Bajaj Allianz Limited

INTERNSHIP REPORT ON

BAJAJ ALLIANZ LIMITED Submitted in partial fulfillment of the requirements of the MBA Degree Course of Bangalore University Submitted By

Annapurna.N.K Under the Guidance and Supervision Of

Dr.N.S Viswanath

M.P.BIRLA INSTITUTE OF MANAGEMENT Associate Bharatiya Vidya Bhavan # 43, Race Course Road Bangalore-560001 2004 – 2006

MPBIM

1

EXECUTIVE SUMMARY What is life insurance 

7KH+HDGRUWKHEUHDGZLQQHURIWKHIDPLO\JHQHUDOO\VXSSRUWVWKHIDPLO\IRUWKHLU

EDVLFQHHGVVXFKDVIRRGFORWKLQJ VKHOWHUE\EULQJLQJLQFRPHDWDUHJXODULQWHUYDO6R ORQJDVKHRUVKHOLYHV WKHLQFRPH

LVUHFHLYHGVWHDGLO\WKHIDPLO\LVVHFXUHEXWXQWLPHO\

GHDWKRUGLVDELOLW\RIWKDWSHUVRQSXWVWKHIDPLO\LQDYHU\GLIILFXOWVLWXDWLRQDQGVRPHWLPHV LQVWDUNSRYHUW\8QFHUWDLQW\RIGHDWKLVLQKHUHQWLQKXPDQOLIH 

,WLVWKHXQFHUWDLQW\WKDWLVWKHU

LVNZKLFKJLYHVULVHWRWKHQHFHVVLW\IRUVRPHIRUPRI

SURWHFWLRQ DJDLQVW WKH ILQDQFLDO ORVV DULVLQJ IURP GHDWK XQFHUWDLQW\E\FHUWDLQW\ 





,QVXUDQFH VXEVWLWXWHV WKLV

7KHSULPDU\SXUSRVHRI/LIH,QVXUDQFHLVWKHSURWHFWLRQRIWKHIDPLO\,QVXUDQFHLQ

LWV YDULRXVIRUPVSURWHFWVDJDLQVWVXFKPLVIRUWXQHVE\KDYLQJWKHORVVHVRIWKHXQIRUWXQDWH IHZSDLGE\WKHFRQWULEXWLRQRIWKHPDQ\WKDWDUHH[SRVHGWRWKHVDPHULVN7KLVLVWKH HVVHQFHRILQVXUDQFH WKHVKDULQJRIORVVHVDQGVXEVWLWXWLRQRIFHUWDLQW\IRUXQ 

FHUWDLQW\

The increasing role of IRDA- Insurance Regulatory development authority and the increasing private players in today’s insurance industry has also been picturised The project also gives a birds eye view about the present insurance industry and how are the customers benefited from the changes taken place from past to present in this industry $ GHWDLOHG FRPSDQ\ SURILOH DORQJ ZLWK WKH ILQDQFLDO KLJKOLJKWV RI WKH SUHYLRXV

DVVHVVPHQW\HDURIWKHFRPSDQ\KDVDOVREHHQLQFOXGHG 

¬ ¬  The

project titled “a comparative study of different products in

insurance industry with that of Bajaj Allianz life insurance Company limited” is undertaken at Bajaj Allianz Life Insurance Company Ltd, Bangalore.  MPBIM

2

¬ ¬  The

project is undertaken in order to understand the different

products of different companies and compare them based on certain parameters. 

¬ ¬  The

main aim of conducting this study is to come out with a

conclusion as to which product of which company is doing best and from the customers point of view which product is the best for their investment. 

¬ ¬  The companies considered for comparison are Bajaj Allianz Life

Insurance Company Ltd, ICICI Prudential and Life Insurance Corporation of India. The products considered for the project are endowment plan, unit linked plans and the children plan.  

    

MPBIM

3

INDUSTRY PROFILE

MPBIM

4

LIFE INSURANCE IN INDIA INTRODUCTION With such a large population and the untapped market area of this population Insurance happens to be a very big opportunity in India. Today it stands as a business growing at the rate of 15-20 per cent annually. Together with banking services, it adds about 7 per cent to the country’s GDP .In spite of all this growth the statistics of the penetration of the insurance in the country is very poor. Nearly 80% of Indian populations are without Life insurance cover and the Health insurance. This is an indicator that growth potential for the insurance sector is immense in India. It was due to this immense growth that the regulations were introduced in the insurance sector and in continuation “Malhotra Committee” was constituted by the government in 1993 to examine the various aspects of the industry. The key element of the reform process was Participation of overseas insurance companies with 26% capital. Creating a more efficient and competitive financial system suitable for the requirements of the economy was the main idea behind this reform. Since then the insurance industry has gone through many sea changes .The competition LIC started facing from these companies were threatening to the existence of LIC. Since the liberalization of the industry the insurance industry has never looked back and today stand as the one of the most competitive and exploring industry in India. The entry of the private players and the increased use of the new distribution are in the limelight today. The use of new distribution techniques and the IT tools has increased the scope of the industry in the longer run. A BRIEF HISTORY

The origin of insurance is very old .The time when we were not even born; man has sought some sort of protection from the unpredictable calamities of the nature. The basic

MPBIM

5

urge in man to secure himself against any form of risk and uncertainty led to the origin of insurance. The insurance came to India from UK; with the establishment of the Oriental Life Insurance Corporation in 1818.The Indian life insurance company act 1912 was the first statutory body that started to regulate the life insurance business in India. By 1956 about 154 Indian, 16 foreign and 75 provident firms were been established in India. Then the central government took over these companies and as a result the LIC was formed. Since then LIC has worked towards spreading life insurance and building a wide network across the length and the breath of the country. After the liberalization the entrance of foreign players has added to the competition in market.the IMPACT OF LIBERALIZATION The introduction of private players in the industry has added to the colors in the dull Industry . The initiatives taken by the private players are very competitive and have given Immense competition to the on time monopoly of the market LIC. Since the advent of the private players in the market the industry has seen new and innovative steps taken by the players in this sector. The new players have improved the service quality of the Insurance. As a result LIC down the years have seen the declining phase in its career. The market share was distributed among the private players. Though LIC still holds the 75% of the insurance sector but the upcoming natures of these private players are enough to give more competition to LIC in the near future. LIC market share has decreased from 95% (2002-03) to 81 %( 2004-05).The following companies has the rest of the market share of the insurance industry Objectives and Advantages of Life Insurance 1. Protection against risk of untimely death Life Insurance is a product, which offers protection against risk of death. In case 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.

MPBIM

6

2. Protection during old age Life Insurance can also be used as a means of saving for one’s future. There are a number of Life Insurance policies, which in addition to life cover also provide the means of investing one’s income. The sum as per the policy will be received only after a period of time. This amount thus provides for old age. 3. Forced Savings Life insurance brings about forced savings. Payment of life insurance premiums is compulsory and becomes a habit. Savings in other schemes can be easily withdrawn and may be used for less worthy purposes. Termination of a life insurance policy by the policyholder usually results in a substantial loss in benefits under the policy to the policyholder. One is thus encouraged to save and keep one’s policy alive. 4. Educational requirements and charity In certain cases, the object of insurance may be to serve as security to educational funds in respect of loans advanced for educational purposes or to provide donations to charitable institutions like hospitals & schools. 5. Nomination and Assignment The Life insured can name the person or persons to whom the policy moneys 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 except to the extent of any interest in the policy retained by the insured. 6. Marketability and suitability for borrowing After a period of 3 years, if the policyholder finds that he is unable to continue payment of premiums he can surrender a policy for a cash sum. A life insurance policy is acceptable as a security for a commercial loan. 7. Loans from the Insurance Company A policyholder can take a loan from his insurance company against the security of his life insurance policy provided the terms of his policy allow for such a loan. This loan can be taken usually after a period of 3 years from commencement of the policy and is a percentage of it’s surrender value. MPBIM

7

8. Investment options The unit linked products give comprehensive insurance solutions that cater to an individual’s dual needs of earning potentially high returns as well as stay insured for life. Thus there is an option to invest money in 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 investments with safer investment vehicles that provide a diversified portfolio. 8. Tax benefits •

The Indian Income Tax Act provides tax concessions to the policyholder both on payment of premium and on the maturity amount.

