A STUDY OF PRODUCT PROFILE OF

HDFC STANDARD LIFE INSURANCE &

SALES PROMOTION
A PROJECT REPORT

In partial fulfillment for the award of the degree

Of

BACHELOR OF BUSINESS ADMINISTRATION

Submitted by:

Project Guide:

NOOR MOHAMMAD KHAN

B.B.A - V SEM
ENROLL NO-1212151708

CHANDERPRABHU JAIN COLLEGE OF HIGHER STUDIES

& SCHOOL OF LAW

GURU GOBIND SINGH INDRAPRASTHA UNIVERSITY

December 2010

CERTIFICATE

This is to certify that Report entitled A STUDY OF PRODUCT PROFILE OF HDFC

STANDARD LIFE INSURANCE &SALES PROMOTION which is submitted by
NOOR MOHAMMAD KHAN in partial fulfillment of the requirement for the award of
degree BACHELOR OF BUSINESS ADMINITRATION to GGSIP University,
Kashmere Gate, Delhi is a record of the candidate own work carried out by him under
my/our supervision. The matter embodied in this thesis is original and has not been
submitted for the award of any other degree

Date:

Supervisor:

DECLARATION

I, hereby declare that the summer training project project report titled A STUDY OF
PRODUCT PROFILE OF HDFC STANDARD LIFE INSURANCE &SALES
PROMOTION is my own original research work and this report has not been submitted
to any University/Institute for the award of any professional degree or diploma.

(NOOR MOHAMMAD)

Date:

BBA 5th SEM

Place:

ACKNOWLEDGEMENT
First of all I would like to thank the Management at HDFC Standard Life Insurance
Company Ltd for giving me the opportunity to do my two-month project training in their
esteemed organization. I am highly obliged to HDFC for granting me to undertake my
training at Janakpuri Branch
I express my thanks to all Sales Managers under whose able guidance and direction, I
was able to give shape to my training. Their constant review and excellent suggestions
throughout the project are highly commendable.
My heartfelt thanks go to all the executives who helped me gain knowledge about the
actual working and the processes involved in various departments.

PREFACE
There are number forces that make marketing an endlessly changing activity. The
constantly activity sociological, psychological and political environment may represent
the uncontrollable marketing factors. To understanding these factors in better way
marketing research is of utmost importance.
This Research Report has been completed in fulfillment of my Management Program
Bachelor of Business Administration (in the company HDFC STANDARD LIFE
INSURANCE. The objective of my Research was TO KNOW THE PUBLIC
AWARENESS OF FINANCIAL PLANNING IN EMERGING INDIAN MARKET.
HDFC STANDARD LIFE is the name which is working as one of the best private
insurance company in insurance sector.
With such large population and the untapped market of populations insurance happens to
be very big opportunity in India. Today it stands as a business growing at the rate of 1520 percent annually. Together with banking services, It adds about 7 percent to the
countrys GDP. In spite of all this growth the statistics of the penetration of the insurance
in the country is very poor. Nearly 80% of Indian populations are without Life Insurance
cover and the Health Insurance. This is an indicator that growth potential for the
insurance sector is immense in India

Table of Contents
Title

P.g. No

Executive Summary 8
Research Objective. 9
Research Methodology 10-11

Type of Research..10
Data Collection..10
Sampling Unit and Size..10-11
Limitations..11

Chapter - 1 Industry Profile... 12 - 35

Overview and Historical perspective..13

Insurance sector reforms..15
Nature of Industry..18
Indian Insurance Industry..21
Importance of Liberalization..22
Current Scenario..26
SWOT Analysis..34

Chapter 2 Company Profile... 36 - 54

HDFC ltd:
I)
Introduction..37
II)
Subsidiary & Associate Companies..39
HDFC Standard
I)
Introduction..40
II)
Key Personnel..43
III)
Knowledge Management..45
IV)
Product Mix..48
V)
Current Sales..52
VI)
Future Plans..54

Chapter -3 Financial Planning 55-64

Financial Planning..56
360` Financial Planning..57
Consumption Pattern..60
Objectives & Sales Procedure..51

Chapter 4 Data Analysis & Findings 65 - 77

Chapter 5 Conclusion & Recommendation. 78 - 83
Appendices 84 - 94
Questionnaire..85
Glossary..89
Bibliography..94

EXECUTIVE SUMMARY

Overall, the life insurance and pension sector is set for rapid changes and growth in the
years ahead. Delivering service, building trust and being innovative are key areas in
which any company will have to excel in order to do well in the long road ahead.
Different companies will take different approaches and it would be myriad of solutions
that will be found to delight the Indian customer.
Market Research was done through various activities and tele-calling which are discussed
further in the report. Activities led to practical exposure and taught me the aspects of
customer dealing.
Finally, interesting conclusions were drawn out of the data collected regarding the
Awareness of Financial Planning among the people in todays environment.
It was great experience because selling an insurance product demands a great deal
of confidence and product knowledge.

RESEARCH OBJECTIVES

To study the awareness of Financial Planning among the people.

To study the importance of Insurance in todays scenario.

Brand awareness of various

private insurance companies.

Preference among different

investment tools.

Purpose of buying insurance.

Preference

in

choosing

channel for buying life insurance.

Quality of service provided

by agents and clients satisfaction

level.

Customers

perception

of

improvements brought in by entry of

Private Insurance Companies.

To generate leads for Unit Linked Insurance and the Unit Linked Pension Plans,
by interacting with walking and existing customers of the company.

RESEARCH MEHODOLOGY
The study of awareness about Financial Planning among the people and particularly the
insurance sector covers data collection through observation, questionnaire and interview
of consumers.
Type of research:
EXPLORATORY:
Type of research carried out was EXPLORATORY in nature; the objective of such
research is to determine the approximate area where the drawback of the company lies
and also to identify the course of action to solve it. For this purpose the information
proved useful for giving right suggestion to the company.

Data Collection:

Primary data

Secondary data

Data used for the research work was primary in nature.

Sample unit: The research process was done by interacting with number of customers during the
activities performed, which included, markets, cold calling, canopies, etc.

Sample

Design consists of Random Sampling.

Sample size: - 100

10

Method of collection: Field procedure for gathering primary data included observation and interview schedule
in which the questionnaires were filed by the interviewer.

Personal interviews through self administered survey was done to collect the data, market
research was undertaken, that was accomplished by performing various activities
designed.
Research Instrument:
Questionnaire
The questionnaire was formulated by keep in mind the following Points:

Giving the respondents clear comprehension of the question.

Inducing the respondents to co-operate.

Giving instructions as to what is wanted.

Identifying the needs to be known.

Limitations:
The following were the limitations that were there during the course of the study:
1. Limited time period.
2. Less number of respondents.
3. Biasness of the respondents.

11

Chapter 1
Industrys Profile

12

INDUSTRY PROFILE
Overview
With largest number of life insurance policies in force in the world, Insurance happens to be a
mega opportunity in India. Its a business growing at the rate of 15-20 per cent annually.
Together with banking services, it adds about 7 percent to the countrys GDP .In spite of all this
growth the statistics of the penetration of the insurance in the country is very poor. Nearly 80 per
cent of Indian population is without life insurance cover while health insurance and non-life
insurance continues to be below international standards. And this part of the population is also
subject to weak social security and pension systems with hardly any old age income security. This
it-self is an indicator that growth potential for the insurance sector is immense.

Historical Perspective
The insurance came to India from UK; with the establishment of the Oriental Life insurance
Corporation in 1818.The Indian life insurance company act 1912 was the first statutory body that
started to regulate the life insurance business in India. By 1956 about 154 Indian, 16 foreign and
75 provident firms were been established in India. Then the central government took over these
companies and as a result the LIC was formed. Since then LIC has worked towards spreading life
insurance and building a wide network across the length and the breath of the country.

13

Important milestones in the life insurance business in India:

1912: The Indian Life Assurance Companies Act enacted as the first statute to regulate the life
insurance business.
1956: 245 Indian and foreign insurers and provident societies were taken over by the central
government and nationalized. LIC formed by an Act of Parliament- LIC Act 1956- with a capital
contribution of Rs.5 cr. from the Government of India.

