Introduction To Insurance Sector
Introduction To Insurance Sector
ON
AN INTRODUCTION ABOUT INSURANCE
SECTOR WITH SPECIAL REFERENCE TO HDFC
STANDARD LIFE INSURANCE COMPANY
LIMITED
(Housing Development & Finance Corporation)
AT
PATIALA
Submitted in partial fulfillment of the requirement for the degree of
Masters of Business Administration
(Session 2006-08)
Submitted to:-
The Department of Management
RIMT (Institute of Engineering & Technology)
Mandi Gobindgarh
Submitted By:
Rajnish Kaushal.
MBA- II SEM.
ROLL NO. 6944
THE DEPARTMENT OF
MANAGEMENT
RIMT (Institute of Engineering &Technology)
Mandi Gobindgarh.
CONTENTS
1) Preface
2) Certificate
3) Acknowledgement
4) Introduction
Definition
Need for Life Insurance
Role of Govt.
Role of Life Insurance
Evaluation of Insurance Industries in India
Future Scenario
5) Opening of Insurance sector in India
6) Changing expectation of customer
7) Major player
HDFC standard life insurance
Life Insurance Corporation
ICICI Prudent
Om Kotak Mahindra
Birla Plus Sun Life
8) Comparison of the unit linked plan of various
companies
9) Research Methodology
Objective and limitation
10) Data Analysis and findings
11) Conclusion
Finding
Suggestion
12) Appendices
Query
Bibliography
AC K N OWLE D G E M E NT
Rajnish Kaushal.
I NS U RAN C E
Insurance is basically risk management device. The losses to assets resulting form
natural calamities like fire, flood, earthquake, accident etc. are met out of the
common pool contributed by large number of persons who are exposed to similar
risks. This contribution of many is used to pay the losses suffered by unfortunate
few. However the basic principle is that losses should occur as a result of natural
calamities or unexpected events which are beyond the human control. Secondly
insured person should not make any gains out of insurance.
It is natural to think of insurance of physical assets such as motor car insurance or
fire insurance but often be forget that creator all these assets is the human being
whose effort have gone along way in building upto assets. In that scene human life
is a unique income generating assets. Unlike physical assets which decreases with
the passage of time. The individual become more experience and mature as he
advances in age. This raises his earnings capacity and the purposes of life
insurance is to protect the income to individual and provide financial security to
his family which is dependent of his income in the event of his pre mature death.
The individual also himself also himself also needs financial security for the old
age or on his becoming permanently disabled when his income will stop.
Insurance also has an element of saving in certain cases.
Insurance is rupees 400 billion business in India and yet its spread In the country
is relatively thin. Insurance as a concept has not being able to make headway in
India. Presently LIC enjoys a monopoly in Life Insurance business while GIC
enjoys it in general insurance business. There has been very little option before
the customer to decide the insurer. A successful passage of the IRA bill have clear
the way of private sector operators in collaboration with their overseas partner. It
is likely to bring in a more professional and focuses approach. More over the
foreign players would bring sophisticated actuarial techniques with them which
would facilitate the insurer to effectively priced the product. It is very important
that the trained marketing professionals who are able to communicate specific
features of the policy should shall sell the policy. In the next millennium all the
activities would play a crucial role in the overall development and maturity of the
insurance industry.
Definition General Definition:-
In the words of D S Hansell, “ Insurance may be defined as a social device
providing financial compensation for the effects of misfortune, the paying being
made from the accumulated contributions of all participating in the scheme.”
Contractual Definition:-
In the words of justice Tindall “insurance is a contract in which a sum of money is
paid to the assured as consideration of insure’ incurring the risk of paying a large
sum upon a given contingency.
Characteristics of Insurance
Sharing of risk
Co-operative device
Evaluation of risk
Payment on happening of special event
The amount of payment depends on the nature of losses incurred
Need of the Life Insurance:-
The original basic intention of life insurance is to provide for one’ family and
perhaps others in the event of death. Originally, polices were to provide for short
periods of time, covering temporary risk situations, such as sea voyages. As life
insurance became more established. It was realized what a useful tool it was in a
number of situations, including:
1. Temporary needs threats:
The original purpose of Life Insurance remains an important element,
namely providing for replacement of income on death etc.
2. Regular saving:
Providing one’s family and oneself, as a medium to long term exercise
(through a series of regular payment of premiums). This has been become more
relevant in recent times as people seek financial independence from their family.
