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A
PROJECT STUDY REPORTON
TRAINING UNDER TAKEN AT
HDFC STANDARD LIFE INSURANCE COMPANY LTD.
(Titled)
Recruitment of Financialconsultants
Submitted in the partial Fulfillment for
the
AWARD OF DEGREE OF
BBA(2010-2011)
Submitted to:- University Of Rajasthan ,Jaipur(raj.)
Submitted By:-
TARUN KUMAWAT
BBA III Year
VIDYASTHALI INSTITUTE OF TECHNOLOGY ,SCIENCE AND
MANAGEMENT
Prithviraj Nagar,Maharani Farm,Durgapura , Jaipur(raj.)
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ACKNOWLEDGEMENT
Memories give you the power to collect roses in the winter.
I express my sincere thanks to my project guide Mr. Vimal modifaculty of Vidyasthali for guiding me right from the inspection
till the successful completion of the project. I sincerelyacknowledge him for ascending their valuable guidancesupport for litereature, critical review of the project and aboveall the moralk support for he had provided to me with all stagesof this project.
I would also like to thanks to Mr.Naveen sharma (BranchManager) and Vimal Modi (Professor) for their extreme supporthelp and cooperation throughout my project.
TARUN KUMAWAT
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STUDENT DECLARATION
I here by declare that the project entitled Recruitment ofFinancial Consultants HDFC Standard Life InsuranceCompany Ltd. Vaishali Nagar Jaipur. Submitted in therecruitment for the degree of bachelor of BusinessAdministration to VIDYASTHALI INSTITUTE OF
TECHNOLOGY, SCIENCE AND MANAGEMENT AFFILIATEDTO UNIVERSITY OF RAJASTHAN JAIPUR(RAJ.) is my original workand has not been submitted for the award of any otherdiploma, fellowship or other similar title or project.
TARUN
KUMAWAT
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PREFACE
As a part of course curriculum for a award of BBA,the studentshave to undergo practical traning for minimum 45 workingdays after the 3rd year.
The underlying object of training is to provide the student withpractical aspect of the organizational working and corporateenvironment . such type of traning helps the students to workin a real industrial environment,to gain practical knowledgeand to build confidence. The idea & intention of taking traning
in this field to came up to me because of tremendous changesand scope in insurance services.
As a part of this trend, I took my traning at:
HDFC Standard life insurance company Ltd.Gopalpura, jaipur
This project deals with analysis of various insurance plans suchas protection, investment,pension saving plans of HDFCstandard life insurance company ltd. Even though I tried tomake efforts at my best there may be manymistakes,shortcomings in my project report which I hope will beforgiven by the reader.
TARUN
KUMAWAT
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CONTENTS Page.no
1. Introduction
5
2. Company Profile10
3. Vision and Values of the Company 24
4. Organization Hierarchy38
5. Products of HDFCSLIC Ltd. 73
6. SWOT Analysis74
7. Findings 758. Conclusions 76
9. Suggestion 77
10. Bibliography 78
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INTRODUCTION
What is Insurance
Every asset has a value for its owner and also for those who
are benefited with the existence of that asset. Insurance is
concerned with the protection of economic value of assets.
All of us are interested in the creation of assets because:
i. All assets have values.
ii. They yield income to the owner.
iii. They meet some other needs of the owner.
iv. They may provide satisfaction of some needs and
also yield income to the owner.
Every asset has normally an expected lifetime. During this
period, it is expected to perform and provide income/comfort to
the owner. The owner, being aware of this, plans the things in
such a way that by the time the expected lifetime of the asset
expires, he is ready with the funds required for its replacement.
In this way, he ensures that the value or income from the assetis not lost. Well, this appears to be a fine arrangement provided
the asset completes its expected lifetime!
All assets carry the risk of being destroyed or damaged. But all
assets may not necessarily get destroyed or damaged. Only in
a few instances, the probability turns out to be true and the
asset gets actually lost or destroyed by accident or some other
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unfortunate event before the completion of its expected
lifetime. The owner and
those deriving benefits from the asset will suffer because the
arrangement to make available its substitute is not yet ready.
Insurance is helpful in mitigating such adverse consequences.
To sum up, assets are insured, as they are likely to be lost or
made non-functional through an accidental occurrence.
Insurance does not protect the assets. This means that
insurance cannot prevent loss to the assets due to perils. Nor
can insurance avoid the occurrence of the perils. It only
compensates, may not be fully, the economic or financial lossresulting to the asset from such damage or destruction.
Brief History of Insurance
The beginning of insurance business is traced to the city of
London. It started with the marine business. Marine traders,
who used to gather at Lloyds coffee house in London, agreed
to share losses to goods during transportation by ship. Marine
related losses included:-
Loss of ship by sinking due to bad weather in high seas.
Goods in transit by ship robbed by sea pirates.
Loss of or damage to the goods in transit by ship due to
bad weather in high seas. The first insurance policy was
issued in England in 1583.
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Life Insurance in India
In India, insurance started with life Insurance. It was in the
early 19th Century when the Britishers on their postings in India
felt the need of life insurance cover.
It started with English Companies like... The European and the
Albert. The First Indian insurance company was the Bombay
Mutual Assurance Society Ltd., formed in 1870.
In the wake of the Swadeshi Movement in India in the early
1900s, quite a good number of Indian companies were formed
in various parts of the country to transact insurance business.
To name a few:: Hindustan Co-operative and National
Insurance in Kolkata; United India in Chennai; Bombay Life,
New India and Jupiter in Mumbai and Lakshmi Insurance in
New Delhi.
Nationalisation of Life Insurance in India
In 1956, life insurance business was nationalized and LIC of
India came into being on 1.9.1956. The government took over
the business of 245 companies (including 75 provident fund
societies) who were transacting life insurance business at that
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time. Thereafter, LIC got the exclusive privilege to transact life
insurance business in India
Purpose and Need for Insurance
Assets are likely to be destroyed or made non-functional
due to accidental occurrences called perils. Assets can,therefore, be insured. A few examples of perils are: fire,
floods, breakdowns, lightning, earthquake etc. Perils are
the events. Risks are the consequential losses or
damages.
Possibility of damage to asset caused by any peril is the
risk that asset is exposed to. Risk means uncertainty or unpredictability about future
loss or damage, which may or may not happen. This refers
to the losses, which may happen suddenly and
unexpectedly.
We can say that a human life is also an income-generating
asset.
Human life may be lost due to unexpected early death or
become non-functional following sickness or disabilities
cause by accidents.
If this happens by the time one is on the verge of
retirement when his income is about to cease, he might
have made alternative arrangements to meet his needs.
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But if this happens at a younger age when he is not expected
to have made adequate alternative arrangement, those who
are dependent on his income, will suffer. Insurance is
necessary to help those dependent on his income.
Types of Insurance
Basically there are two types of Insurances:
Non-Life Insurance
Life Insurance
INSURANCE
NON-LIFE
INSURANCELIFE
INSURANCE
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--MARINE
INSURANCE
--FIRE
INSURANCE
--MISCELLANEOUS
INSURANCE
VEHICLES
FURNITURE BUILDING
AIRCRAFTS
GENERAL
INTANGIBLES
--ONLY HUMAN LIFE
INSURANCE
INCLUDES IN THIS
CATEGORY
--HUMAN BEINGS
SICKNESS, ILLNESS
AND OTHER
ASSURANCE GIVEN
IN THIS CATEGORY
--LONG TERM
CONCEPT
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COMPANY PROFILE
The HDFC Group
HDFC was incorporated in 1977 with two primary objectives - to
enhance housing stock in the country through housing finance
systematically and professionally and promote home
ownership. Today they are the largest residential mortgage
finance institution in India, with a net worth of Rs. 2,703 crores
as of March 31, 2002 and an asset base of over Rs. 22,000
crores. HDFC also aim to increase the flow of resources to the
housing sector by integrating the housing finance sector with
the overall domestic financial markets.
