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PROJECT REPORT
ON
FOR
SUBMITTED BY
Mr. SHASHANK B. MANKAR
1
A
PROJECT REPORT
ON
FOR
SUBMITTED BY
Mr. SHASHANK B. MANKAR
2
ACKNOWLEDGEMENT
PROJECT REPORT
I take this opportunity to express my profound gratitude and indebt ness for
the personal involvement & constructive criticism, which has been provided
beyond technical guidance during the project from my guide
Mr. RUPESH ANKOLEKAR(UNIT MANAGER) of ICICI
PRUDENTIAL LIFE INSURANCE COMPANY LIMITED, PUNE.I shall
ever be grateful to him for the encouraging, suggestions & guidance during the
project period.
I am also indebted to Prof. P.K. SINHA, Director SIBACA ,
Lonavala, for his continuous support, who helped us a lot in completing this
project to the best of my ability.
This report have been the impart the of many persons and I would like
to thanks all those who have knowingly or otherwise helped me in getting
through this study.
Project By :-
Mr. SHASHANK MANKAR
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TO WHOM IT MAY CONCERN
He has worked under our guidance and direction. His work found to be
satisfactory and complete in all respect.
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EXECUTIVE SUMMARY OF THE PROJECT
This Project deals with the analysis of the investing pattern of the service
professionals and also tapping of the potential investor. This project also focuses on
the various aspects of the following.
(iii) It also try find out the significant changes in the investment pattern of
the professionals in the recent period
Before any marketing effort can be initiated, the present customer base and
any potential target markets should be clearly identified. It was therefore
decided to carry out a survey of individual investors in Pune.
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OBJECTIVE
Every project has some objective without whose a project cannot be completed. The
behind e Project titled AWARENESS AWARENESS OF ULIPS AND
CHANGES MADE BY IRDA which was carried out for ICICI PRUDENTIAL
LIFE INSURANCE COMPANY LTD, PUNE,
has following objectives:
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INDEX
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1. INTRODUCTION
INSURANCE
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2. INSURANCE SECTOR IN INDIA
The insurance sector in India has come a full circle from being an open competitive
market to nationalizations and back to a liberalized market again. Tracing the
developments in the Indian insurance sector reveals the 360-degree turn witnessed
over a period of almost two centuries.
The business of life insurance in India in its existing form started in India in the
year 1818 with the establishment of the Oriental Life Insurance Company in
Calcutta.
Some of the important milestones in the life insurance business in India are:
1912: The Indian Life Assurance Companies Act enacted as the first statute
to regulate the life insurance business.
1928: The Indian Insurance Companies Act enacted to enable the government
to collect statistical information about both life and non-life insurance
businesses.
1938: Earlier legislation consolidated and amended to by the Insurance Act
with the objective of protecting the interests of the insuring public.
1956: 245 Indian and foreign insurers and provident societies taken over by
the central government and nationalized. LIC formed by an Act of
Parliament, viz.
LIC Act, 1956, with a capital contribution of Rs. 5 crore from the
Government of India.
The General insurance business in India, on the other hand, can trace its roots to the
Triton Insurance Company Ltd., the first general insurance company established in
the year 1850 in Calcutta by the British.
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Some of the important milestones in the general insurance business in India are:
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INSURANCE SECTOR REFORMS:
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3) REGULATORY BODY
The Insurance Act should be changed
An Insurance Regulatory body should be set up
Controller of Insurance (Currently a part from the Finance Ministry) should
be made independent
4) INVESTMENTS
Mandatory Investments of LIC Life Fund in government securities to be
reduced from 75% to 50%
GIC and its subsidiaries are not to hold more than 5% in any company (There
current holdings to be brought down to this level over a period of time)
5) CUSTOMER SERVICE
LIC should pay interest on delays in payments beyond 30 days
Insurance companies must be encouraged to set up unit linked pension plans
Computerisation of operations and updating of technology to be carried out in
the insurance industry The committee emphasized that in order to improve the
customer services and increase the coverage of the insurance industry should
be opened up to competition.
But at the same time, the committee felt the need to exercise caution as any
failure on the part of new players could ruin the public confidence in the
industry. Hence, it was decided to allow competition in a limited way by
stipulating the minimum capital requirement of Rs.100 crores. The committee
felt the need to provide greater autonomy to insurance companies in order to
improve their performance and enable them to act as independent companies
with economic motives. For this purpose, it had proposed setting up an
independent regulatory body.
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3.INSURANCE COMPANIES
IRDA has so far granted registration to 12 private life insurance companies and 9
general insurance companies. If the existing public sector insurance companies
are included, there are currently 13 insurance companies in the life side and 13
companies operating in general insurance business. General Insurance
Corporation has been approved as the "Indian reinsure" for underwriting only
reinsurance business. Particulars of the life insurance companies and general
insurance companies including their web address are given below:
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Company Share Total Capital FDI % Foreign Capital Market Based
(Rs) (Rs) on
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The following graph shows the weighted new business premium income collected by
private life insurers during the period April to September 2005, as per the statistics
released by the Insurance Regulatory and Development Authority ( IRDA ). Private
life insurers increased their market share to 34.3% in this period, up from 22.8% in
the corresponding period last year.
The private non-life insurers achieved 60.9% growth in gross new business premium
income in the period April to September 2005 over the corresponding period last
year. A breakdown by company is shown below.
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INDUSTRY STATISTICS
The life insurance industry grew by 20.4%, in terms of weighted new premium
income, in the first six months of FY2005-06 over the corresponding period in the
previous year. ICICI Prudential continues to be the leading private sector player,
with a new business market share of 11.5% of the total market. Bajaj Allianz Life
and HDFC Standard Life stood at second and third place among the private players,
with market shares of 5% and 4.2% respectively. The new business market share of
the Life Insurance Corporation of India ( LIC ) slipped to 65.7%, down from 77.2%
in the first six months of FY2004-05.
While the public sector LIC dominates the Indian life insurance market with nearly
80 per cent of the market share. It has 248 branches, 115,000 employees and over 1
million agents. It has also been improving internal processes and systems, upgrading
skills of its agency force and managers and developing innovative products. LIC
sold 1.69 crore policies during the year compared to 18 lakh policies sold by all the
private players.
ICICI Prudential is the leader among the private players with a
market share of 6.69 per cent after its premia collection totaled Rs 11.54 billion.
