GROWTH OF UNIT LINKED INSURANCE PLANS IN INDIAN INSURANCE INDUSTRY AT ICICI PRUDENTIAL LIFE INSURANCE COMPANY LIMITED

A PROJECT REPORT SUBMITTED TO THE SRM SCHOOL OF MANAGEMENT

IN PARTIAL FULFILLMENT OF THE DEGREE OF MASTERS OF BUSINESS ADMINISTRATION BY DEEPAK KUMAR (Reg. No. 35080128) UNDER THE GUIDANCE OF PROF. S.SHENTHIL KUMAR

SRM SCHOOL OF MANAGEMENT SRM UNIVERSITY KATTANKULATHUR 603203 (May 2010)

BONAFIDE CERTIFICATE

Certified that this project titled " GROWTH OF UNIT LINKED INSURANCE PLANS IN INDIAN INSURANCE INDUSTRY AT ICICI PRUDENTIAL LIFE INSURANCE COMPANY LIMITED is a bonafide work of DEEPAK KUMAR (Reg no:-(35080128) who carried out the research under my supervision. Certified further, that to the best of my knowledge the work reported herein does not from part of any other project or dissertation on the basis of which a degree or award was conferred on an earlier occasion on this or any other candidate.

Signature of the guide:

Signature of HOD:

Signature of the External Examiner:

Acknowledgement

I owe everything in my life to other. A person single headed can achieve nothing. In my attempt to do the project many people have graciously extend their guidance, advice and criticism to improve our work. I wish to express my heartful thanks to our Dean Dr.Jayashree Suresh for providing infinite facilities and gave me an opportunity to do this project work to be successful. I express my sincere thanks to my project internal guide Mr. S.Senthil Kumar for his guidance and valuable suggestions, which made this project, a successful one. I express my heartful gratitude to ICICI PRUDENTIAL LIFE INSURANCE(DELHI).for providing me the opportunity to undertake this project in their esteemed organization. My gratitude also extends to the staffs of departments whose words of encouragements kept the spirits high throughout the course of my project.

DATEPLACE

DEEPAK KUMAR

ABSTRACT
The project titled GROWTH OF UNIT LINKED INSURANCE PLANS IN INDIAN INSURANCE INDUSTRY was aimed at studying its potential and growth in the market. Before knowing the growth and market potential, we had to study the functions, features, advantages & benefits of ULIP (Unit Linked Insurance Plan). This motivated me to first study the types of products and its range. This enabled me to know the nature of the plans through the booklets of the insurance companies and from the magazines. The project thus passed the initial stages and it had to find out the market growth of ULIP in order to complete the project successfully. This was possible only through a market research.

That data were analysed thoroughly and it was compared and interpreted in order to find out the solutions to the problems. Thus the study ensured that the problems were arrived at solutions and were able to provide suggestions in this report.

TABLE OF CONTENTS CHAPTER NO. 1 2 3 CONTENTS INTRODUCTION COMPANY PROFILE STATEMENT OF PROBLEM PAGE NO. 1 3 11

OBJECTIVE OF STYDY

12

REVIEW OF LITRETURE

13

RESEARCH METHODOLOGY

18

ANALYSIS OF INTERPRETATION

23

8 9 10

FINDING SUGGESTION CONCLUSION BIBLIOGRAPHY QUESTIONNAIRES

52 53 54 55 56

LISTS OF TABLES
Table No. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 Contents Table shows Age classification of the respondents Table shows Gender classification of the respondents Table shows Education qualification of respondents Table shows Occupation of the respondents Table shows Annual income of the respondents Table shows Respondents awareness of insurance companies Table shows Purpose of investment in insurance Table shows Willingness of the respondents to take the risk while investing in insurance Table shows Investment in other avenues Table shows Awareness of market link plans of ICICI Prudential Table shows Investment in the market link plans of ICICI Prudential Table shows Amount of investment in market link plans of ICICI Prudential Table shows Educational qualification of the respondent who have invested in market link plans Table shows Annual income of the respondents who have invested in market link plans Table shows Occupation of the respondents who have invested in market link plans Page no. 23 24 26 28 29 30 32 33 34 35 37 38 39 41

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LISTS OF FIGURE:
Fig. no 1 2 3 4 5 6 Contents Chart shows Percentage Age of the respondents Chart shows Percentage of male and female Chart shows Percentage of respondents education qualification Chart shows Percentage of respondents occupation Chart shows No and percentage of respondents annual income Chart shows Percentage of respondents awareness of insurance companies Chart shows Purpose of investment in insurance Chart shows Investment risk Percentage Chart shows Percentage of respondents who investments in other avenues Chart shows Percentage of respondents who aware about market link plans Chart shows Percentage of respondents invested in market link plans Chart shows Amount invested in market link plans Page no. 24 25 27 29 30 31

7 8 9

32 34 35

10

36

11

37

12 13

39

Chart shows Percentage of respondents educational 40 qualification who have invested in market link plans Chart shows Annual income of respondents who have invested in market link plans Chart shows No of respondents occupation who have invested in market link plans 42

14

15

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CHAPTER 1

INTRODUCTION
"Insurance" is basically a sharing device. The losses to assets resulting from natural calamities like fire, flood, earthquake, accidents, etc., are met out of the common pool contributed by large number of persons who are exposed to similar risks. Thus contribution of many is used to pay the losses suffered by unfortunate few. However the basic principle is that loss should occur as a result of natural calamities or unexpected events which are beyond human control. Moreover the insured person should not make any gains out of insurance.

It is natural to think of insurance of physical assets such as motor car insurance or fire insurance but often we forget that creator of all these assets is the human being whose efforts have gone a long way in building up the assets. In that sense, human life is a unique income generating asset. Unlike the physical assets, which decrease in value with passage of time, the individual becomes more experienced and more matured as he advances in age. This raises his earning capacity. The purpose of life insurance is to protect the income of individual and provide financial security to his family, which is dependent on his income in the event of his premature death. The individual himself also needs financial security for the old age or on his becoming permanently disabled when his income will stop. Insurance also has an element of savings in certain plans. Features of MARKET LINK Plans:

Market link plans distinguishes itself through the multiple benefits it provides to the customer the plan is a one stop solution providing 1. Life protection 2. Investment and savings 3. Flexibility 4. Transparency 5. Liquidity 6. Tax planning

In a falling interest rate scenario and boom experienced in the equity markets, market link policies are becoming popular and favoured by market savy and high networth individuals.

