insurance agent or broker

citing the various insurance plans and policies available, the insurance premium estimates

and estimate of the prices of the insurance policy short listed, the guidelines and terms of

the insurance company and many such info.

The life insurance companies work in close association with the life insurance agents and

brokers. Special training and education is provided to each insurance agent or broker about

the facts of life insurance, how it works, industry info, insurance leads, types of insurance

policies on offer, claims settlements, life insurance laws in India, knowledge about the return

of premium procedure of the life insurance company and the tax savings the insurance

policy would provide.

Besides the usual life insurance services covering individual insurance, group life insurance,

family insurance, health insurance and medi claims, Life insurance products in India are also

designed for special target groups like:

25

For seniors over 50, over 65 etc

For kids or children

For diabetics

For the elderly

For HIV patients

The ratings and reviews of the Life Insurance Companies in India are available

online where you can check the rankings and rating of the insurance company you

wish to buy a policy from. You can make comparison among the various life

insurance policies on offer by the life insurance companies of India.

A comprehensive list of the major insurance companies has been provided here with

compete profile of the company, their insurance products and policies, the terms and

statistics of the insurance providers etc.

Every company has different policy to offer. You just need to choose which is the

best for you. The amount for which you want to take the policy, the tenure of policy

and the amount you want to pay in each installments, all these factors you need to

keep in mind and then choose the company which fulfills all your needs and provides

full transparency

26

PRESENT SCENARIO - LIFE INSURANCE INDUSTRY IN INDIA

The life insurance industry in India grew by an impressive 47.38%, with premium income at

Rs. 1560.41 billion during the fiscal year 2006-2007. Though the total volume of LIC's

business increased in the last fiscal year (2006-2007) compared to the previous one, its

market share came down from 85.75% to 81.91%.

The 17 private insurers increased their market share from about 15% to about 19% in a

year's time. The figures for the first two months of the fiscal year 2007-08 also speak of the

growing share of the private insurers. The share of LIC for this period has further come

down to 75 percent, while the private players have grabbed over 24 percent.

With the opening up of the insurance industry in India many foreign players have entered

the market. The restriction on these companies is that they are not allowed to have more

than a 26% stake in a company’s ownership.

Since the opening up of the insurance sector in 1999, foreign investments of Rs. 8.7 billion

have poured into the Indian market and 19 private life insurance companies have been

granted licenses.

Innovative products, smart marketing, and aggressive distribution have enabled fledgling

private insurance companies to sign up Indian customers faster than anyone expected.

Indians, who had always seen life insurance as a tax saving device, are now suddenly

turning to the private sector and snapping up the new innovative products on offer. Some of

these products include investment plans with insurance and good returns (unit linked plans),

multi – purpose insurance plans, pension plans, child plans and money back plans.

(www.wikipedia.com)

27

CHAPTER-II

Introduction to the Organization

28

HDFC STANDARD LIFE INSURANCE COMPANY LIMITED

Life insurance

Life insurance or life assurance is a contract between the policy owner and the insurer,

where the insurer agrees to pay a sum of money upon the occurrence of the insured

individual's or individuals' death or other event, such as terminal illness or critical illness. In

return, the policy owner agrees to pay a stipulated amount called a premium at regular

intervals or in lump sums. There may be designs in some countries where bills and death

expenses plus catering for after funeral expenses should be included in Policy Premium. In

the United States, the predominant form simply specifies a lump sum to be paid on the

insured's demise.

As with most insurance policies, life insurance is a contract between the insurer and the

policy owner whereby a benefit is paid to the designated beneficiaries if an insured event

occurs which is covered by the policy.

The value for the policyholder is derived, not from an actual claim event, rather it is the value

derived from the 'peace of mind' experienced by the policyholder, due to the negating of

adverse financial consequences caused by the death of the Life Assured.

To be a life policy the insured event must be based upon the lives of the people named in

the policy.

Insured events that may be covered include:

Serious illness

Life policies are legal contracts and the terms of the contract describe the limitations of the

insured events. Specific exclusions are often written into the contract to limit the liability of

the insurer; for example claims relating to suicide, fraud, war, riot and civil commotion.

Life-based contracts tend to fall into two major categories:

Protection policies - designed to provide a benefit in the event of specified event,

typically a lump sum payment. A common form of this design is term insurance.

29

Investment policies - where the main objective is to facilitate the growth of capital by

regular or single premiums. Common forms (in the US anyway) are whole life,

universal life and variable life policies.

Overview

Parties to contract

There is a difference between the insured and the policy owner (policy holder), although the

owner and the insured are often the same person. For example, if Joe buys a policy on his

own life, he is both the owner and the insured. But if Jane, his wife, buys a policy on Joe's

life, she is the owner and he is the insured. The policy owner is the guarantee and he or she

will be the person who will pay for the policy. The insured is a participant in the contract, but

not necessarily a party to it.

The beneficiary receives policy proceeds upon the insured's death. The owner designates

the beneficiary, but the beneficiary is not a party to the policy. The owner can change the

beneficiary unless the policy has an irrevocable beneficiary designation. With an irrevocable

beneficiary, that beneficiary must agree to any beneficiary changes, policy assignments, or

cash value borrowing.

In cases where the policy owner is not the insured (also referred to as the celui qui vit or

CQV), insurance companies have sought to limit policy purchases to those with an

"insurable interest" in the CQV. For life insurance policies, close family members and

business partners will usually be found to have an insurable interest. The "insurable interest"

requirement usually demonstrates that the purchaser will actually suffer some kind of loss if

the CQV dies. Such a requirement prevents people from benefiting from the purchase of

purely speculative policies on people they expect to die. With no insurable interest

requirement, the risk that a purchaser would murder the CQV for insurance proceeds would

be great. In at least one case, an insurance company which sold a policy to a purchaser with

no insurable interest (who later murdered the CQV for the proceeds), was found liable in

court for contributing to the wrongful death of the victim (Liberty National Life v. Weldon, 267

Ala.171 (1957)).

30

Contract terms

Special provisions may apply, such as suicide clauses wherein the policy becomes

null if the insured commits suicide within a specified time (usually two years after the

purchase date; some states provide a statutory one-year suicide clause). Any

misrepresentation by the insured on the application is also grounds for nullification.

Most US states specify that the contestability period cannot be longer than two

years; only if the insured dies within this period will the insurer have a legal right to

contest the claim on the basis of misrepresentation and request additional

information before deciding to pay or deny the claim.

The face amount on the policy is the initial amount that the policy will pay at the death of the

insured or when the policy matures, although the actual death benefit can provide for

greater or lesser than the face amount. The policy matures when the insured dies or

reaches a specified age (such as 100 years old).

Costs, insurability, and underwriting

The insurer (the life insurance company) calculates the policy prices with intent to fund

claims to be paid and administrative costs, and to make a profit. The cost of insurance is

determined using mortality tables calculated by actuaries. Actuaries are professionals who

employ actuarial science, which is based in mathematics (primarily probability and

statistics). Mortality tables are statistically-based tables showing expected annual mortality

rates. It is possible to derive life expectancy estimates from these mortality assumptions.

Such estimates can be important in taxation regulation

The three main variables in a mortality table have been age, gender, and use of tobacco.

More recently in the US, preferred class specific tables were introduced. The mortality tables

provide a baseline for the cost of insurance. In practice, these mortality tables are used in

conjunction with the health and family history of the individual applying for a policy in order

to determine premiums and insurability. Mortality tables currently in use by life insurance

companies in the United States are individually modified by each company using pooled

industry experience studies as a starting point. In the 1980s and 90's the SOA 1975-80

Basic Select & Ultimate tables were the typical reference points, while the 2001 VBT and

31

2001 CSO tables were published more recently. The newer tables include separate mortality

tables for smokers and non-smokers and the CSO tables include separate tables for

preferred classes.

Recent US select mortality tables predict that roughly 0.35 in 1,000 non-smoking males

aged 25 will die during the first year of coverage after underwriting. Mortality approximately

doubles for every extra ten years of age so that the mortality rate in the first year for

underwritten non-smoking men is about 2.5 in 1,000 people at age 65.Compare this with the

US population male mortality rates of 1.3 per 1,000 at age 25 and 19.3 at age 65 (without

regard to health or smoking status).

The mortality of underwritten persons rises much more quickly than the general population.

At the end of 10 years the mortality of that 25 year-old, non-smoking male is 0.66/1000/year.

