Chapter 1

Insurance industry overview

Historical perspective Industry reforms

Insurance industry overview:

With the largest number of life insurance policies in force in the world, Insurance happens to be a mega opportunity in India. Its a business growing at the rate of 15-20 per cent annually and presently is of the order of Rs 1560.41 billion (for the financial year 2006 2007). Together with banking services, it adds about 7% to the countrys Gross Domestic Product (GDP). The gross premium collection is nearly 2% of GDP and funds available with LIC for investments are 8% of the GDP. Even so nearly 65% of the Indian population is without life insurance cover while health insurance and non-life insurance continues to be below international standards. A large part of our population is also subject to weak social security and pension systems with hardly any old age income security. This in itself is an indicator that growth potential for the insurance sector in India is immense. A well-developed and evolved insurance sector is needed for economic development as it provides long term funds for infrastructure development and strengthens the risk taking ability of individuals. It is estimated that over the next ten years India would require investments of the order of one trillion US dollars. The Insurance sector, to some extent, can enable investments in infrastructure development to sustain the economic growth of the country. (Source: www.indiacore.com)

Historical perspective:
The history of life insurance in India dates back to 1818 when it was conceived as a means to provide for English Widows. Interestingly in those days a higher premium was charged for Indian lives than the non Indian lives, as Indian lives were considered more risky to cover. The Bombay Mutual Life Insurance Society started its business in 1870. It was the first company to charge the same premium for both Indian and non-Indian lives. The Oriental Assurance Company was established in 1880. The General insurance business in India, on the other hand, can trace its roots to Triton Insurance Company Limited, the first general insurance company established in the year 1850 in Calcutta by the British. Till the end of the nineteenth century insurance business was almost entirely in the hands of overseas companies. Insurance regulation formally began in India with the passing of the Life Insurance Companies Act of 1912 and the Provident Fund Act of 1912. Several frauds during the 1920's and 1930's sullied insurance business in India. By 1938 there were 176 insurance companies. The first comprehensive legislation was introduced with the Insurance Act of 1938 that provided strict State Control over the insurance business. The insurance business grew at a faster pace after independence. Indian companies strengthened their hold on this business but despite the growth that was witnessed, insurance remained an urban phenomenon. The Government of India in 1956, brought together over 240
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private life insurers and provident societies under one nationalized monopoly corporation and Life Insurance Corporation (LIC) was born. Nationalization was justified on the grounds that it would create the much needed funds for rapid industrialization. This was in conformity with the Government's chosen path of State led planning and development. The non-life insurance business continued to thrive with the private sector till 1972. Their operations were restricted to organized trade and industry in large cities. The general insurance industry was nationalized in 1972. With this, nearly 107 insurers were amalgamated and grouped into four companies- National Insurance Company, New India Assurance Company, Oriental Insurance Company and United India Insurance Company. These were subsidiaries of the General Insurance Company (GIC).

The key milestones:

1912: The Indian Life Assurance Companies Act enacted as the first statute to regulate the life insurance business. 1928: The Indian Insurance Companies Act enacted to enable the government to collect statistical information about both life and non-life insurance businesses. 1938: Earlier legislation consolidated and amended by the Insurance Act with the objective of protecting the interests of the insuring public. 1956: 245 Indian and foreign insurers along with provident societies were taken over by the central government and nationalized. LIC was formed by an Act of Parliament- LIC Act 1956- with a capital contribution of Rs. 5 crore from the Government of India.

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

Chapter 2
Introduction to HDFC
Key players Key strengths Corporate objective

Introduction to HDFC:
HDFC Life, one of India's leading private life insurance companies, offers a range of individual and group insurance solutions. It is a joint venture between Housing Development Finance Corporation Limited (HDFC), India's leading housing finance institution and Standard Life plc, the leading provider of financial services in the United Kingdom. HDFC Ltd. holds 72.37% and Standard Life (Mauritius Holding) Ltd. holds 26.00% of equity in the joint venture, while the rest is held by others. HDFC Life's product portfolio comprises solutions, which meet various customer needs such as Protection, Pension, Savings, Investment and Health. Customers have the added advantage of customizing the plans, by adding optional benefits called riders, at a nominal price. The company currently has 25 retail and 9 group products in its portfolio, along with 10 optional rider benefits catering to the savings, investment, protection and retirement needs of customers. HDFC Life continues to have one of the widest reaches among new insurance companies with about 500 branches in India touching customers in over 900 cities and Towns. The Company has also established a liaison office in Dubai. HDFC Life has a strong presence in its existing markets with a strong base of Financial Consultants. Associate Companies: HDFC limited HDFC bank HDFC mutual fund HDFC sales HDFC ERGO general insurance HDFC financial services HDFC securities HDFC Red

Other Companies HDFC Trustee Company Ltd.; GRUH Finance Ltd.; HDFC Developers Ltd. ; HDFC Property Ventures Ltd. ; HDFC Ventures Trustee Company Ltd.; HDFC Investments Ltd.; HDFC Holdings Ltd. ; Credit Information Bureau (India) Ltd; HDFC Securities; HDB Financial Services.