3. Investment:
Put simply, the building up of saving while safeguarding it from ravages of
inflation. Unlike regular saving products are traditionally lump is investments,
where the individual makes are one time payment.
4. Retirement:
Provision for one’s on later years has become increasingly necessary.
Especially in charging culture abs social environment, one can buy a suitable
insurance policy which will provide periodical payments on one’s old age.
BENEFITS:
1. It is superior to traditional saving machine
As well as providing a secure vehicle to build up saving etc. it provides
pieced of mind to the policy holder. In the event ultimately death, of say, the main
earner in the family, the policy will pay out guaranteed sum assured, which is
likely to be significantly more then the total premiums paid. With more
traditional, saving vehicles such as fixed deposits, the only return would be the
amount invested plus any interested accrued.
2. It encourages saving and forces thrift:
Once an insurance contract has been entered into, the insured has an
obligation to continue paying premiums, until the end of the term of policy,
otherwise the policy will lapse. In other words, it becomes compulsory for the
insure to save regularly and spend wisely. In contrast saving held in a deposit
account can be accessed or stop easily.
3. It provides easy settlement and protection against creditors
Once a person appointed for receiving the benefits or a transfer of rights is
made (assignments), a claim under the life insurance contracts can be settled
easily. In addition, creditors have no right to any momies by the insurer, where the
policy is written under trust. Under the married woman’s act the money available
from the policy forms a kind of trust which creditors can not claim on.
4. It can be enchased and facilities borrowing.
Sum contracts may allow the policy can be surrendered for a cash amount,
if policy holder is not in a position to pay the premium. A loan, against certain
policy, can be taken for a temporary period to tide over the difficulty. Presence of
life insurance policy facilitates credit for personal or commercial loans as it can be
offered as collateral security.
5. Tax relief:
The policy holder obtains income tax rebates by paying the insurance
premium. The specified from of saving which enjoys a tax rebate u/s 88 of the
income tax act. Include Life Insurance premiums and contribution to a recognized
PF etc.
Govt. Role:
Govt. keen to reduce the dependency on the state via private pension
provisions. They have a choice between using compulsion and incentives. Most of
the govt. chooses the later method. Tax relief is guaranteed in the pension plants
and is extremely generous, reflecting the value that the govt. and the society and
large place on the provision of retirement benefits. Tax treatments of the benefit
caries by country and by benefits.
In India, the proceeds of gratuity and provident fund are tax free in the
hand of the members. In UK a certain amount of the proceeds can be taken as tax
lump sum and reminder as taxable income. Benefits due on with drawl from
scheme or approved pension plan.
Role of Life Insurance
Role1: Life Insurance as ‘investment’ insurance is an attractive option for
investment. While most people recognize the tax hedging and tax saving potential
of life insurance, many are not aware of its advantage as an investment option as
well as, insurance products yields more compared to regular investment option as
this is besides the added incentives (read bonuses) offered by insurers.
You can not compare an insurance product with other investment schemes
for simple reason that it offers financial protection form risks. Something that is
the missing in non insurance products.
Infect, the premiums you pay for an investment against risk. Thus, before
comparing with other scheme, you must accept that a part of total amount invested
insurance life insurance goes towards providing for the risk cover, while the rest is
used for savings.
Insurance life Insurance, unlike non-products, you get maturity benefits on
survival at the end of the term. In other words, if you take a life insurance policy
for 20 years and survive the term the amount investor as premium insurance the
policy will come back to you with family of the deceased will receive the sum
assured.
Now, let us compare insurance as an investment options. If you invest Rs.
10000/- insurance PPF, year money grows to Rs. 10950 at 9.5% interest over a
year. But insurance this case, the access to your funds will be limited one can
withdraw 50% of the initial deposit only after four years.
The same amount of Rs. 10000/- can give an insurance cover of up to
approx. Rs. 5 to 12 lacs. (depending upon the plan, age and medical condition of
life insure etc.) and this amount can become immediately available to the nominee
of the policy holder on death. Thus insurance is a unique investment avenue that
delivers sound returns insurance addition to protection.
Role 2: Life Insurance as “Risk Cover”
First and foremost, insurance is about risk cover and protection – financial
protection, to be more presize – to help out last unpredictable losses. Designed to
safe guard against losses suffered on account of an unforeseen events. Insurance
provide you with that uniqueness scene of security that no other form of
investment provides. By buying life insurance, you buy peace of mind and are
prepared to face any financial demand that would hit the family incase of an
untimely demise.