Consequently, in a group of one thousand 25 year old males with a $100,000 policy, all of

average health, a life insurance company would have to collect approximately $50 a year

from each of a large group to cover the relatively few expected claims. (0.35 to 0.66

expected deaths in each year x $100,000 payout per death = $35 per policy). Administrative

and sales commissions need to be accounted for in order for this to make business sense. A

10 year policy for a 25 year old non-smoking male person with preferred medical history

may get offers as low as $90 per year for a $100,000 policy in the competitive US life

insurance market.

The insurance company receives the premiums from the policy owner and invests them to

create a pool of money from which it can pay claims and finance the insurance company's

operations. Contrary to popular belief, the majority of the money that insurance companies

make comes directly from premiums paid, as money gained through investment of

premiums can never, in even the most ideal market conditions, vest enough money per year

to pay out claims

Rates charged for life insurance increase with the insurer's age because, statistically, people

are more likely to die as they get older.

Given that adverse selection can have a negative impact on the insurer's financial situation,

the insurer investigates each proposed insured individual unless the policy is below a

32

company-established minimum amount, beginning with the application process. Group

Insurance policies are an exception.

This investigation and resulting evaluation of the risk is termed underwriting. Health and

lifestyle questions are asked. Certain responses or information received may merit further

investigation. Life insurance companies in the United States support the Medical Information

Bureau (MIB), which is a clearinghouse of information on persons who have applied for life

insurance with participating companies in the last seven years. As part of the application,

the insurer receives permission to obtain information from the proposed insured's

physicians.[5]

Underwriters will determine the purpose of insurance. The most common is to protect the

owner's family or financial interests in the event of the insurer's demise. Other purposes

include estate planning or, in the case of cash-value contracts, investment for retirement

planning. Bank loans or buy-sell provisions of business agreements are another acceptable

purpose.

Life insurance companies are never required by law to underwrite or to provide coverage to

anyone, with the exception of Civil Rights Act compliance requirements. Insurance

companies alone determine insurability, and some people, for their own health or lifestyle

reasons, are deemed uninsurable. The policy can be declined (turned down) or rated Rating

increases the premiums to provide for additional risks relative to the particular insured

Many companies use four general health categories for those evaluated for a life insurance

policy. These categories are Preferred Best, Preferred, Standard, and Tobacco

Preferred Best is reserved only for the healthiest individuals in the general population. This

means, for instance, that the proposed insured has no adverse medical history, is not under

medication for any condition, and his family (immediate and extended) has no history of

early cancer, diabetes, or other conditions. Preferred means that the proposed insured is

currently under medication for a medical condition and have a family history of particular

illnesses

Most people are in the Standard category. Profession, travel, and lifestyle factor into

whether the proposed insured will be granted a policy, and which category the insured falls.

For example, a person who would otherwise be classified as Preferred Best may be denied

33

a policy if he or she travels to a high risk country.Underwriting practices can vary from

insurer to insurer which provide for more competitive offers in certain circumstances.

Life insurance contracts are written on the basis of utmost good faith. That is, the proposer

and the insurer both accept that the other is acting in good faith. This means that the

proposer can assume the contract offers what it represents without having to fine comb the

small print and the insurer assumes the proposer is being honest when providing details to

underwriter.

Death proceeds

Upon the insured's death, the insurer requires acceptable proof of death before it pays the

claim. The normal minimum proof required is a death certificate and the insurer's claim form

completed, signed (and typically notarized If the insured's death is suspicious and the policy

amount is large, the insurer may investigate the circumstances surrounding the death before

deciding whether it has an obligation to pay the claim.

Proceeds from the policy may be paid as a lump sum or as an annuity, which is paid over

time in regular recurring payments for either a specified period or for a beneficiary's lifetime.

Insurance vs Assurance

The specific uses of the terms "insurance" and "assurance" are sometimes confused. In

general, in these jurisdictions "insurance" refers to providing cover for an event that might

happen (fire, theft, flood, etc.), while "assurance" is the provision of cover for an event that is

certain to happen. "Insurance" is the generally accepted term, however, people using this

description are liable to be corrected. In the United States both forms of coverage are called

"insurance", principally due to many companies offering both types of policy, and rather than

refer to themselves using both insurance and assurance titles, they instead use just one.

Types of life insurance

Life insurance may be divided into two basic classes – temporary and permanent or

following subclasses - term, universal, whole life and endowment life insurance.

34

TEMPORARY TERM

Term assurance: provides for life insurance coverage for a specified term of years for a

specified premium. The policy does not accumulate cash value. Term is generally

considered "pure" insurance, where the premium buys protection in the event of death and

nothing else.

The three key factors to be considered in term insurance are: face amount (protection or

death benefit), premium to be paid (cost to the insured), and length of coverage (term).

Various insurance companies sell term insurance with many different combinations of these

three parameters. The face amount can remain constant or decline. The term can be for one

or more years. The premium can remain level or increase. A common type of term is called

annual renewable term. It is a one year policy but the insurance company guarantees it will

issue a policy of equal or lesser amount without regard to the insurability of the insured and

with a premium set for the insured's age at that time. Another common type of term

insurance is mortgage insurance, which is usually a level premium, declining face value

policy. The face amount is intended to equal the amount of the mortgage on the policy

owner’s residence so the mortgage will be paid if the insured dies.

A policy holder insures his life for a specified term. If he dies before that specified term is up,

his estate or named beneficiary receives a payout. If he does not die before the term is up,

he receives nothing. In the past these policies would almost always exclude suicide.

However, after a number of court judgments against the industry, payouts do occur on death

by suicide (presumably except for in the unlikely case that it can be shown that the suicide

was just to benefit from the policy). Generally, if an insured person commits suicide within

the first two policy years, the insurer will return the premiums paid. However, a death benefit

will usually be paid if the suicide occurs after the two year period.

Permanent Life Insurance

Permanent life insurance is life insurance that remains in force (in-line) until the policy

matures (pays out), unless the owner fails to pay the premium when due (the policy expires

35

OR policies lapse). The policy cannot be canceled by the insurer for any reason except

fraud in the application, and that cancellation must occur within a period of time defined by

law (usually two years). Permanent insurance builds a cash value that reduces the amount

at risk to the insurance company and thus the insurance expense over time. This means

that a policy with a million dollar face value can be relatively expensive to a 70 year old. The

owner can access the money in the cash value by withdrawing money, borrowing the cash

value, or surrendering the policy and receiving the surrender value.

The four basic types of permanent insurance are whole life, universal life, limited pay and

endowment.

Whole life coverage

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. The primary

disadvantages of whole life are premium inflexibility, and the internal rate of return in the

policy may not be competitive with other savings alternatives. Riders are available that can

allow one to increase the death benefit by paying additional premium. The death benefit can

also be increased through the use of policy dividends. Dividends cannot be guaranteed and

may be higher or lower than historical rates over time. Premiums are much higher than term

insurance in the short-term, but cumulative premiums are roughly equal if policies are kept

in force until average life expectancy.

Cash value can be accessed at any time through policy "loans". Since these loans decrease

the death benefit if not paid back, payback is optional. Cash values are not paid to the

beneficiary upon the death of the insured; the beneficiary receives the death benefit only. If

the dividend option: Paid up additions is elected, dividend cash values will purchase

additional death benefit which will increase the death benefit of the policy to the named

beneficiary.

Universal life coverage

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

36

for a higher internal rate of return. There are several types of universal life insurance policies

which include "interest sensitive" (also known as "traditional fixed universal life insurance"),

variable universal life insurance, and equity indexed universal life insurance.

A universal life insurance policy includes a cash account. Premiums increase the cash

account. Interest is paid within the policy (credited) on the account at a rate specified by the

company. Mortality charges and administrative costs are then charged against (reduce) the

cash account. The surrender value of the policy is the amount remaining in the cash account

less applicable surrender charges, if any.

With all life insurance, there are basically two functions that make it work. There's a mortality

function and a cash function. The mortality function would be the classical notion of pooling

risk where the premiums paid by everybody else would cover the death benefit for the one

or two who will die for a given period of time. The cash function inherent in all life insurance

says that if a person is to reach age 95 to 100 (the age varies depending on state and

company), then the policy matures and endows the face value of the policy.

Actuarially, it is reasoned that out of a group of 1000 people, if even 10 of them live to age

95, then the mortality function alone will not be able to cover the cash function. So in order

to cover the cash function, a minimum rate of investment return on the premiums will be

required in the event that a policy matures.

