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SUMMER TRANING PROJECT A COMPARATIVE STUDY OF ULIP PLANS OF RELIANCE LIFE INSURANCE WITH MUTUAL FUNDS

UNDERTAKEN AT RELIANCE LIFE INSURANCE COMPANY LTD Submitted at partial fulfillment of the award of the Degree of BACHELOR OF BUSINESS ADMINISTRATION (2008-2010)Submitted to: Prof. Asim Sahore Submitted by: Xyz B.B.A 5th Semester (xyz)

DECLARATIONI, XYZ Enrollment No.-0xyz Class BBA, 5TH semester (Morning) of TECNIA INSTITUTE OF ADVANCED STUDIES, Delhi hereby declare that the Summer Training report entitled COMPARATIVE STUDY OF ULIP PLANS OF RELIANCE LIFE INSURANCE WITH MUTUAL FUNDS is an original work and the same has not been submitted to any other institute for the award of any other degree. A seminar Presentation of the summer training report was made on and the Suggestions as approved by the faculty were duly incorporated.

Signature of Researcher

Countersigned

Signature of Faculty Guide

ACKNOWLEDGEMENT

First of all I would like to thank the Management of Reliance Life Insurance Company Ltd. for giving me the opportunity to do my two-month Project Training in their esteemed organization. I am highly obliged to Mr.Nimit Verma (Business Development Manager) for granting me to undertake my training at Connaught Place Branch(Zonal office). I express my Thanks to all Sales and Operation Managers under whose able guidance and direction, I was able to give shape to my training. Their constant review and excellent suggestions throughout the project are highly commendable. My heartfelt Thanks go to all the executives who helped me gain knowledge about the actual working and the processes involved in various departments.

PREFACEThe liberalization of the Indian insurance sector has been the subject of much heated debate for some years. The policy makers where in the catch 22 situation wherein for one they wanted competition, development and growth of this insurance sector which is extremely essential for channeling the investments in to the infrastructure sector. At the other end the policy makers had the fears that the insurance premia, which are substantial, would seep out of the country; and wanted to have a cautious approach of opening for foreign participation in the sector. As one of the rare occurrences the entire debate was put on the back burner and the IRDA saw the day of the light thanks to the maturing polity emerging consensus among factions of different political parties. Though some changes and some restrictive clauses as regards to the foreign participation were included the IRDA has opened the doors for the private entry into insurance. Whether the insurer is old or new, private or public, expanding the market will present multitude of challenges and opportunities. But the key issues, possible trends, opportunities and challenges that insurance sector will have still remains under the realms of the possibilities and speculation. What is the likely impact of opening up Indias insurance sector? The large scale of operations, public sector bureaucracies and cumbersome procedures hampers nationalized insurers. Therefore, potential private entrants expect to score in the areas of customer service, speed and flexibility. They point out that their entry will mean better products and choice for the consumer. The critics counter that the benefit will be slim, because new players will concentrate on affluent, urban customers as foreign banks did until recently. This seems to be a logical strategy. Start-

up costs-such as those of setting up a conventional distribution network-are large and high-end niches offer better returns. However, the middle-market segment too has great potential. Since insurance is a volumes game. Therefore, private insurers would be best served by a middle-market approach, targeting customer segments that are currently untapped.

TABLE OF CONTENT

CHAPTER- 1 Research problem and procedure Company profile Industry profile Introduction Scope of the study Objectives of the study

CHAPTER- 2 Review of literature

CHAPTER-3 Current scenario

CHAPTER -4 Research methodology Research instrument Limitation of the study Data analysis & interpretation

CHAPTER-5 DISCUSSION &FINDINGS OF THE STUDY Discussion of the result Findings of the result Suggestion and recommendations Annexure Bibliography

ABBREVIATIONS

ADB---Accidental Death Benefit CAGR---Cumulative average growth return CI---Critical Illness FC Financial Consultant FMC----Fund management charges HDFCHousing Development Finance Corporation SDM----Sales Development Manager IRDAInsurance Regulatory And Development authority NAV----Net asset value NOP--- No. of Policy RLIC--- Reliance Life Insurance Co. LTD. SBI--- State Bank of India ULIP--- Unit linked Insurance plan USP----Unique selling preposition

