CHAPTER-I

INTRODUCTION

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UNIT LINKED INSURANCE PLANS (ULIPs)

Introduction:
Unit linked insurance plans (ULIPs) was first introduced in the 1960s and became very popular in
Western Europe and America. Birla sun life, the first private insurer in India to launch a unit linked plan
(in 2001) with the advent of the private insurance companies and increased competition, a lot has
happened in terms of product innovation and aggressive marketing of the same. The reason that is
attributed to the wide spread popularity of ULIP is because of the transparency and the flexibility which
it offers. As times progressed the plans were also successfully mapped along with life insurance need to
retirement planning. In todays times ULIP provides solution for insurance planning financial needs,
financial planning for childrens future and retirement planning. Features of ULIPs distinguish itself
through the multiple benefits that it provides to the customer.

Features of ULIPS:

In todays times, ULIPs provides solution for insurance planning, financial needs, financial planning for
childrens future and retirement planning. A feature of ULIPs distinguishes itself through the multiple
benefits that it provides to the consumer.

ULIP is contractual savings-cum-insurance plan that offers the following features

High returns
Life insurance cover
Free accident cover
Safety of capital
Tax rebate
Transparency

While some customers are comfortable with this there are others who require some more about the
features. This is provided by the insurance agents. All the charges are clearly disclosed in the product

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broachers that are given to customers. Moreover customers get a benefit illustration, which clearly
illustrates the upfront investment and morality charges that are levied on the premium and how the
money will grow over time, under a certain set of assumptions

Unit linked insurance products are those where the benefits are expressed in terms of number
of units and unit price they can be viewed as a number of units which the customer would get,
would depend on the unit price when he pays his premium. The daily unit price is based on
the market value of the underlying assets (equities, bonds, government securities) and
computed from the net assets value. At the time of launch in 2001 Birla sun life insurance as a
conscious strategy launched all its products on the unit linked platform
The premium paid by the client, less any charges to be deducted is used to buy units in the
fund selected by the client at that days unit price. So more units are added to the clients
account each time he pays a premium. If the unit price on that day is relatively high the clients
get less number of units and if the unit price is relatively low then he gets more number of
units.
In order to pay the regular monthly costs an equivalent number of units are cancelled and are
computed as costs to be deducted divided by unit price on that day.
The value of the funds depends on the unit price, which in turn is determined from the market
value of the underlying assets as seen earlier
Thus,

Fund value = unit price * No of units.

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 Definition:

Experts form Guide to investing by Robert.T.Kiyosaki unit linked insurance plans (ULIP) is a policy
which provides for life insurance where the policy value at any time varies according to the value of the
underlying assets at the time. ULIP is the life insurance solution that provides for the benefit of protection
and flexibility in investment. The investment is denoted as units and is represented by the value that it has
attained called as net assets value (NAV

ULIPs basically work like a mutual fund with a life cover thrown in they invest the premium in
market linked instruments like stocks, corporate bonds and government securities

Simply put an ULIP is a marked linked life insurance plan which invests the premium money in
various proportions in the equity and debt markets. In effect this ensures that the return on such plans are
linked to the performance of the market while also offering the individual an insurance cover at the same
time

ULIPs attempt to fulfill investment needs of an investor with protection/insurance needs of an insurance
seeker. ULIPs, work on the premise that there is class of investors who regularly invest their savings
product like fixed deposits coupon bearing bonds, debt funds, diversified equity funds and stocks. There
is another close of individuals who take insurance to provide for their family in case of an eventuality so
typically both these categories of individuals which also overlap t a large extent have a portfolio of
investments as well as life insurance. ULIP as a product combines both these products (investments and
life insurance) into a single product. This saves the investor/insurance seeker the hassles of managing
and tracking a portfolio of products.

NEED FOR THE STUDY:

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 Usually investors confuse with ulips and mutual funds. A part from some similarities mutual
funds are high varied with ULIPs.
The introduction of ULIPs has been possibly, the single- largest innovations in the field of life
insurance in the past decades.
It is necessary for investors to have a prior knowledge about different investment patterns
Choosing investment plans to suit individual economic position.
In todays market there are huge number of investment avenues are available, but investor has
to take wise decisions to increase returns and reduce the risk by making suitable investment.

OBJECTIVES OF THE STUDY:

The main objective of the project is to bring out major difference between ULIPs and
MUTUAL FUNDS.
In order to make right investment decision for maximization of returns and minimization
of risk.
To know the fund option available to the insured.
To compare the ULIPs of different life insurers in term of their focus.
The objective also includes explain the basic features and types of mutual funds as well as
features of ULIPs.
To know other important aspects affecting the interest of the policy holders.

