A Study on Customer Awareness @ Bajaj Allianz Project Report

EXECUTIVE SUMMARY

The project report on “A study on customer awareness to enhance market share of Bajaj Allianz Unit Link Insurance Plan” in Hubli city. I through under took the project by the help of BAJAJ ALLIANZ Life Insurance Ltd. Sales team manager Chandru. A.Kallanagoudar Objectives: 1. To study the awareness level of Bajaj Allianz ULIPs with view to recommend measure to improve market share. 2. To find vital communication media. 3. To know the factors that influence investors while taking investment decisions. 4. To find potential market for ULIPs. Scope of the study: 

The research was undertaken to gather information from the respondent to know exactly how many people aware of ULIPs in Hubli city and the study is restricted within the city.



One of the fast growing city in Karnataka and represents huge market for scope with more than 90 lakhs people.



Hubli is one of the commercial areas .



It is a place where the small and large industries are located .with the more increase population and there style more people are conscious about the their lives.

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LIMITATIONS OF THE STUDY

Not single work is exception to the limitations every work has got its own limitations, so due to time constraint my study confines only to Hubli city and it is not possible to make extensive study. It is assumed that the sample selected represents entire population.

RESEARCH METHODOLOGY

Primary (Filed Survey)

Data source

:

Area of Research Research instrument Sample plan

: : :

Sample unit

:

Sampling method Sample size

: :

Secondary data (internal)

Hubli city Questionnaires Personal interview Businessman’s, jobholders, professionals etc.

Random sampling 100 customers

INDEX PARTICULAR

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Chapter-I

1) Introduction

09

2) Literature Review

18

3) Statement of the problem

19

4) Purpose of the study

19

5) Scope of the study

26

6) Objectives of study

27

Chapter-II 1) Organization Profile

29

2) Organization Chart

62

3) Sampling

64

4) Research Design

64

5) Data Collection Methods

64

6) Measuring tools.

65 Chapter-III

1) Result & discussion with graphs & charts.

68

2) Summary, conclusion, & a proposed action plan with resource requirements and projected benefits to the organization.

84

Chapter-IV 1) Appendix Questionnaire BABASAB PATIL

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Weekly Reports 2) Bibliography

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4

Industry overview A brief history of the Insurance sector The business of life insurance in India in its existing form started in India in the year: -

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1818



With the establishment of the Oriental Life Insurance Company in Calcutta. Some of the important milestones in the life insurance business

1912 1928



in India are: The Indian Life Assurance Companies Act enacted as the first statute to



regulate the life insurance business. The Indian Insurance Companies Act enacted to enable the government to collect statistical information about both life and non-life insurance

1938 1956



businesses Earlier legislation consolidated and amended to by the Insurance Act with



the objective of protecting the interests of the insuring public By the mid-1950s, there were around 170 insurance companies in the country's life insurance scene. However, in the absence of regulatory systems, scams and irregularities were almost a way of life at most of these companies

As a result, the government decided nationalizes the life assurance business in India. The Life Insurance Corporation of India was set up in 1956 to take over around 250 life companies. 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. For years thereafter, insurance remained a monopoly of the public sector. It was only after seven years of deliberation and debate - after the RN Malhotra Committee report of 1994 became the first serious document calling for the re-opening up of the insurance sector to private players -- that the sector was finally opened up to private players in 2001.

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The Insurance Regulatory & Development Authority, an autonomous insurance regulator set up in 2000, has extensive powers to oversee the insurance business and regulate in a manner that will safeguard the interests of the insured.

INSURANCE SECTOR REFORMS Due to immense growth in the insurance sectors the regulations were introduced. In 1993,Malhotra Committee headed by former Finance Secretary and RBI Governor was formed to evaluate the Indian insurance industry and give its recommendations. After this committee the regulatory body for insurance sector was formed with the name of IRDA.

INSURANCE REGULATORY AND DEVELOPMENT AUTHORITY (IRDA) IRDA has been formed as an authority to protect the interests of insurance policies, to regulate, promote and ensure orderly growth of insurance Industry and for matters connected therewith of incidental thereto.

Composition of Authority under IRDA Act, 1999 As per the section 4 of IRDA Act of 1999, The Authority is a ten-member team consisting of.. 1) A Chairman 2) 5 Whole team Members 3) 4 part time members Duties, Powers and Functions of IRDA

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Section 14 IRDA Act, 1999 lays down the duties, powers and functions of IRDA 1. The Authority has the duty to regulate, promote and ensure orderly growth of the Insurance business and re- insurance business. 2. This Include a) Issue to the applicant a certificate of registration, renew, modify, Withdraw, suspend or cancel such registration. b) Protection of interests of the policy holders in matter concerning assigning of policy, nomination by policyholders, insurable interest, settlement of insurance claim, surrender value of policy and condition of contracts of insurance. c) Specifying the code of conduct and practical training for intermediary or insurance intermediaries and agents 3. Specifying the code of conduct for surveyors and loss assessors. 4. Promoting efficiency in the conduct of insurance business. 5. Promoting and regulating professional organization connected with insurance and reinsurance business. 6. Levying fees and other charges for carrying out the purposes of this act. 7. Calling from information from, undertaking inspection of, conducting enquiries and investigation including audit of the insurers, intermediaries and other organization connected with the insurance business 8. Control and regulation of the rates, advantages, terms and condition 9. Specifying the form and manner in which books of accounts shall be maintained and statement of account shall be rendered by insurers and other intermediaries.

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10. Regulating investment of funds by insurance companies. 11. Regulating maintenance of margin of solvency. 12. Adjudication of disputes between Insurers and intermediaries or insurance intermediaries. 13. Supervising the functioning of the Tariff Advisory Committee. 14. Specifying the % of Premium, Income of the insurer to finance schemes for promoting and regulating professional organizations 15. Specifying the % of Life Insurance Business and general Insurance Business to be undertaken by the Insurer in the rural or social sector.

The IRDA since its incorporation as a statutory body has been framing Regulations and registering the private sector insurance companies. IRDA being an Independent statutory body has put a framework of globally compatible regulations.

Indian Insurance Sector The Insurance sector in India governed by Insurance Act, 1938, the Life Insurance Corporation Act, 1956 and General Insurance Business (Nationalization) Act, 1972, Insurance Regulatory and Development Authority (IRDA) Act, 1999 and other related acts.

