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Keerthi N (P03ad21m0134) Project Report
Keerthi N (P03ad21m0134) Project Report
By
Keerthi N
Reg no : P03AD21M0134
Dr Jayaprakash Reddy
Professor
May 2023
DECLARATION BY THE STUDENT
I also declare that this project is the outcome of my own efforts and that it has not
been submitted to any other university or Institute for the award of any other degree
or Diploma or Certificate.
Certificate of Originality
(Plagiarism)
Name of the Student : Keerthi N
Insurance Plan
Trunitin
PAGE
CHAPTER PARTICULARS
NO.
INTRODUCTION
• Review of literature
• Objectives of the study
• Scope of the study
3 36-42
• Statement of problem
• Need for the study
• Research design
• Tools and techniques
• Limitations of the study
BIBLIOGRAPHY 96
ANNEXURES 97-102
LIST OF TABLES
CHAPTER 1
INTRODUCTION
AIMS INSTITUTE
A COMPARATIVE STUDY ON ULIP AND TRADITIONAL INSURANCE PLAN
INTRODUCTION
The selection of an efficient strategy in the business world is possibly both the most
crucial and most difficult choice to make. choosing one of the major strategies and
determining which approach will best achieve the individual’s goals is complicated
by a number of factors. The same is also true for Indian insurance companies, who
are often updating their plans and introducing new solutions to stay competitive.
There was a time when Life Insurance Company of India (LIC) was the sole
insurance provider available to Indian citizens, and Insurance was often equated
with LIC, the fact that it was a Public Sector Undertaking (PSU), it enjoys strong
public support. But as things have evolved, many more private players have joined
the battle. Several Indian businesses have partnered with international insurance
behemoths like ICICI Prudential, Bajaj Allianz, and others who have already
established themselves in the Indian insurance market. A number of unlimited
programmes are now being offered by the new private players. Also, private
businesses have begun to emphasise the value and necessity of insurance in today's
world.
INDUSTRY PROFILE
Insurance
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A COMPARATIVE STUDY ON ULIP AND TRADITIONAL INSURANCE PLAN
Insurance companies set the premiums to be paid for the policies and undertake the
risk connected with annuities and insurance policies. The carrier specifies in the
policy the duration and terms of the contract, the specific losses it will cover
financially, and the amount that will be paid out. The amount to be awarded in the
event of a loss and the possibility that the insurance provider would have to make a
payment are the primary factors used to determine the policy premium. Insurance
firms invest the premium money they receive in order to be able to pay
policyholders for their losses, creating a portfolio of financial assets and income-
producing real estate that can then be used to settle any potential future claims.
1. Perils like firefloods, breakdowns, lightning, and earthquakes are likely to cause
assets to be destroyed or rendered useless.
2. Only when a loss-causing event's likelihood of happening is unknown does
insurance become important.
3. We might say that the value of a human life is an ongoing resource that can be
lost due to accident-related early death or incapacity.
4. Insurance simply covers economic or financial loss; it does not safeguard assets.
5. No uncertainty No insurance.
India, which has roughly 200 million middle-class households, presents a sizable
untapped market for insurance firms. Market saturation in many developed
economies has increased the appeal of the Indian market for major international
insurance companies. In India, the insurance industry has reached a level of market
competitiveness and significant potential. The current trend is towards innovative
items and aggressive distribution. Indians, who have long viewed life insurance as
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A COMPARATIVE STUDY ON ULIP AND TRADITIONAL INSURANCE PLAN
a tax-saving strategy, are suddenly looking to the private sector, which is offering
them new products and a wide range of options.
• life insurance.
• General (non-life) insurance.
The Ministry of Finance, Government of India, has jurisdiction over the Insurance
Regulatory and Development Authority of India (IRDAI), a statutory agency
entrusted with licencing and overseeing the country's insurance and reinsurance
sectors. It was established by the Insurance Regulation and Development Authority
Act, 1999, a law passed by the Indian government through the Indian Parliament.
LIFE INSURANCE
The risk of dying or being disabled due to natural or unintentional causes exists in
human life. Through life insurance, a person can safeguard themselves from such
occurrences. Human life is insured with life insurance. Even though human life
cannot be valued, a monetary amount that is based on the loss of income in the
coming years can be calculate
ed. Thus, in the case of life insurance, the Sum Assured (or the amount guaranteed
to be paid in the event of a loss) is by way of a "benefit". If the life insured passes
away while still actively earning an income or becomes incapacitated due to an
accident that results in a reduced or complete loss of income earnings, life insurance
policies will pay out a certain amount of money to the insured's dependents.
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Definition
Policy for life insurance typically fall into one of two categories:
2. Investment policies (Unit Linked Insurance Policies): The primary goal of these
plans is to promote capital growth through recurring or one-time premium payment.
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INTRODUCTION TO ULIP
The unit linked insurance plan (ULIP) is a type of life insurance that offers
protection and investing freedom to the client. It is the combination of investment
and life insurance, that offers the chance to transfer financial risk while also earning
non-taxable income. In essence, ULIPs, which are offered by various insurance
firms, provide investors with the advantages of both insurance and investing under
a single integrated plan, first allocating units to clients and calculating NAV (Net
Asset Value) on a daily basis. A company that offers unit-linked plans must, in
accordance with the IRDA, allow investors the option to select amongst debt,
balanced, and equity funds.
The numerous advantages that ULIP offers its policyholders help it stand out from
the competition. These plans are created with the goal of assisting clients in taking
advantage of market possibilities by investing in the capital market and share
market while also providing the option of death benefits and maturity benefits.
When a consumer pays his premium, the number of units he will receive will depend
on the unit price. The market value of the underlying assets (stocks, bonds,
government securities, etc.) is used to determine the daily unit price, which is
computed from the net asset value.
Unit Trust of India launched the first ULIP (UTI). The Insurance Regulatory and
Development Authority of India (IRDAI) issued major guidelines for ULIPs in
2005 after the Government of India opened the insurance sector to foreign investors
in 2001. As a result, several insurance companies entered the ULIP business,
resulting in the launch of an excessive number of ULIP schemes to meet the
investment needs of those seeking to invest in an investment-linked insurance
product.
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ULIP Features
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everything depends entirely on the type of ULIP chosen for investing as well as
the investor's preferences and risk tolerance.
