Chapter -1

Introduction of Life
Insurance

1
LIFE INSURANCE

Life insurance is a form of insurance that pays monetary proceeds upon the death of the

insured covered in the policy. Essentially, a life insurance policy is a contract between the

named insured and the insurance company where in the insurance company agrees to pay

an agreed upon some of money to the insured’s named beneficiary so long as the

insured’s premiums are current.

With a large population and the untapped market area of this population insurance

happens to be a very opportunity in India. Today it stands as a business growing at the

rate of 15-20% annually. Together with banking services, it adds about 7% to country

GDP.

In spite of all this growth statistics of the penetration of the insurance in the country is

very poor. Nearly 80% of Indian populations are without life insurance cover and the

health insurance. This is an indicator that growth potential for the insurance sector is

immense in India.

It was due to this immense growth that the regulations were introduced in the insurance

sector and in continuation “Malhotra Committee” was constituted by the government in

1993 to examine the various aspects of the industry. The key element of the reform

process was participation of overseas insurance companies with 26% capital.

Creating a more competitive financial system suitable for the requirements of the

economy was the main idea behind this reform.

2
Since then the insurance industry has gone through many changes. The liberalization of

the industry the insurance industry has never looked back and today stand as one of the

most competitive and exploring industry in India. The entry of the private players and the

increased use of the new distribution are in the limelight today. The use of new

distribution techniques and the IT tools has increased the scope of the industry in the

longer run.

Insurance is the business of providing protection against financial aspects of risk, such as

those property, life, health and legal liability.

It is one method of a greater concept known as risk management- which is the need to

manage uncertainty on account of exposure to loss, injury, disadvantage or destruction.

Insurance is the method of spreading and transfer of risks. The fortunate many who are

exposed to some or similar risk shares loss of the unfortunate. Insurance does not protect

the assets but only compensates the economy or financial loss.

In insurance the insured makes payment called” Premiums” to an insurer, and in return is

able to claim a payment from the insurer if the insured suffers a defined type of loss.

This relationship is usually drawn upon in a formal legal contract. Insurance companies

also earn investment profits, because the have the use of the premium money from the

time they receive it until the time the need it to pay claims. This money is called the float.

When the investment of float are successful the may earn large profits, even if the

insurance company pays out of claims every penny received as premiums.

3
In fact, most insurance companies pay out more money than they receive in premiums.

The excess amount that they pay to policyholders is the cost of float. An insurance

company will profit if the invest the money at a greater return than their cost of float. An

insurance contract or policy will set out in detail the exact circumstances under which a

benefit payment will be made and the amount of premiums.

Classification of Insurance

The insurance industry in India can broadly classify in two parts. The are.

1. Life Insurance

2. Non Life (general) Insurance

Life Insurance

Life insurance can be defined as “life insurance provides a some of money if the

person who is insured dies while the policy is in effect.”

In 1818 British introduced to India, with the establishment of the oriental life

insurance company in Calcutta. The first Indian owned life insurance company is the

Bombay mutual life assurance society was setup in 1870.

The life insurance act,1912 was the first statuary measure to regulate the life

insurance business in India. In 1983, the earlier legislation was consolidated and

4
amended by the insurance act, 1938, with comprehensive provisions for detailed

effective control over insurance.

The union government had opened the insurance sector for private participation in

1999, also allowing the private companies to have foreign equity up to 26% .

Following the opening up of the insurance sector, 12 private sector companies have

entered the life insurance business.

Benefits of Life Insurance

• Life insurance encourages saving and forces thrift.

• It is superior to traditional saving vehicles.

• It help to achieve the purpose of life assured.

• It can be enchased and facilitates quick borrowing.

• It provides valuable tax relief.

Thus insurance is found to be very useful in the lives of the person both in short term

and long term.

5
Fundamental Principles Of Life Insurance

1. Principle of almost good faith:

“A positive duty to voluntary disclose, accurately and fully, all facts, materials to the

risk being proposed whether requested or not”.

2. Principle of insurable interest:

“Relationship with the subject matter (a person) which is recognized in law and gives

legal rights to insure the person”.

Non-Life (General) Insurance

Triton insurance co. ltd was the first general insurance company to be established in

India in 1850, whose shares were mainly by the British. The first general insurance

company to be set up by an Indian mercantile insurance company ltd., which was

stabilized in 1970.

The general insurance business was nationalized after the promulgation of general

insurance corporation (GIC) of India undertook the post nationalization general

insurance business.

6
THE INSURANCE INDUSTRY IN INDIA

AN OVERVIEW

With the largest number of life insurance policies in force in the world, Insurance

happens to be a mega opportunity in India. It’s a business growing at the rate of 15-20 per

cent annually and presently is of the order of Rs 1560.41 billion (for the financial year

2006 – 2007). Together with banking services, it adds about 7% to the country’s Gross

Domestic Product (GDP). The gross premium collection is nearly 2% of GDP and funds

available with LIC for investments are 8% of the GDP.

Even so nearly 65% of the Indian population is without life insurance cover while health

insurance and non-life insurance continues to be below international standards. A large

part of our population is also subject to weak social security and pension systems with

hardly any old age income security

A well-developed and evolved insurance sector is needed for economic development as it

provides long term funds for infrastructure development and strengthens the risk taking

ability of individuals. It is estimated that over the next ten years India would require

investments of the order of one trillion US dollars.

7
HISTORICAL PERSPECTIVE

The history of life insurance in India dates back to 1818 when it was conceived as a

means to provide for English Widows. Interestingly in those days a higher premium was

charged for Indian lives than the non - Indian lives, as Indian lives were considered more

risky to cover. The Bombay Mutual Life Insurance Society started its business in 1870. It

was the first company to charge the same premium for both Indian and non-Indian lives.

