444comparative Study On ULIPs in The Indian Insurance Market For Tata AIG Life Insurance Company LTD

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A PROJECT REPORT ON
“
COMPARATIVE STUDY ON ULIPS IN THE INDIAN INSURANCE MARKET”
FOR
TATA AIG LIFE INSURANCE COMPANY LTD
BY
MISS DELNAAZ. PARVEZ. DOCTOR
MBA SEMESTER III
Project Guide
“Prof Vaishampayam”
In Partial Fulfillment of the Requirement of the
Two Year Full Time PGDM Programme
Of the
SMVIM, PUNE.
AY 2007-08
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PREFACE
As an essential and obligatory part of my course, I have undergone two months summer
training at Tata AIG Life Insurance Company Ltd, Pune. This training has helped me in getting
the practical knowledge into the business environment.
I got the knowledge about the Insurance industry. In this report I have said about the current
position of the insurance sector in India.
This report includes a deep study made on the ULIPs in the insurance market and its impact on
the person’s income.
1
TABLE OF CONTENTS
S.NO. CONTENTS
PAGE
NO.
1. Acknowledgement 3
2. Certificate from the company
4
5
Certificate from the college
3. Introduction
6
4. Company Profile 7-9
5. Research Methodology 10
6. Introduction to Insurance 11-17
7. About ULIPs
19-26
8.. Distinction between ULIPs & Mutual Funds
27-30
Comment on the Distinction
9. Comparative Analysis of ULIPs( Tata AIG with others)
31-43,44-
Growth & Returns
46, 47-51
Fund Performance
10 Overall Data Analysis and Findings 52
11. Understanding the working of ULIPs of TATA AIG 53-56
12. Market Survey on ULIPs of TATA AIG 57-62
13. Integrated Financial Planning for Life Insurance 63
14. Conclusion
64
15. Recommendations 65
16. Bibliography
66-67
17. Questionnaire
68-69
2
ACKNOWLEDGEMENT
It has been an immense pleasure and truly enriching experience doing my project with
TATA-AIG
LIFE INSURANCE COMPANY LTD, PUNE
I take this opportunity to thank all those people who have made this experience a
memorable one..
Firstly, I would like to extend my sincere and hearty thanks to:
Mr.Parikshit Abroal (Cluster Head – Agency, Tata-AIG Life Insurance), and Mr. Nitish
Beohar (Senior Manager BA) who gave me an
opportunity to associate myself with the
Tatas.
I would like to thank my guide Miss.Anamika Dikshit (Assistant Business Manager,
Tata-AIG Life Insurance) without whose help it would be difficult to complete this
project. I am very grateful to her for being a constant trainer and motivator for me for
successful completion of the project. During the course of time she has given me
valuable tips related with my project and she was more like a friend who guided me
throughout the project.
This gratitude will remain uncompleted if I won’t mention the names of other persons
Who helped me not only in my projects but also motivated me.
I would like to thank
Mr. Rahul Bendre (Business Manager – Tata- AIG Life Insurance),
Mr. Kaizad S. (DCM, Kotak Mahindra Old Mutual Life Insurance Ltd.) and
Mrs.Benaifer.S
(Senior Officer, Finance Control, Societe Generale Corporate and
Investment Banking) who provided me guidance and support from time to time.
Last but not the least I extend my special gratitude to The Advisors of Tata-AIG Life
Insurance Mr. Shrikant Verma, Mr. Sudhir Chavan, Mr. Dattatray.Phule and Mr.Vikram
Balwadkar who have contributed a lot in my project completion and the other advisors
who co- operated with me to carry out the market research and the library staff of
St.Miras College.
Delnaaz Doctor
3
Certificate from the Company