Competition has spurred the usage of technology in the insurance industry. While earlier obtaining the status of life insurance policy was a time consuming process, customers can now get their policy status and other information through call centers, interactive voice response systems and through the internet. The creation of the insurance Regulatory and Development Authority (IRDA) has helped customers vastly as the authority now specifies time limits for documentation and settlement of claims. The regulator has also made it mandatory for insurers to have a premium calculator on their website, which makes it easier for the customer to compare products across companies.

In the last seven years of liberalization, promoters of private insurance companies have demonstrated their long-term commitment to the Indian market in the best way. The total investment in private life insurance companies is now over Rs.3, 000 crore, which is much more than investments by promoters in any other segment of the financial sector.

The insurance industry has also played a significant role in mobilizing the savings of the individuals, providing cover against unforeseen contingencies and is investing these funds for economic development of the country. With only one fourth of the insurable population been provided insurance protection there is vast scope of growth for all the private companies in the future as untapped potential is still very large.

CHAPTER 2 COMPANY PROFILE

ICICI Prudential is a joint venture between ICICI Bank and Prudential Plc engaged in the business of life insurance in India. ICICI Prudential is the largest private insurance company and second largest insurance in India after LIC. ICICI Prudential Life Insurance Company is a joint venture between ICICI Bank, a premier financial powerhouse, and Prudential plc, a leading international financial services group headquartered in the United Kingdom. ICICI Prudential was amongst the first private sector insurance companies to begin operations in December 2000 after receiving approval from Insurance Regulatory Development Authority (IRDA).ICICI Prudential

Life's capital stands at Rs. 37.72 billion (as on March, 2008) with ICICI Bank and Prudential plc holding 74% and 26% stake respectively. For the year ended March 31, 2008, the company garnered Retail New Business Weighted premium of Rs. 6,684 crores, registering a growth of 68% over the last year and has underwritten nearly 3 million retail policies during the period. The company has assets held over Rs. 30,000 crore as on April 30, 2008.ICICI Prudential Life is also the only private life insurer in India to receive a National Insurer Financial Strength rating of AAA (Ind) from Fitch ratings. The AAA (Ind) rating is the highest rating, and is a clear assurance of ICICI Prudential's ability to meet its obligations to customers at the time of maturity or claims.For the past seven years, ICICI Prudential Life has retained its leadership position in the life insurance industry with a wide range of flexible products that meet the needs of the Indian customer at every step in life. . Since the liberalization of Indian Insurance sector, ICICI Prudential Life Insurance has been one of the earliest private players. Since the time, ICICI Pru Life has been the leader in terms of market share as indicated by the IRDA (Insurance Regulatory and Development Authority, the regulator for Indian Insurance Industry) at its website. Arguably the most innovative Indian Life insurer in terms of customer services and products, ICICI Prudential has one of the largest distribution and servicing network with over 2,000 proprietary offices & customer touch points across India. The 30,000 employee strong organization has one of the largest agency distribution in the industry. With a growing product range to match the complex needs of the demanding customers in a growing economy, the organization also has a history of successful. During 2007-08, the organization's focus on rural business has proved its complex project execution capability and strong partnerships for customer servicing. In June, 2009 ICICI Prudential Life Insurance has decided to snap its tie up with TTK Healthcare to settle insurance claims of its users

Distribution:
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ICICI Prudential has one of the largest distribution networks amongst private life insurers in India, having commenced operations in 62 cities and towns in India.

About the Promoters:

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ICICI Bank is India's second-largest bank with total assets of Rs. 3,634.00 billion (US$ 81 billion) at March 31, 2010 and profit after tax Rs. 40.25 billion (US$ 896 million) for the year ended March 31, 2010. The Bank has a network of 2,000 branches and about 5,219 ATMs in India and presence in 18 countries. ICICI Bank offers a wide range of banking products and financial services to corporate and retail customers through a variety of delivery channels and through its specialised subsidiaries in the areas of investment banking, life and non-life insurance, venture capital and asset management. The Bank currently has subsidiaries in the United Kingdom, Russia and Canada, branches in United States, Singapore, Bahrain, Hong Kong, Sri Lanka, Qatar and Dubai International Finance Centre and representative offices in United Arab Emirates, China, South Africa, Bangladesh, Thailand, Malaysia and Indonesia. Our UK subsidiary has established branches in Belgium and Germany.

ICICI Bank's equity shares are listed in India on Bombay Stock Exchange and the National Stock Exchange of India Limited and its American Depositary Receipts (ADRs) are listed on the New York Stock Exchange (NYSE). Corporate Profile ICICI Bank is India's second-largest bank with total assets of Rs. 3,562.28 billion (US$ 77 billion) as on December 31, 2009.

INDUSTRY PROFILE

Insurance is primarily collective cooperation to share a particular risk. This concept is as old as the dawn of human civilization. The joint family system in India is an example of concept of life insurance. Marine insurance is considered to be the oldest branch of insurance for providing protection against loss/damage in sea voyages.

Life insurance in its modem form came to India from England in 1818 with the formation of Oriental Life insurance Company in Calcutta mainly by Europeans to help widows of their kin. By 1968 there were 285 companies doing business of insurance in India. These companies were insuring European lives. Indians were

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treated substandard lives and were offered insurance with an extra premium of 15 to 20% over European lives.

Bombay life Assurance Society was the first Indian Company started in 1870 that started insuring Indians at standard rates. Oriental Govt Security Life Assurance Company established in 1874 became a leading Indian insurance Company.

Life Insurance business in India was nationalized by an Ordinance on 19 Jan 1956. LIC Act was passed in July 1956 LIC of India started in operation on 01 Sep 1956. Prior to nationalization of life insurance business there were 245 companies. Which were merged with LIC.