To provide such protection, insurance firms collect contributions for many
people who face the same risk. A loss claim is paid out of the total premium
collected by the insurance companies, who act as trustees to the monies.
Insurance also provides a safeguard insurance the case of accident or a
drop insurance income after retirement. As accident or disability can be
devastating and an insurance policy can lend timely support to the family
insurance such time. It also comes as a great help when you retire, insurance case
untoward incident happens during the term insurance the policy.
With the entry of private sector player insurance insurance, you have a
wide range of products and service to choose from. Further, many of these can be
further customizes to fit individual/group specific needs considering the amount
you have to pay now, its worth buying some extra sleep.
ROLS 3: LIFE Insurance as “Tax planning.’’
Insurance serves as an excellent tax saving mechanism too. The Govt. of
India have offered tax incentives to life insurance products insurance order to
facilitate the flow of funds into productive assets, U/S 88 OF Income Tax Act
1961, an individual is entitled to rebate 20% On the annual premium payable on
his/her life and life of his/her children or adult children. The rebate is reducible
from tax payable by an individual or Hindu undivided family. This rebate is can
be availed up to a maximum of Rs 12000/- on payment of yearly premium of Rs
6000/- a year, you can buy anything upward of Rs 100000/- in sum assured. This
means that you get Rs 12000/- tax benefit. This rebate is deductible from the tax
payable by an individual or a Hindu undivided family.
THE EVALUATION OF INSURANCE INDUSTRY IN INDIA:
Life insurance in its modern form is a western concept. The Indian
insurance industry is as old as it is insurance other part of the world. Although life
insurance business has been taking shape for the last 300years, it came to India
with the arrival of Europeans. First Life Insurance Company was established
insurance 1818 as Oriental Insurance, mainly to provide for widows of Europeans.
The companies that follow mainly catered to Europeans and charged extra
premium on Indian Lives. The first insurance company insuring Indian Lives at
standard rates was BOMBAY MUTUAL LIFE INSURANCE COMPANY which
was formed insurance 1870. This was also the year when Ist insurance act was
passed by the British Parliament.; the years subsequent to the Swadeshi movement
saw the emergence of several insurance companies. At the end of the year 1995
there were 245 insurance companies AII the insurance companies were
nationalized insurance 1965 and brought under one umbrella. LIFE INSURANCE
CORPORATION OF INDIA (LIC) which enjoyed a monopoly of the life
insurance business until near the end of 2000. By enacting the IRDA act 1999. the
Govt of India effectively ended Lick’s monopoly and opened the door for private
insurance companies Collaboration of Indian Companies with Foreign
Companies.
FUTURE SCENARIO:-
Before looking insurance future prospectus of the insurance industry, we
must take a look into its past history. The independent India started with private
sector insurance companies. These companies were nationalized by the Union
Govt. in 1965 to form a monopoly known as Life Insurance Corporation of India
has being under public sector for over four decades till the govt. opened the
insurance sector for private companies in 2000.
When the insurance Industry was nationalized, it was consider a land mark
and a milestone on the way to the socialistic pattern of society that India had
chosen after independence. Nationalization has lent the industry solidity and
growth which is unparalleled. Forever, along with these achievements there also
grew a feelings of
THE PARTNERSHIPS:-
HDFC and Standard Life commenced discussions about possible joint venture, to
enter the life insurance market, in Jan. 1995. It was clear from the outset that both
companies shared similar values and beliefs and a strong relationship quichly
formed. Insurance Oct. 1995 the companies signed a 3 year joint venture
agreement.
Around this time standard life purchased a 5% stake in HDFC, Further
strengthening the relationship.
A small project term was set up insurance UK and India and set about preparatory
work. Among other things, the team conducted market research, looked at
possible information technology, documented high. Level business process maps
and set about preparing the first project plan.
The next three years were filled uncertainty, due to change insurance
Govt. and booth ongoing delays insurance getting the insurance bill passed
insurance parliament. Despite this both companies remained firmly committed to
venture.
Insurance Oct. 1998, the joint venture agreement was renewed and
additional resources made available. Around this time Standard Life purchased
2% infrastructure Development Finance Company Ltd. (IDFC) standard life also
started to use the services of the HDFC Treasury department to advise them upon
their investments insurance India.