HDFC has demonstrated the viability of market oriented
housing finance in a developing country. The World Bank
considers us a model private sector housing finance company
in developing countries and a provider of technical assistance
for new and existing institutions, in India and abroad.
Their re-engineering has always centered around the customer
in retail markets on both sides of the balance sheet, i.e. loans
are given to individuals and deposits are accepted from
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individuals. A positive personalized approach towards our
customers' needs has been HDFCs goad and motto. HDFC has
been voted the second 'Best Managed Company in India' after
Infosys in a poll conducted by Asia
money for the year 2000. The book, Global Cases in
Benchmarking by Robert Camp includes a case study on HDFC.
HDFC is also the largest mobiliser of retail deposits in the
private sector outside the banking circle. Their deposits have
been awarded the highest safety credit rating 'FAAA' & MAAA
by CRISIL and ICRA respectively for eight consecutive years.
While being a household name in India and the undisputed
market leader in the fields of housing finance, their social
responsibilities have remained in focus.
GROUP COMPANIES OF HDFC
HDFC Bank Limited
HDFC Securities Limited
HDFC Asset Management Company Limited
Home Loan Services India Pvt. Ltd.
HDFC Realty Ltd.
HDFC Deposits
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HDFC Standard Life Insurance
HDFC Chubb
Intelenet
HDFC Bank Limited
The Housing Development Finance Corporation Limited (HDFC)
was amongst the first to receive approval from the Reserve
Bank of India (RBI) to set up a bank in the private sector. The
bank was incorporated in August 1994 in the name of HDFC
Bank Limited, with its registered office in Mumbai. HDFC Bank
commenced operations as a Scheduled Commercial Bank in
January 1995.
Awards
Best Listed Bank of India by Businessworld.
Best Domestic Bank by The Asset Magazines Triple A
Country Award.
Best Local Cash Management Bank2006 in Large and
Medium segmentsAsiamoney Awards
Best Bank in India in 2006Euromoney Awards
HDFC Asset Management Company Ltd.
HDFC Asset Management Company Ltd. (AMC) was
incorporated under the Companies Act, 1956; on December 10,14
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1999 and was approved to act as an Asset Management
Company for the HDFC Mutual Fund by SEBI vide its letter
dated June 30, 2000.HDFC Asset
Management Company Ltd. (AMC) is one of the most growing
Mutual Fund Company of India.
Awards
HDFC mutual fund was recently awarded the CNBC
Moddys investor service award for the best performing
fund house for the one year category.
Zurich also received the best performing fund house
award for the three year category.
Home Loan Services India Pvt. Ltd.
Home Loan Services India Private Limited is a wholly owned
subsidiary of HDFC Ltd. The company has been floated as a
distribution arm of HDFC with an objective of offering doorstep
service to prospective clients of HDFC group.
Financial Management: HLSIL offers financial management
solutions in 9 cities and is continuously expanding its reach.
HLSIL employs sales persons across all spectrums of financial
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management enabling them to meet a range of financial
needs.
HDFC Chubb
Its partnership that leverages the strengths of two financial
powerhousescombining the trust and local experience of
HDFC, Indias premier financial services company, with the 120
years proven expertise of CHUBB, a global leader in non-life
insurance backed by a network of 134 offices in 31 countries.
Chubb today provides property and casualty insurance through
more than 10,000 employees in 32 countries of North America,
South America and Asia.
Motor Insurance
We understand and care for your vehicle beyond just the policyissue and speedy claims. HDFC Chubb's Motor Insurance
product mainly focuses on Motor Package Policy for privatecars & two wheelers.
Home Insurance
With Home Insurance, we will offer you cover for your homeand belongings against fire and burglary. Our Home Insurancewill bring you the convenience of purchase from HDFC's homeloan counters.
Accident & Health Insurance
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Accidents can happen anywhere and at anytime, which is whythe HDFC Chubb Accident and Travel policy is designed toprotect you from the financial consequences. Avail of the GroupAccident Policy, Hospital cash-Accident policy and Business
Travel policy.
Intelenet
Intelenet is a leading BPO service provider with the focus on
providing solutions to global Organizations seeking to reduce
the cost while consistently maintaining superior level of
standards two leading global investorsHDFC and Barclays--
provide the financial banking Intelenet needs to lead in a global
marketplace. Barclays is a venerable financial services group
headquartered in the United Kingdom, ranking amongst the
services group headquartered in the United Kingdom, ranking
among the Top 10 banks in the world based on market
capitalization.
Intelenet impacts your business by seeking to reduce costs
while consistently maintaining superior levels of service. Our
solutions extend across all strata of BPO, technology and
consulting.
Awards
Deloitte Technology Fast 50 India 2005 Program
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Intelenet Global Services has been ranked first among
BPOs while standing third overall in the Technology, Media and
Telecommunications (TMT) sectors across India.
Deloitte Technology Fast 50 India 2006 Program
Intelenet Global Services has continued its ranking,
second time in a row, as amongst the top 50 fast growing
technology companies in India.
Maharashtra Information Technology Awards 2005
Intelenet Global Services came in a close second in the
IT Enabled Services category at the Maharashtra Information
Technology Awards2005.
HDFC Deposits
D E P O S I T S
HDFC has instituted well-defined service standards for both
depositors and deposit agents. HDFC has been able to mobilize
deposits from over 10 lac depositors. Outstanding deposits
grew from Rs. 1,458 crores in March 1994 to Rs. 8,741 crores in
March 2006. Much of this success can be attributed to its
strong brand image, superior services, security and above all,
the significant contribution made by HDFCs deposit agents.
HDFC has over 50,000 deposit agents and distributes all its
retail savings (deposit) products primarily through this channel.
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Awards
HDFC has been awarded AAA rating and MAAA rating
for its deposits from both CRISIL and ICRA for the twelfth
consecutive year, representing highest safety as regards
timely payment of principal and interest.
HDFC Realty Ltd.
Realty Limited
HDFC Realty Ltd. Is a new, organized electronic marketplace for
properties, to provide the entire gamut of real estate services,
bringing together the click world and the bricks world in a
revolutionary and user-friendly way. Making available the best
guidance and the most professional, transparent, efficient
service to the real estate customer.
HDFC Securities Ltd.
S E C U R I T I E S
HDFC Securities Ltd was promoted by the HDFC Bank & HDFC
with the objective of providing the diverse customer base of
the HDFC Group and other investors, a capability to transact in
the Stock Exchanges & other financial market transactions
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HDFC Standard Life Insurance Company Ltd.
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, and leading providers
of financial services in the United Kingdom. HDFC as on March
31, 2007 holds 81.9 per cent of equity and Standard Life was
holding 18.1 in the joint venture.
Highlights
First life insurance Company in the private sector to get
license from the regulator IRDA.
First life insurance Company to come out with Term
Assurance Plan.
First private life insurance Company to declare bonuses
consecutively for 6 years from inception.
First life insurance Company to introduce open option to
the pension plan policyholders.
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First life insurance Company to introduce Automatic
Allocation Option to all the policyholders under Unit Linked
Plans.
Only life insurance Company to give 24 free switching
option to Unit Linked Policyholders.
HDFC is one of the fastest growing Private Life Insurers
and today have more than 8 lakh policyholders.
HDFC have one of the widest networks with more than
160 branches and servicing over 440 towns.
Awards
Over a decade of its operations, HDFC Standard Life Insurance
Company Ltd. has been recognized, rated and awarded by a
number of organizations, which include:
Winner of the Out Look Money Award for two consecutive
years.
Voted as the Most Respected Life Insurance Company
by Business World in 2004.
