PROJECT REPORT

AT
Recruiting Financial Consultants
Of
HDFC Standard Life Insurance ltd.

A Project Report Submitted In Partial Fulfillment Of The

Requirement For The Award Of The Degree Of
MASTER OF BUSINESS ADMINISTRATION

To
PUNJAB TECHNICAL UNIVERSITY, PUNJAB
By

Sanjeev Kumar Singh

Reg. No. 821126303

Under The Guidance Of

Mr. Praveen Maurya
CDM

HDFC STANDERD LIFE INSURANCE

Vikas Marg
NEW DELHI
JULY 2009

STUDENT
DECLARATION
I hereby declare that the project report titled “ Recruitment of financial
Consultant” is my own work and has been carried out under the able
guidance of Mr. Praduman Jain(Area Sales manager), Praveen Maurya
Channel Development Manager, – Vikas Marg Branch (New Delhi). All
care has been taken to keep this report error free and I sincerely regret for
any unintended discrepancies that might have crept into this report. I shall be
highly obliged if errors (if any) are brought to my attention.

Thanking You.

SANJEEV KUMAR SINGH

MBA SEM-2

ACKNOWLEDGEMENT

A successful project is fruitful culmination of efforts

of many people, some directly involved, and others
who have quietly encouraged and extended their
support, while being in the background. I take this

2
 opportunity to extend my deep sense of gratitude and
heartfelt thanks to all those who have helped us directly
or indirectly during the course of my project.

My colleagues and associates at RAI BUSINESS

SCHOOL continue to have important impact on my
thinking. I am in debt to Praveen Maurya(Channel
Devlopment Manager) and Rakhi Mam (Insurance
trainer) who have taught me a great deal as we worked

EXECUTIVE SUMMARY

As everyone knows the future is uncertain, and in order to secure

the future in this dynamic environment we have to insure
ourselves. So even if something happen to us in the future, our
family is secured against the problems that they will face without
us.

My project concerned, increasing the market share by recruiting

financial consultant, who have good social base and are willing to
have an extra source of income. It also included finding out new
clients for HDFC Standard Life Insurance Ltd. As well as to find
out the awareness level of various plans offered by the company. I
was the liaison between the customers and the Company, and had
to bring in new customers. I had to choose a certain area in the

3
NCR region and then fill up a questionnaire by me. This was a tool
to start up a conversation and then go about explaining the benefit
of being a financial consultant with HDFC Standad Life Insurance
Ltd. In the later part of my training I had to bring new customers
for the bank to increase their business and add value to their
operations by intimating people about the various products being
offered. I had to make cold calls to people to know if they were
financially secured and how the financial solutions being offered
by the company will benefit them. Every time I talked and met
new people I had to customize the offerings according to their age
and needs

Life insurance
is the bridge which
covers the economic

4
gap between the time
a man dies and the
time he should die.
INTRODUCTION

THE INSURANCE INDUSTRY IN INDIA

AN OVERVIEW

With the largest number of life insurance policies in force in the world, Insurance
happens to be a mega opportunity in India. It’s a business growing at the rate of 15-20 per
cent annually and presently is of the order of Rs 1560.41 billion (for the financial year
2006 – 2007). Together with banking services, it adds about 7% to the country’s Gross
Domestic Product (GDP). The gross premium collection is nearly 2% of GDP and funds
available with LIC for investments are 8% of the GDP.

Even so nearly 65% of the Indian population is without life insurance cover while health
insurance and non-life insurance continues to be below international standards. A large
part of our population is also subject to weak social security and pension systems with

5
hardly any old age income security. This in itself is an indicator that growth potential for
the insurance sector in India is immense.

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

provides long term funds for infrastructure development and strengthens the risk taking
ability of individuals. It is estimated that over the next ten years India would require
investments of the order of one trillion US dollars. The Insurance sector, to some extent,
can enable investments in infrastructure development to sustain the economic growth of
the country. (Source: www.indiacore.com)

HISTORICAL PERSPECTIVE

The history of life insurance in India dates back to 1818 when it was conceived as a
means to provide for English Widows. Interestingly in those days insurance charged for
Indian lives was more than the non - Indian lives, as Indian lives were considered more
risky to cover. The Bombay Mutual Life Insurance Society started its business in 1870It
was the same company to charge same premium for both Indian and non Indian lives.
The Oriental Assurance Company was established in 1880. The General insurance
business in India, on the other hand, can trace its roots to Triton Insurance Company
Limited, the first general insurance company established in the year 1850 in Calcutta by
the British. Till the end of the nineteenth century insurance business was almost entirely
in the hands of overseas companies.

Insurance regulation formally began in India with the passing of the life insurance
Companies Act of 1912 and the Provident Fund Act of 1912. Several frauds during the
1920's and 1930's sullied insurance business in India. By 1938 there were 176 insurance
companies.

The first comprehensive legislation was introduced with the Insurance Act of1938 that
strict State Control is there over the insurance business. The insurance business grew at a

6
faster pace than other business. Indian companies strengthened their hold on this business
but despite the growth that was witnessed, insurance remained an urban phenomenon.

The Government of India in 1956, brought together over 240 private life insurers and
provident societies under one nationalized monopoly corporation and Life Insurance
Corporation (LIC) was born. Nationalization was justified on the grounds that it would
create the much needed funds for rapid industrialization. This was in conformity with the
Government's chosen path of State led planning and development.

The non-life insurance business continued to thrive with the private sector till 1972. Their
operations were restricted to organized trade and industry in large cities. The general
insurance industry was nationalized in 1972. With this, nearly 107 insurers were
amalgamated and grouped into four companies- National Insurance Company, New India
Assurance Company, Oriental Insurance Company and United India Insurance Company.
These were subsidiaries of the General Insurance Company (GIC).

KEY MILESTONES

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

1928: The Indian Insurance Companies Act enacted to enable the government to collect
statistical information about both life and non-life insurance businesses.