•

Under Section 88 , the Tax benefits on premium paid by an individual for life insurance policies on his own life\on the life of spouse\children-minor or major, including married daughters, can be summed as under:Income

Tax Gross Annual Salary

Tax Savings

Section Section 88

< Rs 1.5 lakh

Rs. 12,000 on investments of Rs. 60,000

Rs 1.5 lakh- Rs. 5 Rs.10,500 on investments lakh

of Rs. 70,000

> Rs. 5 lakh

Nil

Section 80CCC

Across

(Pension Plans)

slabs

Section 80D

Across

(Critical

Illness slabs

all

income Upto Rs. 3,000 saved on investment of Rs. 10,000

all

income Upto Rs. 3,000 saved on Investment of Rs. 10,000.

Riders) •

Under Section 10(10D), any sum received under a Life Insurance Policy (excluding sums received under a Keyman Insurance Policy) including bonus on such policy is fully exempt from tax(provided the premium payable does not exceed 20% of the actual capital sum assured)

MPBIM

8

•

However the above tax calculations are subject to changes as per the Finance Act governed from time to time. The customer has to be advised that he should consult his tax advisor on taxation issues.

9. Protection to wife and children Under Section 6 of the Married Women’s Property Act if a married man takes a policy of life insurance on his own life and expresses on the face of it to be for the benefit of his wife, or of his wife and children, or any of them, then it shall be deemed to be a trust for the benefit of his wife, or 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 control of the husband; or to his creditors, or form 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 . Tax Benefits of Life Insurance The following tax benefits applicable to policyholders Under Income Tax Act,1961 An individual or HUF can claim rebate on the insurance premium paid for self, spouse and children (including dependent children), under section 88 of Income Tax Act. The premiums paid towards Retirement Plan upto Rs.10,000, will qualify for deduction from taxable income under sec. 80CCC of the Income Tax Act Money received under a Life Insurance Policy As per section 10(10D) of the Income Tax Act,1961, any sum received under a life insurance policy including bonus declared or paid do not form part of taxable Income. To put it simply, it is exempt from tax. However, monies received under keyman insurance policy are not covered under section 10(10D).

MPBIM

9

Under Wealth Tax Act Insurance premium paid as well as surrender value of Insurance policy do not form part of chargeable wealth. For the same no wealth tax is attracted when the policy is in force. On maturity of policy the amount received , if it remains in cash on March 31 of the succeeding year, will form part of chargeable wealth.

Under Gift Tax Act Gift Tax Act has been abolished and is no longer applicable. Accordingly, gifts are not normally taxable. However, there are clubbing provisions in Income Tax Act(Sec 64), which make gifts taxable in certain circumstances.

THE VARIOUS LIFE INSURERS ENTERED INDIA IN THE FOLLOWING YEARS

Sl.No.

Date of Reg.

NAME OF THE COMPANY

1

23.10.2000

HDFC Standard Life Insurance Co. Ltd.

2

15.11.2000

Max New York Life Insurance Co. Ltd

3

24.11.2000

ICICI Prudential Life Insurance Co.Ltd

4

10.01.2001

OM Kotak Mahindra Life Insurance

5

31.01.2001

Birla Sun Life Insurance Co. Ltd

MPBIM

10

6

12.02.2001

Tata AIG Life Insurance Co. Ltd

7

30.03.2001

SBI Life Insurance Co.Ltd

8

02.08.2001

ING Vysya Life Insurance Co. Ltd

9

03.08.2001

Allianz Bajaj Life Insurance Co. Ltd

10

06.08.2001

MetLife India Insurance Co. Ltd

11

03.01/2002

AMP SANMAR Assurance Co. Ltd

12

14.05.2002

Aviva Life Insurance Co. Ltd

13

06.02.2004

Sahara India Insurance Co. Ltd

MARKET SHARE (%) OF THE PRIVATE INSURANCE PLAYERS IN THE INDIA. S.NO

Company

Premium

Premium

Growth rate

market share% Up to FEB

Up

to

2005

2005

FEB Up to FEB 2005

1

Bajaj Allianz

49405.12

2.86

333.50

2

ING Vysya

9684.14

.56

114.39

3

AMP Sanmar

8247.45

0.48

292.72

MPBIM

11

4

SBI Life

39603.33

2.29

240.90

5

Tata AIG

25283.08

1.46

76.96

6

HDFC Standard

33533.73

1.94

123.53

7

ICICI Prudential

115465.48

6.69

100.06

8

Birla Sunlife

48454.48

2.81

95.76

9

Aviva

14980.78

0.87

152.40

10

Kotak Mahindra

14398.02

0.83

106.85

11

Max New York

18260.76

1.06

73.61

12

Met Life

4555.62

0.26

149.18

13

Sahara Life

35.23

0.00

0.00

Private

381907.65

22.12

129.20

GRAND TOTAL

MPBIM

813014.01

2534287.67

7527698

26260468

12

100.00 100.00

MARKET SHARE OF LIC AND PVT INSURERS BASED ON POLICY COLLECTED IN THE YEAR 2004-2005 MARKET SHARE BASED ON POLICY COLLECTED PVT INSURERS, 8.50%

LIC , 91.50%

0

MPBIM

13

Aviva 4% ING vysya 5%

Tata aig 10%

bajaj allianz 13% AMP sanmar 2%

SBI life 6% Metlife 2%

icici pru 27%

Max New York 10% Birla Sunlife 9%

MPBIM

kotak 3%

HDFC 9%

Sahara 0%

14

Aviva ING vysya 3% 5%

Tata aig 5%

bajaj allianz 15% AMP sanmar 2%

SBI life 9% Metlife 1% Max New York 4%

icici pru 29%

Birla Sunlife 11% kotak 7%

HDFC 9%

Sahara 0%

The Role and Functions of IRDA in the Insurance Industry The Insurance regulation In India, Insurance regulation in India started with the passage of the Life Insurance Companies act 1912, and provided Fund Act, 1912. The first comprehensive legislation was introduced with the Insurance Act. 1938, which strict state control over insurance business in the country under the supervision of the controller of insurance. The important functions of the IRDA as per the IRDA act 1999 include the following. Licensing and regulating the insurance sector any acting as an independent and regulatory body. Specifying requisite qualifications, code of conduct and practical training for insurance intermediaries and agents. Protecting the interest of the policyholders in matters concerning assigning of policy, settlement of claims etc. MPBIM

15

Regulating investments of funds by insurance companies. Calling for information from undertaking, conducting enquiries and investigation including audit of insurers and other organization connected with the insurance business. Regulating maintenance of margins of solvency of the insurer. Adjudication of disputes between insurers and intermediaries. Supervising the functioning of the tariff Advisory Committee. Promoting efficiency in the conduct of insurance sector. Insurance, apart from acting as an important financial instrument for risk cover, it is also a major instrument for mobilization of long terms savings. The savings part of insurance has channeled efficiently into long-term investments and would play a greater role in funding the infrastructure projects with long gestation periods . in the liberalized scenario , IRDA will have to play a crucial role towards meeting the Long – term solvency of insurance companies, should also promote competition among them.. (c) Specifying requisite qualifications, code of conduct and practical training for intermediary or insurance intermediaries and agents; (d) Specifying the code of conduct for surveyors and loss assessors; (e) Promoting efficiency in the conduct of insurance business; (f) Promoting and regulating professional organizations connected with the insurance and re-insurance business; (g) Levying fees and other charges for carrying out the purposes of this Act; (h) calling for information from, undertaking inspection of, conducting enquiries and investigations including audit of the insurers, intermediaries, insurance intermediaries and other organizations connected with the insurance business; (I) control and regulation of the rates, advantages, terms and conditions that may be offered by insurers in respect of general insurance business not so Controlled and regulated by the Tariff Advisory Committee under section 64U of the Insurance Act, 1938 (4 of 1938);

