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  1. 1. A REPORT ON “A Comparative Study and Analysis of Unit LinkedInsurance Plans (ULIPs)-An IDBI FORTIS Perspective” BY C. JOHN WILLIAMS (08BSHYD0323) IDBI FORTIS LIFE INSURANCE COMPANY Submitted to: Prof.S.Subramanian Date of Submission: 16th May 2009
  2. 2. AUTHORISATIONThis report “A Comparative Analysis of Unit Linked Insurance Plans (ULIPs) – An IDBI FORTISPerspective” done during my Summer Internship Program (SIP) is submitted as a partialfulfillment of the requirement of MBA program of ICFAI Business School (IBS), Hyderabad. 16th May 2009 C.JOHN WILLIAMS ICFAI BUSINESS SCHOOL-HYDERABAD Page 2
  3. 3. ACKNOWLEDGEMENTSI would like to express my sincere gratitude to my company guide Ms.Shanthi Yagyanath,Agency Manager -IDBI Fortis Life Insurance Company, Coimbatore for guiding me throughoutmy summer internship and research project. Her encouragement, time and effort are greatlyappreciated. I would then like to thank my faculty guide, Prof. S Subramanian, for all his valuable inputs andconstant support towards me throughout my project and providing me an opportunity to learnoutside the class room. It was a truly wonderful learning experience.I would like to thank the training heads Mr.Anand, Ms Sudha and Sales executive Ms Priya forhelping me with the training and other activities and constantly motivating me to give my best.I would like to dedicate this project to my parents. Without their help and constant support thisproject would not have been possible.I would like to thank all my friends who did their SIP from IDBI FORTIS for their valuablesuggestions and support.Last but not the least I would like to thank all the respondents who offered their opinions andsuggestions and sometimes critical views throughout the survey which made me constantlyupdate myself come out with a successful project. ICFAI BUSINESS SCHOOL-HYDERABAD Page 3
  4. 4. TABLE OF CONTENTSAUTHORISATION ..........................................................................................................................2ACKNOWLEDGEMENTS ................................................................................................................3ABSRACT .......................................................................................................................................6LIST OF ILLUSTRATIONS ................................................................................................................8INTRODUCTION ..........................................................................................................................10PURPOSE ....................................................................................................................................12SCOPE OF THE STUDY .................................................................................................................12OBJECTIVES OF THE PROJECT .....................................................................................................12LIMITATIONS OF THE STUDY ......................................................................................................12METHODOLOGY .........................................................................................................................13SOURCES OF DATA .....................................................................................................................14LITERATURE STUDY ....................................................................................................................14INSURANCE.................................................................................................................................15CHARACTERISTICS OF INSURANCE .............................................................................................15HISTORY OF INDIAN INSURANCE ...............................................................................................15INSURANCE MARKET - PRESENT ................................................................................................16CAPITAL REQUIREMENTS AND FOREIGN PARTICIPATION .........................................................17LIFE INSURANCE .........................................................................................................................18COMPANY PROFILE ....................................................................................................................21ABOUT IDBI FORTIS ....................................................................................................................21PRODUCT RANGE OF IDBI FORTIS ..............................................................................................23UNIT LINKED INSURANCE PLANS................................................................................................24STRUCTURE OF ULIPs .................................................................................................................24TYPES OF FUNDS UNDER ULIPs ..................................................................................................27ADVANTAGES OF ULIPS ..............................................................................................................28FACTORS INFLUENCING THE BUYING OF UNIT LINKEDINSURANCE PLAN (ULIPs) .....................29UNIT LINKED INSURANCE PLANS (ULIPs) OF DIFFERENT COMPANIES.......................................30IDBI FORTIS LIFE INSURANCE COMPANY ...................................................................................30COMPARITIVE SECONDARY DATA ANALYISIS.............................................................................31 ICFAI BUSINESS SCHOOL-HYDERABAD Page 4
  5. 5. TATA AIG LIFE INSURANCE COMPANY .......................................................................................31BAJAJ ALLIANZ LIFE INSURANCE COMPANY ...............................................................................33LIFE INSURANCE CORPORTAION (LIC) OF INDIA ........................................................................35HDFC STANDARD LIFE INSURANCE COMPANY ..........................................................................37ICICI PRUDENTIAL LIFE INSURANCE COMPANY .........................................................................39PERFORMANCE OF ULIPs OF THE SELECTED COMPANIES .........................................................44PRIMARY DATA ANALYSIS ..........................................................................................................48MERITS AND DE-MERITS OF IDBI FORTIS LIFE INSURANCE COMPANY ......................................57MERITS .......................................................................................................................................57DEMERITS ...................................................................................................................................57POSITIONING ..............................................................................................................................59POSITIONING STRATEGIES..........................................................................................................59POSITIONING STRATEGIES OF IDBI FORTIS ................................................................................60FINDINGS ....................................................................................................................................63RECOMMENDATIONS .................................................................................................................64MY EXPERINECES AND LEARNINGS ............................................................................................66CONCLUSION ..............................................................................................................................66ANNEXURE - I (QUESTIONNAIRE) ...............................................................................................69ANNEXURE - II (FACTOR ANALYSIS OUTPUT [SPSS]) ..................................................................73ANNEXURE - III (SCHEDULE OF THE PROJECT) ...........................................................................79REFERENCES ...............................................................................................................................80 ICFAI BUSINESS SCHOOL-HYDERABAD Page 5