The Oriental Assurance Company was established in 1880. The General insurance

business in India, on the other hand, can trace its roots to Triton Insurance Company

Limited, the first general insurance company established in the year 1850 in Calcutta by

the British. Till the end of the nineteenth century insurance business was almost entirely

in the hands of overseas companies.

Insurance regulation formally began in India with the passing of the Life Insurance

Companies Act of 1912 and the Provident Fund Act of 1912. Several frauds during the

1920's and 1930's sullied insurance business in India. By 1938 there were 176 insurance

companies.

The first comprehensive legislation was introduced with the Insurance Act of 1938 that

provided strict State Control over the insurance business. The insurance business grew at

a faster pace after independence. Indian companies strengthened their hold on this

business but despite the growth that was witnessed, insurance remained an urban

phenomenon.

8
The Government of India in 1956, brought together over 240 private life insurers and

provident societies under one nationalized monopoly corporation and Life Insurance

Corporation (LIC) was born. Nationalization was justified on the grounds that it would

create the much needed funds for rapid industrialization. This was in conformity with the

Government's chosen path of State led planning and development.

The non-life insurance business continued to thrive with the private sector till 1972. Their

operations were restricted to organized trade and industry in large cities. The general

insurance industry was nationalized in 1972. With this, nearly 107 insurers were

amalgamated and grouped into four companies- National Insurance Company, New India

Assurance Company, Oriental Insurance Company and United India Insurance Company.

These were subsidiaries of the General Insurance Company (GIC).

9
KEY MILESTONES

1912: The Indian Life Assurance Companies Act enacted as the first statute to regulate

the life insurance business.

1928: The Indian Insurance Companies Act enacted to enable the government to collect

statistical information about both life and non-life insurance businesses.

1938: Earlier legislation consolidated and amended by the Insurance Act with the

objective of protecting the interests of the insuring public.

1956: 245 Indian and foreign insurers along with provident societies were taken over by

the central government and nationalized. LIC was formed by an Act of Parliament- LIC

Act 1956- with a capital contribution of Rs. 5 crore from the Government of India.

10
INDUSTRY REFORMS

Reforms in the Insurance sector were initiated with the passage of the IRDA Bill in

Parliament in December 1999. The IRDA since its incorporation as a statutory body in

April 2000 has fastidiously stuck to its schedule of framing regulations and registering

the private sector insurance companies. Since being set up as an independent statutory

body the IRDA has put in a framework of globally compatible regulations.

The other decision taken simultaneously to provide the supporting systems to the

insurance sector and in particular the life insurance companies was the launch of the

IRDA online service for issue and renewal of licenses to agents. The approval of

institutions for imparting training to agents has also ensured that the insurance companies

would have a trained workforce of insurance agents in place to sell their products.

PRESENT SCENARIO - LIFE INSURANCE INDUSTRY IN INDIA

The life insurance industry in India grew by an impressive 47.38%, with premium

income at Rs. 1560.41 billion during the fiscal year 2006-2007. Though the total volume

of LIC's business increased in the last fiscal year (2006-2007) compared to the previous

one, its market share came down from 85.75% to 81.91%.

The 17 private insurers increased their market share from about 15% to about 19% in a

year's time. The figures for the first two months of the fiscal year 2007-08 also speak of

the growing share of the private insurers. The share of LIC for this period has further

come down to 75 percent, while the private players have grabbed over 24 percent.

11
With the opening up of the insurance industry in India many foreign players have entered

the market. The restriction on these companies is that they are not allowed to have more

than a 26% stake in a company’s ownership.

Since the opening up of the insurance sector in 1999, foreign investments of Rs. 8.7

billion have poured into the Indian market and 19 private life insurance companies have

been granted licenses.

Innovative products, smart marketing, and aggressive distribution have enabled fledgling

private insurance companies to sign up Indian customers faster than anyone expected.

Indians, who had always seen life insurance as a tax saving device, are now suddenly

turning to the private sector and snapping up the new innovative products on offer. Some

of these products include investment plans with insurance and good returns (unit linked

plans), multi – purpose insurance plans, pension plans, child plans and money back plans.

12
 Chapter-2
Company Profile

13
COMPANY PROFILE

FOUNDER

Few men in history have made as dramatic a contribution to their country’s economic

fortunes as did the founder of Reliance, Sh. Dhirubhai H Ambani. Fewer still have left

behind a legacy that is more enduring and timeless.

• As with all great pioneers, there is more than one unique way of describing the

true genius of Dhirubhai: The corporate visionary, the unmatched strategist, the proud

patriot, the leader of men, the architect of India’s capital markets, the champion of

shareholder interest.

• But the role Dhirubhai cherished most was perhaps that of India’s greatest wealth

creator. In one lifetime, he built, starting from the proverbial scratch, India’s largest

private sector enterprise.

• When Dhirubhai embarked on his first business venture, he had a seed capital of

barely US$ 300 (around Rs 14,000). Over the next three and a half decades, he

converted this fledgling enterprise into a Rs 60,000 crore colossus—an achievement

which earned Reliance a place on the global Fortune 500 list, the first ever Indian

private company to do so.

• Dhirubhai is widely regarded as the father of India’s capital markets. In 1977,

when Reliance Textile Industries Limited first went public, the Indian stock market

was a place patronised by a small club of elite investors which dabbled in a handful of

stocks.

14
• Undaunted, Dhirubhai managed to convince a large number of first-time retail

investors to participate in the unfolding Reliance story and put their hard-earned

money in the Reliance Textile IPO, promising them, in exchange for their trust,

substantial return on their investments. It was to be the start of one of great stories of

mutual respect and reciprocal gain in the Indian markets.