Universal life insurance addresses the perceived disadvantages of whole life. Premiums are

flexible. Depending on how interest is credited, the internal rate of return can be higher

because it moves with prevailing interest rates (interest-sensitive) or the financial markets

(Equity Indexed Universal Life and Variable Universal Life). Mortality costs and

administrative charges are known. And cash value may be considered more easily

attainable because the owner can discontinue premiums if the cash value allows it. And

universal life has a more flexible death benefit because the owner can select one of two

death benefit options, Option A and Option B.

Option A pays the face amount at death as it's designed to have the cash value equal the

death benefit at maturity (usually at age 95 or 100). With each premium payment, the policy

owner is reducing the cost of insurance until the cash value reaches the face amount upon

maturity.

37

Option B pays the face amount plus the cash value, as it's designed to increase the net

death benefit as cash values accumulate. Option B offers the benefit of an increasing death

benefit every year that the policy stays in force. The drawback to option B is that because

the cash value is accumulated "on top of" the death benefit, the cost of insurance never

decreases as premium payments are made. Thus, as the insured gets older, the policy

owner is faced with an ever increasing cost of insurance (it costs more money to provide the

same initial face amount of insurance as the insured gets older).

Limited-pay

Another type of permanent insurance is Limited-pay life insurance, in which all the premiums

are paid over a specified period after which no additional premiums are due to keep the

policy in force. Common limited pay periods include 10-year, 20-year, and paid-up at age

65.

Endowments

Endowments are policies in which the cash value built up inside the policy, equals the death

benefit (face amount) at a certain age. The age this commences is known as the

endowment age. Endowments are considerably more expensive (in terms of annual

premiums) than either whole life or universal life because the premium paying period is

shortened and the endowment date is earlier.

In the United States, the Technical Corrections Act of 1988 tightened the rules on tax

shelters (creating modified endowments). These follow tax rules as annuities and IRAs do.

Endowment Insurance is paid out whether the insured lives or dies, after a specific period

(e.g. 15 years) or a specific age (e.g. 65).

Accidental Death

Accidental death is a limited life insurance that is designed to cover the insured when they

pass away due to an accident. Accidents include anything from an injury, but do not typically

38

cover any deaths resulting from health problems or suicide. Because they only cover

accidents, these policies are much less expensive than other life insurances.

It is also very commonly offered as "accidental death and dismemberment insurance", also

known as an AD&D policy. In an AD&D policy, benefits are available not only for accidental

death, but also for loss of limbs or bodily functions such as sight and hearing, etc.

Accidental death and AD&D policies very rarely pay a benefit; either the cause of death is

not covered, or the coverage is not maintained after the accident until death occurs. To be

aware of what coverage they have, an insured should always review their policy for what it

covers and what it excludes. Often, it does not cover an insured who puts themselves at risk

in activities such as: parachuting, flying an airplane, professional sports, or involvement in a

war (military or not). Also, some insurers will exclude death and injury caused by proximate

causes due to (but not limited to) racing on wheels and mountaineering.

Accidental death benefits can also be added to a standard life insurance policy as a rider. If

this rider is purchased, the policy will generally pay double the face amount if the insured

dies due to an accident. This used to be commonly referred to as a double indemnity

coverage. In some cases, some companies may even offer a triple indemnity cov

39

INTRODUCTION

HDFC Incorporated in 1977 with a share capital of Rs 10 Crores, HDFC has since emerged

as the largest residential mortgage finance institution in the country. The corporation has

had a series of share issues raising its capital to Rs. 119 Crores. The gross premium income

for the year ending March 31, 2007 stood at Rs. 2,856 Crores and new business premium

income at Rs. 1,624 Crores. The company has covered over 8,77,000 lives year ending

March 31, 2007.

HDFC operates through almost 450 locations throughout the country with its corporate head

quarters in Mumbai, India. HDFC also has an International Office in Dubai, UAE with service

associates in Kuwait, Oman and Qatar. HDFC is the largest housing company in India for

the last 27 years.

SNAPSHOT-I

Incorporated in 1977 as the first specialized Mortgage Company in India.

Almost 90% of initial shareholding in the hands of domestic institutes and retail

investors. Current 77% of shares held by foreign institutional investors.

Besides the core business of mortgage HDFC has evolved into a financial

conglomerate with holdings In:

HDFC Standard Life insurance Company- HDFC holds 78.07 %.

HDFC Asset Management Company – HDFC holds 50.1%

HDFC Bank- HDFC holds 22.25%.

Intelenet Global (Business Process Outsourcing) – HDFC holds 50%.

HDFC Chubb General Insurance Company – HDFC holds 74%.

40

SNAPSHOT-II

Loan Approvals Rs. 805 billion.

(up to Dec 2007) (US $ 18.30 bn.)

Loan Disbursements Rs.669 billion

(up to Dec. 2007) (US $ 15.20 bn)

Housing Units Financed 2.5 million.

Distribution

Offices 181

Outreach Programs 90

KEY PLAYERS

Mr. Deepak S Parekh is the Chairman of the Company. He is also the Executive Chairman

of Housing Development Finance Corporation Limited (HDFC Limited). He joined HDFC

Limited in a senior management position in 1978. He was inducted as a whole-time director

of HDFC Limited in 1985 and was appointed as its Executive Chairman in 1993. He is the

Chief Executive Officer of HDFC Limited. Mr. Parekh is a Fellow of the Institute of Chartered

Accountants (England & Wales).

Mr. Deepak M Satwalekar is the Managing Director and CEO of the Company since

November, 2000. Prior to this, he was the Managing Director of HDFC Limited since 1993.

Mr. Satwalekar obtained a Bachelors Degree in Technology from the Indian Institute of

Technology, Bombay and a Masters Degree in Business Administration from The American

University, Washington DC.

41

GROUP COMPANIES

HDFC Bank: World Class Indian Bank- among the top private banks in India.

HDFC AMC: One of the top 3 AMCs in India- Preferred investment manager.

Intelenet Global: BPO services for international customers.

CIBIL: Credit Information Bureau India Limited.

HDFC Chubb: Upcoming Private companies in the field of General Insurance.

HDFC Mutual Fund

HDFC reality.com: Helps to search properties in all major cities in India

HDFC securities

42

STANDARD LIFE

Standard Life is Europe’s largest mutual life assurance company. Standard Life, which has

been in the life insurance business for the past 175 years is a modern company surviving

quite a few changes since selling its first policy in 1825. The company expanded in the 19 th

century from kits original Edinburgh premises, opening offices in other towns and acquitting

other similar businesses.

Standard Life Currently has assets exceeding over £ 70 billion under its management and

has the distinction of being accorded “AAA” rating consequently for the six years by

Standard and Poor.

SNAPSHOT

Founded in 1875, company supporting generation for last 179 years.

Currently over 5 million Policy holders benefiting from the services offered.

Europe’s largest mutual life insurer.

43

JOINT VENTURE

HDFC Standard Life Insurance Company Limited was one of the first companies to be

granted license by the IRDA to operate in life insurance sector. Reach of the JV player is

highly rated and been conferred with many awards. HDFC is rated ‘AAA ’ by both CRISIL

and ICRA. Similarly, Standard Life is rated ‘AAA’ both by Moody’s and Standard and Poor’s.

These reflect the efficiency with which HDFC and Standard Life manage their asset base of

Rs. 15,000 Cr and Rs. 600,000 Cr. respectively.

HDFC Standard Life Insurance Company Ltd was incorporated on 14 th August 2000. HDFC

is the majority stakeholder in the insurance JV with 81.4% staple and Standard of as a

staple 18.6% Mr. Deepak Satwalekar is the MD and CEO of the venture.

HDFC Standard Life Insurance Company Ltd. Is one of India’s leading Private Life

Insurance Companies, which offers a range of individual and group insurance solutions. It is

a joint venture between Housing Development Finance Corporation Limited (HDFC Ltd.)

India’s leading housing finance institution and the Standard Life Assurance Company, a

leading provider of financial services from the United Kingdom. Both the promoters are will

known for their ethical dealings and financial strength and are thus committed to being a

long-term player in the life insurance industry- all important factors to consider when

choosing your insurer.

44

BUSINESS GROWTH Track Record so farThe gross premium income of HDFC, for the year ending March 31, 2007 stood at Rs. 2,856

crores and new business premium income at Rs. 1,624 crores.

The company has covered over 8,77,000 lives year ending March 31, 2007. Company also

declared our 5th consecutive bonus in as many years for our ‘with profit’ policyholders.