1938: Earlier legislation consolidated and amended by the Insurance Act with the
objective of protecting the interests of the insuring public.

1956: 245 Indian and foreign insurers along with provident societies were taken over by
the central government and nationalized. LIC was formed by an Act of Parliament- LIC
Act 1956- with a capital contribution of Rs. 5 crore from the Government of India.

INDUSTRY REFORMS

7
Reforms in the Insurance sector were initiated with the passage of the IRDA Bill in
Parliament in December 1999. The IRDA since its incorporation as a statutory body in
April 2000 has fastidiously stuck to its schedule of framing regulations and registering
the private sector insurance companies. Since being set up as an independent statutory
body the IRDA has put in a framework of globally compatible regulations.

The other decision taken simultaneously to provide the supporting systems to the
insurance sector and in particular the life insurance companies was the launch of the
IRDA online service for issue and renewal of licenses to agents. The approval of
institutions for imparting training to agents has also ensured that the insurance companies
would have a trained workforce of insurance agents in place to sell their products.

COMPANY PROFILE

HDFC STANDARD LIFE INSURANCE COMPANY LIMITED

INTRODUCTION
HDFC Incorporated in 1977 with a share capital of Rs 10 Crores, HDFC has since
emerged as the largest residential mortgage finance institution in the country. The
corporation has had a series of share issues raising its capital to Rs. 119 Crores. The gross
premium income for the year ending March 31, 2007 stood at Rs. 2,856 Crores and new
business premium income at Rs. 1,624 Crores. The company has covered over ,
8, 77,000 lives year ending March 31, 2007.

HDFC operates through almost 450 locations throughout the country with its corporate
head quarters in Mumbai, India. HDFC also has an International Office in Dubai, UAE
with service associates in Kuwait, Oman and Qatar. HDFC is the largest housing
company in India for the last 27 years.

SNAPSHOT-I
 Incorporated in 1977 as the first specialized Mortgage Company in India.

8
  Almost 90% of initial shareholding in the hands of domestic institutes and retail
investors. Current 77% of shares held by foreign institutional investors.
 Besides the core business of mortgage HDFC has evolved into a financial
conglomerate with holdings In:
 HDFC Standard Life insurance Company- HDFC holds 78.07 %.
 HDFC Asset Management Company – HDFC holds 50.1%
 HDFC Bank- HDFC holds 22.25%.
 Intelenet Global (Business Process Outsourcing) – HDFC holds 50%
 .HDFC Chubb General Insurance Company – HDFC holds 74%.

KEY PLAYERS

Mr. Deepak S Parekh is the Chairman of the Company. He is also the Executive Chairman
of Housing Development Finance Corporation Limited (HDFC Limited). He joined
HDFC Limited in a senior management position in 1978. He was inducted as a whole-
time director of HDFC Limited in 1985 and was appointed as its Executive Chairman in
1993. He is the Chief Executive Officer of HDFC Limited. Mr. Parekh is a Fellow of the
Institute of Chartered Accountants (England & Wales).

Mr. Deepak M Satwalekar is the Managing Director and CEO of the Company since
November, 2000. Prior to this, he was the Managing Director of HDFC Limited since
1993. Mr. Satwalekar obtained a Bachelors Degree in Technology from the Indian
Institute of Technology, Bombay and a Masters Degree in Business Administration from
The American University, Washington DC.

GROUP COMPANIES

HDFC Bank: World Class Indian Bank- among the top private banks in India.

9
HDFC AMC: One of the top 3 AMCs in India- Preferred investment manager.

Intelenet Global: BPO services for international customers.

CIBIL: Credit Information Bureau India Limited.

HDFC Chubb: Upcoming Private companies in the field of General Insurance.

HDFC Mutual Fund

HDFC reality.com: Helps to search properties in all major cities in India

HDFC securities

STANDARD LIFE
Standard Life is Europe’s largest mutual life assurance company. Standard Life, which
has been in the life insurance business for the past 175 years is a modern company
surviving quite a few changes since selling its first policy in 1825. The company
expanded in the 19th century from kits original Edinburgh premises, opening offices in
other towns and acquitting other similar businesses.

Standard Life Currently has assets exceeding over £ 70 billion under its management and
has the distinction of being accorded “AAA” rating consequently for the six years by
Standard and Poor.

SNAPSHOT

10
  Founded in 1875, company supporting generation for last 179 years.
 Currently over 5 million Policy holders benefiting from the services offered.
 Europe’s largest mutual life insurer.

JOINT VENTURE

HDFC Standard Life Insurance Company Limited was one of the first companies to be
granted license by the IRDA to operate in life insurance sector. Reach of the JV player is
highly rated and been conferred with many awards. HDFC is rated ‘AAA ’ by both
CRISIL and ICRA. Similarly, Standard Life is rated ‘AAA’ both by Moody’s and
Standard and Poor’s. These reflect the efficiency with which HDFC and Standard Life
manage their asset base of Rs. 15,000 Cr and Rs. 600,000 Cr. respectively.

HDFC Standard Life Insurance Company Ltd was incorporated on 14 th August 2000.
HDFC is the majority stakeholder in the insurance JV with 81.4% staple and Standard of
as a staple 18.6% Mr. Deepak Satwalekar is the MD and CEO of the venture.
HDFC Standard Life Insurance Company Ltd. Is one of India’s leading Private Life
Insurance Companies, which offers a range of individual and group insurance solutions.
It is a joint venture between Housing Development Finance Corporation Limited (HDFC
Ltd.) India’s leading housing finance institution and the Standard Life Assurance
Company, a leading provider of financial services from the United Kingdom. Both the
promoters are will known for their ethical dealings and financial strength and are thus
committed to being a long-term player in the life insurance industry- all important factors
to consider when choosing your insurer.

11
 LITERATURE SURVEY:

 Various Life insurance products?