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+ STRENGT =
Financial Expertis
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Market leader
in the Housing
Finance Sector
Over 2 million
satisfied
customers
Over 1,00,000
Crores in Loan
Approvals
Ranked as
Indias 3rd Best
Managed
Company by
Finance Asia-
2005
Serving
customers for
over 180 years
Currently
administers
125 billion in
assets
Voted 5 Star
Life &
Pensions
provider forlast 10 years
250 Branches
11,00,000
Customers
Multiple
Products
- Protection
- Unit Linked
- With Profit
More than
8 lakhpolicyholders
Servicing over
440 towns in
India
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As a joint venture of leading financial services groups, HDFC
Standard Life has the financial expertise required to manage
your long-term investments safely and efficiently.
Range of Solutions
We have a range of individual and group solutions, which can
be easily customized to specific needs. Our group solutions
have been designed to offer you complete flexibility combined
with a low charging structure.
Track Record so far
Our cumulative premium income, including the first year
premiums and renewal premiums is Rs. 1532.21 Crores Apr-
Mar 2005 - 06.
We have covered over 1.6 million individuals out of which over
5,00,000 lives have been covered through our group business
tie-ups.
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VISION & VALUES
VISION & VALUES
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Our Vision
The most successful and admired LifeInsurance Company, which means that weare most trusted company, the easiest todeal with, offers the best value for money,
and set the standards in the industry. Inshort, The most obvious choice for all.
Values
IntegrityInnovation
Customer CentricPeople CareTeam Work
Joy & Simplicity
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BRANCH PROFILE OF HDFCSLIC, VAISHALINAGAR
HDFC Standard Life Insurance Companys branch at Vaishali
Nagar, Jaipur was started in October 2006. It was started with
the aim to provide best of Insurance services with the core
values of Integrity and Customer Centric Behavior.
HDFCSLIC Ltd. Vaishali Nagar, Jaipur has excelled in all its
services. It offers almost all products of the Company. Some of
them are saving plans, pension plans, various investment plans
etc.
It has a well-planned organization structure. This branch is
integrated by 4 branches, Jaipur-III, Jaipur-IV, Jaipur-V and
Jaipur-IX. All the branches headed by Territory Manager Mr.
Sumeet Chugh and Branch Managers Mr. Naveen Sharma
(Jaipur-III), Mr. Rajesh Gupta (Jaipur-IV), Mr.Utkarsh Upadyaya
(Jaipur-V), Mr. Chardra Shekhar Paliwal (Jaipur-IX), and other
staff members working in various departments and dealing in
each of the products.
Under each Branch Manager there are around 10-16 Sales
Development Managers (SDM), who takes the responsibility of
promoting and selling of HDFCSLICs products.
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ORGANIZATION HIERARCHY
hhhhjhlh
Mr. Sumeet Chugh (TM)
Mr. Rajesh Gupta
BM, Jaipur-IV
Mr. Utkarsh Upadyaya
BM, Jaipur-V
Mr. Chandra S. Paliwal
ABM, Jaipur-IX
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Mr. Siddarth Singh
BM, Jaipur-III
SDM
Ajay Agarwal
Ashish Kedawat
Kanishk Dutt
Rahul Chandal
Ram K. Khandelwal
Ritu Mathur
Rohit Khanna
Pancham Sharma
Shashikant Sharma
Preet Pal Singh
Ramit Chawla
Pankaj Batra
SDM
Mahendra K. Bairwa
Atin Bhargava
Roop C. Lakhera
Neeraj Pareek
Ashish Pareek
Kapil Chaudhary
Atul Rajwanshi
Payal Singhal
Ajay Narain
Mahendra Singh Pal
Mithun Tailor
Dharmendra Prasad
SDM
Arad Ullah Khan
Mohit Pareek
Harish Kumar Dabi
Abhishek Sharma
Dharmendra Saxena
Puneet Wadhwa
Ajay Sharma
Akhil Mathur
Arun Singh
SDM
Ashish Saraswat
Pranaya Sharma
Nisha Jain
Naveen K. Verma
Varun Bhatnagar
Abdul Haseeb
Kuldeep Kumawat
Bal K. Upadhayaya
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LIFE INSURANCE PLANS
Life insurance plans can be compared to medicines. No one pill
can cure all the diseases; one insurance plan can also not
provide the solution to all financial problems. One has to use a
combination of plans to arrive at an insurance solution. Taking
the right medicine for the disease is important, similarly taking
the right kind of insurance plan is important to achieve
financial goals. Medicines can be administered by different
methods like pills, injections. Life insurance plans are also
come in with-profits and unit linked options.
Life Insurance Plans are a means to achieve a solution to the
clients financial needs.
Creating Wealth Childrens Education
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28
An average suburban property
costs Rs. 15 Lakh
--Outlook Money
To study for an MBA & associated
expenses, today you would require inexcess of Rs. 6 lakh
--Outlook Money Statistics
Retirement Standard of Living
96 out of 100 Indians do not
have any provision
--World Bank Report
If you are currently earning
Rs. 20,000 p.m. & inflation is at 5%, you will
need an income of Rs. 53,065 p.m. in 20
years time to maintain your current standard
of living
--Outlook Money Guide, 2005
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Retirement
P.I.P.S.
Classification of life insurance plans
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Serious Illness Premature Death
It will cost Rs. 2 lakh
For open heart surgery & Rs. 18
lakh for a liver transplant--Brand Equity Foundation
More than a quarter
Of Indians do not reach the age of
60--World Health Organization
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Lifeinsurance plans can be classified into the following four
categories according to the
Features:
Protection Plans
Investment Plans
Pension Plans
Savings Plans
Protection Plans
As the name suggests this category of plans are designed to
protect the income earning capacity of the life assured. The
present income of the life assured therefore forms the basis of
the life insurance. A person with no income therefore cannot be
given this plan. The plan is therefore not offered to students,
housewives and minors.
The plans are in the nature of assurances rather than pure
insurance. Under the plan the insurance company assures the
policyholder that a lump sum of money would be paid on the
happening of the insured event. Thus even if the life assured
does not earn the same level of income at the time of the
happening of the insured event, as at the time when he took
the insurance, the lump sum is still payable.
The premium collected under this category of plans is generally
sufficient to cover the risk insured. There is no return of
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premium on the expiry of the cover; however a saving element
can be built under .
the plans to return the savings amount at maturity. The plans
do not share in the profits of the company and have no
bonuses.
The plans can be explained with the following diagram...
Fig 1: The policyholders pay the premium, which goes into a
fund. This fund is sufficient enough to pay all the claims that
arise and meet all the expenses.
The risk is common to the poll of policyholders who by
purchasing the plan choose to share the risk with group. The
claims are paid from the contributions made by the
policyholders. The premium paid by the policyholder issufficient to cover the risk and expenses, hence generally on
the expiry of the cover nothing is payable.
Under the protection plans the risk is covered for a premium,
which is sufficient to pay the claims and the expenses. It is
therefore
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Death ClaimsPremium
Expenses
Fund sufficient to
pay claims to
meet all expenses
Policyholder
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necessary for the insurance company to ensure that the claims
do not exceed the assumed mortality. To ensure this, the
insurance company would strictly underwrite the protection
plans. There is also a stiff
competition under the protection plans as the plans of two
companies can be compared on the basis of the premium
charged. Every company tries to get the share of the market by
keeping the premium under this category lower. The only way
for a company to keep the premium low over a long period is to
control the expenses and claims. The service factor is also
important while selling a protection plan. How quickly the claim
would be settled matters. In case a company is charging some
few rupees more but is known for quick settlement of the claim
the client would not mind going with such company. Hence the
premium rate as well as the service should be explained to the
client while selling the protection plans.