  6. 6. ABSRACTThe project aims to make a detailed study of Unit Linked Insurance Plans (ULIPs) in the Indiancontext, a comparative analysis of ULIPs of some well known selected companies and in theprocess identify the strengths and weaknesses of IDBI FORTIS.The different selected companies apart from IDBI FORTIS on which the project is entirelyfocused are namely: a. ICICI PRUDENTIAL b. BAJAJ ALLIANZ c. TATA AIG LIFE d. LIFE INSURANCE CORPORATION OF INDIA e. HDFC STANDARD LIFE The comparative study is primarily based in terms of the various benefits offered viz. DeathBenefits, Health benefits, Maturity Benefits, financial benefits & other benefits. The variousparameters taken into consideration were flexibility, transparency, liquidity and the number offunds options available.The project consists of a detailed analysis of the comparison of various ULIPs of IDBI FORTISwith that of the selected major players in the market. The results of the project have been anoutcome of a detailed analysis of collected secondary data and well supported by analysis ofprimary data collected through a survey in the Hyderabad city. The project required me todesign a questionnaire and conduct a primary survey. The survey was mainly conducted tostudy the consumer perception, opinion and awareness of various insurance products. Thenumber of respondents targeted was 133.The sample of respondents included was carefullyselected targeting respondents from all age groups. Also the preferences of the respondentstowards these selected insurance companies have been noted and the reasons analyzed. Thedata gathered from the primary survey was coded in a statistical tool called as StatisticalPackage for Social Science (SPSS) for analysis and to find various factors that affect an investordecisions while choosing an investment option in this vast market. Finally we interpreted the results of the project by combining both the primary and thesecondary data analyses then identified the areas where the company is really strong and theareas where it needs to have a second look.We have also found out the amount to which each of the selected companies was affected dueto the market slow down in the last one yearThe project also involved a complete study of the positioning strategies adopted by IBDI FORTISin general. This includes a detailed study of the various advertising strategies as well. ICFAI BUSINESS SCHOOL-HYDERABAD Page 6
  7. 7. The sole objective of this study was to understand the strategies being adopted by the companyto counter the highly efficient stronger players in the market and survive with success.Finally after a detailed study we have found out the merits and demerits of the IDBI FORTIS andbased on those we have given some recommendations to the company in areas where thecompany to has to really work on. The Project helped me enhance my knowledge on various technicalities of the Indian insuranceindustry and gave me a broader prospective of various investment opportunities available inthe market. Marketing concepts learnt in the classroom were implemented in a real lifeenvironment. ICFAI BUSINESS SCHOOL-HYDERABAD Page 7
  8. 8. LIST OF ILLUSTRATIONSFigure 1: The trend of the Indian insurance industry ($Bn) 2000-2011 .................................17Table 1 : The list of life insurance companies in India ............................................................18Figure 2 : The market share of the Indian Life Insurance industry ........................................19Figure 3 : Premium break -up under ULIPs .............................................................................. 24Table 2 : Types of funds under ULIPs ...................................................................................... 26Figure 4 : Advantages of Unit Linked Insurance Plans ............................................................31Table 3 : NAVs of HDFC Standard Life .................................................................................... 43Figure 5 : NAVs of HDFC Standard Life ..................................................................................... 43Table 4 : NAVs of Bajaj Allianz ................................................................................................ 44Figure 6 : NAVs of Bajaj Allianz .................................................................................................. 44Table 5 : NAVs of ICICI Prudential ........................................................................................... 44Figure 7 : NAVs of ICICI Prudential ......................................................................................... 44Table 6 : NAVs of LIC ............................................................................................................... 45Figure 8 : NAVs of LIC ............................................................................................................... 45Table 7 : NAVs of IDBI FORTIS ................................................................................................. 45Figure 9 : NAVs of IDBI FORTIS ................................................................................................. 45Table 8 : NAVs of Tata-AIG ..................................................................................................... 46Figure 10 : NAVs of Tata-AIG .................................................................................................... 46Table 9 : Percentage change in NAVs of various companies due to recession ...................... 46Figure 11 : Percentage change in NAVs of various companies due to recession ..................... 46Figure 12 : Break-up of respondents between different age groups ....................................... 47Figure 13 : Break-up of respondents by their occupations ........................................................ 48Figure 14 : Break-up of respondents based on their preferences for various savingsinstruments .............................................................................................................................. 48Figure 15 : Break-up of respondents based on factors influencing their decision ................. 49Figure 16 : Break-up of respondents based on preferences for various forms of investment ... 49Figure 17 : Break-down of respondents based on their frequencies of investment ............50Figure 18 : Break-down of respondents who own/do not own an insurance policy ................ 50 ICFAI BUSINESS SCHOOL-HYDERABAD Page 8
  9. 9. Figure 19 : Break-down of respondents who rated risk involved in ULIPs ............................... 50Figure 20 : Break-down of respondents who own insurance policies in various life insurancecompanies ............................................................................................................................ 51Figure 21 : Rating scale of selected insurance companies ...................................................... 52 Figure 22 : Break-down of respondents with different perceptions about the term“WEALTHSURANCE” .............................................................................................................. 52 Figure 23 : Break-down respondents with various responses about the future ofIDBI Fortis ..............................................................................................................................53Table 10 : Average frequency of investments among different age groups ............................ 353Figure 24 : Average frequency of investments among different age groups ........................54Table 11 : Age and Frequency of investment (Chi-Square table) ........................................54Table 12 : KMO and Bartlett’s test of sphericity ..................................................................55Table 13 : The prominent factors influencing the consumer’s investment decision ........... 55Table 14 : List of the cities with IDBI Fortis presence ..............................................................59 ICFAI BUSINESS SCHOOL-HYDERABAD Page 9
  10. 10. INTRODUCTIONIn the commercial arena, the choice of an effective strategy is perhaps the most important andthe toughest decision to take. The decision to select among the grand strategies and decidingupon which strategy will best meet the enterprise’s objectives is rendered complex by multipleconsiderations. The same is also true with the insurance companies in India who are constantlyrevamping their strategies and coming out with innovative options to stay in the competition.There were days when Life Insurance Corporation of India (LIC) was the only insurance companyavailable to people in India and where people synonymised Insurance to LIC. Also since it was aPublic Sector Undertaking (PSU) it has a great support from people. But now times havechanged a lot of private players have entered into the fray. There have been a lot of Indiancompanies collaborating with foreign insurance giants like ICICI Prudential, Bajaj Allianz etcwho have already made their presence felt in the Indian Insurance industry.Even though LIC is still the market leader with more than over 60% of the market share, theprivate players are giving it a tough time. Since the last decade the market share of LIC hadfallen down by about more than 20%.The new private players have started offering a variety of unlimited schemes right frominsurance plans for a 30 day old baby to that of a 70 year old senior citizen. Also the privatecompanies have started creating the importance and need of insurance in today’s life. Theyhave started positioning their brands and are marketing their products in such a way thepeople have started feeling the need of security in their lives.Taking into account the huge population and growing per capita income besides several otherdriving factors, a huge opportunity is in store for the insurance companies in India. According tothe latest research findings, nearly 80% of Indian population are without life insurance coverwhile health insurance and non-life insurance continues to be below international standards.And this part of the population is also subjected to weak social security and pension systemswith hardly any old age income security. As per our findings, insurance in India is primarily usedas a means to improve personal finances and for income tax planning; Indians have a tendencyto invest in properties and gold followed by bank deposits. They selectively invest in shares alsobut the percentage is very small (4-5%). This in itself is an indicator that growth potential forthe insurance sector is immense. Its a business growing at the rate of 15-20% per annum andpresently is of the order of around more than $55 billion.India is a vast market for life insurance that is directly proportional to the growth in premiumsand an increase in life density. With the entry of private sector players backed by foreignexpertise, Indian insurance market has become more vibrant. ICFAI BUSINESS SCHOOL-HYDERABAD Page 10
