A SUMMER TRAINING REPORT IN MARKETING STRATEGIES ON MAX NEW YORK LIFE INSURANCE PVT. LTD.

Submitted in partial fulfillment of requirement of Bachelor of Business Administration (BBA) Guru Jambheshwar University, Hisar

Trainee Supervisor SAAVAN RAI KHULLAR (Partner In-charge)

SUBMITTED BY NANDITA NANDA Enrollment no 05511242097

Session: 2005-2008 GURU JAMBHESHWAR UNIVERSITY

HISAR

ACKNOWLEDGEMENT

My training at Max New York life insurance was extremely enriching. I was given an opportunity to work in close association with senior executive and was benefited tremendously with the interaction. I had with them during course of our project. During my training period I got insights in to the insurance sector and an opportunity to understand the mechanics of how the work is done in an insurance company. Study of the distribution models employed in the industry was also extremely enlightening. I would like to extend my heart-felt gratitude to MS. Anju kapoor(sales manager) & Mr Saavan Rai Khullar(tranee supervisor) of Max New York Life insurance company limited for providing an opportunity to work in this organization. I would like to express sincere thanks to Max New York life insurance Company for enlightening guidance. Last but not the least I would like to thank all the respondents who took out time from there busy schedules to help me in my project, this project could not have been a success without them.

NANDITA NANDA

EXECUTIVE SUMMARY

In todays competitive and dynamic world, with every business providing the same kind of product or service, only that firm which comes up with an innovative idea can hope to survive in the long -run, by attracting and luring customers. Insurance, sure is an upcoming sector but with the privatization of the same, selling insurance products has become tough due to the competition angle attached to it. It is usually said that if you can sell insurance, you can sell anything in the world including garbage. The reason behind this concept is the hesitant and unaware population, who simply run away at the mere mention of its name. Providing insurance to a huge population such as ours encompassing different strata of society has indeed been a formidable task for the last few decades. WHO statistics put the insurance access in India at around 65

percent. The remaining 35 percent do not have any access at all. Governments in most parts of the world, developed or otherwise, realize the limitations when it comes to providing Insurance per se or its financing aspects. In a globalize market-driven economy, it becomes imperative for each country to look for the solutions and structure them to suit the domestic needs. While there will be various factors both external and internal influencing this search, there is no doubt that public and private healthcare providers and financers will have to keep the customer in focus when formulating a well thought out and highly integrated approach to cover all sorts of requirements.

PREFACE

The liberalization of the Indian insurance sector has been the subject of much heated debate for some years. The policy makers where in the catch 22 situation wherein for one they wanted competition, development and growth of this insurance sector which is extremely essential for channeling the investments in to the infrastructure sector. At the other end the policy makers had the fears that the insurance premier, which are substantial, would seep out of the country; and wanted to have a cautious approach of opening for foreign participation in the sector. As one of the rare occurrences the entire debate was put on the back burner and the IRDA saw the day of the light thanks to the maturing polity emerging consensus among factions of different political parties. Though

some changes and some restrictive clauses as regards to the foreign participation were included the IRDA has opened the doors for the private entry into insurance. Whether the insurer is old or new, private or public, expanding the market will present multitude of challenges and opportunities. But the key issues, possible trends, opportunities and challenges that insurance sector will have still remains under the realms of the possibilities and speculation. What is the likely impact of opening up Indias insurance sector?

Broadening of Benefits The large scale of operations, public sector bureaucracies and cumbersome procedures hampers nationalized insurers. Therefore, potential private entrants expect to score in the areas of customer service, speed and flexibility. They point out that their entry will mean better products and choice for the consumer. The critics counter that the benefit will be slim, because new players will concentrate on affluent, urban customers as foreign banks did until recently. This seems to be a logical strategy. Start-up costssuch as those of setting up a conventional distribution network-are large and high-end niches offer better returns. However, the middle-market segment too has great potential. Since insurance is a volumes game. Therefore, private insurers would be best served by a middle-market approach, targeting customer segments that are currently untapped.

CONTENT CHAPTER-1 INTRODUCTION 1.1 ABOUT THE INDUSTRY

3 HISTORICAL PERSPECTIVE 4 KEY MILESTONE 5 INDUSTRY REFORMS 1.2 MARKET PRESENCE 6 FUNDAMENTAL DEFINATION 7 CHARACTERISTICS OF INSURANCE 8 FUNCTIONS OF INSURANCE 9 FUNDAMENTAL OF INSURANCE 10 INSURANCE INDUSTRY 11 LIFE INSURANCE INDUSTRY 12 TYPES OF CONTRACTS 1.3 RANGE OF PRODUCT $ SERVICES 1.4 COMPANIES POLICIES 13 LIFE INSURANCE- OTHER PROVISIONS 14 SPECIAL RIDERS 15 GROUP INSURANCE 16 GROUP LIFE INSURANCE 17 INDIAN INSURANCE INDUSTRY 18 INSURANCE SECTOR IN INDIA 19 LIFE INSURANCE SECTOR IN INDIA 20 INSURANCE MARKET IN INDIA 1.5 SWOT ANALYSIS CHAPTER- 2 RESEARCH METHODOLOGY 2.1 Research objectives Scope of the Study 2.2 Research design Individual insurance Group Insurance Employee deposit linked insurance Credit Shield

Unit linked group gratuity

2.3 Data sources 21 Significance of the Industry 22 Significance of the Research 23 Research Technique 2.4 Sample design 24 Sampling Methodology 25 Sampling unit 26 Sampling Area 27 Sample Size 2.5 Limitations of the research CHAPTER- 3 COMPANY PROFILE 28 Vision 29 Mission 30 Values CHAPTER- 4 DATA ANALYSIS AND INTERPRETATION CHAPTER- 5 5.1 FINDINGS 31 Monthly family income level 32 Factors of investment 33 Influencer 34 Analysis of time horizon for investment 35 Annual investment level 36 Preference for life insurance as an investment 37 Return on investment 38 Advantage of investing in life insurance 39 Saving your tax

5.2 CONCLUSIONS

CHAPTER- 6 RECOMMENDATIONS CHAPTER- 7 ANNEXURE Questionnaire CHAPTER-8 BIBLIOGRAPHY CHAPTER-1 1.1 INTRODUCTION TO THE INDUSTRY With the largest number of life insurance policies in force in the world, Insurance happens to be a mega opportunity in India. Its a business growing at the rate of 15-20 per cent annually and presently is of the order of Rs 450 billion (for the financial year 2005 2006). Together with banking services, it adds about 7% to the countrys Gross Domestic Product (GDP). The gross premium collection is nearly 2% of GDP and funds available with LIC for investments are 8% of the GDP. Even so nearly 80% of the Indian population is without life insurance cover while health insurance and non-life insurance continues to be below international standards. A large part of our population is also subject to weak

social security and pension systems with hardly any old age income security. This in itself is an indicator that growth potential for the insurance sector in India is immense. A well-developed and evolved insurance sector is needed for economic development as it provides long term funds for infrastructure development and strengthens the risk taking ability of individuals. It is estimated that over the next ten years India would require investments of the order of one trillion US dollars. The Insurance sector, to some extent, can enable investments in infrastructure development to sustain the economic growth of the country. (Source: www.indiacore.com) HISTORICAL PERSPECTIVE The history of life insurance in India dates back to 1818 when it was conceived as a means to provide for English Widows. Interestingly in those days a higher premium was charged for Indian lives than the non - Indian lives, as Indian lives were considered more risky to cover. The Bombay Mutual Life Insurance Society started its business in 1870. It was the first company to charge the same premium for both Indian and non-Indian lives.

The Oriental Assurance Company was established in 1880. The General insurance business in India, on the other hand, can trace its roots to Triton Insurance Company Limited, the first general insurance company established in the year 1850 in Calcutta by the British. Till the end of the nineteenth century insurance business was almost entirely in the hands of

overseas companies. Insurance regulation formally began in India with the passing of the Life Insurance Companies Act of 1912 and the Provident Fund Act of 1912. Several frauds during the 1920's and 1930's sullied insurance business in India. By 1938 there were 176 insurance companies. The first comprehensive legislation was introduced with the Insurance Act of 1938 that provided strict State Control over the insurance business. The insurance business grew at a faster pace after independence. Indian companies strengthened their hold on this business but despite the growth that was witnessed, insurance remained an urban phenomenon. The Government of India in 1956, brought together over 240 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. 1938: Earlier legislation consolidated and amended by the Insurance Act with the objective of protecting the interests of the insuring public. 1956: 245 Indian and foreign insurers along with provident societies were taken over by the central government and nationalized. LIC was formed by an Act of Parliament- LIC Act 1956- with a capital contribution of Rs. 5 crore from the Government of India. INDUSTRY REFORMS Reforms in the Insurance sector were initiated with the passage of the IRDA Bill in Parliament in December 1999. The IRDA since its incorporation as a statutory body in April 2000 has fastidiously stuck to its schedule of framing regulations and registering the private sector insurance companies. Since being set up as an independent statutory body the IRDA has put in a framework of globally compatible regulations. The other decision taken simultaneously to provide the supporting systems to the insurance sector and in particular the life insurance companies was the launch of the IRDA online service for issue and renewal of licenses to agents. The approval of institutions for imparting training to agents has also ensured that the insurance companies would have a trained workforce of

insurance agents in place to sell their products.