Important milestones in the general insurance business in India are:

1907: The Indian Mercantile Insurance Ltd. set up- the first company to transact all classes of
general insurance business.
1957: General Insurance Council, a wing of the Insurance Association of India, frames a code of
conduct for ensuring fair conduct and sound business practices.
1972: The general insurance business in India nationalized through The General Insurance
Business (Nationalization) Act, 1972 with effect from 1st January 1973. 107 insurers
amalgamated and grouped into four companies- the National Insurance Company Limited, the
New India Assurance Company Limited, the Oriental Insurance Company Ltd. and the United
India Insurance Company Ltd. GIC incorporated as a company.

14

Insurance Sector Reforms

Prior to liberalization of Insurance industry, Life insurance was monopoly of LIC.
In 1993, Malhotra Committee- headed by former Finance Secretary and RBI Governor R.N.
Malhotra- was formed to evaluate the Indian insurance industry and recommend its future
direction. The Malhotra committee was set up with the objective of complementing the reforms
initiated in the financial sector. The reforms were aimed at creating a more efficient and
competitive financial system suitable for the requirements of the economy keeping in mind the
structural changes currently underway and recognizing that insurance is an important part of the
overall financial system where it was necessary to address the need for similar reforms. In 1994,
the committee submitted the report and some of the key recommendations included:

Structure
Government stake in the insurance Companies to be brought down to 50%. Government should
take over the holdings of GIC and its subsidiaries so that these subsidiaries can act as independent
corporations.

Competition
Private Companies with a minimum paid up capital of Rs.1 billion should be allowed to
enter the sector. No Company should deal in both Life and General Insurance through a
single entity. Foreign companies may be allowed to enter the industry in collaboration
with

the

domestic

companies.

15

Regulatory Body
The Insurance Act should be changed. An Insurance Regulatory body should be set up. Controller
of Insurance- a part of the Finance Ministry- should be made independent

Investments
Mandatory Investments of LIC Life Fund in government securities to be reduced from 75% to
50%. GIC and its subsidiaries are not to hold more than 5% in any company (there current
holdings to be brought down to this level over a period of time)

Customer Service
LIC should pay interest on delays in payments beyond 30 days. Insurance companies must be
encouraged to set up unit linked pension plans. Computerization of operations and updating of
technology is to be carried out in the insurance industry.

16

STATISTICS (INDIAN & GLOBAL)

This section gives the users important and detailed statistics of the Indian as well as the Global
insurance industry. These statistics would give important insights of where the respective markets
are headed for.

The global life insurance market stands at $1,521.2 billion while the non-life insurance
market is placed at $922.4 billion.

The United States itself accounts for about one-third of the $2443.6 billion global
insurance market and Japan stands next with a 20.62% share.

India takes the 23rd position with US $9.933 billion annual premium collections and a
meager 0.41% share.

Out of one billion people in India, only 35 million people are covered by insurance.

India's life insurance premium as a percentage of GDP is just 1.77 per cent.

The income derived by GIC and its subsidiary companies through investment was
Rs.2491.76 crore and the investable fund generated was Rs.2843 crore in 1999-2000.

Indian insurance market is set to touch $25 billion by 2010, on the assumption of a 7 per
cent real annual growth in GDP.

17

NATURE OF INDUSTRY

The insurance industry provides protection against financial losses resulting from a variety of
perils. By purchasing insurance policies, individuals and businesses can receive reimbursement
for losses due to car accidents, theft of property, and fire and storm damage; medical expenses;
and loss of income due to disability or death.
The insurance industry consists mainly of insurance carriers (or insurers) and insurance
agencies and brokerages. In general, insurance carriers are large companies that provide
insurance and assume the risks covered by the policy. Insurance agencies and brokerages sell
insurance policies for the carriers.
Insurance companies assume the risk associated with annuities and insurance policies and assign
premiums to be paid for the policies. In the policy, the companies states the length and conditions
of the agreement, exactly which losses it will provide compensation for, and how much will be
awarded.
The premium charged for the policy is based primarily on the amount to be awarded in case of
loss, as well as the likelihood that the insurance carrier will actually have to pay. In order to be
able to compensate policyholders for their losses, insurance companies invest the money they
receive in premiums, building up a portfolio of financial assets and income-producing real estate
which can then be used to pay off any future claims that may be brought.

There are two basic types of insurance carriers: Direct and Reinsurance.
Direct carriers are responsible for the initial underwriting of insurance policies and annuities,
while Reinsurance carriers assume all or part of the risk associated with the existing insurance
policies originally underwritten by other insurance carriers.

18

Direct insurance carriers offer a variety of insurance policies.

Life insurance provides financial protection to beneficiariesusually spouses and dependent
childrenupon the death of the insured.
Disability insurance supplies a preset income to an insured person who is unable to work due to
injury or illness
Health insurance pays the expenses resulting from accidents and illness.
An Annuity (a contract or a group of contracts that furnishes a periodic income at regular
intervals for a specified period) provides a steady income during retirement for the remainder of
ones life.
Property-casualty insurance protects against loss or damage to property resulting from hazards
such as fire, theft, and natural disasters.
Liability insurance shields policyholders from financial responsibility for injuries to others or for
damage to other peoples property. Most policies, such as automobile and homeowners
insurance, combine both property-casualty and liability coverage. Companies that underwrite this
kind of insurance are called property-casualty carriers.

What is Life Insurance?

Human life is subject to risks of death and disability due to natural and accidental causes. When
human life is lost or a person is disabled permanently or temporarily, there is a loss of income to
the household. The family is put to hardship. Risks are unpredictable. Death/disability may occur
when one least expects it. There are a number of life insurance products which offer protection
and also coupled with savings.
A Term insurance product provides a fixed amount of money on death during the period of
contract.
A Whole Life insurance product provides a fixed amount of money on death.

19

An Endowment Assurance product provided a fixed amount of money either on death during the
period of contract or at the expiry of contract if life assured is alive.
A Money Back Assurance product provides not only fixed amounts which are payable on
specified dates during the period of contract, but also the full amount of money assured on death
during the period of contract.
An Annuity product provides a series of monthly payments on stipulated dates provided that the
life assured is alive on the stipulated dates.
A Linked product provides not only a fixed amount of money on death but also sums of money
which are linked with the underlying value of assets on the desired dates.
There are a variety of life insurance products to suit to the needs of various categories of people
children, youth, women, middle-aged persons, old people; and also rural people, film actors
and unorganized laborers.
Life insurance products could be purchased from registered life insurers notified by the IRDA.
Insurers appoint insurance agents to sell their products.
As per regulations, insurers have to give the various features of the products at the point of sale.
The insured should also go through the various terms and conditions of the products and
understand what they have bought and met their insurance needs. They ought to understand the
claim procedures so that they know what to do in the event of a loss..

20

INDIAN INSURANCE SECTOR

REGULATORY BODY
Insurance is a federal subject in India. The primary legislation that deals with insurance business
in India is: Insurance Act, 1938, and Insurance Regulatory & Development Authority Act, 1999.

The Insurance Regulatory and Development

Authority (IRDA)
Reforms in the Insurance sector were initiated with the passage of the IRDA Bill in Parliament in
December 1999. The IRDA since its incorporation as a statutory body in April 2000 has
fastidiously stuck to its schedule of framing regulations and registering the private sector
insurance companies.
The other decision taken simultaneously to provide the supporting systems to the insurance sector
and in particular the life insurance companies was the launch of the IRDAs online service for
issue and renewal of licenses to agents. Since being set up as an independent statutory body the
IRDA has put in a framework of globally compatible regulations.

MISSION-IRDA
To protect the interests of the policyholders, to regulate, promote and ensure orderly
growth of the insurance industry and for matters connected therewith or incidental
thereto.

