Kotak Life Insurance

SUMMER TRAINING REPORT ON PROJECT

SUBMITTED TO

PUNJAB TECHNICAL UNIVERSTY IN PARTIAL FULFILMENT OF REQUIRMENT FOR THE DEGREE OF MASTER OF BUSINESS ADMINISTRATION

SUBMITTED TO:

SUBMITTED BY:

Mr.BIKRAMJIT SINGH BUTALIA (Assistant Manager-Alternate Channel)

SONPREET KAUR M.B.A III sem.

CT INSTITUTE OF MANAGEMENT & I.T. JALANDHAR

CERTIFICATE

ACKNOWLEDGEMENT Research is like an endless ocean and one requires guidance and support of several individuals in order to derive out a handful of pearls from its depth. The successful completion of this project would not have been possible but with the help & guidance of a number of people. I avail this opportunity to convey my sincere gratitude to these people. It was a great privilege and honor to express my deep sense of gratitude and whole-hatred thanks to Mr.BIKRAMJIT SINGH BUTALIA. For giving me the opportunity to summer tanning with the esteemed organization and providing me all sort of guidance needed for the project from time to time, putting my concepts right & constant encouragement at every stage of the project. It gives me immense please to express my sincere and wholehearted senses of gratitude to department of management, CT INSTITUTE OF MGT &IT, JALANDHAR for their untiring guidance & supervision throughout my study. I owe my sincere thank to Mr.Sharanjeet Singh for his valuable guidance and constant encouragement to enable me to cover the manifold features of my project .I also pay my regards to Mr.Subhash Bhutani, as he has been a constant source of inspiration. Sonpreet kaur.

PREFACE “Theoretical knowledge without practical learning is of little value.”

In order to achieve practical positive and results along with theoretical concepts, the exposure of real life situation is very much needed. To fulfill the need the management course has the provision of practical learning.

I took my summer training at kotak mahindra old mutual life insurance ltd. It was my fortune that I’ve got training in an esteemed organization in very healthy and cooperative atmosphere. The present project “competition analysis of equity plans of life INSURANCE” is an output of my research from real life situation occurring.

In the forthcoming pages, an attempt has been made to present comprehensive report concerning different aspects of my training.

CONTENTS 1.KOTAK MAHINDRA OLD MUTUAL LIFE INSURANCE LTD

Introduction • Company profile • History of insurance • Need of life insurance • Type of insurance • Life insurance • IRDA 2.INTRODUCTION OF PROJECT

• Introduction • Objective of research • Research methodology 3. ANALYSIS & INTERPRETATION OF DATA 4. SUGGESSIONS 5. LIMITATIONS 6. CONCLUSION 7. BIBLOGRAPHY

KOTAK MAHINDRA OLD MUTUAL LIFE INSURANCE LTD

INTRODUCTION

HISTORY The story so far... Almost 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. That, perhaps, was how insurance made its beginning. Life insurance had its origins in ancient Rome, where citizens formed burial clubs that would meet the funeral expenses of its members as well as help survivors by making some payments. As European civilization progressed, its social institutions and welfare practices also got more and more refined. With the discovery of new lands, sea routes and the consequent growth in trade, Medieval guilds took it upon themselves to protect their member traders from loss on account of fire, shipwrecks and the like. Since most of the trade took place by sea, there was also the fear of pirates. So these guilds even offered ransom for members held captive by pirates. Burial expenses and support in times of sickness and poverty were other services offered. Essentially, all these revolved around the concept of insurance or risk coverage. That's how old these concepts are, really. In 1347, in Genoa, European maritime nations entered into the earliest known insurance contract and decided to accept marine insurance as a practice.

The first step... Insurance as we know it today owes its existence to 17th century England. In fact, it began taking shape in 1688 at a rather interesting place called Lloyd's Coffee House in London, where merchants, ship-owners and underwriters met to discuss and transact business. By the end of the 18th century, Lloyd's had brewed enough business to become one of the first modern insurance companies. Insurance and Myth... Back to the 17th century. In 1693, astronomer Edmond Halley constructed the first mortality table to provide a link between the life insurance premium and the average life spans based on statistical laws of mortality and compound interest. In 1756, Joseph Dodson reworked the table, linking premium rate to age. Enter companies... The first stock companies to get into the business of insurance were chartered in England in 1720. The year 1735 saw the birth of the first insurance company in the American colonies in Charleston, SC. In 1759, the Presbyterian Synod of Philadelphia sponsored the first life insurance corporation in America for the benefit of ministers and their dependents. However, it was after 1840 that life insurance really took off in a big way. The trigger: reducing opposition from religious groups. The growing years... The 19th century saw huge developments in the field of insurance, with newer products being devised to meet the growing needs of urbanization and industrialization.

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. There were more offshoots of 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. With the advent of the automobile, public liability insurance, which first made its appearance in the 1880s, gained importance and acceptance. In 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 labour 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. In India... 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 practised by the Aryans.

Burial societies of the kind found in ancient Rome were formed in the Buddhist period to help families build houses, protect widows and children. Bombay Mutual Assurance Society, the first Indian life assurance society, was formed in 1870. Other companies like Oriental, Bharat and Empire of India were also set up in the 1870-90s. It was during the swadeshi movement in the early 20th century that insurance witnessed a big boom in India with several more companies being set up. As these companies grew, the government began to exercise control on them. The Insurance Act was passed in 1912, followed by a detailed and amended Insurance Act of 1938 that looked into investments, expenditure and management of these companies' funds. By the mid-1950s, there were around 170 insurance companies and 80 provident fund societies in the country's life insurance scene. However, in the absence of regulatory systems, scams and irregularities were almost a way of life at most of these companies. As a result, the government decided nationalise the life assurance business in India. The Life Insurance Corporation of India was set up in 1956 to take over around 250 life companies. For years thereafter, insurance remained a monopoly of the public sector. It was only after seven years of deliberation and debate - after the RN Malhotra Committee report of 1994 became the first serious document calling for the re-opening up of the insurance sector to private players -- that the sector was finally opened up to private players in 2001. The Insurance Regulatory & Development Authority, an autonomous insurance regulator set up in 2000, has extensive powers to oversee the insurance business and regulate in a manner that will safeguard the interests of the insured.

KOTAK MAHINDRA A Lifetime of Value

Kotak Mahindra one of India's leading financial institutions was born in 1985 as Kotak Capital Management Finance Limited. This company was promoted by Mr. Uday Kotak , Mr. Sidney A. A. Pinto and Kotak & Company. Industrialists Mr. Harish Mahindra and Mr. Anand Mahindra took a stake in 1986, and that's when the company changed its name to Kotak Mahindra Finance Limited. In the life insurance market, Kotak Life Insurance, one of the fastest growing companies in India, demonstrated a first year premium income growth of 260% in 2004 Kotak Life Insurance, with its coverage in over 30 locations with 42 branches and an employee strength of over 1000 employees, is a company with a high brand awareness level Kotak Life Insurance aspires to a spiraling growth with a strong focus on customer, products, geography-distribution channel mapping and fund performance. Special Advantages: • Market leader in brokerage, car finance & investment banking • Dedicated to developing unique products with a special focus on product and service quality • Among the first to offer group insurance products in the Indian Market • Extensive nationwide coverage through a direct sales force, brokers, spotters and frontline sales managers in more than 40 locations • Kotak Life Insurance's value proposition is based on strong corporate relationships, superior products, extensive marketing skills and quality of service

It's been a steady and confident journey to growth and success. 1986 Kotak Mahindra Finance Limited starts the activity of Bill Discounting 1987 Kotak Mahindra Finance Limited enters the Lease and Hire Purchase market 1990 The Auto Finance division is started 1991 The Investment Banking Division is started. Takes over FICOM, one of India’s largest financial retail marketing networks 1992 Enters the Funds Syndication sector 1995 Brokerage and Distribution businesses incorporated into a separate company - Kotak Securities. Investment Banking division incorporated into a separate company - Kotak Mahindra Capital Company 1996 The Auto Finance Business is hived off into a separate company - Kotak Mahindra Primus Limited. Kotak Mahindra takes a significant stake in Ford Credit Kotak Mahindra Limited, for financing Ford vehicles. The launch of Matrix Information Services Limited marks the Group’s entry into information distribution. 1998 Enters the mutual fund market with the launch of Kotak Mahindra Asset Management Company. 2000 Kotak Mahindra ties up with Old Mutual plc. for the Life Insurance business. Kotak Securities launches kotakstreet.com - its on-line broking site. Formal commencement of private equity activity through setting up of Kotak Mahindra Venture Capital Fund. 2001 Matrix sold to Launches Insurance Services

Friday

2003 Kotak Mahindra Finance Ltd. converts to bank

Corporation

Kotak Mahindra is one of India's leading financial institutions, offering complete financial solutions that encompass every sphere of life. From commercial banking, to stock broking, to mutual funds, to life insurance, to investment banking, the group caters to the financial needs of individuals and corporates. The group has a net worth of around Rs.1,700 crore and employs over 4,000 employees in its various businesses. With a presence in 74 cities in India and offices in New York, London, Dubai and Mauritius, it services a customer base of over 5,00,000. Kotak Mahindra has international partnerships with Goldman Sachs (one of the world's largest investment banks and brokerage firms), Ford Credit (one of the world's largest dedicated automobile financiers) and Old Mutual (a large insurance, banking and asset management conglomerate).

