Tamal Fm Icici

A Study on

Investment in the Insurance Sector – A Case study in ICICI Prudential, Bhubaneswar,

Submitted by To The Directorate of Distance and Continuing Education, Utkal University, in the partial fulfillment of

MASTER OF BUSINESS ADMINISTRATION in the Session 2004-07

By

TAMAL RANJAN SAHOO Enr. No. 33222V073063

Under the guidance of

MR. S.K. ACHARYA

Associate Course-Coordinator, Management Programme

DIRECTORATE OF DISTANCE AND CONTINUING EDUCATION UTKAL UNIVERSITY VANIVIHAR

BHUBANESWAR-751007

Dr. S.P. Pani Director, D.D.C.E., Utkal University.

CERTIFICATE

This is to certify that the dissertation entitled “A STUDY ON INVESTMENT IN THE INSURANCE SECTOR- A case study at ICICI Prudential Bhubaneswar’ that is being submitted to the D.D.C.E., Utkal University by Tamal Ranjan Sahoo, as a partial fulfillment of Master of Business Administration - 07 is a report of sincere work carried out by him under the guidance and supervision of Mr. S.K. Acharaya.

The result

embodied in this dissertation has not been submitted to any other University/Institute for the award of any degree.

Date : (S.P. Pani)

Mr. S.K. Acharya. Faculty Management Programme, D.D.C.E., Utkal University.

CERTIFICATE This is to certify that the dissertation entitled “A STUDY ON INVESTMENT IN THE INSURANCE SECTOR-A case study at ICICI Prudential Bhubaneswar’ that is being submitted to the D.D.C.E., Utkal University by Tamal Ranjan Sahoo, as a partial fulfillment of Master of Business Administration - 07 is a report of sincere work carried out by him under my guidance and supervision. The result embodied in this dissertation has not been submitted to any other University/Institute for the award of any degree.

Date :

( S.K. Acharya )

DECLARATION

I do hereby declare that this dissertation entitled “A STUDY ON INVESTMENT IN THE INSURANCE SECTOR- A case study at ICICI Prudential Bhubaneswar’ submitted by me, under guidance and supervision of Mr. S.K. Acharya, D.D.C.E., Utkal University as a partial fulfillment of Master of Business Administration

I also declare that this dissertation report is a result of my own endeavor and that no part of the report has been submitted earlier for any other degree in any University/Institute or published any time before or in any other form.

Date : Mr. Taml Ranjan Sahoo Student of 3yr. MBA, D.D.C.E., Utkal University, Roll No – 33222V073063

ACKNOWLEDGEMENT Really it is fine to have such a golden opportunity to realize the feelings of gratitude imprisoned in my heartbeats. I deem it a time bound privilege to express my gratitude to a number of helping hands for their indefatigable cooperation extended which enabled me to prepare this dissertation report. I owe a sense of gratitude to Prof. S.P. Pani Director DDCE, Utkal University for his kind approval of this project work. I owe a sense of gratitude to Mr.S.K. Acharaya, Faculty Management Programme D.D.C.E., Utkal University for his kind persistent encouragement for the completion of this dissertation report. I am deeply indebted to him for his valuable supervision and guidance constant encouragement immense inspiration, constructive suggestion and personal involvement at every stage of this report. I am grateful to Mr.Snehasish Lenka (Channel Development Manager), Mr. Sujit Baral (Sales Manager) for being my guide for this summer project. I am thankful to Mr. Kabi Mohanty,(Unit Manager) for collecting necessary finance information of ICICI Prudential. I am thankful to the Ms. Padmini Rupashree, (Unit Manager), Debasish Patra, (Unit Manager), Durga Madhab Sethi, (Unit Manager), ICICI Prudential, Bhubaneswar for their Co –operation. My special thanks to all the people those who have co-operated me during my summer project under taken in ICICI Prudential for the completion of the project.

Date : Mr. Taml Ranjan Sahoo Student of 3yr. MBA, D.D.C.E., Utkal University, Roll No – 33222V073063

CONTENTS CHAPTER 1 INTRODUCTION  Insurance  IRDA  Financial Planning

CHAPTER 2 ABOUT THE ORGANIZATION

CHAPTER 3 PRODUCT ANALYSIS

CHAPTER 4 RESEARCH METHODOLOGY

CHAPTER 5 DATA ANALYSIS & INTERPRETATION

CHAPTER 6 FINDINGS, RECOMMENDATIONS & CONCLUSION

CHAPTER 7 APPENDICES  Questionnaire  Customer Satisfaction Report  What we learnt & our contribution  Bibliography

EXECUTIVE SUMMARY An Indian investor who is looking forth to an investment which allows him to beat the inflation rate, and still expose him to aggravated risks, and helps him achieve his financial plan and his work cut out. The stock market has boomed significantly the risks associated with direct equity investment have escalated too, in such a scenario one investment choice should be made keeping all the advantages criteria into hand. A professionally managed ICICI Prudential industry has emerged as the most appropriate investment vehicle for small and large investors who neither have or have some depth of knowledge to build a safe and diversified portfolio that have the potential to provide steady returns over a long period of time. Investors lately have recognized the benefit of investing through different ULIP products and though even at this juncture, the money managed by ICICI Pru is just like little percentage of savings in bank deposits but it is gradually making its presence felt.

Managing Team The ICICI Prudential Life Insurance Company Ltd. Management Team comprises of reputed people from the finance industry both from India and abroad. Ms. Shikha Sharma, Managing Director & CEO. Mr. N.S. Kannan, Executive Director Mr. Sandip Batra, CFO & Company Secretary Ms. Anita Pai, Chief of IT, Customer Service & Operations Mr. Azim Mithani, Chief Actuary. Mr. Puneet Nanda, Chief Investment Officer Mr. Binayan Dutta, Chief Sales & Distribution

Board of Directors Mr. K.V. Kamath, Chair Person Mr. Mark Nonbom Mrs. Lalita D. Gupte Mrs. Kalpana Manparia Mrs. Chanda Kochhar Mr. H.T. Phong Mr. M.P. Modi Mr. R. Narayanan Mr. Keki Dadiseth Ms. Shikha Sharma, Managing Director Mr. N.S. Kanan, Executive Director

ICICI Bank Ltd.

ICICI Securities

ICICI Lombard

ICICI Venture

ICICI Prudential

MANAGING DIRECTOR

Sales Sales & & Distribution Distribution

Marketing Marketing

Actuary Actuary

Human Human Resource Resource

Finance Finance

IT IT & & Services Services

Regional Regional Sales Sales Manager Manager

Operations Operations & & Underwriting Underwriting

Branch Branch Sales Sales Manager Manager

Regional Regional Operation Operation Head Head

Sales Sales Manager Manager

Branch Branch Operation Operation Head Head

Unit Unit Manager Manager

Team Team Members Members

Team Team of of Advisors Advisors ORGANISATIONAL STRUCTURE OF ICICI PRUDENTIAL

INTRODUCTION BRIEF HISTORY OF INSURANCE The business of insurance started with marine business. Traders, who used to gather in the Lloyd's coffee house in London agreed to share the losses" lo their goods while being carried by ships. The losses used to occur because of pirates who robbed on the high seas or because of bad weather spoiling the goods or sinking the ship. The first insurance policy was issued in 1583 in England. In India, insurance began in 1870 with life insurance being transacted by an English company, the European and the Albert. The first Indian insurance company was the Bombay Mutual Assurance Society Ltd, formed in 1870. This was followed by the Oriental Life Assurance Co. in 1874, the Bharatin 1896 and the Empire of India in 1897. Later, the Hindusthan Cooperative was formed in Calcutta, the United India in Madras, the Bombay Life in Bombay, the National in Calcutta, the New India in Bombay, the Jupiter in Bombay arid the Lakshmi in New Delhi. These were all Indian companies, started as a result of the swadeshi movement in the early 1900s. By the year 1956,-when the life insurance business was nationalised and the Life Insurance Corporation of India (LIC) was formed on 1st September 1956. there were 170 companies and 75 provident fund societies transacting life insurance business in India. After the amendments to the relevant laws in 1999, the L.I.C. did not have the exclusive privilege of doing life insurance business in India. By 31.3.2002, eleven new insurers had been registered and had begun to transact life insurance business in India.

