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December 3, 2016 | Author: amarchana | Category: N/A
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INDUSTRY PROFILE Meaning of Life Insurance;Life insurance is insurance on human beings. Though Human life cannot be valued, a monetary sum could be determined which is based on loss of income in future years. Hence in life insurance, the Sum Assured (or the amount guaranteed to be paid in the event of a loss) is by way of a „benefit‟ in the case of life insurance. Life insurance products provide a definite amount of money to the dependants of the insured in case the life insured dies during his active income earning period or becomes disabled on account of an accident causing reduction/complete loss in his income earnings. With such a large population and the untapped market area of this population Insurance happens to be a very big opportunity in India. Today it stands as a business growing at the rate of 15-20 per cent annually. Together with banking services, it adds about 7 per cent to the country‟s GDP .In spite of all this growth the statistics of the penetration of the insurance in the country is very poor. Nearly 80% of Indian populations are without Life insurance cover and the Health insurance. This is an indicator that growth potential for the insurance sector is immense in India. Till date insurance agents still remain the main source through which insurance products are sold. The concept is very well established in the country like India but still the increasing use of other sources is imperative. It therefore makes sense to look at well balanced, alternative channels of distribution. LIC has already well established and have an extensive distribution channel and presence. New players may find it expensive and time consuming to bring up a distribution network to such standards. Therefore they are looking to the diverse areas of distribution channel to have an advantage.
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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 non-life 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 crore from the Government of India.
GROWTH OF LIFE INSURANCE: Many may not be aware that the life insurance industry of India is as old as it is in any other part of the world. The first Indian life insurance company was the Oriental Life Insurance Company, which was started in India in 1818 at Kolkata. A number of players (over 250 in life and about 100 in non-life) mainly with regional focus flourished all across the country. However, the Government of India, concerned by the unethical standards adopted by some players against the consumers, nationalized the industry in two phases in 1956 (life) and in 1972 (non-life). The insurance business of the country was then brought under two public sector companies, Life Insurance Corporation of India (LIC) and General Insurance Corporation of India (GIC). The Government set up a Committee on Reforms (popularly called the Malhotra Committee) in April 1993 to suggest reforms in the insurance sector. The Committee recommended throwing open the sector to private players to usher in competition and bring more choice to the consumer. The objective was to improve the penetration of insurance as a percentage of GDP, which remains low in India even compared to some Developing countries in Asia. Reforms were initiated with the passage of Insurance Regulatory and Development Authority (IRDA) Bill in 1999. IRDA was set up as an independent regulatory authority, which has put in place regulations in line with global norms. So far in the private sector, 12 life insurance companies and 9 general insurance companies have been registered. GLOBAL BUSINESS SCHOOL HUBLI
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INSURANCE IN INDIA: Before insurance sector was opened to the private sector Life Insurance Corporation (LIC) was the only insurance company in India. After the opening up of Insurance sector in India there has been a glut of insurance companies in India. These companies have come up with innovative and flexible insurance policies to cater to varying needs of the individual. Opening up of the Insurance sector has also forced the LIC to tighten up its belt and deliver better service. All in all it has been a bonanza for the consumer. The life insurance business in India started since 1818. Till 1956, the insurance business was mixed and decentralized. In 1956, the life insurance business of all companies was nationalized and a single monolithic organization, the Life Corporation of India (LIC), was set up. The Insurance
Insurance
Regulatory and Development
Authority (IRDA) Bill was passed by Indian parliament in December 1999. The IRDA become a statutory body in April 2000 and has been framing regulations and restrictions the private sector insurance companies. The insurance sector was opened up to the private sector in August 2000. Consequently, some Indian and foreign private companies have entered the insurance business. There are about 16 life insurance companies operating in the private sector in India. The insurance sector in India has come a full circle from being an open competitive market to nationalization and back to a liberalized market again. Tracing the developments in the Indian insurance sector reveals the 360 degree turn witnessed over a period of almost two centuries.
ABOUT THE INDUSTRY: With an annual growth rate of 15-20% and the largest number of life insurance policies in force, the potential of the Indian insurance industry is huge. Total value of the Indian insurance market (2004-05) is estimated at Rs. 450 billion (US$10 billion). According to government sources, the insurance and banking services' contribution to the country's gross domestic product (GDP) is 7% out of which the gross premium collection forms a significant part. The funds available with the state-owned Life Insurance Corporation (LIC) for investments are 8% of GDP.
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Till date, only 20% of the total insurable population of India is covered under various life insurance schemes, the penetration rates of health and other non-life insurances in India is also well below the international level. These facts indicate the of immense growth potential of the insurance sector. The year 1999 saw a revolution in the Indian insurance sector, as major structural changes took place with the ending of government monopoly and the passage of the Insurance Regulatory and Development Authority (IRDA) Bill, lifting all entry restrictions for private players and allowing foreign players to enter the market with some limits on direct foreign ownership. Though, the existing rule says that a foreign partner can hold 26% equity in an insurance company, a proposal to increase this limit to 49% is pending with the government. Since opening up of the insurance sector in 1999, foreign investments of Rs. 8.7 billion have poured into the Indian market and 21 private 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 sector and snapping up the new innovative products on offer. The life insurance industry in India grew by an impressive 36%, with premium income from new business at Rs. 253.43 billion during the fiscal year 2004-2005, braving stiff competition from private insurers. This report "Indian Insurance Industry: New Avenues for Growth 2012", finds that the market share of the state behemoth, LIC, has clocked 21.87% growth in business at Rs.197.86 billion by selling 2.4 billion new policies in 200405. But this was still not enough to arrest the fall in its market share, as private players grew by 129% to mop up Rs. 55.57 billion in 2004-05 from Rs. 24.29 billion in 2003-04 Though the total volume of LIC's business increased in the last fiscal year (20042005) compared to the previous one, its market share came down from 87.04 to 78.07%. The 14 private insurers increased their market share from about 13% to about 22% in a year's time. The figures for the first two months of the fiscal year 2005-06 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
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have
grabbed
over
24
percent. Page 4
There are presently 12 general insurance companies with four public sector companies and eight private insurers. According to estimates, private insurance companies collectively have a 10% share of the non-life insurance market.
Indian Insurance Industry Forecast (2007-2009) The market research report “Indian Insurance Industry Forecast (2007-2009)” gives an in-depth analysis of the present and future of the Indian Insurance Industry. The market research report looks in to the details as well as gives an overview of the Indian insurance market with focus on the performance of the key players. With the initiation of the deregulation in the Indian insurance market, the monopoly of big public sector companies in life insurance as well as general (non-life insurance) market has been broken. New private players have entered the market and with their innovative approaches and better use of distribution channels and technology, they are eating in to the shares
of
established
public
sector
companies
in
Indian
Insurance
Market.
Since the deregulations have been put in to place, the market share of LIC has come down to 71.4% in life insurance market while the private players have captured around 17% market in the general insurance segment. It is said that, public sector insurance companies such as LIC and New India Assurance are registered impressive double-digit growths, which reflects on the overall health of the Indian insurance sector.
Indian Insurance Sector The Insurance sector in India governed by Insurance Act, 1938, the Life Insurance Corporation Act, 1956 and General Insurance Business (Nationalization) Act, 1972, Insurance Regulatory and Development Authority (IRDA) Act, 1999 and other related Acts.
Life Insurance Corporation of India (LIC): GLOBAL BUSINESS SCHOOL HUBLI
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Life Insurance Corporation of India (LIC) was formed in September, 1956 by an Act of Parliament, viz., Life Insurance Corporation Act, 1956, with capital contribution from the Government of India. Then the Finance Minister, Shri C.D. Deshmukh, while piloting the bill, outlined the objectives of LIC thus: to conduct the business with the utmost economy, in a spirit of trusteeship; to charge premium no higher than warranted by strict actuarial considerations; to invest the funds for obtaining maximum yield for the policy holders consistent with safety of the capital; to render prompt and efficient service to policy holders, thereby making insurance widely popular. Since nationalization, LIC has built up a vast network of 2,048 branches, 100 divisions and 7 zonal offices spread over the country. The Life Insurance Corporation of India also transacts business abroad and has offices in Fiji, Mauritius and United Kingdom. LIC is associated with joint ventures abroad in the field of insurance, namely, Ken-India Assurance Company Limited, Nairobi; United Oriental Assurance Company Limited, Kuala Lumpur and Life Insurance Corporation (International) E.C. Bahrain. The Corporation has registered a joint venture company in 26th December, 2000 in Kathmandu, Nepal by the name of Life Insurance Corporation (Nepal) Limited in collaboration with Vishal Group Limited, a local industrial Group. An off-shore company L.I.C. (Mauritius) Off-shore Limited has also been set up in 2001 to tap the African insurance market.
