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Reliance life insurance (1)

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  • 1. Project Report On RELIANCE LIFE INSURANCE COMPANY LIMITED red te is eg nr USubmitted By: Submitted To:Vikrant Tomar Mr. Sachin KumarMBA Reliance LifeRoll NO. - Insurance1102970114
  • 2. CONTENTSPreface--------------------------------------------------- (3)Certificate------------------------------------------------ (4)Acknowledgement-------------------------------------- (5)Executive Summary------------------------------------- (6)Index----------------------------------------------------- (7) r ed te is eg nr U 2
  • 3. EXECUTIVE SUMMARYAnil Dhirubhai Ambani Group (ADAG) announces the acquisition of 100percent shareholding in AMP Sanmar Life Insurance Company Limited.Reliance Life Insurance Company Limited is officially launched onFebruary 1, 2006. This was after obtaining the required regulatiry approvalsfrom the Registrar of Companies and the Insurance Regulatory andDevelopment Authority. Reliance Life Insurance is the part of the RelianceCapital.Reliance Life Insurance has plenty of plans on the anvil. It has also 118 edbranches, with strong presence in South and a bouquet of products catering r tesavings protection and investment need of individuals and corporate. The ishead-office of it is at Chennai. eg nrThe company has already added 600 employees in addition to the 1000 plus Ustaff of the erstwhile AMP Sanmar Life Insurance Company Limited.Reliance Life Insurance aims to be the consumer’s preferred life insurer byunderstanding and meeting his needs.Think Bigger, Think Better! INDEX 3
  • 4. CHAPTER SUBJECT PAGE NO. NO. 1 INSURANCE INDUSTRY 1.1 Meaning of Insurance 10 1.2 Importance of Insurance 11 1.3 Difference between Insurance and Assurance 12 1.4 Principles of Insurance 13 1.5 History of Insurance 15 1.6 Time line in Insurance history 17 1.7 Meaning of Life Insurance 19 1.8 History of Life Insurance 20 1.9 Key features of Life Insurance 24 1.10 Benefits of Life Insurance 27 1.11 Role of Life Insurance in the growth of economy 28 2 INTRODUCTION TO THE COMPANY 2.1 About Reliance Life Insurance ed 30 2.2 History 32 r 2.3 Journey so far te 32 2.4 Role of IT at Reliance Life Insurance 33 is 2.5 Mission 36 eg 2.6 Core Values 36 2.7 Future Plans nr 37 2.8 Head – Office 37 U 2.9 Branches 38 3 PRODUCT MIX 3.1 Traditional Plans 40 3.2 Unit linked Plans 48 4 HUMAN RESOURCE MANAGEMENT 4.1 Recruitment 53 4.2 Selection 53 4.3 Training and Development 56 4.4 Career Development 56 4.5 Communication 57 4.6 Incentives 59 4.7 Services 59 4.8 Performance Appraisal 60 4.9 Organizational form and Structure 61 4.10 Department 61 4
  • 5. 5 MARKETING DEPARTMENT 5.1 Distribution Channel 63 5.2 Promotional Programmes and Target segment 66 5.3 Comparative Study 716 RESEARCH METHODOLOGY 6.1 Objective of the study 79 6.2 Questionnaire 79 6.3 Sampling Method and Sampling Size 80 6.4 Limitations 82 6.5 Analysis of Questionnaire 83 6.6 SWOT Analysis 967 FINANCE DEPARTMENT 998 CONLUSION 1069 BIBLIOGRAPHY AND REFRENCES 10810 APPENDIX r ed 110 te is eg nr U 5
  • 6. CHAPTER-1 INSURANCE INDUSTRY ed r te is eg nr U1.1 MEANING OF INSURANCE 6
  • 7. Insurance may be described as a social device to reduce or eliminate risk ofloss to life and property. Insurance is a collective bearing of risk. Insuranceis a financial device to spread the risks and losses of few people among alarge number of people, as people prefer small fixed liability instead of biguncertain and changing liability.Insurance can be defined as a “legal contract between two parties wherebyone party called insurer undertakes to pay a fixed amount of money on thehappening of a particular event, which may be certain or uncertain.” Theother party called insured pays in exchange a fixed sum known as premium. edInsurance is desired to safeguard oneself and one’s family against possible r telosses on account of risks and perils. It provides financial compensation for isthe losses suffered due to the happening of any unforeseen events. eg nr U1.2 IMPORTANCE OF INSURANCE 7
  • 8. Insurance constitutes one of the major segments of the financial market.Insurance services play predominant role in the process of financialintermediary. Today insurance industry is one of the most growing sectors inIndia. There is lot of potential in the Indian Insurance Industry.There are many issues, which require study. The scope of the study ofinsurance industry of India would be very great as there are ongoingdevelopments in the industry after the opening of the sector.The major issue right now is the hike in FDI (Foreign Direct Investment)limit from 26% to 49% in the insurance sector. Government may in near edfuture allow 49% FDI in Insurance. This would lead to more capital inflow r teby foreign partners. is egAnother major issue is the effects on LIC after the entry of private players in nrthe market. Though market share of LIC has been affected, it has improved Uin terms of efficiency.There are number of other hot topics like penetration of Health Insurance,Rural marketing of insurance, new distribution channels, new productranges, insurance brokers’ regulation, incentive scheme of developmentofficers of LIC etc. So it offers lot of scope for studying the insuranceindustry.Right now the insurance industry has great opportunities in a country likeIndia or China which huge population. Also the penetration of insurance in 8
  • 9. India is very low in both life and non-life segment so there is lot potential tobe tapped.Before starting the discussion on insurance industry and related issues, wehave to start with the basics of insurance. So first we understand what isinsurance? How the word ‘insurance’ is different from the word‘assurance’? etc.1.3 DIFFERENCE BEETWEN INSURANCE AND ASSURANCE edAssurance is older in history and it was used to describe all types of r teinsurances. From 1826, the term assurance came to be used only for the risks is egcovered by life insurance and the term insurance was exclusively used todenote the risks covered by marine, fire, etc. nr UThe word assurance indicated certainty. In life insurance, there is anassurance from the insurance company to make payment under the policyeither on the maturity or at earlier death. On the other hand the wordinsurance was used to denote indemnity type of insurances where theinsurance company was liable to pay only in case of the loss damage theproperty.The insured event was bound to happen sooner or later under assurance butthe event insured against may or may not happen under insurance. 9
  • 10. The principle of “indemnity” applies to “insurance contracts”(non-life) only.The scope of the word, insurance is wider.1.4 PRINCIPLES OF INSURANCEAn insurance contract is based on some basic principles of insurance.(1) Principle of “Uberrima Fides” or Principle of utmost good faith ed It means “maximum truth”. Both the parties should disclose all r material information regarding the subject matter of insurance. te is eg(2) Principle of indemnity nr U This means that if the insured suffers a loss against which the policy has been made, he shall be fully indemnified only to the extent of loss. In other words, the insured is not entitled to make a profit on his loss.(3) Principle of subrogation This means the insurer has the right to stand in the place of the insured after settlement of claims in so far as the insured’s right of recovery from an alternative source is involved. The insurer before the settlement of the claim may exercise the right. In other words, the insurer is entitled to recover from a negligent third party any loss payments made to the 10
  • 11. insured. The purposes of subrogation are to hold the negligent person responsible for the loss and prevent the insured from collecting twice for the same loss. The concept of ‘Third Party Claims’ is based on the same principle. (4) Principle of causa proxima The cause of loss must be direct and an insured one in order to claim of compensation. (5) Principle of insurable interestr ed te The assured must have insurance interest in the life or property insured. is Insurable interest is that interest which considerably alters the position of eg the assured in the event of loss taking place and if the event does not take nr placed, he remains in the same old position. U1.5 HISTORY OF INSURANCE 11
  • 12. The concept of insurance is believed to have emerged almost 4500 years agoin the ancient land of Babylonia where traders used to bear risk of thecarvan by giving loans, which were later repaid with interest when the goodsarrived safely.The concept of insurance as we know today took shape in 1688 at a placecalled Lloyd’s Coffee House in London where risk bearers used to meet totransact business. This coffee house became so popular that Lloyd’s becamethe one of the first modern insurance companies by the end of the eighteenthcentury. edMarine insurance companies came into existence by the end of the r teeighteenth century. These companies were empowered to write fire and life isinsurance as well as marine. The Great Fire of London in 1966 caused huge egloss of property and life. With a view to providing fire insurance facilities, nrDr. Nicholas Barbon set up in 1967 the first fire insurance company known Uas the Fire office.The early history of insurance in India can be traced back to the Vedas. TheSanskrit term ‘Yogakshema’ (meaning well being), the name of LifeInsurance Corporation of India’s corporate headquarters, is found in the RigVeda. The Aryans practiced some form of ‘community insurance’ around1000 BC.Life insurance in its modern form came to India from England in 1818. TheOriental Life Insurance Company was the first insurance company to be setup in India to help the widows of European community. The insurance 12