The plan should be sold on the basis of the Human Life Value
(HLV) concept. As per the HLV concept every individual has an
economic value, which is equal to the present value of all
future earnings of that individual. Company should sell this
plan to clients who have an income and a financialresponsibility. This form of insurance is also called a young
persons privilege as it is easy to get this insurance when you
are young and since savings are low when a person is young he
should possess this cover in case of an unforeseen event.
Rider Benefits also fall in this category of plans. Under the rider
the insured event is defined and claims are payable only if theinsured
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event as defined occurs. Rider benefits usually come with a
number of exclusions.
HDFC Standard Life Company has two products in this category
and they are:
1. Term Assurance Plan
2. Loan Cover Term Assurance Plan
Investment Plan
As the name suggests this category of plans are designed to
help the person reduce some of the risk of investments. All the
investment risks cannot be reduced. What the investment
plans try to do is to create a pool of investors so that they can
get the advantage of large funds, diversified investments,
professional management and better returns. Investment plans
can be designed to protect the policyholder against the market
fluctuations. However all policyholders cannot be protected at
the same time against market fluctuations. It is common to
allow the protection to a small group of policyholders at any
given point of time. One of the objectives of the investment
type of plans is to give a good return to the policyholder.
When risk covers are integrated with the investment plans the
cost of the risk covers reduce the returns to the policyholders.
To avoid the risk cover costs the plans do not offer huge risk
covers. Hence in these type of plans, premium paid by
policyholder is almost equal to the sum assured.
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The premium under the plans mainly consists of investment. It
would not be correct to compare this category of plans on the
basis of the
sum assured and the premium paid. In case a higher premium
is collected under the plan, the company would be in a better
position to pay a bigger amount on maturity/death. A better
way of comparison would be to compare what the client pays
and what he would get under the plans. At the time of selling
unfortunately you would not be able to show to the client as to
what he would get under his plan. Illustrations and past
bonuses are something you can use to convince the client. The
company background and the philosophy of the company can
also be used to convince the client.
Life insurance investment plans are designed for long-term
investments. It is not cost effective for a life insurance
company to design a short-term investment plan. It is therefore
usual for these types of plans to have a term of 10 years and
above. It is important to make the client understand that he is
entering into a long-term investment when he purchases and
investment plan form a life insurance company.
This plan is useful when the client is looking for investment for
a long term financial needs which requires investment of
money for a long term.
The investment plan can be designed as a with-profits contract
or a unit linked contract. In a with profits contract the returns
are smoothened while under the unit linked contract the
returns to the
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client depend on the movement of the Net Asset Values (NAVs)
of the units purchased.
The functioning of a with-profits investment plan can be
explained with the following diagram:
Fig 2: The policyholder pays the premium, which is invested by
the insurance company. The returns are distributed to the
policyholder by means of bonus mechanism, which tries to
achieve a smoothening of the returns.
The Single Premium Whole of Life Insurance Plan (SPWLIP) of
HDFC Standard life falls in this category of products.
Pension PlansPension Plans are designed to provide pension. With the
interest rates fluctuating and the increase in longevity the
interest in the pension products has been growing in the recent
past. Life pensions provide
an income till death and this is attractive in the above
mentioned scenario.
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Sum Assured plus bonus on death/maturity
Investment Returns
ExpensesPremium
Investments
With Profits Fund
Policyholder
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The Indian society has been moving from the joint family
system to the nuclear family system. There is also no form of
social security schemes, which provide an income in the old
age. It is therefore important that all individuals think about
their retirement and save for an income in the old age. Pension
Plans help the client to build the pension fund, which is
earmarked, to provide for the pensions and pay the pensions
on the chosen retirement date.
Pension Plans can be further classified into the following two
categories:
1. Deferred Pension Plans These plans help the client build
the pension fund during his earning years and convert the
fund into pensions on the chosen retirement date.
2. Immediate Pension Plans These plans pay a pension
immediately after the lump sum purchase price is paid to
the insurance company.
The deferred pension plan has two parts. In the first part the
savings of the policyholder is accumulated to create a fund for
the purchase of a pension on the chosen date. This
accumulation can be offered through a with-profits fund or
through the unit linked mechanism.
In the second part the fund is used to purchase an annuity
chosen by the policyholder. There are various immediate
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annuities, which are available and the client should choose
one, which suits him the best.
The choice of the annuities is therefore given to the client just
before the annuity starts.
The aim of a deferred pension plan is to provide a good annuity
to the client. Risk covers are therefore not built in the plan. This
is to ensure that the cost of the risk cover does not reduce the
amount available for pension.
The deferred pension plan works like a savings plans with the
difference that the amount at the end of the contract is paid in
the form of pension. In the event of death before the pension
starts the premium is returned with interest.
The figure below helps to understand how the pension policy
works:
Fig 3: The policyholder pays the premium, which is invested by
the insurance company. The returns are distributed to the
37
Sum Assured plus bonus used to purchase
annuity at the end of the term. In event of
death during the term of the contract the
premium is returned with interest.
Investment Returns
ExpensesPremium
Investments
With Profits Fund
Policyholder
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policyholder by means of bonus mechanism, which tries to
achieve a smoothening
of the returns. On the chosen date of retirement the fund is
used to purchase an annuity. In the event of death of the life
assured during the term the premiums are returned with
interest.
HDFC Standard Life launched the following plans in this
category:
1. Personal Pension Plan (with profits)
2. Unit Linked Pension Plan
Savings Plans
The savings plans are designed to help a person save for a
long-term event. Long-term savings have inherent un-certainties. Besides long term savings instrument are not
available in the market. The savings plans aims to provide a
solution to the client in this area with the benefit of life
insurance.
It is important to note that the insurance cover offered is on the
savings. While purchasing the plan that the policyholder has asavings target in mind. The plan aims to protect this target in
the event of the death of the life assured. In the event of the
death of the life assured during the term, in addition to the
amount saved the amount, which could not be saved is also
paid to the beneficiary.
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The premium paid by the policyholder consists of the savings.
The risk cover cost on the savings forms a very small portion of
the
premium. The effectively means that the premium paid by the
policyholder would determine the maturity amount that the
policyholder would ultimately get.
Savings plans offer the clients a good vehicle to build savings
for a long-term financial need. The earlier the client starts a
savings plan the lesser he would have to contribute as his
savings would grow bigger due to the effect of compound
interest
Savings plans have a risk element, which needs to be
underwritten to ensure that the death claims are controlled. In
case a company is very liberal in granting the covers the
chances are that the policyholders who survive would get a
lower maturity benefits. Maturity benefits can be enhanced by
a strict control on the claims and the expenses.
The following diagram can explain the working of the savings
plan.
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Sum Assured plus bonus on death/maturity
Investment Returns
ExpensesPremium
Investments
With Profits Fund
Policyholder
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Fig 4: The policyholder pays the premium, which is invested by
the insurance company. The returns are distributed to the
policyholder
by means of bonus mechanism, which tries to achieve a
smoothening of the returns.
Savings Plans can be offered as a with-profits plan or a unit
linked plan. A with profits fund aims to smoothen the returns to
the policyholder using the bonus mechanism while the returns
to the policyholder under a unit linked plan depends on the
movement of the unit prices.
HDFC Standard Life offers the followingsavings plans:
1. Endowment Assurance Plan (with profits)
2. Money Back Plans (with profits)
3. Childrens Plan (with profits)
4. Unit Linked Endowment Plan
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PRODUCTS: AT A GLANCE
1. Endowment Assurance Plan
Savings for a better tomorrow
Introduction
The Endowment Assurance Plan is a with profits savings
contract which aims to give good maturity values to the client
by investing the funds as per the IRDA guidelines and reducing
claims and costs. The aim of the plan is to pay good maturity
values so that the savings objectives of the policyholders are
met.