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 recognizing 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: GLOBAL BUSINESS SCHOOL HUBLI
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Government 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. Computerization of operations and updating of technology to be carried out in the insurance industry. The committee emphasized that in order to improve the customer services and increase the coverage of the insurance industry should be opened up to competition. But at the same 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.
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Hence, it was decided to allow competition in a limited way by stipulating the minimum capital requirement of Rs.100 crore. 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 were 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.
TYPES OF LIFE INSURANCE GLOBAL BUSINESS SCHOOL HUBLI
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Basically there are four types of life insurance 1) 2) 3) 4)
Term life insurance Whole life insurance Endowment assurance Unit linked insurance plan
1) TERM LIFE INSURANCE Term insurance provides coverage for a limited “term” or period of time. Most insurance companies offer the term insurance policies with terms from one to thirty years. Term life insurance means providing the lump-sum amount to the family at the time of death of the insured or breadwinner is called as a term insurance. Term insurance policy may be defined as a contract that furnishes life insurance protection for a limited number of years, the face value of the policy being payable only if death occurs at stipulated period /term. Term life insurance policies will be issued for a short period as one year In this policy the lump-sum amount will be paid only if death of insured occurs during the specified term. There are two types of term insurance 1) Renewable term insurance 2) Convertible term insurance
1. Renewable term insurance: It is a term insurance policy that allows customer to continue or renew the policy at the end of its term without reapplying. Because customer is not required to reapply, they avoid the risk of losing life insurance coverage at the end of the current term due to declining health.
2. Convertible term insurance It is a term insurance policy that allows customer to convert the policy to a permanent policy during a specified window of time known as the conversion period. Because customer does not have to prove their insurability at the time of conversion, this provision allows the conversion from term insurance to permanent insurance.
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2) WHOLE LIFE INSURANCE PLAN Whole life insurance is a permanent type of insurance. Premium rate is low but higher than that of the Term Insurance. It provides life insurance coverage for as long as policyholder live or until age 100. In whole life plan premium amount will be paid whole life till death of insured occurred.
Mainly there are two types of whole life insurance 1) Permanent whole life insurance. 2) Limited payment whole life insurance.
1. Permanent whole life insurance: In permanent whole life insurance the insured has to pay the premium amount continuously till his death occurred and the insurance amount will be given at the death of the insured.
2. Limited payment whole life insurance: In limited payment whole life insurance the insured has to pay the premium for a limited / specified period. Once the premium paid up to limited period, further premiums need not be paid but the policy and risk continue till the death of insured and the insured amount will be payable after the death of the insured.
Advantages of whole life insurance 1) The fixed premium has to pay every year. Regardless of the age or health of the policy owner, he pays the same amount for the coverage each year. 2) Premium can be paid up to the specified time and the insurance amount will become payable only at a death of the insured. Death benefit is guaranteed. 3) Minimum cash value is guaranteed.
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Disadvantages of whole life policy 1) Policy cash values may be accessible only by loan or surrender of policy. 2) Premium rate is little higher than the term insurance plan. 3) Cash value accumulation may be at returns lower than the financial investment product.
3) ENDOWMENT ASSURANCE Endowment assurance is an important plan in life insurance. In this plan the insurer has to agree To pay the insurance money in the event of death of insured during the policy period. To pay the insurance amount in the event of the insured surviving till the end of the endowment term. The first benefit has been already described as a term insurance. Means the policy amount will be paid only in the event of death of insured during the policy period. If the insured survived till at the end of the policy period then the insurance company will not pay anything. Second one is called as a “Pure Endowment plan”, which means the insurer will promise to pay the policy amount only if the insured person survives till at the end of the specified period. In case of death of insured occurs during the specified period then nothing becomes payable. Premium rate under Endowment Assurance will be higher than the Whole life insurance plan, because the insurance company will have to pay a maturity benefit also at the end of specified term. Here period of insurance is very long. Endowment Assurance is a sound plan for all types of customers. If the period of savings is cut short by the untimely death of the insured then the policy provides a substantial lump sum amount to the family. An Endowment Assurance can also be used to accumulate a fund for a specific purpose like education of children, marriage of daughters, etc.
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4) UNIT LINKED INSURANCE PLAN:
Unit linked insurance plan is one of the life insurance plan which provides life insurance cover, along with the prospect of high growth. In this life insurance plan the premium payable consists two parts Risk premium and Investment premium
Risk premium will provide the safety to the family members at the time of the policyholder. And second one will provide good returns to the policyholder for their investment. Under this scheme, a portion of the premium is invested in equity and debt instrument in the capital market where scope for high growth exists. In this plan the policyholder, while submitting the proposal form, should select a fund where he wants to put the investment part of the premium. And the life cover option is compulsory for every investor. The investor should take at least life cover of Rs 1000. The policy charge will be taken from the investment money. There is no necessity for payment of premium for the life cover separately. If the death of the policyholder occurs during the period of policy then, whichever is higher (i.e. investment amount or policy amount) that amount would be payable to the nominee of the policyholder. If the policyholder survives till at the end of the specified period then the insured amount will not payable to the policyholder. The policyholder will get only returns, which is earned by the investment every year. Advantage of unit linked insurance plan: 1) Safety for the investment. 2) Investor will get life cover benefit. 3) Investor will get good returns for their investment 4) Investor will get tax benefit.
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INVESTMENT PLANNING
Investment planning is one of the important planning which will come under the financial planning. In the past investment planning was far simpler than today. Means in the past the people will have philosophy that earn little, invest/save little, educate the children and retire with reasonable comfort. But in these days investment is more complex because of these factors. 1) Tax benefit 2) Future security. 3) Greater flotation in the interest rates Most of the people/person uses a Varity of investment instrument for achieve their financial object. The services or investment tools are as follows:
Mutual Funds
Common stocks, bonds
Saving Account
Fixed deposits
Life insurance policies
In this investment planning, insurance is also one of the investment tool used by the people for achieving their financial objectives and also it is one of the risk management tool. In these days people are giving more importance for their future career and their financial objectives. For some persons especially those just entering the work force, the concept of establishing, a savings and investment plan can seem distant. Some families‟ incomes are such that all income must be spent on current living expenses, with no surplus available for saving. Other persons, for various reasons (lack of discipline), spend their income on current consumption, even though their total current needs could be met reasonably within their current income level, and at the same time leave sufficient funds to establish a savings and investment program.
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Total players registered under IRDA
S.No
Registration No
Date of Registration
Name of the Company
1
101
23.10.2000
HDFC Standard Life Insurance Co Ltd.
104
15.11.2000
Max New York Life Insurance Co Ltd.
3
105
24.11.2000
ICICI Prudential Life Insurance Co Ltd.
4
107
10.01.2001
Om Kotak Mahindra Life Insurance Co Ltd.
5
109
31.01.2001
Birla Sun Life Insurance Co Ltd.
6
110
12.02.2001
TATA AIG Life Insurance Co Ltd.
7
111
30.03.2001
SBI Life Insurance Co Ltd.
8
114
02.08.2001
ING VYSYA Life Insurance Co Pvt. Ltd.
9
116
03.08.2001
Allianz Bajaj Life Insurance Co Pvt. Ltd.
10
117
06.08.2001
Met Life India Insurance Co Pvt. Ltd.
2
The following companies are comes under life insurance business.:-
Public sector
Life insurance Corporation of India
Private sector Bajaj Allianz life insurance company Ltd. Birla Sun- Life Insurance Company Ltd. HDFC Standard Life Insurance Company Ltd. ICICI Prudential Life Insurance Company Ltd. ING Vysya Life Insurance Company Ltd. Max New York Life Insurance Company Ltd. MetLife Insurance Company Ltd. Om Kotak Mahindra Life Insurance Company Ltd. SBI Life Insurance Company Ltd. TATA AIG Life Insurance Company Ltd.