5. ULIP programmes have a list of applicable charges that are subtracted from the
payable premium, unlike standard insurance policies. The important ones are
policy administration fees, premium distribution fees, fund switching fees,
mortality fees, and a fee for withdrawing or surrendering a policy. Some
insurers also impose a "Guarantee Fee" that is calculated as a percentage of
Fund Value for the policy's built-in minimum guarantee.
6. Before choosing to invest in ULIPs, one must have a thorough understanding of
the risks involved and one's own capacity for risk absorption. This is because
ULIP returns are directly correlated to market performance and investment risk
in an investment portfolio is entirely assumed by the policy holder.
7. Under Section 80C of the Income Tax Act, investments in ULIPs are eligible
for a tax advantage of up to Rs 1.5 lakhs.
TYPES OF ULIPs
SINGLE REGULAR
EQUITY FUND DEBT FUND
PREMIUM PREMIUM
BASED ULIPs BASED ULIPs
ULIPs ULIPs
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ADVANTAGES OF ULIP
1. Investment opportunities
2. Flexibility
3. Tax Benefit
5. Wealth creation
6. Withdrawal in parts
1. Investment opportunities:
ULIPs allow policyholders to invest in different asset classes like equity, debt,
and balanced funds, depending on their risk appetite and investment goals.
2. Flexibility:
ULIPs offer a lot of flexibility in terms of investment, premium payment, and
policy tenure. Policyholders can choose their premium payment frequency,
investment fund options, and switch between funds depending on market
conditions.
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A COMPARATIVE STUDY ON ULIP AND TRADITIONAL INSURANCE PLAN
3. Tax benefits:
ULIPs offer tax benefits on premiums paid, as well as on maturity proceeds.
Policyholders can claim deductions under Section 80C of the Income Tax Act,
1961, for premiums paid towards ULIPs, subject to certain limits.
6. Withdrawals In Parts
After the lock-in period, policyholders can make partial withdrawals if they
don’t exceed 20% of the policy’s fund value. Furthermore, these withdrawals
are not subject to taxation.
DISADVANTAGES OF ULIPs
1. High charges
3. Market risk
6. Poor liquidity
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1. High charges
ULIPs can have expensive fees, such as those for premium allocation, policy
administration, fund management, mortality, and surrender. The returns on
investment may be greatly reduced by these fees.
3. Market risk
ULIPs invest in equity and debt markets, which can be volatile and subject to
market risk. If the market performs poorly, the value of the investment can
decrease, resulting in lower returns.
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6. Poor liquidity
ULIPs have a lock-in period of 5 years, which means that the policyholder
cannot withdraw the funds before the completion of the lock-in period. This can
limit the policyholder's liquidity and ability to access the funds in case of an
emergency.
A portion of the money used to purchase ULIP premiums is invested in funds, while
the other half is utilised to provide life insurance. Also, we have the choice to create
our own investing portfolio based on our risk tolerance and anticipated returns. we
receive a sum known as the fund value as returns at the end of the investment period.
The NAV of the initial investment in the units will determine the amount received.
The value of an investment fund's assets less the value of its liabilities is known as
the fund’s net asset value (NAV). We can use this figure to monitor the performance
of our investment. Basic knowledge of ULIP operation is necessary to comprehend
NAV.
Like us, a number of other investors pay the insurance provider the premium for a
ULIP. After that, the insurer pools the money from all of these investors into one
huge investment total, which is subsequently invested in a variety of market
instruments. Large and varied investments guarantee good profits.
Depending on the premium each investor pays, they will each receive a different
number of units. The indicator of each unit's value is called Net Asset Value, or
NAV. The amount of units that each investor owns represents their share of the
overall investment. The proceeds are then split according to the number of units
sold.
Example
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Let's imagine that your investment amount is reduced by fundamental expenses like
mortality charges to become 69,500. The contribution from the second investor is
now 29,600/-.
As a result, the insurance firm can invest a total of (69,500 + 29,600) = 99,100/- in
market funds. The invested fund's net market value is represented by this amount.
The insurer now creates units that have a face value of 10/- each unit. Hence, the
overall quantity equals 99,100/10 = 9,910 units. You will possess 69,500/10 = 6,950
units based on its face value. This is because your contribution was 69,500
The net investment value will rise if the investment is profitable. Let's say that the
fund's net value increases to 1,20,000. The NAV also changes as a result. However,
until you add more units by paying the subsequent premium instalment, the number
of units stays the same.
The new net fund value, which is 1,20,000, may be calculated by dividing it by the
total number of units in the fund (9,910 in this case).
And your total net worth is now 6,950 X 12.11/-, which is 84164.50/-. As a result,
you earned a profit of 14,664/-.
➢ A fund's performance
While selecting the best ULIP plans, this is the most important thing to take
into account. It should also be noted that the fund's past performance is not
necessarily a predictor of its future outcomes.
➢ Premium
This is also another essential component that allows policyholders to select
the ULIP Plans that most closely match their preferences.
➢ Policy-Related Costs
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Both the policy fees and all other fees should be disclosed by the company,
and the policy fees should be as reasonable as feasible.
➢ Amount of Money
To provide the maximum return feasible, the fund combinations should be
balanced across equity, debt, and other hybrid funds.
➢ Extra Benefits
You should keep an eye out for bonuses which significantly increase the
fund's value.
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Introduction
Since the beginning of insurance, traditional plans have been in existence. The
benefits of safety and savings have been offered to the policyholders by these
programmes.
The earliest insurance policies are traditional plans, which are designed for people
who don't like taking on a lot of risk. The sum promised and a guaranteed are
provided by traditional insurance policies at maturity. Due to the modest amount of
high-risk equity exposure in these plans, there is also a low chance of a negative
outcome.
But, they don't have the same level of transparency, adaptability, and liquidity that
other investment alternatives have. Private players have been attempting to attract
customers with novel and inventive policies since the insurance sector was opened
up. Customers find unit linked plans to be more transparent, adaptable, and
understandable than standard insurance policies.
Features
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damage (in the case of home insurance). The extent of coverage and the terms
and conditions are outlined in the insurance policy.
4. Policy Renewal: Traditional insurance plans typically have a defined term, after
which the policy may be renewed or terminated. Renewal may be subject to
changes in premiums, coverage, or terms and conditions.