Need for the Plan
The Endowment Assurance Plan is designed to provide a
solution to the long term financial needs. It is often felt that
people save only when their income is more than their
expenses. To put it bluntly if a person can earn more than what
he can spend he can save. In reality this is not the situation as
one finds that it is impossible to save with the current level of
expenses. Why does this happen?
Expenses are a function of our needs, which arise due to our
wants. We all know that the wants of a human being are
unlimited.
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Consequently the needs keep on increasing and often increase
at a rate higher than the rate of growth of income. Income on
the other
hand is limited and often grows at a much lower rate than the
needs. Consequently it is difficult to save.
There are various savings options available in the market;
however most of the options are short-term or medium term.
Life Insurance savings plans are a better choice as in addition
to providing the vehicle to save for long term the plans also
offer insurance on the savings. Income does not increase with
every requirement for finance. Childrens education, marriage,
housing etc. require lump sum amounts. In case any person
has a responsibility to spend on these kinds of long-termevents, he would have a need for the product.
Features of the Endowment Assurance Plan
The following are the features of the plan:
1. Benefits :a) Death Benefits: In the event of death of the life
assured during the term of the contract, and
provided all the premiums are paid till the time of the
death of the life assured, the sum assured, together
with reversionary bonus and the terminal bonuses (if
any) would be paid to the beneficiary. The policywould terminate on payment of the death benefit.
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b) Maturity Benefits: On survival of the life assured tillthe date of maturity, and subject payment of all
premiums, the policyholder would be paid the sum
assured, together with the reversionary bonuses and
terminal bonus.
c) Paid-up Benefits: In case the policyholder
discontinues payment of premium after the
premiums are paid for at least three years, the policy
would be reduced to a paid-up policy. The reduced
paid-up benefits are payable on death of the life
assured during the term, or survival of he life
assured till the date of maturity, whichever is earlier.
d) Surrender Benefits: The policyholder can surrender
the policy at any time. In case the policyholder
chooses to surrender the policy before the payment
of three years premium the surrender value would be
equal to zero and nothing would be payable. In case
the policyholder chooses to surrender after threeyears, he would be entitled for a surrender value.
2. Frequency of premium payment:
The policyholder can choose yearly, half-yearly or
quarterly mode of payment, as he desire. The frequency
of premium payment can be altered during the term of
the contract.
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3. Days of grace :The premium is payable in advance and should be paid
within the days of grace. The days of grace allowed under
the plan are 15 days from the due date of premium. In
case the days of grace end on a holiday then the premium
has to be paid on the next working day.
4. Lapsation:In the event the premium is not paid within the days of
grace the policy lapses. The policy would be automatically
reduced to a paid up policy in case premiums have been
paid for at least three years. In case premiums are not
paid for three years the policy would lapse without value.
A lapsed policy can be reinstated within one year from the
date of lapse only.
5. Minimum premium:
The following are the minimum premium conditions under
the Endowment Assurance Plan.
Annual mode Rs. 1800
Half yearly mode Rs. 1000
Quarterly mode Rs. 550
There is no condition of maximum premium.
6. Other conditions:
Minimum Term 10 years
Maximum Term 30 years
Minimum Age at Entry 12 years
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Maximum Age at Entry 60 years
Maximum Maturity Age 75 years
The policyholder has the choice to choose any term
between 10 to 30 years, subject to the maximum maturity
age. In case the policy is taken on the life of a minor then
the legal guardian of the minor would have to propose the
insurance on behalf of the
minor. The policy would automatically vest in the life
assured when he attains the age of majority.
7. Policy loans:
Policy loans would be available under the plan once the
policy acquires a surrender value. The policy loans would
be to the extent of 90% of the surrender value. The
company would quote the terms and conditions of the
policy loans at the time of granting the loans and the
same would vary from time to time.
8. Life cover basis:
The endowment assurance plan can be offered on a single
life basis or as joint life first claim basis. When the policy
is offered on a joint life basis the death claim would be
paid on the death of any one of the lives assured and the
policy would terminate.
9. Tax benefits:
The premium paid under the plan qualifies for tax rebate
under section 88 of the Income Tax Act 1961. The claim
benefits would also not be taxable as per section 1010 D
of the Income Tax Act 1961.The plan is also approved
under the provisions of section 80 DD of the Income Tax
Act 1961.
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2. Money Back Plan
Plan with periodic survival benefits
Introduction
The Money Back Plan is a with profits savings contract which in
addition to the payment of periodic survival benefits aims to
give good maturity values to the client by investing of funds as
per the IRDA guidelines and reducing claims and costs. The aim
of the plan is to pay periodic survival benefits and build good
maturity values so that the short term, medium term and long-
term savings objectives of the policyholders are met.
The net returns to the policyholders at the time of maturity
would depend on the investment and cost experience during
the term of the contract.
Need for the Plan
The Money Back Plan is designed to provide a solution for the
short-term, medium term and long term financial needs. It is
therefore important to understand the financial needs before
suggesting the plan as a solution.
Since people have some short term and medium term and
medium term financial goals like providing for a vacation,
purchasing of a
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luxury item or house renovations etc, they require money
periodically in short intervals to meet these goals.
The Money Back Plan is designed to provide money periodically
so that the same can be used for such requirements. The
added advantage of the Money Back Plan is that the risk cover
keeps on adjusting during the term of the contract and the
policyholder is assured payment of the full sum assured
together with the bonuses irrespective of the survival benefits
paid on death of the life assured during the term.
Features of the Money Back Plan
The following are the features of the plan:
1. Benefits :
a. Death Benefits: In the event of death of the life
assured during the term of the contract, and
provided all the premiums are paid till the time of the
death of the life assured, the sum assured, together
with reversionary bonus and the terminal bonuses (if
any) would be paid to the beneficiary.
b. Survival Benefits: Survival benefits are paid at the
end of every fifth year on survival of the life assured.
The rates of survival benefits are given below. The
policy would continue after payment of the survival
benefit.
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c. Surv
c. Maturity Benefits: On survival of the life assured till
the date of maturity, and subject payment of all
premiums, the policyholder would be paid the sum
assured, together with the reversionary bonuses and
terminal bonus (if any) less all survival benefits
paid during the term of the contract. The policywould terminate on payment of the maturity benefit.
d. Paid-up Benefits: In case the policyholder
discontinues payment of premium after the
premiums are paid for at least three years, the policy
would be reduced to a paid-up policy. The reduced
paid-up benefits are payable on death of the lifeassured during the term.
Number of years from the policy
commencement date
Policy
Term 5 10 15 20 25
10 40%
15 30% 30%
20 25% 25% 25%
25 20% 20% 20% 20%
30 15% 15% 15% 15% 15%
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e. Surrender Benefits: The policyholder can surrender
the policy at any time. In case the policyholder
chooses to surrender the policy before the payment
of three years
premium the surrender value would be equal to zero
and nothing would be payable.
2. Frequency of premium payment:
The policyholder can choose yearly, half-yearly or
quarterly mode of payment, as he desire. The frequency
of premium payment can be altered during the term of
the contract.
3. Days of grace:The premium is payable in advance and should be paid
within the days of grace. The days of grace allowed under
the plan are 15 days from the due date of premium. In
case the days of grace end on a holiday then the premium
has to be paid on the next working day.
4. Lapsation:
In the event the premium is not paid within the days of
grace the policy lapses. The policy would be automatically
reduced to a paid up policy in case premiums have been
paid for at least three years. In case premiums are not
paid for three years the policy would lapse without value.
A lapsed policy can be reinstated within one year from the
date of lapse only.
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5. Minimum premium:
The following are the minimum premium conditions under
the Money Back Plan.