• Under Dhirubhai’s extraordinary vision and leadership, Reliance scripted one of

the greatest growth stories in corporate history anywhere in the world, and went on to

become India’s largest private sector enterprise.

• Through out this amazing journey, Dhirubhai always kept the interests of the

ordinary shareholder uppermost in mind, in the process making millionaires out of

many of the initial investors in the Reliance stock, and creating one of the world’s

largest shareholder families.

15
ABOUT RELIANCE

Reliance Life Insurance Company Limited is a part of Reliance Capital Ltd. of the

Reliance - Anil Dhirubhai Ambani Group. Reliance Capital is one of India’s leading

private sector financial services companies, and ranks among the top 3 private sector

financial services and banking companies, in terms of net worth. Reliance Capital has

interests in asset management and mutual funds, stock broking, life and general

insurance, proprietary investments, private equity and other activities in financial

services.

• Reliance Capital Limited (RCL) is a Non-Banking Financial Company (NBFC)

registered with the Reserve Bank of India under section 45-IA of the Reserve Bank of

India Act, 1934.

• Reliance Capital sees immense potential in the rapidly growing financial services

sector in India and aims to become a dominant player in this industry and offer fully

integrated financial services.

• Reliance Life Insurance is another step forward for Reliance Capital Limited to

offer need based Life Insurance solutions to individuals and Corporates.

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COMPANY OBJECTIVE

At Reliance Life Insurance, we strongly believe that as life is different at every stage, life

insurance must offer flexibility and choice to go with that stage. We are fully prepared

and committed to guide you on insurance products and services through our well-trained

advisors, backed by competent marketing and customer services, in the best possible

way.

• It is our aim to become one of the top private life insurance companies in India

and to become a cornerstone of RLI integrated financial services business in

India.

COMPANY MISSION

• “To set the standard in helping our customers manage their financial future”.

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INSURANCE PLANS

1. Product (Individual Plans) Saving(Endowment)

2. Reliance Endowment Plan (Formerly Divya Shree)

3. Reliance Special Endowment Plan (Formerly Subha Shree)

4. Reliance Cash Flow Plan (Formerly Dhana Shree)

5. Reliance Child Plan (Formerly Yuva Shree)

6. Reliance Whole Life Plan (Formerly Nitha Shree)

Pensions

7. Reliance Golden Year Plan (Formerly Bhagya Shree)

Investments

7. Reliance Market Return Plan (Formerly Kanaka Shree)

8. Reliance Term Plan (Formerly Raksha Shree)

9. Risk / Protection

• Reliance Group Term Assurance Policy(Formerly Group Term Assurance

Policy)

• Reliance EDLI Scheme (Formerly EDLI Scheme)

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10. Pensions

• Reliance Group Gratuity Policy (Formerly Group Gratuity Policy)

• Reliance Group Superannuation Policy (Formerly Group Superannuation

Policy)

11. Reliance Money Guarantee Plan

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Tax Benefits

Income tax section Gross annual How much tax can Hdfc standard life
salary you save? plans

Sec. 80C Across All income Upto Rs. 33,990 All the life insurance
Slabs saved on plans.
investment of
Rs. 1,00,000.

Sec. 80 CCC Across all income Upto Rs. 33,990 All the pension plans.
slabs. saved on
Investment of
Rs.1,00,000.

Sec. 80 D Across all income Upto Rs. 3,399 All the health insurance
slabs saved on riders available with the
Investment of conventional plans.
Rs. 10,000.

TOTAL SAVINGS
Rs37,389
POSSIBLE

Rs. 33,990 under Sec. 80C and under Sec. 80 CCC , Rs.3,399 under
Sec. 80 D, calculated for a male with gross annual income
exceeding Rs. 10,00,000.

Sec. 10 (10)D Under Sec. 10(10D), the benefits you receive are completely tax-free,
subject to the conditions laid down therein.

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MAJOR PLAYERS IN THE INSURANCE INDUSTRY IN INDIA

• Life Insurance Corporation of India (LIC)

Life Insurance Corporation of India (LIC) was established on 1 September 1956 to spread

the message of life insurance in the country and mobilise people’s savings for nation-

building activities. LIC with its central office in Mumbai and seven zonal offices at

Mumbai, Calcutta, Delhi, Chennai, Hyderabad, Kanpur and Bhopal, operates through 100

divisional offices in important cities and 2,048 branch offices. LIC has 5.59 lakh active

agents spread over the country.

The Corporation also transacts business abroad and has offices in Fiji, Mauritius and

United Kingdom. LIC is associated with joint ventures abroad in the field of insurance,

namely, Ken-India Assurance Company Limited, Nairobi; United Oriental Assurance

Company Limited, Kuala Lumpur; and Life Insurance Corporation (International), E.C.

Bahrain. It has also entered into an agreement with the Sun Life (UK) for marketing unit

linked life insurance and pension policies in U.K.

In 1995-96, LIC had a total income from premium and investments of $ 5 Billion while

GIC recorded a net premium of $ 1.3 Billion. During the last 15 years, LIC's income

grew at a healthy average of 10 per cent as against the industry's 6.7 per cent growth in

the rest of Asia (3.4 per cent in Europe, 1.4 per cent in the US).

LIC has even provided insurance cover to five million people living below the poverty

line, with 50 per cent subsidy in the premium rates. LIC's claims settlement ratio at 95

per cent and GIC's at 74 per cent are higher than that of global average of 40 per cent.

21
Compounded annual growth rate for Life insurance business has been 19.22 per cent per

annum.