2. Money -
1. Endowment 3. Term Life 4. Whole Life
Back
plan Insurance Plan Insurance Plan
Insurance Plan
1. Endowment plan
In this case, the insured receives a lump payment as well as bonuses upon
maturity or death of the insurance. When an insured person passes away, these
plans pay the bonus and the sum insured to the nominee or beneficiary. Just the
years that the insured lived while the insurance was in effect count towards the
bonus.
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1. Guaranteed Benefits
2. Simplicity
3. Fixed Premiums
5. Lower Risk
1. Guaranteed Benefit
Traditional insurance policies frequently include a guarantee of benefits, which
indicates that in the event of a specified event, such as death or disability, the
policyholder will be guaranteed to receive a specific amount of money. For the
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policyholder and their beneficiaries, this offers a feeling of security and peace
of mind.
2. Simpleness
Traditional insurance policies are frequently uncomplicated and simple to
comprehend. They often don't entail complicated investment alternatives or
market risks, and they have a straightforward structure. For of this, they are
suitable for people who prefer a straightforward and predictable approach to
insurance.
3. Premiums Fixed
In Traditional insurance plans, the premiums are often fixed during the policy's
duration, which implies that the policyholder pays the same amount of premium
for the entire time the policy is in effect. Due to the policyholder's knowledge
of the precise premium amount to be paid and their ability to make appropriate
plans, budgeting and financial planning are now made easier.
5. Reduced Risk
Compared to alternative insurance plan types, such unit-linked or variable
insurance plans, traditional insurance plans often have lesser investment risks.
Because of this, they may be a more cautious choice for those who are risk
averse and uncomfortable with market volatility. The returns are less uncertain,
and you know how much money you'll get when. You can better plan for the
future with its assistance.
6. Long-term Coverage
Traditional insurance policies are frequently created to offer long-term
coverage, frequently for the insured's whole lifetime. This can be advantageous
for people who wish to make sure that their loved ones are financially secure in
the case of their passing or handicap, regardless of when that may occur.
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1. Increased Premium
2. Restricted Flexibilit
4. Lack of Transparency
1. Increased Premium
Traditional insurance plans may have rates that are higher than other forms of
insurance plans, such as high-deductible health plans or self-insured plans.
Some people may find it less affordable as a result of higher prices for both
enterprises and individuals.
2. Restricted Flexibility
The range of coverage options available in traditional insurance plans is
frequently somewhat constrained. The options available to policyholders may
be constrained by their tight rules and regulations about the services, providers,
and medications that are covered. For those who require particular treatments
or prescriptions that might not be covered under their plan, this lack of
flexibility can be a drawback.
4. Lack of Transparency
Traditional insurance policies may have complicated pricing arrangements,
which can make it challenging for policyholders to comprehend the actual cost
of their coverage. It may be difficult for policyholders to make wise decisions
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about their healthcare as a result of the lack of transparency, which can cause
confusion and dissatisfaction.
1. Coverage
Take into account the kinds of dangers or occurrences that are covered, the
scope of the insurance, and any potential restrictions or exclusions.
2. Premiums
Assess the cost of premiums, which are the ongoing payments you must make
to keep your insurance in force
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deductibles are the amount you must pay out of pocket before your insurance
coverage begins.
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1. Investment component:
• ULIPs provide an insurance and investment product in one, with a portion
of the premium invested in a variety of funds chosen by the policyholder.
• Traditional life insurance plans, on the other hand, just provide a life cover
and no investing element.
2. Flexibility:
• ULIPs allow for a range of premium payment and investment alternatives.
The funds that policyholders desire to invest in might be changed as needed
to meet their investing objectives. In accordance with their needs, they can
also select the frequency of premium payments and the assured money.
• Traditional plans, on the other hand, provide little flexibility and don't let
you choose your investment selections or the frequency of premium
payments.
3. Charges:
• ULIPs contain a number of fees that are subtracted from the premium that
the policyholder pays. These fees include premium allocation fees, fund
management fees, and mortality fees.
• Traditional insurance policies only impose administrative and premium-
related fees.
4. Returns:
• ULIPs provide returns that are based on the performance of the chosen funds
and may be higher or lower depending on the state of the market.
• Traditional insurance policies provide fixed returns on premiums paid,
which may be less than market returns.
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5. Risk:
• ULIPs have a higher risk because the returns are based on the state of the
market and the performance of the chosen funds.
• Traditional plans, on the other hand, have minimal risk because the rewards
are assured and fixed.
6. Lock-in-period:
• The policyholder cannot surrender or withdraw the policy during the lock-
in term, which is normally 5 years for ULIPs.
• Depending on the conditions of the policy, traditional life insurance plans
may have lock-in periods that are shorter or may not have any at all.
7. Transparency:
• In terms of costs and fees, ULIPs are frequently more open and honest. The
costs connected with the policy are openly disclosed, and policyholders
receive frequent reports on the success of the investment funds.
• The subscribers of traditional life insurance plans might not have as much
access to the investing component and there might be hidden fees.
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CHAPTER 2
COMPANY PROFILE
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The leading solutions (TLS) is the one stop solution provider for all the financial
needs. By creating safety nets to protect one's capital from unforeseen
circumstances and risks, the company aims to become a one-stop solution for all
wealth management and financial issues.
Overview
Website: https://www.theleadingsolutions.com/
Contact information
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Location: RG trade tower, Netaji Subash Place, Pitam Pura, Delhi, 110034
Email: info@theleadingsolutions.com
COMPANY LOGO
➢ 118 clients
➢ 300 interns certified
With the help of renowned B-schools, the company is able to facilitate a variety of
trainings and development programmes. Too far, they have trained thousands of
interns. The TLS organisation has relationships with more than 50 colleges in India
with a base of 800 or more campuses. Keeping in mind the most pressing
requirements of the modern world, they have emerged as a service partner of
numerous banks, offering a one-stop shop for a variety of services.
So, their goal is to set high standards of business etiquette and, through our great
training solutions, to successfully assist a comprehensive and accomplished system
of continual professional growth for every conceivable field.
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TLS is one of India's emerging consultancy firms. TLS offers high-end and HNI
clients a variety of administrative services. Customers from around the nation as
well as those who are stationed abroad are drawn to their extremely well-organized
and focused team. They facilitate each and every administration required to manage
customers' money and make plans for their own and their families' present and
future demands.