1.2 MARKET PRESENCE

The life insurance industry in India grew by an impressive 36%, with premium income from new businesses at Rs. 253.43 billion during the fiscal year 2004-2005. Though the total volume of LIC's business increased in the last fiscal year (2004-2005) compared to the previous one, its market share came down from 87.04 to 78.07%.

The 14 private insurers increased their market share from about 13% to about 22% in a year's time. The figures for the first two months of the fiscal year 2005-06 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. 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. Since the opening up of the insurance sector in 1999, foreign investments of Rs. 8.7 billion have poured into the Indian market and 14 private life insurance companies have been granted licenses. Definitions:

General definition: In the words of John Magee, Insurance is a plan by themselves which large number of people associate and transfer to the shoulders of all, risks that attach to individuals.

Fundamental definition: In the words of D.S. Hansell, Insurance accumulated contributions of all parties participating in the scheme. Contractual definition: In the words of justice Tindall, Insurance is a contract in which a sum of money is paid to the assured as consideration of insurers incurring the risk of paying a large sum upon a given contingency.

Characteristics of insurance Sharing of risks Cooperative device Evaluation of risk Payment on happening of a special event The amount of payment depends on the nature of losses incurred. The success of insurance business depends on the large number of people insured against similar risk. Insurance is a plan, which spreads the risk and losses of few people among a large number of people. The insurance is a plan in which the insured transfers his risk on the

insurer. Insurance is a legal contract which is based upon certain principles of insurance which includes, utmost good faith, insurable interest, contribution, indemnity, causas proxima, subrogation, etc. The scope of insurance is much wider and extensive. Functions of insurance: Primary functions: 40 Provide protection:- Insurance cannot check the happening of the risk, but can provide for the losses of risk. 41 Collective bearing of risk: - Insurance is a device to share the financial losses of few among many others. 42 Assessment of risk: - Insurance determines the probable volume of risk by evaluating various factors that give rise to risk. 43 Provide certainty: - Insurance is a device, which helps to change from uncertainty to certainty. Secondary functions: 44 Prevention of losses: - Insurance cautions businessman and individuals to adopt suitable device to prevent unfortunate consequences of risk by observing safety instructions. 45 Small capital to cover large risks: - Insurance relives the businessman from security investment, by paying small amount of insurance against larger risks and uncertainty. 46 Contributes towards development of larger industries.

Other Function: Means of savings and investment: Insurance companies are business houses. The product they sell is financial protection. To succeed and survive, they must cover their costs, which include payments to cover the losses of policyholders, as well as sales and administrative expenses, taxes and dividends. Insurance companies have two sources of income for covering these costs: premiums and investment income. The premiums are collected on a regular basis and invested in Government Bonds, Gilt, stocks, mutual funds, real estates and other conservative avenues. However, investment income depends on market conditions, interest rates, economy etc. and varies from year to year. Because of the uncertainty associated with the investment income, insurance companies must generate enough income from premiums to cover the bulk of their expenses. The risk becomes insurable if the following requirements are complied with: The insured must suffer financial loss if the risk operates. The loss must be measurable in money, The object of the insurance contract must be legal. The insurer should have sufficient knowledge about the risks he accepts. Fundamentals of Insurance The fundamental Principles of the Insurance are as follows:

Insurable Interest: Insurable interest means the legal right to insure. Insurable Interest is a must and only then the insurance contract is enforceable at law. This principle differentiates a Contract of insurance

from wager. Lack of insurable interest renders the contract null and void. For Insurable Interest to exist there must be Property, Rights, Interest, Life or Liability; this must be insured and the Insured should have a legally recognizable relationship thereto. The Insured should be benefited by the safety of the property or is prejudiced by its loss. Insurable Interest may arise in the following manner: 1. Ownership: Absolute ownership entitles the owner to insure the property. This is the commonest method whereby Insurable Interest arises. 2. Partial Interest is also insurable e.g. a mortgagee. A creditor can also insure the life of his debtor but only to the extent of his loan. 3. Administrators and executors i.e. officials appointed by a court of law to take care of a property may also insure the property. 4. Relationship does not automatically constitute insurable interest. The only relationship recognized by law for this purpose is the one between a husband and wife. 5. An employer can insure his employee under a Personal Accident Policy as he has insurable interest in them.

Proximate cause: Generally, the claims are payable under insurance policies if they arise out of events which are proximately caused by the insured perils. In other words, the proximate cause of the event has to be peril covered by the policy, so as to constitute a valid claim.

Contribution: An insured may have several insurance on the same subject matter. If he recovers his loss under all these insurance, he will obviously make a profit out of loss. This will be an infringement of the principle of indemnity. Common Law has, therefore, evolved the doctrine of contribution whereby the insured is prevented from recovering more

than his loss, despite his having matter.

several insurance on the subject

Subrogation: The principle of indemnity seeks to prevent the insured from making profit out of loss. However, it may so happen that that the insured may recover his loss under his policy and he may also have rights against third parties. If, after the insurance claim is settled, the insured is allowed to enforce his rights against third parties and to retain whatever damages he receives from them, he will certainly make a profit and the principle of indemnity will be infringed. Common Law has therefore, evolved the doctrine of subrogation as corollary to the principle of indemnity. Subrogation may be defined as the transfer of rights and remedies of the insured to the insurers who have indemnified the insured in respect of the loss. The Common Law right of subrogation is implied an all contracts on indemnity, as it arises only after payment of loss.

Utmost Good Faith: In all General Insurance contracts we know that a property or interest or liability or life is offered for insurance and the insured has to take decisions on the acceptance of the proposal. If he decides to accept the proposal a premium commensurate with the risk has to be charged. To enable him to take necessary decision in this regard, the insurer must have certain facts about the risk offered. These facts influence the judgment of the insurer in deciding about the acceptance or otherwise of the risk and the rate of premium to be charged, if accepted. Such facts are known as material facts.

Insurance industry A system under which the insurer, for a consideration usually agreed upon in advance, promises to reimburse the insured or to render services to the insured in the event that certain accidental occurrences result in losses during a given period. It thus is a method of coping with risk. Its primary function is to substitute certainty for uncertainty as regards the economic cost of loss-producing events. Insurance relies heavily on the law of large numbers. In large homogeneous populations it is possible to estimate the normal frequency of common events such as deaths and accidents. Losses can be predicted with reasonable accuracy, and this accuracy increases as the size of the group expands. From a theoretical standpoint, it is possible to eliminate all pure risk if an infinitely large group is selected. From the standpoint of the insurer, an insurable risk must meet the following requirements: 1. The objects to be insured must be numerous enough and homogeneous enough to allow a reasonably close calculation of the probable frequency and severity of losses. 2. The insured objects must not be subject to simultaneous destruction. For example, if all the buildings insured by one insurer are in an area subject to

flood, and a flood occurs, the loss to the insurance underwriter may be catastrophic. 3. The possible loss must be accidental in nature, and beyond the control of the insured. If the insured could cause the loss, the element of randomness and predictability would be destroyed. 4. There must be some way to determine whether a loss has occurred and how great that loss is. This is why insurance contracts specify very definitely what events must take place, what constitutes loss, and how it is to be measured. From the viewpoint of the insured person, an insurable risk is one for which the probability of loss is not so high as to require excessive premiums. What is excessive depends on individual circumstances, including the insured's attitude toward risk. At the same time, the potential loss must be severe enough to cause financial hardship if it is not insured against. Insurable risks include losses to property resulting from fire, explosion, windstorm, etc.; losses of life or health; and the legal liability arising out of use of automobiles, occupancy of buildings, employment, or manufacture. Uninsurable risks include losses resulting from price changes and competitive conditions in the market. Political risks such as war or currency debasement are usually not insurable by private parties but may be insurable by governmental institutions. Very often contracts can be drawn in such a way that an uninsurable risk can be turned into an insurable one through restrictions on losses, redefinitions of perils, or other methods.

