HDFC Insurance

Contact for more project 09413991847 SUMMER TRAINING PROJECT REPORT ON “HDFC STANDARD LIFE INSURANCE" Submitted to

RAJASTHAN UNIVERSITY, Jaipur In the partial fulfillment Of the award of the degree of BBA (Bachelor of Business Administration)

Project guide:Ms. Mridula Mudgal Sr. Lecturer

Submitted by:Gauarv Khandelwal BBA Part III

Alwar Managemant Studies North extension road Alwar IET Groups of institutions

PREFACE The liberalization of the Indian insurance sector has been the subject of much heated debate for some years. The policy makers where in the catch 22 situation wherein for one they wanted competition, development and growth of this insurance sector which is extremely essential for channeling the investments in to the infrastructure sector. At the other end the policy makers had the fears that the insurance premium, which are substantial, would seep out of the country; and wanted to have a cautious approach of opening for foreign participation in the sector. As one of the rare occurrences the entire debate was put on the back burner and the IRDA saw the day of the light thanks to the maturing polity emerging consensus among factions of different political parties. Though some changes and some restrictive clauses as regards to the foreign participation were included the IRDA has opened the doors for the private entry into insurance. Whether the insurer is old or new, private or public, expanding the market will present multitude of challenges and opportunities. But the key issues, possible trends, opportunities and challenges that insurance sector will 2

have still remains under the realms of the possibilities and speculation. What is the likely impact of opening up India’s insurance sector.

The large scale of operations, public sector bureaucracies and cumbersome procedures hampers nationalized insurers. Therefore, potential private entrants expect to score in the areas of customer service, speed and flexibility. They point out that their entry will mean better products and choice for the consumer. The critics counter that the benefit will be slim, because new players will concentrate on affluent, urban customers as foreign banks did until recently. This seems to be a logical strategy. Start-up costs-such as those of setting up a conventional distribution network-are large and high-end niches offer better returns. However, the middle-market segment too has great potential. Since insurance is a volumes game. Therefore, private insurers would be best served by a middle-market approach, targeting customer segments that are currently untapped.

3

ACKNOWLEDGMENT I would like to thank my project guide Mr. Pradeep choaduary, Sales Development Manager HDFC Standard Life Insurance, Alwar for guiding me through my summer internship and research project. His encouragement, time and effort are greatly appreciated. I would like to thank Ms. Mirdula Mudgal (Sr.LECTUR) for supporting me during this project and providing me an opportunity to learn outside the class room. It was a truly wonderful learning experience. I would like to dedicate this project to my parents. Without their help and constant support this project would not have been possible. Lastly I would like to thank all the respondents who offered their opinions and suggestions through the survey that was conducted by me in Alwar.

DECLARAION 4

I hereby declare that this work entitled “Potential of Life Insurance Industry in ALWAR Market” is my work carried out under the guidance of my faculty guide Mr. Pradeep kumar and my company guide Mr. Jignesh Madhavani. This report neither full nor in past has ever been submitted for award of any other degree of either this University or any other University.

Signature of Candidates Gaurav Khandelwal

Executive Summary 5

In today’s corporate and competitive world, I find that insurance sector has the maximum growth and potential as compared to the other sectors. Insurance has the maximum growth rate of 70-80% while as FMCG sector has maximum 12-15% of growth rate. This growth potential attracts me to enter in this sector and ING Life Insurance Company Ltd has given me the opportunity to work and get experience in highly competitive and enhancing sector. •

The success story of good market share of different market organizations depends upon the availability of the product and services near to the customer, which can be distributed through a distribution channel. In Insurance sector, distribution channel includes only agents or agency holders of the company. If a company like RELIANCE LIFE INSURANCE, TATA AIG, MAX etc have adequate agents in the market they can capture big market as compared to the other companies.

Agents are the only way for a company of Insurance sector through which policies and benefits of the company can be explained to the customer.

Certificate Preface 6

Acknowledgement Declaration Executive Summary Tables of Contents Sr.No. 1 2 2.1 2.2 2.3 2.4 3 4 5 6 7 8 9 10

Particulars Introduction of insurance Profile & Comparison of organizations HDFC SLIC Tata AIG LIC Other Competitors HDFC Policies Objectives of the Study Research Methodology Result analysis & interpretation Conclusions Suggestions Questionnaire Bibliography Glossary

7

Page No. 06 13 14 31 34 40 43 45 51 73 75 77 80 82

8

CHAPTER I INDIAN INSURANCE INDUSTRY “AN OVERVIEW”

9

THE INSURANCE INDUSTRY IN INDIA AN OVERVIEW With the largest number of life insurance policies in force in the world, Insurance happens to be a mega opportunity in India. It’s a business growing at the rate of 15-20 per cent annually and presently is of the order of Rs 1560.41 billion (for the financial year 2006 – 2007). Together with banking services, it adds about 7% to the country’s Gross Domestic Product (GDP). The gross premium collection is nearly 2% of GDP and funds available with LIC for investments are 8% of the GDP. Even so nearly 65% of the Indian population is without life insurance cover while health insurance and non-life insurance continues to be below international standards. A large part of our population is also subject to weak social security and pension systems with hardly any old age income security. This in itself is an indicator that growth potential for the insurance sector in India is immense. A well-developed and evolved insurance sector is needed for economic development as it provides long term funds for infrastructure development and strengthens the risk taking ability of individuals. It is estimated that over the next ten years India would require investments of the 10

order of one trillion US dollars. The Insurance sector, to some extent, can enable investments in infrastructure development to sustain the economic growth of the country. (Source: www.indiacore.com) HISTORICAL PERSPECTIVE The history of life insurance in India dates back to 1818 when it was conceived as a means to provide for English Widows. Interestingly in those days a higher premium was charged for Indian lives than the non - Indian lives, as Indian lives were considered more risky to cover. The Bombay Mutual Life Insurance Society started its business in 1870. It was the first company to charge the same premium for both Indian and non-Indian lives. The Oriental Assurance Company was established in 1880. The General insurance business in India, on the other hand, can trace its roots to Triton Insurance Company Limited, the first general insurance company established in the year 1850 in Calcutta by the British. Till the end of the nineteenth century insurance business was almost entirely in the hands of overseas companies. Insurance regulation formally began in India with the passing of the Life Insurance Companies Act of 1912 and the Provident Fund Act of 1912. Several frauds during the

11

1920's and 1930's sullied insurance business in India. By 1938 there were 176 insurance companies. The first comprehensive legislation was introduced with the Insurance Act of 1938 that provided strict State Control over the insurance business. The insurance business grew at a faster pace after independence. Indian companies strengthened their hold on this business but despite the growth that was witnessed, insurance remained an urban phenomenon. The Government of India in 1956, brought together over 240 private life insurers and provident societies under one nationalized monopoly corporation and Life Insurance Corporation (LIC) was born. Nationalization was justified on the grounds that it would create the much needed funds for rapid industrialization. This was in conformity with the Government's chosen path of State led planning and development. The non-life insurance business continued to thrive with the

private

sector

till

1972.

