RESEARCH PROJECT REPORT ON A Comparative Analysis of ULIP of Bajaj Allianz Life Insurance Co.

Ltd with Mutual Fund SUBMITTED FOR THE PARTIAL FULFILLMENT OF THE DEGREE OF MASTER OF BUSINESS ADMINISTRATION Of CHANDIGARH BUSINESS SCHOOL, LANDRAN MOHALI By AKANKSHA GUPTA ROLL NO. 94302236155 MBA IV SEM UNDER THE SUPERVISION OF Mr. Rahul Dhiman (Lec.Finance)

CHANDIGARH BUSINESS SCHOOL, LANDRAN, MOHALI

2009-2011

Certificate of Supervisor

This is to certify that Mr. / Ms. ______________________ Roll No. _________ has completed the research project titled __________________________________ under my supervision in partial fulfillment of the MASTER OF BUSINESS ADMINISTRATION degree of __________universitys name PANJAB TECHNICAL UNIVERSITY.

Supervisors signature: Supervisors name: Supervisors Designation: Date: Place:

Forwarded for evaluation by the Dean:

(Deans Signature) Seal of the Dean

Declaration

I, hereby declare that the research project report titled A Comparative Analysis of ULIP of Bajaj Allianz Life Insurance Co. Ltd with Mutual Fund 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.

AKANKSHA GUPTA M.B.A 4th Sem. Chandigarh Business School

Date: Place:

ACKNOWLEDGEMENT

Initially, let me thank the almighty God for guiding me all through the project work. I express my deep and sincere gratitude to: Mr. Rahul Dhiman , Faculty guide for providing the necessary assistance for the project. I sincerely acknowledge my gratitude to Mr. Justin Paul, Branch Manager of Bajaj Allianz Life Insurance Company Ltd, Chandigarh branch for giving me an opportunity to do this project. I also owe my sincere thanks to all the staff in Bajaj Allianz Life Insurance Company Ltd, Chandigarh branch, and the faculties of the Chandigarh Business School for their valuable guidance and suggestion in the preparation of this report and completing the same successfully.

Preface Decision making is a fundamental part of the research process. Decisions regarding that what you want to do, how you want to do, what tools and techniques must be used for the successful completion of the project. In fact it is the researchers efficiency as a decision maker that makes project fruitful for those who concern to the area of study. Basically when we are playing with computer in every part of life, I used it in my project not for the ease of my but for the ease of result explanation to those who will read this project. The project presents the role of financial system in life of persons. I had toiled to achieve the goals desired. Being a neophyte in this highly competitive world of business, I had come across several difficulties to make the objectives a reality. I am presenting this hand carved efforts in black and white. If anywhere something is found not in tandem to the theme then you are welcome with your valuable suggestions.

Table of content

Certificate issued by Project guide/supervisor Declaration Acknowledgement Preface Certificate issued by the Organization

CHAPTER 1 An Overview CHAPTER 2 CHAPTER 3 Organization Profile Research Methodology

Source(s) of Data -Primary data -Secondary data

Tools used for Data collection Techniques used for Data analysis

Analysis & Interpretation

Findings CHAPTER 4 Conclusion Suggestions/Recommendations Bibliography / References Questionnaire

INTRODUCTION To make comparison of ULIP plans with Mutual funds in Bajaj Allianz Life Insurance Co. Ltd. and to Create awareness about Unit Linked Insurance Plan (ULIP) Benefits. The overall goal of this project was to create awareness about investments. The Above problem arises because every life insurance company has their products having different positive and negative aspects. Life Insurance is booming sector in todays economy. So the responsibilities of the insurance companies have been increased as compare to the past. Because in past people were taking insurance policies for protection tool only. In present scenario insurance sector is providing more services with the basic life insurance. Bajaj Allianz Life Insurance has number of products, which gives the right way to save the money and earn good profit by invested premium. Today people want more services and more return on their investment. So this insurance company is providing more value added services with the basic insurance operation. A Mutual Fund is a trust that pools the savings of a number of investors who share a common financial goal. The money thus collected is then invested in capital

market instruments such as shares, debentures and other securities. The income earned through these investments and the capital appreciations realized are shared by its unit holders in proportion to the number of units owned by them. Thus a Mutual Fund is the most suitable investment for the common man as it offers an opportunity to invest in a diversified, professionally managed basket of securities at a relatively low cost.

INDIAN INSURANCE INDUSTRY The history of life insurance in India dates back to 1818 when it was conceived as a means to provide for English Widows. Interestingly in those days a higher premium was charged for Indian lives than the non-Indian lives as Indian lives were considered more riskier for coverage. The Bombay Mutual Life Insurance Society started its business in 1870. It was the first company to charge same premium for both Indian and non-Indian lives. The Oriental Assurance Company was established in 1880. The General insurance business in India, on the other hand, can trace its roots to the Triton (Tital) Insurance Company Limited, the first general insurance company established in the year 1850 in Calcutta by the British. Till the end of nineteenth century insurance business was almost entirely in the hands of overseas companies.Insurance regulation formally began in India with the passing of the Life Insurance Companies Act of 1912 and the provident fund Act of 1912. Several frauds during 20's and 30's sullied insurance business in India. By 1938 there were 176 insurance companies. The first comprehensive legislation was introduced with the Insurance Act of 1938 that provided strict State Control over

insurance business. The insurance business grew at a faster pace after independence. Indian companies strengthened their hold on this business but despite the growth that was witnessed, insurance remained an urban phenomenon. Some of the important milestones in the life insurance business in India are: 1850: Non life insurance debuts with triton insurance company. 1870: :Bombay mutual life assurance society is the first Indian owned life insurer 1912: The Indian Life Assurance Companies Act enacted as the first statute to regulate the life insurance business. 1928 : :The Indian Insurance Companies Act enacted to enable the government to collect statistical information about both life and non-life insurance businesses. 1938: Earlier legislation consolidated and amended to by the Insurance Act with the objective of protecting the interests of the insuring public. 1956: 245 Indian and foreign insurers and provident societies taken over by the central government and nationalized. LIC formed by an Act of Parliament, viz. LIC Act,

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1956, with a capital contribution of Rs. 5 Crore from the Government of India. The General insurance business in India, on the other hand, can trace its roots to the Triton Insurance Company Ltd., the first general insurance company established in the year 1850 in Calcutta by the British.

Some of the 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 of India. 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. 1968 : The Insurance Act amended to regulate investments and set minimum solvency margins and the Tariff Advisory Committee set up. 1972 : The General Insurance Business (Nationalization) Act, 1972 nationalized the general insurance business in India with effect from 1st January 1973. 107 insurers amalgamated and grouped into four companies viz. the National Insurance Company Ltd., the New India Assurance Company Ltd., the Oriental Insurance

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Company Ltd. and the United India Insurance Company Ltd. GIC incorporated as a company. 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. 1997 : Insurance regulator IRDA set up. 2000: IRDA starts giving licenses to private insurers:Kotak Life Insurance ,ICICI potential and HDFC standard Life insurance are the first private insurers to sell a policy. 2001: Royal Sundaram Alliance first non life insurer to sell a policy 2002 Banks allowed to sell insurance plans.