21

IMPACT OF LIBERALISATION
The introduction of private players in the industry has added to the colors in the dull
industry. The initiatives taken by the private players are very competitive and have given
immense competition to the on time monopoly of the market LIC. Since the advent of the
private players in the market the industry has seen new and innovative steps taken by the
players in this sector.
The new players have improved the service quality of the insurance. As a result LIC
down the years have seen the declining phase in its career. The market share was
distributed among the private players. Though LIC still holds the 79% of the insurance
sector but the upcoming natures of these private players are enough to give more
competition to LIC in the near future. LIC market share has decreased from 95% (200203) to 81 %( 2004-05).
LIC has the current market share of 79%.
Among the private players ICICI Prudential has the maximum of appx 5.60%
Followed by Bajaj Allianz (3.27 %) and HDFC Standard Life of about 3.11%.
Below is the table that shows the market share of various players of the industry.

22

The following companies have the rest of the market share of the insurance industry.

COMPANY NAME

MARKET SHARE

LIC
ICICI PRUDENTIAL
BAJAJ ALLIANZ
HDFC STANDARD LIFE
BIRLA SUNLIFE
TATA AIG
SBI LIFE
MAX NEWYORK
AVIVA LIFE
ING VYSYA
OM KOTAK LIFE
AMP SANMAR
METLIFE
RELIANCE LIFE

79.30
5.63
3.27
3.11
2.32
1.45
1.24
0.90
0.82
0.66
0.54
0.38
0.33
0.05

The liberalization of the Indian insurance sector has opened new doors to private
competition and the new and improved insurance sector today promises several new job
opportunities. With private players now in the field, there will be innovative products,
better packaging, improved customer service, and, most importantly, greater employment
opportunities.

There are a number of options to choose from for a career in Insurance. Ideally an
insurance company will have openings in the following fields:

Actuaries

Underwriter

23

Surveyor

Investment

Marketing & Distribution

Actuaries

Evaluates the risk for companies to be used for strategic management decisions.

Actuaries use their analytical skills to predict the risk of writing insurance policies
through the use of mathematical, statistical and economic models.

An actuary not only fixes the premium rates for new products, but also revises
both

products

and

prices.

They

calculate

costs

to

assume

risk

Underwriters

Insurance underwriters review insurance applications and decide whether they

should be accepted or rejected based on the degree of risks involved in insuring
the people or objects of concern.

In the life insurance business, an underwriter is expected to filter the "bad or

substandard lives". Whereas, in the general insurance segment, he takes care of
risk management.

Agents/Brokers:

Insurance agents may work for one insurance company or as independent agents
selling for several companies.

Insurance agents and brokers can find openings in the health insurance sector,
financial planning services, retirement planning counseling or even provide other
services, for e.g. sell mutual funds, annuities etc.

Surveyor/Loss Assessor:

Surveyors are professionals who assess the loss or damage and serve as a link
between the insurer and the insured.

They usually function only in non life business.

24

Their job is to assess the actual loss and avoid false claims.

Sales/Marketing:
And who can forget the guys who make and break a brand. They would be required in
a large number in order to promote the number of products that will be launched by
numerous companies in the insurance sector.

CURRENT SCENARIO OF THE INDUSTRY

INSURANCE MARKET IN INDIA
India with about 200 million middle class household shows a huge untapped potential for
players in the insurance industry. Saturation of markets in many developed economies
has made the Indian market even more attractive for global insurance majors. The

25

insurance sector in India has come to a position of very high potential and
competitiveness in the market.
Innovative products and aggressive distribution have become the say of the day. Indians,
have always seen life insurance as a tax saving device, are now suddenly turning to the
private sector that are providing them new products and variety for their choice. Life
insurance industry is waiting for a big growth as many Indian and foreign companies are
waiting in the line for the green signal to start their operations. The Indian consumer
should be ready now because the market is going to give them an array of products,
different in price, features and benefits. How the customer is going to make his choice
will determine the future of the industry.
CUSTOMER SERVICE
Consumers remain the most important centre of the insurance sector. After the entry of
the foreign players the industry is seeing a lot of competition and thus improvement of
the customer service in the industry. Computerization of operations and updating of
technology has become imperative in the current scenario. Foreign players are bringing in
international best practices in service through use of latest technologies. The one time
monopoly of the LIC and its agents are now going through a through revision and
training programs to catch up with the other private players. Though lot is being done for
the increased customer service and adding technology to it but there is a long way to go
and various customer surveys indicate that the standards are still below customer
expectation levels.
DISTRIBUTION CHANNELS
Till date insurance agents still remain the main source through which insurance products
are sold. The concept is very well established in the country like India but still the
increasing use of other sources is imperative. It therefore makes sense to look at wellbalanced, alternative channels of distribution.
LIC has already well established and have an extensive distribution channel and
presence. New players may find it expensive and time consuming to bring up a

26

distribution network to such standards. Therefore they are looking to the diverse areas of
distribution channel to have an advantage. At present the distribution channels that are
available in the market are:
Direct selling/Retail
Corporate agents
Group selling
Brokers and cooperative societies
Banc assurance
DIRECT SELLING/RETAIL
Direct selling or retail business is carried out by Agents of the company. This is the
main distribution channel due to the complexity of most insurance products
(Endowment, Whole of Life, Unit Linked). This tends to be the focus of most companies
due to its past success as well as its ability to deliver the right advice. However, this
channel can be expensive and it is a time consuming sales process. An agent is the public
face of an Insurance company. Hence it is important that this face is always smiling and
presentable and the facts and figures at his/ her command are updated and correct.
An agent should be a pleasing personality with complete knowledge about the various
plans and solutions which the company has to offer and must also understand the
customers psychology well to deal in an efficient manner.

BANCASSURANCE
Banc assurance is the distribution of insurance products through the bank's distribution
channel. It is a phenomenon wherein insurance products are offered through the
distribution channels of the banking services along with a complete range of banking and
investment products and services. To put it simply, Banc assurance, tries to exploit
synergies between both the insurance companies and banks.
Advantages to banks

27

 Productivity of the employees increases.

By providing customers with both the services under one roof, they can
improve overall customer satisfaction resulting in higher customer retention
levels.

Increase in return on assets by building fee income through the sale of

insurance products.

Can leverage on face-to-face contacts and awareness about the financial

conditions of customers to sell insurance products.

Banks can cross sell insurance products e.g.: Term insurance products with
loans.

Advantages to insurers

Insurers can exploit the banks' wide network of branches for distribution of
products. The penetration of banks' branches into the rural areas can be utilized to
sell products in those areas.

Customer database like customers' financial standing, spending habits, investment

and purchase capability can be used to customize products and sell accordingly.

Since banks have already established relationship with customers, conversion

ratio of leads to sales is likely to be high. Further service aspect can also be
tackled easily.

Advantages to consumers

Comprehensive financial advisory services under one roof. i.e., insurance services
along with other financial services such as banking, mutual funds, personal loans
etc.

Enhanced convenience on the part of the insured

Easy accesses for claims, as banks are a regular go.

28

Innovative and better product ranges

WHAT DOES LIFE INSURANCE HAVE TO OFFER?

Life insurance is many different things to many different people. For some, it is a
premium to be paid on time. For others it offers liquidity since cash can be borrowed
when needed. For the investment-minded, it denotes a constantly growing capital account
and numerous other benefits.

29

The contractual guarantee is the promise to pay, backed by one of the oldest and most
stably regulated financial industry operating in the Indian sub-continent today.
1) Insurance Buys Time and Money
People like to refer to life insurance as time insurance, the reason being that life insurance
proceeds are paid to the insured's beneficiaries in case of death. The money proffered by
life insurance helps buy time to adjust to the change of circumstances. Insurance provides
large amounts of cash that will keep the lifestyle for the survivors the way it was before
the insured's death.
2) Insurance Offers Peace of Mind
For the person who buys an insurance policy, it offers absolute and complete peace of
mind. He or she knows that the decision made by him will provide sound benefits in the
future, whether or not the individual may live to see it.
3) Multiple Applications
The future is uncertain for each and every one. No one knows how long he or she will
live. The investment benefit is paid to the insured's beneficiaries after his death or it can
be used during the life as well. Life insurance policy owners can turn to the cash value of
the policy in case of a financial emergency when all avenues are either blocked or denied.