Their

operations

were

restricted to organized trade and industry in large cities. The general insurance industry was nationalized in 1972. With this, nearly 107 insurers were amalgamated and grouped Company,

into New

four India

companiesAssurance 12

National Company,

Insurance Oriental

Insurance Company and United India Insurance Company. These

were

subsidiaries

of

the

General

Insurance

Company (GIC).

KEY MILESTONES 1912: The Indian Life Assurance Companies Act enacted as the first statute to regulate the life insurance business. 1928: The Indian Insurance Companies Act enacted to enable the government to collect statistical information about both life and non-life insurance businesses. 1938: Earlier legislation consolidated and amended by the Insurance Act with the objective of protecting the interests of the insuring public. 1956:

245

Indian

and

foreign

insurers

along

with

provident societies were taken over by the central government and nationalized. LIC was formed by an Act of Parliament- LIC Act 1956- with a capital contribution of Rs. 5 crore from the Government of India.

INDUSTRY REFORMS

13

Reforms in the Insurance sector were initiated with the passage of the IRDA Bill in Parliament in December 1999. The IRDA since its incorporation as a statutory body in April 2000 has fastidiously stuck to its schedule of framing regulations and registering the private sector insurance companies.

Since

being

set

up

as

an

independent

statutory body the IRDA has put in a framework of globally compatible regulations. The other decision taken simultaneously to provide the supporting systems to the insurance sector and in particular the life insurance companies was the launch of the IRDA online service for issue and renewal of licenses to agents. The approval of institutions for imparting training to agents has also ensured that the insurance companies would have a trained workforce of insurance agents in place to sell their products.

PRESENT SCENARIO - LIFE INSURANCE INDUSTRY IN INDIA The life insurance industry in India grew by an impressive 47.38%, with premium income at Rs. 1560.41 billion

14

during the fiscal year 2006-2007. Though the total volume of LIC's business increased in the last fiscal year (20062007) compared to the previous one, its market share came down from 85.75% to 81.91%. The 17 private insurers increased their market share from about 15% to about 19% in a year's time. The figures for the first two months of the fiscal year 2007-08 also speak of the growing share of the private insurers. The share of LIC for this period has further come down to 75 percent, while the private players have grabbed over 24 percent. With the opening up of the insurance industry in India many foreign players have entered the market. The restriction on these companies is that they are not allowed to have more than a 26% stake in a company’s ownership. Since the opening up of the insurance sector in 1999, foreign investments of Rs. 8.7 billion have poured into the Indian market and 19 private life insurance companies have been granted licenses. Innovative products, smart marketing, and aggressive distribution have enabled fledgling private insurance companies to sign up Indian customers faster than anyone expected. Indians, who had always seen life insurance as a tax saving device, are now suddenly turning to the private 15

sector and snapping up the new innovative products on offer. Some of these products include investment plans with insurance and good returns (unit linked plans), multi – purpose insurance plans, pension plans, child plans and money back plans. (www.wikipedia.com)

CHAPTER II

16

PROFILE OF ORGANIZATION

2.1 HDFC STANDARD LIFE INSURANCE COMPANY LIMITED INTRODUCTION HDFC Incorporated in 1977 with a share capital of Rs 10 Crores, HDFC has since emerged as the largest residential mortgage

finance

institution

in

the

country.

The

corporation has had a series of share issues raising its capital to Rs. 119 Crores. The gross premium income for the year ending March 31, 2007 stood at Rs. 2,856 Crores and new business premium income at Rs. 1,624 Crores. The company has covered over 8,77,000 lives year ending March 31, 2007.

HDFC operates through almost 450 locations throughout the country with its corporate head quarters in Mumbai, 17

India. HDFC also has an International Office in Dubai, UAE with service associates in Kuwait, Oman and Qatar. HDFC is the largest housing company in India for the last 27 years.

SNAPSHOT-I • Incorporated in 1977 as the first specialized Mortgage Company in India. • Almost 90% of initial shareholding in the hands of domestic institutes and retail investors. Current 77% of shares held by foreign institutional investors. • Besides the core business of mortgage HDFC has evolved into a financial conglomerate with holdings In:  HDFC Standard Life insurance Company- HDFC holds 78.07 %.  HDFC Asset Management Company – HDFC holds 50.1%  HDFC Bank- HDFC holds 22.25%. 

Interline Global (Business Process Outsourcing) – HDFC holds 50%.

 HDFC Chubb General Insurance Company – HDFC holds 74%. SNAPSHOT-II

18

• Loan Approvals

Rs. 805 billion.

(up to Dec 2007)

(US $ 18.30 bn.)

• Loan Disbursements

Rs.669

billion (up to Dec. 2007)

(US $

15.20 bn) • Housing Units Financed

2.5 million.

• Distribution  Offices

181

 Outreach Programs

90

KEY PLAYERS Mr. Deepak S Parekh is the Chairman of the Company. He

is

also

the

Executive

Chairman

of

Housing

Development Finance Corporation Limited (HDFC Limited). He joined HDFC Limited in a senior management position in 1978. He was inducted as a whole-time director of HDFC Limited in 1985 and was appointed as its Executive Chairman in 1993. He is the Chief Executive Officer of HDFC Limited. Mr. Parekh is a Fellow of the Institute of Chartered Accountants (England & Wales).

19

Mr. Deepak M Satwalekar is the Managing Director and CEO of the Company since November, 2000. Prior to this, he was the Managing Director of HDFC Limited since 1993. Mr. Satwalekar obtained a Bachelors Degree in Technology from the Indian Institute of Technology, Bombay and a Masters Degree in Business Administration from The American University, Washington DC.