Wealth can be attained, but wealth maintenance requires various qualities. For a
number of reasons, people, families, and even companies become affluent, but they
frequently make the error of believing they can also triumph in the wealth
management game on their own. Every year, millions of dollars are wasted due to
irresponsible direct investments and bad decisions made by professionals in the
legal, operational, accounting, investment, and insurance fields. The appropriate
partner not only makes sense, but is essential to reaching one's goals because there
are frequently no "do overs." At the end of the day, what you keep is more important
than what you make.
The Leading Solutions (TLS) genuinely cares about its customers and gives them
the greatest solutions based on what they actually need rather than what the business
has. They are service providers, not salespeople, and a competent service provider
is one who simultaneously meets the needs of his/her clients and finds solutions to
their problems on an extended basis.
VISION –
Our motive is to upgrade the perception of investors moving them from traditional
investment decision making to diversified one. In this dynamic economy it is always
better to diversify your funds. We work on the core mentality of investors and try
to shift their interest from traditional to modern mind set by providing them greater
choices to invest. To expand our piece of the overall industry year on year and keep
up a similar dimension of involvement for each customer. What's more, guarantee
that we become the most profitable resource for every customer.
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MISSION –
To assemble a world class business through high quality and genuine budgetary
arrangements upheld by sharp research and master group. The arrangements are
conveyed by specialists who comprehend the particular earnings of each customer.
1. Consultation services
2. Taxation services
3. Accounting services
4. Recruitment services
5. Portfolio management.
SERVICES
1. Consulting services
→ Investment
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→ Operations
→ Technology.
2. Accounting services
3. Portfolio Management
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4. Taxation Service
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o Property taxes - are calculated based on the value of land and other property
assets.
o Tariffs - are levied on imported items with the intention of boosting domestic
industry.
o Estate tax - is calculated as a percentage of a property's fair market value at the
time of death.
People and businesses should carefully research the tax rules of a new location
before earning money or conducting business there because tax systems across
the world differ greatly from one another.
Your thorough tax planning will be aided by TLS. They will also provide you
with taxes insights that will aid in helping your client manage his company's
taxation structure.
5. Recruitment Services
The procedures used to select people for unpaid employment are also referred
to as recruitment. Managers, human resource generalists, and recruitment
experts may be tasked with conducting recruitment, but in some instances,
commercial employment agencies, public employment agencies, or specialised
search consultancies are utilised to carry out specific elements of the process.
Technologies based on the internet that assist with all facets of recruitment are
now commonplace.
Process
→Job analysis - To identify the knowledge, skills, abilities, and other qualities
(KSAOs) needed or desired for a work, a job analysis may be carried out
for new jobs or jobs that have undergone significant changes. A person
specification is created based on these, capturing the pertinent data.
→ Recruiting is the process of locating or enticing candidates.
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Sourcing
In order to find candidates to fill open positions, one or more sourcing
techniques are used. It might involve internal and/or external recruitment
advertising using the right channels, like job portals, regional or national
newspapers, social media, business media, recruitment-specific channels, trade
publications, window ads, job centres, or in a variety of ways online.
In addition, businesses may engage recruitment consultancies or agencies to
locate people who would otherwise be difficult to identify and who, in many
situations, may be happy in their existing roles and not be actively wanting to
change. The recruiter can use the contact information to covertly get in touch
with and screen possible applicants after conducting this initial candidate
research, also known as name generation.
Workers are the foundation of any business, therefore finding the right ones to
hire is crucial. The TLS firm selects the best candidate based on your needs.
They assist with recruiting strategy and conduct interviews for you in addition
to conducting internal and external job analyses.
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SWOT Analysis
Strengths
➢ Strong market presence with a well-known brand and reputation: The Leading
Solutions have a well-established market presence.
➢ Customer base that is diverse: The company have a customer base that is
diverse, decreasing reliance on a single market or industry.
Weakness
➢ Intense competition: The company see intense competition from other industry
participants, which could have an impact on its market share or pricing power.
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Opportunities
➢ Market expansion: The company have the chance to penetrate new markets,
increase its clientele, or focus on developing sectors.
Threats
➢ Competition: The company sees fierce competition from both current and new
competitors, which have an effect on its market share, price, or profitability.
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Company Values
➢ Innovation
Developing new solutions that address complicated issues and spur positive
change while putting a strong emphasis on a culture of creativity.
➢ Customer-centricity
Placing the needs of the customer at the centre of everything a company
does, understanding those needs, and providing solutions that go above and
beyond what the customer expects and upholding long-term relationships
based on trust, openness, and mutual success.
➢ Excellence
Striking for perfection in all areas of their work, upholding the highest levels
of professionalism, integrity, and quality, and consistently looking for ways
to enhance their operations and services, to provide the best results.
➢ Collaboration
Promoting a cooperative and welcoming workplace atmosphere,
encouraging cooperation, open dialogue, and knowledge sharing among
staff members, customers, partners, and stakeholders in order to realise
common objectives and increase group influence.
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CHAPTER 3
RESEARCH DESIGN AND METHODOLOGY
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Review of Literature
Many studies have been conducted on its various facts by researchers, economists,
and academics in the Indian subcontinent and beyond when it comes to the
comparative examination of traditional and unit-linked insurance policies. Research
on Conventional Insurance Plans and ULIPs has been conducted by several
researchers from various angles.
Mitra & Khan (2012) assert that the stock market plays a direct role in the risk
factor of ULIPs. The NAVs are determined daily, and the units' NAVs rise and fall
according to dependent on the performance of the fund and other market-
influencing factors. ULIPs are subject to a variety of fees, including fund
administration fees, mortality fees, premium allocation fees, etc. The fact that
ULIPs are riskier than conventional plans was also emphasised. Research have
indicated that ULIP growth among private enterprises is higher than that of typical
insurance policies. As the investor assumes the risk in ULIPs rather than the insurer,
the insurer should have an open process for determining fees. Switching is possible
depending on the policyholder's risk tolerance, just like mutual funds.
In her research, she also discovered that ULIPs, like other products, cannot make
the claim to be the ideal financial answer. Nonetheless, ULIPs are a fantastic
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investment vehicle accessible in the Indian market for an investor who makes wise
investments and is willing to wait patiently finance industry.
