Edit Reliance Life Insurance Co. Ltd
EXECUTIVE SUMMARY Anil Dhirubhai Ambani Group (ADAG) announces the acquisition of 100 percent shareholding in AMP Sanmar Life Insurance Company Limited. Reliance Life Insurance Company Limited is officially launched on February 1, 2006. This was after obtaining the required regulatiry approvals from the Registrar of Companies and the Insurance Regulatory and Development Authority. Reliance Life Insurance is the part of the Reliance Capital. Reliance Life Insurance has plenty of plans on the anvil. It has also 118 branches, with strong presence in South and a bouquet of products catering savings protection and investment need of individuals and corporate. The head-office of it is at Chennai. The company has already added 600 employees in addition to the 1000 plus staff of the erstwhile AMP Sanmar Life Insurance Company Limited. Reliance Life Insurance aims to be the consumer’s preferred life insurer by understanding and meeting his needs. Think Bigger, Think Better!
INDEX CHAPTER SUBJECT NO. 1 INSURANCE INDUSTRY 1.1 Meaning of Insurance 1.2 Importance of Insurance 1.3 Difference between Insurance and Assurance 1.4 Principles of Insurance 1.5 History of Insurance 1.6 Time line in Insurance history 1.7 Meaning of Life Insurance 1.8 History of Life Insurance 1.9 Key features of Life Insurance 1.10 Benefits of Life Insurance 1.11 Role of Life Insurance in the growth of economy 2 INTRODUCTION TO THE COMPANY 2.1 About Reliance Life Insurance 2.2 History 2.3 Journey so far 2.4 Role of IT at Reliance Life Insurance 2.5 Mission 2.6 Core Values 2.7 Future Plans 2.8 Head – Office 2.9 Branches 3 PRODUCT MIX 3.1 Traditional Plans 3.2 Unit linked Plans 4 RESEARCH METHODOLOGY 6.1 Objective of the study 6.2 Questionnaire 6.3 Sampling Method and Sampling Size 6.4 Limitations 6.5 Analysis of Questionnaire 6.6 SWOT Analysis
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FINANCE DEPARTMENT CONLUSION BIBLIOGRAPHY AND REFRENCES APPENDIX
CHAPTER-1 INSURANCE INDUSTRY
1.1 MEANING OF INSURANCE Insurance may be described as a social device to reduce or eliminate risk of loss to life and property. Insurance is a collective bearing of risk. Insurance is a financial device to spread the risks and losses of few people among a large number of people, as people prefer small fixed liability instead of big uncertain and changing liability. Insurance can be defined as a “legal contract between two parties whereby one party called insurer undertakes to pay a fixed amount of money on the happening of a particular event, which may be certain or uncertain.” The other party called insured pays in exchange a fixed sum known as premium. Insurance is desired to safeguard oneself and one’s family against possible losses on account of risks and perils. It provides financial compensation for the losses suffered due to the happening of any unforeseen events.
1.2 IMPORTANCE OF INSURANCE Insurance constitutes one of the major segments of the financial market. Insurance services play predominant role in the process of financial intermediary. Today insurance industry is one of the most growing sectors in India. There is lot of potential in the Indian Insurance Industry. There are many issues, which require study. The scope of the study of insurance industry of India would be very great as there are ongoing developments in the industry after the opening of the sector. The major issue right now is the hike in FDI (Foreign Direct Investment) limit from 26% to 49% in the insurance sector. Government may in near future allow 49% FDI in Insurance. This would lead to more capital inflow by foreign partners. Another major issue is the effects on LIC after the entry of private players in the market. Though market share of LIC has been affected, it has improved in terms of efficiency. There are number of other hot topics like penetration of Health Insurance, Rural marketing of insurance, new distribution channels, new product ranges, insurance brokers’ regulation, incentive scheme of development officers of LIC etc. So it offers lot of scope for studying the insurance industry. Right now the insurance industry has great opportunities in a country like India or China which huge population. Also the penetration of insurance in 6
India is very low in both life and non-life segment so there is lot potential to be tapped. Before starting the discussion on insurance industry and related issues, we have to start with the basics of insurance. So first we understand what is insurance? How the word ‘insurance’ is different from the word ‘assurance’? etc.
ASSURANCE Assurance is older in history and it was used to describe all types of insurances. From 1826, the term assurance came to be used only for the risks covered by life insurance and the term insurance was exclusively used to denote the risks covered by marine, fire, etc. The word assurance indicated certainty. In life insurance, there is an assurance from the insurance company to make payment under the policy either on the maturity or at earlier death. On the other hand the word insurance was used to denote indemnity type of insurances where the insurance company was liable to pay only in case of the loss damage the property. The insured event was bound to happen sooner or later under assurance but the event insured against may or may not happen under insurance. The principle of “indemnity” applies to “insurance contracts”(non-life) only. 7
The scope of the word, insurance is wider.
1.4 PRINCIPLES OF INSURANCE An insurance contract is based on some basic principles of insurance. (1) Principle of “Uberrima Fides” or Principle of utmost good faith It means “maximum truth”. Both the parties should disclose all material information regarding the subject matter of insurance. (2) Principle of indemnity This means that if the insured suffers a loss against which the policy has been made, he shall be fully indemnified only to the extent of loss. In other words, the insured is not entitled to make a profit on his loss. (3) Principle of subrogation This means the insurer has the right to stand in the place of the insured after settlement of claims in so far as the insured’s right of recovery from an alternative source is involved. The insurer before the settlement of the claim may exercise the right. In other words, the insurer is entitled to recover from a negligent third party any loss payments made to the insured. The purposes of subrogation are to hold the negligent person
responsible for the loss and prevent the insured from collecting twice for the same loss. The concept of ‘Third Party Claims’ is based on the same principle. (4) Principle of causa proxima The cause of loss must be direct and an insured one in order to claim of compensation. (5)
Principle of insurable interest
The assured must have insurance interest in the life or property insured. Insurable interest is that interest which considerably alters the position of the assured in the event of loss taking place and if the event does not take placed, he remains in the same old position.