All Products Term Plans Women's Plans Savings & Investment Plans Health Plans Children's Plans Group Plans

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

Key strengths
Financial Expertise As a joint venture of leading financial services groups, HDFC standard Life has the financial expertise required to manage long-term investments safely and efficiently. Range of Solutions HDFC SLIC has a range of individual and group solutions, which can be easily customized to specific needs. These group solutions have been designed to offer complete flexibility combined with a low charging structure. Strong Ethical Values: HDFC SLIC is an ethical and Cultural Organization. False selling or false commitment with the customers is not allowed. Most respected Private Insurance Company HDFC SLIC was awarded No-1 Private Insurance Company in 2004 by the World Class Magazine Business World for Integrity, Innovation and Customer Care.
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CORPORATE OBJECTIVE Vision 'The most successful and admired life insurance company, which means that we are the most trusted company, the easiest to deal with, offer the best value for money, and set the standards in the industry'. 'The most obvious choice for all'. Values Integrity Innovation Customer centric People Care One for all Teamwork Joy and Simplicity

Chapter 3
Research design
Title of the study Objective of the study Research methodology Types of data collected Sampling

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

The title of my study:

To compare the traditional insurance products & ULIPS. And to know the customer approach toward different products.

Objectives of study:
To analysis the product details of HDFC Standard life Insurance Company limited. To find Points of Parity and Points of Difference of different from HDFC life. To find out factors that influence customers to purchase insurance policies and give suggestions for further improvement.

Research methodology
Type of data collected: There are two types of data used. They are primary and secondary data. Primary data is defined as data that is collected from original sources for a specific purpose. Secondary data is data collected from indirect sources. (Source: Research Methodology, By C. R. Kothari)

Primary sources: These include the survey or questionnaire method, telephonic interview as well as the personal interview methods of data collection. Secondary sources: These include books, the internet, company brochures, product brochures, the company website, competitors websites etc, newspaper articles etc.

Sampling
Sampling refers to the method of selecting a sample from a given universe with a view to draw conclusions about that universe. A sample is a representative of the universe selected for study. Sample size The sample size for the survey conducted was 200 respondents. Sampling technique Random sampling technique was used in the survey conducted. Plan of analysis Tables were used for the analysis of the collected data. The data is also neatly presented with the help of statistical tools such as graphs and pie charts. Percentages and averages have also been used to represent data clearly and effectively. The samples collected from the residents of Visakhapatnam mostly near the pedda waltair area and mainly the students of Andhra university, and some of the data was collected online through the Google forms.

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Chapter 4
Products and services
Different types of products Brief description of traditional and ULIPs

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Products & services

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

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

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

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

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

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 Group Products
One-stop shop for employee-benefit solutions HDFC Standard Life has the most comprehensive list of products for progressive employers who wish to provide the best and most innovative employee benefit solutions to their employees. It offers different products for different needs of employers ranging from term insurance plans for pure protection to voluntary plans such as superannuation and leave encashment. HDFC SLIC offers the following group products to esteemed corporate benefits.

Brief description of some of the important traditional and ULIP plans:

TRADITIONAL PLANS:

Why do I need Term Plans? Term Plans help you shield your family from uncertainties in life due to financial losses in terms of loss of income that may dawn upon them incase of your untimely demise or critical illness. Securing the future of one's family is one of the most important goals of life. Term Plans go a long way in ensuring your family's financial independence in the event of your unfortunate demise or critical illness. They are all the more important if you are the chief wage earner in your family. No matter how much you have saved or invested over the years, sudden eventualities, such as death or critical illness, always tend to affect your family financially apart from the huge emotional loss. For instance, consider the example of Amit who is a healthy 25 year old guy with a income of Rs. 1,00,000/- per annum. Let's assume his income increases at a rate of 10% per annum, while the inflation rate is around 4%; this is how his income chart will look like, until he retires at the age of 60 years. At 50 years of age, Amit's real income would have been around Rs. 10,00,000/- per annum. However, in case of Amit's unfortunate demise at an early age of 42 years, the loss of income to his family would be nearly Rs. 5,00,000/- per annum.

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However, with a Protection Plan, a mere sum of Rs. 2,280/- annually (exclusive of service tax & educational cess) can help Amit provide a financial cushion of up to Rs. 10,00,000/- for his family over a period of 25 years.

1. HDFC Life Click 2 Protect Looking for an easier way to insure yourself and secure your loved ones happiness? You know that the solution is a term insurance plan and you seek a plan that is convenient to buy and is affordable. Your search ends here. HDFC Life is happy to present the perfect plan for your protection needs HDFC Life Click 2 Protect! HDFC Life Click 2 Protect is a term insurance plan. This plan provides for a payment of a lump sum in the event of your unfortunate death during the policy term. Features

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Advantages Buy this plan at click of button , anytime & anywhere High cover at a very nominal cost. Flexibility to choose the Sum Assured and policy term Attractive premium rates for Non tobacco user and those with healthier lifestyle. Tax benefits under sections 80Cand 10(10D) of Income Tax Act, 1961.