According to Song and Satpal, Silender, 2009, The quantity of the policy's
maturity is the most popular factor, according to a research of customer satisfaction
in ULIPs conducted in Delhi and the least desired variable is the insurance surrender
period, which is a factor. The future planning of policies and their features must
take this into account for life insurance companies.
Actuary Member of the IRDA, Mr. Khanna (2009), The market's ups and downs
are common with ULIPs because they are typically granted for extended terms (12–
20 years). It's not a smart idea to cash out units while the market is down, some
Investors consider today to be a favourable time to invest.
Research Methodology
Research methodology is concerned with the method used to conduct the study. The
specification of methods and processes for gathering the required information is a
research design.
The information gathered from both primary and secondary sources formed the
basis of the current study.
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• The scope of study is limited to Karnataka State and the sample size is 70.
• An examination of the insurance sector served as market research.
• In the study, the ULIP plan was compared to other conventional plans.
Statement of problem
Comparing Unit Linked Insurance Plans (ULIP) and traditional insurance plans in
order to discover which is a better investment choice for people is the issue that this
study seeks to solve. The general public lacks clarity and awareness regarding the
distinctions between ULIPs and traditional insurance policies, as well as which one
would best suit their financial and investing goals. In order to help people make
wise investment decisions, this study will present a comparative analysis of the two
insurance products, including their characteristics, benefits, fees, and hazards.
People can make wise financial decisions by comparing Traditional and Unit
Linked Insurance Plans. Additionally, it will assist insurance providers in offering
higher-quality insurance coverage to meet client needs. This research is helpful for
carrying out additional insurance-related research.
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Research Design
1. Sampling Techniques
Sample size:
Sample area:
Sampling Method:
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Sources
a. Primary Data
Primary data is first-hand information that is gathered by the researcher
specifically for the study or analysis in question. It is information that has not
yet been published or examined by others.
Primary data is collected through questionnaire.
• Questionnaire: A questionnaire is a tool used in surveys and research to acquire
information from people or organisations. Typically, it consists of a series of
questions intended to elicit answers from respondents.
The objective was considered when creating the questionnaire. To conduct the
poll, a variety of questions were put to the respondents.
b. Secondary Data
secondary data is information that has previously been gathered by another party
for a different reason and is used by the researcher for their own investigation
or analysis.
Secondary data is collected from
• Libraries
• Magazines/Journals
• Internet
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Tools/techniques
In the analysis and interpretation of the data, the percentage technique was applied.
A percentage is a specific form of ratio that is used to compare two or more data
series and to describe relationships with other elements.
Limitations
1. Drawback of the project is that the research and survey were limited to
Karnataka state only.
2. To analyse the responses provided by respondents, only the percentage
approach was used in the study.
3. A study's findings might not be statistically significant or might not be
generalizable to a larger population if the sample size is small.
4. Timeframe, which restrict the scope and depth of the investigation.
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CHAPTER 4
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DATA ANALYSIS
Data analysis is the act of looking over, cleaning, transforming, and modelling data
with the aim of emphasising important information, offering hypotheses, and
assisting in decision-making. The percentage technique is used to analyse the data.
1. GENDER:
Table no. (4.1) showing the proportions of respondents from each gender
Male 27 41.5%
Female 38 58.5%
Others - -
Analysis:
There are 65 responses in total, in which there are 27 male respondents and 38
respondents in the survey.
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Chart no. (4.1.1) displaying the proportions of respondents from each gender
Interpretation:
The respondents were asked to identify their gender in order to determine which
gender participated in the study most actively. Understanding the traits and
demographics of the research population is the primary goal of this question.
Females made up the majority of responders. In comparison to female responders,
the response rate from men is lower.
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2. AGE GROUP
Table no. (4.2) showing the proportions of respondents from different age groups
15-25 39 60%
25-35 17 26.2%
35-45 6 9.2%
Analysis:
There are 65 responses in total, in which the age group of 15-25 as 39 respondents,
age group of 25-35 as 17 respondents, age group of 35-45 as 6 respondents and 45&
above as 3 respondents.
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Chart no. (4.2.1) displaying the proportions of respondents from different age
groups
Interpretation:
The distribution of responders among various age groups is shown on the chart. It
demonstrates that the majority of respondents (60%) belong to the 15–25 age group,
followed by the 25–35 age group (26.2%), the 35–45 age group (9.2%), and the 45–
and-over age group (4.6%). It implies that a larger proportion of younger people
participated in the study, which might affect how well the findings apply to older
populations.
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3. OCCUPATION
Table no. (4.3) showing the proportions of respondents from different occupations.
Occupation No. of respondents Percentage
Employee 27 41.5%
Businessman 7 10.8%
Student 26 40%
Other 5 7.7%
Analysis:
There are 65 responses in total, in which employees are 27, Businessman are 7,
Students are 26 and others are 5.
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Interpretation:
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4. Annual Income
Table no. (4.4) showing the proportions of respondents of different annual income
levels.
Annual income No. of respondents Percentage
Analysis:
There are 65 responses in total, in which 30 respondents fall under annual income
category of less than 50,000; 21 respondents between 50,000 to 1,00,000 and 41
respondents 1,00,000 and above.
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Interpretation:
• Out of total respondents. 46.2% stated their annual income less than 50,000 per
year.
• 32.3% of the respondents stated their annual income is between 50,000 to
1,00,000
• 21.5% of the respondents stated their annual income is 1,00,000 or more
• The majority of respondents have annual income less than 50,000 per year, it
may also be deduced that the sample under study was relatively low income.
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Yes 40 61.5%
No 25 38.5%
Analysis:
There are 65 responses in total, out of which 40 respondents makes investment and
25 respondents will not make investments.
Interpretation:
• Out of total respondents. 61.5% make investments.
• 38.5% of the respondents stated they will not make investment.
• It demonstrates that majority of respondents make investments.
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Gold 8 12.3%
Analysis:
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Interpretation:
• Of all respondents, 44.6% said they would rather make investments in the
stock market, making it the most popular investment option.
• Bank savings are preferred by 18.5% of the respondents, mutual funds by
15.4%, and gold by 12.3%.
• Just 9.2% of those surveyed said insurance investment options were
preferred.
