Introduction of insurance

Insurance is commerce. Insurance product is a financial contract entered into by parties with a
define consensus of mind. Insurance, in its purest from, is a risk management tool, a security
blanket. It provides financial protection against unexpected events. When we buy insurance,
effectively a portion of risk is transferred to the insurer. This protection comes at a price, but its
a function of what we might otherwise find ourselves burdened with. Whatever stage of life we
are at, chances are, and we need insurance.
Definition:
Insurance can be define as a contract by which insurance agrees to pay the insured a
compensation for specified damage loss or injury suffered in exchange for periodic
payment called premium
Insurance cannot prevent the happening of the event; it can protect a person from the financial
losses he may suffer after the happening of the event. Therefore, insurance if aimed at
compensating the financial loss suffered an insured event.
Classification of insurance:
Insurance is basically classified into two categories.
(1) Life Insurance
(2) General Insurance
Life insurance:
This is provided for the payment of sum money on the death of the insured person due to natural
causes or on the expiry of a certain number of years if the insured person is then alive. Death and
life neither of them can be compensated. Life insurance aims to compensate the Income Earning
Capacity of the person.
Events covered in Life Insurance:
In Life Insurance, income earning capacity of the person is covered. The loss of the income
earning capacity can be on the happening of the following events when the life is assured.
1. Death.
2. Sickness (critical illness).
3. Accident (Death or permanent disability due to accident).
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4. Retirement.
Objectives and advantages of life insurance:
Protection against Risk of Untimely Death:
Life insurance is a product, with offers protection against the risk of Death the full sum assured
is made available under a life assurance policy, whereas under other savings schemes, the total
accumulated savings alone will be available.
Protection during old age:
Life insurance can also be used as a means of saving ones future. There are a number of life
insurance policies which in addition to life cover also provide the means of investing ones
income. The sum as per the policy will be received only after a period of time. This amount thus
provides for the old age.
Forced savings:
Payment of life insurance premiums is compulsory and becomes a habit. Saving in other scheme
can be easily withdrawn and may be used for less worthy purpose. Terminatio1n of a life
insurance policy by the policyholder usually results in substantial loss in benefits under the
policy to the policyholder. One is thus encouraged to save and keep ones policy alive.
Educational Requirement and Charity:
The object of insurance may be to serve as a security to education funds in respect of loans
advanced for educational purpose or to provide donations to
charitable institution like hospital and school.
Nomination and Assignment:
The life insured can name the person or person whom the policy money would be payable in the
event of his death the proceeds of a life insurance policy can be protected against the claims of
the creditors of the life insured by effecting a valid assignment of the policy. The beneficiaries
are fully protected from creditors expect the extent of any interest in the policy retained by the
insured.
Marketability and Suitability for Borrowing:
After 3 years, if the policy holder finds that he is unable to continue payment of premiums he can
surrender a policy for a cash sum. A life insured policy is accepted as a security for a commercial
loan.
Loan from the Insurance Company:
A policy holder can take a loan from his insurance company against the security of his life
insurance policy provided the term of the terms of his policy allow such a loan can be taken
usually after a period of 3 years from commencement of the policy and is a percentage of its
surrender value.
Investment Option:

The unit link products gives comprehensive insurance solution that cater to an individuals need
of earning potentially high return as well as stay for life. Thus there is an option to invest money
in the products that combine the best of insurance and investment.
In a volatile market conditions it is possible to
secure both as one can hedge the investment with saver investment vehicles that provide a
diversified portfolio.
Tax Benefits:
The Indian income tax act provides tax concessions to the policy holder both on payment of
premium and on the maturity amount. Under sec 88 the benefits on premium paid by an
individual for life insurance policy on his own life/on the life of spouse children minor or major,
including married daughters.
Protection to Wife and Children:
Under sec 6 of the married womans property act if a married man takes a policy of the life
insurance on his own life and expenses on the face of it to be for the benefit of his wife or of his
wife and children or any of them, than it shall be deemed to be a trust for the benefit of his wife
and children or any of them, according to the interest so expressed and shall not so long as any
object of trust remains be subject to the controls of the husband or to his creditors or from part of
his estate. An insurance policy taken by a married man in the above manner is ideal way to
protect the interest of his wife and children, even after his untimely death.

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 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).

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.
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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 1956with 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.

