Comparison between traditional plan & ulip’s
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  • 1. Comparison between traditional plan & ULIP’s EXECUTIVE SUMMARY As the people are becoming more and more and aware of their Life Style andIncome level. they need a plan, which has an optimum balance between their Investment andSavings. They require an integrated financial plan for investment.The customer requires those investment options, which provide them with flexibility andLiquidity and tax benefit.Among the various other investment options, Insurance has gained a prominent place .Itprovides the policyholder with the benefit of Life Protection and at the same time allows himto take the benefit of the fluctuations of the share market.Thus Life Insurance has taken a very vital position as a wholesome investment option.Life Insurance is gaining public awareness and interest very rapidly. It was till now beenthought as a way to insure lives, But, recently it is emerging as a prominent Investmentavenue. It has come up as a wholesome Investment avenue & provides the benefit of flexibility,Liquidity and Life protection. Along with added benefits like the rider attachments whichprotect the policyholder from various kinds of diseases and accident etc.Objectives of the Study: 1. To know aware of investing in ULIP’s and Traditional plan’s 2. To Study and Compare the Traditional Life Insurance Plans and ULIP’s with respect to ICICI Prudential life Insurance. 3. To know the factors influence while purchasing life Insurance plans. 4. To know the factors influence while purchasing the particular category of plan •1 BABASAB PATIL
  • 2. Comparison between traditional plan & ULIP’s •Data source: • Primary Data: Personal interactions, Observations Training programs. Through QuestionnaireSecondary Data: Study material by IRDA and ICICI Prudential. Related websites, Past records of ICICI Prudential.& Brochures and pamphlets of ICICI PrudentialSampling:a) Population : People of Hubli cityb) Size : 100 sizec) Method : Random sampling Need for study: After the crises all over world market condition are critical so I am study becauseof what is impact on life insurance. Scope of study: The scope of study is limited to Hubli city and the sample size is 1002 2 BABASAB PATIL
  • 3. Comparison between traditional plan & ULIP’sFindings  Brand Name of the company is the main reason for the advisors to join ICICI Prudential followed by product portfolio and excellent support from the company.  Almost all of them are satisfied with the services offered to them.  As the endowment products, don’t have much liquidity option most people follow the Market linked product.  Almost all respondent are investing in unit linked product in ICICI prudential life insurance.  Risk cover is the most important factor as per the respondents followed by investment and savings.  In ICICI pru life insurance have facing lack of advertisings.  Most of the respondents are satisfied from the return, risk cover and tax savings provided by the products to its customersLIMITATION  Not single work is exception to the limitation every work every work has got its limitations. It is assumed that the sample selected represents entire population.  Another limitation of the project was that the study and the survey were conducted in Hubli city only.3 3 BABASAB PATIL
  • 4. Comparison between traditional plan & ULIP’sSuggestions:  Continuous bombardment of Advertisement by ICICI Prudential as a Life Insurance Company for a common man as well as for well educated and good salaried people.  The company has concentrate increases on premium 20000-50000.  Look for the way to make customer highly satisfied with respect to returns.  Premium and initial charges to be reworked as, the customer is dissatisfied with there. Conclusion Every study and project needs to be concluded. Hence, based on the study ofICICI Prudential and its products in brief, and also conducting a survey on the customers andadvisors sales function towards the products offered and services provided by ICICIPrudential, I have arrived on a conclusion that ICICI Prudential Life’s market share stood at 11.8%, for 10-month ended January 31,2009, making it the leading private life insurance player. As on January 31, 2009, thecompany’s assets under management (AUM) stood at Rs 28,515 crore. The company also hasone of the largest distribution networks amongst private life insurers in India with over 2,100branches (including 1,116 small-offices in rural India), an advisor base of over 2,90,000 and18 banc assurance partners, as on January 31, 2009. Since inception, ICICI Prudential Lifehas sold over 90 lakh policies.4 4 BABASAB PATIL
  • 5. Comparison between traditional plan & ULIP’s INTRODUCTIONINSURANCE: The insurance industry provides protection against financial losses resulting from avariety of perils. By purchasing insurance Policies, individual and businesses can receiveReimbursement for losses due to car accidents, theft of property, and fire and storm damage,medical expenses and loss of income due to disability or death.The insurance industry consists mainly of insurance carriers (or insurers) and insuranceagencies and brokerages. In general, insurance carriers are large companies that provideinsurance and assume the risks covered by the policy. Insurance agencies and brokerages sellinsurance policies for the carriers. While some of these establishments are directly affiliatedwith a particular insure and sell only that carriers policies, many are independent and are thusfree to market the policies of variety of insurance carriers. In addition to supporting these twoprimary components, the insurance industry includes establishments that provide otherinsurance-related services, such as claims adjustment or third-party administration ofinsurance and pension funds. Insurance carriers assume the risk associated with annuities and insurance policiesand assign premiums to be paid for the policies. In the policy, the carrier states the length andconditions of the agreement, exactly which losses it will provide compensation for, and howmuch will be awarded. The premium charged for the policy is based primarily on the amountto be awarded in case of loss, as well as the likelihood that the insurance carrier will actuallyhave to pay. In order to be able to compensate policyholders for their losses, insurancecompanies invest the money they receive in premiums, building up a portfolio of financialassets and income-producing real estate, which can then be used to pay off any future claimsthat may be brought. About ICICI Prudential Life Insurance: ICICI Prudential Life Insurance Companyis a joint venture between ICICI Bank and Prudential plc. It was one of the first players tocommence operations when the insurance industry was opened to the private sector in 2000.For the first quarter ended June 30, 2007, the company garnered Rs. 987 crore of weightedretail + group new business premiums and has underwritten over 5 million policies since5 5 BABASAB PATIL
  • 6. Comparison between traditional plan & ULIP’sinception. The company has a network of over 680 offices, over 235,000 advisors; as well as23 bank partners. It is also the only life insurer in India to be assigned AAA (Ind) creditrating from Fitch Ratings. For the past six years, ICICI Prudential has retained its position asthe No. 1 private life insurer in the country, with a wide range of flexible products that meetthe needs of the Indian customer at every step in life. To know more about the companyLIFE INSURANCE: Life insurance can be defined as “Life Insurance provides a sum of money if theperson who is insured dies while the policy is in effect”. Life insurance is a product that helps you protect your dependents from financialdifficulties in the unfortunate event of your death or disability depriving them of the financialsupport that they get today. When you buy a life insurance policy, essentially you enter into acontract with an insurance company under which you promise to make periodic payments toit (the premium). The insurance company in return promises to pay to your nominees sum ofmoney upon your death or upon occurrence of the events specified in the contract.Usually the contract provides for –  Payment of an amount, on the date of maturity or at specified periodic intervals or at death, if it occurs earlier.  Periodical payment of insurance premium by the assured, to the corporation who provides the insurance.INSURANCE MARKET IN INDIA: India with about 200 million middle class household shows a huge untapped potentialfor players in the insurance industry. Saturation of markets in many developed economies hasmade the Indian market even more attractive for global insurance majors. The insurancesector in India has come to a position of very high potential and competitiveness in themarket. 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 tothe private sector that are providing them new products and variety for their choice.Life insurance industry is waiting for a big growth as many Indian and foreign companies arewaiting in the line for the green signal to start their operations. The Indian consumer shouldbe ready now because the market is going to give them an array of products, different inprice, features and benefits. How the customer is going to make his choice will determine the6 6 BABASAB PATIL