INSURANCE MARKET PRESENT The insurance sector was opened up for private participation seven years ago. For years now, the private players are active in the liberalized environment. The insurance market have witnessed dynamic changes which includes presence of a fairly large number of insurers both life and non-life segment. Most of the private insurance companies have formed joint venture partnering well recognized foreign players across the globe. LIFE INSURANCE COMPANIES

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Sl. No. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

Insurer HDFC Standard Life Insurance Co. Ltd. Standard Life Assurance, UK ICICI-Prudential Life Insurance Co. Ltd. Om Kotak Life Insurance Co. Ltd. Birla Sun Life Insurance Co. Ltd. Tata-AIG Life Insurance Co. Ltd. SBI Life Insurance Co. Ltd.

Foreign Partners Standard Life Assurance, UK New York Life, USA Prudential , UK Old Mutual, South Africa Sun Life, Canada American International Assurance Co., USA BNP Paribas Assurance SA, France

ING Vysya Life Insurance Co. Ltd. ING Insurance International B.V., Netherlands Allianz Bajaj Life Insurance Co. Allianz, Germany Ltd. Metlife India Insurance Co. Ltd. Metlife International Holdings USA Reliance Life Insurance Co. Ltd. AVIVA Aviva International Holdings UK Sahara Life Insurance Co. Ltd. Shriram Life Insurance Co. Ltd. Sanlam, South Africa Bharti AXA Life Insurance Co. AXA Holdings, France Ltd. Future Generali India Life Pantaloon Retail Ltd.; Insurance Company Ltd Marketing Network Pvt. (SMNPL), Generali, Italy IDBI Fortis Life Insurance Fortis, Netherlands Company Ltd. Canara HSBC OBC Life Insurance HSBC, UK Company Ltd. Aegon Religare Life Insurance Religare, Netherlands Company Ltd. DLF Pramerica Life Insurance Co. Prudential of America, USA Ltd.

Ltd., Ltd.,

Sain Ltd.

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21

Life Insurance Corporation of India

MARKET SHARE OF VARIOUS LIFE INSURANCE COMPANIES IN INDIA Here is the market share of various Life Insurance Companies in India at the end of FY2008. Company Name LIC ICICI Prudential Bajaj Allianz SBI Life HDFC Standard Birla Sun life Reliance Life Max New York OM Kodak AVIVA Tata AIG MetLife Market Share (in %) 48.1% 13.7% 10.3% 6.2% 4.1% 3.4% 3.4% 2.4% 1.9% 1.8% 1.5% 1.4%

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ING Vysya Shriram Life Bharti Axa Life

1.2% 0.3% 0.2%

COMPANY PROFILE Bajaj Allianz Life Insurance is a union between Allianz SE, one of the largest Insurance Company and Bajaj Finserv. Allianz SE is a leading insurance conglomerate globally and one of the largest asset managers in the world,managing assets worth over a Trillion(Over INR

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55,00,000 Crores).Allianz SE has over 115 years of financial experience and is present in over 70 countries around the world. At Bajaj Allianz Life Insurance, customer delight is the guiding principle. Their business philosophy is to ensure excellent insurance and investment solutions by offering customized products, supported by the best technology. VISION To be the first choice insurer for customers To be the preferred employer for staff in the insurance industry. To be the number one insurer for creating shareholder value. MISSION As a responsible, customer focused market leader, we will strive to understand the insurance needs of the consumers and translate it into affordable products that deliver value for money.

Accelerated Growth Fiscal Year 2001-2002(6 mths) 2002-2003 2003-2004 2004-2005 2005-2006 2006-2007 2007-2008 No. of policies sold 21,37 1,15,965 1,86,443 2,88,189 7,81,685 20,79,217 37,44,742 New Business in FY Rs. 7 cr. Rs. 63.3 cr. Rs. 180 cr. Rs. 857 cr. Rs. 2,717 cr. Rs. 4,302 cr. Rs. 6,674 cr.

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Bajaj Allianz General Insurance received the Insurance Regulatory and Development Authority (IRDA) certificate of Registration on 2nd May, 2001 to conduct General Insurance business (including Health Insurance business) in India. The Company has an authorized and paid up capital of Rs 110 crores. Bajaj Finserv Limited holds 74% and the remaining 26% is held by Allianz, SE. As on 31st March 2009, Bajaj Allianz General Insurance maintained its premier position in the industry by achieving growth as well as profitability. The company garnered a premium income of Rs. 2866 crore, achieving a growth of 11 % over the last year. Bajaj Allianz has made a profit before tax of Rs. 149.8 crore and has become the only private insurer to cross the Rs.100 crore mark in profit before tax in the last two years. The profit after tax was Rs.95 crores, which is also the highest by any private insurer. The company ranked second (after LIC) in number of policies sold in 2007-08, with total market share of 7.36%.

PRODUCTS PROFILE Unit Linked Plan New family gain New unit gain plus

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 New unit gain premier Traditional plan Invest gain Cash gain Child gain Retirement Solutions Swarna visranthi New unit gain easy pension plus Health Plan Care first Health care Term Plan Risk care Term care

UNIT LINKED INSURANCE POLICY (ULIP)

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A unit linked insurance policy is one in which the customer is provided with a life insurance cover and the premium paid is invested in either debt or equity products or a combination of the two. In other words, it enables the buyer to secure some protection for his family in the event of his untimely death and at the same time provides him an opportunity to earn a return on his premium paid. In the event of the insured person's untimely death, his nominees would normally receive an amount that is the higher of the sum assured (insurance cover) or the value of the units (investments).However, there are some schemes in which the policyholder receives the sum assured plus the value of the investments. The advantage of ULIP is that since the investments are made for long periods, the chances of earning a decent return are high.

Tax benefits The premiums paid for ULIPs are eligible for tax rebates under section 80 which allows a a maximum of Rs. 1,00,000 premiums paid for taxable income below Rs 8,50,000 and Proceeds from ULIPs are tax-free under section 10(10D) unlike those from a mutual fund which attract short term capital gains tax.

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POINTS TO REMEMBER ABOUT ULIP First-year charges: Usually, a minimum of 15 per cent. However, high premiums attract lower charges and vice versa. Charges can be as high as 70 per cent if the scheme affords a lot of flexibility. Subsequent charges: Usually lower than firstyear charges. However, some insurers charge higher fees in the initial years and lower them significantly in the subsequent years. Administration charges: This ranges between Rs 15 per month to Rs 60 per month and is levied by cancellation of units and also depends on the nature of the scheme. Risk charges: The charges are broadly comparable across insurers. Asset management fees: Fund management charges vary from 0.6 per cent to 0.75 per cent for a money market fund, and around 1.5 per cent for an equity-oriented scheme. Fund management expenses and the brokerage are built into the daily net asset value. Switching charges: Some insurers allow four free switches in every year but link it to a minimum amount. Others allow just one free switch in each year and charge Rs 100 for every subsequent switch. Some insurers don't charge anything. Top-ups: Usually attracts 1 per cent of the top-up amount. Top-up normally goes directly into your investment account (units) unless you specifically ask for an increase in the risk cover.

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Surrender value of units: Insurers levy certain charges if the policy is surrendered prematurely. This levy varies between insurers and could be around 75 per cent in the first year, 60 per cent in the second year, 40 per cent in the third year and nil after the fourth year. Fund performance: You could check out the performance of similar schemes (balanced with balanced; equity with equity) across insurance companies. Look at NAV performance over a period of at least two to three years. This can only give you some indication about the credibility of the fund manager because past performance is no guarantee to future returns, especially in insurance products where the emphasis is on long-term performance (10 years or more). Since insurance is a product, which entails a long-term commitment on the part of the insurer, it is important not to go only by the features or the cost advantages of schemes but by the parentage of the insurer as well. Comparing schemes based on costs is a fairly complex exercise. As a rule, the higher the initial years' expenses the longer it takes for the policy to outperform its peers with low initial years' costs and slightly higher subsequent year expenses.

