Summer Training Report

MAJOR PROJECT REPORT

CHAPTER 1GENERAL INTRODUCTION

1.1 Overview of Industry

The insurance sector in India has come a full circle from being an open competitive market to nationalization and back to a liberalized market again. Tracing the developments in the Indian insurance sector reveals the 360 degree turn witnessed over a period of almost two centuries.

With such a large population and the untapped market area of this population Insurance happens to be a very big opportunity in India. Today it stands as a business growing at the rate of 15-20 per cent annually. Together with banking services, it adds about 7 per cent to the countrys GDP .In spite of all this growth the statistics of the penetration of the insurance in the country is very poor. Nearly 80% of Indian populations are without Life insurance cover and the Health insurance. This is an indicator that growth potential for the insurance sector is immense in India. It was due to this immense growth that the regulations were introduced in the insurance sector and in continuation Malhotra Committee was constituted by the government in 1993 to examine the various aspects of the industry. The key element of the reform process was Participation of overseas insurance companies with 26% capital. Creating a more efficient and competitive financial system suitable for the requirements of the economy was the main idea behind this reform.

Since then the insurance industry has gone through many sea changes .The competition LIC started facing from these companies were threatening to the existence of LIC. Since the liberalization of the industry the insurance industry has never looked back and today stand as the one of the most competitive and exploring industry in India. The entry of the private players and the increased use of the new distribution are in the limelight today.

The use of new distribution techniques and the IT tools has increased the scope of the industry in the longer run.

The origin of insurance is very old .The time when we were not even born; man has sought some sort of protection from the unpredictable calamities of the nature. The basic urge in man to secure himself against any form of risk and uncertainty led to the origin of insurance.

The business of life insurance in India in its existing form started in India in the year 1818 with the establishment of the Oriental Life Insurance Company in Calcutta.

Some of the important milestones in the life insurance business in India are:

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 to by the Insurance Act with the objective of protecting the interests of the insuring public.

1956: 245 Indian and foreign insurers and provident societies taken over by the central government and nationalized LIC formed by an Act of Parliament, viz. LIC Act, 1956, with a capital contribution of Rs. 5 crore from the Government of India.

1993: Malhotra Committee, headed by former Finance Secretary and RBI Governor R.N. Malhotra, was formed to evaluate the Indian insurance industry and recommend its future direction.

1.2 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 companys 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)

1.3 Impact Of Liberalization

The introduction of private players in the industry has added to the colors in the dull industry. The initiatives taken by the private players are very competitive and have given immense competition to the on time monopoly of the market LIC. Since the advent of the private players in the market the industry has seen new and innovative steps taken by the players in this sector. The new players have improved the service quality of the insurance. As a result LIC down the years have seen the declining phase in its career.

The market share was distributed among the private players. Though LIC still holds the 75% of the insurance sector but the upcoming natures of these private players are enough to give more competition to LIC in the near future. LIC market share has decreased from 95% (2002-03) to 81 %( 2004-05).

1.4 Product Innovation

There has been a plethora of new and innovative products offered by the new players. Customers have tremendous choice from a large variety of products from pure term (risk) insurance to unit-linked investment products. Customers are offered unbundled products with a variety of benefits as riders from which they can choose. More customers are buying products and services based on their true needs and not just traditional money-back policies, which is not considered very appropriate for long-term protection and savings. There is lots of saving and investment plans in the market. However, there are still some key new products yet to be introduced - e.g. health products.

1.5. Rural Marketing

Rural India seems to have an appetite for mobile phones, computers, and cars and to add to it we have insurance. In India with the private players having entered into the insurance industry, the expected explosion in job opportunities may not actually happen but for them the catchments area is the opportunities in the rural India. In India the insurance business can be said to be "a marathon, not a sprint". This is because of the nature of the business being long term. With merely two years of the industry being opened, not surprisingly, the new comers are making losses. The public sector companies, notably the LIC, have gained in strength, thanks to the deepening of the market consequent to the awareness created by the new companies. However this does not deterred the private sector, which knows know that the race is a marathon, not a sprint. However it seems that they if not anything, are only increasing their spending, though only out of the capital. Today, there are 18 insurance companies in India excluding the PSUs, with 12 in the life insurance business and the rest in non-life .As insurance companies go more and more rural in search of business, there will be opportunities in the rural sector. A research conducted exhibited that the rural consumers are willing to dole out anything between Rs 3,500 and Rs 2,900 as premium each year. In the insurance the awareness level for life insurance is the highest in rural India, but the consumers are also aware about motor, accidents and cattle insurance. In a study conducted by MART the results

showed that nearly one third said that they had purchased some kind of insurance with the maximum penetration skewed in favor of life insurance. The study also pointed out the private companies have huge task to play in creating awareness and credibility among the rural populace. The perceived benefits of buying a life policy range from security of income bulk return in future, daughter's marriage, children's education and good return on savings, in that order, the study adds.