Management

• •

• • • • •

•

Mr. Gaurang Shah (Managing Director) Mr. G Murlidhar (Chief Financial Officer) Mr. Nihar Rao (Chief Technology Officer) Mr. Chandrashekar Sathe (Investment Advisor) Mr.Nandip Vaidya (Vice President-Tied Agency Sales) Mr. Arun Patil (Vice President-Sales & Mgt Dlpmt) Mr. Jim Thompson (Appointed Actuary) Mr. Eksteen de Waal (Head Sales Training)

OTHER GROUPS: 1) 2) 3) 4) 5) 6)

Kotak Mahindra Bank Ltd. Kotak Mahindra Primus Ltd. Kotak Mahindra Capital Company Ltd. Kotak Mahindra Asset Management Company Kotak Mahindra International Ltd Kotak Securities

MERGER

A marriage within the family is usually eyed with a lot of skepticism and often disgust. But when it comes to corporate, getting together as one has its own charm and probably less harm. Take the latest case of kotak mahindra Kotak Mahindra Old Mutual Life Insurance Ltd. Is established in 2000 as a joint venture between Kotak Mahindra Bank Ltd.(KMBL)(74%), and Old Mutual plc.,London(26%). At Kotak Life Insurance, we aim to help customers take important financial decisions at every stage in life by offering them a wide range of innovative life insurance products, to make them financially independent. Jeene Ki Azaadi... At Kotak Mahindra we offer pragmatic, world-class solutions. Put simply, solutions with a lot of common sense. Solutions that take care of your four basic financial needs - Earning, Saving, Investing and Spending. So you live your life to the fullest, sans worries.

OLD MUTUAL OLD MUTUAL was established more than 150 years ago and has developed into an International financial services group whose activities are focused on asset gathering and asset management. The Old Mutual Group offers a diverse range of financial services in three principal geographies: South Africa, the United States and the United Kingdom. The company is listed on the London Stock Exchange with a market capitalisation of approximately $6 billion and is a member of the elite FTSE 100 index. In the 2003 rankings of the World's 500 largest corporations by Fortune magazine, Old Mutual climbed 87 places to position number 366 and was also listed as the 14th largest insurance company in the world.

Old Mutual is the largest financial services business in South Africa, through its life insurance, asset management, banking and general insurance

operations. The company serves 4 million life insurance policyholders and employs over 13 000 South Africans in its local operations. In the USA, Old Mutual is one of the top ten fixed annuity businesses offering an array of specialist asset management skills through its 23 asset management businesses. The company’s US Life business recorded sales of $4 billion at the end of 2002. Operations in the United Kingdom are focused on wealth management, through Gerrard as one of the leading private client stockbroking businesses in the UK. The Old Mutual Group has the ability to cater for a variety of consumer segments and offers a comprehensive and innovative range of products for all income groups.

PRODUCTS: Individual: 1. Kotak Term Plan 2. Kotak Preferred Term Plan 3. Kotak Money Back Plan 4. Kotak Child Advantage Plan 5. Kotak Endowment Plan 6. Kotak Capital Multiplier Plan 7. Kotak Retirement Income Plan 8. Kotak Retirement Income Plan (Unit-linked) 9. Kotak Safe Investment Plan 10.Kotak Safe Investment Plan II

11.Kotak Flexi Plan 12.Kotak Easy Growth Plan 13.Riders 14.Exclusions Under Riders

Group: 1. 2. 3. 4. 5. 6.

Employee Benefits Kotak Term Group plan Kotak Credit-Term Group plan Kotak Complete Cover Group plan Kotak Gratuity Group plan Kotak Superannuation Group plan

Rural : 1. Kotak Gramin Bima Yojana

Unit Values as on 29 Jul 2005 Scheme Name

Sell Price

Buy Price

Money market fund

11.15

11.15

Floating rate fund

10.36

10.38

Gilt fund

10.93

10.93

Bond fund

10.63

10.64

Balanced fund

15.36

15.44

Growth fund

17.37

17.48

Aggressive Growth Fund

13.16

13.25

FUTURE PLANS

Kotak Life Insurance bullish about future MD says superior execution and group synergy the key to success Mr. Gaurang Shah, Managing Director of Kotak Mahindra Old Mutual Life Insurance Limited, in his first press meet at the Capital announced bullish future plans for Kotak's Life Insurance joint venture with Old Mutual plc. On the back of two successive years of about 200%+ growth, Mr. Shah has all reasons to believe that Kotak Life Insurance has got it right. "Most successful financial services company around the world offer products in all sectors ranging from consumer and investment banking, insurance, asset management, securities, asset financing, etc. Kotak over the past 20 years has become one of the examples of Indian Entrepreneurship in the field of Financial Services by extending itself across various offerings" Kotak Life Insurance saw its First Year Premium income jump from Rs 126 cr in 2003-04 to 375 cr in 2004-05, a growth of 198%. This follows a 246% growth in the previous year. "The last two years have seen us grow very fast. This was largely due to exploiting our existing relationships and building up our organization. The loss has also reduced from Rs 49 cr in 2003-04 to Rs 45.6 cr in 2004-05. Today the key challenge for us is to strengthen our organization by building superior execution culture and result orientation. Our energies will be directed towards delivering superior value to our key

stakeholders in our long term growth and profitability targets - the customer, the distributor, the shareholder and the employee." Kotak Life Insurance is likely to maintain its aggressive growth of infrastructure with Sales Managers numbers planned to grow from 450 in 2004-05 to 850 in current financial. Correspondingly, the Life Advisor base of 7000 in 2004-05 is planned to move up to 12000 by end of this financial. Even the Alternate Distribution Channel and the Group Insurance Sales Teams has been expanded. However all this shall be done with the focus on getting more out of the current structure. "The important element of current year strategy is how we sweat the infrastructure that we have put in place over the last couple of years. It is imperative that we make our money go longer than the competition to ensure we breakeven faster." Kotak Life Insurance plans to achieve this Break Even within the next three years.

Kotak Life Insurance shall continue with its pilot project in Kerala of trying out the All Full Time Advisor model of Old Mutual, the South African Insurance Major and its JV partner. This coupled with drives to strengthen presence in high potential states is Kotak Life's key steps in increasing Geographical presence. "Our belief on segmented approach towards selecting target markets and segments shall continue and I believe that with higher penetration in states like Tamil Nadu and Punjab we will be able to exploit the opportunity that the vibrant economy is offering in even smaller towns and rural markets." Kotak Group is building a strong financial services offering under the banner of "Think Investment. Think Kotak." and Kotak Life Insurance's lead products, Kotak Safe Investment Plan II and Kotak Flexi Plan have captured a significant share of the business. Built around the promise of Capital Guarantee, both these products offer excellent opportunity for their customers and embody the brand promise perfectly. "Kotak Life builds around the same innovative streak for which Kotak has been famous in other segments of the financial services earlier. Our offerings in the market are rated highly by both the distributors as well as the customers. We are committed to build stronger and better products in the future too."

