Belgaum Institute of Management Studies, MBA, Belgaum.: People's Education Society and Trust's

People’s Education Society and Trust’s
Belgaum Institute of Management Studies,

MBA, Belgaum.
(Approved by AICTE & Affiliated to Karnataka University Dharwad)
“Comparative study of unit linked insurance plan and mutual fund

to analyze the investor preference towards mutual funds”
A Report Submitted in Partial Fulfillment of the

Requirement for the Award of
MASTER’S DEGREE IN BUSINESS

ADMINISTRATION
2006-2007
Submitted by
KUMAR.A.BANGALORE
Exam No: MBA05006024
Institute Guide: Company Guide:
Mrs.S.S.Dhoni Mr. A.A.Mirji

(Librarian) Unit Manager
BELGAUM INSTITUTE OF MANAGEMENT STUDIES (MBA)

PEST’s BIMS, Belgaum. ICICI Prudential Life Insurance co. Ltd Hubli
People’s Education Society and Trust’s
Belgaum Institute of Management Studies, MBA

Adjacent to KUD PG Center, Bhutramanhatti, Belgaum.
(Recognized by AICTE, New Delhi & Affiliated to Karnataka University Dharwad.)
Certificate
Certificate
This is to certify that Mr. KUMAR.A.BANGALORE K.U.D.
Examination No. MBA05006024 of MBA IV Semester has successfully
completed his Major Concurrent Project 2006-2007 for the said period of 2
months.
Project Guide Director
Date: ____________

ACKNOWLEDGEMENT
The completion and drafting is a solitary task but one which has been made
smoother with the help of many. Here I take this opportunity to thank those who
have made a vital contribution in shaping this study
I would like to express my profound gratuity to Mr. A.A.Mirji (Unit Manager)
and for giving me an opportunity to take my Major Concurrent Project at ICICI
Prudential Life Insurance Co Ltd Hubli.
Any accomplishment requires the efforts of many people. I am indebted to
all the Employees of ICICI Prudential Life Insurance Co. Ltd, who extended their
help and cooperation in collecting data for my project
Regardless of the source I wish to express my gratitude to those who have
contributed to my project, even though anonymously
I extend my thanks to our Director, Dr. S. R. Bharamanaikar, and
Mrs.S.S.Dhoni (Librarian) for providing me an opportunity to work for
ICICI Prudential Life Insurance Co Ltd Hubli.
I would also like to thank my parent and friends for their infinite love,
valuable guidance, support and help during my project. This project wouldn’t have
seen the light of the day, if it wasn’t for the cooperation of all these people.

Place: Belgaum KUMAR.A.BANGALORE
Date: .

Contents
Sl. No. Titles Page No.
I Chapter 1
 Executive summary
 Introduction
 Statement of the Problem
 Purpose of the Study
 Scope of the study
 Objectives of the Study
II Chapter 2
 Organization Profile
 Organization Chart
 Data Collection Method
 Measuring tools
III Chapter 3
 Analysis and interpretation
 Findings
 Suggestions
 Conclusion
IV Chapter 4
Appendix
 Bibliography

Executive summary
The main aim of the investor is to minimize the risk involved in
investment & maximize return and today there are number of options available to
investor like Post office investment, bank deposit, Real estate, debentures, Government
securities, stock market, insurance & gold etc. Among these, Mutual Fund & ULIP
introduced by the insurance companies are the two options which require less capital &
give the benefit of Professional Management & suitable for all especially to the persons
who do not have time to watch the market regularly.
ICICI Prudential commenced on January 20th 2002. The Hubli branch however was
established in Feb 2004. The branch office has mainly 2 departments i.e.; Operations and
Sales. The branch office looks after the business from various serviceable locations, still
in pipeline of expansion to cover some parts of North Karnataka.
Origin of Mutual Fund Investing: When three Boston securities executives pooled their
money together in 1924 to create the first mutual fund. The mutual fund industry in India
started in 1963 with the formation of Unit Trust of India. Mutual fund industry today
manages near about Rs.1.50 lack Crore.
ULIP came into play in the 1960s and became very popular in Western Europe and
Americas. In India also it has become popular. Today ULIP contribute 80% of the
premium collected by the insurance company.

Objective:
 To study and compare the Unit Linked Insurance Plans and Mutual Fund.
 To know whether these two options are substitute for each other or not.
 To know the factors that influence investors while taking investment decisions.
 To know advantages & disadvantages of investing in ULIP and Mutual Funds
 To know the suitability of ULIP & mutual fund to different investors.
 To know Customer awareness and preferences.
Methodology:
The types of the data collection methods are Primary data collection method and
Secondary data collection method. Primary data has been collected for the study with the
aid of questionnaire. And Secondary data has been collected from website and
Brochures.
SAMPLING
a) Population People of Hubli city
b) Frame Investors.
c) Unit Investors
d)Size 100
e) Method Random Sampling
Measuring Tools:

SPSS Software used for measuring the response is in terms of percentage method
using graphical charts like Bar graphs and Pie charts.
Findings
 40% of the investors invest in bank deposits and in postal savings for a better
return compared to any form of deposits .
 78% of the respondents have invested in Insurance Policies, compared to Mutual
Funds and ULIP.
 65% of the investors are from LIC, as the company provides better policy option
and good customer relationship
 55% of investor say that Mutual Funds is worthy. .
 The study shows 43% of the investors invest in Mutual Funds to have moderate
return with minimum risk.
 53% of the investors are ready to recommend investment in mutual funds and
ULIP to a friend.
 6% of the non-investors are interested to invest in ULIP in near future but not
interested to invest in Mutual Fund.
 49% of the respondents are not aware of Unit Linked Insurance Plan.
 3% of the investors say that the Liquidity feature provided by the ICICI PRU
satisfies them.

 3% of investors have ranked ULIP as excellent compared to Mutual Fund.
 The study shows that ULIP and Mutual Fund are not substitutes.
 The study shows that factor that influences most of investors is premium and
return, customer relationship.
 53% of investors expect security from investment plan.
 61% of respondents prefer Family income benefit along with life cover.

Industry overview
A brief history of the Insurance sector

The business of life insurance in India in its existing form started in India in the year: -
1818  With the establishment of the Oriental Life Insurance Company in
Calcutta. Some of the important milestones in the life insurance
business in India are:

1912  The Indian Life Assurance Companies Act enacted as the first statute to
regulate the life insurance business.

1928  The Indian Insurance Companies Act enacted to enable the government
to collect statistical information about both life and non-life insurance
businesses
1938  Earlier legislation consolidated and amended to by the Insurance Act
with the objective of protecting the interests of the insuring public

1956  By the mid-1950s, there were around 170 insurance companies in the
country's life insurance scene. However, in the absence of regulatory
systems, scams and irregularities were almost a way of life at most of
these companies

As a result, the government decided nationalizes the life assurance business in India. The
Life Insurance Corporation of India was set up in 1956 to take over around 250 life
companies. 245 Indian and foreign insurers and provident societies taken over by the
central government and nationalized. LIC formed by an Act of Parliament, viz. LIC Act.
For years thereafter, insurance remained a monopoly of the public sector. It was only
after seven years of deliberation and debate - after the RN Malhotra Committee report of
1994 became the first serious document calling for the re-opening up of the insurance
sector to private players -- that the sector was finally opened up to private players in
2001.
The Insurance Regulatory & Development Authority, an autonomous insurance regulator
set up in 2000, has extensive powers to oversee the insurance business and regulate in a
manner that will safeguard the interests of the insured.
INSURANCE SECTOR REFORMS

Due to immense growth in the insurance sectors the regulations were introduced. In
1993,Malhotra Committee headed by former Finance Secretary and RBI Governor was
formed to evaluate the Indian insurance industry and give its recommendations. After this
committee the regulatory body for insurance sector was formed with the name of IRDA.
INSURANCE REGULATORY AND DEVELOPMENT AUTHORITY (IRDA)
IRDA has been formed as an authority to protect the interests of insurance policies, to
regulate, promote and ensure orderly growth of insurance Industry and for matters
connected therewith of incidental there to.
Composition of Authority under IRDA Act, 1999
As per the section 4 of IRDA Act of 1999, The Authority is a ten-member team consisting
of
1) A Chairman
2) 5 Whole team Members
3) 4 part time members
Duties, Powers and Functions of IRDA
Section 14 IRDA Act, 1999 lays down the duties, powers and functions of IRDA

1. The Authority has the duty to regulate, promote and ensure orderly growth of the
Insurance business and reinsurance business.
2. This Include -
a) Issue to the applicant a certificate of registration, renew, modify,
Withdraw, suspend or cancel such registration.
b) Protection of interests of the policy holders in matter concerning assigning
of policy, nomination by policyholders, insurable interest, settlement of
insurance claim, surrender value of policy and condition of contracts of
insurance.
b) Specifying the code of conduct and practical training for intermediary or
insurance intermediaries and agents
c) Specifying the code of conduct for surveyors and loss assessors.
d) Promoting efficiency in the conduct of insurance business.
e) Promoting and regulating professional organization connected with insurance and
reinsurance business.
f) Levying fees and other charges for carrying out the purposes of this act.

g) Calling from information from, undertaking inspection of, conducting enquiries
and investigation including audit of the insurers, intermediaries and other
organization connected with the insurance business
h) Control and regulation of the rates, advantages, terms and condition
i) Specifying the form and manner in which books of accounts shall be maintained
and statement of account shall be rendered by insurers and other intermediaries.
j) Regulating investment of funds by insurance companies.
k) Regulating maintenance of margin of solvency.
l) Adjudication of disputes between Insurers and intermediaries or insurance
intermediaries.
m) Supervising the functioning of the Tariff Advisory Committee.
n) Specifying the % of Premium, Income of the insurer to finance schemes for
promoting and regulating professional organizations
o) Specifying the % of Life Insurance Business and general Insurance Business to
be undertaken by the Insurer in the rural or social sector.
The IRDA since its incorporation as a statutory body has been framing
Regulations and registering the private sector insurance companies. IRDA being an
Independent statutory body has put a framework of globally compatible regulations.

