Prachi Agarwal
Prachi Agarwal
Project Report
On
“AWARENESS OF FINANCIAL
PLANNING IN EMERGING
INDIAN MARKET"
Submitted To : Submitted By :
Mr. SANJAY SACHDEVA Prachi Agarwal
Department of the Business Administration Roll No.9263597
BBA VIth semester
Prachi Agarwal
(BBA VIth SEM)
DECLARATION
Prachi Agarwal
DECLARATION i
PERFACE ii
ACKNOWLEDGEMENT iii
1. EXECUTIVE SUMMARY 1
2. PROJECT OBJECTIVE 2
3 .RESEARCH METHODOLOGY (3-4)
a) Type of Research 3
b) Data Collection 3
c) Sampling Unit & Size 3
d) Limitations 4
EXECUTIVE SUMMARY
Overall, the life insurance and pension sector is set for rapid changes
and growth in the years ahead. Delivering service, building trust and
being innovative are key areas in which any company will have to excel
in order to do well in the long road ahead. Different companies will take
different approaches and it would be myriad of solutions that will be
found to delight the Indian customer.
During the first part, I was given complete classroom training about the
various unit linked as well as the traditional plans and solutions which
the company offers.
Later, Market Research was done through various activities and tele-
calling which are discussed further in the report. Activities led to practical
exposure and taught me the aspects of customer dealing.
PROJECT OBJECTIVES
To study the awareness of Financial Planning among the people.
RESEARCH MEHODOLOGY
The study of awareness about Financial Planning among the people and
particularly the insurance sector covers data collection through
observation, questionnaire and interview of consumers.
Type of research :
Exploratory :
Type of research carried out was EXPLORATORY in nature; the
objective of such research is to determine the approximate area where
the drawback of the company lies and also to identify the course of
action to solve it. For this purpose the information proved useful for
giving right suggestion to the company.
Data Collection:
Primary data
Secondary data
Data used for the research work was primary in nature.
Sample unit: -
Method of collection: -
Field procedure for gathering primary data included observation and
interview schedule in which the questionnaires were filed by the
interviewer.
Research Instrument:
Questionnaire
Limitations:
The following were the limitations that were there during the course of
the study:4
1. Limited time period.
2. Less number of respondents.
3. Biasness of the respondents.
SECTION 1
INDUSTRY PROFILE
Overview
Historical Perspective
The insurance came to India from UK; with the establishment of the
Oriental Life insurance Corporation in 1818.The Indian life insurance
company act 1912 was the first statutory body that started to regulate
the life insurance business in India. By 1956 about 154 Indian, 16
foreign and 75 provident firms were been established in India. Then the
central government took over these companies and as a result the LIC
was formed. Since then LIC has worked towards spreading life
insurance and building a wide network across the length and the breath
of the country.
Important milestones in the life insurance business in India:
1912: The Indian Life Assurance Companies Act enacted as the first
statute to regulate the life insurance business.
1956: 245 Indian and foreign insurers and provident societies were taken
over by the central government and nationalized. LIC formed by an Act
of Parliament- LIC Act 1956- with a capital contribution of Rs.5 cr. from
the Government of India.
1907: The Indian Mercantile Insurance Ltd. set up- the first company to
transact all classes of general insurance business.
Structure
Government stake in the insurance Companies to be brought down to
50%. Government should take over the holdings of GIC and its
subsidiaries so that these subsidiaries can act as independent
corporations.
Competition
Private Companies with a minimum paid up capital of Rs.1 billion should
be allowed to enter the sector. No Company should deal in both Life and
General Insurance through a single entity. Foreign companies may be
allowed to enter the industry in collaboration with the domestic
companies.
Regulatory Body
Investments
Mandatory Investments of LIC Life Fund in government securities to be
reduced from 75% to 50%. GIC and its subsidiaries are not to hold more
than 5% in any company (there current holdings to be brought down to
this level over a period of time)
Customer Service
LIC should pay interest on delays in payments beyond 30 days.
Insurance companies must be encouraged to set up unit linked pension
plans. Computerization of operations and updating of technology is to be
carried out in the insurance industry.