SCOPE OF THE STUDY:

The study delves into the concept of ULIPs plan.

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 It studies the various investment avenues like mutal funds, traditional plans and other savings
schemes.
The study evaluates the performance of ULIPs scheme provided by ICICI LIFE
PRUDENTIAL
The study focuses on creating awareness among the investors about the right investment products
and helping investors understand the risk and return in the plan.
The study also analyses the superiority of ULIPs over fixed deposits.
It also compares ULIPs with other investment avenues.

RESEARCH METHODOLOGY:

The data collection methods include both primary and secondary collection methods.

Primary method:

This method includes the data collected from the personal interaction with authorized members of the
insurance and mutual funds companies.

Secondary method:

The data collected from the magazines of the BSE, economic times and mutual fund insight.

The brochures and the material provided by the ICICI LIFE PRUDENTIAL

Various books relating to investments, capital markets and other related topics
News papers like economic times and business line.

LIMITATION OF THE STUDY:

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Every study has some limitations but the effectiveness of the project comes from how well
these limitations have been handled to bring out the result, which are pertinent and are adding value to
the already existing studies. This project also has some limitation but my attempt would be to strive hard
to overcome these limitation so that the results prove out be prolific and useful to the organization. Some
of these limitations are:

The study is for a limited period of 45 days

The study relies on secondary data.

The data and figures shown are as given by the bank.

The study does not attempt to analyze the insurance sector as a whole, but islimited to ULIPs

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 CHAPTER-II
REVIEW OF LITERATURE

8
MUTUAL FUNDS IN INDIA

HISTORY OF MUTUAL FUNDS IN INDIA

The mutual fund industry in India started in 1963 with the formation of unit trust of India, at the initiative
of the government of India and reserve bank. The history of mutual funds in India can be broadly divided
into four distinct phases.

FIRST PHASE-1964-87:

Unit trust of India (UTI) was established on 1963 by an act of parliament. It was up the reserve bank of
India and functioned under the regulatory and administrative control of the reserve bank of India. In 1987
UTI was de-linked from the RBI and the industrial development bank of India (IDBI) took over the
regulatory and administrative control in place of RBI. The first scheme launched by UTI was unit scheme
1964. at the end of 1988 UTI has Rs.6700crores of asset under management.

SECOND PHASE-1987-93: (ENTRY OF PUBLIC SECTOR FUNDS)

In 1987 marked the entry of non-UTI, public sector mutual fund setup by public sector banks and life
insurance Corporation of India (LIC) and general insurance corporation of India (GIC). SBI mutual fund
was the first non UTI mutual fund established in june 1987 followed by can bank mutual fund in DEC87,
Punjab national bank mutual fund AUG89, Indian bank mutual fund NOV89, bank of India JUNE90,
bank of baroda mutual fund OCT92.LIC established itsmutual fund in june 1989 while GIC had set up
its mutual fund DEC90.at the end of 1993 the mutual fund industry had assets under management of
Rs.47, 004 cores

THIRD PHASE 1999-2003(ENTRY OF PVT SECTOR FUNDS)

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With the entry of PVT sector funds in 1993 a new era started in the Indian mutual fund industry giving
the Indian investor a wide choice of fund families also 1993 was the year in which the first mutual fund
regulation came into being under which all mutual fund except UTI were to be registered and governed.
The erstwhile kotare pioneer (now merged with Franklin Templeton) was the first PVT sector mutual
fund registered in July 1993. The 1993 SEBI mutual fund regulation were substituted by a more
comprehensive and revised mutual fund regulation in 1996. The industry now functions under the SEBI
mutual fund regulation 1996. The no. Of mutual fund hoses went on increasing with many foreign
mutual funds setting up funds in India and also the industry has witnessed several merges and acquisition
as the end of JAN2003 there were 33 mutual fund with total asset of Rs.1, 21,805crores. The unit trust of
India with Rs.44,541crores of assets under management was way ahead other mutual funds

FOURTH PHASE-SINCE FEB2003:

In FEB2003 following the repeal of the unit of India ACT1963 UTI was bifurcated in to separate entities.
One is the specific undertaking of the unite trust of India with assets under management of Rs.29, 835
crores as 31st end of Jan2003, representing broadly the assets of US 64 scheme, assured return and certain
other schemes. The specified undertaking of unit trust of India, functioning under an administrator and
under the rules framed by gut of India and does not come under the purview of the mutual fund
regulations.