Kotak Life Insurance is very bullish about its future. Built around the three pillars of stronger leverage on group synergies, greater focus on quality execution and innovative product offerings, Mr. Shah is confident that Kotak Life will be a key player in the Indian Insurance market. "I believe that our challenge will lie in channelising our accumulated learning across the group to our advantage and build a culture which encourages performance linked growth. Kotak is and shall remain a company that encourages people to take challenges and build value for all the stakeholders"

About Kotak Mahindra Old Mutual Life Insurance Kotak Mahindra Old Mutual Life Insurance is a joint venture between Kotak Mahindra Bank Ltd. and Old Mutual plc. Kotak Mahindra Old Mutual Life Insurance is one of the fastest growing insurance companies in India and has shown remarkable growth since its inception in 2001. Kotak Mahindra believes in offering its customers a lifetime of value. A commitment that has made it a leading financial services group with net worth of around Rs. 1700 crore as well as a market leader in the areas of investment banking and distribution of financial products. Old Mutual, a company with160 years experience in life insurance, is an international financial services group listed on the London Stock Exchange and included in the FTSE 100 list of companies, with assets under management worth US $270 billion (as on 31 December 2004). For customers, this joint venture translates into a company that combines international expertise with the understanding of the local market.

OBJECTIVE

OF RESEARCH

OBJECTIVE OF STUDY:

THE FOLLOWING ARE THE OBJECTIVE OF THE PRESENT STUDY.

 To know different type of products offered by kotak life ,HDFC , ICICI ,Birla insurance companies.  To know different types of life insurance policies provided by private insurance companies.  To understand unit linked insurance schemes provided by different insurance companies.  To compare the unit linked insurance plans of kotak life ,HDFC , ICICI ,Birla insurance companies 5. to know the share of various players in insurance sector  To know their insurance portfolio.  To list out advantages and benefits of life insurance

HISTORY OF INSURANCE

Insurance in India - A historical perspective Insurance business is not new to India. It finds mention in the writings of Manu, Rishi Yagnavalkya and others, indicating that it has existed in India of ancient times. It has evolved over time and has drawn heavily from the experience of other countries specially England, where insurance companies have a more than 500 years of history. Bombay Life Assurance Company was established in Bombay (now Mumbai) on 1st May 1823. Oriental Life Assurance Company started was in Calcutta by Europeans. The recorded history of Insurance business in India, however, began in 1914 when the Government of India started publishing returns of Insurance Companies in India. The Insurance Amendment Act of 1950 abolished Principal Agencies. However, there were a large number of insurance companies and the level of competition was high. There were also allegations of unfair trade practices. The Government of India, therefore, decided to nationalize the insurance business. An Ordinance issued on 19th January, 1956 nationalized the Life

Insurance sector and 'LIFE INSURANCE CORPORATION OF INDIA' (L.I.C.) came into existence in the same year. The LIC absorbed 154 Indian, 16 non Indian insurers as also 75 provident societies. Since then LIC has been the only player. Similarly, before November, 1972, a number of Indian and many foreign companies did general insurance business in India and this business was linked with their branches abroad. In addition, this product was also offered by LIC, some mutual companies and cooperative societies. In fact, on the eve of nationalizations, 68 Indian (including LIC)and 45 non-Indian entities carried out insurance business in India. Nationalization saw the business of all these organizations absorbed by the GENERAL INSURANCE CORPORATION (GIC) with its four subsidiaries.

Thus Life Insurance Corporation of India in the field of life insurance and General Insurance Corporation of India in the field of general insurance have enjoyed absolute monopoly. However, the reforms in financial sector in the early 90s have since touched Insurance also. The Govt of India set up a committee with Sh. R.N. Malhotra as the Chairman to recommend suitable reforms in this sector. As a consequence of the recommendation of the Malhotra Committee, the Government of India set up an Insurance Regulatory Authority. On the 2nd December, 1999, Indian Parliament has passed, Insurance Regulatory and Development Act, throwing open the Insurance sector to Banks and other private parties. Since then, RBI has come out with draft guidelines for entry to this sector. This is seen as a major step in financial sector reforms, which introduce, for the first time since nationalization of the insurance business, an element of competition in this sector. This should bring competitively priced insurance for the customer and improve the service available to him.

INDUSTRY INDIAN INSURANCE: Insurers Insurance industry, as on 1.4.2000, comprised mainly two players: the state insurers: Life Insurers: •

Life Insurance Corporation of India (LIC)

General Insurers: •

General Insurance Corporation of India (GIC)

GIC had four subsidary companies, namely ( with effect from Dec'2000, these subsidaries have been de-linked from the parent company and made as independent insurance companies.

1. 2. 3. 4.

The Oriental Insurance Company Limited The New India Assurance Company Limited, National Insurance Company Limited United India Insurance Company Limited.

Yr: 2000-2001 : Insurance Industry in the year 2000-2001 had 16 new entrants, namely: Life Insurers: S.No Registratio Date of . n Reg. Number

Name of the Company

1

101

23.10.200 HDFC Standard Life Insurance Company Ltd. 0

2

104

15.11.200 Max New York Life Insurance Co. Ltd. 0

3

105

24.11.200 ICICI Prudential Life Insurance Company Ltd. 0

4

107

10.01.200 Kotak Mahindra Old Mutual Life Insurance 1 Limited

5

109

31.01.200 Birla Sun Life Insurance Company Ltd.

1 6

110

12.02.200 Tata AIG Life Insurance Company Ltd. 1

7

111

30.03.200 SBI Life Insurance Company Limited . 1

8

114

02.08.200 ING Vysya Life Insurance Company Private 1 Limited

9

116

03.08.200 Bajaj Allianz Life Insurance Company Limited 1

10

117

06.08.200 Metlife India Insurance Company Pvt. Ltd. 1

General Insurers : S.No. Registration Date of Name of the Company Number Registration 1

102

23.10.2000

Royal Sundaram Alliance Insurance Company Limited

2

103

23.10.2000

Reliance General Insurance Company Limited.

3

106

04.12.2000

IFFCO Tokio General Insurance Co. Ltd

4

108

22.01.2001

TATA AIG General Insurance Company Ltd.

5

113

02.05.2001

Bajaj Allianz General Insurance Company Limited

6

115

03.08.2001

ICICI Lombard General Insurance Company Limited.

Yr: 2001-2002 : ( From 1st Jan 2001 to Dec. 2002) Insurance Industry in this year, so far has 5new entrants; namel

Life Insurers: S.No Registratio Date of . n Reg. Number

Name of the Company

1

121

03.01.200 AMP Sanmar Life Insurance Company 2 Limited.

2

122

14.05.200 Aviva Life Insurance Co. India Pvt. Ltd.

2 General Insurers : S.No. Registration Date of Name of the Company Number Registration 1

123

15.07.2002

Cholamandalam General Insurance Company Ltd.

2.

124

27.08.2002

Export Credit Guarantee Corporation Ltd.

3.

125

27.08.2002

HDFC-Chubb General Insurance Co. Ltd.

Yr: 2003-2004 : ( From 1st Jan 2003 till Date) Insurance Industry in this year, so far has 1new entrants; namely Life Insurers: S.No. Registration Date of Number Reg. 1

127

Name of the Company

06.02.2004 Sahara India Insurance Company Ltd.

INSURANCE BUSINESS: Insurance business is divided into four classes : 1) Life Insurance 2) Fire Insurance 3) Marine Insurance 4) Miscellaneous Insurance. Life Insurers transact life insurance business; General Insurers transact the rest. No composites are permitted as per law.

LEGISLATION (as on 1.4.2000): Insurance is a federal subject in India. The primary legislation that deals with insurance business in India is: Insurance Act, 1938, and Insurance Regulatory & Development Authority Act, 1999. INSURANCE PRODUCTS (as on 1.4.2000) (for latest information get in touch with the current insurers – website information of insurers is provided at the web page for insurers ): Life Insurance: Popular Products: Endowment Assurance (Participating), and Money Back (Participating). More than 80% of the life insurance business is from these products. General Insurance:

Fire and Miscellaneous insurance businesses are predominant. Motor Vehicle insurance is compulsory. Tariff Advisory Committee (TAC) lays down tariff rates for some of the general insurance products (please visit website of GIC for details ) 2001 New products have been launched by life insurers. These include linkedproducts. For details, please visit the websites of life insurers.