GROUP COMPANIES HDFC Bank: World Class Indian Bank- among the top private banks in India. HDFC AMC: One of the top 3 AMCs in India- Preferred investment manager. Intelenet Global: BPO services for international customers. CIBIL: Credit Information Bureau India Limited.

20

HDFC Chubb: Upcoming Private companies in the field of General Insurance. HDFC Mutual Fund HDFC reality.com: Helps to search properties in all major cities in India HDFC securities

STANDARD LIFE Standard Life is Europe’s largest mutual life assurance company. Standard Life, which has been in the life insurance business for the past 175 years is a modern company surviving quite a few changes since selling its first policy in 1825. The company expanded in the 19th century from kits original Edinburgh premises, opening offices

in

other

towns

and

businesses.

21

acquitting

other

similar

Standard Life Currently has assets exceeding over £ 70 billion under its management and has the distinction of being accorded “AAA” rating consequently for the six years by Standard and Poor. SNAPSHOT • Founded in 1875, company supporting generation for last 179 years. • Currently over 5 million Policy holders benefiting from the services offered. • Europe’s largest mutual life insurer.

JOINT VENTURE

HDFC Standard Life Insurance Company Limited was one of the first companies to be granted license by the IRDA to operate in life insurance sector. Reach of the JV player is highly rated and been conferred with many awards. HDFC is rated ‘AAA ’ by both CRISIL and ICRA. Similarly, Standard Life is rated ‘AAA’ both by Moody’s and Standard and 22

Poor’s. These reflect the efficiency with which HDFC and Standard Life manage their asset base of Rs. 15,000 Cr and Rs. 600,000 Cr. respectively. HDFC

Standard

Life

Insurance

Company

Ltd

was

incorporated on 14th August 2000. HDFC is the majority stakeholder in the insurance JV with 81.4% staple and Standard of as a staple 18.6% Mr. Deepak Satwalekar is the MD and CEO of the venture. HDFC Standard Life Insurance Company Ltd. Is one of India’s leading Private Life Insurance Companies, which offers a range of individual and group insurance solutions. It is a joint venture between Housing Development Finance Corporation Limited (HDFC Ltd.) India’s leading housing finance

institution

and

the

Standard

Life Assurance

Company, a leading provider of financial services from the United Kingdom. Both the promoters are will known for their ethical dealings and financial strength and are thus committed to being a long-term player in the life insurance industry- all important factors to consider when choosing your insurer.

BUSINESS GROWTH Track Record so far The gross premium income of HDFC, for the year ending 23

March 31, 2007 stood at Rs. 2,856 crores and new business premium income at Rs. 1,624 crores. The company has covered over 8,77,000 lives year ending March

31,

2007.

Company

also

declared

our

5th

consecutive bonus in as many years for our ‘with profit’ policyholders. KEY STRENGTH Financial Expertise As a joint venture of leading financial services groups. HDFC standard Life has the financial expertise required to manage long-term investments safely and efficiently.

Range of Solutions HDFC SLIC has a range of individual and group solutions, which can be easily customized to specific needs. These group solutions have been designed to offer complete flexibility combined with a low charging structure. Strong Ethical Values: HDFC SLIC is an ethical and Cultural Organization. False selling or false commitment with the customers is not allowed.

24

Most respected Private Insurance Company HDFC SLIC was awarded No-1 Private Insurance Company in 2004 by the World Class Magazine Business World for Integrity, Innovation and Customer Care. CORPORATE OBJECTIVE Vision 'The most successful and admired life insurance company, which means that we are the most trusted company, the easiest to deal with, offer the best value for money, and set the standards in the industry'. 'The most obvious choice for all'. Values .Integrity .Innovation .Customer centric .People Care One for all .Teamwork .Joy and Simplicity

PRODUCTS & SERVICES The right investment strategies won't just help plan for a more comfortable tomorrow -- they will help you get “Sar Utha ke Jiyo”. At HDFC SLIC, life insurance plans are created keeping in mind the changing needs of family. Its life insurance plans are designed to provide you with flexible options that meet both protection and savings

25

needs. It offers a full range of transparent, flexible and value for money products. HDFC SLIC products are modern and contemporary unitized products that offer unique customer benefits like flexibility to choose cover levels, indexation

and

partial

withdrawals.

(Source:

www.hdfcslic.com)

PLANS THAT ARE OFFERED BY HDFC STANDARDS LIFE INSURANCE Individual Products Protection Plans A person can protect his family against the loss of his income or the burden of a loan in the event of his unfortunate demise, disability or sickness. These plans offer valuable peace of mind at a small price. Protection range includes our Term Assurance Plan & Loan Cover Term Assurance Plan.

Investment Plans HDFC SLIC’s Single Premium Whole of Life plan is well suited to meet long term investment needs. This provides attractive long term returns through regular bonuses. 26

Pension Plans Pension Plans help to secure financial independence even after retirement. Pension range includes Personal Pension Plan, Unit Linked Pension, Unit Linked Pension Plus. Savings Plans Savings Plans offer a flexible option to build savings for future needs such as buying a dream home or fulfilling your children’s immediate and future needs. Savings range includes Endowment Assurance Plan, Unit Linked Endowment, Unit Linked Endowment Plus, Unit Linked Endowment Plus II, Money Back, Unit Linked Enhanced Life Protection II, Children's Plan, Unit Linked Young Star, Unit Linked Young Star Plus, Unit Linked Young Star Plus II.

Group Products One-stop shop for employee-benefit solutions HDFC Standard Life has the most comprehensive list of products for progressive employers who wish to provide

27

the best and most innovative employee benefit solutions to their employees. It offers different products for different needs of employers ranging from term insurance plans for pure protection to voluntary plans such as superannuation and leave encashment. HDFC SLIC offers the following group products to esteemed corporate clients: Group Term Insurance Group Variable Term Insurance Group Unit-Linked Plan An investment solution that provides funding vehicle to manage corpuses with Gratuity, Defined Benefit or Defined Contribution Superannuation or Leave Encashment schemes of your company Also suitable for other employee benefit schemes such as salary saving schemes and wealth management schemes

Social Product Development Insurance Plan Development Insurance plan is an insurance plan which provides life cover to members of a Development Agency for a term of one year. On the death of any member of the group

28

insured during the year of cover, a lump sum is paid to those member beneficiaries to help meet some of the immediate financial needs following their loss.