4) Enduring Elasticity
Since life insurance is flexible enough to serve several needs, the insured can keep
several long-term goals in mind once he or she invests in the insurance plan. The cash
value of the policy can be allocated towards augmenting the monthly income during the
retirement years. Leisure years should be turned into pleasure years. Permanent life
insurance is designed on the concepts of long-term flexibility.
5) Financial Security
30

The insurance policy offers contractual guarantees to people looking for peace of mind
when they buy life insurance. Life insurance offers complete financial security. The
purchase of life insurance demonstrates concern for a family's future financial well being.
6) Regard for Family
The purchase of life insurance clearly displays care and concern for the people the policy
owner loves.
7) Insurance is Safer
No financial institution can do what life insurance does. No industry can back its
products with reserves and surplus as sound as those of the insurance industry.
The proof of strength and safety that insurance companies have ensured even under the
most adverse of conditions is a matter of pride for the entire insurance industry. For
generation after generation, life insurance has been acclaimed as the very benchmark of
security against which the other industries are measured.

OPPORTUNITIES FOR INSURANCE COMPANIES

In the now open sector on insurance, the following is what I feel will determine the
success of the company in particular and the industry in general:

A change in the attitude of the population

Indians have always been wary of employing their hard-earned money in a venture that
will pay them on their death. Insurance has always been used as a Tax saving tool. No
31

more, no less. It is upon the insurers to educate the people to secure/insure their future
against any unknown calamity and make a shield around their families and businesses.

An open and transparent environment created under the IRDA.

The reason for this being on the top of our understanding is that when ever we have seen
any sector open up in India there are always grey areas and unsure policies. These are not
exactly what any player, be it Indian or foreign, looks for. It creates an air of uncertainty
in all the decision making process. Insurance as a sector requires players who are strong
financially and are willing to wait for returns. Their confidence can be bolstered only if
there is an open and a transparent policy guidelines. This will also help the consumers
feel safe that the regulatory is an active one and cares to do everything possible to keep
things under control and help the insurance environment grow maturely.

A well-established distribution network.

To cater to the largest democracy in the world is by no means a

cakewalk. Insurance profits are directly related to number of insured
and this is in turn related to the reach.

Trained professionals to build and sell the product.

It is said that the insurance agent is the best salesman in the world. He makes you pay,
regularly, an amount promising to pay back only on your death. Thus the players will
require an excellent sales team to sell their products in the now competitive environment.

32

Encouragement of new and better products and letting the hackneyed ones
die out.

This will itself ensure the market grows. And that every class/society gets a product that
best

suits

them.

SPECIAL PROVISIONS
The Income Tax Act and Life Insurance policies

Under Section 10(10D), any sum received under a Life Insurance policy (not being a
Key Man policy) is also exempt from taxation. But it is wise to remember that
Pensions received from Annuity plans are not exempted from Income Tax.

Section 80C provides a deduction up to Rs.1,00,000/- to an individual assessee for

any amount paid as a premium.

POLICYHOLDERS GRIEVANCES
Policyholders may have complaints against insurers either in respect of their policies or
their claims. As per Regulations for Protection of policyholders interests, 2002, every
insurer should have in place, a grievance redressal system to address the complaints of
policyholders. The IRDA has a Grievance Redressal Cell which plays a facilitative role
by taking up complaints against insurers with the respective companies for speedy
resolution. The IRDA however does not adjudicate on complaints.

SWOT ANALYSIS OF INSURANCE INDUSTRY

STRENGTH

33

1. Best returns with the added advantage of 100% life insurance coverage.
2. Good option for new investors into the market as all the money is invested
by best fund managers so with less knowledge also they can earn good
returns.
3. Best commission charges paid to the agents which vary from 12% to 35%
which is much higher as compared to mutual funds i.e. , only 2-2.5%.
WEAKNESS
1. HDFC SLIC could not able to match LIC in remote areas services.
2. Misleading facts given by life advisors about the returns of ULIPs.
3. Hidden charges taken by the companies.
4. Less Promotional Campaigns.
OPPORTUNITY
1.

80 percent of Indian population is still under insured. So there is a

big opportunity for insurance companies.

2. As the stock market can be under the mark any time so it can bring loss to
the investors but as in ULIPs there is proper mixture of debt securities and
equity so the loss is incurred during dark trading days also.
3. Unit-linked products are exempted from tax and they provide life insurance.
4. Increasing consumer awareness about Insurance and its use.

THREAT
1. Cannibalism within the industry by providing misleading figures to the investors.

34

2. Govt.s instability has a long term repercussions affecting companys

policies and its

growth.

CONCLUSION

With largest number of life insurance policies in force in the world, Insurance happens to
be a mega opportunity in India, which is growing at the rate of 15-20 per cent annually.
Nearly 80 per cent of Indian population is without life insurance cover while health
insurance and non-life insurance continues to be below international standards. And this
part of the population is also subject to weak social security and pension systems with
hardly any old age income security.
And also the changing attitude and increasing awareness level of the population is an
indicator that growth potential for the insurance sector is immense

35

Chapter 2
Companys Profile

36

COMPANYS PROFILE
INTRODUCTION
Helping Indians experience the joy of home ownership.
Incorporated in 1977 with a share capital of Rs. 10 crores, HDFC has since emerged as
the largest residential mortgage finance institution in the country. The corporation has had
a series of share issues raising its capital to Rs. 119 crores. HDFC operates through 75
locations throughout the country with its Corporate Headquarters in Mumbai, India.

OBJECTIVES AND BACKGROUND

Background
HDFC was incorporated in 1977 with the primary objective of meeting a social need
that of promoting home ownership by providing long-term finance to households for their
housing needs. HDFC was promoted with an initial share capital of Rs. 100 million.
Business Objectives
The primary objective of HDFC is to enhance residential housing stock in the country
through the provision of housing finance in a systematic and professional manner, and to
promote home ownership. Another objective is to increase the flow of resources to the
housing sector by integrating the housing finance sector with the overall domestic
financial markets..

ORGANIZATION AND MANAGEMENT

37

HDFC is a professionally managed organization with a board of directors consisting of

eminent persons who represent various fields including finance, taxation, construction
and urban policy & development. The board primarily focuses on strategy formulation,
policy and control, designed to deliver increasing value to shareholders.
FOUNDER Mr. Hasmukhbhai Parekh
BOARD OF DIRECTORS
Mr. D S Parekh Chairman
Mr. Keshub Mahindra Vice Chairman
Ms. Rene S. Karnad Executive Director
Mr. K M Mistry Managing Director
Mr. Shirish B. Patel
Mr. B S Mehta
Mr. D M Sukthankar
Mr. D N Ghosh
Dr. S A Dave
Mr. S Venketaraman
Dr. Ram S. Tarneja
Mr. N M Munjee
Mr. D M Satwalekar

HDFC has a staff strength of 1029, which includes professionals from the fields of
finance, law, accountancy, engineering and marketing.

SUBSIDIARY & ASSOCIATE COMPANIES

HDFC Bank

38

HDFC Mutual Fund

HDFC Standard Life

Intelenet Global Services Ltd.

HDFC Chubb General Insurance Company Ltd.

HDFC Reality

Other Companies Co-Promoted by HDFC

HDFC Trustee Company Ltd.
HDFC Developers Ltd.
HDFC Venture Capital Ltd.
HDFC Ventures Trustee Company Ltd.
HDFC Investments Ltd.
HDFC Holdings Ltd.
Home Loan Services India Pvt. Ltd.
Credit Information Bureau (India) Ltd

HDFC STANDARD LIFE INSURANCE

39

HDFC Standard Life Insurance Company Limited was one of the first companies to be
granted license by the IRDA to operate in life insurance sector. Each of the JV player is
highly rated and been conferred with many awards. HDFC is rated 'AAA' by both
CRISIL and ICRA. Similarly, Standard Life is rated 'AAA' both by Moody's and
Standard and Poors. These reflect the efficiency with which HDFC and Standard Life
manage their asset base of Rs. 15,000 Cr and Rs. 600,000 Cr respectively.
HDFC Standard Life Insurance Company Ltd was incorporated on 14th August 2000.
HDFC is the majority stakeholder in the insurance JV with 81.4 % stake and Standard
Life has a stake of 18.6%. Mr. Deepak Satwalekar is the MD and CEO of the venture.