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ADVANTAGES OF LIFE INSURANCE Life insurance policy creates an estate: If the bread winner or the saving holder unfortunately dies then the insurance company will become payable lump sum amount than whatever premium amount paid by the policy holder. By this we can say that the life insurance will provide the financial help to the insured dependents. Life insurance is forced to continue the payment of the premium. But in the other savings the holder can have chance to withdraw the money when he want to fulfill his desires. But in case of life insurance there is no any chance for withdraw the money then he has to surrender his policy then the very small percentage of amount will paid by the insurance company. Because of this the policyholder does not go for withdraw the money. Any court of law or income tax authorities cannot attach life insurance. In this insurance the married person can take policy under married women‟s property acts for the benefit of his wife/children and create separate estate for their benefit. Life insurance thus can be used as a gift to the near and dear. Life insurance can be utilized as a collateral security for housing loan. In case of the death of the policy holder then the amount available under the life insurance policy is adjusted for the payment of outstanding loan and interest. It will help to the dependents of the policyholder.
The proceeds of a life insurance policy including any bonuses paid are not liable for income tax. The settlement of the claim of the policy is very simple. In case of death of the insured, the insured amount will be paid to the nominee of the policy and in case of the survival of the policyholders till at the end of the maturity period then the insured amount will be paid to the policy owner.
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WHY DO PEOPLE NEED LIFE INSURANCE?
1) It provides the financial security to the family. An untimely / sudden death of the breadwinner the result is that the family faces a great financial problem. So at that time Life Insurance is a best instrument for family to solve the financial problem.
2) Every person lives in dreams-dreams like high education for Children, grand marriage of daughters, etc. Life insurance will make such dreams come true if the even dreamer is no more.
3) Own shelter has become an essential to every one. Many institutions offer mortgage loan for purchase or construction of a house or flat. Life insurance acts as a collateral security in respect of such loans. Without such security the same shelter considered on asset as long as the house purchaser is alive. Will become liability to the family if he dies before repayment of the entire loan.
4) Life insurance provides financial independence in old age. The lump sum maturity value of a policy when received can be invested to yield interest sufficient to meet expenses after retirement from work life.
5) Organization can purchase group life insurance polices as part of their employee – welfare program. This acts as a moral booster to the worker and result in improved productivity.
ORGANISATION STUDY GLOBAL BUSINESS SCHOOL HUBLI
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ING Group ING Group is known for its philosophy of „keeping it simple‟. This thought is the result of ING Group‟s 150 years of understanding of customers‟ needs and fulfilling them. ING is a global financial institution of Dutch origin. It has 150 years of experience, and provides a wide array of banking, insurance and asset management services in over 50 countries and is trusted by over 60 million customers. Its 1,13,000 employees work daily to satisfy a broad customer base – individuals, families, small businesses , large corporations, institutions and governments. The ING Group has gone from strength to strength year after year and is the world's 13th largest company. The ING Group is the world's largest financial institution with over US $ 1 trillion in assets and profits of US $ 8.5 billion in 2005. Over the last 150 years, ING Group has grown to become the largest insurer in the world. Today it touches the lives of millions of people across 50 countries. NG Group has wide and deep experience in setting up companies in new markets, which require substantial investments underlining ING's long-term commitment. In the last 20 years, ING Group has established successful life insurance companies in 15 countries contributing to the development of insurance services in these countries successfully. ING Vysya Life Insurance Company Limited is a joint venture between Vysya Bank and ING Group of Holland, the world's 4th largest financial services group, with presence across 50 countries, and a heritage of over 150 years. ING Vysya Life started operations in India in September, 2001 and has since then established itself as a strong and distinctive life insurance brand with innovative, attractive and customer friendly offerings. The organization has established presence in over 65 cities with over 20 branches and over 15000 trained and committed advisors. In a span of 5 years has established itself as a distinctive life insurance brand with an innovative, attractive and customer friendly product portfolio and a professional advisor sales force. . It has a dedicated and committed advisor sales force of over 21,000 people, working from 140 branches located in 74 major cities across the country and over 3,000 employees. It also distributes products in close cooperation with the ING Vysya Bank network. The Company has a customer base of over 4,50,000 & is headquartered at Bangalore. In 2005,
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ING Vysya Life earned a total income in excess of Rs. 400 crore and also has a share capital of Rs. 440 crore. ING Vysya Life is headquartered in Bangalore, and is a part of the ING group. The ING group is a 150-year-old global financial institution of Dutch origin offering banking, insurance and asset management to over 60 million private, corporate and institutional clients in 50 countries. We are the world‟s largest financial services group and the world‟s largest Life insurance provider.
CORPORATE OBJECTIVE At ING Vysya Life, we strongly believe that as life is different at every stage, life insurance must offer flexibility and choice to go with that stage. We are fully prepared and committed to guide you on insurance products and services through our well-trained advisors, backed by competent marketing and customer services, in the best possible way. It is our aim to become one of the top private life insurance companies in India and to become a cornerstone of ING‟s integrated financial services business in India.
OUR MISSION: ―To set the standard in helping our customers manage their financial future‖. ING Vysya Life Insurance is committed to you world class products and services that suit your specific needs. ING is Fortune 13th company (in the global fortune 500) and is the largest life Insurance Company across the world, with interest in Banking and Assets Management ING brings to you over 150 years of experience across countries and expertise of managing and exceeding expectation of over 60 million customers. ING Group has wide and deep experience in setting up companies in new markets, which require substantial investment underlining ING‟s long-term commitment. In the last 20 years, ING Group has established successful life insurance companies in 15 countries contributing to the development of insurance services in these countries successfully.
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ING Vysya Life Insurance Company Limited is a joint venture between Vysya Bank and ING Group of Holland, the world's 4th largest financial services group, with presence across 50 countries, and a heritage of over 150 years with the assets of Rs.61.5 lakh crores which is 174% of India‟ s GDP.
1930
Set up in Bangalore
1948
Scheduled Bank
1985
Largest Private Sector Bank
1987
The Vysya Bank Leasing Ltd. Commenced
1988
Pioneered the concept of Co branding of Credit Cards
1990
Promoted Vysya Bank Housing Finance Ltd.
1992
Deposits cross Rs.1000 crores
1993
Number of Branches crossed 300
1996
Signs Strategic Alliance with BBL., Belgium.
1998
Cash Management Services, & commissioning of VSAT.
2000
State
-of
-
the
-art
Date
Centre
at
ITPL,
Bangalore.
RBI clears setting up of ING Vysya Life Insurance Company 2001
ING-Vysya commenced life insurance business.
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Management Board of Directors (as on May 01, 2010)
Mr. Rajan Raheja
CHAIRMAN
Mr. Kshitij Jain
Managing Director & Chief Executive Officer
Mr. N. N. Joshi
Director
Mr. Satish Raheja
Director
Mr. Rajesh Kapadia
Director
Mr. Frank Koster
Director
Mr. Juan Carlos Syquia
Director
Mr. A. K. Mukherjee
Director
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Executive Team (as on May 01, 2010)
Mr. Kshitij Jain
Managing Director & Chief Executive Officer
Mr. John Boers
Chief Financial Officer
Mr. Rahul Agarwal
Chief Distribution Officer
Mr. B. Ashwin
Chief Operating Officer
Partners A glance at our equity partners:
PARTNERS
24%
26% ING INSU INT B.V EXIDE INDUSTRIES OTHER SHARE HOLDERS
50%
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ORGANISATION STRUCTURE
RM
REGIONAL HEADS HEA HEADS
ARM
ARM
BM
GSM
AGENCY MANAGER
SSM
SM/ASM/BDE
ADVISORS
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BUSINESS FLOWCHART
Business
Tied Agency
Bank assurance
Sales Manager
Relationship Manager
Advisors
Sales Executives
Customers
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Product Portfolio: ING Life India has wide array of products which include Retirement plans, child plans, investment plans and term plans.
Retirement Plan: With rising inflation, it‟s absolutely necessary to make provisions for the future which makes retirement plan an important financial decision. Better known as Pension plan, this plan takes care of financial needs after retirement by investing a part of your savings for limited period. Pension plan provides steady income after retirement and takes care of daily needs. The pension plans offered by ING Life are New Best Years and Immediate Annuity.
