1
A
Project Study Report
On
“Awareness of Life Insurance Products in Indian Market.”
At
HDFC STANDARD LIFE INSURANCE CO. L...
2
PREFACE
All the learning in our M.B.A course is practice oriented. However, hands-on experience in
the corporate world d...
3
ACKNOWLEDGMENT
I express my sincere thanks to Dr. R.K. Balyan, Director, Advent institute of Management
studies and my p...
4
EXECUTIVE SUMMARY
The insurance is primarily a social device adopted by civilized society for mitigating the
incidence o...
5
Table of contents
Sr.
No:-
Chapter Name of content Page
no
1. Introduction 1.1 An overview 1-15
1.2 Profile of company 1...
6
Chapter 1
Introduction to the industry
7
INTRODUCTION
AN OVERVIEW
In today‘s emerging Indian economy the role and scope of Insurance companies has
increased mani...
8
Detariffing of interest rates by Insurance Regulatory Development Authority (IRDA), which
gave autonomy to insurers in p...
9
Segment wise splits of weighted new business premium collected during April to December
2011
Life Insurance Industry in ...
10
Even so nearly 80% of the Indian population is without life insurance cover while health
insurance and non-life insuran...
11
Growth:
•New ULIP regulations have impacted growth in H2 FY11
•In H2 we have grown 1.6%, while private industry de-grew...
12
Market Share
•Have adapted well to post September 1, 2010 regime. Ranked # 1 in H2 FY 11 amongst
private insurance comp...
13
Distribution & Product Mix:
• Ban assurance mix has improved in FY11
• We have initiated tied agency transformation pro...
14
Commission Ratio:
•Total commission rates (new business plus renewal) are also reducing as a proportion of
total premiu...
15
Operating Expenses:
•Management action on cost containment and productivity enhancement programmes has
seen operating e...
16
Importance of Life Insurance
Life insurance‘s death benefit feature and, when it is a permanent policy, its cash value,...
17
• Outstanding debt: Charge card balances, auto and school loans, home equity loans
and other installment accounts that ...
18
• A need for income: Immediate cash needs aside, a surviving spouse may need
additional income if, for example, Social ...
19
HISTORICAL PERSPECTIVE
The history of life insurance in India dates back to 1818 when it was conceived as a means
to pr...
20
Assurance Company, Oriental Insurance Company and United India Insurance Company.
These were subsidiaries of the Genera...
21
Chapter 2
Profile of the company
22
Profile of Company
HOUSING DEVELOPMENT FINANCE CORPORATION (HDFC)
The company was incorporated on 14th August 2000 unde...
23
Figure 1: Share Holding Pattern of HDFC
Figure 2: Loans Approved & Disbursed by HDFC
VISION AND VALUES
77%
12%
5%
4% 2%...
24
―The most successful and admired life insurance company, which mean that we are the
most trusted company, the easiest t...
25
COMPANY’S VALUES:
1. INTRGRETY
 Honest and trustful in every action
 Transparency
 Stick to principles irrespective ...
26
 Identify strengths and weakness accordingly allocates responsibility to achieve
common objective.
HISTORY OF EVENTS
J...
27
Standard Life agreed to participate in the Asset Management Company promoted by
HDFC to enter the mutual fund market .T...
28
 Sales
 Operations
 Finance and accounts
 Information technology
29
Plans
Insurance plans can be categorized under three major categories according to their
purpose and functionality as S...
30
Here are some of the reasons why traditional life insurance plans are the answer to the
apprehensions and challenges fa...
31
An important aspect of our product offerings is our range of protection products within the
life segment which provide ...
32
ELIGIBILITY
The age and term limit for the insured parents for taking out the HDFC Children‘s plan are
as show below:
T...
33
A proportion of Sum Assured as cash payout at regular 4 year intervals during the
policy term.
A lump sum payment on su...
34
c) Death Benefits: On unfortunate death of life assured during the policy term, we
would pay the Sum Assured plus attac...
35
ALL UNITS LINKED LIFE INSURANCE PLANS ARE DIFFERENT FORM TRADITIONAL
INSURANCE PLANS AND ARE SUBJECT TO DIFFERENT RISK ...
36
TAX BENEFITS
Premiums paid are eligible for tax benefits under Sections 80C and Sections 10(10D) of the
Income Tax Act1...
37
Various plans with their benefits can be shown as under:
PLAN BENEFIT
SAVING PLANS
Endowment Assurance Plan Life Insura...
38
COMPETITORS:
In presently there are 46 life insurance corporation companies are working and performing
in India. So def...
39
Chapter 3
Research Methodology
40
41
RESEARCH METHODOLOGY
Research is defined as a scientific and systematic search for pertinent information on a
specific ...
42
 To know the consumers‘ willingness to spend on life insurance
 To identify the factors that motivate purchase of ins...
43
Purpose for buying insurance policies
Awareness of life insurance & its products with emergence of private players
in t...
44
awareness about various products and thus find out market share of various insurance
companies. It also helps in knowin...
45
Chapter 4
Facts and Findings
46
Findings and Recommendations
FINDINGS
 Marketing is a very crucial activity in every business organization. Every prod...
47
Chapter 5
Analysis and Interpretation
48
Data Analysis:
ANALYSIS & INTERPRETATION:
TABLE 1: AGE GROUP OF SURVEYED RESPONDENTS
Age group No. of Respondents
18 - ...
49
TABLE 2: GENDER CLASSIFICATION OF SURVEYED RESPONDENTS
Particulars No. of Respondents
Male 113
Female 17
CHART 2: GENDE...
50
TABLE 3: CUSTOMER PROFILE OF SURVEYED RESPONDENTS
Customer profile No. of respondents
Student 30
Housewife 3
Working Pr...
51
TABLE 4: MARKET SHARE OF LIFE INSURANCE COMPANIES
LIFE INSURER NUMBER OF POLICIES
HDFC STANDARD LIFE 5
BIRLA SUN LIFE 4...
52
TABLE 5: ANNUAL PREMIUM PAID BY INDIVIDUALS FOR LIFE INSURANCE
Premium paid (p.a.) No. of respondents
Rs. 5000 – Rs. 10...
53
TABLE 6: POPULAR LIFE INSURANCE PLANS
Type of Plan No. of Respondents
Term Insurance Plans 53
Endowment Plans 62
Pensio...
54
TABLE 7: AWARENESS OF UNIT LINKED INSURANCE PLANS
Awareness of Unit Linked Plans No. of Respondents
Yes 74
No 56
CHART ...
55
TABLE 8: CONSUMER WILLINGNESS TO SPEND ON LIFE INSURANCE PREMIUM
Willingness to spend on
premium
No. of
respondents Per...
56
TABLE 9: CHART SHOWING IDEAL POLICY TERM
Ideal policy term No. of respondents
3 - 5 years 25
6 - 9 years 20
10 – 15 yea...
57
The outlook of insurance as a product should be changed from something which you pay
for your whole life (whole life po...
58
10: FACTORS THAT MOTIVATE RESPONDENTS TO PURCHASE INSURANCE
Parameter No. of Respondents
Advertisements 17
High returns...
59
TABLE 11: PREFERRED COMPANY TYPE OF THE RESPONDENTS
Type of Company No. of Respondents Percentage
Government Owned
Comp...
60
TABLE 12: MINIMUM EXPECTED RETURN ON INVESTMENT
Expected Returns No. of respondents
Less than 5% 3
5% - 10% 20
11% - 15...
61
From the chart above it can clearly been seen that 18% of the respondents would like 16 –
20% returns, 17% would like r...
62
Chapter 6
SWOT Analysis
63
SWOT ANALYSIS OF HDFC SL
SSTTRREENNGGTTHHSS::
HDFC SL‘s strengths are many, to mention a few:
a) Global Presence
Its co...
64
OOPPPPOORRTTUUNNIITTIIEESS::
a) Increasing consumer awareness about Insurance and its use.
b) Tremendous untapped poten...
65
LIMITATIONS
Though every effort was put in to make this report authentic in every respect,
there were few uncontrollabl...
66
Chapter 7
Conclusion
67
Conclusion
The 6 weeks summer practical training undertaken at HDFC BANK was completed with a
great enthusiasm and succ...
68
Chapter 8
Suggestions
69
SSUUGGGGEESSTTIIOONNSS && RREECCOOMMMMEENNDDAATTIIOONNSS
 HDFC SL is having large number of channel partners but it is...
70
Chapter 9
Appendex
71
APPENDIX
Questionnaires
1. Do you own a life insurance policy/ investment plan in your name?
Yes No
2. If yes which com...
72
6.How much would you be willing to spend per annum if you were to go for an
investment/ insurance plan?
