Acknowledgement

It is said that bidding thanks to the well-wisher lessens the weightage of its c
ontribution. However mentioning the words of thanks is the only way to express t
he gratitude. At the outset, I would like to thank AEGON Religare Life Insurance
(ARLC) for having given me an opportunity to do a project on market research on
customer perspectives.
My special gratitude to my project guide, Mr. Mohammed Azam (Agency Development
Manager) for imparting me with clear direction and providing me with practical i
nsights at various stages of the project.
I would also like to thank Mr. Anil Chaturvedi (Branch Manager) for providing me
with
valuable inputs throughout the course of the project.
My sincere thanks to Miss Shradha Gupta (Trainer) and Mr. Prakash (Business Mana
ger)
for helping me out immensely with the execution of the project plan.
I owe a lot to the entire marketing team of ARLC for having provided me with a l
ot of help and
encouragement at every stage of the project.
I also sincerely thank all the clients of ARLC for having provided me with criti
cal insights into
the operations of ARLC.
Last but not the least, I wish to express my sincere thanks to FACULTY OF COMMER
CE
for providing me an opportunity for conducting this training.
Acknowledgement
It is said that bidding thanks to the well-wisher lessens the weightage of its c
ontribution. However mentioning the words of thanks is the only way to express t
he gratitude. At the outset, I would like to thank AEGON Religare Life Insurance
(ARLC) for having given me an opportunity to do a project on market research on
customer perspectives.
My special gratitude to my project guide, Mr. Mohammed Azam (Agency Development
Manager) for imparting me with clear direction and providing me with practical i
nsights at various stages of the project.
I would also like to thank Mr. Anil Chaturvedi (Branch Manager) for providing me
with
valuable inputs throughout the course of the project.
My sincere thanks to Miss Shradha Gupta (Trainer) and Mr. Prakash (Business Mana
ger)
for helping me out immensely with the execution of the project plan.
I owe a lot to the entire marketing team of ARLC for having provided me with a l
ot of help and
encouragement at every stage of the project.
I also sincerely thank all the clients of ARLC for having provided me with criti
cal insights into
the operations of ARLC.
Last but not the least, I wish to express my sincere thanks to FACULTY OF COMMER
CE
for providing me an opportunity for conducting this training.
PRIMARY OBJECTIVE
To know about customer perspective of Unit Linked Insurance Plans.
SECONDRY OBJECTIVE
•
Assessment of customer satisfaction
•
Assessment of corporate culture
•
To identify whether the customers are aware of the ULIPs of ARLF
•
To analyze the factor(s) to increase the sales f ULIPs of ARLF.
•
To know the pattern of investment in insurance sector in context of
Varanasi
•
To know what they think about investment
•
To know perception of consumers about different sector of insurance
company
•
To know perception of consumers of their mode of premium payment.
Limitations
Every Research work suffers from certain limitations .The survey undertaken is a
lso not free from all defects .The purpose of presenting the limitations is to h
elp the reader in forming opinion about the reliability and validity of the pres
ent result.
1.The universe selected for the survey comprised of only Varanasi. So the
result should not be generalized for the entire bulk.
2. Sample size is too small which may affect the reliability of the result
3. Because of lack interest in such activities, the respondents were not benefit
ed in any way and therefore there are chances of incorrect or biased replies.
4.The survey is one sided i.e., I studied the topic from customer’s & company.
Competitors’ viewpoint has not been covered.
4.The survey is one sided i.e., I studied the topic from customer’s & company.
Competitors’ viewpoint has not been covered.

INDUSTRY PROFILE
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 reg
ional focus flourished all across the country. However the government of India,
concerned by the unethical standard adopted by some player against the consumers
, nationalized the industry in two phases in 1956(life) and in 1972(non-life).Th
e insurance business of the country was then brought under two public sector com
panies, Life Insurance Corporation of India (LIC) and General insurance Corporat
ion of India (GIC).
In line with the economic reforms that were ushered in India in early nineties,
the Government set up a committee on reforms (popularly called the Malhotra Comm
ittee) in April 1993 to suggest reforms in the insurance sector. The Committee r
ecommended throwing open the sector to private player to usher in competition an
d bring more choice of the consumers. The objective of the insurance to penetrat
ion of insurance as a percentage of GDP, which remains low in India even compare
d to Insurance Regulatory and Development Authority (IRDA) Bill in 1999. IRDA wa
s set up as an independent regulatory, which has put in place regulations in lin
e with global norms. So far it is not made public.