MPBIM

16

(j) Specifying the form and manner in which books of account shall be maintained and statement of accounts shall be rendered by insurers and other insurance intermediaries; (k) Regulating investment of funds by insurance companies; (l) Regulating maintenance of margin of solvency; (m) Adjudication of disputes between insurers and intermediaries or insurance intermediaries; (n) Supervising the functioning of the Tariff Advisory Committee; (o) Specifying the percentage of premium income of the insurer to finance schemes for promoting and regulating professional organizations referred to in clause (f); (p) Specifying the percentage of life insurance business and general insurance business to be undertaken by the insurer in the rural or social sector; and (q) Exercising such other powers as may be prescribed

MPBIM

17

COMPANY PROFILE

MPBIM

18

Since you will be paying premiums for years to come, you don't want your insurance company to disappear before you or your family receives the benefit. It is worth asking how long the company has been in business, how many life insurance policies they manage and their credit rating. In most cases, you will get a better deal from the smaller life insurance companies, but you just need to be more careful to research them and make sure they are stable. Bajaj Allianz is sure to one such life insurance company Bajaj Allianz life insurance Company limited is a joint venture between two companies. Bajaj Auto and Allianz AG. Allianz Group's Indian life insurance joint venture has changed its name to Bajaj Allianz Life insurance from Allianz Bajaj life insurance (Bombay), Aug 4, 2004 Allianz AG ”Worlds largest insurance company by revenue –Rs520353cr (euro96.9billion) ”World wide 2nd by gross written premiums-Rs477930cr (euro 89 billion)

”3rd largest assets under management (AUM) and largest amongst insurance companies

”11th largest corporation in the world

”50% of globe business from life insurance, close to 60 million lives insured globally

”Established in 1890, 110 years of insurance expertise

”More then 70 countries,173750 employees worldwide

”Insurance to almost half of the fortune 500 companies Bajaj auto ”One of the largest 2 and 3 wheeler manufacturers in the world ”21 million + vehicles on the road across the globe ”Managing fund of over Rs5200cr

MPBIM

19

”Bajaj auto finance one of the largest companies in India

”Rs5934cr turnover and profits after tax of 732cr in 2004-05

Bajaj allianz life insurance ”The fastest growing private life insurance company in India, with a growth rate of 380%

”Have sold over 650000 policies to satisfied customers

”Is back by a network of 400 offices spanning the country

”Ranked second among private life insurance companies in India ”Assets under management Rs936 cr ”Shareholder capital base of Rs267cr ”Product tailored to suit your needs

”Decentralized organization structure for faster response

”Wide reach to serve you better-a national wide network of 400 branches

”Specialized departments for banc assurance, corporate agency and group business ”Well networked customer care centers (CCCs) with state of art IT systems

”Highest standard of customer service and simplified claims process in the industry

”Website to provide all assistance and information on products and services, online buying and online renewals.

”Toll-free number to answer all your queries, accessible from anywhere in the country and a strong tele-marketing and direct marking team

”Swift and easy claim settlement process ”Accelerated growth Vision • To be the first choice insurer for customers.

• To be the preferred employer for staff in the insurance industry. • To be the number one insurer for creating shareholder value

MPBIM

20

Mission As a responsible, customer focused market leader, we will strive to understand the insurance needs of the consumers and translate it into affordable products that deliver value for money. The Bajaj Allianz Difference • Business strategy aligned to clients' needs and trends in Indian and global economy / industry • Internationally experienced core team, majority with local background • Fast, decentralised decision making • Long-term commitment to market and clients Underwriting Our underwriting philosophy focuses on: •

Understanding the customer's needs

•

Underwriting what we understand

•

Meeting the customer's requirements

•

Ensuring optimal coverage at lowest cost

claimsPhilosophy The Bajaj Allianz team follows a service that aims at taking the anxiety out of claims processing. We pride ourselves on a friendly and open approach. We are focused towards providing you a hassle free and speedy claims processing. Our claims philosophy is to: •Be flexible and settle fast •Ensure no claim file to be seen by more than 3 people • Check processes regularly against the global Allianz OPEX (Operational Excellence)methodology Sold over 1 million since inception.

MPBIM

21

Customer Orientation: At Bajaj Allianz, our guiding principles are customer service and client satisfaction. All our efforts are directed towards understanding the culture, social environment and individual insurance requirements - so that we can cater to all your varied needs. Experience And Expert Servicing Team We are driven by a team of experienced people who understand Indian risks and are supported by the necessary international expertise required to analyse and assess them.

Superior Technology •

In order to ensure speedy and accurate processing of your needs, we have established world class technology, with renowned insurance software, which networks all our offices and intermediaries

•

Using the Web, policies can be issued from any office across the country for retail products

•

Unique, user friendly software developed to make the process of issue of policies and claims settlement simpler (e.g. online insurance of marine policy certificate)

Unique Forms of Risk Cover •

Special PA cover for Amarnath Yatris

•

Housing loan cover for people, who are suddenly unemployed

•

Film insurance

•

Event management cover

MPBIM

22

•

Sports & Entertainment Insurance Package

Risk Management – Our Expertise Our service methodology is tried, tested and Proven the world over and involves: •

Risk identification: Inspections

•

Risk analysis: Portfolio review and gap analysis

•

Risk retention

•

Risk Transfer: To an insurer as well as reinsurer (as required)

•

Creation of need based products

•

Ongoing dialogue and proactivity

COMPANY PRODUCTS “Insurance is a contract between two parties whereby one party called insurer undertakes the risk in exchange for a fixed amount of money on the happening of a certain event.” 1. CASH GAIN People needs for insurance protection will vary at different stages of life. Sometimes, they may need to release a part of their savings from insurance commitments and utilize it for other pressing needs. The Bajaj Allianz Cashgain is ideal for those who want to reap and enjoy the benefits of their life insurance policy at regular intervals during their lifetime. Bajaj Allianz Cashgain is a specially designed plan that offers a host of additional benefits you may choose to develop a sound financial portfolio for your family. Among the many unique benefits, the most significant is the Family Income Benefit (FIB) that sustains the family by compensating the loss of regular income due to death or permanent disability. Available as:

MPBIM

23

• Bajaj Allianz Cashgain Economy: The basic package • Bajaj Allianz Cashgain Gold: With double protection • Bajaj Allianz Cashgai n Diamond: With triple protection • Bajaj Allianz Cashgain Platinum: With quadruple protection A Uniform Life Cover Besides giving you regular Cash Benefits, this plan takes care of your life insurance needs also. On death during the term of policy, the following would be paid irrespective of the Cash Benefits already paid: • Bajaj Allianz Cashgain Economy: Sum Assured + Bonuses • Bajaj Allianz Cashgain Gold: Double Sum Assured + Bonuses • Bajaj Allianz Cashgain Diamond: Triple Sum Assured + Bonuses • Baj aj Allianz Cashgain Platinum: Quadruple Sum Assured + Bonuses Choice of Terms Keeping your convenience in mind, we offer you the widest range of terms: 15, 20, 25 and 30 years. Additional Protection for you and your family You have the option to add the following additional benefits, providing total protection against uncertainties. Family Income Benefit (FIB) - The Ultimate Protection - For Your Loved Ones You can select the unique Family Income Benefit from Bajaj Allianz that ensures total financial protection for your loved ones. In case of death or accidental total permanent disability, a guaranteed monthly income of 1% of the sum assured (12% per

MPBIM

24

annum) is paid till the end of the policy term or at least for a period of 10 years, whichever is higher. Moreover, all future premiums are waived. Comprehensive Accident Protection This benefit provides comprehensive cover in case of an accident. It comprises of: Accidental Death Benefit Accidents are always sudden and sometimes fatal. You can't lessen theemotional shock, but you can certainly soften the financial one. Bajaj Allianz Accidental Death Benefit gives the loved ones something to start with after the permanent loss of income by paying an amount equal to the Sum Assured.. Accidental Permanent Total/Partial Disability Benefit Accidents are unpredictable, and so are the consequences. They may lead to a disability - partial or total. This Benefit provides a financial cushion against such misfortunes. You will get 50% of the Sum Assured in case of partial disability and 100% in case of total disability. (Subject to a maximum of Rs. 25,00,000/- for partial and Rs. 50,00,000/- for total disability under all policies with Bajaj Allianz taken together).