  • 7. Comparison between traditional plan & ULIP’sfuture of the industry.The insurance industry in India can broadly classified in two parts. They are,  Life insurance.  Non-life (general) insurance.BRIEF HISTORY OF INSURANCE The business of insurance started with marine business. The first insurance policy wasissued in 1583 in England.Some of the important milestones in the insurance business in India are:1818: -The British introduce to India, with the establishment of the Oriental Life Insurance Company in Calcutta.1850: - Non life insurance debuts, with Triton Insurance company.1870: - Bombay Mutual Life Assurance Society is the first India-owned life insurer.1907: - Indian Mercantile Insurance is the first Indian non-life insurer.1912: -The Indian life assurance Companies act enacted to regulate the life insurance business.1938: - The insurance act, which forms the basis for most current insurance laws, replaces earlier act.1956: - Life insurance nationalized, government takes over 245 Indian and foreign insurers and provident societies.1972: - Non Life insurance nationalized, GIC set up.1993: - Malhotra Committee, headed by former BBI governor R.N. Malhotra, set up to draw up a blue print for insurance sector reforms.1994: -Malhotra Committee recommends re-entry for private players, autonomy to PSU insurers.1997:-Insurance regulator IRDA (Insurance Regulatory and Development Authority) set up.2000:-IRDA starts giving licences to private insurers, ICICI Prudential and HDFC Standard Life first private insurers to sell a policy.2002:- Banks were allowed to sell insurance plans, as TPAs enter the scene, insurers start settling non-life claims in the cashless mode.7 7 BABASAB PATIL
  • 8. Comparison between traditional plan & ULIP’s Need for study: After the crises all over world market condition are critical so I am study becauseof what is impact on life insurance. Scope of study: The scope of study is limited to Hubli city and the sample size is 100Objectives of the Study: • To know aware of investing in ULIP’s and Traditional plan’s • To Study and Compare the Traditional Life Insurance Plans and ULIP’s with respect to ICICI Prudential life Insurance. • To know the factors influence while purchasing life Insurance plans. • To know the factors influence while purchasing the particular category of plan •THE INSURANCE REGULATORY AND DEVELOPMENT8 8 BABASAB PATIL
  • 9. Comparison between traditional plan & ULIP’sAUTHORITY: Reforms in the Insurance sector were initiated with the passage of the IRDA bill inParliament in December 1999. The IRDA since its incorporation as a statutory body in April2000 has fastidiously stuck to its schedule of framing regulations and registering the privatesector insurance companies. The other decisions taken simultaneously to provide the supporting systems to theinsurance sector and in particular the life insurance companies was the launch of the IRDA’sonline service for issue and renewal of licenses to agents. The approval of institutions for imparting training to agents has also ensured that theinsurance companies would have a trained workforce of insurance agents in place to sell theirproducts, which are expected to be introduced by early next year. Since being set up as an independent statutory body the IRDA has put in a frameworkof globally compatible regulations. In the private sector 14 life insurance and 9 generalinsurance companies have been registeredObjective of IRDA: The main objectives of IRDA are:  To take care of the policy holders interest  To open up the insurance sector for private sector  To ensure continued financial soundness and solvency  To regulate insurance and reinsurance companies  To eliminate dishonesty and unhealthy competition  To supervise the activities of the intermediaries  To amend the insurance act ,lic act and the general business nationalization act.Duties and Power of IRDA:  To regulate ,promote and ensure orderly growth of the insurance business9 9 BABASAB PATIL
  • 10. Comparison between traditional plan & ULIP’s  To exercise all the powers and functions of the controller of insurance  To protect the interest of the policy holders in settlement of claims and terms and conditions of policies  To promote and regulate professional organizations connected with insurance business.  To regulate ,promote and ensure orderly growth of the insurance business  To exercise all the powers and functions of the controller of insurance  To protect the interest of the policy holders in settlement of claims and terms and conditions of policies  To promote and regulate professional organizations connected with insurance business.  To regulate investment of funds  To regulate margin of solvency  To adjudicate disputes between insurers and intermediariesFUNCTIONS OF IRDA:  Issue to the applicant a certificate of registration, renew, modify, withdraw, suspend or cancel such registration;  Protection of the interests of the policy holders in matters concerning assigning of policy, nomination by policy holders, insurable interest, settlement of insurance claim, surrender value of policy and other terms and conditions of contracts of insurance;  Specifying requisite qualifications, code of conduct and practical training for intermediary or insurance intermediaries and agents;  Specifying the code of conduct for surveyors and loss assessors;  Promoting efficiency in the conduct of insurance business;10 10 BABASAB PATIL
  • 11. Comparison between traditional plan & ULIP’s  Promoting and regulating professional organizations connected with the insurance and re-insurance business;  Levying fees and other charges for carrying out the purposes of this Act;  Specifying the form and manner in which books of account shall be maintained and statement of accounts shall be rendered by insurers and other insurance intermediaries.  Regulating investment of funds by insurance companies;  Regulating maintenance of margin of solvency;  Adjudication of disputes between insurers and intermediaries or insurance intermediaries.  Supervising the functioning of the Tariff Advisory Committee;  Specifying the percentage of premium income of the insurer to finance schemes for promoting and regulating professional organizations referred to in clause.  Specifying the percentage of life insurance business and general insurance business to be undertaken by the insurer in the rural or social sector11 11 BABASAB PATIL
  • 12. Comparison between traditional plan & ULIP’sINTRODUCTION TO ULIP: The concept of ULIP came in to existence in 1960’s to provide an optimum balancebetween protection and investment. ULIP distinguishes itself through the multiple benefits it provides to thepolicyholders. These plans are designed with a view to help the customers to utilize themarket opportunities by investing in the share market, capital market and at the same timehave the facility of Death Benefit and Maturity Benefit. Unit-linked life insurance products are those where the benefits are expressed in termsof number of units and unit price. They can be viewed as a combination of insurance andmutual funds. The number of units that a customer would get would depend on the unit price whenhe pays his premium. The daily unit price is based on the market value of the underlyingassets (equities, bonds, government securities, et cetera) and computed from the net assetvalue. The advantage of unit-linked plans is that they are simple, clear, and easy tounderstand. Being transparent the policyholder gets the entire upside on the performance ofhis fund. Besides all the advantages they offer to the customers, unit-linked plans also lead toan efficient utilization of capital. Unit-linked products are exempted from tax and they provide life insurance. Investorswelcome these products as they provide capital appreciation even as the yields ongovernment securities have fallen below 6 per cent, which has made the insurers slashpayouts. According to the IRDA, a company offering unit-linked plans must give the investoran option to choose among debt, balanced and equity funds.If you choose a debt plan, the majority of your premiums will get invested in debt securitieslike gilts and bonds. If you choose equity, then a major portion of your premiums will beinvested in the equity market. The plan you choose would depend on your risk profile andyour investment need. The ideal time to buy a unit-linked plan is when one can expect long-term growth12 12 BABASAB PATIL
  • 13. Comparison between traditional plan & ULIP’sahead. This is especially so if one also believes that current market values (stock valuations)are relatively low. So if you are opting for a plan that invests primarily in equity, the buzzing marketcould lead to windfall returns. If one invests in a unit-linked pension plan early on, say when one is 25, one canafford to take the risk associated with equities, at least in the plans initial stages. However, asone approaches retirement the quantum of returns should be subordinated to capitalpreservation. At this stage, investing in a plan that has an equity tilt may not be a good idea. Considering that unit-linked plans are relatively new launches, their short history doesnot permit an assessment of how they will perform in different phases of the stock market.Even if one views insurance as a long-term commitment, investments based on performanceover such a short time span may not be appropriate. Simply put, ULIPs work very similar to a mutual fund with a life cover thrown in.They have a mandate to invest the premiums in varying proportions in gsecs (governmentsecurities), bonds, the money markets (call money) and equities. The primary differencebetween conventional savings-based insurance plans like endowment and ULIPs is theinvestment mandate- while ULIPs can invest upto 100% of the premium in equities, thepercentage is much lower (usually not more than 15%) in case of conventional insuranceplans. ULIPs are also available in multiple options like `aggressive ULIPs (which can investupto 100% in equities), `balanced ULIPs (which invest 40-60% in equities) and `debt ULIPs(which invest only in debt and money market instruments). The exact expense structure/ break-up for ULIPs is as transparent as one would haveliked. Broadly speaking, ULIP expenses are classified into three major categories:1) Mortality Charges:Mortality expenses are charged by life insurance companies for providing a life cover to theindividual. The expenses vary with the age, sum assured and sum-at-risk for the individual.There is a direct relation between the mortality expenses and the above mentioned factors. Ina ULIP, the sum-at-risk is an important reference point for the insurance company. Put13 13 BABASAB PATIL