One of the many success stories over the last few years, has been the
actuarial student program. The program was designed to identify high caliber
individuals who would be sponsored by Standard Life to study for their mutual
qualification in the UK
The new company has 1 Indian actuary and 5 actuarial students in
the team, with a further 2 students undergoing training in the UK. Both parents
companies strongly believe the program will benefit the new company insurance
the years to come and are firmly committed to it. Towards the end of 1999. the
opening of the market looked very promising and both companies agreed the time
was right to move the operation to the next level. Therefore, insurance Jan. 2000
and expect team form the UK joined a hand picked team form HDFC to form the
core project based insurance Mumbai.
Around this time Standard Life purchased a further 5% stake in
HDFC and a 5% stake insurance HDFC bank.
Insurance further development standard life to participate insurance
the Assets Management Company promoted by HDFC to enter the mutual fund
market.
The mutual fund market was launched on 20th July 2000 and one on
on the 10th Nov. 2000 assets under the management reached Rs. 1063 crores.
The company was incorporated on 14 th Aug. 2000 under the name of
HDFC Standard Life Insurance Company Limited.
The ambition of the company form as for back as Oct. 1995 was to
be first private company to reenter the life insurance market insurance India. On
23rd of Oct. 2000, this ambition was realized when HDFC standard Life Insurance
Company Limited were only Life company to be grated a certificate of
registration.
HDFC are main shareholders insurance HDFC standard Life
Insurance Company Limited with 81.4% while standard Life own 18.6 given
Standard Life’s existing investment in the HDFC Group. This is max. investment
allowed under current regulations.
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. In short, “The most obvious choice
for all”.
VALUES
Team Work
Customer Centric
People Care
Innovation
Integrity
Joy and Simplicity
Product
UNIT LINKED YOUNG STAR PLAN
The HDFC Standard Life Unit Linked You:
o An outstanding investment opportunity in a wide range of investment funds
backed by HDFC, leading fund manager.
o Valuable protection in case of the insured parent’s unfortunate demise.
o Valuable protection in case of the insured parent’s unfortunate demise.
o Very flexible benefit combinations and payment options.
o Very flexible benefit combinations and payment options.
o Flexible additional benefit options such as critical illness cover.
Sum Assured you had chosen* plus the fund built up by your and HDFC standard
Life contributions. **
4 easy steps to your own plan
Step1_ choose the premium wish to invest
Step2_ Choose the amount of protection (Sum Assured) You desire.
Step3_Choose the additional benefit options you desire.
Step4_Choose the investment found or funds you desire.
Eligibility
The age and term limits for taking out Unit Linked Young Star Plan are as shown
below.
Benefit Term Period (Yrs.) Entry Age (Yrs.) Maximum
Options age at expiry
(yrs.)
Minimum Maximum Minimum Maximum
Life Option 10 25 18 60 75
Life and 10 25 18 55 65
health option
MISSION:-
“Explore and enhance the quality of life
of people through financial security by
providing products and services of
as pried attributes with competitive
returns, and by rendering resources
for economic development”.
Products:
FUTURE PLUS
LIC’S Future Plus (T. No. 172) is a unit Linked Pension Plan bundled with lots of
options with insurance built flexibility.
o Future Plus, a deferred pension plan is available with or without life cover,
o It can be taken as a single premium policy or under regular premium
payment mode i.e. yearly or half-yearly.
o The plan comes with a host of riders like accident benefit rider, critical
illness rider etc. which are to be opted at the time of taking the policy.
o On vesting, the customer gets a pension on accumulated bid value of the
units allotted under the plan. Option is available to commute up to one-
third of the fund under the units at the time of vesting.
o The policy can be surrendered at no loss on the bid value of the units after
two years of policy existence and a small charge up to a maximum of 4%
of levied if surrendered within two years.
o The vantage pints of the plan are the Auto cover on the plan (keeps the
policy insurance force even if premiums are not paid subject to certain
conditions). The facility for top-ups (additional premium can be paid to
invest insurance the funds with no upper limit) and of course to opt for
early pension (40 years onwards).
o On death of the customer during the deferment period, basic Sum Assured
plus th bid value of the units become payable by LIC provided life cover
option is exercised. Else, the bid value of the units become payable to the
nominee. The nominee can also opt for a pension insurance lieu of lump
sum death claim amount.
o Persons insurance the age band of 18-65 years are eligible to take Future
Plus.
o The minimum and maximum vesting age offered is 40-75 years. The
minimum policy term is five years.
o The minimum premium payable under single premium mode is Rs. 10000
and Rs. 5000 per annum under regular premium mode.
o Future Plus comes with options to invest in any of the four types of funds,
based on the customer’s choice and risk taking ability.
o Bond fund and income fund are available for risk averse customers where
major portion of the fund is invested insurance Govt. securities and other
secured bond/income funds. Growth fund is available for risk loving
customers. Especially for those who aspire for rewarding returns as major
portion of the found would be invested insurance equity markets. Balanced
fund is also available to customer who wish to strike a balance between the
above two.
o The plan is priced at competitive charges on administrative and fund
management fronts with nil bid-offer spread. The plan extends the
Insurance come tax benefits u/s 80 CCC (i).