THE PARTNERSHIP:

40

HDFC and Standard Life first came together for a possible joint venture, to enter the Life
Insurance market, in January 1995. It was clear from the outset that both companies
shared similar values and beliefs and a strong relationship quickly formed. In October
1995 the companies signed a 3 year joint venture agreement.
Around this time Standard Life purchased a 5% stake in HDFC, further strengthening the
relationship.
In October 1998, the joint venture agreement was renewed and additional resource made
available. Around this time Standard Life purchased 2% of Infrastructure Development
Finance Company Ltd. (IDFC). Standard Life also started to use the services of the
HDFC Treasury department to advise them upon their investments in India.
Towards the end of 1999, the opening of the market looked very promising and both
companies agreed the time was right to move the operation to the next level. Therefore, in
January 2000 an expert team from the UK joined a hand picked team from HDFC to form
the core project team, based in Mumbai.
Around this time Standard Life purchased a further 5% stake in HDFC and a 5% stake in
HDFC Bank.

COMPANYS MISSION:

41

To be the top life insurance company in the market.

This not only means being the largest or the most productive company in the market, but
a combination of several things like

Customer service of the highest order

Value for money for customers

Professionalism in carrying out business

Innovative products to cater to different needs of different customers

Use of technology to improve service standards

Increasing market share

COMPANYS VALUES:

SECURITY: Providing long term financial security to our policy holders will be
our constant endeavor. This is done by offering life insurance and pension
products.

TRUST: Company appreciates the trust placed by our policy holders in us.
Hence, company will aim to manage their investments very carefully and live up
to this trust.

INNOVATION: Recognizing the different needs of our customers, company will

be offering a range of innovative products to meet these needs.

Companys mission is to be the best new life insurance company in India and these are
the values that will guide us in this.

KEY MANAGEMENT PERSONNEL

42

Chairman
Mr. Deepak S. Parekh
Board Of Directors
Mr. K. M. Mistry
Ms. Renu S. Karnad
Mr. A. M. Crombie
Ms. Marcia D. Campbell
Mr. Norman Keith Skeoch
Mr. G. R. Divan
Mr. G. N. Bajpai
Mr. Ranjan Pant
Mr. Ravi Narain

Managing Director & CEO

Mr. D. M. Satwalekar
AUDIT COMMITTEE
Haribhakti & Company
Chartered Accountants
B.K. Khare & Co.
Chartered Accountants

Bankers

43

HDFC Bank Ltd.

Union Bank of India
Indian Bank
The Saraswat Co-operative Bank Ltd.
Federal Bank

KNOWLEDGE MANAGEMENT
44

When Should One Go For Insurance?

Your insurance need will change as your life does, from starting to work to enjoying your
golden years and all the stages in between. Each one of these stages may pose a different
insurance need/cover for you. In this section, we have drawn up the basic life stages and
help you analyze various insurance needs accordingly.

Stage 1 : Young and Single

45

This is an important stage where one lays down the foundation of a successful life ahead.
Take advantage of the time and power of compounding to ensure that you build up your
dreams, so start saving early.
Your needs:
o Save for a home and wedding
o Tax Planning
o Save for Golden years

Stage 2 - Just Married

Marriage brings about a significant change. New dreams and new opportunities also
bring in additional responsibilities. While both of you look forward to a happy and secure
life , it is equally important to ensure that eventualities dont come in the way of shaping
your dreams.
Your needs:
o Planning for home / securing your home loan
liability
o Save for vacation
o Save for your first child

Stage 3 - Proud Parents

46

Once you have children, your need for life insurance is even more. You need to protect
your family from an untoward incident. Ensure your protection umbrella takes into
account the future cost of securing your childs dream. You will want life to go on for
your loved ones, and having enough life insurance is a way to help ensure that.
Your needs:
o Provide for childrens education
o Safeguarding family against loan liabilities
o Savings for post-retirement

Stage 4 - Planning for Retirement

While you are busy climbing the ladder of success today, it is important for you to take
time and plan for your life after retirement. Having an early start for retirement planning
can make a significant difference to your savings. Think about your golden years even
before you have reached them. The key is to think ahead and plan well using your time
and money.
Your needs:
o Provide for regular income post retirement
o Immediate Tax benefits
o Lead a secure, independent and comfortable
life style after retirement

47

PRODUCT MIX
At HDFC Standard Life, there is a bouquet of insurance solutions to meet every need.
They cater to both, individuals as well as to companies looking to provide benefits to
their employees.
For individuals, they have a range of protection, investment, pension and savings plans
that assist and nurture dreams apart from providing protection. One can choose from a
range of products to suit ones life-stage and needs.
For organizations they have customized solutions that range from Group Term Insurance,
Gratuity, Leave Encashment and Superannuation Products.

PRODUCTS FOR INDIVIDUALS

PROTECTION - You can protect your family against the loss of your income or the
burden of a loan in the event of your unfortunate demise, disability or sickness. These
plans offer valuable peace of mind at a small price.
Plans :

Term Assurance Plan

Loan Cover Term Assurance Plan.

INVESTMENT - This includes a plan that is well suited to meet your long term
investment needs. We provide you with attractive long term returns through regular
bonuses.

48

Plan :

Single Premium Whole Of Life

PENSION - Our Pension Plans help you secure your financial independence even after
retirement and live a relaxed retired life.

Plans :

Personal Pension Plan

Unit Linked Pension
Unit Linked Pension Plus

SAVING - Our Savings Plans offer you flexible options to build savings for your future
needs such as buying a dream home or fulfilling your childrens immediate and future
needs.
Plans :

Endowment Assurance Plan,

Unit Linked Endowment,
Unit Linked Endowment Plus,
Money Back Plan,
Childrens Plan,
Unit Linked Youngstar,
Unit Linked Youngstar Plus .

GROUP PLANS
49

HDFC Standard Life has the most comprehensive list of products for progressive
employers who wish to provide the best and most innovative employee benefit solutions
to their employees. They offer different products for different needs of employers ranging
from term insurance plans for pure protection to voluntary plans such as superannuation
and leave encashment.
Plans: Group Term Insurance with Riders
Group Term Insurance with Profit-Share
Group Unit-Linked Plan
For Gratuity
For Defined Benefit Superannuation
For Defined Contribution Superannuation
Group Leave Encashment Plan

RURAL CUSTOMER - According to research findings, there is keenness among rural

customers to invest in savings cum protection plan with a term of five years, especially, if
the premium amount is low and affordable. Keeping this in view, HDFC STD> LIFE has
plans like:
Plans : Bima Bachat Yojana.
Super Bachat Yojana

50

DISTRIBUTION OFFICES
In addition to the corporate office at Mumbai, your Company had 169 offices in over 135
cities/towns in the country. It has a widespread network of Financial Consultants,
Corporate Agents and Brokers servicing customers in these cities and towns.

FINANCIAL CONSULTANTS
The number of licensed Financial Consultants appointed by your Company increased
from over 23,000 in the previous year to over 33,000 in the current year. During the year,
the Company continued its

51

CURRENT SALES- HDFC Standard Life

HDFC STANDARD LIFE PACING AHEAD
The Financial Express

15th May 2006

HDFC Standard Life has recorded a strong year-on-year growth of 112% for the period
April-March 2005-06, in comparison to the same period 2004-05, with a new business
first year premium of Rs 1,029 crore.
In terms of effective premium income (EPI), which gives a 10% value to a Single
Premium policy and is an internationally-accepted indicator of an insurance company's
performance, the EPI grew by 103% to Rs 887 cr from Rs 436 crore.
HDFC Standard Life's growth in new business is a manifestation of the number of lives
insured as well as an increase in the average premium. For the individual business,
volume measured by the number of lives insured witnessed a 32% growth.
The average premium also grew by 62% to Rs 27,500 in 2005-06 from Rs 17,000 in
2004-05.
During the year the company issued over 3,97,000 policies and has covered more than
5,80,000 lives

52

Table Showcasing Financial Results:

April-March
Parameters

Total received premium

April-March

2004-05

2005-06

Growth

(Rs. Cr)

(Rs. Cr)

(%)

668.40

1532.21

129.23

i. New Business

486.15

1028.94

111.65

ii. Renewal

182.25

503.27

176.14

436.08

887.30

103.47

49.40

135.15

173.58

Effective Premium Income

(Total)
Group Business Premium
(EPI)

53

FUTURE PLANS
HDFC has always been market-oriented and dynamic with respect to resource
mobilization as well as its lending program. This renders it more than capable to meet the
new challenges that have emerged. Over the years, HDFC has developed a vast client
base of borrowers, depositors, shareholders and agents, and it hopes to capitalize on this
loyal and satisfied client base for future growth. Internal systems have been developed to
be robust and agile, to take into account changes in the volatile external environment.
HDFC has developed a network of institutions through partnerships with some of the best
institutions in the world, for providing specialized financial services. Each institution is
being fine-tuned for a specific market, while offering the entire HDFC customer base the
highest standards of quality in product design, facilities and service.

