Neeraj Gandhi

A SUMMER TRAINING PROJECT ON

“COMPARATIVE STUDY BETWEEN MONEY BACK PLAN AND YOUNG STAR PLAN OF HDFC STANDARD LIFE INSURANCE CO.LTD.”

Project Undertaken by MBA-II Semester

Maharishi Institute of Management Maharishi Centre For Educational Excellence (MCEE) Berasia Road, Lambakheda, Bhopal (M.P.) Affiliated to Barkatullah University, Bhopal 2008-2010

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A SUMMER TRAINING PROJECT ON

“COMPARATIVE STUDY BETWEEN MONEY BACK PLAN AND YOUNG STAR PLAN OF HDFC STANDARD LIFE INSURANCE CO.LTD.”

Project Undertaken by MBA-II Semester Under Guidance of

Mr. Arun Mishra

Maharishi Institute of Management Maharishi Centre For Educational Excellence (MCEE) Berasia Road, Lambakheda, Bhopal (M.P.) Affiliated to Barkatullah University, Bhopal 2008-2010 2

DECLARATION I, here by declare that the project work title “COMPARATIVE STUDY BETWEEN MONEY BACK PLAN AND YOUNG STAR PLAN BY HDFC” is a genuine work done by me and all the information collected is authentic to the best of my knowledge.

MBA-II Semester Maharishi Institute of Management (MCEE), BHOPAL (M.P.).

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ACKNOWLEDGEMENT Completion of research and writing of the report is a satisfying event and the pleasant part is the opportunity to thank those who inspired, contributed and cooperated to it. I am indebted to MR. Santosh Khare, Sales Development Manager, HDFC Standard Life Insurance Co. Ltd. encouraged and supported me and there after provided every possible help and guidance for the completion of my project. I take the opportunity to offer my deep sense gratitude and reverence to Mr. Rakesh Anand, HOD, MIM for his beneficial co-operative help. I also wish to thanks Brig. (Dr.) S.S. Ahlawat Director cum Principal for there great moral support during this project. Last but not the least, I would like to thank all the respondents who spent their precious time to answer the questions, without their support this project would not have been successfully completed.

MBA-II Semester Maharishi Institute of Management(MCEE) Bhopal.

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CONTENTS INTRODUCTION

01-07

ABOUT THE COMPANY

02

WHY HDFC?

03

HDFC’s PARENTAGE

06

VISION AND VALUES

07

ASSOCIATE COMPANIES

08

OTHER COMPANIES

09

OBJECTIVES

10-11

COMPARATIVE ANALYSIS

12-19

ABOUT THE PLANS

13

COMPARATIVE ANALYSIS

19

LEARNINGS

20-21

CONCLUSION

22-23

BIBLIOGRAPHY

24-25

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INTRODUCTION

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Introduction ABOUT THE COMPANY HDFC Standard Life Insurance Company Limited. is one of India's leading private insurance companies, which offers a range of individual and group insurance solutions. It is a joint venture between Housing Development Finance Corporation Limited (HDFC Limited), India's leading housing finance institution and a Group Company of the Standard Life Plc, UK. As on February 28, 2009 HDFC Ltd. holds 72.43% and Standard Life (Mauritius Holding) 2006, Ltd. holds 26.00% of equity in the joint venture, while the rest is held by others.

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

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WHY HDFC? HDFC Standard Life believes that establishing a strong and ethical foundation is an essential prerequisite for long-term sustainable growth. To ensure this, HDFC have concentrated our focus on expansion of branch network, organizing an efficient and well trained sales force, and setting up appropriate systems and processes with optimum use of technology. As all these areas form the basic infrastructure for establishing the highest possible customer service standards. HDFC’s core values are drilled down to all levels of employees, as these are inviolable. It continue to promote high integrity in business practices and shun short cuts and unethical practices, as it wish to be perceived as an institution with high moral standing. Since HDFC’s inception in 2000, when the Indian insurance space was opened for private participation, HDFC have consistently focused on setting benchmarks in all aspect on insurance business. Being the first private player to be registered with the IRDA and the first to issue a policy on December 12, 2000 Strong Promoter HDFC Standard Life is a strong; financially secure business supported by two strong and secure promoters – HDFC Ltd and Standard Life. HDFC Ltd’s excellent brand strength emerges from its unrelenting focus on corporate governance, high standards of ethics and clarity of vision. Standard Life is a strong, financially secure business and a market leader in the UK Life & Pensions sector. Preferred and Trusted Brand HDFC Standard Life is a strong, financially secure business supported by two strong and secure promoters – HDFC Ltd and Standard Life. HDFC Ltd’s excellent brand strength emerges from its unrelenting focus on corporate governance, high standards of ethics and clarity of vision. Standard Life is a strong, financially secure business and a market leader in the UK Life & Pensions sector. Investment Policy HDFC follows a conservative investment management philosophy to ensure that our customer’s money is looked after well. The investment policies and actions are regularly monitored by a formal Investment Committee comprising non-executive directors and the Principal Officer & Executive Director. As a life insurance company, HDFC understands that customers have invested their savings with HDFC for the long term, with specific objectives in mind. Thus, HDFC’s investment focus is based on the primary objective of protecting and generating good, consistent, and stable investment returns to match the investor’s long-term objective and return expectations, irrespective of the market condition.