Types Of Life Insurance Products(Term Assurance)

Based on the benefit patterns the traditional Life Insurance products can be
categorised

into the following types:

* Term Insurance

* Whole Life Insurance

* Endowment Insurance

* Annuities

 TERM INSURANCE:

Term Insurance provides for life insurance protection for the selected term
(period of

years) only. In case the person (whose life is insured) dies during the term, the
benefits

are payable under the policy and in case of his survival till the end of the selected
term

the policy normally expires without any benefit becoming payable. Term
insurance may

be regarded as temporary insurance and is more nearly comparable with

"Property &

Casualty insurance" contracts than the other forms of Life insurance contracts.

12
  WHOLE LIFE INSURANCE:

As the name suggests, the whole life insurance policies are intended to provide
Life

Insurance protection over one's lifetime. The essence of whole life insurance is
that it

provides for payment of the assured amount upon the insured's death regardless
of when

it occurs. Under these policies, the payment of the assured sum is a certainty in
contrast

to the term insurance contracts. Only the time of payment of the assured sum is
an

uncertainty.

Whole life policies can be either participating type or non-participating type.

Participating type policies are those which are entitled to a share in the
distributable

surplus (profits) of the Life Insurance company, whereby the cash value of the
policy can

go up, with the announcement of bonus / dividend. Non-participating policies

have the

same benefit throughout the life of the policy.

There can be the following types of whole life policies:

1. Ordinary Whole Life Insurance

2. Limited Payment Whole Life Insurance

3. Convertible Whole Life Insurance

13
  ENDOWMENT:

These are the most commonly sold policies. These policies assure that the
benefits under

the policy will be paid on the death of the life insured during the selected term or
on his

survival to the end of the term. Hence the assured benefits are payable either on
the date

of maturity or on death of the life insured, if earlier.

Endowment policies assist in providing for the payment of a lump sum amount
for a

specific purpose, say, provision for retirement, meeting the needs of the child etc.
The

money required for the purpose will be built up whether the person is alive till
that date

or not. Like whole life insurance policies, endowment policies can also be of

participating and non-participating types.

 ANNUTIES:

An annuity is a series of periodic payments. An annuity contract is an insurance

policy,

under which the annuity provider (insurer) agrees to pay the purchaser of
annuity

(annuitant)a series of regular periodical payments for a fixed period or during

someone's

14
life time.

Classification of Annuities: Annuities can be classified on the basis of

* The number of lives covered

o Single
o Joint

* The beginning of the payment of annuity

o Immediate annuity
o Deferred annuity

* Method of premium payment

o Single premium
o Regular instalment

 UNIT LINKED INSURANCE PLAN(ULIP)

Unit linked insurance plan (ULIP) is life insurance solution that provides for the
benefits

of risk protection and flexibility in investment. The investment is denoted as

units and is

represented by the value that it has attained called as Net Asset Value (NAV).
The policy

value at any time varies according to the value of the underlying assets at the
time.

In a ULIP, the invested amount of the premiums after deducting for all the
charges and

premium for risk cover under all policies in a particular fund as chosen by the
policy

holders are pooled together to form a Unit fund. A Unit is the component of the
Fund in a

15
Unit Linked Insurance Policy.

The returns in a ULIP depend upon the performance of the fund in the capital
market.

ULIP investors have the option of investing across various schemes, i.e,
diversified

equity funds, balanced funds, debt funds etc. It is important to remember that in
a ULIP,

the investment risk is generally borne by the investor.

In a ULIP, investors have the choice of investing in a lump sum (single premium)
or

making premium payments on an annual, half-yearly, quarterly or monthly

basis.

Investors also have the flexibility to alter the premium amounts during the
policy's

tenure. For example, if an individual has surplus funds, he can enhance the
contribution

in ULIP. Conversely an individual faced with a liquidity crunch has the option of
paying

a lower amount (the difference being adjusted in the accumulated value of his
ULIP).

ULIP investors can shift their investments across various plans/asset classes
(diversified

equity funds, balanced funds, debt funds) either at a nominal or no cost.

2. What are the various Life insurance policies?

16
  Investment Plans:

* Single Premium Whole Life Plan

 Pension Plans:

* Personal Pension Plan

* Unit Linked Pension Plan

* Unit Linked Pension Plus

 Savings Plans:

* Endowment Assurance Plan

* Unit Linked Endowment

* Unit Linked Endowment Plus

* Money Back Plan

* Children's Plan

* Unit Linked Youngstar

* Unit Linked Youngstar Plus

 GROUP PRODUCTS

* Group Term Insurance

* Group Variable Term Insurance

* Group Unit Linked Plan

 OTHER PRODUCTS

* Rural Products

* Social Development Insurance Plan

17
 * Tax Benefit Schemes

3. Who are the competitors of hdfc standard?

 LIFE INSURANCE CORPORATION


 MAX NEW YORK

 TATA AIG

 BIRLA SUN LIFE

 SBI LIFE INSURANCE

 BAJAJ ALLIANZ

 MET LIFE

 ING VYSYA

 ICICI PRUDENTIAL

 OM KOTAK MAHINDRA

Products of HDFC standard life insurance

 Indivisual

 Group

 Social

Individual Products

18
We at HDFC Standard Life realize that not everyone has the same kind of needs.
Keeping this in mind, we have a varied range of Products that you can choose
from to suit all your needs. These will help secure your future as well as the
future of your family.

Protection Plans
You can protect your family against the loss of your income or the burden of a
loan in the event of your unfortunate demise, disability or sickness. These plans
offer valuable peace of mind at a small price.
Our Protection range includes our Term Assurance Plan & Loan Cover Term
Assurance Plan.

Investment Plans
Our Single Premium Whole Of Life plan is well suited to meet your long term
investment needs. We provide you with attractive long term returns through
regular bonuses.