4
5
C
INTRODUCTION
The insurance plays a major role in the life of the humanity. Slowly people stared to realize the
necessity of the insurance and these needs are unending as long as life exists. In fact insurance is
not restricted for any category neither of the society nor in term of cast, ages or life styles. Also
many people have a notion that Insurance is very good form of an investment, which is not right.
Insurance is just creating a protection for you and your family.
As Indian investors are now more exposed to the capital markets and have started understanding
its working, they want to multiply their money rapidly.
This can be done through Unit Linked Insurance Plans (market linked plans ) introduced by the
Insurance Players.
Therefore the only reasons for selecting this topic are
•
To get more knowledge about insurance sector in India
•
To undergo a comprehensive study of ULIPs.
•
To get experienced of corporate scenario.
6
COMPANY PROFILE
Getting associated with a brand like Tata –AIG for just 2 months was really a
prestigious and a memorable period in my MBA tenure. Growth has been the main objective of
the company and will continue to be the driving force in the years to come by spreading the
wings wider in India and contribute in the economic and social development.
Tata- AIG LIFE Insurance Company is a joint venture between
Tata Group and American International Group (AIG.)
Let’s throw light on the facts of both the high profile and prestigious companies.
The Group: TATA-
The name trusted all over the country over the years.
For over 130 yrs The TATA name has stood for Leadership with Trust. As a
business group it has traversed 3 centuries and has emerged as India’s most
respectable corporate group.
.
It is a strong believer in ethics and its profits are placed in philanthropic trusts
Some of the features of TATA are:
•
Over 260,000employees
•
Operates in 130 countries worldwide
•
Trusted by over 3 million shareholders
•
Diversified business interest ( 92 companies)
•
Largest FOREX earner
•
Revenues of US $ 14.25 billion
•
Deep rooted commitment towards society.
7
The Group: AIG
American International Group is a leading US based international
insurance and financial services organization and the largest
underwriter of commercial and industrial insurance in the United
Some of the features of AIG are:
•
In business since 1919,
•
Over 80,000 employees worldwide
•
Presence in over 130 countries
•
Over 50 million customers worldwide
•
Revenues over US $ 81.3 billion
•
Ranks 4
on the FORBES 500 LIST OF 2003.
th
•
Deals in General and life insurance, asset management, financial services.
Tata-AIG LIFE INSURANCE
It is a joint venture between TATA and AIG. It provides insurance cover for both for life
and group. It deals in all kinds of products. And now concentrates more on UNIT LINKED
PLANS.
It is Tata-AI G which consumers trust the more when it comes to giving exact claim
valuation, best in consumer satisfaction and trusted as the best in quick disposal of claims.
Its working is based on Business brought up by Business Associates who are the
advisors/agents for the company.
Areas of business
Tata AIG Life Insurance products include a broad array of life insurance coverage to both
individuals and groups. For groups, the company has life products whereas for individuals,
it has term products, endowment products as
well as money-back products. For groups and
individuals, various types of add-ons and options are available to give consumers
flexibility and choice. The company has also designed specific products for the financially
challenged and underprivileged.
8
Some of the features are:
•
74% Stake of TATAs and 26% of AIG
•
Licensed to operate on February 12, 2001
•
Has over 190 branches and planning to increase the number to 120 plus by August
2007 , and 300 plus by November 2008.
•
Over 5 lac + policy holders.
Tata AIG is all set to scale greater heights and has arrived at a vision of making it
A BILLION DOLLAR COMPANY BY 2009
A glimpse at the Joint Venture
AIG (26%)
TATA (74%)
Martin J. Sullivan
Ratan Tata
President & Chairman
Chairman CEO
Tata- AIG INSURANCE
Farrokh K Kavarana
Chairman
Tata-AIG GENERAL
Tata-AIG LIFE
INSURANCE
INSURANCE
Dalip Verma
Trevor Bull
Managing Director
Managing Director
9
RESEARCH METHODOLOGY
•
Research design
–descriptive
•
Data sources
- primary data and secondary data
•
Research approach
– face to face interview, observation, individual depth interview
•
Research instrument
–questionnaire.
Data Collection:
Primary Data:
1) Use of a Questionnaire for carrying out a survey
2) Presentation given by the Advisors of Tata AIG life.
3) Data explaining the working of the ULIPs.
Secondary Data:
1) Books
2) Newspapers
3) Magazines
4) Newsletter
5) Internet
6) Television
7) Booklet
8) Policy Brochures
This project is about studying the insurance industry which is on the boom .
The introductory part contains the meaning of insurance, its evolution, some,
Statistics of Indian insurance Industry.
The project deals the comprehensive analysis of the ULIP schem es, what is ULIP all
about, its NAV performance, the Growth, performance of the policies since their
inception, its working, its popularity and a market survey.
The project contains various graphs, tables and questionnaire to further.
elaborate on the explanations.
10
INTRODUCTION TO INSURANCE
Today, only one business, which affects all walks of life, is insurance business. That’s
why insurance industry occupies a very important place among financial services operative in
the world. Owing to growing complexity of life, trade and commerce, individuals as well as
business firms are turning to insurance to manage various risks. Therefore a proper
knowledge of what insurance is and what purpose does it serve to individual or an
organization is therefore necessary.
The fut ure is never certain .
So it’s rightly said, “AN INSURANCE POLICY IN HAND KEEPS THE
TENSION AWAY.”
Insurance, essentially, is an arrangement where the losses experienced by a few are
extended over several who are exposed to similar risks. Insurance is a protection against
financial losses arising on the happening of an unexpected event. Insurance companies
collect premium to provide security for the purpose. In simple words it is spreading of
risks amongst many people.
i) LIFE INSURANCE:
It is a fundamental part of a sound financial plan which helps to
insure your loved ones.
Dying too soon
Dying too soon
Living too long
Living too long
Living d eath
Living d eath
Life insurance – the only instrument that takes care o f
Life insurance – the only instrument that takes care o f
Life insurance – the only instrument that takes care of
Life insurance – the only instrument that takes care of
these 3 probabilities and 2 priorities
these 3 probabilities and 2 priorities
these 3 pro babilities and 2 priorities
these 3 pro babilities and 2 priorities
11
ii) Benefits:
1) SAVINGS
For unforeseen circumstances.
2) EDUCATION
For child’s education and for higher studies.
3) RETIREME NT
Facilitates adequate savings for worry free retired life.
iii) Insurance ------ --- -- -a Flash back:
The earliest transaction of insurance as practiced today can be traced back to the 14
th
century AD. The business of insurance started with marine business by Traders who
used to gather in the Lloyd’s coffee house in London, wherein they had agreed to insure
their ships in transit.
The 1
Life Insurance Policy was issued on 18
June, 1583, on the life of
st
th
William Gibbons for a period of 12 months.
Life Insurance in its current form came in India from the UK, with the
establishment of British firm,
Oriental Life insurance Company, in 1818
The 1
Indian insurance company was the Bombay Mutual Assurance Society Ltd,
st
formed in 1870.
By the year 1956, when the life insurance business was nationalized and the
Life
Insurance Corporation Of India ltd (LIC)
was f ormed on 1
September, 1956 and
st
there were 245 companies existing at that time in India.
By 31. 3. 2002, eleven new insurers had been registered and had begun to transact
Life insurance business in India.
12
)
I
C
IV
NSURANCE
LASSIFICATION
Life
Term
Endowment
Unit-linked
Money-back
)
I
V
NSURANCE INDUSTRY POTENTIAL
1) Asia is amongst the world’s largest insurance markets contributing nearly 39% of global
insurance business.
2)The Life Insurance Industry has grown by 27% p.a. over the last 5 years and by about 62%
in the first eleven months of 2006 -07.
Source – IRDA Journal (April 2007)
3) Global Life Insurance Market: $1,521 billion, Global Non-Life Insurance Market: $922
billion
4) India is 23
in insurance business with 0.41% share
rd
5) Out of one billion people in India, only 35 million people are covered by insurance.
6) India’s life insurance premium as a percentage of GDP is just 1.8%
7) Indian insurance market is set to touch $50 billion by 2010, on the assumption of a 7%
growth in GDP
(CII Projections 2001-2002)
8) The Insurance premium as a % of GDP in 2005 increased to 3.14% and is set to touch
4.3% in 2008.
(Source – Lifeline 26
Dec 2006)
th
13
Growth Rate of Insurance sector
•
Public Sector: 5.5%
•
Private Sector: 57.4%
Indian Insurance is growing at the rate of 80%.
L
I
C
I
IFE
NSURANCE
OMPANIES IN
NDIA
1.Life Insurance Corporation of India
Private Players
2. Tata AIG Life Insurance Company Ltd
3. Kotak Mahindra Old Mutual Life Insurance Ltd
4. Birla Sun Life Insurance
5. ICICI Prudential Life Insurance
6. Aviva Life Insurance
7. Allianz Bajaj
8. Max New York Life Insurance
9. Bharti Axa Life Insurance
10. SBI Life Insurance
11. Reliance Life Insurance
12. ING Vysya Life Insurance
13. Sahara India Life Insurance
14. HDFC Standard Life Insurance
15. Shriram Group
14
MARKET SHARE FOR 5 YEARS.
2001-02
2002-03
2003-04
2004-05
2005-06
LIC
98% 94% 87% 78% 71%
2% 6% 13% 22% 29%
Private
Player
M
S
I
I
P
ARKET
HARE OF
NDIAN
NSURANCE
LAYERS
Market Share of public sector and Private sector Insurance Companies for 2006-07
market share
LIC PRIVATE
PRIVATE
26%
LIC
74%
15
MARKET SHARE OF PRIVATE INSURANCE COMPANIES 2006-07
ICICI Prudential life
1.22%
Aviva Life
0.01%
Tata AIG Life
Reliance Life
3.40%
6.97%
Kotak Mahindra
0.06%
Birla Sun Life
2.15%
ING Vysya Life
0.24%
Met Life
0.96%
Bajaj Allianz Life
0.85%
Shriram Life
5.66%
HDFC Standard Life.
4%
sahara Life
0.46%
0.82%
SBI Life
0.62%
Bharati AXA life
1.17%
Max New York
Source: ESCOLIFE (Insurance newspaper by Ritu Nanda, June 2007)
)
Thus we can say that LIC has the highest market share of 74% (public sector
and ICICI Life
Insurance has a highest market share of 6.97%(private sector)
16
COMPETITOR’S COMPARISION
LIC ranks 1
(public sector) in case of the premiums followed by ICICI PRU in the
st
private
Sector whereas Tata AIG Ranks 10
.
th
17
Comparative Study on
ULIPS
In the Indian Insurance
Market
18
CHAPTER 1
ABOUT UNIT LINKED INSURANCE PLANS
1.1) INTRODUCTION
ULIPS also known as UNBUNBLED, VARIABLE INSURANCE PLANS has possibly
been the single largest innovation in the field of life insurance in the past several decades. It
wasn’t too long back, when the good old endowment plan was the preferred way to insure
oneself against an eventuality and to set aside some savings to meet one’s financial
objectives. Then insurance was thrown open to the private sector. The result was the launch
of a wide variety of insurance plans, including the ULIPs.
Two factors were responsible for the advent of ULIPs on the domestic insurance horizon.
First was the arrival of private insurance companies on the domestic scene. ULIPs were one
of the most significant innovations introduced by private insurers. The other factor that saw
investors take to ULIPs was the decline of assured return endowment plans.
These were the two factors most instrumental in marking the arrival of ULIPs, but another
factor that has helped their cause is a booming stock market. While this now appears as one
of the primary reasons for their popularity, it is believed that ULIPs have some fundamental
positives like enhanced flexibility and merging of investment and insurance in a single entity
that have really endeared them to individuals. ULIPs came to play in the 1960s and became
very popular in western Europe and Americas.
19
1.2)
MEANING OF ULIPS
A policy, which provides for life insurance where the policy value at any time varies
according to the value of the underlying assets at the time. ULIP is life insurance solution that
provides for the benefits of protection and flexibility in investment. The investment is
denoted as units and is represented by the value that it has attained called as Net Asset Value
(NAV). In order to offset the erosion of money, ULIPS are introduced. The Sum Assured is
expressed in units whose price is linked to an inflation related index.
In today’s times, ULIP provides solutions for insurance planning, financial needs,
financial planning for children’s future and retirement planning.
Features of ULIPs distinguish itself through the multiple benefits that it provides to
the customer which are as follows
•
Life protection
•
Investment and Savings
•
Flexibility
•
Adjustable Life Cover
•
Investment Options
•
Transparency
•
Options to take additional cover against- Death due to accident- Disability- Critical
Illness- Surgeries·
•
Liquidity·
•
Tax benefits.
According to Vijay Sinha, Asst Director Agency, Tata – AIG LIFE Insurance,
“ULIPs is ideal for some one who is looking for a long term investment product, is
under insured and is averse to taking a traditional life plan. ULIP should be looked at
from both an investment as well as insurance point of view and not in isolation.”
Today many individuals are adding ULIPs to their portfolios to generate wealth.
and protection over a long time.
20
1.3
ULIPS VERSUS ENDOWMENT
)
The following points help us to get a better idea how ULIPs differ from Traditional
(Endowment Plans)
1
)
SUM ASSURED:
This is the most fundamental difference between ULIPs and the traditional plans.
In case of endowment the agent will ask you “HOW MUCH INSURANCE
COVER DO YOU NEED?” & the premium is calculated as per the estimated sum
assured.
In case of ULIPs you are asked “HOW MUCH PREMIUM CAN YOU PAY?” &
accordingly the Sum Assured is estimated.
2) INVESTMENTS:
Endowment plans invest in
•
Government Securities
•
Corporate bonds
•
Money market instruments
( no investment in the stock market)
ULIPs invest in
•
Equities
•
Bonds
•
G-secs
•
Money market.
3) FLEXIBILITY:
In case of ULIPs the investor can choose the fund in which he wants to
allocate his portfolio. He can go for pure Equity, or a combination of debt-
equity ,depending on his requirements.
The investor also has the option of switching from one fund to another .
Usually Free switches are given during the year.
This option is not available in case of Endowment.
21
4)
TOP UP FACILITY:
A top up is a one time additional investment in the ULIP over and above the annual
premium. This feature works well when you have a surplus that you are looking to invest in a
market linked avenue, rather than keeping in an FD or Savings account.
This feature is not for Endowment.
5)
TRANSPARENCY:
ULIPs are more transparent than Endowment Plans as their NAV is declared
EVERYDAY. As a result you can know how your ULIP has performed.
In case of Endowment, the insurance company sends you an annual statement of bonus
declared during the YEAR. , which gives us an idea how our plan is performing.
6) LIQUIDITY:
Since ULIPs investments are NAV based it is possible to withdraw a portion of Your
investments before maturity (after 3yrs lock in period is over).The withdrawal is possible
provided the minimum fund value is maintained.
In case of Endowment, you can only Surrender your policy, but you wont get
everything that you have earned on your policy in terms of premium and bonus. The
Surrender Value is much less than the Sum Assured and the Bonus is also not paid.
THUS investing in ULIPs or in ENDOWMENT depends on the person’s RISK
taking ability.
A Risk Averse person may go for an Endowment, Whereas a person who
wants his corpus to appreciate and is ready to take risks can go for ULIPs.
Therefore we can say that investing in ULIPs is the best in a growing Economy as
compared to the TRADITIONAL PLANS.
22
1.4) ULIPS AND YOU
IRDA has played a part in making ULIPs more investor friendly. Today more individuals
are opting for ULIPs to create wealth over a long term. Over here I have outlined how ULIPs
can help you to fulfill that responsibility.
1.4.1)
If you are between 25 –35 years of age
ULIPs help you to save for your child’s education, marriage, planning for your retirement and
providing for your family in case of your absence.
ULIPs Child plan ------------- --------for your child’s education, marriage.
ULIPs Endowment plan------------- for helping you to meet investment objectives like buying
a house or setting up a business.
ULIPs Pension plan-------------------for your retirement. A long term retirement planning
could be done with an Equity push, as it is necessary to build up a strong corpus to face your
rigorous retirement.
1.4.2)
If you are between 35 –45 years of age
If you haven’t invested in ULIPs, it is not too late even now.
You can opt for some ULIPs as mentioned earlier. Remember ,unlike Endowment
,which gets really expensive at an advanced age, ULIPs because of the way they are , do not
turn out to be expensive.
1.4.3
) If you are above 45 years of age
In this age bracket, you have to review your insurance cover, taking into consideration
the changes of your life style, income needs, etc. By this time your ULIP pension plan must
have matured, so now you can opt for an Annuity (immediate or deferred) depending on your
need.
23
1.5) EXPENSES IN ULIPs
Following expenses have to be incurred for ULIPs:
a) Mortality charges: charged by the company to cover the risk of an eventuality to an
individual.
b) Administration Charges: charged by the company to cover the daily expenses,
overhead costs, agent’s commission etc.
c) Fund Management charges: are levied by Insurance companies to cover the expenses
incurred by them in managing ULIP monies. Charges are high for managing monies
in an Equity Fund.
d) ULIP Fund switch charges: Such are borne by the individuals when they decide to
switch their money form one type of find to another.
e) Top up Charges: A certain % is deducted from the Top up amount to recover the
expenses incurred on managing the same.
f) Cancellation/ Surrender charges: It is charged when an individual wishes to surrender