1.5 HISTORY OF INSURANCE The concept of insurance is believed to have emerged almost 4500 years ago in the ancient land of Babylonia where traders used to bear risk of the carvan 9
by giving loans, which were later repaid with interest when the goods arrived safely. The concept of insurance as we know today took shape in 1688 at a place called Lloyd’s Coffee House in London where risk bearers used to meet to transact business. This coffee house became so popular that Lloyd’s became the one of the first modern insurance companies by the end of the eighteenth century. Marine insurance companies came into existence by the end of the eighteenth century. These companies were empowered to write fire and life insurance as well as marine. The Great Fire of London in 1966 caused huge loss of property and life. With a view to providing fire insurance facilities, Dr. Nicholas Barbon set up in 1967 the first fire insurance company known as the Fire office. The early history of insurance in India can be traced back to the Vedas. The Sanskrit term ‘Yogakshema’ (meaning well being), the name of Life Insurance Corporation of India’s corporate headquarters, is found in the Rig Veda. The Aryans practiced some form of ‘community insurance’ around 1000 BC. Life insurance in its modern form came to India from England in 1818. The Oriental Life Insurance Company was the first insurance company to be set up in India to help the widows of European community. The insurance companies, which came into existence between 1818 and 1869, treated Indian lives as subnormal and charged an extra premium of 15 to 20 per cent. The 10
first Indian insurance company, the Bombay Mutual Life Assurance Society, came into existence in 1870 to cover Indian lives at normal rates. The Insurance Act, 1938, the first comprehensive legislation governing both life and non-life branches of insurance were enacted to provide strict state control over insurance business. This amended insurance Act looked into investments, expenditure and management of these companies. By the mid- 1950s there were 154 Indian insurers, 16 foreign insurers, and 75 provident societies carrying on life insurance business in India. Insurance business flourished and so did scams, irregularities and dubious investment practices by scores of companies. As a result the government decided to nationalize the life assurance business in India. The Life Insurance Corporation of India (LIC) was set up in 1956. The nationalization of life insurance was followed by general insurance in 1972.
1.6 TIME LINE IN INSURANCE HISTORY (MAJOR LANDMARKS)
British introduced the life insurance to India with the establishment of the Oriental Life Insurance Company .
1850 Non life insurance started with Triton Insurance Company.
Bombay Mutual Life Assurance Society is the first India owned life insurer.
The Indian Life Assurance Company Act enacted to regulate the
life insurance business.
The Insurance Act was enacted.
Nationalization took place. Government took over 245 Indian and foreign insurers and provident societies.
Non-life business nationalized, General Insurance Corporation (GIC) came into being.
Malhotra committee was constituted under the chairmanship of former RBI chief R. N. Malhotra to draw a blue print for insurance sector reforms.
Malhotra committee recommended reentry of private players.
IRDA (Insurance Regulatory and Development Authority) was set up
as a regulator of the insurance
market in India.
IRDA started giving license to private insurers. ICICI Prudential, HDFC were first private players to sell insurance Policies.
Royal Sundaram was the first non-life private player to sell an
Bank allowed to sell insurance plans as TPAs enter the scene, insurers start setting non-life claims in the cashless mode.
1.7 MEANING OF LIFE INSURANCE There are three parties in a life insurance transaction: the insurer, the insured, and the owner of the policy (policyholder), although the owner and the insured
Another important person involved in a life insurance policy is the
beneficiary. The beneficiary is the person or persons who will receive the policy proceeds upon the death of the insured.
Life insurance may be divided into two basic classes – term and permanent. •
Term life insurance provides for life insurance coverage for a specified term of years for a specified premium. The policy does not accumulate cash value.
Permanent life insurance is life insurance that remains in force until the policy matures, unless the owner fails to pay the premium when due.
Whole life insurance provides for a level premium, and a cash value table included in the policy guaranteed by the company. The primary advantages of whole life are guaranteed death benefits, guaranteed cash values, fixed and known annual premiums, and mortality and expense charges will not reduce the cash value shown in the policy.
Universal life insurance (UL) is a relatively new insurance product intended to provide permanent insurance coverage with greater flexibility in premium payment and the potential for a higher internal rate of return. A universal life policy includes a cash account. Premiums increase the cash account.
If you want insurance protection only, and not a savings and investment product,
If you want to buy a whole life, universal life, or other cash value policy, plan to
Canceling these policies after only a few years can more than double your life insurance costs. Check the National Association of Insurance Commissioners
website (www.naic.org/cis) or your local library for information on the financial soundness of insurance companies.
1.8 HISTORY OF LIFE INSURANCE Risk protection has been a primary goal of humans and institutions throughout history. Protecting against risk is what insurance is all about. Over 5000 years ago, in China, insurance was seen as a preventative measure against piracy on the sea. Piracy, in fact, was so prevalent, that as a way of spreading the risk, a number of ships would carry a portion of another ship's cargo so that if one ship was captured, the entire shipment would not be lost. In another part of the world, nearly 4,500 years ago, in the ancient land of Babylonia, traders used to bear risk of the caravan trade by giving loans that had to be later repaid with interest when the goods arrived safely. In 2100 BC, the Code of Hammurabi granted legal status to the practice. It formalized concepts of “bottomry” referring to vessel bottoms and “respondentia” referring to cargo. These provided the underpinning for marine insurance contracts. Such contracts contained three elements: a loan on the vessel, cargo, or freight; an interest rate; and a surcharge to cover the possibility of loss. In effect, ship owners were the insured and lenders were the underwriters. Life insurance came about a little later in ancient Rome, where burial clubs were formed to cover the funeral expenses of its members, as well as help survivors monetarily. With Rome's fall, around 450 A.D., most of the
concepts of insurance were abandoned, but aspects of it did continue through the Middle Ages, particularly with merchant and artisan guilds. These provided forms of member insurance covering risks like fire, flood, theft, disability, death, and even imprisonment. During the feudal period, early forms of insurance ebbed with the decline of travel and long-distance trade. But during the 14th to 16th centuries, transportation, commerce, and insurance would again reemerge. Insurance in India can be traced back to the Vedas. For instance, yogakshema, the name of Life Insurance Corporation of India's corporate headquarters, is derived from the Rig Veda. The term suggests that a form of "community insurance" was prevalent around 1000 BC and practiced by the Aryans. And similar to ancient Rome, burial societies were formed in the Buddhist period to help families build houses, and to protect widows and children.