2. HDFC Loan Cover Term Assurance Plan This plan aims to protect your family from your loan liabilities in case of your unfortunate demise within the policy term. It provides the beneficiary with a lump sum amount, which is a decreasing percentage of the initial Sum Assured. This means that as the outstanding loan decreases as per the loan schedule, the cover under the policy also decreases as per the policy schedule. Features

Advantages Flexibility to choose the Sum Assured. Decreasing Sum Assurance as the outstanding loan decreases ensures that you do not pay for the protection you don't need. Additional Optional Benefit is available at a nominal cost. Option of paying single premium or regular premium. Tax benefits are offered under section 80C, 80 D and 10(10D) of the Income Tax Act, 1961

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ULIPS
Why do I need Savings & Investment Plans? You have always given your family the very best. And there is no reason why they shouldn't get the very best in the future too. As a judicious family man, your priority is to secure the well-being of those who depend on you. Not just for today, but also in the long term. More importantly, you have to ensure that your family's future expenses are taken care, even if something unfortunate were to happen to you. A big factor that you need to consider while building your wealth is inflation. It has a dual impact on your hard-earned savings. Inflation not only erodes your current purchasing power but also magnifies your monetary requirements for the future. Sample this: An 35 Year individual needs to invest Rs. 36,000/- per year with 8% returns to build a corpus of Rs. 10,00,000/- by the age of 50 Years.

However, Rs. 10,00,000/- after 15 years would be worth roughly around half of what it is today once adjusted for inflation at the rate of 4%. Therefore, an individual will need to save nearer to Rs 50,000/- annually to reach your targeted savings at the age of 50 Years, if you consider inflation. Our Savings & Investment Plans provide you the assurance of lump sum funds for your and your family's future expenses. While providing an excellent savings tool for your short term and long term financial goals, these plans also assure your family a certain sum by way of an insurance cover. With HDFC Standard Life's range of Saving & Investment Plans, you can therefore ensure that your family always remains financially independent, even if you are not around.

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1. HDFC SL Crest Any uncertainty should not affect your plans. Be it of life, or of markets. You want to secure happiness for yourself and your loved ones. We present HDFC SL Crest insurance cum investment plan that provides valuable financial protection to your family when needed the most along with an investment option for certainty of highest NAV along with a guarantee on returns*. So that when you reap the returns of life, they are on crests not on lows. In this plan you can choose to invest in either of two investments options- Highest NAV Guarantee Fund or Free Asset Allocation Option. This plan is a unit linked plan with insurance coverage that helps you achieve long term savings. Features

Advantages Choice of two Investment Options - Highest NAV Guarantee Fund or Free Asset Allocation Option. Benefit of minimum guaranteed NAV of Rs. 15 at maturity *. On maturity you will receive the Fund value as per the investment option selected. This plan provides valuable protection to your family in case you are not around. In case of your unfortunate demise during the policy term, we will pay the amount higher of your Sum Assured (less partial withdrawals) or your total fund value to your family. Please refer to product brochure for details. This plan can be taken by filling Short Medical Questionnaire, which may not require you to go for medicals. Kindly refer to the product brochure for details. Tax benefits are offered under section 80C and 10(10D) of the Income Tax Act, 1961

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2. HDFC Life ProGrowth Plus You work hard to attain your dreams. Your money should work harder so that you can attain your dreams and aspirations. Investing in a unit linked insurance plan is a nice way to build wealth and also enjoy life insurance cover. We understand that you would like to actively manage your own investment, and prefer to create your own investment strategy. We present HDFC Life ProGrowth Plus, a simple savings-cum-insurance plan that will enable you to enjoy life cover and benefit from comfort of creating your own investment strategies.This ULIP plan aims to help you achieve long term savings while providing insurance coverage as per option selected by you. i.e. Life and Extra Life. Features

; Advantages This plan provides valuable protection to your family in case you are not around. In case of your unfortunate demise during the policy term, we will pay the greater of the Sum Assured or your total fund value to your nominee You can choose any of the following 2 plan options as per your requirement. o Life Option = Death Benefit o Extra Life Option = Death Benefit + Accidental Death Benefit On maturity, you can take the Fund Value at the prevailing unit prices as lump sum or you can opt for settlement option. You have flexibility of creating your own investment strategies, as per your risk and return appetite You have flexibility to make partial withdrawals to meet any unplanned expenses Tax benefits are offered under section 80C and 10(10D) of the Income Tax Act, 1961, as per provisions contained therein.

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Basic differences of traditional & ULIP plans

Types of Savings & Investment Plans Type Traditional Plans Unit Linked Insurance Plans

Regular Premium

HDFC SL New Money Back Plan HDFC Assurance Plan HDFC Savings Assurance Plan

HDFC SL ProGrowth Super II HDFC SL ProGrowth Flexi HDFC Life ProGrowth Plus HDFC Life Smart Woman Plan

HDFC Endowment Assurance Plan

HDFC Life Sampoorn Samridhi Insurance Plan

Single Premium/ Investment

HDFC Single Premium Whole of Life Insurance Plan

HDFC SL ProGrowth Maximiser HDFC Life Invest Wise Plan

Limited Premium Payment

HDFC SL ClassicAssure Insurance Plan

HDFC SL Crest

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Traditional plan
a) Where investment is made by insurance company on your behalf b) Where return is in the form of bonus on maturity HDFC SL Endowment Gain Insurance Plan: With HDFC SL Endowment Gain Insurance Plan, you can be financially prepared for the future and can fulfill your dreams & aspirations. This plan also offers financial protection to your loved ones when they need it the most, enabling you to live life with peace of mind. Enjoy choice of additional optional benefits and Large Sum Assured discount. HDFC SL ClassicAssure Insurance Plan : With HDFC SL ClassicAssure Insurance Plan, you can be financially prepared for the future and can fulfill your dreams & aspirations. Enjoy the benefits of paying premiums for 7 years only and Large Sum Assured discount.

