HDFC STANDARD LIFE INSURANCE COMPANY LIMITED

a MINOR PROJECT REPORT ON

HDFC Standard Life Insurance Company Limited

SUBMITTED IN PARTIAL FULFILMENT OF

BACHELOR OF BUSINESS ADMINISTRATION

(BANKING & INSURANCE V SEM.)

SUBMITTED TO: SUBMITTED BY

..(AFFILIATED TO GURU GOBIND SINGH INDRAPRASTHA UNIVERSITY, DELHI)

EXECUTIVE SUMMARY

HDFC Standard Life insurance is the oldest life insurance company in the world. It is the largest insurer in the UK and is the 28th largest company in the world. In India, the company is marketing life insurance products and unit linked investment plans. From my research at HDFC SLIC, I found that the company has a lot of competition from other private insurers like ICICI, Aviva, Birla Sun Life and Tata AIG. It also faces competition from LIC. To compete effectively HDFC SLIC could launch cheaper and more reasonable products with small premiums and short policy terms (the number of years premium is to be paid). The ideal premium would be between Rs. 5000 Rs. 25000 and an ideal policy term would be 10 20 years.

HDFC must advertise regularly and create brand value for its products and services. Most of its competitors like Aviva, ICICI, Max, Reliance and LIC use television advertisements to promote their products. The Indian consumer has a false perception about insurance they feel that it would not benefit them if they do not live through the policy term. Nowadays however, most policies are unit linked plans where a customer is benefited even if their death does not occur during the policy term. This message should be conveyed to potential customers so that they readily invest in insurance.

Family responsibilities and high returns are the two main reasons people invest in insurance. Optimum returns of 16 20 % must be provided to consumers to keep them interested in purchasing insurance.

On the whole HDFC standard life insurance is a good place to work at. Every new recruit is provided with extensive training on unit linked funds, financial instruments and the products of HDFC. This training enables an advisor/sales manager to market the policies better. HDFC was ranked 13 in the Best Places to Work survey. The company should try to create awareness about itself in India. In the global market it is already very popular. With an improvement in the sales techniques used, a fair bit of advertising and modifications to the existing product portfolio, HDFC would be all set to capture the insurance market in India as it has around the globe.

CONTENTS PAGE NO. Executive summary 2

Acknowledgment 4Introduction to insurance 5Research design 11Company profile of HDFCSLIC 17Company profile of TATA AIG LIC 35Other competitors 39POPS & PODS 45 Competitive analysis 50Marketing problems 55Analysis & interpretation 58Future line of research 75Conclusion 77References 79Appendix 80

ACKNOWLEDGMENT

I would like to thank my project guide Mr. B. K. Panda, Sales Development Manager HDFC Standard Life Insurance, New Delhi for guiding me through my summer internship and research project. His encouragement, time and effort are greatly appreciated. I would like to thank Ms. . for supporting me during this project and providing me an opportunity to learn outside the class room. It was a truly wonderful learning experience.

I would like to dedicate this project to my parents. Without their help and constant support this project would not have been possible.

Lastly I would like to thank Mr director of my colleage.CHAPTER I

INDIAN INSURANCE

INDUSTRY

AN OVERVIETHE INSURANCE INDUSTRY IN INDIAAN OVERVIEW

With the largest number of life insurance policies in force in the world, Insurance happens to be a mega opportunity in India. Its a business growing at the rate of 15-20 per cent annually and presently is of the order of Rs 1560.41 billion (for the financial year 2006 2007). Together with banking services, it adds about 7% to the countrys Gross Domestic Product (GDP). The gross premium collection is nearly 2% of GDP and funds available with LIC for investments are 8% of the GDP.

Even so nearly 65% of the Indian population is without life insurance cover while health insurance and non-life insurance continues to be below international standards. A large part of our population is also subject to weak social security and pension systems with hardly any old age income security. This in itself is an indicator that growth potential for the insurance sector in India is immense.

A well-developed and evolved insurance sector is needed for economic development as it provides long term funds for infrastructure development and strengthens the risk taking ability of individuals. It is estimated that over the next ten years India would require investments of the order of one trillion US dollars. The Insurance sector, to some extent, can enable investments in infrastructure development to sustain the economic growth of the country. (Source: www.indiacore.com)

HISTORICAL PERSPECTIVEThe history of life insurance in India dates back to 1818 when it was conceived as a means to provide for English Widows. Interestingly in those days a higher premium was charged for Indian lives than the non - Indian lives, as Indian lives were considered more risky to cover. The Bombay Mutual Life Insurance Society started its business in 1870. It was the first company to charge the same premium for both Indian and non-Indian lives. The Oriental Assurance Company was established in 1880. The General insurance business in India, on the other hand, can trace its roots to Triton Insurance Company Limited, the first general insurance company established in the year 1850 in Calcutta by the British. Till the end of the nineteenth century insurance business was almost entirely in the hands of overseas companies.

Insurance regulation formally began in India with the passing of the Life Insurance Companies Act of 1912 and the Provident Fund Act of 1912. Several frauds during the 1920's and 1930's sullied insurance business in India. By 1938 there were 176 insurance companies. The first comprehensive legislation was introduced with the Insurance Act of 1938 that provided strict State Control over the insurance business. The insurance business grew at a faster pace after independence. Indian companies strengthened their hold on this business but despite the growth that was witnessed, insurance remained an urban phenomenon.

The Government of India in 1956, brought together over 240 private life insurers and provident societies under one nationalized monopoly corporation and Life Insurance Corporation (LIC) was born. Nationalization was justified on the grounds that it would create the much needed funds for rapid industrialization. This was in conformity with the Government's chosen path of State led planning and development.

The non-life insurance business continued to thrive with the private sector till 1972. Their operations were restricted to organized trade and industry in large cities. The general insurance industry was nationalized in 1972. With this, nearly 107 insurers were amalgamated and grouped into four companies- National Insurance Company, New India Assurance Company, Oriental Insurance Company and United India Insurance Company. These were subsidiaries of the General Insurance Company (GIC).

KEY MILESTONES1912: The Indian Life Assurance Companies Act enacted as the first statute to regulate the life insurance business.1928: The Indian Insurance Companies Act enacted to enable the government to collect statistical information about both life and non-life insurance businesses.

1938: Earlier legislation consolidated and amended by the Insurance Act with the objective of protecting the interests of the insuring public.

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

INDUSTRY REFORMS

Reforms in the Insurance sector were initiated with the passage of the IRDA Bill in Parliament in December 1999. The IRDA since its incorporation as a statutory body in April 2000 has fastidiously stuck to its schedule of framing regulations and registering the private sector insurance companies. Since being set up as an independent statutory body the IRDA has put in a framework of globally compatible regulations. The other decision taken simultaneously to provide the supporting systems to the insurance sector and in particular the life insurance companies was the launch of the IRDA online service for issue and renewal of licenses to agents. The approval of institutions for imparting training to agents has also ensured that the insurance companies would have a trained workforce of insurance agents in place to sell their products.

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)CHAPTER II

RESEARCH DESIGN

RESEARCH DESIGN

INTRODUCTION

A Research Design is the framework or plan for a study which is used as a guide in collecting and analyzing the data collected. It is the blue print that is followed in completing the study. The basic objective of research cannot be attained without a proper research design. It specifies the methods and procedures for acquiring the information needed to conduct the research effectively. It is the overall operational pattern of the project that stipulates what information needs to be collected, from which sources and by what methods.

TITLE OF THE STUDYTo Compare the products of HDFC Standard Life Insurance Company Limited and Tata AIG Life Insurance Company Limited for HDFC Standard Life Insurance Company Ltd.

STATEMENT OF THE PROBLEMThis study was undertaken to identify which type of insurance plans HDFC SLIC should market to beat Tata AIG LIC in India. A survey was undertaken to understand the preferences of Indian consumers with respect to insurance. While marketing policies the sole duty of an advisor/ agent is to provide insurance plans as per customer requirements.