INFORMATION About the insurance industry, the following documents may be helpful: Malhotra Committee Report (The Report of the Committee on Reforms in the Insurance Sector); IRDA's First Annual Report - 2001

TYPE OF INSURANCE

Business Insurance Types There are a number of different types of business insurance which you may or may not need for your company. To get a quote for a complete business insurance package for your company click here. The following is a list of the types of business insurance we can provide:  Employer's Liability Insurance: This cover is set in force to protect

you in the event that someone suffers a loss as a direct result of an action by you or an employee.  Public Liability Insurance: If any members of the public are ever on your premises or interact with your company in some physical form and there is an accident or loss as a result of perceived negligence on your part then this type of insurance can cover you.  Van Insurance: You may be a tradesman who uses their van for business purposes or you may want to insure a fleet of vans.  Lorry Insurance: You could be a small business with one lorry up to a large logistical organisation or construction company with a whole fleet - you'll still need lorry insurance.

 Office insurance: whether you have a small office or just have an

office you work from at home, we are able to provide you with comprehensive cover at great rates.  Key Man Insurance: If there are key individuals within your company which your company would be at a financial loss due to their death or disability then you can insure them.  Landlord Insurance: If you are a landlord (commercial or residential…perhaps buy to let) then you will need insurance for your property regardless of the type of insurance your tenant will have taken out.  Life Insurance: If you are a small business owner and you are worried about what may happen your family or your business if you die then a life insurance policy may give you peace of mind.

cover your business.  Product Liability: If you manufacture a product and there might be

the chance that someone takes you to court as a result of the failure of the product then this type of policy can cover you

 Product/Sales/Servicing Indemnity: The key type of insurance here

is usually product indemnity as discussed above but if you sell products or service goods then the other two types of insurance will be of interest to you.

 Public House Insurance: a public house requires a lot of work to run,

and equally as important it takes a comprehensive insurance policy to fully

LIFE INSURANCE

DEFINITIONS: INSURANCE:  Insurance is a system to alleviate financial losses by transferring risk of loss from one entity to another.  Insurance means promise of reimbursement in the case of loss; paid to people or companies so concerned about hazards that they have made prepayments to an insurance company.  A contract in which one party agrees to pay for another party's

financial loss resulting from a specified event (for example, a collision, theft, or storm damage). Lease agreements generally require that you maintain vehicle collision and comprehensive insurance as well as liability insurance for bodily injury and property damage.

Life insurance:

 A policy that will pay a specified sum to beneficiaries upon the death of the insured.  Insurance in which the risk insured against is the death of a particular person, the insured, upon whose death while the policy is in force, the insurance company agrees to pay a stated sum or income to the beneficiary  If the donor makes the Foundation the owner of the policy, the value of the gift will be approximately the policy's cash surrender value as provided by the insurance policy. If the gift is not paid at the time of the donation, you may make additional contributions each year of the premiums and the WVU Foundation will handle the payment to keep the policy in force. If the donor makes the Foundation the beneficiary of the policy, the estate will receive a charitable deduction for the policy's proceeds.

 With its origins in the provision of funeral expenses by the prepayment of regular amounts, life insurance has historically received favourable tax treatment and has grown into a sophisticated and multi-faceted industry concerned as much with the mitigation of tax and the provision of savings as the pure protection product it was originally designed to be.  Life insurance policies, including pensions and life annuity policies, provide payments depending on the life or the death of a particular person or persons.

WHY DO I NEED LIFE INSURANCE? Unforeseen accidents and tragic events happen to everyday people like you and me. We'd like to think that it doesn't happen to us, but how many times have you seen cars turned upside down on the freeway while driving or television reporters naming off the latest death victims? Tragedy happens-and you need to be prepared to safeguard the futures of your loved ones if it happens to you. That's the simple reason most people get life insurance-they care enough about their loved ones to protect them from hardship or

economic loss in the event of death or tragedy. In this section, you'll be able to find information on life insurance, research the different types of life insurance available, take a closer look at life insurance companies, compare important features when you choose low cost life insurance, obtain life insurance rates, request instant life insurance quotes and much more. You will have a better understanding of the different types of policies available and choose one appropriate for your needs. You know that life insurance companies administer benefits when you die, but were you aware of the benefits you receive while you're alive? One benefit you'll have, is better sleep at night, because your loved ones are protected from unforeseen tragedies. Additionally, permanent life insurance allows you to build accessible cash value that pays you competitive interest rates that grows tax free. You'll have the freedom to do other things with your money and investments because you have an asset your family can count on. Insuring the future happiness of your loved ones is the most precious gift you can give.

What types of life insurance are available? There are two main types: Term vs. Whole Life Insurance:  Permanent life insurance is designed to last for your whole life.

Thereare two main categories: Whole life and Universal life .  Another type of life insurance is Term Life which varies by length of time and is kept 1 year to 30 years. There is also a new type of term life policy that refunds you all premiums paid if you keep the policy for the term period. Learn more about return of premium term life insurance for your own term life insurance comparison. How much coverage should I have? The easy answer is you should have enough coverage to replace the income that you would have earned had you been alive to earn it. How do you calculate that amount? There's a section on this site that shows you how to figure that out. Find out how much life insurance you should have. There is also the very simple method of taking a multiple of your income such as a life insurance amount that is 10 times to 15 times your annual gross income.

How do I choose the right company? Buying life insurance is a little more complex than purchasing a car or a television. When you purchase a policy you are buying a promise, a contract to pay something in the future vs. buying a commodity or something tangible. It's very important for you to examine the company that's backing your policy as well as considering the cost of the policy. One of the important items to consider when looking at life insurance companies are the financial strength ratings. Insurance company financial ratings are described further on this site.

How do I know if I'm getting the best rates? You can find out if you're getting the best life insurance rates here online at lifeinsure.com.& many more sites we s quickly to find you a customized rate and policy. Search for instant term life insurance quotes and instant quotes on return of premium term life policies. For whole life or universal life policies, we'll need to gather some basic information from you to deliver an accurate quote. It's to your advantage to have lifeinsure.com working for you because we're not affiliated with the companies we provide for you, therefore, we can look after your best interest without conflicts of interest. That's where we stand. What are the steps that I would go through? First, choose the coverage amount you desire and then get a quote. If it's term or return of premium term life coverage you’ll get a market survey right here on the lifeinsure.com site. Then choose the policy that suits your needs and move to the next step. The next steps are application, a short medical exam at one of the life insurance companies you choose, review of your information by the life

insurance company, then approval and premium paid and you’re on your way. Learn more about the process to obtain competitive life insurance. Should I get insurance to pay off my mortgage if I die? Getting life insurance to pay off major obligations in case of death is one of the most responsible and generous acts of love you can provide. Feel free to quote inexpensive term life or return of premium life insurance for the amount of your mortgage but also strongly consider getting coverage for the entire amount that is appropriate for you and your loved ones--not just enough to pay off your mortgage.

What other type of insurance is important? Of course, one should have the appropriate amount of car insurance and homeowners insurance but here’s a type of insurance that’s often forgotten: disability insurance to protect your income. It’s a statistical fact that it’s more likely that one has a long term disability before age 65 than dying. You can learn about disability insurance, the best types of disability insurance . What if I smoke cigarettes or use tobacco, does that effect my insurance rates? The answer is yes it will but you still can get competitive rates. Some companies charge less for tobacco use than others. If you smoke cigars occasionally or occasionally chew tobacco, a few companies will still give preferred rates. Contact us at 866 691 0100 so we can get the lowest possible rates that match your situation or email us. Also, if you get a life insurance policy that includes a rate for tobacco use it’s possible to lower it in future years if you quit tobacco for a number of years and remain healthy. We just go back and work with the insurance company to try to lower your rate and in most cases we can do that for you. Does my weight effect my life insurance rate? There are different rate classes for life insurance. When calculating the exact rate for you, the company does take your weight into consideration. There is a height weight chart on this site that can give you an idea how weight affects the way insurance companies might judge your rating class.