INSURANCE COMPANIES: In the private sector 12 life insurance and 6 general insurance companies

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have been registered.

LIFE INSURERS



Public Sector Life Insurance Corporation of India

LIFE INSURANCE CORPORATION OF INDIA (LIC)

An Act of Parliament, viz., Life Insurance Corporation Act, formed Life Insurance Corporation of India (LIC) in September 1956, with capital contribution from the Government of India.

The objective was: to conduct the business with the utmost economy, in a spirit of trusteeship; to charge premium no higher than warranted by strict actuarial considerations; to invest the funds for obtaining maximum yield for the policy holders consistent with safety of the capital; to render prompt and efficient service to policy holders, thereby making insurance widely popular.

Since nationalization, LIC has built up a vast network of 2,048 branches, 100 divisions and 7 zonal offices spread over the country. The Life Insurance Corporation of India also transacts business abroad and has offices in Fiji, Mauritius and United Kingdom.

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CURRENT SCENARIO OF THE INSURANCE INDUSTRY Innovative products and aggressive distribution have become the say of the day. Indians, have always seen life insurance as a tax saving device, are now suddenly turning to the private sector that are providing them new products and variety for their choice.

PRIVATISATION: There were various reasons given by the government to nationalize the insurance sector was to take insurance to the mass, facilitate the flow of long term funds (which insurance companies, by virtue of the business they are in, have ready access to) into development of infrastructure in the country, and safe guard the interest of the policy holders. Towards this end, state insurers did develop the insurance sector, though most experts believe that these monopolies could have done much, much more. In the early nineties is, the government went on a reforms binge and started loosing controls on Indian industry. In 1993 the government appointed the Malhotra committee headed former RBI governor R.N.Malhotra, to draw up a blue print for insurance sector reforms. The panel submitted its report a year later, recommending privatization, backed by stiff entry guidelines and stringent regulations, so as to avoid repeat per nationalization free for all. The insurance regulatory and development authority (IRDA) was founded to regulate the sector and over see the process of privatization. In 2000, the IRDA started giving out licenses, and a year later, the first of the private players started operation. The wheel had come full circle.

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Under state control, the insurance sector, both life and non-life ,grew steadily. Still, Indians are not adequately insured and lag behind most countries. Total insurance penetration (insurance premium as a percentage of gross domestic product) is dismal when compared to its economic standing. Just 2% of the population has some of life insurance.

LIFE INSURANCE COMPANIES IN INDIA & THEIR MARKET SHARE (as per march-06): INDIAN

FOREIGN

COUNTRY

PROMOTER Bajaj Auto

PROMOTER Allianz AG

Germany

ICICI

Prudential

INSURER

WEBSITE

MARKET

Bajaj Allianz

bajajallianz.co.in

SHARE 7.56

USA

Life Insurance ICICI Prudential

iciciprulife.com

7.35

hdfcinsurance.co

2.9

HDFC

Standard Life

UK

Life Insurance HDFC Standard

SBI

Cardif (arm of

Canada

Life Insurance SBI Life

m sbilife.co.in

2.3

Aditya Birla

BNP paribas) Sun Life

Canada

Insurance Birla Sun Life

birlasunlife.com

1.9

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Group TATA

American

USA

International Max India

Group New York life

Insurance Tata-AIG Life

tata_aig.com

1.3

Insurance USA

Max New York

Maxnewyorklife.

1.2

com avivaindia.com

1.1 1.1

Dabur India

Aviva Plc

USA

life insurance Aviva Life

Kotak

Old Mutual

Australia

Insurance Kotak Mahindra

Omkotakmahind

Mahindra

Plc

Old Mutual

ra.com

finance Vysya Bank

ING Group

Netherlands

Funds INGVysya Life

ingvysyalife.com

0.8

Reliance

Amp Sanmar

Australia

Insurance Reliance life

Relianceindia.co

0.5

m Metlifeindia.com

0.4

Sahara India Sriramlife.com

0.1 0.0

Licindia.com

71.4

Jammu &

Met life

USA

insurance Met life

Kashmir bank Sahara India Shriram

insurance None Sanlam

India S.A

Sahara India Sriram life

Government of

None

India

India

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13

Literature Review: The project report on “A study on customer awareness to enhance market share of Bajaj Allianz Unit Link Insurance Plan” in Hubli. I through under took the project by the help of BAJAJ ALLIANZ Life Insurance Ltd. Sales team manager Chandru. A.Kallanagoudar

Body of the Report: Primary data was collected by administration questionnaire of 100 customers. The questionnaire was specially framed to meet the requirement of the survey and the following details. Direct contact was made with the respondents through random sample to collect the needful information with reference to our objective as per to meet the survey requirement.

Interview technique: Direct personal interview was conducted throughout project using direct structured and self-administrative questionnaire.

Conclusion & Recommendation: Analysis was based on the result of the research conducted and the recommendations are based on the analysis.

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Limitation : The major limitation of the project was time frame. STATEMENT OF THE PROBLEM “A study on customer awareness to enhance market share of Bajaj Allianz Unit Linked Insurance Products”.

Management Problem: In the project the management problem is the ULIP’s is new in the market & the lot of people are don’t know about the ULIP’s the management wants the improve market share of ULIP’s.

Advantages of investing in ULIP: ULIPs have been selling like proverbial `hot cakes' in the recent past and they are likely to continue to outsell their plain vanilla counterparts going ahead. So what is it that makes ULIPs so attractive to the individual is, as follows

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1.Insurace cover plus savings:

ULIP serve the purpose of providing life insurance

combined with savings at market-linked returns. To that extent, ULIPs can be termed as a two-in-one plan in terms of giving an individual the twin benefits of life insurance plus savings. This is unlike comparable instruments like a mutual fund for instance, which does not offer a life cover.

2.Multiple investment options: ULIP offer a lot more variety than traditional life insurance plans. So there are multiple options at the individual's disposal. . ULIPs generally come in three broad variants:



Aggressive ULIPs (which can typically invest 80%-100% in equities, balance in debt)



Balanced ULIPs (can typically invest around 40%-60% in equities)



Conservative ULIPs (can typically invest up to 20% in equities)

Although this is how the ULIP options are generally designed, the exact debt/equity allocations may vary across insurance companies. Individuals can opt for a variant based on their risk profile. For example, a 30-Yr old individual looking at buying a life insurance plan that also helps him build a corpus for retirement can consider investing in the Balanced or even the Aggressive ULIP. Likewise, a risk-averse individual who is not comfortable with a high equity allocation can opt for the Conservative ULIP.