• Financial institutions and investment firms can utilise this data to create their
products and better understand the interests of future clients.
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Yes 29 44.6%
No 22 33.8%
Maybe 14 21.5%
Analysis:
There are 65 responses in total, out of which 29 respondents are aware of ULIP ,
22 respondents are not aware of ULIP and 14 respondents are not sure.
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Interpretation:
• In terms of the total number of respondents, 44.6% said they are aware of ULIPs
while 33.8% said they were not.
• For the 21.5% of respondents who are not sure, the answer was "maybe."
• Majority of the respondents are aware about ULIP
• The level of ULIP awareness may be determined using this information, which
insurance companies can utilise to tailor their marketing and instructional
initiatives. They can use it to identify potential clients who might need more
explanation or education about ULIPs.
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Yes 14 21.5%
No 51 78.5%
Analysis:
There are 65 responses in total, out of which 14 respondents have invested in ULIP
and 51 respondents have not invested in ULIP.
Interpretation:
• Out of total respondents, 21.5% have invested in ULIP
• 78.5% have not invested in ULIP
• It can be seen that majority of the respondents have not invested in ULIP
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10 – 15% 12 21.4%
15 – 20% 23 41.4%
20 – 30% 15 26.8%
Analysis:
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Interpretation:
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Flexibility 20 30.8%
Interpretation:
The above table represents respondents’ major reason for investing in ULIP, the
question type was multiple selection of option, where 20 respondents invests as they
found it as a better investment opportunity, followed by 20 respondents who invest
due to flexibility, with maximum respondents investing for tax benefit i.e., 26 and
at last with minimum respondents for insurance coverage & wealth creations.
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No risk 8 12.3%
Analysis:
There are 65 responses in total, out of which 11 respondents say ULIP is very risky,
46 respondents say ULIP is less risky and 8 respondents say there is no risk in ULIP.
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Interpretation:
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Unaware 17 26.15%
Analysis:
There are 65 responses in total, out of which 18 respondents are fully aware of ULIP
working, 30 respondents are little aware of ULIP working and 17 respondents are
unaware of ULIP working.
Unaware 24 36.92%
Analysis:
There are 65 responses in total, out of which 9 respondents are fully aware of
different ULIP plans, 32 respondents are little aware of ULIP plans and 24
respondents are unaware of ULIP plans.
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Unaware 27 41.54%
Analysis:
There are 65 responses in total, out of which 9 respondents are fully aware of ULIP
switching option, 29 respondents are little aware of ULIP switching option and 27
respondents are unaware of ULIP switching option.
Chart no. (4.12.4) showing level of ULIP awareness- ULIP working, Different
plans, Switching option
Interpretation:
a. ULIP working
• Fully aware: 27.69% of respondents said they are fully aware of how ULIPs
operate.
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• Little aware: 46.15 percent of respondents said they were somewhat but not
fully informed about ULIPs.
• Unaware: According to 26.15% of the survey participants, they had no idea
how ULIPs operate.
b. Different plans
• Fully aware: 13.83% of respondents said they were fully informed of the
various ULIP plans that are offered.
• Little aware: 49.23% of respondents said they were somewhat knowledgeable
about the various ULIP plans.
• Unaware: According to the respondents, 36.92% were not aware of the
various plans offered by ULIPs.
c. Switching Options
• Fully aware: According to 13.83% of the respondents, they are completely
informed about the switching option in ULIPs.
• Little aware: 44.61% of the respondents said they were somewhat aware of
the ULIP switching option.
• Unaware: According to the respondents, 41.54% were not aware of the ULIP
switching option.
Overall, the data indicates that a sizeable fraction of respondents have little
knowledge about ULIPs feature, a lesser percentage are fully knowledgeable, and
a sizeable portion are utterly oblivious. This shows that there is room for
improvement in terms of educating the respondents about ULIPs, how they
function, different plans, and switching choices. To increase general awareness
and comprehension among potential investors, it could be advantageous to offer
additional education and information concerning ULIPs.
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1 2 3.1%
2 9 13.8%
3 24 36.9%
4 25 38.5%
5 5 7.7%
Analysis:
There are 65 responses in total, out of which 2 respondents are highly dissatisfied,
9 respondents are dissatisfied, 24 respondents are neutral, 25 respondents are
satisfied and 5 respondents are highly dissatisfied.
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Interpretation:
• On a scale of 1 to 5, with 1 denoting the lowest level of satisfaction and 5
denoting the highest level, the respondents were asked to rate their level of
satisfaction with ULIPs.
• Rank1: Only 3.1% of respondents gave their level of satisfaction with ULIPs
a 1, which is the lowest possible rating.
• Rank 2: 13.8% of those surveyed assigned a satisfaction score of two.
• Rank 3: Most respondents (36.9%) gave their pleasure with ULIPs a rating of
3, which denotes a moderate degree of satisfaction.
• Rank 4: 38.5% of respondents gave their degree of satisfaction at this level.
• Rank 5: Only 7.7% of respondents gave their happiness with ULIPs a rating
of 5, which is the highest possible score.
• According to the survey, most respondents (75%) gave their pleasure with
ULIPs a rating between 3 and 4, which indicates a moderate to high degree
of satisfaction. However, only a tiny portion of the respondents (10.9%)
indicated a low degree of satisfaction by rating their level at 1 or 2.
• The fact that these respondents gave their level of satisfaction a low rating
suggests that there may be room for growth in terms of satisfying their
expectations and demands.
• The insurance providers of ULIPs might find it advantageous to pinpoint the
root causes of low customer satisfaction and take action to remedy them in
order to raise the general level of customer satisfaction.
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Cost 13 20%
Complexity 16 24.6%
Analysis:
The above data represents respondents’ major drawbacks in ULIP, the question type
was multiple selection of option, where 13 responses was for cost, 19 responses for
lock in period, 16 responses for complexity and 24 responses for market risk.
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Interpretation:
• Cost: 20% of respondents said that the price of ULIPs was a disadvantage,
indicating that they thought ULIPs were expensive.
• Lock-in time: According to 29.2% of respondents, the lock-in term is a
disadvantage of ULIPs because they believe it limits their ability to manage
their investments with discretion.
• Complexity: According to 24.6% of the respondents, ULIPs' complexity makes
it difficult for them to comprehend how they operate.