54

Chapter 3
Financial Planning

55

FINANCIAL PLANNING
A comprehensive financial advisory service involving financial strategies, tax,
corporate/trust structures, estate planning, legal issues, family law, asset allocation, asset
protection and investment advice.

Financial Planning takes into account:

Desired asset allocation, risk profile and return expectations.

Building cash flows correlating all expenses and income. Inflation and outflows due
to loans are considering in building the financial plan.

Future goals like retirement, housing and children's education / marriage or other
needs.

Why do you need Financial Planning?

You may have many dreams, needs and desires. For example, you could be dreaming of:

Owning a new car,

Buying a dream house,

Providing your children with the best education,

Planning a grand wedding for your children

Having a great time after your retirement

But in today's world of skyrocketing costs and increasing inflation, how many of these
dreams can you hope to turn into reality? By planning well, you can utilize your limited
resources to the fullest.

56

EXPERIENCE THE POWER 360 FINANCIAL PLANNING

The only thing permanent in life is change. Times change. People change. So does life.
You expect life to be much better tomorrow than it is today. Tomorrow, you hope to fulfill
all your dreams and aspirations. But what happens if things take an untoward turn? Or, if
there is an eventuality? Perhaps it's time for you to change the way you plan your
investments...

How will 360

Financial Planning help?

Instead of investing

in an ad-hoc manner, 360

Financial Planning

helps you take a holistic,

all-round

Briefly,

view.

360

Financial

Planning comprises:

Investment Planning

Cash Flow Planning

Tax Planning

Insurance Planning

Children Future Planning

Retirement Planning

INVESTMENT PLANNING: To make your wealth grow

57

Everyone needs to save for a rainy day. Once you have saved enough to take care of
emergencies, you should start thinking about investing and to make your money grow.
Investment Planning Service includes:

Risk Profiling

Asset Allocation and Portfolio Construction

Creation and Accumulation of Wealth through Systematic Investment Plans (SIP)

Regular review of progress and Portfolio Rebalancing

CASH FLOW PLANNING: To provide for assets and meet the periodic cash
requirements
In simple terms, cash flow refers to the inflow and outflow of money. It is a record of
your income and expenses.
Cash flow planning refers to the process of identifying the major expenditures in future
(both short-term and long-term) and making planned investments so that the required
amount is accumulated within the required time frame.
TAX PLANNING: To save on taxes and increase your income
Proper tax planning is a basic duty of every person which should be carried out
religiously.
According to the Income Tax Act, 1961, One will be eligible for Tax Benefits under
Section 80C and Section 10(10D) of the act.
One has to compare the advantages of several tax saving schemes and depending upon
your age, social liabilities, tax slabs and personal preferences, decide upon a right mix of
investments, which shall reduce your tax liability to zero or the minimum possible.
INSURANCE PLANNING: To protect yourself, your family and your Assets.

58

"Insurance is not for the person who passes away, it for those who survive," goes a
popular

saying

that

explains

the

importance

of

Insurance

Planning.

It is extremely important that every person, especially the breadwinner, covers the risks to
his life, so that his family's quality of life does not undergo any drastic change in case of
an unfortunate eventuality. Insurance Planning is concerned with ensuring adequate
coverage

against

insurable

risks.

CHILDREN'S FUTURE PLANNING: To give your children a financially secure

future
Like every parent, you too must be overjoyed to watch your child grow. All parents want
to give the best possible upbringing to their children. This includes good education and
security, in case of any eventuality. Soon, your little bundle of joy will grow up, and it
will be time to provide for his or her higher education and wedding.
The purpose of Children's Future Planning is to create a corpus for foreseeable
expenditures such as those on higher education and wedding, and to provide for an
adequate security cover during their growing years.

RETIREMENT PLANNING: Because retirement is a time to relax, not to get worried

Some like it. Some dont. But retirement is a reality for every working person. Most
young people today think of retirement as a distant reality.
However, it is important to plan for your post-retirement life if you wish to retain your
financial independence and maintain a comfortable standard of living even when you are
no longer earning. This is extremely important, because, unlike developed nations, India
does not have a social security net.

59

CONSUMPTION PATTERN

Food & Grocery

1.60%
0.80% 4.60%
2.10%

Home Textiles
Personal Care

7.60%

Saving & Investment

2.30%

40.10%

10.80%

Clothing
Consumer Durable
Vacation
Eating out
Footwear

3.90%

Movies & Theater

6.60%
8.80%

4.10%

6.90%

Entertainment
Accessories
Books & Music

*Source-Business world magazine 2nd week April 2008

The consumption pattern is determined by the income so more would be the income more
would be the consumption. The consumption though can differ in terms of areas where
the money is actually spent. The above representation tells us the consumption pattern of
the consumer in India i.e. where do they actually invest their money and in what
proportion do they spend in various areas. The chart shows that people are spending
6.9% of their savings into savings and investments.

60

OBJECTIVE: To generate leads for various Unit Linked Plans offered

by the company, by interacting with walking and existing customers
and to know the awareness level of Financial Planning among them.

SALES PROCEDURE :

FIRST
CONVERSATION

Follow Up

APPOINTMENT
Follow Up

FILLING THE
PROPOSAL FORM

COLLECT THE
REQUIRED
DOCUMENTS AND
THE FIRST
PREMIUM

61

STEP 1:

FIRST CONVERSATION WITH A KNOWN OR

AN UNKNOWN CUSTOMER

This is the first time, when you interact with a person and try to get the information from
him about the industry or the company and understand the customers insight i.e. what
actually does a customer expects from the companies.
The objective was to know the awareness about Financial Planning among the customers
and this was done by getting a questionnaire filled by the people. The various activities
performed were:

1) DELHI METRO : Here we interacted with the commuters &

collected the data.
2) MARKETS : (Cannaught Place & Karol Bagh) During this
activity, we interacted with the shopkeepers as well as the walking
people regarding their views about the industry.
3) CANOPY AT NOIDA : This activity was designed to target the people working
in BPOs and other IT companies.
4) TELE-CALLING: This was random calling from the data base provided by
the company and the aim was to collect

information

from them.
5) CORPORATE PRESENTATION: A presentation was

arranged for

the

employees of VED RAM AND SONS (Paras), to make them aware about the
importance of Financial Planning in todays

unpredictable environment.

62

STEP 2: APPOINTMENT
All the potential and interested customers of all the activities performed are then followed
up and an appointment is fixed for further details.
The motive is to explain the customer in detail, about the various plans offered by the
company. The customer is informed about the procedure and the options he can opt for
like:
1) Choose the premium he wish to invest
2) Select the Premium Payment Option i.e. annual mode, half yearly
mode, quarterly mode, or monthly mode.
3) Choose the amount of protection i.e. the sum assured, he desires.
4) With Maturity Benefit, choose the additional benefits like:
a) Life option Death Benefit
b) Life & Health option Death Benefit + Accidental Death
Benefit
c) Extra Life & Health option Death Benefit + Critical Illness
Benefit + Accidental Death Benefit
5) Choose the Investment funds or funds one desires.
The various funds available are:

Liquid Fund

Secure Managed Fund

Defensive Managed Fund

Balanced Managed Fund

Equity Managed Fund

Growth Fund

63

6) Other information like:

a) Tax Benefit
b) Various Charges
c) Switching option
d) Surrendering
e) Terms & Conditions etc.