The second is the UTI Mutual Fund Ltd, sponsored by SBI, PNB, BOB and LIC. It is registered with
SEBI and functions under the Mutual Fund Regulations. With the bifurcation of the erstwhile UTI which
had in March 2000 more than Rs.76,000 crores of assets under management and with the setting up of a
UTI Mutual Fund, conforming to the SEBI Mutual Fund Regulations, and with recent mergers taking
place among different private sector funds, the mutual fund industry has entered its current phase of
consolidation and growth. As at the end of September, 2004, there were 29 funds, which manage assets of
Rs.153108 crores under 421 schemes.

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GROWTH IN ASSETS UNDER MANAGEMENT

ABC OF Mutual Funds The India Way:

Economics of Mutual Funds

The major causer of underdevelopment of a country is the poor capital formation as it is sine qua non for
development the famous economist, prof. Ragnar Nurkse concept of vicious circle of poverty clearly
established this fact. The mobilization of small savings is one of the important aspects of prelude to
capital formation in a country Even though the Nurksian theory takes a different route to make the circle
virtuous, the essences of the theory hovers around the capital formation concept mutual funds are
engaged in mobilization of small savings in the economy and play the most crucial role in the capital
formation and for the development of a country they act as a vital link between the retail/small investors
and the capital market by mobilizing the funds from innumerable investors across the country and
thereafter investing the same in capital market in most scientific way so as to maximize the return on

11
investment. With the primary objective of maximum return, it has been a lucrative avenue for investment
specifically in the reforms era in the Indian subcontinent.

Mutual funds in India have come a long way since first established in 1964. The articles takes a
detailed look on the very basics of this investment avenue

Strengths of M F:

Mutual Funds provide several benefits to investors. Some of them are:

Benefits retail investors as a source of saving with higher return.

The concept is based on Drops make an Ocean. So, it is a mutual act common benefit.

It is professionally managed.

There is flexibility of portfolio diversification.

There is diversification of risk as it contains small investors in one hand and investment in basket
of blue chip companies, gilt-edged securities, bonds, debt instruments or indices.

There is a relative liquidity.

It is small investor savvy, so it attracts investors in large numbers.

The entry and exit load is nominal. The administration expenses are also economical.

The M F is tax efficient, as in the year 1999 the government has fully exempted the dividends of
M F units in the hands of investors from tax obligations.

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 Various investment options are available in the hands of investors which may cater to their
specific needs, reinvestment option, dividend option investment pattern such as equity, debt or
balanced funds etc.

Weaknesses of MF:

As it is the case with other investment vehicles, MF s too are not free from certain shortcomings. Some of
them are:
It has no tailor-made schemes to suit to each individual retail investor.
No guarantee of returns.
No control over costs.
It has the drawback of the problem of managing large corpus.
Volatility of return depends on market conditions, which is subject to frequent market volatility.

Mostly investment period is medium-term to long-term where expected return is more. Money Market
Mutual Funds scheme is for short period where return is not lucrative and the instruments are less in
number.

INSURANCE PLANNING THE ULIP WAY

Imagination is more important than knowledge - Albert Einstein

One of the recent innovation in the field of financial product is unit linked insurance plan (ULIP)
the article provides a deep insight into these innovative financial instruments.

ULIPs and the Traditional Insurance Plans

Traditionally insurance seekers preferred good old endowment plans to insure them. And at the
same time make some money to meet the financial objectives. The endowment plans used to serve the
purpose of the persons who really wanted to make some money from the market in addition to have
insurance coverage. But then came ULIP, which changed the entire definition of investment through

13
insurance products. Two factors were basically responsible for the advent of ULIPs in the domestic
insurance market. Inspite of being relatively new to the Indian insurance market, ULIP gained maximum
recognition. When compared to traditional insurance plans due to various reasons. The reasons are as
follows:-

Flexibility
Investments
Transparence
Liquidity

ULIPs and Mutual Funds

Often ULIPs are compared with the mutual funds, as it is quite clear, as of now that ULIPs are
definitely encroaching the turf of mutual funds. ULIPs as a investment avenue closely resemble in mutual
funds in terms of their functioning and structure. It would be an exaggeration to say ULIPs as an
insurance component super impose on a MF.