  11. 11. Competition in this market is increasing with companys’ continuous effort to lure thecustomers with new product offerings. However, the market share of private insurancecompanies remains low in the 25-35% range. Even to this day, Life Insurance Corporation (LIC)of India dominates Indian insurance sector. The heavy hand of government still dominates themarket, with price controls, limits on ownership, and other restraints. They private players arestill in their initial days and would take some more time to capture a good market share. Atpresent they are coming up with new and innovative ideas.Since the last decade the life insurance industry in India has been growing very fast and manynew companies have entered this business insurance. The Indian life insurance industry hasrecorded a robust growth of more than 16 per cent for the nine-month period which ended onDecember 31, 2008.It is expected to grow at an amazing rate of 20 per cent this year Also inthe present scenario the most sought after insurance plans are the Unit Linked insurance Plans(ULIPs).A ULIP is a life insurance policy which provides a combination of risk cover and investment.ULIPs have gained high acceptance due to attractive features they offer like flexibility,transparency, liquidity and a vast variety of fund option. Unit linked plans are suitable for allcustomer profiles; however as a general belief the risk averse investors tend to choosetraditional plans and an informed customer prefers a ULIP. ULIPs offer the kind of flexibilitythat no insurance product can. ULIPs essentially combine the benefits of an insurance policyand a market-linked investment. Investors can select a ULIP with an equity-debt combinationthat is in line with their risk profile. A risk-taking investor would typically select one with a highequity component, while a risk-averse investor would opt for a debt-heavy one. Simplyput, ULIPs are structured in such a way that the protection element and the savings elementare distinguishable, and hence managed according to your specific needs. In this way,the ULIP plan offers unprecedented flexibility and transparency.So with many players around for a company to really be successful it has to really be veryefficient on all fronts. It has to constantly adapt to the changing consumer preferences with alot of new innovations and implementing new technology try to different from the lot.Especially if it is a new player in the market the company has to really work very hard to getinto the completion and stay afloat. ICFAI BUSINESS SCHOOL-HYDERABAD Page 11
  12. 12. PURPOSEThe project is being done as a part of summer internship program of ICFAI Business School-Hyderabad. The completion of the project is a partial fulfillment requirement for being awardedthe Masters in Business Administration (MBA) degree from the university.SCOPE OF THE STUDYThis study aims to make a comparative study of the Unit Linked Insurance Plans (ULIPs) of IDBIFORTIS Life Insurance Company with that of some major selected players in the Indianinsurance market and study the consumer perception towards various insurance products. Thecomparative analysis is based on the empirical data collected from the Hyderabad city. Thestudy also aims to discuss in detail the various positioning strategies adopted by IDBI FORTIS ingeneral.OBJECTIVES OF THE PROJECT a. To compare the Unit Linked Insurance Plans (ULIPs) of IDBI FORTIS with that of some other selected companies. b. To identify the strengths and weaknesses of IDBI FORTIS and suggest areas where it could focus more and improve upon. c. To study the consumer perception towards various insurance products. d. To study in detail the positioning strategies of brand IDBI FORTIS in general.LIMITATIONS OF THE STUDY a. The study is confined only to a small segment of the entire population due to monetary and time constraints and hence the results are applicable only to the city of Hyderabad. b. The scope of the project is limited to conceptual and marketing aspects of Life Insurance Companies and doesn’t include Claim Settlement and the underwriting part of the operations which are equally important aspect of learning. c. It is not always possible to evaluate companies under similar parameters since many companies deal with various businesses thus clubbing all the companies on the same parameters is not always possible. ICFAI BUSINESS SCHOOL-HYDERABAD Page 12
  13. 13. METHODOLOGYThe techniques used for data collection are: A. Internet surveys and B. Questionnaire methodThe following methodology has been followed to achieve the objectives of the project. Step: 1 Developing a right research design and timeline for the project. Step: 2 Collecting Secondary data of the insurance Industry Step: 3 Designing of the Questionnaire Step: 4 Analysis of secondary data Step: 5 Pilot Study Step: 6 Collection of primary data-Questionnaires and internet surveys Step: 7 Analysis of primary data Step: 8 Study of positioning strategies of IDBI FORTIS Step: 9 Interpretation of the results Step: 10 Preparation of the final report ICFAI BUSINESS SCHOOL-HYDERABAD Page 13
  14. 14. SOURCES OF DATAIn the data collection method, we have collected both primary and secondary data to meet ourobjectivesPrimary DataThe primary data was collected by a survey based on the questionnaire. It was formulated onthe basis of information carefully gathered by me about the various mindsets of the people.This questionnaire was mainly formulated to target the common man to see his perception andawareness of various investment options available. The number of respondents targeted wasaround 150 and the survey was confined to Hyderabad city.Secondary DataThe secondary data was collected directly from the companies and their websites and internetsurveys. Also a lot of similar research studies and journals have been referred to.LITERATURE STUDYTill today a lot of research has been done on the Indian insurance industry especially the lifeinsurance sector. The material for this study was collected from various internet sites, journalsand books by various authors. Similar research has been carried out by Sathak Mohanty whoworked on the risk profile of ULIPs and analyzed insurance as an investment option. He saysthat Life Insurance Corporation of India (LIC) is still the undisputed leader in the Indian context.According to Anita Gupta-director, marketing and communication, ING Vysa Life insuranceULIPs are suitable for all types of customers, right from the lower class to the premium class.Also according to the Financial express (Dated 12th April, 2009) ULIPs are flexible to the core.During the course of the project some official studies on the products of Tata-AIG and HDFCstandard Life have been referred to. Also the books on Marketing Management by Philip Kotlerand that of Marketing Research by Naresh Malhotra were referred to gain a deeper insight onpositioning strategies and marketing research techniques. A lot of groundwork has also beendone by studying the vast range insurance products before taking up this research. ICFAI BUSINESS SCHOOL-HYDERABAD Page 14
