Final Report Raj Sip

Summer internship Programme-2009 Reliance Money

Changing concepts of Life Insurance products from traditional 1980’s to till date new plan. ABSTRACT This is the time of tough competition in the market, especially after the global turmoil in the world economy that results in the slowdown of the various financial sectors. Thus it is very important for the organizations to keep an eye on the customers’ interest and preferences, and provide them the best facility than the competitors so that organizations can retain the faith of the customers in the services and products being provided to them. The project titled-“Changing concepts of Life Insurance products from traditional 1980’s to till date new plan. This project will study the different rewards and schemes offered to its existing as well as targeted customers of different companies. 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. Result from this project will be of great use to the organization in order to find out the real pit falls, where the organization has to work upon in order to make themselves better than their counterparts.

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Rajender Singh ICFAI BUSINESS SCHOOL

Summer internship Programme-2009 Reliance Money

INTRODUCTION Objective of the Project: To develop an understanding of various Life insurance products introduced by various life insurance companies.

 Scope: • The study then goes on to evaluate and analyse the findings so as to present a clear picture of trends in the Insurance sector. • This study can be conducted by comparing the performances & products of three private & government insurance players in insurance industry. • It provides a high degree of exposure to the schemes available under different insurance companies. 

METHODOLOGY:

• As the project is based on primary data analysis all of the data involved in the study are collected directly by me. •

The study is based on primarily focusing on primary data collection i.e. through questionnaires, personal interviews, market survey.

• The study involves both qualitative and quantitative analysis of the data collected.

 LIMITATIONS OF THE STUDY: • Inadequacy of the information provided (few confidential matters may not be furnished by the organization).

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Rajender Singh ICFAI BUSINESS SCHOOL

Summer internship Programme-2009 Reliance Money •

I wanted to conduct this project on a large scale basis that is on major cities of India but due to financial and time constraint the study of my project is limited to Indore city.

Industry Profile “Insurance is a contract between two parties whereby one party called insurer undertakes in exchange for a fixed amount of money on the happening of a certain event.” Insurance is a protection against financial loss arising on the happening of an unexpected event. The primary purpose of Life Insurance is the protection of the family. Insurance in it's various forms protects against such misfortunes by having the losses of the unfortunate few paid by the contribution of the many who are exposed to the same risk. This is the essence of insurance- the sharing of losses and substitution of certainty for uncertainty. Insurance companies collect premiums to provide for this protection. A loss is paid out of the premiums collected from the insuring public and the insurance companies act as trustees of the amount collected. In is a system by which the losses suffered by a few are spread over many, exposed to similar risks.  Insurance is defined as the equitable transfer of the risk of a loss, from one entity to another, in exchange for a premium. 

Life insurance is a policy that people buy from a life insurance company, which can be the basis of protection and financial stability after one's death. Its function is to help beneficiaries financially after the owner of the policy dies. In some sense we can say that insurance appeared simultaneously with appearance of human society. In earlier economies, we can see insurance in the

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Summer internship Programme-2009 Reliance Money

form of people helping each other. For example, if a house is burnt, the members of the community help build a new one. Should the same thing happen to one’s neighbor, the other neighbors must come to help? Otherwise, neighbors will not receive help in the future.

History of life insurance. Insurance in the modern sense, started as a methods of transferring or distributing risk were practiced by Chinese and Babylonian traders as long ago as the 3rd and 2nd millennia BC, respectively. Chinese merchants traveling treacherous river rapids would redistribute their cargo across many vessels to limit the loss due to any single vessel’s capsizing. The Babylonians developed a system which was recorded in the famous Code of Hammurabi, c. 1750 BC, and practiced by early Mediterranean sailing merchants. If a merchant received a loan to fund his shipment, he would pay the lender an additional sum in exchange for the lender’s guarantee to cancel the loan should the shipment be stolen. Greek monarchs were the first to insure their people and made it official by registering the insuring process in governmental notary offices. They invented the concept of the ‘general average’. Merchants whose goods were being shipped together would pay a proportionally divided premium which would be used to reimburse any merchant whose goods were jettisoned during storm or sinking of the vessel in the sea.

History of life insurance in India The Greeks and Romans introduced the origins of health and life insurance c. 600 AD when they organized guilds called “benevolent societies” which cared for the families and paid funeral expenses of members upon death. Guilds in the

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Summer internship Programme-2009 Reliance Money

middle Ages served a similar purpose. Before insurance was established in the late 17th century, “friendly societies” existed in England, in which people donated. In India, insurance has a deep-rooted history. It finds mention in the writings of Manu ( Manusmrithi ),

Yagnavalkya ( Dharmasastra ) and Kautilya(

Arthasastra). The writings talk in terms of pooling of resources that could be redistributed in times of calamities such as fire, floods, epidemics and famine. This was probably a precursor to modern day insurance. Ancient Indian history has preserved the earlies traces of insurance in the form of marine trade loans and carriers’ contracts. Insurance in India has evolved over time heavily drawing from other countries, England in particular. 1818 saw the advent of life insurance business in India with the establishment of the Oriental Life Insurance Company in Calcutta. This Company however failed in 1834. In 1829, the Madras Equitable had begun transacting life insurance business in the Madras Presidency. 1870 saw the enactment of the British Insurance Act and in the last three decades of the nineteenth century, the Bombay Mutual (1871), Oriental (1874) and Empire of India (1897) were started in the Bombay Residency In 1914, the Government of India started publishing returns of Insurance Companies in India. The Indian Life Assurance Companies Act, 1912 was the first statutory measure to regulate life business. In 1928, the Indian Insurance Companies Act was enacted to enable the Government to collect statistical information about both life and non-life business transacted in India by Indian and foreign insurers including provident insurance societies.