29

Eligibility Members of the development agency and their spouses with: - Minimum age at the start of the policy 18 years last birthday - Maximum age at the start of policy 50 years last birthday Employees of the Development Agency are not eligible to join the group. The group to be covered is only eligible if it contains more than 500 members. Premium Payments The premium to be paid will be quoted per member in the group and will be the same for all members of the group. The premium can only be paid by the Development Agency as a single lump sum that includes all premiums for the group to be covered. Cover will not start until the premium and all the member information in our specified format has been received. Benefits On the death of each member covered by the policy during the year of cover a lump sum equal to the sum assured will be paid to their beneficiaries or legal heirs. Where the death is as a result of an accident, an additional lump sum will be paid equal to half the sum assured. There are no benefits paid at the end of the year of cover and there is no surrender value available at any time. 30

Tax Benefits INCOME

TAX GROSS

SECTION

Sec. 80C

HOW

MUCH HDFC STANDARD

ANNUAL

TAX CAN YOU LIFE PLANS

SALARY

SAVE?

Across income Slabs

All Upto Rs. 33,990 All saved

the

life

on insurance plans.

investment of Rs. 1,00,000. Sec. 80 CCC

Across income slabs.

all Upto Rs. 33,990 All

the

saved

on plans.

Investment

of

pension

Rs.1,00,000. Sec. 80 D

Across income slabs

all Upto Rs. 3,399 All saved

health

on insurance

riders

Investment of

available with the

Rs. 10,000.

conventional plans.

TOTAL SAVINGS POSSIBLE

the

Rs37,389 Rs. 33,990 under Sec. 80C and under Sec. 80 CCC , Rs.3,399 under Sec. 80 D, calculated for a male with gross annual income exceeding Rs. 10,00,000.

2.2 TATA AIG 31

TATA AIG LIFE INSURANCE COMPANY LIMITED Introduction Tata AIG Life Insurance Company Limited (Tata AIG Life) is a joint venture company, formed by the Tata Group and American International Group, Inc. (AIG). Tata AIG Life combines the Tata Group’s pre-eminent leadership position in India and AIG’s global presence as the world’s leading international insurance and financial services organization. The Tata Group holds 74 per cent stake in the insurance venture with AIG holding the balance 26 percent. Tata AIG Life

provides

insurance

solutions

to

individuals

and

corporate. Tata AIG Life Insurance Company was licensed to operate in India on February 12, 2001 and started operations on April 1, 2001. THE TATA GROUP The Tata Group is one of India's largest and most respected business conglomerates, with revenues in 200405 of $17.8 billion (Rs. 799,118 million), the equivalent of about 2.8 per cent of the country's GDP. Tata companies together employ some 215,000 people. The Group's 32 publicly listed enterprises - among them standout names such as Tata Steel, Tata Consultancy Services, Tata Motors and Tata Tea - have a combined market capitalization that is the highest among Indian business houses in the private 32

sector, and a shareholder base of over 2 million. The Tata Group has operations in more than 40 countries across six continents,

and

its

companies

export

products

and

services to 140 nations. AIG American International Group, Inc. (AIG), world leaders in insurance

and

financial

services,

is

the

leading

international insurance organization with operations in more than 130 countries and jurisdictions. AIG companies serve commercial, institutional and individual customers through the most extensive worldwide property-casualty and life insurance networks of any insurer. In addition, AIG companies are leading providers of retirement services, financial services and asset management around the world. AIG's common stock is listed on the New York Stock Exchange as well as the stock exchanges in London, Paris, Switzerland and Tokyo. Tata AIG has strong brand name and recall factor which most of its competitors lack in. Other than the public behemoth Life Insurance Corporation (LIC) of India which has a major hold in the market share (of approximately 79%), the private players too are having more and more opportunities to tighten their hold of the market. Of the

33

private players, ICICI Prudential comes first with an almost 4.50% of the market share followed by Tata AIG with about 2.10% of the pie. The private players have everything to work for, especially with LIC not meeting the needs of its clientele with respect to the services they need. This provides a prospect for the private sector players to increase their share of the market. Companies with a familiarity such as Tata AIG can especially achieve their targets due to the brand image that the Tata group has. (Source: www.tata-aig-life.com) A recent survey conducted by the Voluntary Organization in Interest of Consumer Education (VOICE) revealed Tata AIG Life Insurance Company (Tata AIG Life) as the clear winner in terms of customer satisfaction in the life insurance category. This is India's first-ever customer satisfaction study for the insurance sector. The survey also revealed that Tata AIG Life had a high recall as a reputed brand name. The ability to provide innovative and customer-focused service such as allowing the maximum grace period for premium payment has not only further distinguished Tata AIG Life from other life insurance companies but also appealed to consumers.

34

2.3

OTHER COMPETITORS

LIFE INSURANCE CORPORATION OF INDIA (LIC) LIC has an excellent money back policy which provides for periodic payments of partial survival benefits as long as the policy holder is alive. 20% of the sum assured is payable after 5, 10, 15 and 20 years and the balance 40% is payable at the 20th year along with accrued bonus. (www.lic.com) For a 25 years term , 15% of the sum assured becomes payable after 5,10,15 and 20 years and the balance 40% plus the accrued bonus becomes payable at the 25th year. An important feature of these types of policies is that in the event of the death of the policy holder at any time within the policy term the death claim comprises of full sum assured without deducting any of the survival benefit amounts which have already been paid. The bonus is also calculated on the full sum assured. HDFC SLIC does not have a money back policy. It could offer a money back plan and capture some portion of this

35

market. While marketing insurance products I found that many customers wanted to purchase these plans. LIC offers 66 different plans; plans are formulated for specific occasions – whole life plans, term assurance plans, money back plan for women, child plans, plans for the handicapped individuals, endowment assurance plans, plans for high worth individuals, pension plans, unit linked plans, special plans, social security schemes – diversified portfolio of products. HDFC SLIC could diversify its product portfolio. It could add more plans for high worth individuals and women. ICICI PRUDENTIAL ICICI Prudential is a stiff competitor for HDFC SLIC. The company is a merger between ICICI Bank which is the biggest private bank in India and Prudential Plc which is a global life insurance company. The company has an investment plan which is market related – Invest Shield Life. In this plan even if the market falls, the premium will be returned to investors. It is a guaranteed plan which ensures the company carefully invests your money. The stock market performance of ICICI Prudential is much better than HDFC SLIC. The returns on