Indian Insurance Sector
The Insurance sector in India governed by Insurance Act, 1938, the Life Insurance
Corporation Act, 1956 and General Insurance Business (Nationalization) Act, 1972,
Insurance Regulatory and Development Authority (IRDA) Act, 1999 and other
related acts.
INSURANCE COMPANIES:
In the private sector 19 life insurance and 6 general insurance companies
have been registered.
LIFE INSURERS
 Public Sector
Life Insurance Corporation of India
LIFE INSURANCE CORPORATION OF INDIA (LIC)

An Act of Parliament, viz., Life Insurance Corporation Act, formed Life Insurance
Corporation of India (LIC) in September 1956, with capital contribution from the
Government of India.
The objective was: to conduct the business with the utmost economy, in a spirit of
trusteeship; to charge premium no higher than warranted by strict actuarial
considerations; to invest the funds for obtaining maximum yield for the policy holders
consistent with safety of the capital; to render prompt and efficient service to policy
holders, thereby making insurance widely popular.
Since nationalization, LIC has built up a vast network of 2,048 branches, 100 divisions
and 7 zonal offices spread over the country. The Life Insurance Corporation of India also
transacts business abroad and has offices in Fiji, Mauritius and United Kingdom.
CURRENT SCENARIO OF THE INSURANCE INDUSTRY
Innovative products and aggressive distribution have become the say of the day. Indians,
have always seen life insurance as a tax saving device, are now suddenly turning to the
private sector that are providing them new products and variety for their choice.
Privatization
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. The consumers now has array of products, different in
price, features and benefits

UNIT LINKED INSURANCE PLAN OR MARKET LINKED
INSURANCE PLAN (ULIP).
INTRODUCTION TO ULIP
ULIP came into play in the 1960s and became very popular in Western Europe and
Americas. The reason that is attributed to the wide spread popularity of ULIP is because
of the transparency and the flexibility which it offers. As times progressed the plans were
also successfully mapped along with life insurance need to retirement planning. In
today’s times, ULIP provides solutions for insurance planning, financial needs, financial
planning for children’s future and retirement planning. Features of ULIP distinguish
itself through the multiple benefits that it provides to the consumer. The plan is a one-stop
solution providing: Life protection· Investment and Savings· Flexibility- Adjustable Life
Cover- Investment Options· Transparency· Options to take additional cover against-
Death due to accident- Disability- Critical Illness- Surgeries· Liquidity.
ULIP distinguishes itself through the multiple benefits it provides to the policyholders.
These plans are designed with a view to help the customers to utilize the market
opportunities by investing in the share market, capital market and at the same time have
the facility of Death Benefit and Maturity Benefit.

Meaning
It is a plan, which provides Life Insurance, and here policy value at any time varies
according to the value of the underlying asset at that time.
It is a plan that provides the client with the benefit of protection and flexibility.
An ULIP plan works as a one-stop advantage for the policyholder. It gives the
policyholder a wholesome advantage of integrated financial planning
STRUCTURE OF ULIP:
ULIP
CONTRIBUTION
LESS- CHARGES
INVESTMENT LIFE COVER

REPRESENTED AS
NAV

NAV CONCEPT
It exhibits the value (or the price) that one has for his investment or one will have to pay
for his investment.
As, the investment made by different people are different, the value (or the price) is the
expressed in per unit terms. It helps in knowing the value of Insurance at any point of
time.
Technical Calculation of NAV: -
UNIT Value = (Total market Value of all assets invested less expenses related
to Investment management / Total no. of outstanding units)
Factors affecting NAV:
Market Value of investment portfolio, Number of Units, Expenses and Investment

Income.
Ex: If 2,00,000 /- has been accumulated in the equity fund and the no. of units issued is
10,000 /- then the NAV of the equity fund is: -
2,00,000 / 10,000 = Rs 20 / -
As the equity market develop the fund grows from 2,00,000 / - to 220,000/-
Now the NAV = 2,20,000 / 10,000 = Rs 22 / -

If among these 10,000 units the policyholder has 5000 units then the value of investment
as of now is Rs 1,10,000.
Thus a unit linked plan actually tells, what is the value of the fund.
BASIC FEATURES OF ULIP
1. Life protection
2. Investment and savings
3. Flexibility
4. Transparency
5. Added Benefits
a) Death due to accident
b) Any kind of disability
c) Critical illness
d) Surgeries
6. Liquidity
7. Tax Planning

1) LIFE PROTECTION
Children
Start a
Establishi
Family
ng Career
Retiremen
t Time
Start
Working
The graph shows the various needs of the customer at different point of time,
individuals needs differ and his need for life protection fluctuates. ULIP satisfies
the varying needs of the customer providing him with more and more
protection as and when he requires, by allowing the policyholder to increase or
decrease the death benefit.
It is usually multiple of the contribution being paid, which ensure that the
contribution is adequate enough to provide life protection. And is also able to
maintain a sum balance between protection and savings.

2) INVESTMENTS AND SAVINGS
ULIP provides the client with option of investing as per his risk appetite and gets
returns accordingly. These various options available for an individual to make
investment in comparatively high risks instruments and get high returns. Below
shown is a graph illustrating the various investment options for a client.
Equity
funds
Balance
d funds
Debt
Short funds
term
debt
funds
Risk
Example 1: Here are four types of funds in which a client can invest. In each case
the risk goes on increasing with the type of fund. The client has an option to shift
as the risk and return orientation changes (Switch).

3) FLEXIBILITY
The client has an option to choose the amount of sum assured and the premium
amount he is capable of paying. In case of certain plans of ULIP the client is
allowed to choose the premium.
E.g.: Lifetime and Lifetime I the client has a flexibility to decide the life cover
according to his financial needs, independent of premium selected.
Following points enumerate the flexibility feature of ULIP
a) Increase in death benefit.
As life cycle changes of a client he passes through various risks and
responsibilities. He can increase or decrease the death benefit accordingly.
b) Decrease in death benefit.
If the client is unable to pay the same amount of premium he can decrease
the death benefit with certain conditions applying according to the
particular plans.
c) Premium holiday
After paying the premium regularly for 3 years from the starting date of
the policy the client can take a premium holiday if he is unable to pay a
particular premium due. On returning from the premium holiday the client
can pay the previous premiums if he desires or continue from that date.

d) Choice of fund.
There are four kinds of funds available for a client of ULIP. He has an
option to switch between these four funds. He can either choose only one
or invest in all four depending on his risk tolerance.
Plan Plan objective Risk Investment pattern

Maximiser High growth and High Equity and equity
(Growth) capital appreciation related securities: Max
over a long terms 90%, Debt, money
market and cash: Min
10%
Balancer Balance of capital Average Equity and equity
(balanced) appreciation and related securities: Max
study returns over a 40%, Debt, money
long terms market and cash: Min
60%
Preserver Equal balance of Low Debt instrument: Max
capital appreciation 50%
and study returns Money market and
over a long term cash: Min 50%
Protector Study returns over a Moderate Debt instrument: Max
(Income) long term. 100%
Money market and
cash: Max 25%

e) Switch between the funds
The policyholder has a choice two reallocate the premium paid by him on
every premium policy anniversary. He can switch between the above four
funds to avail the advantages of market fluctuations.
f) Top ups
Some times the client may have surplus amount after his expenses. ULIP
allows him to save that amount by investing in the insurance he can avail
the benefit of top up by paying extra premium, which will be invested in
the share market by the insurer company. The client gets expert fund
management. The policyholder is allowed to do as many top ups in the
tenure of plan.
g) Premium redirection
The policyholder is allowed to reallocate the premium paid each time to
different fund structure. Thus whenever the premium is due (As per the
premium payment mode), he can redirect the current premium into
different asset allocations than the previous time. This helps the
policyholder to optimize the funds in accordance to market with out using
the switch option.

h) Assignment option
The policyholder can assign the policy to any of the nominees or any bank in
case he has taken a loan on the title of the policy. Unfortunately if something
happens to the policyholder then the insurer will repay the loan taken by the
client to the extent of premium paid.
4) Transparency
ULIP products are transparent in terms of, the policyholder is aware of where his
contribution is being allocated. The policyholder is aware of the various charges
charged to him.
The Various charges of the ULIP are: -
a) Contribution related Charges- Running expenses of the policy
b) Administrative Charges- Issuance cost, distribution costs etc
c) Fund Management Fee- cost of being and selling the various financial
instruments for various funds.
d) Mortality Charges: cost of providing life protection.
e) Rider charges: cost of other protection charges.
f) Surrender charges: cost to cover initial expenses.
g) Bid offer charges: difference between the offer price of units and the selling
price i.e. bid price of units. It covers the cost of selling the policy.

h) Transaction specific charges: cost of changing funds, toping up the investment
component or withdrawals
Daily NAV: A feature that lets us know on a daily bases, how the money in
insurance plan is growing.
5) ADDED BENEFITS
To get extra protection ULIP provides the policyholder the advantage of rider
attachments.
a. Death due to accident (ADBR)
b. Disability (ABR)
c. Critical Illness (CIBR)
d. Surgeries (MSAR) (Now discontinued)
6) LIQUIDITY
The feature makes ULIP a marketable plan. The policyholder has an option of
withdrawals in case if need arises. ULIP provides easy access to the money as and
when the policyholder may requires. There are two types of withdrawal options.
a) Partial b) complete
The value of withdrawal reduces the death benefit by same amount. This facility
can be avail only after three full premium payment years are completed.

The minimum worth of this units and a maximum where in at least Rs. 10000/-
worth units remain in all the funds put together.
7) TAX PLANNING
This is another feature of ULIP that motives the policyholder to invest in the
insurance plans. They usually invest to avail the tax benefit. Regulation in India
allows tax benefits in the contribution paid under section 88, contribution paid for
health riders critical illness and major surgical is allowed tax benefits under
section 80D, as per the prevailing tax laws.
Maturity benefits are tax free under section 10(10) D, provided life come is at
least 5 times of the annual contribution paid.
Death benefit is tax free under section 10(10) d.
With so many tax benefits available in one instrument ULIP tends to be an
intelligent tax-planning tool.

Working of a ULIP Plan
Lifetime
timeregular
regularPremium
Premium
Life
Allocated Partofofthe
thePremium
Premiumtowards
towardsthe
the
Allocated Part
Premium policyExpenses
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Premium policy
AllotmentofofUnits
Units Thisgoes
goestotothe
the
Allotment This
Insurance Protectiona/c
a/ctotoprovide
provide
Insurance Protection
Charges
against the 3D Effect ofof
Charges against the 3D Effect
––Death,
Death,Disability
Disability&&
Dreaded Disease
Dreaded Disease
VariousInvestment
Investment
Various
Options.Facilitry ofof
Options.Facilitry Unitsthat
thatbuild
buildupupthe
the
withdrawalsand
andinvesting
investing Units
withdrawals investment value
back in the investment value
back in the
Investment
Investment
This is the Investment a/c. The units that are bought with the premium, which one has paid, first
This is the Investment a/c. The units that are bought with the premium, which one has paid, first
take care of the protection and the remaining amount is put in your Investment account. Here are
take care of the protection and the remaining amount is put in your Investment account. Here are
the various options of investments as per one’s choice and priorities. This is the account where the
the various options of investments as per one’s choice and priorities. This is the account where the
money grows over a long period of time.
money grows over a long period of time.