In effect plans (insurance products) should be flexible to suit individual requirements. This research tries to analyze some key factors which influence the purchase of insurance like the term of the policy, the type of company, the amount of annual premium payable (capacity and willingness to spend), risk taking ability and the influence of advertising. Solutions and recommendations are made based on qualitative and quantitative analysis of the data.

OBJECTIVES OF THE STUDY To analysis the product details of HDFC Standard life Insurance Company limited and Tata AIG life Insurance Company Limited.

To find Points of Parity and Points of Difference of HDFC Standard Life Insurance Company Limited and Tata AIG Life Insurance Company Limited. To find out factors that influence customers to purchase insurance policies and give suggestions for further improvement.RESEARCH METHODOLOGY

TYPE OF DATA COLLECTED

There are two types of data used. They are primary and secondary data. Primary data is defined as data that is collected from original sources for a specific purpose. Secondary data is data collected from indirect sources. (Source: Research Methodology, By C. R. Kothari)PRIMARY SOURCESThese include the survey or questionnaire method, telephonic interview as well as the personal interview methods of data collection.

SECONDARY SOURCES

These include books, the internet, company brochures, product brochures, the company website, competitors websites etc, newspaper articles etc.

SAMPLINGSampling refers to the method of selecting a sample from a given universe with a view to draw conclusions about that universe. A sample is a representative of the universe selected for study.

SAMPLE SIZEThe sample size for the survey conducted was 270 respondents. This sample size was taken on 95% confidence level and 6 significant level. Data universe for this sample is 10,00,000 which is approx population of Jodhpur excluding people below age of 18 years.SAMPLING TECHNIQUERandom sampling technique was used in the survey conducted.

PLAN OF ANALYSISTables were used for the analysis of the collected data. The data is also neatly presented with the help of statistical tools such as graphs and pie charts. Percentages and averages have also been used to represent data clearly and effectively.

STUDY AREAThe samples referred to were residing in Jodhpur City. The areas covered were Shastri Nagar, Sardarpura, Masuriya, Subhash Nagar, City Area and Kamla Nehru Nagar.OVERVIEW OF CHAPTER SCHEMECHAPTER 1: Introduction to insurance - An overview of the industry in India, history, key milestones, reforms in the industry, present scenario in India.CHAPTER 2:Research Design - Introduction, title of the study, statement of the problem, objectives of the study, research methodology, sampling, plan of analysis and study area.

CHAPTER 3:Company profile of HDFC SLIC Introduction of HDFC SLIC, products and services, vision and core values, human resource, organizational structure, introduction to unit linked funds, national & international presence of the organization.

CHAPTER 4:

Company profile of Tata AIG Introduction of Tata AIG, products and services, vision and core values. The advantages of investing in HDFC SLIC compared to other financial instruments.

CHAPTER 5:COMPETITORS -

Introduction about other competitors in the market.CHAPTER 6:

Points of Parity and Points of Difference between HDFC SLIC and Tata AIG LIC Comparison between different plans, charges, fees, deductions and riders available with HDFC SLIC and Tata AIG LICCHAPTER 7:Competitive analysis Information about the plans offered by LIC and other private insurers in India. Comparisons between the plans to find the most popular and beneficial plans which HDFC SLIC can incorporate into their product portfolio.

CHAPTER 8:Marketing problems - The techniques used to market insurance and their advantages and disadvantages along with suggestions for improvement.

CHAPTER 9:Analysis and Interpretation A survey on factors that influence people to purchase Life Insurance Policy.

CHAPTER 10:Problems requiring more research Future line of work

CHAPTER 11:

Conclusion

References

Appendices

CHAPTER IIICOMPANY PROFILEOFHDFC Standard Life Insurance Company Ltd.

HDFC STANDARD LIFE INSURANCE COMPANY LIMITEDINTRODUCTION

HDFC Incorporated in 1977 with a share capital of Rs 10 Crores, HDFC has since emerged as the largest residential mortgage finance institution in the country. The corporation has had a series of share issues raising its capital to Rs. 119 Crores. The gross premium income for the year ending March 31, 2007 stood at Rs. 2,856 Crores and new business premium income at Rs. 1,624 Crores. The company has covered over 8,77,000 lives year ending March 31, 2007.

HDFC operates through almost 450 locations throughout the country with its corporate head quarters in Mumbai, India. HDFC also has an International Office in Dubai, UAE with service associates in Kuwait, Oman and Qatar. HDFC is the largest housing company in India for the last 27 years.

SNAPSHOT-I

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

Almost 90% of initial shareholding in the hands of domestic institutes and retail investors. Current 77% of shares held by foreign institutional investors.

Besides the core business of mortgage HDFC has evolved into a financial conglomerate with holdings In:

HDFC Standard Life insurance Company- HDFC holds 78.07 %.

HDFC Asset Management Company HDFC holds 50.1%

HDFC Bank- HDFC holds 22.25%.

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

HDFC Chubb General Insurance Company HDFC holds 74%.

SNAPSHOT-II

Loan Approvals

Rs. 805 billion.

(up to Dec 2007)

(US $ 18.30 bn.)

Loan Disbursements

Rs.669 billion

(up to Dec. 2007)

(US $ 15.20 bn)

Housing Units Financed

2.5 million.

Distribution

Offices

181

Outreach Programs

90

KEY PLAYERSMr. Deepak S Parekh is the Chairman of the Company. He is also the Executive Chairman of Housing Development Finance Corporation Limited (HDFC Limited). He joined HDFC Limited in a senior management position in 1978. He was inducted as a whole-time director of HDFC Limited in 1985 and was appointed as its Executive Chairman in 1993. He is the Chief Executive Officer of HDFC Limited. Mr. Parekh is a Fellow of the Institute of Chartered Accountants (England & Wales).Mr. Deepak M Satwalekar is the Managing Director and CEO of the Company since November, 2000. Prior to this, he was the Managing Director of HDFC Limited since 1993. Mr. Satwalekar obtained a Bachelors Degree in Technology from the Indian Institute of Technology, Bombay and a Masters Degree in Business Administration from The American University, Washington DC.

GROUP COMPANIES

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

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

Intelenet Global: BPO services for international customers.

CIBIL: Credit Information Bureau India Limited.

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

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

STANDARD LIFE

Standard Life is Europes 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 kits original Edinburgh premises, opening offices in other towns and acquitting other similar businesses.

Standard Life Currently has assets exceeding over 70 billion under its management and has the distinction of being accorded AAA rating consequently for the six years by Standard and Poor.

SNAPSHOT

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

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

Europes largest mutual life insurer.JOINT VENTURE

HDFC Standard Life Insurance Company Limited was one of the first companies to be granted license by the IRDA to operate in life insurance sector. Reach of the JV player is highly rated and been conferred with many awards. HDFC is rated AAA by both CRISIL and ICRA. Similarly, Standard Life is rated AAA both by Moodys and Standard and Poors. These reflect the efficiency with which HDFC and Standard Life manage their asset base of Rs. 15,000 Cr and Rs. 600,000 Cr. respectively.

HDFC Standard Life Insurance Company Ltd was incorporated on 14th August 2000. HDFC is the majority stakeholder in the insurance JV with 81.4% staple and Standard of as a staple 18.6% Mr. Deepak Satwalekar is the MD and CEO of the venture.

HDFC Standard Life Insurance Company Ltd. Is one of Indias leading Private Life Insurance Companies, which offers a range of individual and group insurance solutions. It is a joint venture between Housing Development Finance Corporation Limited (HDFC Ltd.) Indias leading housing finance institution and the Standard Life Assurance Company, a leading provider of financial services from the United Kingdom. Both the promoters are will known for their ethical dealings and financial strength and are thus committed to being a long-term player in the life insurance industry- all important factors to consider when choosing your insurer.

Business GrowthTrack Record so farThe gross premium income of HDFC, for the year ending March 31, 2007 stood at Rs. 2,856 crores and new business premium income at Rs. 1,624 crores.