HDFC Endowment Assurance Plan: Secure the well-being of those who depend on you for the long term. With our HDFC Endowment Assurance Plan, you can start building your savings today and ensure that your family remains financially independent, even when you are not around. This 'With Profits plan is designed to secure your family's future by giving your family a guaranteed lump sum on maturity or in case of your unfortunate demise, early into the policy term.

HDFC Money Back Plan: With this plan you will get regular cash back at periodic intervals, so that you can fulfil your dreams & aspirations. This plan also offers the financial protection to your loved ones when they need it the most, enabling you to live life with peace of mind.

HDFC Single Premium Whole of Life Plan: This Single Premium plan is well suited to meet your long-term investment needs and help you maintain your familys financial independence. This single premium investment plan is a Whole of Life plan aimed at providing long-term real growth of
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your money.

HDFC Life Sampoorn Samridhi Insurance Plan: With HDFC Life Sampoorn Samridhi Insurance Plan, you can be financially prepared for the future and can fulfil your dreams & aspirations. This plan offers financial protection to your loved ones when they need it the most, enabling you and your family live life with peace of mind and sar utha ke !

ULIP plans
a) Where the investment decisions taken by yourself b) Where the choice of investment and the investment risk you take is in your control. c) Where the return is in the form of growth in the NAV.

ProGrowth Super II: You can start building your savings today and ensure that your family remains financially independent, even when you are not around. This Unit Linked Plan also gives you with an outstanding investment opportunity to maximise your savings by providing you a choice of funds. This ULIP offers range of the optional benefits that will offer you comprehensive coverage. Crest: We present HDFC SL Crest insurance cum investment plan that provides an option for certainty of highest NAV along with a guarantee on returns. This insurance plan provides valuable financial protection to your family when needed the most, so that when you reap the returns of life, they are on crests not on lows. ProGrowth Plus: Your money should work harder so that you can attain your dreams and aspirations. Investing in a unit linked insurance plan is a nice way to build wealth and also enjoy life insurance cover. We present HDFC Life ProGrowth Plus, a simple savings-cum-insurance plan that will enable you to enjoy life cover and benefit from market linked returns. This plan allows you to create your own investment strategy by switching and redirecting.
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ProGrowth Flexi: With HDFC SL ProGrowth Flexi, you have a smart savings-cum-insurance plan that will enable you to simply provide the finest for your loved ones. In this plan you also enjoy life insurance coverage so that your loved ones financial future is secured even in your absence. ProGrowth Maximsier: IIn HDFC SL ProGrowth Maximiser, you get the valuable life insurance cover along with the choice of investing in any one of 3 different Investment Options. This single premium plan strives to maximise your returns so that ensuring the best for your loved ones is easy.

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Why HDFC???
HDFC Standard Life believes that establishing a strong and ethical foundation is an essential prerequisite for long-term sustainable growth. To ensure this, we have concentrated our focus on expansion of branch network, organising an efficient and well trained sales force, and setting up appropriate systems and processes with optimum use of technology. As all these areas form the basic infrastructure for establishing the highest possible customer service standards. Our core values are drilled down to all levels of employees, as these are inviolable. We continue to promote high integrity in business practices and shun short cuts and unethical practices, as we wish to be perceived as an institution with high moral standing. Since our inception in 2000, when the Indian insurance space was opened for private participation, we have consistently focused on setting benchmarks in all aspect on insurance business. Being the first private player to be registered with the IRDA and the first to issue a policy on December 12, 2000, our differentiators are: Strong Promoters HDFC Standard Life is a strong, financially secure business supported by two strong and secure promoters HDFC Limited and Standard Life. HDFC Limited excellent brand strength emerges from its unrelenting focus on corporate governance, high standards of ethics and clarity of vision. Standard Life is a strong, financially secure business and a market leader in the UK Life & Pensions sector. Preferred and Trusted Brand Our brand has managed to set a new standard in the Indian life insurance communication space. We were the first private life insurer to break the ice using the idea of self-respect instead of 'death' to convey our brand proposition (Sar Utha Ke Jiyo). Today, we are one of the few brands that customers recognize, like and prefer to do business. Moreover, our brand thought, Sar Utha Ke Jiyo, is the most recalled campaign in its category. Investment Philosophy We follow a conservative investment management philosophy to ensure that our customer's money is looked after well. The investment policies and actions are regularly monitored by a formal Investment Committee comprising non-executive directors and the Principal Officer & Executive Director.
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As a life insurance company, we understand that customers have invested their savings with us for the long term, with specific objectives in mind. Thus, our investment focus is based on the primary objective of protecting and generating good, consistent, and stable investment returns to match the investor's long-term objective and return expectations, irrespective of the market condition. Need-Based Selling Approach Despite the criticality of life insurance, sales in the industry have been characterized by over reliance on tax benefits and limited advice-based selling. Our eight-step structured sales process 'Disha' however, helps customers understand their latent needs at the first instance itself without focusing on product features or tax benefits. Need-based selling process, 'Disha', the first of its kinds in the industry, looks at the whole financial picture. Customers see a plan not piecemeal product selling. Risk Control Framework HDFC Standard Life has fully implemented a risk control framework to ensure that all types of risks (not just financial) are identified and measured. These are regularly reported to the board and this ensures that the company management and board members are fully aware of any risks and the actions taken to ensure they are mitigated. Focus on Training Training is an integral part of our business strategy. Almost all employees have undergone training to enhance their technical skills or the softer behavioural skills to be able to deliver the service standards that our company has set for itself. Besides the mandatory training that Financial Consultants have to undergo prior to being licensed, we have developed and implemented various training modules covering various aspects including product knowledge, selling skills, objection handling skills and so on. Focus on Long-Term Value HDFC Standard Life do not focus in the business of ramping up the topline only, but to create long-term value for policyholders, shareholders, and partners. Today, we are extremely satisfied with the base that we have created for the long-term success of this company.