Child Plan: Parenthood brings responsibilities and no one is better judge of that than you. Child Plan is a plan specifically designed to take care of financial needs of your child. Child plan provides with necessary funds that will take care of child‟s education, marriage etc. By investing small portion of your savings you secure the financial end of your child. Child plans of ING Life are called Aashirwad, Creating Life Child Protection Plan and Creating Life Money Back Plan.
Term Plan: A risk plan which provides comprehensive cover for your family in the unfortunate event of untimely demise. A term life insurance plan provides good cover at relatively nominal cost and has no survival benefits. ING Life term plans are Term Life and Term Life Plus.
Investment Plan: Popularly known as ULIP, an investment plan invests part of your savings in equity or debt market as per your preference. The objective of investment plan is to give you returns which easily beat the rising costs since the usual returns in a bank are extremely low. ULIP‟s offered by ING Life are Market Shield, Prospering Life,ING Prospering Life- Single Premium, Uttam Jeevan- Regular Premium, Uttam Jeevan- Single Premium, Powering Life, Platinum Life Plan, New fulfilling Life Plan, Reassuring Life Endowment Plan, Safal Jeevan Endowment Plan, Safal Jeevan Money Back Plan and Creating Star Guaranteed Future.
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Distribution Network: ING Life India distributes its products through two channels- Tied Agency Force and the Alternate Channel. The former channel comprises over 50,000 Agents while the latter includes the Banc assurance channel, referral partners, corporate agents and brokers.ING Life India is present in 229 cities across 251 branch offices.
Financial Information: The total premium earned for the half year ended September 30, 2010 was Rs 7,167 million. The profit after tax for the same period is Rs 460 million. There have been 1,035 death claims reported during the period out of which 880 claims were settled and 39 claims were rejected.
Marketing Campaigns: ING Life begun with “Mera Farz” campaign which reflected on ING Life assistance in helping people to fulfill their responsibilities towards their family. The latest campaign is in the form of jingle consisted of responsibilities which attach themselves with happy eventsmarriage, child birth and with ING life there is no need to worry. You can enjoy your happiness, these ads proved quite successful in making an impression in customer‟s mind.
Competitors: 1. LIC 2. ICICI Prudential Life Insurance 3. HDFC Standard Life Insurance Co 4. Birla Sun Life Insurance 5. Max New York Life Insurance 6. Bajaj Allianz Life Insurance 7. Tata AIG Life Insurance 8. Met Life Insurance 9. Kotak Mahindra Old Mutual Life Insurance 10. SBI Life Insurance 11. Reliance Life Insurance 12. Sahara Life Insurance 13. ShriRam Life 14. Bharti AXA Life Insurance
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ING Life Product Table: Retirement/Pension Plan
ING New Best Years
Retirement/Pension Plan
ING Immediate Annuity
Child Plan
ING Aashirwad
Child Plan
Creating Life Child Protection Plan
Child Plan
Creating Life Money Back Plan
Term Plan
ING Term Life
Term Plan
ING Term Life Plus
Savings & Investment Plan
ING Market Shield
Savings & Investment Plan
ING Prospering Life
Savings & Investment Plan
ING Prospering Life- Single Premium
Savings & Investment Plan
ING Uttam Jeevan- Regular Premium
Savings & Investment Plan
ING Uttam Jeevan- Single Premium
Savings & Investment Plan
ING Powering Life
Savings & Investment Plan
ING Platinum Life Plan
Savings & Investment Plan
ING New Fulfilling Life Plan
Savings & Investment Plan
Reassuring Life Endowment Plan
Savings & Investment Plan
Safal Jeevan Endowment Plan
Savings & Investment Plan
Safal Jeevan Money Back Plan
Savings & Investment Plan
ING Creating Star Guaranteed Future
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PRODUCTS OF ING VYSYA LIFE INSURANCE ING Vysya Life Insurance offers a range of products that cater to the financial needs of individuals of every age. Children Plans ING Aashirvad Creating Life Child Protection Plan Creating Life Money Back Plan Protection Plans ING Term Life ING Term Life Plus Savings Plans
Reassuring Life Endowment Plan (Reversionary Bonus) Safal Jeevan Endowment Plan ING Creating Star Guaranteed Future ( Brochure | Benefit Illustration | Premium Rates) ING Assured Returns (Withdrawn) - The Guaranteed Interest Rate declared for the 2nd Policy year is 9%* , - The rate for a Delayed Payment Interest rate is 5.5%*. * (including Account Administration Fees of 1.25%) Retirement Plans ING New Best Years ING Immediate Annuity Investment Plans ING Prospering Life SP ING Market Shield ING Prospering Life ING Uttam Jeevan - Regular Premium ING Uttam Jeevan - Single Premium Powering Life New Fulfilling Life Riders Accidental Death Rider Accidental Death, Disability and Dismemberment Rider
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ULIP PRODUCT OFFERED BY COMPETATORS IN MARKET LIC 1. Market Plus 2. Profit Plus 3. Fortune plus
ICICI Prudential Life Insurance 1. Smart Kid New Unit-linked (Single Premium Option Available) 2. Lifetime Gold 3. Lifetime Super 4. Life Link Super 5. Premier Life Gold 6. Lifetime Plus 7. Life Stage 8. Invest Shield Life New 9. Invest Shield Cash Back 10. Lifetime Super Pension 11. Life Link Super Pension
HDFC Standard Life Insurance Co. 1. HDFC Unit Linked Pension 2. HDFC Unit Linked Pension Plus 3. HDFC Unit Linked Endowment 4. HDFC Unit Linked Endowment Plus 5. HDFC Unit Linked Young Star 6. HDFC Unit Linked Young Star plus
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Birla Sun Life Insurance 1. Birla Sun Life Insurance Gold-Plus 2. Supreme Life 3. Simply Life 4. Prime Life Premier 5. Prime Life 6. Flexi Cash Flow 7. Flexi Save Plus 8. Flexi Life Line Plan 9. Single Premium Bond 10. Flexi Secure Life Retirement Plan
Max New York Life Insurance 1. Life Partner Plus 2. SMART Steps 3. SMART Steps Plus 4. SMART Steps (Single Premium) 5. SMART Invest Pension Plan 6. Life Maker – Premium 7. Life Maker – Gold 8. Life Maker – Platinum 9. Life Invest
Bajaj Allianz Life Insurance 1. New Unit Gain Plus 2. New Unit Gain Easy Pension Plus 3. New Unit Gain Premier SP 4. New Unit Gain Super 5. New Family Gain 6. New Unit Gain Plus SP 7. Unit Gain Guarantee SP 8. Unit Gain plus Gold 9. Century plus ----------------------------
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Tata AIG Life Insurance 1. Invest Assure II 2. Invest Assure Plus 3. Invest Assure Extra 4. Invest Assure Gold
Met Life Insurance 1. Met Advantage Plus 2. Met Easy 3. Met Smart Plus 4. Met Smart Premier 5. Met Smart Plus (Single Premium) 6. Met Smart Premier (Single Premium)
Kotak Mahindra Old Mutual Life Insurance 1. Kotak Platinum Advantage Plan 2. Kotak Privileged Assurance Plan 3. Kotak Retirement Income Plan (Unit-linked) 4. Kotak Safe Investment Plan II 5. Kotak Flexi Plan 6. Kotak Easy Growth Plan
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RISK AND RETURN ANALYSIS Risk and Return Analysis Return expresses the amount which an investor actually earned on an investment during a certain period. Return includes the interest, dividend and capital gains; while risk represents the uncertainty associated with a particular task. In financial terms, risk is the chance or probability that a certain investment may or may not deliver the actual/expected returns. The risk and return trade off says that the potential return rises with an increase in risk. It is important for an investor to decide on a balance between the desire for the lowest possible risk and highest possible return.
Risk Analysis Risk in investment exists because of the inability to make perfect or accurate forecasts. Risk in investment is defined as the variability that is likely to occur in future cash flows from an investment. The greater variability of these cash flows indicates greater risk. Variance or standard deviation measures the deviation about expected cash flows of each of the possible cash flows and is known as the absolute measure of risk; while co-efficient of variation is a relative measure of risk. For carrying out risk analysis, following methods are used
Payback [How long will it take to recover the investment] Certainty equivalent [The amount that will certainly come to you] Risk adjusted discount rate [Present value i.e. PV of future inflows with discount rate]
However in practice, sensitivity analysis and conservative forecast techniques being simpler and easier to handle, are used for risk analysis. Sensitivity analysis [a variation of break even analysis] allows estimating the impact of change in the behavior of critical variables on the investment cash flows. Conservative forecasts include using short payback or higher discount rates for discounting cash flows.