For Example
A client put in regular contribution of Rs.20, 000 /-. From this amount a % is deducted as
contribution.
Therefore if the contribution related expense is 40% - Rs.8000/- will be deducted as
contribution charges.
The amount that is now available is Rs.20000-8000=12000/-
Now, if the client who is available is aged 30 years were to take a life cover of 500,000/-
then mortality (1.50/- per thousand at the age of 30) charge of 750 /- will be deducted.
This amount will provide life cover to the policy. The remaining amount of –11250/- will
be invested in any one of them or all of them.
The Investment is shown in terms of units. Thus if client invests in debt fund and the
NAV of the debt fund is Rs. 15/-(market price) then the no. of units that the client will get
is 11,250/15=750. For this investment-fund management fee will be charged and the
charges for maintaining the policy an administrative charge are levied.
PRODUCTS:
ICICI Prudential Life Insurance offers a range of innovative, customer-centric products
that meet the needs of customers at every life stage. Its products can be enhanced with up
to 5 riders, to create a customized solution for each policyholder.

Savings Solutions
 Secure Plus: is a transparent and feature-packed savings plan that offers 3 levels
of protection.
 Cash plus: is a transparent, feature-packed savings plan that offers 3 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 Back: 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.
 Life Time & Life Time II offers customers the flexibility and control to
customize the policy to meet the changing needs at different life stages. Each
offers 4 fund options: Preserver, Protector, Balancer and Maximiser.
 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.
 Premier Life is a limited premium-paying plan that offers customers life
insurance cover till the age of 75.
 Invest Shield Life: is a Market Linked plan that provides capital guarantee on the
invested premiums and declared bonus interest.

 Invest Shield Cash: is a Market Linked plan that provides capital guarantee on
the invested premiums and declared bonus interest along with flexible liquidity
options.
 Invest Shield Gold: is a Market Linked plan that provides capital guarantee on
the invested premiums, and declared bonus interest along with limited premium
payment terms.
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.
 Home Assure: is a mortgage reducing term assurance plan designed specifically
to help customers cover their home loans in a simple and cost-effective manner.
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.

Retirement Solutions
 Forever Life: is a retirement product targeted at individuals in there thirties.
 Secure Plus Pension is a flexible pension plan that allows one to select between 3
levels of cover.
Market-linked retirement products
 Life Time Pension II : is a regular premium market-linked pension plan
 Life Link Pension II: is a single premium market-linked pension plan.
 Invest Shield Pension: is a regular premium pension plan with a capital
guarantee on the investible premium and declared bonuses.
 Golden Years: is a limited premium paying retirement solution that offers tax
benefits up to Rs 100,000 u/s 80C, with flexibility in both the accumulation and
payout stages.
Health Solution
 Health Assure: Is a regular premium plan, which provides long term cover
against 6 critical illnesses by providing policyholder with financial assistance,
irrespective of the actual medical expenses.
 Health Assure Plus: Is a regular premium plan which provides long term cover
against 6 critical illnesses by providing financial assistance, irrespective of actual
medical expenses, as well as an equivalent life insurance cover.
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 group 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 Pru Group Term Plan: ICICI Pru’s flexible group term solution helps
provide affordable cover to members of a group. The cover could be uniform or
based on designation/rank or a multiple of salary. The benefit under the policy is
paid to the beneficiary nominated by the member on his/her death.
RIDERS

RIDER is an added benefit to the client against the 3D effect at a very nominal extra
cost.
1) Critical Illness Rider
2) Accident and Disability Benefit Rider
3) Accident Benefit Rider
4) Income Benefit Rider
5) Waiver of Premium Rider (WOP)
6) Major Surgical Accident Rider (MSAR) [Now discontinued]
The various rider offered by I PRU are:
1) CRITICAL ILLNESS BENEFIT RIDER
This rider provides protection against 9 critical illnesses, namely: Major organ
transplants, Complete renal failure, Stroke, Paralysis, Heart attack, Valve
replacement surgery, Major surgery of the aorta, CAGS (Bypass) and Cancer .
Benefits paid on contracting the illness
1) Accelerated benefits (available with Save n’ Protect and Cash Bak) : If the
policyholder is diagnosed with any of the specified illnesses, then the
policyholder is paid the entire sum assured under the rider.

2) Accelerated benefits (available with Secure Plus, Cash Plus and Secure Plus
Pension) : If the policyholder is diagnosed with any of the specified illnesses, then
the policyholder is paid the entire sum assured under the rider. The life cover
along with all the riders is then terminated.
3) Standalone benefits (available with Premier Life, Life Time, Life Time II, Forever
Life, Group Term Plan, Invest Shield Life, Invest Shield Cash and Invest Shield
Gold) : If the policyholder is diagnosed with any of the specified illnesses, he/she
is paid the rider Sum Assured and the rider terminates. However, the base policy
continues till maturity.
2) ACCIDENT & DISABILITY BENEFIT RIDER
Benefits payable on death due to an accident
1) If the policyholder dies due to an accident, 100% of the rider sum assured is paid
in addition to the basic sum assured.
2) In case the policyholder dies in a land surface, mass public transport system
wherein the policyholder was traveling as a fare-paying passenger, then 200% of
the rider sum assured is paid.

Benefits payable in case of permanent disability due to an accident
3) If the policyholder survives an accident but becomes permanently disabled then
the premium for the basic plan is completely waived off to the extent of the rider
sum assured.
4) Plus, 10% of the rider sum assured is paid for the next 10 years, which helps in
providing that extra money and takes care of sudden financial set back that occurs
after a tragic disability.
3.ACCIDENT BENEFIT RIDER
If the policyholder dies due to an accident, 100% of the rider sum assured is paid in
addition to the basic sum assured.
Accident Benefit rider is available with Save n’ Protect, Cash Bak, Smart Kid
regular premium, Forever Life, Secure Plus, Cash Plus and Secure Plus Pension.
Premiums paid under this rider are eligible for tax benefits under Section 88.
4.INCOME BENEFIT RIDER
In case of death of the life assured during the term of the policy, 10% of the rider
sum assured is paid annually to the beneficiary, on each policy anniversary till
maturity of the rider.
Income Benefit rider is available with Smart Kid Child Plans, Secure Plus and
Cash Plus. Premiums paid under this rider are eligible for tax benefits under
Section 88.

5.WAIVER OF PREMIUM RIDER (WOP)
On total and permanent disability due to an accident, all future premiums for both
the base policy and rider(s) will be waived till the end of the term of the rider or
death of the life assured, if earlier.
Waiver of Premium rider is available with Secure Plus, Cash Plus, Life Guard
ROP, Life Guard WROP, Smart Kid Unit-linked regular premium II, Lifetime II,
Life Time Pension II, Secure Plus Pension, Invest Shield Life, Invest Shield Cash
and Invest Shield Pension.
Advantages of investing in ULIP:
ULIPs have been selling like proverbial `hot cakes' in the recent past and they are likely
to continue to outsell their plain vanilla counterparts going ahead. So what is it that
makes ULIPs so attractive to the individual is, as follows
1.Insurace cover plus savings: ULIP serve the purpose of providing life insurance
combined with savings at market-linked returns. To that extent, ULIPs can be termed as a
two-in-one plan in terms of giving an individual the twin benefits of life insurance plus
savings. This is unlike comparable instruments like a mutual fund for instance, which
does not offer a life cover.

2.Multiple investment options: ULIP offer a lot more variety than traditional life
insurance plans. So there are multiple options at the individual's disposal. . ULIPs
generally come in three broad variants:
 Aggressive ULIPs (which can typically invest 80%-100% in equities, balance in
debt)
 Balanced ULIPs (can typically invest around 40%-60% in equities)
 Conservative ULIPs (can typically invest up to 20% in equities)
Although this is how the ULIP options are generally designed, the exact debt/equity
allocations may vary across insurance companies. Individuals can opt for a variant based
on their risk profile. For example, a 30-Yr old individual looking at buying a life
insurance plan that also helps him build a corpus for retirement can consider investing in
the Balanced or even the Aggressive ULIP. Likewise, a risk-averse individual who is not
comfortable with a high equity allocation can opt for the Conservative ULIP.
3. Flexibility
Mutual Funds also offer hybrid/balanced schemes that allow an individual to
select a plan according to his risk profile. The difference lies in the flexibility that
ULIPs afford the individual. Individuals can switch between the ULIP variants
outlined above to capitalize

4. on investment opportunities across the equity and debt markets. Some insurance
companies allow a certain number of `free' switches.
This is an important feature that allows the informed individual/investor to benefit from
the vagaries of stock/debt markets. For instance, when stock markets were on the brink of
7,000 points (Sensex), the informed investor could have shifted his assets from an
Aggressive ULIP to a low-risk Conservative ULIP.
Switching also helps individuals on another front. They can shift from an Aggressive to a
Balanced or a Conservative ULIP as they approach retirement. This is a reflection of the
change in their risk appetite, as they grow older.
4. Works like an SIP: Rupee cost averaging is another important benefit associated with
ULIPs. With an SIP, individuals invest their monies regularly over time intervals of a
month/quarter and don't have to worry about `timing' the stock markets. As a matter of
fact, even the annual premium in a ULIP works on the rupee cost-averaging principle. An
added benefit with ULIPs is that individuals can also invest a one-time amount in the
ULIP either to benefit from opportunities in the stock markets or if they have an invisible
surplus in a particular year that they wish to put aside for the future.

The chart below shows how ULIP can meet multiple needs at different life
stages.
Integrated Financial Planning
Starting a job, Recently Married, with kids
Single individual married, no kids
Your Low protection, Reasonable Higher protection, still high
Need high asset protection, still on asset creation but steadier
creation and high on asset options, increase savings for
accumulation creation child
Flexibility Choose low death Increase death Increase death benefit,
benefit, choose benefit, choose choose balanced option for
growth/balanced growth/balanced asset creation. Choose riders
option for asset option for asset for enhanced protection. Use
creation creation top-ups to increase your
accumulation

Kids going to Higher studies for child, Children independent,
school, college marriage nearing the golden years

Higher Protection, Lump sum money for education, Safe accumulation for the
high on asset marriage. Facility to stop golden yrs. Considerably lower
creation but premium for 2-3 yrs for these life insurance as the
steadier options, extra expenses dependencies have decreased
liquidity for
education expenses
Withdrawal from Withdrawal from the account for Decrease the death benefit-
the account for the higher education/marriage reduce it to the minimum
education expenses expenses of the child. Premium possible. Choose the income
of the child holiday-to stop premium for a investment option. Top-ups
period without lapsing the form the accumulation (with
policy reduced expenses) for the
golden yrs cash accumulation

Because of their flexibility to adjust to different life stage needs, ULIPs fit in very well
with financial planning efforts.
Limitation:
1. It is prudent to make equity-oriented investments based on an established track record
of at least three years over different market cycles. ULIPs may not fulfill this criterion in
near future.
2. Insurance and savings are two different goals and it is better to address them separately
rather than bundle them into a single product. A combination of a term plan and a mutual
fund could give better results over the long term.
3.The free hand given to ULIPs might prove risky if the timing of exit happens to
coincide with a bearish market phase, because of the inherently high equity component of
these schemes.