Annual mode Rs. 1800
Half yearly mode Rs. 1000
Quarterly mode Rs. 550
There is no condition of maximum premium.
6. Other conditions:
Minimum Term 10 years
Maximum Term 30 years
Minimum Age at Entry 12 years
Maximum Age at Entry 60 years
Maximum Maturity Age 75 years
The policyholder has the choice to choose any term
between 10 to 30 years, subject to the maximum maturity
age. In case the policy is taken on the life of a minor then
the legal guardian of the minor would have to propose the
insurance on behalf of the minor. The policy would
automatically vest in the life assured when he attains the
age of majority.
7. Policy loans:
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Policy loans would be available under the plan once the
policy acquires a surrender value. The policy loans would
be to the extent of 90% of the surrender value. The
company would quote the terms and conditions of the
policy loans at the time of granting the loans and the
same would vary from time to time.
8. Life cover basis:
The Money Back Plan can be offered on a single life basis
or as joint life first claim basis. When the policy is offered
on a joint life basis the death claim would be paid on the
death of any one of the lives assured and the policy would
terminate.
9. Tax benefits:
The premium paid under the plan qualifies for tax rebate
under section 88 of the Income Tax Act 1961. The claim
benefits would also not be taxable as per section 1010 D
of the Income Tax Act 1961.
The plan is also approved under the provisions of section
80 DD of the Income Tax Act 1961.
3. Childrens PlanPlan designed for the benefit of children
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Introduction
The Childrens Plan is a with-profits savings contract designed
for the benefit of the child. The plan therefore has a provision
for a beneficiary, which can be the child, and all benefits under
the plan would be paid to the child. The funds generated under
the plan are invested as per the IRDA guidelines.The net
returns would depend on our investment and cost experience
during the term of the contract
Need for the Plan
Most parents feel that it is their responsibility to provide the
best for their children. In addition to the physical and emotional
wants children also need to be provided for financially. There
are two types of financial needs of the child:
I. Short term financial needs for food, clothing shelter
and education. This need is mostly met from the
income of the parent
II. Long term financial need for higher education,
marriage and start in life. The alternatives for this
are either to save or raise loans.
In the event of an early death of the parent the child become
dependent of one of the close relative. To ensure that the child
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be taken care even after such an eventuality the parent can
look at providing an income as well as lump sum amounts for
the benefit of the child. The Childrens Plan is designed to help
the parent in planning for the above financial needs of the
child.
All the arguments on the need to save and savings being a
better option than raising a loan are applicable while selling the
Childrens Plan.
Features of the Childrens Plan
The following are the features of the plan:
1. Benefits:
a) Death Benefit: Under this option on death of the life
assured during the term of the policy, provided the
premium is paid till the date of death; no amount
would be immediately payable. The future premiums
would be waived and at maturity date of the policy
the full sum assured with the reversionary bonuses
and terminal bonus (if any) would be payable to the
beneficiary. The policy would participate in the
bonuses till the date of maturity. The policy would
terminate on the payment to beneficiary.
b) Accelerated Benefit: Under this option on death of
the life assured during the tem of the policy,
provided the premium is paid till the date of death.
c) would be payable immediately to the beneficiary and
the policy would terminate.
d) Double Benefits: Under this option on death of the
life assured during the term of the policy, provided
the premium is paid till the date of death; one sum
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assured would be paid to the beneficiary
immediately. The future
premiums would be waived and at maturity date of the policy
the full sum assured with the reversionary bonus and terminal
bonus (if any) would be payable to the beneficiary. The policy
would terminate on payment of the benefit on the date of
maturity
e) Maturity Benefits: In the event of survival of the life
assured during the term of the contract, and
provided all the premiums are paid, the sum assured,
together with the reversionary bonuses and the
terminal bonuses (if any) would be paid to the
beneficiary. The policy would terminate on payment
of the maturity benefit.
f) Paid-up Benefits: In case the policyholder
discontinues payment of premium after the
premiums are paid for at least three years, the policy
would be reduced to a paid-up policy. If the
Childrens Plan is made paid up, a table of
adjustment factors will be used to adjust the policys
basic sum assured to a paid up value.
g) Surrender Benefits: The policyholder can surrender
the policy at any time. In case the policyholder
chooses to surrender the policy before the payment
of three years premium the surrender value would be
equal to zero and nothing would be payable. In case
the policyholder
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chooses to surrender after three years, he would be
entitled for a surrender value.
2. Frequency of premium payment:
The policyholder can choose yearly, half-yearly or
quarterly mode of payment, as he desire. The frequency
of premium payment can be altered during the term of
the contract.
3. Days of grace:
The premium is payable in advance and should be paid
within the days of grace. The days of grace allowed under
the plan are 15 days from the due date of premium. In
case the days of grace end on a holiday then the premium
has to be paid on the next working day.
4. Lapsation:
In the event the premium is not paid within the days of
grace the policy lapses. The policy would be automatically
reduced to a paid up policy in case premiums have been
paid for at least
three years. In case premiums are not paid for three years
the policy would lapse without value.
A lapsed policy can be reinstated within one year from the
date of lapse only.
5. Minimum premium:
The following are the minimum premium conditions under
the Childrens Plan.
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Annual mode Rs. 1800
Half yearly mode Rs. 1000
Quarterly mode Rs. 550
There is no condition of maximum premium.
6. Other conditions:
Minimum Term 10 years
Maximum Term 25 years
Minimum Age at Entry 18 years
Maximum Age at Entry 60 years
Maximum Maturity Age 75 years
The policyholder has the choice to choose any term
between 10 to 25 years, subject to the maximum maturity
age. In case the policy is taken on the life of a minor then
the legal guardian of
the minor would have to propose the insurance on behalf
of the minor.
7. Policy loans:
Policy loans would not be available under the plan.
8. Life cover basis:
The Childrens Plan is to be sold on the life of the parent
with the child as the beneficiary. The plan is not offered
on a joint life basis.
9. Tax benefits:
The premium paid under the plan qualifies for tax rebate
under section 88 of the Income Tax Act 1961. The claim
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benefits would also not be taxable as per section 1010 D
of the Income Tax Act 1961.
The plan is also approved under the provisions of section
80 DD of the Income Tax Act 1961.
4.Term Assurance Plan
Protection of Income
Introduction
The Term Assurance Plan is a without profits protection
contract designed to protect the income earning capacity of
the life assured. The present earning capacity of the client
therefore forms the basis of the insurance
Need for the Plan
Uncertainty is a part of life. In the event of death of the
breadwinner the dependents are put to a lot of financial
difficulty as they lose the source of income. The problem is
compounded in case the family does not have savings to rely
on. In case a person has dependents and also does not have
savings on which the family can rely on in the event of his
death, he needs to protect his income for the benefit of
the family. Term Assurance Plan is designed to offer the
protection of the income at the least possible cost.
Term Assurance Plan can also be used to cover liabilities so
that in the event of death the family receives a lump sum
amount so that liabilities are paid off. Term Assurance is an
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insurance of income and hence the existence of liabilities is not
the basis of granting the insurance.
Features of the Term Assurance Plan
The following are the features of the plan:
1. Benefits:
a) Death Benefits: Provided the policy is in force in the
event of death of the life assured during the term of
the contract
b) the sum assured is paid.
Benefits on expiry of the cover: On expiry of the cover
nothing is payable as Term Assurance is designed forprotection only.
c) Paid up Benefits: There are no paid up benefits under
this plan.
d) Surrender Benefits: There are no surrender benefits
under this plan.
2. Frequency of premium payment:
The policyholder can choose to pay by a single premium
or yearly, half-yearly or quarterly mode of payment. The
frequency of premium payment can be altered during the
term of the contract. Please note that a regular premium
policy cannot be changed to a single premium mode
during the term of the contract.