Life insurance industry Life insurance may be defined as a plan under which large groups of individuals can equalize the burden of loss from death by distributing funds to the beneficiaries of those who die. From the individual standpoint life insurance is a means by which an estate may be created immediately for one's heirs and dependents. It has achieved its greatest acceptance in Canada, the United States, Belgium, South Korea, Australia, Ireland, New Zealand, The Netherlands, and Japan, countries in which the face value of life insurance policies in force generally exceeds the national income. In the United States in 1990 nearly $9.4 trillion of life insurance was in force. The assets of the more than 2,200 U.S. life insurance companies totaled nearly $1.4 trillion, making life insurance one of the largest savings institutions in the United States. Much the same is true of other wealthy countries, in which life insurance has become a major channel of saving and investment, with important consequences for the national economy. Life insurance is relatively little used in poor countries, although its acceptance has been increasing. Types of contracts The major types of life insurance contracts are term, whole life, and universal life, but innumerable combinations of these basic types are sold. Term insurance contracts, issued for specified periods of years, are the simplest. Protection under these contracts expires at the end of the stated period, with no cash value remaining. Whole life contracts, on the other hand, run for the whole of the insured's life and gradually accumulate a cash

value. The cash value, which is less than the face value of the policy, is paid to the policyholder when the contract matures or is surrendered. Universal life contracts, a relatively new form of coverage introduced in the United States in 1979, have become a major class of life insurance. They allow the owner to decide the timing and size of the premium and amount of death benefits of the policy. In this contract, the insurer makes a charge each month for general expenses and mortality costs and credits the amount of interest earned to the policyholder. There are two general types of universal life contracts, type A and type B. In type-A policies the death benefit is a set amount, while in type-B policies the death benefit is a set amount plus whatever cash value has been built up in the policy. Life insurance may also be classified, according to type of customer, as ordinary, group, industrial, and credit. The ordinary insurance market includes customers of whole life, term, and universal life contracts and is made up primarily of individual purchasers of annual-premium insurance. The group insurance market consists mainly of employers who arrange group contracts to cover their employees. The industrial insurance market consists of individual contracts sold in small amounts with premiums collected weekly or monthly at the policyholder's home. Credit life insurance is sold to individuals, usually as part of an installment purchase contract; under these contracts, if the insured dies before the installment payments are completed, the seller is protected for the balance of the unpaid debt. Insurance may be issued with a premium that remains the same throughout the premium-paying period, or it may be issued with a premium that

increases periodically according to the age of the insured. Practically all ordinary life insurance policies are issued on a level-premium basis, which makes it necessary to charge more than the true cost of the insurance in the earlier years of the contract in order to make up for much higher costs in the later years; the so-called overcharges in the earlier years are not really overcharges but are a necessary part of the total insurance plan, reflecting the fact that mortality rates increase with age. The insured is not overpaying for protection, because of the claim on the cash values that accumulate in the early years; the policyholder may borrow on this value or may recapture it completely by lapsing the policy. The insured does not, however, have a claim on all the earnings that accrue to the insurance company from investing the funds of its policyholders. By combining term and whole life insurance, an insurer can provide many different kinds of policies. Two examples of such package contracts are the family income policy and the mortgage protection policy. In each of these, a base policy, usually whole life insurance, is combined with term insurance calculated so that the amount of protection declines as the policy runs its course. In the case of the mortgage protection contract, for example, the amount of the decreasing term insurance is designed roughly to approximate the amount of the mortgage on a property. As the mortgage is paid off, the amount of insurance declines correspondingly. At the end of the mortgage period the decreasing term insurance expires, leaving the base policy still in force. Similarly, in a family income policy, the decreasing term insurance is arranged to provide a given income to the beneficiary over a period of years roughly corresponding to the period during which the children are young and dependent.

Some whole life policies permit the insured to limit the period during which premiums are to be paid. Common examples of these are 20-year life, 30year life, and life paid up at age 65. On these contracts, the insured pays a higher premium to compensate for the limited premium-paying period. At the end of the stated period, the policy is said to be paid up, but it remains effective until death or surrender. Term insurance is most appropriate when the need for protection runs for only a limited period; whole life insurance is most appropriate when the protection need is permanent. The universal life plan, which earns interest at a rate roughly equal to that earned by the insurer (approximately the rate available in long-term bonds and mortgages), may be used as a convenient vehicle by which to save money. The owner can vary the amount of death protection as the need for it changes in the course of life. The policy offers flexibility and saves the owner commission expense by eliminating the need for dropping one policy and taking out another as protection requirements change.

Settlement options The death proceeds or cash values of insurance may be settled in various ways. The insured may take the cash value and lapse the policy. A beneficiary may take a lump sum settlement of the face amount upon the death of the insured. The beneficiary may, instead, elect to receive the proceeds over a given number of years or in some fixed amount, such as Rs1000 a month, for as long as the proceeds last. The money may be left

with the insurer temporarily to draw interest. Or the proceeds may be used to purchase a life annuity, which in effect is another insurance policy guaranteeing regular payments for the life of the insured.

1.3 Range of product & services 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. Insurance may be described as a social device to ensure protection of economic value of life and other assets. Under the plan of insurance, a large number of people associate themselves by sharing risks attached to individuals. The risks, which can be insured against, include fire, the perils of sea, death and accidents and burglary. Any risk contingent upon these, may be insured against at a premium commensurate with the risk involved. Thus collective bearing of risk is insurance. Insurance is a contract whereby, in return for the payment of premium by the

insured, the insurers pay the financial losses suffered by the insured as a result of the occurrence of unforeseen events. The term "risk" is used to describe the possibility of adverse results flowing from any occurrence or the accidental happenings, which produce a monetary loss. Insurance is a pool in which a large number of people exposed to a similar risk make contributions to a common fund out of which the losses suffered by the unfortunate few, due to accidental events, are made good. The sharing of risk among large groups of people is the basis of insurance. The losses of an individual are distributed over a group of individuals.

1.4 COMPANIES POLICIES Life insurance - Other provisions Life insurance policies contain various clauses that protect the rights of beneficiaries and the insured. Perhaps the best-known is the incontestable clause, which provides that if a policy has been in force for two years the insurer may not afterward refuse to pay the proceeds or cancel the contract for any reason except nonpayment of premiums. Thus, if the insured made a material misrepresentation when the policy was originally obtained, and this misrepresentation is not discovered until after the contestable period, beneficiaries may still receive the value of the policy so long as the premiums are maintained. Another protective clause is the suicide clause,

which states that after a given period, usually two years, the insurer may not deny liability for subsequent suicide of the insured. If suicide occurs within the period, the insurer tenders to the beneficiary only the premiums that have been paid. If the age of the insured was misstated when the policy was taken out, the misstatement-of-age clause provides that the amount payable is the amount of insurance that would have been purchased for the premium had the correct age been stated. Many life insurance policies, known as participating policies, return dividends to the insured. The dividends, which may amount to 20 percent of the premiums, may be accumulated in cash left with the insurer at interest, used to buy additional life insurance, used to reduce premium payments, or used to pay up the contract sooner than would otherwise have been possible.

Special riders The insured may, at a nominal charge, attach to the contract a waiver-ofpremium rider under which premium payments will be waived in the event of total and permanent disability before the age of 60. Under the disability income rider, should the insured become totally and permanently disabled, a monthly income will be paid. Under the double indemnity rider, if death occurs through accident, the insurance payable is double the face amount.

Group insurance Groups have always been important in the insurance field, from the burial societies of the Romans and the insurance funds of the medieval guilds to the fraternal and religious insurance plans of modern times. In the 20th

century private insurance companies have written increasingly large amounts of group insurance, particularly in life insurance, health insurance, and annuities. In 1990 more than 95 percent of the industrial labour force in the United States was covered by group life and health insurance plans established by employers. Much of the impetus for these employee benefit plans came from the labour unions, which pressed for such fringe benefits in bargaining with employers. Group insurance is widely used throughout the world, both in the form of private plans and as social insurance plans. Social security plans with group coverage exist in more than 140 nations. Private group plans are generally offered wherever private life and health insurance companies operate. Group life insurance is the most commonly offered plan; group health plans are government-operated in many nations. In many countries, group pension plans are common as a supplement to social insurance pension schemes. Group insurance has been especially popular in Japan, where many employees serve a company for life. All Japanese life insurance companies offer group life insurance. Health insurance is provided by the government. Funded group pensions became popular after a 1962 tax law made contributions tax-deductible for Japanese employers. In addition, virtually all Japanese employers provide lump-sum retirement allowances to their workers.