5. An initial allocation charge is deducted from investor premiums for selling,
marketing and broker commissions. These charges could be as high as 65 per cent
of the first year premiums. Premium allocation charges are usually very high (5-
65 per cent) in the first couple of years, but taper off later. The high initial charges
mainly go towards funding agent commissions, which could be as high as 40 per
cent of the initial premium as per IRDA regulations.
The charges are higher for a linked plan than a non-linked plan, as the former require
lot more servicing than the latter, such as regular disclosure of investments, switches,
re-direction of premiums, withdrawals, and so on. Insurance companies have the
discretion to structure their expenses structure whereas a mutual fund does not have
that luxury. The expense ratios in their case cannot exceed 2.5 per cent for an equity
plan and 2.25 per cent for a debt plan respectively. The lack of regulation on the
expense front works to the detriment of investors in ULIPs.
5. The front-loading of charges does have an impact on overall returns as investors lose
out on the compounding benefit. Insurance companies explain that charges get evened out
over a long term. Thus investors are forced to stay with the plan for a longer tenure to
even out the effect of initial charges as the shorter the tenure, the lower will be the
investor real returns.

6. In effect, when investor lock in their money in a ULIP, despite the promise of
flexibility and liquidity, investor will stuck with one fund management style. This is all
the more reason to look for an established track record before committing investor hard-
earned money.
7. Investor life cover charges would depend on the accumulation in investor investment
account. As accumulation increases, the amount at risk for the insurance company
decreases. However, with increasing age, the cost per Rs 1,000 sum assured increases,
effectively increasing policy holder overall insurance costs.
8. It would deal with the fact that expenses on ULIPs were on the higher side in the initial
years and therefore; the exit option would hardly prove to be beneficial for the investors.
9. ULIP face tough competition from mutual funds, which are short-term instruments.
Hence, a liquidity option makes ULIPs as attractive but because of the high front-end
charges on policy, investor may not be left with much to withdraw at the end of 3 years.

Mutual Fund
A Mutual Fund is a trust that pools the savings of a number of investors who share a
common financial goal. The money thus collected is then invested in capital market
instruments such as shares, debentures and other securities. Mutual fund is a
Mechanism for pooling the resources by issuing units to the investors and
investing funds in securities in accordance with objectives as disclosed in
offer document.

Investments in securities are spread across a wide cross-section and sectors thus the risk
is reduced. Diversification reduces the risk because all stocks may not move in the same
direction in the same proportion at the same time. Mutual fund issues units to the
investors in accordance with quantum of money invested by them. Investors of mutual
funds are known as unit holders. Thus a Mutual Fund is the most suitable investment for
the common man as it offers an opportunity to invest in a diversified, professionally
managed portfolio at a relatively low cost. The small savings of all the investors are put
together to increase the buying power. Anybody with an invertible surplus of as little as a
few thousand rupees can invest in Mutual Funds.
The investors in proportion to their investments share the profits or losses. The mutual
funds normally come out with a number of schemes with different investment objectives,
which are launched from time to time. A mutual fund is required to be registered with
Securities and Exchange Board of India (SEBI), which regulates securities markets
before it can collect funds from the public.

Mutual fund set up
A mutual fund is set up in the form of a trust, which has sponsor, trustees,
asset management company (AMC) and custodian. The trust is established by
a sponsor/s who is like promoter of a company. The trustees of the mutual
fund hold its property for the benefit of the unit holders. Asset Management
Company (AMC) approved by SEBI manages the funds by making
investments in various types of securities. Custodian, who is also registered
with SEBI, holds the securities of various schemes of the fund in its custody.
The trustees are vested with the general power of superintendence and
direction over AMC. They monitor the performance and compliance of SEBI
Regulations by the mutual fund.

SEBI Regulations require that at least two thirds of the directors of trustee
company or board of trustees must be independent i.e. they should not be
associated with the sponsors. Also, 50% of the directors of AMC must be
independent. All mutual funds are required to be registered with SEBI before
they launch any scheme.
NAME OF SEBI REGISTERED MUTUAL FUNDS
ABN AMRO Mutual Fund Alliance Capital Mutual Fund
Bench Mark Mutual Fund Bench Mark Mutual Fund
BOB Mutual Fund Bank of India Mutual Fund
Can bank Mutual Fund Chola Mutual Fund

D S P Merrill Lynch Investments Managers Dundee Mutual Fund
Escorts Mutual Fund First India Mutual Fund
GIC Mutual Fund HDFC Mutual Fund
IDBI Principal IL & FS Mutual Fund
Indian Bank Mutual Fund ING Savings Trust
J. M. Mutual Fund J. F. Mutual Fund
Kotak Mahindra Mutual Fund LIC Mutual Fund
Morgan Stanley Mutual Fund Pioneer ITI Mutual Fund
PNB Mutual Fund Prudential ICICI Mutual Fund
Reliance Capital Mutual Fund Sahara Mutual Fund
SBI Mutual Fund Shriram Mutual Fund
Standard Chartered Mutual Fund SUN F&C Mutual Fund
Sundaram Mutual Fund Tata Mutual Fund
GIC Mutual Fund HDFC Mutual Fund
IDBI Principal IL & FS Mutual Fund

Indian Bank Mutual Fund ING Savings Trust
J. M. Mutual Fund J. F. Mutual Fund
Kotak Mahindra Mutual Fund LIC Mutual Fund
Taurus Mutual Fund Templeton Mutual Fund
Unit Trust of India Zurich India Mutual Fund
Growth:
The Indian mutual funds industry has been growing at a healthy pace of 16.44% for the
last 8 years, which is far superior as compared to the growth rate for the worldwide
mutual fund industry, which has been around 13% in the same period. The Indian mutual
funds industry has Rs 204,519 crores worth of assets under management as on 30th Nov
2005, which is a spectacular growth of 37% from last year, The growth can be attributed
to the booming equity markets in majority of the countries across the globe. The rise has
been higher in case of India because of the comparatively smaller base. Liquid/ money
market funds comprise of a large part of the Indian mutual fund assets and stands at 37%
as compared to their worldwide share of 19%. Large institutions and corporate houses
park their surplus short-term funds in liquid schemes as it provides with tax efficient
returns, instant liquidity and superior performance at minimal risk.

Worldwide, there are about 55,920 schemes and 41% are equity-oriented schemes,
whereas 24% are Bond funds, 20% are balanced/mixed funds, and 6% are money market
funds. In India there are 495 schemes as on 30th Nov 05 and 42% are equity-oriented
schemes, 41% are Bond Funds, 7% are in the balanced category and 8% are Liquid funds.
Of these schemes, the larger funds hold the maximum assets as revealed below:
In the equity category, top 10 schemes in terms of corpus; hold 27% of total assets. Top
15 schemes hold 35% and top 20 schemes hold 42%. Top 28 schemes hold more than
50% of the assets.
As on 30th June 05, worldwide mutual funds manage assets worth $16.41 trillion, while
India has a meager 0.22% share of the world market. Equity fund assets represent 43% of
the worldwide mutual fund assets, while money market funds are 19%, and share of bond

funds stands at 20%. Balanced funds represent 9% of the total assets. The Indian story is
however quite different - the equity fund assets have formed only 27% of the total Indian
industry’s AUM as on 30th June 05. This is despite the fact that the equity inflows in
India have witnessed a stupendous rise of 134% in the last one year. The equity assets in
India represented only 15% of the total mutual fund assets a year back (June 2004). As on
November 30, 2005 the equity assets have increased to almost 36% of the total Indian
mutual fund assets bringing it close to the global levels.

TYPES OF MUTUAL FUND SCHEMES
 By Structure
o Open - Ended Schemes
o Close - Ended Schemes
o Interval Schemes
 By Investment Objective
o Growth Schemes
o Income Schemes
o Balanced Schemes
 Other Schemes
o Tax Saving Schemes
o Gilt Fund
o Index Schemes
o Sector Specific Schemes
Money Market Schemes

Schemes according to Maturity Period:
A mutual fund scheme can be classified into open-ended scheme or close-
ended scheme depending on its period.
Open-ended Fund/ Scheme
An open-ended fund or scheme is one that is available for subscription and
repurchase on a continuous basis. These schemes do not have a fixed maturity
period. Investors can conveniently buy and sell units at Net Asset Value
(NAV) related prices, which are declared on a daily basis. The key feature of
open-ended schemes is liquidity.
Close-ended Fund/Scheme
A close-ended fund or scheme has a stipulated maturity period e.g. 5-7 years.
The fund is open for subscription only during a specified period at the time
of launch of the scheme. Investors can invest in the scheme at the time of the
initial public issue and thereafter they can buy or sell the units of the scheme
on the stock exchanges where the units are listed. In order to provide an exit
route to the investors, some close-ended funds give an option of buying back
the units to the mutual fund at NAV related price. SEBI regulations stipulate
that at least one of the two exit routes is provided to the

investor i.e. either repurchase facility or through listing on stock exchanges.
These mutual funds schemes disclose NAV generally on weekly basis.
Interval Funds
Interval funds combine the features of open-ended and close-ended schemes. They are
Open for sale or redemption during pre-determined intervals at NAV related prices.
Schemes according to Investment Objective:
A scheme can also be classified as growth scheme, income scheme or balanced scheme
considering its investment objective. Such schemes may be open-ended or close-ended
schemes as described earlier. Such schemes may be classified mainly as follows:
Growth / Equity Oriented Scheme
The aim of growth funds is to provide capital appreciation over the medium
to long term. Such schemes normally invest a major part of their corpus in
equities. Such funds have comparatively high risks. These schemes provide
different options to the investors like dividend option, capital appreciation,
etc. and the investors may choose an option depending on their preferences.
The investors must indicate the option in the application form. The mutual
funds also allow the investors to change the options at a later date. Growth

schemes are good for investors having a long-term outlook seeking
appreciation over a period of time.
Income / Debt oriented Scheme
The aim of income funds is to provide regular and steady income to investors.
Such schemes generally invest in fixed income securities such as bonds,
corporate debentures, Government securities and money market instruments.
Such funds are less risky compared to equity schemes. These funds are not
affected because of fluctuations in equity markets. However, opportunities of
capital appreciation are also limited in such funds. The NAVs of such funds
are affected because of change in interest rates in the Country. If interest
rates fall, NAVs of such funds are likely to increase in the short run and vice
versa. However, long-term investors may not bother about these fluctuations.
Balanced Fund
The aim of balanced funds is to provide both growth and regular income as
such schemes invest both in equities and fixed income securities in the
proportion indicated in their offer documents. These are appropriate for
investors looking for moderate growth. They generally invest 40-60% in
equity and debt instruments. These funds are also affected because of

fluctuations in share prices in the stock markets. However NAVs of such
funds are likely to be less volatile compared to pure equity funds.
Money Market or Liquid Fund
These funds are also income funds and their aim is to provide easy liquidity,
preservation of capital and moderate income. These schemes invest
exclusively in safer short-term instruments such as treasury bills, certificates
of deposit, commercial paper and inter-bank call money, government
securities, etc. Returns on these schemes fluctuate much less compared to
other funds. These funds are appropriate for corporate and individual
investors, as a means to park their surplus funds for short periods.
Tax Saving Schemes
These schemes offer tax rebates to the investors under specific, provisions of the
Income Tax Act, 1961 as the Government offers tax incentives for investment in
specified avenues. E.g. Equity Linked Savings Schemes (ELSS). Pension schemes
launched by the mutual funds also offer tax benefits. These schemes are growth
oriented and invest predominantly in equities. Their growth opportunities and
risks associated are like any equity-oriented scheme.