Regulatory and Development Authority (IRDA) have set stiff rural targets for insurance companies. For the life sector, in the first year, 5 per cent of the total policies written should come from the rural sector. This will go up to 15 per cent in five years. Similarly, for the non-life sector, two per cent of the total gross premium income should come from the rural sector going up to 5 per cent in five years, according to the regulation. All these moves will make the investment the rural area a big start.

1.6 Information Technology And InsuranceIn the insurance industry today, there is a clear trend away from selling a broad range of products to a large volume of customers in a one size-fits-all manners. Instead of focusing on their different products lines as silos (i.e., life, property and casualty etc) insurers are looking for ways to offer highly targeted insurance products that are tailored to the individuals customers with the highest propensity to buy them.

There is a evolutionary change in the technology that has revolutionized the entire insurance sector. Insurance industry is a data-rich industry, and thus, there is dire need to use the data for trend analysis and personalization.

With increased competition among insurers, service has become a key issue. Moreover, customers are getting increasingly sophisticated and tech-savvy. People today dont want to accept the current value propositions, they want personalized interactions and they look for more and more features and add ones and better service The insurance companies today must meet the need of the hour for more and more personalized approach for handling the customer. Today managing the customer intelligently is very critical for the insurer especially in the very competitive environment. Companies need to apply different set of rules and treatment strategies to different customer segments. However, to personalize interactions, insurers are required to capture customer information in an integrated system.

With the explosion of Website and greater access to direct product or policy information, there is a need to developing better techniques to give customers a truly personalized experience. Personalization helps organizations to reach their customers with more impact and to generate new revenue through cross selling and up selling activities. To ensure that the customers are receiving personalized information, many organizations are incorporating knowledge database-repositories of content that typically include a search engine and lets the customers locate the all document and information related to their queries of request for services. Customers can hereby use the knowledge database to mange their products or the company information and invoices, claim records, and histories of the service inquiry. These products also may be able to learn from the customers previous knowledge database and to use their information when determining the relevance to the customers search request.

The insurance sector remains a very competitive market and those companies that are able to best utilize their data and provide their customer with the most personalized options will have the distinct competitive advantage. The insurers that come up to the top will be those who leverage the appropriate technology solutions effectively in order to foster customer loyalty, attract new customers and improve operational efficiency by providing common information across their lines of business.

1.7 Mergers And Aquisitions

This is an era of mergers and acquisitions. Private companies including MNCs are amalgamating the world over to get more competitive edge. Currently, the general insurance industry has been opened up. The question here is that for over two years, eight private companies have operated and has the size of the cake expanded. The insurers are doing enough to raise the level of risk awareness or are they merely content to compete in the markets organized and established. However sooner or later the private sector players will have to put in place strategies aimed not at winning the existing accounts of the public players but at diversifying markets penetration as a whole. The private players in the future would have to turn their attention to working in the unorganized and under served markets.

What is likely to happen is that the private players would continue to skim the profitable segments of the already organized business in the urban areas? The time has already come for the government of India to evaluate the performance of private companies vis--vis their declared objective of opening up the industry.

However it is high time for the government to realize that importance of merging the public sector general insurance companies into single entity. The resent scenario calls for a better performance from part of each of the public sector insurance companies against each other; or in other words a competition to be the best. The result what we see is the undercutting of premium to retain or wrest business and quoting an uneconomical rate of premium. While this allows one of the Public Sectors Company to win a business form another in this manner. The others suffer a loss and the resultant effect is a cannibalization with a fall in the average premium of the public sector itself. This at many times brings advantage to the private players who grab the business because of the

unethical competition among the public players.

The purpose of having four companies all subsidiaries of General Insurance Corporation of India (GIC) National Insurance Company, New India Assurance Company, Oriental Insurance Company, And The United India Insurance Company; at the time of nationalization was to have competition among themselves in service and products at the same price. The service provided by them was also equally good or bad depending on the experience of the customers.

Now with real competition coming in with most of the global insurance players setting footprints here, it is felt that the time for merger has come and to enjoy the benefits if the size. It is to be sated that size does matter in insurance business. All over the worlds mergers and acquisitions in the risk-underwriting sector is common. The benefits if the four insurance companies merge will be enormous. The merged entity will enjoy higher underwriting and risk retention capacity; increase in reinsurance premium, reduction in reinsurance outflow, healthy solvency margins, setting right the asset liability mismatch and reduction in cost. The insurance market thus becomes a gambling place. Had the public sector companies made into a single entity, perhaps the total premium of the four public sector companies in the year 2003-04 would have gone up but 25 percent. But the public sector alone is forced to underwrite the loss making motor third party liability (TPL) insurance. The public insurance companies insured a loss of Rs 1943 crore on this portfolio on just one year (03-04). The cumulative loss under this portfolio is astronomical. The loss of profitable business in view of undeserved competition among the public sector companies is hampering the subsidization of social insurance including the motor TPL.