Group life insurance Under group life insurance an employer signs a master contract with the insurance company outlining the provisions of the plan. Each employee

receives a certificate that gives evidence of participation in the plan. The amount of insurance depends on the employee's salary or job classification; usually the employer pays a portion of the premium and the employee pays the rest, but sometimes the employer pays the entire cost of the plan. A major advantage of group life insurance to an employee is that usually coverage may be obtained regardless of health. An employee who leaves the group may, without a medical examination, convert the group coverage to an individual policy. The premiums on group life insurance are considerably less than on comparable individual policies, mainly because the selling and administrative costs are minimal.

INDIAN INSURANCE INDUSTRY Insurers Insurance industry, as on 1.4.2000: Life Insurers: Life Insurance Corporation of India (LIC) .

Yr: 2000-2001 : ( From 2nd April '2000 to 31st December'2001) Insurance Industry in the year 2000-2001 had 10 new entrants, namely:

Life Insurers:

S.No. 1 2 3 4 5 6 7 8 9 10

Registration Date of Reg. Name of the Company Number 101 104 105 107 109 110 111 114 116 117 23.10.2000 15.11.2000 24.11.2000 10.01.2001 31.01.2001 12.02.2001 30.03.2001 02.08.2001 03.08.2001 06.08.2001 HDFC Standard Life Insurance Company Ltd. Max New York Life Insurance Co. Ltd. ICICI Prudential Life Insurance Company Ltd. OM Kotak Mahindra Insurance Co. Ltd. Birla Sun Life Company Ltd. Tata AIG Life Life

Insurance Insurance

Company Ltd. SBI Life Insurance Company Limited . ING Vysya Life Insurance

Company Private Limited Allianz Bajaj Life Insurance Company Ltd. Metlife India Insurance Company Pvt. Ltd.

Yr: 2001-2002 : ( From 1st Jan 2001 to Dec. 2002) Insurance Industry in this year, so far has 2 new entrants; namely

Life Insurers: S.No. 1 2 Registration Number 121 122 Date of Reg. Name of the Company 03.01.2002 14.05.2002 AMP SANMAR Assurance Company Ltd. Aviva Life Insurance Co. India Pvt. Ltd.

Yr: 2003-2004 : ( From 1st Jan 2003 till Date) Insurance Industry in this year, so far has 1new entrants; namely Life Insurers: S.No. 1 Registration Number 127 Date of Reg. 06.02.2004 Name of the Company Sahara India Insurance Company Ltd.

Policies And Measures To Develop Insurance Market Generally, the Authority has taken a pro-active role in the establishment of a vibrant insurance market in the country. The market regulation by prudential norms, the registration of players who have the necessary financial strength to withstand the demands of a growing and nascent

market, the necessity to have 'fit and proper' persons in-charge of businesses, the implementation of a solvency regime that ensures continuous financial stability, and above all, the presence of an adequate number of insurers to provide competition and choice to customers-all these steps lead to the establishment of a regime committed to an overall development of the market in normal times. More particularly, for the development of the insurance market and improvement in the insurance density and insurance penetration leading to an adequate social security and health protection, the Authority has prescribed rural and social sector norms in respect of insurance business being underwritten by the companies. The companies have also been asked to devise covers addressed to specific sectors in the economically weak population. For developing the market capacity, insurers have been asked to retain bulk of the premium within the country and to exhaust local market capacity before reinsuring abroad. The reinsurance regulations have tried to ensure that local market capacity is enhanced on a continuous basis. The Authority is also examining the prospects of expanding the reinsurance market in India by encouraging the setting up one or more reinsurance companies in the private sector. The Authority even at the time of grant of registration to the new companies, has made it a practice to specify, in suitable cases, the establishment of branches and offices of the insurers in places where activities are on a low key. In States like Jammu and Kashmir, Orissa, North Eastern areas where the Authority feels that the development of business has been stunted, insurers have been advised to open their offices. Development of products including group policies to cater to special

categories has been one of the salient features for the development of the market. The Authority is conscious of the fact that each of these factors has to be given due importance and recognition for a sustained development of the market. Necessary efforts are being directed continuously in this regard. INSURANCE SECTOR IN INDIA The insurance sector in India has come a full circle from being an open competitive market to nationalisation and back to a liberalised market again. Tracing the developments in the Indian insurance sector reveals the 360degree turn witnessed over a period of almost two centuries. A brief history of the Insurance sector 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 nonlife 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 nationalised. 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. Some of the important milestones in the general insurance business in India are: 1907: The Indian Mercantile Insurance Ltd. set up, the first company to transact all classes of general insurance business. 1957: General Insurance Council, a wing of the Insurance Association of India, frames a code of conduct for ensuring fair conduct and sound business practices. 1968: The Insurance Act amended to regulate investments and set minimum solvency margins and the Tariff Advisory Committee set up. 1972: The General Insurance Business (Nationalisation) Act, 1972 nationalised the general insurance business in India with effect from 1st January 1973. 107 insurers amalgamated and grouped into four companies viz. the National Insurance Company Ltd., the New India Assurance

Company Ltd., the Oriental Insurance Company Ltd. and the United India Insurance Company Ltd. GIC incorporated as a company.

Insurance sector reforms: In 1993, Malhotra Committee headed by former Finance Secretary and RBI Governor R.N. Malhotra was formed to evaluate the Indian insurance industry and recommend its future direction. The Malhotra committee was set up with the objective of complementing the reforms initiated in the financial sector. The reforms were aimed at "creating a more efficient and competitive financial system suitable for the requirements of the economy keeping in mind the structural changes currently underway and recognizing that insurance is an important part of the overall financial system where it was necessary to address the need for similar reforms" In 1994, the committee submitted the report and some of the key recommendations included:

1) Structure Government stake in the insurance Companies to be brought down to 50% Government should take over the holdings of GIC and its subsidiaries so that these subsidiaries can act as independent corporations All the insurance companies should be given greater freedom to operate

2) Competition

Private Companies with a minimum paid up capital of Rs.1bn should be allowed to enter the industry No Company should deal in both Life and General Insurance through a single entity Foreign companies may be allowed to enter the industry in collaboration with the domestic companies Postal Life Insurance should be allowed to operate in the rural market Only One State Level Life Insurance Company should be allowed to operate in each state

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.

LIFE INSURANCE SECTOR IN INDIA Many may not be aware that the life insurance industry of India is as old as it is in any other part of the world. The first Indian life insurance company was the Oriental Life Insurance Company, which was started in India in 1818 at Kolkata1. A number of players (over 250 in life and about 100 in

non-life) mainly with regional focus flourished all across the country. However, the Government of India, concerned by the unethical standards adopted by some players against the consumers, nationalised the industry in two phases in 1956 (life) and in 1972 (non-life). The insurance business of the country was then brought under two public sector companies, Life Insurance Corporation of India (LIC) and General Insurance Corporation of India (GIC). In line with the economic reforms that were ushered in India in early nineties, the Government set up a Committee on Reforms (popularly called the Malhotra Committee) in April 1993 to suggest reforms in the insurance sector. The Committee recommended throwing open the sector to private players to usher in competition and bring more choice to the consumer. The objective was to improve the penetration of insurance as a percentage of GDP, which remains low in India even compared to some developing countries in Asia. Reforms were initiated with the passage of Insurance Regulatory and Development Authority (IRDA) Bill in 1999. IRDA was set up as an independent regulatory authority, which has put in place regulations in line with global norms. So far in the private sector, 12 life insurance companies and 9 general insurance companies have been registered. 47 Term Insurance Policy 48 Whole Life Policy 49 Endowment Policy 50 Money Back Policy 51 Annuities and Pension

Most of the products offered by Indian life insurers are developed and structured around these "basic" policies and are usually an extension or a combination of these policies. So, w hat are these policies and how do they differ from each other? Term insurance policy 52 A term insurance policy is a pure risk cover for a specified period of time. What this means is that the sum assured is payable only if the policyholder dies within the policy term. For instance, if a person buys Rs 2 lakh policy for 15-years, his family is entitled to the money if he dies within that 15-year period. 53 What if he survives the 15-year period? Well, then he is not entitled to any payment; the insurance company keeps the entire premium paid during the 15-year period. 54 So, there is no element of savings or investment in such a policy. It is a 100 per cent risk cover. It simply means that a person pays a certain premium to protect his family against his sudden death. He forfeits the amount if he outlives the period of the policy. This explains why the Term Insurance Policy comes at the lowest cost.