Modern Insurance Illegal almost everywhere else in Europe, life insurance in England was vigorously promoted in the three decades following the Glorious Revolution of 1688. The type of insurance we see today owes it's roots to 17th century England. Lloyd's of London, or as they were known then, Lloyd's Coffee House, was the location where merchants, ship owners and underwriters met to discuss and transact business deals. While serving as a means of risk-avoidance, life insurance also appealed strongly to the gambling instincts of England's burgeoning middle class. 16
Gambling was so rampant, in fact, that when newspapers published names of prominent people who were seriously ill, bets were placed at Lloyd’s on their anticipated dates of death. Reacting against such practices, 79 merchant underwriters broke away in 1769 and two years later formed a “New Lloyd’s Coffee House” that became known as the “real Lloyd’s.” Making wagers on people's deaths ceased in 1774 when parliament forbade the practice.
Insurance moves to America The U.S. insurance industry was built on the British model. The year 1735 saw the birth of the first insurance company in the American colonies in Charleston, SC. The Presbyterian Synod of Philadelphia in 1759, sponsored the first life insurance corporation in America for the benefit of ministers and their dependents. And the first life insurance policy for the general public in the United States was issued, in Philadelphia, on May 22, 1761. But it wasn't until 80 years later (after 1840), that life insurance really took off in a big way. The key to its success was reducing the opposition from religious groups. In 1835, the infamous New York fire drew people's attention to the need to provide for sudden and large losses. Two years later, Massachusetts became the first state to require companies by law to maintain such reserves. The great Chicago fire of 1871 further emphasized how fires can cause huge losses in densely populated modern cities. The practice of reinsurance, wherein the risks are spread among several companies, was devised specifically for such situations. 17
With the creation of the automobile, public liability insurance, which first made its appearance in the 1880s, gained importance and acceptance? More advancement was made to insurance during the process of industrialization. In 1897, the British government passed the Workmen's Compensation Act, which made it mandatory for a company to insure its employees against industrial accidents. During the 19th century, many societies were founded to insure the life and health of their members, while fraternal orders provided low-cost, membersonly insurance. Even today, such fraternal orders continue to provide insurance coverage to members, as do most labor organizations. Many employers sponsor group insurance policies for their employees, providing not just life insurance, but sickness and accident benefits and old-age pensions. Employees contribute a certain percentage of the premium for these policies. Final Thoughts Even though the American insurance industry was greatly influenced by Britain, the US market developed somewhat differently from that of the United Kingdom. Contributing to that was America's size; land diversity and the overwhelming desire to be independent. As America moved from a colonial outpost to an independent force, from a farming country to an industrial nation, the insurance business developed from a small number of companies to a large industry. Insurance became more sophisticated, offering new types of coverage and diversified services for an increasingly complex country. 18
1.9 KEY FEATURES OF LIFE INSURANCE 1) Nomination: When one makes a nomination, as the policyholder you continue to be the owner of the policy and the nominee does not have any right under the policy so long as you are alive. The nominee has only the right to receive the policy monies in case of your death within the term of the policy. 2) Assignment: If your intention is that your policy monies should go only to a particular person, you need to assign the policy in favor of that person. 3) Death Benefit: The primary feature of a life insurance policy is the death benefit it provides. Permanent policies provide a death benefit that is guaranteed for the life of the insured, provided the premiums have been paid and the policy has not been surrendered. 4) Cash Value: The cash value of a permanent life insurance policy is accumulated throughout the life of the policy. It equals the amount a policy owner would receive, after any applicable surrender charges, if the policy were surrendered before the insured's death.
5) Dividends: Many life insurance companies issue life insurance policies that entitle the policy owner to share in the company's divisible surplus. 6) Paid-Up Additions: Dividends paid to a policy owner of a participating policy can be used in numerous ways, one of which is toward the purchase of additional coverage, called paid-up additions. 7) Policy Loans: Some life insurance policies allow a policy owner to apply for a loan against the value of their policy. Either a fixed or variable rate of interest is charged. This feature allows the policy owner an easily accessible loan in times of need or opportunity. 8) Conversion from Term to Permanent: When in need of temporary protection, individuals often purchase term life insurance. If one owns a term policy, sometimes a provision is available that will allow her to convert her policy to a permanent one without providing additional proof of insurability. 9) Disability Waiver of Premium Waiver of Premium is an option or benefit that can be attached to a life insurance policy at an additional cost. It guarantees that coverage will stay in force and continue to grow
1.10 BENEFITS OF LIFE INSURANCE 1) Risk cover: Life Insurance contracts allow an individual to have a risk cover against any unfortunate event of the future. 2) Tax Deduction: Under section 80C of the Income Tax Act of 1961 one can get tax deduction on premiums up to one lakh rupees. Life Insurance policies thus decrease the total taxable income of an individual. 3) Loans: -
An individual can easily access loans from different financial institutions by pledging his insurance policies. 4) Retirement Planning: What had provided protection against the financial consequences of premature death may now be used to help them enjoy their retirement years. Moreover the cash value can be used as an additional income in the old age. 5) Educational Needs: Similar to retirement planning the cash values that flow from ones life insurance schemes can be utilized for educational needs of the insurer or his children.