KEY STRENGTH

Financial ExpertiseAs a joint venture of leading financial services groups. HDFC standard Life has the financial

expertise required to manage long-term investments safely and efficiently.

Range of SolutionsHDFC SLIC has a range of individual and group solutions, which can be easily customized

to specific needs. These group solutions have been designed to offer complete flexibility

combined with a low charging structure.

Strong Ethical Values: HDFC SLIC is an ethical and Cultural Organization. False selling or false commitment with

the customers is not allowed.

Most respected Private Insurance Company HDFC SLIC was awarded No-1 Private Insurance Company in 2004 by the World Class

Magazine Business World for Integrity, Innovation and Customer Care.

45

CORPORATE OBJECTIVE

Vision

'The most successful and admired life insurance company, which means that we are the

most trusted company, the easiest to deal with, offer the best value for money, and set the

standards in the industry'.

'The most obvious choice for all'.

Values

.Integrity

.Innovation

.Customer centric

.People Care One for all

.Teamwork

.Joy and Simplicity

PRODUCTS & SERVICES

The right investment strategies won't just help plan for a more comfortable tomorrow -- they

will help you get “Sar Utha ke Jiyo”. At HDFC SLIC, life insurance plans are created keeping

in mind the changing needs of family. Its life insurance plans are designed to provide you

with flexible options that meet both protection and savings needs. It offers a full range of

transparent, flexible and value for money products. HDFC SLIC products are modern and

contemporary unitized products that offer unique customer benefits like flexibility to choose

cover levels, indexation and partial withdrawals. (Source: www.hdfcslic.com)

46

PLANS THAT ARE OFFERED BY HDFC STANDARDS LIFE INSURANCE

Individual Products

Protection Plans

A person can protect his family against the loss of his income or the burden of a loan in

the event of his unfortunate demise, disability or sickness. These plans offer valuable

peace of mind at a small price. Protection range includes our Term Assurance Plan &

Loan Cover Term Assurance Plan.

 Investment Plans

 HDFC SLIC’s Single Premium Whole of Life plan is well suited to meet long term

investment needs. This provides attractive long term returns through regular bonuses.

 Pension Plans

Pension Plans help to secure financial independence even after retirement. Pension

range includes Personal Pension Plan, Unit Linked Pension , Unit Linked Pension Plus.

 Savings Plans

Savings Plans offer a flexible option to build savings for future needs such as buying a

dream home or fulfilling your children’s immediate and future needs.

Savings range includes Endowment Assurance Plan, Unit Linked Endowment, Unit Linked Endowment Plus, Unit Linked Endowment Plus II, Money Back,

Unit Linked Enhanced Life Protection II, Children's Plan, Unit Linked Young Star, Unit Linked Young Star Plus, Unit Linked Young Star Plus II.

47

Group Products

One-stop shop for employee-benefit solutions

HDFC Standard Life has the most comprehensive list of products for progressive

employers who wish to provide the best and most innovative employee benefit solutions to

their employees. It offers different products for different needs of employers ranging from

term insurance plans for pure protection to voluntary plans such as superannuation and

leave encashment.

HDFC SLIC offers the following group products to esteemed corporate clients:

Group Term Insurance

Group Variable Term Insurance

Group Unit-Linked Plan

An investment solution that provides funding vehicle to manage corpuses with

Gratuity, Defined Benefit or Defined Contribution Superannuation or Leave

Encashment schemes of your company

Also suitable for other employee benefit schemes such as salary saving schemes

and wealth management schemes

48

Social Product

Development Insurance Plan

Development Insurance plan is an insurance plan which provides life cover to members of

a Development Agency for a term of one year. On the death of any member of the group

insured during the year of cover, a lump sum is paid to those member beneficiaries to help

meet some of the immediate financial needs following their loss.

Eligibility 

Members of the development agency and their spouses with:

    - Minimum age at the start of the policy 18 years last birthday

    - Maximum age at the start of policy 50 years last birthday

Employees of the Development Agency are not eligible to join the group. The group to

be covered is only eligible if it contains more than 500 members.

   Premium Payments

  The premium to be paid will be quoted per member in the group and will be the same for

all members of the group.

The premium can only be paid by the Development Agency as a single lump sum that

includes all premiums for the group to be covered. Cover will not start until the premium

and all the member information in our specified format has been received.

49

Benefits  On the death of each member covered by the policy during the year of cover a lump

sum equal to the sum assured will be paid to their beneficiaries or legal heirs. Where the

death is as a result of an accident, an additional lump sum will be paid equal to half the

sum assured. There are no benefits paid at the end of the year of cover and there is no

surrender value available at any time.

   The role of the Development Agency

  Due to the nature of the groups covered, HDFC Standard Life will be passing certain

administrative tasks onto the Development Agency. By passing on these tasks the

premium charged can be lower. These tasks would include:

  Submission of member data in a specified computer format

Collection of premiums from group members

Recording changes in the details of group members

Disbursement of claim payments and the mortality rebate (if any) to group members

These tasks would be in addition to the usual duties of a policyholder such as:

Payment of premiums

Reporting of claims

Keeping policy holder information up to date

  Training and support will be available to give guidance on how to complete the tasks

appropriately. Since these additional tasks will impose a burden on the Development

Agency, the Development Agency may charge a Rs. 10 administration fee to their

members.

50

TATA AIG LIFE INSURANCE COMPANY LIMITED

IntroductionTata AIG Life Insurance Company Limited (Tata AIG Life) is a joint venture company,

formed by the Tata Group and American International Group, Inc. (AIG). Tata AIG Life

combines the Tata Group’s pre-eminent leadership position in India and AIG’s global

presence as the world’s leading international insurance and financial services organization.

The Tata Group holds 74 per cent stake in the insurance venture with AIG holding the

balance 26 percent. Tata AIG Life provides insurance solutions to individuals and corporate.

Tata AIG Life Insurance Company was licensed to operate in India on February 12, 2001

and started operations on April 1, 2001.

THE TATA GROUPThe Tata Group is one of India's largest and most respected business conglomerates, with

revenues in 2004-05 of $17.8 billion (Rs. 799,118 million), the equivalent of about 2.8 per

cent of the country's GDP. Tata companies together employ some 215,000 people. The

Group's 32 publicly listed enterprises - among them standout names such as Tata Steel,

Tata Consultancy Services, Tata Motors and Tata Tea - have a combined market

capitalization that is the highest among Indian business houses in the private sector, and a

shareholder base of over 2 million. The Tata Group has operations in more than 40

countries across six continents, and its companies export products and services to 140

nations.

AIGAmerican International Group, Inc. (AIG), world leaders in insurance and financial services,

is the leading international insurance organization with operations in more than 130

countries and jurisdictions. AIG companies serve commercial, institutional and individual

customers through the most extensive worldwide property-casualty and life insurance

51

networks of any insurer. In addition, AIG companies are leading providers of retirement

services, financial services and asset management around the world. AIG's common stock

is listed on the New York Stock Exchange as well as the stock exchanges in London, Paris,

Switzerland and Tokyo.

Tata AIG has strong brand name and recall factor which most of its competitors lack in.

Other than the public behemoth Life Insurance Corporation (LIC) of India which has a major

hold in the market share (of approximately 79%), the private players too are having more

and more opportunities to tighten their hold of the market. Of the private players, ICICI

Prudential comes first with an almost 4.50% of the market share followed by Tata AIG with

about 2.10% of the pie. The private players have everything to work for, especially with LIC

not meeting the needs of its clientele with respect to the services they need. This provides a

prospect for the private sector players to increase their share of the market. Companies with

a familiarity such as Tata AIG can especially achieve their targets due to the brand image

that the Tata group has.

(Source: www.tata-aig-life.com)

A recent survey conducted by the Voluntary Organization in Interest of Consumer Education

(VOICE) revealed Tata AIG Life Insurance Company (Tata AIG Life) as the clear winner in terms of customer satisfaction in the life insurance category. This is India's first-ever

customer satisfaction study for the insurance sector.

The survey also revealed that Tata AIG Life had a high recall as a reputed brand name. The

ability to provide innovative and customer-focused service such as allowing the maximum

grace period for premium payment has not only further distinguished Tata AIG Life from

other life insurance companies but also appealed to consumers.

