REPORT ON

INSURANCE AS AN INVESTMENT

STUDY CONDUCTED FOR

ICICI PRUDENTIAL LIFE INSURANCE COMPANY

Submitted to: Kurukshetra University, Kurukshetra In the partial fulfillment of the requirement for the degree for the degree of M.B.E. (Master of Business Economics) Session (2004-2006) Submitted By: Shallu Sandhuria MBE

D.A.V COLLEGE FOR GIRLS YAMUNA NAGAR-135001

The Development of Insurance The concept fo insurance is not new. A form of insurance existed in early Rome, where Romans gathered together in burial societies. They all contributed to a fund and the members of the pool had their burial costs met by the society.

To examine the origin of modern insurance is a fascinating area of study in itself. It can also be valuable to those who are exbarking upon the study of insurance as it exists today. A knowledge of the origins of a subject is always benefical, and for insurance we can identify at least three reasons why it is important to look back:

Many of our modern insurance institutions, such as Lloyds of London, would be extremely difficult to understand if we did not enquire into their history. Insurance companies have perfected the method of practising insurance over many years and a large part of present-day practice, including certain policy wordings, would prove quite inexplicable if we had no knowledge of its development. Insuance has often been a response to some problem faced by society, and an understanding of how insuranc companies faced up to and solved these important issues helps to explain many presentday methods.

Vision and Mission Their vision is to make ICICI Prudential Life Insurance Company the dominant new insurer in the life insurance industry. This they hope to achieve through their commitment to excellence, focus on service, speed and innovation, and leveraging our technological expertise.

The success of the organisation will be founded on its strong focus on values and clarity of purpose. These include: Understanding the needs of customers and offering them superior products and service. Building long lasting relationships with their partners Providing an enabling environment to foster growth and learning for their employees.

And above all building transparency in all our dealings.

They believe that they can play a significant role in redefining and reshaping the sector. Given the quality of their parentage and the commitment of their team, they feel that there will be no limits to their growth.

Management
Board of Directors
The ICICI Prudential Life Insurance Company Limited Board comprises reputed people from the finance industry both from India and abroad: Mr. K.V. Kamath, Chariman Mr. Mark Tucker Mrs. Lalita D. Gupte Mr. Danny Bardin Mrs. Kalpana Morparia Mrs. Chanda Kochhar Mr. M.P. Modi Mr. R Narayanan Mr. S.P. Subhedar, (Alternate Director to Mr. Danny Bardin) Mr. Derek Stott, (Alternate Direcotr to Mr. Mark Tucker) Ms. Shikha Sharma, Managing Director Management Team Ms. Shikha Sharma, Managing Director Ms. Anita Pal, chief Operations & Underwriting Mr. Bill Lisle, Chief Agency Officer Mr. Saugata Gupta, Chief-Marketing Mr. Sandeep Batra, Chief Financial Officer & Company Secretary Mr. Saubhro j. Mitra, Chief-Human Resources Mr. V. Rajagopalan, Appointed Actuary Mr. Anil Tikoo, Head-Information Technology

Corporate Office ICICI Prulife Towers 1089, Appasahab Marathe Marg, Proabhadevi Mumbai 400025 Telephone No. : 022-462 1600 Website :// www.iciciprulife.com/

THE DEVELOPMENT OF INSURANCE The Development of Insurance

1550 1600 1650 1700 1750 1800 1850 1900 1950 2000

Marine Life Fire Personal accident Engineering Liability Theft Permanent health Loss of profits Motor 1550Contractors' 1600 1650 1700 all risks 1750 1800 1850 1900 1950 Entrance of Private Companies Industrial life

2000

Figure shows the chronological development of 12 of the more common forms of insurance. Rather than treat each form independently, we shall look at just briefly for illustrative purposes life.

The first real evidence of life assurance as we know it dates back to 1583. A policy was taken out on18 June, on the life of William Gibbons, for a sum of 382. 6s. 8d.

The contract was for 12 months and the money was to be paid if Gibbons died within the year. In frat he did die on 8 May 1584 and, after a slight dispute over whether 12 months meant 12x28 days or 12 calendar months, the money was paid. The short-term form of policy taken out by William Gibbons was typical of the type of assurance issued in these early days. The provision of life assurance continued unaltered for the next century with the short-term form of policy mentioned above and a form of mutual association, similar in design to the ancient burial societies, where members contributed to a common pool out of which payments were made on death.

One such mutual association that grew in prosperity was the Amicable Society for a Perpetual Assurance Office, founded in 1705 by Royal Charter. The Amicable transacted business or traditional lines, but in 1757 it took the daring step of guaranteeing a minimum sum to be payable on death. This seemed to satisfy a demand, because the company did not suffer by its boldness. List of Life Insurance Company Till Date S.No. 1. 2. 3. 4. 5. Registration Number 101 104 105 107 109 Date of Reg. 23.10.2000 15.11.2000 24.11.2000 10.01.2001 31.01.2000 HDFC Standard Life Insurance Company Ltd Max New York Life Insurance Co. Ltd. ICICI Prudential Life Insurance Company Ltd. Om Kotak Mahindra Life Insurance Co. Ltd. Birla Sun Life Insurance Company Ltd. Name of the Company

6. 7. 8. 9. 10. 11. 12.

110 111 114 116 117 121 122

12.02.2001 30.03.2001 02.08.2001 03.08.2001 06.08.2001 03.01.2002 14.05.2002

Tata AIG Life Insurance Company Ltd. SBI ING Allianz Life Insurance Life Life Company Insurance Insurance Limited Vysya Bajaj Company Private Limited Company Ltd. Metlife India Insurance Company Pvt. Ltd. AMP SANMAR Assurance Company Ltd. Aviva Life Insurance Co. India Pvt. Ltd.

Distribution & Products

ICICI Prudential has one of the largest distribution networks amongst private life insurers in India, having commenced operations in 34 cities and towns in India. These are: Ahmedabed, Amritsar, Bangalore, Baroda, Chandigarh, Chennai, Coimbatore, Dehradoon, Gurgaon, Hyderabad, Indore, Jaipur, Jalandhar, Kanpur, Kochi, Kolkata, Kottayam, Karnal, Lucknow, Ludhiana, Madurai, Mangalore, Meerut, Mumbai, Nagpur, Nasik, Noida, New Delhi, Pune, Patiala, Thane, Vadodara and Vashi. The company has seven bank assurance tie-ups, having agreements with ICICI Bank, Allahabad Bank, Federal Bank, South Indian Bank of India, Lord Krishna Bank, and Punjab and Maharashtra Co-operative Bank as well as some corporate agents. It has also tied up with organizations like Dhan for distribution of salaam Zindagi, a policy and economically underprivileged sections of society. ICICI Prudential has recruited over 22,000 insurance agents to interface with and advise customers. Further, it leverages its state-of-theart IT infrastructure to Provide superior quality of service to customers. Insurance Solutions for Individuals ICICI prudential Life Insurance offers a range of innovative, customer-centric products that meet the needs of customers at every life stage. Its 13products can be enhanced with up to 4 riders, to create a customized solution for each policyholder. Savings Solutions ICICI pru save 'n' protect is a traditional endowment savings plan that offers life protection along with adequate returns.

ICICI pru Cash Bak is an anticipated endowment policy ideal for meeting milestone expenses for a child's marriage, expenses for a child's higher education or purchase of an asset.