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Summer internship Programme-2009 Reliance Money

In 1938, with a view to protecting the interest of the Insurance public, the earlier legislation was consolidated and amended by the Insurance Act, 1938 with comprehensive provisions for effective control over the activities of insurers. The Insurance Amendment Act of 1950 abolished Principal Agencies. However, there were a large number of insurance companies and the level of competition was high. There were also allegations of unfair trade practices. The Government of India, therefore, decided to nationalize insurance business. An Ordinance was issued on 19th January, 1956 nationalising the Life Insurance sector and Life Insurance Corporation came into existence in the same year. The LIC absorbed 154 Indian, 16 non-Indian insurers as also 75 provident societies—245 Indian and foreign insurers in all. The LIC had monopoly till the late 90s when the Insurance sector was reopened to the private sector. The history of general insurance dates back to the Industrial Revolution in the west and the consequent growth of sea-faring trade and commerce in the 17th century. It came to India as a legacy of British occupation. General Insurance in India has its roots in the establishment of Triton Insurance Company Ltd., in the year 1850 in Calcutta by the British. In 1907, the Indian Mercantile Insurance Ltd, was set up. This was the first company to transact all classes of general insurance business. 1957 saw the formation of the General Insurance Council, a wing of the Insurance Associaton of India. The General Insurance Council framed a code of conduct for ensuring fair conduct and sound business practices.

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Summer internship Programme-2009 Reliance Money

In 1968, the Insurance Act was amended to regulate investments and set minimum solvency margins. The Tariff Advisory Committee was also set up then. In 1972 with the passing of the General Insurance Business (Nationalisation) Act, general insurance business was nationalized with effect from 1st January, 1973. 107 insurers were amalgamated and grouped into four companies, namely National Insurance Company Ltd., the New India Assurance Company Ltd., the Oriental Insurance Company Ltd and the United India Insurance Company Ltd. The General Insurance Corporation of India was incorporated as a company in 1971 and it commence business on January 1sst 1973. The General Insurance Corporation of India was incorporated as a company. General insurance business was nationalized with effect from 1st January 1973. 107 insurers were amalgamated and grouped into four companies namely 1)National Insurance Company Ltd., 2).The New India Assurance Company Ltd., 3). The Oriental Insurance Company Ltd 4).The United India Insurance Company Ltd. In 1993 The Government set up a committee under the chairmanship of RN Malhotra former Governor of RBI to propose recommendations for reforms in the insurance sector. In 2000 The IRDA was incorporated as a statutory body in April 2000. Foreign companies were allowed ownership of up to 26%. In 2000-Insurance Industry had 16 new entrants, 10 in Life and 6 in General Insurance In 2001- Insurance Industry had 5 new entrants, 2 in Life and 3 in General.

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Summer internship Programme-2009 Reliance Money

In 2003- Insurance Industry had 1new entrant, Sahara India Insurance Company Ltd. In Life Insurance category In 2004-2005 Insurance Industry had 1new entrant, Shri Ram Insurance company Ltd. In 2005-Bharti Axa Life insurance company was granted Certification of Registration in July, In 2006-Bharti Axa Life insurance company commenced its operations the newest player in the insurance sector. The Insurance Regulatory and Development Authority (IRDA) 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. The other decisions taken simultaneously to provide the supporting systems to the insurance sector and in particular the life insurance companies were the launch of the IRDA’s 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, which are expected to be introduced by early next year. Since being set up as an independent statutory body the IRDA has put in a framework of globally compatible regulations.

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Summer internship Programme-2009 Reliance Money

MAJOR PLAYERS IN THE INSURANCE INDUSTRY IN INDIA •

Life Insurance Corporation of India (LIC) Life Insurance Corporation of India (LIC) was established on 1 September 1956 to spread the message of life insurance in the country and mobilise people’s savings for nation-building activities. LIC with its central office in Mumbai and seven zonal offices at Mumbai, Calcutta, Delhi, Chennai, Hyderabad, Kanpur and Bhopal, operates through 100 divisional offices in important cities and 2,048 branch offices. LIC has 5.59 lakh active agents spread over the country. The Corporation also transacts business abroad and has offices in Fiji, Mauritius and United Kingdom. LIC is associated with joint ventures abroad in the field of insurance, namely, Ken-India Assurance Company Limited, Nairobi; United Oriental Assurance Company Limited, Kuala Lumpur; and Life Insurance Corporation (International), E.C. Bahrain. It has also entered into an agreement with the Sun Life (UK) for marketing unit linked life insurance and pension policies in U.K. In 1995-96, LIC had a total income from premium and investments of $ 5 Billion while GIC recorded a net premium of $ 1.3 Billion. During the last 15 years, LIC's

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Summer internship Programme-2009 Reliance Money

income grew at a healthy average of 10 per cent as against the industry's 6.7 per cent growth in the rest of Asia (3.4 per cent in Europe, 1.4 per cent in the US). LIC has even provided insurance cover to five million people living below the poverty line, with 50 per cent subsidy in the premium rates. LIC's claims settlement ratio at 95 per cent and GIC's at 74 per cent are higher than that of global average of 40 per cent. Compounded annual growth rate for Life insurance business has been 19.22 per cent per annum HDFC Standard Life Insurance Company Ltd. HDFC Standard Life Insurance Company Ltd. is one of India’s leading private life insurance companies, which offers a range of individual and group insurance solutions. It is a joint venture between Housing Development Finance Corporation Limited (HDFC Ltd.), India’s leading housing finance institution and The Standard Life Assurance Company, a leading provider of financial services from the United Kingdom. Their cumulative premium income, including the first year premiums and renewal premiums is Rs. 672.3 for the financial year, Apr-Nov 2005. They have managed to cover over 11,00,000 individuals out of which over 3,40,000 lives have been covered through our group business tie-ups. Max New York Life Insurance Co. Ltd. Max New York Life Insurance Company Limited is a joint venture that brings together two large forces - Max India Limited, a multi-business corporate, together with New York Life International, a global expert in life insurance. With their various Products and Riders, there are more than 400 product combinations to choose from. They have a national presence with a network of 57 offices in 37 cities across India. ICICI Prudential Life Insurance Company Ltd.

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Summer internship Programme-2009 Reliance Money

ICICI Prudential Life Insurance Company is a joint venture between ICICI Bank, a premier financial powerhouse and Prudential plc, a leading international financial services group headquartered in the United Kingdom. ICICI Prudential was amongst the first private sector insurance companies to begin operations in December 2000 after receiving approval from Insurance Regulatory Development Authority (IRDA). The company has a network of about 56,000 advisors; as well as 7 bancassurance and 150 corporate agent tie-ups. Bajaj Allianz General Insurance Company Limited Bajaj Allianz General Insurance Company Limited is a joint venture between Bajaj Auto Limited and Allianz AG of Germany. Both enjoy a reputation of expertise, stability and strength. Bajaj Allianz General Insurance received the Insurance Regulatory and Development Authority (IRDA) certificate of Registration (R3) on May 2nd, 2001 to conduct General Insurance business (including Health Insurance business) in India. The Company has an authorized and paid up capital of Rs 110 crores. Bajaj Auto holds 74% and the remaining 26% is held by Allianz, AG, Germany.