  • 13. companies, which came into existence between 1818 and 1869, treatedIndian lives as subnormal and charged an extra premium of 15 to 20 percent. The first Indian insurance company, the Bombay Mutual LifeAssurance Society, came into existence in 1870 to cover Indian lives atnormal rates.The Insurance Act, 1938, the first comprehensive legislation governing bothlife and non-life branches of insurance were enacted to provide strict statecontrol over insurance business. This amended insurance Act looked intoinvestments, expenditure and management of these companies. edBy the mid- 1950s there were 154 Indian insurers, 16 foreign insurers, and r te75 provident societies carrying on life insurance business in India. Insurance isbusiness flourished and so did scams, irregularities and dubious investment egpractices by scores of companies. As a result the government decided to nrnationalize the life assurance business in India. The Life Insurance UCorporation of India (LIC) was set up in 1956. The nationalization of lifeinsurance was followed by general insurance in 1972.1.6 TIME LINE IN INSURANCE HISTORY (MAJOR LANDMARKS) 1818 British introduced the life insurance to India with the 13
  • 14. establishment of the Oriental Life Insurance Company. in Calcutta. 1850 Non life insurance started with Triton Insurance Company. 1870 Bombay Mutual Life Assurance Society is the first India owned life insurer. 1912 The Indian Life Assurance Company Act enacted to regulate the life insurance business. red te 1938 The Insurance Act was enacted. is eg 1956 Nationalization took place. Government took over 245 nr Indian and foreign insurers and provident societies. U 1972 Non-life business nationalized, General Insurance Corporation (GIC) came into being. 1993 Malhotra committee was constituted under the chairmanship of former RBI chief R. N. Malhotra to draw a blue print for insurance sector reforms. 1994 Malhotra committee recommended reentry of private players. 14
  • 15. 1997 IRDA (Insurance Regulatory and Development Authority) was set up as a regulator of the insurance market in India. 2000 IRDA started giving license to private insurers. ICICI Prudential, HDFC were first private players to sell insurance Policies. 2001 Royal Sundaram was the first non-life private player to sell an insurance policy. r ed te 2002 Bank allowed to sell insurance plans as TPAs enter the is scene, insurers start setting non-life claims in the eg cashless mode. nr U1.7 MEANING OF LIFE INSURANCEThere are three parties in a life insurance transaction: the insurer, theinsured, and the owner of the policy (policyholder), although the owner and 15
  • 16. the insured are often the same person.Another important person involved in a life insurance policy is thebeneficiary. The beneficiary is the person or persons who will receive thepolicy proceeds upon the death of the insured.Life insurance may be divided into two basic classes – term and permanent. • Term life insurance provides for life insurance coverage for a specified term of years for a specified premium. The policy does not accumulate cash value. • Permanent life insurance is life insurance that remains in force until ed the policy matures, unless the owner fails to pay the premium when r te due. is eg • Whole life insurance provides for a level premium, and a cash value nr table included in the policy guaranteed by the company. The primary U advantages of whole life are guaranteed death benefits, guaranteed cash values, fixed and known annual premiums, and mortality and expense charges will not reduce the cash value shown in the policy. • Universal life insurance (UL) is a relatively new insurance product intended to provide permanent insurance coverage with greater flexibility in premium payment and the potential for a higher internal rate of return. A universal life policy includes a cash account. Premiums increase the cash account.If you want insurance protection only, and not a savings and investmentproduct, buy a term life insurance policy. 16
  • 17. If you want to buy a whole life, universal life, or other cash value policy,plan to hold it for at least 15 years.Canceling these policies after only a few years can more than double yourlife insurance costs. Check the National Association of InsuranceCommissioners website (www.naic.org/cis) or your local library forinformation on the financial soundness of insurance companies.1.8 HISTORY OF LIFE INSURANCERisk protection has been a primary goal of humans and institutionsthroughout history. Protecting against risk is what insurance is all about. ed rOver 5000 years ago, in China, insurance was seen as a preventative te ismeasure against piracy on the sea. Piracy, in fact, was so prevalent, that as a egway of spreading the risk, a number of ships would carry a portion of nranother ships cargo so that if one ship was captured, the entire shipment Uwould not be lost.In another part of the world, nearly 4,500 years ago, in the ancient land ofBabylonia, traders used to bear risk of the caravan trade by giving loans thathad to be later repaid with interest when the goods arrived safely. In 2100BC, the Code of Hammurabi granted legal status to the practice. Itformalized concepts of “bottomry” referring to vessel bottoms and“respondentia” referring to cargo. These provided the underpinning formarine insurance contracts. Such contracts contained three elements: a loanon the vessel, cargo, or freight; an interest rate; and a surcharge to cover thepossibility of loss. In effect, ship owners were the insured and lenders werethe underwriters. 17
  • 18. Life insurance came about a little later in ancient Rome, where burial clubswere formed to cover the funeral expenses of its members, as well as helpsurvivors monetarily. With Romes fall, around 450 A.D., most of theconcepts of insurance were abandoned, but aspects of it did continue throughthe Middle Ages, particularly with merchant and artisan guilds. Theseprovided forms of member insurance covering risks like fire, flood, theft,disability, death, and even imprisonment.During the feudal period, early forms of insurance ebbed with the declineof travel and long-distance trade. But during the 14th to 16th centuries,transportation, commerce, and insurance would again reemerge. edInsurance in India can be traced back to the Vedas. For instance, r teyogakshema, the name of Life Insurance Corporation of Indias corporate isheadquarters, is derived from the Rig Veda. The term suggests that a form of eg"community insurance" was prevalent around 1000 BC and practiced by the nrAryans. UAnd similar to ancient Rome, burial societies were formed in the Buddhistperiod to help families build houses, and to protect widows and children. Modern InsuranceIllegal almost everywhere else in Europe, life insurance in England wasvigorously promoted in the three decades following the Glorious Revolutionof 1688. The type of insurance we see today owes its roots to 17th centuryEngland. Lloyds of London, or as they were known then, Lloyds Coffee 18
  • 19. House, was the location where merchants, ship owners and underwriters metto discuss and transact business deals.While serving as a means of risk-avoidance, life insurance also appealedstrongly to the gambling instincts of Englands burgeoning middle class.Gambling was so rampant, in fact, that when newspapers published names ofprominent people who were seriously ill, bets were placed at Lloyd’s ontheir anticipated dates of death. Reacting against such practices, 79 merchantunderwriters broke away in 1769 and two years later formed a “New Lloyd’sCoffee House” that became known as the “real Lloyd’s.” Making wagers onpeoples deaths ceased in 1774 when parliament forbade the practice. r ed te Insurance moves to America is egThe U.S. insurance industry was built on the British model. The year 1735 nrsaw the birth of the first insurance company in the American colonies in UCharleston, SC. The Presbyterian Synod of Philadelphia in 1759, sponsoredthe first life insurance corporation in America for the benefit of ministersand their dependents. And the first life insurance policy for the generalpublic in the United States was issued, in Philadelphia, on May 22, 1761.But it wasnt until 80 years later (after 1840), that life insurance really tookoff in a big way. The key to its success was reducing the opposition fromreligious groups.In 1835, the infamous New York fire drew peoples attention to the need toprovide for sudden and large losses. Two years later, Massachusetts becamethe first state to require companies by law to maintain such reserves. The 19
  • 20. great Chicago fire of 1871 further emphasized how fires can cause hugelosses in densely populated modern cities. The practice of reinsurance,wherein the risks are spread among several companies, was devisedspecifically for such situations.With the creation of the automobile, public liability insurance, which firstmade its appearance in the 1880s, gained importance and acceptance?More advancement was made to insurance during the process ofindustrialization. In 1897, the British government passed the WorkmensCompensation Act, which made it mandatory for a company to insure itsemployees against industrial accidents. edDuring the 19th century, many societies were founded to insure the life and r tehealth of their members, while fraternal orders provided low-cost, members- isonly insurance. Even today, such fraternal orders continue to provide eginsurance coverage to members, as do most labor organizations. Many nremployers sponsor group insurance policies for their employees, providing Unot just life insurance, but sickness and accident benefits and old-agepensions. Employees contribute a certain percentage of the premium forthese policies. Final ThoughtsEven though the American insurance industry was greatly influenced byBritain, the US market developed somewhat differently from that of theUnited Kingdom. Contributing to that was Americas size; land diversityand the overwhelming desire to be independent. As America moved from acolonial outpost to an independent force, from a farming country to an 20