PRODUCTS & SERVICES:Corporate life insurance products:

Employee Benefits

Credit Life

Group Pensions

Workplace Solutions

52

Individual life insurance products: Health First

Health Protector

Mahalife

InvestAssure II, InvestAssure Gold

Shubh life, Nirbhay life

With respect to individual life insurance products, Tata AIG has an array of policies to suit

the needs and requirements of all age groups viz, children, students, adults, retirees etc.

The ‘SUPPORT’ arm of Tata AIG Life is constituted of Operations, Human Resources,

Marketing, Corporate Training, Finance and Compliance.

Tata AIG Life possesses the philosophy and drive to customize retirement obligations (for

the company) which occur in the form of cash outflows, for the maximum benefit of both the

employer and the departing employee.

Points of Parity

Funds available with ULIP Plans

General Description Nature of Investments Risk Category

Equity FundsPrimarily invested in company

stocks with the general aim of capital appreciation

High

Income, Fixed Interestand Bond Funds

Invested in corporate bonds,government securities and other fixed

income instrumentsMedium

Cash FundsSometimes known as Money

Market Funds — invested in cash, bank deposits and money market

instruments

Low

Balanced Funds Combining equity investmentwith fixed interest instruments Medium

53

Generally all life insurance companies have three types of fund which are Equity fund, Debt

fund and Balance fund. These fund have different risk profile. Equity fund has high risk but it

gives high return, Debt fund has low risk so it gives low return and Balanced fund is

combination of both Equity and Debt fund so risk is medium and return is also low.

Both HDFC SLIC and Tata AIG LIC have 7 types of funds based on combination of Debt–

Equity fund. These are liquid fund, stable managed fund, secure managed fund, defensive

managed fund, balanced managed fund, equity managed fund, growth fund.

IndexationYou have the option to increase your regular premiums by an indexation rate at any policy

anniversary to protect the real value of your investment against inflation. The rate of

indexation will be in line with the increase in the Whole Sale Price Index (or in the event that

this Index ceases to be published such other index as the Company may select for this

purpose). The base sum assured and sum assured of any attached rider would also be

increased by the corresponding indexation increase.

Charges, Fees and Deductions in ULIP

Premium Allocation Charge

This is a premium-based charge. After deducting this charge from premiums, the remainder

is invested to buy units. The Allocation charges are guaranteed for the entire duration of

policy term.

Mortality Charge

The Mortality Charge will apply on the Sum at Risk (SAR = Sum Assured less the Fund

Value pertaining to regular premiums). It will be deducted by monthly cancellation of units

from the accumulation unit account. The Mortality Charge shall remain guaranteed

throughout the policy term.

54

Fund Management Charge

1% p.a. on With Profits Fund, 1% p.a. on Debt Fund, 1.25% p.a. on Balanced Fund and

1.50% p.a. on Growth Fund. FMC will be applied on the fund while calculating NAV on a

daily basis. The maximum FMC on any fund is 2% p.a. subject to prior approval by the

IRDA.

Policy Administration Charge

Rs. 60 per month, which will increase by 5% p.a. on the 1st of January each year. PAC will

be deducted monthly by cancellation of units from the accumulation unit account. If

premiums are discontinued, this charge would reduce to 60% of the charge applicable for

the premium paying policies

Surrender Charge

This is the charge that applies when the policy is surrendered. It is equal to 50% of the

difference between regular premiums expected and those paid in the first year of the

contract.

Service Tax Deductions

12.36% service tax is applicable on the first premium of life insurance policy.

Tax Benefits

Tax benefits will be as per Section 80C & Section 10(10D) of the Income Tax Act, 1961.

Insurance is tax free up to Rs. 100000 per annum and the returns on investment on maturity

of the policy are also tax free.

55

RIDERS AND BONUSES

  HDFC Standard Life Insurance Tata AIG Life Insurance

Free Look Period 15 days 15 days

Reversionary Bonus Based on company's performance

Based on company's performance

Terminal Bonus Based on company'sperformance

Based on company'sperformance

TOP UP Minimum Rs. 5000 Minimum Rs. 5000 

Riders    

Critical Illness (CI) BenefitGives on diagnosis of

anyone of 6 critical illness

Gives on diagnosis of anyone

of 12 critical illnessAdditional Term Benefit

(ATB) Provides Provides

Accidental Death Benefit (ADB) Provides Provides

Double Benefit Provides Does not provideTriple Benefit Provides Does not provide

Payer Benefit Rider (PBR) Does not provide ProvidesWaiver of Premium (WOP)

Benefit Provides Provides

POINTS OF DIFFERENCE

  HDFC Standard Life Insurance Tata AIG Life Insurance

Grace Period 15 days 31 days

Policy Administration Charge Rs. 60 per month Rs. 55 per month

Guaranteed Bonus Does not give 10% on sum-assured after 10 year

Loyalty Bonus 0.1% every year 0.25% after every 4th year

Fund Switching ChargeTotal 24 free switches in a

policy after this Rs. 100 per Switch

4 free switches per year after this

Rs. 250 per switch

Guaranteed Surrender value 50% of all premiumpaid excluding 1st premium

30% of all premium paid excluding 1st

premium

56

Fund Management Charge 0.80% per annum on the fund value

1.75% per annum on the fund value

Premium Redirection ChargeTotal 12 free Premium

Redirection in a policy after this Rs. 250

per Premium Redirection

First 2 Premium Redirection in a

year is free after this Rs. 1000

per Premium RedirectionLast Year Return 42.70% 72%

We see that both the life insurance companies’ products are almost same. They have same

charges, fees and deductions. There is slightly difference in charges and maximum limits of

all charges are fixed by IRDA. Before buying any life insurance policy one should check

charges and fees on policy and company’s overall performance and return given to its

consumer.

57

COMPETITIVE ANALYSIS

LIFE INSURANCE CORPORATION OF INDIA (LIC)

LIC has an excellent money back policy which provides for periodic payments of partial

survival benefits as long as the policy holder is alive. 20% of the sum assured is payable

after 5, 10, 15 and 20 years and the balance 40% is payable at the 20 th year along with

accrued bonus. (www.lic.com)

For a 25 years term , 15% of the sum assured becomes payable after 5,10,15 and 20 years

and the balance 40% plus the accrued bonus becomes payable at the 25 th year. An

important feature of these types of policies is that in the event of the death of the policy

holder at any time within the policy term the death claim comprises of full sum assured

without deducting any of the survival benefit amounts which have already been paid. The

bonus is also calculated on the full sum assured.

HDFC SLIC does not have a money back policy. It could offer a money back plan and

capture some portion of this market. While marketing insurance products I found that many

customers wanted to purchase these plans.

LIC offers 66 different plans; plans are formulated for specific occasions – whole life plans,

term assurance plans, money back plan for women, child plans, plans for the handicapped

individuals, endowment assurance plans, plans for high worth individuals, pension plans,

unit linked plans, special plans, social security schemes – diversified portfolio of products.

HDFC SLIC could diversify its product portfolio. It could add more plans for high worth

individuals and women.

ICICI PRUDENTIALICICI Prudential is a stiff competitor for HDFC SLIC. The company is a merger between

ICICI Bank which is the biggest private bank in India and Prudential Plc which is a global life

insurance company.

58

The company has an investment plan which is market related – Invest Shield Life. In this

plan even if the market falls, the premium will be returned to investors. It is a guaranteed

plan which ensures the company carefully invests your money. The stock market

performance of ICICI Prudential is much better than HDFC SLIC. The returns on the growth

fund were 46.28% compared to the 42.70% offered by HDFC SLIC. Customers are attracted

by higher returns and this is a plus point for Prudential.

The company is very well advertised. The advertisements are showcased in movies,

television, newspapers, magazines, bill boards, radio etc. The company has an excellent

brand ambassador – Mr. Amitabh Bacchan. His promotion of the company builds trust and

faith in the minds of our people.

However the charges are very high in the plans offered by ICICI Prudential. It is 35% during

the first year, 15% in the next year and 3% from the third year onwards. Also a higher

minimum premium of Rs. 8000 is charged. Hence the policies are not accessible to the

lower strata of the society. (Source: www.iciciprulife.com)

BIRLA SUN LIFE

Birla Sun Life Insurance Company Limited is a joint venture between The Aditya Birla

Group, one of the largest business houses in India and Sun Life Financial Inc., a leading

international financial services organization. The local knowledge of the Aditya Birla Group

combined with the expertise of Sun Life Financial Inc., offers a formidable protection for your

future. (Source: www.birlasunlife.com)

The Aditya Birla Group has a turnover close to Rs. 33000 crores with a market capitalization

of Rs. 53400 crores (as on 31st March 2007). It has over 72000 employees across all its

units worldwide. It is led by its Chairman - Mr. Kumar Mangalam Birla. Some of the key

organizations within the group are Hindalco and Grasim.