The allocated premiums will be applied to purchase units as per the Fund type.
Chosen. The policyholder’s Unit account will be subject to deduction of charges
as specified insurance the Policy Conditions. The value of the unit insurance the
Unit Fund may increase or decrease, depending on the investment return of the
assets representing the chosen fund.
1. Premiums: Regular premium can be paid either insurance yearly of half-yearly
installments. The minimum annual premium will be Rs. 5000/- increasing
thereafter insurance multiples of Rs. 1000.
Alternatively, a single premium can be paid subject to a minimum of Rs. 1000 and
thereafter insurance multiples of Rs. 1000.
2. Benefits:
A) Death Benefit:
Insurance case of death of the policy holder within the policy term, when the life
cover is opted for and is in force, the nominee will get the sum Assured under the
Basic Plan together with the Bid Value of units held insurance the Policy Holder’s
Unit Account either as a lump sum or as pension on his/her life-the actual amount
of the pension will depend on the then prevailing immediate annuity rates under
the annuity option chosen.
The limits on life cover i.e. the Sum Assured under the Basic Plan are as under:-
For Single Premium Policies: Equal to the Single Premium
For Regular Premium Policies:
5 to 20 (integer) times of the annualized
premium as per the option exercised by the
propose. However, the maximum life cover
shall not exceed the annualized premium
multiplied by the term subject to a minimum
life. Cover of 5 times the annualized premium.
In case the policy is taken without risk cover, then the Bid value of the units held
insurance the Policyholder’s Unit Account shall be payable either as a lump sum
or as a pension on his/her life, which will be based on the than prevailing
immediate annuity the relevant annuity option. If the policy is insurance lapsed
condition, than also the Bid Value of the units held in the policyholders unit
account shall become payable to the nominee, either as a lump sum or as a
pension on his/her life which will be based on the than prevailing immediate
annuity rates under the relevant option.
B) Benefit on vesting:
On the policy holder surviving to the date of vesting, the Bid Value of the units
held insurance the policyholders unit account will compulsorily be utilized to
provide a pension based on the tern prevailing immediate annuity rates under the
relevant annuity option. However, the Policyholder may opt to commute upto one
third of the Bid option. However, the Policyholder’s Unit Account at the time of
vesting of the annuity, which shall be period as a lump sum. Insurance case
communication is opted for, the amount of annuity/pension available will be
reduced proportionately. There will also be an option to purchase pension form
any other insurance company subject to Regulatory provisions.
3. Options:
A) Accident Benefit Option:
Accident Benefit can be availed as on optional Rider benefit by paying an
additional premium of Rs. 0.50 p for every Rs. 1000/- of the Accident Benefit
Sum Assured per policy year by cancellation of appropriate number of units
out of the Policyholder’s Unit Account every month. On Accidental death of
the Policyholder’s during the term of the policy, a sum equal to the Accident
Benefit cover is opted for and is insurance force. The Accident Benefit rider
option will not be available insurance case Basic Sum Assured under the Basic
Plan, subject to an overall limit of Rs. 25 lakh under all policies of the
Policyholder with the Corporation taken together.
B) Critical Illness Benefit Rider:
An amount equal to the critical Illness Rider Sum Assured will be payable in
case of diagnosis of defined categories of Critical Illness subject to certain
terms and conditions, provided the Critical Illness Benefit cover is opted for an
is insurance force. The maximum cover to this rider will be Rs. 5 Lakh under
all policies of the Policyholders with the Corporation taken together. The
Critical Illness Rider Sum Assured shall also not exceed the Sum Assured
under the Basic Plan. So, the critical Illness rider option will not be available
in case Sum Assured under the Basic Plan is zero.