Protection Solutions ICICI pru Life Guard is a protection plan, which offers life cover at very low cost. It is available in 3 options-level term assurance, level term assurance with return of premium and single premium. Child Solutions ICICI pru Smart kid provides guaranteed educational benefits to a child along with life insurance cover for the parent who purchases the policy. The policy is designed to provide money at important milestones in the child's life. Market-Linked Solutions ICICI Pru Lifelink is a single premium market linked insurance plan which combines life insurance with the opportunity to stay invested in the stock market. ICICI Pru Life Time offers customers the flexibility and control to customize the policy to meet the changing needs at different life stages. It offers 3 investment options- Growth Plan, Income Plan and Balanced plan. Retirement Solutions ICICI Pru Life Time Pension is a retirement product targeted at individuals in their thirties. Market-linked retirement products ICICI Pru Life Time Pension is a regular premium market-linked pension plan. ICICI Pru LifeLink Pension is a single premium market-linked pension plan.

Single Premium Solutions ICICI Pru Assure Invest is a single premium savings product with life cover for terms of 5,7 or 10 years. ICICI Pru Re Assure is a retirement product for senior citizens who are on the verge of retirement or have just retired. ICICI Prudential also launched Salaam Zindagi, a social sector group insurance policy targeted at the economically underprivileged sections of the society. Group Insurance Solutions ICICI Prudential also offers Group Insurance Solutions for companies seeking to enhance benefits to their employees. ICICI Pru Group Gratuity Plan: ICICI pru's group gratuity plan helps employers fund their statutory gratuity obligation in a scientific manner. The plan can be also be customized to structure schemes that can provide benefits beyond the statutory obligations. ICICI Pru Group Super annuation Plan: ICICI Pru Offers a flexible defined contribution super annuation scheme to provide a retirement kitty for each member of the group. Employees have the option of choosing from various annuity options or opting for a partial commutation of the annuity at the time of retirement. ICICI Pru Group Term Plan: ICICI Pru's flexible group term solution helps provide affordable cover to members of a group. The benefit under the policy is paid to the beneficiary nominated by the member on his/her death. Flexible Rider Options ICICI Pru Life offers flexible riders, which can be added to the basic policy at a marginal cost, depending on the specific needs of the customer.

1. Accidental & disability benefit: If death occurs as the result of an accident during the term of the policy, the beneficiary receives an additional amount equal to the sum assures under the policy. If the death occurs while traveling in an authorized mass transport vehicle, the beneficiary will be entitled to twice the sum assured as additional benefit. 2. Accidental benefit : This rider option pays the sum assured under the rider on death due to accident. 3. Major Surgical Assistance Benefit: provides financial support in the event of medical emergencies, ensuring that benefits are payable to the life assured for medical expenses incurred of surgical procedures Cover is offered against 43 different surgical procedures. Critical Illness Benefit : Projects the insured against financial loss in the event of 9 specified critical illnesses. benefits are payable to the insured for medical expenses prior to death.

OBJECTIVE OF THE STUDY

The primary objective of the project was to study the insurance industry scenario. We further aimed at studying Indian pension fund market and comparing the pension plans offered by different Insurance companies . I also came to know about the recruitment procedure followed by the company. Main Objectives: i) ii) To get insight into the entire array of the insurance market. To know about Indian Pension fund market.

OBJECTIVE OF RESEARCH STUDY

The primary objective of the project was to study the insurance industry scenario. We further aimed at studying and comparing the pension plans offered by various insurance companies and to study Indian pension fund market. I also came to know about the recruitment procedure followed by the company. Main Objectives To get an insight into the entire array of the insurance market. To Know about Indian pension fund market.

RESEARCH METHODOLOGY
With an ever increasing complexity of market and business activities the collection and analysis of data of service sector has become much more complex. It involves a study of buying behaviour , increase in sale of lifetime, brand preference, sales promotion and products sold by competitors both in public as well as private sector. Public Sector Company: Life insurance corporation (LIC) Private Sector Company: Birla sunlife HDFC Standard life ING Vyasa

Research Methodology
Source of information: There are two kinds of source of information i.e. primary and secondary. Primary Source The data collected and gathered from these sources is assembled specifically for the research project at hand. The data collected is a fresh and for the first time and thus happened to be original in character. It is used for satisfying various marketing research objective. Basically there were two instruments. 1. 2. Structure instrument Unstructured instrument

LIMITATION OF STUDY
Due to lack of time and other resources it was not possible to conduct survey at a very large scale. Examining a small part of population i.e. 200 individuals collected relevant information. It was not possible to collect information regarding the recruitment of an agent from other companies except ICICI as they kept it confidential hence no comparisons regarding that could be made.

INTRODUCTION
Insurance is a contract whereby, in return for the payment of premium by the insured , the insurers pay the financial losses suffered by the insured as a result of the occurrence of events. The term "risk" is used to describe all the accidental happenings , which produce a monetary loss. Insurance is an ethos in which a large number of people exposed to a similar risk made contributions to a common fund out of which the losses suffered by the unfortunate due to accident events, are made good. The sharing of risk among large groups of people is the basis of insurance. The losses of an individual are distributed over a group of individuals. The risk becomes insurable if the following requirements are compiled with: The insured must suffer financial loss if the risk operates. The loss must be measurable in money. The object of the insurance contract must be legal. The insured should have sufficient knowledge about the risk he accepts. What is insurance? Mankind is exposed to many serious perils such as property losses from fire and windstrom and personal losses from disability and premature death. Although it is impossible for an individual to foretell or completely prevent their occurrence but it is possible to provide against their financial effect-the loss of property and earnings.

From the point of view of the individuals the life insurance may be defined as a contract whereby for a consideration amount called the premium, one party (the insurer) agrees to pay to the other ( the insured) or a beneficiary a particular amount upon the occurrence of death or any other agreed event. Insurance is the method of spreading and transfer of risks. Losses of few unfortunate are shared by and spread over to many exposed to the same risk. Assets created by the owner in expectations of future needs have a value. Losses of assets for any reason deprive the owner of the expected benefits. It acts as a form of safeguard misfortunes. From the point of view of community life insurance may be defined as a social device to make accumulations to meet uncertain losses resulting from premature death or disability. Purpose And Need Of Insurance As said earlier that the making is exposed to many serious perils which risk the security of their belongings. The risk here means that there is a possibility of occurrence of loss or damage to the property, it may happen or may not happen. Insurance is relevant only in the contingency of uncertainty. If there is no uncertainly about the occurrence of the loss it can not be insured against. Assets are likely to be destroyed or made non- functional due to perils like firefloods, breakdowns, lightning and earthquake. Damage to assets caused by an perils is the risk that assets are exposed to.

 Risk means possibility of loss or damage, which may or may not happen. Insurance become relevant only if there is uncertainly of occurrence of event leading to loss. No uncertainly No insurance. We can say the human life value is an ongoing generating asset, which can be lost on early death or disability caused by accidents. Insurance does not protect the assets but only compensates the economic or financial loss. Basically insurance covers tangible assets but the concept can be extended to intangible also. Two Basic Principles To Make Insurance Popular People are exposed to risk and the consequences of which are difficult to born by individual. No one should be in the position to make the risk happen and take advantage.

Concept Of Insurance
The concept of insurance is that people exposed to the same risk come together and all shares loss suffered by a few. The insurance companies play a role of implementing the said concept - control in advance the shares in the shape of premiums and create a fund out of which loss is paid. In the context of insurance in the event of the death of the bread earned the family income stops suddenly. The family income also stops on the retirement of the bread earner.