Less than Rs. 6...
73
Foreign based company
10. Typically what kind of returns would you look at from your investments? (Please
note: Higher ...
74
26 – 35 years
36 – 49 years
50 – 60 years
Above 60 years
Profile of respondent:
Student
Housewife
Working Professional
...
75
Chapter 10
Bibliography
76
BIBLIOGRAPHY
WEBSITES
“Products and Services.” HDFC-SL. <http://www.hdfcinsurance.com>.
“Historical perspective.” <http...
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  1. 1. 1 A Project Study Report On “Awareness of Life Insurance Products in Indian Market.” At HDFC STANDARD LIFE INSURANCE CO. LTD Submitted in partial fulfillment for the Award of degree of Master of Business Administration (MBA) (2011-2013) Submitted BY:- Submitted To:- Aarti mourya Dr. Sunita Agrawal MBA 3rd sem Professor ADVENT INSTITUTE OF MANAGEMENT STUDIES UDAIPUR
  2. 2. 2 PREFACE All the learning in our M.B.A course is practice oriented. However, hands-on experience in the corporate world during our course is very necessary to be able to test the ability and extent of learning of the student before fully entering the corporate world. The six week training which I underwent at HDFC-SL INSURANCE LTD, Panipat was a wonderful learning experience. I was assigned the project “Awareness of Life Insurance Products in Indian Market.” With the guidance and suggestions provided by Mr. (Deepak Shrama), my Industry Guide. I started first phase of my Research i.e. to identify which type of insurance plans HDFC-SL should market to particular market segments in India. A survey was undertaken to understand the preferences of Indian consumers with respect to insurance. While marketing policies the sole duty of an advisor/ agent is to provide insurance plans as per customer requirements.
  3. 3. 3 ACKNOWLEDGMENT I express my sincere thanks to Dr. R.K. Balyan, Director, Advent institute of Management studies and my project guide Dr., Sunita Agrawal, Professor, Deptt AIMS, for guiding me right from the inception till the successful completion of the project. I sincerely acknowledge her for extending their valuable guidance, support for literature, critical reviews of project and the report and above all the moral support she had provided to me with all stages of this project. I would also like to thank the supporting staff of Advent institute of management studies and cooperation throughout our project. (Signature of the student)
  4. 4. 4 EXECUTIVE SUMMARY The insurance is primarily a social device adopted by civilized society for mitigating the incidence of loss of income to families by unforeseen contingencies. In India, when life insurance companies started operating in the middle of 20th century the Evil play natural to all business had its sway. There was a lot of cut throat competition as well as profiteering. The avowed social objective of insurance had been totally relegated to background. As a result Life Insurance Corporation of India (LIC) came into existence on 1st September, 1956 after nationalization of all the 245 companies engaged in life insurance business. From its very inception, the Corporation has made impressive growth always striving for further improvement. However, Government made a paradigm shift in the economic policy by adopting the process of liberalization, privatization and globalization at the end of previous decade. Consequently a committee was set up under the chairmanship of Mr. Malholtra, Ex-governor of RBI for undertaking various reforms in the insurance sector in the light of new economic policy. The Committee which submitted his report in 1993 recommended the establishment of a special regulatory agency along the lines of SEBI and opening of insurance industry for private sector. This was aggressively opposed by the various trade unions of then operating insurance companies which led to some delay in implementation of Malhotra Committee‘s recommendations. However, the Government passed Insurance Regulatory and Development Authority (IRDA) Act in 1999 and established IRDA to regulate the insurance business in the country. As a result, private sector was allowed entry both in general and life insurance sector in India. IRDA also allowed foreign participation up to 26 per cent in equity shareholding of private companies. As a result many companies (both in general and life insurance) got themselves registered with IRDA to operate in India. This project was to understand the different marketing strategies adopted by the companies to increase their market share and along with it meeting their own targets to achieve the position of no.1 in respective field or segment of the market.Summer training learning helped a lot to complete this project in order to learn a lot of things of the corporate. As a project trainee the first task given to me was to understand the basic behavior of the consumer in order to manipulate the market according to the target competition. For this developed a questionnaire and I did this survey in Panipat.
  5. 5. 5 Table of contents Sr. No:- Chapter Name of content Page no 1. Introduction 1.1 An overview 1-15 1.2 Profile of company 16- 2. Research methodology 2.1 Title of the study 30 2.2 Duration of the project 32 2.3 Objective of the study 34 2.4 Simple size &method 36 2.5 Scope of the study 37 2.6 Limitation of the study 41 3. Findings & Recommendations 3.1 Findings 45 4. Data Analysis 60 5. SWOT analysis of the company 62 6. Conclusion 63 7. Suggestions&Recommendations 64 8. Appendix 65 9. Bibliography 67
  6. 6. 6 Chapter 1 Introduction to the industry
  7. 7. 7 INTRODUCTION AN OVERVIEW In today‘s emerging Indian economy the role and scope of Insurance companies has increased manifold and hence this sector has seen tremendous growth and competition over the years. With largest number of life insurance policies in force in the world, Insurance happens to be a mega opportunity in India. It‘s a business growing at the rate of 15-20 per cent annually and presently is of the order of Rs 450 billion. Together with banking services, it adds about 7 per cent to the country‘s GDP. Gross premium collection is nearly 2 per cent of GDP and funds available with LIC for investments are 8 per cent of GDP. Yet, nearly 80 per cent of Indian population is without life insurance cover while health insurance and non-life insurance continues to be below international standards. And this part of the population is also subject to weak social security and pension systems with hardly any old age income security. This it is an indicator that growth potential for the insurance sector is immense. A well-developed and evolved insurance sector is needed for economic development as it provides long term funds for infrastructure development and at the same time strengthens the risk taking ability. It is estimated that over the next ten years India Would require investments of the order of one trillion US dollar. The Insurance sector, to some extent, can enable investments in infrastructure development to sustain economic growth of the country. Insurance is a federal subject in India. There are two legislations that govern the sector- The Insurance Act- 1938 and the IRDA Act- 1999. The insurance sector in India has come a full circle from being an open competitive market to nationalization and back to a liberalized market again. Tracing the developments in the Indian insurance sector reveals the 360 degree turn witnessed over a period of almost two centuries. One of the premium sectors showing upward growth is insurance, which is a US$ 41-billion industry in India. India is the fifth largest life insurance market in the emerging insurance economies globally and is growing at 32-34 per cent annually. With increasing competitiveness amongst these, the players are bringing out newer products to attract more customers into their kitty. Foreign direct investment (FDI) up to 26 per cent is permitted under the automatic route subject to obtain a license from the official regulator, Insurance Regulatory and Development Authority (IRDA). The total number of life insurance companies operating in India is currently 22. Two major factors impacting the general insurance segment are the
  8. 8. 8 Detariffing of interest rates by Insurance Regulatory Development Authority (IRDA), which gave autonomy to insurers in pricing insurance policies and has created a competitive field in general insurance business, the second being the financial meltdown, which has also made Since the entry of private sector, the Indian life insurance sector has changed dramatically to offer a variety of life insurance solutions through a distribution network spread across the country. The Insurance Regulatory and Development Authority (IRDA) have played an important role in providing direction to the industry. The initial phase of the life insurance industry experienced high growth fuelled by a buoyant economy. As the industry moved from its infancy towards maturity, the regulatory architecture played an important role by guiding and steering the industry on the right track. It has helped in building a robust insurance industry and made favorable initiatives to give the industry an additional boost. Segment wise splits of weighted new business premium collected during April to December 2010
  9. 9. 9 Segment wise splits of weighted new business premium collected during April to December 2011 Life Insurance Industry in India Insurance is a contract between the insurance company (insurer) and the policyholder (insured). In return for a consideration (the premium), the insurance company promises to pay a specified amount to the in secured on the happening of a specific event. Insurance is a form of risk management primarily used to hedge against the risk of a contingent, uncertain loss. Insurance is defined as the equitable transfer of the risk of a loss, from one entity to another, in exchange for payment. An insurer, or insurance carrier, is a company selling the insurance; the insured, or policyholder, is the person or entity buying the insurance policy. The amount to be charged for a certain amount of insurance coverage is called the premium. Risk management, the practice of appraising and controlling risk, has evolved as a discrete field of study and practice. With the largest number of life insurance policies in force in the world, Insurance happens to be a mega opportunity in India. It‘s a business growing at the rate of 15-20 per cent annually and presently is of the order of Rs 450 billion (for the financial year 2004 – 2005). Together with banking services, it adds about 7% to the country‘s Gross Domestic Product (GDP). The gross premium collection is nearly 2% of GDP and funds available with LIC for investments are 8% of the GDP.