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 Transparent Dealing We are one of the few companies whose product details, pricing, clauses are clearly communicated to help customers take the right decision. Strict Compliance with Regulations We have initiated and implemented many new processes, some of which were found useful by the IRDA and later made mandatory for the entire industry.The agents who successfully completed this training only, were authorized by the company to sell ULIPs. This has now been made compulsory by IRDA for all insurance companies under the new Unit Linked Guidelines. Diversified Product Portfolio HDFC Standard Life's wide and diversified product portfolio help individuals meet their various needs, be it: Protection: Need for a sound income protection in case of your unfortunate demise Investment: Need to ensure long-term real growth of your money Savings: Save for the milestones and protect your savings too Pension: Need to save for a comfortable life post retirement Health: Cover for health related exigencies

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TAX benefits
Income Tax Section Sec. 80C Gross Annual Salary Across all income slabs How Much Tax Can You Save? Upto Rs. 30,900/saved on investment of Rs. 1,00,000/Upto Rs. 30,900/saved on Investment of Rs.1,00,000/Upto Rs. 9,270/saved on investment of Rs. 30,000/(Inclusive of Rs.15,000/towards health insurance of parents) Upto Rs. 10,815/saved on investment of Rs.35,000/(Inclusive of Rs. 20,000/- towards health insurance of parents who are senior citizens) HDFC Standard Life Plans All our Life Insurance Plans

Sec. 80CCC

Across all income slabs

All our Plans

Pension

Sec. D*

80

Across all income slabs

All our Health Insurance Plans All the health insurance riders available with our Conventional Plans

Total Savings Possible **

Rs. 41,715/

Rs. 30,900/- under Sec. 80C and Sec. 80CCC Rs. 9,270/- or Rs. 10,815/- under Sec. 80D
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Above figures calculated for a male with gross annual income exceeding Rs. 5,00,000/Under Sec. 10(10D), the benefits received by you are completely taxfree

Sec. 10 (10)D

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Chapter 5
Competitive analysis
Different competitors Marketing problems of HDFC

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Competitive analysis
LIFE INSURANCE CORPORATION OF INDIA (LIC): LIC has an excellent money back policy which provides for periodic payments of partial survival benefits as long as the policy holder is alive. 20% of the sum assured is payable after 5, 10, 15 and 20 years and the balance 40% is payable at the 20th year along with accrued bonus. (www.lic.com) For a 25 years term , 15% of the sum assured becomes payable after 5,10,15 and 20 years and the balance 40% plus the accrued bonus becomes payable at the 25th year. An important feature of these types of policies is that in the event of the death of the policy holder at any time within the policy term the death claim comprises of full sum assured without deducting any of the survival benefit amounts which have already been paid. The bonus is also calculated on the full sum assured. HDFC SLIC does not have a money back policy. It could offer a money back plan and capture some portion of this market. While marketing insurance products I found that many customers wanted to purchase these plans. LIC offers 66 different plans; plans are formulated for specific occasions whole life plans, term assurance plans, money back plan for women, child plans, plans for the handicapped individuals, endowment assurance plans, plans for high worth individuals, pension plans, unit linked plans, special plans, social security schemes diversified portfolio of products. HDFC SLIC could diversify its product portfolio. It could add more plans for high worth individuals and women. ICICI PRUDENTIAL ICICI Prudential is a stiff competitor for HDFC SLIC. The company is a merger between ICICI Bank which is the biggest private bank in India and Prudential Plc which is a global life insurance company. The company has an investment plan which is market related Invest Shield Life. In this plan even if the market falls, the premium will be returned to investors. It is a guaranteed plan which ensures the company carefully invests your money. The stock market performance of ICICI Prudential is much better than HDFC SLIC. The returns on the growth fund were 46.28% compared to the 42.70% offered by HDFC SLIC. Customers are attracted by higher returns and this is a plus point for Prudential. The company is very well advertised. The advertisements are showcased in movies, television, newspapers, magazines, bill boards, radio etc. The company has an excellent brand ambassador Mr. Amitabh Bacchan. His promotion of the company builds trust and faith in the minds of our people. However the charges are very high in the plans
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offered by ICICI Prudential. It is 35% during the first year, 15% in the next year and 3% from the third year onwards. Also a higher minimum premium of Rs. 8000 is charged. Hence the policies are not accessible to the lower strata of the society. (Source: www.iciciprulife.com) BIRLA SUN LIFE Birla Sun Life Insurance Company Limited is a joint venture between The Aditya Birla Group, one of the largest business houses in India and Sun Life Financial Inc., a leading international financial services organization. The local knowledge of the Aditya Birla Group combined with the expertise of Sun Life Financial Inc., offers a formidable protection for your future. (Source: www.birlasunlife.com) The Aditya Birla Group has a turnover close to Rs. 33000 crores with a market capitalization of Rs. 53400 crores (as on 31st March 2007). It has over 72000 employees across all its units worldwide. It is led by its Chairman - Mr. Kumar Mangalam Birla. Some of the key organizations within the group are Hindalco and Grasim. Sun Life Financial Inc. and its partners today have operations in key markets worldwide, including Canada, the United States, the United Kingdom, Hong Kong, the Philippines, Japan, Indonesia, India, China and Bermuda. It had assets under management of over US$343 billion, as on 31st March 2007. The company is a leading player in the life insurance market in Canada. Being a customer centric company, BSLI has invested heavily in technology to build world class processing capabilities. BSLI has covered more than a million lives since inception and its customer base is spread across more than 1000 towns and cities in India. All this has assisted the company in cementing its place amongst the leaders in the industry in terms of new business premium income. The company has a capital base of 520 crores as on 31st July, 2007. Its Flexi Life Line Plan offers life long insurance cover till the policy holder is 100 years of age. There are guaranteed returns of 3% p.a. net of policy charges after every 5 years from the eleventh policy year onwards. However the charges are very high. The initial charges for the first year are 65%. Hence the fund value is greatly reduced.