Existing Insurance Companies in India  1. HDFC Standard Life Insurance Company Ltd.  2. Max New York Life Insurance Co. Ltd.  3. ICICI Prudential Life Insurance Company Ltd.  4. Kotak Mahindra Old Mutual Life Insurance Limited.  5. Birla Sun Life Insurance Company Ltd.

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Summer internship Programme-2009 Reliance Money

 6. Tata AIG Life Insurance Company Ltd.  7. SBI Life Insurance Company Limited.  8. ING Vysya Life Insurance Company Private Limited.  9. Met life India Insurance Company Ltd.  10. Royal Sundaram Life Insurance Company Limited.  11. Aviva Life Insurance Co. India Pvt. Ltd.  12. Sahara India Insurance Company Ltd.  13. Shriram Life Insurance Company  14. Life Insurance Corporation of India.  15. Reliance Life Insurance Company Limited.  16. Bharti AXA Life Insurance Company Limited.

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

17.Canara HSBC Oriental Bank of Commerce Life Insurance Company Ltd.



18. Aegon Religare Life Insurance Company Limited.

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19. DLF Pramerica Life Insurance Company Limited.

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20. Star Union Dai-Ichi Life Insurance Company Limited.

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21. Future Generali India Life Insurance Company Limited.

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22. IDBI Fortis Life Insurance Company Ltd.

Rajender Singh ICFAI BUSINESS SCHOOL

Summer internship Programme-2009 Reliance Money

Company Profile Reliance Money, a Reliance Capital company, is part of the Reliance Anil Dhirubhai Ambani Group. It is a comprehensive financial services and solution provider providing customers with access to Equity, Equity and Commodity Derivatives, Portfolio Management Services, Mutual Funds, IPOs, Life and General Insurance and Gold Coins. Customers can also avail Loans, Credit Card, Money Transfer and Money Changing services. The largest broking house in India with over 2.5 million customers and a wide network of over 10,000 outlets and 20,000 touch points in 5,000+ locations. Reliance Money endeavors to change the way investors transact in financial markets and avails financial services. The average daily volume on the stock exchanges is Rs. 2,000 crores, representing approximately 3% of the total stock exchange volume. Reliance Capital is one of India's leading and fastest growing private sector financial services companies, and ranks among the top 3 private sector financial services and banking groups, in terms of net worth. Sector: Industry:

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Financial Brokerage firm

Summer internship Programme-2009 Reliance Money

Employees (last reported count):

More than 20,000

Reliance Money has over 22 lakhs customers and more then 10'000 branches in around 5000 cities in India. Company is among the largest broking and distribution house of financial products and having share of more then 3% of total stock market volume at BSE & NSE. RelianceMoney.com is the web based investment portal (with Online Stock Trading) from Reliance Money. This website enables its customer to invest & manage most of the services provided by Reliance Money including Equity (Stock) Trading, Commodity Trading, Derivatives, Mutual Fund Investment, IPO Investment, Life Insurances, General insurances, Money Transfer, Forex exchange, Gold Coins and Credit Cards Services. Company recently entered in to Wealth Management with tools like investment in equity-linked portfolio management services, structured products, insurance and mutual funds. Strong National Network The company at present has an enviable network of over 10000 branches spread over 5000 cities across India. All branches are linked on an online real-time basis. Customers in over 120 locations are also serviced through Telephone service. The company’s expansion plans take into account the need to have a presence in all major industrial and commercial centers where its corporate customers are located. Advantages of Reliance Money Extra security features with 'Security Token'', which is the most secure and tested technology in computer world. 2. Simple, easy and fast online stock trading. 3. Almost all investment options are available under one account including Equity Trading, Derivatives, Forex, Commodity, IPO, Mutual Funds and Insurance. 4. Branches are available in all major cities and the number is growing. 1.

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Summer internship Programme-2009 Reliance Money

Benefits of reliance money 



 



It's Cost-effective Lower transaction fees. A flat fee of just Rs. 500/- and transact through Reliance Money. It offers Single Window Access to almost all financial products. Its Convenient - Reliance Money's services are through the Internet, Transaction Kiosks and over the phone. It's Safe Accounts are safe guarded with a unique security number that changes every 32 seconds. This number works as a dynamic password to keep your account extra safe. It provides you a 3...in...l facility of Banking, Trading and Demat Account through a single window and transfer funds across accounts seamlessly.

 About Reliance Life Insurance Company Limited:  Reliance Life Insurance Company Limited is an associate company of Reliance Capital. Limited, a part of the Reliance - Anil Dhirubhai Ambani Group.  Reliance Capital is one of India's leading private sector financial services companies.  Reliance Capital has interests in asset management and mutual funds, stock broking, life and general insurance, proprietary investments, private equity and other activities in financial services.  Reliance - Anil Dhirubhai Ambani Group also has presence in Communications, Energy, Natural Resources, Media, Entertainment, Healthcare and Infrastructure.

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Summer internship Programme-2009 Reliance Money

Reliance Life Insurance Company Limited is a part of Reliance Capital Ltd.

of

the Reliance – Anil Dhirubhai Ambani Group. The company acquired 100 per cent shareholding in AMP Sanmar Life Insurance Company in August 2005. Taking over AMP Sanmar Life provided Reliance Life Insurance a readymade infrastructure and a portfolio. AMP Sanmar Life Insurance was a joint venture between AMP, Australia and the Sanmar Group. Headquartered in Chennai, AMP Sanmar had over 90 offices across the country, 9,000 agents, and more than 900 employees. Reliance Life Insurance Company Limited is a part of Reliance Capital Ltd. of the Reliance – Anil Dhirubhai Ambani Group. Reliance Life Insurance is another step forward for Reliance Capital Limited to offer need based Life Insurance solutions to individuals and Corporate. Reliance Capital Ltd. is one of India’s leading and fastest growing private sector financial services companies, and ranks among the top 3 private sector financial services and banking companies, in terms of net worth. Reliance Capital Ltd. has interests in asset management, life and general insurance, private equity and proprietary investments, stock broking and other financial services. Whatever your career goal, Reliance Life Insurance is a company big enough for your dreams. We, along with the other businesses of Reliance Capital, enjoy a strong position in the financial services category. And this may be the place where you can have the career you always wanted.