The company has covered over 8,77,000 lives year ending March 31, 2007. Company also declared our 5th consecutive bonus in as many years for our with profit policyholders.

KEY STRENGTHFinancial Expertise

As a joint venture of leading financial services groups. HDFC standard Life has the financial expertise required to manage long-term investments safely and efficiently.

Range of Solutions

HDFC SLIC has a range of individual and group solutions, which can be easily customized to specific needs. These group solutions have been designed to offer complete flexibility combined with a low charging structure.

Strong Ethical Values:

HDFC SLIC is an ethical and Cultural Organization. False selling or false commitment with the customers is not allowed.

Most respected Private Insurance Company

HDFC SLIC was awarded No-1 Private Insurance Company in 2004 by the World Class Magazine Business World for Integrity, Innovation and Customer Care.

CORPORATE OBJECTIVE

Vision

'The most successful and admired life insurance company, which means that we are the most trusted company, the easiest to deal with, offer the best value for money, and set the standards in the industry'.

'The most obvious choice for all'.Values

.Integrity .Innovation.Customer centric.People Care One for all .Teamwork.Joy and Simplicity

PRODUCTS & SERVICES

The right investment strategies won't just help plan for a more comfortable tomorrow -- they will help you get Sar Utha ke Jiyo. At HDFC SLIC, life insurance plans are created keeping in mind the changing needs of family. Its life insurance plans are designed to provide you with flexible options that meet both protection and savings needs. It offers a full range of transparent, flexible and value for money products. HDFC SLIC products are modern and contemporary unitized products that offer unique customer benefits like flexibility to choose cover levels, indexation and partial withdrawals. (Source: www.hdfcslic.com)PLANS THAT ARE OFFERED BY HDFC STANDARDS LIFE INSURANCE

Individual Products

Protection Plans

A person can protect his family against the loss of his income or the burden of a loan in the event of his unfortunate demise, disability or sickness. These plans offer valuable peace of mind at a small price. Protection range includes our Term Assurance Plan & Loan Cover Term Assurance Plan.

Investment Plans

HDFC SLICs Single Premium Whole of Life plan is well suited to meet long term investment needs. This provides attractive long term returns through regular bonuses.

Pension Plans

Pension Plans help to secure financial independence even after retirement. Pension range includes Personal Pension Plan, Unit Linked Pension, Unit Linked Pension Plus.

Savings Plans

Savings Plans offer a flexible option to build savings for future needs such as buying a dream home or fulfilling your childrens immediate and future needs. Savings range includes Endowment Assurance Plan, Unit Linked Endowment, Unit Linked Endowment Plus, Unit Linked Endowment Plus II, Money Back, Unit Linked Enhanced Life Protection II, Children's Plan, Unit Linked Young Star, Unit Linked Young Star Plus, Unit Linked Young Star Plus II.

Group Products

One-stop shop for employee-benefit solutions

HDFC Standard Life has the most comprehensive list of products for progressive employers who wish to provide the best and most innovative employee benefit solutions to their employees. It offers different products for different needs of employers ranging from term insurance plans for pure protection to voluntary plans such as superannuation and leave encashment.

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

Group Term Insurance

Group Variable Term Insurance

Group Unit-Linked Plan

An investment solution that provides funding vehicle to manage corpuses with Gratuity, Defined Benefit or Defined Contribution Superannuation or Leave Encashment schemes of your company

Also suitable for other employee benefit schemes such as salary saving schemes and wealth management schemes

Social Product

Development Insurance Plan

Development Insurance plan is an insurance plan which provides life cover to members of a Development Agency for a term of one year. On the death of any member of the group insured during the year of cover, a lump sum is paid to those member beneficiaries to help meet some of the immediate financial needs following their loss.

Eligibility

Members of the development agency and their spouses with:

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

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

Employees of the Development Agency are not eligible to join the group. The group to be covered is only eligible if it contains more than 500 members.

Premium Payments

The premium to be paid will be quoted per member in the group and will be the same for all members of the group. The premium can only be paid by the Development Agency as a single lump sum that includes all premiums for the group to be covered. Cover will not start until the premium and all the member information in our specified format has been received.

Benefits

On the death of each member covered by the policy during the year of cover a lump sum equal to the sum assured will be paid to their beneficiaries or legal heirs. Where the death is as a result of an accident, an additional lump sum will be paid equal to half the sum assured. There are no benefits paid at the end of the year of cover and there is no surrender value available at any time.

The role of the Development Agency

Due to the nature of the groups covered, HDFC Standard Life will be passing certain administrative tasks onto the Development Agency. By passing on these tasks the premium charged can be lower. These tasks would include:

Submission of member data in a specified computer format

Collection of premiums from group members

Recording changes in the details of group members

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

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

Payment of premiums

Reporting of claims

Keeping policy holder information up to date

Training and support will be available to give guidance on how to complete the tasks appropriately. Since these additional tasks will impose a burden on the Development Agency, the Development Agency may charge a Rs. 10 administration fee to their members.

Prohibition of rebates

Section 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 hundredINTROUCTION TO UNIT LINKED FUNDSUnit linked plans are based on the component of the premium or the contribution of the customer towards the plan. This contribution can be in different modes like yearly, half yearly, quarterly and monthly. Unit linked plans have multiple benefits like life protection, rider protection, savings, transparency, investment choices, liquidity and planning for taxes. These plans work like mutual funds.

The premium is collected from the policy holder. He is allotted a certain number of units based of his contribution. The Net Asset Value is the value of each unit of the fund. It is found by subtracting the charges and current liabilities from the current assets and investments and dividing this number by the total number of outstanding units.

Let us take an example. There are 100 investors and each invests Rs. 10 in a fund. The total value of the fund is Rs. 1000 and each person is allotted 1 unit of Rs 10. Now the money (Rs. 1000) is invested in the debt or equity market. Suppose the fund value increased by 20%. As a result the Rs. 1000 invested became Rs. 1200. Hence the value of every investor is now Rs. 12 and not Rs. 10.

UNIT LINKED VERSUS OTHER FINANCIAL INSTRUMENTS

Parameters

RBI Bonds

Fixed Deposits

Mutual Funds

Unit linked

Safety

High

High

Medium

High

Liquidity

None

High

High

High

Returns

Low

Low

High

High

Life Cover

1 time amount

1 time amount

1 time amount

10 times

Tax benefits

Tax free

Taxed

Taxed

Tax free

We find that life insurance unit linked plans is a good area to invest money in as it provides liquidity, safety, high returns, life cover and tax benefits in a single plan. HDFC SLIC offers the option of indexation to beat inflation. Risk is reduced to a large extent as the company invests in a diversified portfolio of stocks.

Tax BenefitsINCOME TAX SECTIONGROSS ANNUAL SALARYHOW MUCH TAX CAN YOU SAVE?HDFC STANDARD LIFE PLANS

Sec. 80CAcross All income SlabsUpto Rs. 33,990 saved on investment of Rs. 1,00,000.All the life insurance plans.

Sec. 80 CCCAcross all income slabs.Upto Rs. 33,990 saved on Investment of Rs.1,00,000.All the pension plans.

Sec. 80 DAcross all income slabsUpto Rs. 3,399 saved on Investment of Rs. 10,000.All the health insurance riders available with the conventional plans.

TOTAL SAVINGS POSSIBLE Rs37,389

Rs. 33,990 under Sec. 80C and under Sec. 80 CCC , Rs.3,399 under Sec. 80 D, calculated for a male with gross annual income exceeding Rs. 10,00,000.

Sec. 10 (10)DUnder Sec. 10(10D), the benefits you receive are completely tax-free, subject to the conditions laid down therein.

AWARDS AND ACCOLADE OF HDFCSL

AWARDS

APRAIL 200

ADFEST 2007 3 Awards

Our advertising has helped create high awareness for our brand and has bagged 2 silver and 1 bronze awards at the ADFEST 2007 National Awards organized by Advertising Agencies Association of India (AAAI, the premier advertising body in India).