STATISTICS (INDIAN & GLOBAL)
This section gives the users important and detailed statistics of the
Indian as well as the Global insurance industry. These statistics would
give important insights of where the respective markets are headed for.
NATURE OF INDUSTRY
The insurance industry provides protection against financial losses
resulting from a variety of perils. By purchasing insurance policies,
individuals and businesses can receive reimbursement for losses due to
car accidents, theft of property, and fire and storm damage; medical
expenses; and loss of income due to disability or death.
The premium charged for the policy is based primarily on the amount to
be awarded in case of loss, as well as the likelihood that the insurance
carrier will actually have to pay. In order to be able to compensate
policyholders for their losses, insurance companies invest the money
they receive in premiums, building up a portfolio of financial assets and
income-producing real estate which can then be used to pay off any
future claims that may be brought.
There are two basic types of insurance carriers: Direct and Reinsurance.
Direct carriers are responsible for the initial underwriting of insurance
policies and annuities, while Reinsurance carriers assume all or part of
the risk associated with the existing insurance policies originally
underwritten by other insurance carriers.
(12)
(13)
A Linked product provides not only a fixed amount of money on death
but also sums of money which are linked with the underlying value of
assets on the desired dates.
(14)
INDIAN INSURANCE SECTOR
REGULATORY BODY
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.
MISSION-IRDA
(15)
IMPACT OF LIBERALISATION
The introduction of private players in the industry has added to the colors
in the dull industry. The initiatives taken by the private players are very
competitive and have given immense competition to the on time
monopoly of the market LIC. Since the advent of the private players in
the market the industry has seen new and innovative steps taken by the
players in this sector.
The new players have improved the service quality of the insurance. As
a result LIC down the years have seen the declining phase in its career.
The market share was distributed among the private players. Though
LIC still holds the 79% of the insurance sector but the upcoming natures
of these private players are enough to give more competition to LIC in
the near future. LIC market share has decreased from 95% (2002-03) to
81 %( 2004-05).
Among the private players ICICI Prudential has the maximum of appx.
5.60%
Below is the table that shows the market share of various players of the
industry.
(16)
The following companies have the rest of the market share of the
insurance industry.
The liberalization of the Indian insurance sector has opened new doors
to private competition and the new and improved insurance sector today
promises several new job opportunities. With private players now in the
field, there will be innovative products, better packaging, improved
customer service, and, most importantly, greater employment
opportunities.
(17)
Business Performance As On 31-03-07
s.no. Company Premium NOP
(Cr)
1. LIC 23899.29 32,143,891
2. ICICI Prudential 3925.21 1,889,835
3. Bajaj Allianz 3027.55 1,905,767
4. BAJAJ Allianz 1220.85 363,322
5. SBI Life 1198.83 480,065
6. Max New York 752.84 544,121
8. Reliance Life 687.86 432,684
9. Aviva 656.91 293,382
10. Tata AIG 518.88 406,265
11. OM Kotak 499.34 159,101
12. ING Vysya 418.00 227,342
13. Met LIFE 302.67 116,988
14. Shriram Life 87.26 76,198
15. Sahara Life 19.70 35,636
16. Bharti Axa Life 7.75 5,220
(18)
There are a number of options to choose from for a career in
Insurance. Ideally an insurance company will have openings in the
following fields:
Actuaries
Underwriter
Surveyor
Investment
Marketing & Distribution
Actuaries
Underwriters
(19)
Agents/Brokers:
Surveyor/Loss Assessor:
Sales/Marketing:
And who can forget the guys who make and break a brand. They
would be required in a large number in order to promote the number
of products that will be launched by numerous companies in the
insurance sector.
(20)
CURRENT SCENARIO OF THE INDUSTRY
INSURANCE MARKET IN INDIA
India with about 200 million middle class household shows a huge
untapped potential for players in the insurance industry. Saturation of
markets in many developed economies has made the Indian market
even more attractive for global insurance majors. The insurance sector
in India has come to a position of very high potential and
competitiveness in the market.
CUSTOMER SERVICE
Consumers remain the most important centre of the insurance sector.