  15. 15. INSURANCEInsurance may be described as a social device to reduce or eliminate risk of loss to life andproperty. Under the plan of insurance, a large number of people associate themselves bysharing risks attached to individuals. The risks which can be insured against include fire, theperils of sea, death and accidents and burglary. Any risk contingent upon these, may be insuredagainst at a premium commensurate with the risk involved. Thus collective bearing of risk isinsurance.CHARACTERISTICS OF INSURANCE 1. Sharing of risks 2. Cooperative device 3. Evaluation of risk 4. Payment on happening of a special event 5. The amount of payment depends on the nature of losses incurred.HISTORY OF INDIAN INSURANCEInsurance has a long history in India. Life Insurance in its current form was introduced in 1818when Oriental Life Insurance Company began its operations in India. General Insurance washowever a comparatively late entrant in 1850 when Triton Insurance company set up its base inKolkata.History of Insurance in India can be broadly bifurcated into three eras: a. Pre Nationalization b. Nationalization and c. Post NationalizationLife Insurance was the first to be nationalized in 1956. Consolidating the operations of variousinsurance companies formed Life Insurance Corporation of India. General Insurance followedsuit and was nationalized in 1973. General Insurance Corporation of India was set up as thecontrolling body with New India, United India, National and Oriental as its subsidiaries. Theprocess of opening up the insurance sector was initiated against the background of EconomicReform process, which commenced from 1991. For this purpose Malhotra Committee wasformed during this year who submitted their report in 1994 and Insurance RegulatoryDevelopment Act (IRDA) was passed in 1999. Resultantly Indian Insurance was opened forprivate companies and Private Insurance Company effectively started operations from 2001.(Source: www.irdaindia.org) ICFAI BUSINESS SCHOOL-HYDERABAD Page 15
  16. 16. INSURANCE MARKET - PRESENTThe insurance sector was opened up for private participation a decade back. For years now, theprivate players are active in the liberalized environment. The insurance market has witnesseddynamic changes, which include presence of a fairly large number of insurers both life, andnon-life segment. Most of the private insurance companies have formed joint venturepartnering well-recognized foreign players across the globe.The Indian life insurance market generated total revenues of $41.36 billion in 2007, thusRepresenting a compound annual growth rate (CAGR) of 11.84% for the period spanning 2000-2007. Life insurance market had a growth of $22.46 billion within a period of 7 years with agrowth rate of 118.24%. Estimated life premiums rose to INR 1,470,800 million ($36.77 billion)in 2006 from INR 1,301,540 million ($32.54billion) in 2005. We envisage that life premiums in2011 will be $65.96 billion, a growth larger than they were in 2007. The performance of themarket is forecast to accelerate, with an anticipated CAGR of 9.78% for the four-year period2007-2011 expected to drive the market to a value of $65.96 billion by the end of 2011. Therewould be a growth of $24.6 billion i.e. 59.48% in the next 4 years.Non-life premiums in India were $6.53 billion in 2007. Gross written premium (GWP) in theIndian non-life insurance market reached a value of $5.75 billion in 2006, this representing anannual growth of 13.55% for the period spanning 2006-2007. Estimated non-life premiums rosefrom INR230 billion ($5.75 billion) in 2006 to INR261 billion ($6.53 billion) in 2007.We anticipate that non-life premiums will grow by a CAGR of 9.40% between 2007-2011. Weare looking for non-life premiums to rise by $405 million over the five years to the end of 2011with a growth rate of 62.02%. (Source: http://www.scribd.com/doc/4996143/OVERVIEW-OF-INSURANCE-SECTOR-INDIA,http://www.indiaprwire.com/pdf/pressrelease/200805079347.pdf)With a huge population base and large untapped market, insurance industry is a bigopportunity area in India for national as well as foreign investors. India is the fifth largest lifeinsurance market in the emerging insurance economies globally and is growing at 32-34%annually. This impressive growth in the market has been driven by liberalization, with newplayers significantly enhancing product awareness and promoting consumer education andinformation. The strong growth potential of the country has also made international players tolook at the Indian insurance market.Moreover, saturation of insurance markets in many developed economies has made the Indianmarket more attractive for international insurance players, according to "Booming InsuranceMarket in India (2008-2011)”. ICFAI BUSINESS SCHOOL-HYDERABAD Page 16
  17. 17.  Total life insurance premium in India is projected to grow Rs 1,230,000 crore by 2010-11.  Total non-life insurance premium is expected to increase at a CAGR of 25% for the period spanning from 2008-09 to 2010-11.  With the entry of several low-cost airlines, along with fleet expansion by existing ones and increasing corporate aircraft ownership, the Indian aviation insurance market is all set to boom in a big way in coming years.  Home insurance segment is set to achieve a 100% growth as financial institutions have made home insurance obligatory for housing loan approvals.  Health insurance is poised to become the second largest business for non-life insurers after motor insurance in next three years.  A booming life insurance market has propelled the Indian life insurance agents into the ‘top 10 country list’ in terms of membership to the Million Dollar Round Table (MDRT) — an exclusive club for the highest performing life insurance agents. (Source: http://www.marketsmonitor.com/Report/IM588_related.htm)CAPITAL REQUIREMENTS AND FOREIGN PARTICIPATIONMinimum capital requirement for direct life and Non-life Insurance company is INR1000 millionand that for reinsurance company is INR2000 million. A maximum 26% foreign equity stake isallowed in direct insurance and reinsurance companies. In the 2004-05 budget, the Governmentproposed for increasing the foreign equity stake to 49%.(Source: www.irdaindia.org) ICFAI BUSINESS SCHOOL-HYDERABAD Page 17
  18. 18. LIFE INSURANCEAs is evident from its very name, it deals with insurance of human life. “Life insurancecorporation of India”- a public sector undertaking has the monopoly in this sector since itsnationalization.In our wordily life, whenever there is uncertainty, there is an involvement of risk. The instinctfor security against such risk is one of the basic motivating forces determining human attitudes.As a squeal to this quest for Security, the concept of insurance must have been born. The urgeto provide insurance or protection against the loss of life & property must have promptedpeople to make some sort of sacrifice willingly in order to achieve security through“COLLECTIVE CO-OPERATION”, in this sense; story of insurance is probably as old as the story ofmankind.All life insurance companies in India have to comply with the strict regulations laid out byInsurance Regulatory and Development Authority of India (IRDA). Therefore there is no risk ingoing in for private insurance players. In terms of being rated for financial strength likeinternational players, only ICICI Prudential is rated by Fitch India at National Insurer FinancialStrength Rating of AAA (Ind) with stable outlook indicating the highest claims paying abilityrating. 90.00 80.00 70.00 60.00 50.00 Life 40.00 Non-life 30.00 20.00 10.00 0.00 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Figure 1: The trend of the Indian insurance industry ($Bn) 2000-2011 (Source: The knowledge Centre)Life Insurance Corporation of India (LIC), the state owned behemoth, remains by far the largestplayer in the market. Among the private sector players, ICICI Prudential Life Insurance(JVbetween ICICI Bank and Prudential PLC)is the largest followed by Bajaj Allianz Life InsuranceCompany Limited (JV between Bajaj Group and Allianz). ICFAI BUSINESS SCHOOL-HYDERABAD Page 18
  19. 19. The private companies are coming out with better products which are more beneficial to thecustomer. Among such products are the ULIPs or the Unit Linked Insurance Plans which offerboth life cover as well as scope for savings or investment options as the customer desires.Further, these types of plans are subject to a minimum lock-in period of three years to preventmisuse of the significant tax benefits offered to such plans under the Income Tax Act.Unlike the mutual fund product that has a very simple cost structure, ULIPs carry a greaternumber of costs (administration and mortality), in addition to the others. So comparing ULIPswith mutual funds is erroneous.(Source: http://www.scribd.com/doc/136703/Indian-Insurance-Changing-Trends-and-a-Fresh-Perspective)Right now there are a total twenty two life insurance companies operating in India, of whichone (Life Insurance Corporation) is a Public Sector Undertaking and the remaining twenty areall private sector enterprises. (Source: www.irdaindia.org) List of life insurance companies in India 1. AEGON RELIGARE 2. AVIVA 3. BAJAJ ALLIAZ 4. BHARATHI AXA 5. BIRLA SUN LIFE 6. FUTURE GENERALI 7. HDFC STANDARD LIFE 8. HSBC 9. ICICI PRUDENTIAL 10. IDBI FORTIS 11. ING VYSYA 12. KOTAK LIFE INSURANCE 13. LIC 14. MAX NEWYORK LIFE 15. MET LIFE 16. RELIANCE LIFE 17. SAHARA INDIA 18. SBI LIFE 19. SHRIRAM LIFE 20. TATA AIG LIFE 21. DLF PRAMERICA 22. CANARA HSBC OBC Table 1: The list of life insurance companies in India ICFAI BUSINESS SCHOOL-HYDERABAD Page 19
  20. 20. MARKET SHARE 2% LIC 1% 3% 2% ICICI Prudential 6% Bajaj Allianz 3% SBI Life 3% Reliance 7% HDFC Standard Life Birla Sun Life 9% 64% Max Newyork Kotak Mahindra OthersFigure 2: The market share of the Indian Life Insurance industry (figures are approximate) (Source: As per a report published in 2008 by Ms Pinky Walia-Financial Advisor) ICFAI BUSINESS SCHOOL-HYDERABAD Page 20