Waiver of Premium Benefit An accident may lead to permanent total disability, limiting one’s ability to earn. Bajaj Allianz Waiver of Premium benefit is a helping hand when one needs it most. It waives off all future premiums while keeping the valuable life insurance cover alive, thus enabling you to live up to your commitments. Critical Illness Benefit (CI) Some illnesses are critical. They not only alter one’s life's pattern but also result in a financial drain. Bajaj Allianz Critical Illness Benefit softens the impact on the family by paying out the Critical Illness Benefit under the plan immediately, while other policy MPBIM

25

benefits continue (excluding Hospital Cash Benefit). We cover 11 critical illnesses. You have the flexibility of choosing Critical Illness cover up to the basic Sum Assured selected by you (Minimum Rs.50, 000). Hospital Cash Benefit (HC) The worry of settling hospital bills (room charges) adds to the trauma of hospitalization. Bajaj Allianz Hospital Cash Benefit reduces this financial burden and helps recovery with peace of mind. Flexibility in Coverage At Bajaj Allianz, we believe in offering benefits and not just products. We realize that you are unique and your needs for insurance vary with time. We therefore offer you the flexibility of inclusion of coverage or exclusion of coverage at each policy anniversary, subject to conditions relating to such inclusions and exclusion. You have the flexibility to change your package and move to a package that provides lower protection at each policy anniversary (premiums would be adjusted accordingly). “Comprehensive Accident Protection” can be included and excluded at each policy anniversary. Family Income Benefit, Critical Illness Benefit and Hospital Cash Benefit can be taken at inception only. FIB, CI & HC can be reduced or excluded subsequently at any policy anniversary. Once reduced or excluded, they cannot be increased or included subsequently. Increase in risk coverage Every added responsibility in your life calls for increase in your risk cover. We provide you the option to increase coverage upto 50% of the basic Sum Assured on each of the following happy moments in life. • Marriage • The birth of first child

MPBIM

26

• The birth of second child This additional coverage is not subject to underwriting. The option should be exercised within 90 days of the occurrence of the said event. 2. SAVE CARE ECONOMY As the breadwinner of the family you shoulder several responsibilities. Your spouse's welfare, your children's education, buying a house or a car - you have a lot to think about, everyday. Bajaj Allianz, believe that the security and growth of your hard earned money should not add to these. Which is why Bajaj Allianz has created the “Bajaj Allianz Save Care Economy Single Premium”-the 10-year Single Premium version of our popular product “Save Care Economy”? It is an ideal plan for a one-time lump sum investment that provides for savings with high risk-cover. The "Bajaj Allianz Save Care Economy - SP", is a Single Premium investment plan for 10 years that also participates in the profits of the company. The highlights of this plan are: Minimum Guaranteed Return up to 3.54% (depending on age at entry). The Minimum Guaranteed Amount (Sum Assured) would grow further by way of compounded annual bonuses. A high risk-cover of up to 142% (depending on age at entry) of the sum invested from the beginning of the policy term as a financial safety net to provide for unpredictable adversities. Eligible for Tax Benefits under Section 88 and Section 10 (10 D) of the Income Tax Act. At Maturity you will receive the Sum Assured (Minimum Guaranteed Amount) along with the accrued bonuses.

MPBIM

27

Death Benefit: In case of death during the term of the plan, the nominee will be paid the Sum Assured (Minimum Guaranteed Amount) plus accrued bonuses. In case of death of a minor (below age 7), the death benefit will be the surrender value or Single Premium whichever is higher. 3. INVESTGAIN It takes only a moment to make promises and a lifetime to keep them. Keeping promises made to your loved ones is not just a responsibility, but a commitment that you have to live up to. When you promise to see your family through thick and thin you need to make sure that you have planned for all the eventualities that may befall on them. You need to be prepared that even if there ever is an instance that you are not there with them you have saved enough to see them through their entire life. We understand this need, which is why we have developed Bajaj Allianz’s InvestGain, the plan that helps you in saying "My family, May you always be happy!” Available as: • Bajaj Allianz Investgain Economy: The basic package • Bajaj Allianz Investgain Gold: With double protection • Bajaj Allianz Investgain Diamond: With triple protection • Bajaj Allianz Investgain Platinum: With quadruple protection All these packages participate in the profits of the company by way of bonuses, and therefore, grow with time Family income benefit You can select the unique Family Income Benefit from Bajaj Allianz that ensures total financial protection for your loved ones. In case of death or accidental total permanent disability, a guaranteed monthly income of 1% of the sum assured (12% per annum) is paid till the end of the policy term or at least for a period of 10 years, whichever is higher. Moreover, all future premiums are waived. MPBIM

28

Popular Products: Endowment Assurance (Participating) and Money Back (Participating). More than 80% of the life insurance business is from these products. 4. UNIT LINKED INSURANCE POLICY The thumb rule for buying insurance is that your insurance needs are minimal in your early earning years, increase with added responsibilities (Marriage, children, loans etc.) and taper off by the time you retire. It is difficult to find a single insurance plan that can take care of all your changing requirements in life – additional protection, more money to invest, sudden requirement of cash or a steady post-retirement income. With Bajaj Allianz UnitGain, you can invest in one life insurance plan that can take care of all your changing requirements throughout your life. This plan has been designed to provide you with maximum flexibility, so that you do not have to worry about your changing needs. Bajaj Allianz UnitGain offers the unique option of combining the protection of life insurance with the attractive prospects of investing in securities. You can choose the investment funds you want to invest your money, providing you with an opportunity to have a direct stake in the performance of the financial markets. You also benefit from attractive tax advantages and can protect your loved ones against unfortunate events. •

Unit Gain Plus : A Unit Linked Plan Bajaj Allianz Unit Gain Plus offers the unique option of combining the protection of life insurance with the attractive prospects of investing in securities. Customers have the choice of 6 investment funds with flexible investment management; they can change funds at any time. Customers also benefit from attractive tax advantages and unmatched flexibility -to match their changing needs. And the advantage of low fund management & fund administration costs.

MPBIM

29

•

Unit Gain Plus SP : A Single Premium Unit Linked Plan This plan enables the customers to protect their loved ones, while making their money grow faster with the advantage of low fund management & fund administration costs. It provides the customers the option of allocating 98% of the single premium to purchase units in any/all of the 6 funds available with company

•

Unit Gain : A Unit Linked Plan This amazingly flexible unit linked life insurance plan provides the customers the opportunity to participate in market linked returns while enjoying the valuable benefits of life insurance

•

Unit Gain SP : A Single Premium Unit Linked Plan This plan enables the customers to protect their loved ones, while making their money grow faster. It provides them the option of allocating 100% of the Single Premium to purchase units in any/all of the 6 funds available with company.