Index Funds
Index Funds replicate the portfolio of a particular index such as the BSE Sensitive
index, S&P NSE 50 index (Nifty), etc. These schemes invest in the securities in
the same weight age comprising of an index.
NAVs of such schemes would rise or fall in accordance with the rise or fall in the
index, though not exactly by the same percentage due to some factors known as
"tracking error" in technical terms. Necessary disclosures in this regard are made
in the offer document of the mutual fund scheme.
There are also exchange traded index funds launched by the mutual funds,
which are traded on the stock exchanges.
Sector specific funds/schemes
These are the funds/schemes, which invest in the securities of only those sectors or
industries as specified in the offer documents. E.g. Pharmaceuticals, Software, Fast
Moving Consumer Goods (FMCG), Petroleum stocks, etc. The returns in these funds
are dependent on the performance of the respective sectors/industries. While
these funds may give higher returns, they, are more risky compared to
diversified funds. Investors need to keep a watch on the performance of
those sectors/industries and must exit at an appropriate time. They may also
seek advice of an expert.

Gilt Fund
These funds invest exclusively in government securities. Government
securities have no default risk. NAVs of these schemes also fluctuate due to
Change in interest rates and other economic factors as are the case with
income or debt oriented schemes.
Sectoral Schemes
Sectoral Funds are those, which invest, exclusively in a specified sector. This could be an
industry or a group of industries or various segments such as 'A' Group shares or initial
public offerings.
FREQUENTLY USED TERMS
Net Asset Value (NAV)
Net Asset Value is the market value of the assets of the scheme minus its liabilities. The
per unit NAV is the net asset value of the scheme divided by the number of units
outstanding on the Valuation Date.
Net Asset Value is the market value of the securities held under the scheme. Since market
value of securities changes every day, NAV of a scheme also varies on day-to-day basis.
The NAV per unit is the market value of securities of scheme divided by the total number
of units of the scheme on any particular date. For example, if the market value of
securities of a mutual fund scheme is Rs 200 lakhs and the mutual fund has issued 10

lakhs units at Rs. 10 each to the investors, then the NAV per unit of the fund is Rs. 20.
NAV is required to be disclosed by the mutual funds on a regular basis - daily or
weekly - depending on the type of scheme
Sale Price
Is the price you pay when you invest in a scheme or NAV a unit holder is charged
while investing in an open-ended scheme is sale price. Also called Offer Price. It
may include a sales load, if applicable.
Repurchase Price
Is the price at which a close-ended scheme repurchases its units and it may include a
back-end load. This is also called Bid Price.
Redemption Price
Is the price at which open-ended schemes repurchase their units and close-ended schemes
redeem their units on maturity. Such prices are NAV related.
Sales Load
Is a charge collected by a scheme when it sells the units also called, ‘Front-end’ load. A
Load is one that charges a percentage of NAV for entry or exit. That is, each time one
buys or sells units in the fund, a charge will be payable. This charge is used by the
mutual fund for marketing and distribution expenses. Suppose the NAV per unit is

Rs. 10. If the entry as well as exit load charged were 1%, then the investors who buy
would be required to pay Rs. 10.10 and those who offer their units for repurchase to the
mutual fund will get only Rs.9.90 per unit. The investors should take the loads into
consideration while making investment as these affect their yields/returns. However, the
investors should also consider the performance track record and service standards of the
mutual fund, which are more important. Efficient funds may give higher returns in spite
of loads.
*Whether a mutual fund impose fresh load or increase the load beyond the level
mentioned in the offer documents:
Mutual funds cannot increase the load beyond the level mentioned in the offer
document. Any change in the load will be applicable only to prospective
investments and not to the original investments. In case of imposition of fresh loads
or increase in existing loads, the mutual funds are required to amend their offer
documents so that the new investors are aware of loads at the time of investments.
*No Load
Schemes that do not charge a load are called ‘No Load’ schemes. A no-load fund is
one that does not charge for entry or exit. It means the investors can enter the
fund/scheme at NAV and no additional charges are payable on purchase or sale of
units.

Repurchase or ‘Back-end’ Load
Is a charge collected by a scheme when it buys back the units from the unit holders.
Benefits of Investing in Mutual Funds:
 Professional Management
Mutual Funds provide the services of experienced and skilled professionals,
backed by a dedicated investment research team that analyses the performance
and prospects of companies and selects suitable investments to achieve the
objectives of the scheme. Fund managers are professionals who track the market
on an on going basis. With their mix of professional qualification and market
knowledge, they are better placed than the average investor to understand the
markets.
 Diversification
Since a mutual fund scheme invests in number of stocks and/or debentures, the
associated risks are greatly reduced. Mutual Funds invest in a number of
companies across a broad cross-section of industries and sectors. This
diversification reduces the risk because seldom do all stocks decline at the same
time and in the same proportion.

 Convenient Administration
Investing in a Mutual Fund reduces paperwork and helps you avoid many
problems such as bad deliveries, delayed payments and follow up with brokers
and companies. Mutual Funds save your time and make investing easy and
convenient.
 Return Potential
Over a medium to long-term, Mutual Funds have the potential to provide a higher
return as they invest in a diversified basket of selected securities.
 Low Costs
Mutual Funds are a relatively less expensive way to invest compared to directly
investing in the capital markets because the benefits of scale in brokerage,
custodial, demat costs, depository costs etc and other fees translate into lower
costs for investors
 Liquidity
In open-end schemes, the investor gets the money back promptly at net asset
value related prices from the Mutual Fund. In closed-end schemes, the units can
be sold on a stock exchange at the prevailing market price or the investor can
avail of the facility of direct repurchase at NAV related prices by the Mutual
Fund.

 Transparency
We get regular information on the value of our investment in addition to
disclosure on the specific investments made by our scheme, the proportion
invested in each class of assets and the fund manager's investment strategy and
outlook.
 Flexibility
Through features such as regular investment plans, regular withdrawal plans and
dividend reinvestment plans, we can systematically invest or withdraw funds
according to your needs and convenience.
 Affordability
Investors individually may lack sufficient funds to invest in high-grade stocks. A
mutual fund because of its large corpus allows even a small investor to take the
benefit of its investment strategy.
 Choice of Schemes
Mutual Funds offer a family of schemes to suit our varying needs over a lifetime.
 Well-Regulated
All Mutual Funds are registered with SEBI and they function within the
provisions of strict regulations designed to protect the interests of investors. The
operations of Mutual Funds are regularly monitored by SEBI.

Drawbacks of Mutual Funds
 No Guarantees: No investment is risk free. If the entire stock market declines in
value, the value of mutual fund shares will go down as well, no matter how
balanced the portfolio. Investors encounter fewer risks when they invest in mutual
funds than when they buy and sell stocks on their own. However, anyone who
invests through a mutual fund runs the risk of losing money.
 Fees and commissions: All funds charge administrative fees to cover their day-
to-day expenses. Some funds also charge sales commissions or "loads" to
compensate brokers, financial consultants, or financial planners. Even if you don't
use a broker or other financial adviser, you will pay a sales commission if you buy
shares in a Load Fund.
 Taxes: During a typical year, most actively managed mutual funds sell anywhere
from 20 to 70 percent of the securities in their portfolios. If your fund makes a
profit on its sales, you will pay taxes on the income you receive, even if you
reinvest the money you made.
 Management risk: When you invest in a mutual fund, you depend on the fund's
manager to make the right decisions regarding the fund's portfolio. If the manager
does not perform as well as you had hoped, you might not make as much money
on your investment as you expected. Of course, if you invest in Index Funds, you
forego management risk, because these funds do not employ managers.

 Unit holder of the mutual fund does not enjoy any right to attend the meeting of
the company & exercise voting rights.
 Performance of the mutual fund is determined by the conditions prevailing in the
stock market.
 No Control over Costs: An investor in a mutual fund has no control over the
overall cost of investing. He pays investment management fees as long as he
remains with the fund, albeit in return for the professional management and
research. Fees are usually payable as a percentage of the value of his investments,
whether the fund value is rising or declining. A mutual fund investor also pays
fund distribution costs, which he would not incur in direct investing. However,
this shortcoming only means that there is a cost to obtain the benefits of mutual
fund services. However, this cost is often less than the cost of direct investing by
the investors.
 Managing a Portfolio of Funds: Availability of a large number of funds can
actually mean too much choice for the investor. We may again need advice on
how to select a fund to achieve his objectives.

.
Management Problem
The Management problem was to know ULIP gives the advantages of guaranteed returns
to the Clint and provides him protection and Investment benefits where as Mutual fund
products gives the returns only. So comparison of both the product ULIP is better than the
mutual fund.
Research Problem:
“Comparative study of ULIP and Mutual fund to analyze the investors preference
towards mutual fund at ICICI Prudential”
Propose of Study
The big question mark in front of every investor is where to invest money to get real
income. There are so many options available to them but it is very difficult to choose
among them, as every option has it’s own merits & demerits. Investor has to be fully
aware of all these options & he should be in a position to choose which one is suitable for
him on the basis of his risk, investment objective and expected return etc. Option that is
suitable for one person may not suit other person’s requirement. This process of choosing
suitable product/option take long time, the best way for the person who has no time &
expertise in selecting investment avenue can either go for ULIP or Mutual Fund

 The study will be helpful for the company to get the clear cut idea of the
difference between Unit Linked Policies and the Mutual Funds.
 It helps the company to convince the clients by telling the difference of both
products [Mutual Funds and Unit Linked Products].
 Study helps to find and compare the returns and risk level of both the products.
 Study helps me to have the practical insight of the procedures of both Mutual
Fund business and the unit Linked policies.
Objective:
 To study and compare the Unit Linked Insurance Plans and Mutual Fund.
 To know whether these two options are substitute for each other or not.
 To know the factors that influence investors while taking investment decisions.
 To know advantages & disadvantages of investing in ULIP and Mutual Funds
 To know the suitability of ULIP & mutual fund to different investors.
 To know Customer awareness and preferences.