PRESENT SCENARIO - LIFE INSURANCE INDUSTRY IN INDIA

The life insurance industry in India grew by an impressive 47.38%, with premium income at Rs.
1560.41 billion during the fiscal year 2006-2007. Though the total volume of LIC's business
increased in the last fiscal year (2006-2007) compared to the previous one, its market share came
down from 85.75% to 81.91%. The 17 private insurers increased their market share from about
15% to about 19% in a year's time. The figures for the first two months of the fiscal year 2007-08
also speak of the growing share of the private insurers. The share of LIC for this period has
further come down to 75 percent, while the private players have grabbed over 24 percent.
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With the opening up of the insurance industry in India many foreign players have entered the
market. The restriction on these companies is that they are not allowed to have more than a 26%
stake in a companys ownership.
Innovative products, smart marketing, and aggressive distribution have enabled fledgling private
insurance companies to sign up Indian customers faster than anyone expected. Indians, who had
always seen life insurance as a tax saving device, are now suddenly turning to the private sector
and snapping up the new innovative products on offer. Some of these products include
investment plans with insurance and good returns (unit linked plans), multi purpose insurance
plans, pension plans, child plans and money back plans.

HDFC STANDARD LIFE INSURANCE COMPANY LIMITED

HDFC Incorporated in 1977 with a share capital of Rs 10 Crores, HDFC has since emerged as
the largest residential mortgage finance institution in the country. The corporation has had a
series of share issues raising its capital to Rs. 119 Crores. The gross premium income for the year
ending March 31, 2007 stood at Rs. 2,856 Crores and new business premium income at Rs.
1,624 Crores. The company has covered over 8,77,000 lives year ending March 31, 2007.
HDFC operates through almost 450 locations throughout the country with its corporate head
quarters in Mumbai, India. HDFC also has an International Office in Dubai, UAE with service
associates in Kuwait, Oman and Qatar. HDFC is the largest housing company in India for the last
27 years.
HDFC Standard Life Insurance Company Limited. Is one of India's leading private
insurance companies, which offers a range of individual and group insurance solutions. It
is a joint venture between Housing Development Finance Corporation Limited (HDFC
Limited), India's leading housing finance institution and a Group Company of the
Standard Life Plc, UK.As on February 28, 2009 HDFC Ltd.Holds72.43% and StandardLife

(Mauritius Holding) 2006, Ltd.Holds 26.00% of equity in the joint venture, while the rest is held
by others.

HDFCStandard Life believes that establishing astrong and ethical foundation is anessential
prerequisite for long-term sustainable growth. To ensure this, we have concentrated our focus on
expansion of branch network,organizing an efficientand welltrainedsalesforce, and setting up
appropriate systemsand processeswith optimumuse of technology. As all these areasform the
basicinfrastructure for establishing the highest possible customer service standards.
SNAPSHOT-I

Incorporated in 1977 as the first specialized Mortgage Company in India.

Almost 90% of initial shareholding in the hands of domestic institutes and retail
investors. Current 77% of shares held by foreign institutional investors.

Besides the core business of mortgage HDFC has evolved into a financial conglomerate
with holdings In:
HDFC Standard Life insurance Company- HDFC holds 78.07 %.
HDFC Asset Management Company HDFC holds 50.1%
HDFC Bank- HDFC holds 22.25%.
Intelnet Global (Business Process Outsourcing) HDFC holds 50%.
HDFC Chubb General Insurance Company HDFC holds 74%.

Our 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'

Our Values :
Values that we observe while we work:

Integrity

Innovation

Customer centric

People Care One for all and all for one

Team work

Joy and Simplicity

Our Key Strengths:

Financial Expertise:
As a joint venture of leading financial services groups, HDFC Standard Life has the
financial expertise required to manage your long-term investments safely and
efficiently.
Range of Solutions:
We have a range of individual and group solutions, which can be easily customized to
specific needs. Our group solutions have been designed to offer you complete
flexibility combined with a low charging structure.
Track Record So Far:
Our gross premium income, for the year ending March 31, 2009 stood at Rs.
5,564.69 crores.
The company has covered over 8,33,070 lives as on March 31, 2009.

STANDARD LIFE
Standard Life is Europes largest mutual life assurance company. Standard Life, which has been
in the life insurance business for the past 175 years is a modern company surviving quite a few
changes since selling its first policy in 1825. The company expanded in the 19 th century from kits
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original Edinburgh premises, opening offices in other towns and acquitting other similar
businesses.
Standard Life Currently has assets exceeding over 70 billion under its management and has the
distinction of being accorded AAA rating consequently for the six years by Standard and Poor.

SNAPSHOT

Founded in 1875, company supporting generation for last 179 years.

Currently over 5 million Policy holders benefiting from the services offered.

Europes largest mutual life insurer.

JOINT VENTURE

HDFC Standard Life Insurance Company Limited was one of the first companies to be granted
license by the IRDA to operate in life insurance sector. Reach of the JV player is highly rated and
been conferred with many awards. HDFC is rated AAA by both CRISIL and ICRA. Similarly,
Standard Life is rated AAA both by Moodys and Standard and Poors. These reflect the
efficiency with which HDFC and Standard Life manage their asset base of Rs. 15,000 Cr and Rs.
600,000 Cr. respectively.