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3. Days of grace:
The premium is payable in advance and should be paid
within the days of grace. The days of grace allowed under
the plan are 15 days from the due date of premium.
4. Lapsation:
In the event the premium is not paid within the days of
grace the policy lapses. A lapsed policy can be reinstated
within one year from the date of lapse only
5. Minimum premium:
The following are the minimum premium conditions under
the Term Assurance Plan.
Single Premium Rs. 2000
Annual mode Rs. 1500
Half yearly mode Rs. 800
Quarterly mode Rs. 450
There is no condition of maximum premium.
6. Other conditions:
Regular Premium Single Premium
Minimum Term 5 years 2 years
Maximum Term 30 years 15 years
Minimum Age at Entry 18 years 18 years
Maximum Age at Entry 60 years 60 years
Maximum Maturity Age 65 years 65 years
7. Policy loans:Policy loans would not be available under the plan.
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8. Life cover basis:
The Term Assurance Plan can be sold on a single life or
joint life first death basis.
9. Tax benefits:
The premium paid under the plan qualifies for tax rebate
under section 88 of the Income Tax Act 1961. The claim
benefits would
also not be taxable as per section 1010 D of the Income
Tax Act 1961.
10. Special Rates for Women:
Since women have a lesser mortality rate than men for
the same age, the premium rate charged fro women
would be the rate applicable to men three years younger.
5. Loan Cover Term Assurance PlanProtection of Loans
Introduction
The Loan Cover Term Assurance Plan is a without profits
decreasing cover protection contract designed to protect the
outstanding loans of the life assured. The plan is designed to
cover loans however the plan will be granted only in case the
client has sufficient income to back the insurance.
Need for the Plan
Uncertainty is a part of life. In the event of death of the
breadwinner the dependents are put to a lot of financial
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difficulty as they lose the source of income. The problem is
compounded in case there are outstanding loans. The Loan
Cover Term Assurance Plan is designed to cover outstanding
loans at the least possible cost.
Features of the Loan Cover Term Assurance Plan
The following are the features of the plan:
1. Benefits:
a) Death Benefits: Provided the policy is in force in the
event of death of the life assured during the term of the
contract the sum assured is paid.
b) Benefits on expiry of the cover: On expiry of the
cover nothing is payable as the Loan Cover Term
Assurance is designed for protection only.
c) Paid up Benefits: There are no paid up benefits under
this plan.
d) Surrender Benefits: There are no surrender benefits
under this plan.
2. Frequency of premium payment:
The policyholder can choose to pay by a single premium
or yearly, half-yearly or quarterly mode of payment. The
frequency of premium payment can be altered during the
term of the contract.
3. Days of grace:
The premium is payable in advance and should be paid
within the days of grace. The days of grace allowed underthe plan are 15 days from the due date of premium.
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In case the days of grace end on a holiday then the
premium has to be paid on the next working day.
4. Lapsation:
In the event the premium is not paid within the days of
grace the policy lapses. A lapsed policy can be reinstated
within one year from the date of lapse only.
5. Minimum premium:
The following are the minimum premium conditions under
the Loan Cover Term Assurance Plan.
Single Premium Rs. 2000
Annual mode Rs. 1500
Half yearly mode Rs. 800
Quarterly mode Rs. 450
There is no condition of maximum premium.
6. Other conditions:
Regular Premium Single
Premium
Minimum Term 5 years 2
years
Maximum Term 30 years 15
years
Minimum Age at Entry 18 years 18 years
Maximum Age at Entry 60 years 60 years
Maximum Maturity Age 65 years 65 years
7. Policy loans:
Policy loans would not be available under the plan.
8. Life cover basis:
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The Term Assurance Plan can be sold on a single life or
joint life first death basis.
9. Tax benefits:
The premium paid under the plan qualifies for tax rebate
under section 88 of the Income Tax Act 1961. The claim
benefits would also not be taxable as per section 1010 D
of the Income Tax Act 1961.
10.Special Rates for Women:
Since women have a lesser mortality rate than men for
the same age, the premium rate charged fro women
would be the rate applicable to men three years younger.
Important
Although the plan is named as Loan Cover Term Assurance
Plan the plan is basically a decreasing cover term assurance.
The plan is not linked to a loan and the client can choose to
purchase this plan even in case he does not have a loan. The
sum assured would decrease at a predetermined rate and is
not linked to the decrease in the loan amount. Care has been
taken to ensure that the sum assured would be sufficient to
pay most of the loans. The plan does not guarantee
payment of the outstanding loan. It is important that the client
compares the outstanding loan amount with the rate of
decrease of the sum assured and chooses an appropriate
cover.
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6. Single Premium Whole of Life Insurance Plan
Plan designed to give long-term real growth
Introduction
The Single Premium Whole of Life Insurance Plan is a with
profits investment contract which aims to give long tem real
growth to the client by investing the funds as per the IRDA
guidelines and reducing claims and costs. The aim of the plan
is to generate long term real growth, providing guarantees at
specific times during the term of the condition
Need for the Plan
The Single Premium Whole of Life Insurance Plan is designed to
help the client in long-term investment. It is therefore
important to understand the problems associated with
investments to sell the plan better.
However all investment is associated with risk. The higher the
risk one takes, the better the chances of getting a better
return. Investment is all about taking risks
Various investment instruments are available in the market and
the client has to choose from the investment option available.
This investment instruments are designed to meet short-term,
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medium-term and long-term objectives. If an instrument is
designed for a short term the same is not suitable for achieving
a long term objectives. This is because the instrument would
terminate in the short term and the client would be exposed to
reinvestment risks. Long-term investments designed to provide
real growth is a solution to the long-term needs.
The client can choose to invest directly where the risks are high
and the potential of a higher return also exists. However he
would have the disadvantage of being a small investor, who
does not have the expertise in the market, does not have large
funds and is not able to diversify. The mutual funds help the
client in this area and pool the investment of a group of small
investors providing them with expertise in investment,
diversification and better returns.
However investment in mutual fund requires a strategy and the
returns depend on the time of entry and exit from the fund.
Two investors may make different kinds of return due to the
different strategies they follow. The Single Premium Whole of
Life Insurance Plan is designed to remove this problem of the
investors by giving insurance in the form of guarantees on
death and at specific time
intervals so that the returns at these guaranteed periods do not
depend on the market conditions.
These guarantees in long-term investment are very valuable
and since the product is a whole of life one, the client can
continue with the investment till death.
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Features of the Single Premium Whole of Life
Insurance Plan
The following are the features of the plan:
1. Benefits:
a) Death Benefits: In the event of death of the life
assured during the term of the contract, and
provided all the premiums are paid till the time of the
death of the life assured, the sum assured, together
with the (compound) reversionary bonus and the
terminal bonuses (if any) would be paid to the
beneficiary. The policy would terminate on payment
of the death benefit.
b) Maturity Benefits: The Single Premium Whole of Life
Insurance Plan is a whole life plan and therefore does
not have a maturity date.
c) Paid up Benefits: This is not applicable to the Single
Premium Whole of Life Insurance Plan since the plan
is a single premium plan.
d) Minimum Guaranteed Surrender Benefits: On
surrender of the policy after a period of three years
from the date of
e) commencement, there is and guarantee that the
minimum surrender value would be equal to 50% of
the premium paid, except in the four weeks
immediately following the completion of the 10th
policy year.
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f) Special Surrender Benefits: The Company at its sole
discretion may pay special surrender values higher
than the guaranteed surrender values depending on
the investment and expense experience of the
company. The special surrender values would be
paid after completion of the first six months from the
date of commencement of the policy.
2. Frequency of premium payment:
The policyholder has to pay the premium by way of a
single premium only. The single premium payable is equal
to 95% of the sum assured chosen.