Investment Risks Investment risk is related to the probability of earning a low or negative actual return as compared to the return that is estimated. There are 2 types of investments risks:
1. Stand-alone risk This risk is associated with a single asset, meaning that the risk will cease to exist if that particular asset is not held. The impact of stand alone risk can be mitigated by diversifying the portfolio. Stand-alone risk = Market risk + Firm specific risk
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Where, o o
Market risk is a portion of the security's stand-alone risk that cannot be eliminated trough diversification and it is measured by beta Firm risk is a portion of a security's stand-alone risk that can be eliminated through proper diversification
2. Portfolio risk This is the risk involved in a certain combination of assets in a portfolio which fails to deliver the overall objective of the portfolio. Risk can be minimized but cannot be eliminated, whether the portfolio is balanced or not. A balanced portfolio reduces risk while a non-balanced portfolio increases risk. Sources of risks o o o o o o
Inflation Business cycle Interest rates Management Business risk Financial risk
Return Analysis An investment is the current commitment of funds done in the expectation of earning greater amount in future. Returns are subject to uncertainty or variance Longer the period of investment, greater will be the returns sought. An investor will also like to ensure that the returns are greater than the rate of inflation. An investor will look forward to getting compensated by way of an expected return based on 3 factors
Risk involved Duration of investment [Time value of money] Expected price levels [Inflation]
The basic rate or time value of money is the real risk free rate [RRFR] which is free of any risk premium and inflation. This rate generally remains stable; but in the long run there could be gradual changes in the RRFR depending upon factors such as consumption trends, economic growth and openness of the economy. If we include the component of inflation into the RRFR without the risk premium, such a return will be known as nominal risk free rate [NRFR] NRFR = ( 1 + RRFR ) * ( 1 + expected rate of inflation ) - 1 Third component is the risk premium that represents all kinds of uncertainties and is calculated as follows -Expected return = NRFR + Risk premium
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Risk and return trade off Investors make investment with the objective of earning some tangible benefit. This benefit in financial terminology is termed as return and is a reward for taking a specified amount of risk. Risk is defined as the possibility of the actual return being different from the expected return on an investment over the period of investment. Low risk leads to low returns. For instance, in case of government securities, while the rate of return is low, the risk of defaulting is also low. High risks lead to higher potential returns, but may also lead to higher losses. Long-term returns on stocks are much higher than the returns on Government securities, but the risk of losing money is also higher. Rate of return on an investment cal be calculated using the following formulaReturn = (Amount received - Amount invested) / Amount invested He risk and return trade off says that the potential rises with an increase in risk. An investor must decide a balance between the desire for the lowest possible risk and highest possible return. The concept of risk and return analysis is integral to the process of investing and finance. All financial decisions involve some risk. You may expect to get a return of 15% per annum in your investment but the risk of "not able to achieve 15% return" will always be there. Return is simply a reward for investing as all investing involves some risk. The greater the risk, the greater the return expected. The objective of risk and return analysis is to maximize the return by creating a balance of risk. For example, in case of working capital management, the less inventory you keep, the higher the expected return as less of your money is locked as asset. but you also have a increased risk of running out of raw material when you actually need it for production or maintenance. Which means you lose sale? Thus all companies tries very hard to maintain an minimum investor as possible without effecting smooth production. This is a very common example of risk and return trade off.
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INTRODUCTION TO ULIP PLANS Ulip came into play in 1960 and is popular in many countries in the world today. In 1971 the unit trust of India offered the unit linked insurance plan. Out of insurance premium a small part of contribution was utilized or providing life cover and balance invested in units. Unit linked guidelines notified by IRDA on 21stDecember, 2005 in India. The main intent of the guidelines was to ensure that they lead to greater transparency and understanding of these products among the insured, especially since the investment risk is borne by the policyholder. Unit linked Insurance Plan (ULIP) is a type of life insurance plan that provides benefits of protection against risks and flexibility to manage the investments of premiums. Part of the premium paid by the customer goes towards the sum assured and the balance is invested in venues of investment desired by the policy holder. There are usually three different venues for investment which are equities, debt instruments and liquid assets; the policy value at anytime keeps varying as per the value of the assets chosen by the insured or insurance company. Based on the combination of assets invested in, the investment corpus after deducting the charges is broken into smaller units and these units carry a price or a value which it has attained called as the Net Asset Value (NAV). Thus NAV is the price per unit. The net investment corpus which remains after deducting the various charges from premiums and adding returns, if any, is called as the Fund value. When people see how investments in the capital market have grown in the last few years, they prefer to use their funds to participate in the boom of the capital market. With ULIP plans, Insurance companies combine the benefits of life insurance as well as give options to reap benefits from the growth of the capital market. ULIPs are basically insurance plans along with an investment component. The investment is done according to the risk profile of the customer and the choice of the customer. The risk of investment is borne by the customer and the returns are marked to the market and hence are not guaranteed. Usually, every ULIP has at least 4 funds to choose from. The most common fund options are - Equity/ Growth, Balanced, Debt and Secure/ Liquid Fund. The objective of each fund would differ and you as a customer would get to choose from one or more funds. The equity fund would have about 60 to 100% exposure in equity depending on the speculation of the fund managers about the markets. The debt fund invests primarily in government bonds, securities and fixed deposits, and other fixed interest securities. The balanced fund is a combination of equity and debt instruments. Finally, the liquid or secure fund invests in the money market. It invests in instruments like commercial papers, treasury bills etc. The policy holder also has the option to partially withdraw money from his fund after completion of 3 years. Every year the policy holder also gets the option to contribute extra money over and above his premiums to his investment corpus, referred to as top-up premium. There are many flexible features offered to the policyholder to allow him derive maximum from his investments.
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ULIP MEANING Meaning: ULIP or unit linked insurance policy is life insurance plan which combines both insurance cover and investment. Simply put, ULIP provides financial protection along with investment opportunities. The premium in ULIP after the deductions is invested in equity or debt market. In ULIP the investment risk is generally borne by the investor.
How does ULIP work? ULIP is combination of risk cover and investment. Generally in a term plan, if you pay premium the specified cover is provided and that is all. However ULIP works differently. A small deduction is made on the premium made by you on account of insurer charges. The major amount is invested into the fund chosen by you and converted into units. The mortality cover and fund management charges and similar expenses are deducted by cancellation of units. The fund is dependent upon equity and debt market for growth.
Types of Funds in ULIP:
The premium after the deduction is invested into a fund. The fund is basically a debt fund or equity fund or combination of both. The returns in the fund are dependent upon the risk appetite of the policyholder. More returns means more risks.
General Description
Nature of Investments
Risk Category
Equity Funds
Primarily invested in company stocks with the general aim of capital appreciation
Medium to High
Income, Fixed Invested in corporate bonds, government Interest and Bond securities and other fixed income instruments Funds
Medium
Cash Funds
Sometimes known as Money Market Funds Low — invested in cash, bank deposits and money market instruments
Balanced Funds
Combining equity investment with fixed interest instruments
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Unit Linked Plans offer unique opportunity to combine protection with investments. Some special features of Unit Linked Life Insurance Policies (ULIPs) are:
1. Provide flexibility in investments: ULIPs offer a complete selection of high, medium and low risk investment options under the same policy. You can choose an appropriate policy according to your risk taking appetite, coupled with the opportunity to switch between fund options without any additional expense for specified number of switches. ULIPs provide the flexibility to choose the sum assured and investment ratio in the annual targeted premium. It also offers the flexibility of one time increase in investment portfolio, through top-ups to avail investment opportunity offered by external environment or own income flows.
2 Transparency The charge structure, value of investment and expected IRR based on 6% and 10% rate of returns, for the complete tenure of the policy are shared with you before you buy a product. Similarly, the annual account statement, quarterly investment portfolio and daily NAV reporting, ensures that you are aware of the status of your investment portfolio at all times. Most companies publish latest NAVs on their respective websites on a daily basis.