1.11 ROLE OF LIFE INSURANCE IN THE GROWTH OF THE ECONOMY
The Life Insurance Industry has an enviable track record among public sector units. It has a Consistent profit and dividend paying record accompanied by a steady growth in its financial resources. Through investments in the Government sector and socially- oriented sectors the Industry has contributed immensely to the nation's development. The industry is recognized as one of the largest financial Institutions in the country. The ventures initiated by the industry in the areas of Mutual Fund, Housing Finance has done exceedingly
well in recent years. To protect the country's foreign exchange reserves, the reinsurance arrangement are so organized that maximum retention is made possible within the country while at the same time protecting interests of the policy holders.
CHAPTER-2 INTRODUCTION TO THE COMPANY
2.1 ABOUT RELIANCE LIFE INSURANCE Reliance Life Insurance Company Limited is a part of Reliance Capital Ltd. of the Reliance - Anil Dhirubhai Ambani Group. Reliance Capital is one of India’s leading private sector financial services companies, and ranks among the top 3 private sector financial services and banking companies, in terms of
net worth. Reliance Capital has interests in asset management and mutual funds, stock broking, life and general insurance, proprietary investments, private equity and other activities in financial services. Reliance Capital Limited (RCL) is a Non-Banking Financial Company (NBFC) registered with the Reserve Bank of India under section 45-IA of the Reserve Bank of India Act, 1934. Reliance Capital sees immense potential in the rapidly growing financial services sector in India and aims to become a dominant player in this industry and offer fully integrated financial services. Reliance Life Insurance is another steps forward for Reliance Capital Limited to offer need based Life Insurance solutions to individuals and Corporate.
Reliance Capital Limited announced the launch of its life insurance business on February 1, 2006. This was after obtaining the required regulatory approvals from the Registrar Of Companies and the Insurance Regulatory and Development Authority. It was in August 2005 that the ball was set rolling when Reliance Capital Limited, the financial arm of Reliance – Anil Dhirubhai Ambani Group 25
(ADAG) – announced the requisition of 100% shareholding in AMP Sanmar Life Insurance Company Limited; and the formal transfer of shares took place in October 2005. The company will issue all policy contracts under the Reliance Life Insurance Company limited name. All the existing policy contracts also stand transferred to the Reliance Life Insurance entity with all the original contractual terms and commitments intact.
2.3 JOURNEY SO FAR… 2005 August:
Anil Dhirubhai Ambani Group (ADAG) announces the
acquisition of 100 percent shareholding in AMP Sanmar Life Insurance Co Ltd. 2006
January 17: ‘Optimising
Mr. Nandgopal participates in a one-day conference on growth
‘Emerging Bancassurance’ organized by the Asia Insurance Post at the Taj President, Mumbai. February 1: Rliance Life Insurance officially launched. February 16, 17, 18:
Strategy meet at the Reliance Management
Institute. Amongst those who participate are the CEO, COO, Functional Heads, Regional Managers and Regional Sales Managers. February 26:
A Puja held at the Churchgate office situated in Express
Building, 4th Floor, 14 ‘E’ Road, Mumbai. March 1: Churchgate office inaugurated by Mr. Amitabh Jhunjhunwala, Mr. Amitabh Chaturvedi and Mr. Nandgopal. March 6: Shifting to the new premises at Churchgate commences. March 7: The new office at Chennai, at the Trapezium, First Floor, # 39, Nelson Manickam Road, inaugurated by their CEO Mr. Nandgopal, Mr. KV Srinivasan and Mr. Sureshbabu also graced the occasion.
2.4 ROLE OF IT AT RELIANCE LIFE INSURANCE
1) World Class Data Centre: -
They plan to establish a Primary Data Centre at Navi Mumbai (Dhirubhai Ambani Knowledge City) which will cater to their company needs across India, with fail-over capability to their Chennai Data Centre within the same business day in occurance if an incident or Disaster happens. 2) Inter Office Connectivity: All their Branch / Area and Regional offices will be interconnected to their Data Centre with a 24x7 access to Core Applications like Lotus Mail, Life-Asia and Internet Applications. This will enable their associates to work faster and better with high-speed Internet connectivity and also ensure faster Turn Around Time for their customers.
3) Customer Care Centre: They will host a centralized Customer Care Centre at Dhirubhai Ambani Knowledge City at Navi Mumbai, which cater services to internal and external queries and complications. A customer Relationship Management Tool (CRM) and Lead Management System (LMS) are in progress. 4) Web Portal: This portal will be an interface between both internal employees and their external users. Some of the functions included in their portal are
Policy Tracking Systems, Corporate News, Quality Checking System, Under Writing Medical System, and Agent Management System etc. 5) R World: Reliance Mobile R-World will provide online information about their Company, Products, and Policy Services to their existing customers, Agents/Advisors and Lead Generators. 6) SMS Alerts: SMS Alerts will be provided to their Sales Managers about the latest happenings like Contests and Campaigns, Employee Alerts will include Company News and Welcome/Birthday/Anniversary message etc. Customer Alerts will include Welcome/Birthday/Anniversary message, Policy Dispatch Details, Policy Servicing SMS like Premium Receipt and Renewal Premium reminders etc. 7) Life and Group Asia: Single Life and Group Life details will be captured and managed by Life and Group Asia. A common middleware between these applications will enable Group Life Customers to view their individual Single Life Insurance Plan details taken with Reliance Life Insurance and vice versa. 8) Advisor Lounge: It is a dedicated area for Reliance Life Insurance Agents/Advisors in all the branches across India. This Lounge will be
equipped with desktops and printers with Internet connectivity, where their Advisors can bring in the prospects and can have discussions across the table and they can create and print quotes. The Agents/Advisors can use this area to service their existing customers. 9) Document Management System: DMS will enable both policy issuance and contract servicing through an automated workflow, which yields a faster Turn around Time to both internal and external users. This application will enable them to have a paperless office and thus mitigate the risk of losing vital records/papers. 10) Wireless Data Access: This will enable identified Top Sales Managers and Top Advisors to access real time data for both LMS and CRM on the fly through Handheld PDA device. 11) SAP – ERP Modules: SAP (Finance and HR Modules), will automate the Expense, Travel and Leave Management Systems.