his ULIP policy.
24
1.6) HOW ULIPS MANAGE MONEY
ULIPs are different from traditional plans.
They invest their monies in Shares, bonds, G-secs, money market instruments in
varied proportions.
Insurance companies usually maintain 4 types of funds.
Growth Fund: 100% equity
Balanced Fund: 60% equity, 40% debt.
Debt Fund: 100% debt.
Money Market Funds 100% MM instruments for a period of one
year
Equity
RISKS
Balance
d
Debt
Money
Market
RETURNS
In case of equity, the risk and return is the highest, and vice verse for Money market
instruments.
It is a principle of Financial management, the higher the risks you take , the higher the return
you get.
25
1.7) STEPS FOR ULIP SELECTION
•
Understand what ULIPs are all about.
•
Focus on your need and risk profile
•
Compare ULIP products from various insurance companies
•
Go for an experienced Insurance advisor
It is estimated that India’s economy will become the 3
largest economy within a few
rd
yrs, with a high GDP growth and a low inflation rate, followed by booming stock
market (SENSEX soaring as high as 20,000 points). So right time to increase your
wealth and become rich starts from today. And ULIPS are the best to invest in.
26
CHAPTER 2
DIFFERENCE BETWEEN ULIPS & MUTUAL FUNDS:-
Points of Difference ULIPS(Unit Linked Insurance Plans) MFs(Mutual Funds)
1) Meaning :-
These are the Insurance policies which are linked to units
It is an investment organization with a main
of Mutual Fund.
objective of collecting funds from various segments
of people and investing the same in a variety of
securities.
2) Primary Objective :-
Its main objective is investment & protection
Its objective is only investments.
3) Investment Duration:-
It works out for long term investment only . It works out to medium term, long term, & short
term. Risky for short term investors.
4) Insurance Cover :-
ULIPs provide insurance cover (except annuity products
which may be issued with/ without risk cover) and from
MF schemes do not cover the life risk and the amount
the amount invested in ULIPs after netting out the risk
invested, net of expenses, gets invested as per the
premium for life risk cover and administrative expenses,
investment objective of the scheme.
the insurer invests the balance as per the objective of the
specific ULIP product.
5) Expenses :-
Insurance companies have a relatively free hand in
In MFs, expenses charged for various activities like
levying expenses on their ULIP products with no upper
sales/marketing, administration and fund
limits being prescribed by the regulator
the Insurance
management are capped (for example in equity-
,
Regulatory and Development Authority (IRDA)
oriented mutual funds, expenses are capped at 2.5%
27
per annum) as per the guidelines of the Securities and
Exchange Board of India (SEBI). Similarly funds
usually charge their investors entry (at the timing of
making an investment) and exit (at the time of sale)
loads.
6) Flexibility :-
Flexibility is limited to moving across different funds
Very flexible. Plenty of scope to correct mistakes if
offered with policy. Correcting mistakes can turn out to
any wrong investment decisions are made. Portfolios
be expensive. Moving funds from one ULIP to another
can be easily shuffled in MFs.
ULIP of a different fund house can be expensive.
7) Liquidity :-
Limited liquidity .It need to stay invested for minimum
Very liquid. MF units can be sold any time(except
years before redeeming.
ELSS).
8) Investment Objective
ULIPs can be used for achieving only long term
MFs can be used as vehicle for investments to
objectives (Children education, marriage, Retirement
achieve different objectives.(E.g.: Buying a car three
:-
planning).
years from now. Down payment for a home five
years from now. Children’s education 10 years from
now. Children’s marriage 15 years from now.
Retirement planning 25 years from now. Medical
expenses after retirement 25 years from now).
9) Flexibility of Switch-
Insurance companies permit their ULIP investors
In MFs an investor usually is subjected to exit load
usually 3-4 switch overs free of charge and thereafter
and/or entry load when he/she exercises a switch over
overs :-
every additional switch over beyond the permissible limit
option.
is permitted at some cost.
10) Minimum Lock- in
ULIPs currently are with a minimum lock-in of three
MF schemes (except ELSS which has a lock-in of
years.
three years) do not have any such lock in.
Period
28
11) Investment styles
Insurance companies declare their portfolios once in a
Most MFs usually declare their portfolios on monthly
quarter and their investment style are less aggressive and
basis and MFs are generally known to be more active
and Portfolio
they resort to less churning.
in fund management
Disclosures :-
12) Tax benefits and
Irrespective of the nature of the plan chosen by the
In the case of mutual funds, only investments in tax-
investor, all ULIP investments qualify for deductions up
saving funds i.e Equity-linked savings schemes
implications :-
to one lakh under Section 80C of the Income Tax Act. In
(ELSS) are eligible for Section 80C benefits
the case of ULIPs the maturity proceeds are tax-free.
On the other hand, in the case of equity-oriented
mutual funds, if the investments are held for a period
over 12 months, the gains are tax free and if sold
within a 12-month period they attract short-term
capital gains tax @ 10 percent.
Similarly, debt-oriented funds attract long-term
capital gains tax @ 10 percent while short-term
capital gain is taxed at the investor’s marginal tax
rate.
29
. The liquidity that these
Mutual funds are essentially short to medium term products
products offer is valuable for investors.
ULIPs,
in contrast, are now positioned as
long-term products
and going ahead, there
will be separate playing fields for ULIPS and MFs, with the product differentiation
between them becoming more pronounced.
ULIPs now do not seek to replace mutual funds, they offer protection against the risk of
dying too early, and also help people save for retirement.
Insurance has to be an integral part of one’s wealth management portfolio. ULIPs and
mutual funds are, therefore, not likely to cannibalise each other in the long run.
While ULIPs as an investment avenue is closest to mutual funds in terms of their
functioning and structure, the first and foremost purpose of insurance is and will always
be
‘protection’.
The value that it provides cannot be downplayed or underestimated. As
an instrument of protection, insurance provides benefits that no investment can offer.
It is important for an investor to understand his financial goals and horizon of investment
in order to make an informed investment decision. The decision to invest in either a
mutual fund or a ULIP should depend on the time period of investment, individual
financial goals as well as risk taking appetite, and it’s about time the industry and
customer realize it.
CHAPTER 3
COMPARATIVE ANALYSIS OF ULIPS
This chapter covers the comparison of ULIPs of 4 Insurance companies, how much growth
the fund has showed since its
Inception, returns for a period of one month compared with the market and tracking of the
NAVs for a period of one month.
Initially ULIPs were started by a few private players way back in 2001-02.
But now almost every Insurance company has got ULIPS suiting the varied requirements of
the customers.
If one has to choose among the ULIP schemes provided by the insurance, it is necessary to do
a through
comparison
to choose the right one for you.
ULIPs of 4 top performing insurance are taken for comparison.
1) TATA-AIG--------------------- Invest Assure II
2) ICICI PRUDENTIAL--------- Life Time Super
3) RELIANCE LIFE ------------- Automatic Investment Plan
4) LIC-------------------------------- Market Plus
Besides these TATA –AIG also provides some other ULIPs which are as follows:
•
Invest Assure Gold
•
Invest Assure Plus
•
Invest Assure
31
Tata – AIG Life Insurance
ICICI Prudential
Reliance Life
Life Insurance
Company
Corporation
(
(Invest Assure II)
(Life Time Super)
(Market Plus)
Automatic Investment Plan)
1) Policy objective :-
It is a unique, flexible insurance
A regular unit linked insurance
The plan promises enhanced life
The unique plan promises a safe
plan which combines security of
policy that offers flexible
cover with complete flexibility to
and a tension free life along
life with the opportunity to exploit
investment options along with the
gain control over your
with a good amount of wealth
the upside of the market returns by
benefit of life insurance cover,
investments in tune with your
creation.
investing in different kinds of
and an opportunity to earn
financial needs and your risk
securities through multiple fund
potentially higher returns on your
appetite.
options.
investment without sacrificing
the protection of your family.
2
) Eligilibility Criteria
(Minimum, Maximum age at
entry):-
Min age= 30 days
Min age= 0
Min age= 0
Min age= 18 years complete
Max age= 45,55,65 years
Max age= 65 years
Max age= 65 years
Max age= 70 years (age nearer
birthday)
3) Policy term :-
15, 20, 30 years
10- 75 years 40- 75 years 5-30 years
4) Premium (Minimum):-
32
Rs 12000 pa
Rs 18,000 pa Rs. 10000 pa Rs 5000 pa
5) Mode of Premium
Payment:-
Annually, half yearly, quarterly,
Annually, half yearly, monthly.
Annually, half yearly, quarterly,
Annually, half yearly, quarterly.
monthly.
monthly
6) Sum Assured (Minimum,
Maximum):-
It is the multiple of annual regular
Min: Annual Premium* Term/2,
Min: Annualized premium for 5
Min: Rs 50000 for regular
premium payable.
subject to a min of Rs.100, 000.
yrs or annualized for half of the
premium
policy term, whichever is the
Max: 20 times of the annualized
highest.
premium.
Max: no limit
7) Benefits :-
Maturity: Total Fund Value + Top
Maturity: Total Fund Value +
up if any.
Top up if any.
Top up if any.
Top up if any.
Death: Fund Value or Sum assured
Death: Fund Value or Sum
whichever is higher
assured whichever is higher
Sum Assured is a multiple of
regular premium payable.
8)Riders
:-
Accidental Death Benefit
Accident & Disability Benefit
Accident Death & Accidental
Accident Benefit.
Accidental Death &
Critical Illness
Total & Permanent Disablement
Dismemberment
Waiver of premium
benefit.
33
Waiver of premium
Term life insurance benefit
Payor Benefit
Critical Illness
9) Fund options :-
Option of choosing from 5 funds or
We offer you 6 investment funds.
Tailor made and Readymade
Growth Fund
: Debt (0-40%)
a combination of them.
funds.
Equity (60-80%)
Equity fund
: Equity shares.(100%)
Flexi Growth
: Equity & Related
Tailor Made
:
Securities Debt, Money Market
Money Market (100%)
Balanced Fund:
Debt (0-70%)
Income fund
: Government Bonds
& Cash (80-100%).
Gilt (100%)
Equity (30-50%)
& Fixed Income Instruments. .
Corporate (100%)
(100%)
Maximiser:
Equity & Equity
Equity ( 100%)
Secured Fund
: Debt (0-85%)
Related Securities Debt, Money
Equity (15-35)
Aggressive growth fund
: Equity
Market & Cash (25%-100%)
Readymade:
(50-80%), Government Bonds (20-
Fund A
Bond Fund:
Debt (100%)
50%).
Flexi Balanced
: Equity &
Fund B
Equity (0%)
Fund C
Stable Growth Fund
: Government
Market & Cash (60-100%)
Bonds (50-70%), Equity (30-50%)
Balancer:
Equity & Equity
Short Term Fixed Income Fund
:
Government securities & Fixed
Market & Cash (40-100%)
Income Instruments (100%),
Money Market Instruments (20%).
Protector:
Debt, Money Market
& Cash (100%)
34
Preserver
: Debt, Money Market
& Cash (50-100%)
10) Surrender option/ partial
withdrawal option :-
Allowed only after 3 years form the
Allowed only after 3 years form
date of issuance of the policy.
the date of issuance of the policy
the date of issuance of the policy
the date of issuance of the
and on payment of full 3 yrs
and on payment of full 3 yrs
policy and on payment of full 3
Surrender charges are a percentage
premium
premium
yrs premium.
of regular premiums—Fund value.
.
Partial withdrawal can be done
The surrender value or the partial
Charge Applicable for 6 yrs---20 or
up to min of Rs 2000.
withdrawal value is equal to the
30 yr policy
Fund value.
Charge Applicable for 5 yrs----15
yr policy
Surrender & partial withdrawal
Partial withdrawal facility is not
available
available.
available
available
Min of up to 4 partial withdrawals
available.
11) Reinstatement/ Revival :-
In case the policy lapses, you can
If full premium for the first 3
You may revive the policy
A lapsed policy can be revived
reinstate it
within 5 years
from the
policy years is not paid, the
within 3 years
from the 1st
within
2 years
fro the date of
date of lapse. If you are unable to
policy lapses.
unpaid premium.
the first unpaid premium. Or
reinstate the policy within 5 years,
Therefore the policy has to be
If not revived, then the policy
gets surrendered.
35
then the policy will be surrendered.
revived
within a period of 2
will be terminated.. And the
years, if
not then the policy will
policy will be surrendered.
In case of lapse, only the Fund
be surrendered.
Value will be given on death. (no
SA)
In case of lapse, only the Fund
Value will be given. (no SA)
.
12) Premium Holiday:-
After completion of 3 years of the
This option is available here,
The policy brochure has no
The policy brochure has no
policy, if you are unable to pay the
which ensures that your life
mention of premium holiday
mention of premium holiday.
premium within the grace period,
insurance cover continues incase
then a Premium Holiday facility is
you are unable to pay the
given with a charge of 3% of the
premium, after completion of 3
regular premium.
years of the policy.
The option here is called A Cover
Continuance option.
13) Free look Period :-
The policy can be cancelled within
The policy can be cancelled
a free look period of
15 days
form
within a free look period of
15
15
15
the date of receipt of the policy.
days form the date of receipt of
days form the date of receipt of
days form the date of receipt
The market value of the invested
the policy
the policy
. The market value of
of the policy
premiums along with the charges
the invested premiums along with
paid will be refunded after making
the charges paid will be refunded
some nominal deductions.
after making some nominal
deductions
36
14) Grace Period: -
Here the grace period provided is
Nothing is mentioned about the
For regular premiums the grace
Nothing is mentioned about the
for 31 days.
grace period in the policy
period is for 30 days,
grace period in the policy
brochure.
For monthly premiums grace
brochure.
period is for 15 days
15) Settlement Benefits :-
You have the option to receive your
On maturity of the policy, you
You have the option to receive
maturity benefit either in lumpsum
can choose to take the fund value.
your maturity benefit either in
or in the from of periodical
lumpsum or in the from of
payments over period of time.
You can opt to get payments on
periodical payments over period
This period will not exceed 5 years
yearly, half yearly, quarterly or
of time . This period will not
from the maturity date.
monthly (through ECS) basis, for
exceed 5 years from the maturity
a period of 1,2,3,4 or 5 yrs, post
date.
maturity.
At any time during settlement
period, you have the option to
withdraw the remaining fund
value.
16) Premium Redirection: -
Re direction of all the future
No benefit Re direction of all the future
No benefit
premiums under a policy, in an
premiums under a policy, in an
alternative proportion to the various
alternative proportion to the
Fund units is available
various Fund units is available.
37
17)Top Up premium:-
Minimum top up amount is Rs
Amount not mentioned. Minimum top up amount is Rs
Minimum top up amount is Rs
10,000
2500
1000.
18) Tax Benefits:-
Premiums paid under the policy are
Premiums paid under the policy
eligible for tax benefit u/s 80C of
are eligible for tax benefit u/s
the Income Tax Act, 1961.
80C of the Income Tax Act,
80C of the Income Tax Act,
80C of the Income Tax Act.
Life insurance proceeds are tax free
1961.
1961.
Life insurance proceeds are tax
u/s 10(10D).
free u/s 10(10D).
free u/s 10(10D)
free u/s 10(10D).
38
19)CHARGES
Most of the life insurance companies incur certain charges which are as follows:
a) MORTALITY CHARGES
b) FUND MANAGEMENT CHARGES
c) SWITCH OVER CHARGES
d) POLICY ADMINISTRATION CHARGES
A GRAPHICAL REPRESENTATION WILL MAKE THE CHARGES
UNDERSTANDABLE AND EASY TO COMPARE
39
a) MORTALITY CHARGES
MORTALITY CHARGES (Rs)
AGE Tata AIG
ICICI
Reliance
(Automatic
( Invest Assure II)
(Life Time Super)
Investment Plan)
20yrs 1.05 1.33 1.117
30yrs 1.17 1.46 1.287
40yrs 2.15 2.48 2.36
50yrs 5.53 5.91 6.085
MORTALITY CHARGES
20
18
16
14
12
Reliance
10
ICICI
T ata AIG
8
6
4
2
0
20yrs 30yrs 40yrs 50yrs
AGE
Interpretation:
The mortality charges of Reliance (Automatic Investment Plan) are the highest whereas The
charges of Tata AIG
(Invest Assure II) is the least.
40
b) FUND MANAGEMENT CHARGES
(Only for Equity Fund)
FMC (pa) FOR EQUITY FUND ONLY
Tata AIG
( Invest Assure II)
1.75%
ICICI
(Life Time Super)
2.25%
Reliance
(Automatic Investment
1.50%
Plan)
LIC
(Market Plus)
1.50%
FMC CHARGES
2.50%
2.25%
2.00%
1.75%
1.50% 1.50%
1.50%
CHARGES
1.00%
0.50%
0.00%
Tata AIG ICICI Reliance LIC
COMPANY
Interpretation:
ICICI have the highest FMC whereas Charges of Tata AIG are comparatively
higher than the other two.
41
c) SWITCH OVER CHARGES
Tata AIG ( Invest
ICICI (Life Time
Reliance
LIC (Market Plus)
Assure II)
Super)
(Automatic
Investment Plan)
The first
4
switches
The first
4
switches
The first
25
The first
4
switches
per policy will be
per policy will be
switches per policy
per policy will be
free.
free.
will be free.
free.
Charge (Rs)
250
Tata AIG
( Invest Assure II)
2000
ICICI (
Life Time Super)
100
Relian ce
(Automatic Investment Plan
)
100
LIC (
Market Plus)
SWITCH OVER CHARGES
250
100 100
Tata AIG
ICICI
Reliance
LIC
2000
:
Interpretation
Even in this case ICICI has got the highest switch over charge, whereas charge
of
Tata AIG are comparatively than the other two. Over here Reliance proves to be superior as it
provides 52 switches free as compared to just 4 switches offered by others and its charges are
. also less
42
d) POLICY ADMINISTRATION CHARGES
Charges( Rs /month)
38
Tata AIG
( Invest Assure II)
---
ICICI (
Life Time Super)
40
Relian ce
(Automatic Investment Plan
)
20
LIC (
Market Plus)
POLICY ADMINISTRATION CHARGES per month
(RS)
60
60
50
38 40
40
RATES
30
CHA RGES per month
20
10
0
Tata AIG Reliance LIC
COMPANY
Interpretation: In this case charges of Tata AIG are higher than LIC but lower than Reliance.
43
GROWTH & RETURNS