General insurance industry in India was nationalized in the Year 1972 by merging 107 companies. With effect from 1st Jan 1973. GIC of India and its four subsidiary companies i.e. New India Assurance Company,

Oriental Insurance Company, National Insurance Company, United India Insurance Company started operations in General Insurance Business.

With the passing of IRDA Act 1999, the insurance sector was opened up, and Private insurance Companies were allowed to enter life/Non life insurance business with a maximum of 26% participation by a foreign partner.

Presently there are 14 Life insurance Companies and 14 Non-life insurance Companies operating in the insurance market.

PRODUCT PROFILE

ICICI Prudential Life Insurance Offers a range of innovative, customers- centric products that meet the needs of customers at every life stage. Its 19 products can be enhanced with up to 6 riders, to create a customized solution for each policyholder.

Saving Solutions:

Secure Plus is a transparent and feature packed savings plan that offers 3 levels of protection.

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Cash Plus is a transparent, feature packed savings plan that offers 2 levels of protection as well as liquidity options.

Save "n" Protect is a traditional endowment savings plan that offers life protection along with adequate returns.

Cash Bak is an anticipated endowment policy ideal for meeting milestone expenses like a child's marriage, expenses for a child's higher education or purchase of an asset.

Protection Solutions:

Life Guard is a protection plan, which offers life cover at very low cost. It is available in 3 options level term assurance, level term assurance with return of premium and single premium.

Child Plans:

Smart Kid education plans provide guaranteed educational benefits to a child along with life insurance cover for the parent who purchases the policy. The policy is designed to provide money at important milestones in the child's life. Smart kid plans are also available in unit-linked form both single premium and regular premium.

Market link Solutions:

Life Link II is a single premium market linked Insurance Plan which combines life insurance cover with the opportunity to stay invested in the stock market.

Life Time II offer customers the flexibility and control to customize the policy to meet the changing needs at different life stages. It offers 4 fund options preserver, protector, balancer and maximiser.

Premier Life is a limited premium paying plan that offers customers life insurance cover till the age of 75.

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Retirement Solutions: Forever Life is a retirement product targeted at individuals in their thirties. Secure Plus Pension is a flexible pension plan that allows one to select between 3 levels of cover. Life Time Pension II is a regular premium market linked pension plan. Life Link Pension II is a single premium market linked pension's plan.

ICICI prudential also launched "Salaam Zindagi", a social sector group insurance policy targeted at the economically underprivileged sections of the society.

Group Insurance Solutions ICICI Prudential also offers Group Insurance Solutions for companies seeking to enhance benefits to their employees.

ICICI Pru Group Gratuity Plan: ICICI Pru's gratuity plan helps employers fund their statutory gratuity obligation in a scientific manner. The plan can also be customized to structure schemes that can provide benefits beyond the statutory obligations.

ICICI Pru Group Superannuation Plan: ICICI Pru offers a flexible defined contribution superannuation scheme to provide a retirement kitty for each member of the group. Employees have the option of choosing from various annuity options or opting for a partial commutation of the annuity at the time of retirement.

ICICI Prudential has a wide array of insurance plans that have been designed with the philosophy that different individuals are bound to have differing insurance needs.

The ideal insurance plan is one that addresses the exact insurance needs of the individual that will depend on the age and life stage of the individual apart from a host of other factors. Life Insurance Plans:

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Under Life insurance plans, ICICI Prudential offers plans under the following major need categories:

Education insurance plans Wealth creation plan Protection plan

Pension & Retirement Solutions: The primary objective of a pension plan is to help you provide for your financial needs in your post retirement years. You will find a Pension Planning Calculator on the site, meant to make your pension plan review as simple as possible. The calculator is the first step in your Pension Plan scheme, there are other steps towards getting the Indian pension policy you need.

ICICI Pru lifetime Pension maxima ICICI Pru lifestage pension advantage ICICI Pru Elite Pension II ICICI Pru Assure Pension ICICI Pru Forever life ICICI Pru Immediate Annuity

Health Product Suite: Under Health Product Suite, ICICI Prudential offers plans under the following major need categories:

Hospitalisation Plans

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MediAssure Hospital care

Critical Illness Pans

Crisis cover

CHAPTER 3
STATEMENT OF PROBLEM

The project envisages ascertaining the market potential of the life insurance industry by which the target groups may be matched with the products by which the productivity level may be improved. The project also finds out the need of various target groups which may help in improvement performance of the advisors.

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CHAPTER 4
OBJECTIVES OF THE STUDY
PRIMARY OBJECTIVE

1.

To study the market potential of life insurance industry with special reference to ICICI Prudential Life Insurance Company Limited.

SECONDARY OBJECTIVE

1. 2. 3.

To find out the needs of the customers. To find out the target segments which are left out by the organization. To suggest ways to the management for targeting these segments.

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CHAPTER 5
REVIEW OF LITERATURE

MARKET POTENTIAL - AN OVERVIEW In this section, the literature has been reviewed with especially a view to the market potential and how to keep business with customers.

Market Potential:

The principles of determining market share and market potential are the same for all geographic areas. First determine a customer profile (who) and the geographic size of the market (how many). This is the general market potential. Knowing the number and strength of your competitors (and then estimating the share of business you will take from them) will give you the market potential specific to your enterprise.

There is no doubt that the potential market for the buyers of insurance is significant in India and offers a great scope of growth. First, while estimating the potential of the Indian insurance market we often tempt to look at it from the perspective of macro-economic variables such as the ratio of premium to GDP which is indeed comparatively low in India. For example, India's life insurance premium as a percentage of GDP is 1.3% against 5.2% in the US, 6.5% in the UK or 8% in South Korea. But the fact is that the large part of the India's, (the number of potential buyers of insurance) is certainly attractive. However, this ignores the difficulties of approaching this population. New entrants in other mass industries such as consumer products or retail

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banking have discovered this after burning their fingers. Much of the demand may not be accessible because of poor distribution, large distances or high costs relative to returns. Secondly most new entrants have a tendency to target the business of existing companies rather than expanding the market, this is myopic. This not only leads to intense competition for the new players and their much of their efforts is spent on trying to capture existing customers by offering better service or other advantages. Yet, the benefits of this strategy are likely to be limited. For example, 50% of the current demand for general insurance comes from the corporate segment. The corporates are likely to shop around for the best rates, products and service. Nevertheless, the corporate segment, as a whole will not be a big growth area for new entrants. This is because penetration is already good, companies receive good service because of their size and rates are tariff-governed. In both volumes and profitability therefore, the scope for expansion is modest. A better approach may be to examine specific niches where demand can be met or stimulated.