  • 14. Comparison between traditional plan & ULIP’ssimply, the sum-at-risk is the difference between the sum assured and the investment valuethe individuals corpus as on a specified date.2. Sales and administration expenses:Insurance companies incur these expenses for operational purposes on a regular basis. Theexpenses are recovered from the premiums that individuals pay towards their insurancepolicies. Agent commissions, sales and marketing expenses and the overhead costs incurredto run the insurance business on a day-to-day basis are examples of such expenses.3. Fund management charges (FMC):These charges are levied by the insurance company to meet the expenses incurred onmanaging the ULIP investments. A portion of ULIP premiums are invested in equities,bonds, gases and money market instruments. Managing these investments incurs a fundmanagement charge, similar to what mutual funds incur on their investments. FMCs differacross investment options like aggressive, balanced and debt ULIPs; usually a higher equityoption translates into higher FMC. Apart from the three expense categories mentioned above, individuals may also haveto incur certain expenses, which are primarily `optional in nature- the expenses will beincurred if certain choices that are made available to individuals are exercised.a) Switching charges:Individuals are allowed to switch their ULIP options. For example, an individual can switchhis fund money from 100% equities to a balanced portfolio, which has say, 60% equities and40% debt. However, the company may charge him a fee for `switching. While most lifeinsurance companies allow a certain number of free switches annually, a switch made overand above this number is charged.b) Top-up charges:ULIPs allow individuals to invest a top-up amount. Top-up amount is paid in addition to thepremium amount for a particular year. Insurance companies deduct a certain percentage fromthe top-up amount as charges. These charges are usually lower than the regular charges thatare deducted from the annual premium.c) Cancellation charges:14 14 BABASAB PATIL
  • 15. Comparison between traditional plan & ULIP’sLife insurance companies levy cancellation charges if individuals decide to surrender theirpolicies (usually) before three years. These charges are levied as a percentage of the fundvalue on a particular date.Having defined ULIP expenses, an illustration will help in understanding how they pan out aswell as their impact on returns over a period of time.NAV concept: It exhibits the value (or the price) that one has for his investment or one will have topay for his investment. As, the investment made by different people are different, the value (or the price) isthe expressed in per unit terms. It helps in knowing the value of Insurance at any point oftime.Technical Calculation of NAV: - UNIT Value = (Total market Value of all assets invested less expenses related toInvestment management / Total no.of outstanding units)Factors affecting NAV: Marketing Value of investment portfolio, Number of Units, Expenses and InvestmentIncome.Ex: If 2,00,000 /- has been accumulated in the equity fund and the no. of units issued is10,000 /- 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 ten the value of investment as ofnow is Rs 1,10,000.Thus a unit linked plan actually tells, what is the value of the fund.BASIC FEATURES OF ULIP15 15 BABASAB PATIL
  • 16. Comparison between traditional plan & ULIP’s 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 same balance between protection and savings. 2) INVESTMENTS AND SAVINGS16 16 BABASAB PATIL
  • 17. Comparison between traditional plan & ULIP’s Equity funds Balance d funds Debt Short funds term debt fundsRiskULIP provides the client with option of investing as per his risk appetite and gets returnsaccordingly. These various options available for an indivual to make investment incomparatively high risks instruments and get high returns. Below shown is a graphillustrating the various investment options for a client.Example 1: Here are four types of funds in which a client can invest. In each case the riskgoes on increasing with the type of fund. The client has an option to shift as the risk andreturn orientation changes (Switch). 3. FLEXIBILITY:The client has an option to choose the amount of sum assured and the premium amount he iscapable of paying. In case of certain plans of ULIP the client is allowed to choose thepremium. Exp: Lifetime and Lifetime I The client has a flexibility to decide the life coveraccording 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 premium17 17 BABASAB PATIL
  • 18. Comparison between traditional plan & ULIP’s holiday the client can pay the previous premiums if he desires or continue Plan Plan objective Risk Investment patternMaximiser High growth and capital High Equity and equity related(Growth) appreciation over a long securities: Max 90%, Debt, terms money market and cash : Min 10%Balancer Balance of capital Average Equity and equity related(balanced) appreciation and study securities: Max 40%, Debt, returns over a long terms money market and cash : Min 60%Preserver Equal balance of capital Low Debt instrument: Max 50% appreciation and study Money market and cash Min returns over a long term 50%Protector Study returns over a long Moderate Debt instrument: Max 100%(Income) term. Money market and cash Max 25% from that date. d) Choice of fund. There are four kinds of funds available for a client of ULIP. He has a option to switch between these four funds. He can either choose only one or invest in all four depending on his risk tolerance. 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. Table: Kinds of funds available for a client of ULIP e) Top ups: Some times the client may have surplus amount after his expenses. ULIP allows him to save that amount the 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.18 18 BABASAB PATIL
  • 19. Comparison between traditional plan & ULIP’s f) 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. g) Assignment option: The policyholder can assign the policy to any of the nominee 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 you know on a daily bases, how the money in insurance plan is growing.19 19 BABASAB PATIL
  • 20. Comparison between traditional plan & ULIP’s 5. ADDED BENEFITS: To get extra protection from the 3D effect 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. This is one of the motives of the policy holder 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. Whit so many tax benefits available in one instrument ULIP tends to be an intelligent tax- planning tool.Modes of Premium Payment:20 20 BABASAB PATIL
  • 21. Comparison between traditional plan & ULIP’sPremiums are payable through any of the following modes:Cash*ChequesDemand DraftsPay OrdersBankers ChequeInternet facility as approved by the Company from time to time.Electronic Clearing SystemCredit Cards (Only standing instruction)*Amount and Modalities will be subject to company Rules and relevantlegislation/regulationsPremium Payment frequency:Your Premium will fall due in every policy year based on the periodicity of payment ofpremiums, i.e.Yearly,Half-Yearly orMonthlyHow much does the coverage cost?The most comprehensive coverage is also affordable. Below are the annual premium rates for21 21 BABASAB PATIL
  • 22. Comparison between traditional plan & ULIP’sa Sum Assured of Rs. 500,000 for various policy terms and entry ages for Males. Age(Years) Policy Term 15 years 20 years 25 years 25 Rs. 2435 Rs. 2474 Rs. 2734 30 Rs. 2896 Rs. 3204 Rs. 3738 35 Rs. 4106 Rs. 4724 Rs. 5576 40 Rs. 6282 Rs. 7281 Rs. 8442 45 Rs. 9804 Rs. 11,182 Rs. 12,554Premium in RupeesThe premiums are guaranteed for first five years from the date of commencement of thepolicy. Thereafter, the premiums are annually reviewable. Any change in premium will onlybe effected with approval from IRDA.Above premiums are inclusive of modal rebate and Large SA discount & exclusive of anyservice tax and education cess.Waiting Period: No benefit in respect of Critical Illness Benefit (CIB) or Total &Permanent Disability Benefit (TPDB) will be payable if it has occurred due to sickness withinthe first 6 months of the policy or first 3 months of the policy reinstatement date where thepolicy has lapsed formore than 3months.What is your Human Life Value?Beyond all doubt, your life is invaluable. Yet, there is a certain worth that can be attributed tothe financial support you offer your parents, spouse or children. This worth is referred to as22 22 BABASAB PATIL
  • 23. Comparison between traditional plan & ULIP’sHuman Life Value (HLV). In the future, if your family does not have the protective blanketof your presence, they will no longer be able to enjoy the benefits of the income you earned.Put simply, Human Life Value is the present value of your future earnings.Why should you calculate your Human Life Value?You should calculate your Human Life Value so you can accordingly invest in insuranceplans that provide your family with adequate finances and hence security even in yourabsence.How do you determine your Human Life Value?Your Human Life Value is determined by 3 factors:1. Your age2. Current and future expenses3. Current and future incomeAs a thumb rule, if you are 30 years of age, you should insure yourself for an amountapproximately 8 times your annual income. At 35, your investment should be close to 6 timesyour income. Of course, the exact amount of your investment should be determined by thenumber of people who depend on you, your existing investments and your life stage. Forexample, if you are 30 years of age and have two children and parents to provide for, theamount you invest should be reflective of your requirements.Calculate your Human Life Value NOWUse our quick and easy Human Life Value Calculator to determine your Human Life Valueand the corresponding amount you should invest. Start right away!23 23 BABASAB PATIL