BAJAJ ALLIANZ Bajaj Allianz is a joint venture between Allianz AG with over 110 years of experience in over 70 countries and Bajaj Auto, a trusted automobile manufacturer for over 55 years in the Indian market. Together they are committed to offering you financial solutions that provide all the security you need for your family and yourself. Bajaj Allianz is the number one private life insurer for the year 2005 2006. It is leading by 78 crores. It has experienced a whopping growth of 216% in the last financial year.

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The company has sold 13, 00,000 policies and is backed by 550 offices across India. It offers travel insurance, motor insurance, home insurance, health and corporate insurance. The mortality charges are lower than HDFC SLIC. The entry age could be zero years which allow even new born babies to be insured. (Source: www.bajajallianz.com) TATA AIG Tata Aig is a joint venture between the Tata group and American International Group Inc. In one of the plans the company offers hospital cash benefit wherein it will pay Rs. 2500 per day in case of hospitalization and Rs.12.5 lakhs in case the person suffers from any critical illness. Annual premium is much less (about Rs. 6712) to avail such a good benefit. Charges are relatively low compared to HDFC SLIC for some policies. The company offers high coverage plans at low cost. There is a plan even for a policy term of 1 year. Your family can continue to enjoy their current lifestyle even in the case of something happening to you. These plans are very flexible and HDFC SLIC could adopt this idea of insuring individuals for short periods of time. For example; there is a family of four. The only earning member is the father. He has just taken a loan from a bank of 20 lakhs to purchase a new home. He is able to repay the loan with his current salary in 15 years. The problem arises if something were to happen to him within these fifteen years. Not only will the family face the emotional and financial loss of their father but they will also have to repay the home loan or risk being homeless. (Source: www.tataaig.com)

Marketing problems faced by HDFC

The old and out dated technique of tele-marketing is used to prospect customers. More modern techniques must be adopted. The company must sponsor shows and give presentations in corporate houses. The financial health check must be performed for every prospect to assess his/her true financial position and needs. Some of the advisors skip this vital step and the prospect ends up with a plan they do not appreciate and soon surrender or discontinue. Some of the main problems in marketing the policies are: Large amount of competition (18 players in the market) Other brands are well advertised and have higher recall value LIC is considered a safer option Face competition from banks and mutual funds
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High premium policies are difficult to market Incorrect perception about insurance Interested prospects might have a lack of time and postpone investments Short term plans are available only at large premium Customers do not have risk appetite to invest in shares Some prospects have already invested and are not interested in further investments Consumers dont want to undertake medical examinations Large amount of documentation Customers do not like their money locked up for many years Lack of awareness about the unit linked funds in the market No money back plan present in the product portfolio Suggestions for improvement Advertise about the company and its products it motivates individuals to purchase insurance Create a positive perception about insurance Speak about the good features a plan offers like high returns, life cover, tax benefits, indexation, and accident cover while prospecting customers Try to sell the product/plan which the consumer requires and not the plan where the advisors benefit is higher Improve the efficiency in operations Bring out policies with small premiums payable for short periods of time Rs. 5000 Rs. 10000 per annum for 10 years Attract the youth of India with higher returns on investment as returns are the motivating factor which influence purchase of insurance Promote insurance in colleges and corporate houses Promote HDFC SLIC as an Indian Company to build trust HDFC SLIC could have a brand ambassador or a mascot to promote its services Should have partial withdrawals from the first year onwards.

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Factors influence the customer in buying different products:

ULIPs ULIPs provide both protection and savings combined with flexibility to investors. These products are market-linked, and have the potential to deliver higher returns. A ULIP investor has the flexibility to switch funds, determine the amount of investment and withdraw funds partially or systematically. ULIPs also provide the convenience of pliable insurance coverage, which can be increased or decreased at any time. However, the ULIP policyholder needs to be more involved as the investment risk rests with him.