Pension Plans
Our Pension Plans help you secure your financial independence even after
retirement.
Our Pension range includes our Personal Pension Plan, Unit Linked Pension,
Unit Linked Pension Plus

Savings Plans
Our Savings Plans offer you flexible options to build savings for your future
needs such as buying a dream home or fulfilling your children immediate and
future needs.
Our Savings range includes Endowment Assurance Plan, Unit Linked
Endowment, Unit Linked Endowment Plus, Unit Linked Endowment Plus II,

19
Unit Linked Enhanced Life Protection II, Children's Plan, Unit Linked Young
Star, Unit Linked Young Star Plus, Unit Linked Young Star Plus II.

Group Products

One-stop shop for employee-benefit solutions

HDFC Standard Life has the most comprehensive list of products for progressive

employers who wish to provide the best and most innovative employee benefit

solutions to their employees. We offer different products for different needs of

employers ranging from term insurance plans for pure protection to voluntary

plans such as superannuation and leave encashment.

We now offer the following group products to our esteemed corporate clients:

 Group Term Insurance

 Group Variable Term Insurance

 Group Unit-Linked Plan

An investment solution that provides funding vehicle to manage corpuses with

Gratuity, Defined Benefit or Defined Contribution Superannuation or Leave

Encashment schemes of your company

Also suitable for other employee benefit schemes such as salary saving schemes

and wealth management schemes

Social Product

Development insurance plan

Development Insurance plan is an insurance plan which provides life cover to

members of a Development Agency for a term of one year. On the death of any

20
member of the group insured during the year of cover, a lump sum is paid to

those member beneficiaries to help meet some of the immediate financial needs

following their loss.

Eligibility

 Members of the development agency and their spouses with:

 Minimum age at the start of the policy 18 years last birthday
 Maximum age at the start of policy 50 years last birthday
Employees of the Development Agency are not eligible to join the group. The
group to be covered is only eligible if it contains more than 500 members.

4. STRENGTHS AND WEAKNESSES OF HDFC STANDARD?

 STRENGTHS

1.First private life insurance company who got license from irda.

2. HDFC STANDARD has the largest distribution network among private life
insurers.

3. Recently voted as most respected private insurance company by business

world.

 WEAKNESSES

1. Less number of branches compare to nearest competitors.

2. Many people are not aware of hdfc standard as a brand in rural areas.

3. Every employee does not have proper knowledge about insurance products
and commission rates.

21
 Strengths that competitors have over hdfc standard

1) Less management expenses and administrative cost.

2) Good retention percentage of tied up agents.

3) Branches are more as compared to hdfc standard.

4) Brand awareness in rural area.

STRENGTHS

First private life insurance company to get license by IRDA.

Domestic image of HDFC supported by Prudential’s international image is strength of the
company.
The company also provides innovative products to cater to different needs of different
customers.
Large pool of technically skilled manpower.
Strong capital and reserve base.
Lower premium rates being introduced to tap more people.
Commission rates increasing.
IT is bringing new dimensions to insurance sector.
Insurance having good market share.

WEAKNESSES

Products similar to competitors.

Buying insurance still a cumbersome process.

22
Slow to respond to changing needs.
Heavy management expenses and administrative costs.
Low customer confidence on the private players.
Vertical hierarchical reporting structure with many designations and cadres leading to
power politics at all levels without any exception.
Poor retention percentage of tied up agents.
Less number of branches as compared to its near competitors.
Lack of brand awareness in the rural area.

OPPURTUNITIES

A large percent of population still uninsured.

Technology is improving so paperless transactions can also be a hit.
Like mobile banking mobile insurance could be a hit.
Busy life and customers need flexible and customizable policies.

THREATS

Changing weather cycles a big threat to the company..

Many big companies entering with a view to capture market.
Sensex downfall can be a big blow to ULIP's and other plans dependent on share market.
New substitute product emerging.
Increasing expenses and smaller profit margins hitting hard on smaller agencies.

ADVERTISEMENT AND SALES PROMOTION

23

Film opens in the compound of a
house. Father is checking
something inside the bonnet of an
old small car. His daughter,
around 27-28 years old, is
working on a lap top next to him
Daughter continues affirmatively
as she signs on a cheque.
Daughter: “Aur wo bhi badi wali.
24
Daughter: “Dad”. Father: “Bolo”
Daughter: “Nayi car lene mein hee
bhalaai hai.”
Dad nods in agreement without
looking up. Dad: “Hmmm…”
Dad looks at her and asks.
Dad: “Huh, Badi kyon?”
Daughter: “Relax dad, plan kiya.”
Dad doesn’t know what to say:
“Par...”
 Dad doesn’t know what to say as
he looks at the cheque.
Daughter pleads: “Please…dad”

Super: Unit Linked Savings Plans

MVO: “Unit Linked Savings Plans
from HDFC Standard Life.
zimmedari nibhao, Aaj bhi kal bhi ”

Father daughter are sitting.

MVO: “Sar Utha Ke Jiyo.”

COMPETITIVE

25
 ANALYSIS

POINTS OF PARITY
AND
POINTS OF DIFFERENCE
BETWEEN HDFC SLIC AND TATA
AIG

26
 Points of Parity

Funds available with ULIP Plans

General Description Nature of Investments Risk Category

Primarily invested in company

Equity Funds stocks with the general aim of capital High
appreciation
Invested in corporate bonds,
Income, Fixed Interest
government securities and other fixed Medium
and Bond Funds
income instruments
Sometimes known as Money
Cash Funds Market Funds — invested in cash, bank Low
deposits and money market instruments

Combining equity investment

Balanced Funds Medium
with fixed interest instruments

Generally all life insurance companies have three types of fund which are Equity fund,
Debt fund and Balance fund. These fund have different risk profile. Equity fund has high
risk but it gives high return, Debt fund has low risk so it gives low return and balanced
fund is combination of both Equity and Debt fund so risk is medium and return is also
low.
Both HDFC SLIC and Tata AIG LIC have 7 types of funds based on combination of
Debt–Equity fund. These are liquid fund, stable managed fund, secure managed fund,
defensive managed fund, balanced managed fund, equity managed fund, growth fund.