Bajaj Allianz with sales of Rs 4.9 billion had a market share of 2.86 per cent. Birla
Sun Life with sales of Rs 4.8 billion had a market share of 2.81 per cent and SBI
Life with premium collection of Rs 3.9 billion, a market share of 2.29 per cent. With
its combination of aggressive marketing through an agency force and the use of the
banking channel, ICICI has emerged as a key player. Initially, the company drove
new business by opening branches in new locations. The focus has now shifted to
penetrating these locations for increasing market share. The company is also trying
to get higher penetration in the High Net Worth segment. The company has seven
bancassurance partners and this is the largest contributor to non-agency business. It
also has 15 key non-bank partners and 800 financial sales consultants. As of
September 2004, it had 90 branches in 60+ locations. It took the initiative in
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launching non-traditional products such as life-stage products, retirement solutions
and child plans. It also focused on Unit Linked Plans (ULIPs) to target new
consumer segments. It has a presence in 15 states through partnership arrangements
and as of 2003-04, it sold 64,764 policies in rural areas.
HDFC Standard Life has established its branches in 110 locations and is
targeting non-metro towns. It is hoping to leverage its pedigree/parentage to gain
more customer acceptance. As a result, it is focusing on quality not just volume
growth. It has developed some innovative products like the Loan Cover Term
Assurance Plan which provides a lumpsum in case of death of the assured life during
the term plan. Aimed at the growing segment of home loan takers, the plan helps the
family to repay the outstanding loan. Given that HDFC has a huge database of
home-loan customers, it can easily tap into this resource to acquire new business.
The compnay is leveraging its large customer database of home loan and banking
clients to cross-sell insurance products.
Birla Sun Life was the first to offer ULIPs in the Indian insurance
market. And this has been the primary driver of its growth over the last one year.
The company has been investing in customer education and feels that as a result
customers don't view ULIPs as mutual funds but long term insurance. As of 2004,
the company had 33 branches, 10,274 agents, 79 corporate relationships and 10
bancassurance partners.
Bajaj Allianz has been focusing on second tier towns and cities which
are yet to witness the entry of other life insurance players apart from LIC. It is using
first mover advantage by opening an office in the most prominent location in a non-
metro town. It hires local people who are trained. Its mantra is to develop only the
indispensable infrastructure so that it can match the pricing of LIC. Apart from that
it claims that it is the only private player to provide policy servicing at the branch
level. Standard Chartered is currently its biggest partner followed by Syndicate
Bank and Centurion Bank. The biggest challenge that the company faces is the weak
infrastructure particularly transport and communications in the smaller cities. It
is also facing a challenge in terms of banking channels, particularly for customers
who bank with cooperative banks, where delays in clearing cheques are inevitable.
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Tied agencies comprise the biggest channel (68%) of new business acquisitions for
Bajaj Allianz. Bancassurance (27%) is the other significant channel of growth for
the company.
Table 2: Market Shares of Key Players
LIC 80%
Aviva 0.8%
Om Kotak 0.6%
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4. ICICI PRUDENTIAL LIFE INSURANCE COMPANY
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. 1185 crore with ICICI
Bank and Prudential plc holding 74% and 26% stake respectively. For the half year
ended September 30, 2005, the company garnered Rs 820 crore of new business
premium for a total sum assured of Rs 7,131 crore and wrote 283,818 policies. For
the past four years, ICICI Prudential has retained its position as the No. 1 private
life insurer in the country, with a wide range of flexible products that meet the needs
of the Indian customer at every step in life .
The logo in the combination of ICICI Bank s I man and Prudential s
lady prudence.. The I-man signifies the dynamic individual with drive and
conviction, while prudence epitomizes wise conduct. Every three minutes ICICI
PRUDENTIAL protects one more Indian life.ICICI PRUDENTIAL is the life
insurance company to implement six sigma quality programme. Of the company s
2000 plus employees, less than 5% have prior experience in insurance industry.
The average age of its employees is 29 years.
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VISION OF COMPANY
To make ICICI Prudential the dominant Life and Pensions player built on trust by
world-class people and service.
ICICI Bank (NYSE:IBN) is India's second largest bank and largest private sector
bank with assets of Rs. 1892.18 billion as on September 30, 2005. ICICI Bank
provides a broad spectrum of financial services to individuals and companies. This
includes mortgages, car and personal loans, credit and debit cards, corporate and
agricultural finance. The Bank services a growing customer base of more than 14
million customers through a multi-channel access network which includes over 590
branches and extension counters, 2,030 ATMs, call centres and Internet banking
(www.icicibank.com).
Established in London in 1848, Prudential plc, through its businesses in the
UK and Europe, the US and Asia, provides retail financial services products and
services to more than 16 million customers, policyholder and unit holders
worldwide. As of June 30, 2004, the company had over US$300 billion in funds
under management. Prudential has brought to market an integrated range of financial
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services products that now includes life assurance, pensions, mutual funds, banking,
investment management and general insurance. In Asia, Prudential is the leading
European life
insurance company with a vast network of 24 life and mutual fund operations in
0twelve countries - China, Hong Kong, India, Indonesia, Japan, Korea, Malaysia,
the Philippines, Singapore, Taiwan, Thailand and Vietnam.
ICICI BANK
ICICI Bank (NYSE:IBN) is India''s second largest bank and largest private sector
bank with over 50 years of financial experience and with assets of Rs. 1812.27
billion as on 30th June, 2005. ICICI Bank offers a wide range of banking products
and financial services to corporate and retail customers through a variety of delivery
channels and through its specialised subsidiaries and affiliates in the areas of
investment banking, life and non-life insurance, venture capital and asset
management. ICICI Bank is a leading player in the retail banking market and has
over 13 million retail customer accounts. The Bank has a network of over 570
branches and extension counters, and 2,000 ATMs.
PRUDENTIAL PLC
Established in London in 1848, Prudential plc, through its businesses in the UK and
Europe, the US and Asia, provides retail financial services products and services to
more than 16 million customers, policyholder and unit holders worldwide. As of
June 30, 2004, the company had over US$300 billion in funds under management.
Prudential has brought to market an integrated range of financial services products
that now includes life assurance, pensions, mutual funds, banking, investment
management and general insurance. In Asia, Prudential is the leading European life
insurance company with a vast network of 24 life and mutual fund operations in
twelve countries - China, Hong Kong, India, Indonesia, Japan, Korea, Malaysia, the
Philippines, Singapore, Taiwan, Thailand and Vietnam.
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5. ICICI PRUDENTIAL s PRODUCTS
PRODUCT SEGMENTS
LINKED PRODUCTS
As the name suggests, the premium received on these products post mortality
charges & admin charges is invested in Funds .These products are directly linked
to the performance of underlying fund. E.g.: Lifetime, LifeLink.
PENSION PRODUCTS
A Pension Product is one which provides for retirement benefits i.e.,
pensions, annuities.