Traditional insurance plans Traditional insurance plans, which include term, endowment and whole life policies, offer multiple benefits in terms of risk cover, return and safety. Traditional policies are considered risk-free, as they provide fixed returns in case of death or maturity of the term. Investment guidelines also ensure safety of funds with a cap on equity investment. Traditional Participating plans are the most popular category of traditional life insurance products. Though it is popular in Indian market for many decades now, there is still lack of understanding about these products. Participating plans provides the policyholder 90% share of surplus whereas 10% is the share of life insurer. This sharing mechanism aligns the intent of both the policyholder and the life insurer as high investment surplus will drive higher returns for both parties. In participating plans as the investments are primarily in debt instruments, the returns do not have the volatility generally witnessed in market linked plans. Traditional participating plans are truly protection oriented financial instrument as it has a strong sum assured orientation along with consistent returns. In a young economy like India, where a large share of population is in 20s and 30s, traditional plans are seen as slow and opaque. There are some myths around these plans.

It is often said that traditional participating policies give inferior returns. But what is not mentioned is that the investment risk is also lower. Therefore the money is invested in bond instruments, but companies may invest up to 35% of the funds in equities to provide positive real returns to customers over the long term.
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Participating plans are also seen as less flexible. Empirical evidence suggests that only a very small percentage of customers use flexibilities like partial withdrawal or switch available within unit-linked products. On the other hand even traditional plans offer flexibilities like policy loans and automatic premium loan for short term cash needs and are much more used by policyholders.

Another myth around traditional participating plans is that these are less transparent as no NAV is declared every day. How many Policyholders check the NAV of their plan daily? The answer is none. What do policyholders want to know? The status of their investment periodically; returns on investment at the end of policy tenure, and safety of their capital. In traditional plans there is guaranteed return through pre-defined sum assured know at the time of buying the policy as well as bonus announced on yearly basis.

The customer chooses the product on the basis of:

o Income An investors future income expectation determines whether to opt for a market linked product or a safe instrument. For instance, if a person expects her income to increase faster than inflation she would invest in ULIPs, which are market-linked compared to traditional insurance plans which assure guaranteed returns.

o Age and number of dependents in the family The age of an individual and number of dependents is also directly proportional to her risk taking ability. Younger a person is, more time she has to remain invested to average out market fluctuation, hence her risk appetite increases. Similarly if she is the sole breadwinner in the family and has dependents relying on her income, she may not want to take any risk with her savings.
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o Investment value The amount of returns one expects from investment is also one of the determinants of choice of product. In case an investor expects substantial returns, she will be willing to take the risk with ULIPs, whereas for moderate but assured returns, sticking to traditional insurance plans would be better.

o Type of investor ULIPs are ideal for an aggressive investor who wants higher returns and is prepared to withstand market volatilities, whereas a traditional insurance plan would suit the requirements of a conservative investor.

o Volatility The kind of volatility an investor is willing to handle also affects her investment decision. Investment in ULIPs may be more volatile than traditional insurance plans as they are directly linked to the market fluctuation.

o In a nut shell Deciding whether to invest in a traditional insurance plan or a ULIP is not easy and best left to the advice of experts such as agent advisors. Knowing ones risk profile, financial condition, understanding the nitty-grittys of various financial instruments, planning with an objective in mind, goes a long way in making a wise decision.

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Chapter 6
Analysis and interpretation

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Analysis and interpretation

This survey is to identify how the customers approach towards different insurance products

1. Your age? <20 18 20-30 56 30-40 10 >40 15

60 50 40 30 20 10 0 1 2 3 4 5 6

From this bar graph we came to know that most of the respondents were aged between 20-30 years. From the total respondents 56% of them are between 20-30 years of age. 2. Your annual income? <200000 58 2-400000 8 4-600000 19 >600000 14

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70 60 50 40 30 20 10 0 <200000 2-400000 4-600000 >600000 2.Your annual income?

From this bar graph we came to know that our respondents annual income is less than 200000 per annum that is of nearly 58% and some of the respondents whose income is about 600000 they were nearly 20% of the total respondents.

3. yes 38

Do you have any insurance earlier? no 62

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From this pie chart we can analyse that nearly 40% of the total respondents were already having the insurances from different companies of different products earlier.

4. If yes, what type of product is it? Basic term plan endowment plan plan linked with units

60
70 60 50 40 30 20 10 0 Basic term plan

25

15

endowment plan

plan linked with units

4.If yes, what type of product is it?

From this graph we can see that the respondents having insurance earlier are having mostly about the basic term plans that are of 60% of the total respondents.

5. Which type of product you would like to take for your further investments? Product which gives product with more both security for money returns

16

16

68

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80 70 60 50 40 30 20 10 0 Product which gives security for money product with more returns both

5.Which type of product you would like to take for your further investments?

From this graph we see that the respondents were looking for both the guaranteed returns and also security for their investments, from the total respondents nearly 70% of the respondents go for both of the options. 6. You wish to invest your money for how much term? Very short 5
60 50 40 30 20 10 0 Very short short long very long terms 6.You wish to invest your money for how much term?

short 23

long 56

very terms 16

long

From this graph we can see that around 56% of the respondents were interested in the long term investments.
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7. Do you have a clear idea about the concept of the product? Yes 53 no 47

60 50 40 30 20 10 0 1 2 3

From the graph we see that 53% of respondents know what product they are taking, whereas 47% of the respondents dont even know about the product what they are taking.

8. Do you believe in big money in a short period? yes 36 no 64

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8.Do you believe in big money in a short period? yes 8.Do you believe in big money in a short period? no

From the respondents nearly 65% of them doesnt believe in big money in a short period. 9. What do you feel, Money invested in secure products? Stagnated for long gives good returns for can be used term future protection for

10

41

49

50 45 40 35 30 25 20 15 10 5 0 Stagnated for long term gives good returns for future can be used for protection

9.What do you feel, Money invested in secure products?