 Life insurance covers the contingencies and provides relief to the family members in the event of death or retirement of the bread earner. Life Insurance Life insurance is a contract where the person requiring and insurance pays a consideration / premium to maintain a policy and the insurer promises to pay a sum assured or a guaranteed amount on the happening of an eventuality. If no eventuality occurs then the insured may be eligible for some bonus also. Various need of life insurance can be : 1. 2. 3. 4. 5. 6. 7. Protection of the interest of the family member. Provision for education and marriage of the children. Post retirement income for self and dependents. Special needs for medical expenses. Provision for health / illness. Provision for housing. Provision for income tax rebate.

Benefits of life insurance

Insurance not only serves the ends of individuals or of special groups of individuals but also is advantageous to the society as a whole. Benefits to the individual : Superior to any other saving plans. Unlike any other saving plan, a life insurance policy affords full protection against risk of death. In the event of death of a policy holder, the insurance company makes available the full sum assured to the near and dear of policy holder. In comparison, any other saving plan would amount the total saving accumulated till date. If the death occurs prematurely, such saving can be much lesser than sum assured. Evidently the potential financial loss of family of the policy holder is sizable. Encourages and forces thrift : A saving deposit can easily be withdrawn. The payment of Life insurance permiums, however, is considered sacrosanct and is viewed with the same seriousness as the payment of interest on a mortgage. Thus, a life insurance policy in effect bring about compulsory saving. Easy settlement and protection against creditors A life insurance policy is the only financial instrument, the proceeds of which can be protected against the claims of a creditor of the assured by affecting a valid assignment of the policy.

Administering the legacy for beneficiaries Speculative or otherwise, expenses can quickly cause the proceeds to be squandered. Several policies have foreseen this possibility and provide for payment over a period of years or in a combination of installments and lump sum amounts. Ready marketing and suitability for quick borrowing: A life insurance policy can, after a certain period (generally Three years), is surrendered for a cash value. T policy is also acceptable as a security for commercial loans, for example, a student loan. Disability benefits: Death is not only hazard that is insured; many policies may include disability benefits. Typically, these provide for waiver of future premiums and payment of monthly installment periods. Accidental death benefits: Many policies can also provide for an extra sum to be paid (typically equal to sum assured) if death occurs as a result of accident. When these benefits are factored in, it is found that most Policies offer returns that are comparable/ or even better than other saving modes such as PPF, NSC etc. moreover, the cost insurance is a very negligible.

Benefit to business:
Insurance results in business continuation and welfare of employees. Uncertainty of business losses is reduced by insurance.

Benefits of society:
The welfare of the society is protected. Insurance results in economic growth of the country and reduction in inflation. The above motive behind buying of life insurance is tax saving i.e 83 respondents said that they have bought life insurance to save tax only. The second reason behind buying of life insurance is protection i.e. they buy life insurance to protect their families in case of any mishappening. The third reason behind buying of life insurance is the saving i.e. they tend to save money at the same time they want to get protection. The fourth reason behind of life insurance is investment. This is only for those persons who have high income and have lots of money with them. Fundamental of Insurance: The fundamental (principles) of insurance are as follows: Insurable interest Proximate cause Contribution Subrogation Utmost good faith Proximate Cause: Generally the claims are payable under insurance policies if they arise out of events which are approximately caused by the insured perils.

In other words, the proximate cause of the event has to be perils covered by the policy, so as to contribute valid claims. Contribution: An insured may have several insurances on the same subject matter. If he recovered his loss under all these insurances, he will obviously make a profit out of loss. This will be an infringement of the principle of indemnity. Common law has therefore, evolved the doctrine of contribution whereby the insured is prevented from recovering more than his loss, despite his loss, despite his having several insurance on subject matter. Subrogation: The principles of indemnity seek to prevent the insured from making profit out of loss. However, it may so happen that the insured may recover his loss under his policy and he may also have rights against third parties. If after the insurance claims is settled the insured is allowed to ensure his rights against third parties and to retain whatever damages he receives from them he will certainly make a profit and the principles of indemnity. Will be infringed. Common law has therefore, evolved the Doctrine of subrogation as corollary to the principles of indemnity. Subrogation may be defined as the transfer of right and remedies of the insured to the insures who have indemnified the insured in respect of the loss. Utmost good faith: Insurance required the insured to voluntarily disclose, accurately and fully, all facts material to the risk being proposed , whether requested or

not. The insurer needs to be aware of all the details of the health, family, history, habits and other facts about he proposer. Insurable Interest: Insurance interest exist if the policy owner or the nominee is likely to benefit financially if the insured continues to live and is likely to suffer from an economic loss, if the insurer dies. A person may take a life insurance policy on his life to provide financial security to his family. The motivating force is his interest in the welfare of his family. An insurable interest is one of the most basic of all the requirements in insurance. Examples of insurable interest are the interest arising in blood relationships like father and son, husband and wife or employer and employee relationship etc.

Classification of life insurance products

Term Insurance: Under term insurance plan, sum assured is payable only if death occurs during the specified pre determined term. If death does not take place during the such term the amount of premium stand forfeited. Thus it can be seen that the term insurance is nothing but the cost of pure protection. It is a contract which provides financial protection if death should occur within a specified period. No survival benefits are provided under the contract. Whole life Insurance: Whole life insurance provides for the payment of the face value upon the death of the insured, regardless of when it may occur. This policy furnished permanent protection to the insured at he moderate cost. This is highly important for the average man or woman of moderate salary, who require considerable family protection and whose limited income does not

enable him or her both to pay premiums and to accumulate a large savings fund. The whole life policy provides a capital sum of money in the event of death of the assured whenever that may occur. Endowment Policy: Endowment is a product, which includes Risk cover and saving also. In the pure endowment policy the sum assured is payable in the event of death of definitely on maturity. In an endowment sum assured is for sure given to the policyholder on completion of the term. Endowment plans are very popular in developing nations since they serve a dual purpose of life cover and savings. Many a people in our country go for endowment products because of the compulsory saving aspect. An endowment plan on the other hand is not a cheap plan since the insurer has a dual liability of providing life cover and on maturity giving the entire sum assured. Annuities: Annuities refer to income or other financial provision usually for retirement or old age . An annuity may be defined as a periodic repayment made during a fixed period or for the duration of a designated life or lives. In one sense the life annuity may be described as the opposite of insurance protection against death in its pure form a life annuity may be defined as a contract whereby for a premium consideration one party ( the insurer) agrees to pay the other (the annuitant) a stipulated sum ( the annuity) periodically throughout life. The purpose of the annuity is to protect again a risk the outliving of one's income. Indian Scene: Competition in the market always proves favorable to the to the consumer. So it is in the case of life insurance. After what seems like almost an event, finally the doers of the life insurance sector were thrown