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 regulation
s and registering the private sector insurance companies
The other decision taken simultaneously to provide the supporting systems to the
insurance sector and in particular the insurance companies was the launch of th
e IRDA’s online services for issue and renewal of licenses to agents.
The approval of institutions for imparting training to agents has also ensured t
hat the insurance companies would have a trained workforce of insurance agents i
n place to sell their products, which are expected to be introduced by early nex
t year.
Since being set up as an independent statutory body the IRDA has put in a framew
ork of globally compatible regulations. In the private sector 12 life insurance
and 6 general insurance companies have been registered.

PURPOSE & NEED OF INSURANCE

Assets are insured, because they are likely to be destroyed, through accidental
occurrences. Such possible occurrences are called perils. Fire, flood, breakdown
, lightening, earthquake, etc. are perils. If such perils can cause damage to th
e assets, we say that the asset is exposed to that risk. Perils are the events.
Risks are the consequential losses or damages.
The risk to an owner of a building, because of the peril of earthquake, may be a
few crores of rupees, depending on the cost of the building and the contents in
it.
Insurance does not protect the asset. It does not prevent its loss due to the
peril. The peril cannot be avoided through insurance. The peril can
sometimes be avoided, through better safety and damage control management. Insur
ance only tries to reduce the impact of risk on the owner of the asset and those
who depend on that asset. It only compensates the losses- and that too, not ful
ly. Only economic consequences can be insured. If the loss is not financial, ins
urance may not be possible. Examples of non- economic losses are love and affect
ion of parents, leadership of managers, sentimental attachments to family heirlo
oms, innovative and creative abilities, etc.

ROLE OF LIFE INSURANCE

1. Life insurance as “Investment”
Insurance is an attractive option for investment. Which most people recognize th
e risk hedging and tax saving potential of insurance, many are not aware of its
advantages as an investment option as well. Insurance products yield more compar
ed to regular investment options.
You cannot compare an insurance product with other investment schemes for the si
mple reason that it offers financial protection from risks, something that is mi
ssing in non-insurance products. In fact, the premium you pay for an insurance p
olicy is an investment against risk. Thus before comparing with other schemes, y
ou must accept that a part of the total amount invested in life insurance goes t
owards providing for the risk cover, while the rest is used for savings.
2. Life insurance as “Risk cover”
o
First and foremost, insurance is about risk cover and protection –financial protec
tion, to be more precise – to help outlast life’s unpredictable losses. By buying li
fe insurance, you buy peace of mind and are prepared to face any financial deman
d that would hit the family in case of an untimely demise.
o
To provide such protection, insurance firms collect contributions from many peop
le who face the same risk. A loss claim is paid out of the total premium collect
ed by the insurance companies, who act as trustees to the monies.
o
Insurance also provides a safeguard in the case of accidents or
a drop in income after retirement.

3. Life insurance as “Tax planning”

•
Insurance serves as an excellent tax saving mechanism too. The Government of Ind
ia has offered tax incentives to life insurance products in order to facilitate
the flow of funds into productive assets. Under section 80(c) of Income Tax Act
1961,an individual is entitled to a rebate of Rs.1Lakh on the annual premium pay
able on his/her life and life of his/her children or adult children. The rebate
is deductible from tax payable by the individual or a Hindu Undivided Family (HU
F), the rebate is deductible from the tax liability of an
individual or a Hindu Undivided Family.