  • 21. industrial nation, the insurance business developed from a small number ofcompanies to a large industry.Insurance became more sophisticated, offering new types of coverage anddiversified services for an increasingly complex country.1.9 KEY FEATURES OF LIFE INSURANCE 1) Nomination: -When one makes a nomination, as the policyholder you continue to be the edowner of the policy and the nominee does not have any right under the r tepolicy so long as you are alive. The nominee has only the right to receive the ispolicy monies in case of your death within the term of the policy. eg nr 2) Assignment: - UIf your intention is that your policy monies should go only to a particularperson, you need to assign the policy in favor of that person. 3) Death Benefit: -The primary feature of a life insurance policy is the death benefit it provides.Permanent policies provide a death benefit that is guaranteed for the life ofthe insured, provided the premiums have been paid and the policy has notbeen surrendered. 4) Cash Value: - 21
  • 22. The cash value of a permanent life insurance policy is accumulatedthroughout the life of the policy. It equals the amount a policy owner wouldreceive, after any applicable surrender charges, if the policy weresurrendered before the insureds death. 5) Dividends: -Many life insurance companies issue life insurance policies that entitle thepolicy owner to share in the companys divisible surplus. 6) Paid-Up Additions: -Dividends paid to a policy owner of a participating policy can be used in ednumerous ways, one of which is toward the purchase of additional coverage, rcalled paid-up additions. te is 7) Policy Loans: - eg nrSome life insurance policies allow a policy owner to apply for a loan against Uthe value of their policy. Either a fixed or variable rate of interest is charged.This feature allows the policy owner an easily accessible loan in times ofneed or opportunity. 8) Conversion from Term to Permanent: -When in need of temporary protection, individuals often purchase term lifeinsurance. If one owns a term policy, sometimes a provision is available thatwill allow her to convert her policy to a permanent one without providingadditional proof of insurability. 9) Disability Waiver of Premium 22
  • 23. Waiver of Premium is an option or benefit that can be attached to a lifeinsurance policy at an additional cost. It guarantees that coverage will stay inforce and continue to grow r ed te is eg nr U1.10 BENEFITS OF LIFE INSURANCE 1) Risk cover: -Life Insurance contracts allow an individual to have a risk cover against anyunfortunate event of the future. 2) Tax Deduction: -Under section 80C of the Income Tax Act of 1961 one can get tax deductionon premiums up to one lakh rupees. Life Insurance policies thus decrease thetotal taxable income of an individual. 23
  • 24. 3) Loans: -An individual can easily access loans from different financial institutions bypledging his insurance policies. 4) Retirement Planning: -What had provided protection against the financial consequences ofpremature death may now be used to help them enjoy their retirement years.Moreover the cash value can be used as an additional income in the old age. 5) Educational Needs: -Similar to retirement planning the cash values that flow from ones life edinsurance schemes can be utilized for educational needs of the insurer or his r techildren. is eg nr U1.11 ROLE OF LIFE INSURANCE IN THE GROWTH OF THE ECONOMYThe Life Insurance Industry has an enviable track record among publicsector units. It has a Consistent profit and dividend paying recordaccompanied by a steady growth in its financial resources. Throughinvestments in the Government sector and socially- oriented sectors theIndustry has contributed immensely to the nations development. Theindustry is recognized as one of the largest financial Institutions in thecountry. The ventures initiated by the industry in the areas of Mutual Fund, 24
  • 25. Housing Finance has done exceedingly well in recent years. To protect thecountrys foreign exchange reserves, the reinsurance arrangement are soorganized that maximum retention is made possible within the country whileat the same time protecting interests of the policy holders. r ed te is eg nrCHAPTER-2 U INTRODUCTION TO THE COMPANY 25
  • 26. r ed te is eg nr U2.1 ABOUT RELIANCE LIFE INSURANCEReliance Life Insurance Company Limited is a part of Reliance Capital Ltd.of the Reliance - Anil Dhirubhai Ambani Group. Reliance Capital is one ofIndia’s leading private sector financial services companies, and ranks amongthe top 3 private sector financial services and banking companies, in terms 26
  • 27. of net worth. Reliance Capital has interests in asset management and mutualfunds, stock broking, life and general insurance, proprietary investments,private equity and other activities in financial services.Reliance Capital Limited (RCL) is a Non-Banking Financial Company(NBFC) registered with the Reserve Bank of India under section 45-IA ofthe Reserve Bank of India Act, 1934.Reliance Capital sees immense potential in the rapidly growing financialservices sector in India and aims to become a dominant player in thisindustry and offer fully integrated financial services.Reliance Life Insurance is another steps forward for Reliance Capital edLimited to offer need based Life Insurance solutions to individuals and r teCorporate. is eg nr U2.2 HISTORYReliance Capital Limited announced the launch of its life insurance businesson February 1, 2006. This was after obtaining the required regulatoryapprovals from the Registrar Of Companies and the Insurance Regulatoryand Development Authority.It was in August 2005 that the ball was set rolling when Reliance CapitalLimited, the financial arm of Reliance – Anil Dhirubhai Ambani Group 27
  • 28. (ADAG) – announced the requisition of 100% shareholding in AMP SanmarLife Insurance Company Limited; and the formal transfer of shares tookplace in October 2005. The company will issue all policy contracts under theReliance Life Insurance Company limited name. All the existing policycontracts also stand transferred to the Reliance Life Insurance entity with allthe original contractual terms and commitments intact. r ed te is eg nr U2.3 JOURNEY SO FAR… 2005 August: Anil Dhirubhai Ambani Group (ADAG) announces the acquisition of 100 percent shareholding in AMP Sanmar Life Insurance Co Ltd. 2006 January 17: Mr. Nandgopal participates in a one-day conference on ‘Optimising growth opportunities through Distribution Matrix: 28
  • 29. ‘Emerging Bancassurance’ organized by the Asia Insurance Post at the Taj President, Mumbai. February 1: Rliance Life Insurance officially launched. February 16, 17, 18: Strategy meet at the Reliance Management Institute. Amongst those who participate are the CEO, COO, Functional Heads, Regional Managers and Regional Sales Managers. February 26: A Puja held at the Churchgate office situated in Express Building, 4th Floor, 14 ‘E’ Road, Mumbai. March 1: Churchgate office inaugurated by Mr. Amitabh ed Jhunjhunwala, Mr. Amitabh Chaturvedi and Mr. Nandgopal. r te March 6: Shifting to the new premises at Churchgate commences. is eg March 7: The new office at Chennai, at the Trapezium, First Floor, # nr 39, Nelson Manickam Road, inaugurated by their CEO Mr. Nandgopal, U Mr. KV Srinivasan and Mr. Sureshbabu also graced the occasion.2.4 ROLE OF IT AT RELIANCE LIFEINSURANCE 1) World Class Data Centre: - They plan to establish a Primary Data Centre at Navi Mumbai(Dhirubhai Ambani Knowledge City) which will cater to their companyneeds across India, with fail-over capability to their Chennai Data Centre 29
  • 30. within the same business day in occurance if an incident or Disasterhappens. 2) Inter Office Connectivity: - All their Branch / Area and Regional offices will be interconnected to their Data Centre with a 24x7 access to Core Applications like Lotus Mail, Life-Asia and Internet Applications. This will enable their associates to work faster and better with high-speed Internet connectivity and also ensure faster Turn Around Time for their customers. r ed te is 3) Customer Care Centre: - eg nr They will host a centralized Customer Care Centre at U Dhirubhai Ambani Knowledge City at Navi Mumbai, which cater services to internal and external queries and complications. A customer Relationship Management Tool (CRM) and Lead Management System (LMS) are in progress. 4) Web Portal: - This portal will be an interface between both internal employees and their external users. Some of the functions included in their portal are Policy Tracking Systems, Corporate News, Quality Checking System, Under Writing Medical System, and Agent Management System etc. 5) R World: - 30
  • 31. Reliance Mobile R-World will provide online information abouttheir Company, Products, and Policy Services to their existing customers,Agents/Advisors and Lead Generators.6) SMS Alerts: - SMS Alerts will be provided to their Sales Managers about thelatest happenings like Contests and Campaigns, Employee Alerts willinclude Company News and Welcome/Birthday/Anniversary messageetc. Customer Alerts will include Welcome/Birthday/Anniversarymessage, Policy Dispatch Details, Policy Servicing SMS like PremiumReceipt and Renewal Premium reminders etc. ed7) Life and Group Asia: - r te is Single Life and Group Life details will be captured and managed egby Life and Group Asia. A common middleware between these nrapplications will enable Group Life Customers to view their individual USingle Life Insurance Plan details taken with Reliance Life Insurance andvice versa.8) Advisor Lounge: - It is a dedicated area for Reliance Life InsuranceAgents/Advisors in all the branches across India. This Lounge will beequipped with desktops and printers with Internet connectivity, wheretheir Advisors can bring in the prospects and can have discussions acrossthe table and they can create and print quotes. The Agents/Advisors canuse this area to service their existing customers.9) Document Management System: - 31
  • 32. DMS will enable both policy issuance and contract servicing through an automated workflow, which yields a faster Turn around Time to both internal and external users. This application will enable them to have a paperless office and thus mitigate the risk of losing vital records/papers. 10) Wireless Data Access: - This will enable identified Top Sales Managers and Top Advisorsto access real time data for both LMS and CRM on the fly through HandheldPDA device. 11) SAP – ERP Modules: - ed r SAP (Finance and HR Modules), will automate the Expense, te is Travel and Leave Management Systems. eg nr U2.5 MISSIONThe mission of Reliance Life Insurance Company Limited is to be the best inevery sphere- business results, customer care and employee focus. The aimof the company is to Think Bigger and Think Better.2.6 CORE VALUESReliance Life Insurance Company Limited has some core values which arelisted as follows: 32