The mission of Reliance Life Insurance Company Limited is to be the best in every sphere- business results, customer care and employee focus. The aim of the company is to Think Bigger and Think Better.
2.6 CORE VALUES Reliance Life Insurance Company Limited has some core values which are listed as follows: 1) Result Oriented 2) Performance Driven 3) Customer Focused 4) Learning and Development Oriented 5) Employee Centric 6) Informal and Fun
2.7 FUTURE PLANS Forty-four new branches to be opened across the country in the coming months; and a pan India presence with 162 branches in the coming year. A state-of-the-art customer care centre will provide continuous, responsive services to the caller and promptly address queries, collate
feedback and suggestions from the caller, who may be both prospective and existing clientele and from channel partners in Chennai and Mumbai. It will be launching additional products aimed at providing unparalleled service to its valued clientele.
2.8 HEAD – OFFICE Reliance Life Insurance Company Limited, The Trapezium, 39, First Floor, Nelson Manickam Road, Chennai – 600 029.
2.9 BRANCHES They have so many branches and substations in the India. They have around 160 branches in the India. And they have planned to open more branches across the country in the coming months.
3 PRODUCT MIX
3.1 TRADITIONAL PLAN:Life insurance products are designed to suit the requirements of customers. Fundamentally the product provide for: Risk cover Investment
Health cover In every product, to a certain degree, risk cover is imperative for it to fall under the category of insurance. Based on the coverage of the product, the premiums are calculated and the customer pays accordingly. In order to suggest the right product, it is essential for an agent to understand the requirements of the customer well. Reliance Life Insurance Company Limited has offered 9 traditional plans to the customers, which are listed as follows: 1) Reliance Term Plan 2) Reliance Whole Life Plan 3) Reliance Child Plan 4) Reliance Endowment Plan 5) Reliance Special Endowment Plan 6) Reliance Cash Flow Plan 7) Reliance Credit Guardian Plan 8) Reliance Special Credit Guardian Plan Each of the above traditional plans is discussed as follows: 1) Reliance Term plan: This insurance policy is designed for those who only want life cover for the protection of their family, and do not wish to save for themselves. It can also be useful to business firms that wish to provide financial security to their 35
business against the sudden loss of partners or valuable manpower. Since there is no saving element or bonus provision, the premium is very low. Hence, this is a high-risk plan with a low premium.
Features: a) Purely a term plan b) Entry age minimum 18 years and maximum 65 year c) Maximum premium paying term is 30 year d) Loan facility N.A. e) Maturity amount = Sum assured
2) Reliance Whole Life Plan: This insurance policy is designed for people who do not wish to avail of any benefits themselves but wish to create an immediate estate to protect their family by availing of insurance cover on their life at a very low cost.
Features: a) It is a whole life insurance policy with profits b) Low cost life cover c) Maturity age is 85 year or 99 years last birthday as chosen 36
d) Maturity amount = Sum assured + Vested bonus e) Tax benefit is available 3) Reliance Child Plan: This insurance policy is designed for people who wish to save money for a future time when there will be a recurring need for substantial amounts of money. This is especially true when it comes to paying large sums of money for higher education as and when your son or daughter is studying to become an Engineer, a Doctor or specialize in some other field, or is perhaps planning to go abroad. This money is payable in equal installments over the last 4 years of the policy term. Features: I. Minimum entry age is 20 year and maximum 60 year a) Minimum sum assured is Rs. 25,000. b) Minimum premium paying term is 5 year and maximum 20 year c) Tax benefit is available d) Maturity amount = Four equal installment of sum insured in last four year plus vested bonus in the last year e) Loan facility is available
4) Reliance Endowment Plan: Reliance Life Insurance’s Reliance Endowment Plan is the key to all your financial needs. It is an inexpensive and easy way to protect you, your family or your business. In a nutshell this plan will keep you financially prepared for all the special occasions in your life - your daughter’s wedding, your child’s university education or even a new office for your business - by eliminating the burden that a shortage of money creates. In the event of your untimely death, Reliance Endowment Plan will also assist your loved ones through this difficult time by the financial support that it provides. Reliance Endowment Plan also gives you the additional benefit of participating in the company’s profits, which you will receive at the end of the policy period.
Features: a) Entry age minimum is 5 year and maximum 65 year
b) Maturity age minimum is 18 year and maximum 75 year c) Minimum premium paying term is 5 year and maximum 35 year in case of regular and in case of single 15 year d) Minimum sum assured is Rs. 25,000 or as determined by the minimum premium e) Maximum sum assured is Rs. 5,00,000 (entry age below 18 years and no limit for entry age 18 and above) f) Premium mode annual, half yearly, quarterly and monthly (by salary deduction only) g) Loan up to 90% of the surrender value of the policy h) Maturity amount = Guaranteed sum assured + Reversionary bonus
5) Reliance Special Endowment Plan: This insurance policy is designed for people who wish to combine savings with extended security. The unique feature of this policy is that life protection continues for five years after you have stopped the payment of premium. Payment of sum assured at the end of premium paying term and extension of life cover thereafter for the full sum assured for a period of 5 years, are characteristics of the policy. This plan also participates in the profits.