Organizational Profile
ABOUT ICICI PRUDENTIAL (Life Insurance)
ICICI Prudential Life Insurance Company is a joint venture between ICICI Bank, a
premier financial powerhouse, and prudential plc, a leading international financial service
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 equity base stands at Rs. 925 crore with ICICI Bank and Prudential
plc holding 74% and 26% stake respectively. In the financial year ended March 31, 2005,
the company garnered Rs 1584 crore of new business premium for a total sum assured of
Rs 13,780 crore and wrote nearly 615,000 policies. For the past four years, ICICI
Prudential has retained its position as the No. 1 private life insurer in the country, with a
wide range of flexible products that meet the needs of the Indian customer at every step

in life. ICICI Prudential has recruited and trained about 56,000 insurance advisors to
interface with and advise customers.
DISTRIBUTION CHANNELS
At present the distribution channels that are available in the market are:
 Direct selling
 Corporate agents
 Group selling
 Brokers and cooperative societies
 Banc assurance
Banc assurance is one of the most upcoming channels of distribution. This is a
mutually beneficial situation as banks can also expand their range of products on offer to
customers, while the insurance company will also earn profits from the exposure.

LIFE INSURANCE COMPANIES IN INDIA & THEIR
MARKET SHARE (As Per March -06):

INDIAN FOREIGN COUNTRY INSURER WEBSITE MARKET
PROMOTER PROMOTER SHARE

ICICI Prudential USA ICICI Iciciprulife.com 7.56
Prudential Life
Insurance
Bajaj Auto Allianz AG Germany Bajaj Allianz bajajallianz.co.in 7.35
Life Insurance
HDFC Standard Life UK HDFC Standard hdfcinsurance.co 2.9
Life Insurance m
SBI Cardif (arm of Canada SBI Life sbilife.co.in 2.3
BNP paribas) Insurance

Aditya Birla Sun Life Canada Birla Sun Life birlasunlife.com 1.9
Group Insurance
TATA American USA Tata-AIG Life tata_aig.com 1.3
International Insurance
Group
Max India New York life USA Max New York Maxnewyorklife. 1.2
life insurance com
Dabur India Aviva Plc USA Aviva Life avivaindia.com 1.1
Insurance
Kotak Old Mutual Australia Kotak Mahindra Omkotakmahind 1.1
Mahindra Plc Old Mutual ra.com
finance Funds
Vysya Bank ING Group Netherlands INGVysya Life ingvysyalife.com 0.8
Insurance

Reliance Amp Sanmar Australia Reliance life reliancelife.com 0.5
insurance
Jammu & Met life USA Met life metlifeindia.com 0.4
Kashmir bank insurance
Sahara India None India Sahara life Saharalife.com 0.1
Insurance
Shriram Sanlam S.A Sriram life sriramlife.com 0.0
insurance
LIC None India Life insurance licindia.com 71.4

corporation
(LIC)
COMPANY PROFILE
India's Number One private life insurer, ICICI Prudential Life Insurance Company is a
joint venture between ICICI Bank-one of India's foremost financial services companies-
and Prudential plc- a leading international financial services group headquartered in the
United Kingdom. Total capital infusion stands at Rs. 15.85 billion, with ICICI Bank
holding a stake of 74% and Prudential plc holding 26%.
It began operations in December 2000 after receiving approval from Insurance
Regulatory Development Authority (IRDA). Today, its nation-wide team comprises

nearly 120,000 insurance advisors, 18 banc assurance partners and 200 corporate agent
tie-ups.
ICICI Prudential was the first life insurer in India to receive a National Insurer Financial
Strength rating of AAA (Ind) from Fitch ratings. For three years in a row, ICICI
Prudential has been voted as India's Most Trusted Private Life Insurer, by The Economic
Times - AC Nielsen ORG Marg survey of 'Most Trusted Brands'. As we grow our
distribution, product range and customer base, we continue to tirelessly uphold our
commitment to deliver world-class financial solutions to customers all over India.
Our vision
To make ICICI Prudential the dominant Life and Pensions player built on trust by world-
class people and service.
This we hope to achieve by:
 Understanding the needs of customers and offering them superior products
and service

 Leveraging technology to service customers quickly, efficiently and
conveniently
 Developing and implementing superior risk management and investment
strategies to offer sustainable and stable returns to our policyholders
 Providing an enabling environment to foster growth and learning for our
employees
 And above all, building transparency in all our dealings.
Our values
Every member of the ICICI Prudential team is committed to 5 core values: Integrity, Customer
First, Boundary less, Ownership, and Passion. These values shine forth in all we do, and have
become the keystones of our success. Each of the values describe what the company stands for, the
qualities of our people and the way we work.
ICICI Bank Group

Promoters
ICICI Bank
ICICI Bank (NYSE:IBN) is India's second largest bank and largest private sector bank with assets
of Rs. 2823.72 billion as on September 30, 2006. ICICI Bank provides a broad spectrum of financial
services to individuals and companies. This includes mortgages, car and personal loans, credit and
debit cards, corporate and agricultural finance. The Bank services a growing customer base through
a multi-channel access network which includes over 635 branches and extension counters, 2325
ATMs, call centers and Internet banking.
PRUDENTIAL PLC

Established in London in 1848, prudential plc is an international financial services
company, offering the customers with appropriate savings and protection products.
Through its retail financial services products and services to more than 16 million
customers, policyholder and unit holders worldwide.
Prudential has brought to market an integrated range of financial services products that
now includes life assurance, pensions, mutual funds, banking, investment management
and general insurance. In Asia, Prudential is the leading European life insurance company
with a vast network of 24 life and mutual fund operations in twelve countries - China,
Hong Kong, India, Indonesia, Japan, Korea, Malaysia, the Philippines, Singapore,
Taiwan, Thailand and Vietnam.
The Joint Venture
ICICI Prudential Life Insurance Company Limited was incorporated on July 20, 2000.
The authorized capital of the company is Rs.2300 Million. The paid up capital is Rs.
1900 Million. The Company is a joint venture of ICICI (74%) and Prudential plc UK
(26%).
The Company was granted Certificate of Registration for carrying out Life Insurance
business, by the Insurance Regulatory and Development Authority on November 24,
2000. It commenced commercial operations on December 19, 2000, becoming one of the
first few private sector players to enter the liberalized.

The joint venture between the two can be depicted in the following manner.
The joint strengths
A powerful joint venture partnership with each carrying a set of strengths

complementing each others
Brand strength Reputation
Insurance
expertise
Infrastructure
Customer base PRUDENTIAL Product

ICICI
Market Innovators Distribution
Local knowledge Operations
As a consequence of such a powerful joint venture there came existence of robust
organization named ICICI Prudential life insurance co ltd.
Below mentioned model reveals the ultimate strengths that the company possesses in
literally all the dimensions.

Our approach : A new age life insurance model
 J oint venture entry platform

Entry  Strong, respected partners
 Comprehensive portfolio
Product  Innovative and flexible
Brand  Creation of a superbrand

ICICI PRUDENTIAL
 Rapid expansion of agency
Distribution  Multi-channel platform
 Best in class
Operations  Customer centric
People  Talent from diverse industries
Board of Directors
The ICICI Prudential Life Insurance Company Limited Board comprises reputed people
from the finance industry both from India and abroad.
Mr. K.V. Kamath, Chairman
Mr. Barry Stowe

Mrs. Kalpana Morparia
Mrs. Chanda Kochhar
Mr. HT Phong
Mr. M.P. Modi
Mr. R Narayanan
Mr. Keki Dadiseth
Ms. Shikha Sharma, Managing Director
Mr. N. S. Kannan, Executive Director
Mr. Bhargav Dasgupta, Executive Director
Ms. Anita Pai, Chief-IT, Customer Service & Operations
Mr. Azim Mithani, Chief Actuary
Mr. Puneet Nanda, Chief Investments Officer
Mr. Binayak Dutta, Chief – Sales and distribution
Distribution
ICICI Prudential has one of the largest distribution networks amongst private life insurers
in India with a network of over 120,000 advisors, and having commenced operations in
319 cities and towns in India, stretching from Bhuj in the west to Guwahati in the east,
and

Jammu in the north to Trivandrum in the south.
The company has 18 bancassurance partners, having tie-ups with ICICI Bank, Bank of
India, Federal Bank, South Indian Bank, Lord Krishna Bank, all regional rural banks
sponsored by Bank of India, as well as some co-operative banks; as well as over 200
corporate agents and brokers. It has also tied up with NGOs, MFIs and corporates for the
distribution of rural policies.
CEO
CEO
Chief Customer Chief IT Chief actuaries Chief Chief HR

Chief Customer
Service and Chief IT Chief actuaries Chief
Finance Chief HR
Service and
Operations Finance
Operations
ORGANIZATIONAL Head
STRUCTURE OF ICICIHead Sales
PRUDENTIAL LIFE INSURANCE
Regional Head
Underwriting Head Sales
Regional
Head CS&O Underwriting
Head CS&O and claims
and claims
Regional
Regional
Head
Head
Zonal
Zonal
Head
Head
Zonal Head
Zonal Head
Branch
Branch
Head Branch
Head Branch
Head
RESEARCH METHODOLOGY
PROJECT TITLE: “Comparative study of unit linked insurance plan and mutual
fund to analyze the investor preference towards mutual funds”
TYPES OF D ATA C O L L E C T E D
a. Primary Data Collection: Primary data has been collected for the study

with the aid of questionnaire.
b. Secondary Data Collection: Secondary data has been collected from
website and Brochures
SAMPLING
Sampling Method: Random Selection
Sample Size: 100
SURVEY
The survey has been conducted in the Hubli city.
ANALYSIS OF DATA AND FINDINGS

Section –A
1. Which of the following investment option would you prefer?

Frequency Percent Valid Percent Cumulative Percent
Valid Bank fixed deposit 40 40.0 40.0 40.0
postal savings 40 40.0 40.0 80.0
Shares and bonds 7 7.0 7.0 87.0
mutual funds 4 4.0 4.0 91.0
Insurance policies 8 8.0 8.0 99.0

others (specify) 1 1.0 1.0 100.0
Total 100 100.0 100.0
50
40
40 40
30
20
10
Percent
8
7
4
0
Bank f ixed deposit Shares and bonds Insurance policies
postal savings mutual f unds others (specif y)
Analysis:
According to above table 40% of respondents have invested in bank deposits,
40% have invested in postal savings.7% of respondents have invested in shares and bonds
and 4% in mutual funds ,8% in Insurance Policy and 1% in others.
2. Have you invested in the following? (Please tick)(if yes, go

to Q no.4)
Frequency Percent Valid Percent Cumulative

Percent
Valid Mutual Funds 22 22.0 22.0 22.0
Insurance Policies 78 78.0 78.0 100.0
Total 100 100.0 100.0

100
80
78
60
40
20 22
Percent
0
Mutual Funds Insurance Policies
Analysis:
According to the above table 22 % of the respondents have invested in Mutual Funds
and 78 % respondents have invested in Insurance Policies.
3.What is the reason for not investing?