  10. 10. 10 Even so nearly 80% of the Indian population is without life insurance cover while health insurance and non-life insurance continues to be below international standards. A large part of our population is also subject to weak social security and pension systems with hardly any old age income security. This in itself is an indicator that growth potential for the insurance sector in India is immense. Growth in HDFC Standard Life Insurance Company Limited Twelve months ended March 2010-11 Premium Income: • A robust 17% growth in individual new business (regular premium) • Focus on single premium polices in H2 results in growth of 120% • High quality of existing business & continued focus on persistency led to 36% increase in renewal premium • A growth of 29% in total premium
  11. 11. 11 Growth: •New ULIP regulations have impacted growth in H2 FY11 •In H2 we have grown 1.6%, while private industry de-grew by 40.7% •One of the very few private insurers to achieve positive growth in FY11 •We are fastest growing amongst the top 15 private players •Since last 3 years grown faster than private industry
  12. 12. 12 Market Share •Have adapted well to post September 1, 2010 regime. Ranked # 1 in H2 FY 11 amongst private insurance companies. Ranked # 3 in private sector for the full year; # 5 during same period last year •Highest market share gain of 4.2% in private space in FY11 over same period last year
  13. 13. 13 Distribution & Product Mix: • Ban assurance mix has improved in FY11 • We have initiated tied agency transformation program, which focuses on unique agent value proposition • Renewed focus on direct distribution has led to growth of 111%.
  14. 14. 14 Commission Ratio: •Total commission rates (new business plus renewal) are also reducing as a proportion of total premium •Post September 1, 2010, first year commissions have reduced
  15. 15. 15 Operating Expenses: •Management action on cost containment and productivity enhancement programmes has seen operating expense ratio reduce over the last 3 years •Operating expenses have increased marginally by 4% against individual new business growth of 27% Total Capital: •Capital infusion by promoters has scaled down over the last 3 financial years •Generation of surplus on existing policies has reduced the need for capital draw-down •Out of the capital infusion of `1.9 bn promoters brought in `1.7 bn •Solvency Ratio as at 31st Mar 2011 was 172% as against regulatory requirement of 150%
  16. 16. 16 Importance of Life Insurance Life insurance‘s death benefit feature and, when it is a permanent policy, its cash value, make it a unique, versatile financial planning product. Financial Security in the Earning Years During your productive earning years, your ability to generate a salary may be your greatest asset. But if you die prematurely, your loved ones may not have the assets necessary to meet those needs. Life insurance death benefits can help secure your family‘s finances in the event of your untimely death. Here‘s a list of financial needs life insurance can help meet in the event of premature death. • Final expenses: The need for immediate cash at death is universal. Final expenses typically include the cost of a last illness — which could span days, weeks or longer — along with funeral and burial expenses. Death can also create a tax liability requiring immediate payment.
  17. 17. 17 • Outstanding debt: Charge card balances, auto and school loans, home equity loans and other installment accounts that were formerly paid when your steady, ongoing income was available, still need to be paid. • Housing expenses: Survivors need money for mortgage or rent payments. Ideally, funds should be earmarked to pay off a mortgage or make rental payments for a number of years. • Family income: The need to find replacement income is usually the largest and most important consideration. Even when there is more than one breadwinner, the loss of one income can be financially devastating. • Education fund: For a young family, an especially critical need is money to pay for a dependent child‘s education — something a parent‘s continuing income was expected to provide. • Social Security “blackout” period: Generally, a surviving spouse with young children receives Social Security benefits until the youngest child reaches age 16. At that point the spouse‘s benefit stops until age 60, at which point a widow‘s or widower‘s benefits become payable. Funds may be needed to fill in the income void during this period. 2 • Special needs: Providing for children with special needs presents its own challenges. While life insurance may be a cost-effective way to help provide for monetary needs, careful planning is nonetheless required. To avoid unintended consequences, it is a good idea to work closely with a qualified attorney. Estate Cash and Income Needs: When we reach the end of our working years, or are near retirement, there‘s still a need to protect the assets we‘ve accumulated over the years and also to prevent needless estate shrinkage. Life insurance can help here also. • A need for cash: Once an estate has reached a respectable size — thanks to increasing income, savings, successful investing and similar wealth-building activities — there can still be a need for cash at the estate owner‘s death. This is especially true when the property consists of non-liquid assets such as real estate, a business, or other property that cannot quickly be converted to cash. The other point is that estate taxes cannot be ignored. Depending on the size of the estate, federal estate and income taxes, state taxes and other levies can dramatically shrink assets, particularly retirement plan money. To compound the problem, estate taxes are typically payable in cash at the time of death, or shortly afterward.
  18. 18. 18 • A need for income: Immediate cash needs aside, a surviving spouse may need additional income if, for example, Social Security or pension benefits are lost or reduced at a spouse‘s death. And, depending on whether adequate retirement planning was actually done, there may also be a need for supplemental retirement income, whether or not the estate owner dies. Estate Distribution Needs: A different type of estate planning need is created by assets that are no longer necessary to provide for the individuals who amassed them. Orderly asset distribution plans must be in place to make sure the people and institutions who are supposed to receive the money actually do. • Family members: An important consideration is how to treat family members equitably and fairly when distributing estate assets. Proper planning can go a long way in preserving family harmony. Consider the example of the daughter and her siblings — she is in line to assume ownership and control of the family business. If the business assets pass to her, her siblings may feel shortchanged, unless other assets are available to provide equitable estate distribution. Once again, life insurance can help with this type of planning. • Charitable giving: An estate owner who provides funds and other support to one or more favorite charities may want to ensure that this support continues after he or she passes. Earmarking estate assets for charitable giving is one way to accomplish this, but thoughtful plans need to be made well in advance, and sufficient assets have to be in place to fulfill all the estate obligations.
  19. 19. 19 HISTORICAL PERSPECTIVE The history of life insurance in India dates back to 1818 when it was conceived as a means to provide for English Widows. Interestingly in those days a higher premium was charged for Indian lives than the non - Indian lives, as Indian lives were considered more risky to cover. The Bombay Mutual Life Insurance Society started its business in 1870. It was the first company to charge the same premium for both Indian and non-Indian lives. The Oriental Assurance Company was established in 1880. The General insurance business in India, on the other hand, can trace its roots to Triton Insurance Company Limited, the first general insurance company established in the year 1850 in Calcutta by the British. Till the end of the nineteenth century insurance business was almost entirely in the hands of overseas companies. Insurance regulation formally began in India with the passing of the Life Insurance Companies Act of 1912 and the Provident Fund Act of 1912. Several frauds during the 1920's and 1930's sullied insurance business in India. By 1938 there were 176 insurance companies. The first comprehensive legislation was introduced with the Insurance Act of 1938 that provided strict State Control over the insurance business. The insurance business grew at a faster pace after independence. Indian companies strengthened their hold on this business but despite the growth that was witnessed, insurance remained an urban phenomenon. The Government of India in 1956, brought together over 240 private life insurers and provident societies under one nationalized monopoly corporation and Life Insurance Corporation (LIC) was born. Nationalization was justified on the grounds that it would create the much needed funds for rapid industrialization. This was in conformity with the Government's chosen path of State led planning and development. The non-life insurance business continued to thrive with the private sector till 1972. Their operations were restricted to organized trade and industry in large cities. The general insurance industry was nationalized in 1972. With this, nearly 107 insurers were amalgamated and grouped into four companies- National Insurance Company, New India
  20. 20. 20 Assurance Company, Oriental Insurance Company and United India Insurance Company. These were subsidiaries of the General Insurance Company (GIC). Industry Reforms Reforms in the Insurance sector were initiated with the passage of the IRDA Bill in Parliament in December 1999. The IRDA since its incorporation as a statutory body in April 2000 has fastidiously stuck to its schedule of framing regulations and registering the private sector insurance companies. Since being set up as an independent statutory body the IRDA has put in a framework of globally compatible regulations. The other decision taken simultaneously to provide the supporting systems to the insurance sector and in particular the life insurance companies was the launch of the IRDA online service for issue and renewal of licenses to agents. The approval of institutions for imparting training to agents has also ensured that the insurance companies would have a trained workforce of insurance agents in place to sell their products.