THE GROWTH RATE OF ULIPS
THE NAVs taken over here only belong to The Equity Fund of the
)
Policies. (No other fund taken into consideration
Growth rate of ULIPs (Equity Fund) of the 4 Insurance companies
Date of
NAV as on
NAV as on
I
ncrease
Growth %
Inception
inception
July,20
Rs
2007 Rs
Tata AIG
(
24 Jan, 2004 10 30.45 20.45 204.5
Invest Assure
II)
ICICI
(Life
16 Nov,2001 10 53.32 43.32 433.2
Time Super
)
Relian ce
28 May,2007 10 10.98 0.98 9.8
(Automatic
Investment
Plan
)
LIC
(Market
5 July, 2006 10 11.89 1.89 18.9
Plus)
From the tabular compilation, it can be observed that the Equity Fund of the policies has
performed very well over the years.
In case of
Tata AIG
--------the Equity Fund has grown up to
204.5%
in
3 years
from the
date of inception.
In case of
ICICI
--------the Equity Fund has grown up to
433.2%
in
5 years
from the date of
inception.
Also Reliance Equity Fund has increased to
9.8%
in a short span of
2mths.
LIC has also done a good job with a growth up to
18.9% in 1 year
.
44
COMPARISON OF RETURNS
RETURNS OF Tata AIG Equity Fund, ICICI equity fund, Reliance equity fund,
LIC equity fund,
V/s
BSE SENSEX & NSE NIFTY.
PERIOD OF 1 MONTH FROM JUNE 20, 2007 TO JULY 20, 2007
Particulars From To Increase
Return
Rank
By
%
4
Tata AIG Equity Fund
28.25 30.45 2.20 7.79
1
ICICI Equity Fund
48.43 53.32 4.89 10
2
Relian ce Equity Fund
10.14 10.98 0.84 8.2
6
LIC Equity Fund
11.25 11.89 0.64 5.6
3
BSE SENSEX
14411.95 15565.55 1153.55 8
5
NSE NIFTY
4248.65 4566.05 317.4 7.4
45
RETURNS
12.00%
10%
10.00%
8.20%
8% 7.40%
7.79%
8.00%
5.60%
6.00%
4.00%
2.00%
0.00%
ICICI Equity Fund has outperformed all others giving the highest returns, followed
by Reliance.
Tata AIG Equity Fund has marginally outperformed NIFTY.
Also it is very close to SENSEX..
.
LIC Equity Fund has given the least returns
46
FUND PERFORMANCE
(Only of Equity Fund)
Period: 1month
From 20
June, 2007--------20
July, 2007
th
th
NAVs of the Equity Fund (Rs)
Tata AIG
(
ICICI
Reliance
LIC
Invest
(Life
(
(
Assure II)
Time Super)
Market
Automatic
)
)
Plus
Investment Plan
20-Jun 28.24 48.43 10.14 11.25
21-Jun 28.49 48.44 10.15 11.26
22-Jun 28.49 48.75 10.13 11.13
25-Jun 28.61 48.85 10.15 11.35
26-Jun 28.77 48.95 10.22 11.45
27-Jun 28.62 48.66 10.21 11.3
28-Jun 28.841 48.45 10.27 11.31
29-Jun 29.13 48.33 10.33 11.39
30-Jun 29.14 49.1 10.34 11.4
2-Jul 29.39 50.52 10.38 11.45
3-Jul 29.57 50.25 10.48 11.46
4-Jul 29.54 50.49 10.54 11.52
5-Jul 29.53 50.45 10.53 11.57
6-Jul 29.69 51 10.63 11.59
9-Jul 29.89 51.47 10.73 11.64
10-Jul 29.65 51.22 10.72 11.64
11-Jul 29.59 51.5 10.69 11.65
12-Jul 30 52 10.83 11.72
13-Jul 30.34 52.6 10.93 11.73
16-Jul 30.26 52.3 10.94 11.81
17-Jul 30.65 52.45 10.87 11.82
18-Jul 30.94 52.39 10.85 11.85
19-Jul 30.34 53.21 11.5 11.93
20-Jul 30.45 53.32 10.98 11.89
47
CONSOLIDATED FUND PERFORMANCE SHOWN