After the entry of the foreign players the industry is seeing a lot of
competition and thus improvement of the customer service in the
industry. Computerization of operations and updating of technology has
become imperative in the current scenario. Foreign players are bringing
in international best practices in service through use of latest
technologies. The one time monopoly of the LIC and its agents are now
(21)
going through a through revision and training programs to catch up with
the other private players. Though lot is being done for the increased
customer service and adding technology to it but there is a long way to
go and various customer surveys indicate that the standards are still
below customer expectation levels.
DISTRIBUTION CHANNELS
Till date insurance agents still remain the main source through which
insurance products are sold. The concept is very well established in the
country like India but still the increasing use of other sources is
imperative. It therefore makes sense to look at well- balanced,
alternative channels of distribution.
• Direct selling/Retail
• Corporate agents
• Group selling
• Brokers and cooperative societies
• Bancassurance
DIRECT SELLING/RETAIL
Direct selling or retail business is carried out by Agents of the company.
This is the main distribution channel due to the complexity of most
(22)
insurance products (Endowment, Whole of Life, Unit Linked). This tends
to be the focus of most companies due to its past success as well as its
ability to deliver the right advice. However, this channel can be
expensive and it is a time consuming sales process. An agent is the
public face of an Insurance company. Hence it is important that this face
is always smiling and presentable and the facts and figures at his/ her
command are updated and correct.
BANCASSURANCE
Bancassurance is the distribution of insurance products through the
bank's distribution channel. It is a phenomenon wherein insurance
products are offered through the distribution channels of the banking
services along with a complete range of banking and investment
products and services. To put it simply, Bancassurance, tries to exploit
synergies between both the insurance companies and banks.
Advantages to banks
Productivity of the employees increases.
By providing customers with both the services under one roof, they
can Improve overall customer satisfaction resulting in higher customer
retention Levels.
Increase in return on assets by building fee income through the sale of
Insurance products.
Can leverage on face-to-face contacts and awareness about the
financial Conditions of customers to sell insurance products.
(23)
Banks can cross sell insurance products e.g.: Term insurance products
with loans.
Advantages to insurers
Insurers can exploit the banks' wide network of branches for
distribution of products. The penetration of banks' branches into
the rural areas can be utilized to sell products in those areas.
Customer database like customers' financial standing, spending
habits, investment and purchase capability can be used to
customize products and sell accordingly.
Since banks have already established relationship with customers,
conversion ratio of leads to sales is likely to be high. Further
service aspect can also be tackled easily.
Advantages to consumers
Comprehensive financial advisory services under one roof. i.e.,
insurance services along with other financial services such as
banking, mutual funds, personal loans etc.
Enhanced convenience on the part of the insured
Easy accesses for claims, as banks are a regular go.
Innovative and better product ranges
(24)
WHAT DOES LIFE INSURANCE HAVE TO OFFER?
People like to refer to life insurance as time insurance, the reason being
that life insurance proceeds are paid to the insured's beneficiaries in
case of death. The money proffered by life insurance helps buy time to
adjust to the change of circumstances. Insurance provides large
amounts of cash that will keep the lifestyle for the survivors the way it
was before the insured's death.
For the person who buys an insurance policy, it offers absolute and
complete peace of mind. He or she knows that the decision made by him
will provide sound benefits in the future, whether or not the individual
may live to see it.
3) Multiple Applications
The future is uncertain for each and every one. No one knows how long
(25)
he or she will live. The investment benefit is paid to the insured's
beneficiaries after his death or it can be used during the life as well. Life
insurance policy owners can turn to the cash value of the policy in case
of a financial emergency when all avenues are either blocked or denied.
4) Enduring Elasticity
5) Financial Security
The purchase of life insurance clearly displays care and concern for the
people the policy owner loves.
7) Insurance is Safer
(26)
The proof of strength and safety that insurance companies have ensured
even under the most adverse of conditions is a matter of pride for the
entire insurance industry. For generation after generation, life insurance
has been acclaimed as the very benchmark of security against which the
other industries are measured.