Whole life policy 55 As the name suggests, a Whole Life Policy is an insurance cover against death, irrespective of when it happens. 56 Under this plan, the policyholder pays regular premiums until his death, following which the money is handed over to his family.

This policy, however, fails to address the additional needs of the insured during his post-retirement years. It doesn't take into account a person's increasing needs either. While the insured buys the policy at a young age, his requirements increase over time. By the time he dies, the value of the sum assured is too low to meet his family's needs. As a result of these drawbacks, insurance firms now offer either a modified Whole Life Policy or combine in with another type of policy. Endowment policy Combining risk cover with financial savings, endowment policies is the most popular policies in the world of life insurance. 57 In an Endowment Policy, the sum assured is payable even if the insured survives the policy term. 58 If the insured dies during the tenure of the policy, the insurance firm has to pay the sum assured just as any other pure risk cover. 59 A pure endowment policy is also a form of financial saving, whereby if the person covered remains alive beyond the tenure of the policy; he gets back the sum assured with some other investment benefits. In addition to the basic policy, insurers offer various benefits such as double endowment and marriage/ education endowment plans. The cost of such a policy is slightly higher but worth its value.

Money back policy 60 These policies are structured to provide sums required as anticipated expenses (marriage, education, etc) over a stipulated period of time. With inflation becoming a big issue, companies have realized that sometimes the money value of the policy is eroded. That is why with-profit policies are also being introduced to offset some of the losses incurred on account of inflation. 61 A portion of the sum assured is payable at regular intervals. On survival the remainder of the sum assured is payable. 62 In case of death, the full sum assured is payable to the insured. 63 The premium is payable for a particular period of time.

Annuities and pension In an annuity, the insurer agrees to pay the insured a stipulated sum of money periodically. The purpose of an annuity is to protect against risk as well as provide money in the form of pension at regular intervals. Over the years, insurers have added various features to basic insurance policies in order to address specific needs of a cross section of people.

What are the types of term insurance policies?

Term insurance comes in two basic varietieslevel term and decreasing term. These days, almost everyone buys level term insurance. The terms level and decreasing refer to the death benefit amount during the term of the policy. A level term policy pays the same benefit amount if death occurs at any point during the term. Common types of level term are: 64 yearly- (or annually-) renewable term 65 5-year renewable term 66 10-year term 67 15-year term 68 20-year term 69 25-year term 70 30-year term 71 term to a specified age (usually 65) Yearly renewable term, once popular, is no longer a top seller. The most popular type is now 20-year term. Most companies will not sell term insurance to an applicant for a term that ends past his or her 80th birthday.

INSURANCE MARKET IN INDIA

By any yardstick, India, with about 200 million middle class households, presents a huge untapped potential for players in the insurance industry. Saturation of markets in many developed economies has made the Indian market even more attractive for global insurance majors. Table 1 reflects the low percentage and per capita penetration of insurance in India compared to other developed and developing countries. With the per capita income in India expected to grow at over 6% for the next 10 years and with improvement in awareness levels, the demand for insurance is expected to grow at an attractive rate in India. An independent consulting company, The Monitor Group has estimated that the life insurance market will grow from Rs.218 billion in 1998 to Rs.1003 billion by 2008 (a compounded annual growth of 16.5%). 1.5 SWOT ANALYSIS

STRENGTH

WEAKNESS

OPPORTUNITY

THREAT

Continuous Innovation

Lack customer orientation

Huge untapped Potential.

Detarrification leads to higher competition. Cut throat competition with Bajaj Allianz & ICICI. Competitive Prices

Wide product portfolio.

Lack in Follow- Customers value ups quality the most .

Brand Name

Sales & profit oriented approach

Competition is very high

CHAPTER-2 RESEARCH METHODOLOGY

Title : Marketing Strategies of Max New York Life Insurance Ltd. Title Justification : Max New York Life (MNYL) marketing strategies is to become a leading player in the life insurance segment of India. The training methodologies and process improvements undertaken by the company are a part of their growth strategy. The distribution system developed by Max New York Life has been discussed both in rural and urban markets. The product differentiation strategies followed by Max New York Life also plays an important role in their growth.

2.1 RESEARCH OBJECTIVES 72 To study the insurance sector in India with special consideration to Max New York Life Insurance. 73 To study marketing strategies of Max New York Life Insurance and find out the future scope of insurance in India.

Objective One To study the insurance sector in India with special consideration to Max New York Life Insurance.

Objective Two To study marketing strategies of Max New York Life Insurance and find out the future scope of insurance in India.

RESEARCH DESIGN Max New York Life has led the industry in realigning it towards providing the right balance between protection and saving in life insurance products. Over 70 per cent of the companys business is from protection-oriented Whole Life policies, which offer the true value of life insurance. The approach of Max New York Life (MNYL) marketing strategies is to become a leading player in the life insurance segment of India. The training methodologies and process improvements undertaken by the company are a part of their growth strategy. The distribution system developed by Max New York Life has been discussed both in rural and urban markets. The product differentiation strategies followed by Max New York Life also plays an important role in their growth. Key strategies adopted by Max New York Life to promote marketing of its products are: 74 Importance of training in Life Insurance Industry. 75 Need for SWOT analysis before planning competitive strategies. 76 To carefully analyze Impact of a wide distribution network 77 Product differentiation in Life Insurance 78 To tie up with various rural banks in order to penetrate more. As a part of this strategy Max New York Life and Adilabad District Cooperative Central Bank Ltd announced a strategic tie-up to sell life insurance products through the rural bank. 79 My Options strategy. Max New York Life believes that no two individuals have the same specific needs. That is why Max New York Life tries to personalize life insurance policies through My Options. My Options gives customers the flexibility to customize your life insurance policy. Simply choose one of our

base life insurance policies, attach any one or more of the relevant offerings from My Options, and shape chosen policy to suit requirements. This customization can be done at the time of buying the policy or anytime later, subject to meeting certain conditions. Max New York Life keeps maximum stress on its Product differentiation Strategy. As a part of this strategy it has a large range of products for various age groups and genders. The various ranges of products and various benefits given by Max New York Life are discussed below.

INDIVIDUAL INSURANCE PROTECTION

80 Whole Life Participating Insurance Whole Life Participating Insurance provides an insurance cover that is guaranteed for entire life. This policy also builds cash value, which can be used during lifetime to fund any unforeseen needs either by surrendering accumulated PUAs or taking a loan. In addition this policy is also eligible for bonuses.

Unique features of this policy/Key benefits of this policy: 81 On death of life insured: Sum Assured plus accrued bonuses. 82 On Maturity (attaining age 100): Sum Assured plus accrued bonuses.

83 Bonus: From 3rd policy year, we will declare bonuses every year. 84 Option to Participate in Progressive Bonuses: Allows you to top up your premiums to purchase additional Sum Assured in your existing policy. It also generates further bonuses.

85 Tax benefits:

You are entitled to the following tax benefits under Income Tax Act 1961: o Your premiums are eligible for deduction u/s 80C up to Rs.100,000/- every year. o Your DD rider premiums are eligible for an additional deduction u/s 80D up to Rs.10, 000/- every year. o Your claim amounts (from death, through surrenders or on maturity) are eligible for tax exemption u/s 10(10D).

86 Level Term Policy (Non-Participating/Non-Convertible) In the exciting journey of your life, there will be uncertainties. Additionally there are bound to be occasions when you have to assume additional responsibilities as the head of the family. Max New York Lifes Level Term (Non Participating) Policy insures your life at a very low cost and reduces any hardship your family may have to bear in the unfortunate event of your death.

Unique features of this policy/Key benefits of this policy:

87 On death of life insured: In case of the unfortunate death of the life insured during the term of the plan, an amount equal to the Sum assured is paid to the beneficiary. 88 Tax benefits: You are entitled to the following tax benefits under Income Tax Act 1961: o Your premiums are eligible for deduction u/s 80C up to Rs.100,000/- every year o Your DD rider premiums are eligible for an additional deduction u/s 80D up to Rs.10, 000/- every year. o Your claim amounts (from death) are eligible for tax exemption u/s 10(10D).