UNIVERSAL LIFE PRODUCTS
Universal Life Products are products wherein the capital amount invested in the
Insurance plan is guaranteed.
RURAL PRODUCTS
Rural Products are customized to the requirements of the rural sector. It s a
regulatory obligation on every insurance company to source a certain percentage
of the business from the rural sector. ICICI Prudential has Mitr, Suraksha as its
rural products.
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GROUP PRODUCTS
A Group Policy as the name suggests is a Policy which covers a group of
people .e.g. a Policy taken by the organization which covers all the
Employees.
SAVINGS SOLUTIONS:
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Invest Shield Life is a Market Linked plan that provides capital
guarantee on the invested premiums and declared bonus interest.
Invest Shield Cash is a Market Linked plan that provides capital
guarantee on the invested premiums and declared bonus interest along
with flexible liquidity options.
Invest Shield Gold is a Market Linked plan that provides capital
guarantee on the invested premiums and declared bonus interest along
with limited premium payment terms.
PROTECTION SOLUTIONS
Lifeguard 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.
Home Assure is a mortgage reducing term assurance plan designed
specifically to help customers cover their home loans in a simple and
cost-effective manner.
CHILD PLANS
RETIREMENT SOLUTIONS
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Market-linked retirement products
Lifetime Pension II is a regular premium market-linked pension plan
Life Link Pension II is a single premium market-linked pension plan.
Invest Shield Pension is a regular premium pension plan with a capital
guarantee on the investible premium and declared bonuses.
Golden Years: is a limited premium paying retirement solution that offers tax
benefits up to Rs 100,000 u/s 80C, with flexibility in both the accumulation
and payout stages.
ICICI Prudential also launched Salaam Zindagi , a social sector group
insurance policy targeted at the economically underprivileged sections of the
society.
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 also be customized to structure schemes that can provide benefits
beyond the statutory obligations.
ICICI Pru Group Superannuation Plan: ICICI Pru offers a flexible defined
contribution superannuating 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 cover could be uniform
or based on designation/rank or a multiple of salary. The benefit under the
policy is paid to the beneficiary nominated by the member on his/her death.
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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.
Accident & 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 rider sum assured 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.
Accident Benefit: This rider option pays the sum assured under the rider on
death due to accident.
Critical Illness Benefit: protects 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.
Income Benefit: This rider pays the 10% of the sum assured to the nominee
every year, till maturity, in the event of the death of the life assured. It is
available on Smart Kid, Secure Plus and Cash Plus
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6. UNIT LINKED INSURANCE PLANS (ULIPs)
Unit Linked Insurance Plan: A policy which provides for life insurance where the
policy value at any time varies according to the value of the underlying assets at the
time.
Unit Linked Insurance Plan (ULIP) is life insurance solution that
provides the client with the benefits of protection and flexibility in investment.
The investment is denoted as units and is represented by the value that it has
attained called as Net Asset Value (NAV)
ULIP came into play in the 1960s and became very popular in Western
Europe and Americas. The reason that is attributed to the wide spread popularity of
ULIP is because of the transparency and the flexibility which it offers to the clients.
As times progressed the plans were also successfully mapped along with life
insurance need to retirement planning.
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ULIP STRUCTURE LOOKS LIKE AS FOLLOWS
Contribution
Less charge
In today s times ULIP provides solutions for all the needs of a client like
insurance planning, financial needs, financial planning for children s future and
retirement planning.
1. Over the last two years, insurance companies have been hard selling unit-
linked life insurance plans promising the invester over15% per annum in
return , compared to the 6percent or so that an endowment policy yield.
ULIPs have become the policies to push in the Indian life insurance market.
2. ULIPs are the life insurance plans that like endowment schemes pay a
specific amount (sum assured.) upon the death of insured. But unlike the
endowment plan, here the premium paid is treated somewhat like an
investment in a mutual fund.
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3. Some of it is deducted as cost of insurance and servicing a ULIP while the
investor is issued units for the rest. Of the first year s premium, at least 73
percent goes into units. The proportion keeps increasing in the following
years.
4. The investor can choose the investment option he wants. Most companies
offer 3-5 options ranging from full debt to large dollops of equity. And
premium need not be paid over the life of the policy.
5. The entire amount can be paid in the first year itself. On maturity endowment
plan gives the insured the sum assured and a bonus-more than amount
invested. In an ULIP like mutual fund, he could get more or less than what he
invested depending on the net asset value (NAV) of the scheme.
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FEATURES OF A UNIT LINKED PLAN
ULIP distinguishes itself through the multiple benefits that it provides to the
consumer. The plan is a one stop solution providing
1. Life Protection
2. Investment and Savings
3. Flexibility
a. Adjustable life cover
b. Investment option
4. Transparency
5. Options to take additional cover against
6. Liquidity.
7. Tax planning
In today s fast paced world, the clients need change equally fast. Taking the above
benefits lets see how each gets morphed with situation changing for the client.
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LIFE PROTECTION
Can any one of us deny that we do not need life protection? Honestly none can
especially when we see the fatal events that occur so frequently around us.
However the need may vary and ULIP provides the benefit of adjusting according
to the varying need of the client.
The life insurance needs keep changing throughout the life stage of an individual
When we retire
Time
Therefore as our responsibilities grow the need for life protection grows and when
these responsibilities are successfully executed the need reduces.
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ULIP allows a client to change the varying life protection needs that makes it
Easier for the client to manage
Hassle free
Economically effective
The death benefit is usually a multiple of the Contribution being paid which ensures
that the Contribution is adequate enough to provide life protection and is also able
to maintain a semblance between protection and savings.
The charge is deducted each year as per the age of the client
therefore at the age of 30, mortality for the age of 30 is charged and at the age of
31mortality for the age of 31 is charged.
Undoubtedly all of us look for saving the money that we have and to ensure that the
investment that we make should create value for us and more the better.
Many life insurance plans present in the market do not provide justice to this
important need of the client.ULIP on the other hand has all the composition of
satisfying investment and savings needs of the clients.
ULIP provides the client with the option of investing as per personal
risk profile and get returns accordingly. There are options of funds where in the
client can put money in
Equity Market
Debt Markets
Balanced funds with a mix of the above two
Short-term debt market
This also helps the client in saving in accordance to the age as a younger person can
afford to take some risk however a senior citizen might not be in a position to make
investment in comparatively high risk instruments.
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TRANSPARENCY
Every client has the right to know about the manner in which the contribution being
given by him is being invested. The biggest concern that is raised is about the
charges.
ULIP are completely transparent and the client knows as how every
paisa being charges is allocated.