GRAFICALLY.
FUND PERFORMANCE
60
50
40
Tata AIG (Invest Assure II)
ICICI (Life Time Super)
30
Reliance (Automatic Investment Plan)
LIC ( Market Plus)
20
10
0
1 MONTH (20JUNE--20JULY)
48
INDIVIDUAL EQUITY FUND PERFORMANCE

TATA AIG ICICI
Invest Assure
Life Time
Super
Tata AIG (Inv es t A ss ure II)
I C I CI (L i f e Ti
m e Su p e r)
31.5
54
31
53
30.5
52
30
29.5
51
29
Tata A IG (Inv es t As sur e II)
50
I C I CI (L i f e Ti
m e Su p e r)
28.5
49
28
48
27.5
47
27
46
26.5
45
DA TES
D a te s
49
LIC
RELIANCE
Market
Plus
Automatic Investment Plan
L I C ( M a rk e t Pl u s )
Re l i a nc e (Au t o m a t i c I n v e s t m en t P l
an)
12
12
11.8
11 . 5
11.6
11
11.4
L I C ( M a rk e t Pl u s)
10 . 5
Rel
i a n c e ( Au t o m at i c I n v e st m e n t Pl a n)
11.2
10
11
9.5
10.8
10.6
9
Da te s
D a te s
50
From the above graphs, it can be seen that the NAV of Reliance Automatic Investment plan
is fluctuating less as compared to the others.
NAV of ICICI Life Time Super has fluctuated more as compared to the others.
Tata AIG has moderate NAV Fluctuations
It has been observed that the lesser the fluctuations in the NAV, the better it is
for the fund.
But the good thing is that all the NAVs are on a rising trend. which indicates the
strength of the Equity Fund.
Thus as far as NAV consistency is concerned, investing in Reliance Equity Fund can be a
Prudent decision.
It is expected that the NAVs will rise in the future, promising good returns for the
Investors.
51
OVERALL DATA ANALYSIS & FINDINGS