WEALTH MANAGEMENT UNDER THE UMBRELLA OF INCOME

TAX

Tax planning is one of the complex but effective ways of managing ones wealth. The article
provides an understanding of the same with an emphasis on tax saving instruments:-
Mutual Fund through the ELSS way.
Life Insurance
Public Provident Fund
National Saving Certificate.

Life Insurance:

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 This is the popular mode of investment and all investors tend to protect ones life. Generally the
insurance help the people cultivate the habit of saving on yearly basis that may be small but create the
value for money in the long term. The jeevan shree policy of 1999 fetches the guaranteed return of
around 9% a year and investor of the policy is covered against the risk and benefited with return of other
side. Insurance has now discontinued guaranteed return product due to decreasing trend of the bank rate
in the last year and today the new plan called ULIP has taken over the investing pattern of the investor.
The over all working of the ULIP does match with the mutual fund with the added benefit of insurance
cover.
.

FINANCIAL PLANNING CHALLENGES BEFORE THE INVESTORS

This article looks into the various reasons that lead people towards financial advisors, and the
reasons that give financial advisors an edge over a layman while making investment decisions.

A need as defined by the oxford dictionary, means a situation in which something is necessary or
must be done needs analysis is the process of identifying and evaluating needs. Investment is an act of
putting ones savings to tasks with a view to earn further wealth. Investing is not about putting all the
money in a savings account nor is it about investing into the emerging blue chips, hoping to make it big.
Its about taking reasonable risks to reap study rewards. The options for investing are continually
increasing, yet every single investment vehicle ca be easily categorized according to four fundamental
characteristics.

Safety
Income

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 To gain something one needs to sacrifice or forego something and to achieve more return or
more income, one needs to undertake more risk because, the safest investment avenues are
also by far the ones that provide the lowest rate of return.
Tax planning
An investor may pursue certain investments in order to adopt tax minimization as a part off
his investment strategy. A highly paid executive, for example, may seek investments with
favorable tax treatment in order to reduce his overall income tax burden.

Professional opinion
One may be confident about making all the right moves with the available money, but still
there may be a need to check with a professional to ensure best chance of success. It is always
not necessary to outsource the services of a planner for ones entire financial planning

Flexible protection

Choice of two insurance covers:

The customer has the flexibility to choose from two insurance covers - as per the customers needs.

Level insurance cover:

In the unfortunate event of death the nominee shall receive higher of the insurance cover or value of
units.

Increasing insurance cover:

In the unfortunate event of death the nominee shall receive the sum of insurance cover and the value of
units in the plan. The policyholder can change the type of cover from increasing insurance cover to level
insurance cover during the plan tenor.
Change your sum assured:

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The plan allows policyholder to change the level of insurance cover to vary the ratio of protection and
investment.

Flexible investment
Choice of four attractive fund options
The customer has the option of investing money in four attractive funds. The choice of funds is derived
from the investor risk profile which looks at factors such as age, ability to invest & risk appetite.

CHAPTER-III
INDUSTRIAL PROFILE
&
COMPANY PROFILE
17
18
INDUSTRY PROFILE

INSURANCE:

Insurance may be described as to protect the economic value of asset. It can be said to be a system of
spreading the losses of an individual over a group of individuals.Since it is an intangible product,
Insurance Industry is a service industry. Insurance Industry do not produce any goods but sell the
promise. A promise to take care of the customers or their dependents in case they suffer a loss due to
some peril during the term of policy.

What Is Insurance?

M a n k i n d i s e x p os e d t o ma n y s e r i o u s p e r i l s s u c h a s p r o p e r t y l o s s e s f r o m f i r e
a n d windstorm and personal losses from disability and premature death. Although it
isimpossible for an individual to foretell or completely prevent their occurrence but it is possible to
provide against their financial effect the loss of property and earnings.F r o m t h e p o i n t o f v i e w o f
t h e i n d i v i d u a l t h e l i f e I n s u r a n c e m a y b e d e f i n e d a s a contract whereby for
a C o ns i d e r a t i o n a mo u n t c a l l e d t h e p r e mi u m, o n e p a r t y ( t h e insurer) agrees to pay to
the other (the insured) or a beneficiary a particular amount upon the occurrence of death or any
other agreed event

Insurance is the method of spreading and transfer of risks

Losses of few unfortunate are shared by and spread over to many exposed to the same
risk.

Assets created by the owner in expectation of future needs have a value.

Losses of assets for any reason deprive the owner of the expected benefits.

It acts as a form of a safeguard against misfortunes

From the point of view of community life insurance may be defined as a

sociald e v i c e t o m a k e a c c u m u l a t i o n s t o m e e t u n c e r t a i n l o s s e s r e s u l t i n g f
r o m premature death or disability.