• General Insurance Corporation of India (GIC)

The general insurance industry in India was nationalized and a government company

known as General Insurance Corporation of India (GIC) was formed by the Central

Government in November 1972. With effect from 1 January 1973 the erstwhile 107

Indian and foreign insurers which were operating in the country prior to nationalization,

were grouped into four operating companies, namely, (i) National Insurance Company

Limited; (ii) New India Assurance Company Limited; (iii) Oriental Insurance Company

Limited; and (iv) United India Insurance Company Limited. (However, with effect from

Dec'2000, these subsidiaries have been de-linked from the parent company and made as

independent insurance companies). All the above four subsidiaries of GIC operate all

over the country competing with one another and underwriting various classes of general

insurance business except for aviation insurance of national airlines and crop insurance

which is handled by the GIC.

Besides the domestic market, the industry is presently operating in 17 countries directly

through branches or agencies and in 14 countries through subsidiary and associate

companies.

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In Addition To Above State Insurers The Following Have Been Permitted

To Enter Into Insurance Business: -

The introduction of private players in the industry has added to the colors in the dull

industry. The initiatives taken by the private players are very competitive and have given

immense competition to the on time monopoly of the market LIC. Since the advent of the

private players in the market the industry has seen new and innovative steps taken by the

players in this sector. The new players have improved the service quality of the

insurance. As a result LIC down the years have seen the declining phase in its career. The

market share was distributed among the private players. Though LIC still holds the 75%

of the insurance sector but the upcoming natures of these private players are enough to

give more competition to LIC in the near future. LIC market share has decreased from

95% (2002-03) to 82 %( 2004-05).

1. HDFC Standard Life Insurance Company Ltd.

HDFC Standard Life Insurance Company Ltd. is one of India’s leading private life

insurance companies, which offers a range of individual and group insurance solutions. It

is a joint venture between Housing Development Finance Corporation Limited (HDFC

Ltd.), India’s leading housing finance institution and The Standard Life Assurance

Company, a leading provider of financial services from the United Kingdom. Their

cumulative premium income, including the first year premiums and renewal premiums is

Rs. 672.3 for the financial year, Apr-Nov 2005. They have managed to cover over

11,00,000 individuals out of which over 3,40,000 lives have been covered through our

group business tie-ups.

23
2. Max New York Life Insurance Co. Ltd.

Max New York Life Insurance Company Limited is a joint venture that brings together

two large forces - Max India Limited, a multi-business corporate, together with New

York Life International, a global expert in life insurance. With their various Products and

Riders, there are more than 400 product combinations to choose from. They have a

national presence with a network of 57 offices in 37 cities across India.

3. ICICI Prudential Life Insurance Company Ltd.

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). The

company has a network of about 56,000 advisors; as well as 7 banc assurance and 150

corporate agent tie-ups.

4. Om Kotak Mahindra Life Insurance Co. Ltd.

Kotak Mahindra Old Mutual Life Insurance Ltd. is a joint venture between Kotak

Mahindra Bank Ltd. (KMBL), and Old Mutual plc.

24
5.Birla Sun Life Insurance Company Ltd.

Birla Sun Life Insurance Company is a joint venture between Aditya Birla Group and

Sun Life financial Services of Canada.

• Tata AIG Life Insurance Company Ltd.

• SBI Life Insurance Company Limited

• ING Vysya Life Insurance Company Private Limited

• Allianz Bajaj Life Insurance Company Ltd.

• Metlife India Insurance Company Pvt. Ltd.

• AMP SANMAR Assurance Company Ltd.

• Dabur CGU Life Insurance Company Pvt. Ltd.

6. Royal Sundaram Alliance Insurance Company

The joint venture bringing together Royal & Sun Alliance Insurance and Sundaram

Finance Limited started its operations from March 2001. The company is Head Quartered

at Chennai, and has two Regional Offices, one at Mumbai and another one at New Delhi.

25
7. Bajaj Allianz General Insurance Company Limited

Bajaj Allianz General Insurance Company Limited is a joint venture between Bajaj Auto

Limited and Allianz AG of Germany. Both enjoy a reputation of expertise, stability and

strength.

Bajaj Allianz General Insurance received the Insurance Regulatory and Development

Authority (IRDA) certificate of Registration (R3) on May 2nd, 2001 to conduct General

Insurance business (including Health Insurance business) in India.

8. ICICI Lombard General Insurance Company Limited

ICICI Lombard General Insurance Company Limited is a joint venture between ICICI

Bank Limited and the US-based $ 26 billion Fairfax Financial Holdings Limited. ICICI

Bank is India's second largest bank, while Fairfax Financial Holdings is a diversified

financial corporate engaged in general insurance, reinsurance, insurance claims

management and investment management.

Lombard Canada Ltd, a group company of Fairfax Financial Holdings Limited, is one of

Canada's oldest property and casualty insurers. ICICI Lombard General Insurance

Company received regulatory approvals to commence general insurance business in

August 2001.

26
9. TATA AIG General Insurance Company Ltd.

Tata AIG General Insurance Company Ltd. is a joint venture company, formed from the

Tata Group and American International Group, Inc. (AIG). Tata AIG combines the

strength and integrity of the Tata Group with AIG's international expertise and financial

strength. The Tata Group holds 74 per cent stake in the two insurance ventures while AIG

holds the balance 26 per cent stake.

Tata AIG General Insurance Company, which started its operations in India on January

22, 2001, offers the complete range of insurance for automobile, home, personal accident,

travel, energy, marine, property and casualty, as well as several specialized financial

lines.