Retire unhurt Pension plans are essentially tailored to meet old age financial requirements. But there are certain advantages in joining a pension plan.

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First of all, contribution to pension funds upto Rs 10,000 is eligible for tax deduction under section 80CCC. In other words, your pension contribution will get deducted from your taxable income. So if you are in the top tax bracket, liable to pay to a 30.6 per cent tax, then your tax savings will be that much. All life insurance companies offer pension products - both conventional and unitlinked. In both cases you pay a certain premium amount for a specified length of time. HOW DOES ULIP WORK Sara is a thirty-year old who wants a product that will give him market-linked returns as well as a life cover. He wants to invest Rs 50,000 a year for 10 years in an equity-based scheme. Based on this premium, the sum assured works out to Rs 532,000, the exact amount of premium being Rs 50,032. Based on the current NAV of the plan that Sara chooses to invest in, he is allotted units in the scheme. Then, units equivalent to the charges are deducted from his portfolio. The charges in the first year include a 14 per cent sales charge, an administration charge (7 per cent for the first Rs 20,000 and 3 per cent for the remaining Rs 30,000) and underwriting charges, which are deducted monthly. Besides, mortality charges or the charges for the life cover are also deducted. For the remaining nine years a 3.5 per cent sales charge and an administrative charge of 4 per cent (for the first Rs 20,000 and 2 per cent for the remaining Rs 30,000) are levied in addition to mortality charges.

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Fund management fee of 1.5 per cent (equity) and brokerage are also charged. This cost is built into the calculation of net asset value. On maturity - that is, after 10 years - Sara would receive the sum assured of Rs 532,000 or the market value of the units whichever is higher. Assuming the growth rate in the market value of the units to be 6 per cent per annum Sara would receive Rs 581,500; assuming the growth rate in the market value of the units to be 10 per cent, Sara would receive Rs 7,24,400. In case of Sara's untimely death at the end of the ninth year, his beneficiaries would receive the sum assured of Rs 532,000 or the market value of the units whichever is higher. Assuming the growth rate in the market value of units is 6 per cent per annum, the value of investment would be Rs 510,200. However, his family will get Rs 532,000 as it is the sum assured. Assuming a growth rate of 10 per cent per annum, the value of units at the end of the ninth year would be Rs 621,900. Hence, the beneficiaries would get Rs 621,900. ADVANTAGES OF ULIP

Can easily rebalance your risk between equity and debt without any tax implications. Best suited for medium risk taking individuals who wish to invest in equity and debt funds (at least 40% or higher exposure to debt). No additional tax burden for those investing mainly in debt unlike in MFs.

RISKS ASSOCIATED WITH ULIPS

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ULIPS as the name suggests are directly linked with the investments made by the insured. Though he does not have a direct say in this but he does offer his choice in the form of investment.With stock markets soaring high a few months back, ULIPs were offering a good rate of return, but now with a sudden downfall of the stocks, ULIPs are bound to become negative investments. INTRODUCTION OF MUTUAL FUNDS: A mutual fund is simply a financial intermediary that allows a group of investors to pool their money together with a predetermined investment objective. The mutual fund will have a fund manager who is responsible for investing the pooled money into specific securities (usually stocks or bonds). When you invest in a mutual fund, you are buying shares (or portions) of the mutual fund and become a shareholder of the fund. Mutual funds are one of the best investments ever created because they are very cost efficient and very easy to invest in (you don't have to figure out which stocks or bonds to buy). By pooling money together in a mutual fund, investors can purchase stocks or bonds with much lower trading costs than if they tried to do it on their own. But the biggest advantage to mutual funds is diversification.

CHARACTERISTICS OF A MUTUAL FUND:

Investors own the mutual fund.

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 Professional managers manage the affairs for a fee. The funds are invested in a portfolio of marketable Securities, reflecting the investment objective. Value of the portfolio and investors holdings, alters with Change in market value of investments. ADVANTAGES OF MUTUAL FUNDS: The advantages of investing in a Mutual Fund are: 1. Professional Management: You avail of the services of experienced and skilled professionals who are backed by a dedicated investment research team which analyses the performance and prospects of companies and selects suitable investments to achieve the objectives of the scheme. 2. Diversification: Mutual Funds invest in a number of companies across a broad cross section of industries and sectors. This diversification reduces the risk because seldom do all stocks decline at the same time and in the same proportion.You achieve this diversification through a Mutual Fund with far less money than you can do on your own. 3. Convenient Administration: Investing in a Mutual Fund reduces paperwork and helps you avoid many problems such as bad deliveries, delayed payments and

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unnecessary follow up with brokers and companies. Mutual Funds save your time and make investing easy and convenient. 4. Return Potential: Over a medium to longterm, Mutual Funds have the potential to provide a higher return as they invest in a diversified basket of selected securities. 5. LowCosts: Mutual Funds are a relatively less expensive way to invest compared to directly investing in the capital markets because the benefits of scale in brokerage, custodial and other fees translate into lower costs for investors. DISADVANTAGES OF MUTUAL FUNDS:

No Guarantees: No investment is risk free. If the entire stock market declines in value, the value of mutual fund shares will go down as well, no matter how balanced the portfolio. Investors encounter fewer risks when they invest in mutual funds than when they buy and sell stocks on their own. However, anyone who invests through a mutual fund runs the risk of losing money. Fees and commissions: All funds charge administrative fees to cover their dayto-day expenses. Some funds also charge sales commissions or "loads" to compensate brokers, financial consultants, or financial planners. Even if you don't use a broker or other financial adviser, you will pay a sales commission if you buy shares in a Load Fund. Management risk: When you invest in a mutual fund, you depend on the fund's manager to make the right decisions regarding the fund's portfolio. If the manager

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does not perform as well as you had hoped, you might not make as much money on your investment as you expected. RISK Equity Balanced Debt High Medium Low RETURN High Medium Low

TYPES OF MUTUAL FUNDS: I. Closed-end or Open-end Open-end Funds: An open-end fund is one that has units available for sale and repurchase at all time. An investor can buy or redeem units from the fund itself at a price based on the Net Asset Value (NAV) per unit. Close-end Funds: A close ended fund makes a one-time sale of a fixed number of unit. It does not allow investors to buy or redeem units directly from the funds. However, to provide liquidity to investors many closed-end funds get themselves listed on stock exchange. Funds do offer buy-back of funds/units thus offering another avenue for liquidity to closed-end fund investor. II. Load vs. No Load: Marketing of a new mutual fund scheme involves initial expense. These expenses may be recovered from the investors in different ways at

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different times. Three usual ways in which a funds sales expenses may be recovered from the investors are: 1. At the time of investors entry into the fund/scheme, by deducting a specific amount from his initial contribution: front-end or entry load. 2. By charging the fund/scheme with a fixed amount each year, during the stated number of years: deferred load. 3. At the time of the investors exit from the fund/scheme, by deducting a specific amount from the redemption proceeds payable to the investor: back end or exit load These charges made by the fund managers to the investors to cover distribution/sales/marketing expenses are often called loads. Funds that charge front-end, back-end or deferred loads are called load funds. Funds that make no such charges or loads for sales expenses are called no-load funds. In India, SEBI has defined a load as the one-time fee payable by the investor to allow the fund to meet initial issue expenses including brokers/agents/distributors commissions, advertising and marketing expenses. A load funds declared NAV does not include load charges III. Tax-exempt vs. Non-Tax exempt Funds: Generally, when a fund invests in tax-exempt securities, it is called a tax-exempt fund. In India, after the 1999 Union Government Budget, all of the dividend income received from any of the mutual funds is tax-free in the hands of the investors. However, funds other than Equity Funds have to pay a distribution tax, before distributing income to investors. In other words, equity mutual fund schemes are tax-exempt investment avenues, while other funds are taxable for distributable income.