This analysis is done by giving ranks to all the policies taking into consideration the
following criteria
(1= excellent, 2=good, 3=fair, 4=average)
In the end, whichever fund has the least score will be the best buy
CRITERIA
TATA
ICICI RELIANCE LIC
AIG
Amount of Premium 3 4 2 1
Mode of premium payment 1 2 1 2
Revival of the Policy 1 3 2 3
Amount of Top up premium 1
2 3
Not given
Oldest policy 2 1 4 3
Policies issued 4 2 3 1
Premiums collected 4 2 3 1
Mortality charges 1 2 3
Not given
FMC
2 3 1 1
Policy Administration charges 2
3 1
Not given
Switch over charges 2
1 1
3
Fund performance 2
3 4
1
Returns
3
2 4
1
Market share 4
3 1
2
TOTAL SCORES 32 26 34 26
From the above analysis it can be said that, ICICI and LIC have scored the least.
Therefore a person can either buy a ULIP form ICICI or from LIC.
52
CHAPTER 4:-
UNDERSTANDING THE WORKING OF ULIPS of Tata AIG
ULIPs are said to be the most lucrative from of investment, which not only
give you high market returns but also protection from risk, and also secures
the livelihood of your loved ones even after your death.
Here is an illustration which explains how a ULIP makes your money work.
Harder than you.
SAMPLE SALES ILLUSTRATION OF INVEST ASSURE II (TATA AIG LIFE)
Name of the proposed insured: Miss Dimple Solanki Proposal no. : 1577
Age of the proposed insured : 23 yrs Date : 15/7/07
Name of the policy holder : Miss Dimple Solanki Currency : Rupees
Age of the policyholder : 23 yrs Payment Mode : Annual
Insurance plan
Benefit
Premium
Premium
Annual
Modal
Sum
Additional
Fund
period
Paying
multiple
premium
premium
Assured
coverage
period
(SA)
Invest Assure II 30 yrs 30yrs 22.50 12000 12000 270000 270000 Equity
100%
53
Note : 1)SA is the multiple of annual premium: 12000*22.50= 270,000
2) Additional coverage given as Accident Death Benefit Rider taken by the policy holder.
3) Investment in Equity is 100%.
Invest assure II 30 YEAR POLICY
Min Return on units=10%( non guaranteed)
CHARGES:
Balance invested in the Equity fund
1
st
year= 50% of premium
50%
2
year= 25% of premium
nd
75%
99%
3
rd
year= 1 %of premium
YEAR 1
YEAR 2
YEAR 3
12000 premium
12000 premium
12000 premium
1% 99%= Rs 11880
Return= Rs 1188
50% 50%= Rs 6000
25% 75% = Rs 9000
Total = Rs 13068
Return =Rs 600
Return= Rs 900
Total =Rs 6600
Total = Rs 9900
NAV =RS 30
NAV =RS 10
NAV=RS. 20
(16500+13068)=Rs 29568
No. of units =Rs 6600/10= 660units
(6600+9900)=Rs
16500
No of units=
Rs 29568/ 30=986 units
No. of units =
Rs16500/ 20= 825 units
54
TOTAL UNITS IN HAND: 660+825+986=2471 UNITS AFTER 3 YEARS.
Therefore the units keep on increasing with the change in the NAVs.
There is an inverse relation between the NAVs and the No. of Units.
As the NAVs rises the no of units decrease.
& As the NAVs fall, the No of Units increase.
986.
E.g.: In the 3
year, the investment was Rs 29568. NAV was Rs 30. So the no. of Units was
rd
1479.
Now if the NAV Falls to Rs 20. Then the no. of Units would have been
55
Therefore the rising trend of NAV is not always a good sign, as your
no of units decrease.
Therefore if Miss Dimple Solanki continues with her policy for 30 years ,
she will get a
•
Maturity benefit = existing Fund Value which is the sum of the
regular premium fund value
•
On death = SA Rs 270000 or NAV whichever is higher
•
On Death due to Accident= Double the SA.
56
CHAPTER 7
MARKET SURVEY
A questionnaire was prepared, wherein 10 advisors of Tata AIG were asked to fill
it. The reason for carrying out a market survey was to know the opinion of the
advisors and the popularity of ULIPs in the market.
Questionnaire for Advisors of Tata AIG
Q 1) What type or class of customers visits your office?
a. salaried
b. housewives
c. self employed
d. retired
e. pensioner
p ens i on er , 0 %
sel f em pl oy e d,
Sa l ar i ed
4 0%
hou se wi f e
S al a r i e d, 5 0%
sel f em pl o y e d
pen si o ner
ho use wi f e, 10%
57
Q 2) Which policies the client opts for?
a. Traditional
b. ULIPS
90%
100%
90%
80%
70%
60%
50%
40%
30%
10%
20%
10%
0%
Traditional ULIPs
Schemes
Q 3) Are ULIP schemes popular?
a. yes
b. no
c. can’t say
CAN'T
SAY, 0%
NO, 30%
YES
NO
CA N'T S A Y
YES, 70%
58
Q 4) Are the clients aware of ULIP schemes?
a. less than 10%
b. 10% --- 30%
c. 30%---- 60%
d. Above 60%
0%
20%
30%
Less
Than 10%
10%- 30%
30%- 60%
60% & above
50%
Q 5) Out of ten , how many
clients opt for ULIP ?
ANS) On an average 6 clients out
60%
of 10 opt for ULIPs.