HDFC Standard Life Insurance Company Ltd was incorporated on 14 th August 2000. HDFC is
the majority stakeholder in the insurance JV with 81.4% staple and Standard of as a staple 18.6%
Mr. Deepak Satwalekar is the MD and CEO of the venture.
HDFC Standard Life Insurance Company Ltd. Is one of Indias leading Private Life Insurance
Companies, which offers a range of individual and group insurance solutions. It is a joint venture
between Housing Development Finance Corporation Limited (HDFC Ltd.) Indias leading
housing finance institution and the Standard Life Assurance Company, a leading provider of
financial services from the United Kingdom. Both the promoters are well known for their ethical
dealings and financial strength and are thus committed to being a long-term player in the life
insurance industry- all important factors to consider when choosing your insurer.

BUSINESS GROWTH
The gross premium income of HDFC, for the year ending March 31, 2007 stood at Rs. 2,856
crores and new business premium income at Rs. 1,624 crores.
The company has covered over 8,77,000 lives year ending March 31, 2007. Company also
declared our 5th consecutive bonus in as many years for our with profit policyholders.

KEY STRENGTH
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:

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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.

PRODUCTS & SERVICES

The right investment strategies won't just help plan for a more comfortable tomorrow -- they will
help you get SarUthakeJiyo. 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.
PLANS THAT ARE OFFERED BY HDFC STANDARDS LIFE INSURANCE

Individual Products
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
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small price. Protection range includes our Term Assurance Plan&Loan Cover Term
Assurance Plan.

Safeguard your familys financial independence

Security against uncertainties
Financial cushion in case of an eventuality

Why do I need Protection Plans?

Protection 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 ones family is one of the most important goals of life. Protection
Plans go a long way in ensuring your familys 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.
Types of Protection Plans
HDFC TERM ASSURENCE PLAN
This plan is designed to help secure your familys financial needs in case of uncertainties. The
plan does this by providing a lump sum to the family of the life assured in case of death or
critical illness (if option is chosen) of the life assured during the term of the contract. One can
choose the lump sum that would replace the income lost to ones family in the unfortunate event
of ones death. This helps your family to maintain their financial independence, even when you
are not around.
Features

Advantages
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High cover at a very nominal cost.

Flexibility to choose the Sum Assured.

Additional benefit options can be availed at marginal costs.

Premium amount remains the same over the term of the policy in case of regular
premium

Option of paying single premium or regular premium.

Tax benefits under sections 80C, 80D and 10(10D) ofIncome Tax Act, 1961.

HDFC LONG TERM ASSURENCE PLAN

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

13

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 dont 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

Childrens Plans

Helps you secure your childs dreams

Economic support when your child needs it most

Funding major milestones

Why do I need Childrens Plans?

Childrens Plans helps you save so that you can fulfill your childs dreams and aspirations.
These plans go a long way in securing your childs future by financing the key milestones in
their lives even if you are no longer around to oversee them. As a parent, you wish to provide
your child with the very best that life offers, the best possible education, marriage and life
style.
Most of these goals have a price tag attached and unless you
plan your finances
carefully, you may not be able to provide the required economic support to your child when you
need it the most. For example, with the high and rising costs of education, if you are not
financially prepared, your child may miss an opportunity of a lifetime.
For exampleToday, a 2-year MBA course at a premiere management institute would cost you nearly Rs.
3,00,000/- At a assumed 6% rate of inflation per annum, 20 years later, you would need almost
Rs. 9,07,680/- to finance your child's MBA degree.

14

An illustration of how education expenses could rise with passing time due to inflation

So, how can you cope with these costs? Childrens Plans help you save steadily over the long
term so that you can secure your childs future needs, be it higher education, marriage or
anything else. A small sum invested by you regularly can help you build a decent corpus over a
period of time and go a long way in providing your child a secured financial future along with .
15

Types of Childrens Plans

Our range of Children's Plans includes

HDFC Childrens Plan

As a parent, your priority is your childs future and being able to meet your childs dreams and
aspirations. With our HDFC Childrens Plan, you can start building your savings today and
ensure a bright future for your child. This With Profits plan is designed to secure your childs
future by giving your child (Beneficiary) a guaranteed lump sum on maturity or in case of your
unfortunate demise, early into the policy term.
Features

Advantages
16

The Double Benefit Plan Option helps you secure your childs immediate and future
needs. In case of your unfortunate demise, we will pay the Sum Assured to your child
(Beneficiary). Your family need not pay any further premiums and the policy continues.
And on maturity of the plan, we will pay you the Sum Assured plus Bonuses Declared

You can choose to pay your premium as either Annually, Half-Yearly or Quarterly
depending on your convenience. You also have a range of convenient auto premium
payment options

Tax benefits are offered under section 80C and 10(10D) of the Income Tax Act,1961

Retirement Plans

Monetary security
Financial independence even after retirement
Live carefree in your golden years

Why do I need Retirement Plans?