Purpose and Need of Insurance:

A s s a i d e a r l i e r t h a t t h e ma k i n g i s e x p o s e d t o ma n y s e r i o u s p e r i l s which risk
thes e c u r i t y o f t h e i r b e l o n g i n g s . T h e r i s k h e r e m e a n s t h a t t h e r e i s a possibil
i t y o f o c c u r r e n c e o f l o s s o r d a m a g e t o t h e p r o p e r t y, i t ma y h a p p e n o r ma y n o t
h a p p e n . Insurance is relevant only in the contingency of uncertainty. If there is no
uncertainlyabout the occurrence of the loss it cant be insured against:

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 A s s e t s a r e l i k e l y t o b e d e s t r o ye d o r ma d e n o n - f u n c t i o n a l d u e t o p e r i l s
l i k e firefloods, breakdowns, lightning and earthquake.

Damage to assets caused by any perils is the risk that assets are exposed to.

Insurance become relevant only if there is uncertainly of occurrence of event leading to

loss.

No uncertainty No insurance.

We can say that the human life value is an ongoing generating asset, which can be lost
on early death or disability caused by accidents.

I n s u r a n c e d o e s nt p r o t e c t t h e a s s e t s b u t o n l y c o mp e n s a t e s t h e e c o n o mi c
o r financial loss.

Basically insurance covers tangible assets but the concept can be extended to intangible
also

Functions of Insurance:
The functions of Insurance can be bifurcated into two parts:

1. Primary Functions2. Secondary Functions

The primary functions of insurance include the following:

Provide Protection:

The primary function of insurance is to provide protectionagainst future risk, accidents and
uncertainty. Insurance cannot check the happeningof the risk, but can certainly provide for the losses
of risk. Insurance is actually a protection against economic loss, by sharing the risk with others.

Collective bearing of risk

Insurance is a device to share the financial loss of fewamong many others. Insurance is a mean by
which few losses are shared among larger number of people.

Assessment of risk

Insurance determines the probable volume of risk by evaluatingvarious factors that give rise to risk.
Risk is the basis for determining the premiumrate also.

Provide Certainty

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 Insurance is a device, which helps to change from uncertainty tocertainty. Insurance is device whereby
the uncertain risks may be made more certain.

The secondary functions of insurance include the following:

Prevention of Losses

Insurance cautions individuals and businessmen to adoptsuitable device to prevent unfortunate

consequences of risk by observing safetyinstructions; installation of automatic sparkler or alarm systems,
etc. Prevention of losses cause lesser payment to the assured by the insurer and this will encourage for

more savings by way of premium. Reduced rate of premiums stimulate for more business and better
protection to the insured.

Small capital to cover larger risks

Insurance relieves the businessmen fromsecurity investments, by paying small amount of premium
against larger risks anduncertainty.

Contributes towards the development of larger industries

Insurance providesdevelopment opportunity to those larger industries having more risks in their
settingup. Even the financial institutions may be prepared to give credit to sick industrialunits which have
insured their assets including plant and machinery.

Life Insurance:

Life insurance is a contract where the person requiring and insurance pays
a consideration / premium to maintain a policy and the insurer promises to pay a sumassured
or a guaranteed amount on the happening of an eventuality. If no eventuality occurs then the
insured may be eligible for some bonus also.

Why life insurance:

1. P r o t e c t i o n o f t h e i n t e r e s t o f t h e f a m i l y me m b e r
2. P r o v i s i o n f o r e d u c a t i o n a n d ma r r i a g e o f t h e c h i l d r e n .
3. P o s t r e t i r e me n t i n c o me f o r s e l f a n d d e p e n d e n t s .
4. Special needs for medical expenses.
5. Provision for health /illness.
6. Provision for housing.
7. Provision for income tax rebate.

Various Players Presents In The Market

1. Bajaj Allianz Life Insurance Company Limited.

2. Birla Sun Life Insurance Co. Ltd.
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 3. HDFC Standard Life Insurance Co. Ltd.
4. ICICI Prudential Life Insurance Co. Ltd.
5. ING Vysya Life Insurance Company pvt. Ltd.
6. Life Insurance Corporation of India.
7. Max New York Life Insurance Co. Ltd.
8. Kotak Mahindra Old Mutual Life Insurance Limited.
9. SBI Life Insurance Co. Ltd.
10. Tata AIG Life Insurance Company Limited.
11. Reliance Life Insurance Company Limited.
12. ICICI LIFE PRUDENTIAL Life Insurance Co. India Pvt.Ltd.
13. Sahara India Life Insurance Co.Ltd.
14. Shriram Life Insurance Co.Ltd.
15. Bharti AXA Life insurance Company Ltd.