  21. 21. 21 Chapter 2 Profile of the company
  22. 22. 22 Profile of Company HOUSING DEVELOPMENT FINANCE CORPORATION (HDFC) The company was incorporated on 14th August 2000 under the name of HDFC Standard Life Insurance Company Limited. Company‘s ambition from as far back as October 1995, was to be the first private company to re-enter the life insurance market in India. On the 23rd of October 2000, this ambition was realized when HDFC Standard Life was the only life company to be granted a certificate of registration. HDFC and Standard Life have a long and close relationship built upon shared values and trust. The ambition of HDFC Standard Life is to mirror the success of the parent companies and be the yardstick by which all other insurance companies in India are measured. Monopoly of LIC has been broken to make Indian Insurance to change its face and pace to tap the market and to make the new challenges in it. Insurance in India is not about India only; it is an open sector for the private players. The names which see in Indian insurance market is something like: - HDFC (Indian company) + Standard life (foreign player), BAJAJ (Indian company) + Allianz (foreign player), TATA (Indian company) + Aig (foreign player), and so many like them. HDFC has its joint venture with standard life. It is a private sector company. The company was registered on 23/10/2000. HDFC Standard Life Insurance Company Ltd. is one of India‘s leading private life insurance companies, which offers a range of individual and group insurance solutions. It is a joint venture between Housing Development Finance Corporation Limited (HDFC Ltd.), India‘s leading housing finance institution and one of the subsidiaries of Standard Life plc, leading providers of financial services in the United Kingdom. Both the promoters are well known for their ethical dealings and financial strength and are thus committed to being a long-term player in the life insurance industry – all- important factors to consider when choosing your insurer. Mumbai based Housing Development Finance Corporation was incorporated in 1977 by H.T. Parekh, founder chairman of ICICI which has grown to be India's leading housing finance company. Its services are aimed at individuals as well as companies availing loans for housing purposes. It also provides lease finance to companies and to development authorities for financing infrastructure and other assets along with its property related services. Companies now are tapping a lot of ways to capture the market and hence adopting different ways to hold the large portion of the market.
  23. 23. 23 Figure 1: Share Holding Pattern of HDFC Figure 2: Loans Approved & Disbursed by HDFC VISION AND VALUES 77% 12% 5% 4% 2% SHAREHOLDING PATTERN of HDFC Ltd FII & FDI Individuals Bamks & Insurance Companies Mutual Funds Companies 2005-06 2006-07 2007-08 APPROVED 256.34 333.32 425.2 DISBURSED 206.79 261.78 328.75 0 50 100 150 200 250 300 350 400 450 INbn LOANS APPROVAL & DISBURSED
  24. 24. 24 ―The most successful and admired life insurance company, which mean that we are the most trusted company, the easiest to deal with, offer the best value for money, and set the standards in the industry. In short, ‗the most obvious choice for all‘‖. HDFC Limited: HDFC is India‘s leading finance institutions has helped build more than 23, 00,000 houses since its incorporation in 1977. In Financial Year 2003-04 its assets under management crossed Rs. 36000 Cr. As at March 31, 2004 outstanding deposits stood at Rs 7840 Cr. The depositor base now stands at around 1 million depositors. Rated ‗AAA‘ CRISIL and ICRA for the 10th consecutive year Stable & experienced management high service standard. Awarded The Economic Times Corporate citizen of the year Award for its long standing commitment to community development. Presented the Dream Home‘ award for the best housing finance provider in 2004 at third Annual Outlook money Award. The Partnership: HDFC is an organization that strives for excellence, with the twin objective of enhancing customer satisfaction and shareholder value. The standard life assurance company was present in the Indian life insurance market from 1847 to 1938 when agencies were setup in Kolkata and Mumbai. Each of the JV player is highly rated and been conferred with many awards .HDFC is rated ‗AAA‘ by both CRISIL and ICRA. Similarly, standard life is rated ‗AAA‘ both by moody‘s and standard and poor‘s. This reflects the efficiency with which HDFC and standard life manage their asset base of Rs15000 Cr and Rs600000 Cr respectively.
  25. 25. 25 COMPANY’S VALUES: 1. INTRGRETY  Honest and trustful in every action  Transparency  Stick to principles irrespective of every action  Be just fair to every one 2. INNOVATION  Building a storehouse of treasure through experience.  Looking at every product and process through fresh eyes every day. 3. CUSTOMER CENTRIC  Understand his expectations by keeping him as a centric point  Listen actively  Understand customer needs and deliver solutions  Customer interest always supreme 4. PEOPLE CARE:  Genuinely understanding the people we work with  Guiding their development through training and support  Helping them develop requisite skills to reach their true potential  Know them on a personal front  Create an environment of trust and openness  Respect for the time of others 5. TEAM WORK:  Whole team take the ownership of the deliverables  Consult or involved, understand and arrive at a common objective  Cooperate and support across department boundaries
  26. 26. 26  Identify strengths and weakness accordingly allocates responsibility to achieve common objective. HISTORY OF EVENTS JANUARY 1995: HDFC and Standard life first came together for a possible joint venture, to enter the life insurance market. At the outset it was clear that both co. shared similar values and beliefs and a strong relationship quickly formed. OCTOBER 1995: The companies signed a three year joint venture agreement. Around this time Standard life purchased a 5% stake in HDFC, further strengthening the relationship. The next three years were filled with uncertainty due to changes in government and ongoing delays in getting the IRDA (Insurance Regulatory and Development Authority) Act passed in parliament. In October 1998: The joint venture agreement was renewed and additional resource made available, around this time standard Life purchased 3% of Infrastructure Development Finance company Ltd (IDFC) Standard life also started to use the services of the HDFC Treasury department to advise them upon their investments in India. End OF 1999 The opening of the market looked very promising and both companies agreed the time was right to move the operation to the next level. January 2000: An expert team form the UK joined a handpicked team from HDFC to form the core project team, based in Mumbai. Around this time Standard Life purchased a further 5% stake in HDFC and a 5% Stake in HDFC bank. In a further development
  27. 27. 27 Standard Life agreed to participate in the Asset Management Company promoted by HDFC to enter the mutual fund market .The Mutual fund was launched on 20th July. 14th August 2000: The company was incorporated under the name :HDFC STANDARD LIFE INSURACE COMPANY LIMITED: their ambition from as far back as October 1995 was to be the first private company to re enter the life insurance market in India 23rd October 2000: HDFC Standard Life became the‖ First life insurance company in the private sector: TO be granted a certificate to Registration by the Insurance Regulatory and Development Authority to transact life insurance business in India. HDFC are the main shareholders in HDFC Standard Life, with81.4%, while standard Life owns 18.6%. HDFC and Standard Life have a long and close relationship built Upon shared valued and trust. The ambitions of HDFC Standard life is to mirror the Success of the parent companies and be the yardstick by which all other insurance Companies in India are measured. HDFC Standard Life Insurance Company has been Signed on by Blue Star to provide insurance cover to its 1805 employees across India And overseas. HDFC Standard life Insurance is one of the leading players in the group insurance Segment of the life insurance business. Its group business has grown significantly since Inception and now covers over 25,000 lives across the entire industry spectrum. USP: Strong Financial History Segment: Personal and Group Insurance Target Group: Urban and Rural Investor Positioning: Complete Insurance and Financial Solution
  28. 28. 28  Sales  Operations  Finance and accounts  Information technology
  29. 29. 29 Plans Insurance plans can be categorized under three major categories according to their purpose and functionality as Shown in the following fig. Products Each of us leads a unique life and so has unique needs as per our life styles. HDFC Standard Life offers a range of products and invites to choose the one that suits the best. Our product mix covers all the life stage needs of our customers. At a broad level our major ―lines of business‖ catering to unique customer needs are life and pensions. We introduced a few traditional products during this period though our major focus was on revamping the unit linked portfolio in view of new regulations issued by IRDA. During the first half there was a skew towards unit linked pension products as in the new regime pension products would have limited flexibility. Traditional plans Traditional insurance plans, which include term, endowment and whole life policies, offer multiple benefits in terms of risk cover, return, safety and tax benefit. Traditional policies are considered risk-free, as they provide fixed income returns in case of death or maturity of the policy. Investment guidelines also ensure safety of funds with a cap on equity investment. Insurance Plans Traditional Plans ULIP Protection Plans
  30. 30. 30 Here are some of the reasons why traditional life insurance plans are the answer to the apprehensions and challenges faced by consumers and the Life Insurance industry. 1. The interest of the company and the customer are aligned: In participating products the life insurance company can make margins only when the customer makes margins and to that extent the interest of the company and the customer are aligned. As per the insurance law, the company can retain only 1/10th of the profits with 9/10th of the profits shared with the customers. This is colloquially known as the ―90/10‖ rule in the industry. Put simply if the company makes Rs 100 as profits, Rs 90 (approximately) has to be given to the customer first. 2. Investment risk is managed better in Traditional products: In Unit Linked products the investment risk lies with the customer. But most customers do not fully appreciate the risks involved in such products. In traditional participating products the investments are managed by the company in a prudent manner. This works out to the advantage of a passive investor as there are investment guarantees built into the product design. Not only are investments done in a more conservative manner, the dividends are also 'smoothed' and declared in a steady fashion. Unit Linked Insurance Plans Unit Linked Insurance Plan (ULIP) is a life insurance policy which provides a combination of risk cover and investment. The dynamics of the capital market have a direct bearing on the performance of the ULIPs. In a Unit Linked Policy, the investment risk is generally borne by the investor. Investment returns from ULIP may not be guaranteed Protection plans Protection plans are Term Plans which provide only life cover. These plans can help get adequately covered and secure our family financially in case of unfortunate event. These are low cost life insurance plans. What‘s more, depending on person‘s future responsibilities and financial commitments Increasing and Decreasing Term Plans offers the flexibility to increase or decrease the sum assured in systematic manner.