  21. 21. COMPANY PROFILEABOUT IDBI FORTISIDBI Fortis Life Insurance Co Ltd is a joint venturebetween three leading financial conglomerates – India’s premier development and commercialbank, IDBI Bank, one of India’s leading private sector banks, Federal Bank and Europe’s bankingand insurance giant, Fortis, each of which enjoys a significant status in their respective businesssegments. In this venture, IDBI Bank owns 48% equity while Federal Bank and Fortis own 26%equity each.IDBI Fortis launched its first set of products across India in March 2008, after receiving therequisite approvals from the Insurance Regulatory Development Authority (IRDA). The companyoffers its services through a vast nationwide network across the branches of IDBI Bank andFederal Bank in addition to a sizeable network of advisors and partners.At IDBI Fortis, people endeavor to deliver products that provide value and convenience to thecustomer. Through a continuous process of innovation in product and service delivery thecompany intends to deliver world-class wealth management, protection and retirementsolutions to Indian customersIDBI Ltd. continues to be, since its inception, India’s premier industrial development bank.Created in 1956 to support India’s industrial backbone, IDBI has since evolved into apowerhouse of industrial and retail finance. Today, it is amongst India’s foremost commercialbanks, with a wide range of innovative products and services, serving retail and corporatecustomers in all corners of the country from over 490 branches and more than 600 ATMs. TheBank offers its customers an extensive range of diversified services including project financing,term lending, working capital facilities, lease finance, venture capital, loan syndication,corporate advisory services and legal and technical advisory services to its corporate clients aswell as mortgages and personal loans to its retail clients. As part of its development activities,IDBI has been instrumental in sponsoring the development of key institutions involved in India’sfinancial sector – such as the Securities and Exchange Board of India (SEBI), National StockExchange of India Limited (NSE) and National Securities Depository Ltd.Federal Bank is one of India’s leading private sector banks, with a national network anddominant presence in the state of Kerala. It has a strong network of over 550 branches and 450ATMs spread across India. The bank provides over four million retail customers with a widevariety of financial products. Federal Bank is one of the first large Indian banks to have anentirely automated and interconnected branch network. They operate on the core bankingplatform and are RTGS/ NEFT enabled through which the Bank offers state-of-the-arttechnology enabled products and services. ICFAI BUSINESS SCHOOL-HYDERABAD Page 21
  22. 22. In addition to interconnected branches and ATMs, the Bank has a wide range of services likeInternet Banking, Mobile Banking, Tele Banking, Any Where Banking, debit cards, co-brandedcredit cards, online bill payment and call centre facilities to offer round the clock bankingconvenience to its customers. The Bank has been a pioneer in providing innovativetechnological solutions to its customers and the Bank has won several awards andrecommendations.Fortis, a European financial services provider engaged in banking and insurance with apresence in over 50 countries, offers its personal, business and institutional customers acomprehensive package of products and services through its own channels, in collaborationwith intermediaries and through other distribution partners. With a market capitalization ofover EUR 40 billion, Fortis ranks among the 20 largest financial institutions in Europe. Fortis’sound solvency position and dedicated, professional workforce of over 80,000, enables it tocombine global strength with local flexibility to provide its clients with optimum support andservice.VISIONTo be the leading provider of wealth management, protection and retirement solutions thatmeets the needs of our customers and adds value to their lives.MISSIONTo continually strive to enhance customer experience through innovative product offerings,dedicated relationship management and superior service delivery while striving to interact withour customers in the most convenient and cost effective manner.To be transparent in the way we deal with our customers and to act with integrity.To invest in and build quality human capital in order to achieve the mission.VALUES Transparency: Crystal Clear communication to our partners and stakeholders Value to Customers: A product and service offering in which customers perceive value Rock Solid and Delivery on Promise: This translates into being financially strong, operationally robust and having clarity in claims. Customer-friendly: Advice and support in working with customers and partners. Profit to Stakeholders: Balance the interests of customers, partners, employees, shareholder sand the community at large ICFAI BUSINESS SCHOOL-HYDERABAD Page 22
  23. 23. PRODUCT RANGE OF IDBI FORTISIDBI Fortis offers a variety of products targeting every customer right from a 3 month child to a70 year senior citizen. All the products have been classified majorly under four plans namely Wealthsurance Homesurance Bondsurance RetiresuranceWEALTHSURANCEThe Wealthsurance Foundation Plan enables the customer to save and build wealth to meetyour financial goals. However, unlike other investment alternatives, it also enables him toachieve his wealth goals even in the event of unexpected death, accidents, disablement orserious illness. The Wealthsurance Foundation Plan can ensure that his plans for wealthcreation are achieved by protecting that plan with insurance benefits.HOMESURANCEThe Homesurance Protection Plan is a reducing term plan, which provides insurance coverequal to the outstanding balance of your home loan. In the unfortunate event of death of thehome loan borrower, the insurance cover enables repayment of the home loan liability.BONDSURANCEBondsurance is a single premium plan which allows you to make a one-time investment and geta guaranteed amount on maturity. You can choose a maturity period of 5 or 10 years for yourinvestment. At the end of the chosen period, you will receive a guaranteed maturity amount.Besides the guaranteed maturity amount, Bondsurance also provides a life insurance cover. Incase of death before the maturity date, a Death Benefit which is also guaranteed will be paid.Thus you can get life insurance cover, while earning an assured return on your investment.RETIRESURANCERetiresurance is a pension plan without life cover that allows a longer policy term so that thecustomer’s investments can get the benefit of compounding. The customer has to choose anyvesting age between 40-75 yrs. The vesting age chosen can also be postponed or preponedwithin the above range by informing the company 30 days in advance. It is especially for peoplewho wish to lead a happy and prosperous life even after their retirement.(Source:www.idbifortis.com) ICFAI BUSINESS SCHOOL-HYDERABAD Page 23
  24. 24. UNIT LINKED INSURANCE PLANSUnit linked insurance plan (ULIP) is a life insurance solution that provides the client with thebenefits of protection and flexibility in investment. It is a solution which provides for lifeinsurance where the policy value at any time varies according to the value of the underlyingassets at the time. The investment is denoted as unit and is represented by the value that it hasattained called as Net Asset Value (NAV).ULIPs are a category of goal-based financial solutions that combine the safety of insuranceprotection with wealth creation opportunities. In ULIPs, a part of the investment goes towardsproviding a life cover. The residual portion of the ULIP is invested in a fund which in turn investsin stocks or bonds; the value of investments alters with the performance of the underlying fundopted by the customer.Simply put, ULIPs are structured in such that the protection element and the savings elementare distinguishable, and hence managed according to your specific needs. In this way,the ULIP plan offers unprecedented flexibility and transparency.ULIPs came into play in 1960s and became very popular in Western Europe and America. Thereason that is attributed to the wide spread popularity of ULIP is because of the transparencyand the flexibility which it offers to the clients.As time progressed the plans were also successfully mapped along with life insurance needs toretirement planning .In today’s times ULIP provides solution for all the needs of a client likeinsurance planning, financial needs, financial planning for children’s future and retirementplanning.( Source:http://www.scribd.com/doc/7216240/Understand-ULIP-Insurance)STRUCTURE OF ULIPsULIPs offered by different insurers have varying charge structures. Broadly the different typesof fees and charges are given below. However the insurers have the right to revise or cancel thefees and charges over a period of time( Source: http://www.scribd.com/doc/7044410/ULIPs)Premium Allocation chargesThis is a percentage of the premium appropriated towards charges before allocating the unitsunder the policy. This charge normally includes initial and renewal expenses apart fromcommission expenses. ICFAI BUSINESS SCHOOL-HYDERABAD Page 24