There are various kinds of expenses that are involved in any insurance
plan. These expenses may be related to the sales and distribution cost, or the
operational costs, the costs related to the life insurance cover or the costs related to
the management of expenses. Since all unit-linked plans have a transparent
structure, they have to exhibit all the charges. It may be worthwhile to know about
the various kind of expenses related to a unit-linked plan.
These are charges that are represented as a percentage of the regular or single
contribution paid. In case of a regular contribution plan, it is usually high in the first
year to pay for the distribution cost. This charge pays for the issuance and for
distribution commissions.
This is a charge to cover the running expenses of the policy. For single contribution
plans this is levied once at the start of the policy. For regular contribution plans this
will be charged on a regular uniform basis depending upon the frequency of
payments.
Normally these charges are shown as percentage of the contribution. Allocation is
another terminology used by the company in actually representing costs.
Allocations are mathematically reverse of the charges.
Thus mathematically;
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Allocation= 1- charges.
Thus for example if a product has a 70% allocation in the first year, it means 1-
0.7=0.3 or 30% charge
ADMINISTRATION CHARGES:
These are charges that are levied for the administration of the policy and the related
costs of administration of the insurance company, itself. These costs are different
from the issuance and the distribution related costs of the product. They are more
related to the costs like the IT, operational, etc cost of continuing the policy.
There are a few prominent ways in which these costs are levied.
They can be levied as the percentage of the value of the investments (funds) in the
account of the policyholder. So for example, as Bajaj Allianz levy a charge of 1.25%
of the fund for the administration of the policy, every year. These kinds of charges
get adjusted in the Unit Value (NAV), as the NAV is declared after adjusting these
costs.
They can be levied as a flat charge with an option of increasing it by a certain
percentage over years. For example, Birla levies a flat charge of Rs 28 per month on
its policy. HFDC SL unit linked plan levies Rs 180 annually as the administration
charges.
All unit linked plans have underlying funds, which the policyholders choose for
their investments. These funds constitute of various financial instruments such as
equity, bonds, money market instruments.
The fund management fees is levied to pay for the charges of managing the
investments, which basically involve the cost of buying and selling the various
financial instruments for the various funds.
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Options:
a. Choice of investment plan
1. MAXIMISER (GROWTH):
If high growth is priority, this is the plan. Investment is done primarily in equity
and equity related securities.
Equity and related security Max: 100%
Debt, Money Market & Cash: Max: 25%
2. PROTECTOR (INCOME):
If priority is steady returns, one can opt for the protection Plan . One can accumulate
a steady income , at a low risk , across a medium to long term period from a
portfolio , which is primarily invested in fixed income securities .
Debt investment Max : 100%
Money market and cash Max : 25%
3. BALANCER (BALANCED):
If one prefers balance of growth and steady returns ,he should choose balance plan.
Investment will be in equity and equity linked securities as well as in fixed
income securities.
Debt, Money Market & Cash : Min: 60
Equity & equity related securities : Max: 40%
5. PRESERVER:
The objective of the plan is to ensure capital protection by investing in very low risk
investments like cash and money markets investment up to 20 % can be allocated to
this fund.
Debt instruments: Max: 50
Money Market & cash : Min: 50%
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b. choice to switch between investment options
1. 4 Free switches every year
2. Any switch beyond this limit will be charged at Rs. 100 per switch.
c. choice of Top-up
MORTALITY CHARGES:
This covers the cost of providing life protection for the insured and may be paid
once at the start of the policy or a recurrent manner (for example). This charge is
levied to provide the insurance cover under the plan. Normally these charges are 1-
year charges and keep changing as per the age of the policyholder.
These are normally expressed as- per thousand of the sum assured and depend on the
age of the policyholder. So, for example one would have the mortality charge as Rs
1.50 per thousand of SA for a 30 year old and Rs 1.55 for the age of 35 years. This
means that the cost of insurance of Rs 1000 at the age of 30 is 1.50, where the same
insurance cover costs Rs 1.55 at the age of 35 years.
All unit- linked products have a mortality charge table that is used to calculate the
life insurance cover charge on a yearly basis.
RIDER CHARGES:
Rider charges are similar in nature to the mortality charges as they are levied to pay
for the other protection benefits that the policyholder has chosen for-like the critical
illness benefit or the accident benefit, etc.
SURRENDER CHARGES:
When the policyholder decides to surrender the policy or partially withdraw some of
the units for cash, a surrender charge may be apply. Usually the surrender charges
only apply in the first few years after the units are invested and are usually on a
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decreasing scale. Surrender charges are used to cover initial expenses that have been
incurred by the company but not yet recovered from the policyholder yet.
These charges can either be expressed as a percentage of the value of investments or
as a fixed flat charge, depending on the structure of the product.
So, the policyholder may have charge of 2% of the unit value as the surrender
charge or Rs 1000 as the surrender penalty.
Surrender charges usually apply to policies with high allocation, especially in the
first few years.
In ULIP specifically certain insurers might create a difference in the price at which
they sell the unit and the price at which they buy the units.
Investor s contributions are used to buy units in the investment fund at the offer
price and are sold when benefits are required at the bid price.
The difference between the offer and bid prices is known as the bid offer spread ,
this is used to cover expenses when setting up the policy.
Bid-offer spread is expressed as a percentage of the NAV S and hence also becomes
a percentage of the value of units.
So for example a company has bid-offer spread of 5% and has an offer price of Rs
10 per unit. This means that the bid price would be 5% less and hence 95% of the
offer price, i.e. 95%*10=Rs9.50.
Hence a policyholder having 100 units in his investment would get Rs 9.5*100=Rs
950 as his value and if he has to but another 100 units he will have to pay Rs
10*100=Rs1000. This Rs 50 difference is the bid-offer spread.
Any fund which has a bid-offer spread would have 2 NAV s buying and selling,
where as a fund which does not have bid-offer spread is a 1 NAV fund- same for
buying and selling.
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TRANSACTIONAL SPECIFIC CHARGES:
These charges are levied when the client does some specifics transaction like
changing funds, topping up the investment component or withdrawals.
EXTRA PROTECTION :
Riders provide more protection to the policyholder and ULIP allows addition of
riders, at minimal cost.
The common riders that are attachable are
Death due to accident
Disability
Critical Illness
Surgeries
LIQUIDITY
This facility makes the ULIP a very practical insurance in current times. Most life
insurance plans do not provide the policyholder the facility of withdrawing money in
case the need arises.
Unit Linked Plans provide you easy access to your money as and
when you may require. One can redeem the units after a particular period of time as
defined by the plan, as per the need. ULIP allows either partial & complete
withdrawal, without penalizing the policyholder.