89 Five Year Renewable and Convertible Term Insurance Five Year Renewable and Convertible Term Insurance provide you with a low cost insurance cover during its tenure of five years. It is also convertible any time into any permanent life insurance policy from Max New York Life, so that you are able to take advantage of increasing your savings when your responsibilities increase viz. on marriage, or on child birth.

Unique features of this policy/Key benefits of this policy: 90 On death of life insured: Sum Assured

91 Tax benefits: o Your premiums are eligible for deduction u/s 80C up to Rs.100,000/- every year o Your DD rider premiums are eligible for an additional deduction u/s 80D up to Rs.10, 000/- every year. o Your claim amounts (from death) are eligible for tax exemption u/s 10(10D).

92 Life Partner Plus Life Partner Plus Limited Pay Endowment to age 75 offers you powerful triple benefits of 93 Money if you live i.e. maturity benefit at age 75 94 Money if you don't i.e. a Life Insurance coverage till age 75 95 Money backs i.e. a part of the Sum Assured at regular intervals to take care of your periodic foreseen needs.

Unique features of this policy/Key benefits of this policy: 96 On death of life insured: Initial Sum Assured Plus Sum Assured of Paid Up Additions through bonuses 97 On survival: Money backs @ 7.5% of the Initial Sum Assured will be paid on each policy anniversary from age 61 to 75.

98 On maturity: 100% of Sum Assured with Sum Assured of Paid Up Additions, if any. 99 On Surrender of Policy: Surrender value. 100Limited Premium Payment term: You can choose to pay the premiums over 4 terms i.e. 3 years, 7 years, 10 years or 20 years. 101Bonus: From 3rd policy year, we will declare bonuses every year.

SAVINGS

102Life Gain Endowment (Participating Plan) Life Gain Endowment (Participating Plan) provides you with an insurance cover that is guaranteed during the tenure of the policy. This policy also builds cash value, which you can use during your lifetime to fund any unforeseen needs either by surrendering accumulated PUAs (explained below) or taking a loan. In addition this policy is also eligible for bonuses. Unique features of this policy/Key benefits of this policy: 103On death of life insured: Sum Assured plus accrued bonus 104On maturity: Sum Assured plus Guaranteed Addition @ 10% of Sum Assured plus accrued bonus plus terminal bonus (if any). 105On Surrender of Policy: Surrender value. 106Bonus: From 3rd policy year, we will declare bonuses every year. 107Life Pay Money Back (Participating Plan)

Life Pay Money Back (Participating Plan) will keep paying you a part of the Sum Assured at regular intervals, to take care of your periodic foreseen needs, and the balance keeps growing to take care of your long term saving needs, as well as provides insurance coverage till maturity. In addition this policy is also eligible for bonuses. 108Life Gain Plus Endowment (Participating) Policy Life Gain Plus Endowment (Participating) Policy provides you with insurance cover that is guaranteed during the tenure of the policy. This policy also builds cash value, which you can use during your lifetime to fund any unforeseen needs either by surrendering accumulated PUAs (explained below) or taking a loan. In addition this policy is also eligible for bonuses.

10920 Year Endowment Participating Insurance 20 Year Endowment Participating Insurance helps you save for specific need 20 years from now viz. v Higher education of your child v Children's marriage v To buy a house v To pay off a housing loan v To create a fund for your retirement And also provides you with an insurance cover to protect your family from financial uncertainties in case of your untimely death during this period.

This policy will mature exactly 20 years after you buy it, and during this period, it also builds cash value. This policy is also eligible for bonuses. You may use the cash value and/or the bonuses to fund any unforeseen needs either by surrendering accumulated PUAs (explained below) or taking a loan.

UNIT LINKED

110Life Maker Premium Investment Plan A unit linked insurance plan that enables you to manage your investments and fulfill your lifes needs. Life gives you a lot of choices-especially when youre looking for ways to protect your family, build the business you aim to own and the life style you hope to establish. But things may change along the way and you may have to adjust to the changes which life brings to you and this adaptability should also be available with your life insurance plan. Our Unit linked Life Insurance plan can be the financial cornerstone for your objectives. Life Maker Premium Investment Plan provides you a solution to fulfill all your dreams, whether youre buying a home, starting a family, launching a business venture. Max New York Life Insurance provides you a powerful

investment-cum-insurance plan that empowers you to manage your investments through your insurance policy. In this unit linked plan, you can direct your investments in our customized unit linked funds, which offer investments of different types: Fixed Income (e.g. Govt. Securities, Company Debentures) and Equities (shares). Hence it is a one-stop option to fulfill all your plans without the hassle of managing multiple products.

111Life Maker Gold In the Life Maker Gold plan; the premiums you pay are invested in funds offered by us. You will determine the appropriate ratio of investments into these funds in consultation with your Agent Advisor. These funds are invested in assets such as equities, money market instruments, investment grade corporate bonds, and government securities. These funds offer a wide range of returns basis market returns. You can choose to invest your premiums in one or more of these funds, basis your risk taking ability. In turn, we issue units, which represent the value of your policy i.e. you can "see" the value of your policy on any day by multiplying the number of your units by the value of units on that day. The value of these units is called the Net Asset Value (or NAV) and is normally published in newspapers on a daily basis. The NAV is based on the market value of the underlying investments in that fund i.e. equities, company bonds, government securities, etc.

112Life Maker Platinum The journey of life is full of wonderful dreams. To make them come true, your need for protection, investment, and financial liquidity keeps changing at different stages of life. The birth of a child will require you to increase your insurance cover; a marriage in the family will require additional money. Similarly on a promotion you may want to increase your investments, to create a large kitty for future expenses. Usually you would require multiple financial products to meet all your needs and would have to actively manage them. However with the Life Maker Platinum- A Unit Linked Investment Plan you can meet all your financial needs, without the tedium of managing multiple products. In the Life Maker Platinum plan; the premiums you pay are invested in funds offered by us will determine the appropriate ratio of investments into these funds in consultation with your Agent Advisor. These funds are invested in assets such as equities, money market instruments, investment grade corporate bonds, and government securities. These funds offer a wide range of returns basis market returns. We can choose to invest premiums in one or more of these funds, basis your risk taking ability. In turn, we issue units, which represent the value of your policy i.e. you can "see" the value of your policy on any day by multiplying the number of your units by the value of units on that day. The value of these units is called the Net Asset Value (or NAV) and is normally published in newspapers on a daily basis. The NAV is based on the market value of the underlying investments in that fund i.e. equities, company bonds, government securities, etc.

113Life Invest Plan Life Invest Plan is designed keeping in mind that different individuals have different needs, which change over time. We build many dreams and aspirations and long to see they come true, sometime in our life. To make them come true, your need for protection, investment, and financial liquidity keeps changing at different stages of life. When you reach a certain stage in life, you need your money to grow and see new heights. This plan helps you meet all your investment and insurance needs and gives you an opportunity to invest your money where it grows much faster than you expenses.

CHILDREN

114Children's Endowment Participating Insurance Children's Endowment Participating Insurance to age 18/24 with whole life option enables you to provide for specific needs of your growing children viz. o Child Endowment to Age 18 enables you to provide for higher education of your child. o Child Endowment to Age 24 enables you to provide for the best possible wedding of your child and also builds cash value, which you can use during to fund any unforeseen needs by taking a loan. In addition this policy is also eligible for bonuses

115Stepping Stones Participating Insurance Plan Stepping Stones Participating Insurance Plan is a smart way to plan for and secure your child's future irrespective of whether you are there or not. It provides you with regular money when it is required. This policy also builds cash value, which you can use during your lifetime to fund any unforeseen needs by surrendering accumulated PUAs (explained below). In addition this policy is also eligible for bonuses. RETIREMENT Easy Life Retirement Plan Regular Premium/Single Premium (Participating) Policy helps you to save money for your retirement, and also provides you with an opportunity to take home a regular retirement income (pension) for your entire life from your chosen date of retirement. This income is a guaranteed amount, guaranteed when your annuity starts. In addition this policy is also eligible for bonuses. GROUP INSURANCE: Group insurance is a health care coverage plan in which individual employees or members are included under one 'master policy' owned by their employers. Because the group insurance plan has so many contributors, the policy often provides coverage for more services at a much lower cost per participant. Group insurance may be provided by other organizations besides for-profit companies. Labor unions, churches and other service groups can also obtain group insurance for recognized members and

possibly their dependents. Individual members of a group insurance plan receive insurance certificates which demonstrate their eligibility for benefits. If the master policy held by the employer requires participation in an HMO(HUMAN MANAGEMENT ORGANISATION) , then individuals are also registered as members. Other group insurance policies may be associated with major medical groups such as Blue Cross/Blue Shield. A major medical policy may or may not restrict an individual's choice of primary physician and specialists. HMO policies often require a patient to use a specified physician, who must approve any visits to eligible specialists. Financing for a group insurance policy is commonly a flexible payroll deduction, although some companies will absorb the entire cost of the policy as a benefit for employees. As with many insurance policies, however, the cost of premiums can rise significantly without warning. If a few participants receive expensive treatments for serious medical conditions, the rest of the group may have to absorb the higher premium costs over time. Group insurers don't always require physical exams before issuing a master policy, so some participants may benefit from treatments for pre-existing conditions.