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3.Flexibility Mutual Funds also offer hybrid/balanced schemes that allow an individual to select a plan according to his risk profile. The difference lies in the flexibility that ULIPs afford the individual. Individuals can switch between the ULIP variants outlined above to capitalize on investment opportunities across the equity and debt markets. Some insurance companies allow a certain number of `free' switches. This is an important feature that allows the informed individual/investor to benefit from the vagaries of stock/debt markets. For instance, when stock markets were on the brink of 7,000 points (Sensex), the informed investor could have shifted his assets from an Aggressive ULIP to a low-risk Conservative ULIP. Switching also helps individuals on another front. They can shift from an Aggressive to a Balanced or a Conservative ULIP as they approach retirement. This is a reflection of the change in their risk appetite, as they grow older. 4. Works like an SIP: Rupee cost-averaging is another important benefit associated with ULIPs. With an SIP, individuals invest their monies regularly over time intervals of a month/quarter and don't have to worry about `timing' the stock markets. As a matter of fact, even the annual premium in a ULIP works on the rupee cost-averaging principle. An added benefit with ULIPs is that individuals can also invest a one-time amount in the ULIP either to benefit from opportunities in the stock markets or if they have an investible surplus in a particular year that they wish to put aside for the future. The chart below shows how ULIP can meet multiple needs at different life stages.

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Integrated Financial Planning Starting a job, Single individual

Recently married, Married, with kids no kids

Your

Low protection,

Reasonable

Higher protection,

Need

high asset creation protection, still

still high on asset

and accumulation

high on asset

creation but steadier

creation

options, increase savings for child

Flexibility Choose low death

Increase death

Increase death

benefit, choose

benefit, choose

benefit, choose

growth/balanced

growth/balanced

balanced option for

option for asset

option for asset

asset creation.

creation

creation

Choose riders for enhanced protection. Use top-ups to increase your accumulation

Kids going to

Higher studies for child,

Children independent, nearing

school, college

marriage

the golden years

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Higher Protection,

Lump sum money for

Safe accumulation for the golden

high on asset

education, marriage. Facility to

yrs.Considerably lower life

creation but

stop premium for 2-3 yrs for

insurance as the dependencies

steadier options,

these extra expenses

have decreased

Withdrawal from

Withdrawal from the account

Decrease the death benefit-reduce

the account for the

for higher education/marriage

it to the minimum possible.

liquidity for education expenses

education expenses expenses of the child. Premium of the child

Choose the income investment

holiday-to stop premium for a

option. Top-ups form the

period without lapsing the

accumulation (with reduced

policy

expenses) for the golden yrs cash accumulation

Because of their flexibility to adjust to different life stage needs, ULIPs fit in very well with financial planning efforts.

Limitation:

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1. It is prudent to make equity-oriented investments based on an established track record of at least three years over different market cycles. ULIPs may not fulfill this criterion in near future.

2. Insurance and savings are two different goals and it is better to address them separately rather than bundle them into a single product. A combination of a term plan and a mutual fund could give better results over the long term.

3.The free hand given to ULIPs might prove risky if the timing of exit happens to coincide with a bearish market phase, because of the inherently high equity component of these schemes.

4. An initial allocation charge is deducted from investor premiums for selling, marketing and broker commissions. These charges could be as high as 65 per cent of the first year premiums. Premium allocation charges are usually very high (5-65 per cent) in the first couple of years, but taper off later. The high initial charges mainly go towards funding agent commissions, which could be as high as 40 per cent of the initial premium as per IRDA regulations.

The charges are higher for a linked plan than a non-linked plan, as the former require lot more servicing than the latter, such as regular disclosure of investments, switches, redirection of premiums, withdrawals, and so on. Insurance companies have the discretion to structure their expenses structure whereas a mutual fund does not have that luxury. The

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expense ratios in their case cannot exceed 2.5 per cent for an equity plan and 2.25 per cent for a debt plan respectively. The lack of regulation on the expense front works to the detriment of investors in ULIPs.

5. The front-loading of charges does have an impact on overall returns as investors lose out on the compounding benefit. Insurance companies explain that charges get evened out over a long term. Thus investors are forced to stay with the plan for a longer tenure to even out the effect of initial charges as the shorter the tenure, the lower will be the investor real returns.

6. In effect, when investor lock in their money in a ULIP, despite the promise of flexibility and liquidity, investor will stuck with one fund management style. This is all the more reason to look for an established track record before committing investor hard-earned money.

7. Investor life cover charges would depend on the accumulation in investor investment account. As accumulation increases, the amount at risk for the insurance company decreases. However, with increasing age, the cost per Rs 1,000 sum assured increases, effectively increasing policy holder overall insurance costs.

8. It would deal with the fact that expenses on ULIPs were on the higher side in the initial years and therefore; the exit option would hardly prove to be beneficial for the investors.

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9. ULIP face tough competition from mutual funds, which are short-term instruments. Hence, a liquidity option makes ULIPs as attractive but because of the high front-end charges on policy, investor may not be left with much to withdraw at the end of 3 years.

Scope of the study: The research was undertaken to gather information from the respondent to know exactly how many people aware of ULIPs in Hubli city and the study is restricted within the city.

The reason for confining the scope of the research in Hubli were. 2) One of the fast growing city in Karnataka and represents huge market for scope with more than 90 lakhs people. 3) Hubli is one of the commercial areas . 4) It is a place where the small and large industries are located .with the more increase population and there style more people are conscious about the their lives.

Objectives:

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1. To study the awareness level of Bajaj Allianz ULIPs with view to recommend measure to improve market share. 2. To find vital communication media. 3. To know the factors that influence investors while taking investment decisions. 4. To find potential market for ULIPs.

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1. ORGANISATION PROFILE:

Bajaj Group  

A STRONG INDIAN BRAND- HAMARA BAJAJ One of the Largest 2 & 3 wheeler manufacturer in the world .