ADVANTAGES OF LIFE INSURANCE

Life insurance has no competition from any other business. Many people think tha
t life insurance is an investment or a means of saving. This is not a correct vi
ew. When a person saves, the amount of funds available at any time is equal to t
he amount of money set aside in the past, plus interest. If the money is investe
d in buying shares and stocks, there is the risk of the money being lost in fluc
tuation of the stock market even if there is no loss, the available money at any
time is the amount invested plus appreciation. In life insurance, however the f
und available is not the total of the savings already made (premium paid),but th
e amount one wished to have at the end of the saving period (which is the next 2
0 or 30 years).the final fund is secure from the very beginning. One has to pay
for it only as long as one life or for a lesser period if so chosen.
There is no other scheme which provides this kind of benefit therefore life insu
rance has no substitute. Even so, a comparison with other form of saving will sh
ow that life insurance has the following advantages:-
•
In the event of death, the settlement is easy. The heirs can collect the moneys
quicker, because of the facility of nomination and assignment.
•
The facility of nomination is now available for some bank accounts.
•
There is a certain amount of compulsion to go through the plan of
savings.
•
In other forms, if one changes the original plan of savings, there is no
loss.
Creditor can not claim life insurances moneys. They can be protected
against attachment by courts.
•
There are text benefits, both in income tax and capital gains. Marketability and
liquidity are better. A life insurance policy is property and can be transferre
d or mortgaged. Loan can be raised against the policy.
ulip
ULIP is an abbreviation for Unit Linked Insurance Policy. A ULIP is a life insur
ance policy which provides a combination of risk cover and investment. The dynam
ics of the capital market have a direct bearing on the performance of the ULIPs.
Unit Linked Insurance Policies (ULIPs) as an investment avenue are closest to mu
tual funds in terms of their structure and functioning. ULIPs is allotted units
by the insurance company and a net asset value (NAV) is declared for the same on
a daily basis.
Similarly ULIP investors have the option of investing across various schemes ,i.
e., diversified equity funds, balanced funds and debt funds to name a few. Gener
ally speaking, ULIPs can be termed as mutual fund schemes with an insurance comp
onent. However it should not be construed that barring the insurance element the
re is nothing differentiating mutual funds from ULIPs.
ULIPs are a category of goal-based financial solutions that combine the safety o
f insurance protection with wealth creation opportunities. In ULIPs, a part of t
he investment goes towards providing you life cover. The residual portion of the
ULIP is invested in a fund which in turn invests in stocks or bonds; the value
of investments alters with the performance of the underlying fund opted by you.
Simply put, ULIPs are structured in such that the protection element and the sav
ings element are distinguishable, and hence managed according to your specific n
eeds. In this way, the ULIP plan offers unprecedented flexibility and transparen
cy.

REMEMBER THAT IN A UNIT LINKED POLICY, THE INVESTMENT RISK

IS GENERALLY BORNE BY THE INVESTOR
Working of ulip
It is critical that you understand how your money gets invested once you
purchase a ULIP:
When you decide the amount of premium to be paid and the amount of life
cover you want from the ULIP, the insurer deducts some portion of the ULIP
premium upfront. This portion is known as the Premium Allocation charge, and var
ies from product to product. The rest of the premium is invested in the fund or
mixture of funds chosen by you. Mortality charges and ULIP administration charge
s are thereafter deducted on a periodic (mostly monthly) basis by cancellation o
f units, whereas the ULIP fund management charges are adjusted from NAV on a dai
ly basis.
Since the fund of your choice has an underlying investment – either in equity or d
ebt or a combination of the two – your fund value will reflect the performance of
the underlying asset classes. At the time of maturity of your plan, you are enti
tled to receive the fund value as at the time of maturity. The pie-chart below i
llustrates the split of your ULIP premium:
One of the big advantages that a ULIP offers is that whatever be your specific f
inancial objective, chances are that there is a ULIP which is just right for you
. The figure below gives a general guide to the different goals that people have
at various age-groups and thus, various life-stages.

Flexibility of ulip
Most unit linked policy holders opt for ULIPs because of the flexibility they of
fer. There is an option of making lump sum investment or paying regular premiums
using the systematic investment plans (SIP). In ULIPs also one can choose from
annual, half-yearly, quarterly or monthly premium payment options to suit your f
inancial needs.
Additionally, as a unit linked policy holder, you have the option of investing y
our units across various fund options such as equity fund, balanced fund, debt f
und and secure fund. During the tenure of your policy depending on your risk app
etite you can also switch investments from one fund to another. This gives you t
he flexibility of customizing your investment plan.

Payment of premiums is discontinued

a) Discontinuance within three years of commencement – If all the premiums have no
t been paid for at least three consecutive years from inception, the insurance c
over shall cease immediately. Insurers may give an opportunity for revival withi
n the period allowed; if the policy is not revived within that period, surrender
value shall be paid at the end of third policy anniversary or at the end of the
period allowed for revival, whichever is later.
b) Discontinuance after three years of commencement -- At the end of the period
allowed for revival, the contract shall be terminated by paying the surrender va
lue. The insurer may offer to continue the insurance cover, if so opted for by t
he policy holder, levying appropriate charges until the fund value is not less t
han one full year’s premium. When the fund value reaches an amount equivalent to o
ne full year’s premium, the contract shall be terminated by paying the fund value.
Charges, fees and deductions in a ULIP
1.Premium Allocation Charge This is a percentage of the premium
appropriated towards charges before allocating the units under the policy. This
charge normally includes initial and renewal expenses apart from commission expe
nses.
2.Mortality Charges These are charges to provide for the cost of
insurance coverage under the plan. Mortality charges depend on
number of factors such as age, amount of coverage, state of health etc
3.Fund Management Fees These are fees levied for management
of the fund(s) and are deducted before arriving at the Net Asset Value
(NAV).
4.Policy/ Administration Charges These are the fees for
administration of the plan and levied by cancellation of units. This could
be flat throughout the policy term or vary at a pre-determined rate.
5.Surrender Charges Surrender charge may be deducted for
premature partial or full encashment of units wherever applicable as
mentioned in the policy conditions.