Features: a) Entry age minimum 12 year and maximum 65 year b) Minimum sum assured is Rs. 25,000 c) Minimum premium paying term is 10 year and maximum 40 year d) Unique feature of this policy is that five year life protection continues after you have stopped the payment of premium e) Tax benefit is available f) Under this policy bonus is compounded yearly g) Loan facility is available h) Maturity amount = Full sum assured before maturity date + Vested bonus at the time of maturity date
6) Reliance Cash Flow Plan: This insurance policy is designed for those who have a recurring need for reinvestment in business or look for short-term investment channels. The advantage of the policy is that they need not part with a sizable amount of money at any one time, but create, through regular premium payments, a periodic return of lump sums which become available for reinvestment at higher returns, while providing simultaneously, substantial life cover. Alternatively, it can be used to meet any immediate financial crisis in the family like your son's college admission, your daughter's engagement, and renovation of your home or perhaps, a holiday abroad.
The money is payable in installments. The first installment is paid at the end of the 4th year and thereafter at the end of every 3rd year. Features:a) Plan with profits b) Minimum entry age is 15 year and maximum is 63 year c) Maximum premium paying term is 34 year
d) Loan facility is not available e) In case of death full sum assured + accrued bonuses up to the date of death is payable immediately f) In case of survival up to maturity date all premium paid g) Rider accident death and critical illness h) Mode of payment is available
7) Reliance Credit Guardian Plan: This insurance policy is designed for those who not only safeguards individuals but also families and businesses from the financial hardship that could arise from unfortunate and unexpected death. Features: a) Loan protection against home, home improvement, two wheelers and four wheelers b) In case of death remaining loan amount paid immediately
c) In case of survival no benefit is available d) Premium payment option for single and regular is available e) Premium paying term is 2/3 of loan period and remaining period paid by the company
8) Reliance Special Credit Guardian Plan: This insurance policy is designed for those who not only safeguards individuals but also families and businesses from the financial hardship that could arise from unfortunate and unexpected death, disability or critical illnesses. Features: a) Loan protection against home, home improvement, two wheelers and four wheelers b) In case of death remaining loan amount paid immediately c) In case of survival no benefit is available d) Premium payment option for regular and single is available e) Premium payment term is 2/3 of loan period and remaining period paid by the company f) Maturity amount = All the premium paid amount g) Tax benefit is available
3.2 UNIT LINKED PLAN A unit-linked policy is a life assurance policy in which the benefits depend on the performance of a portfolio of shares. Each premium paid by the insured person is split: a part is used to provide life assurance cover, while the balance (after the deduction of costs, expenses, etc.) is used to buy units in a unit trust. In this way, a small investor can benefit from investment in a managed fund without making a large financial commitment. As they are linked to the value of shares, unit linked policies can go up or down in value. Policyholders can surrender the policy at any time and the surrender value is the selling price of the units purchased by the date of cancellation 9less expense). A small part of the contribution is used for providing life cover and the balance is invested in unit. Legal heirs are entitled to the amount of insurance cover and entitled units in case of death of the insured. Reliance Life Insurance Company Limited has also offered the two Unit Linked Plans, which are listed as follows: 1) Reliance Market Return Plan 2) Reliance Golden Years Plan Amongst the above plans the Reliance Market Return Plan is the largest selling plan of the Reliance Life Insurance Company Limited. The above two ULIP plans are discussed as follows: 43
1) Reliance Market Return Plan: Reliance Market Return Fund is the unit-linked product that helps you invest in the financial markets in a combination of investment instruments of your choice. You can enjoy the returns from the markets without the trouble of monitoring and managing your own investment portfolio and keeping track of the market movements. At the same time your investment premiums provide you with insurance cover. Reliance Market Return Fund unit-linked insurance plan provides you with a basket of fund options that balances your return and risk exposure while providing life cover at the same time. Features: a) Minimum entry age is 30 days and maximum entry age is 65 year b) Maximum policy term 40 year and minimum policy term 5 year c) Mode of premium as annual, quarterly, half yearly and monthly Rs. 1000 (for salary deduction only) and Rs. 2500 (standing order/credit card) d) Top up premium minimum Rs. 2500 e) Option of investment fund i.
Capital secure 100% fixed interest securities
Balanced minimum 80% fixed interest securities and maximum 20% in equity
Equity 100% equity
Growth minimum 60% fixed interest securities and maximum 40% in equity
f) Loan facility is not available g) One switches every year free and subsequent switches charged 1% of the amount switched h) Partial withdrawals per year under regular and single premium options is 2 times i) Lock in period till today is 3 year j) Minimum unit account balance after each withdrawals is Rs. 10,000
2) Reliance Golden Years Plan: Reliance Golden Years Plan….. The Reliance Life Insurance ‘no-worry stay happy’retirementplan. Reliance Golden Years Plan is a flexible package that provides freedom of choice in choosing the type of investment, life cover, vesting options such as commuting and annuity options. Contributions provide Income tax savings as well. Reliance Golden Years Plan, a flexible pension product is available for all individuals who are between the ages of 18 and 65. Features: a) Entry age minimum is 18 year and maximum 65 year b) Minimum premium amount Rs. 10,000 and maximum is unlimited
c) Mode of premium payment is available d) Pension plan with risk cover and without risk cover e) Choice of investment i.
Capital secure fund – 80% in equity and 20% in government security
Balanced fund – 80% in government and 20% in equity
f) No loan facility is available g) Tax benefit is available h) Annuity options i.
Annuity payable for life
Annuity payable for 5/10/15 years certain and thereafter with life
Annuity payable for life with return of capital on death of the annuitant
OBJECTIVES OF STUDY 1) To get some good market exposure by dealing with the prospects face to face. 2) To improve our ability to sell a financial product like life insurance. 3) To know the perception of the consumer about life insurance. 4) To get a deep knowledge of the financial product like insurance. 5) To get some information about the market share of Reliance Life Insurance as compared to the giants like LIC and to know the standing of the company in the market.
QUESTIONNAIRE It is most common instrument whether administered in person
by phone or online questionnaires are very flexible. The form of each question is also important. Closed end question include all the possible answers and subjects matters choices among them. I have used open-end questions so that customers can write answer in their own words.