Retirement Plans provide you with financial security so that when your professional income
starts to ebb, you can still live with pride without compromising on your living standards. By
providing you a tool to accumulate and invest your savings, these plans give you a lump sum on
retirement, which is then used to get regular income through an annuity plan. Given the high cost
of living and rising inflation, employer pensions alone are not sufficient. Pension planning has
therefore become critical today.
Indias average life expectancy is slated to increase to over 75 years by 2050 from the present
level of close to 65 years. Life spans have been increasing due to better health and sanitation
conditions in the country. However, the average number of years of employment has not been
rising commensurately. The result is an increase in the number of post-retirement years.
Accordingly, it has become necessary to ensure regular income for life after retirement, so that
you can live with pride and enjoy your twilight years.

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Priorities at different stages of life

However, skyrocketing costs can throw even a well-laid plan off balance. With costs rising every
day, you can just imagine how high they will be when you are ready to hang up your boots. So,
what should you do to counter this? Its time to plan your retirement and that too sooner than
later.
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The above illustration shows how with each passing year your annual savings requirement would
increase. For instance, if you are 30 years old and plan to retire at 60, then, with a current annual
expenditure of Rs. 3,00,000/- , you would need a corpus in excess of Rs. 2,00,00,000/- to
maintain your living standards, assuming you live till 85 years and the inflation rate is 4%. To
build this retirement corpus, you need to invest Rs 3,60,000/- per annum in a retirement plan that
offers 8% returns per annum. In case you delay planning your retirement by 5 years then the
investment amount would increase to Rs 6,90,000/- per annum.

Types of Retirement Plans

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Our range of Savings & Investment Plans includes

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
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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.
Why do I need Savings & Investment Plans?
You have always given your family the very best. And there is no reason why they shouldnt
get the very best in the future too. As a judicious family man, your priority is to secure the wellbeing of those who depend on you. Not just for today, but also in the long term. More
importantly, you have to ensure that your familys 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.

21

Our Savings & Investment Plans provide you the assurance of lump sum funds for your and
your familys future expenses. While providing an excellent savings tool for your short term
and long term financialgoals, these plans also assure your family

a certain sum by way

of an insurance cover.
Types

22

of

Savings

&

Investment

Plan

Health Plans

Secure your health costs

Financial independence despite illnesses

Meeting medical expenses effortlessly

10
Sec.
(10)D

Under Sec. 10(10D), the benefits you

23
receive are completely tax-free, subject to
the conditions laid down therein.

STATEMENT OF PROBLEM:
One of the major problems affecting the performance of the company is the change in the
customer needs and requirements, and also depends on the companys Value added services.
Therefore the problematic area of this study focuses on the study of customer perception towards
value added services provided by the HDFC Standard Life Insurance Ltd.
RESEARCH DESIGN OF THE STUDY:
Marketing research can be defined as the systematic design,
collection, analysis, and reporting of the data and finding relevant to a specific marketing
situation facing the company.
Research design is the basic plan which guides the researchers in the collection and analysis of
data required for practicing the research product. In fact the research design is the conceptual
structure with which research is conducted. It consist the blue print for the collection,
measurement and analysis of the data that was followed completing the study to ensure that
study is relevant to the problem and will follow the predetermined and set data.
The main data feature of Research Design is that it specifies population to be studied. The
main them of the chapter is to know the source of the data the researcher has collected. Data are
raw facts of observation, typically about physical phenomenon. Thus data are usually subjected
to
value added process where :
It from is aggregated, manipulated and organized
Its contents are analyzed and evaluated
It is placed in a proper context for human user
Therefore, information is processed data placed in a context gives value for the reader. It is a
basis for analyzing and interpreting, which helps in making note of findings, conclusions and
also helps to give suggestions so data should accurate, correct and clear. If it is inaccurate and
not in proper order the whole out put gets affected and it may lead to confusion.

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CONCLUSION
HDFC Standard Life Insurance was grown a lot through its
aggressive marketing strategies and the growth rate as tremendous, through it is growing faster it
has to work on certain things and maintain the standard. This can be done through introducing
more innovative products and recruiting good quality advisors because they are the pillars of the
company and it is the most valuable value added services that the company
is having.
Therefore, the best the company can do is giving the customer
something, which is little bit different and better than its competitor. The company should also be
successful in expressing the extra features, which is given to the customer. The customer should
feel that whatever company is giving is something great, and no one could ever imagine about it.
This
feeling makes the customer feel that company is very much satisfying them. In addition, the
extra feature given to satisfying is some thing great.

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