In the now open sector on insurance, the following is what I feel will
determine the success of the company in particular and the industry in
general:
The reason for this being on the top of our understanding is that when
ever we have seen any sector open up in India there are always grey
areas and unsure policies. These are not exactly what any player, be it
Indian or foreign, looks for. It creates an air of uncertainty in all the
decision making process. Insurance as a sector requires players who
are strong financially and are willing to wait for returns. Their confidence
can be bolstered only if there is an open and a transparent policy
guidelines. This will also help the consumers feel safe that the regulatory
is an active one and cares to do everything possible to keep things
under control and help the insurance environment grow maturely.
(27)
A well-established distribution network.
It is said that the insurance agent is the best salesman in the world. He
makes you pay, regularly, an amount promising to pay back only on your
death. Thus the players will require an excellent sales team to sell their
products in the now competitive environment.
This will itself ensure the market grows. And that every class/society
gets a product that best suits them.
SPECIAL PROVISIONS
(29)
SWOT ANALYSIS OF INSURANCE
INDUSTRY
STRENGTH
WEAKNESS
OPPORTUNITY
1. 80 percent of Indian population is still under insured.
So there is a big opportunity for insurance companies.
(30)
2. As the stock market can be under the mark any time so
it can bring loss to the investors but as in ULIPs there is proper
mixture of debt securities and equity so the loss is incurred during
dark trading days also.
3. Unit-linked products are exempted from tax and they provide life
insurance.
4. Increasing consumer awareness about Insurance and its use.
THREAT
(31)
CONCLUSION
And also the changing attitude and increasing awareness level of the
population is an indicator that growth potential for the insurance
sector is immense.
(32)
SECTION 2
(33)
COMPANY’S PROFILE
INTRODUCTION
Background
Business Objectives
(35)
(37)
(38)
(39)
HDFC STANDARD LIFE INSURANCELIFE
INSURANCE
INTRODUCTION :
(40)
THE PARTNERSHIP :
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, in January 2000 an expert team
from the UK joined a hand picked team from HDFC STANDARD LIFE
INSURANCEto form the core project team, based in Mumbai.
(41)
COMPANY’S MISSION:
This not only means being the largest or the most productive company in
the market, but a combination of several things like-
COMPANY’S VALUES:
(42)
KEY MANAGEMENT PERSONNEL
Chairman
Mr. Deepak S. Parekh
Board of Directors
Mr. K. M. Mistry
Ms. Renu S. Karnad
Mr. A. M. Crombie
Ms. Marcia D. Campbell
Mr. Norman Keith Skeoch
Mr. G. R. Divan
Mr. G. N. Bajpai
Mr. Ranjan Pant
Mr. Ravi Narain
AUDIT COMMITTEE
Haribhakti & Company
Chartered Accountants
B.K. Khare & Co.
Chartered Accountants
(43)
Bankers
HDFC STANDARD LIFE INSURANCEBank Ltd.
Union Bank of India
Indian Bank
The Saraswat Co-operative Bank Ltd.
Federal Bank
(44)
KNOWLEDGE MANAGEMENT
Your insurance need will change as your life does, from starting to work
to enjoying your golden years and all the stages in between. Each one of
these stages may pose a different insurance need/cover for you. In this
section, we have drawn up the basic life stages and help you analyze
various insurance needs accordingly.
(45)
Stage 1: Young and Single
Your needs:
Your needs:
(46)
Stage 3 - Proud Parents
Once you have children, your need for life insurance is even more. You
need to protect your family from an untoward incident. Ensure your
protection umbrella takes into account the future cost of securing your
child’s dream. You will want life to go on for your loved ones, and having
enough life insurance is a way to help ensure that.
Your needs:
While you are busy climbing the ladder of success today, it is important
for you to take time and plan for your life after retirement. Having an
early start for retirement planning can make a significant difference to
your savings. Think about your golden years even before you have
reached them. The key is to think ahead and plan well using your time
and money.
Your needs:
(47)
PRODUCT MIX
For organizations they have customized solutions that range from Group
Term Insurance, Gratuity, Leave Encashment and Superannuation
Products.
PROTECTION - You can protect your family against the loss of your
income or the burden of a loan in the event of your unfortunate demise,
disability or sickness. These plans offer valuable peace of mind at a
small price.