The 3 awards that our ads won are notable for a number of reasons:

The ADFEST 2007 is the biggest national awards festival in the marketing and advertising field.

The 3 awards are the highest won by any single brand in the Financial Services business (including Banking, MF, Insurance other Financial Services).

The 2 silvers were won in a category where the gold was not awarded to any brand. Thus the silver was the best that any brand could have got.

Our brand topped radio as a medium across all brands - across all industries.

b. March 2007

4Ps Power Brand 2007

HDFC Standard Life was selected as '4Ps Power Brand 2007', for being one of Indias 25 Best Startup Companies in an exclusive survey conducted by ICMR (Indian Council of Market Research) and 4Ps - Business and Marketing (a Business and Marketing magazine published by Plan man Media). The list of companies was prepared based on innovative and new concepts brought about to serve the Indian consumers. The research on the 25 best startups was based upon the number of years since the company has been established vis-a-vis the growth of the company.c. August 2006

4Ps Power Brand 2006

HDFC Standard Life has been as '4Ps Power Brand 2006', for being one of India's Top 25 5'Most Innovative Companies' in an exclusive survey conducted by ICMR (Indian Council of Market Research) and 4Ps - Business and Marketing (a Business and Marketing magazine published by Plan man Media). The survey highlighted 25 companies that have made India think differently and radically through their Business and Marketing practices. HDFC Standard Life was the only company selected from the insurance domain. Besides us, the list included giants like (in no particular order) HLL, Microsoft, Nokia, LG, Samsung, IBM, HP, ITC Group, Hero Honda, Bajaj Auto, Ranbaxy, ICICI Bank, SBI Bank, Bennett, Coleman & Co. Ltd., Tata Group, Kingfisher Airlines, Bharti Televentures, Pantaloon, General Electric, HPCL, Maruti, Anil Dhirubhai Group, Reliance Industries and CNBC TV 18.

ACCOLADE

a. March, 2008

Unit Linked Savings Plan Advertisement Tops Mint Best TV Ads Survey

Mint 24/03/2008

The Unit Linked Savings Plan advertisement of HDFC Standard Life, one of the leading private insurance companies in India, has topped Mints Top Television Advertisement survey conducted, for February 2008. HDFC Standard Lifes Unit Linked Savings Plan advertisement was ranked 4th in terms of a combined score of ad awareness and brand recall and 3rd in terms of ad diagnostic scores (likeability, enjoyment, believability, and claim). The respondents were between 18 and 40 years. Mints exclusive report, New voices in a makeover outlines the survey in detail.

b. January2008

4Ps Business and Marketing's recent issue covers '60 Glorious Advertising & Marketing Moments' over the last 60 years in India.

Issue dated 21/12/2007 to 03/01/2008

The 50's have been named as the era of setting up new institutions with Air India Maharaja titled as the first Indian brand mascot, Surf being India's first detergent powder. The 60's saw the maturing of brand punch lines and the beginning of jingles, with 'MRF Muscleman', 'Utterly Butterly Delicious Amul'; the 70's heralded the age of professionalism with the Liril girl at the waterfall; the 80's saw many iconic Indian brands being launched with Bombay Dyeing, Maggi Noodles, Lalitaji endorsing Surf and others; since 1991 where the massive inflow of brands into India, initiated a veritable deluge of marketing and positioning strategies, with the famous Ericsson commercial, Cadbury's 'Kya Swad Hai Zindagi Mein' and many others.

In the new millennium, ideas that created an impact include the 'Incredible India' campaign, Hutch campaign with the little pup 'Chika', Indianised version of coke commercials featuring Aamir Khan, among many others. In this feature they have made a special mention on Insurance advertising becoming 'happier' as one of those glorious moments. Earlier, insurance advertisements showed signs of negativity and focused on just protection. It mentions HDFC Standard Life to be "....one of the first private insurers to break the ice using the idea of self respect (Sar Utha Ke Jiyo) instead of 'death' to convey its brand proposition, which was then, followed by others including ICCI Prudential, thus giving us the credit of bringing up one such glorious advertising and marketing moment in last 60 years!

c. December 2007

A survey of the best ads on television in November in which HDFC Standard Life pension plans, topped the ad diagnostics and came in eighth on ad reach - Mint 24/12/2007

Our pension advertising was ranked first in terms of ad diagnostic scores (including likeability, credibility, enjoyment).

Especially important as respondents were between 18 and 40 yrs and therefore our target prospects.

And was ranked 8th in terms of a combined score of ad awareness and brand recall.

Our advertising started in the last week of November and therefore has managed to reach audiences quickly, especially since the study was done in November. Given our media spends, our industry and other brands in the ranking, this score is very encouraging.d.December 2007

Column 'AGK SPEAK" in Business Standard by A.G. Krishnamurthy (AGK), an advertising industry veteran, where he has spoken highly about our pension commercial.

Business Standard 21/12/2007

d. AGKSPEAKWHAT IVE LIKED - Straight to the heart!

I have often said that nothing makes an ad work like empathy. Find a connect and you have done it! That is exactly what the HDFC Pension Plans television commercial, airing on most channels, currently achieves. Even though the target audience might not have been me and my wife but rather, a younger couple who should be investing their earnings wisely, we both felt an instant bonding with the couple on screen!

The casting has been done so superbly that I am sure that the reaction must be common across the country. Although the couple expresses sentiments that might seem alien to the children of today, they are very much a part of our syntax. Admittedly, todays girls are far more independent and wouldnt dream of total dependence on any one, it was not quite so just a generation ago. It was the norm rather, for a husband to be totally responsible for his wifes comfort and yes, statements like Did you ask for my hand to put me through all this strike a chord. So even if my daughters generation is reminded of their parents when this ad airs, I am sure it still does its job by getting them to plan for a light-heated retirement depicted by the ever-so identifiable on screen pair.

e. September 2007

JusConsults Ad Box Office Monthly Monitor (featured in Economic Times)- HDFC Standard Life was ranked 6th amongst The 10 most effective ads in September 2007. It moved up from 56th in August 2007. JuxtConsults Ad Box Office is Indias biggest monthly monitor of most effective television ads amongst urban consumers. The ranking was based on the total effectiveness of the ad in connecting the brand with the consumers.

JuxtConsults Ad Box Office Monthly Monitor (featured in Economic Times)- HDFC Standard Lifes ad slogan Sar Utha Ke Jiyo was ranked 10th in the Top 10 Top-of-mind ad slogans in September, 2007 (The ranking was based on how much our ad slogan recalled top of mind in the daily ad clutter.)

f. december2006-January 2007

HDFC Standard Life was ranked 29th in the most trusted Indian Brands amongst the Top 50 Service Brands of 2006. This study was conducted by Brand Equity (Economic Times supplement). HDFC SL moved up 16 places to be positioned at number 29 (was earlier at 45). The highest jump amongst all service brands.

CHAPTER IVCOMPANY PROFILEOFTata AIG Life Insurance Company Ltd.