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Different types of mutual fund Types of Mutual Fund: Once we have reviewed the fund classes, we are ready to discuss more specific fund types. Funds are generally distinguished from each other by their investment objectives and types of securities they invest in. A. Broad Fund Types by Nature of Investments Mutual funds may invest in equities, bonds or other fixed income securities, or short-term money market securities. So we have Equity, Bonds and Money Market Funds. All of them invest in financial assets. But there are funds that invest in physical assets. For example, we may have Gold or other Precious Metal Funds, or Real Estate Funds. B. Broad Fund Types by Investment Objective Investors and hence the mutual funds pursue different objectives while investing. Thus, Growth Funds invest for medium to long term capital appreciation.

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Income Funds invest to generate regular income, and less for capital appreciation. Value Funds invest in equities that are considered under-valued today, whose value will be unlocked in the future. C. Broad Fund Types by Risk Profile The nature of a funds portfolio and its investment objective imply different levels of risk undertaken. Funds are therefore often grouped in order of risk. Thus, Equity Funds have a greater risk of capital loss than a Debt Fund that seeks to protect the capital while looking for income. Money Market Funds are exposed to less risk than even the For internal use by Training Department of Prudential ICICI Mutual Fund Bond Funds, since they invest in short-term fixed income securities, as compared to longer-term portfolios of Bond Funds. Money Market Funds: Lowest rung in the order of risk level, Money Market Funds invest in securities of a short-term nature, which generally means securities of less than one-year maturity. Gilt Funds: Gilts are government securities with medium to long-term maturities, typically of over one year (under one-year instruments being money market securities). Debt Funds (or Income Funds): Next in the order of risk level, we have the general category Debt Funds. Debt funds invest in debt instruments issued not only by governments, but also by private companies, banks and financial institutions and other entities such as infrastructure companies/utilities. Diversifies Debt Funds: A debt fund that invests in all available types of debt securities, issued by entities across all industries and sectors is a properly

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diversified debt fund. A diversified debt fund is less risky than a narrow-focus fund that invests in debt securities of a particular sector or industry. Focused Debt Funds: Some debt funds have a narrow focus, with less diversification in its investment. Examples include sector, specialized and offshore debt funds. Other examples of focused funds include those that invest only in Corporate Debentures and Bonds or only in Tax Free Infrastructure or Municipal Bonds. High yield Debt Funds: There are funds which seek to obtain higher interest rates by investing in debt instruments that are considered below investment grade. e.g. Junk Bond Funds. Assured Return Funds an Indian Variant: The SEBI permits only those funds whose sponsors have adequate net-worth to offer assurance of return. For e.g. MIPs. Investors have some lock-in period. Fixed Term Plan Series Another Indian Variant: These are essentially closedend. These plans do not generally offer guaranteed returns. This scheme is for short-term investors who otherwise place money as fixed term bank deposits or inter corporate bonds. Equity Fund: As investors move from Debt Fund category to Equity Funds, they face increased risk level. No guarantee returns High potential for growth of capital

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Types of Equity Fund a) Aggressive Growth Fund Maximum capital appreciation Invests in less researched or speculative shares.

Very volatile & riskier.

b) Growth Fund Growth fund invest in companies whose earnings are expected to

Rise above average rate. e.g. Technology Fund

Capital appreciation in 3 5 years Less volatile then aggressive growth fund.

d) Diversified Equity Funds A fund that seeks to invest only in equities, except for a very small portion in liquid money market securities, bur is not focused on any one or few sectors or shares, may be termed a diversified equity fund. While exposed to all equity price risks, diversified equity funds seek to reduce the sector or stock specific risks through diversification. e) Equity Index Funds An index fund tracks the performance of a specific stock market index. The objective is to match the performance of the stock market by tracking an index that represents the overall market. The funds invest in share that constitute the index and in the same proportion on the index.

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f) Value Funds Value Funds try to seek out fundamentally sound companies whose shares are currently under-prices in the market. Value Funds will add only those shares to their portfolios that are selling at low price-earnings ratios, low market to book value ratios and are undervalued by other yardsticks. Fund concentrate on future growth prospect having good potential. g) Equity Income Funds There are equity funds that can be designed to give the investor a high level of current income along with some steady capital appreciation, investing mainly in shares of companies with high dividend yields.

Hybrid Funds Quasi Equity/Quasi Debt: Many mutual funds mix these (money market, debt and equity) different types of securities in their portfolios. Such funds are termed hybrid funds as they have a dual equity/bond focus.

Commodity Funds: While all of the debt/equity/money market funds invest in financial assets, the mutual fund vehicle is suited for investment in any other- for examples- physical assets.

Real Estate Funds: Specialized Real Estate Funds would invest in Real Estate directly, or may fund real estate developers, or lend to them, or buy shares of housing finance companies or may even buy their securities assets.

Following are the different products and services Offered by Mutual Fund Companies

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 Open ended schemes Close ended schemes Growth/Equity oriented Schemes Income/Debt oriented Schemes Balanced Funds Money market or liquid funds Gilt Funds Index Funds Exchange Traded Funds Sectoral Funds Thematic Funds Commodity Funds Real Estate Funds Tax Saving Funds Hybrid Funds There are several ways for investment and disinvestments in mutual funds such as : Systematic Investment Plans (SIPs)

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 Value Averaging Systematic Transfer Plans (STPs) Systematic Withdrawal Plans(SWPs) Automatic Reinvestment Plans. Open ended fund In an open-ended fund, sale and repurchase of units happen on a continuous basis, at NAV related prices, from the fund itself. The corpus of open-ended funds, therefore, changes every day. Close ended fund A closed-end fund offers units for sale only in the NFO. It is then listed in the market. Investors wanting to buy or sell the units have to do so in the stock markets. Usually closed-end funds sell at a discount to NAV. The corpus of a closed-end fund remains unchanged. Growth fund Provide capital appreciation over the medium to long-term Investor who does not require periodic income distribution can choose the option, where the incomes earned are retained in the investment portfolio and allowed to grow, rather than being distributed to investors. Investors with longer investment horizons and limited requirements for income choose this option.

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 The return to the investor who chooses a growth option is the rate at which his initial investment has grown over a period for which he has invested in the fund. The investor choosing this option will vary the NAV with the value of the investments portfolio , while the no. of units held with remains constant. Income fund Provide regular and steady income to investor Balanced fund Provide both growth and regular income. Money market fund Provide easy liquidity, regular income and preserve the income Tax saving scheme offer tax rebeats to the under specific provisions of the Indian income tax laws Investment made under some schemes are allowed as deduction U/S 88 of the income tax act . Automatic Reinvestment Plans Reinvestment of amount of dividend made by fund in the same fund. In this option, the no. of units held by the investor will change with every reinvestment. The value of units will be similar to that under the dividend option There are four types of plans as follows Lump sum Investment It is one time investment..