  • 33. 1) Result Oriented 2) Performance Driven 3) Customer Focused 4) Learning and Development Oriented 5) Employee Centric 6) Informal and Fun2.7 FUTURE PLANS ed Forty-four new branches to be opened across the country in the r coming months; and a pan India presence with 162 branches in the te is coming year. eg nr A state-of-the-art customer care centre will provide continuous, U responsive services to the caller and promptly address queries, collate feedback and suggestions from the caller, who may be both prospective and existing clientele and from channel partners in Chennai and Mumbai. It will be launching additional products aimed at providing unparalleled service to its valued clientele.2.8 HEAD – OFFICE 33
  • 34. Reliance Life Insurance Company Limited,The Trapezium,39, First Floor,Nelson Manickam Road,Chennai – 600 029.2.9 BRANCHES r ed teThey have so many branches and substations in the India. They have around is160 branches in the India. And they have planned to open more branches egacross the country in the coming months. nr U 34
  • 35. CHAPTER – 3 ed r te PRODUCT MIX is eg nr U 35
  • 36. r ed te is eg nr U3.1 TRADITIONAL PLAN:- Life insurance products are designed to suit the requirementsof customers. Fundamentally the product provide for: Risk cover Investment Health cover 36
  • 37. In every product, to a certain degree, risk cover is imperativefor it to fall under the category of insurance. Based on the coverage of theproduct, the premiums are calculated and the customer pays accordingly. Inorder to suggest the right product, it is essential for an agent to understandthe requirements of the customer well. Reliance Life Insurance Company Limited has offered 9traditional plans to the customers, which are listed as follows: 1) Reliance Term Plan ed 2) Reliance Whole Life Plan r te 3) Reliance Child Plan is 4) Reliance Endowment Plan eg 5) Reliance Special Endowment Plan nr 6) Reliance Cash Flow Plan U 7) Reliance Credit Guardian Plan 8) Reliance Special Credit Guardian Plan Each of the above traditional plans is discussed as follows: 1) Reliance Term plan: -This insurance policy is designed for those who only want life cover for theprotection of their family, and do not wish to save for themselves. It can alsobe useful to business firms that wish to provide financial security to theirbusiness against the sudden loss of partners or valuable manpower. Since 37
  • 38. there is no saving element or bonus provision, the premium is very low.Hence, this is a high-risk plan with a low premium. Features: - a) Purely a term plan b) Entry age minimum 18 years and maximum 65 year c) Maximum premium paying term is 30 year d) Loan facility N.A. e) Maturity amount = Sum assured ed r te 2) Reliance Whole Life Plan: - is eg nrThis insurance policy is designed for people who do not wish to avail of any Ubenefits themselves but wish to create an immediate estate to protect theirfamily by availing of insurance cover on their life at a very low cost. Features: - a) It is a whole life insurance policy with profits b) Low cost life cover c) Maturity age is 85 year or 99 years last birthday as chosen d) Maturity amount = Sum assured + Vested bonus e) Tax benefit is available 38
  • 39. 3) Reliance Child Plan: -This insurance policy is designed for people who wish to save money for afuture time when there will be a recurring need for substantial amounts ofmoney. This is especially true when it comes to paying large sums of moneyfor higher education as and when your son or daughter is studying to becomean Engineer, a Doctor or specialize in some other field, or is perhapsplanning to go abroad.This money is payable in equal installments over the last 4 years of thepolicy term. ed Features: - r te I. Minimum entry age is 20 year and maximum 60 year is eg a) Minimum sum assured is Rs. 25,000. nr b) Minimum premium paying term is 5 year and maximum U 20 year c) Tax benefit is available d) Maturity amount = Four equal installment of sum insured in last four year plus vested bonus in the last year e) Loan facility is available 4) Reliance Endowment Plan: - 39
  • 40. Reliance Life Insurance’s Reliance Endowment Plan is the key to all yourfinancial needs. It is an inexpensive and easy way to protect you, yourfamily or your business.In a nutshell this plan will keep you financially prepared for all the specialoccasions in your life - your daughter’s wedding, your child’s universityeducation or even a new office for your business - by eliminating the burdenthat a shortage of money creates.In the event of your untimely death, Reliance Endowment Plan will alsoassist your loved ones through this difficult time by the financial support thatit provides. edReliance Endowment Plan also gives you the additional benefit of r teparticipating in the company’s profits, which you will receive at the end of isthe policy period. eg nr U Features: - a) Entry age minimum is 5 year and maximum 65 year b) Maturity age minimum is 18 year and maximum 75 year c) Minimum premium paying term is 5 year and maximum 35 year in case of regular and in case of single 15 year 40
  • 41. d) Minimum sum assured is Rs. 25,000 or as determined by the minimum premium e) Maximum sum assured is Rs. 5,00,000 (entry age below 18 years and no limit for entry age 18 and above) f) Premium mode annual, half yearly, quarterly and monthly (by salary deduction only) g) Loan up to 90% of the surrender value of the policy h) Maturity amount = Guaranteed sum assured + Reversionary bonus r ed te 5) Reliance Special Endowment Plan: - is egThis insurance policy is designed for people who wish to combine savings nrwith extended security. The unique feature of this policy is that life Uprotection continues for five years after you have stopped the payment ofpremium. Payment of sum assured at the end of premium paying term andextension of life cover thereafter for the full sum assured for a period of 5years, are characteristics of the policy.This plan also participates in the profits. Features: - a) Entry age minimum 12 year and maximum 65 year b) Minimum sum assured is Rs. 25,000 c) Minimum premium paying term is 10 year and maximum 40 year 41
  • 42. d) Unique feature of this policy is that five year life protection continues after you have stopped the payment of premium e) Tax benefit is available f) Under this policy bonus is compounded yearly g) Loan facility is available h) Maturity amount = Full sum assured before maturity date + Vested bonus at the time of maturity date 6) Reliance Cash Flow Plan: -This insurance policy is designed for those who have a recurring need for edreinvestment in business or look for short-term investment channels. The r teadvantage of the policy is that they need not part with a sizable amount of ismoney at any one time, but create, through regular premium payments, a egperiodic return of lump sums which become available for reinvestment at nrhigher returns, while providing simultaneously, substantial life cover. UAlternatively, it can be used to meet any immediate financial crisis in thefamily like your sons college admission, your daughters engagement, andrenovation of your home or perhaps, a holiday abroad.The money is payable in installments. The first installment is paid at the endof the 4th year and thereafter at the end of every 3rd year. Features:- a) Plan with profits b) Minimum entry age is 15 year and maximum is 63 year 42
  • 43. c) Maximum premium paying term is 34 year d) Loan facility is not available e) In case of death full sum assured + accrued bonuses up to the date of death is payable immediately f) In case of survival up to maturity date all premium paid g) Rider accident death and critical illness h) Mode of payment is available 7) Reliance Credit Guardian Plan: - edThis insurance policy is designed for those who not only safeguards r teindividuals but also families and businesses from the financial hardship that iscould arise from unfortunate and unexpected death. eg nr Features: - U a) Loan protection against home, home improvement, two wheelers and four wheelers b) In case of death remaining loan amount paid immediately c) In case of survival no benefit is available d) Premium payment option for single and regular is available e) Premium paying term is 2/3 of loan period and remaining period paid by the company 8) Reliance Special Credit Guardian Plan: - 43
  • 44. This insurance policy is designed for those who not only safeguardsindividuals but also families and businesses from the financial hardship thatcould arise from unfortunate and unexpected death, disability or criticalillnesses. Features: - a) Loan protection against home, home improvement, two wheelers and four wheelers b) In case of death remaining loan amount paid immediately ed c) In case of survival no benefit is available r te d) Premium payment option for regular and single is available is e) Premium payment term is 2/3 of loan period and remaining eg period paid by the company nr f) Maturity amount = All the premium paid amount U g) Tax benefit is available3.2 UNIT LINKED PLAN A unit-linked policy is a life assurance policy in which the benefitsdepend on the performance of a portfolio of shares. 44
  • 45. Each premium paid by the insured person is split: a part is used toprovide life assurance cover, while the balance (after the deduction of costs,expenses, etc.) is used to buy units in a unit trust. In this way, a small investor can benefit from investment in a managedfund without making a large financial commitment. As they are linked to thevalue of shares, unit linked policies can go up or down in value.Policyholders can surrender the policy at any time and the surrender value isthe selling price of the units purchased by the date of cancellation 9lessexpense). A small part of the contribution is used for providing life coverand the balance is invested in unit. Legal heirs are entitled to the amount of edinsurance cover and entitled units in case of death of the insured. r te is Reliance Life Insurance Company Limited has also offered the two egUnit Linked Plans, which are listed as follows: nr U 1) Reliance Market Return Plan 2) Reliance Golden Years Plan Amongst the above plans the Reliance Market Return Plan is thelargest selling plan of the Reliance Life Insurance Company Limited. Theabove two ULIP plans are discussed as follows: 1) Reliance Market Return Plan: -Reliance Market Return Fund is the unit-linked product that helps you investin the financial markets in a combination of investment instruments of your 45