Percent
Valid Non Respondents 90 90.0 90.0 90.0
. Uncertainty 5 5.0 5.0 95.0
High cost 1 1.0 1.0 96.0

Not interested in 3 3.0 3.0 99.0
investment
Others 1 1.0 1.0 100.0

Total 100 100.0 100.0
Others
Not interested in in
High cost
. Uncertainty
Non Respondents
Analysis:
According to the above table 5 %of the respondents are uncertain to invest in Mutual
Funds. 1% of the respondents think it is high cost and 3 % of them are not interested in
investments, 1% of respondent says other and 90% are non respondents.
4. Do you think investing in Mutual Fund is worthy?

Percent
Valid Yes 55 55.0 55.0 55.0

No 43 43.0 43.0 98.0
Non Respondents 2 2.0 2.0 100.0
Total 100 100.0 100.0
60
55
50
43
40
30
20
10
Percent
0
Yes No Non Respondents
Analysis:
According to the above table 55% of the respondents think that investing in
Mutual Funds is worthy and 43% of the respondents think it is not , 2 % have not
responded.
6. According to you why an individual should invest in Mutual Fund?

Percent
Valid To multiply money 5 5.0 5.0 5.0
Moderate return 43 43.0 43.0 48.0
with minimum risk

To have faster 16 16.0 16.0 64.0
rate of growth
Others 1 1.0 1.0 65.0
Total 100 100.0 100.0
50
43
40
35
30
20
16
10
Percent
5
0
To multiply money To have faster rate Non Respondents
Moderate return w ith Others
Analysis:
According to the above table 5% of the respondents say that they have invested to
multiply their money, 43 % of the respondents have invested for moderate returns with
minimum risk, 16 % of the respondents have invested to have a faster rate of growth with
less risk, 1 % of the respondents have invested as other reason and 35% have not
responded.
7. Do you have any plan of investing in near future? (if no go to Q no.8)

Percent
Valid Yes 8 8.0 8.0 8.0
.No 90 90.0 90.0 98.0

Non 2 2.0 2.0 100.0
Respondents
Total 100 100.0 100.0
Non Respondents Yes
.No
Analysis:
According to the table 8 % of respondents plan to invest in a Mutual fund and
90 % do not plan to invest ,2% have not responded.
8. When do you plan to invest

Percent
Valid A month 2 2.0 2.0 2.0
1month - 1 year 1 1.0 1.0 3.0

After 1 year 7 7.0 7.0 10.0
Non 90 90.0 90.0 100.0

Respondents
Total 100 100.0 100.0
100
90
80
60
40
20
Percent
7
0
A month 1month - 1 year After 1 year Non Respondents
Analysis:
According to the table 2% of respondents plan to invest in a month ,1% during a month to
a year and 7% plan to invest after a year and 90% have not responded.
9. How likely are you to recommend investment in Mutual fund to your

friend?

Percent
Valid Definitely 53 53.0 53.0 53.0

recommend
Might not 47 47.0 47.0 100.0

recommend
Total 100 100.0 100.0
Might not recommend
Definitely recommend
Analysis:
According to the above table 53 % of the respondents definitely will
recommend about the investment of Mutual Funds. 47 % of the respondents might or
might not recommend .
Section – B
1. Are you aware of ULIP concept in Life Insurance?

Percent
Valid Yes 51 51.0 51.0 51.0
No 49 49.0 49.0 100.0
Total 100 100.0 100.0
60
50 51
49
40
30
20
Frequency
10
0
Yes No
Are you aware of ULIP concept in Life Insurance?
Analysis:
According to the table 51% of respondents are aware of ULIP concept and 49 % are not
aware .
2. In which companies have you invested?

Percent
Valid LIC 65 65.0 65.0 65.0

ICICI Pru 3 3.0 3.0 68.0
Bajaj Allianz 21 21.0 21.0 89.0
Aviva Life Insurance 9 9.0 9.0 98.0
Reliance 1 1.0 1.0 99.0
others 1 1.0 1.0 100.0
Total 100 100.0 100.0
70
65
60
50
40
30
Frequency
20
21
10
9
0
LIC Bajaj Allianz Reliance
ICICI Pru Aviva Lif e Insurance others
In which companies have you invested?
Analysis:
According to the table 65% respondents have invested in LIC, 3 % have invested
in ICICI PRU, 21 % in BAJAJ ALLIANZ, 9% in AVIVA,1% in Reliance and 1 % in
others.
3. What made you to go for that company?

Percent
Valid Brand Name 27 27.0 27.0 27.0
service 15 15.0 15.0 42.0
Customer 39 39.0 39.0 81.0
relationship
Better policy 14 14.0 14.0 95.0
option
. Others 1 1.0 1.0 96.0
Total 100 100.0 100.0
50
40
39
30
27
20
Frequency
15
14
10
4
0
Brand Name Customer relationshi . Others
service Better policy option Non Respondents
What made you to go for that company?
Analysis:
According to the table 27% of respondents have invested in the company for
a Brand name,15% have invested for the service provided, 39% have invested
for the customer relationship the company maintain. 14% of respondents have
invested for the better policy options available, 1% have invested for other reason and 4%
have not responded.
4. What extra benefits would you like to have along with life cover?

Percent
Valid Family income 61 61.0 61.0 61.0
benefit

Riders 7 7.0 7.0 68.0
Return 4 4.0 4.0 72.0
Critical illness benefit 26 26.0 26.0 98.0
Others 2 2.0 2.0 100.0

Total 100 100.0 100.0
70
60
61
50
40
30
26
20
Frequency
10
7
0 4
Family income benefi Return Others
Riders Critical illness ben
What extra benefits would you like to have along with life cover?
Analysis:
According to table the extra benefit customer would like to have is 61 %
Want a family income benefit , 26% would like to have critical illness
Benefit,7% would like to have riders ,4% would like to have more return and
2% would like other benefit.
5. What is your expectation from investment plan?

Percent
Valid Security 53 53.0 53.0 53.0
High return 5 5.0 5.0 58.0
Minimum 1 1.0 1.0 59.0
premium

Easy claim 36 36.0 36.0 95.0
Maximum sum 5 5.0 5.0 100.0
assured
Total 100 100.0 100.0
60
50 53
40
36
30
20
Frequency
10
5 5
0
Security Minimum premium Maximum sum assured
High return Easy claim
What is your expectation from investment plan?
Analysis:
According to table 53% of respondents expect security, 5% expect high return
and 1% expect minimum premium,36% expect easy claim and 5% expect maximum sum
assured.
6. Are you aware of ULIP of ICICI Pru? (If no go to question no 10)

Percent
Valid Traditional 1 1.0 1.0 1.0
insurance plan
Retirement plan 3 3.0 3.0 4.0
Life time plan 5 5.0 5.0 9.0

Life link super 2 2.0 2.0 11.0
Non 89 89.0 89.0 100.0
Respondents
Total 100 100.0 100.0
100
89
80
60
40
Frequency
20
0 5
Traditional insuranc Lif e time plan Non Respondents
Retirement plan Life link super
Are you aware of ULIP of ICICI Pru?
Analysis:
According to table 1% of customers are aware of traditional plan, 3% are aware of
Retirement plans, 5% are aware of Life time and 2% are aware of Life Link Super, 89%
have not responded.
7.Do you hold Unit linked insurance plan?

Percent
Valid Yes 3 3.0 3.0 3.0
No 16 16.0 16.0 19.0

Non 81 81.0 81.0 100.0
Respondents
Total 100 100.0 100.0
Do you hold Unit linked insurance plan?
Yes
No
Non Respondents
Analysis:
According to table 3% of customers hold Unit Linked Insurance Plan and 16 % do not
hold Unit Linked Insurance Plan. And 81% have not responded.
8.What did you like about Unit Linked Insurance Plan?

Percent
Valid Liquidity 2 2.0 2.0 2.0
withdrawal 3 3.0 3.0 5.0

Flexibility 4 4.0 4.0 9.0
others 1 1.0 1.0 10.0
Non 90 90.0 90.0 100.0
Respondents
Total 100 100.0 100.0
100
90
80
60
40
20
Percent
0
Liquidity w ithdraw al Flexibility others Non Respondents
Analysis:
According to table 2% of customers liked liquidity ,3% of customer liked withdrawal,
4% of customer liked flexibility , 1% others and 90 % have not responded.
10.How do you rank Unit linked plan of ICICI Pru as compared to Mutual
Fund?
Percent
Valid Excellent 3 3.0 3.0 3.0
Very good 4 4.0 4.0 7.0
Good 4 4.0 4.0 11.0
Satisfactory 3 3.0 3.0 14.0

Non 86 86.0 86.0 100.0
Respondents
Total 100 100.0 100.0
Excellent
Very good
Good
Satisfactory
Non Respondents
Analysis:
According to table 3% of customer have ranked ICICI PRU as Excellent , 4% says Very
good ,4% says Good and 3% have ranked as satisfactory, 86% have not responded.
11.Do you have any plan of investing in near future? (if no go to Q no.12)
Percent
Valid Yes 6 6.0 6.0 6.0

No 91 91.0 91.0 97.0

Non 3 3.0 3.0 100.0
Respondents
Total 100 100.0 100.0
100
91
80
60
40
20
Percent
0 6
Yes No Non Respondents
Analysis:
According to the table 6 % of respondents plan to invest in a ULIP and
91 % do not plan to invest in near future, 3% have not responded which clearly tell us
that customers have no clear idea about products of ICICI Prudential .
12. When do you plan to invest?

Percent
Valid A month 2 2.0 2.0 2.0
1 month - 1 year 3 3.0 3.0 5.0

After 1 year 5 5.0 5.0 10.0
Non 90 90.0 90.0 100.0

Respondents
Total 100 100.0 100.0
A month
1 month - 1 year
After 1 year
Non Respondents
Analysis:
According to the table 2% of respondents plan to invest in a month, 3% of investor plan
to invest one month to one year, 5% plan to invest after a year,90 % have not
responded ,which clearly tell us that customers have no clear idea about products of
ICICI Prudential .
13.How likely are you to recommend investment in ULIP?

Percent

Valid Definitely will 51 51.0 51.0 51.0
recommend
Might not 49 49.0 49.0 100.0

recommend
Total 100 100.0 100.0
Might not recommend
Definitely w ill reco
Analysis:
According to the above table 51 % of the respondents definitely will recommend about
the investment of ULIP. 49 % of the respondents might or might not recommend .