GROUP TERM LIFE Group Term Insurance is the mainstay of our employee benefit platform. Here are some of the key features and benefits:

o Easy and convenient administration one single master policy for all employees. o Group size of at least 25 employees. No upper limit on membership. o Policy is valid for one year and can be renewed annually. o Uniform or a graded cover can be provided on any basis chosen by your subject to a maximum of three years of salary per employee. o In case of death of an employee, due to natural or accidental reasons, the entire sum assured amount is paid to the employer. o Additional Protection is available through riders for Critical Illness, Accidental Death Benefits, Disability and Dismemberment. o New members can join and out going members can leave the scheme at any time with premium adjustment.

GROUP GRATUITY After an employee has rendered continuous service for at least five years, he/ she is eligible for 15 of days pay for each completed year of service. The employer can also structure a gratuity benefit that is higher than statutory requirements. The gratuity benefit is payable on cessation of employment (either by resignation, death, retirement or termination etc), by taking last drawn basic salary as the basis for the calculation. Gratuity payment is a statutory liability for an organization and tends to increase as the salaries and tenure of employment increase annually. In case of big, developing & growing organization, gratuity payout can work out to

a substantial amount. If the employer pays gratuity from its current revenue, it may become difficult to meet the liability, it is therefore prudent and also beneficial that a gratuity fund is set up.

Benefit of the group gratuity plan 116Investment management in a conservative manner to ensure steady appreciation in fund income. 117Employees can be insured for the future service gratuity for fullanticipated service. 118Scientific funding of gratuity on actuarial valuation and hence superior planning for gratuity payments. 119Past gratuity liability contribution can be made in installments. 120Contributions are exempt under income tax act.

Benefit to the member of the Group Gratuity Plan 121Max New York Life will provide statement of account every quarter. 122Free Actuarial Valuation for future gratuity liability. 123For a new fund Max New York Life can assist in formation of the Trust and its documentation.

124An existing Gratuity Fund can be taken over by Max New York Life and we will offer assistance in documentation like Deed of variation to the original Trust Deed etc. 125Basic Guidelines for Max New York Life Group Gratuity Scheme.

EMPLOYEE DEPOSIT LINKED INSURANCE All establishments with at least 10 full-time permanent employee and to whom the employees provident fund and miscellaneous provisions act 1952 applies, have a statutory liabilities to subscribe to employees deposits linked insurance schemes. The organization will enjoy the following advantages by subscribing to the Max New York Life Group Term Insurance as compared to the EDLI scheme: 126 The premium payable by the employer under the Max New York Life Group Term Insurance Scheme will be usually less than the total contribution being paid by the employer to Regional Provident Fund Commissioner, particularly when average age of the group is low and the employer is in a low-risk industry. 127Flexibility to opt for either a uniform flat cover for all employees or a graded cover as per notional PF balance. 128Well defined and simplified claim process will ensure quicker and hassle-free claim settlement. 129Administrative convenience for additions and deletions of members

with no elaborate paperwork. CREDIT SHIELDS This plans provides a life cover for a group of employees why have taken a loan from one organization or one institution like banks, finance provider, credit institution etc. Credit Shield is a protection cover, which ensures that the loan amount is paid back to the lender in case of an untimely demise of the borrower. The plan can be conveniently structured in a way such that the entire loan amount or the balance loan amount is paid up in case of the untimely demise of the borrower. The premiums can also be adjusted every year according to the reducing loan balance amount. This plan provides total peace of mind because in case of an untimely demise of the borrower, the family is not burdened with the loan.

UNIT LINKED GROUP GRATUITY Max New York Life has made the group insurance portfolio more robust by launching the unit linked gratuity plan. Gratuity is a statutory benefit to the employees under the Payment of Gratuity Act 1972. After the employee has rendered continuous service for at least five years, he/ she are eligible for 15 days pay for each completed year of service. The gratuity benefit is payable on cessation of employment (either by resignation, death, retirement or termination etc), by taking last drawn basic salary as the basis for the calculation.

Gratuity payment is a statutory liability for an organization and tends to increase as the salaries and tenure of employment increase annually. In case of big, developing & growing organization, gratuity payout can work out to a substantial amount. If the trust pays gratuity from its current revenue, it becomes difficult to meet the liability, it is therefore beneficial that a gratuity fund is set up for prudent financial planning.

Max New York can now offer you two options of:
130Non unit Linked or Traditional Group Gratuity Plan: Which

facilitates systematic and steady funding of the liability

131Unit Linked Group Gratuity Plan: This facilitates steady

funding and the opportunity of increased returns on investment.

Benefits of the Unit Linked Group Gratuity Plan o Opportunity for growing the fund safely and prudently by managing the fund investments properly and maximizing the returns on the investments and thereby bringing down the costs of the funding liability in the future. o Multiple Flexible Investment options based on the risk taking ability of the trust.

o Life covers for full-anticipated service. o Contributions are exempted from Tax. o Total Transparency in charges and the returns declared. Complete range of services provided: Taxation, Legal, and Investment. 2.3 DATA SOURCES SCOPE OF THE STUDY The insurance industry in our country is on the threshold of a new era of rapid expansion. A more competitive environment is emerging with new participants entering the insurance industry. Risk management has a wide application. To understand risk, measure it and weigh its consequences are an integral part of management. Financial institutions in the management of the funds placed with them have to reckon with market risk, credit risk, and counter party risk and liquidity risk. To mitigate the impact of various risks is the essence of risk management.

SIGNIFICANCE OF THE STUDY Insurance plays a very important role in the day-to-day activities of the common man, business houses, industries, agriculturists and other service providers. Insurance not only provides protection for individual and industry through risk coverage; it also mobilizes funds for economic activity, and encourages savings. Thus an insurance cover is considered an important tool for economic stability. The insurance industry is a key sector in the economy of any country.

Significance for the researcher To facilitate in appreciative of marketing situation of max. Research Design Probability / Non Probability Exploratory / descriptive / experimental

2.4 SAMPLE DESIGN SAMPLING METHODOLOGY Sampling Unit : Individuals Sampling Technique : : Convenient Sampling and judgmental sampling Sampling Area : : New Delhi SAMPLE SIZE 132200 people in NCR

2.5 LIMITATIONS: The duration of time for the study was limited & hence a comprehensive & elaborate study could not be undertaken.

CHAPTER- 3 COMPANY PROFILE

Max New York Life Insurance Company Ltd. is a joint venture between New York Life, a Fortune 100 company and Max India Limited, one of India's leading multi-business corporations. The company has positioned itself on the quality platform. In line with its vision to be the most admired life insurance company in India, it has developed a strong corporate

governance model based on the core values of excellence, honesty, knowledge, caring, integrity and teamwork. The strategy is to establish itself as a trusted life insurance specialist through a quality approach to business. In line with its values of financial responsibility, Max New York Life has adopted prudent financial practices to ensure safety of policyholder's funds. The Company's paid up capital is Rs. 657 crore, which is more than the norm laid down by IRDA. Max New York Life has identified individual agents as its primary channel of distribution. The Company places a lot of emphasis on its selection process, which comprises four stages - screening, psychometric test, career seminar and final interview. The agent advisors are trained in-house to ensure optimal control on quality of training. Max New York Life invests significantly in its training programme and each agent is trained for 152 hours as opposed to the mandatory 100 hours stipulated by the IRDA before beginning to sell in the marketplace. Training is a continuous process for agents at Max New York Life and ensures development of skills and knowledge through a structured programme spread over 500 hours in two years. This focus on continuous quality training has resulted in the company having amongst the highest agent pass rate in IRDA examinations and the agents have the highest productivity among private life insurers. 201 agent advisors have qualified for the Million Dollar Round Table membership in 2005. MDRT is an exclusive congregation of the worlds top selling insurance agents and is internationally recognized as the standard of excellence in the life insurance business.