COMPANY PRODUCT Product Details of Reliance Life Insurance

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Products:Individual Plans Reliance Wealth + Health Plan Reliance Secure Child Plan Reliance Automatic Investment Plan Reliance Money Guarantee Plan Reliance Endowment Plan Reliance Special Endowment Plan Reliance Cash Flow Plan Reliance Child Plan Reliance Term Plan Reliance Whole Life Plan Reliance Market Return Plan Reliance Golden Years Plan Reliance Golden Years Plan Value Reliance Golden Years Plan Plus Reliance Simple Term Plan Reliance Special Term Plan Reliance Credit Guardian Plan

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Summer internship Programme-2009 Reliance Money

Reliance Connect 2 Life Plan Employee Benefit Plans Group Term Assurance Policy Reliance EDLI Scheme Reliance Group Gratuity Policy Reliance Group Superannuation Policy 1.Automatic investment plan:The Key benefits of Reliance Automatic Investment Plan are as follows: •

A smart plan which adapts to your changing risk profile with increasing age

•

Option to lower the average cost of units through systematic transfer of your funds

•

Flexibility to switch between funds and plans

•

Options for additional Insurance cover available through riders Key Features Reliance Automatic Investment Plan

•

Two plan options to choose from Ready-made and Tailor-made

•

Life Stage asset allocation to ensure automatic change in investment patterns, under the Ready-made Plan option

•

Freedom to decide your own fund mix based on your risk profile under the Tailormade Plan

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•

Regular, limited, single premium paying options

•

Unmatched flexibility through our ‘Exchange Option’

•

Liquidity in the form of partial withdrawal

Rajender Singh ICFAI BUSINESS SCHOOL

Summer internship Programme-2009 Reliance Money •

Option to avail of Accidental Death Benefit, Accidental Total, Premium Disability and Term Insurance riders How does this Plan work? As a customer you will have the liberty to choose between the Ready-made and Tailor-made Plan options. The premium contributions made by you, net of Premium Allocation Charges and Sum Assured Related Charges are invested in fund/funds of your choice and units are allocated depending on the price of units for the fund/funds. The Fund Value is the total value of units that you hold in the fund/ funds. The Mortality Charges and Policy Administration Charges are deducted through cancellation of units, whereas the Fund Management Charge is priced in the Unit Value. Reliance Automatic Investment Plan at a glance Basic Plan

Minimum

Maximum

Age at Entry

30 days

65

years

last

birthday Age

at 18 years last birthday

Maturity Premium

years

birthday 5 years

Paying Term

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80

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30 years

last

Summer internship Programme-2009 Reliance Money

Min Assured

Sum Regular / Limited Premium: Annualised Premium for 5 years or Annualised Premium for half of the policy term, whichever higher Single Premium 125% of the single premium amount

Max Assured

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Sum No Limit Minimum premium

Rajender Singh ICFAI BUSINESS SCHOOL

Summer internship Programme-2009 Reliance Money

Regular Premium option Rs 10,000 Rs5,000 Rs 2,500 Rs 1,000

Limited Premium Rs 20,000 Rs10,000 Rs 5,000 Rs 2,000

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Summer internship Programme-2009 Reliance Money

Reliance Super Market Return Plan UNDER THIS PLAN THE INVESTMENT RISK IN THE INVESTMENT PORTFOLIO IS BORNE BY THE POLICYHOLDER. You have always aspired for the best in life. And we help you achieve just that. With Reliance Super Market Return plan you can have the twin advantage of insurance protection as well as reaping the benefits of investment growth. It is a flexible plan which works all through your life and meets the changing requirements like additional protection, liquidity through cash, option to invest in different asset class, steady golden years and many more. Key features:  Twin benefit of market linked return and insurance protection  A Unit Linked Plan, different form traditional Life Insurance  products, with maximum maturity age of 80 years last birthday  Option to create your own portfolio depending on your risk appetite  Choose form eight different investment funds  Flexibility to switch between funds  Option to pay regular as well as single premium & Top-ups  Option to package policy with Reliance Major Surgical Benefit Rider, Reliance Critical Conditions (25) Rider, Reliance Term Life Insurance Benefit Rider, Reliance Accidental Death and Total and Permanent Disablement Rider. 

Liquidity through partial withdrawals. How does this Plan work?

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Summer internship Programme-2009 Reliance Money

The premium paid by you, net of Premium Allocation Charges is invested in fund/funds of your choice and units are allocated depending on the price of units for the fund/funds. The Fund Value is the total value of units that you hold in the fund/funds. The Mortality Charges and Policy Administration Charges are deducted through cancellation of units whereas the Fund Management Charge is priced in the unit value. Benefits

Life Cover Benefit: In case of unfortunate loss of life, your Beneficiary will get sum Assured or Fund Value, whichever is higher. You can choose the basic Sum Assured within the minimum and maximum levels mentioned below. Minimum Sum Assured:  Regular Premium: 5 times of the annualized premium.  Single Premium: 110% of the single premium .

Maximum Sum Assured and Regular Premium

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Single premium

Rider Benefit: The following optional riders are available on payment of additional premium on the life of the Life assured; 1. Reliance Major Surgical Benefit Rider: Provides lump sum amount to cover surgical expenses from a list of 33 surgeries including Open Heart surgery, Kidney Transplant, Cornea transplantation, Transplant of Lungs and many more.

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Summer internship Programme-2009 Reliance Money

2. Reliance Critical Conditions (25) Rider: Provides lump sum amount to take care of 25 critical conditions including Cancer, Heart Attack, Paralysis, Major Organ transplant and many more. 3. Reliance Term Life Insurance Benefit Rider: Provide additional death benefit depending on the sum assured selected under the rider. 4. Reliance Accidental Death and Total and Permanent Disablement Rider: Provide additional death/disability benefit if the death/disability occurs as a result of an accident. Also, the Waiver of Premium benefit under the rider continues the plan incase of disability.