CHAPTER I RESEARCH PROBLEM AND PURPOSE

RESEARCH PROBLEM AND PURPOSE THE HISTORY OF INDIAN INSURANCE INDUSTRY

Life InsuranceIn 1818 the British established the first insurance company in India in Calcutta, the Oriental Life Insurance Company. First attempts at regulation of the industry were made with the introduction of the Indian Life Assurance Companies Act in 1912. A number of amendments to this Act were made until the Insurance Act was drawn up in 1938. Noteworthy features in the Act were the power given to the Government to collect statistical information about the insured and the high level of protection the Act gave to the public through regulation and control. When the Act was changed in 1950, this meant far reaching changes in the industry. The extra requirements included a statutory requirement of a certain level of equity capital, a ceiling on share holdings in such companies to prevent dominant control (to protect the public from any adversarial policies from one single party), stricter control on investments and, generally, much tighter control. In 1956, the market contained 154 Indian and 16 foreign life insurance companies. Business was heavily concentrated in urban areas and targeted the higher echelons of society. Unethical practices adopted by some of the players against the interests of the consumers then led the Indian government to nationalize the industry. In September 1956, nationalization was completed, merging all these companies into the so-called Life Insurance Corporation (LIC). It was felt that nationalization has lent the industry fairness, solidity, growth and reach.

Some of the important milestones in the life insurance business in India are:1912: The Indian Life Assurance Companies Act enacted as the first statute to regulate the life insurance business. 1928: The Indian Insurance Companies Act enacted to enable the government to collect statistical information about both life and non-life insurance businesses. 1938: Earlier legislation consolidated and amended to by the Insurance Act with the objective of protecting the interests of the insuring public. 1956: The market contained 154 Indian and 16 foreign life insurance companies.

General InsuranceThe General Insurance industry in India dates back to the Industrial Revolution and the subsequent increase in trade across the oceans in the 17th century. As for Life Insurance, the British brought General Insurance to India, and a similar path was followed in the development of this industry. A number of private companies were in existence for years and years until, in 1971, the Indian Government decided that the public interest would be served by nationalizing the industry, merging all the 107 companies into four companies, depending on the sort of business transacted (Marine, Fire, Miscellaneous). These were the National Insurance Company Ltd., the Oriental Insurance Company Ltd., the New India Assurance Company Ltd., and the United India Insurance Company Ltd. located in Calcutta, New Delhi, Bombay and Madras respectively. The General Insurance Corporation (GIC) was set up in 1972 as a holding company, having these four companies as its subsidiaries.

Some of the important milestones in the general insurance business in India are:1907: The Indian Mercantile Insurance Ltd. set up, the first company to transact all classes of general insurance business. 1957: General Insurance Council, a wing of the Insurance Association of India, frames a code of conduct for ensuring fair conduct and sound business practices. 1968: The Insurance Act amended to regulate investments and set minimum solvency margins and the Tariff Advisory Committee set up. 1972: The General Insurance Business (Nationalization) Act, 1972 nationalize the general insurance business in India with effect from 1st January 1973. 107 insurers amalgamated and grouped into four companies viz. the National Insurance Company Ltd., the New India Assurance Company Ltd., the Oriental Insurance Company Ltd. and the United India Insurance Company Ltd. GIC incorporated as a company.

1) COMPANY PROFILE OF RELIANCE LIFE INSURANCE

Reliance Life Insurance Company Limited is a part of Reliance Capital Ltd. of the Reliance Anil Dhirubhai Ambani Group. The company acquired 100 percent shareholding in AMP Sanmar Life Insurance Company in August 2005. Taking over AMP Sanmar Life provided Reliance Life Insurance a readymade infrastructure and a portfolio. AMP Sanmar Life Insurance was a joint venture between AMP, Australia and the Sanmar Group. Headquartered in Chennai, AMP Sanmar had over 90 offices across the country, 9,000 agents, and more than 900 employees. Reliance Life Insurance Company Limited is a part of Reliance Capital Ltd. of the Reliance Anil Dhirubhai Ambani Group (ADAG). Reliance Life Insurance is another step forward for Reliance Capital Limited to offer need based Life Insurance solutions to individuals and Corporate. Reliance Capital Ltd. is one of Indias leading and fastest growing private