Definition : It is a contract in which the insurer in consideration of certain premium either in a lump sum or by other periodical payments agrees to pay to the assured sum of money on the happening of a specified event contingent on the human life. Insurance is a protection against a financial loss arising on the happening of an unexpected event. Insurance companies collect premium to provide for this protection.

A loss is paid out of this

premium collected from the insuring public. The insurance company act as a trustee to the amount collected through the premium. ‘Insurance' is basically a sharing device. The losses to assets resulting from natural calamities like fire, flood, earthquake, accidents, etc. are met out of the common pool contributed by large number of persons who are exposed to similar risks. This contribution of many is used to pay the losses suffered by unfortunate few. However the basic principle is that loss

should

occur as a result of natural calamities or unexpected events which are beyond the human control. Secondly insured person should not make any gains out of insurance. It is natural to think of insurance of physical assets such as motor car insurance or fire insurance but often we forget that creator of all these assets is the human being whose efforts have gone a long way in building up the assets. In that sense, human life is a unique income generating asset. Unlike the physical assets, which decrease in value with passage of time, the individual becomes more experienced and more matured as he advances in age. This raises his earning capacity and the purpose of life insurance is to protect the income of individual and provide financial security to his family, which is dependent on his income in the event of his premature death. The individual himself also needs financial security for the old

age or on his becoming permanently disabled when his income will stop. Insurance also has an element of savings in certain cases.

BASIC CONCEPTS OF INSURANCE Life is a game of Snakes and Ladders. Ladders - a bonus, a legacy or a windfall - take a person higher in terms of personal and financial growth, while Snakes - natural calamities, robbery, disability, disease or death - can bring the same person down. Insurance is like an antidote to snakebite.

What is Insurance ? In effect and in the last resort, insurance protects the economic value of assets. It is a device or a method or a system to provide protection against the risk of financial loss. Indeed, insurance is relevant only if there is a possible economic loss. A question naturally arises as to why such protection is called for Obvious enough, assets are likely to be lost or destroyed or made nonfunctional through accidental occurrences. Such accidental occurrences are called PERILS. Some examples of perils arc accident, burglary, cyclone, death, earthquake, fire, floods etc. A peril may cause loss or damage. You can-say the cause of loss is called peril. Always remember, peril is the cause, loss is the effect. As such, peril and loss are not one and the same thing. For example :

Accident is a peril not a loss. Fire is a peril not a loss.

The damage or loss that the perils cause is called RISK. Risk only means the possibility of loss or damage. In other words, risk is the

possibility

of an adverse

result flown*g from

an accidental

occurrence. There has to be an uncertainty about a risk. Insurance is possible or relevant only if there are uncertainties. As the saying goes - NO UNCERTAINTY, NO RISK AND THEREFORE NO INSURANCE. Needless to add, an event which will certainly happen can not be insured against.

HOW INSURANCE WORKS The mechanism of insurance is very simple. People who are exposed to the same risks come together and agree that, if any one of them suffers a loss, the others will share the loss and make good to the person who lost. All people who send goods by ship are exposed to the same risks, which are related to water damage, ship sinking, piracy, etc. Those owning factories are not exposed to these risks, but they are exposed to different kinds of risks like, fire, hailstorms, earthquakes, lightning, burglary, etc. Like this, y different kinds of risks can be identified and separate groups made, including those exposed to such risks. By this method, the heavy loss that any one of them may suffer (all of them may not suffer such losses at the same time) is divided into bearable small losses by all. In other words, the risk is spread among the community and the likely big impact on one is reduced to smaller manageable impacts on all. There are certain principles, which make it possible for insurance to remain a fair arrangement. The first is that it is difficult for any one individual to bear the consequences of the risks that he is exposed to. It will become bearable when the community shares the burden. The second is that the peril should occur in an accidental manner. Nobody should be in a position to make the risk happen. In other words, none in the group should set fire to his assets and ask others to share the costs of damage. This would be taking unfair advantage

of an arrangement put into place to protect people from the risks they are exposed to. The occurrence has to be random, accidental, and not the deliberate creation of the insured person. The manner in which the loss is to be shared can be determined before-hand. It may be proportional to the risk that each person is exposed to. This would be indicative of le benefit he would receive if the peril befell him. The 'share could be collected from the members after the loss has occurred or the likely shares may be collected in advance, at the time of admission to the group. Insurance companies collect in advance and create a fund from which the losses are paid. The collection to be made from each»person in advance, is determined on assumptions. While it may not be possible to tell beforehand, which person will suffer, it may be possible to tell, on the basis of past experiences, how many persons, on an average, may suffer losses. The following two examples explain the above concept of insurance. Example : In a village, there are 400 houses, each valued at Rs.20,000. Every year, on the average, 4 houses get burnt, resulting into a total loss of Rs.80,000. If all the 400 owners come together and contribute Rs.200 each, the common fund would be Rs.80,000. This is enough to pay Rs.20,000 to each of the 4 owners whose houses got burnt. Thus, the risk of 4 owners is spread over 400 house - owners of the village. Classification of Insurance Insurance business can be divided into two broad categories, life and non- life.

Life Insurance is concerned with making provision for a specific event happening to the individual, such as death whereas non life (or general Insurance) is more commonly concerned with the provision for a specific event which affects a property, such as fire, flood, theft etc. In this course we will only cover life insurance. So, let us now move on to the definition of life insurance. Definition of Life Insurance According to the U.S. Life Office Management Association Inc. (LOMA), life insurance is defined as follows: 'Life insurance provides a sum of money if the person who is insured dies whilst the policy is in effect". Anybody who has knowledge about life insurance will be tempted to say "yes BUT.....". In other words, surely this is far too brief an explanation for a financial service that provides a very sophisticated range of savings and investment products, as well as mere compensation for death.

Need for Life Insurance The above definition captures the original, basic, intention of life insurance: i.e. to provide for one's family and perhaps others in the event of death, especially premature death. Originally, policies were to provide for short periods of time, covering temporary risk situations, such as sea voyages. As life insurance became more established, it was realized what a useful tool it was for a number of situations, including :Temporary needs threats : The original purpose of life insurance remains an important element, namely providing for replacement of income on death etc.

Regular Savings : Providing for one's family and oneself, as a medium to long term exercise (through a series of regular payment of premiums). This has become more relevant in recent times as people seek financial independence from their family. Investment

:

Put

simply,

the

building

up

of

savings

while

safeguarding it from the ravages of inflation. Unlike regular saving products,

investment

products

are

traditionally

lump

sum

investments, where the individual makes a one time payment. Retirement : Provision for one's own later years become increasingly necessary, especially in a changing cultural and social environment. One can buy a suitable insurance policy, which will provide periodical payments in one's old age.

Benefits from Life Insurance 1. It is superior to a traditional saving vehicles 2. It encourages saving and forces thrift 3. It provides easy settlement and protection against creditors 4. It helps to achieve the purpose of the Life Assured 5. It can be encashed and facilitates borrowing 6. Tax Relief

BASIC PRINCIPLES OF LIFE INSURANCE 1.

The theory of life assurance is based on three basic principles

•

Economic,

•

Legal and

•

Actuarial.

1. Economic Principles Life is uncertain. It is not known how long one may live, livery prudent person knows that, (i) his family life depends on his income, (ii) income will stop on death and (iii) earnings may cease after some age. He is always worried that his dependents will be in financial difficulties if he were to die without making any provision for the dependents The life styles and children's education may be adversely affected. His family, therefore, needs security and this economic needs is the basis of life assurance. If there is no economic need there Ms no purpose for life assurance. The various economic needs of the proponent can be met by the insurer by giving him suitable plans of insurance.