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Investors can invest particular amount one time for fixed time of period.

Systematic Investment Plans( SIP) For regular investment SIP is investing a fixed sum periodically in a disciplined manner for long

term. It gives benefit of Rupee Cost averaging. In SIP monthly minimum Rs.500 or Rs.100 are invested. Interest is calculating compoundly. Many SIP gives insurance benefits. VAP is modified version of SIP. It is Voluntary Accumulation Plan. It allows the investor flexibility with respect to the amount and frequency of investment. In VAP, investor has to impose voluntary self discipline

Dividend option

Investors will receive dividends from the mutual fund , as an and

when dividends are declared. Dividends are paid in the form of warrants or are directly credited to the investors bank accounts. COMPARISON OF ULIP VS MUTUAL FUND Unit Linked Insurance Policies (ULIPs) as an investment avenue are closest to mutual funds in terms of their structure and functioning. As is the cases with

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mutual funds, investors in ULIPs are allotted units by the insurance company and a net asset value (NAV) is declared for the same on a daily basis. Similarly ULIP investors have the option of investing across various schemes similar to the ones found in the mutual funds domain, i.e. diversified equity funds, balanced funds and debt funds to name a few. Generally speaking, ULIPs can be termed as mutual fund schemes with an insurance component. However it should not be construed that barring the insurance element there is nothing differentiating mutual funds from ULIPs 1. Mode of investment/ investment amounts Mutual fund investors have the option of either making lump sum investments or investing using the systematic investment plan (SIP) route which entails commitments over longer time horizons. The minimum investment amounts are laid out by the fund house. ULIP investors also have the choice of investing in a lump sum (single premium) or using the conventional route, i.e. making premium payments on an annual, half-yearly, quarterly or monthly basis. In ULIPs, determining the premium paid is often the starting point for the investment activity. This is in stark contrast to conventional insurance plans where the sum assured is the starting point and premiums to be paid are determined thereafter. ULIP investors also have the flexibility to alter the premium amounts during the policy's tenure. For example an individual with access to surplus funds can enhance the contribution thereby ensuring that his surplus funds are gainfully invested; conversely an individual faced with a liquidity crunch has the option of paying a

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lower amount (the difference being adjusted in the accumulated value of his ULIP). The freedom to modify premium payments at one's onvenience clearly gives ULIP investors an edge over their mutual fund counterparts. 2. Expenses In mutual fund investments, expenses charged for various activities like fund management, sales and marketing, administration among others are subject to predetermined upper limits as prescribed by the Securities and Exchange Board of India. For example equity-oriented funds can charge their investors a maximum of 2.5% per annum on a recurring basis for all their expenses; any expense above the prescribed limit is borne by the fund house and not the investors. Insurance companies have a free hand in levying expenses on their ULIP products with no upper limits being prescribed by the regulator, i.e. the Insurance Regulatory and Development Authority. This explains the complex and at times 'unwieldy' expense structures on ULIP offerings. The only restraint placed is that insurers are required to notify the regulator of all the expenses that will be charged on their ULIP offerings. 3. Portfolio disclosure Mutual fund houses are required to statutorily declare their portfolios on a quarterly basis, albeit most fund houses do so on a monthly basis. Investors get the opportunity to see where their monies are being invested and how they have been managed by studying the portfolio.

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There is lack of consensus on whether ULIPs are required to disclose their portfolios. During our interactions with leading insurers we came across divergent views on this issue. While one school of thought believes that disclosing portfolios on a quarterly basis is mandatory, the other believes that there is no legal obligation to do so and that insurers are required to disclose their portfolios only on demand. 4. Flexibility in altering the asset allocation As was stated earlier, offerings in both the mutual funds segment and ULIPs segment are largely comparable. For example plans that invest their entire corpus in equities (diversified equity funds), a 60:40 allotment in equity and debt instruments (balanced funds) and those investing only in debt instruments (debt funds) can be found in both ULIPs and mutual funds. If a mutual fund investor in a diversified equity fund wishes to shift his corpus into a debt from the same fund house, he could have to bear an exit load and/or entry load. On the other hand most insurance companies permit their ULIP inventors to shift investments across various plans/asset classes either at a nominal or no cost (usually, a couple of switches are allowed free of charge every year and a cost has to be borne for additional switches). Effectively the ULIP investor is given the option to invest across asset classes as per his convenience in a cost-effective manner.

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This can prove to be very useful for investors, for example in a bull market when the ULIP investor's equity component has appreciated, he can book profits by simply transferring the requisite amount to a debt-oriented plan. 5. Tax benefits ULIP investments qualify for deductions under Section 80C of the Income Tax Act. This holds good, irrespective of the nature of the plan chosen by the investor. On the other hand in the mutual funds domain, only investments in tax-saving funds (also referred to as equity-linked savings schemes) are eligible for Section 80C benefits. Maturity proceeds from ULIPs are tax free. In case of equity-oriented funds (for example diversified equity funds, balanced funds), if the investments are held for a period over 12 months, the gains are tax free; conversely investments sold within a 12-month period attract short-term capital gains tax @ 10%. Similarly, debt-oriented funds attract a long-term capital gains tax @ 10%, while a short-term capital gain is taxed at the investor's marginal tax rate. Despite the seemingly similar structures evidently both mutual funds and ULIPs have their unique set of advantages to offer. As always, it is vital for investors to be aware of the nuances in both offerings and make informed decisions.

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Research Methodology

OBJECTIVES To understand the reason for which customers prefer ULIP as one of the best insurance investment mode rather than Mutual fund. To find the significance difference between customers of different income with that of investment mode. To Compare Investment Options of customers in ULIPs and Mutual Funds

Types of data collection There are two types of data collection methods available. 1. Primary data collection

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2. Secondary data collection 1) Primary data The primary data is that data which is collected fresh or first hand, and for first time which is original in nature. Primary data can collect through personal interview, questionnaire etc. to support the secondary data. 2) Secondary data collection method The secondary data are those which have already collected and stored. Secondary data easily get those secondary data from records, journals, annual reports of the company etc. It will save the time, money and efforts to collect the data. Secondary data also made available through trade magazines, balance sheets, books etc.

Tools and Techniques As no study could be successfully completed without proper tools and techniques, same with my project. For the better presentation and right explanation I used tools of statistics and computer very frequently. And I am very thankful to all those tools for helping me a lot. Basic tools which I used for project from statistics are- Bar Charts - Pie charts - Tables

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bar charts and pie charts are really useful tools for every research to show the result in a well clear, ease and simple way. Because I used bar charts and pie charts in project for showing data in a systematic way, so it need not necessary for any observer to read all the theoretical detail, simple on seeing the charts any body could know that what is being said.

DATA INTERPRETATION AND ANALYSIS (A) Gender: Gender Frequen Valid Cumulative cy Percent Percent Percent Valid Male 37 74.0 74.0 74.0 Female 13 26.0 26.0 100.0 Total 50 100.0 100.0

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INTERPRETATION : The above graph shows that , out of 50 customers, 74% of the respondents are male policy holders and the rest 26% are female policy holders.

