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Evaluation of Insurance Sector Through Comparison of AVIVA Life Insurance With Life Insurance Corporation (LIC) "
Evaluation of Insurance Sector Through Comparison of AVIVA Life Insurance With Life Insurance Corporation (LIC) "
Evaluation of Insurance sector through comparison of AVIVA Life Insurance with Life Insurance Corporation (LIC)
SUBMITTED BY: CHANDAN SINGH (73) NARESH SANDHU (75) JYOTI NAGAR (79) ASHISH SHANDILYA (81) PRASHANT BEDWAL (94) KHUSHBOO PANDITA (97)
INDEX
Serial No. Particulars Page No.
Introduction to Insurance Company profile Various life insurance plans of AVIVA Various plans of LIC Objectives Research Methodology Data Analysis Findings Suggestions Limitations Conclusion Bibliography Annexure
3 9 11 13 18 19 20 29 31 33 34 35 36
INTRODUCTION
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The business of insurance is related to the protection of the economic values of assets. Every asset has a value. The asset would have been created through the efforts of the owner. The asset is valuable to the owner, because he expects to get some benefits from it. It is a benefit because it meets some of his needs. The benefit may be an income or in some other form. In the case of a factory or a cow, the product generated by it is sold and income is generated. In the case of a motor car, it provides comfort and convenience in transportation. There is no direct income. Both are assets and provide benefits. Every asset is expected to last for a certain period of time during which it will provide the benefits. After that, the benefit may not be available. There is a life time for a machine in a factory or a cow or a motor car. None of them will last forever. The owner is aware of this and he can so manage his affairs that by the end of that period or life time, a substitute is made available. Thus, he makes sure that the benefit is not lost. However, the asset may get lost earlier. An accident or some other unfortunate event may destroy it or make it incapable of giving the benefits. An epidemic may kill the cow suddenly. In that case, the owner and those enjoying the benefits there from would be deprived of the benefits. The planned substitute would not have been ready. There is an adverse or unpleasant situation. Insurance is a mechanism that helps to reduce the effects of such adverse situations. It promises to pay to the owner or beneficiary of the asset, a certain sum if the loss occurs.
India in Chennai, the National, the National Indian and the Hindustan Cooperative in Kolkata. Later, were established the Cooperative Assurance in Lahore, the Bombay Life (originally called the Swadeshi Life), the Indian Mercantile, the New India and the Jupiter in Mumbai and 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 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 31.8.2007, sixteen new life insurers had been registered and were transacting life insurance business in India.
CLASSIFICATION OF RISKS
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1. Critical Risks: It is based on the extent of the damage likely to be caused. Critical or Catastrophic risks are those which may lead to the bankruptcy of the owner. It would happen if the loss is total, like in a tsunami, wiping out everything. It can also happen if the deceased person was heavily in debt. 2. Financial & Non Financial Risks: Insurance is concerned with the financial status of the risk. 3. Dynamic & Static Risks: Dynamic risks are caused by perils which have national consequence, like inflation, calamities, technology, political upheavals, etc. Static risks are caused by perils which have no consequence on the national economy, like a fire or theft or misappropriation. Dynamic risks are less likely to occur than static risks, but are also less predictable. Static risks are more suited to management through insurance. 4. Fundamental & Particular Risks: Fundamental risks are those that affect large populations while Particular risks affect only specific persons. A train crash is a fundamental risk while a theft is a particular risk. Life Insurance business deals with particular risks, but fundamental risks affect the life insurance companys experience, as many persons will be affected at the same time, when there is an earthquake, flood or riot. 5. Pure & Speculative Risks: The latter are in the nature of betting or gambling where the risk is, to some extent, under the control of the person concerned, while a pure risk is not so. It is more in the nature of an Act of God. Insurance deals with only pure risks and not speculative risks.
arrangement put into place to protect people from the accidental risk 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 can be equal among all. It can also be proportional to the risk that each person is exposed to. The share (that each member of the community has to pay) 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 the basis of assumptions. While it may not be possible to tell before hand 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.
4. There are tax benefits, both in income tax and in capital gains. 5. Marketability and liquidity are better. A life insurance policy is property and can be transferred or mortgaged. Loans can be raised against the policy. 6. It is possible to protect a life insurance policy from being attached by debtors. The beneficiaries interests will remain secure.
LITERATURE REVIEW
Aviva India is a joint venture between one of the countrys oldest and largest groups, Dabur, and Aviva plc, the UK's largest insurance group, whose association with India dates back to 1834. Our vision is to be amongst Indias leading life insurers with a quality business model, focused on sustainable growth. We seek to build a robust product portfolio meeting all customer lifecycle needs related to Savings, Retirement, Investments and Protection. With a strong sales force of over 30,000 Financial Planning Advisers (FPAs), we have initiated and pioneered many innovative sales approaches, including the concept of Bancassurance and Financial Health Check services. We are among the first companies to introduce the contemporary unit-linked products. A seasoned team of fund managers make our fund management one of the key differentiators. With a wide distribution network of 195 branches and close to 40 Bancassurance partnerships, we are spread across nearly 3,000 towns and cities in India. Keeping with our commitment of social responsibility, we have been successful in reaching out to the underprivileged strata through our Micro insurance initiatives.