It is thus clear that it is good for the public sector companies to merge immediately when they are still strong, lest a merger becomes inevitable later after the independent public sector companies fail one after another. This does not bid well for the public sector, nor fort he insuring public and not for the economic development either. For a progress me require merger of strong public sector companies. Else it would render public sector companies weak and destroy them.

1.8 Potential Of Insurance Industry In India :

Only ONE out of FIVE insurable population in India have insurance coverage.

In terms of Insurance premium per capita and premium per GDP, India ranks as one of the lowest in the world.

Life insurance premium constitutes only 9% of domestic savings.

By 2010, hundred million elderly look to planning for old age pension and annuities.

More than 325 million labor forces have no social security.

With an annual growth rate of 15-20% and the largest number of life insurance policies in force, the potential of the Indian insurance industry is huge. Total value of the Indian insurance market (2004-05) is estimated at Rs. 450 billion (US$10 billion). According to government sources, the insurance and banking services' contribution to the country's gross domestic product (GDP) is 7% out of which the gross premium collection forms a significant part. The funds available with the state-owned Life Insurance Corporation (LIC) for investments are 8% of GDP.

Till date, only 20% of the total insurable population of India is covered under various life insurance schemes, the penetration rates of health and other non-life insurances in India is also well below the international level. These facts indicate the of immense growth potential of the insurance sector.

The year 1999 saw a revolution in the Indian insurance sector, as major structural changes took place with the ending of government monopoly and the passage of the Insurance Regulatory and Development Authority (IRDA) Bill, lifting all entry restrictions for private players and allowing foreign players to enter the market with some limits on direct foreign ownership.

Though, the existing rule says that a foreign partner can hold 26% equity in an insurance company, a proposal to increase this limit to 49% is pending with the government. Since opening up of the insurance sector in 1999, foreign investments of Rs. 8.7 billion have poured into the Indian market and 21 private 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.The life insurance industry in India grew by an impressive 36%, with premium income from new business at Rs. 253.43 billion during the fiscal year 2004-2005, braving stiff competition from private insurers. Though the total volume of LIC's business increased in the last fiscal year (2004-2005) compared to the previous one, its market share came down from 87.04 to 78.07%. The 14 private insurers increased their market share from about 13% to about 22% in a year's time. The figures for the first two months of the fiscal year 2005-06 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.

There are presently 12 general insurance companies with four public sector companies and eight private insurers. According to estimates, private insurance companies collectively have a 10% share of the non-life insurance market.

CHAPTER 2INTRODUCTION TO HDFC STANDARD LIFE INSURANCE2.1. HDFCThe Housing Development Finance Corporation Limited (HDFC Bank) was incorporated in 1977 with a share capital of Rs. 10 crores and the primary objective of meeting a social need that of promoting home ownership by providing long-term finance to households for their housing needs; HDFC has since emerged as the largest residential mortgage finance institution in the country. The Bank commenced operations as a Scheduled Commercial Bank in January 1995. HDFC was amongst the first to receive an 'in principle' approval from the Reserve Bank of India (RBI) to set up a bank in the private sector, as part of the RBI's liberalization of the Indian Banking Industry in 1994. The corporation has had a series of share issues raising its capital to Rs. 119 crores. The net worth of the corporation as on March 31, 2000 stood at Rs. 2,096 crores.

HDFC operates through 75 locations throughout the country with its Corporate Headquarters in Mumbai, India. HDFC also has an international office in Dubai, U.A.E., with service associates in Kuwait, Oman and Qatar.

HDFC Bank has a network of over 531 branches spread over 228 cities across India. All branches are linked on an online real-time basis. HDFC Banks Customers are serviced through Telephone Banking in over 120 locations. The Bank also has a network of about over 1054-networked ATMs across these cities. HDFC Bank's ATM network can be accessed by all domestic and international

Visa

MasterCard

Visa Electron

Maestro

Plus

Cirrus and American Express Credit

Charge cardholders.

HDFC Bank has won many awards for its excellent service. Major among them are "Best Bank in India" by Hong Kong-based Finance Asia magazine in 2005 and "Company of the Year" Award for Corporate Excellence 2004-2005.

The primary objective of HDFC is to enhance residential housing stock in the country through the provision of housing finance in a systematic and professional manner, and to promote home ownership. Another objective is to increase the flow of resources to the housing sector by integrating the housing finance sector with the overall domestic financial markets.

HDFCs main goals are to

Develop close relationships with individual households,

Maintain its position as the premier housing finance institution in the country,

Transform ideas into viable and creative solutions,

Provide consistently high returns to shareholders,

To grow through diversification by leveraging off the existing client base.

HDFC has always been market-oriented and dynamic with respect to resource mobilization as well as its lending programmed. This renders it more than capable to meet the new challenges that have emerged. Over the years, HDFC has developed a vast client base of borrowers, depositors, shareholders and agents, and it hopes to capitalize on this loyal and satisfied client base for future growth. Internal systems have been developed to be robust and agile, to take into account changes in the volatile external environment.