(B) Marital Status: Marital Frequenc y Percent Valid Married 33 66.0 Unmarrie 17 34.0 d Total 50 100.0 Valid Cumulative Percent Percent 66.0 66.0 34.0 100.0 100.0

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INTERPRETATION : From a sample of 50 customers, 66% of the policy holders are unmarried and the rest 34% of the policy holders are married.

(C) Age:

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Age Frequenc y Percent 6 12.0 14 28.0 17 34.0 11 22.0 2 4.0 50 100.0 Valid Cumulative Percent Percent 12.0 12.0 28.0 40.0 34.0 74.0 22.0 96.0 4.0 100.0 100.0

Valid 20-30 30-40 40-50 50-60 60-70 Total

INTERPRETATION : The graph shows that majority of the sample respondents were in the age group of 40-50 yrs ie,34%, 12% were in the age group of 20-30 yrs & 28% of them were 3040 yrs, 22% were in the age group of 50-60 yrs and 4% were in the age group of 60-70 yrs. (D) Occupation:

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Occupation Frequenc y Percent Valid Government 18 36.0 Private 14 28.0 service Business 11 22.0 NRIs 3 6.0 Others 4 8.0 Total 50 100.0

Valid Cumulative Percent Percent 36.0 36.0 28.0 64.0 22.0 6.0 8.0 100.0 86.0 92.0 100.0

INTERPRETATION : The graph shows that majority of the policy holders are working in the Government sector i.e.36% , 28% of them are engaged in Private service, 22% of them are business field, 6% of them are NRIs and 8% of them are engaged other works.

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(E) Annual Income: Annual income Frequenc y Percent 19 38.0 23 6 2 50 46.0 12.0 4.0 100.0 Valid Cumulative Percent Percent 38.0 38.0 46.0 12.0 4.0 100.0 84.0 96.0 100.0

Valid Below 2 lakhs 2-4 lakhs 4-6 lakhs 6-8 lakhs Total

INTERPRETATION : The graph shows that 46% of the policy holders get a salary of 2-4 lakhs, 38% of the policy holders get a salary of below 2 lakhs, 12% of the policy holders get a

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salary of 4-6 lakhs, 3 of the policy holders get a salary below 2 lakhs and 4% of them above 6-8 lakhs. 1. Sources that helps you in making investment decision. Sources that helps you in making the investment decisions. Frequenc Valid Cumulative y Percent Percent Percent Valid Financial 5 10.0 10.0 10.0 journal Television 2 4.0 4.0 14.0 Brokers/Agen 27 54.0 54.0 68.0 t Friends 13 26.0 26.0 94.0 Consultants 3 6.0 6.0 100.0 Total 50 100.0 100.0

INTERPRETATION : From the sample of 50 customers, 54% of the customers are strongly agree that the agents or brokers helps them to make investment decision, 26% of the customers

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point out their friends take part in the investment decision. And 10% customers reveal that the financial journals helps them, Remaining 6% is from consultants, and 4% selects television as the source. 2. Factors that influence your investment decision in a particular company. Factors that influence your investment decisions in a particular company. Frequenc Valid Cumulative y Percent Percent Percent Valid Attractive 2 4.0 4.0 4.0 schemes Tax benefits 27 54.0 54.0 58.0 High reputation 3 6.0 6.0 64.0 Rate of return 14 28.0 28.0 92.0 Variety of 4 8.0 8.0 100.0 products Total 50 100.0 100.0

INTERPRETATION :

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54% customers agree that the tax benefit is influence them to buy policy , 28% looks the rate of return what they will earn, variety of products from the company attracts 8% customers, and high reputation of the company attracts 6% of the customers, and remaining 4% pointing out the attractive schemes.

3. You generally like to invest money in. You generally like to invest money. Frequenc Valid Cumulative y Percent Percent Percent Valid Insurance 13 26.0 26.0 26.0 Stock market 1 2.0 2.0 28.0 Mutual fund 6 12.0 12.0 40.0 Bank deposit 28 56.0 56.0 96.0 Both insurance and 2 4.0 4.0 100.0 mutual fund Total 50 100.0 100.0

INTERPRETATION :

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From a sample of 50 customers, 56% of the customers invest money in bank deposit, 26% in insurance sector,12% in mutual fund, then 4% in both insurance and mutual fund,and remaining 2% in stock market.

4. According to you who among the following life insurance company is best. According to you who among the following life insurance companies is best. Frequenc Valid Cumulative y Percent Percent Percent Valid Bajaj Allianz 27 54.0 54.0 54.0 HDFC Standard 5 10.0 10.0 64.0 life Tata AIG 4 8.0 8.0 72.0 Aviva Life 3 6.0 6.0 78.0 SBI Life 11 22.0 22.0 100.0 Total 50 100.0 100.0

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INTERPRETATION : From a sample of 50 customers,54% customers select Bajaj Allianz is the best insurance company, and 22% customers choose SBI Life,10% select HDFC,8% for Tata AIG and remaining 6% stands for Aviva life insurance company.

5. How would you rate our products. How would you rate our products. Frequenc Valid Cumulative y Percent Percent Percent Valid Excelle 2 4.0 4.0 4.0 nt Good 37 74.0 74.0 78.0 Fair 9 18.0 18.0 96.0 Poor 2 4.0 4.0 100.0 Total 50 100.0 100.0

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INTERPRETATION : From a sample of 50 customers,74% customers thinks that the products offered by Bajaj Allianz Life insurance co. is good,4% thinks its excellent,18% of them select Bajaj Allianz products are fair, and remaining 4% not satisfied with our products. 6. I would like to invest money in ULIP.

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I would like to invest money in ULIP. Frequenc Valid Cumulative y Percent Percent Percent Valid Strongly agree 2 4.0 4.0 4.0 Agree 33 66.0 66.0 70.0 Neutral 8 16.0 16.0 86.0 Disagree 5 10.0 10.0 96.0 Strongly 2 4.0 4.0 100.0 disagree Total 50 100.0 100.0

INTERPRETATION : From a sample of 50 customers, 66% agree, 4% of them strongly supporting that fact, and 16% has no opinion about it. And 4% strongly disagreed, remaining 10% also disagree with investment in ULIP. 7. Reason for choosing ULIPs because of insurance coverage.

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Reason for choosing ULIPs because of insurance coverage. Frequenc Valid Cumulative y Percent Percent Percent Valid Strongly 14 28.0 28.0 28.0 agree Agree 32 64.0 64.0 92.0 Neutral 2 4.0 4.0 96.0 Disagree 2 4.0 4.0 100.0 Total 50 100.0 100.0

INTERPRETATION : From a sample of 50 customers, 64% of the customers agree, ,28% of them strongly support it,4% customers didnt say anything, and remaining 4% disagree

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with that fact. So we can see that most of the Customers choose ULIP because of insurance coverage. 8. I would like to invest money in Mutual Funds. I would like to invest money in mutual funds. Frequenc Valid Cumulative y Percent Percent Percent Valid Strongly agree 3 6.0 6.0 6.0 Agree 13 26.0 26.0 32.0 Neutral 14 28.0 28.0 60.0 Dsagree 18 36.0 36.0 96.0 Strongly 2 4.0 4.0 100.0 disagree Total 50 100.0 100.0

INTERPRETATION:

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From a sample of 50 customers, 26% of the customers agree with that fact, 6% of the customers strongly support it, and 28% customers have no idea about it. And remaining 10% disagreed, out of this 10%, 4% strongly disagreed with it.