6.Fund Switching Charge Generally a limited number of fund

switches may beallowed each year without charge, with subsequent
switches, subject to a charge.
7.Service Tax Deductions Before allotment of the units the applicable
service tax is deducted from the risk portion of the premium.
Investors may note, that the portion of the premium after deducting for all char
ges and premium for risk cover is utilized for purchasing units

Unit Fund
The allocated (invested) portions of the premiums after deducting for all
the charges and premium for risk cover under all policies in aparticular
fund as chosen by the policy holders are pooled together to form a Unit
fund.
Net Asset Value (NAV)
NAV is the value of each unit of the fund on a given day. The NAV of each
fund is displayed on the website of the respective insurers.
Types of Funds ULIP Offer
Most insurers offer a wide range of funds to suit one’s investment objectives, ris
k profile and time horizons. The following are some of the common types of funds
available along with an indication of their risk characteristics.
1.Equity FundsPrimarily invested in company stocks with the
general aim of capital appreciation, risk is Medium to High.
2.Income, Fixed Interest and Bond Funds Invested in
corporate bonds, government securities and other fixed income
instruments, risk is Medium.
.Cash Funds Sometimes known as Money Market Funds — invested
in cash, bank deposits and money market instruments, risk is Low
5. Balanced FundsCombining equity investment with fixed
interest instruments risk is generally Medium

BENEFITS OF ULIP
ULIPs provide an opportunity for the discerning investor to benefit from the
return available in their capital market without going for direct investments.
CUSTOMER SATISFACTION:
Market to your own Customer:
Giving a lot of thoughts to your marketing program aimed at current
customer is one aspect of building customers royalty.
U se Complaints to build Business:
When customers aren’t happy with your business they usually won’t complain to you-in
stead, they’ll probably complain to just about everyone else them – and take their b
usiness to your competition. That’s why increasing number of business are making f
ollow-up calls of mailing satisfaction questionnaires after the sale is made. Th
ey find that if they promptly follow up resolve a customer’s complaint, the custom
er might be even more likely to do business then the average customer who didn’t h
ave a complaint.
REACH OUT TO YOUR CUSTOMER:
Contact with current customer is a good way to Build their loyalty. The more the
customer sees someone from your firm, the more likely you’ll get the next order.
The more they know about you, the more they see you as someone out to help them,
the more they know about your accomplishments-the more loyal a customer they wi
ll be.
Building customer loyalty will be a lot easier if you have a royal workforce- no
t at all a given these days. It is especially important for you to retain those
employees such as sales peoples, technical support, and the customer-service peo
ple. Many companies give an attention to retaining
sales people but little to support people.

Historical Perspective
The history of life insurance in India dates back to 1818 when it was conceived
as a means to provide for English Widows. Interestingly in those days a higher p
remium was charged for Indian lives than the non-Indian lives as Indian lives we
re considered more riskier for coverage.
Insurance regulation formally began in India with the passing of the Life Insura
nce Companies Act of 1912 and the provident fund Act of 1912. Several frauds 20’s
sullied insurance business in Indian. By 1938 there were 176 insurance companies
. The first comprehensive legislation was introduced with the Insurance Act of 1
938 that provided strict State Control over insurance business. The insurance bu
siness grew at a faster pace after independence. Indian companies strengthened t
heir hold on this business but despite the growth that was witnessed, insurance
remained an urban phenomenon.
The Government of India in 1956 , brought together over 240 private life insurer
s and provident societies under one nationalized monopoly corporation and Life I
nsurance Corporation (LIC) was born. Nationalization was justified on the ground
s that it would create much needed funds for rapid industrialization . This was
in conformity with the Government’s chosen path of State lead planning and develop
ment.
The (non-life) insurance business continued to thrive with the private sector ti
ll 1972. Their operations were restricted to organized trade and industry in lar
ge cities. The general insurance industry was nationalized in 1972. With this, n
early 107 insurers were amalgamated and grouped into four companies- National In
surance Company, New India Assurance Company, Oriental Insurance Company and Uni
ted India Insurance Company and United India Insurance Company. These were subsi
diaries of the General Insurance
Company (GIC)