HDFC has developed a network of institutions through partnerships with some of the best institutions in the world, for providing specialized financial services. Each institution is being fine-tuned for a specific market, while offering the entire HDFC customer base the highest standards of quality in product design, facilities and service.2.2. 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 19th century from its original Edinburgh premises, opening offices in other towns and acquiring 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 past six years by Standard & Poor.

2.3. The 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. Each 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 Poors. These reflect the efficiency with which HDFC and Standard Life manage their asset base of Rs. 15,000 Crores and Rs. 600,000 Crores respectively.

HDFC Standard Life Insurance Company Ltd was incorporated on 14th August 2000. HDFC is the majority stakeholder in the insurance JV with 81.4 % stake and Standard Life has a stake of 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 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 a Group Company of the Standard Life, UK. HDFC as on March 31, 2007 holds 81.9 per cent of equity in the joint venture2.3.1 Board Of Directors

Following are the board of directors of HDFC Standard Life Insurance LTD.

Mr. Deepak S. Parekh (CHAIRMAN)

Mr. K. M. Mistry

Ms. Renu Sud Karnad

Mr. A. M. Crombie

Ms. Marcia D. Campbell

Mr. Norman Keith Skeoch

Mr. G. R. Divan

Mr. Ranjan Pant

Mr. Ravi Narain

Mr. Gerald Edgar Grimstone

Mr. D. M. Satwalekar (MANAGING DIRECTOR & C.E.O)2.3.2 Subsidiary Companies

Following are the some subsidiary companies of HDFC Standard Life Insurance LTD.

HDFC Limited (Holding Company)

Standard Life Assurance Company (Investing Party)

HDFC Asset Management Company Limited (Fellow Subsidiary)

HDFC Developers Limited (Fellow Subsidiary)

HDFC Holdings Limited (Fellow Subsidiary)

HDFC Trustee Company Limited (Fellow Subsidiary)

HDFC Realty Limited (Fellow Subsidiary)

HDFC Investment Limited (Fellow Subsidiary)

HDFC Chubb General Insurance Company Limited (Fellow Subsidiary)

GRUH Finance Limited (Fellow Subsidiary)

Home Loan Service India Private Limited (Fellow Subsidiary)

HDFC Venture Capital Limited (Fellow Subsidiary)

HDFC Venture Trustee Company Limited (Fellow Subsidiary)

HDFC Property Ventures Limited (Fellow Subsidiary)

2.4. Our Key Strengths

Financial ExpertiseAs a joint venture of leading financial services groups, HDFC Standard Life has the financial expertise required to manage our long-term investments safely and efficiently.Range of Solutions

They have a range of individual and group solutions, which can be easily customized to specific needs. There group solutions have been designed to offer us complete flexibility combined with a low charging structure.Track Record so farThere 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

2.5. Products Of HDFC Standard Life Insurance

HDFC Standard Life Insurance has offered the following products: -

Group Products Social Products Rural Products Individual Products2.6. Life Stages In HDFC Insurance Plan

Insurance need will change as our life does, from starting to work to enjoying our golden years and all the stages in between. Each one of these stages may pose a different insurance need/cover for us. There are basic life stages, which help us to analyze various insurance needs accordingly.

Stage 1

Young and SingleAn important stage where one lays down the foundation of a successful life ahead. Take advantage of the time and power of compounding to ensure that you build up your dreams. Start saving early.

Our needs

Save for a home and wedding

Tax planning

Save for golden years

Stage 2

Just marriedMarriage brings about a significant change. New dreams and new opportunities also bring in additional responsibilities. While both of us look forward to a happy and secure life, it is equally important to ensure that eventualities dont come in the way of shaping your dreams.

Our needs

Planning for home / securing your home loan liability

Save for vacation

Save for your first child Stage 3

Proud Parents

Once we have children, our need for life insurance is even more. We need to protect our family from an untoward incident. Ensure our protection umbrella takes into account the future cost of securing our childs dream. We will want life to go on for your loved ones, and having enough life insurance is a way to help ensure that.

Our needs

Provide for childrens education

Safeguarding family against loan liabilities

Savings for post-retirement Stage 4

Planning for Retirement

While we are busy climbing the ladder of success today, it is important for us to take time and plan for our life after retirement. Having an early start for retirement planning can make a significant difference to our savings. Think about our golden years even before we have reached them. The key is to think ahead and plan well using your time and money.

Our needs Provide for regular income post retirement

Immediate Tax benefits

Lead a secure, independent and comfortable life style in your retirement years

CHAPTER 3GROUP PRODUCTS

OF

HDFC SLIC3. Group ProductsHDFC 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. We offer different products for different needs of employers ranging from term insurance plans for pure protection to voluntary plans such as superannuation and leave encashment. We now offer the following group products to our esteemed corporate clients:3.1. Group Term Insurance

Whatever the business Its the people who make it a success. Everybody requires some type of life insurance, especially when others depend on them financially.