  • 24. Comparison between traditional plan & ULIP’s WORKING OF A ULIP PLANFor ExampleA client put in regular contribution of Rs. 20,000 /-. From this amount a % is deducted ascontribution.Therefore if the contribution related expense is 20% - Rs.4000/- will be deducted as24 24 BABASAB PATIL
  • 25. Comparison between traditional plan & ULIP’scontribution charges.The amount that is now available is Rs.20000-4000=16000/-Now, if the client who is available is aged 30 years were to take a life cover of 500,000/- thenmortality (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 – 15,250/- will beinvested 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 ofthe debt fund is Rs. 16/-(market price) then the no. of units that the client will get is15,250/16=953.125. For this investment-fund management fee will be charged and thecharges for maintaining the policy an administrative charge are levied.He same example would look as follows in a chart. FLOW CHART OF A UNIU LINKED PLAN Less 20%25 25 BABASAB PATIL
  • 26. Comparison between traditional plan & ULIP’s 20,000-4000=16000 Mortality & Rider ChargesContribution Contribution related deucted charges deducted 16,000-750=15,250 Life Protection 500,000 for the age 30- mortality at 1.50 per thousand The client invests resultant Investment in in funds as chosen Funds Debt / Equity or balanced 15,250/- invested in debt fund at a NAV of 16/- Units Allocated 953.1250units allocated Represented as NAV NAV of debt fund 16/- per unit 26 26 BABASAB PATIL
  • 27. Comparison between traditional plan & ULIP’sTRADITIONAL PLANS:These are the oldest types of plans available. These plans cater to customers with a low riskappetite. Some of the common features of traditional plans are: 1. Steady Investment 1. Major chunk of investible funds are in debt instruments 2. Steady and almost assured returns over the long term 2. Features 1. Death benefit is Sum Assured + guaranteed & vested bonus 2. Helps in asset creation as they are for a long tenure 3. Premium to Sum Assured ratios are fixed for each plan and age. Traditional plans have existed since the inception of Insurance. These plans have beenproviding the policyholders, advantages of savings and protection. But they lack, transparency, flexibility and liquidity etc that are available in eitherInvestment avenues. Ever since the Insurance sector was opened up, private players havebeen trying to entice the customer with new and innovative policies. Unlike traditional Insurance products, customers find unit linked plans moretransparent, flexible and easy to understand. The key to good financial goals, risks appreciated and portfolio mix. The next stepwould be allocate asset across different categories and systematically adhere to an investmentpattern, so that they work in tandem to meet one’s requirements over the next month, year ordecade. Because of their flexibility to adjust to different life stage needs ULIP’s have anupper hand over the traditional plans. Buying an ULIP is quite different from buying a traditional Life Insurance product.The policyholder is totally aware of the various charges being charged to him and also aboutwas his contribution is being invested.Ex: If 2,00,000 /- has been accumulated in the equity fund and the no. of units issued is10,000 /- 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/-27 27 BABASAB PATIL
  • 28. Comparison between traditional plan & ULIP’sNow the NAV = 2,20,000 / 10,000 = Rs 22 / -If among these 10,000 units the policyholder has 5000 units ten the value of investment as ofnow is Rs 1,10,000.Thus a unit linked plan actually tells, what is the value of the fund. COMPARISON BETWEEN TRADITIONAL AND ULIP Broadly, insurance plans can be distinctly divided into ULIPs and traditional plans. Abrief detail of both segments: Unit Linked Insurance Product: ULIPs have gained high acceptance due toattractive features they offer. These include: 1. Flexibility 1. Flexibility to choose Sum Assured. 2. Flexibility to choose premium amount. 3. Option to change level of Premium /Sum Assured even after the plan has started. 4. Flexibility to change asset allocation by switching between funds 2. Transparency: 1. Charges in the plan & net amount invested are known to the customer. 2. Convenience of tracking one’s investment performance on a daily basis. 3. Liquidity: 1. Option to withdraw money after few years (comfort required in case of exigency). 2. Low minimum tenure. 3. Partial / Systematic withdrawal allowed. 4. Fund Options. 5. A choice of funds (ranging from equity, debt, cash or a combination). 6. Option to choose your fund mix based on desired asset allocation.28 28 BABASAB PATIL
  • 29. Comparison between traditional plan & ULIP’s COMPANY PROFILEEvolution of ICICI Prudential Life Insurance: ICICI Prudential Life Insurance today announced that Emgee Muthoot, the Insurancedivision of the Muthoot group, one of Keralas largest banking and financial services groups,has crossed the Rs 10 crore premium mark in a span of less than three years. Emgee Muthoot,which began distributing ICICI Prudentials life insurance products under the corporateagency relationship, has also emerged as ICICI Prus largest non-bank partnership in the state.ICICI Prudential Life Insurance pioneered the multi-channel distribution strategy in thecountry, and Kerala has emerged as one of its most successful examples of this model. Thecompany has tied up with leading banks in the state, like Federal Bank and The South IndianBank, as well as some other strong retail financial services distributors such as EmgeeMuthoot. Each of these are key partners in ICICI Prudentials alternate distribution strategyand contribute greatly to the companys business as well as awareness levels and customerexperience. Speaking at the event, Ms Shikha Sharma, CEO & MD, ICICI Prudential LifeInsurance said, Its been wonderful to see the evolution of Emgee Muthoot into a diversifiedfinancial services company. Ever since they decided to become corporate agents anddistribute our life insurance products in February 2002, they have made huge strides intraining and developing their workforce to sell a complex product like life insurance, anddeliver value to their customers. I believe that it is thanks to these efforts that they are todaynot only our leading corporate agent in Kerala, but the second largest in the country. Mr. George Alexander Muthoot, Managing Director, the Muthoot group, said A fewyears ago, we took a strategic decision to leverage our extensive branch network and therebyexpand the scope of the services we offer our customers. Our partnership with ICICIPrudential has been fantastic, and today life insurance has become a core business for us. Ibelieve that the success of this relationship has been founded on our shared values andmission to deliver a superior experience to our customers.Emgee Muthoot is one of the most successful corporate agents for ICICI Prudential, and hasbeen one of the frontrunners in the companys Partner Program, an initiative to strengthenrelationships with key partners. The groups strategic move towards a branch model of29 29 BABASAB PATIL
  • 30. Comparison between traditional plan & ULIP’sdistribution in mid-2003 served as a catalyst for the groups life insurance foray, and thecompany has earned over Rs 5 crore in premium income since the beginning of this financialyear alone. ICICI Prudentials early start and continued focus on alternate channels, whichinclude bank tie-ups, corporate agents and brokers, has resulted in these channels contributingnearly 30% of ICICI Prudentials new business. Currently, ICICI Prudential has 7 bankrelationships and over 150 corporate agency and broker tie-ups.Overview: ICICI Prudential Life Insurance Company is a joint venture between ICICI Bank -one of Indias foremost financial services companies-and Prudential plc - a leadinginternational financial services group headquartered in the United Kingdom. Total capitalinfusion stands at Rs. 47.80 billion, with ICICI Bank holding a stake of 74% and Prudentialplc holding 26%. We began our operations in December 2000 after receiving approval from InsuranceRegulatory Development Authority (IRDA). Today, our nation-wide team comprises of 2099branches (inclusive of 1,116 micro-offices), over 276,000 advisors; and 18 bancassurancepartners. ICICI Prudential is the first life insurer in India to receive a National Insurer FinancialStrength rating of AAA (Ind) from Fitch ratings. For three years in a row, ICICI Prudentialhas been voted as Indias Most Trusted Private Life Insurer, by The Economic Times - ACNielsen ORG Marg survey of Most Trusted Brands. As we grow our distribution, productrange and customer base, we continue to tirelessly uphold our commitment to deliver world-class financial solutions to customers all over India. Mumbai, September 3, 2007: ICICI Prudential Life Insurance, Indias leading privatelife insurance company, has simultaneously crossed 2 significant milestones, furtherstrengthening its position as a market leader. It has become the first private life insurer tocross the 5 million policies mark, a milestone that has pushed the companys assets held pastthe 20,000 crore milestone. Each of these achievements reflect the trust retail investors havereposed in the company as well as the immense reach that the company has been able to buildover the past few years, particularly the last 18 months30 30 BABASAB PATIL