For example in the 6 th year of your plan, you require 15000/- for
certain medical expenses that came up.
Your investment has been made in the balanced fund. If the current NAV of the
balanced fund is 15/-, then all you need to do is to sell 1000 units which will give
you 15000/-. The rest of the fund and the policy will continue normally as this is a
partial withdrawal.
38
If need be, the policyholder can withdraw all the monies in the funds
by redeeming all the units.Liquidity thus provided to the policyholder is immense
value in servicing the ever-changing needs of the client.
TAX PLANNING
Regulation in India allows tax benefits in the contribution paid under section
88.contribution paid for health riders (critical illness and major surgical) is allowed
tax benefit under section 80 D, as per the prevailing tax laws.
Maturity benefits are tax free under section 10 (10) d, provided the life cover is at
least 5 times of the annual contribution paid.
Death benefit is tax free under section 10 (10) d
With so many tax benefits available in one instrument - ULIP tends to be an
intelligent tax planning tool.
Premium:
1minimum 18000 annually
1. minimum 9000 semiannually
2. minimum 1500 monthly
39
7. ULIP AND INSURANCE COMPANIES
REASONS BEHIND SELLING ULIPS:
1. Over the last three years , the Indian equity markets have posted
handsome gains.
2. Insurer have been pushing equity based ULIPs.In 2004-05, the share of
Unitlinked premium for private sector players was 71 per cent.
It is investment in equity that offers tax free accumulation of wealth.
3. For insurer , equity ULIP makes sense as the capital they have to invest
the third to a quarter of what they would have to put up for a non-ULIP
policy with similar sum assured.
4. ULIP do not offer any guarantee on the capital invested or the returns.
5. Out of the investment risk and the risk that the insured will die, the
Insurer will bear only the later. So, the capital it needs to protect this
risk is correspondingly lower.
6. The insurance company makes the money as the cost of insurance,
brokerage and processing is charged up front.
7. Margins in the life insurance have not been stabilized and overheads for
most of firms are running ahead of plan, forcing them to push sales
of less capital intensive products.
8. Unlike traditional policies , in unit linked policy, pricing and expense
assumptions have to be fairly accurate as there is a much lower
chance of recouping the loss later. Once the charges are set for a policy
they can not be revised without IRDA approval.
9. Competition also putting pressure on the margins. Average margins on
ULIP are around 10 percentage point lower than those on conventional
insurance policies.
10. Most ULIP had allowed full premium holiday after three years and
large tax free withdrawals of the accumulated corpus as early as a year
after the policy is issued. This left the insurer with little time to recover
the high upfront costs and make a profit.
40
PROBLEMS FACED BY PRIVATE INSURANCE
COMPANIES
1. Capital Availability
1. One major is the high commission paid out to agents. At 40% of first-year
premium, it leaves the insurance company with only Rs. 60 for every Rs
100 it receives from the customers.
4. Network of offices
5. Infrastructure
41
8. NEED TO CHANGE THE ULIP GUIDELINES
Unit Linked Insurance Policies (ULIPs) are gaining popularity because of the
versatile benefits it offers. Besides, the stock market is also booming. Nearly all
insurers have unit linked plans in the market today. In fact a new unit linked plan,
Jeevan Plus is soon to be launched by LIC.
ULIPs not only provide insurance protection against death but also
provide provision for long-term savings depending on its structure. Most investors
in these plans are however unaware or not totally informed about the pros and cons
of these policies. On the other hand there are several who are exploiting the
loopholes to earn a quick buck.
In an attempt to prevent investors from making short-term tax-free
gains in the stock market with ULIPs, IRDA is setting up certain guidelines.
According to these guidelines the sum assured will be a fixed percentage of the
premium collected. These guidelines will enhance the insurance content in ULIPs.
Under this new strategy a relatively larger proportion of premium will
have to be allocated for pure risk cover but this will leave a small amount for
investment in the units. Liquidity is an important feature investment, the reason for
which people buy ULIPs.
42
9. IRDA
As per the section 4 of IRDA Act' 1999, Insurance Regulatory and Development
Authority (IRDA, which was constituted by an act of parliament) specify the
composition of Authority
The Authority is a ten member team consisting of
(a) a Chairman;
(b) five whole-time members;
(c) four part-time members,
(all appointed by the Government of India)
Section 14 of IRDA Act, 1999 laysdown the duties,powers and functions of IRDA..
(1) Subject to the provisions of this Act and any other law for the time being in
force, the Authority shall have the duty to regulate, promote and ensure orderly
growth of the insurance business and re-insurance business.
(2) Without prejudice to the generality of the provisions contained in sub-section
(1), the powers and functions of the Authority shall include,
43
Enquiries and investigations including audit of the insurers,
intermediaries, insurance intermediaries and other organisations connected
with the insurance business;
(i) control and regulation of the rates, advantages, terms and conditions that
may be offered by insurers in respect of general insurance business not so
Controlled and regulated by the Tariff Advisory Committee under section
64Uof the Insurance Act, 1938 (4 of 1938);
(j) specifying the form and manner in which books of account shall be
maintained and statement of accounts shall be rendered by insurers and
other insurance intermediaries;
(k) regulating investment of funds by insurance companies;
(l) regulating maintenance of margin of solvency;
(m) adjudication of disputes between insurers and intermediaries or insurance
intermediaries;
(n) supervising the functioning of the Tariff Advisory Committee;
(o) specifying the percentage of premium income of the insurer to finance
schemes for promoting and regulating professional organizations referred
to in clause (f);
(p) specifying the percentage of life insurance business and general insurance
business to be undertaken by the insurer in the rural or social sector; and
(q) exercising such other powers as may be prescribed
44
10. CHANGES IN ULIP MADE BY IRDA
CHANGES
1. In LifeTime one had to pay premium for three years and they one could take
premium holiday.
2. In LifeTime Super one has to pay premium for at least 5 years and then he
can draw amount after 3 years systematically.
3. In Life Time Plus, it includes one more benefit of settlement option. In this
Option, one can opt to get payments yearly, halfyearly, quarterly or monthly
through ECS way for a period of 1, 2,3,4,5 yearly, and post maturity.
4. Surrender values after 3,4,5,6,7 years are different for LifeTime Plus and Life
Time Super.
1 . Insurace companies have not shield away from investing in unit linked
insurance policies even after the recent stockmarket meltdown.
2. ICIC Prudential continues to invest in ULIPs that constitute nearly 50%
of the funds under it s management.
3. Nearly 85% of the new business premium of the company went towards
equity.