IRDA

MISSION To protect the interests of the policyholders, to regulate, promote and ensure orderly growth of the insurance industry and for matters connected therewith or incidental there to Composition of Authority under IRDA Act, 1999 As per the section 4 of IRDA Act' 1999, Insurance Regulatory and Development Authority (IRDA, which was constituted by an act of parliament) specify the composition of Authority The Authority is a ten member team consisting of (a) a Chairman; (b) five whole-time members; (c) four part-time members, (all appointed by the Government of India)

Duties, Powers and Functions of IRDA Section 14 of IRDA Act, 1999 lays down the duties, powers and functions of IRDA..(1) Subject to the provisions of this Act and any other law for the time being in force, the Authority shall have the duty to regulate, promote and ensure orderly growth of the insurance business and re-insurance business. (2) Without prejudice to the generality of the provisions contained in subsection (1), the powers and functions of the Authority shall include, (a)

issue to the applicant a certificate of registration, renew, modify, withdraw, suspend or cancel such registration;

(b) protection of the interests of the policy holders in matters concerning assigning of policy, nomination by policy holders, insurable interest, settlement of insurance claim, surrender value of policy and other terms and conditions of contracts of insurance; (c) specifying requisite qualifications, code of conduct and practical training for intermediary or insurance intermediaries and agents; (d) specifying the code of conduct for surveyors and loss assessors; (e) promoting efficiency in the conduct of insurance business; (f) promoting and regulating professional organizations connected with the insurance and re-insurance business;

(g) levying fees and other charges for carrying out the purposes of this Act;

(h) calling for information from, undertaking inspection of, conducting enquiries and investigations including audit of the insurers, intermediaries, insurance intermediaries and other organisations connected with the insurance business; (i) control and regulation of the rates, advantages, terms and conditions that may be offered by insurers in respect of general insurance business not so controlled and regulated by the Tariff Advisory Committee under section 64U of the Insurance Act, 1938 (4 of 1938); (j) specifying the form and manner in which books of account shall be maintained and statement of accounts shall be rendered by insurers and other insurance intermediaries; (k) regulating investment of funds by insurance companies; (l) regulating maintenance of margin of solvency; (m) adjudication of disputes between insurers and intermediaries or insurance intermediaries; (n) supervising the functioning of the Tariff Advisory Committee; (o) specifying the percentage of premium income of the insurer to finance schemes for promoting and regulating professional organizations referred to in clause (f);

(p) specifying the percentage of life insurance business and general insurance business to be undertaken by the insurer in the rural or social sector; and (q) exercising such other powers as may be prescribed

AUDIT REPORT ON THE ACCOUNTS OF INSURANCE REGULATORY & DEVELOPMENT AUTHORITY FOR 2001-2002 a) INTRODUCTION The Insurance Regulatory and Development Authority was established on 19th April, 2000 under Insurance Regulatory and Development Authority Act, 1999 with its headquarter at New Delhi. The Authority has changed its headquarters to Hyderabad in December 2001. The Audit of the accounts of the Authority has been entrusted under Section 19 (2) of the Comptroller & Auditor General" (Duties, Power & Conditions of Service) Act, 1971. The Authority was to consist of a Chairman, five full time Members and four Part-time Members. As on date the Authority has one chairman, two full time and four part time members. There is an Insurance Advisory Committee, which helps the Authority in making its Rules and Regulations for proper discharge of its activities. The main powers and functions of the Authority are as under: b) Protect the interest of and secure fair treatment to policyholders; c) Bring about speedy and orderly growth of the insurance industry (including annuity and superannuation payments), for the benefit of the common man, and to provide long term funds for accelerating growth of the economy; d) Set, promote, monitor and enforce high standards of integrity, financial soundness, fair dealing and competence of those it regulates; e) Ensure that insurance customers receive precise, clear and correct information about products and services and make them aware of their responsibilities and duties in this regard; f) Ensure speedy settlement of genuine claims, to prevent insurance frauds and other malpractices and put in place effective grievance redressal machinery;

g) Promote fairness, transparency and orderly conduct in financial markets dealing with insurance and build a reliable management information system to enforce high standards of financial soundness amongst market players; h) Take action where such 'standards are inadequate or ineffectively enforced; i) Bring about optimum amount of self-regulations in day to day working of the industry consistent with the requirements of prudential regulation.

2. Sources of Receipts During 2001-02, the Authority's receipts were Rs.42.17 crores as against its expenditure of Rs.5.89 crores. The receipts mainly consisted of fees received from various Insurance companies operating in India on account of their Registration and Renewal charges. 1. Funds The funds of the authority are being retained by itself despite directions of the Ministry to house the funds in Public Account of India as non-interest bearing funds. As on 31st March 2002, the Authority continues to house its funds amounting to Rs. 57.42 crore in interest bearing deposits of banks and other financial institutions.

5. Comments on Accounts

4.1 Under statement of Current Assets, Loan and Advances Current Assets, Loan and Advances: Rs. 20,031,959. This does not include a sum of Rs. 20,00,000/- which was paid as advances to M/s Andhra Pradesh Industrial Development Corporation Ltd. (APIDC) vide cheque no. 308126 dt. 08/03/2002 (HDFC A/c -New 435). The amount was given for the renovation work at IRDA office at Hyderabad. Since this amount represented advance in the nature of amount recoverable in cash or kind, the same was required to be shown in the Balance Sheet. The Authority has charged this amount to Income and Expenditure Account by showing it as Establishment Expenses - Repair and Maintenance of Buildings and Premises. Thus both Income arid Current Assets of the Authority have been understated by Rs. 20,00,000/-. The Authority in its reply stated

that the sum of Rs. 20 Lakhs was, released as running payments against the renovation work, which is construed as an advance payment. Authority's reply is not acceptable as all notes and correspondence of the authority clearly stipulate the payment as advance. (Reference to the completion certificate showed that is has been issued by APIDC without recording measurement of the works).

4.2 Under statement of Current Liabilities & Provisions Current liabilities and provisions: Rs. 12,92,305. (I) This does not include provisions for salary amounting to Rs. 23.6 lakhs which was demanded by the Life Insurance Corporation vide its letters dt. 12/02/2002, 13/09/2002, 23/09/2002 & 5/11/2002 for payment to LIC staff working for IRDA on working arrangement basis. Apparently the amount pertains to the period 2001-2002 for which no provision has been made in the accounts of the Authority. Hence, both Expenditure as well as Liabilities remained understated to that extent. The Authority in its reply stated that it would make provisions for payment of salary and other benefits from the date of joining if their previous employer make a demand for the period they were with the Authority on working arrangement. . (2) No provision was made in the accounts for the value of 'PCs amounting to Rs. 2.93 lakhs purchased by LIC on behalf of IRDA, the payment for which was released to LIC on 25th July 2002. Hence Current Liabilities and provisions remained understated to that extent. 4.3 Incorrect depiction of investment to the tune of Rs. 37.40 lakhs and excess accounting of interest of Rs. 2.25 lakhs on investments. As on 31st March, 2001, an investment of Rs. 5742.28 Lakhs has been made as fixed deposit with the Indian Overseas Bank and HDFC Bank by Insurance Regulatory and Development Authority. Scrutiny of Certificate of Fixed Deposit and consolidated statement of Investment revealed that the maturity amount of Investment has been taken as Rs. 6644.99 lakhs instead of Rs. 6607.59 lakhs resulting in a difference of Rs. 37.40 lakhs between the two. Similarly interest accrued has been taken into account as Rs. 191.00 1akhs instead of Rs. 188.75Iakhs. Thus, an excess interest of Rs. 2.25 1akhs was depicted in the Balance Sheet resulting in overstatement of income to the extent of Rs. 2.25 lakhs. The details of Investment and Interest is enclosed as' Annexure I'

The authority accepted the audit observation and stated that necessary rectification would be carried in the accounts of 2002-2003. Interest accrued/actual on investment may be reconciled arid necessary rectification/adjustment be made into account under intimation to audit.