Indexation
You have the option to increase your regular premiums by an indexation rate at any
policy anniversary to protect the real value of your investment against inflation. The rate
of indexation will be in line with the increase in the Whole Sale Price Index (or in the
event that this Index ceases to be published such other index as the Company may select
for this purpose). The base sum assured and sum assured of any attached rider would also
be increased by the corresponding indexation increase.

27
 Charges, Fees and Deductions in ULIP

 Premium Allocation Charge

This is a premium-based charge. After deducting this charge from premiums, the
remainder is invested to buy units. The Allocation charges are guaranteed for the entire
duration of policy term.

 Mortality Charge

The Mortality Charge will apply on the Sum at Risk (SAR = Sum Assured less the Fund

Value pertaining to regular premiums). It will be deducted by monthly cancellation of

units from the accumulation unit account. The Mortality Charge shall remain guaranteed

throughout the policy term.

 Fund Management Charge

1% p.a. on With Profits Fund, 1% p.a. on Debt Fund, 1.25% p.a. on Balanced Fund and

1.50% p.a. on Growth Fund. FMC will be applied on the fund while calculating NAV on

a daily basis. The maximum FMC on any fund is 2% p.a. subject to prior approval by the

IRDA.

 Policy Administration Charge

Rs. 60 per month, which will increase by 5% p.a. on the 1st of January each year. PAC

will be deducted monthly by cancellation of units from the accumulation unit account. If

premiums are discontinued, this charge would reduce to 60% of the charge applicable for

the premium paying policies

 Surrender Charge

28
This is the charge that applies when the policy is surrendered. It is equal to 50% of the
difference between regular premiums expected and those paid in the first year of the
contract.

 Service Tax Deductions

12.36% service tax is applicable on the first premium of life insurance policy.

Tax Benefits

Tax benefits will be as per Section 80C & Section 10(10D) of the Income Tax Act, 1961.
Insurance is tax free up to Rs. 100000 per annum and the returns on investment on
maturity of the policy are also tax free.

Riders and Bonuses

HDFC Standard Life Tata AIG Life

Insurance Insurance
Free Look Period 15 days 15 days
Based on company's Based on company's
Reversionary Bonus
performance performance
Based on company's Based on company's
Terminal Bonus
performance performance
TOP UP Minimum Rs. 5000 Minimum Rs. 5000

Riders
Gives on diagnosis of Gives on diagnosis of
Critical Illness (CI)
anyone anyone
Benefit
of 6 critical illness of 12 critical illness
Additional Term Benefit
Provides Provides
(ATB)
Accidental Death Benefit
Provides Provides
(ADB)
Double Benefit Provides Does not provide
Triple Benefit Provides Does not provide
Payer Benefit Rider (PBR) Does not provide Provides
Waiver of Premium
Provides Provides
(WOP) Benefit

29
 Points of Difference

HDFC Standard Life Tata AIG Life

Insurance Insurance
Grace Period 15 days 31 days
Policy Administration
Rs. 60 per month Rs. 55 per month
Charge
10% on sum-assured
Guaranteed Bonus Does not give
after 10 year
0.25% after every 4th
Loyalty Bonus 0.1% every year
year
Total 24 free switches in a
4 free switches per year
policy
Fund Switching Charge after this
after this Rs. 100 per
Rs. 250 per switch
Switch
50% of all premium 30% of all premium
Guaranteed Surrender
paid excluding 1st paid excluding 1st
value
premium premium
Fund Management 0.80% per annum 1.75% per annum
Charge on the fund value on the fund value
First 2 Premium
Total 12 free Premium
Redirection in a
Redirection
Premium Redirection year is free after this
in a policy after this Rs.
Charge Rs. 1000
250 per Premium
per Premium
Redirection
Redirection
Last Year Return 42.70% 72%

We see that both the life insurance companies’ products are almost same. They have same
charges, fees and deductions. There is slightly difference in charges and maximum limits of all
charges are fixed by IRDA. Before buying any life insurance policy one should check charges
and fees on policy and company’s overall performance and returns given to its customers.

30
 Porter’s Five Force Framework - I have made Porter’s five force framework with
reference to HDFC STANDARD Life Insurance Company and its competitors. The basis
of designing this framework was secondary research using media scanning etc.

POTENTIAL SUBSTITUTES
ENTRANTS JEEVAN ASTHA (LIC),
STAR UNION DAI- UNIT PLUS (SBI LIFE),
CHI LIFE, FUTURE NEW CAPITAL GAIN
GENERALI LIFE, (BAJAJ ALLIANZ) etc.
SRIRAM SUNLAM
LIFE

INDUSTRY
COMPETITORS
LIC, BAJAJ ALLIANZ,
SBI LIFE, RELIANCE
LIFE, BIRLA SUN LIFE,
MAX NEW YORK
LIFE, KOTAK
MAHINDRA

BUYERS SUPPLIERS
SWITCHING TO GROWING POWERS
DIFFERENT BANKS, CA ARE
INVESTMENT IMPORTANT
SECTORS FOR BETTER CHANNELS TO
RETURNS, REACH THE CLIENT.
UNDIFFERENTIATED HIGH BARGAINING
PRODUCT POWER

Findings from the Porter’s Five Force Theory:

31
 A segment like insurance sector is very attractive because it is in the growing
stage of its life cycle. So, there are lots of aggressive competitors. As the number
of competitors is less at this time which makes this industry most attractive for
new players. There is not much threat for the existing players from the new
entrants because entry barrier is high for foreign companies, because of restriction
imposed by government. When we consider substitute products this segment is
unattractive because there are many actual and potential substitutes. If new
product is brought it becomes obsolete as every competitor copies it very soon
with added features. Here Service point of view matters rather than the products.
Buyers have great bargaining power in this segment because there are many
competitors to provide similar products at cheaper prices. This is what makes this
industry more competitive in terms of products and services.