9. Mutual funds are more risky than ULIP products. Mutual funds are more risky than ULIP products. Frequenc Valid Cumulative y Percent Percent Percent Valid Strongly 17 34.0 34.0 34.0 agree Agree 27 54.0 54.0 88.0 Neutral 4 8.0 8.0 96.0 disagree 2 4.0 4.0 100.0 Total 50 100.0 100.0

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INTERPRETATION : From a sample of 50 customers,54% of the customers thinks that mutual funds are more risky than ULIP products,34% strongly agree with this statement.8% customers have no opinion about it,and remaining 4% disagree with it. 10. ULIPs have advantage over Mutual funds.

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ulip has advantage over mutual funds. Frequenc Valid Cumulative y Percent Percent Percent Valid Strongly 12 24.0 24.0 24.0 agree Agree 31 62.0 62.0 86.0 Neutral 5 10.0 10.0 96.0 Disagree 2 4.0 4.0 100.0 Total 50 100.0 100.0

INTERPRETATION : 62% of the customers agree with ULIP have advantage over mutual fund statement.24% customers strongly agree with this fact. And 4% of customers not supporting the statement. And remaining 10% have no opinion about it. 11. Do you think the safety factor is important in your investment in ULIP.

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Safety Frequenc y Percent Valid Strongly agree 4 8.0 Agree 26 52.0 Neutral 2 4.0 Disagree 15 30.0 Strongly 3 6.0 disagree Total 50 100.0

Valid Cumulative Percent Percent 8.0 8.0 52.0 60.0 4.0 64.0 30.0 94.0 6.0 100.0 100.0

INTERPRETATION : From a sample of 50 customers,52% customers agree,8% strongly agree,30% customers were disagree with that fact,6% strongly disagree, and remaining 4% have no opinion about safety factor is important in the investment of ULIP.

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12. Do you think the Liquidity factor is important in your investment in ULIP. Liquidity Frequenc y Percent Valid Strongly agree 3 6.0 Agree 5 10.0 Neutral 5 10.0 Disagree 30 60.0 Strongly 7 14.0 disagree Total 50 100.0 Valid Cumulative Percent Percent 6.0 6.0 10.0 16.0 10.0 26.0 60.0 86.0 14.0 100.0 100.0

INTERPRETATION :

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From a sample of 50 customers, majority of the customers disagree i.e. 60%, 14% strongly disagree with that fact. And 6% strongly agree,10% agree,and remaining 10% neither agree nor disagree with that statement. 13. Do you think the Rate of return factor is important in your investment in ULIP. Rate of return Frequenc y Percent Valid Strongly agree 6 12.0 Agree 21 42.0 Neutral 3 6.0 Disagree 12 24.0 Strongly 8 16.0 disagree Total 50 100.0

Valid Cumulative Percent Percent 12.0 12.0 42.0 54.0 6.0 60.0 24.0 84.0 16.0 100.0 100.0

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INTERPRETATION : From a sample of 50 customers, majority of the customers agree i.e. 42%, 12% strongly agree with that fact. And 24% disagree,16% strongly disagree, and remaining 6% neither agree nor disagree with that statement 14. Do you think the Tax savings is influence your investment decision in ULIP. Tax savings Frequenc y Percent Valid Strongly agree 6 12.0 Agree 21 42.0 Neutral 5 10.0 Disagree 16 32.0 Strongly 2 4.0 disagree Total 50 100.0

Valid Cumulative Percent Percent 12.0 12.0 42.0 54.0 10.0 64.0 32.0 96.0 4.0 100.0 100.0

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INTERPRETATION : From a sample of 50 customers, majority of the customers agree i.e. 42%, 12% strongly agree with that fact. And 32% disagree,4% strongly disagree, and remaining 10% neither agree nor disagree with that statement 15. Past schemes performance influence your investment decision in ULIP. past scheme's performance Frequenc Valid Cumulative y Percent Percent Percent Valid Strongly agree 8 16.0 16.0 16.0 Agree 8 16.0 16.0 32.0 Neutral 7 14.0 14.0 46.0 Disagree 23 46.0 46.0 92.0 Strongly 4 8.0 8.0 100.0 disagree Total 50 100.0 100.0

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INTERPRETATION : From a sample of 50 customers, majority of the customers disagree i.e. 46%, 8% strongly disagree with that fact. And 16% strongly agree,16% agree, and remaining 14% neither agree nor disagree with that statement 16. Advertisement influence the investment decision in ULIP.

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Advertisement Frequenc y Percent Valid Strongly agree 9 18.0 Agree 11 22.0 Neutral 19 38.0 Disagree 5 10.0 Strongly 6 12.0 disagree Total 50 100.0

Valid Cumulative Percent Percent 18.0 18.0 22.0 40.0 38.0 78.0 10.0 88.0 12.0 100.0 100.0

INTERPRETATION : From a sample of 50 customers, 22%agree, 18% strongly agree with that fact. And 10% disagree,12% strongly disagree, and remaining 38% neither agree nor disagree with that statement.

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17. Do you think the safety factor is important in your investment in mutual fund. Safety Frequenc y Percent Valid Strongly agree 2 4.0 Agree 4 8.0 Neutral 8 16.0 Disagree 30 60.0 Strongly 6 12.0 disagree Total 50 100.0

Valid Cumulative Percent Percent 4.0 4.0 8.0 12.0 16.0 28.0 60.0 88.0 12.0 100.0 100.0

INTERPRETATION:

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From a sample of 50 customers,8% customers agree,4% strongly agree,60% customers were disagree with that fact 12% strongly disagree, and remaining 16% have no opinion about safety factor is important in the investment of mutual fund. 18. Do you think the Liquidity factor is important in your investment in mutual fund? Liquidity Frequenc y Percent Valid Strongly agree 7 14.0 Agree 19 38.0 Neutral 15 30.0 Disagree 6 12.0 Strongly 3 6.0 disagree Total 50 100.0

Valid Cumulative Percent Percent 14.0 14.0 38.0 52.0 30.0 82.0 12.0 94.0 6.0 100.0 100.0

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INTERPRETATION : From a sample of 50 customers, majority of the customers agree i.e. 38%, 14% strongly agree with that fact. And 12% disagree,6% strongly disagree, and remaining 30% neither agree nor disagree with that statement. 19. Do you think the Rate of return factor is important in your investment in mutual fund?

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Rate of return Frequenc y Percent Valid Strongly agree 2 4.0 Agree 7 14.0 Neutral 21 42.0 Disagree 15 30.0 Strongly 5 10.0 disagree Total 50 100.0

Valid Cumulative Percent Percent 4.0 4.0 14.0 18.0 42.0 60.0 30.0 90.0 10.0 100.0 100.0

INTERPRETATION : From a sample of 50 customers, 30% disagree, 10% strongly disagree with that fact. And 14% agree,4% strongly agree, and remaining 42% neither agree nor disagree with that statement.