  • 31. Comparison between traditional plan & ULIP’sThe ICICI Prudential Edge: The ICICI Prudential edge comes from our commitment to our customers, in all thatwe do - be it product development, distribution, the sales process or servicing. Heres a peekinto what makes us leaders.1. Our products have been developed after a clear and thorough understanding of customersneeds. It is this research that helps us develop Education plans that offer the ideal way to trulyguarantee your childs education, Retirement solutions that are a hedge against inflation andyet promise a fixed income after you retire, or Health insurance that arms you with the fundsyou might need to recover from a dreaded disease.2. Having the right products is the first step, but its equally important to ensure that ourcustomers can access them easily and quickly. To this end, ICICI Prudential has an advisorbase across the length and breadth of the country, and also partners with leading banks,corporate agents and brokers to distribute our products .3. Robust risk management and underwriting practices form the core of our business. Withclear guidelines in place, we ensure equitable costing of risks, and thereby ensure a smoothand hassle-free claims process.4. Entrusted with helping our customers meet their long-term goals, we adopt an investmentphilosophy that aims to achieve risk adjusted returns over the long-term.5. Last but definitely not the least, our team is given the opportunity to learn and grow, everyday in a multitude of ways. We believe this keeps them engaged and enthusiastic, so that theycan deliver on our promise to cover you, at every step in life.OUR VISION, MISSION QUALITY POLICY”To be the dominant Life, Health and Pensions player built on trust by world-class peopleand 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 conveniently31 31 BABASAB PATIL
  • 32. Comparison between traditional plan & ULIP’s • 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 The success of the company will be founded in its unflinching commitment to 5 corevalues -- Integrity, Customer First, Boundaryless, Ownership and Passion. Each of the valuesdescribe what the company stands for, the qualities of our people and the way we work.We do believe that we are on the threshold of an exciting new opportunity, where we canplay a significant role in redefining and reshaping the sector. Given the quality of ourparentage and the commitment of our team, there are no limits to our growth.Our values:Every member of the ICICI Prudential team is committed to 5 core values: Integrity,Customer First, Boundaryless, Ownership, and Passion. These values shine forth in all we do,and have become the keystones of our success.Promoters: ICICI Bank Limited (NYSE:IBN) is Indias largest private sector bank and thesecond largest bank in the country with consolidated total assets of about US$ 95 billion as ofMarch 31, 2009. ICICI Bank’s subsidiaries include India’s leading private sector insurancecompanies and among its largest securities brokerage firms, mutual funds and private equityfirms. ICICI Bank’s presence currently spans 19 countries, including India.Prudential: Established in London in 1848, Prudential plc is a leading internal retail financialservices group with significant operations in Asia, the US and the UK. Prudential has beenwriting protection and savings insurance for over 160 years, and today has more than 21million customers worldwide and over 249 billion in assets under management (as ofDecember 31, 2008). In Asia, Prudential is the leading Europe-based life insurer withoperations in China, Hong Kong, India, Indonesia, Japan, Korea, Malaysia, the Philippines,Singapore, Taiwan, Thailand, and Vietnam. Prudential is one of the largest asset managementcompanies in terms of overall assets sourced in Asia ex-japan, with ?36.8 billion funds under32 32 BABASAB PATIL
  • 33. Comparison between traditional plan & ULIP’smanagement (as of December 31, 2008) and operations in ten markets including China, HongKong, India, Japan, Korea, Malaysia, Singapore, Taiwan, Vietnam and United ArabEmirates.The CompanyICICI Prudential Life Insurance Company is a joint venture between ICICI Bank, a premierfinancial powerhouse, and Prudential plc, a leading international financial services groupheadquartered in the United Kingdom. ICICI Prudential was amongst the first private sectorinsurance companies to begin operations in December 2000 after receiving approval fromInsurance Regulatory Development Authority (IRDA).ICICI Prudential Lifes capital stands at Rs. 4,780 crores (as of March, 2009) with ICICIBank and Prudential plc holding 74% and 26% stake respectively. For the period April 1,2008 to March 31, 2009, the company has posted a growth of 13%, garnering total receivedpremium (new business + renewal) of Rs 15,356 crores as against Rs 13,563 crores inFY2008 and has underwritten over 9 million policies since inception. The company has assetsheld over Rs. 32,000 crores as on March, 2009.ICICI Prudential Life is also the only private life insurer in India to receive a National InsurerFinancial Strength rating of AAA (Ind) from Fitch ratings. The AAA (Ind) rating is thehighest rating, and is a clear assurance of ICICI Prudentials ability to meet its obligations tocustomers at the time of maturity or claims.For the past eight years, ICICI Prudential Life has retained its leadership position in the lifeinsurance industry with a wide range of flexible products that meet the needs of the Indiancustomer at every step in life.33 33 BABASAB PATIL
  • 34. Comparison between traditional plan & ULIP’sSTAGES IN POLICY ISSUANCE: • Proposal A Proposal Stage is the First stage before the policy is issued at COPS. At this stage, the application form is received by COPS, but it is pending for issuance due to further clarifications required from the customer. • Login A proposal, which is complete i.e., duly filled with all necessary documents attached to it & accepted by the Branch ops, is called a Login • Reject An Application gets rejected at the Branch Ops level due to necessary details not filled in the form or necessary documents not submitted are a Reject. It is then sent back to the Advisor for completion. • Issuance Issuance means a policy that is issued to the Customer by Central Ops. • Decline Status When a customer refuses to take a policy post login but before Issuance is called a Decline • Cancellation When the cheque given by the customer bounces, it amounts to cancellation of the policy. • Lapse A policy for which the Customer fails to pay subsequent premiums is a Lapsed Policy. • Free look Post issuance of the policy, the policyholder has the option to turn down the policy within 15 days from the date of issuance. This period of 15 days is called Free look Period. • Surrender When a customer wants to discontinue with the policy it is called Surrender.34 34 BABASAB PATIL
  • 35. Comparison between traditional plan & ULIP’sDistribution Channels:Tied Agency ChannelThe Tied Agency Channel, as the name suggests, is driven by agents (advisors) of thecompany. For insurance distribution, this is the most popular channel. This channel sourced73% of ICICI Prudential’s business in FY 2004.Bank assurance:Bank assurance is a setup whereby a tie up is made with a Bank. This distribution modelworks on referral basis. The customer base of the bank that is made available to it benefits theInsurance Company. The bank, in return earns referral commission for every policy issued tothe bank customer. In this arrangement, typically an employee of the ICICI Prudential isstationed at the bank branch and he sources the business through walk-ins that happen at thebank. His domain of prospective customers is a banks’ customer. Such agents put up atbanks are called as Financial Service Consultant (FSC). Banc assurance, as an arrangementfor distribution, has been proved successful because of the extended reach that the insurancecompany gets through the bank branch network.Corporate Agents: Corporate Agents (CAs) are corporate entities that source policies for the InsuranceCompany with whom they have a tie-up. They are authorized to source policies for oneinsurance company only. The difference between CA & Banc assurance arrangement is thatthe former trains its own employees to sell the policies while in case of Banc assurancearrangement, the employees of the insurance company (FSCs) source the business.Brokers:A variant of CAs, Brokers are not tied to a particular company and are allowed to sourcebusiness for more than one insurance company.Direct Marketing:Direct marketing, as a channel of distribution, is relatively a new one. It basicallyencompasses all unconventional channels of distribution. Inter alia, it includes call center,Internet and other mass media channels. All leads that come through this channel are thenattended and closed by our branches.Advisor: An Advisor is the agent of the Company who sources or sells the policy for thecompany. They are called as FOS - Feet on Street.INSURANCE PRODUCT AND SERVICE:35 35 BABASAB PATIL