  • 46. choice. You can enjoy the returns from the markets without the trouble ofmonitoring and managing your own investment portfolio and keeping trackof the market movements. At the same time your investment premiumsprovide you with insurance cover. Reliance Market Return Fund unit-linkedinsurance plan provides you with a basket of fund options that balances yourreturn and risk exposure while providing life cover at the same time. Features: - a) Minimum entry age is 30 days and maximum entry age is 65 year b) Maximum policy term 40 year and minimum policy ed term 5 year r te c) Mode of premium as annual, quarterly, half yearly and is monthly Rs. 1000 (for salary deduction only) and Rs. eg 2500 (standing order/credit card) nr d) Top up premium minimum Rs. 2500 U e) Option of investment fund i. Capital secure 100% fixed interest securities ii. Balanced minimum 80% fixed interest securities and maximum 20% in equity iii. Equity 100% equity iv. Growth minimum 60% fixed interest securities and maximum 40% in equity f) Loan facility is not available g) One switches every year free and subsequent switches charged 1% of the amount switched 46
  • 47. h) Partial withdrawals per year under regular and single premium options is 2 times i) Lock in period till today is 3 year j) Minimum unit account balance after each withdrawals is Rs. 10,000 2) Reliance Golden Years Plan: -Reliance Golden Years Plan….. The Reliance Life Insurance ‘no-worry stayhappy’retirementplan. Reliance Golden Years Plan is a flexible package thatprovides freedom of choice in choosing the type of investment, life cover, edvesting options such as commuting and annuity options. Contributions r teprovide Income tax savings as well. is egReliance Golden Years Plan, a flexible pension product is available for all nrindividuals who are between the ages of 18 and 65. U Features: - a) Entry age minimum is 18 year and maximum 65 year b) Minimum premium amount Rs. 10,000 and maximum is unlimited c) Mode of premium payment is available d) Pension plan with risk cover and without risk cover e) Choice of investment 47
  • 48. i. Capital secure fund – 80% in equity and 20% in government security ii. Balanced fund – 80% in government and 20% in equity f) No loan facility is available g) Tax benefit is available h) Annuity options i. Annuity payable for life ii. Annuity payable for 5/10/15 years certain and thereafter with life iii. Annuity payable for life with return of capital ed on death of the annuitant r te is eg nr UCHAPTER – 4 HUMAN RESOURCE MANAGEMENT 48
  • 49. r ed te is eg nr U4.1 RECRUITMENTRecruitment is the process of finding and attracting capable applicants foremployment. The process begins when new recruits are sought and endswhen their applications are submitted. The result is a pool of applicants fromwhich new employees are selected. 49
  • 50. In this company the Sales Manager, who recruits the advisors/agents forselling the products of the company, does the recruitment. The advisorsshould have at least passed the S.S.C. examination. They must pass the pre-recruitment examination, which is conducted by the Insurance Institute ofIndia, Mumbai, or any other approved examination body. After clearing theexamination the code will be provided to them and the license will also begiven to them, the validity the license would be 3 years. After all theserequirements, the person will become an insurance advisor in the company.4.2 SELECTION r ed teSelection is the process of picking individuals (out of the pool of job isapplications) with requisite qualifications and competence to fill job in the egorganization. In simple words, it is the process of differentiating between nrapplicants in order to identify these with a greater likelihood of success in a Ujob.The Branch Manager, which includes-, will conduct the process of selectionof Sales Manager 1) Personal Interview: - The first step of selection of Sales Manager in theReliance Life Insurance Company Limited is to conduct a personal interviewof an applicant by the Branch Manager. 50
  • 51. 2) Project 40 Interview: - After clearing the personal interview, the project 40interview will be taken by the Branch Manager. In this step, the applicantshould have to make a list of 40 and then start the business with them. 3) Interview with Regional Head: - After clearing the project 40 interview, the applicantshould be interviewed by the Regional Head, who will check his/herperformance. 4) Negotiation: - ed After clearing the interview with Regional Head, the r tenegotiation will be provided to the applicant. is eg nr U 5) Medical Examination: - After that, the medical check up should e made to theapplicant. 6) Selection: - After clearing all the above steps the applicant should beappointed/selected as a Sales Manager in the company. 51
  • 52. Requirements of Sales Manager:- The Sales Manager should possess thefollowing things- 1. They should be an M.B.A. 2. The age of them should be between 25 to 35 years. 3. They should have good communication skill. 4. They should have at least sales experience of 3 years. 5. They should have the capability to handle the team. ed 6. Their job profile includes recruitment, training, guiding, motivating r te and in turn getting business out of a team. is eg nr U 4.3 TRAINING AND DEVELOPMENT:-Training and Development is any attempt to improve current or futureemployee performance by increasing an employee’s ability to performthrough learning usually by changing the employee’s attitude or increasinghis/her skills and knowledge. The need for training and development isdetermined by the employee’s performance deficiency, computed as follows: 52
  • 53. Training & Development = Standard Performance – Actual Performance They are providing 100 hours training to their advisors, whoare newly recruited. They are also providing the product training to theiradvisors and Sales Managers, who are newly recruited. The 100 hourstraining is to be conducted at Net Bios Computer Academy whereas theproduct training is to be conducted at NIS SPARTA. The NIS SPARTAInstitute has more than 150 batches and is trained over 3000 agents for mostof the private insurance companies. This institute is approved by IDRA totrain agents/advisors. r ed te4.4 CAREER DEVELOPMENT is egThey are also providing career development plans, which will identify nrpotential and create avenues for growth. U4.5 COMMUNICATIONCommunication is the process through which an individual can exchangetheir beliefs, things, information, and experience to others. In simple words,it is the process of exchanging the information from one person to another.They are providing an open environment, which enabling free interactionbetween all levels. The communication is provided in the following manner: 53
  • 54. U nr eg is te red54
  • 55. BRANCHBRANCH BRANCH REGIONALREGIONAL ed REGIONAL r te is eg CHANNEL HEAD nr U CMO CEO 55
  • 56. Explanations of the diagram:- The communication is flow between Branch to Branch.Within a branch, it flows between Branch Manager to Sales Managers andSales Managers to Agents/Advisors, and then Branch Head to RegionalHead, then different Regional Head to Regional Head, then Regional Headto Channel Head, then to Chief Marketing Officer (CMO), then to ChiefExecutive Officer (CEO).4.6 INCENTIVES r ed teIncentives are monetary benefits paid to workmen in recognition of their isoutstanding performance. They are providing an aggressive reward and egrecognition plans, which are including sales incentives. nr U4.7 SERVICESThey are offering following certain services to their employees. 1) They are providing knowledge sharing and certification practices. 2) They are planned team building and fun events. 3) They are creating Reliance Life Insurance family, which includes employees, associates and their families. 56
  • 57. 4) Reliance Life Insurance in a team building mode and is looking for performance driven, achievement oriented and challenge loving performance.4.8 PERFORMANCE APPRAISALPerformance appraisal is the systematic evaluation of the individual withrespect to his/her performance on the job and his/her potential fordevelopment. Performance appraisal is a formal, structured system ofmeasuring and evaluating an employee’s job related behaviors and outcomes edto discover how and why the employee is presently performing on the joband how the employee can perform more effectively in the future so that the r teemployee, organization and society all benefit. is eg nrThey are providing a balanced scorecard approach for strategy deployment Uand performance measurement, which goals and measure financial, customerfocused, process related and employee development related initiatives. Inaddition to this, the Branch Manager should measure the performance of theSales Managers at every six months and the Sales Manager should measurethe performance of the advisors/agents. If the performance is best thenhe/she will be prompted. 57
  • 58. 4.9 ORGANIZATION FORM ANDSTRUCTURE CEO CMO Channel Head Regional Head Branch Head SalesCEO Manager ed r Advisors/Agents te is Customers eg nr U4.10 DEPARTMENTThey are providing following areas or departments: 1) Retail Sales 2) Under Writing 3) Actuarial 4) Insurance Operations 5) Customer Service 6) Quality and Processes 7) Human Resources 58
  • 59. 8) FinanceCHAPTER – 5 MARKETING DEPARTMENT ed r te is eg nr U 59