Sun Life Financial Inc. and its partners today have operations in key markets worldwide,

including Canada, the United States, the United Kingdom, Hong Kong, the Philippines,

Japan, Indonesia, India, China and Bermuda. It had assets under management of over

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US$343 billion, as on 31st March 2007. The company is a leading player in the life

insurance market in Canada.

Being a customer centric company, BSLI has invested heavily in technology to build world

class processing capabilities. BSLI has covered more than a million lives since inception and

its customer base is spread across more than 1000 towns and cities in India. All this has

assisted the company in cementing its place amongst the leaders in the industry in terms of

new business premium income. The company has a capital base of 520 crores as on 31st

July, 2007.

Its Flexi Life Line Plan offers life long insurance cover till the policy holder is 100 years of

age. There are guaranteed returns of 3% p.a. net of policy charges after every 5 years from

the eleventh policy year onwards. However the charges are very high. The initial charges for

the first year are 65%. Hence the fund value is greatly reduced.

BAJAJ ALLIANZBajaj Allianz is a joint venture between Allianz AG with over 110 years of experience in over

70 countries and Bajaj Auto, a trusted automobile manufacturer for over 55 years in the

Indian market. Together they are committed to offering you financial solutions that provide

all the security you need for your family and yourself. Bajaj Allianz is the number one private

life insurer for the year 2005 – 2006. It is leading by 78 crores. It has experienced a

whopping growth of 216% in the last financial year.

The company has sold 13, 00,000 policies and is backed by 550 offices across India. It

offers travel insurance, motor insurance, home insurance, health and corporate insurance.

The mortality charges are lower than HDFC SLIC. The entry age could be zero years which

allow even new born babies to be insured. (Source: www.bajajallianz.com)

TATA AIG

Tata Aig is a joint venture between the Tata group and American International Group Inc. In

one of the plans the company offers hospital cash benefit wherein it will pay Rs. 2500 per

day in case of hospitalization and Rs.12.5 lakhs in case the person suffers from any critical

60

illness. Annual premium is much less (about Rs. 6712) to avail such a good benefit.

Charges are relatively low compared to HDFC SLIC for some policies.

The company offers high coverage plans at low cost. There is a plan even for a policy term

of 1 year. Your family can continue to enjoy their current lifestyle even in the case of

something happening to you. These plans are very flexible and HDFC SLIC could adopt this

idea of insuring individuals for short periods of time. For example; there is a family of four.

The only earning member is the father.

He has just taken a loan from a bank of 20 lakhs to purchase a new home. He is able to

repay the loan with his current salary in 15 years. The problem arises if something were to

happen to him within these fifteen years. Not only will the family face the emotional and

financial loss of their father but they will also have to repay the home loan or risk being

homeless. (Source: www.tataaig.com)

MARKETING PROBLEMS

The old and out dated technique of tele marketing is used to prospect customers. More

modern techniques must be adopted. The company must sponsor shows and give

presentations in corporate houses. The financial health check must be performed for every

prospect to assess his/her true financial position and needs. Some of the advisors skip this

vital step and the prospect ends up with a plan they do not appreciate and soon surrender or

discontinue.

Some of the main problems in marketing the policies are:

Large amount of competition (18 players in the market)

Other brands are well advertised and have higher recall value

LIC is considered a safer option

Face competition from banks and mutual funds

High premium policies are difficult to market

Incorrect perception about insurance

61

Interested prospects might have a lack of time and postpone investments

Customers get defensive if you cold call

Short term plans are available only at large premium

Customers do not have risk appetite to invest in shares

Some prospects have already invested and are not interested in further investments

Consumers don’t want to undertake medical examinations

Large amount of documentation

Customers do not like their money locked up for many years

Lack of awareness about the unit linked funds in the market

No money back plan present in the product portfolio

SUGGESTIONS FOR IMPROVEMENT

Advertise about the company and its products – it motivates individuals to purchase

insurance

Create a positive perception about insurance

Speak about the good features a plan offers like high returns, life cover, tax benefits,

indexation, accident cover while prospecting customers

Try to sell the product/plan which the consumer requires and not the plan where the

advisors benefit is higher

Bring out policies with small premiums payable for short periods of time – Rs. 5000 –

Rs. 10000 per annum for 10 years

Attract the youth of India with higher returns on investment as returns are the

motivating factor which influence purchase of insurance

Promote insurance in colleges and corporate houses

Promote HDFC SLIC as an Indian Company to build trust

62

CHAPTER-III

Research Methodology

63

RESEARCH METHODOLOGY

TITLE OF THE STUDY

“To Compare the products of HDFC Standard Life Insurance Company Limited and Tata

AIG Life Insurance Company Limited for HDFC Standard Life Insurance Company Ltd.”

DURATION OF THE PROJECT

The duration of the project was from 4 June to 18 July.

OBJECTIVES OF THE STUDY

1. To analysis the product details of HDFC Standard life Insurance Company limited

and Tata AIG life Insurance Company Limited.

2. To find ‘Points of Parity’ and ‘Points of Difference’ of HDFC Standard Life Insurance

Company Limited and Tata AIG Life Insurance Company Limited.

3. To find out factors that influence customers to purchase insurance policies and give

suggestions for further improvement.

TYPE OF RESEARCHThere are two types of data used. They are primary and secondary data. Primary data is

defined as data that is collected from original sources for a specific purpose. Secondary

data is data collected from indirect sources. (Source: Research Methodology, By C. R.

Kothari)

PRIMARY SOURCESThese include the survey or questionnaire method.

64

SECONDARY SOURCESThese include books, the internet, company brochures, product brochures, the company

website, competitor’s websites etc, newspaper articles etc.

SAMPLE SIZE AND METHOD OF SELECTING SAMPLE

SAMPLINGSampling refers to the method of selecting a sample from a given universe with a view to

draw conclusions about that universe. A sample is a representative of the universe selected

for study.

SAMPLE SIZEThe sample size for the survey conducted was on 70 respondents. This sample size was

taken on 95% confidence level and 6 significant level. Data universe for this sample is in

approx population of Jaipur excluding people below age of 18 years.

SAMPLING TECHNIQUERandom sampling technique was used in the survey conducted.

SCOPE OF STUDYIt was done to get the in depth knowledge of

INSURANCE SECTOR

PAYING CAPACITY OF CONSUMERS

ADVERTISEMENTS ANS IT’s IMPACTS.

LIMITATION OF STUDYTEDIOUS TASK

FIGURES CAN FLUCTUATE

HIGH DEPENDENCY ON HIGH RETURNS

65

CHAPTER-IV

Facts and Findings

66

FACTS AND FINDINGS

We find that 47% of the respondents fall in the age group of 18 – 25 years, 25% fall

in the age group of 26 – 35 years and 17% fall in the age group of 36 – 49 years.

Therefore most of the respondents are relatively young (below 26 years of age).

These individuals could be induced to purchase insurance plans on the basis of its

tax saving nature and as an investment opportunity with high returns.

In India, the largest life insurance company is Life Insurance Corporation of India. It

has been in existence in India since 1956 and is completely owned by the

Government of India. Today the organization has grown to 2048 offices serving 18

crore policies and has a corpus of over 340000 crore INR.

The outlook of insurance as a product should be changed from something which you

pay for your whole life (whole life policy) and do not receive any benefit (the nominee

only receives the benefit in case of your death) to an extremely useful investment

opportunity with the prospects of good returns on savings, tax saving opportunities

as well as providing for every milestone in your life like marriage, education, children

and retirement.

HDFC SLIC is faced with a large amount of competition. There are 18 insurance

companies in India inclusive of LIC. Hence to capture a larger part of the market the

company could introduce more reasonable plans with lesser premium payable per

annum.

67

CHAPTER-V

Analysis and Interpretation

68

ANALYSIS & INTERPRETATION

“A SURVEY ON THE LIFE INSURANCE INDUSTRY IN INDIA”

AGE GROUP OF SURVEYED RESPONDENTS

TABLE 1:

Age group No. of Respondents

18 - 25 years 127

26 - 35 years 67

36 - 49 years 46

50 - 60 years 24

More than 60 years 6

CHART 1:

47%

25%

17%

9%

2%

18 - 25 years26 - 35 years36 - 49 years50 - 60 yearsMore than 60 years

69

INTERPRETATION:From the chart above we find that 47% of the respondents fall in the age group of 18 – 25

years, 25% fall in the age group of 26 – 35 years and 17% fall in the age group of 36 – 49

years.