2. Legal Principles Life assurance is a contract and .therefore, the provisions of the Contract Act, 1982 apply. Other enactments life Transfer properly Act, Estate Duty Act, Indian Stamps Act. Law of Limitation, Succession Act etc. also arc applicable. All the, essentials of contract have to be fulfilled in the life assurance contract also, some of which are stated hereafter. •

There should be offer and acceptance

•

Parties should have capacity to contract

•

Consent of the parties is necessary

•

Consideration from each party is necessary

•

Consideration and object should be lawful

•

Insurable Interest

3. Actuarial Principles In life assurance the risk is shared by many, on payment of premium The risk of death for all individuals is not uniform. It is different for

different ages. It also differs from person to person depending on his health, habits etc Since the premium depends on the risk involved, people with different degrees of risks will have to pay different amounts as premiums It is necessary to measure and predict the risk before arriving at the premium. Actuarial science has developed principles and techniques necessary to make such measurements and predictions. These principles are vital in the management of the life insurance business Those who have mastered the actuarial sciences arc called actuaries. Life insurance companies cannot do-'Without actuaries.

THE IRDA ACT The Insurance Regulatory and Development Act of 1999 set out “to provide for the establishment of an Authority to protect the interests of holders of insurance policies, to regulate, promote and ensure orderly growth of the insurance industry and for matters connected therewith or incidental thereto and further to amend the Insurance Act, 1938, the Life Insurance Corporation Act, 1956, and the General Insurance Business Nationalisation) Act, 1972.” The Act effectively reinstituted the Insurance Act of 1938 with (marginal) modifications. Whatever was not explicitly mentioned in the 1999 Act referred back to the 1938 Act.

FINANCIAL PLANNING Goal Setting Investing is like taking a long holiday. There is a lot of planning that goes into it. •

How long is the trip (what is your investing “time horizon”).?

•

What should you pack (What type of investment will you

make?) •

How much fuel will you need? (How much money will you

need to reach your goals?) •

Will you need to stop along the way? (Do you have short term

financial needs?) •

How long do you plan on staying? (Will you need to live off the

investment in later years?). You must answer the following question before you can successfully set about yours savings / investing journey.  What are your goals? Is this money for retirement? A house? Your child’s education? Income to live on?  How much money can you set aside to a regular investing plan? The more you specific you can be the more likely you are to set and achieve reasonable goals.

Investment Consideration Generally, people invest their money to: •

Provide for comfortable statement of living

•

Provide for dependant

•

Provide income for retirements.

•

Provide for buying house or other assets.

ABOUT ICICI BANK ICICI was formed by Govt. of India, along with the World Bank and the Indian industry, to assist in the development of Indian Industry. It is a 50-year-old institution (Est.05 Jan 1955), older than LIC. It is one of the largest financial institutions in India It has a network of 562 branches and extension counters. ICICI Bank has the following Group Companies ► ICICI Venture ► ICICI Securities ► ICICI Prudential life Insurance company ► Prudential ICICI Asset Management Co. ► ICICI Lombard ► 3i Infotech

Over forty lakh investors have put in trust and invested in ICICI safety bonds. The bank has an account holder database of over 6 Lakhs.ICICI bank has the largest ATM network in India - over 1400 ATM's and the number is growing. ICICI's IT services subsidiary has received ISO 9002 certification for its investor services activities implying highest standards in customer services. ICICI has been associated with building up of renowned institutions like HDFC. ICICI was the second entity in India to set up merchant banking services. We follow the six-sigma quality standard, which is the highest quality standard. ICICI was the first institution to receive ADB loans. First public issue by an Indian entity in the Swiss capital markets in 1986. ICICI bank's website featured amongst the best 15 bank web sites in the world, reviewed by Forbes global in 2000.

Prudential Plc Prudential plc was founded in1848. Since its inception it has grown into one of the largest life insurance company in the United Kingdom (Source: S&P’s UK Life Financial Digest, 1998). It has a presence in over 15 countries, and caters into the financial needs of over 10 million customers. It manages assets of over US $ 259 billion as of December 31, 1999. Asia has always been an important region for Prudential and it has had a presence in Asia for over 75 years. In fact Prudential’s first overseas operation was in India, way back in 1923 to establish Life and General Branch agencies.

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. ICICI Prudential’s equity base stands at Rs. 9.25 billion with ICICI Bank and Prudential plc holding 74% and 26% stake respectively. ICICI Prudential Life Insurance Company Limited was incorporated on July 20, 2000. The authorized capital of the company is Rs. 2300 million. The paid up capital is Rs. 1900 million. The company was granted Certificate of Registration for carrying out Life insurance business by the IRDA on November 24, 2000. It commenced commercial operations on December 19, 2000. In the financial year ended in March 31, 2005, the company granted Rs. 1584 crores of new business premiums for a total sum assured of Rs. 13780 crores and wrote nearly 615000 policies. The company has a network of 56000 advisors: as well as 7banc assurance and

150

corporate

agent

tie-ups.

ICICI

Prudential

Life

Insurance

Company Ltd. has retained its position as the No. 1 private life insurer in the country, with a large range of flexible products that meet the needs of the Indian customers at every step in life.

About ICICI Prudential Life Insurance Company. With the growing importance of Insurance sector in India ‘Prudential’ the UK based company entered India having merger with ICICI Bank. That is why is called as ICICI Prudential India’ No-1 Private Insurance Company’.

ICICI Prudential is the largest private player in the insurance Industry in India with a market share of around 36% amongst the private players. The total market share of ICICI Prudential as of 31st March 2007 is at 20%. It had sold over policies till date. It sells one policy every 2 minutes. We have collected over Rs.2363 crore as premium income so far.

ICICI Prudential is the first life insurance company to offer ECS debit facility. Most of the Life Insurance companies LIC till date doesn't extend this facility. ICICI Prudential is first co. to introduce unit linked life Insurance and pension products -currently we have the maximum no of ranges under the ULIP like Life Insurance, investment as well as pension plans. ICICI Prudential has 107 branches spread over 69 locations all over India and we are expanding even further. We have a large network of over 57,000 advisors selling life insurance in India. All our advisors have undergone a professional 100 hours training approved by IRDA.

ICICI Prudential offers a complete and diversified portfolio of products - Endowment, Term, Child Policy. Pension, Market linked Investments & Pension Plans. ICICI Prudential has settled 1287 cases with a payout of about 16.5 crores, as of 31st March 2005. ICICI Prudential has one of the lowest repudiation of claims in the industry with as low as 8% of total claims.

As per Economics times survey AC Nielson survey 2003. ICICI Prudential has been stated as the Most Trusted Private Life Insurer. ICICI Prudential has already been awarded "the best Insurer Award" by Outlook Money for 2 years consecutively, for its customized services and innovation in products. ICICI Prudential has deposited a Paid up capital of Rs 925 Crores with IRDA as a caution deposit, the highest amongst all the life insurance companies in India (LIC has deposited only 60 crore so far). ICICI Prudential has been able to insure lives for sum assure of over Rs 20000 crore. ICICI Prudential has proved to be very efficient in its fund management, giving a return of 18% min the debt fund since the inception of market linked products. ICICI Prudential has been able to notch up a market share of around 25% in the pension products amongst all the other insurance players in the country including LIC. ICICI Prudential provides its Sales force with highly developed technological support - all related information can be available at their fingertips from the website and mobile SMS. ICICI Prudential has been awarded as "Most Customer Centric" in Prudential World.

MARKETING STRATEGY Once the corporate image and brand identity is established company has to formulate a marketing strategy. ICICI pru life insurance believes in proving a stop complete solution for the insurance needs of one and all. ICICI pru concentrates on repositioning of insurance from a tax saving device to a complete financial solution and because with this positioning it expects to see even sales than those products positioned as tax-saving tools as the latter are purchased more at the time of taxes. This was tackled through product-specific advertising such as for ICICI pru smart kid, retirement solution or lifetime.