50%
50%
40%
Q 6) How much commission do
30%
20%
20%
you get from the company on
ULIP policy?
20%
10%
a. 0--- 10%
10%
b. 11—20%
c. 21---30%
0%
0- 10% 11%- 20% 21%- 30% 31%- 40%
d. 31--- 40%
C o mmissio n
59
Q 7) How many clients have the background of finance?
10—20%
a.
b.20—40%
c. 40% & above
0% 10%-
20%
40%
20%-
40%
60%
40%-
above
Q8 ) Mode of payment of premium.
a. cheque
b. Demand Draft
c. Cash
demand draft,
0%
cash, 0%
cheque
demand draft
cash
cheque, 100%
60
Q9) What is the better positioning for ULIP?
a. as a tax saving plan
b. as a retirement plan
c. as a child education plan
d. as a security cum profitable plan.
80%
70%
70%
60%
50%
40%
30%
20%
20%
10%
10%
0%
0%
as a tax saving
as a retirement
as a child
as a security
plan
plan
education plan
cum profitable
plan
Q 10) Qualifications
a. HSC pass
b. Graduate c.MBA
60%
50%
50%
40%
30%
30%
20%
20%
10%
0%
HSC Graduate MBA
61
Q 11) How is ULIP different from the other policies?
Please refer to pg 21 “ULIPs v/s Endowment.”
Q 12) How does a client respond, if any new policy is suggested to him?
According to the survey, the client’s reaction depends upon the presentation that is
ANS
:
given to him by the Advisor.
Usually the client shows positive signs of buying the product, sometimes are reluctant to buy
due to financial problems.
According to most of the advisors the 1
st
quest asked by the client is about the guarantee and
returns.
They want to know about the popularity of the policy as well as the insurance company.
62
CHAPTER 8
Integrated Financial Planning for Life Insurance
Starting a job,
Recently
Married,
Kids going
Higher studies
Children
Single
married, no
with kids
to school,
for child,
independent,
individual
kids
college
marriage
nearing the
golden years
Your Need
Low protection,
Reasonable
Higher
Higher
Lump sum
Safe
high asset
protection,
protection,
Protection,
money for
accumulation
creation and
still high on
still high on
high on
education,
for the golden
accumulation
asset
asset creation
asset
marriage.
yrs.Considera
creation
but steadier
creation but
Facility to stop
bly lower life
options,
steadier
premium for 2-
insurance as
increase
options,
3 yrs for these
the
savings for
liquidity for
extra expenses
dependencies
child
education
have
expenses
decreased
Flexibility
Choose low
Increase
Increase death
Withdrawal
Withdrawal
Decrease the
death benefit,
death
benefit;
from the
from the
death benefit-
choose
benefit,
choose
account for
account for
reduce it to
growth/balance
choose
balanced
the
higher
the minimum
d option for
growth/bala
option for
education
education/marri
possible.
asset creation
nced option
asset creation.
expenses of
age expenses of
Choose the
for asset
Choose riders
the child
the child.
income
creation
for enhanced
Premium
investment
protection.
holiday-to stop
option. Top-
Use top-ups to
premium for a
ups form the
increase your
period without
accumulation
accumulation
lapsing the
(with reduced
policy
expenses) for
the golden
yrs cash
accumulation
63
CONCLUSION:
From the above project , I would point out that the insurance industry is growing at a very
fast pace .The Insurance needs of the people are increasing.
ICICI Prudential is a key player in the private sector and LIC is a leader in the public sector
with the largest market share.
The returns provided by ICICI is the highest as compared to other companies and is superior
to others in all respects. Therefore a person can rightly choose to buy insurance from ICICI .
Thus ULIPs are simple combination of Term assurance and investment.
Synergy, flexibility, durable tax advantages, flexibity in debt- equity ratio, top up facility,
transparency, subjected to market conditions, capital appreciation makes ULIPs structurally
more effective for achieving long term financial goals.
There is no other investment avenue which provides double the amount invested, in case of
death due to accident or on death.
Therefore insurance has and should be a part of every person’s portfolio which satisfies twin
objectives of protection against risks & to increase your wealth.
Putting your money in the ULIP equity fund will give you a good return and capital
appreciation.
So relax and enjoy your life as ULIPs is there behind you.
64
RECOMMENDATIONS
For the Company based on the above market survey.
1) The company should now target pensioners & housewives as they constitute only 10% in
the selection of ULIPs.
2) The company can arrange a seminar for the existing clients informing them about the
progress made by the company, and also give some lessons on understanding the basics of
FINANCE.
3) Since ULIPs are less popular “as a retirement plan”, Tata AIG should advertise inorder to
attract the attention of salaried people and to make them understand the importance of
investing in ULIPS for retirement.
Publicity
on a large scale about the different policies to be
given in all means of communication. (Basically on TV during prime hours)
For the changes in ULIPs:
1. The amount of premium should be reduced in order to cater to the lower income groups.
2. On maturity, the policy holder should receive the Fund value or the Sum Assured
whichever is higher, (as in the case of death benefit.)
3. Reduction in the charges.
4. Commission structure to be revised
5. Give a Pure traditional plan along with the ULIPs.
6. Remove the charges on surrender or partial withdrawal.
7. Increase the number of Switch options. as four is not enough.
8. Design ULIPs for meeting short term investment goals.
9. The investment style should be more aggressive
.
65
BIBLIOGRAPHY
A. B
OOKS
1. Insurance Principles & Practices
-----M. N.Misra S Chand Publications.
2. Insurance
------ M.J. Mathew RBSA Publications.
3. Insurance Fundamentals, Environment & Procedures
-------B.S.Bodla, M.C. Garg, K.P. Singh
Deep & Deep Publications of 2003
4.
Insurance Institute of India IC 33------
S.J. Gidwani
5.
Taxmann Life Insurance agent ----
P.R. Khanna , Taxmann Allied service pvt
ltd
4
edition 2005.
th
B. NEWSPAPERS
1. Economic Times
2. Times Of India
3. ESCOLIFE PAPER on Insurance by Ritu Nanda
Vol 2, Issue viii June, 2007.
C. M
AG AZINES
1. Money Simplified --Vol xxx ,Feb 2007 “ ULIPs how they fit in”
2. Consumer Voice ---Vol 7, Issue 3
.
66
D. NEWSLETTER
1. Tata AIG Life Agency Newsletter
Vol 1, Edition 6 , March ,2007.
E. INTERNET
www.tata-aig.com
www.licofindia.com
www.iciciprulife.com
www.reliancelife.com
www.moneycontrol.com
www.personalfn.com
www.et.com
www.google.com
(Note- The above Sites were logged on between 20 June,07 to 21
st
July,2007 )
F. CNBC TV 18
G. BOOKLET on the Orientation Programme of Employees at Tata AIG
H. Policy Brochures of Tata AIG, ICICI Prudential, Reliance Life & LIC.
67
QUESTIONNAIRE FOR ADVISORS