open to the private sector players last year. The finance act, 2001 has thankfully cleared quite a lot of cobwebs giving a level playing field to both the sectors. Private sector players would only be too aware that this is the proverbial first step of the thousand mile journey that lies up ahead. Contending for a piece of market share with a Goliath that LIC is, will not be an easy task unless Pvt. Sector offer qualitative and innovative products at an affordable price. That they would be pulling out all the stops to attract customers is not in doubt. Hence, this is as good a time as any to pay attention and see what is on display. The strategy too many option simply confuse the users whereas too few will surely turn them away. India's position is far behind the developed countries but reasonable god compared to the other LDC's with the real growth higher than both groups. Among the developed countries life insurance penetration is found to be highest in south korea and least in US. In the developing countries on the other hand Chile showed the highest penetration which was 33.80% while china. Had the lowest which was the just 0.53% . India was next to Philippines with 5.60% penetration. On the other hand life insurance density was the highest in Zimbabwe ($3.34%) and ($1.11%) in India. The lowest density was found in china, which was $ 0.18 only. Most countries, whether developed or developing and where state and private insurers operated featured highly concentrated markets since they serve consumer's interest with minimum risk. Degree of Concentration in Insurance Market: Indian insurance market size is presently estimated at US$ 66-70 million. By 2005, it is expected to grow five fold told US$ 377 million. In 2000-01 fiscal year total global premiums stood at US$ 9933 million, which is 0.41percent of total global premium of US$ 2443.6 billion. Total premiums of Indian insurance industry in 2001-01 fiscal were 2.32 percent of country's GDP. Per capital premium stood at US$9.9 . Indian insurance

market potential could be gauged by the fact that currently about 40-42 million people have been brought under insurance whereas the potential is estimated at 200-250 million. Insurance companies could tap only 5 percent of Indian middle class segment. In India insurance is generally considered as a tax saving device instead of its other implied long term financial benefits , Indian people are prone to investing in properties and gold followed by bank deposits. They selectively in shares also but the percentage is very small- 4-5% . Even to this day, Life Insurance corporation of Indian dominates Indian insurance sector. With the entry of private sector players backed by foreign expertise, Indian insurance market has become more vibrant. In India motor vehicle insurance premium 2.5 percent of the vehicle cost against international standard of 6 percent Indian federal government considers insuranceas one of major sources of funds for infrastructure development. The government has identified the following as major thrust areas: Timely and reliable statistical data and information about polices and market to install a degree of credibility; A code of good practices base on international best practices to raise standard of Indian insurance sector. Strengthening of supervision and regulation; market participation in decision marking ; high solvency standard and developing alternative channels. Till end of 1999-2000 fiscal year, two state run insurance companies, namely , life insurance corporation (LIC) and general insurance corporation (GIC) were the monopoly insurance (both life and non life providers in India).

CONCLUSION
Indian insurance industry is a sunrise industry that's hoping its sunset is a long day away. Insurance today is clearly a growth industry in India. There are over 20 companies offering both life and general insurance products to Indian customers. Insurance is a Rs. 400 billion business in India, and together with banking services adds about 7% to India's GDP. Gross premium collection is about 2% of GDP and has been growing by 15-20 % per annum. India also has the highest number of life insurance policies in force in the world, and total investible funds with the LIC are almost 8% of GDP. Yet more than three fourths of India's insurable population has no life insurance , pension cover, post retirement protection cover. The joint family system has traditionally provided security to the elders and the Indian economy being essentially an agriculture economy, retirement was a gradual process. An individual after reaching a particular age would slowly start withdrawing from the active life in a phased manner. However, with increasing urbanisation the process of breaking up of the joint family system gathering , the need of provide for old age is being increasingly felt now. In India old age social and income security (OASIS) committee, was constituted by the Govt. for devising a pension system for India, recommended setting up of defined contribution fully funded individual retirement accounts ( IRAS) for non salaried working population with annuities to be purchased from the annuity providers on retirement and building up of pension through occupational pensions and personal pension initiatives. The existing pension system in India consists of four different programmes. There is a state and central government workers fund covering 11.1 million people. The publicity managed employees provident

fund and employee pension scheme together cover the approximately 18 million "organized sector" workers in about 175 industries. Then there is a series of in house managed funds covering 45 millions workers from nearly 3000 businesses, whose funds are managed along the lines of those in the EPF and EPS systems. Plus the public provident fund set up in the late 1960 s benefits the unorganized sector. This PPF is offered through the post offices and nationalized workforce. The OASIS report that out of 314 million workers in India less than 11% have got old age income security. That still leaves 89 percent of the working population nearly 280 million people without any formal provisions for old age security. Also, a large captive market consisting of individuals as well as self employed and professional partners in a partnership firm etc. called as the Bhagidari sector remains untapped as their coverage is very limited. Although the sector contributes 90 % to the total national income and above 80% to the services sector, still the only pension fund products available in this category is public provident funds and individuals pension plans which form just 122 billions rupees out of an estimated corpus of rs. 1602 billion. The bhagidar market is estimated to generated premium worth Rs. 1250 crores of premium in the very fast year of the reforms. All this suggests that the demand for pension plans and products is likely to increase with rising per capita incomes, rising literacy rates and increase of the service sector as has been seen from the example of several other developing countries. In fact, launching of new and innovative products including pension products preceded by opening up of the insurance sector is an integral part of the liberlization process being pursued by many developing countries. In a country's social security system pensions play an imperative part. The development of the pension funds market is necessary for ensuring the future needs of the country's population and developing depth in the equity and bond markets. Inflact, liberlisation of insurance and pension has been cornerstone of every

developing country's embracing of free market economy. After Korean and Taiwanese insurance sectors were liberalized , the Korean retirement cover market has grown three times faster than GDP and in Taiwan; the rate of growth has been almost 4 times tat of its GDP. Philippines followed the trend in 1992. Following the world bank three pillar model for pension markets at the back of their mind, Indian policymakers have brought about reforms in the pension market. The first pillar is aimed at the economically underpriviledged populated of the country who need the government support for sustenance. The purpose of such a pension system would be redistribution of the money through budgetary support. The second pillar is on the lines of chilean model of privately IRAs. Pillar three would cover occupation and personal pension plans. Although the market is estimated to be worth above Rs. 1000 crores but the true potential is going to be realized only after the ensuing reforms. A whole new range of companies such as state run LIC, banks, mutual funds and private insurance companies have started offering pension products. One may ask, why is the need for active private players in pension market? Answer lies in the baltant fact that a state monopoly has little incentive to innovate or offer a wider range of products, efficient service or even showing professional attitude. This can be seen by a lack of certain products from LIC's porfolio which currently offers only two products is pension product line. After the recent entry of the private players in this sector things have started looking up. At the end of the day, it has to be realised that the competition enhances the efficiency of market participants through the process of creative destruction. Now when we are aware that banks mutual funds and of course insurance companies are allowed to launch pension products, one can safely forecast the potential offered by the pension product market.

It is the economic rationale? Seen from the global economic scenario the pension industry is a key component of the financial infrastructure of an economy, in the sense that it is one of the few sources of long term funds which have null or least risk associated with maturity of assets and liabilities, and its viablity and strengths have far reaching consequences for not only its money and capital markets, but also for each and every facet of the economy. With the liberalization also comes the details such as portfolio management of the pension funds where there is need for lesser stringent rules regarding investment in equities to give better returns. But the risk should also be adequately considered to ensure safety of the pensioner's funds. it is very much apparent that decisions about what constitutes acceptable portfolio quality and the extent of price regulation hold the key to a relatively newly liberlized pension market regulation in a post liberlisation insurance market. As the US experience suggests, insurance companies and other entities in such business are usually subjected to stringent asset quality norms. Indeed while a part of their portfolio might comprise of equity, mortgages and other relatively risky securities , much of their portfolio is made up of bonds and liquid (and highly rated) mortgage backed securities. An Indian insurance company on the other hand , is constrained by the fact that the market for fixed income securities is very liquid such that only gilts and AAA and AA+ rated corporate bonds have liquid markets. At the same time absence of a market for liquid mortgage backed securities denies these companies the opportunity to enhance the yield on their investment without significantly adding to portfolio risk. This might not pose a problem in the absence of competition especially if the government helps to increase the returns to the policyholders by way of tax breaks but might pose a serious problem if liberlisation leads to price competition among a large number of players.