Name of the Company LIC ICICI PRUDENTIAL BIRLA SUNLIFE BAJAJ ALLIANZ SBI LIFE HDFC STANDARD TATA AIG MAX NEW YORK AVIVA OM KOTAK MAHINDRA ING VAIYSA AMP SANMAR+ METLIFE

Market Share (%) 81.3 6.63 2.56 2.03 1.8 1.36 1.29 0.9 0.79 0.51 0.37 0.26 0.21

PRODUCT ANALYSIS Types of Insurance Plans - Traditional or Unit Linked Insurance Plans - At a glance Broadly, insurance plans can be distinctly divided into ULIPs and traditional plans. A brief detail of both segments:

What are Unit-Linked Insurance Plans (ULIP) ? Unit-linked insurance plans, ULIPs, are distinct from the more familiar ‘with profits’ policies sold for decades by the Life Insurance Corporation. ‘With profits’ policies are called so because investment gains (profits) are distributed to policyholders in the form of a bonus announced every year. ULIPs also serve the same function of providing insurance protection against death and provision of long-term savings, but they are structured differently. In ‘with profits’ policies, the insurance company credits the premium to a common pool called the ‘life fund,’ after setting aside funds for the risk premium on life insurance and management expenses. Every year, the insurer calculates how much has to be paid to settle death and maturity claims. The surplus in the life fund left after meeting these liabilities is credited to policyholders’ accounts in the form of a bonus. In a ULIP too, the insurer deducts charges towards life insurance (mortality charges), administration charges and fund management charges.

The rest of the premium is used to invest in a fund that invests money in stocks or bonds. The policyholder’s share in the fund is represented by the number of units. The value of the unit is determined by the total value of all the investments made by the fund divided by the number of units. If the insurance company offers a range of funds, the insured can direct the company to invest in the fund of his choice. Insurers usually offer three choices an equity (growth) fund, balanced fund and a fund which invests in bonds.

ULIPS DEMYSTIFIED Work best for people aged 25-40 years Because these are long-term products that need an investment horizon of at least 10 years to yield maximum benefits. Is a good investment after life insurance Because they combine basic insurance with mutual fund It could also work as entry-level mutual fund Because it allows you to switch across funds at lowest cost Low-cost mutual fund in the long term Because annual fund management charges in Ulips are around 1% compared with 2-3% charged by equity mutual funds. Allow liquidity to the investor Because all or part of corpus can be withdrawn after 3 years.

ULIPS VERSUS MUTUAL FUNDS ULIP

MUTUAL FUNDS

• Most plans offer more than three, ;free fund switches every year • There is no tax implication when switching between funds • Top-ups come with 1% charge

• Switching is costly. Exit and entry loads and can be as high as 3-4% • Profits from equity funds taxed at 10%. debt profits added to income • Top-ups carry 2.25% charge

• Good only for long-term investing because of high initial charges • Life cover is compulsory • You need to contribute regularly for the long term

• Good for short-term to medium-term investing time frame • Pure investment, no life cover • Investor not under any compulsion to invest year after year

LONG-DISTANCE RUNNERS Assuming that a term plan equity fund and Ulip equity option earn 10% returns, the Ulip's returns would overtake the fund in 10-12 years. That's of because Ulips charge only 1% annual fee while funds charge 2.5% a year.

ULIPs have gained high acceptance due to attractive features they offer. These include: 1.

Flexibility •

Flexibility to choose Sum Assured.

•

Flexibility to choose premium amount.

•

Option to change level of Premium /Sum Assured even after the plan has started.

•

Flexibility to change asset allocation by switching between funds

2.

Transparency •

Charges in the plan & net amount invested are known to the customer

•

Convenience

of

tracking

one’s

investment

performance on a daily basis. 3.

Liquidity •

Option to withdraw money after few years (comfort required in case of exigency)

•

Low minimum tenure.

•

Partial / Systematic withdrawal allowed

4.

Fund Options •

A choice of funds (ranging from equity, debt, cash or a combination)

•

Option to choose your fund mix based on desired asset allocation

ULIP PRODUCT LIFETIME ICICI pru Lifetime is a complete market-linked insurance plan that adapts itself to your changing protection and investment needs thought life.

Suitability Lifetime gives the flexibility and control in meeting protection and investment needs. The plan offers freedoms to direct investment to get the benefit of market linked returns choose the land of protection. The insured can accommodate his changing needs.

Eligibility Minimum age at entry-:0 years Maximum age at entry:-60 years(completed years) Minimum investment Annual mode-Rs.18000 p.a. Half yearly mode-Rs.9000 per half year Quarterly mode-Rs.4500 per quarter Monthly mode-Rs.1500 per month

SMART KID Smart kid is a regular premium ULIP policy for your children which offers a flexible investment option along with the benefits of the insurance cover.

Eligibility Parent’s age-(20-60) years Child age-(0-12) years Maturity age of child-(20-25) years Minimum investment Minimum sum assured-Rs.10, 000

Maximum sum assured-Rs.3, 00,000 Minimum premium-Rs..8400 p.a. BENEFITS (In case of uncertainty)  Sum assured paid.  .All future premium are waive up.  Granted educational benefit.  If financial requirement is milestone.  provides you the flexibility of benefit.  22-25 years of the child age (maturity) depends upon the child age.

PENSION PLAN Eligibility Minimum age of entry - 18 years Maximum age of maturity – 65 years Minimum Term – 10 years Maximum Term – 57 years Maximum cover age – 75 years Minimum premium – Rs. 10,000 p.a. Minimum vesting age – 45 years Maximum vesting age – 75 years

TRADITIONAL PLANS Traditional Plans of Life Insurance : There are four basic classes of life insurance contracts. They are : I)

Term Insurance

II)

Whole Life Insurance

III)

Endowment

IV)

Annuities

I. TERM INSURANCE Such a policy plan provides cover for a specified period or term only, and may also be described as temporary insurance. The policy benefit is only payable if: (a) The insured person dies during the specified period, or term; and (b) The policy is valid (in force) at the time of death. This form of cover is an exception to the general rule that a life insurance always results in a claim. Indeed, in the great majority of cases, term insurance runs their course without a claim. For these reasons, it is the cheapest form of cover available (but, of course, its limitations must be understood). In theory, the term could be for any period of time, even a few hours to cover an aircraft flight, for example. In practice, it is rare to find a term insurance for a period of less than one year.

1. Level Term Insurance Level term insurance: this policy plan is perhaps the most popular term insurance. It involves a level (unchanging) premium and benefit throughout the policy period (Fig.1). In the event of death during the term, the sum assured of the policy is payable. If the term is for more than one year, the renewal premium is the same each year. Popular largely because of its simplicity, this is a useful answer to a temporary need which neither increases nor decreases to any significant extent over the period of time involved (perhaps a loan which is not being repaid by installments).

Fig. 1

Premium 120 100 80 60

Premium

40 20 0 1

2

3

4

5

6

Sum Assured 35000 30000 25000 20000

Sum Assured

15000 10000 5000 0 1

2.

2

3

4

5

6

Decreasing term insurance

Under this plan, the premium is level (constant) throughout the premium paying term, but the benefit decreases annually, or at other specified times (Fig. 2). Because the benefit is continually decreasing and is payable only on death during the term, this is the cheapest' form of life insurance available. It is particularly suited for a temporary need, which is reducing. Some typical examples are:

Credit life : designed to repay the balance of a loan direct

i)

to the lender should the borrower die before all repayment installments have been made. This plan is often sold to lending institutions on a group basis to cover the lives of borrowers. Mortgage redemption : designed to repay a typical

ii)

mortgage loan being reduced by monthly or other periodic payments. This plan covers the balance of loan outstanding in the event of death. This may be on a joint basis (e.g. husband and wife), the benefit being payable when the first life dies. This is an obvious and popular form of cover throughout Europe. Fig. 2

Premium 120 100 80 60

Premium

40 20 0 1

2

3

4

5

6

Sum Assured 35000 30000 25000 20000

Sum Assured

15000 10000 5000 0 1

3.