  31. 31. 31 An important aspect of our product offerings is our range of protection products within the life segment which provide income protection for the family in the unfortunate event of death or critical illness. These include our term assurance plans, home loan protection plans and health plans besides the riders available along with our savings products. Plans: The major categorized plans can be further classified as under SAVING PLANS INVESTMENT PLANS PROTECTION PLANS RETIREMENT PLANS Saving plans Children’s plan: The HDFC Children‘s plan is designed to secure our child‘s future by giving (the beneficiary) a guaranteed lumps sum, on maturity or in case of your unfortunate demise, early in the policy term. The premiums, paid by person, are invested by the company to give a good long term returns. The plan receives simple Reversionary Bonuses, which are usually added annually. At the end of the term an additional Terminal Bonus may be paid depending on the performance of the underlying investment. The HDFC Children’s plan gives: Invaluable financial support to person‘s child A choice to customize an ideal plan for person‘s child Multiple options for multiple benefits
  32. 32. 32 ELIGIBILITY The age and term limit for the insured parents for taking out the HDFC Children‘s plan are as show below: TERM PERIOD (Yrs.) AGE AT ENTRY (Yrs.) MAXIMUM AGE AT MATURITY (Yrs) Minimum Maximum Maximum Maximum 10 25 18 60 75 BONUSES: The Reversionary Bonus is usually declared annually as a percentage of the basic Sum Assured of this policy. Once added to a policy, the bonus is guaranteed to be payable either on death or maturity. The Reversionary Bonus is declared keeping in mind a long-term view of investment returns, expenses, mortality, and other experiences. Beneficiaries: The beneficiaries are the sole person it receive the benefit under the policy. At where the beneficiary is less than 18 year of age, the benefit will be paid to the appointee. TAX BENEFITS (Based on current tax lows): Premiums paid are eligible for tax benefits under Sections 80C and Sections 10 (10 D) of the income Tax Act, 1961, subject to provisions contained therein. Under Sections 80C, a person can save up to 30900 Rs. From the tax each year as premiums up to 1, 00,000 Rs. Are allowed as a deduction from person‘s taxable income. Under Sections 10(10D), the benefits received from this policy are exempt from tax. MONEY BACK PLAN: HDFC SL New money back plan is a ―with profit‖ plan that offers.
  33. 33. 33 A proportion of Sum Assured as cash payout at regular 4 year intervals during the policy term. A lump sum payment on survival up to Maturity date. Valuable financial protection to the family. BONUSES The Reversionary bonus as a percentage of the sun Assured would be declared at the end of the financial year. Once added to the policy, the bonus is guaranteed to be payable on the earlier death or on maturity. The terminal Bonus is sometimes added to policy on maturity and enables the company to pay a fair share of surplus at the end, based on the actual experience over the policy term and allowing for the reversionary bonus already attached. BENEFITS a) Money back: On completion of every 4 years. POLICY TERM (Yrs.) SURVIVAL BENEFIT AS A % OF SUM ASSURED (MONEY BACK PAYOUT) 4th yr 8th yr 12th yr 16th yr 20th yr 24th yr 12 25% 25% 50%+attaching bonus - - - 16 25% 25% 25% 25%+attaching bonus - - 20 20% 20% 20% 20% 20%+attaching bonus - 24 15% 15% 15% 15% 15% 25%+attaching bonus b) Maturity Benefits: On maturity, A person will receive survival benefits due at that point along with attaching bonuses on the full Sum Assured.
  34. 34. 34 c) Death Benefits: On unfortunate death of life assured during the policy term, we would pay the Sum Assured plus attaching bonuses to the nominee. There would be no deduction for any of the money back payouts made prior to the unfortunate death of the life Assured. ELEGIBILITY TERM (YRS) ENTRY AGE (YRS.) MAXIMUM MATURITY AGE (YRS.) MINIMUM MAXIUM 12,16,20 or 24 14 53 65 TAX BENEFITS Premiums paid are eligible for tax benefits under Sections 80C and Sections 10(10D) of the Income Tax Act1961. Under Sections 80C, a person can save up to 30900 Rs. From tax each year as premiums up to 1, 00,000 Rs. Are allowed as a deduction from person‘s taxable income. Under Sections 10(10D), the benefits received from this policy are exempt from tax. Unit linked youngster plus plan The HDFC Youngster plan gives. Valuable financial protection for child. Yearly payments to the family in case of person unfortunate demise. Flexible Benefits Payment preferences-Save-n-Gain Benefit. An outstanding investment opportunity by providing a choice of selected investments.
  35. 35. 35 ALL UNITS LINKED LIFE INSURANCE PLANS ARE DIFFERENT FORM TRADITIONAL INSURANCE PLANS AND ARE SUBJECT TO DIFFERENT RISK FACTORS. BENEFITS: Save Benefit: We will pay the sum Assured to the beneficiary. Need not pay any further premiums, we will pay 100% of all the future regular premiums, at the original level, towards the policy and all risk covers will cease. On Maturity, We will pay the fund value to the beneficiary. Save –n-Gain Benefit: We will pay the sum Assured to the beneficiary. Need not pay any further premiums, we will pay 50%of all the future premiums towards the policy and 50% of the premiums will be paid to the beneficiary and when due, on an annual basis and all risk covers will cease. On Maturity, We will pay the fund value to the beneficiary. ELEGIBILITY ELEGIBILITY LIFE OPTION LIFE & HEALTH OPTION MINIMUM ENTRY AGE 18 Years MINIMUM ENTRY AGE 65 Years 55 Years MAXIMUM MATURITY AGE 75 years 65 Years MINIMUM POLICY TERM 10Years MAXIMUM POLICY TERM 20 Years
  36. 36. 36 TAX BENEFITS Premiums paid are eligible for tax benefits under Sections 80C and Sections 10(10D) of the Income Tax Act1961. Under Sections 80C, you can save up to 30900 Rs. From your tax each year as premiums up to 1, 00,000 Rs. Are allowed as a deduction from your taxable income. Under Sections 10(10D), the benefits received from this policy are exempt from tax. Unit link pension plan: Our primary responsibility towards our customers in the Indian life insurance market is to ensure that they have adequate life cover in the event of unforeseen circumstances. While our pure protection products do that exclusively, our savings products also have an inbuilt life cover. The table below shows the in force sum assured and death benefit as on September, 30 2010 across all individual and group unit linked products.
  37. 37. 37 Various plans with their benefits can be shown as under: PLAN BENEFIT SAVING PLANS Endowment Assurance Plan Life Insurance with savings Unit linked endowment plan Life insurance and saving with Choice of investment funds Children‘s plan Financial security for your child Unit linked youngster plus plan Financial security for your child with Choice of investment funds Money back plan Life insurance with savings. INVESTMENT PLANS Single premium whole of life plan Investment with life insurance PROTECTION PLANS Term assurance plan Life insurance at an affordable price Loan cover term assurance plan Life insurance customized for home loans RETIREMENT PLANS Personal pension plan Saving for retirement Unit link pension plan Retirement saving with a choice of investment funds.
  38. 38. 38 COMPETITORS: In presently there are 46 life insurance corporation companies are working and performing in India. So definitely HDFC Standard life has good competition with other. The main competitors are as following. LIFE Insurance Corporation. ICICI Prudential Life Insurance. BAJAJ Allianz. SBI Life Insurance. BIRLA Sun Life. AVIVA. TATA AIG. Various Other Competitors In The Market Bajaj Allianz Life Insurance Co. Ltd. Birla Sun Life Insurance Co. Ltd. ICICI Prudential Life Insurance Co. Ltd. ING Vysya Life Insurance Co. Ltd. Life Insurance Corporation Of India Max New York Life Insurance Co. Ltd Met Life India Insurance Co. Ltd. Kotak Mahindra Old Mutual Life Insurance Ltd. SBI Life Insurance Co. Ltd. Tata AIG Life Insurance Co. Ltd. Reliance Life Insurance Co. Ltd.