It might be argued that if the pensionfund industries as a part of insurance industry is liberlised, and if the fund managers of all these companies indulge in active portfolio management, the liquidty of the bond market will increase significantly. Such increase in liquidity across the board would enable and the fund managers to invest in investment grade bonds of lower rating and thereby add to the average yield of their investment without adding significantly to their portfolio risk. The problem however is that till the imperfect character of the bond market is removed to a significant extent, the player companies might have to operate with thinner margins or remain exposed to unacceptably high levels of liquidity risk. It might therefore, be prudent for the policymakers to impose stringent capital and reserve norms on the entitles in pension market, in order to ensure their viability in the short to medium run. Thus, with the success of India's endeavor hinging upon the reform process of which the insurance sector and pension reforms play an important role. The regulator and the players have a greater responsibility that the promise of such a huge market is tapped adequately for the benefit of the consumer. Insurance product has undergone a big change from the days when LIC, a tied agency force a loan hawked products. In the days to come, newentrants will implement multi channel strategies, the most significance being banc assurance cop rate agency for selling of insurance product in financial conglomerates. The portfolio game has shifted and the average size of policies bought has increased. The reason behind buying a risk cover has shifted . People are not buying cover for the sake of tax break. They are looking at safe guarding themselves from the risk of dying to soon or living too long. Whole life and term insurance policies are increasingly becoming more popular. Pre-liberlization and endowment and money back covers used to

account for 82 to 85 percent of policies sold by LIC. While things are going gung ho for the industry as a hole, there are quite a few challenges a head before new players can hope to complete with the state incumbent. The first task is the new player build up reach the expend their geographical spread. Only smalls portion of the country has been taped so far. Building the agency force still a channel in terms of finding right people, training them to meet the high industry standard today companies run on premium income, which is the cash flow. As a result more policies mean more course as cover need to be serviced. The univalve per policies is a key element and gets reflected in the coast ratio . On the other hand, if risk are too concentrated are need to guard against the same, as it will mean writing many more policies to match the high claim should one occur in the case of a high some assured policy. The awareness level of insurance has also brought about a certain amount of selling and marketing discipline. This is reflected in the fact that selling of life cover is not skewed to March pressure, where earlier that selling of life cover is not skewed to March pressure, where earlier LIC used to report 40 percent of total year's figure in the month alone. Now selling spread across a wider period of time.

LIFE TIME PENSION

Your financial priority in life, be it saving protection or investment depends on the stage of your life. With changing life stages your priorities will changes as well to meet this constantly evolving needs. You have to buy different policies at every stage. ICICI prudential life insurance presents LIFE TIME PENSION. A single policy that is only solution to your retirement. This solution as been developed to offer you the flexibility and control to meet your savings protection and investment needs in every stage of life. Entry Conditions of life time pension: You should between 18-60 years. The minimum annual premium is Rs. 5000/- and monthly premium is Rs. 834/-. Minimum term is ten years. Power to receive your pension in FIVE different ways: On vesting, you have the flexibility to choose from five different annuity options. 1. Life Annuity : Annuity for life. 2. Life annuity with return of purchase: Life annuity for the annuitant with the return of the purchase price to the beneficiary.

3.

Life annuity guaranteed for 5,10,15 years: Guaranteed annuity is paid for the chosen term (5/10/15 years) and after that, the annuity continues as long as the annuitant is alive.

4.

Joint life, Last Survivor with return of purchase price: In this case, the annuity if first paid to the annuitant. After the death of the annuitant, the spouse starts getting a pension, which is an amount that is equal to the annuity paid to the annuitant. After the death of the last survivor, the purchase price is returned to the beneficiary.

5.

Joint Life, Last Survivor without Return of Purchase Price: In this case, the annuity is first paid to the annuitant. After the death of the annuitant, the spouse starts getting a pension, which is an amount that is equal to the annuity paid to the annuitant.

RECRUITMENT PROCEDURE:
1. (a) LITERATURE SURVEY: IDENTICICATION OF THE SOUIRCE 2. Natural Market Friends Relatives Employer/employees Neighbours Dependent & Their references

YELLOW PAGES: It is the collection of several pages, the space of those pages are bought by high profile people of the city to publicize about there business or profession. The compilation of these pages forms yellow pages.

3.

TELEPHONE DIRECTORY: It is a book containing lists of information, usually in alphabetical order, presenting telephone numbers, address, and various other commercial and useful general information.

4.

WEBSITES: Where a company, etc has given information about themselves on the web. Web is the complicated pattern of things that are closely connected to each other.

II DATA COLLECTION:

The data had been collected of the following categories: Retire Government Employees School Teachers College Lecturers Small Business Owners Tax Consultant DATA ANALYSIS: Basis of data analysis: Job Profile Age 25 and above Higher secondary education (12th passed) (In case of urban area) Matric (10th Passed) (In case of rural area) 2. Establishing contact by: Cold calls: It refers to the system of calling randomly without having prior information about the client from the data collected through various indirect sources such as telephone directories. Personal meeting : It refers to a system in a face to face interaction is done with the candidate, so as to explain the subject matter in a much better and understandable manner and also to access his interest towards it..

3.

Fixing an appointment : In this step of the recruitment procedure the interview of the interested potential candidate is fixed with the unit manager.

4.

Interview Session : Interview of the potential candidate is conducted on the following basis. Hard worker Urge for status in society Necessity of money Flexible Capacity to handle pressure Moral conduct

5.

Recommended candidates: The recommended candidates are those who are approved by the unit manager and are called for their final interview.

6.

Final interview : At this stage the final interview is taken by Ast. Sales manager who has to adjudge candidate on some specific parameters.

7.

Completion of legal formalities : For the completion of legal formalities the selected candidate is required to bring the following documents: A copy of Bio-data Residential proof certificate

FINDINGS
1. 2. 3. 4. 5. I found that ICICI is not as accessible - as is required. LIFE TIME PENSION is having higher premium. LIFE TIME PENSION is having higher administration charges as compared with other investment modules. Lack of knowledge about customer requirements. It is difficult for working class to spare time for training.

SWOT ANALYSIS
Strengths:1. Tax advant One of the basic aims behind saving & investment is for benefit. Life time pension as an insurance product offers benefits under sec. 80 CCC. lum-sum amt. received on vesting date is also exempted under IT date. 2. Liquidity : By definition the term liquidity means availability of funds as and when required. This is the very imp. feature of this policy that policy holder can withdraw money after 3 years of starting date of policy. 3. Premium Holiday: By premium we mean the amount that a person pays in installments annually, half yearly etc. against a life insurance policy. In the present scenario the uncertainties in life are variable and imminent. Under a particular case the proponent might just not be able to pay his annual premium. LIFETIME offers an option in such a case teh proponent may not pay the premium also. The policy cover continues even if the premium is not paid. 4. Flexible Sum Assured: Our needs, securities as well as insecurities vary with time and so should our life insurance and the cover against risk that we take. LIFETIME again offers a brilliant solution by giving option to increase or decrease the sum assured or the risk covered as required under specified conditions.