I have also used closed-end questions, which provide answers that are easier to interpret and tabulate. I have taken care in the wording and ordering of questions. I have used simple, direct, unbiased wording questions, which are arranged in a logical order. I have asked personal questions at last so that respondent does not become defensive. Questionnaire of the customer I have made questionnaire consisting seventeen questions to get customer’s view about life insurance. I have asked personal questions at last so that they do not become defensive. I have tried to know their performance i.e. whether they want to invest, where thy want to invest, up to what amount and since when.
SAMPLING METHOD AND SAMPLE SIZE
Introduction:Any organization whether big or small, private or public need different types of information are to know its popularity. I have gathered secondary data and primary data and collected information from the combination of these two data. Secondary data: -
Secondary data consist of information that already exists somewhere, having been collected for another purpose. I have gathered secondary data from website of different operators, different magazines, newspapers and libraries. Primary data: I have taken great care while collecting primary data to answer that it is relevant, accurate, current and unbiased. I have taken a sample of 50 people. I have visited them personally to get data. Sample size: I have taken sample size of 50 respondents. Because the population is too large so it is difficult to survey.
I am a human hang, so there is some limitation of the human hangs which is reflected in this research. The following are the limitation of this research study. 1) The sample size of 50 might not represent the perception of whole population, as the sample size is too small for total population of Ahmedabad city. 2) The opinion expressed by the respondents may be biased. 3) The attitude of the research might be biased. 4) One of the most influencing and most critical limitations is that I am not trained for the research study and this is my first study. I tried hard to come at conclusion, but there is lack of expertise. 5) Another limitation is that there is lack of time. If I give more time then studies will be more effective. There are some limitations of this study. But in spite of their limitation I worked with the enthusiasm. And I tried to give the best results to the research of this report.
ANALYSIS OF QUESTIONNAIRE
Here I have formed a questionnaire to study why people go for life insurance. What is people’s major motive behind investing in life insurance? Do they decide upon their own or they take guidance of an agent? What is their perception about Reliance Life Insurance Company Limited? Questions:There are 7 questions in the questionnaire. Out of these 7 questions, 6 questions are close ended and one question is an open ended one. Target Population:I had conducted this survey among 50 people, and the target group was a mix of people from the society. I asked the questions to Doctors, Professionals, Professors, Advocates, Engineers, and general public. Analysis:I have used pie charts, and some other statistical measures to analyze the questions.
Q.1 What is your main motive behind investing in life insurance? (a) Tax Benefit
(b) Savings (c) Risk Cover (d) Return/Yield
TAX SAVING RISK COVERAGE RETURN/YIELD TOTAL
20 5 23 2 50
There could be any motive of people behind investing in a life insurance policy. The main purpose of life insurance is the Risk cover of one’s life. But some people consider different advantages of a life insurance policy. Some people consider Tax benefit as the main advantage of life insurance. Some believe that life insurance is an investment so they tend to invest in life insurance. While some people believe that it is a compulsory saving. Now let’s see what all people say
TAX SAVING RISK COVERAGE RETURN/YIELD
Here we can see that majority of the people tend to invest in life insurance for the risk coverage. The next preferred option is Tax Saving. We founded from the discussion with public and some experts that those people with a low income tend to invest in life insurance to gain tax benefit. Saving motive constitutes very small part of the total sample. Return comes last. But this is the general conclusion of 50 people. If we take a larger sample, we can get a different result. As the private players have launched ULIPs, more and more people are turning towards these products so the Investment motive has been gaining command. Also the number of those people who wish to invest for return is also increasing. According to a life insurance expert (Vinod Thakkar ), life insurance is for protection first then for Savings and Tax benefits all those things.
Q.2 Rank the above motives according to your preference
MOTIVE OF INVESTMENT TAX BENEFIT SAVINGS RISK COVER RETURN/YIELD Preference 1 2 3 4
21 19 8 2
3 11 25 11
24 16 7 3
40 35 30 25 20 15 10 5 0
1 4 10 35
TAX BENEFIT SAVINGS
Pr ef er en
We can see from the table and the graph that the number one motive of people about investing in life insurance is risk coverage, which is the main theme of life insurance followed by Tax benefit. The third position is of saving and fourth is Return. This shows that still people consider other financial tools more viable for return and life insurance is for Tax benefit and risk cover.
Q.3 How do you decide about investing in life insurance? 55
(a) On my own (b) family decision (c) Employer decides (d) as per the guidance of agent This is a very crucial question as most of the people are not much familiar about different life insurance plans offered by different life insurance companies so people take help of the life insurance agent and as he guides understanding the needs of the individual, people would invest. Here one hazardous factor is the moral hazard. People tend to invest in life insurance plans to maintain relations though they are not in need of life insurance. Also sometimes it depends upon the convincing power of the agent.
ON MY OWN FAMILY DECISION EMPLOYER DECIDES AGENT GUIDANCE TOTAL
29 7 0 14 50
ON MY OWN FAMILY DECISION EMPLOYER DECIDES AGENT GUIDANCE
Here we can see that majority people (58%) decides on their about investing in life insurance. 28% persons decides as per the guidance of the agent. There is no contribution of employers in the decision of one’s investment in life insurance. 14% people invest in life insurance as per the family decision.
Q.4. Which life insurance policy would you prefer to buy? (a) Term Assurance (b) Whole Life (c) Endowment (d) Combination of Whole Life and Endowment (e) Unit Linked This is another crucial question as there are number of products offered by life insurance companies. The products range from pure Term Assurance Plans to Unit Linked Insurance Plans, which are relatively new entrant in the market.
We have already explained all these policies ahead. Now let’s find out what people have to say: Type of policy
Term Assurance Whole Life Endowment Combined ULIPs TOTAL
9 9 7 19 6 50
Term Assurance Whole Life Endowment Combined ULIPs
As it is evident from the chart and the table 38% people prefer combination of Whole Life and Endowment product. It gives people double advantage. The person would get some amount at the end of the stipulated period; for
instance 20 years, and after that period the risk cover continues and the rest of the amount would be paid when the person dies.