•

Lifelong Gain Plan : Unit Linked Whole Life Plan This is the perfect plan to take care of ongoing and future family expenses like

debts, expenses on children, living expenses, etc. It can also take care of unforeseen expenses like accidents, illnesses, hospitalization, etc. and provides customers family with a safety net. It provides whole life protection with only 10 or 15 years of contributions. Guaranteed Survival Benefits @3% are available under this policy. Guaranteed Survival Benefits that pays 3% of the Sum Assured every year after the premium payments are over SUITABILITY

MPBIM

30

This policy is a long-term market linked total protection plan. The plans offer protections for life at the same time allows the policyholder to get market linked returns. It is a single product combining the benefits of both an investment product and insurance plan. This apart, the product offers a lot of flexibility. DIFFERENT FUNDS EQUITY INDEX The investment objective of this fund is to provide capital appreciation through investment in equities. The plan is expected to match the returns given by NIFTY Index of the National Stock Exchange. This fund will invest at least 85% in equities and maximum 15% in debt and cash. EQUITY PLUS FUND The investment objective of this fund is to provide capital appreciation through investment in selected equity stocks that have the potential for high capital appreciation. The fund will invest at least 85% in equities and maximum 15% in debt and cash DEBT PLUS FUND The objective of this fund is to provide accumulation of income through investment in high quality fixed income securities like G-securities and corporate debt rates AA and above. This fund is invested fully in debt instrument and money market instrument. BALANCE PLUS FUND This fund is a fund of funds. The objective of this fund is to provide a balanced investment between long-term capital appreciation and current income through investment in the units of our equity and debt funds. The balanced fund will invest 30% to 50% in the equity index fund and 50% to 70% debt fund.

MPBIM

31

CASH PLUS FUND The investment objective of this plan is to have a fund that guarantees invested capital through investments in liquid money market and short term instruments like commercial papers, certificate of deposits, money market mutual funds, bank F.D’s etc. The price of unit in this fund is gu aranteed not to go down. 100% of this fund will be invested in money market instruments. The price of the units in this fund is guaranteed never to go down. FOCUSED SALES NETWORK

Bajaj Allianz Life Insurance Company

Agency Channel

Banc assurance

Branches

Satellite

Satellite

Satellite

Group and Alternate Channel

Standard Chartered Bank

Group Employee Benefit

Syndicate Bank

Corporate Agency

Centurion Bank

Franchisee

Cosmos Bank

Brokers

Jankalyan Sahakari Bank Jijamata Sahakari Coop Bank

MPBIM

32

The overall premium target is broken down as follows by distribution channel: FP + SP

ANNUAL(crores)

AGENCY

1,827

BANCASSURANCE

650

ALTERNATE CHANNELS

523

RENEWALS

500

TOTAL

3500

AGENCY CHANNEL:

Ö Ö  Currently the company has some 300 offices made up of 68 branches and

about 239 satellite offices.

Ö Ö  The company will continue with the same hub and spoke structure, but will

increase the number of branches to 100 and satellites to 300.

Ö Ö  The number of STMs a branch or a satellite can have will be between 2 and

8.

Ö Ö  Underwriting and processing of business will continue at the branch level. Ö Ö  The branches will continue to support the bancassurance and alternate channels for underwriting and processing of business, as well as offer the office infrastructure for the other channels staff to operate from.

BANCASSURANCE: The company has some 6 bank tie ups these will be managed by the bancassurance team.following are the banks with which the company has tied up: 1. Syndicate bank. 2. Centurion bank. 3. Standard chartered bank. 4. indusland ind bank. MPBIM

33

ALTERANATE CHANNELS: The focus will be corporate agency, franchise, brokers, worksite marketing, NRI business, HNI business, group business and rural social business ORGANISATION STRUCTURE OF SALES AGENCY

MPBIM

34

CEO CFO HOD SALES ZONAL MANAGER REGIONAL MANAGER SENIOR BRANCH MANAGER BRANCH MANAGER ASSISTANT BRANCH MANAGER SALES MANAGER CONSULTANTS. / AGENTS

BANK-ASSURANCE/ALTERNATE CHANNEL

MPBIM

35

CEO

CFO

HOD SALES

AREA MANAGER

DEPUTY MANAGER

FINANCIAL SERVICE\PLANNING CONSULTANTS

MPBIM

36

FINANCIAL HIGHLIGHTS YEAR 2004-2005 Particulars

2004-05

2003-04

2002-03

2001-02

Rs. Million

Rs.

Rs. Million

(11

Million

Months)*

Rs. Million

Gross Written Premium

8,560.7

4,798

2,998

1,420

Net Written Premium

4,792.9

2,864

1,808

841

Net Earned Premium

3,709.2

2,306

1,541

98

Net Incurred Claims

(2,263.3)

(1,542)

(1,072)

(127)

Net Commissions

419.4

231

155

128

Management Expenses

(1,455.9)

(984)

(689)

(370)

Underwriting Results

409.4

11

(33)

(271)

Income from Investments

388.8

285

207

143

Others

28.6

22

(3)

(5)

Profit Before Tax

769.6

318

171

(133)

Provision for Tax

(298.7)

(101)

(75)

37

Profit After Tax

470.9

217

96

(96)

Claim's Ratio

61%

67%

70%

130%

Commission Ratio

-11%

-10%

-10%

-130%

Management Expenses Ratio

40%

42%

43%

376%

Combined Ratio

90%

99%

102%

376%

Return on Equity

34%

20%

9%

-9%

Shareholder' s Equity

1,824.1

1,380

1,095

997

Assets Under Management

5835.5

3,486

2,709

1,688

Number of Employees

924

480

306

141

MPBIM

37

GROWTH OF BAJAJ ALLIANZ LIFE INSURANCE CO

Fiscal year

No of policies sold in FY

GWP in FY

2001-2002 (6months)

21376

Rs 7cr

2002-2003

115965

Rs69cr

2003-2004

186443

Rs221cr

2004-2005

288189

Rs1002cr

300000 250000 200000 150000

policies sold in Rs

100000 50000 0

MPBIM

2001-2002 (6months)

2003-2004

38

1200 1000 800 600 GWP in cr

400 200 0

2001-2002 2002-2003 2003-2004 2004-2005 (6months)

¾Assets under management Rs936 cr

¾Shareholder capital base of Rs267cr ¾Product tailored to suit your needs

¾Decentralized organization structure for faster response

¾Wide reach to serve you better-a national wide network of 400 branches

¾Specialized departments for banc assurance, corporate agency and group business ¾Well networked customer care centers (CCCs) with state of art IT systems

¾Highest standard of customer service and simplified claims process in the industry

¾Website to provide all assistance and information on products and services, online buying and online renewals.

¾Toll-free number to answer all your queries, accessible from anywhere in the country and a strong tele-marketing and direct marking team

¾Swift and easy claim settlement process

LIFE TRACK OF BAJAJ ALLIANZ LIFE INSURANCE COMPANY LTD Objectives Of The Company For The Year 2004-05: •

to be one of the top 3 private life insurers in terms of gross premium and achieve a premium target of more than Rs 750 crs.

MPBIM

39

•

To be one of the top 2 companies in terms of profitability.

•

To be more customer focused and reduce complexity.

The Company’s Major Achievements In The Last Financial Year Are: •

Number 2 amongst the private insurers in terms of new business premium, up to February 2005.

•

Gross premium achieved over Rs 1000crs GWP

•

300 + offices, 2700 + STM’s and 45000 + ICs

•

190 MDRTs , 9COTs

•

6 bancassurance tieups

•

intermediaries including franchisees and corporate agents over 400.

•

A full basket of products approved.