LIFE INSURANCE CORPORATION OF INDIA (LIC)

LIC has a excellent money back policy which provides for partial survival benefits as
long as the policy holder is alive. 20% of the sum assured is payable after 5, 10, 15 & 20
years and the balance40% is payable after 20th year along with accrued bonus.
(www.lic.com)

HDFC SLIC does not have a money back policy. It could offer a money back plan and
capture some portion of this market. While marketing insurance products I found that
many customers wanted to purchase these plans.

LIC offers 66 different plans and the plans are formulated for specific occasions– whole
life plans, term assurance plans, money back plan for women, child plans, plans for the
handicapped individuals, endowment assurance plans, plans for high worth individuals,
pension plans, unit linked plans, special plans, social security schemes – diversified
portfolio of products. HDFC could diversify its product portfolio and could add more
plans for high net worth individuals and women.

32
ICICI PRUDENTIAL
ICICI is one of the biggest competitors for HDFC STANDARD LIFE and the company is
a merger between ICICI one of the largest private banks and prudential which is also a
big insurance firm.

The company has an invest plan which is – INVEST SHIELD Life. In this plan even if
the market falls the premium will be paid to the investors. It is a guaranteed plan which
ensures the company carefully invests your money. The stock performance of ICICI
Prudential is much better than HDFC SLIC. The returns on the growth fund were 46.28%
compared to the 42.70% offered by HDFC SLIC. Customers are attracted by higher
returns and this is a plus point for ICICI.
The company is well advertised and the brand ambassador Amitabh Bachaan builds trust
and faith in the minds of the masses. However the charges are very high in the plans
offered by ICICI Prudential.. Hence the policies are not accessible to the lower strata of
the society. (Source: www.iciciprulife.com)

BIRLA SUN LIFE

Birla Sun Life Insurance Company Limited is a joint venture between The Aditya Birla
Group, one of the largest business houses in India and Sun Life Financial Inc., a leading
international financial services organization. The local knowledge of the Aditya Birla
Group combined with the expertise of Sun Life Financial Inc., offers a formidable
protection for your future. (Source: www.birlasunlife.com)

The Aditya Birla Group has a turnover close to Rs. 33000 crores with a market
capitalization of Rs. 53400 crores (as on 31st March 2007). It has over 72000 employees
across all its units worldwide. It is led by its Chairman - Mr. Kumar Mangalam Birla.
Some of the key organizations within the group are Hindalco and Grasim.

33
Sun Life Financial Inc. and its partners today have operations in key markets worldwide,
including Canada, the United States, the United Kingdom, Hong Kong, the Philippines,
Japan, Indonesia, India, China and Bermuda. It had assets under management of over
US$343 billion, as on 31st March 2007. The company is a leading player in the life
insurance market in Canada.

Being a customer centric company, BSLI has invested heavily in technology to build
world class processing capabilities. BSLI has covered more than a million lives since
inception and its customer base is spread across more than 1000 towns and cities in India.
All this has assisted the company in cementing its place amongst the leaders in the
industry in terms of new business premium income. The company has a capital base of
520 crores as on 31 st July, 2007.

Its Flexi Life Line Plan offers life long insurance cover till the policy holder is 100 years
of age. There are guaranteed returns of 3% p.a. net of policy charges after every 5 years
from the eleventh policy year onwards. However the charges are very high. The initial
charges for the first year are 65%. Hence the fund value is greatly reduced.

BAJAJ ALLIANZ
BAJAJ ALLIANZ is a joint venture between BAJAJ ALLIANZ AG with over 110 years
of experience in over 70 countries and BAJAJ AUTO, a trusted automobile manufacturer
for over 50 years. Together they are committed to provide you all the security you need
for you and your family.. Bajaj Allianz is the number one private life insurer for the year
2005 – 2006. It is leading by 78 crores. It has experienced a whopping growth of 216% in
the last financial year.

The company has sold more than 13 lakh policies and is backed by 550 offices all over
INDIA. It offers travel insurance, motor insurance, home insurance, health and corporate
insurance. The mortality charges are lower than HDFC SLIC. The entry age could be
zero years which provide even new born babies to be insured.. (Source:
www.bajajallianz.com)

34
TATA AIG

Tata Aig is a joint venture between the Tata group and American International Group Inc.
In one of the plans the company offers hospital cash benefit wherein it will pay Rs. 2500
per day in case of hospitalization and Rs.12.5 lakhs in case the person suffers from any
critical illness. Annual premium is much less (about Rs. 6712) to avail such a good
benefit. Charges are relatively low compared to HDFC SLIC for some policies.

The company offers high coverage plans at low cost. There is a plan even for a policy
term of 1 year. Your family can continue to enjoy their current lifestyle even in the case
of something happening to you. These plans are very flexible and HDFC SLIC could
adopt this idea of insuring individuals for short periods of time. For example; there is a
family of four. The only earning member is the father.

He has just taken a loan from a bank of 20 lakhs to purchase a new home. He is able to
repay the loan with his current salary in 15 years. The problem arises if something were
to happen to him within these fifteen years. Not only will the family face the emotional
and financial loss of their father but they will also have to repay the home loan or risk
being homeless. (Source: www.tataaig.com)

RESEARCH
METHODOLOGY
RESEARCH METHODOLOGY

35
 Research: Research is a scientific systematic re research for perfect
information on a specific topic. In other words we can say research is an art of
scientific investigation .The advance learner’s dictionary of current English
lays down the meaning of research as a careful investigation or enquiry
especially through search for in any branch of knowledge.

Research Design:
Research design is simply the framework or plan for a study which is used as
a guide in collecting and analyzing the data. As the objective of the research is
Descriptive in form, the research design must be made accordingly.

 Formulating objective of the study.

 Designing the method of data collection.