  39. 39. 39 Chapter 3 Research Methodology
  40. 40. 40
  41. 41. 41 RESEARCH METHODOLOGY Research is defined as a scientific and systematic search for pertinent information on a specific topic. The function of a marketing research is to provide information, which assist marketer in recognizing and reacting to marketing opportunities and problems. In essence/ researchers mix managers to take the better decision. STATEMENT OF THE PROBLEM This study was undertaken to identify which type of insurance plans HDFC-SL should market to particular market segments in India. A survey was undertaken to understand the preferences of Indian consumers with respect to insurance. While marketing policies the sole duty of an advisor/ agent is to provide insurance plans as per customer requirements. In effect plans (insurance products) should be flexible to suit individual requirements. This research tries to analyze some key factors which influence the purchase of insurance like the term of the policy, the type of company, the amount of annual premium payable (capacity and willingness to spend), risk taking ability and the influence of advertising. Solutions and recommendations are made based on qualitative and quantitative analysis of the data. TITLE OF THE STUDY “Awareness of Life Insurance Products in Indian Market. (With respect to HDFCSL) ” DURATION OF THE PROJECT The duration of the project is 45 days OBJECTIVES OF THE STUDY  To explore the awareness of life insurance product in Indian Market
  42. 42. 42  To know the consumers‘ willingness to spend on life insurance  To identify the factors that motivate purchase of insurance policies  To understand the type of company preferred for investment and awareness level of consumers about unit linked insurance plans(ULIP‘s) SAMPLE SIZE A sample of 130 people will be taken for the survey. The required data collected through questionnaire. SAMPLING AREA The sampling unit may be a Geographical one such as state, District, Village etc., The geographical sampling unit under study has covered the area of Sonipat ,Panipat ,Rohtak . SAMPLING DESIGN A sample design is a definite plan for obtaining a sample from a given population. It refers to the techniques or procedures the researcher would adopt in selecting items for the sample. METHODOLOGY APPROACH  The primary data was collected by using structured questionnaire. . Getting questionnaire filled up by respondents picked up spontaneously by simple random sampling and face-to-face interview was conducted to collect the data  Developing questionnaire to conduct a survey: A questionnaire was developed to gauge Awareness of various private insurance companies Types of plans sold in the market
  43. 43. 43 Purpose for buying insurance policies Awareness of life insurance & its products with emergence of private players in the market.  Secondary Data: Secondary data is that data which somebody else had collected and which had already been passed through the statistical process. The indirect information of data from sources containing past and present information is collected from newspapers, journals, business manuals, magazines, pamphlets etc. DATA COLLECTION The information required for our project was collect mainly from the primary sources and even from secondary sources. The primary source consists of the data analyzed from questionnaire and interaction with the user at that time only. And internet is used as secondary source. Convenience sampling is used in exploratory research where the researcher is interested in getting an inexpensive approximation of the truth. As the name implies, the sample is selected because they are convenient. This non probability method is often used during preliminary research efforts to get a gross estimate of the results, without incurring the cost or time required to select a random sample. SCOPE OF STUDY Through This project it‘s trying to give an in depth analysis on the same scarping on the growth and emergence of new companies in the turf which was predominated by government backed companies. This study relates to evaluate various insurance companies in terms of products, revenue, sales, and human resources on the basis of consumer awareness about their products. It also covers emergence and growth of new insurance companies in India. In this study will go through the customers of various insurance companies and evaluate their awareness and satisfaction level with HDFCSLIC products so that company can easily improve their productivity and boost their sales. In this study a research will be conducted by using a structured questionnaire to compare the
  44. 44. 44 awareness about various products and thus find out market share of various insurance companies. It also helps in knowing customers needs which is very beneficial for company to increase productivity and boost sales. It is also helpful to understand various marketing strategies adopted by various insurance companies so that company can increase their market share by modifying marketing strategies and can better serve the customers‘ needs. I am also collecting information from the company, websites, journals, magazines and unpublished data available at company to compare various insurance companies. I have also done a certification of IRDA to get a financial advisor license. I have also gone through compliance sales training (CST) so that I can get better knowledge of existing products of HDFCSLIC and it is also helpful in comparing with other companies products. A sample of 130 people will be taken to collect data by using structured and unbiased questionnaire and probability sampling technique will be used to select sample of 130 people from whole population and a convenience sample will be selected. LIMITATIONS OF THE STUDY  The study was limited only to a few areas.  The study was conducted only for a short period of two month.  The study is based on the assumption that information provided by the respondents is true.  Respondents want to hide some information. .
  45. 45. 45 Chapter 4 Facts and Findings
  46. 46. 46 Findings and Recommendations FINDINGS  Marketing is a very crucial activity in every business organization. Every product produced within an industry has to be marketed otherwise it will remain as unsold stock, which will be of no value.  In this project we found that the investor in insurance industry are taking interest to have interest not only for security in a long term policy but also doing investment for the short term policy which is presently called the ULIPS market.  ICICI Prudential, TATA AIG have better awareness in the market then HDFC SL in private companies  Risk cover remains the most important purpose for buying insurance followed by option as investment  Premium income for HDFC SL grows by 132% for financial year 2004-2005. the company generated new business premium income of Rs.486 crore  Unit linked products accounted for over 50% of the new business premium  HDFC Standard Life continues to have one of the widest reaches among new insurance companies. The company doubled the number of offices to 104 across the country. Through these offices, the company today services customer needs in over 440 towns. The company also increased its depth in existing markets by increasing its Financial Consultant strength from 17,000 as on 31st March 2004 to over 23,000 as on 31st March 2005.  The company expanded its portfolio of products by launching plans to cover Superannuating and Leave Encashment needs, thereby offering a wide range of employee benefit solutions to its corporate clients.  Alternate Channels including bank assurance have recorded an impressive growth of over 400% to contribute 37% to the Effective Premium Income (EPI).