TATA AIG LIFE INSURANCE COMPANY LIMITEDIntroductionTata AIG Life Insurance Company Limited (Tata AIG Life) is a joint venture company, formed by the Tata Group and American International Group, Inc. (AIG). Tata AIG Life combines the Tata Groups pre-eminent leadership position in India and AIGs global presence as the worlds leading international insurance and financial services organization. The Tata Group holds 74 per cent stake in the insurance venture with AIG holding the balance 26 percent. Tata AIG Life provides insurance solutions to individuals and corporate. Tata AIG Life Insurance Company was licensed to operate in India on February 12, 2001 and started operations on April 1, 2001.THE TATA GROUPThe Tata Group is one of India's largest and most respected business conglomerates, with revenues in 2004-05 of $17.8 billion (Rs. 799,118 million), the equivalent of about 2.8 per cent of the country's GDP. Tata companies together employ some 215,000 people. The Group's 32 publicly listed enterprises - among them standout names such as Tata Steel, Tata Consultancy Services, Tata Motors and Tata Tea - have a combined market capitalization that is the highest among Indian business houses in the private sector, and a shareholder base of over 2 million. The Tata Group has operations in more than 40 countries across six continents, and its companies export products and services to 140 nations.AIGAmerican International Group, Inc. (AIG), world leaders in insurance and financial services, is the leading international insurance organization with operations in more than 130 countries and jurisdictions. AIG companies serve commercial, institutional and individual customers through the most extensive worldwide property-casualty and life insurance networks of any insurer. In addition, AIG companies are leading providers of retirement services, financial services and asset management around the world. AIG's common stock is listed on the New York Stock Exchange as well as the stock exchanges in London, Paris, Switzerland and Tokyo.Tata AIG has strong brand name and recall factor which most of its competitors lack in. Other than the public behemoth Life Insurance Corporation (LIC) of India which has a major hold in the market share (of approximately 79%), the private players too are having more and more opportunities to tighten their hold of the market. Of the private players, ICICI Prudential comes first with an almost 4.50% of the market share followed by Tata AIG with about 2.10% of the pie. The private players have everything to work for, especially with LIC not meeting the needs of its clientele with respect to the services they need. This provides a prospect for the private sector players to increase their share of the market. Companies with a familiarity such as Tata AIG can especially achieve their targets due to the brand image that the Tata group has.

(Source: www.tata-aig-life.com)

A recent survey conducted by the Voluntary Organization in Interest of Consumer Education (VOICE) revealed Tata AIG Life Insurance Company (Tata AIG Life) as the clear winner in terms of customer satisfaction in the life insurance category. This is India's first-ever customer satisfaction study for the insurance sector.

The survey also revealed that Tata AIG Life had a high recall as a reputed brand name. The ability to provide innovative and customer-focused service such as allowing the maximum grace period for premium payment has not only further distinguished Tata AIG Life from other life insurance companies but also appealed to consumers.

PRODUCTS & SERVICES:Corporate life insurance products:

Employee Benefits Credit Life Group Pensions Workplace SolutionsIndividual life insurance products:

Health First Health Protector

Mahalife

InvestAssure II, InvestAssure Gold

Shubh life, Nirbhay life

With respect to individual life insurance products, Tata AIG has an array of policies to suit the needs and requirements of all age groups viz, children, students, adults, retirees etc. The SUPPORT arm of Tata AIG Life is constituted of Operations, Human Resources, Marketing, Corporate Training, Finance and Compliance.

Tata AIG Life possesses the philosophy and drive to customize retirement obligations (for the company) which occur in the form of cash outflows, for the maximum benefit of both the employer and the departing employee.

CHAPTER V

COMPETITORS

OTHER COMPETITORS

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. (www.lic.com)

For a 25 years term , 15% of the sum assured becomes payable after 5,10,15 and 20 years and the balance 40% plus the accrued bonus becomes payable at the 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.

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. (Source: www.iciciprulife.com)

BIRLA SUN LIFE

Birla Sun Life Insurance Company Limited is a joint venture between The Aditya Birla Group, one of the largest business houses in India and Sun Life Financial Inc., a leading international financial services organization. The local knowledge of the Aditya Birla Group combined with the expertise of Sun Life Financial Inc., offers a formidable protection for your future. (Source: www.birlasunlife.com)

The Aditya Birla Group has a turnover close to Rs. 33000 crores with a market capitalization of Rs. 53400 crores (as on 31st March 2007). It has over 72000 employees across all its units worldwide. It is led by its Chairman - Mr. Kumar Mangalam Birla. Some of the key organizations within the group are Hindalco and Grasim.

Sun Life Financial Inc. and its partners today have operations in key markets worldwide, including Canada, the United States, the United Kingdom, Hong Kong, the Philippines, Japan, Indonesia, India, China and Bermuda. It had assets under management of over US$343 billion, as on 31st March 2007. The company is a leading player in the life insurance market in Canada.

Being a customer centric company, BSLI has invested heavily in technology to build world class processing capabilities. BSLI has covered more than a million lives since inception and its customer base is spread across more than 1000 towns and cities in India. All this has assisted the company in cementing its place amongst the leaders in the industry in terms of new business premium income. The company has a capital base of 520 crores as on 31st July, 2007.

Its Flexi Life Line Plan offers life long insurance cover till the policy holder is 100 years of age. There are guaranteed returns of 3% p.a. net of policy charges after every 5 years from the eleventh policy year onwards. However the charges are very high. The initial charges for the first year are 65%. Hence the fund value is greatly reduced. BAJAJ ALLIANZBajaj Allianz is a joint venture between Allianz AG with over 110 years of experience in over 70 countries and Bajaj Auto, a trusted automobile manufacturer for over 55 years in the Indian market. Together they are committed to offering you financial solutions that provide all the security you need for your family and yourself. Bajaj Allianz is the number one private life insurer for the year 2005 2006. It is leading by 78 crores. It has experienced a whopping growth of 216% in the last financial year.

The company has sold 13, 00,000 policies and is backed by 550 offices across India. It offers travel insurance, motor insurance, home insurance, health and corporate insurance. The mortality charges are lower than HDFC SLIC. The entry age could be zero years which allow even new born babies to be insured. (Source: www.bajajallianz.com)

CHAPTER VIPOINTS OF PARITY

AND

POINTS OF DIFFERENCE

BETWEEN

HDFC SLIC AND TATA AIGPoints of Parity

Funds available with ULIP PlansGeneral DescriptionNature of InvestmentsRisk Category

Equity FundsPrimarily invested in company stocks with the general aim of capital appreciationHigh

Income, Fixed Interestand Bond FundsInvested in corporate bonds,government securities and other fixed income instrumentsMedium

Cash FundsSometimes known as Money Market Funds invested in cash, bank deposits and money market instrumentsLow

Balanced FundsCombining equity investmentwith fixed interest instrumentsMedium

Generally all life insurance companies have three types of fund which are Equity fund, Debt fund and Balance fund. These fund have different risk profile. Equity fund has high risk but it gives high return, Debt fund has low risk so it gives low return and Balanced fund is combination of both Equity and Debt fund so risk is medium and return is also low.

Both HDFC SLIC and Tata AIG LIC have 7 types of funds based on combination of DebtEquity fund. These are liquid fund, stable managed fund, secure managed fund, defensive managed fund, balanced managed fund, equity managed fund, growth fund.IndexationYou have the option to increase your regular premiums by an indexation rate at any policy anniversary to protect the real value of your investment against inflation. The rate of indexation will be in line with the increase in the Whole Sale Price Index (or in the event that this Index ceases to be published such other index as the Company may select for this purpose). The base sum assured and sum assured of any attached rider would also be increased by the corresponding indexation increase. Charges, Fees and Deductions in ULIP

Premium Allocation Charge

This is a premium-based charge. After deducting this charge from premiums, the remainder is invested to buy units. The Allocation charges are guaranteed for the entire duration of policy term. Mortality Charge

The Mortality Charge will apply on the Sum at Risk (SAR = Sum Assured less the Fund Value pertaining to regular premiums). It will be deducted by monthly cancellation of units from the accumulation unit account. The Mortality Charge shall remain guaranteed throughout the policy term. Fund Management Charge

1% p.a. on With Profits Fund, 1% p.a. on Debt Fund, 1.25% p.a. on Balanced Fund and 1.50% p.a. on Growth Fund. FMC will be applied on the fund while calculating NAV on a daily basis. The maximum FMC on any fund is 2% p.a. subject to prior approval by the IRDA. Policy Administration Charge Rs. 60 per month, which will increase by 5% p.a. on the 1st of January each year. PAC will be deducted monthly by cancellation of units from the accumulation unit account. If premiums are discontinued, this charge would reduce to 60% of the charge applicable for the premium paying policies Surrender Charge

This is the charge that applies when the policy is surrendered. It is equal to 50% of the difference between regular premiums expected and those paid in the first year of the contract. Service Tax Deductions12.36% service tax is applicable on the first premium of life insurance policy.