Therefore most of the respondents are relatively young (below 26 years of age). These

individuals could be induced to purchase insurance plans on the basis of its tax saving

nature and as an investment opportunity with high returns.

Individuals at this age are trying to buy a house or a car. Insurance could help them with this

and this fact has to be conveyed to the consumer. As of now many consumers have a false

perception that insurance is only meant for people above the age of 50. Contrary to popular

belief the younger you are the more insurance you need as your loss will mean a great

financial loss to your family, spouse and children (in case the individual is married) who are

financially dependent on you.

70

CUSTOMER PROFILE OF SURVEYED RESPONDENTSTABLE 3:

Customer profile No. of respondents

Student 62

Housewife 5

Working Professional 116

Business 49

Self Employed 24

Government service employee 14

CHART 3:

23%

2%

43%

18%

9%

5%

StudentHousewifeWorking ProfessionalBusiness Self EmployedGovernment service employee

INTERPRETATION:From the chart above it can clearly be seen that 43% of the respondents are working

professionals, 23% are students and 18% are into business. Therefore the target market

would be working individuals in the age group of 18 – 25 years having surplus income,

interested in good returns on their investment and saving income tax.

71

NO. OF RESPONDENTS WHO HAVE LIFE INSURANCE POLICY IN THEIR NAMETABLE 4:

Person who have life insurance policy

Yes 103

No 167

CHART 4:

103, 38%

167, 62%

YesNo

INTERPRETATION : This graph shows that out of total 270 respondents only 103 or 38% respondents have life

insurance policy in their name. Rest all don’t have a single policy in their name. So there is a

very big scope for life insurance companies to cover these people. So in future business of

life insurace will gro further.

72

MARKET SHARE OF LIFE INSURANCE COMPANIES

TABLE 5:

LIFE INSURER NUMBER OF POLICIES

HDFC STANDARD LIFE 4

BIRLA SUN LIFE 3

AVIVA LIFE INSURANCE 6

BAJAJ ALLIANZ 7

LIC 55

TATA AIG 6

ICICI PRUDENTIAL 12

ING VYSYA 6

BHARTI AXA 2

OTHERS 2

CHART 5:

0%

10%

20%

30%

40%

50%

60%

4% 3% 6% 7%

53%

6%11%

6%2% 2%

Company Name

Perc

enta

ge

INTERPRETATION:In India, the largest life insurance company is Life Insurance Corporation of India. It has

been in existence in India since 1956 and is completely owned by the Government of India.

Today the organization has grown to 2048 offices serving 18 crore policies and has a corpus

of over 340000 crore INR.

73

ANNUAL PREMIUM PAID BY INDIVIDUALS FOR LIFE INSURANCE

TABLE 6:

Premium paid (p.a.) No. of respondents

Rs. 5000 - Rs. 10000 40

Rs. 10001 - Rs. 15000 26

Rs. 15001 - Rs. 24900 18

Rs. 25000 - Rs. 50000 10

Rs. 50001 - Rs. 60000 4

Rs.60001 - Rs. 80000 2

Rs. 80001 - Rs. 100000 3

CHART 6:

ANNUAL PREMIUM PAID BY INDIVIDUALS FOR LIFE INSURANCE

39%

25%

17%

10%4% 2% 3%

Rs. 5000 - Rs. 10000Rs. 10001 - Rs. 15000Rs. 15001 - Rs. 25000Rs. 25001 - Rs. 50000Rs. 50001 - Rs. 60000Rs.60001 - Rs. 80000Rs. 80001 - Rs. 100000

INTERPRETATION:From the chart above we find that, 39% of the respondents surveyed pay an annual

premium less than Rs. 10001 towards life insurance. 25% of the respondents pay an annual

premium less than Rs. 15001 and 17% pay an annual premium less than Rs. 25000. Hence

we can safely say that HDFC SLIC would be able to capture the market better if it

introduced products/plans where the minimum premium starts at Rs. 5000 per annum.

74

POPULAR LIFE INSURANCE PLANS

TABLE 7:

Type of Plan No. of Respondents

Term Insurance Plans 105

Endowment Plans 122

Pension Plans 16

Child Plans 8

Tax Saving Plans 19

CHART 7:

POPULAR LIFE INSURANCE PLANS

39%

45%

6%

3%7%

Term Insurance PlansEndowment PlansPension PlansChild PlansTax Saving Plans

INTERPRETATION:From the chart given above we can clearly see that 45% of the respondents hold

endowment plans and 39% of the respondents hold term insurance plans. Endowment plans

are very popular and serve two purposes – life cover and savings.

If the policy holder dies during the policy term the nominee gets the death benefit that is,

sum assured and accumulated bonus. On survival the policy holder receives the survival

benefit with a bonus.

75

AWARENESS OF UNIT LINKED INSURANCE PLANS

TABLE 8:

Awareness of Unit Linked Plans No. of Respondents

Yes 154

No 116

CHART 8:

AWARENESS OF UNIT LINKED INSURANCE PLANS

57%

43%

YesNo

INTERPRETATION:From the chart given above we find that 57% of the respondents are aware of unit linked life

insurance plans and 43% are not aware of such plans. These plans should be promoted

through advertising.

The company can advertise through television, radio, newspapers, bill boards and

pamphlets. This would increase awareness and arouse curiosity in the minds of the

consumer which would enable the company to market its products more effectively.

76

Unit – linked plans are those where the benefits are expressed in terms of number of units

and unit price. They can be viewed as a combination of insurance and mutual funds. The

number of units a customer would get would depend on the unit price .

CONSUMER WILLINGNESS TO SPEND ON LIFE INSURANCE PREMIUM

TABLE 9:

Willingness to spend on premium No. of respondents Percentage

Less than Rs. 6,000 41 15%

Rs. 6,001 - Rs. 10,000 73 27%

Rs. 10,001 - Rs. 25,000 110 41%

Rs. 25,001 - Rs. 50,000 41 15%

Rs. 50,001 - Rs. 1,00,000 5 2%

CHART 9:

CONSUMER WILLINGNESS TO SPEND ON LIFE INSURANCE PREMIUM

Less than Rs. 6,000

Rs. 6,001 - Rs. 10,000

Rs. 10,001 - Rs. 25,000

Rs. 25,001 - Rs. 50,000

Rs. 50,001 - Rs. 1,00,000

0%

10%

20%

30%

40%

15%

27%

41%

15%

2%

Insurance Premium

Perc

enta

ge

INTERPRETATION:From the graph above, we can clearly see that 41% of the respondents would be willing to

spend between Rs. 10001 – Rs. 25000 for life insurance. 27 % would be willing to spend

between Rs. 6001 – Rs. 10000 per annum. Only 15% would be willing to spend more than

Rs. 25000 per annum as life insurance premium.

77

We could say that the maximum premium payable by most consumers is less than Rs.

25000 p.a. This is further reduced as most customers have already invested with LIC, ICICI

Prudential, Birla Sun Life, Bajaj Allianz etc.

CHART SHOWING IDEAL POLICY TERMTABLE 10:

Ideal policy term No. of respondents

3 - 5 years 51

6 - 9 years 41

10 - 15 years 95

16 - 20 years 38

21 - 25 years 24

26 - 30 years 5

More than 30 years 3

Whole life Policy 13

CHART 10:

CHART SHOWING IDEAL POLICY TER

3 - 5 years 6 - 9 years 10 - 15 years

16 - 20 years

21 - 25 years

26 - 30 years

More than 30 years

Whole life Policy

0%5%

10%15%20%25%30%35%40%

19%15%

35%

14%9%

2% 1%5%

Years

Perc

enta

ge

INTERPRETATION:

78

From the chart given above it can be seen that 35% of the respondents prefer a policy term

of 10 – 15 years, 19% prefer a term of 3 – 5 years and 15% prefer a term of 6 – 9 years.

This means that HDFC SLIC could introduce more plans wherein the premium paying term

is less than 15 years.