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VARIOUS LIFE INSURANCE PLANS BY AVIVA 1. CHILD - Aviva New Young Scholar
Aviva New Young Scholar is a comprehensive plan that enables you to secure your childs future in any eventuality through: Attractive returns, enhanced by loyalty additions every year starting end of 5th year and maturity addition to build the desired corpus of funds on maturity of the policy All future premiums being waived off and invested as a lump sum amount in to the funds, so the policy continues even in the unfortunate event of the parents death, disability or on contracting a critical illness, while the Sum Assured is paid out immediately Provision of a regular income for the minor child, in the event of parents death Systematic Transfer Plan for safe entry and safer exit into equities Option to minimize the effect of inflation through Indexation
Option to reduce premium and increase / decrease Life Cover (Sum Assured) Option to cover husband and wife under the same policy Select from three riders Accidental Death and Dismemberment Rider (AD&D) , Comprehensive Health Benefit (CHB) Rider Hospital Cash Benefit Rider (HCB) Aviva Payor Plus Rider Indexation to protect savings & protection against inflation Limited premium paying term(PPT) including 3 & 5 years, with an option to increase the PPT (if PPT>=10)
Attractive returns enhanced by Loyalty Additions during the policy term and Maturity Addition Opportunity to invest in high growth sectors such as PSU, Infrastructure, in addition to the Index-II fund Minimize the risk of market volatility with investment options such as AAA or STP Option to minimize the effect of inflation through Indexation
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Children Plans
1. Jeevan Anurag: Is plan designed for the children educational requirements . This plan can be taken on the parents life. The basic sum assured is given immediately on the death of the life assured during the term of the policy. 2. Jeevan Kishore: Is a plan which can be availed by the parent or grand parents of the children. It is an endowment assurance plan for children of less than 12 years of age. 3. Jeevan Chhaya: It is a plan where financial protection is given against death during the term of the plan. It is an Endowment Assurance plan. Besides this benefit one-fourth of Sum Assured is payable at the end of each of last four years of policy term irrespective if the life assured dies or survives the duration of the policy. 4. Komal Jeevan: Is a Money Back Plan which can be bought by the parent or grand parent for their child from the age of 0-10years. This plan gives financial protection against death during the duration of the plan with periodic payments on survival at specified durations. 5. Child Future Plan: A policy where the future needs like education, marriage and other requirements are taken care of. This plan provides a benefit which not only takes care of the risk cover of the child during the policy but also after 7 years of the policy being expired.
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6. Child Career Plan: A plan to meet the educational and other needs of the child. It provides the risk cover on the life of child during the policy term as well as 7 years after the policy has expired. There are also Survival benefits given to the life assured at the end of a specific duration. 7. Child Fortune Plan: Is a unit linked plan which offers long term capital appreciation. 8. Marriage Endowment Or Educational Annuity Plan: This is an Endowment Assurance plan that provides for benefits on or from the selected maturity date to meet the Marriage/Educational expenses of the named child.
Pension plans
1. New Jeevan Dhara - I: is a Deferred Annuity plans that allows the policyholder to make provision for regular income after the selected term. 2. New Jeevan Suraksha - I: Is a deferred annuity plan. 3. Jeevan Nidhi: Is a deferred annuity plan with profits. 4. Jeevan Akshay - VI: By paying a lump sum amount this immediate annuity plan can be bought.
Unit Plans
1. Child Fortune Plus: Is a plan for children and to meet their educational needs. Its a unit linked plan with long term capital appreciation. 2. Fortune Plus: It is a unit linked assurance plan where premium payment term (PPT) is 5 years and the premium payable in the first year will be 50% of total premium payable under the policy.
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3. Market Plus: Is a unit linked pension plan where after a specific period the pension is paid. 4. Money Plus - I: Is a unit linked Endowment plan which has investment plus insurance during the term and you can pay regular premiums. 5. Profit Plus: It is a unit linked Endowment plan where the premium payment term (PPT) is limited to single lump sum, or uniformly over 3, 4 or 5 years.
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SBI Life SBI Life Insurance Company Limited is a joint venture between State Bank of India and BNP Paribas Assurance. It is present in more than 41 countries across the world. SBI Life offers a variety of plans in life insurance and pension. TATA AIG The TATA Group and American International Group Inc together formed Tata AIG Life Insurance Co. Ltd.Tata Group holds 74% stake in the insurance venture with AIG holding the balance 26%. They started their operations in April 2001 Aviva Aviva, one of UK's largest insurance company and world's 5th largest insurance group. It was one of the first international insurance company to set up its office in India in the year 1995. They introduced the concept of banc assurance in India. IDBI Fortis IDBI Fortis Life Insurance Co. Ltd is a joint venture between three financial institutes; they are IDBI Bank, Federal Bank and Fortis. They introduced there plans in March 2008. IDBI owns 48% equity while Federal Bank and Fortis own 26% equity each. ING VYSYA ING Life was established in 2001 as a joint venture between ING Insurance International B.V. (INGI), ING Vysya Bank Limited and GMR Industries Limited. At present, INGI, Exide Industries Limited, Ambuja Cement Ltd, Enam Group are the joint venture partners.