Q.5 Would you prefer Reliance Life Insurance or LIC for buying the life insurance policy? (a) Reliance Life Insurance (b) LIC This is the most important question as it reflects the scope of the study. It is the main theme of this questionnaire. Prior to 2000 LIC was the only player in the life insurance market and it had the total market. So people had to go to LIC for buying life insurance policy. But after the entry of private players in 2000, some people have also turned to private life insurers. Reliance Life Insurance Company Limited is newly launched company. So it has fewer customers as compared to LIC. But the ULIP plans are sold more of Reliance life insurance as compared to LIC in today’s environment. Now let’s see what people say: Particulars
Reliance Life Insurance LIC TOTAL
15 35 50
Reliance Life Insurance LIC
As evident from the chart that 30% of people would prefer Reliance Life Insurance while 70% would prefer LIC.
Personal Details: 1) Age (a) 18 to 30 (b) 31 to 50 (c) 51 to 65
18 to 30 31 to 50 51 to 65 TOTAL
5 30 15 50
18 to 30 31 to 50 51 to 65
As evident from the chart that I have taken a sample of 50. Out of which 10% people are aged between 18 to 30, 60% people are aged between 31 to 50, and remaining 30% people are aged between 51 to 65.
2) Occupation (a) Service (b) Business (c) Profession (d) Housewife (e) Retired
Service Business Profession Housewife Retired
As the evident from the chart that out of 50 respondents 10% are of service men, 30% are of business men, 20% are of professions, 10% are of housewives and remaining 30% are of retired.
3) Income (a) 50,000 to 1,00,000 (b) 1,00,000 to 5,00,000 (c) More than 5,00,000
Income (Per Annum)
50,000 to 1,00,000
1,00,000 to 5,00,000
More than 5,00,000
50,000 to 1,00,000 1,00,000 to 5,00,000 More than 5,00,000
As the evident from the chart out of 50 respondents 20% are earning annually between 50,000 to 1,00,000, 50% are earning between 1,00,000 to 5,00,000 and 30% are earning more than 5,00,000.
4) Family members (a) 2 (b) 3 (c) 4 (d) More than 4
More than 4
2 3 4 More than 4
As the evident from the chart out of 50 respondents 10% have 2 family members, 30% have 3 family members, 40% have 4 family members and remaining 20% have more than 4 family members.
SWOT analysis is the analysis of the internal and external factors, which have impact on the survival of any organization. Now let’s make SWOT analysis for reliance Life Insurance Company Limited. ☻STRENGTHS: 1) Reliance Life Insurance Company Limited is the part of the Reliance Capital. 2) The brand name is enough to sell the products easily. 3) Private placement of Rs. 10,000 crs worth of securities with RBI by the government. Led to an improvement in market securities. 4) Strong liquidity from FII was the major reason for the up move. 5) Range of products 6) Reliance has a long and strong history of solvency, financial stability.
▼WEAKNESSES: 1) Newly established company, so people seems it risky. 2) Lack of staff. 3) Lack of advertisement, so most of the customers are not aware of the Reliance Life Insurance.
☼ OPPORTUNITY: 1) There is a vast untapped market in India. The life insurance penetration in India is approximately 2.5%. So it has large potential. 2) Intention of traditional products is to encourage long term, regular and disciplined savings to systematically build up a target fund. 3) The average insurance premium being collected by the company has been growing exponentially year on year.
● THREATS: 1) The main threat is from the other players who have grabbed approximately 15% of the market share. 2) As the government has scrapped the rebate on the life insurance premium, the people who used to invest in life insurance for the sole motive of tax benefit may turn to other instrument
After the deep study of insurance sector of India, I can tell that this is the sector, which has most business opportunities perhaps in India. Insurance industry is one of the fastest sectors in India. Insurance sector has been growing by 25% to 30% and it is expected to increase by 50% in coming 5 years. After the opening up of the insurance sector, it has become much competitive and insurance awareness among people has increased.
As far as the comparison of Reliance Life Insurance and other players is concerned, there are both positive as well as negative impacts on both the sides. For Reliance Life Insurance, the negative aspect is that its market share is low. For private players the negative aspect is that they have to fight with the public sector giant which is established player with a high brand value. But the positive impact is that the life insurance awareness has increased and the business of Reliance Life Insurance has increased.
BIBLIOGRAPHY AND REFERENCES
Life Time Magazine of Reliance Life Insurance
Net Bios Computer Academy’s Life Insurance Book Broachers of Reliance Life Insurance
Survey by student of R.K.C.B.M. On Life Insurance
Q.1 What is your main motive behind investing in life insurance? (a) Tax Benefit (b) Savings (c) Risk Cover (d) Return/Yield Q.2 Rank the above motives according to your preference
MOTIVE OF INVESTMENT TAX BENEFIT SAVINGS RISK COVER RETURN/YIELD Preference 1 2 3 4
Q.3 How do you decide about investing in life insurance? (a) On my own (b) family decision (c) Employer decides (d) as per the guidance of agent Q.4. Which life insurance policy would you prefer to buy? (a) Term Assurance (b) Whole Life (c) Endowment (d) Combination of Whole Life and Endowment
(e) Unit Linked Q.5 Would you prefer Reliance Life Insurance or LIC for buying the life insurance policy? (a) Reliance Life Insurance (b) LIC
PERSONAL DETAILS 1) Age (a) 18 to 30 (b) 31 to 50 75
(c) 51 to 65
2) Occupation (a) Service (b) Business (c) Profession (d) Housewife (e) Retired 3) Income (a) 50,000 to 1,00,000 (b) 1,00,000 to 5,00,000 (c) More than 5,00,000 4) Family members (a) 2 (b) 3 (c) 4 (d) More than 4