36

the growth fund were 46.28% compared to the 42.70% offered by HDFC SLIC. Customers are attracted by higher returns and this is a plus point for Prudential. The company is very well advertised. The advertisements are

showcased

in

movies,

television,

newspapers,

magazines, bill boards, radio etc. The company has an excellent brand ambassador – Mr. Amitabh Bacchan. His promotion of the company builds trust and faith in the minds of our people. However the charges are very high in the plans offered by ICICI Prudential. It is 35% during the first year, 15% in the next year and 3% from the third year onwards. Also a higher minimum premium of Rs. 8000 is charged. Hence the policies are not accessible to the lower strata of the society. (Source: www.iciciprulife.com)

BIRLA SUN LIFE Birla Sun Life Insurance Company Limited is a joint venture between The Aditya Birla Group, one of the largest business houses in India and Sun Life Financial Inc., a leading international financial services organization. The

37

local knowledge of the Aditya Birla Group combined with the expertise of Sun Life Financial Inc., offers a formidable protection for your future. (Source: www.birlasunlife.com) The Aditya Birla Group has a turnover close to Rs. 33000 crores with a market capitalization of Rs. 53400 crores (as on 31st March 2007). It has over 72000 employees across all its units worldwide. It is led by its Chairman - Mr. Kumar Mangalam Birla. Some of the key organizations within the group are Hindalco and Grasim. Sun Life Financial Inc. and its partners today have operations in key markets worldwide, including Canada, the United States, the United Kingdom, Hong Kong, the Philippines, Japan, Indonesia, India, China and Bermuda. It had assets under management of over US$343 billion, as on 31st March 2007. The company is a leading player in the life insurance market in Canada. Being a customer centric company, BSLI has invested heavily in technology to build world class processing capabilities. BSLI has covered more than a million lives since inception and its customer base is spread across more than 1000 towns and cities in India. All this has assisted the company in cementing its place amongst the

38

leaders in the industry in terms of new business premium income. The company has a capital base of 520 crores as on 31st July, 2007. Its Flexi Life Line Plan offers life long insurance cover till the policy holder is 100 years of age. There are guaranteed returns of 3% p.a. net of policy charges after every 5 years from the eleventh policy year onwards. However the charges are very high. The initial charges for the first year are 65%. Hence the fund value is greatly reduced. BAJAJ ALLIANZ Bajaj Allianz is a joint venture between Allianz AG with over 110 years of experience in over 70 countries and Bajaj Auto, a trusted automobile manufacturer for over 55 years in the Indian market. Together they are committed to offering you financial solutions that provide all the security you need for your family and yourself. Bajaj Allianz is the number one private life insurer for the year 2005 – 2006. It is leading by 78 crores. It has experienced a whopping growth of 216% in the last financial year. The company has sold 13, 00,000 policies and is backed by 550 offices across India. It offers travel insurance, motor insurance, home insurance, health and corporate

39

insurance. The mortality charges are lower than HDFC SLIC. The entry age could be zero years which allow even new

born

babies

to

be

insured.

(Source:

www.bajajallianz.com) TATA AIG Tata Aig is a joint venture between the Tata group and American International Group Inc. In one of the plans the company offers hospital cash benefit wherein it will pay Rs. 2500 per day in case of hospitalization and Rs.12.5 lakhs in case the person suffers from any critical illness. Annual premium is much less (about Rs. 6712) to avail such a good benefit. Charges are relatively low compared to HDFC SLIC for some policies. The company offers high coverage plans at low cost. There is a plan even for a policy term of 1 year. Your family can continue to enjoy their current lifestyle even in the case of something happening to you. These plans are very flexible and HDFC SLIC could adopt this idea of insuring individuals for short periods of time. For example; there is a family of four. The only earning member is the father. He has just taken a loan from a bank of 20 lakhs to purchase a new home. He is able to repay the loan with his 40

current salary in 15 years. The problem arises if something were to happen to him within these fifteen years. Not only will the family face the emotional and financial loss of their father but they will also have to repay the home loan or risk being homeless. (Source: www.tataaig.com)

2.4 HDFC Policies HDFC Children Plans As a parent, your priority is your child's future and being able to meet your child's dreams and aspirations. Today, providing a good education, establishing a professional career or even a modest wedding is expensive. Costs are increasing fast. Just imagine how much you'll need when your child takes these important steps in life! The HDFC CHILDREN'S PLAN:

Gives valuable protection and invaluable financial support to the child. Works on Beneficiary concept, where beneficiary is the sole person to receive the benefit under the policy. Provides you multiple options for multiple benefits.

41

Death Benefit(on death of insured parent during the policy term)

Plan Option Accelerated Benefit Plan



Sum Assured + Bonuses Declared.



The policy terminates immediately.

Maturity Benefit Plan



Double Benefit Plan

Maturity Benefit 

Sum Assured + Bonuses Declared

Your family need not pay any further premiums and the policy continues.



Sum Assured + Bonuses Declared



Sum Assured.



Sum Assured + Bonuses Declared



Your family need not pay any further premiums.

HDFC Young star Champion Plans Today, providing a good education, establishing a professional career or even a modest wedding is expensive. Costs are increasing fast. Just imagine how much you will need when your children take these important steps in life. Plan today to ensure a bright future for your children. Start building savings today with our HDFC Unit Linked YoungStar Champion so that your child is able to lead a life of respect and dignity with a secured financial future. Feature The HDFC Unit Linked YoungStar Champion gives you

42

Valuable protection to your child in case you are not around An outstanding investment opportunity by providing a choice of thoroughly researched and selected investments Bumper Addition to the fund value at maturity Flexible premium payment options No need to go for medicals. Just filling the Short Medical Questionnaire will do Benefit The HDFC Unit Linked YoungStar Champion gives you In case of unfortunate demise of the parent, HDFC Standard Life will: Pay the Sum Assured you had chosen to your child. Continue to pay 50% of the original regular premium towards the policy

HDFC Pension Plan The HDFC Unit Linked Pension II is an insurance policy that is designed to provide a retirement income for life with the freedom to maximise your investment returns. Stride into your golden years of retirement with dignity and pride. FeaturesThe HDFC Unit Linked Pension II gives you