5.

Investment Switching Option: Returns against our investment is one of the chief parameter. Fluctuation share markets and lower interest rates in govt. securities don't allow us to have consistent higher returns on our investment. Thus we require an option to reap the benefits of favourable conditions. LIFE TIME PENSION enables the proponent to switch the funds in equity as well as govt. securities. The name of the funds being MAXIMISER (equity), PROTECTOR (govt. securities), BALANCER (combination of govt.securities)

6.

Whole Life: LIFE TIME PENSION offer life insurance cover to a person right from the time he / she is born till the name he survives. Whereas in other insurance products there is a specified entry age and also an age when the policy ceases.

7.

Transparency Of Investment: Investment in private companies attracts a bio question of faulty fund management. Here in LIFE TIME PENSION the various charges i.e. administration charges, Fund management charge, mortality charges are disclosed right before the premiums are collected.

8.

Flexibility : Needs being a function of circumstances the person might need monetary help at any point of time. LIFE TIME PENSION offers flexibility to withdraw any amount out of the invested funds. After a specified lock in period as much as 100% of policy value at that point of time.

WEAKNESS: 1. Withdrawals reduce your death benefit by the same amount: This can be explained with the help of an example i.e. If a person has deposited Rs 18,000 p.a and the life cover is Rs. 20,0000 for the first 3 years. Then in 4 th year he has withdrawn Rs. 1,0000 which will reduce the sum assured by 1,0000 i.e. Rs. 19,0000. 2. No Fixed Return. As this is an market linked insurance plan, It does not promises any fixed return as in case with NSC, PPF. 3. Minimum premium is on the higher side: The minimum premium to be paid is Rs. 10,000. Which is slightly higher side than the often mkt. players. 4. Initial Administration Charges are high. The initial administration charges in the I st year would be 20% of the premium, for premium amounts less than Rs. 50,000. For premiums equal to or greater than Rs. 50,000, the charge would be 18% of the premium. 5. Sensitive to Stock Exchange . The unit values are subject to the ups and down in stock market. Therefore if the share market is on hike then the unit value is very high whereas in case of depression in share market the unit value can go down.

Opportunities: 1. To create awareness among masses: This means that as most of the population in India belongs to villages and literacy % is very small in villages. Therefore the company has the opportunity to create the awareness about the importance of insurance among masses. 2. It can be used as an investment tool: This product is more of an investment tool then as just insurance policy. As when we invest in any other investment modules our amount of investment increases. Here not only the investment provides higher returns, but it can be used as a short term as well as long term investment option. 3. It can be used an asset-building tool: Here it means that this type of investment provides security as that of/an asset. As assets are created to provide security in case of any mishappening i.e they can be sold and there value is expected to appreciate in near future. 4. It can be use as an key man insurance policy: Key man insurance refers to the insurance of the key in a company. As this type of insurance provides high tax saving benefits. Private companies generally prefer it.

Threats:
1. Competition from public sector: As the only and biggest competitor is L.I.C, which has a wide range of products can further stress on, their marketing activities and can attract a major market share. 2. Competition from private players: Now in this age of cutthroat competition every big company is coming into insurance sector in collaboration with foreign companies thereby making the relevance of the concept of survival of the fittest. To capture more and more market share is the sole aim of every upcoming or existing company. 3. Sensitive to taxation norms: In India most of the people take insurance not for their security needs but they take it as an tax saving device. Therefore there is a high effect of taxation norms on insurance sector .e.g. if the slab of income free from tax moves upto Rs. 15,0000 Then the people who were initially covered under tax are free from tax. So no tax saving no insurance.

Recommendation:
1. Making ICICI more accessible : Here I mean that as 80% of the population of India is rural therefore ICICI must have there branches in important towns such as Ambala, Jagadhri, not only this will increase the awareness among people more over it will help company to acquire local market and cater to their needs effectively. 2. There should be a product with similar features and low initial premium: A product like Life Time Pension in suitable for all but the initial premium which cannot be less than 18000 rs. is on the higher side , therefore the company should derive a product with similar features but with low initial premium so that it is affordable to normal service class. 3. Administration charges should be low as in comparison with mutual funds, national saving certificate (N.S.C), etc.: The company should lessen down the administration charges so that this product can have an edge over other investment modules like N.S.C, P.P.F. etc. 4. Market surveys should be conducted regularly so that to know about customer demands and changing needs: The company should know about the customers changing needs and demands by conducting market surveys which are helpful in innovating a product which suits the customers requirements. 5. There should be Training batches on weekends:

It is advised that the company should have training batches for the already serving class on weekends, so that the willing candidates can opt it as a part time business opportunity. 6. Access to rural areas: Company should target rural area and make the rural population aware about the impartment benefits of insurance.

BIBLIOGRAPHY
Printed Sources:
1. ICICI Prudential Life Insurance Company "Career Launch Program" manual. 2. ICICI Prudential Life Insurance Company Unit Linked Product Guide. 3. 4. Life Insurance Agent Pre-Licensing Course By RNIS College of insurance. Life Insurance : Changing life circumstances can leave you exposed, Outlook Money Sep. 2003.

Brochures:
ICICI Prudential Life Insurance Company Ltd., May 2004 Life Insurance Company Ltd. Birla Sunlife Life insurance Company HDFC Standard Life Insurance Company ING VYASA Life Insurance Company Websites : www.iciciprulife.com www.indiainfoline.com www.irdaindia.org

ICICI PRU LIFE # LIC

Company Plan ICICI Pru Life Lifetime pension plan LIC New Jeewan Suraksha1/ New Age of Entry (Min. & Max.) Term of Plan Minimum Premium Vesting Age Top up option 18-60 years 10-52 years Rs. 10000 50-70 years After policy Jeevan Dhara-1 (Defered Annuity Plans) 18-65 years 2-35 years Rs. 2500 50-79 years insurance No such option

minimum Rs. 10000 and in Investment Option multiples of 500 1. Protector (income) 2. Switch Option Balancer (Balanced) N.A.

3. Maximiser (Growth) 1 free switch each policy year, No such facility more than that 1% charge on switch Available after 10 years- life No such facility and rider protection continues (30 Grace days for premium payment) Policy holder can withdraw No withdrawals money after 3 years Annuity to be chosen from 4 1. annuity options 1. 2. Life annuity Life return price. 3. Joint life, last survivor 3. annuity with return of purchase price. 4. Life and 15 years annuity guaranteed for 5,10 annuity of with purchase 2. Pension for life. Pension guaranteed and thereafter. Joint and last survivor annuity to the annuitant and his / her spouse which under pension for life 5/10/15/20 years

Premium Holiday

Withdrawals Annuity option

payable to the

spouse on death of the purchaser will be 50% of that payable to the pensioner. 4. Pension for life with 5. return of purchase price. Pension for life with simple Other option 1. 2. 3. Extension of vesting 1. age Open Market Option 25% can be commuted at the time of vesting 2. 3. pension rate of increasing at a 3% p.a. Surrender Value: 90% of the premium paid is given excluding first premium. Single premium option Dating allowed the the back within same period for in 15 year

financial year for excess Riders Allowed 1. Accident Disability Rider 2. 3. Benefits Critical illness benefit rider Major surgical assistance rider and 1. Benefit

days. Term rider

Death Benefits

If life cover is opted. Sum .............. assured is paid as a lumpsum to the nominee or the spouse The plans acquires a surrender 90% of premium paid is value after full premiums for given 3 policies year are paid. year excluding first premium