  25. 25. Mortality ChargesThese are charges to provide for the cost of insurance coverage under the plan. Mortalitycharges depend on number of factors such as age, amount of coverage, state of health etc.Fund Management ChargesThese are fees levied for management of the fund(s) and are deducted before arriving at theNet Asset Value (NAV) .Policy/ Administration ChargesThese are the fees for administration of the plan and levied by cancellation of units. This couldbe flat throughout the policy term or vary at a pre-determined rate PREMIUM LESS CHARGES INVESTMENT LIFE COVER REPRESENTED AS UNITS Fund ULIPs Structure Management Mortality Charges Administration Charges Charges Premium Allocation Charges Invested Amount Figure 3 : Premium break -up under ULIPs ICFAI BUSINESS SCHOOL-HYDERABAD Page 25
  26. 26. Surrender ChargesA surrender charge may be deducted for premature partial or full encashment of unitswherever applicable, as mentioned in the policy conditions.Fund Switching ChargeGenerally a limited number of fund switches may be allowed each year without charge, withsubsequent switches, subject to a charge. But now a days many insurers offer fund switchingfree of cost.Service Tax DeductionsBefore allotment of the units the applicable service tax is deducted from the risk portion of thepremium. ICFAI BUSINESS SCHOOL-HYDERABAD Page 26
  27. 27. TYPES OF FUNDS UNDER ULIPsMost insurers offer a wide range of funds to suit one’s investment objectives, risk profile andtime horizons. Different funds have different risk profiles. The potential for returns also variesfrom fund to fund. The following are some of the common types of funds available along withan indication of their risk characteristics.(Source: www.irdaindia.org)General description Nature of investments Risk categoryEquity Funds Primarily invested in company Medium to High stocks with the general aim of capital appreciation.Income, Fixed Interest and Invested in corporate bonds, MediumBond Funds government securities and other fixed income instruments.Cash Funds Sometimes known as Money Low Market Funds — invested in cash, bank deposits and money market instrumentsBalanced Funds Combining equity investment Medium with fixed interest instruments Table 2: Types of funds under ULIPs ICFAI BUSINESS SCHOOL-HYDERABAD Page 27
  28. 28. ADVANTAGES OF ULIPSULIP distinguishes itself through the multiple benefits that it provides to the consumer. The planis a one stop solution for everything the customers want. Unit Linked Insurance Plans (ULIPs)are different from traditional plans purely because, they are much more transparent, variouscharges are shared with the customer before the sale of the product, so as to enable thecustomer to make an informed decision. (Source:www.scribd.com/doc/7044410/ULIPs)Customers have the flexibility to choose their life cover. Also the customers have the choice ofmultiple fund options based on their risk appetite, thereby enabling an investor to make thedesired returns from the investment.The following are some of the advantages of Unit linked plans: a. Life protection b. Investment and Savings  Market linked fund based on risk profile  Switch option  Premium redirection  Automatic Transfer Plan(ATP) c. Tax Planning d. Flexibility of cover continuance e. Transparency f. Extra protection with riders  Death due to accident  Disability  Critical illness g. Liquidity  Partial withdrawals during the term  At maturity h. Variable investment options i. Premium holiday j. Allow Top-ups ICFAI BUSINESS SCHOOL-HYDERABAD Page 28
  29. 29. Insurance + Investment Long Term Allow Top Ups Wealth Creation Tax Benefits Riders ADVANTAGES OF ULIPS Guaranteed Transparency Capital Returns Flexibility Invest as per your risk appetite Premium Holiday Figure 4: Advantages of Unit Linked Insurance PlansFACTORS INFLUENCING THE BUYING OF UNIT LINKEDINSURANCE PLAN (ULIPs)The degree of buying of ULIPs insurance varies from person to person. It depends upon manyfactors. The factors can be classified into personal, social, economic, psychological andcompany related variables. Age and experience of policyholder are personal factors, while theco- education is a social factor. Economic factors include occupation, income and wealth, andthe psychological factors consist of perception, satisfaction about the services rendered byinsurance companies, the impact of advertisement and personal selling made by insurancecompanies on policyholders. The company related variables are the promotional efforts to sellthe policies to prospective buyers. These include advertisement and personal selling too. ICFAI BUSINESS SCHOOL-HYDERABAD Page 29
  30. 30. UNIT LINKED INSURANCE PLANS (ULIPs) OF DIFFERENT COMPANIESIDBI FORTIS LIFE INSURANCE COMPANYIDBI FORTIS different variety of schemes and a goodrange of ULIPs under the flagship banner Wealthsurance. There are a lot of other ULIPs underBondsurance, Homesurance and Retiresurance but as our study is only confined to the studyand comparative analysis of ULIPs under Wealthsurance we would just be discussing about thevarious plans under Wealthsurance. As discussed earlier the Wealthsurance Foundation Planenables the customer to save and build wealth to meet your financial goals. However, unlikeother investment alternatives, it also enables him to achieve his wealth goals even in the eventof unexpected death, accidents, disablement or serious illness.The Wealthsurance Foundation Plan can ensure that his plans for wealth creation are achievedby protecting that plan with insurance benefits. Wealthsurance is one of its kind in India. Thecompany offer 11 investment options and 8 protection benefits under the plan apart from taxbenefits (Source: www.idbifortis.com)Under Wealthsurance there are a lot of different funds available which are explained below: WEALTHSURANCEMin entry age 30 dysMax entry age 65 yrsMin premium 10000Max maturity age 75 yrsRiders ADBR,ADB,WOPR,MAJOR DISEASES BENIFIT,HOSPITAL CASH BENEFIT,TERMINAL ILLNESS BENEFITMin premium payment term 3 yrsTypes of funds EQUITY,NIFTY,Capital Guarantee, Asset Allocator, GRF,MONTHLY INT A/C,INCOME,LIQUIDAs discussed earlier we would be comparing the Unit Linked Insurance Plans (ULIPs) of thecompanies selected initially with those of IDBI FORTIS and then make a detailed analysis. Thisanalysis would be well supported by the primary data analysis and then the final results wouldbe interpreted .So here first we would be listing out various ULIPs of the selected companiesand their details. After that we make a detailed comparison with that of the plans underWealthsurance of IDBI FORTIS and explain it.So following are the details of ULIPs of various companies and the comparative analyses. ICFAI BUSINESS SCHOOL-HYDERABAD Page 30
  31. 31. COMPARITIVE SECONDARY DATA ANALYISISTATA AIG LIFE INSURANCE COMPANYTATA AIG OFFERS FOUR DIFFERENT TYES OF ULIPs a. INVEST ASSURE CARE b. INVEST ASSURE FLEXI c. INVEST ASSURE II d. INVEST ASSURE EXTRA INVEST ASSURE CARE INVEST ASSURE FLEXIMin entry age 30 dys Min entry age 30 dysMax entry age 45 yrs Max entry age 70 yrsMax Maturity age 65 Max Maturity age 80Min premium 12000 Min premium 15000No of funds 5 No of funds 7Riders ADBR,CIBR Riders ADBR,CIBRMin premium payment term NM Min premium payment term NM INVEST ASSURE II INVEST ASSURE EXTRAMin entry age 15,20,30 Min entry age 15,20,30 yrs yrsMax entry age 45 yrs Max entry age 45 yrsMax Maturity age 60 Max Maturity age 60Min premium 12000 Min premium 12000No of funds 5 No of funds 4Riders ADBR,CIBR, Riders ADBR,CIBR WOPMin premium payment term NM Min premium payment term NMADBR-Accidental Death Benefit Rider, CIBR-Critical Illness Benefit Rider, NM-Not Mentioned (Source: www.tata-aig-life.com) ICFAI BUSINESS SCHOOL-HYDERABAD Page 31