3. Liquidity To cope with unforeseen circumstances, ULIPs offer the benefit of partial withdrawal; wherein after 5 years you can withdraw funds from our Unit Linked account, retaining only the stipulated minimum amount.
4. Disciplined and regular savings ULIPs help you inculcate a regular saving habit. Also, the average unit costs tend to be lower than one time investment.
5. Multiple benefits bundled in one product ULIP is an outstanding solution for risk cover, long term investments with the benefit of various investment opportunities, coupled with tax benefits.
6. Spread of risk ULIPS are ideal for those investors who wish to avail the benefit of market linked growth without actually participating in the stock market, with the added benefit of risk-cover.
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CHARGES UNDER ULIP PLANS 1. Premium Allocation Charges This is the primary component that every prospective buyer should check. PAC charges are deducted in the initial years of the policy wherein a part of your invested amount is deducted. This is usually spread across the first 5 years and thereon it is discontinued. Policy allocation charges also happen to be one of the USPs of ULIPs as they claim to have lower PAC compared to their peers. This, however, is more like charging less in the initial years to attract new investors and later on make it up towards the later years. More or less, investors end up paying the same amount whatever be the case. The key changes in ULIPs initiated by IRDA also mandates the distribution of PAC evenly during the lock in period to prevent miss -selling.
2. Policy Administration Charges Policy administration charges has seen an increase across ULIP products since the time IRDA decided to spoil the party and laid stringent guidelines and restrictions. Insurance providers subsequently have increased the Premium Allocation Charges to make up for loss by way of an upper limit on Premium Allocation Charges. Prospective buyers also need to check for the incremental increase in policy administration charges which say for instance can go up by 5% every year. The policy administration charges again is governed by IRDAs upper limit on ULIP charges.
3. Guarantee Charges Like the mortality charge which is explained below, Guarantee charge also doesn‟t fall into the list of components restricted or capped by IRDA. Guarantee charge is usually levied on ULIP plans that offer investors a guaranteed return on investment at the end of the tenure and hence you are most likely to see a guarantee charge being levied if you opt for policies that offer components like highest NAV guaranteed or other similar offers.
4. Surrender Charges As per the new norms laid by IRDA, an insurance company cannot charge more than 6% of the fund value (subject to a maximum value of Rs. 6000) if the policy holder decides to surrender his/her policy within the first year. There have been upper limits set for the remaining 4 years of lock in period as well. Insurance providers are not allowed to levy any surrender charges if the policy holder chooses to surrender the policy after the lock in period of 5 years.
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5. Mortality Charges Mortality charges are basically the amount deducted from your premium that is allocated to provide insurance cover. The policy buyer‟s age, industry specific mortality tables, and company‟s own internal claims data are some of the factors that insurance companies use to fix the amount that you need to pay. Ideally mortality charges for a ULIP as well as a simple term insurance plan should be similar. That, however, doesn‟t stand true for most of the ULIPs and can vary from one provider to another. Again, insurers don‟t necessarily need to abide by IRDA‟s regulations to determine or fix mortality charges. Mortality charges across most new ULIPs have been significantly increased compared to old ULIPs before the key changes were implemented by IRDA.
6. Switching Charges ULIP policy holders are given the option of switching their funds across asset classes any time they wish to during their policy‟s life span. Insurance companies do offer options to switch to a different asset class or fund without any charges but again there are limits to the number of switches a policy holder can make beyond which switch charges are applied as per the rates fixed by the insurance provider. This again is not standard and can vary from one provider to another.
7. Fund Management Charges The new limits specified by IRDA warrants that insurance companies cannot impose a fund management fee in excess of 1.35% per annum.So that makes up for most of the standard charges that insurance companies across the ULIP production spectrum charge policy holders. A cumulative understanding of all these charges put together would give that additional bunch of information that can used to make a buying or should we say „investing‟ decision.
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OBJECTIVE OF THE STUDY To study the factors considered by investors while investing in ING Ulip Plans
Sub objectives: 1. To study the level of risk tolerance of investor towards ULIP Plan 2. To study the return expectation of investors towards ULIP Plan 3. To understand the reasons for selecting a particular plan 4. To know the overall satisfaction level towards investment in ING Vysya ULIP Plans.
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Scope of the study 1. The scope of the study is extended to the existing policyholder of ING vysya life insurance 2. The study will help the company to the investors reactions towards ULIP PLANS. 3. The study will help company to implement effective campaign of the products.
BENEFITS OF THE STUDY 1. The study helps to find out the satisfaction level of the existing investors in the company. 2. The study helps to launch new products in the market. 3. The study helps company to understand the risk expected by the customer in ulip plans.
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METHODOLOGY
Data collection Method
Primary Data: Primary data will be collected through questionnaire. Sample Size: 100 Sampling Method: Random Sampling Method Sampling Period: Aug 1 to Aug 20 Sampling Area: Dharwad Statistical Tools: Simple Bar Graph is used for representation the data using SPSS software.
Secondary Data: For writing company profile – Website www.ing life.com For writing the details about ULIP Plans – company website For writing theoretical aspect about ULIP Plan – Text books
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Data analysis Table 1: Table showing the age of the respondents. Age Cumulative Frequency Valid
Percent
Valid Percent
Percent
20-30
33
33.0
33.0
33.0
31-40
43
43.0
43.0
76.0
41-50
18
18.0
18.0
94.0
6
6.0
6.0
100.0
100
100.0
100.0
More than 50 Total
Interpretation: Out of the 100 respondents 33% fall in the 20-30 age category,43% are in the age of 31-40 , and 18% are fall in the 41-50 and 6% are in the age category more than 50. GLOBAL BUSINESS SCHOOL HUBLI
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3. The table showing the occupation of the respondents. Occupation Cumulative Frequency Valid Service
Percent
Valid Percent
Percent
20
20.0
20.0
20.0
Professional
24
24.0
24.0
44.0
Business
27
27.0
27.0
71.0
Others
29
29.0
29.0
100.0
100
100.0
100.0
Total
Interpretation: From the chart above we find that 20% respondents fall in the service category,24% fall in the professional category,27% fall in the business category and rest 29% are fall in the category of others. GLOBAL BUSINESS SCHOOL HUBLI
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4. The table showing the monthly income of the respondents. Monthly Income Cumulative Frequency Valid
Percent
Valid Percent
Percent
10000-15000
30
30.0
30.0
30.0
15000-25000
44
44.0
44.0
74.0
25000-40000
26
26.0
26.0
100.0
100
100.0
100.0
Total
Interpretation: From the chart above we find that 30% respondents are in the group of 10000-15000,44% are in the group of 15000-25000,and rest 26% are fall in the income group of 25000-40000 category.
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5.The table showing ulip plan invested by the respondents. Tick the ULIP Plan you have invested in. Cumulative Frequency Valid
Percent
Valid Percent
Percent
Freedom Plan
19
19.0
19.0
19.0
Future Perfect
22
22.0
22.0
41.0
High Life
27
27.0
27.0
68.0
ING Creating Star
21
21.0
21.0
89.0
ING Flexi Life
9
9.0
9.0
98.0
ING Flexi Life Plus
2
2.0
2.0
100.0
100
100.0
100.0
Total
Interpretation: From the chart above we find that 19% are invested in the freedom plan,22% are invested in the Future perfect plan,27% are invested in High life plan,21% are invested in ING creating star,9% are invested in ING flexi life and rest 2% are invested in ING flexi life ulip plan.
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6.The table showing the nature of premium payment by the respondents Nature of Premium payment: Cumulative Frequency Valid Quarterly Half Yearly Yearly Total
Percent
Valid Percent
Percent
36
36.0
36.0
36.0
58
58.0
58.0
94.0
6
6.0
6.0
100.0
100
100.0
100.0
Interpretation: From the chart above we find that 36% respondents fall in the quarterly premium payment, 58% are fall in the half yearly premium payment and rest 6% are fall in the yearly premium payment. GLOBAL BUSINESS SCHOOL HUBLI
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7.The table showing the amount of premium invested by the respondents. Amount of Premium invested annually Cumulative Frequency Valid
15000
Percent
Valid Percent
Percent
8
8.0
8.0
8.0
15000-25000
75
75.0
75.0
83.0
25000-40000
17
17.0
17.0
100.0
100
100.0
100.0
Total
Interpretation: From the chart above we find that 8% respondents are fall in the 15000 premium payment,75% are fall in the 15000-25000 premium payment and rest 17% are fall in the 25000-40000 premium payment annually. GLOBAL BUSINESS SCHOOL HUBLI
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8. The table showing the important reason for the investment by the respondents. Tick ONE most important reason for your investment. Cumulative Frequency Valid
Tax savings
Percent
Valid Percent
Percent
7
7.0
7.0
7.0
33
33.0
33.0
40.0
Better future after retirement
41
41.0
41.0
81.0
Wealth Creation
19
19.0
19.0
100.0
100
100.0
100.0
Financial security and risk coverage
Total
Interpretation: From the chart above we find that 7% respondents are fall in tax savings,33% say that financial security and risk coverage,41% say that better future after retirement, and rest 19% say that wealth creation is reason for their investment.