4.4 Difference between Assets Register and Balance Sheet Scrutiny of Assets Register and Balance Sheet as on 31st March, 2002 revealed that there was a difference of Rs. 1.48 lakhs between the two which was not reconciled. The Authority in its reply stated that it was presumed that consumable and the perishable items had been taken into account in the dead stock register. The details of such items with regard to their cost will be extracted from the records of the previous years and these items will be removed from the dead stock register to correct the difference. 4.5 Non- verification of Assets. The Authority had fixed assets valued at Rs. 28,33,511.06 as per Balance Sheet as on 31st March, 2002 details of which were shown in Annexure-I. In this connection, the following comments are offered: 1. The progressive totals of value of all assets entered in the Fixed Assets Register were not carried out in accordance with the rule 151 (4)(a) of General Financial Rule. 2. Consumables like buckets, boxes purchased for shifting records, wall clocks, crockery, gas stove etc. were also included in the assets register. The Authority did not maintain inventories of such articles in the prescribed form. Assets register may be recast in the light of the above observation under intimation to audit. Sd/Director General of Audit Central Revenues Place: New Delhi Date: 18-07-

WHAT`S NEW IN IRDA All Insurance Companies/Reinsure Re : Appointment of Statutory Auditors by Insurance Companies As you are aware, section 12 of Insurance Act 1938 prescribes that all insurance companies must be Audited annually by the Auditors. Regulation 3(4) of IRDA (Preparation of Financial Statements and Auditors Report of Insurance Companies) Regulations 2002 provides that “The Authority may, from time to time, issue separate directions/guidelines in the matter of appointment, continuance or removal of auditors of an insurer or reinsurer, as the case may be, and such directions/guidelines may include prescriptions regarding qualifications and experience of auditors, their rotation, period of appointment, etc., as may be deemed necessary by the Authority”. The Authority has also been maintaining a panel of auditors based on the applications received consequent to the circular issued by the Authority in February 2001 on the qualification, rotation etc., and advised insurers to appoint auditors from the above list available in the website. The procedure for maintaining a panel of auditors has been reviewed in the light of (1) the constraints in verifying and processing the applications received from Chartered Accountant firms for inclusion of their names in the panel and (ii) the need to provide more opportunities to the eligible audit firms. The revised guidelines are accordingly issued herewith in supersession of earlier circular issued in February 2001 and the main features of the proposals are as under :(I)

It has been decided that the Authority would not maintain henceforth a panel of auditors and instead prescribe the requirements to be satisfied by the Chartered Accountant Firms for appointment of Statutory Auditors. The qualifications and other requirements of the intending auditors are detailed in the enclosure.

(II) Consequent to (I) above, the insurance companies would be responsible for selection of audit firms that satisfy the eligibility criteria set by the Authority. The audit firms selected by the company should submit the information to the Insurance company in the prescribed form along with certificates from ICAI/ by way of self declaration confirming (a) constitution of the firm and (b) absence of any pending disciplinary cases against them.

(III) Insurance companies should verify to their satisfaction the eligibility criteria before considering/approving their appointment. (IV) Any change in the constitution of the firm/information submitted/certifications submitted should be duly informed by the Audit firm to the Insurance Company within one week of such change. (V) Insurance Companies are required to intimate to the Authority, the name and address of the audit firms, for information within one week of their appointment. If it comes to the notice of the Authority that the appointment is not in line with the prescriptions/information furnished by the Audit firm, the appointment is liable for cancellation and it is open for the Authority to consider such further action as may be deemed necessary in this context. These revised guidelines will be applicable commencing from the financial year 1st April 2006.

(C.R. Muralidharan) Member

Insurance Regulatory and Development Authority

Head Office: 3rd Floor, Parisrama Bhavanam Basheerbagh Hyderabad 500 004. Phone +91-040-55820964 +91-040-55789768 Fax +91-040-55823334

Surveyor Department: Gate No. 3 Jeevan Tara Building, First Floor, Sansad Marg, New Delhi-110001, Phone +91 11-23743345 to 48

INSURANCE IN INDIA The insurance sector in India has come a full circle from being an open competitive market to nationalisation and back to a liberalised market again. Tracing the developments in the Indian insurance sector reveals the 360 degree turn witnessed over a period of almost two centuries. A brief history of the Insurance sector The business of life insurance in India in its existing form started in India in the year 1818 with the establishment of the Oriental Life Insurance Company in Calcutta. Some of the important milestones in the life insurance business in India are: 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 nonlife insurance businesses. 1938: Earlier legislation consolidated and amended to by the Insurance Act with the objective of protecting the interests of the insuring public. 1956: 245 Indian and foreign insurers and provident societies taken over by the central government and nationalized. LIC formed by an Act of Parliament, viz. LIC Act,

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

1850 In Calcutta by the British. Some of the important milestones in the general insurance business in India are: 1907: The Indian Mercantile Insurance Ltd. set up, the first company to transact all classes of general insurance business. 1957: General Insurance Council, a wing of the Insurance Association of India, frames a code of conduct for ensuring fair conduct and sound business practices. 1968: The Insurance Act amended to regulate investments and set minimum solvency margins and the Tariff Advisory Committee set up. 1972: The General Insurance Business (Nationalization) Act, 1972 nationalized the general insurance business in India with effect from 1st January 1973 .107 insurers amalgamated and grouped into four companies viz. the National Insurance Company Ltd., the New India Assurance Company Ltd., the Oriental Insurance Company Ltd. and the United India Insurance Company Ltd. GIC incorporated as a company.

Insurance sector reforms In 1993, Malhotra Committee, headed by former Finance Secretary and RBI Governor R.N. Malhotra, was formed to evaluate the Indian insurance industry and recommend its future direction. The Malhotra committee was set up with the objective of complementing the reforms initiated in the financial sector. The reforms were aimed at “creating a more efficient and competitive financial system suitable for the requirements of the economy keeping in mind the structural changes currently underway and recognising that insurance is an important part of the overall financial system where it was necessary to address the need for similar reforms…” In 1994, the committee submitted the report and some of the key recommendations included: i) Structure   G overnment stake in the insurance Companies to be brought down to 50% Government should take over the holdings of GIC and its subsidiaries so that these subsidiaries can act as independent corporations All the insurance companies should be given greater freedom to operate ii) Competition Private Companies with a minimum paid up capital of Rs.1bn should be allowed to enter the industry No Company should deal in both Life and General Insurance through a single entity Foreign companies may be allowed to enter the industry in collaboration with the domestic companies Postal Life Insurance should be allowed to operate in the rural market Only one State Level Life Insurance Company should be allowed to operate in each state iii) Regulatory Body The Insurance Act should be changed

An Insurance Regulatory body should be set up Controller of Insurance (Currently a part from the Finance Ministry) should be made independent iv) Investments Mandatory Investments of LIC Life Fund in government securities to be reduced from 75% to 50% GIC and its subsidiaries are not to hold more than 5% in any company (There current holdings to be brought down to this level over a period of time) v) Customer Service LIC should pay interest on delays in payments beyond 30 days Insurance companies must be encouraged to set up unit linked pension plans Computerisation of operations and updating of technology to be carried out in the insurance industry The committee emphasised that in order to improve the customer services and increase the coverage of the insurance industry should be opened up to competition. But at thesame time, the committee felt the need to exercise caution as any failure on the part of new players could ruin the public confidence in the industry.Hence, it was decided to allow competition in a limited way by stipulating the minimum capital requirement of Rs.100 crores. The committee felt the need to provide greater autonomy to insurance companies in order to improve their performance and enable them to act as independent companies with economic motives. For this purpose, it had proposed setting up an independent regulatory body. The Insurance Regulatory and Development Authority 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. The other decisions taken simultaneously to provide the supporting systems to the insurance sector and in particular the life insurance companies was the launch of the IRDA’s 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, which are expected to be introduced by early next year.Since being set up as an independent statutory body the IRDA has put in a framework of globally compatible regulations. In the private sector 12 life insurance and 6 general insurance companies have been registered.

INTRODUCTION OF PROJECT

COMPETITION ANALYSIS: “competition analysis is only a means to an end.”

COMPETITION: The act of seeking, or endeavoring to gain, what another is endeavoring to gain at the same time; common strife for the same objects; strife for superiority; emulous contest; rivalry, as for approbation, for a prize, or as where two or more persons are engaged in the same business and each seeking patronage; -- followed by for before the object sought, and with before the person or thing competed with.