  32. 32. COMPARITIVE ANALYSIS I. Through Wealthsurance a customer can even invest at the age of 65 where as in this product if the customer is beyond 45 years he will not be allowed to invest. INVEST ASSURE CARE II. Customer can keep his money invested till the age of 75 years and take benefit of the market performance whereas here the plan matures at the age of 65. III. In Wealthsurance Free partial withdrawal starts after completion of 3 years where as in this product the customer needs to wait for 5 completed years before he can do a withdrawal IV. Wealthsurance has a Premium allocation charge of only 4% as against 50% allocation in this product V. Through Wealthsurance a customer can even invest at the age of 65 where as in this product if the INVEST ASSURE II customer is beyond 45 years he will not be allowed to invest. VI. Customer can keep his money invested till the age of 75 years and take benefit of the market performance whereas here the plan matures at the age of 60. I. Wealthsurance has a Premium allocation charge of only 4% as against 40% allocation in this product II. Through Wealthsurance a customer can even invest at the age of 65 where as in this product if the INVEST ASSURE EXTRA customer is beyond 45 years he will not be allowed to invest. III. Customer can keep his money invested till the age of 75 years and take benefit of the market performance whereas here the plan matures at the age of 60. IV. Min Entry age in Wealthsurance as 0 Years as against the Min Entry age of 15 Years I. In Wealthsurance the Min Premium amount is only Ten Thousand Rupees in comparison to Fifteen Thousand Rupees in this Product. II. Wealthsurance has a 4% allocation charge where as INVEST ASSURE FLEXI in this product the allocation charge is 16% III. Wealthsurance has different riders/protection Basket to choose from including Hospital cash benefit which gives money on a daily basis if hospitalized. ICFAI BUSINESS SCHOOL-HYDERABAD Page 32
  33. 33. BAJAJ ALLIANZ LIFE INSURANCE COMPANYBAJAJ ALLAINZ OFFERS FIVE TYES OF ULIPs a. UNIT GAIN PLUS GOLD b. UNIT GAIN PREMIER c. CENTURY PLUS d. NEW UNIT GAIN PLUS e. PENSION GUARANTEE UNIT GAIN PLUS GOLD UNIT GAIN PREMIERMin entry age 0 yrs Min entry age 0 yrsMax entry age 60 yrs Max entry age 60 yrsMax Maturity age 70 yrs Max Maturity age 70 yrsMin premium 12000 Min premium 50000No of funds 6 No of funds 3Riders 6(after 18) Riders NMMin premium payment term 3 yrs Min premium payment term 3 yrs CENTURY PLUS NEW UNIT GAIN PLUSMin entry age 8 yrs Min entry age 0 yrsMax entry age 60 yrs Max entry age 60 yrsMax Maturity age 70 yrs Max Maturity age 70 yrsMin premium 25000 Min premium 10000No of funds 7 No of funds 7Riders ADBR Riders ADBR,WOP CIBR,FIB,HCB PDBMin premium payment term 3 yrs Min premium payment term 3 yrs PENSION GUARANTEE ADBR-Accidental Death Benefit Rider,Min entry age 45 yrs CIBR-Critical Illness Benefit Rider,Max entry age 80 yrs NM-Not Mentioned,Max Maturity age NA WOP-Waiver of Premium,Min premium 25000- FIB-Family Income Benefit, purchase HCB-Hospital Cash Benefit, price PDB-Permanent Disability BenefitNo of funds NMRiders NM (Source: www.bajajallianz.com)Min premium payment term NM ICFAI BUSINESS SCHOOL-HYDERABAD Page 33
  34. 34. COMPARITIVE ANALYSIS I. Wealthsurance only has a allocation charge of only 4% in comparison to 15% in this product UNIT GAIN PLUS GOLD II. Max Entry age in Wealthsurance is 65 as against 60 of Unit Gain Gold Plus III. Wealthsurance has an Min Entry Age of 0 Years against this product where the entry age is 8 Years. IV. Min Premium in Wealthsurance is only Ten Thousand CENTURY PLUS Rupees in comparison to Twenty Five Thousand Rupees of this product. V. In Wealthsurance there is a choice of 5 riders where as in this product only one rider is available I. Wealthsurance only has a allocation charge of only NEW UNIT GAIN PLUS 4% in comparison to 55% in this product II. Max Entry age in Wealthsurance is 65 as against 60 of Unit Gain Gold Plus I. Min Premium in Wealthsurance is only Ten Thousand Rupees in comparison to Fifty Thousand Rupees of UNIT GAIN PREMIUM this product. II. Max Entry age in Wealthsurance is 65 as against this product which has a cut of 60 years. I. Wealthsurance can be customized for retirement planning. II. Customers can opt for a partial withdrawal without PENSION GUARANTEE any charges post 3 years from his fund value and use the money as pension. There is no Tax/Charges on the money withdrawn/taken as pension ICFAI BUSINESS SCHOOL-HYDERABAD Page 34
  35. 35. LIFE INSURANCE CORPORTAION (LIC) OF INDIALIC OFFERS THREE DIFFERENT TYPES OF ULIPS a. MARKET PLUS b. PROFIT PLUS (RP & SP) c. FORTUNE PLUS MARKET PLUS PROFIT PLUS(RP&SP)Min entry age 18 yrs Min entry age 0 yrsMax entry age 70 yrs Max entry age 65 yrsMax Maturity age 75 yrs Max Maturity age 70,75 yrsMin premium 5000 RP Min premium 1000 RP 10000 SP 20000 SPNo of funds 4 No of funds 4Riders ADBR Riders ADBR,CIBRMin premium payment term 5 yrs Min premium payment term 3 yrs FORTUNE PLUS Min entry age 12 yrs Max entry age 60 yrs Max Maturity age 65 yrs Min premium 20000 No of funds 4 Riders ADBR Min premium payment term 5 yrs ADBR-Accidental Death Benefit Rider, CIBR-Critical Illness Benefit Rider (Source: www.licindia.com) ICFAI BUSINESS SCHOOL-HYDERABAD Page 35
  36. 36. COMPARITIVE ANALYSIS I. Premium allocation charge is 16.5% in this product where as Wealthsurance has a charge of Max 4%. II. In Wealthsurance there is unlimited switching redirection and partial withdrawal allowed absolutely MARKET PLUS free of charge. III. There are no riders available in this product as against Wealthsurance has a host of riders to choose from. IV. After 3 years we can go for unlimited partial withdrawals as against in this product there are no partial withdrawal available I. Premium allocation charge is 15% min in this product where as Wealthsurance has a charge of Max 4%. PROFIT PLUS (RP & SP) II. In Wealthsurance there is unlimited switching redirection and partial withdrawal allowed absolutely free of charge. III. There are no riders available in this product as against Wealthsurance has a host of riders to choose from. I. Min Entry age in Wealthsurance is 0 years as against in this product it is 12 years FORTUNE PLUS II. Max entry age in Wealthsurance is 65 years as against in this product it is 60 years only. ICFAI BUSINESS SCHOOL-HYDERABAD Page 36
  37. 37. HDFC STANDARD LIFE INSURANCE COMPANYHDFC STANDARD LIFE OFEERS FOUR DIFFERENT TYPES OF ULIPs a. ENDOWMENT PLUS II b. ENHANCED LIFE PROTECTION II c. UNIT LINKED PENSION RP d. UNIT LINKED PENSION SP ENDOWMENT PLUS II ENHANCED LIFE PROTECTION IIMin entry age 18 Min entry age 18Max entry age 65 Max entry age 45Max Maturity age 75 Max Maturity age 75Min premium 12000 Min premium 12000No of funds 7 No of funds 7Riders ADBR,CIBR Riders NOMin premium payment term TERM Min premium payment term TERM UNIT LINKED PENSION RP UNIT LINKED PENSION SPMin entry age 18 Min entry age 18Max entry age 65 Max entry age 70Max Maturity age 75 Max Maturity age 75Min premium 12000 Min premium NMNo of funds 7 No of funds 7Riders NO Riders NOMin premium payment term TERM Min premium payment term TERM ADBR-Accidental Death Benefit Rider, CIBR-Critical Illness Benefit Rider (www.hdfcstandardlife.com) ICFAI BUSINESS SCHOOL-HYDERABAD Page 37
  38. 38. COMPARATIVE ANALYSIS I. Min Entry age in Wealthsurance is 0 years as against in this product it is 18 years II. Premium allocation charge is 40% in this product ENOWMENT PLUS II where as Wealthsurance has a charge of Max 4%. III. Min Premium in Wealthsurance is 10000 as against this product. IV. Min Entry age in Wealthsurance is 0 years as against in this product it is 18 years V. Premium allocation charge is 40% in this product where as Wealthsurance has a charge of Max 4%.ENHANCED LIFE PROTECTION VI. Min Premium in Wealthsurance is 10000 as II against this product. Max entry age in this product is only 45 years where as in Wealthsurance it is 65 years VII. In Wealthsurance after 3 years unlimited partial withdrawals are allowed where as in this product the customer needs to wait till the 5th year. I. There are no rider available in this product as against Wealthsurance has a host of riders to choose from. II. Allocation charge of 25% on this product and Wealthsurance has a 4% charge. UNIT LINKED PENSION RP III. Annuity is taxable where as all the funds in Wealthsurance is tax free. Wealthsurance can be customized to be a tax free retirement plan. IV. Post 3 years customers can also do unlimited partial withdrawal whenever there is a need for money without being charged or taxed. V. Min Premium in Wealthsurance is 10000 as against this product. I. There is no rider available in this product as against Wealthsurance has a host of riders to UNIT LINKED PENSION SP choose from. II. Allocation charge of 6% on this product and Wealthsurance has a 4% charge. III. Post 3 years customers can also do unlimited partial withdrawal whenever there is a need for money without being charged or taxed. IV. Min Premium in Wealthsurance is 10000 as against this product. ICFAI BUSINESS SCHOOL-HYDERABAD Page 38
  39. 39. ICICI PRUDENTIAL LIFE INSURANCE COMPANYICICI PRUDENTIAL OFFERS ELEVEN DIFFERENT TYPES OF ULIPs a. LIFE TIME GOLD b. LIFE LINK SUPER c. PREMIER LIFE GOLD d. LIFE TIME PLUS e. LIFE STAGE f. SMART KID CHILD PLAN g. LIFE TIME SUPER PENSION h. LIFE STAGE RP PRNSION i. LIFE STAGE RP j. LIFE STAGE ASSURE k. INVEST SHEILD LIFE NEW LIFE TIME GOLD LIFE LINK SUPERMin entry age 0 Min entry age 0Max entry age 65 Max entry age 65Max Maturity age 75 Max Maturity age 70Min premium 20000 Min premium 50000No of funds 7 No of funds 7Riders ADBR,CIBR, Riders NO WOPMin premium payment term 3 yrs Min premium payment term SP PREMIER LIFE GOLD LIFE TIME PLUSMin entry age 0 Min entry age 0Max entry age 65,69 Max entry age 65Max Maturity age 75 Max Maturity age 75Min premium 10000 Min premium 20000No of funds 7 No of funds 7Riders ADBR,CIBR Riders ADBR,CIBR WORPMin premium payment term 3,5 yrs Min premium payment term 3 yrs ICFAI BUSINESS SCHOOL-HYDERABAD Page 39