Surrender Benefits

(Surrender value will not be available for the term Tax Benefits rider benefit) Sec 80 ccc and health riders Sec 80 ccc and health have tax benefit under Sec 80 riders have tax benefit D of income tax Remarks under Sec 80 D of income tax Daily NAV in the newspaper. Annuity with return of NAV on single pricing purchase price on the mechanism for rider min SA death of the Annuitent is Policy Fees & Charges is 100,00 the best option. 1. Initial administration N.A. charges: Life time pension ( with life cover) the initial charges fro premiums < 50,000 would be 20%. However the charges for the premiums> 50,000 would be a reduced 18%. 2. Insurance Charges: This is basically towards the morality charges. These are deducted by the cancellation of units on a monthly basis. The morality charges are charged on the life cover , which is the difference between the death benefit and value of the units. These charges are deducted on a monthly basis. 3. Annual fund: Management Charges:

Strengths

1. 2. 3. 4.

Annual Adm. charges if 1% p.a. for protector (income) 1.25% p.a. for maximiser (growth) & for balance fund annual investment charges ( of net asset) P.A. 5% for the protector fund & 1% maximiser and balancer funds. Option to choose Zero 1. death benefit under this product. Open market options 2. facility. Top up facility. Power in customers hands to decide how much pension he would receive. 3. 4.

Five different annuity option are available. Minimum pension payable Rs. 250 Low premium Special surrender value option.

ICICI PRU LIFE # BIRLA SUNLIFE

Company Plan ICICI Pru Life Lifetime pension plan Birla Sun Life Flexi secure life Retirement plan (regular Age of Entry (Min. & Max.) Term of Plan Minimum Premium Vesting Age Top up option 18-60 years 10-52 years Rs. 10000 50-70 years After policy -premium) 18-60 years 10 years (Min.) Rs. 5000/50-70 years insurance Additional investment up) 3 Investment options 1) 2) Nourish Growth Enrich change the

minimum Rs. 10000 and in min. Rs. 10000/- (top Investment Option multiples of 500 1. Protector (income) 2. 3. Switch Option Balancer (Balanced) Maximiser (Growth)

3) 1 free switch each policy year, Can switch

more than that 1% charge on investment option during the tenure of the policy after the first policy years. 2 switches in one Premium Holiday Withdrawals Annuity option policy years are free. Available after 10 years- life No such facility and rider protection continues Policy holder can withdraw No withdrawals money after 3 years Annuity to be chosen from 4 1. annuity options 1. 2. Life annuity Life return price. 3. Joint life, last survivor 2. annuity with return of purchase price. 4. Life annuity guaranteed for 5,10 annuity of with purchase Life years payable thereafter for the life. Life annuity with return purchase made till of price the annuity and

guaranteed for 20

less the payouts

and 15 years Other option 1. 2. 3. Extension of vesting 1. age Open Market Option 25% can be commuted 2. at the time of vesting

death

of

the be

annuitant. 25% can

commuted at the time of vesting. Life cover insurance till the face

vesting age with minimum 50000. 3. Riders Allowed 1. Accident Disability Rider 2. 3. Critical illness benefit rider Major surgical assistance rider Death Benefits If life cover is opted. Sum Policy fund or the life assured is paid as a lumpsum insurance coverage face to the nominee or the spouse amount chosen which ever is higher. The spouse will have the option to take the lump sum death benefit or purchase an annuity or from any other company Surrender Benefits in market. The plans acquires a surrender Policy fund- surrender value after full premiums for and all other outstanding 3 policies year are paid. charges. guaranteed surrender). (Min. investmetn 3. and 1. Benefit 2. Open market option. Critical illness Accident and dismemberment Term rider death amount of Rs.

return do not apply at

Tax Benefits

Sec 80 ccc and health riders Premium paid will be have tax benefit under Sec 80 eligible for tax benefits D of income tax as per sec. 80 CCC of income tax 1961. Daily NAV in the newspaper. The valuation of each NAV on single pricing investment fund is done net asset value (NAV) per as : Market Assetsliabilities/ value of current no. of Investment+current unit of each investmentcalculated mechanism for rider min SA on a unitised basis. The is 100,000

Remarks

Policy Fees & Charges

1.

Initial charges: cover)

outstanding units administration 1. The policy Life the time initial loading fee is an up front charge and varies as per premium payment year. Regular 20% 2% Excess 1% 1% mode and the policy

pension ( with life charges fro premiums < 50,000 would be 20%. charges premiums> 18%. However for the the 50,000 Yr 2nd

would be a reduced Ist

2. Insurance Charges: onwards This is basically towards the 2. Policy morality charges. These are deducted by administration the cancellation of fee of Rs. 20 per units on a monthly basis. The morality month will be charges are charged on deducted by the life cover , which is the difference cancellation of between the death units on a benefit and value of the units. These monthly basis.

3.

charges are deducted 3. on a monthly basis. Annual fund: Management Charges: Annual Adm. charges if 1% p.a. for protector (income) 1.25% p.a. for fund investment maximiser annual charges (growth) & for balance

Fund 2

switching switches

charges: in a year between investment fund option are free. For additional switch, a charge not 1% 0.5%) amount transferred will be levied. Plan in competition with the ICICI pru life's life time. Minimum guaranteed investment return @ 3%. Market option facility. exceeding (currently of the every

( of net asset) P.A. 5% for the protector fund & 1% maximiser and balancer funds. Strengths 1. 2. 3. 4. Option to choose Zero 1. death benefit under this product. Open market options 2. facility. Top up facility. Power in customers hands to decide how much pension he would receive. 3.

ICICI PRU LIFE # HDFC STANDARD LIFE

Company Plan Age of Entry (Min. & Max.) Term of Plan Minimum Premium Vesting Age Top up option ICICI Pru Life Lifetime pension plan 18-60 years 10-52 years Rs. 10000 50-70 years After policy HDFC Standard life Persona pension plan 18-60 years

10 years Rs. 2500/Min. 50-75 insurance No such facility

minimum Rs. 10000 and in Investment Option multiples of 500 1. Protector (income) 2. Switch Option Balancer (Balanced) Investment options

depends on the vesting

3. Maximiser (Growth) age 1 free switch each policy year, No such facility more than that 1% charge on switch Available after 10 years- life No such facility and rider protection continues Policy holder can withdraw No withdrawal money after 3 years Annuity to be chosen from 4 Not a unit link plan annuity options 1. 2. Life annuity Life return price. 3. Joint life, last survivor annuity with return of purchase price. 4. Life annuity guaranteed for 5,10 annuity of with purchase

Premium Holiday Withdrawals Annuity option

Other option

1. 2. 3.

and 15 years Extension of vesting age Open Market Option 25% can be commuted at the time of vesting Accident and Disability Rider Benefit

Riders Allowed

1.

2. 3.