4. ELIGIBILIGY CONDITONS AND OTHERS RESTRICTIONS:
For the Basic Plan:
(a) Minimum Age at entry - 18 years completed
(b) Maximum Age at entry - 65 years (age nearer birthday)
(c) Minimum Age at vesting - 40 years (age last birthday)
(d) Maximum vesting Age - 75 years (age last birthday)
(e) Minimum Policy Term - 5 years for both Single Premium and
Regular Premium policies (with and
without Risk Cover)
(f) Minimum Premium - Rs. 10000 for Single Premium
Rs. 5000 p.a. for Regular Premium
(g) Sum Assured under the Basic Plan (where Life Cover is opted for)-
Single Premium - Equal to the Single Premium
Regular Premium - 5 to 20 9integer) times of the annualized
Premium as per the option exercised by
the proposed However, the maximum
life cover shall not exceed the
annualized premium multiplied by the
term subject to a minimum life cover of
5 times the annualized premium.
Critical Illness Benefit Rider Option:
(a) Minimum Age at entry - 18 years completed
(b) Maximum Age at entry - 50 years (age nearer birthday)
(c) Maximum Maturity Age - 60 years (age nearer birthday)
(d) Minimum Sum Assured - Rs. 50000 provided the Sum Assured
under the Basic Plan is more than or
equal to Rs. 50000
(e) Maximum Sum Assured under Critical
Illness Benefit Rider Option - The maximum Critical Illness Rider
Sum Assured shall be of Rs. 500.000
taking, critical illness riders under all
policies of the Policyholder with the
Corporation and the Critical Illness
Benefit option under the new proposal
into consideration.
Accident Benefit Rider Option :
(a) Minimum Age at entry - 18 years completed
(b) Maximum Age at entry - 65 years (Age nearer birthday)
(c) Maximum Maturity age - 70 years (age nearer birthday)
(d) Minimum Sum Assured - Rs. 25000 provided Sum Assured under
the Basic Plan is Rs. 25000 or more.
(e) Maximum Sum Assured -
under Accident Benefit Option – The Maximum Accident Benefit Sum Assured
shall be of Rs. 2500000 taking Accident
Benefit under all policies of the Policyholder
with the Corporation and the Accident Benefit
Sum Assured under the new proposal into
consideration.
5. Investment of Funds:
The premiums allocated toi purchase units will be strictly invested according
to the investment pattern committed insurance various fund types. Various
types of fund and their investment pattern will be as under:
Fund Type Investment insurance Short term Investment insurance
Govt./Govt. Guaranteed investment such as Listed Equity Share.
Securities money market
instruments
(including Govt.
Securities)
(i) Bond Fund Not less than 0% 100% Nil
(ii) Income Fund Not less than 70% Not more than 90% Not more than 20%
(iii) Balance Fund Not less than 60% Not more than 80% Not more than 3%
(iv) Growth Fund Not less than 30% Not more than 50% Not more than 60%
The Policyholder has the option to choose any One of the above 4 funds.
Insurance case no fund has been opted from the allocated premiums shall, by
default, be invested insurance the INCOME FUND.
6. Method of Calculation of Unit price:
Units will be allotted based on the Net Asset Value (NAV) of the respective fund
as on the date of purchase of units. There is no Bid-Offer spread (the Bid price
and Offer price of units will both the equal to the NAV). The NAV will be
computed based on investment performance under each fund type and shall be
calculated as under:
Market/Fair value of the chosen fund’s underlying assets plus Current
Assets, accrued income (net of Fund Management charge and other outgo)
Less Current Liability and Provisions
Net Asset Value =
Number of Units existing insurance the fund at the valuation date
7. Charges under the Plan:
I) Allocation Rate: The allocation applicable to the premium to determine the part
of premium utilized to purchase units in the Policy holder’s Unit Account will
depend on whether the policy is a Single Premium or Regular Premium contract
and on the premium size as under:
Single Premium:
Premium Band Allocation Rate*
10000 to 19000 0.9600
20000 to 49000 0.9700
50000 to 99000 0.9775
100000 to 499000 0.9815
500000 and above 0.9835
* Under Single Premium Policies an amount equal to (1-the allocation rate) times
the Single Premium will also be deducted at the First Policy anniversary by
canceling an appropriate number of units form the Policyholder’s Unit Account.