• Market risk: According to the respondents, 36.9% of them believe that the
investments made through ULIPs are vulnerable to market changes, which
could result in losses.
• This suggests that these issues need to be addressed in order to increase
customer access to and transparency regarding ULIPs.
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15. If you don't have any ULIP plan, could you please explain why?
Analysis:
There are 65 responses in total, out of which 13 respondents’ reason for not
investing in ULIP is unable to pay, 15 respondents don’t perceive advantages to the
system, 12 respondents don’t understand ULIP function, 16 respondents don’t know
a much about ULIP plans and 9 respondents have ULIP.
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Interpretation:
• Unable to pay: 20% of respondents said they did not invest in ULIPs because
they could not afford to do so, indicating that they lacked the necessary
financial resources.
• No benefits perceived: 23.1% of respondents said they did not invest in ULIPs
because there were no benefits perceived, indicating that they did not perceive
any real benefits from doing so.
• Lack of understanding of how ULIPs work: 18.5% of respondents cited this
as a reason not to invest in ULIPs, indicating that they perceive ULIPs to be
complex and challenging to grasp.
• Have limited knowledge about ULIP plans: Lack of understanding of ULIP
plans was cited by 24.6% of respondents as the reason they did not invest in
ULIPs, demonstrating their lack of familiarity with the features and
advantages of ULIPs.
• Already have ULIP: 13.8% of respondents cited already owning a ULIP as a
reason for not investing in ULIPs, suggesting that they may have already
purchased a financial product similar to ULIPs and do not see the need to do
so.
• It might be advantageous for the insurance firms to address these issues and
give the clients additional education and information about the advantages of
ULIPs, how they work, and their potential for long-term growth.
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Yes 13 20%
No 19 29.2%
Maybe 33 50.8%
Analysis:
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Interpretation:
• Yes: 20% of respondents said they intended to purchase ULIPs,
demonstrating their interest in making an investment in this financial product.
• No: According to the respondents, 29.2% do not intend to purchase ULIPs,
showing that they have no interest in making an investment in this financial
product.
• Maybe: 50.8% of respondents said they weren't sure if they wanted to
purchase ULIPs or not.
• Overall, the data indicates that respondents' responses to their intentions to
purchase ULIPs are divided. While some survey participants are considering
investing in this financial instrument, others are hesitant or have no interest.
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Yes 51 78.5%
No 14 21.5%
Analysis:
There are 65 responses in total, out of which 51 respondents are aware of traditional
insurance plans and 14 respondents are not aware of traditional insurance plan.
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Interpretation:
• Yes: 78.5% of respondents said they were aware of traditional insurance plans,
showing that they are familiar with this category of insurance product.
• No: 21.5% of respondents said they were unaware of traditional insurance
plans, showing that they were either unfamiliar with or had little awareness of
this kind of insurance product.
• The data as a whole indicates that most respondents are aware of traditional
insurance plans. However, a sizable portion of the respondents are still unaware
of this kind of insurance plan.
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Yes 35 53.8%
No 30 46.2%
Analysis:
There are 65 responses in total, out of which 35 respondents are have traditional
insurance plans and 30 respondents don’t have traditional insurance plan.
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Interpretation:
• Yes: 53.8% of respondents said they have traditional insurance plans,
showing that they have already made an investment in this category of
insurance.
• No: 46.2% of respondents said they don't have traditional insurance plans,
indicating that they haven't yet made a purchase of this kind of insurance.
• Overall, the data indicates that the majority of respondents have previously
invested in traditional insurance plans, although a sizeable minority of
respondents have not yet done so.
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Cost 14 21.5%
Analysis:
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Interpretation:
• Coverage: 31 votes, or 47.7% of the total, were cast for this choice. It was the
one that respondents preferred the most.
• Cost: 14 votes, or 21.5% of the total, were voted for this option.
• Reputation of the company: 13 votes, or 20% of the total votes cast, were cast
for this option.
• Customer service: 22 votes were cast for this choice, or 33.8% of the total.
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No risk 39 33.8%
Analysis:
There are 65 responses in total, out of which 4 respondents say it is very risky, 22
respondents say it is less risky and 39 respondents say there is no risk.
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Interpretation:
• 6.2%of the total respondents regarded traditional insurance plans as having a
high level of risk.
• Traditional insurance policies were viewed as less risky by majority of the
respondents i.e., 60% of the sample.
• 33.8% of the respondents, did not think traditional insurance policies carried
any risk.
• It is crucial to keep in mind, though, that how risk is interpreted might differ
depending on a variety of circumstances, including one's values, experiences,
and perception of the consequences.
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Table no. (4.21) showing reasons for investing in traditional insurance plan
Reasons No. of votes Percentage
Simplicity 19 29.2%
Analysis:
The above data represents respondents’ reasons for investing in traditional
insurance plan. The question type was multiple selection of option, where 18
responses was for guaranteed benefit, 19 responses for simplicity, 18 responses for
lower risk and 22 responses for fixed premium.
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Chart no. (4.21.1) showing reasons for investing in traditional insurance plan
Interpretation:
• The chart shows that "simplicity" and "fixed premium" are the most often
mentioned benefits of purchasing a traditional insurance plan, with 29.2% and
33.8% of respondents choosing these benefits, respectively.
• A combined 27.7% of respondents chose "guaranteed benefit" and "lower
risk" as their second and third most preferred reasons.
• The numbers add up to more than 100% since respondents were permitted to
choose many reasons.
• Overall, the table demonstrates that people respect traditional insurance
plans' dependability, stability, simplicity, and ease of understanding.
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22. Have you ever made a claim with your traditional insurance
plan?
Yes 20 30.8%
No 45 69.2%
Analysis:
There are 65 responses in total, out of which 20 respondents claimed insurance and
45 respondents did not claim insurance.
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Interpretation:
• 30.8% (20 persons) of the total respondents indicated they had filed an
insurance claim in the past by choosing the "Yes" option.
• 69.2% of respondents (45 persons) indicated "No," suggesting they had not
filed an insurance claim. This may imply that these people have not
experienced any important occurrences that would have necessitated them
making an insurance claim, or it may indicate that they have decided not to
make a claim for a variety of reasons, such as a low loss value, large
deductibles, or concern over future premium increases.