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

21 million + vehicles on the roads across the globe



managing funds of over Rs5200crore



Bajaj Auto finance one of the largest auto finance companies in India Rs5934cr turnover and profits after tax of 732cr in 2004-05



Bajaj group ,a Rs. 8,000 crore group ,a household name in India with a strong brand image and brand loyalty.



Bajaj Group is synonymous with quality and customer focus.



Bajaj Auto is a Rs.4,000 crore auto giant.



4th largest in the world.



Has over 15,000 employees.

Allianz Group 

Allianz Group is one of the world's leading insurers and financial services providers



Founded in 1890 in Berlin,

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

Allianz is one of the leading global insurance companies headquartered in Munich, Germany .



Established in 1890 ,more than 110 years of experience in insurance.



Allianz has over 700 subsidiaries and approximately 1,81,000 employees worldwide.



Allianz global network extends to over 70 countries in: o Europe . o South and Northern Americas. o Africa. o Middle East. o Asia Pacific.



World largest insurance company by revenue 520353cr



worldwide 2nd gross written premium 477930cr



3rd largest assets under management(AUM) and largest insurance companies AUM of Rs9594200cr.



11th largest corporation in the world



50% global business from life insurance close to 60 million lives insured globally.



Allianz’ shares are treated at the 5 leading international stock exchanges: 

Frankfurt.



London .



Paris.

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



Zurich.



New York.

Insurance to almost half of the Fortune 500 companies.

Bajaj Allianz life Insurance

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Bajaj Allianz life Insurance Company Limited is a joint venture between Bajaj Auto Limited and Allianz AG of Germany. Both enjoy a reputation of expertise,

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stability and strength.

Bajaj Allianz General Insurance received the Insurance Regulatory and Development Authority (IRDA) certificate of Registration (R3) on May 2nd, 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 Auto holds 74% and the remaining 26% is held by Allianz, AG, Germany.

Key Achievements in FY 2005-06 :

• No.1 Pvt Life Insurer FY 2006-06. Leading by Rs. 78 Cr. • No.1 Pvt Life Insurer in Retail Business. Leading by Rs. 339 Cr. • Whopping growth of 216% for the FY 2005-06 • Have sold over 13,00,000 policies to satisfied customers • Is backed by a network of 550 offices spanning the country • Accelerated Growth Fiscal Year

No of policies sold in FY

GWP in FY

2001-2002 (6mths)

21,376

Rs 7 cr.

2002-2003

1,15,965

Rs 69 cr.

2003-2004

1,86,443

Rs 221 cr.

2004-2005

2,88,189

Rs 1002 cr.

2005-2006

7,81,685

Rs 3134 cr.



Assets under management Rs 3,324 cr.



Shareholder capital base of Rs 500 cr.

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Company punch line

Mission:

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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.

Why Bajaj Allianz Life Insurance: The Bajaj Allianz Difference •

Business strategy aligned to clients’ needs and trends in Indian and global economy / industry.

•

Internationally experienced core team, majority with local background.

•

Fast, decentralized decision-making.

•

Long-term commitment to market and clients.

Shareholder in Bajaj Allianz life insurance company: Bajaj Auto Limited Bajaj Auto Limited is the largest manufacturer of two and three –wheelers in India and also one of the largest manufacturers in the world. Bajaj Auto has been in operation for over 55 years. As a promoter of Bajaj Allianz General Insurance Company Ltd., Bajaj Auto has the following to offer. •

Vast distribution network.

•

Knowledge of Indian consumers.

•

Financial strength and stability to support the insurance business.

CHANNEL PARTNERS BABASAB PATIL

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Bancassurance Vantage

UNIT LINKED INSURANCE PLAN OR MARKET LINKED INSURANCE PLAN (ULIP).

INTRODUCTION TO ULIP ULIP came into play in the 1960s and became very popular in Western Europe and Americas. The reason that is attributed to the wide spread popularity of ULIP is because of the transparency and the flexibility which it offers. As times progressed the plans were also BABASAB PATIL

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successfully mapped along with life insurance need to retirement planning. In today’s times, ULIP provides solutions for insurance planning, financial needs, financial planning for children’s future and retirement planning. Features of ULIP distinguish itself through the multiple benefits that it provides to the consumer. The plan is a one-stop solution providing: Life protection· Investment and Savings· Flexibility- Adjustable Life CoverInvestment Options· Transparency· Options to take additional cover against- Death due to accident- Disability- Critical Illness- Surgeries· Liquidity.

ULIP distinguishes itself through the multiple benefits it provides to the policyholders. These plans are designed with a view to help the customers to utilize the market opportunities by investing in the share market, capital market and at the same time have the facility of Death Benefit and Maturity Benefit.

Meaning It is a plan, which provides Life Insurance, and here policy value at any time varies according to the value of the underlying asset at that time. It is a plan that provides the client with the benefit of protection and flexibility. An ULIP plan works as a one-stop advantage for the policyholder. It gives the policyholder a wholesome advantage of integrated financial planning.

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STRUCTURE OF ULIP: ULIP

CONTRIBUTION CONTRIBUTION

LESS-CHARGES CHARGES LESS-

INVESTMENT INVESTMENT REPRESENTEDAS AS REPRESENTED NAV NAV

LIFECOVER COVER LIFE

NAV CONCEPT It exhibits the value (or the price) that one has for his investment or one will have to pay for his investment. As, the investment made by different people are different, the value (or the price) is the expressed in per unit terms. It helps in knowing the value of Insurance at any point of time. Technical Calculation of NAV: -

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UNIT Value = (Total market Value of all assets invested less expenses related to Investment management / Total no. of outstanding units) Factors affecting NAV: Market Value of investment portfolio, Number of Units, Expenses and Investment Income. Ex: If 2,00,000 /- has been accumulated in the equity fund and the no. of units issued is 10,000 /- then the NAV of the equity fund is: 2,00,000 / 10,000 = Rs 20 / As the equity market develop the fund grows from 2,00,000 / - to 220,000/Now the NAV = 2,20,000 / 10,000 = Rs 22 / If among these 10,000 units the policyholder has 5000 units then the value of investment as of now is Rs 1,10,000. Thus a unit linked plan actually tells, what is the value of the fund .BASIC FEATURES OF ULIP

1. Life protection 2. Investment and savings 3. Flexibility 4. Transparency 5. Added Benefits a) Death due to accident b) Any kind of disability c) Critical illness

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d) Surgeries 6. Liquidity 7. Tax Planning 8. Adjustable Life Cover 9. - Investment Options

-

1) LIFE PROTECTION

Start a Family

Children Establishi ng Career Retiremen t Time

Start Working

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The graph shows the various needs of the customer at different point of time, individuals needs differ and his need for life protection fluctuates. ULIP satisfies the varying needs of the customer

providing him with more and more protection

as and when he requires, by allowing the policyholder to increase or decrease the death benefit. It is usually multiple of the contribution being paid, which ensure that the contribution is adequate enough to provide life protection. And is also able to maintain a sem balance between protection and savings.