The Company’s Objectives For The Year 2005-06 •

To be one of the top 2 private life insurers in terms of premium and profitability

•

Achieve a minimum premium target of Rs 3500 crs(with less than 30% single premium)each office to look at growing the business from 2004-05levels by 350% to 400%

•

Improve customer service at all levels.

•

Conduct business in an ethical manner.

THE KEY INITIATIVES THE COMPANY PLANS TO TAKE IN THIS QUARTER INCLUDE THE FOLLOWING:

¬ ¬  Increase branch numbers to 100 and satellite offices to 300. ¬ ¬  Increase STM strength to3500 and IC strength to 50000 ¬ ¬ Products for filing and approval women’s plan, health, tactful and revised ULIP ¬ ¬ Metro city strategy- increase number of branches in metro cities. ¬ ¬ Target 5 banks/coop banks for tie ups. MPBIM

40

¬ ¬  Increase franchisee and corporate agents tie up. ¬ ¬  Group and broker team to be strengthened. ¬ ¬ Tactful team to be setup. ¬ ¬ NRI and HNI teams to be set up to focus on these areas. ¬ ¬ Online system to incorporate renewals, switches and withdrawals. ¬ ¬ Finalization of accounts for 2004-2005 ¬ ¬ Recruitment of training head and trainers for branches

MPBIM

41

THE VARIOUS RESPONSIBILITIES AND THE WORK CARRIED OUT IN THE BANGALORE BRANCH OFFICE 1. Bangalore is the area office. 2. There are different channels namely bancassurance, retail banking, agents and agency managers headed by respective managers. 3. Primary responsibility of all the channels is to meet the targets set by the head office. 4. Policy logins are done here. 5. Underwriting and medical checkups are done here. 6. After the preliminary verification policies are sent to head office for issuance. 7. Training is also held for the newly appointed employees. 8. Certificate for selling insurance is given once employees clear the IRDA exam.

MPBIM

42

MICROSCOPIC STUDY

MPBIM

43

PROJECT TITLE: “A COMPARATIVE STUDY OF INSURANCE PRODUCTS OF BAJAJ ALLIANZ LIFE INSURANCE COMPANY WITH COMPITITORS”

PRODUCTS FOR COMPARISON •

UNIT LINKED PLAN

•

CHILDREN PLAN

•

ENDOWMENT PLAN

COMPANIES FOR THE COMPARISON:

MPBIM

44

•

BAJAJ ALLIANZ LIFE INSURANCE COMPANY

•

ICICI PRUDENTIAL

•

LIFE INSURANCE CORPORATION (LIC)

UNIT LINKED PLANS: Most insurers in the year 2004 have started offering at least a few unit-linked plans. Unitlinked life insurance products are those where the benefits are expressed in terms of number of units and unit price. They can be viewed as a combination of insurance and mutual funds. The number of units that a customer would get would depend on the unit price when he pays his premium. The daily unit price is based on the market value of the underlying assets (equities, bonds, government securities, et cetera) and computed from the net asset value. The advantage of unit-linked plans is that they are simple, clear, and easy to understand. Being transparent the policyholder gets the entire upside on the performance of his fund. Besides all the advantages they offer to the customers, unit-linked plans also lead to an efficient utilization of capital. Unit-linked products are exempted from tax and they provide life insurance. Investors welcome these products as they provide capital appreciation even as the yields on government securities have fallen below 6 per cent, which has made the insurers slash payouts. According to the IRDA, a company offering unit-linked plans must give the investor an option to choose among debt, balanced and equity funds. If you opt for a unit-linked endowment policy, you can choose to invest your premiums in debt, balanced or equity plans. If you choose a debt plan, the majority of your premiums will get invested in debt securities like gilts and bonds. If you choose equity, then a major portion of your

MPBIM

45

premiums will be invested in the equity market. The plan you choose would depend on your risk profile and your investment need. The ideal time to buy a unit-linked plan is when one can expect long-term growth ahead. This is especially so if one also believes that current market values (stock valuations) are relatively low. So if you are opting for a plan that invests primarily in equity, the buzzing market could lead to windfall returns. However, should the buzz die down, investors could be left stung. If one invests in a unit-linked pension plan early on, say when one is 25, one can afford to take the risk associated with equities, at least in the plan's initial stages. However, as one approaches retirement the quantum of returns should be subordinated to capital preservation. At this stage, investing in a plan that has an equity tilt may not be a good idea. Considering that unit-linked plans are relatively new launches, their short history does not permit an assessment of how they will perform in different phases of the stock market. Even if one views insurance as a long-term commitment, investments based on performance over such a short time span may not be appropriate. Particulars/

ICICI Prudential

Name Of The

Bajaj Allianz Life LIC Insurance Co,Ltd

Company Name

of

the LIFE TIME 11

policy Min

UNIT

GAIN BIMA PLUS

PLUS age

of 0

0

12

age

of 60

60

55

entry Max entry Min

premium 18,000

15,000

yearly MPBIM

46

yearly Term

Choice

rests

customer

with

with

a

the Choice rests with 10yrs min the customer with

premium payment for 10 a min premium Sum assured

yrs

payment for 3 yrs

Min SA is Rs 1,00,000.

Min SA is 5 times Maximum up to

Max SA is Rs 50,00,000.

of the premium. 2lakhs Max SA is as per the age ie 125 times

of

the

premium . SA can be increased or decreased. Maturity

Any time after 4th yrs Anytime

benefit

contribution 100% of the payment of 3 full the units along surrender avaliable

value

is yrs can

after Fund value of

premiums, with

maturity

withdraw bonus at 5% of

100% of the fund the SA value or the SA whichever

is

higher. Death benefit

Higher of SA or value of Higher of SA or Death units. The value of units value of units.

benefit

during the first

will be treated as the The value of units 6

months-30%

death benefit if the life will be treated as of the SA +value assured is less than 7 yrs death benefit if of

units,

next

of age or more than 70 yrs the life assured is 6months-60% of of age.

less than 7 years the SA+ value of of age and more units

.death

than 70 yrs of age. after 1st year – SA units. MPBIM

+value

of

Death

th 47 during the 10 yr-105%of the

SA+

value

of

units.

Death

during the 10th yr-105%of SA+

value

the of

units Withdrawal

Partial

benefit

available from the 3rd complete year

withdrawal onwards.

surrender

is Partial

or Withdrawal allowed after 1

100% withdrawal

is year.

is available after 3rd

value

available after 4th yrs yr contribution. contribution. Flexibility

to The

increase

or premiums can be upto the premium is

decrease premium

max

decrease

the 20%of

the

in Flexibility to raise Not avaliable

initial available with or

premium chosen at the without

increase

time of the inception of in the SA. The SA the policy. There is no can

be

even

limit for increasing the decreased.

The

premium. This can be premiums cannot done

with

or

without be reduced.

increase in the SA Investment

Maximiser,

Balancer,

options

protector & preserver.

Equity

Index, Balanced,

Equity Plus, Debt Secured & Plus,

Balanced Risk

Plus, Cash Plus, Mid cap Increase/ decrease death benefit

Available. Any increase of SA of SA

is

subjected

underwriting

can

be Not available

to increased without any medical test every

3rd

year

upto 4 times. The increase would be MPBIM

25%

of

the48 original SA or Rs 1, 00,000 which

increase would be 25%

of

the

original SA or Rs 1, 00,000 which ever is lower. SA can be decreased at any time. Top ups

Available. Minimum top Available.

Available

up amount is Rs 10000 in Minimum top up multiples of 500. Switches

amount is 5000

4 free switches per year, 3

free

switches No

free

with a minimum switch every policy year. switches. amount

being

Rs Subsequent

Cost

of switching 2%

10000.all other switches switches would be of

the

fund

will be charged Rs100 per charged @1% of value. switch.

the switch or Rs 100 whichever is higher.