Introduction to IRDA
Insurance regulatory authority, 1996 (IRA):

The IRA was set up in January 1996

The IRA bill has first to be passed by parliament to make the IRA a statutory body.

Second, the powers of the erstwhile controller of insurance have to be conferredon the IRA.

Third, comprehensive legislation aimed at reviewing the insurance act of 1938 andrepealing the
LIFE INSURANCE CORPORATION ACT of 1956 and the generalinsurance (Nationalization)
act of 1972 have to be passed.

Governments pronouncements:

Post statutory status, IRA to be centre piece for future insurance sector reforms

IRA will be sole authority, which will be responsible for awarding of licensing i.e.little or no
government or political interference in licensing in process.

No restriction on the no. of licenses.

No composite licenses for life and non life business.IRDA were set up to protect the interests of
the policyholders, to regulate, promote andensure orderly growth of the insurance industry. After
this the private players startedentering the market.

INDUSTRY PROFILE
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 Incorporated in 1977 as a public limited company
To specialize in provision of housing finance to individuals, co-operative societies & the
corporate sector
First private sector retail housing finance company
ICICI is listed on both BSE and NSE
Market capitalization (June 2002) - Rs. 79 billion (US $ 1.6 bn)

COMPANY PROFILE

COMPANY NAME: ICICI STANADARD LIFE INSURANCE CO.

INDIAN PARTNER: ICICIBANK

FORIGN PARTNER: PRUDENTIAL LIFE (U.K )

EQUITY RATIO: 74:26

COMMENCEMENT DATE: January 1995

FIELD OF OPERATION: LIFE INSURANCE

CEO OF THE COMPANY: Mr. Amitabh Chaudhary

Managing Director and Chief Executive

23
Officer

. ABOUT THE COMPANY

ICICI PRUDENTIAL LIFE Insurance Limited is a joint venture between ICICI of India &
PRUDENTIAL LIFE of UK wherein ICICI has a stake of 72.37% and PRUDENTIAL LIFE a stake of
26% & rest for others.
The company currently has 28 retail and 9 group products in its portfolio, along with ten optional rider
benefits catering to the savings, investment, protection and retirement needs of customers.
ICICI is a AAA rated first private sector retail housing finance company. PRUDENTIAL LIFE UK is
the largest mutual life insurance company in Europe with assets over Rs. 5, 81,000 crores ( 83.2 bn)

Achievements
ICICI PRUDENTIAL LIFE Insurance is the first private life insurer to re-enter the life insurance market
in India. HDFCSL was the first life insurer to be granted a certificate of registration incorporated on 14 th
August 2000.
Ranked as Indias most respected private insurance company in 2004, HDFCSL seeks to mirror the
success of its parent company and be a yardstick by which all other insurance companies are measured.
During the year 2003-04, the company crossed Rs. 13,500 Crores in Sum Assured covering 450,000 lives
and registered a 76% growth in new business premium.

Growth Strategy
The future growth strategy of ICICISLIC is to reach out to more and more customers. Company is
strengthening their presence in the existing markets and also it is targeting new market, focusing on
offering customized solutions and maintaining excellent service standards.

24
ORGANIZATIONAL STRUCTURE

25
 MARKET POSITION

ICICI PRUDENTIAL LIFE Insurance Company Ltd.

In the total market share, LIC has reduced its share from 91% to 70%. This means that private insurance
players have got more margins in their hands which have increased from 9% to 30% in last 2years only.

In the private market share, ICICISLIC leads with 39% of the market share in its hand followed by Bajaj
Allianz with 18% shares and then comes Birla Sun Life with 15% market shares.

ICICISLIC has been maintaining its NO 2nd position since last 5 years because of its prolific product
range and commanding brand equity. It has a highest capital base of Rs. 925 crores and a team of more
than 56,300 well-trained advisors. It enjoys a brand recall rate of 92% and gives credit of its success to
the 5 core values-

Integrity
Customer
Boundary Less
Ownership
Passion

ICICI PRUDENTIAL LIFE

ICICI PRUDENTIAL LIFE Insurance Company is a joint venture between India's largest housing
finance provider, ICICI and Europe's largest mutual life assurance company

The PRUDENTIAL LIFE Assurance Company (U. K).