The growth strategy for marketing:Ansoffs product / market matrix Introduction The Ansoff Growth matrix is a tool that helps businesses decide their product and market growth strategy. Ansoffs product/market growth matrix suggests that a business attempts to grow depend on whether it markets new or existing products in new or existing markets.

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The output from the Ansoff product/market matrix is a series of suggested growth strategies that set the direction for the business strategy. These are described below: Market penetration Market penetration is the name given to a growth strategy where the business focuses on selling existing products into existing markets. Market penetration seeks to achieve four main objectives: Maintain or increase the market share of current products this can be achieved by a combination of competitive pricing strategies, advertising, sales promotion and perhaps more resources dedicated to personal selling Secure dominance of growth markets Restructure a mature market by driving out competitors; this would require a much more aggressive promotional campaign, supported by a pricing strategy designed to make the market unattractive for competitors Increase usage by existing customers for example by introducing loyalty schemes A market penetration marketing strategy is very much about business as usual. The business is focusing on markets and products it knows well. It is likely to have good

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information on competitors and on customer needs. It is unlikely, therefore, that this strategy will require much investment in new market research. Market development Market development is the name given to a growth strategy where the business seeks to sell its existing products into new markets. There are many possible ways of approaching this strategy, including: New geographical markets; for example exporting the product to a new country New product dimensions or packaging: for example New distribution channels Different pricing policies to attract different customers or create new market segments Product development Product development is the name given to a growth strategy where a business aims to introduce new products into existing markets. This strategy may require the development of new competencies and requires the business to develop modified products which can appeal to existing markets. Diversification Diversification is the name given to the growth strategy where a business markets new products in new markets. This is an inherently more risk strategy because the business is moving into markets in which it has little or no experience. Growth Of Insurance Sector:-

Indian insurance sector is likely to register unprecedented growth of 200% and attain a size of Rs. 2000 billion by 2009-10, in which a private sector insurance business will achieve a growth rate of 140% as a result of aggressive marketing technique being adopted by them against 35-40% growth rate of state owned insurance companies.

The aforesaid findings are made by The Associated Chambers of Commerce and Industry of India (ASSOCHAM) on `Insurance in Next 2 Years, saying that in the last
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couple of years, the insurance sector has grown by CAGR of around 175% and the trend will emerge still better because of potential factor. Currently, the insurance sector size is estimated at Rs.500 billion.

On account of intense marketing strategies adopted by private insurance players, the market share of state owned insurance companies like GIC, LIC and others have come down to 70% in last 4-5 years from over 97%.

The private insurance players despite the sector is still regulated has been offering rate of return (RoR) to its policy holders which is estimated at about 35% as against 20% of domestic insurance companies. This factor is mainly responsible for hike in private insurance market share which will grow further which is why the ASSOCHAM estimates that its growth rate could even exceed 140%.

Secondly, the state owned insurance companies such as LIC and GIC have limited number of policies to offer to their subscribers while in case of private insurance companies, their policy numbers are many more and the premium amount as well as the maturity period is much competitive as against those of government insurance companies. Interestingly, said Mr. Dhoot that the private sector insurance players have started exploring the rural markets in which until recently, the state owned companies had the monopoly.

The Chamber has projected that in rural markets, the share of private insurance players would increase substantially as these have been able to generate a faith among their rural consumers.

Estimating the potential of the Indian insurance market from the perspective of macroeconomic variables such as the ratio of premium to GDP, ASSOCHAM reveals that Indias life insurance premium, as a percentage of GDP is 1.8% against 5.2% in the US, 6.5% in the UK or 8% in South Korea.

CHAPTET 6

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RESEARCH METHODOLOGY Introduction:

According to the oxford advanced Learners Dictionary of current English the meaning of research is a "Careful Study or investigation especially in order to discover new facts or information".

Research is defined as movement from the known to the unknown. It is an effort to discover something. According to Clifford Woody "Research comprise defining and redefining problems formulating hypothesis or suggested solutions, collecting/ organizing and evaluating data making deduction & research conclusions and at last carefully testing the conclusion to determine whether they fit the formulation hypothesis.

5.1 HYPOTHESIS
Quite often a research hypothesis is a predictive statement, capable of being tested by scientific methods that relates and independent variable to some dependent variable. The following hypothesis were set in order to achieve the objectives. There is no significant relationship between the purpose of investment in insurance and the annual income. There is no significant relationship between the risk taken while investing and the amount invested. There is no significant relationship between age of the respondent and the risk taken by them while investing.

5.2 Research design:

Research design is a plan of action that guides the entire research. There are four types of research design available. They are 1 Exploratory Research Design 2 Descriptive Research Design 3 Diagnostic Research Design 4 Experimental Research Design

In my Study Descriptive Research Design has been adopted.

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5.2 Sampling Method:

Simple random sampling method was adopted to select sample customer. Under this sampling design, every item of the universe has an equal chance of inclusion in the sample. It is, so to say, a lottery method in which individual units are picked up from the whole group not deliberately but by some mechanical process. The list of 2400 customers of ICICI Bank in the Dwarka (New Delhi) Branch has been given .Every customer has been given the numbers and the sample size of 120 has been selected by placing all these numbers in a box and the numbers are picked up randomly.

5.3 Pre-testing:
Pre-testing as it is known is a method which has to be followed strictly. Once questionnaire is drafted it should be field tested before finalizing.

The responses are studied to determine the need for restructuring the questionnaire. Pre-testing was done on a group of 15 respondents. With the result of the pre-testing the researcher has reframed some of the questions.