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Need Based Selling Approach Despite the criticality of life insurance, sales in the industry have been characterized by over reliance on tax benefits and limited advice-based selling. HDFC’s eight-step structured sales process ‘Disha’ however, helps customers understand their latent needs at the first instance itself without focusing on product features or tax benefits. Need-based selling process, 'Disha', the first of its kinds in the industry, looks at the whole financial picture. Customers see a plan not piecemeal product selling. Risk Control Framework HDFC Standard Life has fully implemented a risk control framework to ensure that all types of risks (not just financial) are identified and measured. These are regularly reported to the board and this ensures that the company management and board members are fully aware of any risks and the actions taken to ensure they are mitigated Focus on Training Training is an integral part of our business strategy. Almost all employees have undergone training to enhance their technical skills or the softer behavioral skills to be able to deliver the service standards that our company has set for itself. Besides the mandatory training that Financial Consultants have to undergo prior to being licensed, HDFC have developed and implemented various training modules covering various aspects including product knowledge, selling skills, objection handling skills and so on. Focus on Long Term Value HDFC Standard Life do not focus in the business of ramping up the top line only, but to create maximization of stakeholder's value. Today, HDFC is extremely satisfied with the base that it has created for the long-term success of this company. Transparent Dealing HDFC is one of the few companies whose product details, pricing, clauses are clearly communicated to help customers take the right decision. Strict Compliance with Regulations HDFC has initiated and implemented many new processes, some of which were found useful by the IRDA and later made mandatory for the entire industry. The agents who successfully completed this training only, were authorized by the company to sell ULIPs. This has now been made compulsory by IRDA for all insurance companies under the new Unit Linked Guidelines.

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Diversified Product Portfolio HDFC Standard Life’s wide and diversified product portfolio help individuals meet their various needs, be it: Protection: Need for a sound income protection in case of your unfortunate demise Investment: Need to ensure long-term real growth of your money Savings: Save for the milestones and protect your savings too Pension: Need to save for a comfortable life post retirement Health: Cover for health related exigencies

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HDFC’S PARENTAGE HDFC Limited HDFC Limited, India’s premier housing finance institution has assisted more than 3.3 million families own a home, since its inception in 1977 across 2400 cities and towns through its network of over 250 offices. It has international offices in Dubai, London and Singapore with service associates in Saudi Arabia, Qatar, Kuwait and Oman to assist NRI’s and PIO’s to own a home back in India. As of December 2008, the total asset size has crossed more than Rs. 95,000 crores including the mortgage loan assets of more than Rs. 82,800 crores. The corporation has a deposit base of Rs. 17,551 crores, earning the trust of more than 9,00,000 depositors. Customer Service and satisfaction has been the mainstay of the organization. HDFC has set benchmarks for the Indian housing finance industry. Recognition for the service to the sector has come from several national and international entities including the World Bank that has lauded HDFC as a model housing finance company for the developing countries. HDFC has undertaken a lot of consultancies abroad assisting different countries including Egypt, Maldives, and Bangladesh in the setting up of housing finance companies. Standard Life Group (Standard Life plc and its subsidiaries) The Standard Life Group has been looking after the financial needs of customers for over 180 years. It currently has a customer base of around 7 million people who rely on the company for their insurance, pension, investment, banking and health-care needs. Its investment manager currently administers £125 billion in assets. It is a leading pensions provider in the UK, and is rated by Standard & Poor's as 'strong' with a rating of A+ and as 'good' with a rating of A1 by Moody's. Standard Life was awarded the 'Best Pension Provider' in 2004, 2005 and 2006 at the Money Marketing Awards, and it was voted a 5 star life and pension’s provider at the Financial Adviser Service Awards for the last 10 years running. The '5 Star' accolade has also been awarded to Standard Life Investments for the last 10 years, and to Standard Life Bank since its inception in 1998. Standard Life Bank was awarded the 'Best Flexible Mortgage Lender' at the Mortgage Magazine Awards in 2006.