4. During recent volatility in the stockmarket, customers took advantage of
the switch option.
5. ICICI already had policies with the mandated 3-year lock-in period even
before the regulator stipulated the lock-in.
45
HOW IS UNIT VALUE CALCULATED?
A
Unit Value = ----------
B
A= Market /Fair Value of the relevant Plan s Investment Plus Current
Assets Less Current Liabilities and Provisions.
The Average Unit Value is the average of the value of the daily fund value of
the preceding the date of additional allocation.
46
PERFORMANCE OF ICICI S ULIP
47
COMPETITION FACED BY ULIP PRODUCTS.
2. But unlike traditional policy where the insurer gets to keep part of the
Returns it earns beyond the guaranteed returns(if any), for ULIP the upside
Is limited to annual charges of 1-3 per cent of the NAV.
3. Insurance companies are also facing the heat from mutual funds (MFs),
which are offering similar products. One ULIP like product charges 5 per
cent entry load compared to the 10-15 per cent on ULIP policies, which
place limits on free switches between schemes(equity, balanced or debt),
and houses allow investors to switch freely between schemes whenever
they want without any penalty.
4. With MFs offering similar products at lower entry load , the pressure on
ULIPs to further reduce charges will intensify.
48
COMPARING PURE INSURANCE WITH ULIPS
It is illustrates the outgo for individual investors for a term plan and a ULIP. The
term plan outgo covers just insurance and will pay back the sum assured of Rs.10
lakhs only in the case of death and there will be no premium returned at the end of
the tenure. In contrast, the same amount of cover requires Rs.10,000 as premium in
the case of a ULIP and the returns depend on the performance of the fund corpus
chosen by the investor.
This is where differentiating between insurance and investment needs
come into play. An individual investor would be better off investing in mutual funds
depending on the individual risk profile, whereas the insurance company does not
provide so many options. This way he has clearly segregated two distinct
requirements, contingency and earning returns, through dedicated instruments
without making a compromise.
EXPECTED TRENDS
The industry will grow at a galloping rate. More and more people will buy insurance
now that the ULIP includes returns along with safety. Business Monitor research
forecasts Indian insurance sector to grow at 8-10% over the next 10 years. Given the
low penetration and low awareness about insurance, the growth potential is
phenomenal. This gives the private players ample space to grow mainly at the
expense of LIC and at higher growth rates than projected above.
While the average premium per policy will go up, the average term of
life cover might reduce. Again the reason would be ULIP. Prospective policy
holders seem to prefer the ULIPs of private insurers as they can exit in a shorter
term. They seem willing to take short-term risks, whereas in the case of traditional
policies they favour LIC. The companies proclaim the provision of flexibility of
switching between the fund options depending on market performance, life stage and
risk profile of the customer. But the real reason for the private sector to push ULIP
is the shift of the investment risk (and return) to the policyholders. This in turn
49
reduces the burden on the bonus payout and the provisions towards solvency norms.
It is also much easier to sell a higher return plan where you can paint a rosy picture.
But ULIPs, like all life insurance policies, are long-term instruments and must be
bought with that time frame in mind. The customer will not benefit from a ULIP if
he holds it for a short period. Broadly, the units are invested in equities and debt
instruments which carry an element of risk. Research forecasts suggest that equity
investments yield rewards in the long term rather than in the short term due to
market imperfections. Entry and exit of investments into ULIPs eventually exposes
the investors to market timing or short term risks.
ULIP will dominate the market in the short and medium term.
However, in the long term, pure insurance will grow faster as more and more
investors use professional services from financial planners for their investment
goals. In the developed world, insurance and investment are two different objectives
and not put in the same basket. As the local market matures, people will realize this
and move on to segregate the two objectives into separate products. The current
hybrid nature of the product defeats one of the objectives completely, as people exit
the market very early, thus giving it a speculative aspect. The ULIP may be offered
to certain customers who think the insurance company's investment policy matches
their own requirements.
Channel Innovations like Bancassurance (A tie-up with banks to sell
insurance products through bank branches and channels) will increase the
penetration. As more and more insurance companies realize the strength of the
bank's reach, Bancassurance is likely to pick up. Estimations of the market size are
difficult to make, but industry experts quote the depositor base as one indicator,
which is huge.
Financial planners will become the preferred intermediaries. As the
quality and quantum of offerings improve, there will be a need for specialized
planners to guide investors. This would be different from the agents tied to specific
insurance companies. Financial planners are people who take a comprehensive
approach to assess the individual's financial need, history and risk appetite and
suggest the best from the alternatives available. As this consultancy becomes
50
independent of the agency, companies will have to improve their offering and the
value offered to the consumer. So the competition will not just be between brands
but across categories.
In the future, private insurers will definitely make further inroads into
LIC's market share. LIC's share has moved from a monopoly to 74% in five years
since the insurance sector was opened up for private players. ICICI Prudential (7%)
has the highest market share among private players followed by Bajaj Allianz,
HDFC Standard Life and Birla Sun Life. With per capita insurance at US$ 9 in India
against US$ 2,500 in US, the industry offers tremendous growth prospects, which is
justified by the presence of all global insurance majors in India. The total value of
the Indian insurance market is estimated at US$10 billion. Will it evolve into a
system similar to that of the western world? That is a something only time will tell.
51
11. SWOT ANALYSIS OF UNIT LINKED PRODUCT
STRENGTHS
5. These life insurance plans come with a 15-day free look, which allows
you to return the policy if you believe it does not meet your needs or
expectations.
8. They offer tax rebate under section 88 with a tax free dividend.
52
WEAKNESSES
1. ULIP does not offer any life as well as accident cover to minors.
2. ULIP costs are bit higher than mutual funds.
3. The returns announced by most companies on ULIPs are on net
premium (i.e. gross minus all expenses) and not the actual premium
paid by an investor.
4. Customer has to wait for liquid the amount as lock in period is 3years
5. The premium required to pay is high
6. Traditional approach that money get to the insurers nominee not
himself.
7. For taking decision of switching in ULIP the person requires
conceptual knowledge about financial market.
8. ULIP takes very high charges in first year.
OPPORTUNITIES
1. The product could have sectorial investment option like mutual fund.
2. There is a very large untapped market in rural area.
3. They can make foray into booming investment options like Realty
sector, gold
. 4. They can have large customer base
THREATS
1. Tax saving mutual fund schemes
2. IRDA levies strict norms.
3. Volatility of the Sensex, which changes the mindset of the
people
53
12. MARKET RESEARCH
METHODOLOGY
QUESTIONNAIRE DESIGN
SAMPLING TECHNIQUE
The basic idea of sampling is that by selecting some of the elements in a population
we may draw conclusions about the entire population. A population element is the
subject on which the measurement is being taken. A population is the total of
elements about which we wish to make inferences. The ultimate test of a sample
design is how well it represents the characteristics of the population it supports to
represent. In measurement terms the sample must be valid. Interview method was
used to fill the questionnaire. This is in fact, known as Schedule technique.