2) INVESTMENTS AND SAVINGS

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ULIP provides the client with option of investing as per his risk appetite and gets returns accordingly. These various options available for an individual to make investment in comparatively high risks instruments and get high returns. Below shown is a graph illustrating the various investment options for a client.

Equity funds Balance d funds Short term debt funds

Debt funds

Risk

Example 1: Here are four types of funds in which a client can invest. In each case the risk goes on increasing with the type of fund. The client has an option to shift as the risk and return orientation changes (Switch). 3) FLEXIBILITY

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The client has an option to choose the amount of sum assured and the premium amount he is capable of paying. In case of certain plans of ULIP the client is allowed to choose the premium. Eg: Lifetime and Lifetime I the client has a flexibility to decide the life cover according to his financial needs, independent of premium selected.

Following points enumerate the flexibility feature of ULIP

a) Increase in death benefit. As life cycle changes of a client he passes through various risks and responsibilities. He can increase or decrease the death benefit accordingly. b) Decrease in death benefit. If the client is unable to pay the same amount of premium he can decrease the death benefit with certain conditions applying according to the particular plans. c) Premium holiday After paying the premium regularly for 3 years from the starting date of the policy the client can take a premium holiday if he is unable to pay a particular premium due. On returning from the premium holiday the client can pay the previous premiums if he desires or continue from that date. d) Choice of fund.

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There are four kinds of funds available for a client of ULIP. He has an option to switch between these four funds. He can either choose only one or invest in all four depending on his risk tolerance. Plan Maximiser

Plan objective High growth

(Growth)

capital

Risk and High

appreciation

over a long terms

Investment pattern Equity and equity related securities: Max 90%,

Debt,

money

market and cash: Min Balancer

Balance

(balanced)

appreciation

Preserver

of

capital Average and

10% Equity

and

equity

related securities: Max

study returns over a

40%,

long terms

market and cash: Min

Equal

60% Debt instrument: Max

capital

balance

of Low

appreciation

and study returns over

Debt,

money

50% Money

market

and

Protector

a long term cash: Min 50% Study returns over a Moderate Debt instrument: Max

(Income)

long term.

100% Money

market

and

cash: Max 25% e) Switch between the funds The policyholder has a choice two reallocate the premium paid by him on every premium policy anniversary. He can switch between the above four funds to avail the advantages of market fluctuations. f) Top ups

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Some times the client may have surplus amount after his expenses. ULIP allows him to save that amount by investing in the insurance he can avail the benefit of top up by paying extra premium, which will be invested in the share market by the insurer company. The client gets expert fund management. The policyholder is allowed to do as many top ups in the tenure of plan. g) Premium redirection The policyholder is allowed to reallocate the premium paid each time to different fund structure. Thus whenever the premium is due (As per the premium payment mode), he can redirect the current premium into different asset allocations than the previous time. This helps the policyholder to optimize the funds in accordance to market with out using the switch option. e) Assignment option The policyholder can assign the policy to any of the nominees or any bank in case he has taken a loan on the title of the policy. Unfortunately if something happens to the policyholder then the insurer will repay the loan taken by the client to the extent of premium paid. 4) Transparency ULIP products are transparent in terms of, the policyholder is aware of where his contribution is being allocated. The policyholder is aware of the various charges charged to him. The Various charges of the ULIP are: a) Contribution related Charges- Running expenses of the policy b) Administrative Charges- Issuance cost, distribution costs etc

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c) Fund Management Fee- cost of being and selling the various financial instruments for various funds. d) Mortality Charges: cost of providing life protection. e) Rider charges: cost of other protection charges. f) Surrender charges: cost to cover initial expenses. g) Bid offer charges: difference between the offer price of units and the selling price i.e. bid price of units. It covers the cost of selling the policy. h) Transaction specific charges: cost of changing funds, toping up the investment component or withdrawals Daily NAV: A feature that lets us know on a daily bases, how the money in insurance plan is growing. 5) ADDED BENEFITS To get extra protection ULIP provides the

policyholder the advantage of rider

attachments. a. Death due to accident (ADBR) b. Disability (ABR) c. Critical Illness (CIBR) d. Surgeries (MSAR) (Now discontinued) 6) LIQUIDITY The feature makes ULIP a marketable plan. The policyholder has an option of withdrawals in case if need arises. ULIP provides easy access to the money as and when the policyholder may requires. There are two types of withdrawal options. a) Partial

b) complete

The value of withdrawal reduces the death benefit by same amount. This facility can be avail only after three full premium payment years are completed. The minimum worth of this units and a maximum where in at least Rs. 10000/- worth units remain in all the funds put together.

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7) TAX PLANNING This is another feature of ULIP that motives the policyholder to invest in the insurance plans. They usually invest to avail the tax benefit. Regulation in India allows tax benefits in the contribution paid under section 88, contribution paid for health riders critical illness and major surgical is allowed tax benefits under section 80D, as per the prevailing tax laws. Maturity benefits are tax free under section 10(10) D, provided life come is at least 5 times of the annual contribution paid. Death benefit is tax free under section 10(10) d. With so many tax benefits available in one instrument ULIP tends to be an intelligent tax-planning tool. Working of a ULIP Plan Liferime rimeregular regularPremium Premium Life Partofofthe thePremium Premium Part towardsthe thepolicy policy towards Expenses Expenses

Allocated Allocated Premium Premium

AllotmentofofUnits Units Allotment

Various Investment Options. Facility of withdrawals and investing back in the Investment BABASAB PATIL

Insurance Insurance Charges Charges

Thisgoes goes This to the to the Protection Protection a/ctoto a/c provide provide against against the3D 3D the Effect Effect

Unitsthat thatbuild buildup upthe the Units investment value investment value

43

For Example A client put in regular contribution of Rs.20, 000 /-. From this amount a % is deducted as contribution. Therefore if the contribution related expense is 40% - Rs.8000/- will be deducted as contribution charges. The amount that is now available is Rs.20000-8000=12000/Now, if the client who is available is aged 30 years were to take a life cover of 500,000/then mortality (1.50/- per thousand at the age of 30) charge of 750 /- will be deducted. This amount will provide life cover to the policy. The remaining amount of –11250/- will be invested in any one of them or all of them. The Investment is shown in terms of units. Thus if client invests in debt fund and the NAV of the debt fund is Rs. 15/-(market price) then the no. of units that the client will get is 11,250/15=750. For this investment-fund management fee will be charged and the charges for maintaining the policy an administrative charge are levied.