• Whereas the majority of respondents (or "No") said that they had not filed
any insurance claims
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others 11 16.9%
Analysis:
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Interpretation:
• The lack of transparency was cited by 26.2% (17 out of the total respondents)
as a major flaw in traditional insurance plans. This may suggest that these
people believe that insurance firms are not being transparent or sufficiently
clear about their policies, coverage, or premiums.
• The claim process was challenging to 20% of respondents (13 people), which
may indicate that these people had trouble filing or processing insurance
claims or had to wait longer to receive their rewards.
• 24 respondents, or 36.9%, claimed that the flexibility of traditional insurance
plans is limited. This may indicate that they are unhappy with the few
alternatives or lack of customization that these plans offer, such as the
inability to select the doctors or hospitals of their choice or to modify their
coverage when their needs change.
• Finally, 16.9% of the respondents brought up additional disadvantages, they
might have to do with things like expensive rates, insufficient coverage, or
subpar customer service, among other things.
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Analysis:
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Interpretation:
• 58.5% of the total respondents, said they preferred the conventional insurance
plan. It could be inferred from this that these people prefer the security and
predictability provided by conventional insurance plans, where premiums and
benefits are set and unaffected by changes in the stock market or investment
returns.
• On the other side, ULIP, a form of insurance plan that combines life insurance
with investment choices, was picked by 41.5% of respondents (27 persons).
ULIPs, which enable policyholders to invest in a variety of market-linked funds
and change their investment allocation as necessary, appear to provide these
people greater flexibility and the possibility of higher returns.
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ICICI 15 23.1%
HDFC 16 24.6%
LIC 20 30.8%
SBI 2 3.1%
Others 5 4.6%
Analysis:
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Interpretation:
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CHAPTER 5
FINDINGS, SUGGESTIONS AND CONCLUSION
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FINDINGS
• According to the questionnaire study, many people are between the ages of 15
and 25 and majority of them are employees. It implies that a larger proportion
of younger people participated.
• A significant portion of the surveyed individuals engage in some form of
investment activity.
• People are aware of ULIP – Unit Linked Insurance Plan but are not complete
aware of ULIP working or operations, ULIP different plans and majority of
them do not have any ULIP plan.
• Returns expected out of ULIP vary widely, with some respondents anticipating
relatively high or relatively low return but majority of them expects a return
from 15 – 25%.
• Tax benefit and Greater flexibility are the major reasons why individuals
purchase or invest in ULIP.
• Investing ULIP is risky but less i.e., the amount of risk involved in ULIP is less.
• There is room for improvement in terms of educating the respondents about
ULIPs, how they function, different plans, and switching choices.
• The majority of respondents are satisfied with the ULIP's return, risk coverage,
and tax savings.
• Respondents think that market fluctuations could cause losses in investments
made through ULIPs and that’s the major drawback or reason for not investing
in ULIPs.
• Respondents are not sure about whether to invest in ULIPs or not to invest in
the future but majority of them intend to buy.
• Majority of the respondents are much aware of Traditional insurance plan and
have made investment in it as compared to awareness and investment made in
ULIPs.
• Coverage option and customer service are the main factors considered before
investing in traditional insurance plans.
• Majority of the respondents think that there is no risk involved in traditional
insurance plans which may be because of the fixed premium and guaranteed
benefit from it.
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SUGGESTIONS
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CONCLUSION
Based on the results of the questionnaire study, it can be said that a sizeable
percentage of those surveyed participate in some kind of investment activity, with
a bigger percentage of younger people doing so. Although many individuals are
aware of ULIPs, or unit-linked insurance plans, they may not fully understand how
they operate or the many plans that are available. However, the main reasons why
people buy or invest in ULIPs are the tax benefits and the increased flexibility.
However, respondents favour standard insurance plans over ULIPs because of the
security they offer—their premiums and benefits are predetermined and unaffected
by changes in the stock market or investment returns—and because they are more
popular. Before purchasing typical insurance policies, coverage options and
customer service are the major considerations. Even though the majority of
respondents are happy with the return, risk coverage, and tax savings offered by
ULIPs, they are unsure about continuing to invest in them in the future, primarily
due to the perceived risk involved. Education of respondents regarding ULIPs, their
functioning, various plans, and switching options has to be improved. The study's
findings generally imply that people should know more about ULIPs and traditional
insurance plans in order to make informed investment choices that are tailored to
their own needs and preferences.
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BIBLIOGRAPHY
Websites:
• https://irdai.gov.in/
• https://business.mapsofindia.com/insurance/
• https://groww.in/blog/best-ulip-plans-in-india
• https://www.policybazaar.com/life-insurance/traditional-plan-india/
• https://m.economictimes.com/wealth/insure/life-insurance/types-of-
traditional-insurance-plans-and-who-they-suit/traditional-or-whole-life-
insurance/slideshow/83301826.cms
• https://www.bankbazaar.com/life-insurance/ulip.html
• https://www.policygenius.com/life-insurance/traditional-life-insurance-
pros-and-cons/
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ANNEXURE
Questionnaire:
1. Name:
2. Gender:
3. Age:
15-25
25-35
35-45
45&above
4. Occupation
Employee
Businessman
Student
Other
5. Annual Income
50,000 - 1,00,000
1,00,000 - 2,00,000
2,00,000 & above
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10. If yes, how much return do you expect from your ULIP?
10 – 15%
15 – 20%
20 – 30%
30% & above
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13. How would you rate your understanding of the key features of ULIP
Fully aware Little aware Unaware
ULIP working
Different plans
Switching option
16. If you don’t have ULIP plan, could you please explain why
Unable to pay
Don’t perceive any advantage to the system
Don’t understand how ULIP function
Don’t know a lot about ULIP plans
I have ULIP
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20. When selecting traditional insurance plan, what aspects are significant to you
Coverage option
Cost
Reputation of the company
Customer service
22. What are the major reasons for investing in traditional insurance plan
Guaranteed benefit
Simplicity
Lower risk
Fixed premium
23. Have you ever made a claim with your traditional insurance plan
Yes
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No
24. What do you think is the major drawback of traditional insurance plan
Lack of transparency
Complicated claim process
Restricted flexibility
Others
26. Which of the following bank ULIP & traditional insurance plan do you prefer
ICICI
HDFC
LIC
Bajaj Allianz
other
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