Schedule is the name usually applied to set of questions, which are asked and filled
in by the investigator in face-to-face situation with other person. The replies given
were filled in the questionnaire. Since all the data was available in written form,
tabulation of data and analysis became easy.
54
The other advantage of schedule is that, it specified the object of
inquiry clearly because questions were asked directly and the subject information
was collected about that alone.
1. Sample size: 150
2. Target group: Professionals like salaried and self employed people
3. Location: all urban and sub urban regions in Pune.
INTERVIEW METHOD
The interview method of collecting data involves presentation of oral verbal stimuli
and reply in terms of oral verbal responses. This method can be used thought
personal interviews and if possible through telephone interview.
PERSONAL INTERVIEW:
First the interview of the person took for collecting the data; the area covered is all
over Pune, through urban to sub urban area, then standard questionnaire filled.
TELEPHONE INTERVIEW:
This method I used for persons to whom I know generally relatives, friends. As
questionnaire contains mainly multiple choice questions so this method found very
time efficient.
MAILED QUESTIONNAIRE:
The mail questionnaire is the best way to reach people who would not give personal
interview. The people whose email ids were available were send e-mail and request
was made to fill at convenience time.
55
13. RESEARCH ANALYSIS AND FINDING
(iii) It also try find out the significant changes in the investment pattern of
the professionals in the recent period
56
ANALYSIS AND FINDINGS
DEMOGRAPHIC STUDY
29%
M
F
71%
Fig.1
The research was taken place in the most of the area of Pune there were
largely male take the decision of investment and I interviewed females who were
married.
57
II) MARITAL STATUS
Following figure shows the respondents were mostly equally distributed between
married and unmarried..
43%
S
M
57%
Fig 2
9% 3%
13% 20-30
30-40
40-50
>50
75%
Fig 3
58
As our target was to include most of the youth person as they are in the start of
carried and they have to fulfill lot of responsibilities ahead of their life, so we
targeted majority of youth in the research. As the younger age professionals spend
more on luxuries so it was very essential for company to their investment pattern so
mostly age within 20-30 years who just started earning are covered in the survey .
3%
38%
HSC
GD
PG
59%
Fig 4
As survey was conducted to find out the investment pattern of professionals so
most of the people interviewed were graduates and post graduates.
59
v) WHERE THEY INVEST:
When they were asked about where they invest the following Portfolio
composition I got.
7% 4% 9% EQTY
9%
INSURA
ULIP
MF
18%
R.E
53%
NSC
Fig 5
Here I put insurance as separate as LIC not any private insurance companies
included in that. As I was mostly checking ULIP s composition in their portfolio so
I put it separately.
As we can see majority of people wanted security for their hard earned money so
insurance was the easy option for them.
60
VI) MAJOR REASONS FOR YOUR INVESTMENT OPTION:
4%
25% 31% Return
Liquidity
Security
Tax sav
8% Flexible
32%
Fig 6
When they asked about to give priority to reasons they invest I had given them many
options the most of the people told that they invest due to security for their hard
earned money. Afterwards they look their investment option to have good return and
tax benefit.
61
VII) WHEN THEY ASKED WHETHER THEY INVEST IN HIGH TO LOW
RISK FUNDS:
23%
High
Low
Mod.
61% 16%
Fig 7
The most people interviewed where young and were software professionals so most
of them have moderate and high risk, these shows that they are ready to invest in
high risky funds in their future.
62
viii) WHEN THEY ASKED ABOUT THEIR SAVING DIRECTED TOWARDS
WHICH OF THE FOLLOWING OPTIONS:
Buying house
18% 19%
13% Buying vehicle
Other
Fig 8
Majority of people believes in retirement needs is most important, supporting of
education of children and buying their dream house come later. So it gives signals
for the companies to generate schemes which will fulfilled retirement needs,
education of children s etc.
63
ix) WHEN THEY ASKED, HAVE U TAKEN ANY ULIP POLICY:
The following figure shows the distribution of ULIP policyholder in the research.
18%
YES
NO
82%
Fig 9
The following response I got, when they were asked above question. The figure
shows there is still large untapped market for the ULIP, which will be very suitable
for the fulfilling the investor s needs.
49% Know
51% Don t Know
Fig 10
Percentage of people who know ULIP: 49%
Percentage of people who do not know ULIP: 51%
64
Xi ) AWARENESS AMONG PEOPLE REGARDING CHANGES
MADE BY IRDA
26%
Aware
Not Aware
74%
Fig.11
People who are aware of the changes made by IRDA: 26%
People who are not aware of the changes made by IRDA: 74%
25%
Heard
Not Heard
75%
Fig.12
People heard about ICICI Prudential Life Insurance company: 75%
People have not heard about ICICI Prudential Life Insurance company: 25%
65
Xiii ) PROPORTION OF POLICIES IN THE MARKET
(with respect to this sample)
6%
LIC
Other
94%
Fig.13
People having policy of LIC: 94%
People having policy of other company or no policy but not LIC: 6%
15%
ICICI Pru
Other
85%
Fig 14
66
14. DEALING WITH CLIENTS AND THEIR DOUBTS
TYPES OF OBJECTIONS
3. Closing
1. When any one talks about the concept of the product, it is Preappoach.
2. When we talk about Product , price and company, it comes under sales
interview.
67
DOUBTS RAISED BY CLIENTS
1. The client does not want to deal with this subject insurance.
2. Clients did not like the product either because they already have
insurance policy.
4. The client did not want to the deal with this company because it is a
private insurance company.
68
Some people said that returns are less compared to other financial
Instruments.
A customer is able to structure his policy because of it s flexibility. A customer can
choose his investment plan in market related policies. The returns which are earned
are tax free under section 80 c. Any amount paid to you in form of withdrawals or
other benefits will be eligible for tax benefits under section10(10D).
Clients asked whether they can choose companies to invest their money
ICICI Prudential has fundmanagers who work with professional team and the
research team does all research.
69
THESE REASONS HELP THE CLIENT TO DECIDE BUY
UNIT LINKED PRODUCTS:
5. Premium holiday
7. Tax saving
70
ASSET CREATION WITH LIFETIME
14.4
LifeTime Regular
Allocated
Premium Part of the premium
towards the policy
expenses
This goes to your Protection
Allotment of Insurance A/c to provide you with the
UNITS Charges cover against the 3D effect of
D eath, D isability and
Various Investment Dreaded Diseases.