Tax Benefits Tax benefits will be as per Section 80C & Section 10(10D) of the Income Tax Act, 1961. Insurance is tax free up to Rs. 100000 per annum and the returns on investment on maturity of the policy are also tax free.Riders and Bonuses

HDFC Standard Life InsuranceTata AIG Life Insurance

Free Look Period15 days15 days

Reversionary BonusBased on company's performanceBased on company's performance

Terminal BonusBased on company'sperformanceBased on company'sperformance

TOP UPMinimum Rs. 5000Minimum Rs. 5000

Riders

Critical Illness (CI) BenefitGives on diagnosis of anyone of 6 critical illnessGives on diagnosis of anyone of 12 critical illness

Additional Term Benefit (ATB)ProvidesProvides

Accidental Death Benefit (ADB)ProvidesProvides

Double BenefitProvidesDoes not provide

Triple BenefitProvidesDoes not provide

Payer Benefit Rider (PBR)Does not provideProvides

Waiver of Premium (WOP) BenefitProvidesProvides

Points of DifferenceHDFC Standard Life InsuranceTata AIG Life Insurance

Grace Period15 days31 days

Policy Administration ChargeRs. 60 per monthRs. 55 per month

Guaranteed BonusDoes not give10% on sum-assured after 10 year

Loyalty Bonus0.1% every year0.25% after every 4th year

Fund Switching ChargeTotal 24 free switches in a policy after this Rs. 100 per Switch4 free switches per year after this Rs. 250 per switch

Guaranteed Surrender value50% of all premiumpaid excluding 1st premium30% of all premium paid excluding 1st premium

Fund Management Charge0.80% per annum on the fund value1.75% per annum on the fund value

Premium Redirection ChargeTotal 12 free Premium Redirection in a policy after this Rs. 250 per Premium RedirectionFirst 2 Premium Redirection in a year is free after this Rs. 1000per Premium Redirection

Last Year Return42.70%72%

We see that both the life insurance companies products are almost same. They have same charges, fees and deductions. There is slightly difference in charges and maximum limits of all charges are fixed by IRDA. Before buying any life insurance policy one should check charges and fees on policy and companys overall performance and return given to its consumer.

CHAPTER VIICOMPETITIVE

ANALYSIS

COMPETITIVE ANALYSISLIFE 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. (www.lic.com)

For a 25 years term , 15% of the sum assured becomes payable after 5,10,15 and 20 years and the balance 40% plus the accrued bonus becomes payable at the 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.ICICI PRUDENTIALICICI Prudential is a stiff competitor for HDFC SLIC. The company is a merger between ICICI Bank which is the biggest private bank in India and Prudential Plc which is a global life insurance company. The company has an investment plan which is market related Invest Shield Life. In this plan even if the market falls, the premium will be returned to investors. It is a guaranteed plan which ensures the company carefully invests your money. The stock market performance of ICICI Prudential is much better than HDFC SLIC. The returns on the growth fund were 46.28% compared to the 42.70% offered by HDFC SLIC. Customers are attracted by higher returns and this is a plus point for Prudential.

The company is very well advertised. The advertisements are showcased in movies, television, newspapers, magazines, bill boards, radio etc. The company has an excellent brand ambassador Mr. Amitabh Bacchan. His promotion of the company builds trust and faith in the minds of our people.

However the charges are very high in the plans offered by ICICI Prudential. It is 35% during the first year, 15% in the next year and 3% from the third year onwards. Also a higher minimum premium of Rs. 8000 is charged. Hence the policies are not accessible to the lower strata of the society. (Source: www.iciciprulife.com)BIRLA SUN LIFEBirla Sun Life Insurance Company Limited is a joint venture between The Aditya Birla Group, one of the largest business houses in India and Sun Life Financial Inc., a leading international financial services organization. The local knowledge of the Aditya Birla Group combined with the expertise of Sun Life Financial Inc., offers a formidable protection for your future. (Source: www.birlasunlife.com)

The Aditya Birla Group has a turnover close to Rs. 33000 crores with a market capitalization of Rs. 53400 crores (as on 31st March 2007). It has over 72000 employees across all its units worldwide. It is led by its Chairman - Mr. Kumar Mangalam Birla. Some of the key organizations within the group are Hindalco and Grasim.

Sun Life Financial Inc. and its partners today have operations in key markets worldwide, including Canada, the United States, the United Kingdom, Hong Kong, the Philippines, Japan, Indonesia, India, China and Bermuda. It had assets under management of over US$343 billion, as on 31st March 2007. The company is a leading player in the life insurance market in Canada.

Being a customer centric company, BSLI has invested heavily in technology to build world class processing capabilities. BSLI has covered more than a million lives since inception and its customer base is spread across more than 1000 towns and cities in India. All this has assisted the company in cementing its place amongst the leaders in the industry in terms of new business premium income. The company has a capital base of 520 crores as on 31st July, 2007.

Its Flexi Life Line Plan offers life long insurance cover till the policy holder is 100 years of age. There are guaranteed returns of 3% p.a. net of policy charges after every 5 years from the eleventh policy year onwards. However the charges are very high. The initial charges for the first year are 65%. Hence the fund value is greatly reduced.

BAJAJ 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. (Source: www.bajajallianz.com)TATA AIG

Tata Aig is a joint venture between the Tata group and American International Group Inc. In one of the plans the company offers hospital cash benefit wherein it will pay Rs. 2500 per day in case of hospitalization and Rs.12.5 lakhs in case the person suffers from any critical illness. Annual premium is much less (about Rs. 6712) to avail such a good benefit. Charges are relatively low compared to HDFC SLIC for some policies.The company offers high coverage plans at low cost. There is a plan even for a policy term of 1 year. Your family can continue to enjoy their current lifestyle even in the case of something happening to you. These plans are very flexible and HDFC SLIC could adopt this idea of insuring individuals for short periods of time. For example; there is a family of four. The only earning member is the father.

He has just taken a loan from a bank of 20 lakhs to purchase a new home. He is able to repay the loan with his current salary in 15 years. The problem arises if something were to happen to him within these fifteen years. Not only will the family face the emotional and financial loss of their father but they will also have to repay the home loan or risk being homeless. (Source: www.tataaig.com)

CHAPTER VIIIMARKETING

PROBLEMS

MARKETING PROBLEMSThe old and out dated technique of tele marketing is used to prospect customers. More modern techniques must be adopted. The company must sponsor shows and give presentations in corporate houses. The financial health check must be performed for every prospect to assess his/her true financial position and needs. Some of the advisors skip this vital step and the prospect ends up with a plan they do not appreciate and soon surrender or discontinue.

Some of the main problems in marketing the policies are:

Large amount of competition (18 players in the market)

Other brands are well advertised and have higher recall value

LIC is considered a safer option

Face competition from banks and mutual funds

High premium policies are difficult to market

Incorrect perception about insurance

Interested prospects might have a lack of time and postpone investments

Customers get defensive if you cold call

Short term plans are available only at large premium

Customers do not have risk appetite to invest in shares

Some prospects have already invested and are not interested in further investments

Consumers dont want to undertake medical examinations

Large amount of documentation

Customers do not like their money locked up for many years

Lack of awareness about the unit linked funds in the market

No money back plan present in the product portfolio

SUGGESTIONS FOR IMPROVEMENT Advertise about the company and its products it motivates individuals to purchase insurance Create a positive perception about insurance Speak about the good features a plan offers like high returns, life cover, tax benefits, indexation, accident cover while prospecting customers Try to sell the product/plan which the consumer requires and not the plan where the advisors benefit is higher Improve the efficiency in operations Bring out policies with small premiums payable for short periods of time Rs. 5000 Rs. 10000 per annum for 10 years Attract the youth of India with higher returns on investment as returns are the motivating factor which influence purchase of insurance Promote insurance in colleges and corporate houses Promote HDFC SLIC as an Indian Company to build trust HDFC SLIC could have a brand ambassador or a mascot to promote its services Should have partial withdrawals from the first year onwards Tap the rural market where there is large potential Diversify product portfolio Make products more straight forward reduce complexitiesCHAPTER IXANALYSIS

&

INTERPRETATION

ANALYSIS & INTERPRETATIONA SURVEY ON THE LIFE INSURANCE INDUSTRY IN INDIA

AGE GROUP OF SURVEYED RESPONDENTSTABLE 1: Age groupNo. of Respondents

18 - 25 years127

26 - 35 years67

36 - 49 years46

50 - 60 years24

More than 60 years6

CHART 1:

Analysis:

From the chart above we find that 47% of the respondents fall in the age group of 18 25 years, 25% fall in the age group of 26 35 years and 17% fall in the age group of 36 49 years.