  • 60. 5.1 DISTRIBUTION CHANNEL Reliance Life Insurance Company Limited is using five types ofdistribution channel, which are as follows: 1) Agency: - Independent insurance agents represent a number of companies and can research these companies’ products to find the right combination ed for their clients. Independent agents & insurance producer groups are growing in prevalence. Although producer groups are in their infancy, r te their emergence may potentially be realignment in the distribution of is eg financial services. Independent shops realized that by pooling production nr and funding a central support office, they had increased buying power. U The one type of distribution channel, which Reliance Life Insurance Co. Ltd is using, is an agency. This channel works as follows: Branch Managers Advisors Customers 60
  • 61. 2) Bank Assurance: - While a lot of bank relationships with insurance companieshave been established, life insurance sales have been slower than onewould expect he primary bank insurance activities have been thedistribution of annuities, credit life, and direct marketing insurance.Banks are failing to incorporate successful sales tactics used to sell otherfinancial services like investments. Another type of distribution channel is bank assurance. Thischannel is tie up with banks. In this channel the advisors using or edtargeting the bank customers to make a business with them i.e., to sell the rpolicy of the company. te is eg nr3) Corporate:- U To gain a better understanding of the demand amongstindependent advisors for trust services and to gain a better feel for howindependent advisors handle trust services, a research was performedwith independent advisors across several broker/dealers and custodians.The interviews revealed that demand is greatest for living trusts amongindependent advisors, followed by demand for corporate trustee services. Another type of distribution channel is corporate, which arefor employee benefits. This channel is tie up with corporate or smallenterprises. Through these small enterprises, the advisors will sell theproducts/policy to customers of the small enterprises. 61
  • 62. 4) Rural Benefits:- Brokerage firms have gained much of the institutional andpersonal trust business lost by the banks. These firms have steadilycaptured assets, primarily at the expense of the banks. The number ofnon-bank trust companies has increased in recent years as independenttrust companies have emerged and more broker/dealers are integratedservices. Insurance companies view full-service brokers as a potentiallynew distribution channel as well. Another type of distribution channel is rural benefits. Thischannel works as a dealership. In this channel, the dealers will sell thepolicy to the target customers. ed r te is eg5) Web World:- nr Direct sales of life insurance are growing rapidly, but many of Uthe traditional full-serve players seem to be letting it go. Across allfinancial services, consumers are expressing a willingness to deal with avariety of providers on the web. Web sites are starting to pop up offeringconsumer insurance products especially designed for distribution over theweb. Another type of distribution channel is web world. This channelis tie up with customer database. In this channel, the advisors will sell thepolicy to the target customers, which are taken from the customerdatabase, are listed in the website. 62
  • 63. 5.2 PROMOTIONAL PROGRAMMES &TARGET SEGMENTPromotional programmes and target segment are related to each other.The promotional programmes are made to motivate the advisors/agentsand sales managers to do more business i.e., to sell the more policies. TheReliance Life Insurance Co. Ltd has made three promotional schemes,which are as follows: r ed te is eg nr U 1) Shubh – Arambh:- This promotional scheme is detailed as follows: SLAB (WRP) REWARD ACHIEVERS 63
  • 64. 30,000 Reliance Life T-Shirt50,000 Table Top Clock75,000 Leather Bag1,00,000 World Space Radio1,50,000 L.G. Microwave- 19L2,00,000 DVD/VCD/MP3 Player3,00,000 Sony Music SystemSUPER ACHIEVERS5,00,000 LG Refrigerators GL-2337,50,000 LG Air Conditioner 1T10,00,000 Sony Digital Camcorder15,00,000 Trip to Dubai 3D/4N20,00,000 Hero Honda Splender edSTAR ACHIEVERS r te50,00,000 Maruti Alto Std. is75,00,000 Maruti Swift Lxi eg1,00,00,000 GM Aveo 1.4LS nr ULogin: 1st April to 31st May ‘06Issuance till 15th June ‘062) R.A.R.E.:- The full form of R.A.R.E. is Reliance Advisor’s RewardExperience. This programs consists of 1. New Advisor Incentive Program 2. Board of Advisors 64
  • 65. 3. Annual Discovery Series 4. Advisor Career Progression 5. RARE Club – Loyalty Program The above programs are described as follows1. R.A.R.E. Program New Advisor Incentives:- Criteria There will be two levels in the New Advisor Incentive program A. Launch Pad ed B. Take Off r te is2. R.A.R.E. Program Board of Advisors:- eg nr Criteria U There will be two levels in the Board of Advisors program A. Time Period B. Parameters3. R.A.R.E. Program Discovery Series:- Criteria There will be six levels in the Discovery Series program A. Qualification period B. Business criteria 65
  • 66. C. The qualification criteria will be the same for both the Global and the National Discovery Series D. Qualification for the Global Discovery Series E. Qualification for the National Discovery Series F. The top 150 will bb calculated based on WRP (Weighted Recd Premium)4. R.A.R.E. Program Advisor Career Progression:- Advisor Career Progression ed A. Business Associate r te B. Sales Manager is eg5. R.A.R.E. Privilege Club:- nr U Levels A. The RARE Club will have 6 different levels B. The criteria for entry into each level will be based on I. Business (WRP) II. Persistency III. Product Mix C. The qualification period is I. Logins from 1st Apr ’06 to 31st Mar ‘07 II. Issuances from 1st Apr ’06 to 15th Apr ‘07 Qualification Criteria 66
  • 67. Level WRP (Rs) Traditional Persistency Products Topaz 1,50,000 60% 80% Pearl 5,00,000 60% 80% Sapphire 10,00,000 60% 80% Emerald 15,00,000 50% 85% Ruby 25,00,000 50% 85% Diamond 50,00,000 50% 85% 3) Elite Club Scheme:- In this scheme the advisor, who have login the regular ed premium of Rs. 2, 00,000 will be eligible for the Elite Club r Membership. te is eg nr U 5.3 COMPARATIVE STUDY Presently there are 15 Life insurance companies in the country.There is only one public sector company LIC and the rest 14 are privatesector. Although LIC has been dominating the Life Insurance business sincepast few years the private players have now started to take the momentum. 67
  • 68. 1) Major Market Players: - Birla Sun Life Insurance Company: - Birla Sun Life Insurance Company is a 74:26 joint venturebetween Birla group and Sun Life Financial. It is a private sector company.The company was registered on 31/1/2001. The market share for FY 2005-06 was 1.89%. HDFC – Standard: - ed HDFC standard is a 74:26 joint venture between HDFC and rStandard Life. It is a private sector company. The company was registered te ison 23/10/2000. The market share for FY 2005-06 was 2.87%. eg ICICI Prudential Life Insurance: - nr U ICICI Prudential Life is a 74:26 joint venture between ICICIand Prudential. It is a private sector company. The company was registeredon 24/11/2000. The market share for FY 2005-06 was 7.35%. Life Insurance Corporation of India (LIC): - Life Insurance Corporation of India is a 100% government heldPublic Sector Company. Being the first to be established LIC is theforerunner in the Life Insurance sector. The market share for FY 2005-06was 71.44%. Kotak Mahindra OLD Mutual: - 68
  • 69. Kotak Mahindra OLD Mutual is a 74:26 joint venture betweenKotak Mahindra bank and Old Mutual. It is a private sector company. Thecompany was registered on 10/1/2001. The market share for FY 2005-06was 1.11%. Max New York Life: - Max New York Life is a 74:26 joint venture between J & Bank,Pallonji & Co and MetLife. It is a private sector company. The company wasregistered on 6/8/2001. The market share for FY 2005-06 was 1.23%. Aviva Life Insurance India: - ed Aviva Life insurance is a 74:26 joint venture between Aviva and rDabur. It is a private sector company. The company was registered on te is14/5/2002. The market share for FY 2005-06 was 1.14%. eg nr U ING Vysya Life insurance: - ING Vysya Life Insurance is joint venture between Exide(50%), Gujarat Cements (14.87%), Enam (9.13%) and ING (26 %). It is aprivate sector company. The company was registered on 2/8/2001. Themarket share for FY 2005-06 is 0.79%. Met Life India: - 69
  • 70. Met Life India is a 74:26 joint venture between 74:26 JVbetween J & Bank, Pallonji & Co and MetLife. It is a private sectorcompany. The company was registered on 6/8/2001. The market share forFY 2005-06 was 0.40%. Bajaj Allianz Life Insurance Co.: - Bajaj Allianz Life Insurance Company is a 74: 26 Jointventure between Bajaj Auto limited and Allianz AIG. The company wasregistered on 3/8/2001. The market share for FY 2005-06 was 7.56%. SBI Life Insurance Company Ltd: - ed SBI Life Insurance Company is a 74: 26 Joint venture between rSBI and Cardiff S.A. The company was registered on 31/3/2001.It is a te isprivate sector company. The market share for FY 2005-06 was 2.31%. eg nr U The TATA AIG Group: - TATA AIG group is a 74:26 JV between Tata Group and AIG. Itbelongs to the private sector. The company was registered on 12/2/2001. Themarket share for FY 2005-06 was 1.29%. Sahara India Life Insurance Company Ltd.: - 70
  • 71. First Wholly Indian Owned Private Life Insurance Company.The Company commenced operations from 30th October 2004. The marketshare for FY 2005-06 was 0.06 %. Shriram life insurance company Ltd: - Shriram Life is a recent entrant into the life insurance sectorIt is a 74:26 joint venture between the Shriram group through its ShriramFinancial Holdings and Sanlam Life Insurance Limited, South Africa. Thecompany expects to start operations soon. r ed te is eg nr U 2) Market Share: -Sr. No Insurer Market Share (%) 1 LIC 71.44 2 Bajaj Allianz 7.56 3 ICICI Prudential 7.35 4 HDFC Standard 2.87 71
  • 72. 5 SBI Life 2.31 6 Birla SunLife 1.89 7 Tata AIG 1.29 8 Max New York 1.23 9 Aviva 1.14 10 Kotak Mahindra OLD Mutual 1.11 11 ING Vysya 0.79 12 Reliance Life 0.54 13 MetLife 0.4 14 Sahara Life r ed 0.06 te 15 Shriram Life 0.03 is eg nr UNow let’s depict the market share of these players on diagram 72