Are ULIPs similar to mutual funds?. In structure, yes; in objective, no. Because of the high first-year charges, mutual funds are a better option if you have a five-year horizon. But if you have a horizon of 10 years or more , then ULIPs have an edge. To explain this further a ULIP has high first –year charges towards acquisition (including agents commissions). As a result, they find it difficult to outperform mutual funds in the five years. But in the long term, ULIP managers have advantages over mutual funds managers.

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Since policyholder premium come at regular intervals, investments can be planned out more evenly. Mutual fund managers cannot take a similar long term view because they have bulk investors who can move money in and out of schemes at short notice. Which is better, unit-linked or ‘Traditional plan’? The two strong arguments in favor of unit-linked plans are that –the investor knows exactly what is happening to his money and two ,it allows the investor to choose the assets into which he wants his funds invested. A traditional ‘with profits,’ on the other hands, is a black box and a policyholder has little knowledge of what is happening. An investor in a ULIP knows how much he is paying towards mortality, management and administration charges. He also knows where the insurance company has invested the money. The investor gets exactly the same returns that the fund earns, but he also bears the investment risk. The transparency makes the product more competitive .So if you are willing to bare the investment risk in order to generate a higher return on your retirement funds, ULIPs are for you. Traditional ‘with profits’ policies too invest in the market and generate the same Returns prevailing in the marker. But here the insurance company evens out returns to ensure that policyholders do not lose money in a bad year. In that sense they are safer. ULIPs also offer flexibility. For instance, a policyholder can ask the insurance Company to liquidate units in his account to meet the mortality charges if he is unable to pay any premium installment.

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This eats into his savings, but ensures that the policy will continue to cover his life.

Why do insurers prefer ULIPs? Insurers love ULIPs for several reasons. Most important of all, insurers can sell these policies with less capital of their own than what would be required if they sold traditional policies. In traditional ‘with profits’ policies, the insurance company bears the investment risk to the extent of the assured amount .In ULIPs, the policyholder bears most of the investment risk. Since ULIPs are devised to mobilize savings, they give insurance companies an opportunity to get a large chunk of the asset management business, which has been traditionally dominated by mutual funds. Are unit-linked insurance plans good? Most insurers in the year 2004 have started offering at least a few unit-linked plans . Unit-linked life insurance products are those where the benefits are expressed in terms of number of units and unit price. They can be viewed as a combination of insurance and mutual funds. The number of units that a customer would get would depend on the unit price when he pays his premium. The daily unit price is based on the market value of the underlying assets (equities, bonds, government securities, etc) and computed from the net asset value.

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The advantage of unit –linked plans is that they arte simple, clear, and easy to understand. Being transparent the policyholder gets the entire upside on the performance of his fund .Besides all the advantages they offer to the customers, unitlinked plans also lead to an efficient utilization of capital. Unit –linked products are exempted from tax and they provide life insurance. Investor welcome these products as they provide capital appreciation even as the yields on government securities have fallen below 6 percent , which has made the insurers slash payouts. According to the IRDA, a company offering unit-linked plans must give the investor an option to choose among debt, balanced and equity funds. If you opt for a unit-linked endowment policy, you can choose to invest your premiums in debt, balanced or equity plans. If you choose a debt plan, the majority of your premiums will get invested in debt securities like gilts and bonds. If you choose equity, then a major portion of your premiums will be invested in the equity market. The plan you choose would depend on your risk profile and your investment needs. The ideal time to buy a unit-linked plan is when one can expect long term growth ahead . This is especially so if one also believes that current market values (stock valuations ) are relatively low. So if you are opting for a plan that invests primarily in equity , the buzzing market could lead to windfall returns. However , should the buzz die down , investors could be left stung.

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If one invests in a unit-linked pension plan early on , say when one is 25, one can afford to take the risk associated with equities , at least in the plan’s initial stages. However ,as one approaches retirement the quantum of returns should be subordinated to capital preservation. At this stage , investing in plan that has an equity tilt may not be a good idea. Considering that unit-linked plans are relatively new launches, their short history does not permit an assessment of how they will perform in different phases of the stock market. Even if one views insurance as a long term commitment, investments based on performance over such a short time span may not be appropriate.

Allianz Bajaj launches its first unit linked policy. Allianz Bajaj Life Insurance Company has launched Unit Gain , the company’s first unit linked policy. Unit Gain allows customers to combine the benefits of life insurance with higher investment returns from equity and debt markets. Unit Gain was launched with a choice of four funds to the customer- equity, debt, balanced and cash funds. The cash funds comes with the guarantee that the value of units in the fund will not go down. Unit Gain is one of the most flexible unit linked plans in the market, and allows the customer to change the sum assured during the term of the policy to match their changing life insurance requirements. Also the plan offers a premium holiday feature, where the policy is kept in-force even when premiums are not paid as long as there are enough units to cover charges. The policy provides customers flexibility in paying additional premium through single premium top-ups, as well as in increasing the level of regular premium in later years

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48

(along with increase in income). In addition, the facility of cash withdrawals allows the Bajaj Allianz ULIP’S products.

Bajaj Allianz ULIP’S products: 1) Unit Gain Regular Premium: The Bajaj Allianz unit comes with a host of features to allow you to have the best of all words –protection and investment with flexibility like never before. Some of the features of this plan are:  Guaranteed death benefits.  Choice of 6 investment funds with flexible investment management you can change funds at any time.  Attractive investment alternative to fixed investment securities.  Provision for full/partial withdrawal any time after 3 full years premiums are paid.  Unmatched flexibility –to match tour charging needs.