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9. The table showing the fund chosen for investment by the respondents.
Tick fund chosen for investment Cumulative Frequency Valid
Percent
Valid Percent
Percent
Balanced Fund
24
24.0
24.0
24.0
Debt Fund
17
17.0
17.0
41.0
Equity Fund
29
29.0
29.0
70.0
Growth Fund
24
24.0
24.0
94.0
Secure Fund
6
6.0
6.0
100.0
100
100.0
100.0
Total
Interpretation: From the chart above we find that 24% respondents chosen balanced fund,17% chosen Debt fund,29%chosen Equity fund,24% chosen Growth fund, and rest 6% say secure fund. GLOBAL BUSINESS SCHOOL HUBLI
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10.The table showing the risk expected at the time of investment by the respondents.
Risk expected at the time of investment. Cumulative Frequency Valid
Percent
Valid Percent
Percent
High risk
25
25.0
25.0
25.0
Moderate risk
54
54.0
54.0
79.0
Low risk
21
21.0
21.0
100.0
100
100.0
100.0
Total
Interpretation: From the chart above we find that 25% respondents expect high risk at the time of investment, 54% say that moderate risk, and rest 21% expect low risk at the time of investment. GLOBAL BUSINESS SCHOOL HUBLI
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11. Returns expected from investment.
returns expected from investment Cumulative Frequency Valid
Percent
Valid Percent
Percent
above20%
35
35.0
35.0
35.0
15-20%
48
48.0
48.0
83.0
10-15%
17
17.0
17.0
100.0
100
100.0
100.0
Total
Interpretation: From the chart above we find that 35% respondents expect above 20%risk from investment, 48% say that 15-20% risk expected from the investment and rest 17% respondents expect 10-15%risk return from the investment.
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12. What is your level of risk tolerance? level of risk tolerance Cumulative Frequency Valid
Percent
Valid Percent
Percent
above 15%
13
13.0
13.0
13.0
10-15%
50
50.0
50.0
63.0
5-10%
37
37.0
37.0
100.0
100
100.0
100.0
Total
Interpretation: From the chart above we find that 13% respondents tolerate above 15% risk, 50% tolerate 10-15% risk, and rest 37% say that they tolerate 5-10% risk for their investment.
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13. State your satisfaction level for your investment. State your satisfaction level for your investment. Cumulative Frequency Valid
Not Satisfied
Percent
Valid Percent
Percent
2
2.0
2.0
2.0
Neutral
23
23.0
23.0
25.0
Satisfied
62
62.0
62.0
87.0
Highly Satisfied
13
13.0
13.0
100.0
100
100.0
100.0
Total
Interpretation: From the chart above we find that 2% respondents are not satisfied with their investment,23% say neutral,62% are satisfied with their investment,13% are highly satisfied with their investments.
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14. Would you like to Invest in ING Vysya ULIP Plan in future? would you like to invest in ING VYSYA ULIP plan in future Cumulative Frequency Valid
Percent
Valid Percent
Percent
yes
40
40.0
40.0
40.0
no
60
60.0
60.0
100.0
100
100.0
100.0
Total
Interpretation: From the chart above we find that 40% respondents say they will invest in ING vysya ulip plan in future, and rest 60% say they will not invest in future.
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If yes Tick reason. If YES Cumulative Frequency Valid
Capital Appreciation
Valid Percent
Percent
15
15.0
37.5
37.5
25
25.0
62.5
100.0
Total
40
40.0
100.0
System
60
60.0
100
100.0
Expectation of high returns & risk coverage
Missing
Percent
Total
Interpretation: From the chart above we find that 15% respondents say capital appreciation is reason for their investment in ING, and rest 25% say that expectation of high returns& risk coverage is the reason for their investment in ING in future.
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If no if no Cumulative Frequency Valid
Missing
Percent
Valid Percent
Percent
poor returns
22
22.0
36.7
36.7
high risk
38
38.0
63.3
100.0
Total
60
60.0
100.0
System
40
40.0
100
100.0
Total
Interpretation: From the chart above we find that 22% respondents say for poor return is the reason for not investing in the ING in future, and rest 38% say that high risk is the reason for not investing in ING in future.
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15. Tick areas for your future investments. Tick areas for your future investments. Frequency Valid
Percent
Valid Percent
Cumulative Percent
Mutual funds
10
10.0
10.0
10.0
Govt Sec & Bank Deposits
24
24.0
24.0
34.0
Shares
29
29.0
29.0
63.0
Insurance
26
26.0
26.0
89.0
Real Estate
7
7.0
7.0
96.0
Postal Saving Scheme
4
4.0
4.0
100.0
100
100.0
100.0
Total
Interpretation: From the chart above we find that 10% respondents wants to invest in mutual funds in future,24%Govt sec&Bank Deposits,29% in Shares , 26% in shares ,7% in Real Estate, and rest 4% say that postal saving schemes
GLOBAL BUSINESS SCHOOL HUBLI
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State reason. State reason. Cumulative Frequency Valid
Percent
Valid Percent
Percent
Safe investments
32
32.0
32.0
32.0
Guaranteed / Good Returns
10
10.0
10.0
42.0
High Returns
29
29.0
29.0
71.0
6
6.0
6.0
77.0
23
23.0
23.0
100.0
100
100.0
100.0
Liquidity Returns and risk coverage Total
Interpretation: : From the chart above we find that 32% fall in the safe investments,10%fall in the guaranteed good returns,29% say high returns, 6%say liquidity and rest 23%say returns and risk coverage as reason for their future investments.
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16) Rate the parameters you consider during your investment. Rate of return Rate the parameters you consider during your investment.(Rate Of Return) Cumulative Frequency Valid
Neutral
Percent
Valid Percent
Percent
8
8.0
8.0
8.0
Important
55
55.0
55.0
63.0
Very Important
37
37.0
37.0
100.0
100
100.0
100.0
Total
Interpretation: From the chart above we find that 8% say neutral,55% respondents say rate of return is important, and rest 37%say rate of return is very important during the investments.
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Present Market Scenario And Tax Benefits Rate the parameters you consider during your investment.(Present Market Scenario And Tax Benefits) Cumulative Frequency Valid
Less Important
Percent
Valid Percent
Percent
5
5.0
5.0
5.0
Neutral
46
46.0
46.0
51.0
Important
27
27.0
27.0
78.0
Very Important
22
22.0
22.0
100.0
100
100.0
100.0
Total
Interpretation: From the chart above we find that 5% of the respondent gives less important to this parameter,46%sayneutral,27%say important, and rest 22% give very importance to the present market scenario tax benefits.
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Past Performance Of The Company
Cumulative Frequency Valid
Percent
Valid Percent
Percent
Less Important
17
17.0
17.0
17.0
Neutral
29
29.0
29.0
46.0
Important
31
31.0
31.0
77.0
Very Important
23
23.0
23.0
100.0
100
100.0
100.0
Total
Interpretation: From the chart above we find that 17% of the respondents gives less importance to this parameter,29%say neutral,31%say important to this parameter, and rest 23%give very importance to the past performance of the company during their investment.
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Advertisements Rate the parameters you consider during you investments(Advertisements) Cumulative Frequency Valid
Percent
Valid Percent
Percent
Not Important
6
6.0
6.0
6.0
Less Important
20
20.0
20.0
26.0
Neutral
33
33.0
33.0
59.0
Important
30
30.0
30.0
89.0
Very Important
11
11.0
11.0
100.0
100
100.0
100.0
Total
Interpretation: From the chart above we find that 6% of the respondents say not important about advt,20%gives less important to this parameter,33%say neutral,30%give importance to the advertisements ,and rest11% gives very important during their investments.