43

An outstanding investment opportunity by providing a choice of thoroughly researched and selected investments Freedom from tracking the market with Asset Allocation Option Bumper Addition of 50% of original annualized premium at vesting and on death Provides a post retirement income for life Gives you the flexibility to plan your retirement date You can choose your premium and the investment strategy. We will then invest your premium, net of premium allocation charges according to your chosen investment strategy. At the end of the policy term, you will receive the accumulated value of your funds, which will be used to provide your pension income. The HDFC Unit Linked Pension II benefits you in the following ways: Take 1/3rd of the fund value as tax-free cash lump sum and purchase annuity with the balance amount. Purchase annuity from HDFC Standard Life or any other insurer

44

CHAPTER III OBJECTIVES OF STUDY

The main of the present study of is accomplishing the following objective.  Proper understanding and analysis of life insurance industry.  To know about brand awareness of HDFC Life Insurance and customer’s preference about HDFC Life Insurance.  Conduct market survey on a sample selected from the entire population and derived opinion on that research. 45

 According the market survey come know about how much potential of insurance market in our city.  Training aims at recruiting maximum number of Life Advisors and to Sell the maximum policies for the company and bring the business for the company which ever is going at the particular point of time.  Along with it I will be gaining the thorough knowledge of insurance sector. This will give me in more confidence in marketing products given to me.  As the HDFC Life Insurance well reputed company in India it’s great chance for me to observed different products launch by other competitor companies like ICICI prudential, Bajaj alliance ,LIC, Max New York life etc. In all, it is to understand the overall working of the Life insurance sector.  The objective behind the project is as follows:  To find the right candidate.  To about their family background, occupation, social relation, Qualification, Age.  Finalize candidates for the IRDA training

46

CHAPTER IV RESEARCH METHODOLOGY

RESEARCH METHODOLOGY TITLE: To determine customer-buying behavior with a focus on market segmentation for HDFC Standard Life Insurance.

47

•

TITLE JUSTIFICATION: The above title is self explanatory. The study deals mainly with studying the buying

pattern in the insurance industry with a special focus on

HDFC Standard Life Insurance. The various segments of the markets divided in terms of Insurance Needs, Age groups , Satisfaction levels etc will also studied. OBJECTIVE Objective One •

To determine reasons behind opting for an insurance.

•

To provide the company with information of customer's Insurance policy if they have any and reasons for opting for that particular policies.

 To know the most preferred policy.

Objective Two •

To determine customers perception towards private insurance companies and their expectation form private insurance companies.

48

•

To determine the feedback on services provided by any other insurance agent.

•

To study the types of benefits provided by insurance services.

•

To determine the use of Internet for valuable information and decision-making process.

SCOPE OF THE STUDY A big boom has been witnessed in Insurance Industry in recent times. A large number of new players have entered the market and are vying to gain market share in this rapidly improving market. The study deals with HDFC Standard Life in focus and the various segments that it caters to. The study then goes on to evaluate and analyze the findings so as to present a clear picture of trends in the Insurance sector.

SIGNIFICANCE TO THE INDUSTRY : This is a limited study which takes into consideration the responses of 100 people. This data can be explorated to take in the trends across the 49

industry. The significance for the industry lies in studying these trends that emerge from the study. It is a rapiddly changing and evolving sector. People are only beginning to wake up to it’s vast possibilities. A study like this can attempt to guide the future of the industry based on current trends.

SIGNIFICANE FOR THE RESEARCHER : To facilitate and provide all the useful informtaion of the studt, the company, the insurance industry and also provide marketing ways, methods of HDFC Standard Life insurance. RESEARCH DESIGN • NON-PROBABILITY • EXPLORATORY

&

DISCRIPTIVE

EXPERIMENTAL

RESEARCH The research is primarily both exploratory as well as descriptive in nature. The sources of information are both primary & secondary. 50

A well-structured questionnaire was prepared and personal interviews were conducted to collect the customer’s perception and buying behavior, through this questionnaire. SAMPLING METHODOLOGY SamplingTechnique: Initially, a rough draft was prepared keeping in mind the objective of the research. A pilot study was done in order to know the accuracy of the Questionnaire. The final Questionnaire was arrived only after certain important changes were done. Thus my sampling came out to be judgmental and continent Sampling Unit: The respondents who were asked to fill out questionnaires are the sampling units. These comprise of employees of MNCs, Govt. Employees, Self Employed etc.

Sample size: The sample size was restricted to only 100, which comprised of mainly peoples from different regions of Chennai due to time constraints. Sampling Area :

51

The area of the research was CHENNAI,TAMILNADU, INDIA.

LIMITATIONS OF THE RESEARCH

1. The research is confined to a certain parts of CHENNAI (MADRAS) and does not necessarily shows a pattern applicable to all of Country. 2. Some respondents were reluctant to divulge personal information which can affect the validity of all responses. 3. In a rapidly changing industry, analysis on one day or in one segment can change very quickly. The environmental changes are vital to be considered in order to assimilate the findings.

52

CHAPTER V RESULT ANALYSIS & INTERPRETATION

ANALYSIS & INTERPRETATION “A SURVEY ON THE LIFE INSURANCE INDUSTRY IN INDIA”

53

AGE GROUP OF SURVEYED RESPONDENTS TABLE 1: Age group 18 - 25 years 26 - 35 years 36 - 49 years 50 - 60 years More than 60 years

No. of Respondents 127 67 46 24 6

CHART 1:

Analysis: From the chart above we find that 47% of the respondents fall in the age group of 18 – 25 years, 25% fall in the age group of 26 – 35 years and 17% fall in the age group of 36 – 49 years. Therefore most of the respondents are relatively young (below 26 years of age). These individuals could be induced to purchase insurance plans on the basis of its tax saving nature and as an investment opportunity with high returns.

54

Individuals at this age are trying to buy a house or a car. Insurance could help them with this and this fact has to be conveyed to the consumer. As of now many consumers have a false perception that insurance is only meant for people above the age of 50. Contrary to popular belief the younger you are the more insurance you need as your loss will mean a great financial loss to your family, spouse and children who are financially dependent on you.