Premium Band Allocation Rate
First Year & 2nd Year Thereafter
5000 to 9000 0.8700 0.9750
10000 to 19000 0.8950 0.9750
20000 to 49000 0.9075 0.9750
50000 to 99000 0.9150 0.9750
100000 to 499000 0.9175 0.9750
500000 and above 0.9200 0.9750
INTRODUCTION
Suitability
The policy is an investment cum endowment insurance plan, and suitable for
people who are looking at investment option with good return and the security of
the investment.
Salient Features
This is an endowment cum plan and hence benefits are payable both on
death and on maturity
Premiums paid are invested in capital markets providing the policyholder
an opportunity to earn market linked returns. Policyholder can avail of all
the profits from the markets and in case the market does not perform well,
he would still get back the guaranteed Sum Assured thus protecting him
from the adverse affects of market.
The plan assures a minimum guaranteed amount on maturity, or in case of
death.
This is a non participating plan.
The premiums paid, net of charges, are converted into units and invested in
funds selected by the policyholder. Based on his risk appetite policyholder
has the to choose any of the four funds offered under the policy
Money market Fund – A portfolio invested primarily in money market
instruments and other short-term investments. It provides access to a low
risk portfolio and is useful when one wants to avoid the risks associated
with long-term investments.
Min. investment Maximum Risk Profile
Money Market Instruments / Bank 100% 100% Low
Deposit
Equity shares of blue chip companies 40% 80% Medium to
High
Policy holder has the flexibility to switch the money (or a part of it) from one
fund to the other is available. Funds can be switched any number of times
during the term of the plan, at daily declared selling and buying prices.
Loan can be availed provided the policy has been in force for 3 years
Automatic Cover Maintenance facility: This facility keeps the policy in force
even on non-payment of premium. However, this facility is available only if
the policy has been in force for a period of 3 years. Under this facility, in case
policyholder misses premium payments, units would be liquid dated at the
prevailing selling price to meet the ridk and expense charges an policy would
be in force. As long as the value of units is sufficient to meet the expenses, the
policy would be in force, on maturity, the residual value of uits would be paid
as a benefit to the policy holder.
The premiums paid under the plan will qualify for rebate under Sec. 88 of the
Income Tax Act, 1961 and the returns are fully Tax exempt under Sec 10
(10D). premiums paid for Critical Illness Benefit qualify for rebate under Sec,.
80 D.
The policy benefits can be enhanced by adding riders to it. The riders available
with the policy are:-
o Term / Preferred Term Benefit
o Accidental Death Benefit
o Permanent Disability Benefit
o Critical Illness Benefit
o Life Guardian Benefit
o Accidental Disability Guardian benefit
Benefit
On Maturity
Full Sum Assured or the market value of the units, whichever is higher is payable,
On Death
Full Sum Assured or the market value of the units, whichever is higher is payable
Riders
Term/Preferred Term Benefit: In the event of death during the term of this benefit,
the beneficiary would receive and additional death benefit amount, which is over
and above the sum assure. The maximum amount of benefit one can avail is equal
to the basic sum assured. Where the Term Benefit cover applied for is more than
Rs. 10 Lakhs. Better rates may apply, subject to meeting eligibility requirements.
Accidental Death Benefit: This benefit provides an additional amount (over and
above the sum assured) to the beneficiary in the event accidental death of the life
insured. The maximum cover available under this benefit is equal to the basic sum
assured (subject to a maximum of Rs. 10 lakhs).
Permanent Disability Benefit: In case of permanent disability due to an accident,
the riders pays an additional amount, which is paid out as an annuity, the
maximum, permanent Disability Benefit that one Can avail of is equal to the basic
sum assured (subject to a maximum of Rs. 10 lakhs)
Critical Illness Benefit:- This benefit can be added to the basic life insurance plan
to provide financial support in the event of medical emergencies. On the first
occurrence of critical illness during the term of the plan, policyholder would
receive a portion of the sum assured to reduce your financial burden in this
emergency.
Life Guardian Benefit: In case of the unfortunate death of the proposer, this
benefit keeps the policy alive by waiving all future premiums on the policy.
Accident Disability Guardian Benefit: In case the proposer is permanently
disabled as a result of accident, this benefit keeps the policy alive by waving all
future premiums on the policy
Other Conditions
Minimum Age at entry : 18 years
Maximum Age at entry : 60 years
Maximum maturity age : 75 years
Term of the policy : 10-30 years
Minimum Premium
1. Quarterly – Rs.2620
2. Half yearly – 5115
3. yearly – 10000
Exclusions
In case the life insured commits suicide during the first year of the plan, the
beneficiary would not receive any of the benefits outlined in the plan.