 Selecting sample size.

 Collection of data.

 Analysis & findings.

 Recommendations.

 Conclusion.

Descriptive research includes surveys, observation and fact-finding enquiry of

different kind. Statistical method is used in this project under descriptive studies

Research Instruments:

36
 The research instruments generally used to collect the primary data are
Questionnaires, interviews and survey methods.

Questionnaires:

Questionnaires are formal set of questions prepared to collect the required

information. They are one of the most effective and popular techniques used in
surveys. However, before deciding on the questions, it was important to
understand the exact nature of information required and who should be
interviewed. The knowledge level of target respondents was kept in mind, while
drawing of questions. The major junk of those interviewed were basically from
rural background. The questionnaire was designed in English.

Sampling:

The sample is a subset of a unit of a population, collected as a representation of

it. The proper sample design is essential in marketing research. The sample has
to be collected in such a way, that it represents the population. The sample was
taken from all the segments of the customers.

Sample Size:

The size of the sample is an important element in the research process as it has a
direct affect on the result of the research. As a size of sample increases, accuracy
and reliability of the research results also increases. However, the cost of the
research also increases. Therefore, we need to make a tradeoff between the
accuracy and cost of research. Type of project was another important aspect of
deciding the sample size.

 During this project I covered 100 respondents in Delhi region, whom i met
personally.

The marketing research process that will be adopted in the present study will
consist of following stages:

37
o Defining the problem and the research objective:

The research objective states what information is needed to solve the

problem. The objective of the research is to derive the opinion of the users
and opinion of the potential customers.

o Developing the research plan:

Once the problem is identified, the next step is to prepare a plan for
getting the information needed for the research. The present study will
adopt the exploratory approach wherein there is a need to gather large
amount of information before making a conclusion. If required, the
descriptive and casual approaches may also be used.

o Collection and Sources of data:

Market research requires two kinds of data, i.e., Primary data and
Secondary data. Being a firm in service industry, data gathering will
involve usage of both primary and secondary data though there will be an
extensive usage of primary data. Well-structured questionnaires will be
prepared for the Sales Managers. There will be personal interview
surveys. The questionnaires will contain both open-ended and close-
ended questions. Secondary data will be collected from company journals,
and web sites.

o Analyze the collected information:

38
 This involves converting raw data into useful information. It involves
tabulation of data, using statistical measures on them for developing and
calculating the averages.

o Report research findings:

This phase will mark the culmination of the marketing research effort. The
report with the research findings is a formal written document.

TYPE OF DATA COLLECTED

There are two types of data used. They are primary and secondary data. Primary data is
defined as data that is collected from original sources for a specific purpose. Secondary
data is data collected from indirect sources. (Source: Research Methodology, By C. R.
Kothari)

PRIMARY SOURCES

These include the survey or questionnaire method, telephonic interview as well as the
personal interview methods of data collection.

SECONDARY SOURCES

These include books, the internet, company brochures, product brochures, the company
website, competitor’s websites etc, newspaper articles etc.

39
SAMPLING

Sampling refers to the method of selecting a sample from a given universe with a view to
draw conclusions about that universe.

SAMPLE SIZE
The sample size for the survey conducted was 270 respondents.

SAMPLING TECHNIQUE

Random sampling technique was used in the survey conducted.

of the collected data. The data is also neatly presented with the help of statistical tools
such as graphs and pie charts. Percentages and averages have also been used to represent
data clearly and effectively.

STUDY AREA

The samples referred to were residing in New Delhi City.

DATA

ANALYSIS

&

40
 INTERPRETATION

ANALYSIS & INTERPRETATION

“A SURVEY ON THE LIFE INSURANCE INDUSTRY IN INDIA”

AGE GROUP OF SURVEYED RESPONDENTS

TABLE 1:

Age group No. of Respondents

18 – 25 years 127
26 – 35 years 67
36 – 49 years 46
50 – 60 years 24
More than 60 years 6

CHART 1:

41
 9% 0%

17%
(18-25)
(26-35)
49% (36-49)
(50-60)

25%

Analysis:
From the chart above we find that 47% of the respondents fall in the age group of 18 – 25
years, 25% fall in the age group of 26 – 35 years and 17% fall in the age group of 36 – 49
years.

Therefore most of the respondents are relatively young (below 26 years of age). These
individuals could be induced to purchase insurance plans on the basis of its tax saving
nature and as an investment opportunity with high returns.

Individuals at this age are trying to buy a house or a car. Insurance could help them with
this and this fact has to be conveyed to the consumer. As of now many consumers have a
false perception that insurance is only meant for people above the age of 50. Contrary to
popular belief the younger you are the more insurance you need as your loss will mean a

42
great financial loss to your family, spouse and children (in case the individual is married)
who are financially dependent on you.

GENDER CLASSIFICATION OF SURVEYED RESPONDENTS

TABLE 2:

Particulars No. of Respondents

Male 193

Female 77

Which insurance company having seen or heard advertising for in

past month?

0%
15%
22%

9%
LIC
OTHERS
HDFC STANDARD
MAX NEW YORK
ICICI PRUDENTIAL

24%
30%

Analysis:

43
From the chart above it can clearly been seen that 18% of the respondents would like 16
– 20% returns, 17% would like returns between 21 – 25% and 17% would like returns of
11 – 15% on their investments. Therefore the average return on investment should be at
least 16 – 20 %.

Most consumers are willing to adapt to some amount of risk but still want some
guaranteed returns. Therefore the bulk of investment should be made in the balanced fund
with 50% debt and 50% equity. The returns on the Secure Fund are guaranteed as these
involve investment is government securities and the debt market. But the returns on these
instruments are low (8 – 10%). If the company invests in shares, returns are higher (39%)
but correspondingly risk borne by the policy holder is also higher. Therefore a good
combination of the two instruments is often a wise choice

SUGGESTIONS AND RECOMMENDATIONS

 Leverage Information technology to service large numbers of customers

efficiently and bring down overheads. Technology can complement or supplement
distribution channels cost-effectively. It can also help improve customer service
levels considerably.