5.4 Period of Study :

The period of study is for two months i.c., march to april 2010

5.5 Method of Data Collection:

The data collected for the study includes both primary and secondary data in order to attain the objectives of the study.

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Apart from this information regarding the company, future prospects etc have been collected from websites, clipping, from newspapers, magazines, journals, books.

5.6 Questionnaire Design:

Quite often questionnaire is considered as the heart of a survey operation. Hence it should be very carefully constructed. Questionnaire was prepared with the combinations of various types of questions which have been listed below.

5.7 Statistical Tools Used:

The role of statistics in research is to furnish as a tool in designing research, analyzing its data and drawing conclusions there from. As every individual clearly knows that a researcher cannot ignore the science and statistics. Tools used are as follow. Chi-Square test: The objective of the chi-square test is to determine whether there is any significant difference exists among the various groups. Chi-square test involves comparison of expected frequency (Ei) with observed frequency (Oi) to determine whether the difference between the two is greater than the tabulated value that might occur by chance. There are 5 steps in using chi-square test. 1. 2. 3. 4. 5. The difference between each observed frequency and each expected frequency is computed. The difference is squared. Each squared difference is divided by the respective expected frequency. Their quotients are added together to obtain the computed chi square value. This computed value is then compared to tabulate chi-square value.

If the computed x2 value is greater than the tabulated x2 value at a predetermined level of significance and degrees of freedom, the hypothesis is rejected.

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On the other hand, if the calculated x2 value is less than the tabulated valued, the hypothesis is accepted.

X2

(O-E)2/E

Where X2 = O E =

Chi-Square Observed frequency Expected frequency

5.9 Limitations of the Study:

The number of respondents who respond to the survey being limited there are chances for bias in the output of the survey.

The respondents have little awareness over the private companies. So, it is difficult to find out the opinion about the market link plans of the company.

Most of the respondents are not interested to give their suggestions for the survey.

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CHAPTER 7
ANALYSIS AND INTERPRETATION

TABLE-1

AGE CLASSIFICATION OF RESPONDENTS AGE NO.OF RESPONDENTS PERCENTAGE %

1 2 3 4 5

25 30 31 35 36 40 41- 50 ABOVE 51 TOTAL

10 24 33 29 24 120

8.3 20 27.5 24.1 20 100

INFERENCE:

From the above table it can be inferred that 33 % respondents are between the age group above 46 years, 28% of the respondents were between the age group 20 25 , followed by 25 - 30 , 41- 45 and 31 - 35 with the percentages 23 %, 9 % and 9 %.

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ONDENTS FIG. 1. AGE OF THE RESPO

25 30 0

31 35

36 40

41 50

A ABOVE 51

2 20%

8% 8 20%

24% %

% 28%

TAB BLE- 2. GENDER G R CLASSI IFICATIO ON OF TH HE RESP PONDEN NTS

SNO GEND DER NO.OF NDENTS RESPON PERCENT TAGE %

1 2

MALE E FEMA ALE TOTA AL

74 46 120

61.6 38.3 100

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INFERENCE:

From the above table it can be is inferred that 61.6% are male respondents and 38.3% are female respondents.

FIG.2 GENDER CLASSIFICATION

MALE

FEMALE

38%

62%

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TABLE-3 EDUCATION QUALIFICATION OF THE RESPONDENTS

SNO EDUCATION NO.OF RESPONDENTS 23 47 33 17 120 PERCENTAGE % 19.1 39.1 27.5 14.1 100

1 2 3 4

HSC GRADUATE PG OTHERS TOTAL

INFERENCE:

From the table it can be inferred that 39.1% of the respondents are graduates, 27.5% are the post graduates followed by Hsc and others with 19.1% and 14.1%

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FIG.3 EDUCATIO E ON QUALI IFICATION N OF THE RESPOND DENTS

%OFRESPON R NDENTS S

OTHERS S 14%

HSC 19%

PG 28% GRADUATE 39%

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TABLE-4. OCCUPATION OF THE RESPONDENTS

SNO OCCUPATION NO.OF RESPONDENTS PERCENTAGE %

1 2 3 4 5 6

SELF EMPLOYE GOVERNMENT SERVANT PRIVATE HOUSE WIFE RETIRED OTHERS TOTAL

27 28 32 11 14 8 120

22.5 23.3 26.6 9.1 11.6 6.6 100

INFERENCE: From the table it can be inferred that 26.6% of private employees, 23.3% are government servants followed by self employees, retired, house wife's and others.

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FIG.4.OCCUPA ATION

OF F RESPONDENTS S

%OF O RESP PONDEN NTS

SELFEMPLO OYE PRIVATE RETIRED 12% % 9% 27% 23% % 7% 22% GOVERNM MENTSERVANT T HOUSEWIFE OTHERS

TABL LE-5. ANNU UAL INCOME E OF THE RESPONDEN R NTS

SNO

AN NNUAL INCO OME

NO.OF. NDENTS RESPON

ENTAGE PERCE %

1 2 3 4 5

BE ELOW 1 LAC C 1-2 2 LAC 2-5 5 LAC 5- 10 LAC AB BOVE 10 LAC C TO OTAL

27 53 18 12 10 120

22.5 44.1 15 10 8.3 100

INFE ERENCE:

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From the table t it can be inferred that 44% 4 of the respondents are in the income group 1- 2 lac c, follow wed by below 1 lac, 2-5 lac, 5-10 5 lac and ab bove 10 lac. FIG G.5

AN NNUAL

INCOM ME

OF O

TH HE

RE ESPONDE ENTS

60 50 40 30 20 10 0 BELOW1 LAC 1 12LAC 25LAC L 5 10LA AC ABOVE10 LAC 4 5 N NO.OF. RESPO ONDENTS P PERCENTAGE %

TAB BLE-6. RESP PONDEN NTS AW WARENES SS OF INSURA ANCE COM MPANIE ES.