How does the plan work: The premiums paid are invested in fund/funds of your choice (depending on the allocation rate) &unit are allocated depending on the price of units for the fund/funds. The value of your policy is the value of units that you hold in the fund/funds. The insurance cover charges are deducted through monthly cancellation of units . The funds administration charge and fund management charge are priced in the unit value.  Minimum sum assured= 5 times the annual premium.

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 Maximum sum assured =y times the annual premium where y will be as per the following table.

Age

0-30

31-35

36-40

41-45

46-55

56-60

Group Y

125

105

75

55

30

20

Important details of “Bajaj allianz unit gain RP” plan Minimum age at entry: 0(risk commences at age 7, and ceases after age 70) Maximum age at entry :60 The minimum age at entry for all additional benefits is 18 years. The maximum age at entry for all additional benefits is 50 years. All additional benefits are available till age 65. 2) Unit Gain Single Premium: The bajaj allianz unit gain SP comes with a host of features to allow you to have the best of all worlds- protection and investment with flexibility like never before. Some of the feature of this plan are Convenient single premium payment, with option to pay top-ups later. 100% of the single premium/top ups are allocated. Guaranteed death benefits. Choice of 6 investment funds with flexible investment management you can with between funds at any time . Attractive investment alternative to fixed interest securities.

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Provision for full/partial withdrawal any time after the single premium is paid. Unmatched flexibility – to match your changing needs. How does the plan works? 100% of the single premium is invested in a fund/funds. The value of your choice and unit are allocated depending on the price of units for the fund/funds the value of your policy is the total value of units that you hold in the fund/funds . The insurance cover changes are deducted through monthly cancellation of units. The funds administration charge and fund management charge are pried in the unit value. •

Minimum sum assured =1.01 times the single premium.

•

Maximum sum assures =y times the single premium where y will be as per the following table.

Age

0-30

31-35

36-40

41-45

46-60

61-67

Group Y

45

40

25

15

5

1.01

Important details of the “Bajaj allianz unit gain SP” plan:•

Minimum age at entry :0(risk commences at age 7, and ceases after age 70)

•

Maximum age at entry :67

•

Minimum single premium :Rs .25000.

•

Minimum top-up :Rs 10000.

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51

3) Unit Gain Plus Regular Plan: The Bajaj allianz unit gain plus RP comes with a host of features to allow you to have the best of all words – protection and investment with flexibility like never before. Some of the key feature of this plan are  Guaranteed death benefit.  Choice of six investment funds with flexible investment management you can change funds at any time .  Attractive investment alternative to fixed –interest securities.  Provision for full/partial withdrawals any time after 3 full years premium are paid  Unmatched flexibility –to match changing needs.

How does the plan work? The premium paid are invested in a fund or funds of your choice (depending on the allocation rate) and units are allocated depending on the price of the units for the fund or funds. The insurance cover and administration charges are deducted through cancellation of units. The fund management charge is prices in the unit value.  Minimum sum assured = 5 times the annual premium.  Maximum sum assured = y times the annual premium where y will be as per the following table.

Age

BABASAB PATIL

0-30

31-35

36-40

41-45

46-55

56-60

52

Group Y

125

90

60

40

20

15

Important details of the “Bajaj Allianz Unit Gain Plus RP” plan  Minimum age at entry :0(Risk commences at age 7 and ceases after age 70)  Maximum age at entry :60  Minimum age at entry for all additional benefits is 18 years.  The maximum age at entry for additional benefits is 50 years.  All additional benefits are available till age 65.

4) Unit Gain Plus Single Premium Plan: The bajaj allianz unit gain plus Sp comes with a host of feature to allow you to have the best of all words – protection and investment with flexibility like never before. Some of the key feature of this plan are  Convenient single premium payment, with option to pay top-ups later.  98% of the single or top-ups are allocated.  Guaranteed death benefit.  Choice of five investment funds with flexible investment management you can change funds at any time.  Attractive investment alternative to fixed –interest securities.  Unmatched flexibility – to match your changing needs.  Provision for full or partial withdrawal any time after the single premium is paid.

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How does the plan works ? 98% of the single premium is invested in a funds or funds of your choice and units allocated depending on the price of units for the fund or funds . The value of your policy is the total value of units that you hold in the fund or funds. The insurance cover and fund administration charges are deducted through cancellation of units. The funds management charge is priced in the unit value. 

Minimum assured =1.01 times the single premium.



Maximum sum assured = y times the single premium where y will be as the following table.

Age

0-30

31-35

36-40

41-45

46-60

61-69

Group Y

45

35

20

10

5

1.5

Important details of the “Bajaj Allianz Unit Gain Plus SP” Plan  Minimum age at entry :0(Risk commence at age 7,and ceases after age 70)  Maximum age at entry :69  Minimum single premium :Rs. 25000.  Minimum top-up :Rs .5000.

5)Unit Gain Life Pension plan:

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With Bajaj Allianz ,you can take control of your future and ensure a retirement you can look forward to. This plan has been be signed to take of your retirement and insurance needs, there by providing you with a comprehensive solution for life time. There are two packages choose from: 1. Unit gain life pension regular premium. 2.

Unit gain life pension single premium.

Defending on the amount of premium you want to pay, you choose sum assure as per the condition given below: 1. Minimum sum assured =5 times annual/1.01 times single premium. 2. maximum sum assured =y times the annual/single premium where y will be as per the following table: Age group Y for

18-30 125

31-35 90

36-40 60

41-45 40

46-55 20

55-60 15

61-65 10

45

35

20

10

5

5

1.5

regular premium Y for regular premium

How does the Bajaj Allianz Unit Gain Life Pension Plan Work? The premium paid are invested in funds of your choice (depending on the allocation rate) and unit are allocated depending on the price of unit for the fund or funds.

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The value of your policy is the total value of units that hold in the fund or funds. The insurance cover and administration charges are deducted through cancellation of units. The fund management charge is priced in the unit value. Important details of the “Bajaj Allianz Unit Gain Life Pension” Plan: Age of entry Deferment period Age at vesting

Minimum 18 5 45

Maximum 65 40 70

6) Unit Gain Easy Pension Plan: With bajaj allianz , you can take control of your future and ensure a retirement you can look for word to. There are two packages to choose form: 1. Unit gain easy pension regular premium. 2. Unit gain easy pension single premium.