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VISION & VALUES Vision 'The most successful and admired life insurance company, which means that HDFC is the most trusted company, the easiest to deal with, offer the best value for money, and set the standards in the industry'. 'The most obvious choice for all'. Values Values that HDFC observe while it work: Integrity Innovation Customer centric People Care “One for all and all for one” Team work Joy and Simplicity

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ASSOCIATE COMPANIES Associate Companies

HDFC Limited

HDFC Bank

HDFC Mutual Fund

HDFC Sales

HDFC ERGO General Insurance

OTHER COMPANIES 13

HDFC Trustee Company Ltd. GRUH Finance Ltd. HDFC Developers Ltd. HDFC Property Ventures Ltd. HDFC Ventures Trustee Company Ltd. HDFC Investments Ltd. HDFC Holdings Ltd. Credit Information Bureau (India) Ltd HDFC Securities

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OBJECTIVES

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OBJECTIVES • • •

To know about money back plans To know about youngster plans Comparative study of Money Back and Young Star Plan.

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COMPARATIVE ANALYSIS

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COMPARATIVE ANALYSIS

ABOUT THE PLANS 1. HDFC Money Back Plan You have always believed in living life on your own terms. So why let the changing realities of everyday life overwhelm you and make your aspirations take a back seat? With HDFC Money Back Plan, you can plan now to ensure that you have the necessary funds to have the necessary funds to secure your long-term as well as short-term financial goals. This ‘With Profits’ plan gives you a proportion of the basis Sum Assured as Cash lump sums at regular 5-year intervals within the policy term.

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Features Maturity Benefit You get a proportion of basic Sum Assured as cash lump sums at regular 5 year intervals within the policy term and on maturity, you receive the balance proportion due at that point of time along with attaching bonuses for full Sum Assured calculated for the full policy term. Choose Savings Target This plan gives you the flexibility to structure an ideal plan depending on your short-term and long-term goals by letting you choose the amount of targeted savings and the policy term Choice of 4 Additional Optional Benefits You can add from any one of the 4 benefit options depending on your requirement: 1) Critical Illness Benefit 2) Additional Term Benefit 3) Accidental Death Benefit 4) Waiver of Premium Benefit Age Limits The Min. and Max. age limits as well as the Max. Age at Maturity vary for the basic policy as well as for all the 4 Additional Optional Benefits Bonuses This plan receives simple Reversionary Bonuses, which are usually added annually. At the end of the term, an additional Terminal Bonus may be paid depending on performance of underlying investment. Term Limits Min. term is 10 years and Max. term is 30 years for the basic policy as well as for all the 4 Additional Optional Benefits

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Advantages This plan gives you a proportion of the basic Sum Assured as Cash lump sums at regular 5-year intervals within the policy term and a lump sum payment on survival up to maturity date. An ideal way to secure your long-term as well as short-term financial goals

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Provides invaluable protection to your family by way of lump sum payment in case of unfortunate demise within policy term, over and above any earlier payouts.

•

Gives you the flexibility to customize your policy according to your needs by adding any one of the 4 benefit options available

•

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

•

Tax benefits under sections 80C, 80D and 10(10D) of Income Tax Act, 1961

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2. Young Star Plan HDFC Unit Linked Young Star II As a parent, your priority is your child’s future and being able to meet your child’s dreams and aspirations. With HDFC’s Unit Linked Young Star II, you can start building your savings today and ensure a bright future for your child. This plan provides valuable protection to your child in case you are not around. This Unit Linked Plan also gives you with an outstanding investment opportunity to maximize your savings by providing you a choice of thoroughly researched and selected investments.

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Features Choice of Additional Plan Benefits You can choose any one of 2 Additional Plan Benefit options depending on your requirement: 1) Life Option (Death Benefit only) 2) Life & Health Option (Death Benefit + Critical Illness Benefit) Term Limits The Min. term of the policy is 10 years and Max. term is 25 years Age Limits For Life Option, the Min. entry age is 18 years and Max. age is 65 years. For Life & Health Option, the Min. entry age is 18 years and Max. age is 55 years. The Max. age limit at Maturity is 75 years for Life Option and 65 years for Life & Health Option. Choice of Funds Choice to invest in any of 7 funds depending on your risk appetite: 1) Liquid Fund II 2) Stable Managed Fund II 3) Secure Managed Fund II 4) Defensive Managed Fund II 5) Balanced Managed Fund II 6) Equity Managed Fund II 7) Growth Fund II Flexible benefit payment preferences HDFC also offer flexible payment preferences by letting you choose one of the 2 Benefit payment preferences

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1) Double Benefit 2) Triple Benefit

Level of Protection You can choose any amount of Sum Assured with a Min. of 5 times and Max. of 40 times of your chosen annual regular premium Advantages •

You can customize the ideal plan for your child by choosing the premium you wish to invest along with the Sum Assured, depending on the level of protection required.