Options, Facility of Units that build up your investment
withdrawals and value.
investing back in
your investment A/c
This is your investment A/c. The units that are bought with the premium, which
you have paid, first take care of your protection and then the remaining amount is
put into your investment account. Here you have various options of investments
as per your choice and priorities. This is the account where your money grows
over a long period of time.
Value for your investment depend You create your own value
upon the bonuses declared by the and in the long-run this
company turns out to be cost-effective
71
72
FINDINGS:
2. Women are not having insurance policy or do not show interest to know it.
3. There are many people who do not know anything about unit linked plan.
4. Many people who know about the unit linked plan is because of the marketing
strategy followed by the companies. They know it through advisors of the
company and circulars distributed by investment firms.
5. People who come under high income group have unit linked plan.
6. People who do not belong to high income group have endowment schemes and
they do invest in equities but as per their convenience.
7. These people want to have total control on their investment or wanted to have
guaranteed income.
8. Out of 150 people only 39 were aware of changes made by IRDA. It was again
because of the market strategy followed by insurance companies. Companies
wanted to sell more policies by assuring maximum benefit before changes were
implemented.
9. People know ICICI Prudential Life Insurance company either through friends or
others (wallpapers , circulars, advisors).
73
15. TAPPING OF POTENTIAL INVESTORS
Pre-approach
Approach
Presentation and
demonstration
Overcoming objections
Closing
74
PROSPECTIVE AND QUALIFYING
The first step in selling is to identify and qualify prospects. More companies are
taking responsibility for finding and qualifying leads so that salespeople can use
their expensive time doing what they can do best: selling.
Company can qualify the leads by contacting them by mail or phone to assess their
level of interest and financial capacity. The leads can be categorized, with hot
prospects turned over to the field sales force and warm prospect turned over to the
telemarketing unit for follow-up.
PREAPPROACH
The salesperson needs to learn as much as possible about the prospect company
(what it needs, who is involved in the purchase decision) and its buyers (personal
characteristics and buying sales). The salesperson should set call objectives: to
qualify the prospect, gather information. He can make personal visit, a phone call.
As a salesperson of ICICI Prudential one should understand the above prospects
very well.
In my case I made list of contacts I had to visit and then I called people and took
their appointment for explaining the product. Some places I made directly visit and
then took their appointment at specific time.
The salesperson now tells the product story to the buyer, following AIDA formula of
gaining attention, holding interest, arousing desire and obtaining action. The
salesperson uses a features, advantages, benefits, and value approach.
To get the good result salesperson should stress on benefit and value i.e. a customer
orientation not more on future of the product, i.e. product orientation.
As a salesperson I made presentation in the understandable language and make
person feel comfortable, holding his interest in product and adding some emotional
factors as the product was life insurance policy. Explained how this product will be
75
helpful for him and his family in terms of investment as well as in gaining life
cover.
OVERCOMING OBJECTIONS
CLOSING
Salespeople need to know how to recognize closing signs from the buyer, including
physical actions, statements or comments and questions.
Salesperson of ICICI Prudential should use techniques like asking for directly
premium or started filling forms or asking for their documents.
76
METHODOLOGY ADOPTED
Problem recognition
Information search
Evaluation of alternatives
Purchase decision
PROBLEM RECOGNITION:
The buying process starts when the buyer recognizes a problem or need.
The need can be triggered by internal or external stimuli. As you know
uncertainty in today s life is very high, u can see the bomb blasts, any
natural calamites that lead to make person think about him and family
members. In my discussion with potential customers as a marketer I tried to
correlate this issues with my investment option that I had to explain to
them, so that I could trigger need in the persons mind.
77
INFORMATION SEARCH:
EVALUATION OF ALTERNATIVES :
78
PURCHASE DECISION :
In the evaluation stage the consumer forms preferences among the brands in
the choice set. The consumer sets a minimum acceptable cut-off level for
each attribute & chooses the first alternative that meets the minimum
standard for all attributes or he chooses the best brand on the basis of the
perceived most important attribute
These understanding are very much essential by the sales executive of
ICICI Prudential .He/She should help in the decision process to the
customer. He can add emotional factors which leads to the trust between
them so that customer can persuade to buy early.
After the purchase, the consumer might experience dissonance that stems
from noticing certain disquieting features or hearing favorable things about
other brands. Marketing communications should supply beliefs &
evaluations that reinforce the consumer s choice & help him or her feel
good about the brand. So the sales team should not just end up at this stage
rather they should try to develop better customer relationship through
occasional calling up the customer & finding out if he has any kind of
problem. Moreover the role of the after sales team is also of vital
importance at this stage. As one good customer can fetch u many customers
by their word of mouth.
79
16. CONCLUSION
80
17. RECOMMENDATIONS
They should focus more on rural area, where the large untapped market is
present.
They should increase their physical presence; they should increase their
network.
Electronic Clearance Facility should be available most of the cities, which
will be helpful for the customer for quick delivery of payments.
Policy login period should have minimum period; customer should get policy
papers, which can build trust amongst the customers.
They should increase bancassurance that will helpful in getting more
customer base of small and medium sized banks.
They can make foray into new investment options like realty sector, precious
metals like gold etc.
They can target customers like teachers, bank clerks, which income range
around 10k and they have to it return by the end of March month, they can
target in this segment on particular period.
As the research shows that there is necessary for the insurance of the
daughter s marriage, which is one of the biggest burden of the parents. As
there are large customer base that can take it, so insurance companies should
look towards these option.
Thy can attract NRI customers as NRI could avail this facility as their another
property in India, they can take it for their parents, children etc.
Company can use recent bomb blast scenario in Pune to create the awareness
amongst people to insure themselves and protect their family.
More than three-fourths of India's insurable population has no life insurance,
pension cover and post-retirement protection cover. They should focus on this
area.
81
18. BIBILOGRAPHY
Websites visited:
www.irda.com
www.investopedia.com
www.insuranceonline.com
www.bussinessindia.com
www.imag.com
www.google.com
Book referred:
Intelligent investors
Philip Kotler- Marketing Management
82
19. ANNEXURE
QUESTIONNAIRE
Name: _________________________________________________
Address: _____________________________________________________
________________________________________________________
Phone: ______________________
Other
83
7) Have you heard ICICI PRUDENTIAL LIFEINSURANCE COMPANY:
Yes
No
MODERATE
Daughter s marriage
No
13) Did you take ICICI Prudential Life Insurance Policy? Yes No
84
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