SNO

COMPANY

NO.O OF. RESPO ONDENTS

PERCENTAGE %

1 2 3 4

LIC C ICIC CI PRUDENT TIAL BIR RLA SUN LIFE SBI I LIFE

52 26 12 8

43.3 21.6 10 6.6

35

OTH HERS TO OTAL

22 120

18.3 100

E: INFERENCE m the above table 43.3% of f the responde ents were awar re of lIC follo owed by From ICICI I PRUDENTIA AL, OTHERS S, BIRLA SUN N LIFE, and SBI S LIFE.

FI IG.6. AWAR RENESS OF INSURANCE I E COMPANIES

%OF.RESPON NDENTS S
LIC ICICIPRUDENTIAL BIR RLASUNLIFE SBILIFE

8% 12% 53% 27 7%

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TABLE-7. PURPOSE OF INVESTMENT IN INSURANCE

SNO

PURPOSE INVESTMENT

OF

NO.OF. RESPONDENT

PERCENTAGE %

1 2 3 4 5

LIFE COVERAGE RETURNS LIQUIDITY INVESTMENT OTHERS TOTAL

72 12 8 22 6 120

60 10 6.6 18.3 5 100

INFERENCE:

From the table it can be inferred that 60% of the respondents have invested in insurance for life coverage, followed by investments, returns, liquidity and others.

FIG.7. PURPOSE OF INVESTMENT IN INSURANCE

37

OTHERS 5% ESTMENT INVE 18%

%OF.RESPON R DENT

LIQUIDITY 7%

LIFECOV VERAGE 60 0%

RETUR RNS 10% %

TAB BLE-8. WILLING W GNESS OF F THE RE ESPOND DENTS TO O TAKE THE RIS SK WHIL LE INVE ESTING IN I INSUR RANCE
SNO INVE ESTMENT RIS SK NO.OF. DENTS RESPOND PERC CENTAGE %

1 2 3 4

HIGH H RISK MODE ERATE RISK K LOW RISK RISK AVERSE TOTA AL

18 43 28 31 120

15 35.8 23.3 25.8 100

INFE ERENCE:

From the table t it can be inferred i that 35.8% 3 of the re espondents are e willing to tak ke moderate ris sk follow wed by risk ave erse, low risk , and high risk.

38

FIG.8. INVESTMENT RISK

50 45 40 35 30 25 20 15 10 5 0 HIGHRISK MODERATE LOWRISK RISK RISK AVERSE NO.OF.RESPONDENTS PERCENTAGE%

TABLE-9. INVESTMENT IN OTHER AVENUES

SNO

INVESTMENTS

NO.OF. RESPONDENTS

PERCENTAGE %

1 2

MUTUAL FUNDS FIXED DEPOSITS

25 47

20.8 39.1

39

3 4 5

SHARES REAL ESTA ATES OTHERS TOTAL

16 6 18 8 14 4 12 20

13.3 15 11.6 100

INFE ERENCE From the table it ca an be inferred that t 39.1% of the responden nts invested in fixed deposits s followed by mutual funds, real estates an nd others.

FIG.9.

INVESTME ENTS IN OTHER O A AVENUES S

%OF F.RESPO ONDENT TS

OTHERS 12% MUTUAL L FUNDS 21%

REALESTATES E 15 5%

SHARES % 13%

FIXED DDEPOSITS 39%

TAB BLE-10. AWARE ENESS OF MARK KET LIN NK PLAN NS OF ICICI PRU UDENTIA AL.

40

SNO

AWARENESS

NO.OF.RESPONDE NTS

PERCENTAGE %

1 2 3 4

FULLY AWARE PARTIALLY AWARE NOT AWARE CANT SAY TOTAL

32 52 20 16 120

26.6 43.3 16.6 13.3 100

INFERENCE: From the table it can be inferred that 43.3% of the respondents are partially aware of market link plans followed by fully aware, not aware and can't say.

FIG.10. AWARENESS OF MARKET LINK PLANS

41

%OF.RESP O ONDEN NTS

CANTSAY C 13% NOTAWARE A 17%

FULLY YAWARE 2 27%

PA ARTIALLY AWARE A 43%

TAB BLE-11. INVESTM MENT IN N THE MARKET M LINK PL LANS OF ICICI PR RUDENT TIAL
SNO O INV VESTMENT MADE NO.OF F.RESPOND DENTS PERCENTA AGE %

YES S

47

39.1

42

NO TOT TAL

73 120

60.9 100

INFE ERENCE:

From the above a table we e can infer that t 60.9% of the respondents are a not aware of market link plans. Only 39.1% respond dents are awar re of the Mark ket Link plans

FIG. .11.

%.OF.RES % SPONDE ENTSIN NVESTED DIN M MARKET LINKPL LANS

YES 39%

NO 61%

TAB BLE-12. AMOUN NT INVE ESTED IN MAR RKET L LINK PL LANS OF ICICI PRUDE ENTIAL
SNO O AMO OUNT INV VESTED 1 BEL LOW 25,000 18 38.2 NO.OF.R RESPONDEN NTS PERCEN NTAGE %

43

2 3. 4. 5.

25,000 - 50,000 50,000-75,000 75,000-1,00,000 ABOVE 1,00,000 TOTAL

11 7 6 5 47

23.4 14.8 12.7 10.6 100

INFERENCE:

From the above table it can be inferred that 38.2% of the respondents have invested below 25000 followed by 25,000 - 50,000-75,000-1,00,000 and above 1,00,000.

FIG.12.AMOUNT INVESTED IN MARKET LINK PLANS

44

NO O.OF.RE ESPOND DENTS

18 8 16 6 14 4 12 2 10 0 8 6 4 2 0 NO.OF.RESPONDENTS

TAB BLE-13. EDUC CATIONA AL QU UALIFICA ATION OF THE T RES SPONDE ENT WH HO HAV VE INVE ESTED IN MAR RKET LINK L PLA ANS.
S.NO O. 1. 2 3. 4. EDU UCATION HSC GRA ADUATE PG OTH HERS TOT TAL NO O.OF. RE ESPONDENT TS 9 23 30 10 72 P PERCENTAG GE % 1 12 3 32 4 42 1 14 1 100

ERENCE: INFE

45

From the table it can be inferred that Graduate's and post graduates are having good knowledge about the market link plans.