27
Reliance Policies

(1) Reliance Children Plans

What could make you happier than knowing, that your child's future is secure? Nothing,

we suppose. Which is why, Reliance Life Insurance brings to you Reliance Secure Child

Plan, a unit-linked Insurance Plan, that gives you the freedom to enjoy today with your

child, because his tomorrow is in safe hands.

• Do you see your child becoming a trailblazer?

• Will they create the ultimate symphony or give sports a new dimension?

Our children may just be the ones to end the arms race and wipe out poverty from the

face of the Earth. But for them to be able to aim for the skies, YOU NEED TO ACT

NOW!

Introducing Reliance Secure Child Plan - a unique life insurance cum savings plan.

secure the future of your child.

Key Features

• Insurance cover on the life of child

• Your child is completely protected - we will continue to pay the

premiums even if you are not alive

• Life time income to child in the event of disability
• Return Shield option to protect your investment returns

• Liquidity in the form of partial withdrawals

• Capital guarantee available on maturity and on death of the child for

28
 basic and top-up premiums
• Option to package with Accidental Death and Total and Permanent

Disablement Rider, Critical Conditions Rider and Term Life Insurance

Benefit Rider.

(2)Reliance Health + Wealth Policy

There are times when late working hours take precedence over your health check-ups.

And there are times when a visit to the doctor seems more important than dividends on

your shares. In the rat race to make money, we often forget to take care of ourselves.

We understand this predicament. Here is a plan that will ensure that your wealth keeps

increasing constantly and yet your health does not take a backseat. The Reliance Wealth

Health Plan. A plan that gives you the benefits of wealth bhi. health bhi.

Life changes. And as it does, so do your priorities. After all, the circumstances of your

life can determine the type of health coverage you need.

India has made rapid strides in the health sector. Since Independence, life expectancy has

gone up markedly and survival rates have also increased, still critical health issues

remain. Infectious diseases continue to claim a large number of lives.

Reliance Wealth + Health Plan, a health insurance plan underwritten by Reliance Life

Insurance Company Limited, is designed to work in conjunction with contributions

towards savings.

29
Key Feature

• A Unit Linked plan with Unique Savings Component

• Twin benefit of market linked return and health protection
• Choose from two different plan options
• Flexibility to take care of your family’s health
• Flexibility to switch between funds / plan options
• Option to pay Top-ups

(3) Reliance Pension Policy

Retirement means different things to different people, while some want to relax and take

a trip around the world, some want to start up a venture of their own, and pursue a dream

harnessed for years. The power to make your autumn years special lies only with you.

The Reliance Super Golden Years Plan gives you the power and the right kind of solution

- A retirement plan that allows you to save systematically and generate the much-needed

corpus to make your olden years look golden.

Key Feature

• Invest systematically and secure your golden years

• A flexible unit-linked pension product that is different from traditional

life insurance products with Vesting Age between 45 & 70 years

• Eight different investment funds to choose from
• Flexibility to switch between funds
• Option to pay Regular, Single as well as Top-up premiums
• Flexibility to advance / extend your Vesting Age

30
 • Tax free commutation up to one third of Fund Value at Vesting Age

(4) Reliance Whole life insurance policy

You’ve always loved your family. As a loving person you want to be rest assured that

they will be happy, even if something were to happen to you. With Reliance Whole Life

Plan you can be sure that your family will receive that timely financial support they need.

Go ahead, live your today to the fullest, without a worry about tomorrow.

Key Feature

• Insurance protection till age 85

• Choice of extending your insurance coverage till age 99
• Convenient Premium Payment Term
• Wealth creation through bonus additions
• More value for your money by way of High Sum Assured Rebate Get
Sum Assured plus Bonuses in case of your unfortunate death
• Option to add two Riders – Critical Illness and Accidental Death Benefit
and Total and Permanent Disablement Rider
• Policy Loan available after three full years premium payment

31
Chapter-3
32
 Objective of The
Study

Objectives of the study

• To determine reasons behind opting for an insurance.

 To know the most preferred policy.

• To determine customers perception towards private insurance companies and their

expectation form private insurance companies.

• To study the benefits provided by insurance services.

SCOPE OF THE STUDY

33
A big boom has been witnessed in Insurance Industry in recent times. A large number of

new players have entered the market and are vying to gain market share in this rapidly

improving market. The study deals with Reliance in focus and the various segments that

it caters to. The study then goes on to evaluate and analyze the findings so as to present a

clear picture of trends in the Insurance sector.

SIGNIFICANCE OF THE STUDY

This is a limited study which takes into consideration the responses of 100 people. This

data can be explorated to take in the trends across the industry. The significance for the

industry lies in studying these trends that emerge from the study. It is a rapidly changing

and evolving sector. People are only beginning to wake up to it’s vast possibilities. A

study like this can attempt to guide the future of the industry based on current trends.

Chapter-4
34
 Research
Methodology

RESEARCH METHODOLOGY

Research in common parlance refers to a search for knowledge. One can also define

research as a scientific and systematic search for pertinent information on a specific topic.

The word research has been derived from French word Researcher means to search.

FRANCIES RUMMER defined “It is a careful inquiry or examination to discover new

information or relationship and to expand or verify existing knowledge.

Research is the solution of the problem, whether created or already generated.When

research is done, some new out come, so that the problem to be solved.

35
The finding of the research should capable of being utilized for the better performance of

the organization.

RESEARCH DESIGN

Research Design is the conceptual structure within which research is conducted. It

constitutes the blueprint for collection, measurement and analysis of data. The design

used for carrying out this research is Descriptive.

“A research design is a simply the framework or plan for a study that is used as a guide in

collection and analyzing the data. It is blueprint that is followed in completing a study.”

TYPES OF RESEARCH

• NON-PROBABILITY

• EXPLORATORY & DISCRIPTIVE EXPERIMENTAL RESEARCH

The research is primarily both exploratory as well as descriptive in nature.