INVESTMENT - This includes a plan that is well suited to meet your long
term investment needs. We provide you with attractive long term returns
through regular bonuses.
(48)
PENSION - Our Pension Plans help you secure your financial
independence even after retirement and live a relaxed retired life.
SAVING - Our Savings Plans offer you flexible options to build savings
for your future needs such as buying a dream home or fulfilling your
children’s immediate and future needs.
Children’s Plan,
(49)
GROUP PLANS
(50)
DISTRIBUTION OFFICES
FINANCIAL CONSULTANTS
(51)
CURRENT SALES- HDFC STANDARD LIFE
INSURANCELife
During the year the company issued over 3,97,000 policies and has
covered more than 5,80,000 lives”
(52)
Table Showcasing Financial Results:
April-March April-March
Parameters 2005-06 2006-07 Growth
(Rs. Cr) (Rs. Cr) (%)
Total received
668.40 1532.21 129.23
premium
Effective Premium
Income (Total) 436.08 887.30 103.47
Group Business
Premium (EPI) 49.40 135.15 173.58
(53)
Unit Prices as on 29/08/2007
Offer Prices Bid Price
Fund Name
Liquid Fund
(Rs)
24.5661
(Rs)
24.5661
Secure Managed Fund 22.6666 22.6666
Defensive Managed
27.3346 27.3346
Fund
Balanced Managed
36.2603 36.2603
Fund
Equity Managed Fund
Growth Fund
46.2655
59.0512
46.2655
59.0512
U
NIT PRICE AS ON 30/08/2007
(54)
FUTURE PLANS
(55)
SECTION 3
(56)
FINANCIAL PLANNING
You may have many dreams, needs and desires. For example, you could
be dreaming of:
(57)
EXPERIENCE THE POWER 360º FINANCIAL PLANNING
How will 360° Financial Planning
help?
Investment Planning
Cash Flow Planning
Tax Planning
Insurance Planning
Children’ Future Planning
Retirement Planning
(58)
Risk Profiling
Asset Allocation and Portfolio Construction
Creation and Accumulation of Wealth through Systematic
Investment Plans (SIP)
Regular review of progress and Portfolio Rebalancing
CASH FLOW PLANNING: To provide for assets and meet the periodic
cash requirements
In simple terms, cash flow refers to the inflow and outflow of money. It is a
record of your income and expenses.
According to the Income Tax Act, 1961, one will be eligible for Tax
Benefits under Section 80C and Section 10(10D) of the act.
(59)
One has to compare the advantages of several tax saving schemes and
depending upon your age, social liabilities, tax slabs and personal
preferences, decide upon a right mix of investments, which shall reduce
your tax liability to zero or the minimum possible.
"Insurance is not for the person who passes away, it for those who
survive," goes a popular saying that explains the importance of Insurance
Planning.
Like every parent, you too must be overjoyed to watch your child grow. All
parents want to give the best possible upbringing to their children. This
includes good education and security, in case of any eventuality. Soon,
your little bundle of joy will grow up, and it will be time to provide for his or
her higher education and wedding.
(60)
RETIREMENT PLANNING: Because retirement is a time to relax, not to
get worried
Some like it. Some don’t. But retirement is a reality for every working
person. Most young people today think of retirement as a distant reality.
(61)
CONSUMPTION PATTERN
(62)
OBJECTIVE: To generate leads for various Unit Linked Plans offered
by the company, by interacting with walking and existing customers and
to know the awareness level of Financial Planning among them.
SALES PROCEDURE:
FIRST
CONVERSATION
Foll
APPOINTMENT
ow
Up
Foll
FILLING THE
PROPOSAL FORM
ow
Up
COLLECT THE
REQUIRED
DOCUMENTS AND
THE FIRST
PREMIUM
(63)
STEP 1: FIRST CONVERSATION WITH A KNOWN OR
AN UNKNOWN CUSTOMER
This is the first time, when you interact with a person and try to get the
information from him about the industry or the company and understand
the customer’s insight i.e. what actually does a customer expects from the
companies.
(64)
STEP 2: APPOINTMENT
All the potential and interested customers of all the activities performed
are then followed up and an appointment is fixed for further details.