The Group Term Insurance (GTI) plan meets this need and serves as an ideal way for companies to reinforce their bond with their employees. The sort of needs, you, as an employer need to cater to could be in form of : Employee benefits Cover for housing or vehicle loans given by you to your employees A GTI cover for future service gratuity liability to be taken along with the HDFC Group Unit Linked PlanThe HDFC Group Term Insurance is a cost-effective plan that addresses these needs. In addition you have the choice to opt for a GTI with an experience discount feature ("Profit Share"), where a discount is given on future premiums in case of favorable claim experience (subject to group size).The HDFC group term insurance plan will have the following structure:

One year renewable term insurance plan One master policy issued covering all members of the group Sum assured is payable on death (either due to natural causes or accidents)The plan covers death due to any cause; accidental or natural, and hence is more comprehensive than Group Personal Accident Insurance. Several multinational corporations, large Indian companies, foreign banks and software companies have already chosen the HDFC Group Term Insurance, an innovative product from HDFC Standard Life Insurance, to protect their employees.Optional Rider Benefits

Accidental Death Benefit

Total Permanent Disability

Total Permanent and Partial Diability Benefit

Critical Illness Benefit

Terminal Illness Benefit3.2. Group Variable Term Insurance

The Group Variable Term Insurance is a tailor made insurance policy for third party institutions. HDFC Standard Life Insurance Company will offer life insurance to customers of one or more of the third partys specific products in order that in the event of their death, there will be a lump sum available.

On death, will pay a lump sum known as a sum assured. The sum assured varies over time in order that the customer receives the cover that they need Is a group policy Has no lengthy underwriting procedure Is simple to administer3.3. Group Unit Linked Plans

An investment solution that provides funding vehicle to manage corpuses with3.3.1. Gratuity schemesMost employers have a statutory obligation to pay a gratuity to its employees on termination of employment. This gratuity is in the form of a one-off payment made on termination of employment. It depends on salary and number of years of service, so will therefore increase with time. The HDFC Group Unit Linked plan is a new and innovative unit-linked plan, which offer employers and gratuity scheme trustees a flexible and cost effective way to fund this gratuity liability. The plan helps a corporate by: Building a fund systematically, which will be used to meet your future gratuity liability Providing the opportunity to maximise investment returns and thus provide the benefit in a cost-effective mannerOne factor that helps you to maximise the investment returns is low charges. Our charges are the lowest in the industry and therefore can improve your long-term returns.3.3.2. Superannuation schemesMany organisations realise that the statutory requirement benefits are not sufficient for their trusted employees to continue enjoying their quality of life after they retire. The HDFC Group Unit Linked Plan is a great way for an employer to show his employees that he not only takes care of them while in service, but has also ensured that they can lead a comfortable life after retirement.The HDFC Group Unit Linked plan is also a great employee retention and motivation tool that helps employers to fund their employees post-retirement needs in a systematic, tax-efficient and cost-effective manner. Moreover, as a unit-linked plan, it gives you tremendous flexibility and freedom to customise individual retirement funds for your employees based on their appetite for risk and the stage of life they are in.

This plan helps an organisation by: Providing an investment vehicle to trustees for making the contribution for each member Helping build a substantial retirement fund for each member Presenting a potential to provide higher benefits to employees Offering tax benefits for investments made through the formation of a trust3.3.3. Leave Encashment schemesMany employers provide their employees with the option of encashing their leave to their credit at the time of retirement or resignation. Accounting Standard 15 requires that an actuarial valuation of a company leave encashment liability be carried out and reflected in the books of accounts. The HDFC Group Unit Linked Plan is an innovative plan, which offers employers a flexible and cost effective way to fund this Leave Encashment liability. The plan helps an organisation by:

Creating a fund that can be built up to meet your future leave encashment liability Providing the opportunity to maximize investment returns and thus provide the benefit in a cost-effective mannerOne factor that helps maximise investment returns is low charges. Our fund management charges are the lowest in the industry today and therefore can improve your long-term returns.Also suitable for other employee benefit schemes such as Salary Saving Schemes and Wealth Management Schemes

CHAPTER 4SOCIAL PRODUCTS

OF

HDFC SLIC4. Social Products4.1. 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 that members beneficiaries to help meet some of the immediate financial needs following their loss.4.1.1. Eligibility Members of the development agency and their spouses with Minimum age at start of Policy is 18 Years and Maximum age at start of Policy is 50 Years As Per Last BirthdayEmployees 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.4.1.2. Premium PaymentsThe 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.

The premium rate is Rs. 25 per Rs. 10,000 of lump sum, per member.4.1.3. BenefitsOn 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.