TYPES OF DATA

The task of data collection begins after a research problem has been defined and research

design chalked out. While deciding about the method of data collection we should keep

in mind two types of data.

36
 • Primary Data: Primary data may be described as those data that have been

observed and recorded by the researchers for the first time to their knowledge.

• Secondary Data: Secondary data are statistics not gathered for the immediate

study at hand but for other purpose. They may be describe as those data that have

been compiled by some agency other than the user.

DATA SOURCE

The sources of collection of secondary data are.

• Questionnaire

• Books

• Websites

• Magazines

• Company Brochures

37
SAMPLING PLANS

Sampling Technique:

Initially, a rough draft was prepared keeping in mind the objective of the research. A pilot

study was done in order to know the accuracy of the Questionnaire. The final

Questionnaire was arrived only after certain important changes were done. Thus my

sampling came out to be judemental and convinent

Sampling Unit:

The respondents who were asked to fill out questionnaires are the sampling units. These

comprise of employees of MNCs, Govt. Employees, and Self Employed etc.

Sample size:

The sample size was restricted to only 100, which comprised of mainly peoples from

different regions of Gorakhpur due to time constraints.

Sampling Area:

The area of the research was Gorakhpur.

LIMITATIONS OF THE RESEARCH

38
1. The research is confined to a parts of Gorakhpur and does not necessarily shows a

pattern applicable to all of Country.

2. Some respondents were reluctant to divulge personal information which can affect

the validity of all responses.

3. In a rapidly changing industry, analysis on one day or in one segment can change

very quickly. The environmental changes are vital to be considered in order to

assimilate the findings.

39
MARKETING STRATREGIES OF THE COMPANY

Some of the strategies adopted by reliance life insurance Company.

Reliance Life Insurance plans to tap Reliance Communications' 2.5-crore telephony

subscriber base to market its products.

The company is considering a series of options to leverage its relationship with Reliance

Communications.

However, a joint product or a co-branded solution would require approval from the

Insurance Regulatory and Development Authority

Customers of R World, the information and entertainment portal of Reliance

Communications, would also be able to pay premiums through a bank account, provided

the bank is listed on the network.

Reliance Life Insurance officials, however, offered no comment when asked whether

there would be an arrangement for payment of commission to Reliance Communications.

As an alternative channel for distribution, insurance companies usually tie up with banks.

In the case of banc assurance, where there is a corporate agency tie-up, the commission

could range from 5 per cent to 40 per cent of first-year premium depending on the

commission loaded on to the product at the time of registration with IRDA.

40
 Chapter-5

Data Analysis &

Interpretation

DATA ANALYSIS & INTERPRETATION

41
1. Data gives preference of respondents of the insurance companies

Company’s name No.of respondent Share (%)

L.i.c. 78 78

Reliance life insurance 3 3

Icici prudential 10 10
Sbi life 7 7
Hdfc 2 2
Total 100 100

7 2

10
LIC
3 REL
ICICI
SBI
HDFC

78

INTERPRETATION

 78% of the people contacted prefer LIC policy to any other and therefore it is
ranked no.1 by that percent of respondents.

2. Data gives benefits of insurance perceived by respondents

42
 Benefits No.of respondents Share (%)

Cover Future Uncertainty 55 55

Tax Deductions 20 20
Future Investment 25 25
TOTAL 100 100

25%
Cover Future
Uncertainty
Tax Deductions
55%
Future Investment
20%

INTERPRETATION

 55% of the respondents believe that covering future uncertainty is the biggest
benefit of an insurance policy.

 Whereas, 20% and 25% of them believe that the other benefits are Tax deduction
and future investments respectively.

3. Data provides features of insurance policy that attracted respondents

43
Feature No.of respondents Share (%)

Money Back Guarantee 15 15

Larger Risk Coverance 37 37
Easy Access to Agents 7 7
Low Premium 30 30
Company’s Reputation 11 11
TOTAL 100 100

FEATURES OF INSURANCE POLICY

MONEY BACK
GUAARENTEE

11% 15% LARGER RISK

COVERANCE

EASY ACCESS TO
AGENTS
30%
LOW PREMIUM
37%
7%
REPUTATION OF
COMPANY

INTERPRETATION

 Majority of the respondent (37%) found Larger risk coverance as the most
attracted feature of the all.

44
 4. Data provides number of insurance policy type respondents

Policy type No. Of respondents Share (%)

Life policy 75 75

Non life policy 15 15

Both 10 10

80
70
60
50
40 LIFE POLICY
30 NONLIFE POLICY
20 BOTH

10
0
NO.OF
RESPONDENT

INTERPRETATION

 75% of the respondents have Life Insurance Policy while 15% have both.
(The % is calculated out of 280 positive response)

45
5. Data gives people perception about insurance

Response No. Of respondents Share (%)

A saving tool 80 80%

A tax saving device 15 15%

A tool to protect your family 5 5%

80
70
60
50 A savingtool
40
A tax saving
30 device
20 A tool to protect
your family
10
0
NO.OF
RESPONDENT

INTERPRETATION

• 80% of the respondents have perception of Insurance being a saving tool.

• And 15% of the respondents have perception of Insurance being a tax saving
device.

• But 5% of the respondents are with the view that Insurance is a tool to protect
your family.

46
 6. Data shows peoples having insurance

30%

70%

Yes
No

Response No. Of respondents Share (%)

Yes 70 70%

No 30 30%

Total 100 100%

INTERPRETATION

• Of the sample size of 400 surveyed respondents 70% of the respondents are
having Insurance policy.