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Brand Of The Company
Rate the parameter during your investment s(Brand of the company) Cumulative Frequency Valid
Percent
Valid Percent
Percent
Not Important
1
1.0
1.0
1.0
Less Important
3
3.0
3.0
4.0
Neutral
9
9.0
9.0
13.0
Important
47
47.0
47.0
60.0
Very Important
40
40.0
40.0
100.0
100
100.0
100.0
Total
Interpretation: From the chart above we find that 1% say not important about this parameter,3%say less important,9%say neutral,47%say brand of the company is very important during the invt.40%say very important to this parameter during their investments.
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FINDINGS 1. In my survey I found 43%&33% investor‟s age is 31-40 and20-30 and 18% investor‟s age is 41-50, and 6% investor‟s age is more than 50. The majority of investor‟s age is 31-40. 2. 29% investors are in the other occupation and 27% investors are businessman, 24% investors are professionals, and the lowest 20% of investors are service field. 3. In my survey 44% of the investors monthly income is15000-25000,30% investors monthly income is 10000-15000, and the lowest 26% of the investors monthly income is 25000-40000. 4. 27% investors are invested in high life plan,22% investors are invested in future perfect plan,21% investors are invested in ING creating star plan,19% investors invested in freedom plan,9% investors are invested in ING flexi life plan, and the lowest 2% investors invested in ING flexi plus ulip plan. 5. 58% investors are paying premium half yearly,36% investors are paying premium quarterly, and lowest 6%investors pay premium as yearly. 6. 75% of investors invested 15000-25000pemium annually,17% investors invested 25000-40000 premium annually, and lowest 8% investors invested 15000 premium annually. 7. 41% investors invested for better future after retirement,33% investors invested for financial security &risk coverage,19% investors invested for wealth creation,7% investors invested for tax savings as a reason for their investment in the plans. 8. 29% investors invested in equity fund,24% investors invested in balanced fund &growth fund,17% investors invested in debt fund, and lowest 6% of the investors invested in secure fund. 9. 54% investors expect moderate risk at the time of investment,25%investors expect high risk at the time of investment and lowest 21% expect low risk at the time of investment. 10. 48% investors expect 15-20% returns from investment, 35% investors expect above 20% returns from the investments, and lowest 17% investors expect 1015% returns from investment. 11. 50% of the investors tolerate 10-15%risk,37% of the investors tolerate 5-10% risk and lowest 13% investors tolerate above 15% risk. 12. 62% investors are satisfied with their investments,23% are neutral with their investments,13% are highly satisfied with their investments and lowest 2% are not satisfied with their investments. 13. 60% of the investors don‟t want to invest in future in Ing Vysya ULIP plan and 40% want to invest in ING Vysya ULIP plans in future. 14. 25% of the people invest in future because expectation of high returns &risk coverage and lowest 15% for capital appreciation.
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15. 38% investors say high risk so they don‟t want to invest in future and 22% say poor returns is their so they don‟t want to invest in future in ING Vysya ULIP plans. 16. 29% investors future investments is in shares,26% investors in insurance,24% in govt securities& bank deposits,10% want to invest in mutual funds,7& in real estate and the lowest 4% in postal saving scheme as their future investments. 17. 32% investors say safe investments the reason for future investments,29% high returns,23%returns &risk coverage,10% guaranteed good returns,6% liquidity as the reason for future investments. 18. 55% investors say important for rate of return during their investments,37% say very important, and lowest 8% remain neutral to this parameter. 19. 46% investors say neutral to the present market scenario &tax benefits,27% say important,22% say very important, and lowest 5% say less important to the present market scenario &tax benefits during their investments. 20. 31% say very important to the past performance of the company,29% say neutral,23% say very important and 17% say less important to this point during their investments. 21. 33% say neutral to the advertisements during their investments,30% say important,20% say less important,11% say very important and 6% say not important to this point during their investments. 22. 47% of the investors consider brand of the company is important during their investments,40% say very important,9% say neutral,3% less important,1% say not important to this point while their investments.
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Suggestions 1. The advisors have to meet existing investors to know their future investments. 2. The 60% of the investors say don‟t want to invest in future in ING vysya ulip plans the company has to implement promotional campaign to attract the investors. 3. 55% of the investors say rate of return is important during their investments so the company consider this parameter and give good rate of return to the ulip plans. 4. The majority of the investors wants to invest in shares as their future investments as a reason of of safe investments. 5. 54% investor expect moderate risk at the of investment. 6. 48% investors expect 15-20% returns from the investments. 7. Majority of the investors age is 31-40. 8. 62% investors are satisfied with their investments. 9. The company has to work on more on ULIP plan because the investors are very risky attitudes towards that product.
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CONCLUSION
The study aimed at to know the investors reaction towards ULIP plan of the company. Majority of the investors are satisfied with their investments in the company. Most of the investors invest in Traditional plan because their safe investments and risk coverage they have feeling that ulip plans are very risky investments. The ULIP plans are involved risk so the advisors have to work towards the product and understand the customer effectively to invest in this product. The study helps to know the investors perception towards risk and return of the ULIP plans of the company.
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ANNEXURES & REFERENCE Following are my Annexure:
Questionnaire
Bibliography
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QUESTIONNAIRE Sir/Madam, I am Mr. Sahajsingh Mokashi – MBA student of Global Business School College Hubli, doing project at ING Vysya Life Insurance Company on A Study of Risk and Return involved in Investment in ING Vysya ULIP Plans. I request you to express your opinion or response towards ULIP products by answering the following questions. The data collected will be solely used for academic purpose. 1. Name: _________________________________________________________________ 2. Age:
a) 20-30
b)31-40
c ) 41-50
d) More
than50 3 Occupation: a) Service ( )
b) Professional (
) c)Business (
)
d) Others ( )
4. Monthly Income a). 10000-15000
b) 15000-25000
c) 25000-40000
d) 40000 & Above
5. Tick the ULIP Plan you have invested in. a) Freedom Plan d) ING Creating Star
b) Future Perfect
c) High Life
e) ING Flexi Life
f) ING Flexi Life Plus
6. Nature of Premium payment: a) Monthly
b) Quarterly
c) Half Yearly
d) Yearly
e)Single
Premium
7. Amount of Premium invested annually. a) 15000
b) 15000-25000
GLOBAL BUSINESS SCHOOL HUBLI
c) 25000-40000
d) 40000 & Above
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8. Tick ONE most important reason for your investment. a) Tax savings
b) Financial security and risk coverage
c) Better future after retirement
d) Wealth Creation.
9. Tick fund chosen for investment. a) Balanced Fund
b)Debt Fund
c)Equity Fund
d)Growth Fund
e) Secure Fund 10. Risk expected at the time of investment. a) High risk
b) Moderate risk
c) Low risk
d) No Risk
11. Returns expected from investment. a) High risk
b) Moderate risk
c) Low risk
d) No Risk
12. What is your level of risk tolerance. a) High risk
b) Moderate risk
c) Low risk
d) No Risk
13. State your satisfaction level for your investment. Highly Parameter Dis-satisfied
Not Satisfied
Neutral Satisfied
Highly Satisfied
1. Overall
14. Would you like to Invest in ING Vysya ULIP Plan in future? a) Yes
b) No
Tick reason. - If YES
a) Capital Appreciation
b) Expectation of high returns & risk coverage.
- If NO
a) Poor returns
b) Uncertain returns ( High Risk)
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15. Tick areas for your future investments. a) Mutual funds
b) Govt Sec & Bank Deposits
d) Insurance
e) Real Estate
c) Shares
f) Postal Saving Scheme
16 .State reason. a) Safe investments d) Liquidity
b) Guaranteed / Good Returns
c) High Returns
e) Returns and risk coverage
17) Rate the parameters you consider during your investment. Factors
Not
Less
Important
Important
Neutral
Important
Very Important
1. Rate Of Return 2. Present Market Scenario And Tax Benefits 3. Past Performance Of The Company 4 .Advertisements 5. Brand Of The Company
Thank You For Your Valuable Time
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Bibliography Websites: WWW.inglife.com WWW.lic.com Other references Polizy bazaar.com Article on insurance &ULIP plans
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