2

3

4

5

6

Increasing term insurance

This plan, as the name suggests, involves a benefit, which increases annually, or as otherwise agreed. The premium also increases proportionately (Fig. 3). The increases will traditionally be at a fixed percentage, or in line with an agreed index (e.g. Consumer Price. Index). The basic idea is to keep the benefit in line with the value of money, especially in case of inflation. Fig. 3 Premium 200 180 160 140 120 100 80 60 40 20 0

Premium

Year 1

Year 5

Year 10

Year 15

Sum Assured 20000 18000 16000 14000 12000 10000 8000 6000 4000 2000 0

Sum Assured

Year 1

4.

Year 5

Year 10

Year 15

Renewable/Convertible Term Insurance

Renewable term insurance: at first sight, this seems to be a contradiction, because we have said that term insurance is for a fixed period, and this extends the period. The key point, however, is that the right to renew the policy is without submitting fresh evidence of insurability (health) and the premium for the further period is increased to reflect the increased age of the life insured. (The new premium is said to be based on the attained age.) As there is no underwriting when the plan is renewed, the risk to the insurer will increase as and when policies are renewed. Because of this, most insurers apply certain limitations on the policy, such as: a) renewals may only be for equal or smaller sums assured; b) the number of renewals permitted may be restricted (e.g. three times); c)

premium rates may be higher than for non-renewable policies.

Convertible term insurance : such a plan includes a conversion privilege, which gives the proposer the right to convert (change) the policy to a permanent (non-term - typically an endowment) plan without

evidence of insurability (health). If this privilege

is

exercised, the premium for the new plan must be the standard rate for such a plan and the attained age (actual age on conversion of policy) of the life insured. Again, because there is no underwriting on conversion, the insurer will again typically apply certain restrictions: .a

conversion may not be possible beyond a certain age (say 55 or 65);

.b

conversion may not be possible after the policy has been in force for say 50% of its specified term (or a specified number of years);

.c

the sum assured of the new plan will be limited to that for the term insurance (probably less after the term policy has been in force for some specified time).

II.

WHOLE LIFE INSURANCE

This contract has no fixed term. In most contracts premiums are paid up to the date of death, when the sum assured becomes payable. Premiums can also be paid for limited term selected by the proposer. Thereafter the policy jcontinues as fully paid up policy and sum assured is paid on death only. All contracts will have claims made against them and this being so the premiums charged are much higher than for term insurance. Usually this type of contract is used purely to cover the event of early death over long periods. Convertible Whole Life Policy

This is basically Whole Life Policy with limited period of payment of premiums. The policyholder has an option to convert the policy into an endowment assurance generally on expiry of 5 years. It is useful to a person: •

of moderate salary when the plan is first purchased

•

requires life cover over a long period

•

who may wish to switch to a savings plan at some point in the future.

III.

ENDOWMENT POLICY

An endowment plan provides for the payment of the sum assured at the end of a specified term or upon earlier death. Should the insured person survive the term, the policy is said to mature. Thus, a claim may arise under such a plan either by death or maturity. As with a term insurance, the / description of the policy must include reference to the number of years of the term involved, e.g. a 20year endowment provides for payment of the face value after 20 years (on maturity) or upon earlier death. Features to be noted with this plan are: 1. Premiums: are not cheap, since under normal circumstances a claim must arise nor later than the specified number of years in the future; 2. Technically : the plan is a combination of a term insurance and a pure endowment for equal amounts.

IV. ANNUITIES This refers to income or other financial provision (usually) for retirement or old age. A simple definition is:

Annnuity: A series of periodic payments to an annuitant (the person receiving the benefits), for life or on other agreed terms or conditions, in return for a single payment or series of payments (premium). If the specified period during which annuity premiums are to be made is fixed without regard to the duration of life, it called annuity certain. If it is related to life, it is called life annuity. Under a life annuity plan the money invested by the client is "lost" if the annuitant dies early. Although, this may appear unattractive at first, they do have their uses, particularly with elderly people with a reasonable to considerable amount of capital and no living dependants or close family. In such circumstances a guaranteed income for life may have its attractions, especially with the temptation to spend the capital being removed. Annuities are of two types - Immediate Annuity and Deferred Annuity: 1.

Immediate annuity: Immediate Annuity is purchased with a single premium called purchase price. The annuity payment starts immediately after the expiry of first period ^namely a month, a quarter, a half year or a year from the date of purchase. This type of annuity is often purchased when a person reaches retirement age and has a lump sum to invest (an example would be the proceeds from an endowment plan which was taken out to mature at the same time as the policy holder retired).

2.

Deferred

annuity:

the

installment

(payments

to

the

annuitant) payments commence at some specified time or specified age of the annuitant. This type of annuity can be funded by either a single payment or a series of regular

payments. The most common use being in providing for retirement. It is also possible to provide for cash option to the annuitant in lieu of annuity on the vesting date provided the deferment period is 10 years and above. 3.

Other Choices: Insurance companies gives the following options: •

Joint life/Survivor (Husband-wife) annuity

•

Annuity for guaranteed term i.e. 5 or 10 or 15 years and thereafter for life.

•

Annuity for life with return of purchase price on death to his nominee.

The underlying philosophy of annuities is completely opposite to that of conventional life insurance. With conventional life insurance the premium increases with age at inception. With annuities, the installment benefit increases with age at inception. Put briefly, life insurance is based upon the chances of dying and annuities are based upon the chances of living.

These are the oldest types of plans available. These plans cater to customers with a low risk appetite. Some of the common features of traditional plans are: 1.

Steady Investment

1.

Major chunk of investible funds are in debt instruments

2.

Steady and almost assured returns over the long term

2.

Features

1.

Death benefit is Sum Assured + guaranteed & vested bonus

2.

Helps in asset creation as they are for a long tenure

3.

Premium to Sum Assured ratios are fixed for each plan and age.

4.

Generally withdrawals are not allowed before maturity

RESEARCH METHODOLOGY OBJECTIVE •

The main objective of this Research is to find out the degree of awareness of Unit Link products of ICICI Prudential Insurance Company as well as comparatively others.

•

To understand the consumer attitude & behaviour towards life insurance in Bhubaneswar.

•

To study the distribution channel of the economy.

•

To identify the areas where improvement is essential and to recommend ways and means to improve.

•

To analyse the market of other competitors in

insurance

market. •

To study how effective and secure the products of ICICI Prudential Life Insurance.

Methodology Considering all the above requirements and objective survey was designed.

Research Design Primary

works

:

To

conduct

a

survey

through

telephonic

conversation on awareness of ULIP. Secondary works: Inputs from project guide, reports and articles.

Limitation In my studies conducted as followed in the report certain limitations have to be forced as far as collecting of information is concerned.

•

People are not aware about all products which proved to be a limiting factor.

•

Due to high price of the product people are taking less interest to take plan.

•

Due to some compulsory formalities

•

Linguistic barriers, age barriers also created some problem.

Research Methodology The chi-square value if often used to judge the significance of population variance i.e. we can use the test to judge the random sample has been drawn from a normal population with mean (µ ) and with a specified variance (σ p2). The test is based on the χ

2

-

distribution. Such as a distribution we encounter when we deal with collections of value that involve adding up squares. Variance of sample requires us to add a collection of squared quantities and thus have distributions that are related to chi-square distribution. If we take each one of a collection sample variances, divided them by the known population variance and multiply the quotients by (n-1), where the n means the no of items in the sample, we shall obtain a χ

2

distribution. Thus, (σ s2/σ p2) (n-l) = (σ s2/σ p2) (d.f.) would have

the same distribution with (n-1) degrees of freedom. The χ

distribution is not symmetrical and all the values are

2

positive. For making use of this distribution, one is required to know the degrees of freedom. When we have to use chi-square as a test population variance, we have to work out the value of χ null hypothesis as underχ

2

= (σ s2 / σ p2 ) (n-l)

2

to test the

Where, σ s2= variance of the sample σ p2 = variance of the population (n-1) = degree of freedom Then by comparing the calculated value with the table value of χ

2

for (n-1) degree of freedom at a given level of significance, we may either accept or reject the null hypothesis. If the calculated value of χ