• 30% of the respondents are either not having any Insurance policy at present
or their policy is already matured.

47
 • And at present 100% of the respondents are with the view that Insurance is a
tool to protect your family.

7. Data shows buying process of the people

Buying process No. Of respondents Share (%)

Customer approached Insurance 45 45%

company/Agent

Company/agent approached 55 555

customer

Total 100 100%

55%
45%

Customer approached Insurance company/Agent

Company/agent approached customer

INTERPRETATION

• 44.5% of the respondents approached the Insurance Company / Agent.

• Whereas, 55.5% of the respondents were approached by the Company

/Agent.

48
 8. Data shows reasons behind for insurance

RESPONSE NO. OF SHARE (%)

RESPONDENTS

Tax saving 62 62%

Saving / Investment 20 20.%

Family protection 18 18%

18

20 62

Slice 1 Slice 2 Slice 3

INTERPRETATION

• 62% of the Respondents opted for Insurance for tax saving benefits.

• 20% of the Respondents opted for saving / Investments.

• But all of them, i.e. 18% of the respondents have opted for insurance for their
family protection.

49
 9. Data shows satisfaction of respondents with respect to policy

Response No. Of respondents Share (%)

Satisfied 60 60%

Not satisfied 40 40%

Not Responded 0 0.0%

Total 100 100%

0%

40%

60%

Satisfied Not satisfied Not Responded

INTERPRETATION

• 60% of the respondents are more or less satisfied with their existing policy.

• 40% of the respondents are not satisfied with their existing policy.

• In this case all of those who have taken a policy have responded.

50
 10. Data shows satisfaction of respondents with respect to service agent

Response No. Of respondents Share (%)

Satisfied 45 45%

Not satisfied 55 55%

Not Responded 0 0.0%

Total 100 100%

45.00%
55.00%

Satisfied Not satisfied

INTERPRETATION

• 45% of the respondents are satisfied with their existing service agent.

• 55% of the respondents are not satisfied with their existing insurance agent.

• All of those who have taken a policy have responded.

51
 11. Data shows number of respondents paying tax

Response No. Of respondents Share (%)

Paying tax 100 100%

Not paying tax - 0%

Total 100 100%

0%

100%

Paying tax Not paying tax

INTERPRETATION

• Of the sample size of 400 respondents, all the respondents are paying tax.

52
 12. Data shows respondent’s investments for tax saving

Investments No. Of respondents Share (%)

LIC 55 55%
NSC 17 17%
Bonds 11 11%
PPF 7 7%
PF 9 9%
EPF 11 11%

21

55
9

11

17
LIC NSC BOND PPF PF EPF

INTERPRETATION

• 55% of the respondents save their tax by investing in LIC, which is the
highest among all Investment. This shows that most people for getting taxes benefits
invest in LIC.

• 17% of the respondents do their tax saving by investing in NSC.

• 11% of the respondents to their tax saving by investing in bonds.

13. Data shows respondents perception about best form of investment for
securing their future

53
 No. Of respondents Share (%)
Fixed Assets 25 25%
Bank deposits 30 30%
Jewellery 10 10%
Securities i.e. bonds, MFs 5. 5%
Shares 2 2%
Insurance 28 28%

35
30
Fixwd Assets
25 Bank deposit
20 Jewellery
15 Securities bond, MFs
10 shares
5 Insurance
0
no of
resondent

INTERPRETATION

• 25% of the respondents as with the view that Fixed Assets is the best form
of investment for securing their future.

• 28% of the respondents are with the perception that Insurance is the best
form of investment for securing their future, which is one of the highest
and this shows that insurance is an important key for securing your future.

14. Data shows what people intent to gain from their investment

Response No. Of respondents Share (%)

54
 Saving & Returns 45 45%
Security 20 20%
Tax benefits .35 35.%

35
45

20

Saving & Returns Security Tax benefits

INTERPRETATION

• 45% of the respondents intent to gain saving and returns from their
investment.

• 20% of the respondent’s intent to gain security from their investments.

• Whereas, 35% of the respondent’s intent to gain tax benefits from their
investments.

15. Data gives people’s perception on appropriate age for buying insurance

55
 Response No. Of respondents Share (%)
After 25 years 29 29%
After 35 years 10 10%
After 45 years 1 1%
Anytime 60 60%

15% 5.03%
30.15%

50%

After 25 years After 35 years After 45 years Anytime

INTERPRETATION

• 29% of the respondents are with the view that insurance should be bought
after the age of 25 years.

• 10% of the respondents are with the view that insurance should be buyed
after the age of 35 years.

• Whereas, 60% of the respondents are with the view that buying of insurance
do not have any thing to do with age i.e. there is no age limitations. It can be
purchased any time according to the need.

56
 16. Data shows people opinion about Indian insurance companies

Response No. Of respondents Share (%)

Rigid plans 20 20%
Non user friendly 5 5%
Unsatisfactory services 7 7%
Non Aggressive 40 40%
Satisfactory 25 25%
Good 3 3%
Very good 0 0%

20

3 0

25

40

Inflexible plans Non user friendly

Unsatisfactory services Non Aggressive
Satisfactory Good
Very good

INTERPRETATION

57
• 20% of the respondents have the opinion that Indian Insurance Companies
have Rigid plans.

• 5% feel that Indian Insurance companies are Non-user friendly.

• 7% feel that services of Indian Insurance companies are Unsatisfactory.

• 40% of the respondents are with the view that Indian Insurance companies
are Non-aggressive.

• 25% of the respondents feel that products and services of Indian Insurance
companies is Satisfactory.

• Whereas only 3% feel that it is Good enough.

• And according to the data, no single person has felt that it is very good.