Automatic

Available after the 1st 3 Premium holiday Not avaliable

cover

yrs premiums have been or

the

cover

continuance

paid. Can be availed upto continues

after

a max of 2 yrs at a time in the payment 3 full the 1st 10 yr of the policy. years

premium.

After the 10 yrs of the the

cover

policy the customer can continues till the avail

the

cover age of 70

continuance without any limits. Charges Initial charges

% Of premium allocation. % Of premium allocation.

MPBIM

49

18,000-35,999:

allocation.

1st yr-81%; 2nd to5th yr- 1st year -76%, 96%; 6th to 10th yr-98%; 2nd year-97%, 11th yr onwards-99%.

3rd year-99%,

36,000-99,999:

4th

year

1st yr-83%; 2nd to 5th yr- onwards100% 96%; 6th to 10th yr-98%; allocation

is

11th yr onwards-99%.

made.

1,00,000-4,99,999:

Allocation for top

1st yr-85%; 2nd to 5th yr- ups is 100% 96%; 6th to 10th yr-98%; 11th yr onwards-99%. 5,00,000++: 1st yr-88%; 2nd to 5th yr96%; 6th to 10th yr-98%; 11th yr onwards-99%. Admin charges

Admin

charges

60/month

of

Rs Annual

admin This will be 1%

charges of Rs 20 of the Fund per per

annum, charged

month,escalating

on

a

weekly

at 5%per annum basis at the end of each financial year. Riders

Accident and disability Accidental death Inbuilt rider

benefit.

accidental

Critical illness.

Accidental

benefit.

Major surgical assistance permanent benefit rider.

total/partial disability. Critical illness.

MPBIM

50

Hospital

cash

benefit Surrender value Acquires

a

surrender Acquires

a

value after 3 complete surrender years

of

provided

value

the

policy after 3 complete

1st

three years of the policy

premium are been paid. provided 1st three The surrender value is premium are been 100% of the investments.

paid.

The

surrender value is 100%

of

the

investments. Additional allocation units

Declared as % of unit Not available

Not available

of value. Paid at the end of 4th, 8th &12th policy year. The allocation of units would be only made if the annual contribution till that date were made in total. <=75,000-5,00,000:0.15 % 75,001-5,00,000:0.2% 5,00,001-10,00,000:0.25% 10,00,001-50,00,000:0.30 50,00,001&above:0.35%

MPBIM

51

ANALYSIS From the above table it is very clear that the policies of the companies are almost similar and it shows only minor differences between them making the product more attractive from the customer’s viewpoint. For Bajaj Allianz and ICICI the minimum age of entry is zero but in the case of LIC ,policy starts only at the age of 18.hence LIC have to concentrate another product for targeting the zero to 18 age group where as Bajaj and ICICI can cover these groups with this policy. Naturally customer base for unit gain and unit gain plus of Bajaj and life time of ICICI will be more compared to the LIC’s Bima plus. The minimum premium when compared, ICICI has the highest premium, bajaj allianz with Rs 15,ooo which cannot be affored by every one. The minimum SA provided by all the companies is 5 times. But in case of maximum sum assured, Bajaj Allianz is leading with 125 times coverage of annual

MPBIM

52

premium. On the other side ICICI is assuring only 50 times so we can predict that Bajaj is giving more value to a person’s life. Bajaj allianz and ICICI pru provide facility to increase or decrease the SA with or without increase in premium,but this facility is not available in LIC. The customer has to pay the premium for the minimum period of 3 yrs in unit gain plus. Hence the premium holiday can be extended till there are enough funds in the policy to cover the risk of the policyholder.

Where as in lifetime 2, the

policyholder has to pay premium for the first 3 years and can take premium holiday up 2 years then he has to continue paying the premium till the 10th year of the policy. Hence unit gain plus is more beneficial to the customer than life time2.because the fear of lapsation of the policy to the customer is reduced to a greater extent. Customers can switch their money between funds according the market situations. In this case ICICI is giving a more switches than bajaj and LIC. The switching charges of LIC is higher than other 2 companies with no free switches. The following table shows the fund allocations of different policies in different years. year

Unit gain plus

Unit gain

Life time

1st year

76%

30%

80%

2nd year

97%

98%

92.5%

3rd year

97%

99%

96%

4th year

97%

100%

96%

5th year onwards

97%

100%

96%

From the above table we can predict that for a investor of less than 5 years unit gain plus is much better. For a long-term investment it is better to invest in Unit gain why because after the 3 rd year it will invest 100 % premium to the funds. All the policies are providing tax benefits to its customers.

It is a main

advantage to the investors by comparing with mutual funds and other investment

MPBIM

53

options. The tax benefits are given according to the section 10(10) D of Income Tax Act and section 88. Unit-linked life insurance products are those where the benefits are expressed in terms of number of units and unit price. They can be viewed as a combination of insurance and mutual funds. 7KH DGYDQWDJH RI XQLW

-linked plans is that they are simple, clear, and easy to

understand. 7UDQVSDUHQF\%HLQJ WUDQVSDUHQW WKH SROLF\KROGHU JHWV WKH HQWLUH XSVLGH RQ WKH performance of his fund. ,QYHVWRUV ZHOFRPH WKHVH SURGXFWV DV WKH\ SURYLGH FDSLWDO DSSUHFLDWLRQ HYHQ DV WKH yields on government securities have fallen below 6 per cent, which has made the insurers slash payouts. 7KHLGHDOWLPHWREX\DXQLW

-linked plan is when one can expect long-term growth

ahead. This is especially so if one also believes that current market values (stock valuations) are relatively low. /LTXLGLW\ )OH[LELOLW\ The inherent strengths of ULIP make it adaptable to any and every other product offering from the competition. The product is ‘all-in-one’ and can tackle every customer need. The rider offerings namely Term, Critical Illness, Waiver of Premium and Accidental Death & Dismemberment rider add to the attractiveness of the product, which can provide various permutations and combinations.

MPBIM

54

CHILDREN PLANS: Particulars\name of Bajaj Allianz Life Insurance, Co. Ltd

ICICI Prudential

LIC

Smart kid

Koma

the company Name

of

the Child gain 21 or 24

product Minimum Term:

5

10

8

Maximum term

18

25

18

0

0

12

10

22yrs to 25yrs

26

Minimum age of 0 entry(child) Maximum age of 13 entry(child) Max age of child at 21 or 24 maturity Minimum age of 20

20yrs

entry(parent) MPBIM

55

entry(parent) Maximum age of 50

60yrs

entry(parent) Min sum assured

Rs 1,00,000

Rs 1,00,000

1,00,00

Max sum assured

Rs 50,00,000

Rs 30,00,000

25,00,0

Rs 8,400

Policy

Min

premium Rs 5,000

payment p.a Death benefit

multip 1. Future premium waived.

Sum

assured

2. Family income benefit.

premium+

3. Guaranteed payouts.

continue as it is

+waiver

periodic

of Sum

benefits Additi if any

4. Additional SA paid at the age of 21 or 24(as opted) of the child as “Start Of Life Benefit” in case of Child gain 21 Plus and Child gain 24 Plus. Survival benefit

A guaranteed % of SA returned at A

guaranteed

%

of

SA SA +

various ages and the vested bonus returned at various terms and Loyalt along with the terminal bonus if any the vested bonus if any will be will be given at the time of first cash given at the time of first cash Riders

payout.

payout.

1. Premium waiver benefit.

1. Accidental and disability 1. Prem

2. Family income benefit.

benefit.