The eight different funds offered are Fund Name Target Investment Objectives Asset Category (%) Asset Allocation

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Summer internship Programme-2009 Reliance Money

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Rajender Singh ICFAI BUSINESS SCHOOL

Summer internship Programme-2009 Reliance Money

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Summer internship Programme-2009 Reliance Money

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Summer internship Programme-2009 Reliance Money

Range (%)Reliance

Money Guarantee Plan

UNDER THIS PLAN THE INVESTMENT RISK IN THE INVESTMENT PORTFOLIO IS BORNE BY THE POLICYHOLDER.

Key Features Capital Guarantee: The sum of all premiums paid is guaranteed on maturity or on death before the maturity. Capital Guarantee is available on both the basic premiums as well as on top-up premiums. Unique Return Shield feature to protect your returns. Choice to invest from 3 pre-packaged investment fund options. Unmatched flexibility through our ‘Exchange Option’ to move between the Reliance Life Insurance Unit Linked products offered, as you grow up the ladder. Liquidity in the form of partial withdrawals from top-up fund . Option to package with Accidental Death & Disability and Term Insurance riders.

Some product of LIC 1. Jeevan aannad Product summary: This plan is a combination of Endowment Assurance and Whole Life plans. It provides financial protection against death throughout the lifetime of the life assured with the provision of payment of a lump sum at the end of the selected term in case of his survival. Premium: Premiums are payable yearly, half-yearly, quarterly, monthly or through salary deductions as opted by you throughout the selected term of the policy or till earlier death. 1

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Bonuses: This is a with-profit plan and participates in the profits of the Corporations life insurance business. It gets a share of the profits in the form of bonuses. Simple Reversionary Bonuses are declared per thousand Sum Assured annually at the end of each financial year. Once declared, they form part of the guaranteed benefits of the plan. Bonuses will be added during the selected term or till death, if it occurs earlier. Final (Additional) Bonus may also be payable provided the policy has run for certain minimum period. 2. Jeevan saral This is an Endowment Assurance plan where the proposer has simply to choose the amount and mode of premium payment. The plan provides financial protection against death throughout the term of the plan. The death benefit is directly related to the premiums paid. The Maturity Sum Assured depends on the age at entry of the life to be assured and is payable on survival to the end of the policy term. It also offers the flexibility of term and a lot of liquidity. Premiums: Premiums are payable yearly, half-yearly, quarterly, or monthly through salary deductions as opted by you throughout the term of the policy or till earlier death.

Loyalty Additions: This is a with-profits plan and participates in the profits of the Corporations life insurance business. It gets a share of the profits in the form of loyalty additions which are terminal bonuses payable along with death benefit or maturity benefit. Loyalty Additions may be payable from the 10th year onwards depending upon the experience of the Corporation.

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BENEFITS: On Death: 250 times the monthly premium, plus return of premiums excluding extra/rider premium and

first year premium, plus the loyalty addition, if any.

On Maturity: Maturity sum assured, plus The Loyalty Additions, if any SPECIAL FEATURES: High risk cover at low premium Extended risk cover for one year after 3 years premium payment. Optional higher cover through Term Riders The policyholder can choose a maximum term but can surrender at any time without any surrender penalty or loss after 5 years Any number of withdrawals through partial surrendering OTHER ELIGIBILITY CONDITIONS: Premium

: Minimum premium of Rs.250/- per month for entry age upto 49

years. and Rs.400/- per month for entry age 50 years and above. The maximum premium will be Rs.10,000/- per month.

3. Jeevan Tarang This is an Endowment Assurance plan where the proposer has simply to choose the amount and mode of premium payment. The plan provides financial protection

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Summer internship Programme-2009 Reliance Money

against death throughout the term of the plan. The death benefit is directly related to the premiums paid. The Maturity Sum Assured depends on the age at entry of the life to be assured and is payable on survival to the end of the policy term. It also offers the flexibility of term and a lot of liquidity. Premiums: Premiums are payable yearly, half-yearly, quarterly, or monthly through salary deductions as opted by you throughout the term of the policy or till earlier death. Loyalty Additions: This is a with-profits plan and participates in the profits of the Corporations life insurance business. It gets a share of the profits in the form of loyalty additions which are terminal bonuses payable along with death benefit or maturity benefit. Loyalty Additions may be payable from the 10th year onwards depending upon the experience of the Corporation. BENEFITS: On Death: 250 times the monthly premium, plus return of premiums excluding extra/rider premium and

first year premium, plus the loyalty addition, if any.

On Maturity: Maturity sum assured, plus The Loyalty Additions, if any SPECIAL FEATURES: High risk cover at low premium Extended risk cover for one year after 3 years premium payment. Optional higher cover through Term Riders The policyholder can choose a maximum term but can surrender at any time without any surrender penalty or loss after 5 years

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Summer internship Programme-2009 Reliance Money

Any number of withdrawals through partial surrendering OTHER ELIGIBILITY CONDITIONS: Premium

: Minimum premium of Rs.250/- per month for entry age upto 49

years. and Rs.400/- per month for entry age 50 years and above. The maximum premium will be Rs.10,000/- per month.

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Rajender Singh ICFAI BUSINESS SCHOOL

Summer internship Programme-2009 Reliance Money

Different types of plan Endowment Assurance Plan  Endowment assurance plan is a participating (with profits) insurance plan that offers the following features:  Provides financial support to the family by way of a lump sum payment in case of the unfortunate death of the life assured within the term of the policy.  provides a lump sum payment to the life assured on survival up to maturity This plan is with profits saving plan and is well suited for saving money for your long term financial goals. This plan also helps provide for the needs of your family in your absence by paying out a lump sum in the event of your unfortunate death during the term of the policy. Optional benefits You can add the following optional benefits to customise your policy to suit your needs: • Critical Illness (CI) Benefit provides an amount, equal to the sum assured chosen under this optional benefit, on diagnosis of any one of the 6 common critical illnesses(1). The sum assured is payable if you survive for 30 days after the date of the claim. Once such a claim has been met, no further Critical Illness Benefit is payable. However, your basic policy continues even after we pay a claim On this benefit. •

Additional Term Benefit (ATB) provides an additional amount equal to the sum assured chosen under this optional benefit, in case of your unfortunate death.