FIG.13. EDUCATION OF RESPONDENTS

%OF.RESPONDENTS
HSC GRADUATE PG OTHERS

14%

12%

32% 42%

TABLE-14. ANNUAL INCOME OF THE RESPONDENT WHO HAVE INVENTED IN MARKET LINK PLACES:

46

S.NO

ANNUAL INCOME

NO.OF. RESPONDENTS 14 29 15 8 6 72

PERCENTAGE % 19.4 40.2 20.8 11.1 8.3 100

1 2. 3. 4. 5

BELOW 1 LACK 1-2 LACK 2-5 LACK 5 -10 LACK ABOVE TOTAL

INFERENCE:

From the table it can be inferred that the respondents whose annual income is between 1 - 2 lack had made their investment in market link.

FIG.14. ANNUAL INCOME OF RESPONDENT

47

35 30 25 20 15 10 5 0 BELOW1LACK 12LACK 25LACK NO.OF.RESPONDENTS 510LACK ABOVE 14 15 29

8 6

TABLE-15. OCCUPATION OF THE RESPONDENTS WHO HAVE INVENTED IN MARKET LINK PLANS. S.NO OCCUPATION NO.OF. RESPONDENTS 12 14 32 2 4 8 72 PERCENTAGE

1 2 3 4 5 6

SELF EMPLOYEE GOVERNMENT SERVENT PRIVATE EMPLOYEE HOUSE WIFE RETIRED OTHERS TOTAL

16.7 19.4 44.4 2.8 5.6 11.1 100

INFERENCE:

48

From the table it can be inferred that private employees have invested in market link plans in a large number compared to others.

FIG.15.

OCCUPATIONOFRESPONDENTS
35 30 25 20 15 10 5 0 NO.OF.RESPONDENTS

STATISTICALS ANALYSIS:

49

( I )Chi-square test to find out the relationship between the purpose of investment in insurance and the annual income of the respondent.

Null Hypothesis (Ho) : There is no significant relationship between the purpose of investment in insurance and the annual income. Alternate Hypothesis (H1) : There is significant relationship between the purpose of the investment in insurance and the annual income.

Life
PURPOSE OF INVESTMENT

Returns

Liquidity

Investment

Others

Total

Coverage

ANNUAL INCOME

Below 1,00,000 1 to 2,00,000 2 to 5,00,000 5 to 10,00,000 Above 10,00,000 Total

12 28 15 9 8 72

5 7 0 0 0 12

3 2 1 2 0 8

6 11 2 12 2 22

1 5 0 0 0 6

27 53 18 12 10 120

Chi-Square Table

50

0 12 5 3 6 1 28 7 2 11 5 15 0 1 2 0 9 0 2 1 0 8 0 0 2 0 Total =

E 16.2 2.7 1.8 4.95 1.35 31.8 5.3 3.53 9.7 2.65 10.8 1.8 1.2 3.3 0.9 7.2 1.2 0.8 2.2 0.6 6 1 0.66 1.83 0.5

(0-E)2 17.64 5.29 1.44 1.025 0.1225 14.44 2.89 2.3404 1.69 5.5225 17.64 3.25 0.04 1.69 0.81 3.24 1.44 1.44 1.44 0.36 4 1 0.4356 0.17 0.25

(0-E)2 E 1.088 1.959 0.8 0.222 0.0907 0.454 0.545 0.663 0.1742 2.083 1.6333 1.8055 0.333 0.5121 0.9 0.45 1.2 1.8 0.654 0.6 0.666 1 0.66 0.0928 0.5 20.5859

Degree of freedom

(r-1) (c-1) =(5-1) (5-1)

= 16

51

The tabulated value of x2 at 16 degree of freedom and at 0.05 level of significanceis 26.296

Since the calculated value is less than the tabulated value our null hypothesis is accepted and alternate hypothesis is rejected.

Inference:
There is no significance relationship between the purpose of investment in insurance and the annual income.

52

( II ). Chi-square test find out the relationship between the risk taken while investing and the amount invested.

Null Hypothesis: There is no significant relationship between the risk taken while and the amount invested.

Alternate Hypothesis: There is significance relationship between the risk taken while investing and the amount invested.

RISK TAKEN WHILE INVESTMENT

High Risk

Moderate Risk

Low Risk

Risk Averse

Total

AMOUNT INVESTED

Below 25,000 25,000 - 50,000 50,000 - 75,000 75,000 - 1,00,000 Above 1,00,000 Total

6 3 2 2 0 13

5 2 3 3 3 16

5 4 2 0 0 11

2 2 0 1 2 7

18 11 7 6 5 47

53

Chi square test:

0 6 5 5 2 3 2 4 2 2 3 2 0 2 3 0 1 1 3 0 0 TOTAL

E 5 6.1 4.2 2.7 3.04 3.8 2.6 1.7 1.9 2.3 1.7 1.04 1.7 2.04 1.4 0.9 1.3 1.7 1.1 0.7

(0-E)2 1 1.21 0.64 0.49 0.0016 3.24 1.96 0.09 0.01 0.49 0.09 1.086 0.09 0.9216 1.96 0.01 0.01 1.69 1.21 0.49

(0-E)2 E 0.2 0.19 0.15 0.18 0.005 0.85 0.75 0.05 0.005 0.21 0.05 1.04 0.05 0.45 1.4 0.01 0.01 0.9 1.1 0.7 8.3955

Degree of freedom: = (4 - 1) (5-1) = 12

The tabulated value of x2 at 12 degrees of freedom and at 0.05 level of significance is = 21.026 Since the computed value is less than the tabulated value Null Hypothesis is accepted and alternate hypothesis is rejected.

54

Inference:
There is no significant relationship between the risk taken while investing and the amount invested.

( III ) Chi-Square table find out the relationship between the age of the respondents and the risk taken by the respondent while investing.

Null Hypothesis: There is no significant relationship between age of the respondent and the risk taken while investing.

Alternate Hypothesis: There is significant relationship between the age of the respondent and the risk taken while investing.