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20. Do you think the Tax savings is influence your investment decision in mutual fund. Tax savings Frequenc y Percent Valid Strongly agree 3 6.0 Agree 6 12.0 Neutral 23 46.0 Disagree 12 24.0 Strongly 6 12.0 disagree Total 50 100.0 Valid Cumulative Percent Percent 6.0 6.0 12.0 18.0 46.0 64.0 24.0 88.0 12.0 100.0 100.0

INTERPRETATION:

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From a sample of 50 customers, 24% disagree, 12% strongly disagree with that fact. And 12% agree,6% strongly agree, and remaining 46% neither agree nor disagree with that statement. 21. Past schemes performance influence your investment decision in mutual fund. past scheme's performance Frequenc Valid Cumulative y Percent Percent Percent 6 12.0 12.0 12.0 22 15 7 50 44.0 30.0 14.0 100.0 44.0 30.0 14.0 100.0 56.0 86.0 100.0

Valid Strongly agree Agree Neutral Disagree Total

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INTERPRETATION : From a sample of 50 customers, 44% agree, 12% strongly agree with that fact. And 14% disagree, and remaining 30% neither agree nor disagree with that statement. 22. Advertisement influence the investment decision in mutual fund.

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Advertisement Frequenc y Percent Valid Strongly agree 4 8.0 Agree 16 32.0 Neutral 24 48.0 Disagree 4 8.0 Strongly 2 4.0 disagree Total 50 100.0

Valid Cumulative Percent Percent 8.0 8.0 32.0 40.0 48.0 88.0 8.0 96.0 4.0 100.0 100.0

INTERPRETATION : From a sample of 50 customers, 8% strongly agree,32% agree with that fact. And 8% strongly disagree,4% disagree, and remaining 24% neither agree nor disagree with that statement. 23. I would like to reinvest my funds in the same company again.

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Reinvestment in the same company again Frequenc Valid Cumulative y Percent Percent Percent Valid Strongly agree 23 46.0 46.0 46.0 Agree 15 30.0 30.0 76.0 Neutral 6 12.0 12.0 88.0 Disagree 4 8.0 8.0 96.0 Strongly 2 4.0 4.0 100.0 disagree Total 50 100.0 100.0

INTERPRETATION : 46% of the customers express their satisfaction level with Bajaj Allianz service. They Strongly agree with the statement, 30% customers also agree with it. And 12% have neutral situation. And remaining 12% not satisfied with Bajaj Allianz.

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LIMITATIONS The middle class people do not know basic concept of ULIP so creating awareness is a big challenge for me. The findings of my research is from a small sample size. Narrow minded thinking of middle class people as investment is not their cup of tea. Many customers are thinking that investment in share market is very risky. As ULIP and Mutual fund both are related to share market. A general preference to LIC and SBI over private players. Hesitations on the part of respondents to disclose financial information. Limitations of the study Following limitations were encountered while preparing this project: 1) Limited data:This project has completed with annual reports; it just constitutes one part of data collection i.e. secondary. There were limitations for primary data collection because of confidentiality. 2) Limited period:This project is based on secondary data . Conclusions and recommendations are based on such limited data. 3) Limited area:Also it was difficult to collect the data regarding the competitors and their

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financial information. Industry figures were also difficult to get. FINDINGS AND SUGGESTIONS After survey there are some findings and suggestions as follows. As insurance sector is growing rapidly so most of the life insurance players are selling ULIP plans. And the awareness about ULIP is growing most of the people knows the ULIP of life insurance. Since last 4-5 years the returns provided by ULIP were very good so people tend more towords ULIP Middle class people who are interested in investment but they are not aware of such options so more awareness should be there, as main target customer are the middle class peoples. While investing any insurance company customer prefers for good branded company Bajaj is Indias one of the most famous and richest family. And second preference is given to SBI life as many people perceive that SBI Life is a govt. owned company so people want security for their investment. As now till date people in India dont wanted to invest in share market because then were thinking that it is a bad thing but as the awareness about Mutual fund is increasing as more and more private players are entering in the market. So awareness about MF is not very good and it can be improved.

While survey I found that many all customers had already invested in ULIP and Mutual Fund some people had invested in both options. 12% of people had invested in Mutual Fund and 26% people had invested in ULIP and 4% people had invested in both the options. While investing in mutual fund 44% of the customers looks their return,42% customers observe the schemes performance in past years.

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 First reason or preference that why an investor is interested in ULIP is Investment Purpose, and second is to its returns and after that they investing CONCLUSION AND RECOMMENDATIONS From above analysis and survey we can conclude as follows Awareness of ULIP is increasing as more number of private players are entering in life insurance industry. Mutual Fund is also getting more and more famous in Indian market as many private companies innovating new funds as the investors demand. ULIP differentiate from Mutual fund in respect of Insurance cover. Investors in Bajaj Allianz Life ULIP will be getting the advantage of life insurance cover. People are turning towords the ULIP as a good investment option but as ULIP is in its starting phase so customers are preferring only big brands. Mutual fund is having good growth but many customers from rural areas dont have any knowledge about Mutual fund.They think it is very risky. Even investors from cities like Changanacherry dont have that much of Knowledge about fund selection they all are depend on Brokers.

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 People in Changanacherry are investing in only good branded companies as they dont believe on other financial companies for taking ULIP. There is a need for insurers to undertake a demand audit in order to understand what the policyholder wants and needs.

APPENDIX

Questionnaire

NAME AGE. ADDRESS: ... CITYPIN CODE.... SEX: MALE/FEMALE

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1. Sources that helps you in making the investment decisions. (a) Financial journal (c) Brokers or agents (e) Consultants 2. Factors that influence your investment decisions in a particular company. (a) Attractive schemes (c) High reputation (e) Variety of products 3. You generally like to invest money. (a) Insurance (c) Mutual Fund (e) Both insurance and mutual fund 4. According to you who among the following Life Insurance companies is best. (b) Stock Market (d) Bank deposits (b) Tax benefits (d) Rate of return (b) Television (d) Friends

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(a) Bajaj Allianz (c) Tata Aig (e) Sbi Life 5. How would you rate our products. (a) Excellent (c) Fair (e) Very poor

(b) Hdfc Standard Life (d) Nce

(b) Good (d) Poor

6. I Would like to invest money in ULIP. (a) Strongly agree (c) Neutral (e) Strongly disagree 7. Reason for choosing ULIPs because of insurance coverage. (a) Strongly agree (c) Neutral (e) Strongly disagree 8. I would like to invest money in Mutual Funds. (a) Strongly agree (c) Neutral (e) Strongly disagree 9. Mutual funds are more risky than ULIP products. (b) Agree (d) Disagree (b) Agree (d) Disagree (b) Agree (d) Disagree

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(a) Strongly agree (c) Neutral (e) Strongly disagree 10. ULIPs have advantage over Mutual funds. (a) Strongly agree (c) Neutral (e) Strongly disagree

(b) Agree (d) Disagree

(b) Agree (d) Disagree

Do you view following factors/sources of information important while investing in ULIP. Strongly agree (11) Safety (12) Liquidity (13) Rate of Return (14) Tax savings (15) past schemes Performance (16) Rating of ULIP by Agencies (17)Advertisements Do you view following factors/sources of information important while investing in Mutual Funds. Strongly agree Agree Neutral Disagree Strongly disagree Agree Neutral Disagree Strongly disagree

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(11) Safety (12) Liquidity (13) Rate of Return (14) Tax savings (15) past schemes Performance (16) Rating of ULIP by Agencies (17)Advertisements

BIBLIOGRAPHY

REFERENCE: 1) Research Methodology, C.R Kothari, 2nd edition

2) Outlook Money, 15 May 2005, ULIP Mania. 3) The Business Line, 10 June 2007, Know all About ULIPS.

WEBSITE

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www.irdaindia.gov www.bajajallianzlife.co.in www.quickmba.com www.amfindia.com www.mba.com www.articlebase.com

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