PRUDENTIAL LIFE, UK, founded in 1825, has been at the forefront of the UK insurance industry for
175 years by combining sound financial judgment with integrity and reliability.
It is the Largest Mutual Life company in Europe and has total assets of Rs. 5, 50,000 crore.

Training activities for agents/advisors:

As per IRDA guidelines, 100hrs training is compulsory.
Both online & classroom training are available.
Training is compulsory with both part-time & full time Options.
A clear exam is conducted by IRDA, the minimum qualification required is-
12th pass for urban areas`
10th pass for rural areas.

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Commission Structure:
Depends on the product, like on savings
20-40% 1st year premium.
On investment 2%
On pension 7.5%

Modes & ways through which the company recruits agents:

Direct contacts.
Newspaper adds.
Consultants.
Member of the company can introduce a new member.

Current agent force:

Around 5000-6000 in Agra.

Top 5 USPs (Unique Selling proposition) of icicistd. life;

Declared bonus every year from the day of incorporation (only company)

Provides fast service to the customers in terms of claim

g Proposition) Of ICICI Std. Life:

Best insurer according to Outlook.
Well supported by foreign 1st private sector life insurance Company to be granted a license.

PRODUCTS
ICICI PRUDENTIAL LIFE Products

Life Insurance Products are basically classified into 4 sub segments:

I. Protection Low Premium cost, High-Risk Cover
II. Investment Aim for long term real growth and steady accumulation of funds
III. Pension Provide for retirement expenses and income at old age.
IV. Savings Helps to save for a particular event in future

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 Single Premium Whole of Life Plan

Term Assurance Plan

Loan Cover Term Assurance Plan

Personal Pension Plan

Unit Linked Pension Plan

Endowment Assurance Plan

Unit Linked Endowment Plan

Childrens Plan

Unit Linked Young Star Plan

Money Back Plan

28
LIFE TIME POLICIES

ICICI PRUDENTIAL LIFE Insurance

LIFE TIME PLAN

Policy that meets your changing need over a lifetime
Premium part is adjusted towards morality and
administrative charges and rest is invested in plan of
your choice.

ENDOWMENT POLICIES
ICICI PRUDENTIAL LIFE Insurance

ICICI PRUDENTIAL LIFE INSURANCE SAVE N PROTECT

An HDFCSLIC ideal plan for those who want to accumulate funds on a regular
basis with life cover

It is a fixed term policy that combines saving with life cover. The premium is paid
regularly during the term

On death up to age: - basic premium returned without interest

On death after age 7: - sum assured @3.5% compounded interest for first 4 yrs
and then vested bonus.

29
(MONEY BACK POLICIES)
ICICI PRUDENTIAL LIFE INSURANCE

ICICI PRUDENTIAL LIFE INSURANCE CASH BACK

An ideal plan for every milestone of life. It combines life cover + liquidity +
savings.
It provides survival benefit after every 3 or 4 yrs and add-on benefit for a
nominal extra premium.

CHILDREN POLICIES
ICICI PRUDENTIAL LIFE INSURANCE

SMART KID
Plan designed for critical educational milestone include specialised course in
the country and abroad
The sum assured is paid immediately from 100,000 to 300,000
All future payments are waived off
Most importantly the Childs will continue to receive the policy benefits.

30
SINGLE PREMIUM POLICIES
ICICI PRUDENTIAL LIFE INSURANCE

ICICI PRUDENTIAL LIFE INSURANCE REASSURE

A safe and comprehensive plan for those about to retire or has retired. It combines best
of insurance and investment
Liquidity with assured and steady annual returns. Life cover up to 110% of premium
paid.
ICICI PRUDENTIAL LIFE INSURANCE ASSURE INVEST
An investment with healthy returns and added benefit of insurance.
This policy has a fixed term of 7 or10 yrs.
ICICI PRUDENTIAL LIFE INSURANCE LIFE LINK
An ideal market linked insurance plan that enables you to enjoy the upside of market
returns.
It gives you flexibility of choosing your investment option between growth, income or
balanced plan.

31
Protection Plans
Protection range includes our Term Assurance Plan & Loan Cover Term Assurance Plan.

Investment Plans
Single Premium Whole Of Life plan is well suited to meet your long term investment needs

Pension Plans

Pension range includes our Personal Pension Plan, Unit Linked Pension, Unit Linked Pension Plus

Savings Plans
Savings range includes Endowment Assurance Plan, Unit Linked Endowment, Unit Linked Endowment
Plus, Money Back Plan, Childrens Plan.