 Use data warehousing, management and mining to gauge the profitability and
potential of various customer and product segments and ensure effective cross
selling. Understanding the customer better will allow insurance companies to
design appropriate products, determine pricing correctly and increase profitability.

 Ensure high levels of training and development not just for staff but for agents
and distribution organizations. Existing organizations will have to train staff for
better service and flexibility, while all companies will have to train staff for better
service and flexibility, while all companies will have to train employee to cope
with new products and an intensive use of information technology.

44
  The importance of alliances and tie-ups means that companies will have to
integrate related but separate providers into their systems to ensure seamless
delivery.

 Build strong relationship with intermediates such as agents.

 Advertise about the rural market as it has huge potential

 Create a positive perception about insurance

 Making purchase of policies a less cumbersome process

 Promote insurance in corporate houses and colleges.

 Attracting youth by educating about higher rate of return as compared to banks.

 Allowing partial withdrawal from first year onwards.

 Try to sell the plan according to his need and not according to the agent’s
commission.

CONCLUSION

HDFC STANDARD LIFE, the insurance arm of HDFC has already a good number of
employees on board and is recruiting financial consultants heavily to increase the
headcount of people who can sell the policies.

The company should try to increase awareness of its product through advertisements as it
faces immense competition and make people aware of the benefits of joining HDFC as a
financial consultant. HDFC is a brand in itself and it should try to leverage on this aspect
as compared to other players. The company must be promoted as an Indian company as
customers seem to have more trust in investing in Indian company.

The ULIP scheme should be promoted and people are not aware of its benefits and
people should try to use it as a tax saving and long term investment option.

45
The the company should try to tap the rural market as this segment has immense scope
and people are ready to invest provided the premiums are small and the terms are less.

It is also seen that women are insured less as compared to males and this should also
changed.

The company should try to advertise through television as most of its near competitors
like Bajaj, ICICI, Max New York Life and other players use this medium.

IMPLICATION FOR FUTURE RESEARCH

The company should try to conduct a research on how to set up a successful

advertisement campaign so that people are aware of the products and policies and how it
can serve both the purpose of life cover and as a wonderful investment option. This has to
be conveyed to the public and the negative perception of considering insurance just as an
inauspicious thing i.e. something related to death or loss should be completely avoided.

Secondly, the company can also conduct a research on how to allocate the premium
collected in the best possible options so that the returns to the policyholders can be
increased.

46
Thirdly, the company can also conduct a research on how to market its products and
analyze the sales technique used by it with other insurance companies not only in INDIA
but outside as well.

REFERENCES

www.irda.com

www.lic.com

www.hdfc.com

www.tataaig.com

www.bajajallianz.com

www.icici.com

www.birlasunlifge.com

www.google.com

www.wikipedia.com

MAGAZINES

Insurance world

The outlook money

Secrets of successful insurance sales

A SURVEY ON SWOT ANALYSIS OF INSURANCE INDUSTRY’

47
Dear Sir/Madam,

I am a student of Rai BUSINESS SCHOOL, NOIDA. As part of the requirements for my

Post Graduation Degree in Management I am required to do a research based project.
Kindly spend a few minutes of your valuable time and fill in this questionnaire.

Do you have a life insurance policy/investment plan in your name?

o Yes o No

If yes which company’s insurance policies do you hold?

o HDFC Standard Life Insurance
o Birla Sun Life Insurance
o Tata AIG Life Insurance
o ICICI Prudential Life Insurance
o Others (specify name)
o Aviva Life Insurance
o Bajaj Allianz Life Insurance
o LIC
o ING Vysya Life Insurance
o Bharti Axa Life Insurance

What is the approximate premium paid by you annually (in Rupees)?

o Rs. 5,000 – Rs. 10,000 o Rs. 50,001 – Rs. 60,000

o Rs. 10,001 – Rs. 15,000 o Rs. 60,001 – Rs. 80,000
o Rs. 15,001 – Rs. 25,000 o Rs. 80,001 – Rs. 1,00,000
o Rs. 25,001 – Rs. 50,000
o More than Rs. 1,00,000 (specify premium)

What kind of insurance policy would suit you best in your current stage of
life?
o Life Insurance o Pension Plans
o Life Insurance and Investment o Child Plans
Plans
o Tax saving plans

Are you aware of the new unit linked insurance plans in the market?

o Yes o No

How much would you be willing to spend per annum if you were to go for an
investment/insurance plan?

o Less than Rs. 6,000 o Rs. 25,001 – Rs. 50,000

o Rs. 6,001 – Rs. 10,000 o Rs. 50,000 – Rs. 1,00,000
o Rs. 10,001 – Rs. 25,000 o More than Rs. 1,00,000

48
Which according to you is an ideal policy term? (Number of years you would
be willing to pay premium)

o 3 to 5 years o 21 to 25 years
o 6 to 9 years o 26 to 30 years
o 10 to 15 years o More than 30 years
o 16 to 20 years o Whole life policy

What motivates you to purchase insurance/investment plans?

o Advertisements o Advice from friends

o High Returns o Family responsibilities
o Others (specify)

In which kind of company would you prefer to make a purchase of insurance?

o Government owned company o Private Company

o Public Limited Company o Foreign based company

Typically what kind of returns would you look at from your investments?
(Please note: Higher returns involve greater risk)

o Less than 5% o 26% - 30%

o 6% - 10 % o 31% - 40%
o 11% - 15 % o 41% - 50%
o 16% - 20 % o More than 50%
o 21% - 25%

Personal Details:

Name:

Address:

Age: Contact No. :

Profile of respondent:

49
  Student
 Housewife
 Working Professional
 Business
 Self – Employed
Government Service Employee

Sanjeev Kumar Singh – Student of Rai Business School

50