FACTORS THAT MOTIVATE RESPONDENTS TO PURCHASE INSURANCE

TABLE 11:

Parameter No. of Respondents

Advertisements 35

High returns 84

Advice from friends 46

Family responsibilities 89

Others 16

CHART 11:

13%

31%

17%

33%

6%

AdvertisementsHigh returnsAdvice from friendsFamily responsibilitiesOthers

INTERPRETATION:

79

From the chart above it can be seen that 33% of the respondents purchase life insurance to

secure their families, 33% take life insurance to get high returns, 17% purchase insurance

on the advice of their friends and 13% purchase insurance because of the influence of

advertisements.

The main purpose of insurance is to cover the financial or economic loss that occurs to the

family in case of the uncertain death of the policy holder. But now a days this trend is

changing. Along with protection (life cover), a savings element is being added to insurance.

With the introduction of the new unit linked plans in the market, policy holders get the option

to choose where their money will be invested. They can invest their money in the equity

market, debt market, money market or a combination of these. The debt and money markets

usually have low risk attached whereas the equity market is a high risk investment option.

80

PREFERRED COMPANY TYPE OF THE RESPONDENTSTABLE 12:

Type of Company No. of Respondents Percentage

Government Owned Company 127 47%

Public Limited Company 62 23%

Private Company 49 18%

Foreign Company 32 12%

CHART 12:PREFERRED COMPANY TYPE OF THE RESPONDENTS

Government Owned Company

Public Limited Company

Private Company Foreign Company0%

10%

20%

30%

40%

50%

60%

70%60%

29%

7% 4%

Type of Company

No.

of R

epon

dent

s (%

)

INTERPRETATION:From the graph above we find that 60% of the respondents preferred to purchase insurance

from a government owned company, 29% of the respondents preferred to purchase

insurance from a public limited company and only 4% of the respondents preferred a foreign

based company. Heavy advertising through television, newspapers, magazines and radio is

required.

81

CHAPTER-VI

SWOT

Swot Analysis Of Hdfc Standard Life Insurance

82

Analysis of the industry’s environment

(SWOT Analysis)HDFC and Standard Life first came together for a possible joint venture, to enter the life

Insurance market, in January 1995. It was clear from the outset that both companies shared similar values and beliefs and a strong relationship quickly formed. In October 1995, the

companies signed a 3-year joint venture agreement.

STRENGTH

1. Domestic image of HDFC supported by Prudential’s international image is strength of the company.

2. Strong and well spread network of qualified intermediaries and sales person.

3. Strong capital and reserve base.

4. The company provides customer service of the highest order.

5. Huge basket of product range which are suitable to all age and income groups.

6. Large pool of technically skilled manpower with in depth knowledge and understanding of the market.

7. The company also provides innovative products to cater to different needs of different customers.

WEAKNESS

1. Heavy management expenses and administrative costs.

2. Low customer confidence on the private players.

3. Vertical hierarchical reporting structure with many designations and cadres leading to power politics at all levels without any exception.

4. Poor retention percentage of tied up agents.

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OPPORTUNITIES

1. Insurable population †According to ING only 10% of the population is insured, which represents around 30% of the insurable population. This suggests more than 300m people, with the potential to buy insurance, remain uninsured.

2. There will be inflow of managerial and financial expertise from the world’s leading insurance markets. Further the burden of educating consumers will also be shared among many players.

3. International companies will help in building world class expertise in local market by introducing the best global practices.

THREATS

1. Legislation could impact.

2. Great risk involved.

3. Very high competition prevailing in industry.

4. Lack of infrastructure in rural areas could constrain investment.

84

CHAPTER-VII

CONCLUSION

85

CONCLUSION

HDFC standard life insurance is first life insurance Company in India. It has businesses

spread out across the globe. It was registered on 23rd December 2000. It currently ranks

number 4 amongst the insurers in India (Source: annual premium provided by the company)

The company faces a large amount of competition. To sustain itself it must promote its

products through advertising and improve its selling techniques. Consumers must be aware

of the new plans available at HDFC SLIC. The medium of advertising used could be

television since most of its competitors use this tool to promote their products. The company

must be promoted as an Indian company since consumers seem to have more trust in

investing in Indian firms.

The unit linked concept must be specifically promoted. The general perception of life

insurance has to change in India before progress is made in this field. People should not be

afraid to invest money in insurance and must use it as an effective tool for tax planning and

long term savings.

HDFC SLIC could tap the rural markets with cheaper products and smaller policy terms.

There are individuals who are willing to pay small amounts as premium but the plans do not

accept premiums below a certain amount. It was usually found that a large number of males

were insured compared to females. Individuals below the age of 30 (mostly male) were

interested in investment plans. This was a general conclusion drawn during prospecting

clients.

86

CHAPTER-VIII

Recommendation and Suggestions

87

Recommendation and Suggestions

There are few recommendations that are recommended if the project is to be conducted again in future.

Employees should be trained according to the changing standards of the

organization.

Company should conduct survey from time to time to according to which

changes can be introduced in the organization to stay updated in the market.

They should introduce creativity into the work, so that the employees can do

their work active mindedly.

Employees should be given compensation in order to keep them loyal.

Employees should be more involved in decision making to become more

differentiated.

Company should provide incentives to shop keepers.

More and More dealers can be appointed, so that sell can be increased.

Distribution system should be based on wholesaler and retilers.

Channel length should be short so cost can be reduced.

88

CHAPTER-IX

Appendix

89

APPENDIX

A SURVEY ON ‘INSURANCE INDUSTRY’

Dear Sir/Madam

Do you have a life insurance policy/investment plan in your name?

o Yes o No

If yes which company’s insurance policies do you hold?

o HDFC Standard Life Insurance

o Birla Sun Life Insurance

o Aviva Life Insurance

o Bajaj Allianz Life Insurance

o LIC

o Tata AIG Life Insurance

o ICICI Prudential Life Insurance

o ING Vysya Life Insurance

o Bharti Axa Life Insurance

o Others (specify name)

What is the approximate premium paid by you annually (in Rupees)?

o Rs. 5,000 – Rs. 10,000

o Rs. 10,001 – Rs. 15,000

o Rs. 15,001 – Rs. 25,000

o Rs. 25,001 – Rs. 50,000

o Rs. 50,001 – Rs. 60,000

o Rs. 60,001 – Rs. 80,000

o Rs. 80,001 – Rs. 1,00,000

o More than Rs. 1,00,000 (specify premium)

What kind of insurance policy would suit you best in your current stage of life?o Life Insurance

o Life Insurance and Investment

Plans

o Pension Plans

o Child Plans

o Tax saving plans

90

Are you aware of the new unit linked insurance plans in the market?

o Yes o No

How much would you be willing to spend per annum if you were to go for an investment/insurance plan?

o Less than Rs. 6,000

o Rs. 6,001 – Rs. 10,000

o Rs. 10,001 – Rs. 25,000

o Rs. 25,001 – Rs. 50,000

o Rs. 50,000 – Rs. 1,00,000

o More than Rs. 1,00,000

Which according to you is an ideal policy term? (Number of years you would be willing to pay premium)

o 3 to 5 years

o 6 to 9 years

o 10 to 15 years

o 16 to 20 years

o 21 to 25 years

o 26 to 30 years

o More than 30 years

o Whole life policy

What motivates you to purchase insurance/investment plans?

o Advertisements

o High Returns

o Advice from friends

o Family responsibilities

o Others (specify)

In which kind of company would you prefer to make a purchase of insurance?

o Government owned company

o Public Limited Company

o Private Company

o Foreign based company

91

Typically what kind of returns would you look at from your investments? (Please note: Higher returns involve greater risk)

o Less than 5%

o 6% - 10 %

o 11% - 15 %

o 16% - 20 %

o 21% - 25%

o 26% - 30%

o 31% - 40%

o 41% - 50%

o More than 50%

Personal Details:

Name:

Address:

Age: Contact No. :

Profile of respondent: Student

Housewife

Working Professional

Business

Self – Employed

Government Service Employee

92

CHAPTER-XBIBLIOGRAPHY

93

WIBLOGRAPHY

Websites:

www.hdfcslic.com

www.tata-aig-life.com

www.irdaindia.com

www.lic.com

www.money control.com

www.bajajallianz.com

www.icici.prulife.com

BIBLOGRAPHY

Magazine & News Paper

Insurance World

The Outlook Money

Insurance Chronicle

Economic Times

The Times Of India

94

Books:

Tripathy Pal, Insurance Theory and Practice Prentice Hall India 2005

Jain Mamta, Insurance HRD Practice Ritu Publication 2007

Pal Bodla Garg, Insurance Management Deep & Deep Publication 2007

Mr. Jack Kinder Secrets of Successful Insurance Sales 2005

95

96