1

Rajender Singh ICFAI BUSINESS SCHOOL

Summer internship Programme-2009 Reliance Money

•

Accidental Death Benefit (ADB) provides an additional amount, equal to the sum assured chosen under this optional benefit, in case of your unfortunate death: -due to an accident and within 60 days of an accident.

•

Waiver Of Premium (WOP) Benefit waives the premium for you in case you become totally disabled. The waiver is applicable during the period of total disability. This plan can be taken on a single life basis or a joint life (first claim) basis.

Eligibility This plan can be taken as a single life basis or a joint life (first claim) basis. The eligibility ages are as follows: Basic Policy Basic policy with optional benefits ATB

ADB

WOP

Min. age of entry

12

18

18

18

18

Max. age of entry

60

5

60

55

50

Max. age of expiry

75

70

75

65

60

Minimum term: 10 years

Tax Benefits

1

CI

Rajender Singh ICFAI BUSINESS SCHOOL

Maximum term: 30 years

Summer internship Programme-2009 Reliance Money

Tax benefits described in Section 88, Section 80D and Section 10 (10D) of the income Tax Act are applicable. Applicable to premium paid for CI and WOP Payment options you have the choice of paying your premium either in yearly, half-yearly or quarterly modes, depending on your convenience

Unit Linked Endowment Plan: The unit linked endowment plan is an insurance policy that is designed to pay a lump sum on maturity or on earlier death. The Unit Linked Endowment Plan also gives the option of additional protection against the six common critical illnesses, as well as additional protection if death is as the result of an accident. Your premiums are invested in units of the investment fund of your choice, based on the prevailing unit price. On maturity you receive the value of your units. On death (or critical illness, if chosen) you receive the greater of the value of your units and your selected basic sum assured. Premiums Premiums can be paid either quarterly, half-yearly or annually, throughout the term of the policy. The minimum premium amount is Rs. 10,000 each year. Premiums can be paid by cash, cheque or demand draft.

1

Rajender Singh ICFAI BUSINESS SCHOOL

Summer internship Programme-2009 Reliance Money

Benefits There are 4 different options available to choose from: 1. Life Option On death within the policy term, the greater of the Sum Assured and the value of the unit-linked fund will be paid to your nominee. On survival to the end of the policy term the value of the unit linked fund will be paid to you. 2. Life and Health Option On death or earlier diagnosis of any one of six common critical illnesses within the policy term, the greater of the Sum Assured and the value of the unit-linked fund will be paid to your nominee. On survival to the end of the policy term the value of the unit-linked

fund

will be paid to you. “The illnesses covered under this option are cancer, coronary artery by pass graft surgery, heart attack, kidney failure, major organ transplant (as recipient) and stroke 3. Extra Life Option This option pays the same benefits as the Life Option but, should death occur within the policy term as the result of an accident, an extra benefit equal to the Sum Assured will be paid.

1

Rajender Singh ICFAI BUSINESS SCHOOL

Summer internship Programme-2009 Reliance Money

4.Extra Life and Health Option This option pays the same benefits as the Life and Health Option but, should death occur within the policy term as the result of an accident, an extra benefit equal to the Sum Assured will be paid. Levels of protection Depending on your age at entry, you may choose between 3 levels of cover – Low, Medium or High. For each level the Sum Assured is based on the amount of premium you pay each year. The Sum Assured can’t be changed during the term of the contract. Functions of Insurance The functions of Insurance can be bifurcated into three parts: 1. Primary Functions 2. Secondary Functions 3. Other Functions The primary functions of insurance include the following: 1) Provide Protection - The primary function of insurance is to provide protection against future risk, accidents and uncertainty. Insurance cannot check the happening of the risk, but can certainly provide for the losses of risk. Insurance is actually a protection against economic loss, by sharing the risk with others.

1

Rajender Singh ICFAI BUSINESS SCHOOL

Summer internship Programme-2009 Reliance Money

2) Collective bearing of risk - Insurance is a device to share the financial loss of few among many others. Insurance is a mean by which few losses are shared among larger number of people. All the insured contribute the premiums towards a fund and out of which the persons exposed to a particular risk is paid.

3) Assessment of risk - Insurance determines the probable volume of risk by evaluating various factors that give rise to risk. Risk is the basis for determining the premium rate also. 4) Provide Certainty - Insurance is a device, which helps to change from uncertainty to certainty. Insurance is device whereby the uncertain risks may be made more certain. The secondary functions of insurance include the following: 1) Prevention of Losses - Insurance cautions individuals and businessmen to adopt suitable device to prevent unfortunate consequences of risk by observing safety instructions; installation of automatic sparkler or alarm systems, etc. Prevention of losses causes lesser payment to the assured by the insurer and this will encourage for more savings by way of premium. Reduced rate of premiums stimulate for more business and better protection to the insured. 2) Small capital to cover larger risks - Insurance relieves the businessmen from security investments, by paying small amount of premium against larger risks and uncertainty. 3) Contributes towards the development of larger industries - Insurance provides development opportunity to those larger industries having more risks in

1

Rajender Singh ICFAI BUSINESS SCHOOL

Summer internship Programme-2009 Reliance Money

their setting up. Even the financial institutions may be prepared to give credit to sick industrial units which have insured their assets including plant and machinery. The other functions of insurance include the following: 1) Means of savings and investment - Insurance serves as savings and investment, insurance is a compulsory way of savings and it restricts the unnecessary expenses by the insured's For the purpose of availing income-tax exemptions

also,

people

invest

in

insurance.

2) Source of earning foreign exchange - Insurance is an international business. The country can earn foreign exchange by way of issue of marine insurance policies

and

various

other

ways.

3) Risk Free trade - Insurance promotes exports insurance, which makes the foreign trade risk free with the help of different types of policies under marine insurance cover.

TAXATION TAX BENEFITS OF INSURANCE AND PENSION PLAN. Life insurance and retirement plans are effective ways of saving taxes. The tax breaks that are available under various insurance and pension policies are described below: 1. Life insurance plans are eligible for deduction under Sec. 80C. 2. Pension plans are eligible for a deduction under Sec. 80CCC. 3. Health riders are eligible for deduction under Sec. 80D.