4.1.4. The role of the Development AgencyDue 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.4.1.5. Prohibition of rebatesSection 41 of the Insurance Act, 1938 states

No person shall allow or offer to allow, either directly or indirectly, as an inducement to any person to take out or renew or continue an insurance in respect of any kind of risk relating to lives or property in India, any rebate of the whole or part of the commission payable or any rebate of the premium shown on the policy, nor shall any person taking out or renewing or continuing a policy accept any rebate, except such rebate as may be allowed in accordance with the published prospectus or tables of the insurer If any person fails to comply with sub regulation (previous point) above, he shall be liable to payment of a fine which may extend to rupees five hundredCHAPTER 5RURAL PRODUCTSOF

HDFC SLIC5. Rural Products5.1. HDFC Gramin Bima Mitra Yojna

Timely preparedness for uncertainties of the future can go a long way towards living a life of confidence. HDFC Gramin Bima Mitra Yojana provides this preparedness through robust returns even on an investment as small as Rs. 500 by adding 50% to your original investment in 3 years. In addition to the guaranteed returns, the plan offers the security of a life insurance cover and the flexibility to exit prematurely. HDFC Gramin Bima Mitra Yojana is a special offering from HDFC Standard Life, exclusively for the benefit of our rural customers.

5.1.1. Product Features

On survival of the life assured to maturity of the plan which is 3 years after the inception date, a guaranteed maturity benefit of Rs. 750 is payable.

On termination of the plan before maturity, the guaranteed benefits payable are (in Rs.):

During Year123

On Death500050005000

On Surrunder500575650

5.1.2. Eligibility

To be eligible for this plan, age at entry of the life assured must be between 18 and 50 years of age. This policy can be taken only on a single-life basis.5.1.3. Premium

A single premium of Rs. 500 is due on the date of commencement. There are no further premium/s due.5.2. HDFC Bima Bachat Yojna

5.2.1. Product Feature

A single premium of Rs. 500 is due on the date of commencement. There are no further premium/s due. This policy does not participate in profits.

On survival of the life assured to maturity of the plan which is 5 years after the inception date, a maturity benefit of Rs. 1000 is payable.

On termination of the plan before maturity, benefits payable are (in Rs.):During Year12345

On Death50005000500050005000

On Surrunder500550625700850

5.2.2. Eligibility

To be eligible for this plan, age at entry of the life assured must be between 18 and 50 years of age. This policy can be taken only on a single-life basis.

CHAPTER 6INDIVIDUAL PRODUCTSOF

HDFC SLIC6. INDIVIDUAL PRODUCTSWe at HDFC Standard Life realise that not everyone has the same kind of needs. Keeping this in mind, we have a varied range of Products that you can choose from to suit all your needs. These will help secure your future as well as the future of your family.6.1. PROTECTION PLANS

You can protect your family against the loss of your income or the burden of a loan in the event of your unfortunate demise, disability or sickness. These plans offer valuable peace of mind at a small price. Our Protection range includes

6.1.1. HDFC Term Assurance PlanThe HDFC Term Assurance Plan is an insurance policy that is designed to help secure your family's financial needs. The plan does this by providing a lump sum to the family of the life assured in case of death or critical illness (if option is chosen) of the life assured during the term of the contract. One can choose the lump sum that would replace the income lost to one's family in the unfortunate event of one's death6.1.2. HDFC Loan Cover Term Assurance PlanThis Plan provides a lump sum on the unfortunate death of the life assured within the policy term. If you are taking a loan to buy a house for your family, this plan can help you ensure that life's uncertainties do not affect their shelter. It is an affordable plan that has been designed to help your family repay the outstanding loan in case of your unfortunate death. The lump sum will be a decreasing percentage of the initial Sum Assured as the outstanding loan decreases as per the loan schedule, the cover under the policy also decreases as per the policy schedule.6.1.3. HDFC Home Lone Protection PlanThe HDFC Home Loan Protection Plan provides you with the comfort of knowing that should you die; a sum of money will be available towards repaying your housing loan. This means that your dependants will be secure in your family home.Benefits A decreasing sum assured payable if you die during the term of the contract. This sum assured is intended to help pay-off your outstanding home loan. By reducing the sum assured as the years go by, we ensure that you do not pay for protection you dont need.

Your commitmentTo avail yourself of this policy, you only need to pay us a single premium in advance. It may be possible to include this premium in the loan amount and repay as part of your instalments.

6.2. INVESTMENT PLANS

Our investment products are well suited to meet your long-term needs.

Our investment range include6.2.1. Single Premium Whole Life Plan

The well-informed rightly said and proves how important investments are In todays date and age. The question that we all fear is What about the risks attached?GOOD NEWS for all the people who are anxious the same way! HDFC Standard Life Insurance brings to you a safe investment plan that would take care of your savings and nurture your earnings

HDFC Single Premium Whole of Life Insurance Plan.