STEP 3: FILLING THE PROPOSAL FORM

After the second step, the interested customers are required to fill the proposal form
which requires the following information:
b) Personal details of the policy holder,
c) Personal details of Beneficiary or Nominee
d) The Premium amount selected
e) The Term of the policy
f) The Fund choice for investment

STEP 4 : COLLECTING THE DOCUMENTS

Once the form is filled all the necessary documents are collected like :
a) Address proof,
b) DOB certificate etc.
And also the first premium amount in form of cheque or cash is collected.
Within 15 days, the policy documents reach the customers place, and the customer is
required to read the documents carefully.

64

Chapter 4
Analysis
And
Finding

65

SAMPLE SIZE: 100

Sample was collected on Random Basis

AGE DISTRIBUTION

Highest number of Respondents (41%) from Age group 31 to 45 yrs.

35% respondents are of age below 30 yrs, small percentage of which is
unemployed.

66

MARITAL STATUS

Total number of single respondents 23

Total number of married respondents 77

67

INCOME DISTRIBUTION

Highest, 16 respondents in income bracket below 1.5 lacs, which mainly

comprises of age group below 30 years.
Respondents of the age group 31-45 yrs, lie in all the income slabs.
Minimum, 6 respondents in income bracket of above 5 lacs, which are in age
group of above 45 years.

68

ARE YOU AWARE ABOUT FINANCIAL PLANNING ?

98% of the respondents were aware about Financial Planning.

69

BRAND RECALL

100 % respondents mentioned first name to be LIC

Among private players, ICICI Prudential has the highest
Brand Recall i.e. 96%
HDFC Standard life has Brand Recall of 92%

70

INVESTMENT PREFERENCE

21% respondents prefer banks and post office schemes as an investment tool
preference.
Respondents of age group below 30 years prefer Mutual Funds, as they provide
higher returns than banking investment tools.
Insurance ranks 2nd as an investment tool choice, which itself includes various
protection, saving and pension plans.
Govt. Bonds & securities are mostly preferred by people of higher age group
rather than young generation.
Property as an investment option is most lucrative choice. However it is important
to mention that majority of respondents are in age group of above 30 years and
people with high income bracket prefers to invest in Real Estate.

INSURED PERCENTAGE
71

87 % of respondents were insured on own life and on life of their family

members.

So we had 13 % of potential customers to approach.

COMPANY PREFERENCE
72

55% of respondents have insurance cover provided by LIC only

15% of respondents have insurance cover provided by Private Cos. only

Whereas 30% have got insurance from both LIC and Private Companies.

Total number of LIC policies sums up to 85% and total number of Pvt.
Companies policies sold sums up to 45%.

Data provides that though LIC is still got a maximum market share but Private
Companies are making a fast move in the market.

73

TYPE OF PLAN BOUGHT

Money back Policies have been most popular and also the endowment plans.
As people today are more aware about financial planning, so people of the age 30
years have planned for their Retirement now.

ULIPs are fast gaining popularity as they provide investment

benefit with Insurance.

PURPOSE OF BUYING INSURANCE

74

 Risk cover remains the most important purpose for buying insurance followed
by option as Tax saving tools.
Retirement Planning in a early period is also gaining the market share.
ULIPs are responsible for increasing popularity of insurance as an investment
tool

DISTRIBUTION CHANNEL PREFERENCE

75

 According to the data, known/current Advisors remains the 1 st choice for buying
Insurance.
In retail also known Advisors are preferred over referrals.
Bancassurance is emerging as a popular option for buying life Insurance.
Group insurance is a channel which customers expect but it is not so popular
because only few employers have taken the initiative.
Buying insurance from a unknown person or getting a phone call is still not
preferred by most of the people

76

THE BARRIERS FACED DURING THE PROCESS:

The Attitudinal Barriers To Purchasing ..
Death - a taboo topic for discussion
Its quite ashubh talking about death
The belief in karma destiny
Jo kismet me likha hai wohi hoga, hum kya kar sakte hai
The Product/ Service Barriers
Liquidity
What if I need my money urgently for some medical illness?
Service quality of the Agent
He disappears after he takes the first premium
Sanctity of the contract
What if my dependents do not get the money once I die?

Charges
Its better to invest in Mutual Funds, the charges there are very less

The Other Barriers.

Unsure about Pvt. Companies

Low rate of return

Better to put my money in PPF, at least I get fixed returns

Money gets tied up

High premiums

77

Chapter 5
Conclusion
&
Recommendations

78

CONCLUSION
The various conclusions drawn from the project are:
There has been a tremendous change in the insurance industry. And with it there has been
continuous growth in this sector both in Indian as well as world context.
The opening up of the insurance sector has changed the whole look of the industry. While
the LIC, in order to face the competition is coming up with new strategies. New private
players are leading the sector due to their strategic management and tailored made
projects.
From the research, we also conclude that though the awareness and people opting for LIC
plans are more as compared to other private players but the latter are gaining momentum
in the market day by day.
The demand for insurance is likely to increase with rising per-capita income, rising
literacy rates, and growth of service sector. In-fact opening up of the insurance sector is
an integral part of the liberalization process being pursued by many developing countries.
Life insurance as a form of protection is the single-most important financial product any
earning member of a family must have. Having said this, a well-diversified portfolio is
one of the first rules of financial planning, and as such one should consider different
instruments as the ability to save increases.
Possible investment options range from bank deposits and government small saving
schemes to mutual funds, stocks and property.
Certainly ULIPs successfully combine the first and most important need of protection,
with savings, and hence are an excellent addition to your portfolio.
All financial products have a certain amount of risk and charges, be it a mutual fund,
property, or even a bank deposit. It would be unrealistic to assume that the features and
benefits of a ULIP come at no cost, though the charges are considerably lower than that
of a traditional product.
In fact, the very reason the product is transparent is because the customer knows the
charges and risks.

79

There is no right or wrong in this. The success of marketing insurance depends on

understanding the social and cultural needs of the target population, and matching the
market segment with the suitable intermediary segment.
All intermediaries cant sell all lines of business profitably in all markets. There should
be clear demarcation in the marketing strategies of the company from this perspective.
Clients should also receive price differentials for using different channels.
The intermediaries need to be empowered with the right learning, training and sales tools
and technology enablers. Coupled with the right product mix, this
will help the insurers to survive and flourish in this competitive market scenario.
So lets conduct this business with utmost economy with the spirit of trusteeship;
thereby making insurance widely popular.

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RECOMMENDATION

Positioning insurance as a means to fulfilling ones duties during ones lifetime.

Fears relating to thefts, ailments, death could be addressed through sensitive

communication

Fears relating to claims:

Need to promote trust. Demonstrating claim

testimonials, positioning as worry free.

Low returns: Reposition insurance as a risk cover, security instrument rather than a
financial investment.

Lack of understanding: Training of Channels

To provide quality advice on products best suited

Lack of Knowledge: Ease of Process, simplifying the product and the procedure

Need to promote the quality of awareness

The benefits: Leverage on Risk Protection or Returns oriented or both

The product: catering to life stages

Need for Branding in Insurance: Branding is more relevant in the Insurance market
which not only faces the problem of securing and retaining customers in an
increasingly competitive marketplace but also experiences the need for heightened
relevance of the brand proposition in a world where brand has been termed the new
religion.
In rural India, the LIC is especially synonymous with insurance. But in the
wake of competition insurance companies have to do a considerable brand
building exercise at least in urban India. Adequate time, investment and
longer-term management of the brand are essential, not only for success

but also

survival. All brands need to be built around well-differentiated and

credible positioning that springs from the organizations history. The brand
must not only be believed but lived by management and employees.

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Focus on different segments to survive and thrive in a competitive

environment.