1

Rajender Singh ICFAI BUSINESS SCHOOL

Summer internship Programme-2009 Reliance Money

4. The proceeds or withdrawals of life insurance policies are exempt under Sec 10(10D), subject to norms prescribed in that section.

Tax Rates for Individuals The rates of income tax for FY 2005-06 are as follows:

Total Income (Rs.)

Senior

Rate of tax Women Other

citizen

below 65

s

years Up to Rs 1, 10,000/Above Rs 110,000/- to

Nil

Nil

Nil

Nil

Nil

10%

Nil

10%

10%

20%

20%

20%

30%

30%

30%

125,000/Above Rs 125,000/- to 150,000/Above Rs 150,000/- to 250,000/Above Rs 250,000/-

1

Rajender Singh ICFAI BUSINESS SCHOOL

Summer internship Programme-2009 Reliance Money

HDFC PENSION-II VS BIRLA FLEXI SECURE LIFE RETIREMENT VS BAJAJ ALLIANZ UNIT GAIN VS LIC BIMAPLUS AND RELIANCE LIFE BIRLA Flexi

Allianz Bajaj

Featur HDFC

Secure Life

Unit gain

es

PENSION

Retirement

Age

18 - 60

18 - 60 years

LIC Bima

Life

Plus

{MRP}

0 – 60 years

years

Term

Reliance

30days 12 - 55

to 65

years

year

10 - 30

Minimum Term Choice rests

10year(m

years

of 10 years

with the

in) and

consumer

30year

with a

(max.)

minimum premium payment term of 3 years

10 years

Minimum Sum

Minimum

Maximum

Assure 10, 20

Assured is Rs.

Sum Assured limit up to

of

d

(age-

50,000. Zero

is 5 times

premium

based)

Death Benefit

the premium

multiples

is also

paid.

Sum

1

Only 5,

Rajender Singh ICFAI BUSINESS SCHOOL

Rs. 2 lakhs

58 times

Summer internship Programme-2009 Reliance Money

are

available.

allowed as Sum Assured. Surviv

Value of

Unit Value is

Value of

Value of

al

units

used to

Fund at Bid

units

benefi

partly in

purchase an

price

partly in

t

cash

annuity

cash

partly

partly

converted

Bid Value

to annuity.

of the fund d to units

annuity.

Death

Max of

Death

Value of

Value of units

Higher of

benefi

units, no

in this case

Sum Assured during the

t

sum

the Sum

or value of

first 6

assured is

Assured is

units.

months -

given.

zero.

30% of SA + value of units, next 6 months 60% of SA + value of units. Death after 1st year - SA

1

Rajender Singh ICFAI BUSINESS SCHOOL

converte

S,A, Andfund value

Summer internship Programme-2009 Reliance Money

+ value of units. Death during the 10th year 105% of SA + value of units.

Withdr

No Partial No Partial

awal

withdrawa withdrawals

benefi

ls are

t

available.

are available

Partial or

Premature

Partial or

complete

withdrawal complete

withdrawal

allowed

withdraw

at bid price

after one

al at bid

after 3rd

year (after

price

year

applying

after 3rd

bid-offer

year

spread.

Contri

Minimum:

Minimum Rs.

Minimum:

Minimum:

bution

Rs.

5,000 p.a.

Rs. 10,000

Rs.

/

10,000

premi

p.a.

p.a.

um

10,000

Rs. 10,000

p.a.

p.a

Flexibl Available

Not available

e

1

Minimum

Rajender Singh ICFAI BUSINESS SCHOOL

Only an

Not

increase in

available

Available

Summer internship Programme-2009 Reliance Money

contri

contribution

bution

is allowed

Invest

5 Fund

Nourish,

Equity Fund,

Balanced,

ment

Options-

Growth and

Debt Fund,

Secured &

option

Balanced,

Enrich

Balanced

Risk

s

Defensive

Fund, Cash

Managed,

Fund

8 funds

Safe Managed, Liquid & Growth 4th yr 5%

Surren The

Surrender is

A selling /

Partial

der

surrender

available from

purchase

surrender

Value

charge is

the 1st year

price spread

up to 50%

25% of 3

itself. In the

of 5% will be of bid

Nil

years of

1st year

applicable

value of

therafter

regular

surrender

from the 3rd

units

premium.

charges are

year

allowed

No

75%, in the

onwards

after 3

charges

2nd year the

years from

after 3

charges are

date of

years

50%, in the

commence

3rd year the

ment

5th yr 3%

charges are 25%.. Top-up Available

1

Available, with

Rajender Singh ICFAI BUSINESS SCHOOL

Available

Available

2500

Summer internship Programme-2009 Reliance Money

with a

a minimum

minimum

top-up of Rs.

top-up of

10,000

Rs 5,000 and

(Charges:

maximum

1.5% of

of 20% of

the top-up)

sum assured. Switch

Initial

24 Switches

2 free switches

Three free

are free.

every year. Every

switches every

additional switch

policy year.

will be charged at

Subsequent

52 switches Free p.a.

0.5% of the switch switches would

No free

amount.

be charged

switches.

@1% of switch

Cost of

amount or Rs.

switching is

100, whichever

2% of the

is higher.

fund value.

Charges

Charges

Charges

1st yr-27%,

20% of the initial

1st year - 70%;

Charges

Charge

2nd yr- 27%, premium in the 1st 2nd year - 2%; 3rd yr

year and 2% of the 3rd year - 1%;

onwards- 1% premium from the 2nd year onwards.