HDFC Single Premium Whole Of Life Insurance Plan is a tailor-made plan well suited to meet your long-term investment needs. This participating plan offers you the following benefits:

Whole of life plan aimed at providing long-term real growth of your money Single premium investment plan In case of your unfortunate demise during the policy term, this participating (With Profits) insurance plan will pay your family the Sum Assured and compound Reversionary Bonuses, which are usually added annually. An additional Terminal Bonus may be paid depending on the performance of the underlying investments During Guaranteed Surrender Periods you get the Sum Assured and all bonuses vested as at the date of surrender6.2.2. Unit Linked Wealth Maximum Plus

In This Policy, The Investment Risk In Investment Portfolio Is Borne By the Policy holder

You have given your best to everything in life. And you will settle for nothing but the best for yourself and your family. No wonder, you want an investment plan that enhances your investment returns. We present HDFC Unit Linked Wealth Maximiser Plus, a unique single premium investment plan that strives to maximise your investment returns and takes care of your familys protection need. So that while you reap potential returns of your investment, your and yours familys financial independence is also secured.6.3. PENSION PLANSOur Pension Plans help you secure your financial independence even after retirement.

Our pension range includes6.3.1. Personal Pension Plans

Today, you are busy climbing the ladder of success and realizing your dreams. Today, time is with you. Just take a moment and think. Will you be able to continue at the same pace? Will your income be the same forever? Will you be able to live life on your own terms even after you retire6.3.2. HDFC Personal Pension PlanWe understand your need to build a secure future for yourself. Hence, the HDFC Personal Pension Plan is an insurance policy that is designed to provide a post - retirement income for life with the freedom to choose your retirement date.

You can choose your premium, the Sum Assured and your retirement date. At the end of the policy term, you will receive the Sum Assured plus any attaching bonus, which will provide your post retirement income.

The HDFC Personal Pension Plan is an insurance policy, which can benefit you in the following ways:

We understand your need to build a secure future for yourself. Hence, the HDFC Personal Pension Plan is an insurance policy that is designed to provide a post - retirement income for life with the freedom to choose your retirement date.

You can choose your premium, the Sum Assured and your retirement date. At the end of the policy term, you will receive the Sum Assured plus any attaching bonus, which will provide your post - retirement income.

The HDFC Personal Pension Plan is an insurance policy, which can benefit you in the following ways:

Provides a post retirement income in your golden years Gives you the flexibility to plan your retirement date Gives you tax benefits on your premiumsThe plan receives simple Reversiory Bonuses, which are usually added annually. At the end of the term an additional Terminal Bonus may be paid depending on the performance of the underlying investment.

Don't compromise on your self-respect, ever. Go ahead, hold your head high and enjoy life with the HDFC Personal Pension Plan.6.3.3. Unit Linked Pension

Today, you are busy climbing the ladder of success and realizing your dreams. Today, time is with you. Just take a moment and think. Will you be able to continue at the same pace? Will your income be the same forever? Will you be able to live life on your own terms even after you retire

The HDFC Unit Linked Pension is an insurance policy that is designed to provide a retirement income for life with the freedom to maximise your investment returns. Stride into yours gold years of retirement with dignity and pride.

The HDFC Unit Linked Pension gives you:

An outstanding investment opportunity by providing a choice of thoroughly researched and selected investments A post retirement income for life Flexibility to plan your retirement date Freedom to invest premiums as per your preference.HDFC Standard Life is the name of our Insurance Company and HDFC Unit Linked Pension is the name of this plan. The name of our company and the name of our plan do not, in any way, indicate the quality of the plan, its future prospects or returns.6.3.4. Unit Linked Pension Plus

Today, you are busy climbing the ladder of success and realizing your dreams. Today, time is with you. Just take a moment and think. Will you be able to continue at the same pace? Will your income be the same forever? Will you be able to live life on your own terms evenafter you retire?The HDFC Unit Linked Pension Plus is an insurance policy that is designed to provide a retirement income for life with the freedom to maximise your investment returns. Stride into your golden years of retirement with dignity and pride.

The HDFC Unit Linked Pension Plus gives you:

An outstanding investment opportunity by providing a choice of thoroughly researched and selected investments Regular Loyalty Units to boost your fund value every year A post retirement income for life Flexibility to plan your retirement date Freedom to invest premiums as per your preferenceHDFC Standard Life is the name of our Insurance Company and HDFC Unit Linked Pension Plus is the name of this plan. The name of our company and the name of our plan do not, in any way, indicate the quality of the plan, its future prospects or returns.6.3.5. Immediate Pension Plan

The HDFC Immediate Annuity is a contract that uses your capital to provide you with a guaranteed gross income through out your lifetime or over a period of your choice. The income is guaranteed and is unaffected by the rise and fall of interest rates. This means you can plan your life the way you want it to be, safe in the knowledge that your gross income will not fall during the period you have selected.The HDFC Immediate Annuity offers a number of options to meet all your income needs.Flexibility in how you receive your incomeYou can choose to receive your income at times to suit your own circumstances.

Monthly Every 3 months Every 6 months Once a yearThe annuity can be paid in advance or arrears i.e. either at the start or the end of the payment period you have chosen.