2

is less than the table value, the null hypothesis is accepted, but if

the calculated value is equal to greater than the table value, the hypothesis is rejected. The best-known situations in which the chi-square distribution is used are the common chi-square tests for goodness of fit of an observed distribution to a theoretical one, and of the independence of two criteria of classification of qualitative data. However, many other statistical tests lead to a use of this distribution. One example is Friedman's analysis of variance by ranks. The chi-square distribution has numerous applications in inferential statistics, for instance in chi-square tests and in estimating variances. It enters the problem of estimating the mean of a normally distributed population and the problem of estimating the slope of a regression line via its role in Student's t-distribution. It enters all analysis of variance problems via its role in the Fdistribution, which is the distribution of the ratio of two independent chi-squared random variables divided by their respective degrees of freedom. For the use of non parametric Test, χ2 = ∑(Oij − Eij ) 2 /Eij

Where, Oij = observed frequency of the cell in the ith row and jth column. Eij = Expected frequency of the cell in the ith row and jth column. Analysis Of Variance (ANOVA) In statistics, analysis of variance (ANOVA) is a collection of statistical models, and their associated procedures, in which the observed variance is partitioned into components due to different explanatory variables, usually called factors in Design of experiments. The initial techniques of the analysis of variance were pioneered by the statistician and geneticist R. A. Fisher in the 1920s and 1930s, and is sometimes known as Fisher's ANOVA or Fisher's analysis of variance, due to the use of Fisher's F-distribution as part of the test of statistical significance. In practice, there are several types of ANOVA depending on the number of treatments and the way they are applied to the subjects in the experiment: •

One-way ANOVA is used to test for differences among three or more independent groups.

•

One-way ANOVA for repeated measures is used when the subjects are subjected to repeated measures; this means that the same subjects are used for each treatment. Note that this method can be subject to carryover effects.

•

Multivariate analysis of variance (MANOVA) is used when there is more than one dependent variable.

Degrees of freedom Degrees of freedom indicate the effective number of observations which contribute to the sum of squares in an ANOVA, the total

number of observations minus the number of linear constraints in the data. The degrees of freedom are the number of participants (for each group) minus 1. This removes the error otherwise produced by the differences in variance of such groups to account for the difference in sample and population variance. Data Analysis Null hypothesis(H0): On the basis of savings there is no investment in insurance product. 1. On the basis of savings. If you are given 5 options then in which you want to invest? Product

Yes No Total

Mutual

Fixed

Insurance Saving Equity Total

Funds

Deposit

Product

3 4 7

11 6 17

10 5 15

Accoun Marke t 4 3 7

Expected frequency (Yes) (i)

for Mutual Funds = (30 X 7) / 50 = 4.2

(ii)

for Fixed Deposit = (30 X 17) / 50 = 10.2

(iii)

for Insurance Product = (30 X 15) / 50 - 9

(iv)

for Saving Account = (30 X 7) / 50 = 4.2

(v)

for Equity Market = (30 X 4) / 50 - 2.4 (No)

(vi)

for Mutual Funds = (20 X 7) / 50 = 2.8

(vii)

for Fixed Deposit = (20 X 17) / 50 = 6.8

(viii) for Insurance Product = (20 X 15) / 50 = 6 (ix)

for Saving Account = (20 X 7) / 50 = 2.8

(x)

for Equity Market = (20 X 4) / 50 = 1.6

t 2 2 4

30 20 50

Observed frequency (0)

Expected frequency (E)

(O-E)

(O-E)2 / E

+ve respondent Mutual funds Fixed deposits Insurance

3 11 10

4.2 10.2 9

-1.2 1.2 1

0.342 0.141 0.111

products Saving

4

4.2

0.2

0.095

2

2.4

0.4

0.066

respondent Mutual funds Fixed deposits Insurance

4 6 5

2.8 6.8 6

-2.8 -0.8 -1

2.8 0.94 0.166

products Saving

3

2.8

0.2

0.014

accounts Equity market

2

1.6

0.4

0.1 Total =

accounts Equity market +ve

5.53

Degree of freedom = (r-1 )(c-1) (2-1) (5-1) = 4 The table value of χ

2

for 4 degree of freedom at 5% level of

significance =9.488. Comparing the table vale and the calculated value, we find that the calculated value is less the table value and it supports the hypothesis.

Anova testFirst calculate the mean of the sampleX1 = (3+4) = 7/2 = 3.5 X2 = (l 1+6) =17/2 = 8.5 X3= (10+5) =15/2 =7.5 X4 = (4+3)=7/2 =3.5 X5 = (2+2) = 4/2 = 2 Mean of the sample mean, X

= (3.5 + 8.5+ 7.5+ 3.5+ 2)/ 5 = 5

SS between

= 2(3.5-5)2 + 2 (8.5-5)2 + 2(7.5-5)2 +2(3.5-5)2 +

2(2-5)2 = 4.5 + 24.5 + 12.5 + 4.5+18 = 64 SS within = (3-3.5)2 + (4-3.5)2 + (11-8.5)2 +(6-8.5)2 + (10-7.5)2 +(57.5)2 + (4-3.5)2 +(3- 3.5)2 + (2-2)2 + (2-2)2 = .25+.25+6.25+6.25+6.25+6.25+.25+.25+0+0 =26 SS for total variance, = (3-5)2+ (4-5)2 +(11-5)2+ (6-5)2 +(10-5)2 + (5-5)2 + (4-5)2+ (3-5)2 + (2-5)2 + (2-5)2 = 4 +1+36+1+25+0+1+4+9+9 = 90

Source of variation

SS

d.f.

MS

Between

64

5-1=4

64/4 = 8

sample Within

26

10 -5 =5 26/5= 5.2

sample Total

90

10-1=9

F-Ratio

5% limit from the Ftable 8/5.2=1.5 4.82

The above table shows that the calculated value of F ratio is 1.5 which is less than the table value of 4.82 at 5% level with d.f. being vl= 4 and v2= 5 and hence this hypothesis support the null hypothesis, therefore we may conclude that the difference in uses is insignificant and just a matter of chance. Null hypothesis (H0): On the basis of total benefits there is no significant uses of Smart Kid.

DATA ANALYSIS In general, exploratory is appropriated for any problem where very little knowledge is available. In this research primary data are collected for the primary data. I interviewed the respondents by calls and analysed the data, to what extent people like the products. These data is based on only a particular region, Bhubaneswar Tools for Research In the study of insurance in ICICI Pru, following research techniques were used. •

Primary data were collected through informal and unstructured interviews i.e., contact nos., address, references).

•

SD collected from the internet ignore official contact from website.

COMMENTS For Endowment Plan With Birla Sunlife. •

Benefits are almost same in both plan.

•

The surrender charges of Birla Sunlife are much more higher than ICICI Pru Life.

•

ICICI Pru’s investment option much more effective than Birla Sun Life and also more reasonable.

•

ICICI Pru’s Plan is more favourable with regard to switch option.

•

ICICI Pru is again more customer friendly.

•

Minimum top up of Birla Sunlife is higher than ICICI Prudential.

•

ICICI Pru plans are more flexible than Sun Life.

FOR ENDOWMENT PLAN WITH LIC •

LIC Provide minimum age limit then ICICI Pru.

•

The death benefit of ICIC Pru is more better than the LIC.

•

Accidental death benefits are not available.

•

Merit benefit of LIC is better than ICICI PW.

•

Surrender charge are low of ICICI Pru.

•

Flexibilities is more of ICICI than LIC

FOR CHILD PLAN With HDFC Standard Life •

ICICI Plan is beneficial in the context of flexibilities option.

•

ICICI Pru Investment options seem more beneficial for policy holder.

•

4 switches are in ICICI Pru Plan. Here HDFCSL Plan provides 5 switches, better facility than ICICI Pru.

•

ICICI Pru Plan more customer friendly.

•

Policy fee and charges of HDFC plan is less then ICIC Pru.

We can say that which option and inert option and minimum premium amount shows HDFST plan is better than ICICI Pru.

FOR PENSION PLAN With HDFCSL •

Premium amount of ICICI Pru is the lower than HDFCL.

•

The invest option of ICICI Pru are more effective and reasonable than HDFCSI.