  • 36. Comparison between traditional plan & ULIP’s ICICI Prudential’s ultimate promise is financial security. A strong brand certainlyboosts sale, but without customer-friendly, innovative products, even the best brand wouldnot last long. ICICI Prudential’s product range has been developed on the understanding thatdifferent people have their own sets of needs at various stages of their lives. It has thus built aflexible portfolio of products that can be customized to cater to varying needs of people ateach stage, and thus ensure protection in every step of life. The company’s philosophy hasbeen to help customers understand their financial needs and work closely with them tocustomize a product that would meet. Advisors can offer a complete range of products –Savings plans, Child plans, Market-linked plans, Protection plans, and Retirement plans – andtailor a flexible solution to meet customers’ changing needs at every stage of life. In fact,ICICI Prudential was the first to un-bundle product benefits, pioneering the concept of‘riders’ and soon after introduce comprehensive market-linked and retirement plans. ICICIPrudential has launched a handful of products that are analyzed below: ICICI Prudentials lifeinsurance products may be loosely categorized under three forms: pure life insuranceproducts without an investment angle to them; a product that is a mix of a cumulativeinvestment scheme and an insurance product; and, finally, standard products such as money-back and endowment policies.PRODUCTS:Insurance Solutions for IndividualsICICI Prudential Life Insurance offers a range of innovative, customer-centric products thatmeet the needs of customers at every life stage. Its products can be enhanced with up to 4riders, to create a customized solution for each policyholder. Life Time Gold is a unit-linked plan which offers potentially higher returns over the long term with flexible investment options to help you achieve your goals. It offers 8 fund options - Preserver, Protector, Return Guarantee Fund, Balancer, Flexi Balanced Multiplier, R.I.C.H and Flexi Growth. Life Stage RP is unit linked plan that provides you with an option of lifecycle-based portfolio strategy that continuously re-distributes your money across various asset classes based on the customer’s profile, helping him achieve his desired financial goals. LifeLink Super is a single premium unit linked insurance which offers attractive36 36 BABASAB PATIL
  • 37. Comparison between traditional plan & ULIP’s premium allocation along with the opportunity to enjoy potentially high returns over the long term, without compromising on the protection of your family. InvestShield Life New is a unit linked plan that provides premium guarantee and allows the customer to enjoy the benfits of potentially higher returns while guaranteeing him that he will get back atleast all the premiums paid by him, while providing protection to your family with a life insurance cover. InvestShield Life New is a unit linked plan that provides premium guarantee and allows the customer to enjoy the benfits of potentially higher returns while guaranteeing him that he will get back atleast all the premiums paid by him, while providing protection to your family with a life insurance cover. InvestShield Cashbak is a unit linked plan that provides premium guarantee while maintaing a balance between return, safety & liquidity. Wealth Advantage s a unique whole life single premium unit linked plan that provides long term coverage upto the age of 70 years and provides you the option to systematically withdraw your money. Life Stage Assure a unit linked insurance plan that provides Guaranteed Maturity Addition of 100%- 450% of first year premium based on the term and number of premiums paid, with the additional advantage of a lifecycle based portfolio strategy that allocates the investor’s money across various asset classes based on his age and risk appetite Protection Solutions  Pure Protect is a flexible and affordable term product, with which you can ensure your life and provide total security for your family in case of an unfortunate event.  Life Guard is a protection plan, which offers life cover at low cost. It is available in 2 options –level term assurance with return of premium & 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 mannerChild Plans:Smart Kid New ULRP: The policy is designed to provide money at key educationalmilestones in the childs life. SmartKid plans are also37 37 BABASAB PATIL
  • 38. Comparison between traditional plan & ULIP’sRetirement Solutions:  Forever Life is a traditional retirement product that offers guaranteed returns for the first 4 years.  Life Time Super Pension is a regular premium unit linked pension plan that helps one accumulate over the long term and offers 5 annuity options (life annuity, life annuity with return of purchase price, joint life last survivor annuity with return of purchase price, life annuity guaranteed for 5,10 and 15 years & for life thereafter, joint life, last survivor annuity without return of purchase price) at the time of retirement.  Life Stage Pension is a regular premium unit linked pension plan that provides you with a unique lifecycle-based strategy that continuously re-distributes your money across various asset classes based on your age and risk profile.  Life Link Super Pension is a single premium unit linked pension plan.  Immediate Annuity is a single premium annuity product that guarantees income for life at the time of retirement. It offers the benefit of 5 payout options. Health Solutions:  Hospital Care is a fixed benefit plan covering various stages of treatment – hospitalization, ICU, procedures & recuperating allowance. It covers a range of medical conditions (900 surgeries) and has a long term guaranteed coverage upto 20 years.  Crisis Cover is a 360-degree product that will provide long-term coverage against 35 critical illnesses, total and permanent disability, and death.  Diabetes Care Active is a long term insurance policy created for individuals with Type II diabetes and pre-diabetes. It offers long term (upto 20 years) control over diabetes through a specially designed Wellness Programme including regular health checkups and a Diabetes Coach to facilitate diabetes management. It also provides you coverage against seven major critical illnesses.  Cancer Care is a regular premium plan that pays cash benefit on the diagnosis as well as at different stages in the treatment of various cancer conditions.38 38 BABASAB PATIL
  • 39. Comparison between traditional plan & ULIP’s  Medical Assure is a health insurance policy that provides assured insurability till age 75 years, assured coverage for accepted pre-existing illnesses after 2 years and an assured price for 3 years.  Health Saver provides comprehensive hospitalization cover and reimburses all other medical expenses by building a health fund.  available in traditional form Flexible Rider Options: ICICI Prudential Life offers flexible riders, which can be added to the Basic policy ata marginal cost, depending on the specific needs of The customer. Accident & disability benefit: If death occurs as the result of an accident during the term of the policy, thebeneficiary receives an additional amount equal to the rider sum assured under the policy. Ifan accident results in total and permanent disability, 10% of rider sum assured will be paideach year, from the end of the 1st year after the disability date for the remainder of the basepolicy term or 10 years, whichever is lesser. If the death occurs while travelling in anauthorized mass transport vehicle, the beneficiary will be entitled to twice the sum assured asadditional benefit.Critical illness benefit: Critical Illness Benefit Rider provides protection against 9 critical illnesses to thepolicyholder when attached to the basic plan.Waiver of premium: On total and permanent disablement due to accident all future premiums under the base plan will be waived till the end of the term of the rider or death of assured life, if earlier.Income benefit rider: In case of death of the Life Assured during the term of the policy, 10% of the Sum Assured is paid annually to the nominee on each policy anniversary till the maturity of the rider. Table Ownership Pattern39 39 BABASAB PATIL
  • 40. Comparison between traditional plan & ULIP’sNature of relationship Name of the related partyHolding Company ICICI Bank LimitedSubstantial Interest Prudential Corporation Holdings LimitedFellow Subsidiaries ICICI Brokerage Services Limited ICICI Venture Funds Management Company Limited ICICI Home Finance Company Limited ICICI Lombard General Insurance Company Limited ICICI Trusteeship Services Limited ICICI Securities Limited ICICI Securities Inc. ICICI Securities Holding Inc. ICICI Investment Management Company Limited ICICI International Limited ICICI Bank UK Limited ICICI Bank Canada ICICI Bank Eurasia L.L.C. (formerly Investment Credit Bank Limited Liability Company) Prudential ICICI Asset Management Company Limited Prudential ICICI Trust Limited ICICI Property TrustKey management Shikha Sharma, Managing Director N. S. Kannan, Executivepersonnel Director (appointed on August 1, 2005) ICICI Prudential Life Insurance Company Limited Employees’ Group Gratuity Cum Life Insurance SchemeSignificant influence ICICI Prudential Life Insurance Company Limited Employees’ Provident Fund ICICI Prudential Life Insurance Company Limited Superannuation SchemeCompetitors: LIFE INSURERS Websites Public Sector Life Insurance Corporation of India www.licindia.com Private Sector Allianz Bajaj Life Insurance Companywww.allianzbajaj.co.in Limited Birla Sun-Life Insurance Company Limited www.birlasunlife.com HDFC Standard Life Insurance Co. Limited www.hdfcinsurance.com ICICI Prudential Life Insurance Co. Limited www.iciciprulife.com ING Vysya Life Insurance Companywww.ingvysayalife.com Limited Max New York Life Insurance Co. Limited www.maxnewyorklife.com MetLife Insurance Company Limited www.metlife.com Om Kotak Mahindra Life Insurance Co. Ltd. www.omkotakmahnidra.com40 40 BABASAB PATIL
  • 41. Comparison between traditional plan & ULIP’s SBI Life Insurance Company Limited www.sbilife.co.in TATA AIG Life Insurance Companywww.tata-aig.com Limited Dabur CGU Life Insurance Co. Pvt. Limited www.avivaindia.com GENERAL INSURERS Public Sector National Insurance Company Limited www.nationalinsuranceindia.com New India Assurance Company Limited www.niacl.com Oriental Insurance Company Limited www.orientalinsurance.nic.in United India Insurance Company Limited www.uiic.co.in Private Sector Bajaj Allianz General Insurance Co. Limitedwww.bajajallianz.co.in ICICI Lombard General Insurance Co. Ltd. www.icicilombard.com Reliance General Insurance Co. Limited www.ril.com Royal Sundaram Alliance Insurance Co.www.royalsun.com Ltd. TATA AIG General Insurance Co. Limited www.tata-aig.com Cholamandalam General Insurance Co. Ltd. www.cholainsurance.com Export Credit Guarantee Corporation www.ecgcindia.com HDFC Chubb General Insurance Co. Ltd. REINSURER General Insurance Corporation of India www.gicindia.comMarket share: ICICI Prudential Life Insurance hiked its market share to 42.72 per cent in theOctober-November period last year, up from 37.92 per cent in first quarter and 38.85 per centin the second quarter of the current fiscal. Its total share of the Rs 439.2-crore premium collected by private players during the April-November period stood at 39.66 per cent. Its aggregate estimated premium income amountedto Rs 174.2 crore as at the end of November. According to ICICI officials, while the premiummop-up by private companies in April-June 2002 was about Rs 117 crore, the correspondingfigures for the July-September and October-November periods were Rs 201.3 crore and Rs120.8 crore. Out of this, ICICI’s premium income stood at Rs 44.4 crore, Rs 78.2 crore and41 41 BABASAB PATIL