How does the Bajaj Allianz Unit Gain Easy Pension Plan works? The premium paid are invested in a fund/funds of your choice (depending on the allocation rate) and units are allocated depending on the price of units for fund/funds. The value of your policy is the total value of units that you hold in the fund/funds. The administration are deducted through cancellation of units. The fund management is priced in the unit’s value.

Important details of “Bajaj Allianz Unit Gain Life Pension” Plan:

Age of entry

BABASAB PATIL

Minimum 18

Maximum 65

56

Deferment period Age at vesting

5 45

40 70

Bajaj Allianz Life Insurance Bajaj Allianz Life Insurance

Agency Channel Agency Channel

Bancassurance Bancassurance

Branches Branches

Group and Alternate Group and Alternate Channel Channel

Standard Chartered Bank Standard Chartered Bank

Group Employee Benefit Group Employee Benefit

Syndicate Bank Syndicate Bank

Corporate Agency Corporate Agency

Centurion Bank Centurion Bank

Franchisee Franchisee

Cosmos Bank Cosmos Bank

Brokers Brokers

ORGANISATION CHART

Satellite Satellite

Satellite Satellite

Satellite Satellite

Jankalyan Sahakari Bank Jankalyan Sahakari Bank

BABASAB PATIL

57 Jijamata Sahakari Co-op Jijamata Sahakari Bank Co-op Bank

2.ORGANISATION CHART Bajaj Allianz Life Insurance Company

BAJAJALLIANZ ALLIANZLIFE LIFEINSURANCE INSURANCE BAJAJ

CHANNEL CHANNEL

BANCASSURANCE ASSURANCE BANC

CORPORATE CORPORATE

ZONALSENIOR SENIORMANAGER MANAGER ZONAL

BRANCH BRANCH

ORGANISATION CHART OF THE BRANCH SATELLITEBRANCH BRANCH SATELLITE

SALESTAAM TAAMMANAGER MANAGER SALES BABASAB PATIL INSURANCECONSULTATIVE CONSULTATIVE INSURANCE

58

3. SAMPLING:

Sampling: we are taken random sample Sample size: 100 consumers Sample unit: collection of data was made from customer that is respondents

4. RESEARCH DESIGN:

BABASAB PATIL

59

The research design chosen was exploratory in nature as it involved effectives study to determine the awareness of ULIPs and its products since the population in Hubli city is very vast. It is difficult to carry out 100% with in a limited time period. Hence sample survey technique was adopted for the study. Fieldwork was carried out to collect the necessary data (through schedule questions /personal interview ).

5. DATA COLLECTION METHODS: a) Primary data : A structural interview schedule/ questionnaire was used as a tool for primary data collection from respondent. b) Secondary data: Books Journals, magazines and websites.

6.MEASURING TOOLS:

Data code sheet S/no 1 2 3 4 5 6 7

Q1 D C D C D A C

Q2 H E G H E A E

BABASAB PATIL

Q3 A D D D D D A

Q4 A A A A A A A

Q5 A A A A A A B

Q6 A B C D A A A

Q7 D B C C A A

Q8 E D D C C B

Q9 D B

Q10 Q11 A B C B A D C B B D B A B

Q12 A B B B A A B

60

Q13 D D A A

8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48

D D C D C B D D D D C C C C B D D D D C A D D A D C D D D D D D D D D D D D A B C

C B B D B B B G E E C C B B H H E E H E H E E G E A E C B F E B B B F F E H H B G

BABASAB PATIL

A E B D A B B D B A E E B C E E E B E E A D E E A B E D B B D B A B A E B C E D E

A B B B A A B A A A A A B A A A A A A A A A A A B A A A B B A A B B A B A A A B A

B A B B A B B A B B A A B A A A A A A A A A B A B A A A B B B B B A B B A B B B A

B

A B

A B

C C

A A A A C A A B B D A B B B B D C

C A E B C

C B B B A B B B A A B D A D A C B

A B

A D

D C C C C C D C C D C B E

E

A A

D A

B B C

A A A A B B D B B A C C B A A A

B B

A A

E C

B A

D A C A C A

E

E E

D B A

D

A

B

C

A C A A

F A A A A E A A A A A F A A A A A C D A B F D A F A A F B A B B A C A F A F C D D

B A A B A A A B A B B B B A A B A B A A A B B A B A A A A B A B B A B A B B B B A 61

A

A

C D C A A

C D

D E A

B B A C A C D A

49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89

B B C A C B D D C D C B D D C D B C A C D C D C D D C D B C A C A C C D B C D C D

D E E E G D G B C E A D B B E A D H D F D A B A B A D E B D H B D A H A E C D D F

BABASAB PATIL

B B D B D A B A D E A D A B B B A E E E B B A B B D B A C B E C E B C D E C B B A

A A A A A A B A B A A A B B A A B A A A B A A A B B A A A A A A B A A A B A B A A

B B B B A B B A B B A B B A B A A A A B B B B A B B A A A A A A B A A A A B A A A

A C A A B A A A A A

A A B B A

A B A B B B

A A A A A B

B

C

B

A A

A C C

C

A C A

D A C A A A

A A B C

A C

A A

B B A

C

A C C

A A A

A

A A A

B

B B B A A A

B A D D C B

A

B A B

B D B A

D B A

A A B

A

C C E B

B C B B A

A A B B

A D

C C B C

A

B D

A A D B A F A A B C A D A A D A B B D A A B A A A A A B D D B A A B F A B C B A C

B B B B A A A A B A A A A A B A A B A B B B A B B B A B A B A A A B A B A A B A B 62

A A A A

C

B

A A A A A B A B C

D C

A D

90 91 92 93 94 95 96 97 98 99 100

C B A B D D C D D C B

H B D G A C H E E G C

BABASAB PATIL

E C B A C E E A D D A

A B A A A B A A A A A

A B B A B A A B B A A

B A D A C A D A D

A

B

B

B

E B B

B A A

A B

E C

D A B B B

A

D A A A A

A B D B A A B A C B D

A A A A B B A B B B A

63

D

A D D A D

1.What is your ratio of saving of the total income? a) More then 60% c) 50% - 25%

> 60% 60%-50% 50%-25% 60%

13%

60%-50% 50%-25%