GENDER CLASSIFICATION OF SURVEYED RESPONDENTS TABLE 2: Particulars Male Female CHART 2:

No. of Respondents 193 77

CUSTOMER PROFILE OF SURVEYED RESPONDENTS TABLE 3: Customer profile Student Housewife Working Professional Business

No. of respondents 62 5 116 49 55

Self Employed Government service employee

24 14

CHART 3:

Analysis: From the chart above it can clearly be seen that 43% of the respondents are working professionals, 23% are students and 18% are into business. Therefore the target

56

market would be working individuals in the age group of 18 – 25 years having surplus income, interested in good returns on their investment and saving income tax. NO. OF RESPONDENTS WHO HAVE LIFE INSURANCE POLICY IN THEIR NAME TABLE 4: Person who have life insurance policy Yes 103 No 167 CHART 4:

ANALYSIS: This graph shows that out of total 270 respondents only 103 or 38% respondents have life insurance policy in their name. Rest all don’t have a single policy in their name. So there is a very big scope for life insurance companies to

57

cover these people. So in future business of life insurace will gro further. MARKET SHARE OF LIFE INSURANCE COMPANIES TABLE 5:

LIFE INSURER

NUMBER OF POLICIES

HDFC STANDARD LIFE

4

BIRLA SUN LIFE

3

AVIVA LIFE INSURANCE

6

BAJAJ ALLIANZ

7

LIC

55

TATA AIG

6

ICICI PRUDENTIAL

12

ING VYSYA

6

BHARTI AXA

2

OTHERS CHART 5:

2

58

Analysis: In India, the largest life insurance company is Life Insurance Corporation of India. It has been in existence in India since 1956 and is completely owned by the Government of India. Today the organization has grown to 2048 offices serving 18 crore policies and has a corpus of over 340000 crore INR.

59

ANNUAL PREMIUM PAID BY INDIVIDUALS FOR LIFE INSURANCE TABLE 6: Premium paid (p.a.)

No. of respondents

Rs. 5000 - Rs. 10000

40

Rs. 10001 - Rs. 15000

26

Rs. 15001 - Rs. 24900

18

Rs. 25000 - Rs. 50000

10

Rs. 50001 - Rs. 60000

4

Rs.60001 - Rs. 80000

2

Rs. 80001 - Rs. 100000

3

CHART 6: ANNUAL PREMIUM PAID BY INDIVIDUALS FOR LIFE INSURANCE

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Analysis: From the chart above we find that, 39% of the respondents surveyed pay an annual premium less than Rs. 10001 towards life insurance. 25% of the respondents pay an annual premium less than Rs. 15001 and 17% pay an annual premium less than Rs. 25000. Hence we can safely say that HDFC SLIC would be able to capture the market better if it introduced products/plans where the minimum premium starts at Rs. 5000 per annum. Only 19% of the respondents pay more than Rs. 25000 as premium and most products sold by HDFC SLIC have Rs.12000 as the minimum annual premium amount. They should introduce more products like Easy Life Plus and Safe Guard where the minimum premium is Rs.6000 p.a. and Rs. 12000 p.a. respectively. This would definitely increase their market share as more individuals would be able to afford the policies/plans offered.

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POPULAR LIFE INSURANCE PLANS TABLE 7:

Type of Plan Term Insurance Plans Endowment Plans Pension Plans Child Plans Tax Saving Plans CHART 7:

No. of Respondents 105 122 16 8 19

POPULAR LIFE INSURANCE PLANS

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Analysis: From the chart given above we can clearly see that 45% of the respondents hold endowment plans and 39% of the respondents hold term insurance plans. Endowment plans are very popular and serve two purposes – life cover and savings. If the policy holder dies during the policy term the nominee gets the death benefit that is, sum assured and accumulated bonus. On survival the policy holder receives the survival benefit with a bonus. A term plan is a pure risk cover plan wherein the insured pays a lower premium for a higher sum assured. Term insurance is the cheapest form of insurance and helps the policy holder insure himself for a relatively low premium. For the returns sensitive investor term plans do not find favor as they do not offer a return in case the individual does not die during the policy term.

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AWARENESS OF UNIT LINKED INSURANCE PLANS TABLE 8: Awareness of Unit Linked Plans Yes No

No. of Respondents 154 116

CHART 8: AWARENESS OF UNIT LINKED INSURANCE PLANS

Analysis: From the chart given above we find that 57% of the respondents are aware of unit linked life insurance plans and 43% are not aware of such plans. These plans should be promoted through advertising. The company can

64

advertise through television, radio, newspapers, bill boards and pamphlets. This would increase awareness and arouse curiosity in the minds of the consumer which would enable the company to market its products more effectively. Unit – linked plans 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 a customer would get would depend on the unit price when they pay the premium. When the policy matures the individual gets his fund value. The value of his fund is calculated by multiplying the net asset value and number of units held by them on that day.

CONSUMER WILLINGNESS TO SPEND ON LIFE INSURANCE PREMIUM TABLE 9: Willingness to spend on premium

No. of respondents

Percentage

Less than Rs. 6,000

41

15%

Rs. 6,001 - Rs. 10,000

73

27%

Rs. 10,001 - Rs. 25,000

110

41%

65

Rs. 25,001 - Rs. 50,000

41

15%

Rs. 50,001 - Rs. 1,00,000

5

2%

CHART 9: CONSUMER WILLINGNESS TO SPEND ON LIFE INSURANCE PREMIUM

Analysis: From the graph above, we can clearly see that 41% of the respondents would be willing to spend between Rs. 10001 – Rs. 25000 for life insurance. 27 % would be willing to spend between Rs. 6001 – Rs. 10000 per annum. Only 15% would be willing to spend more than Rs. 25000 per annum as life insurance premium. We could say that the maximum premium payable by most consumers is less than Rs. 25000 p.a. This is further 66

reduced as most customers have already invested with LIC, ICICI Prudential, Birla Sun Life, Bajaj Allianz etc. HDFC SLIC is faced with a large amount of competition. There are 18 insurance companies in India inclusive of LIC. Hence to capture a larger part of the market the company could

introduce

more

reasonable

plans

with

lesser

premium payable per annum.

CHART SHOWING IDEAL POLICY TERM TABLE 10:

Ideal policy term

No. of respondents

3 - 5 years

51

6 - 9 years

41

10 - 15 years

95

16 - 20 years

38

21 - 25 years

24

26 - 30 years

5

More than 30 years

3 67

Whole life Policy

13

CHART 10: CHART SHOWING IDEAL POLICY TERM

Analysis: From the chart given above it can be seen that 35% of the respondents prefer a policy term of 10 – 15 years, 19% prefer a term of 3 – 5 years and 15% prefer a term of 6 – 9 years. This means that HDFC SLIC could introduce more plans wherein the premium paying term is less than 15 years.