ANALYSIS:  An investigation of the component parts of a whole and their relations in making up the whole.  The process of systematically applying statistical and/or logical techniques to describe and illustrate, condense and recap, and evaluate data  Analysis refers to the ability to break down material into its component parts so that its organizational structure may be understood. This may include the identification of the parts, analysis of the relationships between parts, and recognition of the organizational principles involved. Learning outcomes here represent a higher intellectual level than comprehension and application because they require an understanding of both the content and the structural form of the material

Unit linked insurance policy Unit Linked Insurance Plans (ULIPs) were always seen as a 'wonder product' that simultaneously fulfilled an individual's needs for investment and insurance. However, the recent downswings in the markets have forced investors to do a rethink. Very often it was poor selection that was responsible for the investors' woes. Here is a 5-step strategy for investing in ULIPs. 

Understand the concept of ULIPs

Try to do as much homework as possible before investing in an ULIP. This way you will know what you are getting into and won't be faced with unpleasant surprises at a later stage. Our experience suggests that many a time people do not realise what they are getting into (in fact we have been approached by several people who wanted to cancel the ULIPs they had been coerced into taking by unscrupulous agents). Gather information on ULIPs, the various options available and understand their working. Read the literature available on ULIPs on the Web sites and brochures circulated by insurance companies.

Focus on your requirement and risk profile Identify a plan that is best suited for you (in terms of allocation of money between equity and debt instruments). Your risk appetite should play an important role in the plan you choose. So if you have a high-risk appetite, go in for a more aggressive investment option and vice-a-versa. Opting for a plan that is lop-sided in favour of equities when you are a risk-averse individual might spell disaster for you (this is true in most cases currently).

Unit-Linked Insurance Plans Unit-linked insurance plans, ULIPs, are distinct from the more familiar ‘with profits’ policies sold for decades by the Life Insurance Corporation. ‘With profits’ policies are called so because investment gains (profits) are distributed to policyholders in the form of a bonus announced every year. ULIPs also serve the same function of providing insurance protection against death and provision of long-term savings, but they are structured differently. In ‘with profits’ policies, the insurance company credits the premium to a common pool called the ‘life fund,’ after setting aside funds for the risk premium on life insurance and management expenses. Every year, the insurer calculates how much has to be paid to settle death and maturity claims. The surplus in the life fund left after meeting these liabilities is credited to policyholders’ accounts in the form of a bonus. In a ULIP too, the insurer deducts charges towards life insurance (mortality charges), administration charges and fund management charges. The rest of the premium is used to invest in a fund that invests money in stocks or bonds. The number of units represents the policyholder’s share in the fund. The value of the unit is determined by the total value of all the investments made by the fund divided by the number of units. If the insurance company offers a range of funds, the insured can direct the company to invest in the fund of his choice. Insurers usually offer three choices — an equity (growth) fund, balanced fund and a fund, which invests in bonds. In both ‘with profits’ policies as well as unit-linked policies, a large part of the first year premium goes towards paying the agents’ commissions.



Better unit-linked or ‘with profits’

The two strong arguments in favour of unit-linked plans are that — the investor knows exactly what is happening to his money and two; it allows the investor to choose the assets into which he wants his funds invested. A traditional ‘with profits,’ on the other hand, is a black box and a policyholder has little knowledge of what is happening. An investor in a ULIP knows how much he is paying towards mortality, management and administration charges. He also knows where the insurance company has invested the money. The investor gets exactly the same returns that the fund earns, but he also bears the investment risk. The transparency makes the product more competitive. So if you are willing to bear the investment risks in order to generate a higher return on your retirement funds, ULIPs are for you. Traditional ‘with profits’ policies too invest in the market and generate the same returns prevailing in the market. But here the insurance company evens out returns to ensure that policyholders do not lose money in a bad year. In that sense they are safer. ULIPs also offer flexibility. For instance, a policyholder can ask the insurance company to liquidate units in his account to meet the mortality charges if he is unable to pay any premium installment. This eats into his savings, but ensures that the policy will continue to cover his life. 

ULIPs AND MUTUAL FUNDS In structure, yes; in objective, no. Because of the high first-year charges, mutual funds are a better option if you have a five-year horizon. But if you have a horizon of 10 years or more, then ULIPs have an edge. To explain this further a ULIP has high first-year charges towards acquisition (including agents’ commissions). As a result, they find it difficult to outperform mutual funds in the first five years. But in the long-term, ULIP managers have several advantages over mutual fund managers. Since policyholder premiums come at regular intervals, investments can be planned out more evenly.



Insurers prefer ULIPs

required if they sold traditional policies. Insurers love ULIPs for several reasons. Most important of all, insurers can sell these policies with less capital of their own than what would be In traditional ‘with profits’ policies, the insurance company bears the investment risk to the extent of the assured amount. In ULIPs, the policyholder bears most of the investment risk. Since ULIPs are devised to mobilize savings, they give insurance companies an opportunity to get a large chunk of the asset management business, which has been traditionally dominated by mutual funds.



Compare ULIPs of different insurance companies  Compare products of the leading insurance companies. Enquire about the premium payments as ULIPs work on minimum premium basis as opposed to sum assured in the case of conventional insurance policies.  Check the fund's performance over the past six months. Find out how the debt and equity schemes are performing and how steady the performance has been.  Enquire about the charges you will have to pay. In ULIPs the costs involved are a big deciding factor.  Ask about the top-up facility offered by ULIPs i.e. additional lump sum investments you can make to increase the savings portion of your policy.  The companies give you the option to increase the premium amounts, thereby providing you with the opportunity to gainfully utilize surplus funds at your disposal.  Enquire about the number of times you can make free switches (i.e. change the asset allocation of the money in your ULIP account) from one investment plan to another.  Some insurance companies offer you free switch for a 2-year period while others do so only for 1 year.

Go for an experienced insurance advisor Select an advisor who is not only professional and informed, but also independent and unbiased. Also enquire whether he has serviced clients like you. Company asks him a few product-related questions to test him and also ask him why the other products should not be considered. Insurance advice at all times must be unbiased and independent and your agent must be willing to inform you about the pros and cons of buying a particular plan.

Unit linked insurance plans (Ulip) Unit linked insurance plans (Ulip) are the flavor of the season. These plans are now contributing over 50 per cent of the private life insurance companies since their inception in 2004. In an era of booming stock market, these schemes are giving investors a higher return as well as life protection. Encouraged by the response, many players are launching different savings and endowment plans in the unit-linked format. According to the IRDA, a company offering unit linked plans must give the investor an option to choose among debt, balanced and equity funds. This policy is suitable for young people who can take risk. These give flexibility of insurance and mutual funds. Insurance coverage is essential for every individual. In a country of over one billion population, almost 70 per cent people are still uninsured. So they should be aware of all the available insurance policies. How much and what type of insurance one needs differs from person to person. So it is better to fix your targets and consult an insurance agent to avail the best policy.

ULIP: Investment & Insurance A Unit Link Insurance Policy (ULIP) is one in which the customer is provided with a life insurance cover and the premium paid is invested in either debt or equity products or a combination of the two. In other words, it enables the buyer to secure some protection for his family in the event of his untimely death and at the same time provides him an opportunity to earn a return on his premium paid. In the event of the insured person's untimely death, his nominees would normally receive an amount that is the higher of the sum assured or the value of the units (investments). To put it simply, ULIP attempts to fulfill investment needs of an investor with protection/insurance needs of an insurance seeker. It saves the investor/insurance-seeker the hassles of managing and tracking a portfolio or products.

ULIP - Key Features  Premiums paid can be single, regular or variable. The payment period too can be regular or variable. The risk cover can be increased or decreased.  As in all insurance policies, the risk charge (mortality rate) varies with age.  The maturity benefit is not typically a fixed amount and the maturity period can be advanced or extended.  Investments can be made in gilt funds, balanced funds, money market funds, growth funds or bonds.  The policyholder can switch between schemes, for instance, balanced to debt or gilt to equity, etc.  The maturity benefit is the net asset value of the units.  The costs in ULIP are higher because there is a life insurance component in it as well, in addition to the investment component.  Insurance companies have the discretion to decide on their investment portfolios.  Provides capital appreciation.  Being transparent the policyholder gets the entire episode on the performance of his fund.

CONCLUSION The returns generated. Unit Linked products are finally products of choice. If you feel equipped to manage your investments on your own or are not comfortable with long lock-ins or you can't make the most of these tax breaks, you may be better off investing elsewhere after securing your life insurance needs.