The motive is to explain the customer in detail, about the various plans
offered by the company. The customer is informed about the procedure
and the options he can opt for like:
1) Choose the premium he wish to invest
2) Select the Premium Payment Option i.e. annual mode, half
yearly mode, quarterly mode, or monthly mode.
3) Choose the amount of protection i.e. the sum assured, he
desires.
4) With Maturity Benefit, choose the additional benefits like:
a) Life option Death Benefit
b) Life & Health option Death Benefit + Accidental Death
Benefit
c) Extra Life & Health option Death Benefit + Critical Illness
Benefit + Accidental Death Benefit
5) Choose the Investment funds or funds one desires.
The various funds available are:
Liquid Fund
Secure Managed Fund
Defensive Managed Fund
Balanced Managed Fund
Equity Managed Fund
Growth Fund
(65)
6) Other information like:
a) Tax Benefit
b) Various Charges
c) Switching option
d) Surrendering
e) Terms & Conditions etc.
After the second step, the interested customers are required to fill the
proposal form which requires the following information:
b) Personal details of the policy holder,
c) Personal details of Beneficiary or Nominee
d) The Premium amount selected
e) The Term of the policy
f) The Fund choice for investment
Once the form is filled all the necessary documents are collected like:
a) Address proof,
b) DOB certificate etc.
And also the first premium amount in form of cheque or cash is collected.
Within 15 days, the policy documents reach the customers place, and the
customer is required to read the documents carefully.
(66)
SECTION 4
DATA ANALYSIS
(67)
AGE DISTRIBUTION
AGE DISTRIBUTION(yrs.)
Below 30
24%
35%
31 - 45
Above 45
41%
(68)
MARITAL STATUS
100%
90%
16
80%
70%
60%
37
50%
24
40%
19
30%
20%
10%
0%
4
Below 30 31 - 45 Above 45
AGE(yrs)
(69)
INCOME DISTRIBUTION
> 5 lacs 1 10 6
INCOME
3 - 5 lacs 5 12 12
1.5 - 3 lacs 13 12 6
<1.5 lacs 16 7 0
Below 30 31 - 45 Above 45
(70)
ARE YOU AWARE ABOUT FINANCIAL PLANNING ?
100 YES
NO OF PEOPLE
90
98%
80
70
NO
60
50
40
30
2%
20
10
(71)
BRAND RECALL
BRAND RECALL
LIC
51 100 ICICI Prudential
60
HDFC Std Life
71 96 TATA AIG
BIRLA SUN LIFE
KOTAK MAHINDRA
75
SBI LIFE
92
AVIVA
64 MAX NEW YORK
82 METLIFE
72
86 INGVYSYA
(72)
INVESTMENT PREFERENCE
INVESTMENT PREFERENCE
Banks & Post
office
9% Share Market
21%
21% Insurance
Bonds
18%
11%
Mutual Funds
20%
Real Estate
(73)
INSURED PERCENTAGE
13%
YES
NO
87%
(74)
COMPANY PREFERENCE
COMPANY PREFERENCE(in %)
1
55% 30% 15%
0 20 40 60 80 100 120
(75)
TYPE OF PLAN BOUGHT
TYPE OF PLAN
PENSION PLAN
24, 28%
ULIPs
20, 23%
Money back Policies have been most popular and also the endowment
plans.
As people today are more aware about financial planning, so people of
the age 30 years have planned for their Retirement now.
ULIPs are fast gaining popularity as they provide investment
benefit with Insurance.
(76)
PURPOSE OF BUYING INSURANCE
Retirement
Planning
14%
Investment 11%
0 10 20 30 40 50 60
Risk cover remains the most important purpose for buying insurance
followed by option as Tax saving tools.
Retirement Planning in a early period is also gaining the market share.
ULIPs are responsible for increasing popularity of insurance as an
investment tool
(77)
DISTRIBUTION CHANNEL PREFERENCE
CHANNEL PREFERENCE
1
56 17 14 9 4
0 20 40 60 80 100 120
(78)
SECTION 5
FINDINGS
(79)
THE BARRIERS FACED DURING THE PROCESS:
The Attitudinal Barriers To Purchasing …..