1

Rajender Singh ICFAI BUSINESS SCHOOL

No charges from the 4th

Not Disclosed

4th yr 5% 5th yr 3% Nil therafter

Summer internship Programme-2009 Reliance Money

year onwards Admin

Admin

Policy admin fee

Annual admin

Charge

charges of

of Rs. 20 per

charges of

Rs.180 fixed month

1.25% p.a. of

charge

net assets

Per annum. Fund

Least in the

1.5%-1.75%

Not applicable

A fund based fee

Annual

1% of the

Manage industry

of 2.25 % p.a. of

investment

fund per

ment

the policy fund.

charge of 1%

annum

0.8% of the

Charges fund per

Rs40 p.a.

p.a. of fund.

annum Bonus

Available

Not Available

Not Available

Available

Not Available

units

DATA ANALYSIS & INTERPRETATION  DATA GIVES PREFERENCE OF RESPONDENTS OF INSURANCE COMPANIES COMPANY’S NAME L.I.C. RELIANCE LIFE INSURANCE ICICI PRUDENTIAL SBI LIFE HDFC TOTAL

1

Rajender Singh ICFAI BUSINESS SCHOOL

NO.OF RESPONDENT 78

SHARE (%) 78

3

3

10 7 2 100

10 7 2 100

Summer internship Programme-2009 Reliance Money

7

2

10

LIC

3

REL ICICI SBI HDFC

78

INTERPRETATION  78% of the people contacted prefer LIC policy to any other and therefore it is ranked no.1 by that percent of respondents.  DATA GIVES BENEFITS OF INSURANCE PERCEIVED BY RESPONDENTS

BENEFITS

NO.OF RESPONDENT S

SHARE (%)

Cover Future Uncertainty

55

55

Tax Deductions

20

20

Future Investment

25

25

TOTAL

100

100

25%

Cover Future Uncertainty Tax Deductions 55% Future Investment

20% Rajender Singh 1

ICFAI BUSINESS SCHOOL

Summer internship Programme-2009 Reliance Money

INTERPRETATION  55% of the respondents believe that covering future uncertainty is the biggest benefit of an insurance policy.  Whereas, 20% and 25% of them believe that the other benefits are Tax deduction and future investments respectively.  DATA PROVIDES FEATURES OF INSURANCE

POLICY THAT

ATTRACTED RESPONDENTS FEATURE

1

SHARE (%)

Money Back Guarantee Larger Risk Coverance

NO.OF RESPONDENTS 15 37

Easy Access to Agents Low Premium Company’s Reputation TOTAL

7 30 11 100

7 30 11 100

Rajender Singh ICFAI BUSINESS SCHOOL

15 37

Summer internship Programme-2009 Reliance Money

FEATURES OF INSURANCE POLICY

MONEY BACK GUAARENTEE LARGER RISK COVERANCE

11% 15% 37%

30%

EASY ACCESS TO AGENTS

LOW PREMIUM

7%

REPUTATION OF COMPANY

INTERPRETATION  Majority of the respondent (37%) found Larger risk coverance as the most attracted feature of the all.  DATA PROVIDES

NUMBER

OF INSURANCE

RESPONDENTS POLICY TYPE

1

NO. OF RESPONDENTS

SHARE (%)

LIFE POLICY

75

75

NON LIFE POLICY

25

25

BOTH

45

45

Rajender Singh ICFAI BUSINESS SCHOOL

POLICY TYPE

Summer internship Programme-2009 Reliance Money

NATURE OF POLICY

45

75

LIFE POLICY NON LIFE POLICY BOTH

25

INTERPRETATION 

75% of the respondents have Life Insurance Policy while 45% have both. (The % is calculated out of 280 positive response)

 DATA GIVES PEOPLE PERCEPTION ABOUT INSURANCE RESPONSE

1

NO. OF RESPONDENTS

SHARE (%)

A saving tool

81

81%

A tax saving device

74

74%

A tool to protect your family

100

100%

Rajender Singh ICFAI BUSINESS SCHOOL

Summer internship Programme-2009 Reliance Money

81 100

SAVING TOOL TAX SAVING TOOL FAMILY PROTECTIO N

74

INTERPRETATION •

81% of the respondents have perception of Insurance being a saving tool.

•

And 74% of the respondents have perception of Insurance being a tax saving device.

•

But 100% of the respondents are with the view that Insurance is a tool to protect your family.

 DATA SHOWS PEOPLES HAVING INSURANCE RESPONSE

NO. OF RESPONDENTS

SHARE (%)

Yes

70

70%

No

30

30%

100

100%

30%

70%

1

Rajender Singh ICFAI BUSINESS SCHOOL

Yes No

Summer internship Programme-2009 Reliance Money

INTERPRETATION •

Of the sample size of 400 surveyed respondents 70% of the respondents are having Insurance policy.

•

30% of the respondents are either not having any Insurance policy at present or their policy is already matured.

Experiences at Reliance money This project is helping me to learn how to communicate when work has to be done at the front-end. Some prospects will listen to you and will give positive response. Its not easy to work at the front-end one has to be patient and calm. If one is a good listener than make sure that your half work is done. While on the other hand some customers will not even listen to you and will give reactions that one will not even dare to go back to them. It hard sometimes to take appointments and when its given then person is not available. The golden rule is “how well you communicate” to your customers. RECOMMENDATIONS •

As the people think that insurance is a tool to protect their family & a tax saving device. They are aware of the fact & realizing its, importance. The company should try to expand & build up its infrastructure because there is a large potential for insurance in India.

1

Rajender Singh ICFAI BUSINESS SCHOOL

Summer internship Programme-2009 Reliance Money •

Company should come up with its branch in various cities. With the objective and goals to meet the demands & expectations of the public. Because the entrance of private players will increase the competition and it would be a tough task to secure a good position in market.

•

Since Reliance Life Insurance is leading with several companies’ policies it should be easy for them to penetrate into the market and secure a good position if they pay greater attention to the service part provided to their customer and thereby forming a long and trusted relationship.

•

As seen from the survey that at present 70% of the customer are having insurance policy out of which 87.5% of the customer are planning for new investments. So it can be a good potential for the company and they should make an attempt to trap these customers.

•

43% of the customer is even ready to go for insurance if a service provider away from their home is providing it. But intend they should provide good products and services. The company should try to convince these customers and get them in its favor.

CONCLUSION Our exhaustive research in the field of Life Insurance threw up some intresting trends which can be seen in the above analysis. A general impression that we gathered during Data collection was the immense awareness and knowledge among people about various companies and their insurance products. People are beginning to look beyond LIC for their insurance needs and are willing to trust private players with their hard earned money.

1

Rajender Singh ICFAI BUSINESS SCHOOL

Summer internship Programme-2009 Reliance Money

In these type of market conditions the ULIP plan are giving better return to investor. Todays ULIP product are better than mutual fund because in this we have switching options .

References  www.reliancemoney.com  Google search engine  World economic forum  IRDA website  www.reliancelife.com  Hdfc.com  www.licindia.com

1

Rajender Singh ICFAI BUSINESS SCHOOL