  • 42. Comparison between traditional plan & ULIP’sRs 51.6 crore, respectively.They cited Irda statistics saying the total premium income of the life sector was Rs 1,191crore in April-June, 2002, and Rs 3,512.8 crore uptil September. ORGANIZATION STRUCTURE BRANCH OFFICE SALES OPERATION REGIONALSALES MGR SALES MGR SALES MGR HEAD OPERATOR ASMASM ASM ZONAL MGR AGENCYMGRAGENCYMGR AGENCYMGR STATE MGRUNIT MGR UNIT MGR UNIT MGR42 42 BRANCH BABASAB PATIL MGRFINANCIAL FINANCIAL FINANCIALADVISORS ADVISORS ADVISORS TEAM LEADER EXECUTIVE
  • 43. Comparison between traditional plan & ULIP’s BOARD OF DIRECTORS Ms. Chanda .D. Kochhar : Chairperson Mr. N. S. Kannan : Director Mr. K. Ramkumar : Director Mr. Barry Stowe : Director Mr. Adrian O’Connor : Director Mr. Keki Dadiseth : Director Prof. Marti G. Subrahmanyam : Director Ms. Rama Bijapurkar : Director Mr. Vinod Kumar Dhall : Director Mr. V. Vaidyanathan : Managing Director & CEO Management team Mr.V.Vaidyanathan, : Managing Director & CEO Ms. Anita Pai, : Executive Vice Presiden Customer Service, Technology & Marketing43 43 BABASAB PATIL
  • 44. Comparison between traditional plan & ULIP’s Dr. Avijit Chatterjee, : Appointed Actuary Mr. Puneet Nanda, : Executive Vice President Awards and Achievements44 44 BABASAB PATIL
  • 45. Comparison between traditional plan & ULIP’s e w In su re r: O ut lo o k M o ne y A w ar ds 2 0 0 345 45 BABASAB PATIL
  • 46. Comparison between traditional plan & ULIP’sData source:Primary Data: Personal interactions, Observations Training programs. Through QuestionnaireSecondary Data: Study material by IRDA and ICICI Prudential. Related websites, Past records of ICICI Prudential.& Brochures and pamphlets of ICICI PrudentialSampling:a) Population : People Hubli cityb) Size : 100 sizec) Method : Random samplingMEASURING TOOLS: SPSS Software used for measuring the response is in terms of percentage method usinggraphical charts like Bar graphs & Pie charts.ANALYSIS:46 46 BABASAB PATIL
  • 47. Comparison between traditional plan & ULIP’s1. Gendor: Frequency Percent Valid Cumulative Percent Percent Valid Male 73 73.0 73.0 73.0 Female 27 27.0 27.0 100.0 Total 100 100.0 100.0 gendor 80 60 40 20 Frequency 0 male female gendorInterpretation: According to survey we have come to now the out of 100 responds in that73% are male and 27% female. Therefore male are more than female in Hubli city.2. Occupation Frequency Percent Valid Cumulativ Percent e Percent47 47 BABASAB PATIL
  • 48. Comparison between traditional plan & ULIP’s Validgovernment 9 9.0 9.0 9.0 employee private 36 36.0 36.0 45.0 employee student 1 1.0 1.0 46.0 business 29 29.0 29.0 75.0 man Others 25 25.0 25.0 100.0 Total 100 100.0 100.0 occupation 40 30 20 10 Frequency 0 goverement employee student others private employee bussiness man occupationInterpretation: According survey i came know that at 9% are government,36% are private people,1% Are student, 29% are businessman, 25% are other.3. Why did you go for ICICI prudential life insurance? FrequencyPercen Valid Cumulati t Percen ve t Percent48 48 BABASAB PATIL
  • 49. Comparison between traditional plan & ULIP’s Validbrand name 39 39.0 39.0 39.0 product 18 18.0 18.0 57.0 profile advisors 36 36.0 36.0 93.0 connivance ability advertisement 7 7.0 7.0 100.0 Total 100 100.0 100.0 why did you go for icici pru life insurance 50 40 30 20 Frequency 10 0 brand name advisors convinacy a product profile advertsement why did you go for icici pru life insuranceInterpretation: From above table clear that brand name 39%, product profile 18%, advisorsconvince ability 36%, advertisement 7% .4. Your savings consist of Frequency Percent Valid Percent Cumulative Percent Valid post office 17 17.0 17.0 17.0 bank f,d 10 10.0 10.0 27.0 Shares 6 6.0 6.0 33.0 land/ building 6 6.0 6.0 39.049 49 BABASAB PATIL
  • 50. Comparison between traditional plan & ULIP’s Life 55 55.0 55.0 94.0 insurance Gold 3 3.0 3.0 97.0 not respond 3 3.0 3.0 100.0 Total 100 100.0 100.0 your savings consist of not respond gold post office bank f,d shares life insurance land/ buildingInterpretation: According to survey we have come to know that 17% of responds are savingThere income in post office, 10% responds are saving in bank f.d, 6% responds areSaving there income in shares, 6% responds are saving there income in land/building, out of100 responds are 55% peoples are saving there income in life insurance because to protectthere life in future.3% people are save there income in gold and 3% are not responds thereincome5. The following insurance plan you have Frequency Percent Valid Cumulative Percent Percent Valid smart kid 16 16.0 16.0 16.0 life time 16 16.0 16.0 32.0 gold cash back 9 9.0 9.0 41.0 retirement 10 10.0 10.0 51.0 solution if other 31 31.0 31.0 82.0 specify50 50 BABASAB PATIL
  • 51. Comparison between traditional plan & ULIP’s not respond 18 18.0 18.0 100.0 Total 100 100.0 100.0 the following insurance plan you have 40 30 20 10 Frequency 0 smart kid cash back if other specify life time gold retirement solution not respond the following insurance plan you haveInterpretation: According to survey we have come to know out of 100 responds they have choiceinsurance plan in ICICI prudential 16% of people in smart kid, 16% of responds life timegold, cash back is only 9%, 10% responds retirement solution31% and 18% are others andnot responds.6. How much of premium amount o policy you have Frequency Percent Valid Cumulative Percent Percent Valid 5000-10000 63 63.0 63.0 63.0 10000-2000 13 13.0 13.0 76.0 0 20000-5000 2 2.0 2.0 78.0 0 50000&abo 1 1.0 1.0 79.0 ve not respond 21 21.0 21.0 100.0 Total 100 100.0 100.051 51 BABASAB PATIL
  • 52. Comparison between traditional plan & ULIP’sInterpretation: According to survey we have come to know that 63% of respondsThere premium amount 5000-10000, and 13% responds are prefer to10000-20000Only 2% responds are premium 20000-50000, 1% and 21% 50000 above and not responds7. Did you know about the life insurance? Frequency Percent Valid Cumulative Percent Percent Valid magazines/n 1 1.0 1.0 1.0 ews papers television 5 5.0 5.0 6.0 advisors 55 55.0 55.0 61.0 Friends 20 20.0 20.0 81.0 relatives 6 6.0 6.0 87.0 not respond 13 13.0 13.0 100.0 Total 100 100.0 100.052 52 BABASAB PATIL
  • 53. Comparison between traditional plan & ULIP’s did you know about the life insurance? magaznes/new s papers television not respond relatives friends advisorsInterpretation: According to survey we have come to know out of 100 responds are knowabout the life insurance from different sources 1% responds magazines/news papers 5%respondent are 5% respondent are television more of respondent are come to know fromadvisors,20% respondent are friends,6% are relatives and 13%are not respond.8. Are aware of ulip and traditional plan? Frequency Percent Valid Cumulative Percent Percent Valid Yes 61 61.0 61.0 61.0 No 32 32.0 32.0 93.0 not respond 7 7.0 7.0 100.0 Total 100 100.0 100.053 53 BABASAB PATIL
  • 54. Comparison between traditional plan & ULIP’s are aware of ulip and traditional plan? 70 60 50 40 30 20 Frequency 10 0 yes no not respond are aware of ulip and traditional plan?Interpretation: According to survey we have come to know that most of people are ulipWhich is 61%and 32% are traditional plan and reaming are not respondent.9. In which companies have you invested Frequency Percent Valid Cumulative Percent Percent Valid LIC 19 19.0 19.0 19.0 ICICI pru life 44 44.0 44.0 63.0 insurance Bajaj Allianz 14 14.0 14.0 77.0 not respond 23 23.0 23.0 100.054 54 BABASAB PATIL
  • 55. Comparison between traditional plan & ULIP’s Total 100 100.0 100.0 in which company have you invested 50 40 30 20 Frequency 10 0 lic icici pru life insur bajaj allianz not respond in which company have you investedInterpretation: According to survey we have come to know that 19% respondent are invested in LIClife insurance 44% are peoples are ICICI prudential insurance,14% are Invested are in BajajAllianz life insurance and remaining 23% are not respondent.10. For what purpose you invested in that company? Frequency Percent Valid Cumulative Percent Percent Valid tax saving 14 14.0 14.0 14.0 risk cover 42 42.0 42.0 56.0 Returns 21 21.0 21.0 77.0 Safety 6 6.0 6.0 83.0 Others 1 1.0 1.0 84.0 not respond 16 16.0 16.0 100.0 Total 100 100.0 100.055 55 BABASAB PATIL
  • 56. Comparison between traditional plan & ULIP’s for what purpose you invested in that company? 50 40 30 20 Frequency 10 0 tax saving risk cover returns safty others not respond for what purpose you invested in that company?Interpretation: According to survey we have come to know out of 100 respondent 14%Are they have invested in life insurance tax saving,42% are to risk saving purpose21% respondent for purpose of risk cover, and 6% are safety purpose,1% And 16%Are others and not respondent.11. Which of the following invested plan would you prefer? Frequency Percent Valid Cumulative Percent Percent Valid traditional 20 20.0 20.0 20.0 plan Unit linked 61 61.0 61.0 81.0 insurance not respond 19 19.0 19.0 100.0 Total 100 100.0 100.056 56 BABASAB PATIL