• Death - a taboo topic for discussion
“It’s quite ashubh talking about death”
• The belief in karma … destiny
“Jo kismet me likha hai wohi hoga, hum kya kar sakte hai”
(80)
SECTION 6
CONCLUSION
(81)
CONCLUSION
The various conclusions drawn from the project are:
There has been a tremendous change in the insurance industry. And with
it there has been continuous growth in this sector both in Indian as well as
world context.
The opening up of the insurance sector has changed the whole look of
the industry. While the LIC, in order to face the competition is coming up
with new strategies. New private players are leading the sector due to
their strategic management and tailored made projects.
From the research, we also conclude that though the awareness and
people opting for LIC plans are more as compared to other private
players’ but the latter are gaining momentum in the market day by day.
(82)
Possible investment options range from bank deposits and government
small saving schemes to mutual funds, stocks and property.
Certainly ULIPs successfully combine the first and most important need of
protection, with savings, and hence are an excellent addition to your
portfolio.
RECOMMENDATION
(84)
RECOMMENDATION
VARIETY-BASED POSITIONING
This type of positioning is based on varieties in products and services
rather than customer segments. It is a sensible strategy for those
companies who have distinctive advantages or strengths in offering
certain products and services. In the insurance industry too, it is
possible to achieve a unique position by focusing on certain category
of products.
NEEDS-BASED POSITIONING
This is the most commonly understood positioning and is based on the
differing needs of different groups of consumers. This can be done
successfully if a company has unique strengths to service a group of
customer needs better than others.
The insurance needs of customers vary significantly for different
groups of customers. The insurance needs of young family with small
children will be quite different from that of a family in which the income-
earner is close
(86)
to retirement. However, in India most of the life insurance companies
have a wide variety of products tailored for different customer needs
and there is no company focusing on a particular customer need.
ACCESS-BASED POSITIONING
Positioning of customers can also be done by the way they are
accessible. That is different groups of customers may be accessible in
different ways even though they may have similar needs. Access is
typically a function of customer geography or customer scale. There is
excellent opportunity in the insurance industry to employ access-based
positioning by targeting the rural insurance sector.
The rural market for life insurance is very different from the urban
market in terms of needs, income levels and distribution (seasonality,
for example), penetration of media and so on. Rural market can be a
highly profitable position if one is able to carefully plan and tailor an
entire set of low-cost activities of advertising, distribution, and product
design etc. to successfully exploit the potential.
(87)
Questionnaire
Glossary
List of Preference
Bibliography
QUESTIONNAIRE
(88)
Questionnaire
Name: ________________________
Age: ______
Gender: M F
Occupation: ___________________
YES NO
Q2) Mention the names of Life insurance companies you have heard
of:
1) ________________ 4) ________________
2) ________________ 5) ________________
3) ________________ 6) ________________
Q5) Have you taken any life insurance policy on your own life or on
life of any of your family member?
YES NO
Endowment Plan
Pension Plan
ULIP
a) PROTECTION
OF FAMILY
b) TAX BENEFIT
c) INVESTMENT
d) RETIREMENT
PLANNING
Q9) Have you ever been approached for Life insurance by any of the
following (please √), also Rank according to your preference from
whom you are most likely to buy insurance?
(91)
(√ Here) (Rank)
1) Known/Current Advisor
Q10) Do you feel opening up of the sector has created more insurance
awareness among the public?
YES NO
_____________________________________________________
Accident Benefit
An add-on with a life policy. It compensates a policyholder in the event of
death or injury by accident
Annuity
An investment option that makes a series of regular payments to an
individual in exchange for a premium or a series of premium.
Asset allocation
How your investments are spread across various asset classes
Bonus
The amount paid as return in a ‘with-profit’ policy. The bonus, expressed
as a percentage of the sum assured, is generally declared every year.
The amount is linked to the profits earned by the insurer. Depending on
the time of withdrawal, there are two kinds of bonuses – reversionary and
cash. A reversionary bonus can be encashed only on maturity of the
policy; a cash bonus can be withdrawn when declared
Capital gains
Profit earned from the sale of stocks, mutual fund units and real estate.