Critical illness benefit rider Major surgical assistance rider

Death Benefits

If life cover is opted. Sum

assured is paid as a lumpsum Surrender Benefits to the nominee or the spouse The plans acquires a surrender value after full premiums for Tax Benefits 3 policies year are paid. Sec 80 ccc and health riders have tax benefit under Sec 80 Remarks D of income tax Daily NAV in the newspaper. NAV on single pricing mechanism for rider min SA Policy Fees & Charges is 100,000 1. Initial charges: cover) administration Life the time initial

pension ( with life charges fro premiums < 50,000 would be 20%. charges premiums> 18%. 2. Insurance Charges: This charges. deducted is basically These by are the towards the morality However for the the 50,000

would be a reduced

cancellation of units on a monthly basis. The morality charges are charged on the life cover , which is the difference between the death benefit and value of the units.

These basis. 3.

charges

are

deducted on a monthly Annual fund: Management Charges: Annual Adm. charges if 1% p.a. for protector (income) 1.25% p.a. for fund investment maximiser annual charges (growth) & for balance

( of net asset) P.A. 5% for the protector fund & 1% maximiser and balancer funds.

Strengths

1.

Option to choose Zero death benefit under this product.

2. 3. 4.

Open market options facility. Top up facility. Power in customers hands to decide how much pension he would receive.

ICICI PRU LIFE # ING VYASA

Company Plan Age of Entry (Min. & Max.) Term of Plan Minimum Premium Vesting Age Top up option ICICI Pru Life Lifetime pension plan 18-60 years 10-52 years Rs. 10000 50-70 years After policy multiples of 500 ING Vyasa Best years retirement plan 18-65 years

5-52 years 5000/45-70 years insurance Make contribution over contribution in any year before the vesting age . The minimum amount of such top up shall be at least Rs. 2000 No such facility

minimum Rs. 10000 and in and above the regular

Investment Option

1. 2.

Protector (income) Balancer (Balanced)

Switch Option

3. Maximiser (Growth) 1 free switch each policy No such facility year, more than that 1% charge on switch Available after 10 years- life Min. Rs. 2000 per year is and rider protection continues necessary Policy holder can withdraw No such facility money after 3 years Annuity to be chosen from 4 annuity options 1. 2. Life annuity Life return price. 3. Joint life, last survivor annuity with return of purchase price. 4. Life annuity guaranteed for 5,10 annuity of with purchase

Premium Holiday Withdrawals Annuity option

Other option

1.

and 15 years Extension of vesting All contribution will be

age 2. 3. Open Market Option 25% of vesting can

transferred individual

to

your pension

be account and charges are will be deducted. The balance in IPA will be invested in ING Vyasa capital guaranteed plan which follows:
Types of Assets 1. Govt. Securities 2. Govt. Sec. Or other approved securities 3. Balance in approved investment Not Exceeding 60% %age not less than 20% not less than 40%

commuted at the time applicable

is

invested

as

Riders Allowed

1.

Accident Disability Rider

and Term rider Benefit

2. 3. Benefits Death Benefits

Critical illness benefit rider Major surgical assistance rider

If life cover is opted. Sum In case of the death assured is paid as a lumpsum spouse to the nominee or the spouse will to have differ the the of following options purchase

immunity if the age of spouse is less than 45 years. To encash up to

5% of the benefit amount outstanding each year up to the age of 45 years and then apply the balance . If any at age 45 to purchase Surrender Benefits The plans acquires a The annuity. policy can be

surrender value after full surrendered for cash after premiums for 3 policies year 3 years. The guaranteed are paid. surrender value is 60% of the balance in IPA at the Tax Benefits time of surrender. Sec 80 ccc and health riders Under Sec 80CCC and 10 have tax benefit under Sec 80 (10A) Remarks facility of tax D of income tax exemption is provided Daily NAV in the newspaper. NAV on single pricing mechanism for rider min SA Policy Fees & Charges is 100,000 1. Initial administration charges: cover) Life the time initial pension ( with life charges fro premiums < 50,000 would be 20%. charges premiums> 18%. 2. Insurance Charges: This is basically Bal. in IPA
Rs. 50000

Initial charges Rs. 700 (one time) Contribution charges

All All

first

year

However for

the contribution 10% the subsequent Annual management fees

Ann. Mgt. Fees 2.5%

50,000 contribution 3%

would be a reduced

towards the morality Up to

charges. deducted

These by

are 50001-75000 2.0 % the 75001-10000 1.75%

100001-more 1.5%

cancellation of units on a monthly basis. The morality charges are charged on the life cover , which is the difference between the death benefit and value of the units. These charges on are a deducted 3. Annual fund: Management Charges: Annual Adm. charges if 1% p.a. p.a. balance for for fund protector 1.25% for annual charges (income)

monthly basis.

maximiser (growth) & investment ( of net

asset) P.A. 5% for the protector fund & 1% maximiser Strengths 1. and Market facility 2. Lump amount exempted sum received under option balancer funds. Option to choose Zero 1. death benefit under this product. 2. 3. 4. Open market options facility. Top up facility. Power in customers hands to decide how much pension he

on vesting date is 10(10A) IT act.

would receive.

MARKET SHARE OF PRIVATE INSURANCE PLAYERS

25% 6% 8% 10%

39%

12%

ICICI Prue Life Birla Sunlife HDFC Standard Bajaj Allianz ING Vyasa Others

Motive Behind Pension Plan

Protection 18% 42% 23% 17% Tax Saving Secure Investment Savings

COMPANY PROFILE ICICI Prudential Life Insurance Company is a joint venture between ICICI Bank, a premier financial powerhouse and prudential plc, a leading international financial services group headquartered in the United Kingdom. ICICI Prudential was amongst the first private sector insurance companies to begin operations in December 2000 after receiving approval from Insurance Regulatory Development Authority (IRDA). ICICI Prudential's equity base stands at Rs. 6.75 billion with ICICI Bank and Prudential plc holding 74% and 26% stake respectively. As of December 31,2003 the company had issued over 550,000 policies, with a sum assured exceeding Rs. 13,000 crore and premium income of over Rs. 1000 crore. The company has a network of about 30,000 advisors; as well as banc assurance tie-ups. Today the company is the #1 private life insurer in the country.

ICICI Venture Funds Management Company Ltd. ICICI Venture Funds Management Company Limited (erstwhile TDICI Ltd.) was set up by ICICI and UTI as the countrys first venture capital finance company in July 1988. ICICI Venture primarily provides assistance to small and medium industries in the form conceived of by technocrat direct entrepreneurs project loans,

subscriptions to equity and a quasi-equity instrument called conditional loan spread across knowledge-based sectors like information technology, healthcare and services. Operations During 2000-01, assistance sanctioned and disbursed by ICICI Venture increased to Rs.2,036 million and Rs.1,849 million from Rs.1,262 million and Rs.953 million in 19992000, respectively. Up to end-March 2001, sanctions and disbursements aggregated Rs.6,380 million and Rs.5,814 million, respectively. Bulk of assistance sanctioned and disbursed during the year was by way of underwriting & direct subscriptions which increased nearly two fold, whereas sanctions under rupee loans declined considerably (Table 18.4 & Appendix 141). TABLE 18.6 - LIABILITIES AND ASSETS (Rs. million) ASSETS A. LIABILITIES 1. Paid-up capital 30.0 30.0 2. Reserves and surplus 286.6 230.6 3. Borrowings from ICICI 55.0 39.0 4. Others 94.4 39.7 Total 466.0 339.3 1. Cash and bank balances 70.5 39.3 2. Investments 217.3 95.0 3. Loans and advances 15.0 43.3 4. Other assets 163.2 161.7 Total 466.0 339.3