  • 57. Comparison between traditional plan & ULIP’s which of the following invested plan would you prefer 70 60 50 40 30 20 Frequency 10 0 traditional plan unit linked insuranc not respond which of the following invested plan would you preferInterpretation: According to survey we have know that in icici prudential life insurancecomparing between ulip and traditional plan. Out of 100 respondents20 % traditional plan invested, and 61% are invested in ulip and 19% are not respondent.12. Have you invested in this plan? Frequency Percent Valid Cumulative Percent Percent Valid Yes 65 65.0 65.0 65.0 No 23 23.0 23.0 88.0 not respond 12 12.0 12.0 100.0 Total 100 100.0 100.057 57 BABASAB PATIL
  • 58. Comparison between traditional plan & ULIP’s have you invested in this plan 70 60 50 40 30 20 Frequency 10 0 yes no not respond have you invested in this planInterpretation: According to survey 65% respondent are invested in ulip And 23% are notinvested. 12% are respondent not respondent.13. If, yes why did you give Importance in this plan? Frequency Percent Valid Cumulative Percent Percent Valid Returns 32 32.0 32.0 32.0 withdrawals 18 18.0 18.0 50.0 Charges 15 15.0 15.0 65.0 premium 10 10.0 10.0 75.0 Others 2 2.0 2.0 77.0 not respond 23 23.0 23.0 100.0 Total 100 100.0 100.058 58 BABASAB PATIL
  • 59. Comparison between traditional plan & ULIP’s if,yes why did you give imporance in this plan 40 30 20 10 Frequency 0 returns w ithdraw als charges premium others not respond if,yes why did you give imporance in this planInterpretation: According to survey we come to know that 32% Invested for the return, 18% investedfor purpose withdrawals, 15%Charges facility, 10% respondent premium, 2% and 23% othersand Not respondent.14. Rank the unit linked insurance plan? Frequency Percent Valid Cumulative Percent Percent Valid excellent 24 24.0 24.0 24.0 Very good 37 37.0 37.0 61.0 Average 18 18.0 18.0 79.0 Bad 4 4.0 4.0 83.0 not respond 17 17.0 17.0 100.0 Total 100 100.0 100.059 59 BABASAB PATIL
  • 60. Comparison between traditional plan & ULIP’s rank the unit linked insurance plan 40 30 20 10 Frequency 0 excellent very good average bad not respond rank the unit linked insurance planInterpretation: From above table rank the unit linked plan 24% excellent, 37% veryGood , 18% respondent average, 4% ,17% are bad and not respondent.15. How much invested in unit linked plan? Frequency Percent Valid Cumulative Percent Percent Valid 10000-5000 64 64.0 64.0 64.0 0 50000-1lack 11 11.0 11.0 75.0 5lack above 1 1.0 1.0 76.0 not respond 24 24.0 24.0 100.0 Total 100 100.0 100.060 60 BABASAB PATIL
  • 61. Comparison between traditional plan & ULIP’s how much invested in unit linked plan 70 60 50 40 30 20 Frequency 10 0 10000-50000 50000-1lack 5lack above not respond how much invested in unit linked planInterpretation: From above table we have know that 64%invested in unit linked plan11% 50000-1lack, 24% are not respondent.16. You invested in life insurance because of…. Frequency Percent Valid Cumulative Percent Percent Valid 3 3.0 3.0 3.0 Life security for our self 11 11.0 11.0 14.0 For protect for your family 42 42.0 42.0 56.0 members For retirement befit 18 18.0 18.0 74.0 For children benefit 8 8.0 8.0 82.0 For investment only 3 3.0 3.0 85.0 Not respond 15 15.0 15.0 100.0 Total 100 100.0 100.061 61 BABASAB PATIL
  • 62. Comparison between traditional plan & ULIP’s you invested in life inurance because of not respond life security for ou for investement only for children benfit for retirement befit for protect for yourInterpretation:From above table we have know that respondent are investing in life insurance 11% lifesecurity, 42% for protect family members, 18% retirement benefit 8% for children’s,3%investment,15% not respondent.17. Tick the factors of prime importance to you while purchasing life insurance Frequency Percen Valid Cumulative t Percent Percent ValidBrand name 25 25.0 25.0 25.0 product 23 23.0 23.0 48.0 portfolio personal 23 23.0 23.0 71.0 advisor needs advisor 16 16.0 16.0 87.0 connivance ability service 13 13.0 13.0 100.0 aspects Total 100 100.0 100.062 62 BABASAB PATIL
  • 63. Comparison between traditional plan & ULIP’stick the factors of prime imporance to you while purchaging life insuran service aspects brand name advisor convinace ab product portfolio personal advisor nee Interpretation: From above table is show that respondent the factor influence while purchasing life insurance out 100 respondents’ 25% brand name, 23% product portfolio and personal advisor needs, 16% advisor convince ability, 13% service aspects. Findings  Brand Name of the company is the main reason for the advisors to join ICICI Prudential followed by product portfolio and excellent support from the company.  Almost all of them are satisfied with the services offered to them.  As the endowment products, don’t have much liquidity option most people follow the Market linked product.  Almost all respondent are investing in unit linked product in ICICI prudential life insurance. 63 63 BABASAB PATIL
  • 64. Comparison between traditional plan & ULIP’s  Risk cover is the most important factor as per the respondents followed by investment and savings.  In ICICI pru life insurance have facing lack of advertisings.  Most of the respondents are satisfied from the return, risk cover and tax savings provided by the products to its customers LIMITATION  Not single work is exception to the limitation every work every work has got its limitations. It is assumed that the sample selected represents entire population.  Another limitation of the project was that the study and the survey were conducted in Hubli city only.Suggestions  Continuous bombardment of Advertisement by ICICI Prudential as a Life Insurance Company for a common man as well as for well educated and good salaried people.  The company has concentrate increases on premium 20000-50000.  Look for the way to make customer highly satisfied with respect to returns.  Premium and initial charges to be reworked as, the customer is dissatisfied with there.64 64 BABASAB PATIL
  • 65. Comparison between traditional plan & ULIP’s Conclusion Every study and project needs to be concluded. Hence, based on the study ofICICI Prudential and its products in brief, and also conducting a survey on the customers andadvisors sales function towards the products offered and services provided by ICICIPrudential, I have arrived on a conclusion that ICICI Prudential Life’s market share stood at 11.8%, for 10-month endedJanuary 31, 2009, making it the leading private life insurance player. As on January 31, 2009,the company’s assets under management (AUM) stood at Rs 28,515 crore. The company alsohas one of the largest distribution networks amongst private life insurers in India with over2,100 branches (including 1,116 small-offices in rural India), an advisor base of over2,90,000 and 18 bancassurance partners, as on January 31, 2009. Since inception, ICICIPrudential Life has sold over 90 lakh policies. BIBLIOGRAPHY  IRDA Notes  ICICI Prudential training notes  WWW.iciciprulife.com65 65 BABASAB PATIL
  • 66. Comparison between traditional plan & ULIP’s  WWW.licindia.com  WWW.google.com  Business magazines (business times)  News papers (Economic times, Times of India). QUESATIONNAIREDear Sir/MadamPersonal information1) Name : __________________________________________2) Age : 15-20 , 20- 25 25-30 30-403) Gender : Male Female4) Contact no :____________________________5) Occupation : Government employee Private employee Student Businessman Others66 66 BABASAB PATIL
  • 67. Comparison between traditional plan & ULIP’s6) Annual income: Less than 100,000 1,00,000-2,00,000 3,00,000-4,00,000 4,00,000 & above7) Address:_____________________________________________________________________________________________________8) Why did you go with ICICI Prudential? a) Brand Name b) Product Portfolio c) Advisor’s Convincing ability d) Advertisements e) Friends/ Relatives f) Others-------------------------9) Your saving consist of. a) Post office b) Bank F. D c) Shares d) Land / Building e) Life insurance f) Gold10) Which of the following insurance plan you have? a. Smart kid c. Life Time gold b. Cash Back d. Retirement Solution If others specify ______________________________11) How much of premium amount of policy you have? a. 5000-10,000 c. 10,000-20,00067 67 BABASAB PATIL
  • 68. Comparison between traditional plan & ULIP’s b. 20,000-50,000 d. 50,000& above12) How did you know about the life insurance life ? a. Magazines/news papers b. Television c. Advisors d. Friends e. Relatives13) Are you aware of ULIP s and Traditional plan at ICICI prudential life insurance Company ? Yes No14) In which company have you invested? a. LIC b. ICICI prudential life insurance c. Bajaj Allianz d. Reliance life insurance e. Others15) For what purpose you invested in that company? a. Tax saving b. Risk cover c. Returns d. Safety e Others 16) Which of the following Invested plan would you prefer? a. Traditiononal plan68 68 BABASAB PATIL
  • 69. Comparison between traditional plan & ULIP’s b. Unit linked Insurance 17) Have you invested in this plan? Yes No 18) If yes, why did you give importance in this plan? a. Returns b. Withdrawals c Charges d. Premium e Other19) Rank the Unit linked insurance plan? Excellent very good Average Bad Wast 20) How much invested in unit linked plan ? 1) 10000 -50000 2) 50000- 1 lack 2) 1 lack -5 lack 3) 5 lack above 21) You have invested in life insurance because of 1) Life security for our self 2) For protect for your family members 3) For retirement benefit 4) For children benefit 5) For investment only 22) Tick the factor/s of prime importance to you while purchasing a life Insurance Plan. a) Brand Name b) Product Portfolio 69 69 BABASAB PATIL
  • 70. Comparison between traditional plan & ULIP’s c) Personal financial needs d) Advisor’s Convincing ability e) Service Aspects f) Others________________ Thank you sir70 70 BABASAB PATIL