 There is a great need to disclose the risk involved in the schemes properly to the investor/insurance seeker by the insurance/investment companies.

 The Insurance Regulatory and Development Authority has to issue set of guidelines on ULIP policies offered in the market.

 The charges in the initial years should be brought down.

 The high returns (above 20 per cent) are definitely not sustainable over a long term, as they have been generated during the biggest Bull Run in recent stock market.

 Investors/Insurance seeker has to take switching charges into consideration as they have a long-term implication on

RESEARCH METHODOLOGY

METHODOLOGY REPORT The research problem call for an appropriate methodology. The study of the project is based on LIFE INSURANCE . The information gives in this project is factual in nature and has been collected from various sources since the study is based on both historical and present design both, primary and secondary secondary source of material is being utilized .The secondary source of data has been mainly obtained from Om kotak mahindra life insurance ltd.The primary data was collected to know the role of various life insurance company’s. To analyze the data appropriately statistical method ware used and the result have been presented in the from of tables and graphs. The descriptive data was analyzed and correlated with the statistical data and compiled to give the present form.

The research process followed consists of following steps : A: Defining a problem and research objectives: The defining of problem includes study of competition analysis of unit linked plans of various insurance companies. B: Developing a research plan: The second stage of research calls for developing the efficient plan for gathering the needed information . Designing a research plan calls for the data sources , research approach ,research instruments ,sampling plan and contacts, methods. C: Data sources: Two types of data sources were taken into consideration i.e. primary and secondary data .major emphasis was laid on gathering the needed information .major emphasis was laid on gathering the primary has been used to give a clear view of things.

Primary data-direct collection of data from the information, techniques include personal interview and survey etc. Secondary data- direct collection of data from sources containing past or recent information like annual report, books, news papers, magazines etc.

D: Research approach: Survey are best suited for descriptive research survey are undertaken to learn about peoples knowledge, beliefs, attitudes, values, preferences, satisfaction, and so on and to measure these magnitudes in general public, I have done this survey for the descriptive research process.

E: Sampling plan: The sampling plan call for three decisions : 1. Sampling unit : who is to be surveyed? The target population must be defined that has to be sampled .It is necessary so as to develop a sampling frame so that every one in the target population has an equal chance of being sampled. The sampling unit of this project was Jalandhar district. 2. Sampling size : number of people surveyed .generally large samples give more reliable results than small samples. The sample consist of people dealing in different line of business. Sampling procedures:

• How the respondents were chosen? The respondents were chosen from various insurance companies offices. • Collecting the information Once the sampling plan has been determined the question is how the subject should be contained. telephone ,mail or personal interviews. In this survey the respondents were contacted through personal interviews. After this I have collected the information from respondent with the help of questionnaire

• Analyze the information: The next step is to extract the pertinent findings from the collection data .I have tabulated the information on some specific terms. • Presentation of findings: This is the last and important step in the research process . the findings are presented in the form of graphs ,pie charts , conclusions, suggestions and recommendations after data analysis.

ANALYSIS OF DATA & INTERPRETATION

COMPARISON OF UNIT LINKED PLANS OF VARIOUS INSURANCE COMPANIES NAME OF THE COMPANIES:  Kotak life insurance  ICICI prudential life insurance  HDCF standard life insurance  Birla sun life insurance Company. 



NAMES OF UNIT LINKED PLANS:  Kotak life insurance  Kotak safe investment plan ||

 ICICI prudential life insurance  Invest shield cash  Invest shield gold  Life time || investment plan

 HDCF standard life insurance  Unit linked endowment plan

 Birla sun life insurance Company.  Classic life premier



TABLE OF COMPARISION OF VARIOUS UNIT LINKED PLANS:

KOTAK LIFE

ICICI

HDFC

BIRLA

KOTAK SAFE INVEST MENT PLAN ||

INVEST SHIELD CASH

INVEST SHIELD GOLD

LIFE TIME || INVESTM ENT PLAN

UNIT LINKED ENDOW MENT PLAN

CLASSIC LIFE PREMIER

MATURITY GUARANTEE

sum assured is guaranteed.

guarantee is only on premiums net of charges and not on sum assured. Also, there is no equity exposure in this plan.

guarantee on market value of funds.

guarantee on market value of funds.

no guarantee on sum assured or on returns.

INVESTMENT PORTFOLIO

5 fundsgrowth/balan ced/bond/floa ting rate/gilt.max equity exposure limit is 80% in growth. Higher equity could generate better returns in the long run. sum assured or market value of unit whichever is higher.

unit fund (debt & money market -100%) no option of different funds. 0% equity exposures. Reduces the potential of higher returns. sum assured+ higher of unit fund or guaranteed value of unit funds. To combat this, a term rider may be attached along with KSIP ||.

guarantee is only on premiums net of charges and not on sum assured. Also, there is only a 30% equity exposure in this plan. unit fund (fixed debt :equity ratio 70:30) only 30% equity exposures.

4 funds- maxi miser/balanc er/ protector/ preserver. 100% equity exposure in maxi miser.

5 fundsliquid/secure/ defensive/bal ance managed/gro wth. 100% equity exposure in growth.

5 fundsprotector, builder, enhancer, creator, & magnifier. Max equity exposure limit is 90% in magnifier.

sum assured+ higher of unit fund or guaranteed value of unit funds. To combat this, a term rider may be attached along with KSIP ||.

sum assured or market value of unit whichever is higher.

sum assured or market value of unit whichever is higher.

face amount(life cover) will be to 10 times the premium. Upto the age of 72, higher of the policy fund or the face amount less all withdrawals made in the 24 months preceding the death.

DEATH BENEFIT

MATURITY BENEFIT

PARTIAL WITH DRAWAL

COMPLETE SURRENDER

sum assured or market value of unit whichever is higher. allowed after year 1 (from supplementar y account). After yr 3, from main account with a 2.5 % charge till the 10th yr. withdrawals can be made subject to leaving behind a balance of Rs 10,000 giving flexibility to choose the amount. after year 3.

LPP OPTION

Available3,5,7,10,15.

RIDERS

ADB,PDB, CI,TERM, WOP.

OTHER FEATURES

automatic cover maintenance

higher of unit fund or guaranteed value of unit fund. after 6 years,10% of unit fund, once in a year. limited liquidity due to restrictions on the amount & number of withdrawal s.

higher of unit fund or guaranteed value of unit fund. after 6 years,10% of unit fund, once in a year. limited liquidity due to restrictions on the amount & number of withdrawal s.

market value of fund.

market value of the fund.& policy will terminate.

can make partial withdrawal after 3 yrs at no penalty. Minimum amt of withdrawal is Rs 2000.

any time provided: # Min Withdrawal amt is Rs.10,000 # after withdrawal, the fund exceeds Rs.15k # surrender charges r forced.

after year 1,high surrender charge. A 5% charge continues even after the 10th police yr. Not allowed.

after year 1,high surrender charge. A 5% charge continues even after the 10th police yr. Fixed premium paying term.

after 3 yrs.

if paid 3 yrs of regular premium then no charges otherwise high charges.

NA

NA

ADB, CI, WOP. Term rider not allowed. loyalty addition -at the end of every 5th yr, 5%,10%,15 %... Flexibility to increase /decrease

ADB, CI. Term rider not allowed.

ADR, WOP,CI, MSAB. Term rider not allowed. loyalty addition -at 4th,8th,12th policy year. Flexibility to increase /decrease premium.

CI, AD.

loyalty addition -at regular intervals. Flexibility to increase /decrease premium.

NA

Beyond that, the face amount will be reduced by all withdrawal made after the age of 70. market value of units.

allowed after year 3. two withdrawals in every policy year will be free of charge and other 2 addition withdrawals will be subject to a charge of 0.5% of the amount withdrawn. minimum withdrawal amount Rs. 25000. subject to a minimum policy fund balance of Rs.25,000. NA

if plan duration is up to age 75 3,5years of LPP. Up to age 100 - 10,15,20 years or throughout. Term , CI, CI plus, ADB, dismemberment , CI for women. flexibility to increase decrease sum assured. Loyalty addition on 10th anniversary and on every 5th anniversary thereafter. Addition will be

premium.

ALLOCATION RATE

year 1- 86%. Year 2 onwards96.5%.

yr 1premium