  • 73. 1LIC Market Share(%) 2 B ajaj A llianz 3 ICICI P rudential 4 HDFC Standard 5 SB I Life 6 B irla SunLife 7 Tata A IG 8 M ax New Yo rk 9 A viva 1 Ko tak M ahindra OLD 0 M utual 1 ING Vysya 1 1 Reliance Life 2 1 M etLife 3 1 Sahara Life 4 1 Shriram Life 5 red teHere we can see from the diagram that LIC is the market leader and it iscommands the major part of the total life insurance market. Its market share egwas approximately 98% before 2000 but after the entry of private players it nrhas significantly decreased. UAmong private players Bajaj Allianz stands first. It has the market share ofapproximately 7.56% in the total market and it constitutes 40% of the marketshare among private players.HDFC Standard comes third. SBI Life insurance Company Limited comesfourth. ICICI Prudential is also one of the fastest growing life insurancecompanies in India.Rest of the players has market share below 2%. 73
  • 74. 3) Capital Fund: - Capital Fund of Private Companies ( Rs in Crore ) ICICI Prudential 375 Max New York 250 HDFC Standard 218 Bajaj Allianz 200 ed Tata AIG 183 r te Birla Sun Life 180 is AVIVA 155 eg OM Kotak 153 nr U Reliance Life 126 SBI Life 125 Met Life 110 ING Vysya 110 74
  • 75. red te is egCHAPTER – 6 nr U RESEARCH METHODOLOGY 75
  • 76. r ed te is eg nr U6.1 OBJECTIVES OF STUDY 1) To get some good market exposure by dealing with the prospects face to face. 2) To improve our ability to sell a financial product like life insurance. 76
  • 77. 3) To know the perception of the consumer about life insurance. 4) To get a deep knowledge of the financial product like insurance. 5) To get some information about the market share of Reliance Life Insurance as compared to the giants like LIC and to know the standing of the company in the market. ed6.2 QUESTIONNAIRE r te is It is most common instrument whether administered in person eg by phone or online questionnaires are very flexible. The form of each nr question is also important. Closed end question include all the possible U answers and subjects matters choices among them. I have used open-end questions so that customers can write answer in their own words. I have also used closed-end questions, which provide answers that are easier to interpret and tabulate. I have taken care in the wording and ordering of questions. I have used simple, direct, unbiased wording questions, which are arranged in a logical order. I have asked personal questions at last so that respondent does not become defensive. 77
  • 78. Questionnaire of the customer I have made questionnaire consisting seventeen questions to get customer’s view about life insurance. I have asked personal questions at last so that they do not become defensive. I have tried to know their performance i.e. whether they want to invest, where thy want to invest, up to what amount and since when.6.3 SAMPLING METHOD AND SAMPLE SIZE r ed te Introduction:- is eg Any organization whether big or small, private or public need nrdifferent types of information are to know its popularity. I have gathered Usecondary data and primary data and collected information from thecombination of these two data. Secondary data: -Secondary data consist of information that already exists somewhere,having been collected for another purpose. I have gathered secondary datafrom website of different operators, different magazines, newspapers andlibraries. Primary data: - 78
  • 79. I have taken great care while collecting primary data to answer that it is relevant, accurate, current and unbiased. I have taken a sample of 50 people. I have visited them personally to get data. Sample size: - I have taken sample size of 50 respondents. Because the population is too large so it is difficult to survey. r ed te is eg nr U 6.4 LIMITATIONS I am a human hang, so there is some limitation of the humanhangs which is reflected in this research. The following are the limitation of this research study. 79
  • 80. 1) The sample size of 50 might not represent the perception of whole population, as the sample size is too small for total population of Ahmedabad city. 2) The opinion expressed by the respondents may be biased. 3) The attitude of the research might be biased. 4) One of the most influencing and most critical limitations is that I am not trained for the research study and this is my first study. I ed tried hard to come at conclusion, but there is lack of expertise. r te is 5) Another limitation is that there is lack of time. If I give more time eg then studies will be more effective. nr UThere are some limitations of this study. But in spite of their limitation Iworked with the enthusiasm. And I tried to give the best results to theresearch of this report.6.5 ANALYSIS OF QUESTIONNAIREHere I have formed a questionnaire to study why people go for lifeinsurance. What is people’s major motive behind investing in life insurance?Do they decide upon their own or they take guidance of an agent? What istheir perception about Reliance Life Insurance Company Limited? 80
  • 81. Questions:-There are 7 questions in the questionnaire. Out of these 7 questions, 6questions are close ended and one question is an open ended one. Target Population:-I had conducted this survey among 50 people, and the target group was amix of people from the society. I asked the questions to Doctors,Professionals, Professors, Advocates, Engineers, and general public. Analysis:-I have used pie charts, and some other statistical measures to analyze the edquestions. r te is eg nr UQ.1 What is your main motive behind investing in life insurance? (a) Tax Benefit (b) Savings (c) Risk Cover (d) Return/Yield 81
  • 82. MOTIVE NO. TAX 20 There could be any motive of SAVING 5 RISK COVERAGE 23 people behind investing in a RETURN/YIELD 2 life insurance policy. The main TOTAL ed 50 purpose of life insurance is the r teRisk cover of one’s life. But some people consider different advantages of a islife insurance policy. Some people consider Tax benefit as the main egadvantage of life insurance. Some believe that life insurance is an nrinvestment so they tend to invest in life insurance. While some people Ubelieve that it is a compulsory saving. Now let’s see what all people say TAX SAVING RISK COVERAGE RETURN/YIELD 82
  • 83. Here we can see that majority of the people tend to invest in life insurancefor the risk coverage. The next preferred option is Tax Saving. We foundedfrom the discussion with public and some experts that those people with alow income tend to invest in life insurance to gain tax benefit.Saving motive constitutes very small part of the total sample. Return comeslast.But this is the general conclusion of 50 people. If we take a larger sample,we can get a different result. edAs the private players have launched ULIPs, more and more people are r teturning towards these products so the Investment motive has been gaining iscommand. Also the number of those people who wish to invest for return is egalso increasing. nr UAccording to a life insurance expert (Vinod Thakkar ), life insurance is forprotection first then for Savings and Tax benefits all those things.Q.2 Rank the above motives according to your preference MOTIVE OF INVESTMENT TAX BENEFIT SAVINGS RISK COVER RETURN/YIELDPreference 1 21 3 24 1 2 19 11 16 4 3 8 25 7 10 4 2 11 3 35 83
  • 84. 40 35 30 25 20 TAX BENEFIT 15 10 SAVINGS 5 RISK COVER 0 RETURN/YIELD ce 1 2 3 4 en er ef PrWe can see from the table and the graph that the number one motive ofpeople about investing in life insurance is risk coverage, which is the main edtheme of life insurance followed by Tax benefit. The third position is of r tesaving and fourth is Return. This shows that still people consider other isfinancial tools more viable for return and life insurance is for Tax benefit egand risk cover. nr UQ.3 How do you decide about investing in life insurance? (a) On my own (b) family decision (c) Employer decides (d) as per the guidance of agentThis is a very crucial question as most of the people are not much familiarabout different life insurance plans offered by different life insurance 84
  • 85. companies so people take help of the life insurance agent and as he guidesunderstanding the needs of the individual, people would invest.Here one hazardous factor is the moral hazard. People tend to invest in lifeinsurance plans to maintain relations though they are not in need of lifeinsurance.Also sometimes it depends upon the convincing power of the agent. SOURCE NO. ed ON MY OWN 29 r te FAMILY DECISION 7 EMPLOYER DECIDES 0 is AGENT GUIDANCE 14 eg TOTAL 50 nr U ON MY OWN FAMILY DECISION EMPLOYER DECIDES AGENT GUIDANCEHere we can see that majority people (58%) decides on their about investingin life insurance. 28% persons decides as per the guidance of the agent. 85
  • 86. There is no contribution of employers in the decision of one’s investment inlife insurance. 14% people invest in life insurance as per the family decision.Q.4. Which life insurance policy would you prefer to buy? (a) Term Assurance (b) Whole Life (c) Endowment (d) Combination of Whole Life and Endowment (e) Unit Linked edThis is another crucial question as there are number of products offered by rlife insurance companies. The products range from pure Term Assurance te isPlans to Unit Linked Insurance Plans, which are relatively new entrant in the egmarket. nr UWe have already explained all these policies ahead.Now let’s find out what people have to say: Type of policy N0. Term Assurance 9 Whole Life 9 Endowment 7 Combined 19 ULIPs 6 TOTAL 50 86
  • 87. Term Assurance Whole Life Endowment Combined ULIPsAs it is evident from the chart and the table 38% people prefer combinationof Whole Life and Endowment product. It gives people double advantage.The person would get some amount at the end of the stipulated period; for edinstance 20 years, and after that period the risk cover continues and the rest rof the amount would be paid when the person dies. te is eg nr UQ.5 Would you prefer Reliance Life Insurance or LIC for buying thelife insurance policy? (a) Reliance Life Insurance (b) LICThis is the most important question as it reflects the scope of the study. It isthe main theme of this questionnaire. 87