Long-term capital gains arise from assets owned for more than a year
while short-term capital gains are made from assets owned for less than a
year.
(93)
Corpus
The amount of money available with a scheme for investing. If already
invested, the corpus is the current value of the scheme’s portfolio.
Cover
Another word for insurance; it also refers to the amount of insurance.
Critical illness rider
A rider that provides a policyholder financial protection in the event of a
critical illness
Death benefit
The amount payable to the nominee on death of the policyholder. The
amount paid is the sum assured plus benefits applicable (if any) less
outstanding loans.
Endowment plans
An insurance plan that provides a policyholder risk cover and some return
on investment. Usually suitable for the risk-averse
ELSS (equity-linked savings schemes)
Diversified equity funds that additionally offer a tax deduction under
Section 80C on investments up to Rs.1 lakh.
Financial planning
It covers the essential elements of a person’s financial affairs and is
aimed at achieving a person’s financial goals.
(94)
Group Insurance
An insurance policy taken out by employers to provide life cover to their
employees. Usually the cheapest form of insurance.
Insured
The policyholder: The person who buys an insurance policy
Insurer
The insurance company
Investments
Assets like fixed deposits, post office savings, bonds and stocks that are
acquired for the purpose of earning a return
Liquidity
The quality of assets that can be easily and quickly converted into cash
without any, or significant, loss in value.
Lock-in period
The period of time for which investments made in an investment option
cannot be withdrawn.
Maturity date
The date on which a policy term or fixed-income investment like fixed
deposit or bond comes to an end.
(95)
Money-back plans
A variant of endowment plans in which survival benefits are disbursed
through the policy term, rather than in a lump sum at the end.
Nominee
The person(s) nominated by the policyholder to receive the policy benefits
in the event of his death.
Pension Plan
Investment products offered by insurance companies and mutual funds
that required the investor to make defined contributions over regular
periods, mostly every year. The contributions are invested according to a
pre-decided investment plan. At retirement, the accumulation is paid out
through regular pay-out options.
Policy
The legal document issued by an insurance company to a policyholder
that states the terms and conditions of an insurance contract.
Policy term
The period for which an insurance policy provides cover
(96)
Post office schemes
Also known as Small Savings schemes, they are offered at post offices
and carry the highest returns among fixed income instruments.
Government backing makes these instruments like Public Provident Fund
(PPF), National Savings Certificate (NSC), Kisan Vikas Patra (KVP) and
Post Office Monthly Income Scheme (POMIS) risk-free
Premium
The amount paid by the insured to the insurer to buy cover
Riders
Additional covers that can be added to a life policy, for a cost
Sum assured
The amount of cover taken under a life insurance policy, it is the minimum
amount that will be paid on death of the policyholder during the policy
term.
Surrender value
The amount payable by the insurer to the owner of an investment-based
plan in case he opts to terminate the policy after three years (the
mandatory lock-in period) but before its maturity date. The surrender
value will be the premium paid till date minus surrender charges and any
outstanding loans due.
Term plans
A plan that provides life cover for a specified period of time, but no return
on the premium paid
(97)
Vesting date
In pension plans, it is the date from which the policyholder starts receiving
pension. In children’s plans, it is the date from which a child becomes the
owner of a policy taken out in his name (generally, around his 18th
birthday).
Waiver of premium rider
A rider that waives the premium payable on the base policy and other
riders in certain circumstances mostly related to death, disability or injury.
An important feature especially for investment products such as children’s
policies.
Will
A document that designates the assets of a person-both financial and
physical- to various family members and other heirs.
Whole-life plans
Class of life insurance policies that provide cover through your lifetime.
(98)
BIBLIOGRAPHY
BOOKS
Marketing Management ,By Philip kotaler
Marketing of Service By Dr. S.L Gupta and V.V. Ratna
Finanaial Management By I.M.Panday
Economics Times
Websites
www.rbi.org.in
www.irdaindia.org
www.banknetindia.com
www.BAJAJ Allianzinsurance.com
www.businessworldonline.com
www.google.com (search engine)
Other References:
Brochures of various plans
(99)