AGE RISK

25-30

31-35

35-40

41-50

Above 51

Total

High Risk Moderate Risk Low Risk Risk Averse Total

3 4 2 1 10

5 12 3 4 24

6 19 4 4 33

3 5 9 12 29

1 3 10 10 24

18 43 28 31 120

Chi-Square Table
0 3 5 E 1.5 3.6 (0-E)2 2.25 1.96 (0-E)2 E 1.5 0.54

55

6 3 1 4 12 19 5 3 2 2 4 9 10 1 4 4 12 10 Total =

5 4.35 3.6 3.6 8.6 12 10.3 8.6 2.3 5.6 7.7 6.8 5.6 2.6 6.2 8.5 7.5 6.2

1 1.8225 6.76 0.16 11.56 49 28.09 37.36 0.09 6.76 13.69 4.84 19.36 2.56 4.84 20.25 20.25 14.44

0.2 0.4 1.9 0.04 1.34 4.08 2.7 3.6 0.03 1.2 1.7 0.07 3.45 1 0.07 2.38 2.7 2.3 32.38

Degree of freedom

(r-1) (c-1) = 4x5

= 21.026

The tabulated value of x2 at 12 degrees of freedom and at 0.05 level of significance is 21.026.

Since the tabulated value is less than the calculated value our alternate hypothesis is accepted and null hypothesis is rejected.

56

Inference:
investing.

There is significant relationship between the age of respondents and amount of risk taken while

CHAPTER 8
FINDINGS
The respondents have wide knowledge about the market link plans of different insurance companies. The respondents are willing to take moderate risk while investing in market link plans. The education qualification of the respondent plays a vital role while investing in market link plans. The respondent working in private organization are fully aware of the market link plans. Most of the respondents doesn't have the complete knowledge about the equity market and the debt market.

57

Most of the male respondents spouses do not have insurance More than 50% of the respondents have gone in for traditional plans than for market linked insurance and they are also willing to take high or moderate risk.

The awareness towards key man insurance is very low among the private limited companies. But the opportunity which was available in keyman insurance is lost because of the rule brought in by IRDA as only term products can be given for Key man Insurance.

CHAPTER 9
SUGGESTIONS

1. The investors should be given monthly reports instead of quarterly reports. 2. ICICI prudential has to concentrate more on advertisement through news papers televisions etc., in order to inform the customers about the different options available in market link plans. 3. Against the population 105 crores only 10 crores are covered by insurance. Private insurance companies have to reach to all segment of market by winning the confidence of the public. 4. Many people are not willing to monitor the equity market for the funds maintained in market linked insurance plan even though they have the knowledge of the market. Therefore ICICI Pru can come out with non participating market linked products.

58

5. They can also concentrate on the lives of females whose life is also valuable both financially and mentally. 6. Now the whole Rs. 100000 can be invested in insurance which can offer a high rate of return than any other segment. 7. They can also concentrate private limited companies for key man insurance and have a Niche product for the same so that the penetration can be made easily which may include an annuity scheme which may be used for superannuation.

CHAPTER 10
CONCLUSION

Life is uncertain and life insurance makes this uncertain as certain.

Even though the bread winner of the family dies, the family will not suffer and they can enjoy the life insurance cover. Life insurance will protect the family and make them happy in future.

There is always a market potential for life insurance among the housewives segment where the penetration of life insurance has been very low.

The additional tax benefits provided in the budget has also increased the potential of life insurance.

The awareness and penetration of key man insurance among the private limited companies is not even one percentage. This may give a scope for a large market in this segment. But it can be given only as a pure insurance product and not as an investment.

59

BIBLIOGRAPHY

BOOKS S.P.GUPTA D.N.ELHANCE - Statistics - fundamentals of statistics

WILLIAM G. ZIKMUND- Business research methods

Websites: www.icicipru.com www.icicibanks.com www.google.co.in

60

QUESTIONNAIRE
To study the GROWTH OF UNIT LINKED INSURANCE PLANS IN INDIAN
INSURANCE INDUSTRY AT ICICI PRUDENTIAL LIFE INSURANCE COMPANY LIMITED

Name :

Address :

1.

Sex :

Male [ ]

Female [ ]

2.

Age:

25 - 30 [ ]

31 - 35 [ ]

36 - 40 [ ]

41 - 50 [ ]

Above 51 [ ]

3.

Education:

HSC [ ]

Graduate [ ]

PG [ ]

Others [ ]

4.

Annual Income:

61

Below1, 00,000 [ ] 2 to 5, 00,000 [ ] Above 10, 00,000 [ ]

1- to 2, 00,000 [ ] 5 to 10, 00,000 [ ]

5.

Occupation: Self Employee [ ] Government Servant [ ] Private Employee [ ]

House Wife [ ]

Retired [ ]

Others [ ]

6. If I say Life Insurance which company comes to your mind? L.I.C. [ ] ICICI Prudential [ ] Birla Sun Life [ ]

SBI Life [ ]

Others [ ]

7. What is the purpose of your investment in insurance?

Life Coverage [ ] Returns [ ] Liquidity [ ]

Investment

[]

Others [ ]

8. Have you invested in any of the following?

Mutual Funds [ ] Fixed Deposits [ ] Shares [ ]

Real Estate [ ]

Others [ ]

9.

Are you aware of insurence plans of ICICI Prudential?

Fully aware [ ]

Partially Aware [ ]

62

Not aware [ ]

Cant Say [ ]

10.

How did you come to know about these plans?

News Papers [ ]

Media [ ]

Advisors [ ]

Friends [ ]

11.

How much risk are you willing to take while investing insurance

High Risk [ ]

Moderate Risk [ ]

Low Risk [ ]

Risk Averse [ ]

12.

Have you ever invested in the market link plan of ICICI PRUDENTIAL?

Yes [ ]

No [ ]

13.

If yes how much money have you invested?

63

Below 25,000 [ ]

25,000 - 50,000 [ ]

50,000-75,000 [ ]

75,000 - 1, 00,000 [ ]

Above 1, 00,000 [ ]

14.

Are you satisfied with the service provided by ICICI Prudential?

Yes [ ]

No [ ]

Cant Say [ ]

64