  47. 47. 47 Chapter 5 Analysis and Interpretation
  48. 48. 48 Data Analysis: ANALYSIS & INTERPRETATION: TABLE 1: AGE GROUP OF SURVEYED RESPONDENTS Age group No. of Respondents 18 - 25 years 62 26 - 35 years 33 36 - 49 years 22 50 - 60 years 12 More than 60 years 2 CHART 1: AGE GROUP OF SURVEYED RESPONDENTS Interpretations: 47% of the respondents fall in the age group of 18 – 25 years 25% in group of 26 – 35 years and 17% in 36 – 49 years. Therefore most of the respondents are relatively young (below 26 years of age). These individuals could be induced to purchase insurance plans on the basis of its tax saving nature and as an investment opportunity with high returns. 47% 25% 17% 9% 2% 18 - 25 years 26 - 35 years 36 - 49 years 50 - 60 years More than 60 years
  49. 49. 49 TABLE 2: GENDER CLASSIFICATION OF SURVEYED RESPONDENTS Particulars No. of Respondents Male 113 Female 17 CHART 2: GENDER CLASSIFICATION OF SURVEYED RESPONDENTS Interpretation: Mostly males are aware about the insurance and its various products only a few no. of women are aware about the insurance sector. In their houses male take care all about their insurance policy‗s related decisions. Gender of the respondents 17 113 0 20 40 60 80 100 120 Male Female No.ofrespondents Male Female
  50. 50. 50 TABLE 3: CUSTOMER PROFILE OF SURVEYED RESPONDENTS Customer profile No. of respondents Student 30 Housewife 3 Working Professional 55 Business 24 Self Employed 12 Government service employee 7 CHART 3: CUSTOMER PROFILE OF SURVEYED RESPONDENTS Interpretation: From the chart above it can clearly be seen that 43% of the respondents are working professionals, 23% are students and 18% are into business and only 2% are housewives. Therefore the target market would be working individuals in the age group of 18 – 25 years having surplus income, interested in good returns on their investment and saving income tax. 23% 2% 43% 18% 9% 5% Student Housewife Working Professional Business Self Employed Government service employee
  51. 51. 51 TABLE 4: MARKET SHARE OF LIFE INSURANCE COMPANIES LIFE INSURER NUMBER OF POLICIES HDFC STANDARD LIFE 5 BIRLA SUN LIFE 4 AVIVA LIFE INSURANCE 8 BAJAJ ALLIANZ 9 LIC 64 TATA AIG 8 ICICI PRUDENTIAL 14 ING VYSYA 7 BHARTI AXA 3 OTHERS 2 CHART 4: MARKET SHARE OF LIFE INSURANCE COMPANIES Interpretation: The largest life insurance company is Life Insurance Corporation of India completely owned by the Government of India covering 53% of market share. The largest private insurance company in India is ICICI Prudential covering 11% followed by Bajaj Allianz with 7% and HDFC is having only 4% of market share. 4% 3% 6% 7% 53% 6% 11% 6% 2% 2% HDFC STANDARD LIFE BIRLA SUN LIFE AVIVA LIFE INSURANCE BAJAJ ALLIANZ LIC TATA AIG ICICI PRUDENTIAL ING VYSYA BHARTI AXA OTHERS
  52. 52. 52 TABLE 5: ANNUAL PREMIUM PAID BY INDIVIDUALS FOR LIFE INSURANCE Premium paid (p.a.) No. of respondents Rs. 5000 – Rs. 10000 45 Rs. 10001 - Rs. 15000 29 Rs. 15001 - Rs. 24900 19 Rs. 25000 - Rs. 50000 12 Rs. 50001 - Rs. 60000 5 Rs.60001 – Rs. 80000 2 Rs. 80001 - Rs. 100000 3 CHART 5: ANNUAL PREMIUM PAID BY INDIVIDUALS FOR LIFE INSURANCE Interpretation: 39% of the respondents pay an annual premium less than Rs. 10001 towards life insurance. 25% pay less than Rs. 15001 and 17% pay less than Rs. 25000.HDFC-SL would be able to capture the market better if it introduced products/plans where the minimum premium starts at Rs. 5000 p.a. They should introduce more products like Easy Life Plus and Safe Guard where the minimum premium is Rs.6000 p.a. and Rs. 12000 p.a. respectively. 39% 25% 17% 10% 4% 2% 3% Rs. 5000 - Rs. 10000 Rs. 10001 - Rs. 15000 Rs. 15001 - Rs. 24900 Rs. 25000 - Rs. 50000 Rs. 50001 - Rs. 60000 Rs.60001 - Rs. 80000 Rs. 80001 - Rs. 100000
  53. 53. 53 TABLE 6: POPULAR LIFE INSURANCE PLANS Type of Plan No. of Respondents Term Insurance Plans 53 Endowment Plans 62 Pension Plans 8 Child Plans 4 Tax Saving Plans 10 CHART 6: POPULAR LIFE INSURANCE PLANS Interpretation: 45% of the respondents hold endowment plans and 39% of the respondents hold term insurance plans. Endowment plans are very popular and serve two purposes – life cover and savings. If the policy holder dies during the policy term the nominee gets the death benefit that is, sum assured and accumulated bonus. On survival the policy holder receives the survival benefit with a bonus. A term plan is a pure risk cover plan wherein the insured pays a lower premium for a higher sum assured. Term insurance is the cheapest form of insurance and helps the policy holder insure himself for a relatively low premium. For the returns sensitive investor term plans do not find favor as they do not offer a return in case the individual does not die during the policy term. 39% 45% 6% 3% 7% Term Insurance Plans Endow m ent Plans Pension Plans Child Plans Tax Saving Plans
  54. 54. 54 TABLE 7: AWARENESS OF UNIT LINKED INSURANCE PLANS Awareness of Unit Linked Plans No. of Respondents Yes 74 No 56 CHART 7: AWARENESS OF UNIT LINKED INSURANCE PLANS Interpretation: 57% of the respondents are aware of unit linked life insurance plans and 43% are not aware of such plans. Unit – linked plans are those where the benefits are expressed in terms of number of units and unit price. They can be viewed as a combination of insurance and mutual funds. The number of units a customer would get would depend on the unit price when they pay the premium. When the policy matures the individual gets his fund value. The value of his fund is calculated by multiplying the net asset value and number of units held by them on that day. 57% 43% Yes No
  55. 55. 55 TABLE 8: CONSUMER WILLINGNESS TO SPEND ON LIFE INSURANCE PREMIUM Willingness to spend on premium No. of respondents Percentage Less than Rs. 6000 20 15% Rs. 6001 - Rs. 10000 35 27% Rs. 10001 - Rs. 25000 54 41% Rs. 25001 - Rs. 50000 20 15% Rs. 50001 - Rs. 100000 2 2% CHART 8: CONSUMER WILLINGNESS TO SPEND ON LIFE INSURANCE PREMIUM Interpretation: 41% of the respondents are willing to spend between Rs. 10001 – Rs. 25000 for life insurance. 27 % to spend between Rs. 6001 – Rs. 10000 per annum. Only 15% would be willing to spend more than Rs. 25000 per annum as life insurance premium. We could say that the maximum premium payable by most consumers is less than Rs. 25000 p.a. This is further reduced as most customers have already invested with LIC, ICICI Prudential, Birla Sun Life, Bajaj Allianz etc. HDFC-SL is faced with a large amount of competition. Hence to capture a larger part of the market the company could introduce more reasonable plans with lesser premium payable per annum. 0 10 20 30 40 50 60 Less than Rs. 6000 Rs. 6001 - Rs. 10000 Rs. 10001 - Rs. 25000 Rs. 25001 - Rs. 50000 Rs. 50001 - Rs. 100000
  56. 56. 56 TABLE 9: CHART SHOWING IDEAL POLICY TERM Ideal policy term No. of respondents 3 - 5 years 25 6 - 9 years 20 10 – 15 years 46 16 – 20 years 18 21 – 25 years 12 26 – 30 years 2 More than 30 years 1 Whole life Policy 6 CHART 9: CHART SHOWING IDEAL POLICY TERM Interpretation: From the chart given above it can be seen that 35% of the respondents prefer a policy term of 10 – 15 years, 19% prefer a term of 3 – 5 years and 15% prefer a term of 6 – 9 years. This means that HDFC-SL could introduce more plans wherein the premium paying term is less than 15 years. 19% 15% 35% 14% 9% 2% 1% 5% 3 - 5 years 6 - 9 years 10 - 15 years 16 - 20 years 21 - 25 years 26 - 30 years More than 30 years Whole life Policy
  57. 57. 57 The outlook of insurance as a product should be changed from something which you pay for your whole life (whole life policy) and do not receive any benefit (the nominee only receives the benefit in case of your death) to an extremely useful investment opportunity with the prospects of good returns on savings, tax saving opportunities as well as providing for every milestone in your life like marriage, education, children and retirement.
  58. 58. 58 10: FACTORS THAT MOTIVATE RESPONDENTS TO PURCHASE INSURANCE Parameter No. of Respondents Advertisements 17 High returns 42 Advice from friends 23 Family responsibilities 45 Others 3 CHART 10: Interpretation: From the chart above it can be seen that 33% of the respondents purchase life insurance to secure their families, 33% take life insurance to get high returns, 17% purchase insurance on the advice of their friends and 13% purchase insurance because of the influence of advertisements. The main purpose of insurance is to cover the financial or economic loss that occurs to the family in case of the uncertain death of the policy holder. But nowadays this trend is changing. Along with protection (life cover), a savings element is being added to insurance. With the introduction of the new unit linked plans in the market, policy holders get the option to choose where their money will be invested. They can invest their money in the equity market, debt market, money market or a combination of these. The debt and money markets usually have low risk attached whereas the equity market is a high risk investment option. 13% 31% 17% 33% 6% Advertisements High returns Advice from friends Family responsibilities Others
  59. 59. 59 TABLE 11: PREFERRED COMPANY TYPE OF THE RESPONDENTS Type of Company No. of Respondents Percentage Government Owned Company 67 47% Public Limited Company 33 23% Private Company 26 18% Foreign Company 4 12% CHART 11: PREFERRED COMPANY TYPE OF THE RESPONDENTS Interpretation: From the graph above we find that 47% of the respondents preferred to purchase insurance from a government owned company, 23% of the respondents preferred to purchase insurance from a public limited company and only 12% of the respondents preferred a foreign based company. HDFC-SL could be promoted as an essentially ―Indian‖ company with a foreign tie up. Its tie up with HDFC, a trusted name in an Indian industry, could be used to give a ―push‖ to its products/ services. Heavy advertising through television, newspapers, magazines and radio is required. Very few people know that HDFC-SL is one of the trusted insurance companies in the world. These facts would surely increase the customer base it currently possesses and thereby increase sales of HDFC-SL products in the Indian insurance market. 0 10 20 30 40 50 60 70 80 Government Owned Company Public Limited Company Private Company Foreign Company
  60. 60. 60 TABLE 12: MINIMUM EXPECTED RETURN ON INVESTMENT Expected Returns No. of respondents Less than 5% 3 5% - 10% 20 11% - 15% 22 16% - 20% 23 21% - 25% 22 26% - 30% 12 31% - 40% 11 41% - 50% 7 More than 50% 10 CHART 12: MINIMUM EXPECTED RETURN ON INVESTMENT Interpretation: 2% 15% 17% 18% 17% 10% 8% 5% 8% Less than 5% 5% - 10% 11% - 15% 16% - 20% 21% - 25% 26% - 30% 31% - 40% 41% - 50% More than 50%
  61. 61. 61 From the chart above it can clearly been seen that 18% of the respondents would like 16 – 20% returns, 17% would like returns between 21 – 25% and 17% would like returns of 11 – 15% on their investments. Therefore the average return on investment should be at least 16 – 20 %. Most consumers are willing to adapt to some amount of risk but still want some guaranteed returns. Therefore the bulk of investment should be made in the balanced fund with 50% debt and 50% equity. The returns on the Secure Fund are guaranteed as these involve investment is government securities and the debt market. But the returns on these instruments are low (8 – 10%). If the company invests in shares, returns are higher (39%) but correspondingly risk borne by the policy holder is also higher. Therefore a good combination of the two instruments is often a wise choice. .