•

The coverage of ICICI Pru better than HDFCL.

•

In HDFCSL premium plan rider are not available but ICICI Prudential have.

We can say that investment option, policy feel and charges, minimum premium amount or surrender value shows ICICI Pru Plan is better than HDFCSL.

PENSION PLAN WITH LIC •

Invest option is much more effective and reasonable than LIC.

•

Switch option of ICICI Pru is more better than LIC.  Riders are not available in ICICI have riders.

•

The flexibility of ICICI Pru much more better than LIC.

ANALYSIS •

The

Analysis

of

the

data

collected

from

the

survey,

Bhubaneswar. •

The Analysis throws some interesting and unexpected results and sheds, lights on the challenging trends and preference of the people towards insurance.

1. TOP OF THE MIND RECALL In the top of the mind Recall, maximum respondents thought about LIC, with its figure touching 51.5%, next web ICICI with 14%, Tata AIG with 5.5%, HDFCSL with 4.5%, Birla Sunlife with 3%, Bajaja Allianz with 8.5%. This indicate that our approach to the clients is very less as compared to LIC

60.00% 51.50% 50.00% 40.00% 30.00% 20.00%

14%

10.00%

5.50%

8.50%

4.50%

3%

Tata AIG HDFCSL

Birla Sunlife

0.00% LIC

ICICI

Bajaja Allianz

2. HAVING INSURANCE PLAN I have taken 100 respondents, out of which 25% are relating Insurance with Securities, 20% tax benefits, 25% returns, 20% all of these, 10% of the people have not any idea.

25%

25%

25% 20%

20%

20% 15% 10% 10% 5% 0% Insurance Tax benefits with securties

Returns

3. HAVING INSURANCE PLAN

All of these Have no idea

About 55% of the people have insurance plan only 45% have no plans.

45%

55%

Yes

No

4. WHICH COMPANY’S PLAN HAVE GREATER BENEFITS?

8

6

15

11

60

ICICI Pru

LIC

HDFCSL

Birla

Other

5. PEOPLE HAVING IDEA REGARDING ULIP

35%

65%

Yes

No

6. ULIP PLANS PROVIDES SECURITIES AND INVESTMENT FUND, DO YOU PREFER THIS OR TRADITIONAL PLAN?

45%

55%

Yes

No

7. PREFER POLICY TYPE ON THEIR INCOME BASIS 46% of the people feel that policy type should be affordable and 23% feels it should be high, while 31% of the people feel it should be cheap on their income basis.

23%

31%

46%

High

Affordable

Cheap

ALLIANZ BAJAJ UNIT GAIN Positioning of Allianz Bajaj Unitgain as per the company Income / Category

Protectio n

Child

Wealth

Retirement

Rich Mass Affluent Allianz Bajaj Unitgain

Mass Low Income

Features of Allianz Bajaj Unitgain Type of the Product: - Unit Linked insurance plan Premium: - Minimum: Rs. 10,000 p.a. Age: - 0 - 60 years Term: - Choice rests with the consumer with a minimum premium payment term of 3 years Sum Assured: - Minimum Sum Assured is 5 times the premium paid. Maximum Sum Assured is as per the limits set per age bands. Death Benefits: - Higher of Sum Assured or value of units. However, the value of units will be treated as death benefit if the Life Assured is less than 7 years of age or more than 70 years of age. Maturity Benefits: - Value of Fund at Bid price Withdrawal benefits: - Partial or complete withdrawal at bid price after 3rd year

Fund Options: - Equity Fund, Debt Fund, Balanced Fund, Cash Fund Riders: - ABR/ADBR/CI/ Hospital Cash Benefit Surrender Value: - A selling / purchase price spread of 5% will be applicable from the 3rd year onwards Initial charges: - 1st year - 70%; 2nd year - 2%; 3rd year - 1%; No charges from the 4th year onwards Admin Charge: - Annual admin charges of 1.25% p.a. of net assets Fund management Charge: - Annual investment charge of 1% p.a. of net assets. Comparing

Allianz Bajaj Unitgain

with

LIFETIME of

ICICI Prudential •

LifeTime has higher benefit at the end of the term as Allianz

Bajaj applies a bid-offer spread of 5% on the total fund value in case of death or survival, which essentially translates to a lower benefit at the end of the term. •

LifeTime has no bid offer charges on withdrawals like Bajaj

Allianz •

LifeTime gives you the option to reduce the premium amount

without any change in the policy benefits. •

LifeTime offers bonus units at regular intervals based on the

premium amount paid. •

LifeTime offers partial withdrawals from the 1st year itself in

case one needs to withdraw funds due to any eventuality. •

LifeTime offers a differential charge structure based on

premium bands to increase the value offered to each prospect. •

There are no additional charges in Lifetime and as compared

to Bajaj Allianz

SBI LIFE UNIT PLUS Positioning of SBI Life unit plus as per the company Income / Category

Protection

Child

Wealth

Retirement

Rich Mass Affluent Mass

Unit Plus (SBI Life)

Low Income

Features of SBI Life unit Plus Type of the Product: - Unit Linked Product Premium: - Min. Rs. 24,000 p.a. and Max. Rs. 50 crores Age: - 7 - 65 years Term: - Limited: 5 to 40 yrs (minor lives should be major at maturity) Whole Life: - up to 99 yrs. Throughout the term Sum Assured: - 5 to 20 times the annualized premium Death Benefits: - Higher of Fund Value or Sum Assured less withdrawal within last 12 calendar months Maturity Benefits: - Fund Value is payable in a lump sum. Increase of Sum Assured: - Available from 18 to 50 yrs from the 3rd policy year and should be within limits of 20 - 50 times With drawl benefits: - Available from 4th year, minimum fund Value being Rs.10, 000/. Minimum withdrawal amt Rs. 10,000 and Max withdrawal amount: Year 4&5: 25% of Fund Value at the beginning of the year. Year 6 onwards: Fund Value less Rs. 10,000

Bonus: - For term: 20 yrs and above If at the time of allocation there is no unpaid premium, Year 8

:

15% first YP, Year 15:

25% first

YP, Year 20: 60% first YP Fund Options: - Equity Fund, Bond Fund, Growth Fund and Balanced Fund Riders: - Accidental Death & Accidental TPD rider, Critical Illness rider Surrender Value:- The surrender Value are as : 1st year - Nil, 2nd year - 94% of the fund value, 3rd year - 98% of the fund value, 410th year - 99% of the fund value and 11th year onwards - 100% of the fund value Initial charges:- 24000 - 100000:- 1st year - 25% ; 2nd & 3rd year 7.5% ; 4th & 5th year - 5% and 6th year onwards - 2%, 101000 500000:- 1st year - 15% ; 2nd & 3rd year - 5% ; 4th & 5th year - 5% and 6th year onwards - 2%, 501000 and above :- 1st year - 10% ; 2nd & 3rd year - 3% ; 4th & 5th year - 3% and 6th year onwards 2%. Admin Charge: - Charges: Rs. 60 per month Fund management Charge: - Equity Fund: 1.5% p.a., Bond Fund: 1% p.a., Growth Fund: 1.35% p.a. Balanced Fund: 1.25% p.a.

How the customers perceive about “ULIP” who have invested in Allianz Bajaj’s Unit Gain:

The question was “Is ULIP is better than Allianz Bajaj’s Unit Gain” Yes

No

22

8

No of Respondents

27%

73%

Yes

No

How the customers perceive about “ULIP” who have invested in SBI Unit Plus: The question was “Is ULIP is better than SBI Unit Plus”

Yes

No

19

11

No of Respondents

37%

63%

Yes

No

FINDINGS, RECOMMENDATIONS AND CONCLUSION Major Findings 1.

People have more interest and faith in Bank deposit and Post office deposit rather that ICICI Pru.

2.

Percentage of investment in ICICI pru is also quite less compared to others.

3.

The quality of service provided by ICICI pru is somewhat average.

4.

The problem resolving skills are very satisfactory. 5.

Customers were agree with the fact that customer service representative is very courteous but when the factor was knowledge then the result was neutral.

6.