  40. 40. LIFE STAGE SMART KID CHILD PLANMin entry age 0 Min entry age 0Max entry age 65 Max entry age 15Max Maturity age 75 Max Maturity age 25Min premium 15000 Min premium 12000No of funds 7 No of funds 7Riders ADBR,CIBR Riders ADBR,CIBR WOPMin premium payment term LIFE BASED Min premium payment term 3 yrs LIFE TIME SUPER PENSION LIFE STAGE RP PENSIONMin entry age 18 Min entry age 18Max entry age 65 Max entry age 70Max Maturity age 45 yrs Max Maturity age 50-80 yrs vesting age Vesting ageMin premium 15000 Min premium 15000No of funds 7 No of funds 6Riders ADBR,CIBR Riders NOMin premium payment term 3 yrs Min premium payment term 3 yrs LIFE STAGE RP LIFE STAGE ASSUREMin entry age 0 Min entry age 0Max entry age MAX TERM Max entry age 65 75Max Maturity age 75 Max Maturity age 75Min premium 15000 Min premium 10000No of funds 6 No of funds 7Riders ADBR,CIBR Riders ADBR,CIBRMin premium payment term 3 yrs Min premium payment term 3 yrs INVEST SHIELD LIFE NEW ADBR-Accidental Death Benefit Rider,Min entry age 0 CIBR-Critical Illness Benefit Rider,Max entry age 65 NM-Not Mentioned,Max Maturity age 75 WOP-Waiver of PremiumMin premium 12000 SP-Single PremiumNo of funds 6Riders NM (Source: www.iciciprulife.com)Min premium payment term 3 yrs ICFAI BUSINESS SCHOOL-HYDERABAD Page 40
  41. 41. COMPARATIVE ANALYSIS I. Premium allocation charge is premium based in this product where as Wealthsurance has a charge of Max 4% and with higher premium the allocation charge LIFE TIME GOLD decreases. II. Min Premium in Wealthsurance is only Rs.10000 as against in this product it is 20000 III. In Wealthsurance there is unlimited switching redirection and partial withdrawal allowed absolutely free of charge. I. Premium allocation charge is 20% in this product where as Wealthsurance has a charge of Max 4%. II. Min Premium in Wealthsurance is only Rs.10000 as LIFE LINK SUPER against in this product it is 20000 III. In Wealthsurance there is unlimited switching redirection and partial withdrawal allowed absolutely free of charge. I. Premium allocation charge is 12% in this product where as Wealthsurance has a charge of Max 4% II. There are no riders available in this product as PREMIER LIFE GOLD against Wealthsurance has a host of riders to choose from. III. In Wealthsurance there is unlimited switching redirection and partial withdrawal allowed absolutely free of charge I. Premium allocation charge is 25% in this product where as Wealthsurance has a charge of Max 4%. II. Min Premium in Wealthsurance is only Rs.10000 as LIFE TIME PLUS against in this product it is 20000 III. In Wealthsurance there is unlimited switching redirection and partial withdrawal allowed absolutely free of charge. I. Premium allocation charge is 25% in this product where as Wealthsurance has a charge of Max 4%. II. Min Premium in Wealthsurance is only Rs.10000 as against in this product it is 20000 III. In Wealthsurance there is unlimited switching LIFE STAGE RP redirection and partial withdrawal allowed absolutely free of charge. IV. There are only 2 riders available in this product as against Wealthsurance has a host of riders to choose from. ICFAI BUSINESS SCHOOL-HYDERABAD Page 41
  42. 42. I. Premium allocation charge is 25% in this product where as Wealthsurance has a charge of Max 4%. II. Min Premium in Wealthsurance is only Rs.10000 as against in this product it is 20000 LIFE STAGE III. In Wealthsurance there is unlimited switching redirection and partial withdrawal allowed absolutely free of charge. IV. There are only 2 riders available in this product as against Wealthsurance has a host of riders to choose from. I. Premium allocation charge is 20% in this product where as Wealthsurance has a charge of Max 4%. II. Min Premium in Wealthsurance is only Rs.10000 asSMART KID CHILD PLAN against in this product it is 12000 III. Wealthsurance can be beautifully customized to be a child plan by just adding wavier of premium. I. Premium payable in this product is Rs.75000 as against in Wealthsurance it is only Rs.10000 II. There are only two rider available in this product as against Wealthsurance has a host of riders to choose from. III. Allocation charge of 20% on this product and LIFE TIME SUPER Wealthsurance has a 4% charge. PENSION IV. Annuity is taxable where as all the funds in Wealthsurance is tax free. Wealthsurance can be customized to be a tax free retirement plan. 4. Post 3 years customers can also do unlimited partial withdrawal whenever there is a need for money without being charged or taxed. I. Premium payable in this product is Rs.15000 as against in Wealthsurance it is only Rs.10000 II. There are only two rider available in this product as against Wealthsurance has a host of riders to choose from.LIFE STAGE PR PENSION III. Annuity is taxable where as all the funds in Wealthsurance is tax free. Wealthsurance can be customized to be a tax free retirement plan. IV. Post 3 years customers can also do unlimited partial withdrawal whenever there is a need for money with being charged or taxed, absolutely free. ICFAI BUSINESS SCHOOL-HYDERABAD Page 42
  43. 43. I. In Wealthsurance partial withdrawals are allowed right after 3 years where as in this product the customer cannot touch his funds till 7th year. II. First year premium is utilized towards Guaranteed additions and returned on maturity as a Guarantee. LIFE STAGE ASSURE III. If you surrender the policy the GA component is not given to the customer and only the FV which gets accumulated from 2nd premium is returned after deducting surrender charges, where as in Wealthsurance there will not be any other charges apart from surrender charges that too if applicable IV. Premium allocation charge is 20% in this product where as Wealthsurance has a charge of Max 4%. V. Min Premium in Wealthsurance is only Rs.10000 as against in this product it is 20000 VI. In Wealthsurance there is unlimited switching INVEST SHEILD LIFE redirection and partial withdrawal allowed absolutely NEW free of charge. VII. There are only 2 riders available in this product as against Wealthsurance has a host of riders to choose from. VIII. This product has no top up facility where as in Wealthsurance tops are allowed any time.IDBI FORTIS is a new company with over just over one year of operations and so we have veryless information about its past performance. Therefore not many negatives can be found withthe company in regard to the Unit Linked Insurance Plans. Some general demerits with regardto the distribution network and marketing strategies have been mentioned after the analysis ofthe primary data.As a part of this comparative analysis we have also compared the performance of ULIPs of aselected fund since the last one year (as the data of IDBI FORTIS is limited only to the last oneyear). The comparison has been carried out in the next page. ICFAI BUSINESS SCHOOL-HYDERABAD Page 43
  44. 44. PERFORMANCE OF ULIPs OF THE SELECTED COMPANIESHere in order to compare the performances of the ULIPs of the selected five companies withthat of IDBI FORTIS we have selected a particular type of fund called equity growth funds. Thereason for selecting equity growth fund is that we would be very clearly able to understand theeffect of market slowdown on these companies. Here we have considered the Net asset Values(NAV) of the equity growth funds from April 1st 2008 to April 30th2009.We have then comparedthe compared the maximum and minimum NAVs during the period and found out thepercentage change for the NAVs observed for the equity funds of the respective selectedcompanies selected companies.We have calculated the average NAV for every month (from April 1st 2008 to April 30th2009) forall the companies and then plotted them on graphs. We have then found out the extent towhich each company was affected due to the market slowdown. We have also taken intoconsideration the latest NAVs of these companies to see the pattern of growth of these fundspost recession. The percentage change (negative) in the Net Asset value for all the companieshas been calculated below and we observe that LIC was the least affected among the selectedcompanies with only a percentage change of only -23.38% which is quite low compared to-43.84% of that of Bajaj Allianz.IDBI Fortis has shown a percentage change of -38.95%.But since IDBI Fortis is a new companywhich was started just a year back we can say that it has managed quite well and right now itis showing a quite good and positive growth as we can see from its present NAV. Month NAV Apr-08 8.4099 May-08 7.7124 HDFC STANDARD LIFE Jun-08 7.5374 9 8 Jul-08 8.1797 7 Aug-08 7.9632 6 5 NAV Sep-08 5.9740 4 Oct-08 5.7968 3 Nov-08 5.6706 2 1 Dec-08 5.5100 0 Jan-09 5.4479 May-08 Jun-08 Oct-08 Jan-09 Mar-09 Apr-08 Aug-08 Apr-09 Jul-08 Sep-08 Nov-08 Feb-09 Dec-08 Feb-09 5.1516 Mar-09 6.1597 MONTH Apr-09 6.4646 Table 3 & Figure 5: NAVs of HDFC Standard Life (Source: wwww.hdfcstandardlife.com) ICFAI BUSINESS SCHOOL-HYDERABAD Page 44

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