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From the respondents we can see that nearly 50% of them think that long term money can be used for protection. And the others think of the high returns.

10. What do you feel, Money invested in ULIP or MFs or stocks? Gives a good return Its just a legal gamble within short term Its not my cup of tea

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38 37 36 35 34 33 32 31 30 29

37

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Gives a good return within short term

Its just a legal gamble

Its not my cup of tea

10.What do you feel, Money invested in ULIP or MFs or stocks?

When the respondents were asked about their interest in stocks or the share market there were some mixed feelings, and most of them feel it is a gamble kind of thing and some of them dont even understand what are those and from these we can see that the respondents feel insecure in investing in stocks or mutual funds.

11. Have you ever heard about the products of HDFC? yes 64 no 36

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11.Have you ever heard about the products of HDFC? yes 11.Have you ever heard about the products of HDFC? no

Here from the graph we can see that nearly 65% of the respondents were aware of the products of HDFC.

12. If yes from which source? T.v ads agents friends corporate agents (banks) 21

21
50 45 40 35 30 25 20 15 10 5 0 T.v ads

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14

agents

friends

corporate agents (banks)

12.If yes from which source?

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From the graph we can see that the respondents know about the products of HDFC through agents i.e, nearly 45% of the total respondents are having some contact with agents from this we come to know that the agents of HDFC are doing a good job in generating leads to the company.

13. Which type of products is best in HDFC? Traditional (term etc) unit linked plans

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70 60 50 40 30 20 10 0

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Traditional (term etc)

unit linked plans

13.Which type of products is best in HDFC?

From the graph we can see that nearly 65% of the total respondents feel that HDFC is having better traditional products than the ULIPs.

14. How can you rate the products in HDFC? Best 18 average 47 can improve 26 poor 9

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50 45 40 35 30 25 20 15 10 5 0 Best average can improve poor 14.How can you rate the products in HDFC?

Most of the respondents said that the products of the HDFC were average and gave a feedback that they could improve their products to attract more customers.

Interpretations
From this the overall interpretation can be made such as that the overall respondents were willing invest for a long term and in the traditional plans considering that would give them security for their investment and better investments. From the age group of the respondents we can see that most of the young age people near 30s were who could bear risk also want some security for their money, but we can also see that they not only want stick to the traditional products they want diversify their investments and get some better investments. And from the survey we can see that HDFCs products are not so aware in the market and the company should look into its advertising and promotion part to make the customer aware of its products.

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Chapter 7
Future line of research Conclusion

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FUTURE LINE OF RESEARCH

The future topics for research in the organization could be setting up of an appropriate ad campaign. It is very vital to the companies success that the people of India know about HDFC SLIC, its products and their special features and how insurance in general can help them in their future. The advertisements have to be emotionally appealing. They might also include a celebrity. The brand name of HDFC could be used to give a push to HDFC SLIC and its products. The general perception of insurance as inauspicious should be done away with and individuals and corporations accept insurance on power with other investment opportunities. The other area of research could be in the management of funds HDFC SLIC possesses and how it can maximize returns for its investors. A research project could be undertaken on how to ensure that the money gets invested in the right companies and earns a medium high return on investment. Another area of research could be an analysis of the sales and marketing techniques used by HDFC SLIC. A large number of changes could be introduced and this would help in saving operating costs and improving the efficiency of the firm.

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CONCLUSION
HDFC standard life insurance is first life insurance Company in India. It has businesses spread out across the globe. It was registered on 23rd December 2000. It currently ranks number 4 amongst the insurers in India. The company faces a large amount of competition. To sustain itself it must promote its products through advertising and improve its selling techniques. Consumers must be aware of the new plans available at HDFC SLIC. The medium of advertising used could be television since most of its competitors use this tool to promote their products. The company must be promoted as an Indian company since consumers seem to have more trust in investing in Indian firms. The unit linked concept must be specifically promoted. The general perception of life insurance has to change in India before progress is made in this field. People should not be afraid to invest money in insurance and must use it as an effective tool for tax planning and long term savings. HDFC SLIC could tap the rural markets with cheaper products and smaller policy terms. There are individuals who are willing to pay small amounts as premium but the plans do not accept premiums below a certain amount. It was usually found that a large number of males were insured compared to females. Individuals below the age of 30 (mostly male) were interested in investment plans. The traditional products give security and the other diversified products give returns so the customers need a product from which they get these both options for these the customers were ready to invest in a long term without any hesitation and also the youngsters who are willing to invest in the short term products for good money they want a clear idea about the product which would lead them in investing in different products.

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References
Secondary data:
http://www.moneycontrol.com/master_your_money/stocks_news_consumption.php?autono= 618817 http://www.hdfclife.com/Products/SavingsPlans/Savings-investment-Plans.aspx http://tataaiginsurance.in/about-us/tata-aig/index.html http://www.bajajallianz.com/Corp/aboutus/general-insurance-company.jsp http://insurance.birlasunlife.com/Pages/Individual/About-Us/Overview.aspx http://en.wikipedia.org/wiki/Insurance#Societal_effects

Magazines:
Business world The outlook

Books:
Banking and insurance by gopinath

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