  62. 62. 62 Chapter 6 SWOT Analysis
  63. 63. 63 SWOT ANALYSIS OF HDFC SL SSTTRREENNGGTTHHSS:: HDFC SL‘s strengths are many, to mention a few: a) Global Presence Its collaborations and joint ventures with international companies such as Standard life, and partnership with chub, enable it to bring the best service available worldwide to its consumers. b) Fast paced and flexible work culture, which provides its employees autonomy to accomplish the task without much pressure from the higher authorities. Thus, employees are motivated to give their best to the organization. The core strength of HDFC SL is the talent and innovativeness of its people, which enables it to provide the ―right solution at the right time.‖ c) The mass markets handled through a chain of financial consultants usage closer to the individual. It has very strong distribution network. d) Its pool of competencies: mutual funds, sum assured, etc e) Ability to understand customer's business and offer right technology. f) Long-standing relationship with customers. g) support & service infrastructure. h) Best-value-for-money offerings. WEAKNESSES: a) HDFC SL Could not able to match LIC in remote area services. b) Always emphasizes on numbers and fast results. c) After sales service. d) Less promotional campaigns.
  64. 64. 64 OOPPPPOORRTTUUNNIITTIIEESS:: a) Increasing consumer awareness about Insurance and its use. b) Tremendous untapped potential of Insurance products in India. c) Increasing competition. d) Tie-ups with various MNC‘s enable to extract their core competencies. e) Insurance industry booming at a rate of 45% every year. TTHHRREEAATTSS:: a) New private players are coming in the market e.g. RELIANCE Insurance. b) Entry of MNC‘s giving direct competition. c) Govt. instability has a long-term repercussion affecting company‘s policies & its growth.
  65. 65. 65 LIMITATIONS Though every effort was put in to make this report authentic in every respect, there were few uncontrollable factors that might have had their influence on the final report. The various limiting factors are:- While making this report few typing and compilation result may have crept in which have not been able to get rectified. Also the major part of the data collect is primary in nature and hence the data may be subject to some human errors. The study was mainly conducted in the region of Sonipat, Panipat and few from Rohtak. It has not have included relevant respondents in other areas in the sample size. The information about some scheme differs from one source to another. As I was a trainee in the company the many secrets and the important facts, figures and information has not been provided.
  66. 66. 66 Chapter 7 Conclusion
  67. 67. 67 Conclusion The 6 weeks summer practical training undertaken at HDFC BANK was completed with a great enthusiasm and success. The main aim of having introduced to a totally new office environment and to learn stunning new things in life was covered in the training period. During my training period I come to know about the various perspectives of life insurance .I learnt how to persuade the customer emotionally for buying insurance policy. I interacted nearly 150 persons some of them have don‘t the insurance policy. The problem is faced by us is that today also people considered insurance as a negative product and they don‘t want to buy it. As a whole mostly people are aware about the various insurance providers and their products through advertisement and reference of their relatives or friends. Emotional appeal plays a very important role in the insurance sector.
  68. 68. 68 Chapter 8 Suggestions
  69. 69. 69 SSUUGGGGEESSTTIIOONNSS && RREECCOOMMMMEENNDDAATTIIOONNSS  HDFC SL is having large number of channel partners but it is not supporting & taking care all of them equally which results in increasing discontentment among new channel partners because it‘s not possible for company to support all of them equally. Company should take some positive action against it.  Company executive should visit customer on regular basis.  They should pay proper attention towards checking of various components of insurance before end user delivery. Otherwise it tends towards defame of brand name in comparison to rivals.  Need to expend customer care center as the consumer base of HDFC SL is increasing with tremendously fast pace.  Proper attention should be paid for advertisement planning otherwise it may lead to problem for customer as well as for company.  Company should tie up with some event management company to organize various promotional activities like canopy, Carnival.  Company should make policy for fixed end user price for all customers so that fair game will be played & customer would not to compromise on their margin.
  70. 70. 70 Chapter 9 Appendex
  71. 71. 71 APPENDIX Questionnaires 1. Do you own a life insurance policy/ investment plan in your name? Yes No 2. If yes which company/ company’s insurance policies do you hold? HDFC Standard Life Birla Sun Life Aviva Life Insurance Bajaj Allianz LIC Tata AIG ICICI Prudential ING Vysya Bharti AXA Others (specify name) 3. What is the approximate premium paid by you annually (in Rupees)? Rs. 5000 – Rs. 10000 Rs. 10001 – Rs. 15000 Rs. 15001 – Rs. 24900 Rs. 25000 – Rs. 50000 Rs. 50001 – Rs. 60000 Rs. 60001 – Rs. 80000 Rs. 80001 – Rs. 100000 More than Rs. 100000 (specify premium) 4. What kind of insurance policy would suit you best in your current stage of life? Life Insurance Life Insurance and Investment Plans Pension Plans Child Plans Tax saving plans 5.Are you aware of the new unit linked insurance plans in the market? Yes No
  72. 72. 72 6.How much would you be willing to spend per annum if you were to go for an investment/ insurance plan? Less than Rs. 6000 Rs. 6001 – Rs. 10000 Rs. 10001 – Rs. 25000 Rs. 25001 – Rs. 50000 Rs. 50000 – Rs. 100000 More than Rs. 100000 7. Which according to you is an ideal policy term? (Number of years you would be willing to pay premium) 3 to 5 years 6 to 9 years 10 to 15 years 16 to 20 years 21 to 25 years 26 to 30 years More than 30 years Whole life policy 8. What motivates you to purchase insurance/ investment plans? Advertisements High Returns Advice from friends Family responsibilities Others (specify) 9. In which kind of company would you prefer to make a purchase of insurance? Government owned company Public Limited Company Private Company
  73. 73. 73 Foreign based company 10. Typically what kind of returns would you look at from your investments? (Please note: Higher returns involve greater risk) Less than 5% 5% - 10 % 11% - 15 % 16% - 20 % 21% - 25% 26% - 30% 31% - 40% 41% - 50% More than 50% 11. Personal Details: Name: Phone: Gender: Male Female Age group: 18 – 25 years
  74. 74. 74 26 – 35 years 36 – 49 years 50 – 60 years Above 60 years Profile of respondent: Student Housewife Working Professional Business Self – Employed Government Service employee
  75. 75. 75 Chapter 10 Bibliography
  76. 76. 76 BIBLIOGRAPHY WEBSITES “Products and Services.” HDFC-SL. <http://www.hdfcinsurance.com>. “Historical perspective.” <http://www.wikipedia.com>. ““Reforms." Wikipedia. <http://www.wikipedia.com>. “Unit Linked Plans." Life insurance Corporation of India. <http://www.lic.com>. “Unit Linked Plans." Tata aig. <http://www.tataaig.com>. “Life Insurance." Bajaj allianz. <http://www.bajajallianz.com/ “Convenience Sampling.” Statpac. <http://www.statpac.com>. “Various private sectors companies in India.< < www.hdfcstandardlife.com www.irda.gov.in www.legalpundits.com BOOKS Business research by C.R. Kothari IC-33 LIFE INSURANCE (Revised) by INSURANCE INSTITUTE OF INDIA Indian Financial System by P.N. Varshney & D.K. Mittal NEWSPAPERS Economic times The Times of India

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