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The outlook of insurance as a product should be changed from something which you pay for your whole life (whole life policy) and do not receive any benefit (the nominee only receives the benefit in case of your death) to an extremely prospects

useful of

good

investment

opportunity

returns

savings,

on

with tax

the

saving

opportunities as well as providing for every milestone in your life like marriage, education, children and retirement.

FACTORS THAT MOTIVATE RESPONDENTS TO PURCHASE INSURANCE TABLE 11: Parameter Advertisements High returns Advice from friends Family responsibilities Others

No. of Respondents 35 84 46 89 16

CHART 11:

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Analysis: From the chart above it can be seen that 33% of the respondents purchase life insurance to secure their families, 33% take life insurance to get high returns, 17% purchase insurance on the advice of their friends and 13% purchase

insurance

because

of

the

influence

of

advertisements. The main purpose of insurance is to cover the financial or economic loss that occurs to the family in case of the uncertain death of the policy holder. But now a days this trend is changing. Along with protection (life cover), a savings element is being added to insurance.

70

With the introduction of the new unit linked plans in the market, policy holders get the option to choose where their money will be invested. They can invest their money in the equity

market,

debt

market,

money

market

or

a

combination of these. The debt and money markets usually have low risk attached whereas the equity market is a high risk investment option.

PREFERRED COMPANY TYPE OF THE RESPONDENTS TABLE 12: No. of Respondents

Percentage

127

47%

62

23%

Private Company

49

18%

Foreign Company

32

12%

Type of Company Government Owned Company Public Limited Company

CHART 12: PREFERRED COMPANY TYPE OF THE RESPONDENTS

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Analysis: From the graph above we find that 60% of the respondents preferred to purchase insurance from a government owned company, 29% of the respondents preferred to purchase insurance from a public limited company and only 4% of the respondents preferred a foreign based company. Heavy

advertising

through

television,

newspapers,

magazines and radio is required. MINIMUM EXPECTED RETURN ON INVESTMENT TABLE 13: Expected Returns

No. of respondents

72

Less than 5%

5

5% - 10%

39

11% - 15%

46

16% - 20%

49

21% - 25%

46

26% - 30%

27

31% - 40%

22

41% - 50%

14

More than 50%

22

CHART 13:

Analysis: From the chart above it can clearly been seen that 18% of the respondents would like 16 – 20% returns, 17% would 73

like returns between 21 – 25% and 17% would like returns of 11 – 15% on their investments. Therefore the average return on investment should be at least 16 – 20 %. Most consumers are willing to adapt to some amount of risk but still want some guaranteed returns. Therefore the bulk of investment should be made in the balanced fund with 50% debt and 50% equity. The returns on the Secure Fund are guaranteed as these involve investment is government securities and the debt market. But the returns on these instruments are low (8 – 10%). If the company invests in shares, returns are higher (39%) but correspondingly risk borne by the policy holder is also higher.

Therefore

a

good

combination

instruments is often a wise choice.

74

of

the

two

CHAPTER VI CONCLUSION

75

CONCLUSION HDFC standard life insurance is first life insurance Company in India. It has businesses spread out across the globe. It was registered on 23rd December 2000. It currently ranks number 4 amongst the insurers in India. The company faces a large amount of competition. To sustain itself it must promote its products through advertising and improve its selling techniques. Consumers must be aware of the new plans available at HDFC SLIC. The medium of advertising used could be television since most of its competitors use this tool to promote their products. The company must be promoted as an Indian company since consumers seem to have more trust in investing in Indian firms. The unit linked concept must be specifically promoted. The general perception of life insurance has to change in India before

76

progress is made in this field. People should not be afraid to invest money in insurance and must use it as an effective tool for tax planning and long term savings. HDFC SLIC could tap the rural markets with cheaper products and smaller policy terms. There are individuals who are willing to pay small amounts as premium but the plans do not accept premiums below a certain amount. It was usually found that a large number of males were insured compared to females. Individuals below the age of 30 (mostly male) were interested in investment plans. This was a general conclusion drawn during prospecting clients.

CHAPTER VII SUGGESTION 77

Finding and Suggestion •

According the survey only 42% people are insured in Alwar so reaming other part is potential for insurance sector.

• Among that 42% people who having insurance, they have insurance 40% for self 28%for spouse 21% for children and 18% for their parents and 11% for all family member, also its very help full for insurance sector so they should take necessary step for capture this potential. •

Only 42% people having insurance in Alwar in that 42% there are 82 % people are under insured and other 18% people are fully insured according to their income so that is also plus point for insurance sector to capture the market.

78

79

CHAPTER VIII QUESTIONNAIRE

80

81

82

Chapter IX Bibliography

83

By the help of Books • Marketing Management written BY “Phillip Kotlar” (12 edition, page No 99) By the Help of Manuals • HDFC Report of 2008 & Internet. By the help of Other Sources • By the head’s and the consultant of the HDFC SLIC. By the help of Websites 1.

www. IRDAIndia.org.

2.

www.insure2bsecure.com

3.

www.google.com

4.

www. Wikkipedia.com

5. www.hdfcinsurance.com/

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Chapter X GLOSSARY

Accident Benefit An add-on with a life policy. It compensates a policyholder in the event of death or injury by accident. Budget It is a tool used to monitor and control expenditures and purchases. Cover Another word for insurance; it also refers to the amount of insurance.

Disability rider A rider that provides for additional cover in the event of disability, or dismemberment, of the policy holder due to an accident.

85

Financial planning It covers the essential elements of a person’s financial affairs and is aimed at achieving a person’s financial goals. Hospital cash benefit rider A rider that provides cover for hospitalization. IRDA Insurance regulatory development Authority. To ensure the equal development of in country. Liquidity The quality of assets that can be easily and quickly converted into cash without any, or significant, loss in value. Market value The monetary value an asset will fetch if sold in the market today. Nominee The person(s) nominated by the policyholder to receive the policy benefits in the event of his death. Policyholder The person who buys an insurance policy. Also referred to as the ‘insured’. Riders Additional covers that can be added to a life policy, for a cost. Sum assured The amount of cover taken under a life insurance policy, it is the minimum amount that will be paid on death of the policyholder during the policy term. Terminal bonus A one-time bonus paid on maturity of a with-profit plan. Whole-life plans Class of life insurance policies that provide cover through your lifetime.

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