Therefore most of the respondents are relatively young (below 26 years of age). These individuals could be induced to purchase insurance plans on the basis of its tax saving nature and as an investment opportunity with high returns.

Individuals at this age are trying to buy a house or a car. Insurance could help them with this and this fact has to be conveyed to the consumer. As of now many consumers have a false perception that insurance is only meant for people above the age of 50. Contrary to popular belief the younger you are the more insurance you need as your loss will mean a great financial loss to your family, spouse and children (in case the individual is married) who are financially dependent on you.

GENDER CLASSIFICATION OF SURVEYED RESPONDENTS

TABLE 2: ParticularsNo. of Respondents

Male193

Female77

CHART 2:

CUSTOMER PROFILE OF SURVEYED RESPONDENTS

TABLE 3:

Customer profileNo. of respondents

Student62

Housewife5

Working Professional116

Business 49

Self Employed24

Government service employee14

CHART 3:

Analysis:From the chart above it can clearly be seen that 43% of the respondents are working professionals, 23% are students and 18% are into business. Therefore the target market would be working individuals in the age group of 18 25 years having surplus income, interested in good returns on their investment and saving income tax.

No. of Respondents who have life insurance policy in their nameTABLE 4:

Person who have life insurance policy

Yes103

No167

CHART 4:

ANALYSIS:

This graph shows that out of total 270 respondents only 103 or 38% respondents have life insurance policy in their name. Rest all dont have a single policy in their name. So there is a very big scope for life insurance companies to cover these people. So in future business of life insurace will gro further.MARKET SHARE OF LIFE INSURANCE COMPANIESTABLE 5:

LIFE INSURERNUMBER OF POLICIES

HDFC STANDARD LIFE4

BIRLA SUN LIFE3

AVIVA LIFE INSURANCE6

BAJAJ ALLIANZ7

LIC55

TATA AIG6

ICICI PRUDENTIAL12

ING VYSYA6

BHARTI AXA2

OTHERS2

CHART 5:

Analysis:

In India, the largest life insurance company is Life Insurance Corporation of India. It has been in existence in India since 1956 and is completely owned by the Government of India. Today the organization has grown to 2048 offices serving 18 crore policies and has a corpus of over 340000 crore INR.

ANNUAL PREMIUM PAID BY INDIVIDUALS FOR LIFE INSURANCE

TABLE 6: Premium paid (p.a.)No. of respondents

Rs. 5000 - Rs. 1000040

Rs. 10001 - Rs. 1500026

Rs. 15001 - Rs. 2490018

Rs. 25000 - Rs. 5000010

Rs. 50001 - Rs. 600004

Rs.60001 - Rs. 800002

Rs. 80001 - Rs. 1000003

CHART 6:

ANNUAL PREMIUM PAID BY INDIVIDUALS FOR LIFE INSURANCE

Analysis:From the chart above we find that, 39% of the respondents surveyed pay an annual premium less than Rs. 10001 towards life insurance. 25% of the respondents pay an annual premium less than Rs. 15001 and 17% pay an annual premium less than Rs. 25000. Hence we can safely say that HDFC SLIC would be able to capture the market better if it introduced products/plans where the minimum premium starts at Rs. 5000 per annum.Only 19% of the respondents pay more than Rs. 25000 as premium and most products sold by HDFC SLIC have Rs.12000 as the minimum annual premium amount. They should introduce more products like Easy Life Plus and Safe Guard where the minimum premium is Rs.6000 p.a. and Rs. 12000 p.a. respectively. This would definitely increase their market share as more individuals would be able to afford the policies/plans offered. POPULAR LIFE INSURANCE PLANS

TABLE 7: Type of PlanNo. of Respondents

Term Insurance Plans105

Endowment Plans122

Pension Plans16

Child Plans8

Tax Saving Plans19

CHART 7:

POPULAR LIFE INSURANCE PLANS

Analysis:

From the chart given above we can clearly see that 45% of the respondents hold endowment plans and 39% of the respondents hold term insurance plans. Endowment plans are very popular and serve two purposes life cover and savings.

If the policy holder dies during the policy term the nominee gets the death benefit that is, sum assured and accumulated bonus. On survival the policy holder receives the survival benefit with a bonus.

A term plan is a pure risk cover plan wherein the insured pays a lower premium for a higher sum assured. Term insurance is the cheapest form of insurance and helps the policy holder insure himself for a relatively low premium. For the returns sensitive investor term plans do not find favor as they do not offer a return in case the individual does not die during the policy term.

AWARENESS OF UNIT LINKED INSURANCE PLANS

TABLE 8:Awareness of Unit Linked PlansNo. of Respondents

Yes154

No116

CHART 8:

AWARENESS OF UNIT LINKED INSURANCE PLANS

Analysis:From the chart given above we find that 57% of the respondents are aware of unit linked life insurance plans and 43% are not aware of such plans. These plans should be promoted through advertising. The company can advertise through television, radio, newspapers, bill boards and pamphlets. This would increase awareness and arouse curiosity in the minds of the consumer which would enable the company to market its products more effectively.

Unit linked plans are those where the benefits are expressed in terms of number of units and unit price. They can be viewed as a combination of insurance and mutual funds. The number of units a customer would get would depend on the unit price when they pay the premium.

When the policy matures the individual gets his fund value. The value of his fund is calculated by multiplying the net asset value and number of units held by them on that day.

CONSUMER WILLINGNESS TO SPEND ON LIFE INSURANCE PREMIUMTABLE 9:

Willingness to spend on premiumNo. of respondentsPercentage

Less than Rs. 6,0004115%

Rs. 6,001 - Rs. 10,0007327%

Rs. 10,001 - Rs. 25,00011041%

Rs. 25,001 - Rs. 50,0004115%

Rs. 50,001 - Rs. 1,00,00052%

CHART 9:

CONSUMER WILLINGNESS TO SPEND ON LIFE INSURANCE PREMIUM

Analysis:From the graph above, we can clearly see that 41% of the respondents would be willing to spend between Rs. 10001 Rs. 25000 for life insurance. 27 % would be willing to spend between Rs. 6001 Rs. 10000 per annum. Only 15% would be willing to spend more than Rs. 25000 per annum as life insurance premium.

We could say that the maximum premium payable by most consumers is less than Rs. 25000 p.a. This is further reduced as most customers have already invested with LIC, ICICI Prudential, Birla Sun Life, Bajaj Allianz etc.

HDFC SLIC is faced with a large amount of competition. There are 18 insurance companies in India inclusive of LIC. Hence to capture a larger part of the market the company could introduce more reasonable plans with lesser premium payable per annum.CHART SHOWING IDEAL POLICY TERMTABLE 10:

Ideal policy termNo. of respondents

3 - 5 years51

6 - 9 years41

10 - 15 years95

16 - 20 years38

21 - 25 years24

26 - 30 years5

More than 30 years3

Whole life Policy13

CHART 10:

CHART SHOWING IDEAL POLICY TERM

Analysis:From the chart given above it can be seen that 35% of the respondents prefer a policy term of 10 15 years, 19% prefer a term of 3 5 years and 15% prefer a term of 6 9 years. This means that HDFC SLIC could introduce more plans wherein the premium paying term is less than 15 years.