Findings
 40% of the investors invest in bank deposits and in postal savings for a
better return compared to any form of deposits .
 78% of the respondents have invested in Insurance Policies, compared to
Mutual Funds and ULIP.
 65% of the investors are from LIC, as the company provides better policy
option and good customer relationship
 55% of investor say that Mutual Funds is worthy. .
 The study shows 43% of the investors invest in Mutual Funds to have
moderate return with minimum risk.
 53% of the investors are ready to recommend investment in mutual funds
and ULIP to a friend.
 6% of the non-investors are interested to invest in ULIP in near future but
not interested to invest in Mutual Fund.
 49% of the respondents are not aware of Unit Linked Insurance Plan.
 3% of the investors say that the Liquidity feature provided by the ICICI
PRU satisfies them.
 3% of investors have ranked ULIP as excellent compared to Mutual
Fund.
 The study shows that ULIP and Mutual Fund are not substitutes.

 The study shows that factor that influences most of investors is premium
and return, customer relationship.
 53% of investors expect security from investment plan.
 61% of respondents prefer Family income benefit along with life cover.
LIMITATIONS
1.The limitation of the project was that the study and the survey were conducted
in Hubli city only, the analysis and recommendations may not be fully applicable to
other cities.
2.The limitation of this project was that, only the customers of ICICI Prudential were
considered for the study.
3.The time was not enough to study the vast and growing Life insurance sector in
Hubli city.
Recommendations

 Most of the respondents are not aware of Unit Linked Insurance Plan, the
awareness programme for non-investors should be created.
 49% of respondents are not aware, which should be increased by different medias
like TV, Magazines, & News Paper.
 The company has to provide proper training or marketing skills to improve the
marketability of products.
 Educate people about how ULIP work because investors are not aware of ULIP as
an investment option and investor’s don’t have the sufficient knowledge of the
basic concept of ULIP, nor about the operations .
 Complete information should be provided regularly to the advisor as well as to the
investor.
 Many of the investors say that they are ready to recommend about investment to
friends, so the company should approach the investors through the advisor and
explain about the schemes.
 ICICI Prudential should come out with more and more innovative schemes to
meet the requirement of every investor.
CONCLUSION

This study has basically helped to know how Unit Linked Insurance Plan and Mutual
Fund are working and how they differ. There are some conclusion based on the research:
After comparing Unit Linked life insurance plans and Mutual Fund it can be concluded
that most of investors are not aware of ULIP products of ICICI Pru. .
Unit Linked Insurance Plan can be one product class that the investor may look at for
satisfying all their investment need. ULIP attempts to fulfill investment needs of an
investor with protection/insurance needs of an insurance seeker. It saves the
investor/insurance-seeker the hassles of managing and tracking a portfolio or products.
No investment is good or bad but what can potentially happen is a wrong selection of the
investment or product against what investor really need. So both Mutual Fund and ULIP
are good but varies according to individual needs.
There is the difference between expenses of a ULIP as compared with the expenses of a
mutual fund. In a ULIP charges are front loaded, that is most of the charges are recovered
within the first few years. So if investor are looking for a long-term investment avenue
with an insurance cover that goes with it, then ULIP is the product for them and if they
are looking at a product that helps investor to focus purely on investment and returns
over a medium term, then go for a mutual fund.

Most of investors are not aware of Unit Linked Insurance Plan , the awareness
programme for non-investors should be created. Around 51 per cent of the people have
invested in Mutual Fund, which gives an indication that ICICI Pru Company is losing out
on a huge market that would have otherwise been theirs. Most of young people prefer
Mutual Funds then ULIP ,so ICICI Pru has to overcome this competition .
Today ULIP is facing great challenge by Mutual Fund , so ICICI Prudential should come
out with more and more innovative schemes to meet the requirement of every investor.
BIBLIOGRAPHY

 ICICI Prudential training notes
 WWW.iciciprulife.com
 WWW.google.com
 Business magazines (business times)
 News papers (Economic times, Times of India).

QUESTIONNAIRE
Dear Sir/Madam:
I am pleased to introduce myself as a student of Belgaum Institute of Management
Studies (MBA) Belgaum. As a part of my curriculum, I have under taken a project on
“Comparative study of unit linked insurance plan and mutual fund to analyze the
investor preference towards mutual funds”. The information provided by you will be
kept confidential and used for academic preference only.
RESPONDENT DETAILS
NAME :
ADDRESS :
TEL/MAIL/MOBILE :
AGE :
OCCUPATION : BUSINESSMAN PROFESSIONAL

GOVT-EMPLOYEE SELF EMPLOYED
OTHERS
INCOME (annual) : Below Rs. 200000

Rs.200000 to Rs. 500000
Above Rs.500000

Section –A
1. Which of the following investment option would you prefer? (Please tick)
a. Bank fixed deposit [ ] b. postal savings [ ]
c. Shares and bonds [ ] d. mutual funds [ ]
e. Insurance policies [ ] f. others (specify) [ ]
2. Have you invested in the following? (Please tick)(if yes, go to Q no.4)
a. Mutual Funds [ ] b. Insurance Policies [ ]
3. What is the reason for not investing?
a. Uncertainty [ ] b. High cost [ ]
c. Not interested in investment [ ] d. Others [ ]
4. Do you think investing in Mutual Fund is worthy?
a. Yes [ ] b. No [ ]
5. According to you why an individual should invest in Mutual Fund?
a .To multiply money [ ]
b. Moderate return with minimum risk [ ]
c. To have faster rate of growth [ ]
d. Others (specify) [ ]
a. Yes [ ] b. No [ ]

a. A month [ ] b. 1month – 1 year [ ]
c. After 1 year [ ]
8. How likely are you to recommend investment in Mutual fund to your friend?
a. Definitely recommend [ ]
b. Might not recommend [ ]
Section – B
1. Are you aware of ULIP concept in Life Insurance?
a. Yes [ ] b. No [ ]
2. In which companies have you invested?
a. LIC [ ] b. ICICI Pru [ ]
c. Bajaj Allianz [ ] d. Aviva Life Insurance [ ]
e. Reliance [ ] f. others (specify) [ ]
3. What made you to go for that company?
a. Brand Name [ ] b. service [ ]
c. Customer relationship [ ] d. Better policy option [ ]
e. Others (specify) [ ]
4. What extra benefits would you like to have along with life cover?
a. Family income benefit [ ] b. Riders [ ]
c. Return [ ] d. Critical illness benefit [ ]
e. Others (specify) [ ]

5. What is your expectation from investment plan?
a. Security [ ] b. High return [ ]
c. Minimum premium [ ] d. Easy claim [ ]
e. Maximum sum assured [ ] e. others [ ]
6. Are you aware of ULIP of ICICI Pru? (If no go to question no 10)
a. Traditional insurance plan [ ] b. Retirement plan [ ]
c. Life time plan [ ] d. Life link super [ ]
7. Do you hold Unit linked insurance plan?
a. Yes [ ] b. No [ ]
8. What did you like about Unit Linked Insurance Plan?
a. Liquidity [ ] b. withdrawal [ ]
c. Flexibility [ ] d. others (specify) [ ]
9. How do you rank Unit linked plan of ICICI Pru as compared to Mutual Fund?
a. Excellent [ ] b. Very good [ ]
c. Good [ ] d. Satisfactory [ ]
a. Yes [ ] b. No [ ]
a. A month [ ] b. 1 month – 1 year [ ]
c. After 1 year [ ]

12. How likely are you to recommend investment in ULIP?
a. Definitely will recommend [ ]
b. Might not recommend [ ]
13. Valuable suggestions for improvement___________________
THANK YOU

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People’s Education Society and Trust’s

Belgaum Institute of Management Studies,

“Comparative study of unit linked insurance plan and mutual fund

A Report Submitted in Partial Fulfillment of the

MASTER’S DEGREE IN BUSINESS

Mrs.S.S.Dhoni Mr. A.A.Mirji

BELGAUM INSTITUTE OF MANAGEMENT STUDIES (MBA)

People’s Education Society and Trust’s

Belgaum Institute of Management Studies, MBA

This is to certify that Mr. KUMAR.A.BANGALORE K.U.D.

Examination No. MBA05006024 of MBA IV Semester has successfully

Project Guide Director

BELGAUM INSTITUTE OF MANAGEMENT STUDIES (MBA)

have made a vital contribution in shaping this study

I would like to express my profound gratuity to Mr. A.A.Mirji (Unit Manager)

and for giving me an opportunity to take my Major Concurrent Project at ICICI

Prudential Life Insurance Co Ltd Hubli.

Any accomplishment requires the efforts of many people. I am indebted to

help and cooperation in collecting data for my project

Regardless of the source I wish to express my gratitude to those who have

contributed to my project, even though anonymously

I extend my thanks to our Director, Dr. S. R. Bharamanaikar, and

Mrs.S.S.Dhoni (Librarian) for providing me an opportunity to work for

ICICI Prudential Life Insurance Co Ltd Hubli.

BELGAUM INSTITUTE OF MANAGEMENT STUDIES (MBA)

BELGAUM INSTITUTE OF MANAGEMENT STUDIES (MBA)

BELGAUM INSTITUTE OF MANAGEMENT STUDIES (MBA)

The main aim of the investor is to minimize the risk involved in

who do not have time to watch the market regularly.

in pipeline of expansion to cover some parts of North Karnataka.

manages near about Rs.1.50 lack Crore.

premium collected by the insurance company.

BELGAUM INSTITUTE OF MANAGEMENT STUDIES (MBA)

 To know advantages & disadvantages of investing in ULIP and Mutual Funds

 To know the suitability of ULIP & mutual fund to different investors.

 To know Customer awareness and preferences.

a) Population People of Hubli city

e) Method Random Sampling

BELGAUM INSTITUTE OF MANAGEMENT STUDIES (MBA)

using graphical charts like Bar graphs and Pie charts.

return compared to any form of deposits .

 78% of the respondents have invested in Insurance Policies, compared to Mutual

Funds and ULIP.

and good customer relationship

 55% of investor say that Mutual Funds is worthy. .

return with minimum risk.

interested to invest in Mutual Fund.

BELGAUM INSTITUTE OF MANAGEMENT STUDIES (MBA)

return, customer relationship.

 53% of investors expect security from investment plan.

BELGAUM INSTITUTE OF MANAGEMENT STUDIES (MBA)

A brief history of the Insurance sector

1818  With the establishment of the Oriental Life Insurance Company in

Calcutta. Some of the important milestones in the life insurance

business in India are:

regulate the life insurance business.

to collect statistical information about both life and non-life insurance

with the objective of protecting the interests of the insuring public

country's life insurance scene. However, in the absence of regulatory

systems, scams and irregularities were almost a way of life at most of

BELGAUM INSTITUTE OF MANAGEMENT STUDIES (MBA)

The Insurance Regulatory & Development Authority, an autonomous insurance regulator

manner that will safeguard the interests of the insured.