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OBJECTIVES OF STUDY
To determine and analyze the Market Potential of AVIVA Life Insurance Company. To study and determine the competitor (LIC) position in the market.
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RESEARCH METHODOLOGYMEANING OF RESEARCHBefore understanding Research Methodology, we should understand the meaning of research. Research in common parlance refers to a search for knowledge. One can also define Research as a scientific and systematic search for pertinence information on a specific topic. In fact, research is an art of scientific investigation. MEANING OF RESEARCH METHODOLOGYResearch Methodology, it is a way to systematically solve the research Problem. It may be understood as a science of studying how research is done scientifically. In it we study the various steps that are generally adopted by the researcher in studying his research problem along with the logic behind them. It is necessary for the researcher to know not only the research. Data Collection: - The objectives of the project are such that both primary and secondary data is required to achieve them. So both primary and secondary data was used for the project. The mode of collecting primary data is questionnaire mode and sources of secondary data are various magazines, books, newspapers, & websites etc. Primary data The primary data are those data which are collected afresh and for the first time, and thus happen to be original in character. Secondary data The secondary data on the other hand, are those which have already been collected by someone else and which have already been passing through the statistical process. Sample size 100 people were selected
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DATA ANALYSIS
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Particulars
Yes
No. of respondents
90
No
10
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Particulars
No. of respondents
AVIVA
40
LIC
60
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Particulars
High interest Good image of CO. Growth of the CO. Annual premium is reasonable Maturity benefits
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Particulars
Yes No
No. of respondents
44 56
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No. of respondents
10 16 8 4 6
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No. of respondents
24 14 12 6
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8) In near future, do you think AVIVA will have high growth rate?
Particulars
Agree Neutral Disagree Cant say
No. of respondents
20 26 14 40
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FINDINGS
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90 people saying that investment in insurance sector is good option and 10 are saying no. 40 people have AVIVA policies and 60 have of LIC. 10 people of AVIVA have Whole life plan, 4 have retirement plan, 22 have children plan, 4 have health plan. 56 people are saying that investment in LIC is better than AVIVA, 44 are saying investment in AVIVA is better. Most of the people of both LIC and AVIVA are getting rate of interest 812% Most of the people have children plan of AVIVA. Most of the people invest due to high interest of the policy in AVIVA People have more faith in govt. Companies than the private. 14 people invest in LIC due to its brand loyalty.
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SUGGESTIONS
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2) The company should find out the no. of people who are not having any of the insurance plans through an intensive market research and motivate them to get insured. 3) At some level Company should provide information to the customers about the charges of the policy. 4) Company should target each and every class of the society. 5) Charges should be low of the policies. 6) Annual premium should be reasonable. 7) AVIVA Company should work in systematic way.
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LIMITATIONS
As the sample size is small compared to the total population, therefore there cant be full accuracy. The time was limited Area was limited
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CONCLUSION
Here in this study we see that people have more policies of LIC in comparison to AVIVA. People have more faith in govt. companies than private. So it is necessary for AVIVA LIFE INSURANCE. that it should give more attention to that points or that areas where it lacks for further future growth. Insurance sector is very wide and co. can grow in future.
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Bibliography
www.avivaindia.com www.licindia.com www.google.com http://en.wikipedia.org/wiki/Aviva http://en.wikipedia.org/wiki/Life_Insurance_Corporation_of_India
Newspapers
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ANNEXURE
NOTE: The information that you will provide will be kept confidential and will be used only for academic Purpose.
GENERAL
1. Do you think that investment in insurance sector is good option (a) Yes (b) No
2. Which companys policy do you have? (a) AVIVA Life Insurance 3. Which type of policy you have? (a)Whole Life Plan (e) Golden jubilee plan (b) Retirement Plan (c) Children Plan (d) Health Plan (b) LIC
4. What percentage of interest you get from it? (a) Below 5% (b) 5-8% (c) 8-12% (d) Above 12%
5. Why do you invest in this company? (a) High interest (b) good image (c) Company growth (e) due to maturity benefits
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6. Do you think that investment in AVIVA is better than LIC? (a) Yes (b) No
( If your answer is no then jump to question no. 8) 7. if yes then why? (a) Because AVIVA gives guaranteed fund value at maturity time (b) Growth rate of company is high (d) Risk factor is covered properly (c) AVIVA has more ULIP plans than LIC (e) all above
(f) Any other (please specify)_____________ 8. If no then why? (a) Because LIC is having government stake. (c) It has low premium plans than AVIVA AVIVA (e) Any other (please specify)__________________________ 9. Whenever company launch new product, then any information is given to you about that product? (a) Yes (b) No (b) Brand loyalty of LIC (d) Investment return is higher than
10. In near future AVIVA is having high growth rate. (a) Agree (b) neutral (c) disagree (d) cant say
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