Q 1) What type or class of customers visit your office?
•
salaried
•
housewives
•
self employed
•
retired
•
pensioner
Q 2) Which policies the client opts for?
•
Traditional
•
ULIPS
Q 3) Are ULIP schemes popular?
•
yes
•
no
•
can’t say
Q 4) Are the clients aware of ULIP schemes?
•
less than 10%
•
10% --- 30%
•
30%---- 60%
•
Above 60%
Q 5) Out of ten, how many clients opt for ULIP?
Q 6) How much commission do you get from the company on ULIP policy?
•
0--- 10%
•
11—20%
•
21---30%
•
31--- 40%
Q 7) How many clients have the background of finance?
•
10—20%
•
20—40%
•
40% & above.
Q8) Mode of payment of premium.
•
cheque
•
Demand Draft
•
Cash
Q9) What is the better positioning for ULIP?
68
•
as a tax saving plan
•
as a retirement plan
•
as a child education plan
•
as a security cum profitable plan.
Q 10) Qualifications
•
HSC pass
•
Graduate
•
MBA
Q 11) How is ULIP different from the other policies?
Q 12) How does a client respond, if any new policy is suggested to him?
.
69
THANK YOU
70

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Certificate from the Company

GROWTH & RETURNS

CONSOLIDATED FUND PERFORMANCE SHOWN

INDIVIDUAL EQUITY FUND PERFORMANCE

OVERALL DATA ANALYSIS & FINDINGS

of 10 opt for ULIPs.

QUESTIONNAIRE FOR ADVISORS

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