The outlook of insurance as a product should be changed from something which you pay for your whole life (whole life policy) and do not receive any benefit (the nominee only receives the benefit in case of your death) to an extremely useful investment opportunity with the prospects of good returns on savings, tax saving opportunities as well as providing for every milestone in your life like marriage, education, children and retirement.

FACTORS THAT MOTIVATE RESPONDENTS TO PURCHASE INSURANCE

TABLE 11: ParameterNo. of Respondents

Advertisements35

High returns84

Advice from friends46

Family responsibilities89

Others16

CHART 11:

Analysis:From the chart above it can be seen that 33% of the respondents purchase life insurance to secure their families, 33% take life insurance to get high returns, 17% purchase insurance on the advice of their friends and 13% purchase insurance because of the influence of advertisements.The main purpose of insurance is to cover the financial or economic loss that occurs to the family in case of the uncertain death of the policy holder. But now a days this trend is changing. Along with protection (life cover), a savings element is being added to insurance.

With the introduction of the new unit linked plans in the market, policy holders get the option to choose where their money will be invested. They can invest their money in the equity market, debt market, money market or a combination of these. The debt and money markets usually have low risk attached whereas the equity market is a high risk investment option.

PREFERRED COMPANY TYPE OF THE RESPONDENTS

TABLE 12:

Type of CompanyNo. of RespondentsPercentage

Government Owned Company12747%

Public Limited Company6223%

Private Company4918%

Foreign Company3212%

CHART 12:

PREFERRED COMPANY TYPE OF THE RESPONDENTS

Analysis:

From the graph above we find that 60% of the respondents preferred to purchase insurance from a government owned company, 29% of the respondents preferred to purchase insurance from a public limited company and only 4% of the respondents preferred a foreign based company. Heavy advertising through television, newspapers, magazines and radio is required.MINIMUM EXPECTED RETURN ON INVESTMENT

TABLE 13: Expected ReturnsNo. of respondents

Less than 5%5

5% - 10%39

11% - 15%46

16% - 20%49

21% - 25%46

26% - 30%27

31% - 40%22

41% - 50%14

More than 50%22

CHART 13:

Analysis:

From the chart above it can clearly been seen that 18% of the respondents would like 16 20% returns, 17% would like returns between 21 25% and 17% would like returns of 11 15% on their investments. Therefore the average return on investment should be at least 16 20 %.

Most consumers are willing to adapt to some amount of risk but still want some guaranteed returns. Therefore the bulk of investment should be made in the balanced fund with 50% debt and 50% equity. The returns on the Secure Fund are guaranteed as these involve investment is government securities and the debt market. But the returns on these instruments are low (8 10%). If the company invests in shares, returns are higher (39%) but correspondingly risk borne by the policy holder is also higher. Therefore a good combination of the two instruments is often a wise choice.

CHAPTER X

FUTURE LINE OF

RESEARCH

FUTURE LINE OF RESEARCHThe future topics for research in the organization could be setting up of an appropriate ad campaign. It is very vital to the companies success that the people of India know about HDFC SLIC, its products and their special features and how insurance in general can help them in their future. The advertisements have to be emotionally appealing. They might also include a celebrity. The brand name of HDFC could be used to give a push to HDFC SLIC and its products. The general perception of insurance as inauspicious should be done away with and individuals and corporations accept insurance on power with other investment opportunities.

The other area of research could be in the management of funds HDFC SLIC possesses and how it can maximize returns for its investors. A research project could be undertaken on how to ensure that the money gets invested in the right companies and earns a medium high return on investment. Another area of research could be an analysis of the sales and marketing techniques used by HDFC SLIC. A large number of changes could be introduced and this would help in saving operating costs and improving the efficiency of the firm.

CHAPTER XICONCLUSIONCONCLUSIONHDFC standard life insurance is first life insurance company in India. It has businesses spread out across the globe. It was registered on 23rd December 2000. It currently ranks number 4 amongst the insurers in India (Source: annual premium provided by the company)

The company faces a large amount of competition. To sustain itself it must promote its products through advertising and improve its selling techniques. Consumers must be aware of the new plans available at HDFC SLIC. The medium of advertising used could be television since most of its competitors use this tool to promote their products. The company must be promoted as an Indian company since consumers seem to have more trust in investing in Indian firms.

The unit linked concept must be specifically promoted. The general perception of life insurance has to change in India before progress is made in this field. People should not be afraid to invest money in insurance and must use it as an effective tool for tax planning and long term savings.

HDFC SLIC could tap the rural markets with cheaper products and smaller policy terms. There are individuals who are willing to pay small amounts as premium but the plans do not accept premiums below a certain amount. It was usually found that a large number of males were insured compared to females. Individuals below the age of 30 (mostly male) were interested in investment plans. This was a general conclusion drawn during prospecting clients.

REFERENCESwww.hdfcslic.comwww.tata-aig-life.comwww.irdaindia.comwww.lic.comwww.money control.comwww.bajajallianz.comwww.icici.prulife.comMagazine

Insurance World

The Outlook Money

Secrets of Successful Insurance Sales by Mr. Jack Kinder

A SURVEY ON INSURANCE INDUSTRYDear Sir/Madam,

I am a student of Aravali Institute of Management, Jodhpur. As part of the requirements for my Post Graduation Diploma in Management I am required to do a research based project. Kindly spend a few minutes of your valuable time and fill in this questionnaire. Do you have a life insurance policy/investment plan in your name? Yes

No

If yes which companys insurance policies do you hold? HDFC Standard Life Insurance Birla Sun Life Insurance Aviva Life Insurance Bajaj Allianz Life Insurance LIC

Tata AIG Life Insurance ICICI Prudential Life Insurance ING Vysya Life Insurance Bharti Axa Life Insurance Others (specify name)

What is the approximate premium paid by you annually (in Rupees)? Rs. 5,000 Rs. 10,000

Rs. 10,001 Rs. 15,000

Rs. 15,001 Rs. 25,000 Rs. 25,001 Rs. 50,000

Rs. 50,001 Rs. 60,000

Rs. 60,001 Rs. 80,000

Rs. 80,001 Rs. 1,00,000

More than Rs. 1,00,000 (specify premium)

What kind of insurance policy would suit you best in your current stage of life? Life Insurance

Life Insurance and Investment Plans

Pension Plans

Child Plans

Tax saving plans

Are you aware of the new unit linked insurance plans in the market? Yes

No

How much would you be willing to spend per annum if you were to go for an investment/insurance plan?

Less than Rs. 6,000

Rs. 6,001 Rs. 10,000

Rs. 10,001 Rs. 25,000

Rs. 25,001 Rs. 50,000

Rs. 50,000 Rs. 1,00,000

More than Rs. 1,00,000

Which according to you is an ideal policy term? (Number of years you would be willing to pay premium)

3 to 5 years 6 to 9 years 10 to 15 years 16 to 20 years 21 to 25 years

26 to 30 years

More than 30 years Whole life policy

What motivates you to purchase insurance/investment plans?

Advertisements

High Returns

Advice from friends

Family responsibilities

Others (specify)

In which kind of company would you prefer to make a purchase of insurance?

Government owned company

Public Limited Company

Private Company

Foreign based company

Typically what kind of returns would you look at from your investments? (Please note: Higher returns involve greater risk)

Less than 5%

6% - 10 %

11% - 15 %

16% - 20 %

21% - 25%

26% - 30%

31% - 40%

41% - 50%

More than 50%Personal Details:

Name:

Address:

Age:

Contact No. :

Profile of respondent:

Student

Housewife

Working Professional

Business

Self Employed

Government Service Employee

Date:

12