•

The Triple Benefit payment preference helps you secure your child’s immediate and future needs. In case of your unfortunate demise or critical illness, HDFC will pay the Sum Assured to your child (Beneficiary). Your family need not pay any further premiums. HDFC will pay 50% of all the future premiums at the original level towards your policy and 50% of the premiums will be paid to the Beneficiary as and when due, on an annual basis. Any Death Benefit or Critical Illness cover terminates immediately.

•

In the long term, the key to building great maturity values is a low Fund Management Charge (FMC). HDFC has a low FMC of only 1.25% per annum (of the fund’s value).

•

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

•

You can change your investment fund choices in two ways: 1. Switching: You can move your accumulated funds from one fund to another anytime 2. Premium Redirection: You can pay your future premiums into a different selection of funds, as per your need

•

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

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COMPARATIVE ANALYSIS BETWEEN YOUNG STAR PLANS AND MONEY BACK PLAN

Plan Type Tax Benefit Age Limits Term Limits Additional Plans Benefits

Money Back Plan

Young Star Plan

Saving & Investment Plan US 80C, 80D and 10(10D) of Income Tax Act, 1961 18 Years to 55Yyears 10 to 30 Years 1) Critical Illness Benefit 2) Additional Term Benefit 3) Accidental Death Benefit 4) Waiver of Premium Benefit

Children’s Plan 80C and 10(10D) of the Income Tax Act, 1961 18 Years to 65 Years 10 to 25 Years 1) Liquid Fund II 2) Stable Managed Fund II 3) Secure Managed Fund II 4) Defensive Managed Fund II 5) Balanced Managed Fund II 6) Equity Managed Fund II 7) Growth Fund II

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LEARNINGS

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LEARNINGS •

Customers are less aware about the private insurance company in market.

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Educated customers are now vending towards private insurance Companies, due to the attractive packages and services provided by various new insurance companies.

•

LIC has created a branded image in 3-4 decades, due to which new insurance companies are facing trouble in capturing market share.

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If the customers are joining HDFC the segment is more of tax consultant, investment for consultant and other people who are engaged in investment business that is because they want to diversity their portfolio.

•

Associated with an other company.

1) 2) 3) 4)

Do not have time Low sales. Private Player. Lack of awareness

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CONCLUSION

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CONCLUSION HDFC Standard Life Insurance Company Limited. is one of India's leading private insurance companies, which offers a range of individual and group insurance solutions. As a joint venture of leading financial services groups, HDFC Standard Life has the financial expertise required to manage your long-term investments safely and efficiently. After collection of data interpretation is done on that basis conclusion is drawn. The conclusion drawn. Conclusion prefers government insurance company other than private insurance companies due to its reliability. Customers are more brand oriented rather than product oriented. Customers are less aware about the private insurance companies. Private Players in order to encase maximum number of customers are introducing new and innovative scheme for their FC. Customers like to invest in other investment zones due to the hectic rules and regulations associated with, entering into a contract with insurance companies. Customers do not feel secure with private insurance companies. Customers don’t want commission base job. The central problem with the insurance companies is having that they are trying to convince customers for a product which do not have any present relevance, i.e. each policy which the customer is going to purchase will have a future set of action and benefits. Due to which most of the people like to invest in those securities or investment, which will give them a fruitful return in short period of time ? Life insurance Corporation has completed more than three decades and that’s where counts, inters of brand name, different number of policies for differed class and age group of customers. The Private players are on the way, but they need a lot of time investment for creating a favorable brand image.

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BIBLIOGRAPHY

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BIBLIOGRAPHY BOOKS •

Marketing Management - Philip Kotler

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Personnel Management

- C.B.Memoria

MAGAZINES •

Business Standard Newspaper

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Business world

•

Mutual Fund Insight

NEWSPAPERS •

The Hindu

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Business Line

•

Economic Times

WEBSITES •

www.google.com

•

www.hdfcstandardlife.com

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