Chance of replacing the brand is there.

Recommendations 1.

There should be proper training programme for their advisors then they can increase the knowledge of customers.

2.

There should be more hoardings of ICICI pru in Bhubaneswar.

3.

The knowledge of costumers’ representative in ICICI pru should increase.

4.

ICICI pru should send monthly statement of costumers’ investment to their address.

Conclusion ULIP is a better product when compared with other competitors’ products in terms of the flexibilities and facilities offered by the company. But due to a slightly high premium charged by the company it is not affordable by all categories or segment of people. But it is really a marvelous project undertaken by the company ICICI Prudential Life Insurance Company Ltd. this aims at the betterment of the customers from every aspects of life. It is a revolutionary product that has helped in booming the market share of ICICI Prudential Life Insurance Company Ltd. Like anything in the past decade and has helped ICICI Prudential Life Insurance Company Ltd. reached in a highly prestigious second position behind the market leader LIC in the insurance sector which is characterized by stiff competition among the players.

APPENDICES QUESTIONNAIRE 1.

What is your income level (monthly)? Specify the range. a) 5000 & below b) 5001- 10,000 c) 10,000-15000 d) 15001-20000 e) 20001-30000 f) 30001& above

2.

If you have invested in any of the product of ICICI Prudential (specify the percentage of investment) a) _________________ b) _________________ c) _________________ d) _________________ e) _________________

3.

If you have any surplus money then where you like to invest? (Please rank them e.g. – 1,2,3… according to your choice) a) Bank deposits b) Mutual funds c) Govt. bonds d) Share markets e) Post office deposits f) Life Insurance g) Others

4.

How could you specify the risk factor in ULIP product of ICICI PRU? a) High risk low return b) High risk high return

c) Low risk low return d) Low risk high return e) Cant say 5.

Please specify the rank order of the company’s where you like to invest. (e.g. 1, 2, 3 …… according to your choice. a) State Bank of India b) Franklin Templeton c) UTI d) Bajaj Allianz e) ICICI Prudential f) ING Vysya

6.

Have you ever invested in any other product of ICICI Prudential? If yes, then specify Product Name

Scheme Name & Option

________________________

_______________________ Amount

_____________ 7.

Do you have any knowledge about ICICI Prudential? a) Yes

b) No

Thank you for your cooperation.

Customer Satisfaction (Service quality evaluation) Dear Customer, I want to thank you for giving us the opportunity to serve you. Please help us serve you better by taking a couple of minutes to tell us about the service that you have received so far. We appreciate your business and want to make you sure we meet your expectation. Sincerely, Chetan lal Saraf (Summer Trainee) 1.

In evaluation your most recent customer service experience was the quality of service you received. a) Very poor

b) Some what unsatisfactory

c) About average d) Very satisfactory e) Superior 2.

The process of getting your problem resolved was a) Very poor

b) Some what unsatisfactory

c) About average d) Very satisfactory e) Superior Customer Service Representation 3.

The customer service representative was very courteous. a) Strongly disagree

b) somewhat disagree

c) Neutral d) Some what agree 4.

e) strongly agree

Which of the following qualities of the service representative stood our (as being superior). a) Patient

b) Enthusiastic

d) Friendly e) Responsive 5.

c) Listen carefully f) Others

What qualities of the customer service representative irked you? a) Not Patient

b) Not Enthusiastic

c) Did not listen carefully d) Unfriendly

e) Unresponsive f) No qualities irritated me g) Others 6.

The customer service representative handled my call quickly. a) Strongly disagree

b) somewhat disagree

c) Neutral d) Some what agree 7.

e) strongly agree

What would best describe your experience when you called? a) Kept me waiting in hold.

b) Hard to explain several times

c) Didn’t know how to handle problem

d)

Hard

to

ask

others e) Spoke slowly 8.

f) No improvement needed

The customer service representative was very knowledgeable a) Strongly disagree

b) somewhat disagree

c) Neutral d) Some what agree 9.

g) others

e) strongly agree

The customer service representative a) Gave me the wrong information b) Didn’t understand the question c) Gave unclear answers d) couldn’t solve problems e) Disorganized

10.

f) No improvement needed

g) Others

The waiting time for having my question addressed was satisfactory a) Strongly disagree

b) somewhat disagree

c) Neutral d) Some what agree 11.

e) strongly agree

My phone call was quickly transferred to the person who could best assist me. a) Strongly disagree

b) somewhat disagree

c) Neutral d) Some what agree 12.

e) strongly agree

Over the next 12 months, how likely are you to replace your product with another (product or brand). a) Certain

b) High Chance

c) Equal chance

d) Low chance

e) Never Thank you for your feedback. We sincerely appreciate your honest opinion and will take your input into consideration while providing product and services in the future.

Question 1 Analysis & Recommendation 60

60 50

36

40 30 20 10

5

0

0 a

b

0 c

d

e

. Question 2 Analysis & Recommendation 50

50 40

40 30 20 10

5

5

0

0 a

b

c

d

e

Question 3 Analysis & Recommendation 60

60 50 40 30

25

20

15

10

0

0 a

Question 4

0 b

c

d

e

Analysis & Recommendation 30

30 25

25 20

25

20

15 10 5 0

0 a

b

0 c

d

e

f

Question 5 Analysis & Recommendation 50

50 45 40 35 30 25 20

25

15 10 5

10

10 5

0

0

0

a

b

c

d

e

f

g

Question 6 Analysis & Recommendation 60

60 50 40

30

30 20 10

5

0

0 a

b

5 c

d

e

Question 7 Analysis & Recommendation 25

25

25 20 20 15 10

10 10 5

5 5 0 a

b

c

d

e

f

g

Question 8

Analysis & Recommendation 35

35

30

30

25

25 20 15

10

10 5

0

0 a

b

c

d

e

Question 9 Analysis & Recommendation 25

25

25

20 15

15 10

10

10 5

5 0

0 a

b

c

d

e

f

g

Question 10 Analysis & Recommendation 60

60 50 40

30

30 20 10

5

0

0 a

b

5 c

d

e

Question 11

Analysis & Recommendation 40

40

40

35 30 25 20

15

15 10

5

5

0

0 a

b

c

d

e

Question 12

Analysis & Recommendation 50

50 40

30

30 20

10

10 0

5 a

5 b

c

d

e

What we Learnt from the organization Who is an Advisor? An advisor is the person who can recruit and who in turn procure business for you and the organization. They are the most important link between the market and the company. Sources •

Personal network

•

Advisor referrals

•

Client referrals

•

Industry seminars

•

Association and clubs

•

HNI ladies forums

•

COI – Centres of Intelligence

•

Advertisements in appropriate journals, media.

Profiles •

Housewives

•

Businessman

•

Accountants / Financial consultants

•

Sales persons employed in private / public companies

•

Office bearers of leading clubs / associations

•

Consistent LIC MDRT / COT Agents

•

VRS / retired people

•

Ex-serviceman

•

Teachers

What to look for and what to avoid •

High probability of success  Bond / Mutual Fund Agents  LIC agents – surrogates  Small business owners  Women

•

Average Profile  Students  VRS / Retired Personnel

•

Avoidable Profiles  New to the city  Income profile – approx Rs.1 lac p.a.  People who do not own their transport / mobile

•

The most successful profile – The person who has been trained and inducted well by you

Recruitment Process •

Gathering names

•

Qualifying names and fixing appointment (Q score)

•

Probing, handling objectives

•

Confirmation of Intent

•

Licensing

Remember the recruiting formula

25 contacts

10 for Interview Wider is the rim of recruitment process, more will be the number of FOs

2 selected

So, key to success is recruitment and key to recruitment is suspecting (gather names)

OUR CONTRIBUTION •

We have recruited 4 financial advisors during the

project training •

Given 10 databases to our unit managers

BIBLIOGRAPHY www.icici.com www.icicipru.com www.bsli.com www.insuranceport.com www.fsa.com www.irda.com ICICI Pru brochure HDFCSL brochure BSLI brochure LIC brochure Research Methodology by C.R. KOTHARI