Having set a best in class agency distribution model in place, the company is spearheading a major thrust into additional distribution channels to further grow its business. The company is using a five-pronged strategy to pursue alternative channels of distribution. These include the franchisee model, rural business, direct sales force involving group insurance and telemarketing opportunities, banc assurance and corporate alliances. Max New York Life offers a suite of flexible products. It now has 26 life insurance products and 8 riders that can be customized to over 400 combinations enabling customers to choose the policy that best fits their need.

VISION To become the most admired life insurance Company in India.

MISSION Become one of the top quartile life insurance companies in India Be a national player Be the brand of first choice Be the employer of choice Become principal of choice for agents

VALUES

133KNOWLEDGE Knowledge leads to expertise; and our expertise is in helping people protect themselves. Perfectly combining global expertise with local knowledge, we are India's life insurance specialist. Max New York Life believes that for knowledge to be of value it must be focused, current, tested and shared.

134CARING Max New York Life is redefining the life insurance paradigm by focusing on customers first. The service process is responsive, personalized, humane and empathetic. Every individual who represents the company is for us our brand champion.

135HONESTY Honesty is the heart of the life insurance business. It is all about trust. Transparency, integrity and dependability form the cornerstones of the Max New York Life experience. The company ensures that everyone who represents the brand carries a promise : we care in word as well as deed. 136EXCELLENCE Excellence at Max New York Life implies the ability to perform at a consistently high level. Focused on the value of continuous improvement in people, processes and the organization, the company strives for the highest standards of quality in every aspect of its business.

CHAPTER- 4 DATA ANALYSIS & INTERPRETATION

137From the findings of the study it can be said that the scope of Life Insurance market in India is full of opportunities & a huge potential lies in rural areas. 138The potential customers want value added products to meet their needs & requirements on individual basis. 139From the study it can be inferred that people have started looking towards Life Insurance as a future long-term source of investment with life cover. 140Insurance is a source of tax saving among corporates.

141People give priority to family security while investing in any Life Insurance policy. 142Private players in the industry need to focus towards marketing strategies to capture more of industry share with the growing competition.

CHAPTER-5 5.1 FINDINGS

1.

Monthly Family Income Level (Rs.):

< 10000 14

10000-20000 41

20000-40000 76

>40000 64

5 people didnt disclosed their family income.

80 60 40 20 0 < 10000 1000020000 20000- >40000 40000 Series1

2. Factors of Investment:

S. No. 1 2 3 4

Ist Priority Tax Benefits Liquidity Safety Returns

No. of People Favoring 68 15 52 59

6 people Didnt Disclosed

No. of People Favoring 80 60 40 20 0 Tax Liquidity Benefits 1 2 Safety 3 Returns 4

No. of People Favoring

3. Influencer:

S. No. 1 2 3 4

Influencer Self/Spouse Parents Intermediateries Friends

No. of People 118 49 17 15

1 Didnt Disclosed

S. No. Influencer 1 Self/Spouse 2 Parents 3 Intermediateries 4 Friends

4.

Analysis of Time Horizon for Investment with Investment tools:

Priority Years < 1 yrs 1-3 yrs 3-10 yrs >10 yrs

Equity

PPF/NSC FD

Bonds Mutual Life Funds Insuranc e 19 62 37 26

4 17 6 3

13 46 33 16

15 28 18 7

3 17 17 3

3 8 6 4

160 140 120 100 80 60 40 20 0

SC FD ds ity ds Eq u Bo n un /N lF ra nc e

>10 yrs 3-10 yrs 1-3 yrs < 1 yrs Years

PP F

ua ut M

Li fe

In

su

5. Annual Investment Level(Rs.):

<10000 35

10000-25000 59

25000-50000 42

>50000 60

5 people didnt disclosed their Investment level.

60 50 40 30 20 10 0 <10000 10000- 25000- >50000 25000 50000 Series1

6. Preference For Life Insurance as an Investment:

S. No. 1 2 3 4

Investment Option Tax Savings Family Security Unforeseen Expense Saving for old age

No. of People 76 93 11 17

3 people Didnt disclosed

No. of People

6% 9%

39%

1 Tax Savings 2 Family Security 3 Unforeseen Expense 4 Saving for old age

46%

7. Return on investment:

S. No. 1 2 3 4

No. of Years <3 3-5 5-10 > 10

No. of people 53 67 33 39

8 people didnt disclose

No. of people

1<3 2 5-Mar 3 10-May 4 > 10

8. Advantages of investing in Life Insurance Options

8 people didnt disclosed

50 40 30 20 10 0
Long Term Savings 40 Forced Savings 35 Tax Savings and Tax 50 Peace of Mind for Family 32 Provision after retirement 35

9. SAVING YOUR TAX

10 people didnt disclosed

60 50 40 30 20 10 0
Invest in Life Insurance 50 Invest in Invest in Invest in PPF Infrastructure pension plans bonds 40 55 45

5.2 CONCLUSIONS

143Max New York Life Company is a leading company. It provides a variety of products and services to different segments of customers. 144The company aims to serve customers from infant to senior citizen, hence different products designed to suit specific requirements of the above. 145The company aims to serve all classes of the society from the salaried middle class to the high income business class. Customers are categorized and segmented according to their requirements and needs. 146The company prides itself with the ability to provide differentiate products in the crowed market of life insurance. 147The company is also involved in marketing activities, which serves as a medium of advertisements for the company. 148The company wants its customers to transact more through more internets rather than the customers base during the last couple of years. 149The no. one reason of people choosing Max New York life is the brand name/reputation of the company. Hence it should be careful that the brand name and goodwill the Max New York life has earned is not

diluted. 150Overall the customer appreciates the services and products offered by the company and are willing to recommend the company to their acquaintances.

CHAPTER- 6 RECOMMENDATIONS The company must strive to have their products genuinely priced. The company must provide a wider range service to consumers. The Company must enhance the knowledge of people about their products. I.e. They should do proper marketing of their products. The Company must be made awarded of the difference between the Health Insurance and Life Insurance. Special promotional activities should be done in various organizations and also in hospitals. Seminars should be organized to spread awareness about health insurance in educational institutions The time consumption for enrolment of customers should be

minimum The registration forms and procedures should be simple so that customers feel comfortable. Speedy settlements of claims should be there in order to promote products.

CHAPTER- 7 ANNEXURE

ANNEXURE

QUESTIONNAIRE NAME: -----------------------------------COMPANY:----------------------AGE:-----------------MOBILE:------------------TEL:-----------------

1. MONTHLY FAMILY INCOME (Tick the appropriate one) 151<10000 15210000-20000 15320000-40000 154>40000

2. Rank the following factors in order of your preference, which you consider while making any investment: q Liquidity q Tax Benefits q Safety q Returns

3. Who influences your investment decisions? (Tick the appropriate one) 155Self/Spouse 156Parents 157Friends 158Intermediaries (Agents, Brokers etc) 4. What is the time horizon for which you generally invest? (Tick the appropriate one) 159<1 year 1601-3 years 1613-10 years 162>10 years 5. How much money do you invest annually? (Tick the appropriate one) 163<Rs.10000 164Rs.10000-25000 165Rs. 25000-50000 166>Rs. 50000

6. What are the instruments you invest in ? (Tick your choices) q Equity Shares q PPF, NSC or G-sec q Fixed Deposits q Life Insurance q Any other, Specify _________________

7. What is your order of preference for LIFE INSURANCE as an Investment option?

Tax Savings Family Security Unforeseen Expenses Savings for old age 8. Have you ever consulted any financial intermediary to make investment in Life Insurance options? 167Yes 168No If No, then how do you make investment ________________________________________________________ _____ 9. You would prefer to get returns within? (Tick the appropriate one) 169<3 years 1703-5 years 1715-10 years 172>10 years 10. Give ratings in order of your preference for these advantages of investing in Life Insurance options?

173Long Term Savings 174Forced Savings 175Tax Savings & Tax Free Returns 176Peace of mind for Family 177Provision after retirement

11. How you save your Tax? (Tick the appropriate one) 178Invest in Life Insurance 179Invest in PPF 180Invest in Infrastructure bonds 181Invest in pension plans 12. Incase you wouldnt have reached home last night, how would have this affected your family financially? (Tick the appropriate one) 182100% 18375% 18450%

BIBLIOGRAPHY Magazines : THE WEEK BUSINESS TODAY INSURANCE TIMES

Internet Sites: WWW.MAX NEW YORK LIFE.COM

WWW.ECONOMYWATCH.COM

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