Each company has to choose its own unique positioning based on its unique strengths.
Below-mentioned positioning alternatives can be worth considering.
VARIETY-BASED POSITIONING
This type of positioning is based on varieties in products and services rather than
customer segments. It is a sensible strategy for those companies who have distinctive
advantages or strengths in offering certain products and services. In the insurance
industry too, it is possible to achieve a unique position by focusing on certain
category of products.
NEEDS-BASED POSITIONING
This is the most commonly understood positioning and is based on the differing needs
of different groups of consumers. This can be done successfully if a company has
unique strengths to service a group of customer needs better than others.
The insurance needs of customers vary significantly for different groups of customers.
The insurance needs of young family with small children will be quite different from
that of a family in which the income-earner is close
to retirement. However, in India most of the life insurance companies have a wide
variety of products tailored for different customer needs and there is no company
focusing on a particular customer need.
ACCESS-BASED POSITIONING
Positioning of customers can also be done by the way they are accessible. That is
different groups of customers may be accessible in different ways even though they
may have similar needs. Access is typically a function of customer geography or
customer scale. There is excellent opportunity in the insurance industry to employ
access-based positioning by targeting the rural insurance sector.

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The rural market for life insurance is very different from the urban market in terms of
needs, income levels and distribution (seasonality, for example), penetration of media
and so on. Rural market can be a highly profitable position if one is able to carefully
plan and tailor an entire set of low-cost activities of advertising, distribution, and
product design etc. to successfully exploit the potential.

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Appendices
Questionnaire
Glossary
Bibliography

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QUESTIONNAIRE
Awareness of Financial Planning and Consumers Perception about Insurance
Industry
Name:________________________
Age:______
Gender:

F F

Marital Status: Married

Single

Occupation : ___________________
Contact No : __________________
Annual Income (appx. in Rs.)
Upto 1.50 lacs
3 lacs-5 lacs

1.50 lacs-3 lacs

Above 5 lacs

Q1) Are you aware about what is financial planning?

YES

NO

Q2) Mention the names of Life insurance companies you have heard of:
1) ________________
2) ________________
3) ________________

4) ________________
5) ________________
6) ________________

Q3) How much do you save approximately of your annual income?

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Q4) Where do you invest/would like to invest your savings?

(Rank in order of preference, 1 being most preferable)

Banks

Share Market

Insurance

Bonds & Securities

Mutual Funds

Real Estate/Property

Q5) Have you taken any life insurance policy on your own life or on life of any
of your family member?
YES

NO

(If no, switch to Q 9 )

Q6) Which company(s) policy(s) you have?
LIC

ICICI PRUDENTIAL

BIRLA SUNLIFE

ING VYSYA

BAJAJ ALLIANZ

SBI LIFE

HDFC STD. LIFE

TATA AIG

MAX NEW YORK LIFE

AVIVA

RELIANCE

KOTAK MAHINDRA

MET LIFE

OTHER ____________ (specify)

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Q7) Which type of plan did you buy?

Money Back Plan
Endowment Plan
Pension Plan

ULIP

Q8) What was your purpose/will be your likely purpose of taking insurance?
RANK THEM (1 being most ideal)
a) PROTECTION
OF FAMILY
b) TAX BENEFIT
c) INVESTMENT
d) RETIREMENT
PLANNING
Q9) Have you ever been approached for Life insurance by any of the following
(please ), also Rank according to your preference from whom you are most
likely to buy insurance?
( here) (Rank)
1) Known/Current Advisor
2) Advisors referred by friends/family
3) Telesales and subsequent visit by unknown Advisor
4) Schemes offered by your bank (Bancassurance)
5) Group Insurance Policies offered by your employer

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Q10) Do you feel opening up of the sector has created more insurance awareness
among the public?
YES

NO

Q11) How many dependents do you have?

<2

2-4

4-6

>6

Q12) Do you really think insurance cover in todays scenario is not

essential?
_____________________________________________________
_____________________________________________________
THANK YOU FOR YOUR CONTRIBUTION

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GLOSSARY
Accident Benefit
An add-on with a life policy. It compensates a policyholder in the event of death or injury
by accident
Annuity
An investment option that makes a series of regular payments to an individual in
exchange for a premium or a series of premium.
Asset allocation
How your investments are spread across various asset classes
Bonus
The amount paid as return in a with-profit policy. The bonus, expressed as a percentage
of the sum assured, is generally declared every year. The amount is linked to the profits
earned by the insurer. Depending on the time of withdrawal, there are two kinds of
bonuses reversionary and cash. A reversionary bonus can be encashed only on maturity
of the policy; a cash bonus can be withdrawn when declared
Capital gains
Profit earned from the sale of stocks, mutual fund units and real estate. Long-term capital
gains arise from assets owned for more than a year while short-term capital gains are
made from assets owned for less than a year.
Corpus
The amount of money available with a scheme for investing. If already invested, the
corpus is the current value of the schemes portfolio.

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Cover
Another word for insurance; it also refers to the amount of insurance.
Critical illness rider
A rider that provides a policyholder financial protection in the event of a critical illness
Death benefit
The amount payable to the nominee on death of the policyholder. The amount paid is the
sum assured plus benefits applicable (if any) less outstanding loans.
Endowment plans
An insurance plan that provides a policyholder risk cover and some return on investment.
Usually suitable for the risk-averse
ELSS (equity-linked savings schemes)
Diversified equity funds that additionally offer a tax deduction under Section 80C on
investments up to Rs.1 lakh.
Financial planning
It covers the essential elements of a persons financial affairs and is aimed at achieving a
persons financial goals.
Group Insurance
An insurance policy taken out by employers to provide life cover to their employees.
Usually the cheapest form of insurance.
Insured
The policyholder: The person who buys an insurance policy

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Insurer
The insurance company
Investments
Assets like fixed deposits, post office savings, bonds and stocks that are acquired for the
purpose of earning a return
Liquidity
The quality of assets that can be easily and quickly converted into cash without any, or
significant, loss in value.
Lock-in period
The period of time for which investments made in an investment option cannot be
withdrawn.
Maturity date
The date on which a policy term or fixed-income investment like fixed deposit or bond
comes to an end.

Money-back plans
A variant of endowment plans in which survival benefits are disbursed through the policy
term, rather than in a lump sum at the end.
Net asset value (NAV)
The simplest measure of how a scheme is performing, it tells how much each unit of it is
worth at any point in time. A schemes NAV is its net assets (the market value of the
financial securities it owns minus whatever it owes) divided by the number of units it has
issued.
Nominee

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The person(s) nominated by the policyholder to receive the policy benefits in the event of
his death.
Pension Plan
Investment products offered by insurance companies and mutual funds that required the
investor to make defined contributions over regular periods, mostly every year. The
contributions are invested according to a pre-decided investment plan. At retirement, the
accumulation is paid out through regular pay-out options.
Policy
The legal document issued by an insurance company to a policyholder that states the
terms and conditions of an insurance contract.
Policy term
The period for which an insurance policy provides cover
Post office schemes
Also known as Small Savings schemes, they are offered at post offices and carry the
highest returns among fixed income instruments. Government backing makes these
instruments like Public Provident Fund (PPF), National Savings Certificate (NSC), Kisan
Vikas Patra (KVP) and Post Office Monthly Income Scheme (POMIS) risk-free
Premium
The amount paid by the insured to the insurer to buy cover
Riders
Additional covers that can be added to a life policy, for a cost
Sum assured
The amount of cover taken under a life insurance policy, it is the minimum amount that
will be paid on death of the policyholder during the policy term.

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Surrender value
The amount payable by the insurer to the owner of an investment-based plan in case he
opts to terminate the policy after three years (the mandatory lock-in period) but before its
maturity date. The surrender value will be the premia paid till date minus surrender
charges and any outstanding loans due.
Term plans
A plan that provides life cover for a specified period of time, but no return on the
premium paid
Vesting date
In pension plans, it is the date from which the policyholder starts receiving pension. In
childrens plans, it is the date from which a child becomes the owner of a policy taken out
in his name (generally, around his 18th birthday).
Waiver of premium rider
A rider that waives the premia payable on the base policy and other riders in certain
circumstances mostly related to death, disability or injury. An important feature
especially for investment products such as childrens policies.
Will
A document that designates the assets of a person-both financial and physical- to various
family members and other heirs.
Whole-life plans
Class of life insurance policies that provide cover through your lifetime.

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BIBLIOGRAPHY
Websites
www.rbi.org.in
www.irdaindia.org
www.banknetindia.com
www.hdfcinsurance.com
www.businessworldonline.com
www.google.com (search engine)
Other References:
Brochures of various plans
Business week

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