3. Premium:
The following are the premium conditions under the Single
Premium Whole of Life Insurance Plan:
Minimum Premium Rs. 23,750
Maximum Premium Rs. 47,50,
4. Other conditions:
Minimum Sum Assured Rs. 25,000
Maximum Sum Assured Rs. 50,00,000
Minimum Age at Entry 18 yearsMaximum Age at Entry 70 years
5. Policy loans:
Policy loans would be available under the plan once the
policy acquires a surrender value. The policy loans would
be to the extent of 90% of the surrender value. The
company would quote the terms and conditions of the
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policy loans at the time of granting the loans and the
same would vary from time to time.
6. Life cover basis:
The Single Premium Whole of Life Insurance Plan can be
offered on a single life basis only.
7. Tax Benefits:
The Premium paid under the plan qualifies for tax rebateunder section 88 of the Income Tax Act 1961.
The plan is also approved under the provisions of section
80 DD of the Income Tax Act 1961
7. Personal Pension Plan
Savings for a better retirement
Introduction
The Personal Pension Plan is a with profits deferred pension
contract which aims to give good pension benefits to the client
by helping the client build a retirement fund. The aim of the
plan is to build good fund values so that the client can enjoy abetter pension on retirement.
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Need for the Plan
Income in retirement is becoming more and more important.With the breakup of the joint family system and the increase in
longevity, it is becoming more and more important to provide
for retirement. The fall in the interest rates and the uncertainty
prevailing in the market make pensions more attractive.
Pension can provide a guaranteed income till death and hence
there is a renewed interest in pension schemes in the recentyears.
It is important that the person plans for his retirement. The
planning should start early so that the person contributes
lesser amounts and there is time for the fund to grow. For
retirement there is only one
option for the person and that is to save. One cannot raise a
loan for retirement.
There are various instruments of savings and investment,
which the client can use to provide for his retirement. A
deferred pension plan has the following advantages:
I. The deferred pension plan can be issued for long terms so
that the single instrument covers the retirement need of
the client.
II. The deferred pension plan automatically vests in the life
assured on the date of vesting. This is an advantage as
the likelihood that the fund would be used for some other
purposes is minimized and fund would be used only for
retirement.
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III. Special tax benefits are available for investment in
deferred pension plans.
Features of the Personal Pension Plan
The following are the features of the plan:
1. Benefits:
a) Death Benefits: In the event of death of the life
assured during the term of the contract the following
amount would be payable:
i. In the event of the death of the life assured in
the first year then 90% of the premium paid
would be payable in case of single premium
policies and 80% of the premium paid would be
payable in case of regular premium policies.
ii. In the event of the life assured after the first
year
Sum assured plus reversionary bonus
attached would be payable under single
premium policies.
Lower of the sum assured plus
reversionary bonus and return of
premium paid with interest of 8% is
payable, under regular premium policies.
b) Benefits at Vesting: On the vesting date, provided
the policy is in full force the Notional Cash Value
(NCV) would be used to pay the following:
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i. Cash lump sum to the extent permitted by the
regulations at the time of vesting. The
policyholder may choose either to take the cash
lump sum or use the full NCV to purchase an
annuity.
ii. Purchase of an immediate annuity as per the
choice of the policyholder. In case the
policyholder has opted for the cash lump sum
the balance NCV would be used to purchase the
annuity. In case the policyholder has not opted
for the cash lump sum
iii. then the full NCV would be used to purchase the
annuity.
c) Paid up Benefits: In case the policyholder
discontinues payment of premium after the
premiums are paid for at least three years, the policy
would be reduced to a paid-up policy. The reduced
paid up benefits would form the Notional Cash Value
on the date of vesting of the policy. The paid up
policy will not participate in future bonuses.
d) Surrender Benefits: The policyholder can surrender
the policy at any time. In case the policyholder
chooses to surrender the policy before the payment
of three years premium the surrender value would be
equal to zero and nothing would be payable. In case
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the policyholder chooses to surrender after three
years, he would be entitled for a surrender value.
2. Frequency of premium payment:
The policyholder can choose to pay single premium or
regular premium by yearly, half-yearly or quarterly mode.
The frequency of premium payment can be altered during
the term of the contract.
3. Days of grace:
The premium is payable in advance and should be paid
within the days of grace. The days of grace allowed under
the plan are 15 days from the due date of premium. In
case the days of grace
end on a holiday then the premium has to be paid on the
next working day.
4. Lapsation:
In the event the premium is not paid within the days of
grace the policy lapses. The policy would be automatically
reduced to a paid up policy in case premiums have been
paid for at least three years. In case premiums are not
paid for three years the policy would lapse without value.
A lapsed policy can be reinstated within one year from thedate of lapse only.
5. Minimum premium:
The following are the minimum premium conditions under
the Personal Pension Plan.
Single Premium Rs. 25000
Annual mode Rs. 2400
Half yearly mode Rs. 1300
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Quarterly mode Rs. 700
6. Maximum premium:
The following are the maximum premium conditions under
the Personal Pension Plan.
Single Premium Rs. 50,00,000
Annual mode Rs. 50,00,000
Half yearly mode Rs. 25,00,000
Quarterly mode Rs. 12,50,000
7. Other conditions:
Minimum Term 10 years
Maximum Term 40 years
Minimum Age at Entry 18 years
Maximum Age at Entry 60 years
Minimum Vesting Age 50 years
Maximum Vesting Age 70 years
The policyholder has the choice to choose any term
between 10 to 40 years, subject to the minimum and
maximum vesting age.
8. Policy loans:
Policy loans would not be available under the plan.
9. Life cover basis:
The Personal Pension Plan can be offered on a single life
basis only.
10.Tax benefits:
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The premium paid under the plan qualifies for tax
deductions under section 80CCC of the Income Tax Act
1961.
The cash lump sum received at the date of vesting is tax
free under section 1010a (iii) of the Income Tax Act 1961.
Surrender value during the deferment period would be
taxable as per section 80CCC of the Income Tax Act.
Similarly pensions received after vesting would be taxable
in the hands of the life assured.
SWOT ANALYSIS
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STRENGTH
Country WideRecognition
Need BaseAnalysis
Same Standard
Services in allBranches
Fair Deal in allTransactions
Customers CentricApproach
Infrastructure
WEEKNESS
Frequent JobRotation
Less number ofadvertisements
Hidden Charges
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FINDINGS:
1. In HDFC SL I feel that Insurance sector is one of the most
growing sectors among all sectors in India.
2. I also find that HDFC Standard Lifes Traditional Plans arevery useful for a normal person.
3.Jaipur is one of the most growing city and there is lot ofscope of insurance.
4. Most of the people are aware of traditional plans.
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OPPORTUNITY
Scope in Jaipur asit is in thedeveloping phase
Only 25% ofinsurable peoplehave anyinsurance
Higher possibilityof growth in Indianshare Market
THREAT
LICs Brand Name
People of Jaipurprefer short-terminvestment ratherthan in insurance
Upcoming privateinsurancecompanies.
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5. Electronic media has proved to be very beneficial for peopleto understand about the insurance.
6.There is lot of opportunities for young and energetic peoplein HDFC SL to build there sound career.
7. HDFC Standard Lifes traditional plans like children plan, oneof the most popular product of the company.
CONCLUSION
HDFC is the leading insurance service providers to public
and private sector. HDFC Standard Life is the first private
insurance company which got license in 2000 from IRDA.
Life Insurance in India has a huge potential for growth.
Statistics reveal that only 25% of the insurable population in
India is insured. And those insured are in need of still higher
insurance cover. The cover 100% growth displayed by
private life insurers indicates this huge untapped potential.
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Traditional plans like children plan gives invaluable support
to your child, Term Assurance Plan gives
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