6.4. SAVINGS PLAN

Our Savings Plans offer you flexible options to build savings for your future needs such as buying a dream home or fulfilling your childrens immediate and future needs. Our saving range includes:6.4.1. Endowment Assurance Plan

The HDFC Endowment Assurance Plan gives you: An ideal way to secure your long-term financial goals Valuable protection to your family by way of lump sum payment in case of your unfortunate demise within policy term Lump sum payment (basic Sum Assured plus any bonus additions) on survival up to maturity date Very flexible benefit options and payment optionsIn case of your unfortunate demise during the policy term, this participating ('With Profits') insurance plan will pay your family the Sum Assured (together with the attached bonuses) you had chosen. The plan receives simple Reversionary Bonuses, which are usually added annually. At the end of the term an additional Terminal Bonus may be paid depending on the performance of the underlying investment.6.4.2. Assurance Plan

To fulfil your dreams for your family and yourself, you need to start saving today. And you not only need to save enough but also need the assurance that your familys future is secure Get the convenience of HDFC Assurance Plan. HDFC Assurance Plan helps you conveniently build your long-term savings while keeping your familys future protected.

This plan offers you the following features Convenient no medical examination procedure Insurance cover up to Rs. 5 Lakh with limited documentation You can choose to save monthly, quarterly, half yearly or yearly as per your convenience The annual amount you pay is eligible for tax relief under Sec. 80 C The maturity amount is completely tax-free under Section 10(10 D)

What is HDFC Assurance Plan?

This plan is a with profits savings policy, which offers the following features :

The policy receives simple reversionary bonuses, which are usually added annually. At maturity, the policy pays out the basic Sum Assured plus reversionary bonuses declared during the policy term. Interim or terminal bonus are also be payable if declared. The policy can be surrendered for cash value before maturity Provides financial support to your family by way of a lumpsum payment in case of your unfortunate death within the term of the policy. The lumpsum is the basic sum assured plus any bonus additions6.4.3. Savings Assurance Plan

Inspite of your best efforts, you do not end up savings regularly for your familys and your future. Unexpected expenses, unplanned purchases and often, sheer lack of time defeat your efforts. Dont you wish that someone would take on the responsibility of regularly savings your money for you? Auto build your savings with HDFC Savings Assurance Plan.

HDFC Savings Assurance Plan helps you conveniently build your long term savings.

This plan offers you the following features :

You can choose to save monthly, quarterly, half yearly or yearly as per your convenience The chosen amount is automatically invested from your bank account into the plan. You can choose to invest as little as Rs. 200 per month. And there is no limit to the maximum amount. No underwriting or extensive documentation required. The annual amount you pay is eligible for tax relief under Sec. 80 C The maturity amount is completely tax-free under Section 10(10 D)6.4.4. Childrens Plan

As a parent, your priority is your child's future and being able to meet your child's dreams and aspirations. Today, providing a good education, establishing a professional career or even a modest wedding is expensive. Costs are increasing fast. Just imagine how much you'll need when your child takes these important steps in life.The HDFC Children's Plan is designed to secure your child's future by giving your child (the beneficiary) a guaranteed lump sum, on maturity or in case of your unfortunate demise, early in the policy term. The premiums, paid by you, are invested by the company to give you good long-term returns. The plan receives simple Reversionary Bonuses, which are usually added annually. At the end of the term an additional Terminal Bonus may be paid depending on the performance of the underlying investment.

6.4.5. Money Back

A proportion of the basic Sum Assured as Cash lump sums at regular 5-year intervals within the policy term (see the table given below) an ideal way to secure your long- term as well as short-term financial goals. A lump sum payment on survival up to maturity date. Valuable protection to your family by way of lump sum payment in case of your unfortunate death within the policy term. This is over and above any earlier payouts.6.4.6. Unit Linked Endowment SuvidhaIn This Policy, The Investment Risk In Investment Portfolio Is Borne By the Policyholder. You have given your family the very best. And there is no reason why they should not get the very best in the future too. With HDFC Unit Linked Endowment Suvidha, you can ensure that your family remains financially independent, even if you are not around. You can ensure that they live a life of respect and dignity.CHAPTER 7COMPETITIVE ANALYSIS

7. COMPETITIVE ANALYSIS

7.1 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 20th year along with accrued bonus.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 25th 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.

7.2 ICICI PRUDENTIAL

ICICI 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. 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. 7.3 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.

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 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.

7.4 BAJAJ ALLIANZ

Bajaj 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.

7.5 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 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.CHAPTER - 8CONCLUSIONHDFC 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. The company faces a large amount of competition. To sustain itself it must promote its products through advertising and improve its selling techniques. Consumers are well aware of the new plans available at HDFC SLIC. The medium of advertising used by HDFC Standard Life Insurance is television since most of its competitors use this tool to promote their products. The company is promoted as an Indian company since consumers seem to have more trust in investing in Indian firms.

The unit linked concept is 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 45 (mostly male) were interested in investment plans. This was a general conclusion drawn during prospecting clients.

BIBLIOGRAPHYBIBLIOGRAPHY

WEBSITES1. www.lic.com2. www.birlasunlife.com3. www.hdfc.com4. www.icici.com5. www.bajajaliaanz.comMAGAZINE6. India Today

7. Business Today

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