Exclusions for Accidental Death Benefit, Permanent Disability Benefit,
Critical Illness Benefit, and Accidental Disability Guardian Benefit
q. Self inflicted injuries, suicide, insanity, immorality, committing any breach
of law or being under the influence of drugs. Liquor etc.
r. when the life insured / proposed is engaged in aviation or aeronautics other
than as a passenger on a license commercial aircraft operating on a schedule
route.
s. due to injuries from war (whether war is declared or not), invasion, hunting,
mountaineering, motor racing of any kind, other dangerous hobbies or
activities, or having been on duty in military, para military, security or police
organization. Additional Exclusions for Critical Illness Benefit
t. Unreasonable failure to seek or follow medical advice.
u. any pre-existing medical conditions not disclosed at inception.
v. infection with Human Immunodeficiency Virus (HIV) or condition due to
any Acquired Immune Deficiency Syndrome (AIDS)
w. Infection with Human Immunodeficiency Virus (HIV) or condition due to
any Acquired Immune Deficiency Syndrome (AIDS)
x. In addition, no benefit would be paid in respect of the exclusions specific to
each critical illness.
Gilt Fund – the portfolio primarily consists of securities issued by or
guaranteed by the Central Government of India. Short-term
investments will also be made with banks. There is no credit risk
associated with this portfolio, suitable for investors looking for regular
and steady income.
Min. Maximum Risk
Investment Investment Profile
Securities issued by Central Govt. / Guaranteed by 80% 100% Low
Central Govt.
Short Term Bank Deposit / Call Money / Cash 0% 20% Low
Balanced Fund – A portfolio invested primarily in share of well-
managed companies and in highly rates securities of Central Govt. this
portfolio offer you a balance of steady returns and growth.
Min. Maximum Risk
Investment Investment Profile
Equity shares of blue chip companies 30% 60% Medium
Securities issued by Central govt. / Guaranteed by 20% 70% Low
Central Govt.
Short Term Bank Deposit / Call money / Cash 0% 20% Low
Growth Fund – A portfolio invested judiciously in equity and equity
related investments of well-managed companies. Security will be
enhanced through holdings in highly rated securities and short term
deposits. This fund is suitable for investors looking for growth and
capital appreciation in the term.
RESEARCH METHODOLOGY
LIMITATIONS:-
1. Most of the people are not interested to give the right data.
2. Some people don’t know about the private companies.
3. A span of 6 weeks training was too short for survey
Respondent Profile:-
Birla Plus
E ICICI
LIC A
D
A Standing and Goodw ill of the Co. B Product range of the Co.
C Advertisement being released by the Co. D Services being by the Co.
E Communication and know ledge of the Rep. F Returns of Bonus declared by the Co.
CONCLUSIONS
FINDINGS AND RECOMMENDATIONS:
1. The monopoly of LIC has been broken because private Insurance
companies came into the market.
2. 09% respondents are aware of privatization of Insurance Industry and
10% respondents do not know about private companies.
3. 90% people know about LIC Insurance Company. 75% people know
about HDFC Insurance Co. and 15% people know about other
companies.
4. Some people preferred to the private companies because of their better
services.
5. Some people believe only or preferred only Public Insurance
Companies like LIC.
6. As majority of the population of Patiala City belongs to the services
class so they consider tax saving rather purchasing a life insurance
7. The financial growth of private companies is much more Life Insurance
companies
8. The private companies always keep in touch with their customers with
the latest information.
9. Most of the respondent said that private companies should not be
trustworthy
10. Most of the people go for Children benefit because of triple benefit.
11. Now, a days people preferred to invest the money in Insurance policy
rather than in Banks because of better benefits of Insurance policies
growth money with life cover.
12. The respondents are above 45 they believe in Public Insurance
companies and those respondents who are less than 45 believe in
Private Insurance companies.
13. HDFC has made its presence felt in the market in a short span of time.
SUGGESTIONS:
Name Address
Telephone Age
Occupation Annual Income
Marital Status Single Ø Married Ø (Age of Children if applicable)
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Q. 1 Any There Insurance Companies, which you are aware of ?
(Thank You)
BIBLIOGRAPHY
Websites
www.hdfcinsurance.com//http//www/hdfcinsurance
www.iciciprulife.com //http//www/iciciprulife.com
www.licindia.com //http//www/licindia.com
www.bimaonline //http//www.bimaonline.com