2. Fam

2. Accident benefit rider. 3. Income benefit rider. Additional benefits

Start of life Rider(available in child The policy holder can choose gain 21 plus & child gain 24 plus)

between payments

the or

2

cash

the

flow

periodic

benefits . Cash flow intervals

CHILD GAIN 21 & CHILD GAIN21

PERIODIC BENEFIT-1

PLUS:

T-7 : 20% OF SA

Policy

anniversary

completion of age MPBIM

following

T-5 : 25% OF SA

Age

T-2 : 25% OF SA

child

56

T

completion of age

Guaranteed additions @ 3.5%

18

compounded

20

(for

22

8-21

PERIODIC BENEFIT-2

24

if

T-4 : 25% OF SA

26

interest rates

T-3 : 20% OF SA

Term: 8- are 7% at

T-2 : 20% OF SA

21

T-1 : 20% OF SA

years

years the

Guarante

beginning of

T

ed Payout

the payouts

Guaranteed additions @ 3.5%

20%

+ 20%

Bonus*

Bonus*

19

25%

25%

20

25%

25%

21

35%

43%**

Total

105%

payout

Bonus*

+

: 20% OF SA+

compounded

+ 105%

+

Bonus*

PLUS: anniversary

following

completion of age Policy

Policy

Term: 8- Term: 8-21 21

years years

Guarante

Payout

ed Payout

interest rates

if are

7% at the beginning of payouts

annually

first 4 years) + VB

CHILD GAIN 24 & CHILD GAIN 24

MPBIM

annually

first 4 years) + VB

Policy

Policy

child

Policy Term: Payout

18

: 30% OF SA+

the 57

(for

of

the

payouts 18

Rebate

20%

+ 25%

Bonus*

Bonus*

20

25%

25%

22

25%

25%

24

35%

40%

Total

105%

payout

Bonus*

+ 115%

+

+

Bonus*

Large sum assured discount:

For

Less than 2,00,000 : nil

premi

2,00,000-4,99,999

:Re 1 per For h

1000 5,00,000 and above: Rs 2 per 1000

premi

Quart

Sum A

Sum A equal

per th

MPBIM

58

MPBIM

59

ANALYSIS From the above comparison it can be found that, 1.The minimum payment term in Child gain is the least as compared to that of Smart kid and Komal Jeevan. Because the maximum age of entry in child gain is higher ie 13 yrs. 2. The minium SA for all the three products is the same but the maximum SA is highest in case of child gain which inturn benefits the customer the most. 3. The minimum premium is least in case of child gain, which makes the policy more affordable by the customer. 4. All the products have almost same riders but the product Child Gain plus has another benefit called “start of life” which means the child is given another SA in case of death of the parents so that the child can leads its life without many hurdles. 5. The total payout at maturity of the plan in case of Chid Gain and smart kid is almost the same ie 105% but in case of Komal Jeevan the payout at maturity is 100%

MPBIM

60

ENDOWMENT PLAN: Particulars\name

Bajaj

Allianz

Life ICICI Prudential

of the company

Insurance, Co. Ltd

Name of the policy

Invest gain

LIC

Save N Protect

Endowment assurance plan(with profits)

Minimum term

5

10

5

Maximum term

40

30

55

Min age at entry

0

0

12

Max age at entry

65

60

65

Max age at expiry

70

70

75

Min sum assured

50,000

50,000

20,000

Max sum assured

No limit

1,00,00,000

No limit

Min premium

5,000 yearly

6,000yearly

Death benefit

Sum

assured

+ SA+GB+VG

SA+VB

assured

+ SA+GB+VG

SA+

bonuses Maturity benefit

Sum bonuses

Rider benefit

• •

Family income

•

disability

Comprehensive

benefit •

MPBIM

Accidental

•

Accident&

benefit.

Protection.

•

benefit. •

Critical

Accident benefit

illness •

Disability

•

Waiver

Major

premium

death benefit.

surgical

benefit.

Accidental

assistance

permanent total/

partial

disability benefit.

final

additional bonus

accidental. •

VB+

61

of

permanent total/

•

partial

Accident rider

disability

benefit

benefit. •

Waiver

of

premium benefit. •

Critical illness benefit.

•

Hospital

cash

benefit. Rebate

For every Rs 10,000

For yearly:3%

SA above Rs 50,000

Half year:1.5% SA 25000 to 49000: 1 SA 50000 & above:2

Loan

Can avail loan upto Can

avail

loan No loans granted

90% of the surrender upto 90% of the value. Surrender

surrender value.

After 3 full policy year After 3 full policy After 3 full policy year

year

Additional

Flexibility to change Extra

features

the packages at each cover for 5 years policy anniversary.

insurance

after maturity of

Addl risk cover of the policy for 50% 50%

of

SA

on of

the

sum

marriage, birth of 1st assured. child & birth of 2nd Premium child. MPBIM

discounts

for

females equal to 262 yr younger male on base plan.

child.

discounts

for

Discount for females- females equal to 2 equal to 2 yr younger yr younger male male on base pack Plans

on base plan.

Economy –the basic package. Gold

–with

triple

protection Diamond- with triple protection Platinum-

with

quadruple protection

MPBIM

63

REFERENCES BOOKS • Insurance chronicle-ICFAI publications • Outlook money –magazine WEBSITES • www.google.com • www.bajajallianz.co.in • www.iciciprulife.com • www.in.insuranceyahoo.com • www.moneycontrol.com • www.bimaonline.com • www.irdaindia.org • www.licindia.com • www.outlookmoney.com

OTHERS • Broachers of different products considered for comparison •

Product manuals

MPBIM

64

PERFORMANCE OF DIFFERENT INSURERS IN 2004-2005 Total Premium u/w

Sl. No. Insurer

Total No. of Policies Issued

Market Share based on

March

Apr.- Mar

March

Apr.- Mar

Premium

Policy

4738.99

30022.07

31148

228894

1.18

0.87

23313.41

37475.21

14975

63468

1.48

0.24

1

TATA AIG

2

KOTAK MAHINDRA MUTUAL

3

BIRLA SUNLIFE

13673.42

62128.31

41710

198370

2.45

0.76

4

MAX NEW YORK

4208.25

22469.01

33608

216671

0.89

0.83

5

ING VYSYA

18478.59

28162.46

26088

111141

1.11

0.42

6

HDFC STANDARD

19771.79

48615.08

58695

206320

1.92

0.79

7

MET LIFE

1048.10

5603.71

9579

46682

0.22

0.18

8

BAJAJ ALLIANZ

36596.63

86001.80

83017

288191

3.39

1.10

9

ICICI PRUDENTIAL 42942.95

158408.46

96352

614673

6.25

2.34

10

SBI

8690.23

48293.56

43271

129974

1.91

0.49

11

AVIVA

4248.50

19229.27

13989

83209

0.76

0.32

12

AMP SANMAR

870.99

9118.44

6378

35268

0.36

0.13

OLD

MPBIM

65

13

14

SAHARA LIFE

131.86

167.09

7146

10214

0.01

0.04

PRIVATE TOTAL

178713.70

555694.47

465956

2233075

21.93

8.50

LIC

634300.31

1978593.20

7061742

24027393

78.07

91.50

MPBIM

66

S. N O

Company

1 2 3 4 5 6 7 8 9 10 11 12 13

Bajaj Allianz ING Vysya AMP Sanmar SBI Life Tata AIG HDFC Standard ICICI Prudential Birla Sunlife Aviva Kotak Mahindra Max New York Met Life Sahara Life Private

MPBIM

Premium

Growth rate

Up to FEB 2005

Premium market share% Up to FEB 2005

49405.12 9684.14 8247.45 39603.33 25283.08 33533.73 115465.48 48454.48 14980.78 14398.02 18260.76 4555.62 35.23 381907.65

2.86 .56 0.48 2.29 1.46 1.94 6.69 2.81 0.87 0.83 1.06 0.26 0.00 22.12

333.50 114.39 292.72 240.90 76.96 123.53 100.06 95.76 152.40 106.85 73.61 149.18 0.00 129.20

Up to FEB 2005

67