  • 88. Prior to 2000 LIC was the only player in the life insurance market and it hadthe total market. So people had to go to LIC for buying life insurance policy.But after the entry of private players in 2000, some people have also turnedto private life insurers.Reliance Life Insurance Company Limited is newly launched company. So ithas fewer customers as compared to LIC. But the ULIP plans are sold moreof Reliance life insurance as compared to LIC in today’s environment.Now let’s see what people say: r ed Particulars No. te Reliance Life Insurance 15 is LIC 35 eg TOTAL 50 nr U Reliance Life Insurance LICAs evident from the chart that 30% of people would prefer Reliance LifeInsurance while 70% would prefer LIC. 88
  • 89. ed r te is eg nr Personal Details: - U1) Age (a) 18 to 30 (b) 31 to 50 (c) 51 to 65 Age No. 18 to 30 5 31 to 50 30 51 to 65 15 TOTAL 50 89
  • 90. 18 to 30 31 to 50 51 to 65 As evident from the chart that I have taken a sample of 50. Out ofwhich 10% people are aged between 18 to 30, 60% people are aged between ed31 to 50, and remaining 30% people are aged between 51 to 65. r te is eg nr 2) Occupation U (a) Service (b) Business (c) Profession (d) Housewife (e) Retired Occupation No. 90
  • 91. Service 5 Business 15 Profession 10 Housewife 5 Retired 15 TOTAL 50 Service ed Business Profession r Housewife te Retired is eg nr UAs the evident from the chart that out of 50 respondents 10% are of servicemen, 30% are of business men, 20% are of professions, 10% are ofhousewives and remaining 30% are of retired. 3) Income (a) 50,000 to 1,00,000 (b) 1,00,000 to 5,00,000 (c) More than 5,00,000 91
  • 92. Income (Per Annum) No. 50,000 to 1,00,000 10 1,00,000 to 5,00,000 25 More than 5,00,000 15 TOTAL 50,000 to 50 1,00,000 1,00,000 to 5,00,000 More than 5,00,000 ed r te isAs the evident from the chart out of 50 respondents 20% are earning egannually between 50,000 to 1,00,000, 50% are earning between 1,00,000 to nr5,00,000 and 30% are earning more than 5,00,000. U 4) Family members (a) 2 (b) 3 (c) 4 (d) More than 4 92
  • 93. Family Members No. 2 5 3 15 4 20 More than 4 10 TOTAL 50 2 ed 3 4 r te More than 4 is eg nr UAs the evident from the chart out of 50 respondents 10% have 2 familymembers, 30% have 3 family members, 40% have 4 family members andremaining 20% have more than 4 family members.6.6 SWOT ANALYSISSWOT analysis is the analysis of the internal and external factors, whichhave impact on the survival of any organization. Now let’s make SWOTanalysis for reliance Life Insurance Company Limited. 93
  • 94. ☻STRENGTHS: 1) Reliance Life Insurance Company Limited is the part of the Reliance Capital. 2) The brand name is enough to sell the products easily. 3) Private placement of Rs. 10,000 crs worth of securities with RBI by the government. Led to an improvement in market securities. 4) Strong liquidity from FII was the major reason for the up move. 5) Range of products ed 6) Reliance has a long and strong history of solvency, financial r te stability. is eg nr U▼WEAKNESSES: 1) Newly established company, so people seems it risky. 2) Lack of staff. 94
  • 95. 3) Lack of advertisement, so most of the customers are not aware of the Reliance Life Insurance.☼ OPPORTUNITY: 1) There is a vast untapped market in India. The life insurance penetration in India is approximately 2.5%. So it has large potential. 2) Intention of traditional products is to encourage long term, regular and disciplined savings to systematically build up a target fund. ed r 3) The average insurance premium being collected by the te is company has been growing exponentially year on year. eg nr● THREATS: U 1) The main threat is from the other players who have grabbed approximately 15% of the market share. 2) As the government has scrapped the rebate on the life insurance premium, the people who used to invest in life insurance for the sole motive of tax benefit may turn to other instruments. CHAPTER – 7 FINANCE DEPARTMENT 95
  • 96. r ed te is eg nr U FUND PERFORMANCE:- There are four fund options, which Reliance Life InsuranceCompany Limited has offered, which are as follows: 96
  • 97. 1) Capital Secure Fund:- This fund is for Reliance Golden Years Plan, and RelianceMarket Return Plan.In line with the objective of protecting the capital against any erosion, 61.4%of the funds were invested in short-term Government Securities (Gilts) andto meet liquidity requirement higher about 40% of funds are kept in shortterm bank deposits. The net return credited to policyholders and the assetcomposition ratios are given in the boxes below.Net Returns during last 1 month (Mar.’06) ed 0.36%Net Returns during the last 3 months (Jan.-Mar.’06) 1.10% r teNet Returns during the last 12 months (Apr.’05-Mar.’06) 4.09% is egNet Returns since Inception in Feb’03 (Annualized) 3.89% nr U Bank Fixed Deposits Asset Name % of total assets Total Bank Deposit 38.60 Gilts 6.75% GOI 2006 6.75 11.68% GOI 2006 13.69 11.75% GOI 2006 40.96 97
  • 98. Total Gilts 61.40 Total 100.00 Asset Allocation:- Gilts Bank Deposits ed r te is eg 2) Balanced Fund:- nr This fund is for Reliance Golden Years Plan, and Reliance Market UReturn Plan. To take advantage of the bullish trend in the equity market, theequity holdings in the fund was maintained as close as possible to themaximum of 20% allowed for the fund. Bank deposits were maintained onlyfor the purpose of liquidity management. To reflect their bearish view on thedebt market the duration of the fixed income portfolio was kept low. Withinthe fixed income portfolio, allocation to Gilts was higher than corporatebonds. All the bonds in the portfolio are top rated. The asset composition,the details of the portfolio and the net returns are disclosed below.Net Returns during last 1 month (Mar.’06) 2.47% 98
  • 99. Net Returns during the last 3 months (Jan.-Mar.’06) 4.07%Net Returns during the last 12 months (Apr.’05-Mar.’06) 13.83%Net Returns since Inception in Feb’03 (Annualized) 13.10% Asset Name % of Total Asset Equity 20 Corporate Bonds & Debentures 22 Gilts 53 Bank Deposits 5 Total ed 100.00 r te is Equity eg nr Corporate Bonds & Debentures U Gilts Bank Deposits 3) Growth Fund:- 99
  • 100. This fund is for Reliance Golden Years Plan, and Reliance MarketReturn Plan. To take advantage of the bullish trend in the equity market, the equityholdings in the fund was maintained as close as possible to the maximum of20% allowed for the fund. To reflect their bearish view on the debt marketthe duration of the fixed income portfolio was kept low. All the bonds in theportfolio are top rated. The asset composition, the details of the portfolio andthe net returns are disclosed below.Net Returns during last 1 month (Mar.’06) ed 4.60%Net Returns during the last 3 months (Jan.-Mar.’06) 7.99% r teNet Returns during the last 12 months (Apr.’05-Mar.’06) 24.90% isNet Returns since Inception in Feb’03 (Annualized) 21.04% eg nr U Asset Name % of Total Asset Equity 9 Corporate Bonds & Debentures 40 Gilts 45 Bank Deposits 6 Total 100.00 100
  • 101. Equity Corporate Bonds & Debentures Gilts Bank Deposits 4) Equity Fund:- This fund is for Reliance Market Return Plan. In line with the edstated asset allocation pattern and their view of the market, the entire corpus rof the fund was invested in equities. Net returns earned since inception and tethe full portfolio are disclosed below. is eg nrNet Returns during last 1 month (Mar.’06) 11.18% UNet Returns during the last 3 months (Jan.-Mar.’06) 20.02%Net Returns during the last 12 months (Apr.’05-Mar.’06) 64.46%Net Returns since Inception in Feb’03 (Annualized) 57.83% 101
  • 102. Asset Name % of Total Asset Equity 98.93 Mutual Fund/Bank Deposits 1.07 Total 100.00 Equity Mutual Fund/Bank Deposits ed r te is eg nr UCHAPTER – 8 102
  • 103. CONCUSION r ed te is eg nr UAfter the deep study of insurance sector of India, I can tell that this isthe sector, which has most business opportunities perhaps in India. 103
  • 104. Insurance industry is one of the fastest sectors in India. Insurance sector has been growing by 25% to 30% and it is expected to increase by 50% in coming 5 years. After the opening up of the insurance sector, it has become much competitive and insurance awareness among people has increased. As far as the comparison of Reliance Life Insurance and other players is concerned, there are both positive as well as negative impacts on both the sides. For Reliance Life Insurance, the negative aspect is that its market share is low. For private players the negative aspect is that they have to fight with ed the public sector giant which is established player with a high brand r te value. is eg But the positive impact is that the life insurance awareness has nr increased and the business of Reliance Life Insurance has increased. UCHAPTER – 9 BIBLIOGRAPHY AND REFERENCES 104
  • 105. ed r te is eg nr Uwww.reliancelife.comwww.indiainfoline.comwww.bimaonline.comwww.google.com 105
  • 106. Life Time Magazine of Reliance Life Insurance Net Bios Computer Academy’s Life Insurance Book Broachers of Reliance Life Insurance r ed te is eg nr UCHAPTER – 10 ANNEXURE 106
  • 107. Questionnaire r ed te is eg nr U Survey by student of R.K.C.B.M. On Life InsuranceNAME: ___________________________________________Q.1 What is your main motive behind investing in life insurance? (a) Tax Benefit (b) Savings (c) Risk Cover 107
  • 108. (d) Return/YieldQ.2 Rank the above motives according to your preference MOTIVE OF INVESTMENT TAX BENEFIT SAVINGS RISK COVER RETURN/YIELDPreference 1 2 3 4Q.3 How do you decide about investing in life insurance? (a) On my own ed (b) family decision r te (c) Employer decides is eg (d) as per the guidance of agent nrQ.4. Which life insurance policy would you prefer to buy? U (a) Term Assurance (b) Whole Life (c) Endowment (d) Combination of Whole Life and Endowment (e) Unit LinkedQ.5 Would you prefer Reliance Life Insurance or LIC for buying thelife insurance policy? (a) Reliance Life Insurance (b) LIC 108
  • 109. ed r te is eg nr PERSONAL DETAILS U1) Age (a) 18 to 30 (b) 31 to 50 (c) 51 to 652) Occupation (a) Service (b) Business 109
  • 110. (c) Profession (d) Housewife (e) Retired3) Income (a) 50,000 to 1,00,000 (b) 1,00,000 to 5,00,000 (c) More than 5,00,0004) Family members (a) 2 r ed te (b) 3 is eg (c) 4 nr (d) More than 4 U 110