58
 17. Data shows what people would look for in an insurance company

Response No. Of Share (%)

respondents
A trusted name 55 55%
Friendly service & 15 15%
responsiveness
Good plans 25 25%
Accessibility 5 5%
5

25

55

15

A trusted name
Friendly se rvice & responsiveness
Good plans
Acce ssibility

INTERPRETATION

• 55% customers look for a Trusted name in a company for insurance.

• 15% customers look for a good plan in a company for insurance.

• Friendly service & responsiveness and Accessibility are also important factors
looked by customers in a company.

18. Data shows people planning for new investments

59
 Response No. Of respondents Share (%)

Planning 87 87%

Not planning 13 13%

Total 100 100%

13.0%

87.0%

Planning Not planning

INTERPRETATION

• Only 12.5% of the customers contacted are not planning for new investments
presently.

• Whereas, 87.5% of the customers are still planning for new investments this
can be a great potential for Reliance Life Insurance to take them on their favor.

60
 19. Data shows people interested in going for insurance if a service provider
away from the city offers better service & products

Response No. Of respondents Share (%)

Yes 43 43%
No 44 44%
Uncertain 13 13%
Total 100 100%

13%

43%

44%

Yes No Uncertain

INTERPRETATION

The interested customers i.e. 43% are ready to go for insurance even away from a city if
services and products are worthwhile, which again is a good prospect (potential) for
Reliance Life Insurance to take them on their favor.

61
 Chapter-6
Findings &
Suggestion

FINDINGS

62
Our exhaustive research in the field of Life Insurance threw up some interesting trends

which can be seen in the above analysis. A general impression that we gathered during

Data collection was the immense awareness and knowledge among people about various

companies and their insurance products. People are beginning to look beyond LIC for

their insurance needs and are willing to trust private players with their hard earned

money.

People in general have been impression by the marketing and advertising campaigns of

insurance companies. A high penetration of print, radio and Television ad campaigns

over the years is beginning to have it’s impact now.

The general satisfaction levels among public with regards to policy and agents still

requires improvement. But therein lays the opportunity for a relative new comer like

ING. LIC has never been known for prompt service or customer oriented methods and

Reliance can build on these factors.

Suggestion

63
• According the survey only 42% people are insured in Gorakhpur so

reaming other part is potential for insurance sector.

• Among that 42% people who having insurance, they have insurance 40%

for self 28%for spouse 21% for children and 18% for their parents and

11% for all family member, also its very helpful for insurance sector so

they should take necessary step for capture this potential.

• Only 42% people having insurance in Gorakhpur in that 42% there are 82

% people are under insured and other 18% people are fully insured

according to their income so that is also plus point for insurance sector to

capture the market.

64
 Chapter-7

Questionnaire

QUESTIONNAIRE

65
 1. Are you employed?
Yes No
If YES, only then proceed

2. Do you have any insurance policy?

Yes No

3. Which insurance policy do you have?

Life Non-Life Both

4. Which company’s insurance policy you prefer the most?

(Rank them)

a) LIC

b) ICICI Prudential

c) SBI Life Insurance

d) ING VYSYA Life

e) Reliance Life Insurance

f) TATA AIG Life

G) Any Other ________( Specify)

5. For how many years do you have insurance policy? (Please Tick)

66
 a) <5Yrs b) 5-10 Yrs c) 10-15 Yrs d) Any Other______
(Specify)

6. What do you think are the benefits of insurance cover? (Rank them)

a) Cover future uncertainty

b) Tax deductions

c) Future investment

d) Any other _________ (Specify)

7. Which feature of your policy attracted you to buy it? (rank them)
a) Low premium

b) Larger risk coverance

c) Money back guarantee

d) Reputation of company

e) Easy access to agents

f) Any other _________ (Specify)

8. Your monthly income?

67
 a)<4k b)4k-8k c)8k-12k d)12k-16k e)Other_____(Specify)

9. Do you really think insurance policy cover in today’s scenario is not essential?

_____________________________________________________

10. What’s your perception about insurance? (Rank them)

a) A saving tool

b) A tax saving device

c) A tool to protect future

11. How has/would you bought/buy insurance?

a) Customer approached insurance co.’s

b) Insurance cos approached customer

12. Are you satisfied with the policy?

A) Satisfied saving tool

B) Not satisfied

C) Not responding
13. Are you satisfied with the service agent?

68
 A) Satisfied saving tool

B) Not satisfied

C) Not responding

14 Do you pay taxes?

Yes No

15. Where have you invested for tax saving? (Rank them)

a) LIC

b) NSC

c) BONDS

d) PPF

e) PF

17. What do you intent to gain from investments?

a) Saving & returns

b) Security

c) Tax benefits
18. What’s the right age to buy insurance?

69
 a) After 25 yrs

b) After 35 yrs

c) After 45 yrs

d) Anytime

20. Are you planning for new investments?

Planning Not planning

21. Would you go for insurance if a service provider away from the city offers better
service & products?

a) Yes

b) No

c) Uncertain

Thank you Name: _________________________

Address: ______________________
______________________________
Occupation: ___________________

70
 Chapter-8

Bibliography

BIBLIOGRAPHY

71
1. Books/magazines referred:

• Study guide- principles & practices of life / general insurance, by AIMA.

• Books published by insurance institute of India

• Life-insurance, by mc gill

• Insurance watch.

• Money outlook.

2. Websites referred:

• www.reliancelife.co.in

• www.cifainsurance.com

• www.moneyoutlook.com

• www.insurance.ind.com

3. Reports /articles referred:

• Report: issues & challenges facing the insurance industry…. dec2008.

72
• Brief profile of LIC, India…Dec 2008.

73