AWARDS & ACCOLADE

'Young Star Super' Voted 'Product of the Year 2010'

Best Companies to Work for in India in 2010- ranked 34 among 50.

Deepak M Satwalekar Awarded QIMPRO Gold Standard Award 2007 in business category-2008
Rated as the Best Non-Banking Financial Company in Asia by Institutional Investor Research
Group 2002
Euro money identified ICICI as one of Asias top 10 best managed companies in the finance
sector 2001
Asia money declared ICICI as the second best managed company in India 2001
IMC Ramakrishna Bajaj National Quality Award in the service category 1999

Excellence in service industry by the Indian Institute of Marketing Management & Top
Management Club (Pune) 1998
Rated as one of the best companies in India for strategy & management and investor relations by
Asia money - 1998
Best presented accounts 1994-95 and 1996-97 (3rd place) - in the SAARC region by the South
Asian Federation of Accounts in the financial sector category
Most competitive Indian company by Euro money 1997
Indias best managed company by Asia money magazine - 1995 and 1996
United Nations Scroll of Honour 1991

32
 Shield for the best presented accounts for banks and financial institutions - over 11 times (8 years
in a row)

DIRECT MARKETING

Direct marketing program of ICICI PRUDENTIAL LIFE insurance is a powerful way to communicate
with best prospects and customerstargeted direct marketing efforts are necessary for acquiring more
and more customers for the company. ICICI PRUDENTIAL LIFE Insurance Companys directing
marketing distribution channel gives the opportunity to:

Create an effective direct marketing plan

Acquire new customers
Gain insight into your direct marketing customer base
Leverage relationships with your existing customers
Improve customer retention and decrease churn
Target new direct marketing opportunities
Assist with new product development

The Direct Marketing function at ICICI PRUDENTIAL LIFE Insurance covers an array of activities -
brand and media management, channel support, direct marketing and corporate communications. The
Brand and Communications team is in charge of advertising, consumer research, media planning &
buying and Public Relations; that helps develop and nurture ICICIStandard corporate identity while
effectively communicating its varied product offerings to the customer. Channel marketing provides
support to the sales force by streamlining the design and development of collaterals and sales tools across
distribution channels. The Direct marketing team was set up to generate high quality leads for profitable
business. The team achieves this through target database acquisition and communicating customized
product information through e-mailers, telemarketing and innovative direct mailers.

ICICI PRUDENTIAL LIFE has been advertising in outdoor, TV and press. The company launched a
corporate television campaign Saat Phere which took the emotions and thoughts.

The company has also undertaken press and internet campaigns to inform customers about benefits of
some of its products, particularly retirement solutions.

33
ICICI PRUDENTIAL LIFE Insurance also introduced some innovations in the category, such as: having
a tax planner by the name of Chintamani on radio, who would answer consumers queries about the role
of insurance in financial planning.

Other initiatives included tie-up with the Dabbawalla Organization in Mumbai for a direct marketing
exercise, to talk to the customer through a non-cluttered route, and thereby have a higher impact. The
direct mailer was about ICICISLIC retirement solutions and the tax benefits that one can avail of buy
investing in any of these. About 100,000 direct mailers were attached to the dabbas, in areas such as
Churchgate, Bandra and Andheri where there are mostly office-goers.

In addition to advertising, the company has also initiated several activities to raise consumer awareness
about life insurance and ICICI PRUDENTIAL LIFE. It includes seminars ICICISLIC regularly holds
consumer awareness meets on the need for retirement planning in different cities such as Pune,
Aurangabad, Coimbatore, Nagpur, Bangalore and Mangalore. These are very well attended and have
contributed significantly towards increasing awareness about the category and the company. Apart from
this, They have also entered into alliances with telecom companies, as well as companies like BPCL and
Dominos.

TIED-AGENCY / CORPORATE AGENTS/ FINANCIAL ADVISORS

Tied agency comprising a large advisor force that targets various customer segments. An advisor is a
representative of an insurance company authorized to sell insurance policies, who has completed the
regulatory requirements for being an advisor as prescribed by the insurance regulatory and development
authority holds a current and valid license issued by IRDA to act as a life insurance agent and is
registered as an advisor with the Insurance Company.

The IRDA has prescribed a code of conduct for agents and may cancel the agents license in case of gross
misconduct and fraud.

Tied Agency is the largest distribution channel of ICICI PRUDENTIAL LIFE. The strength of tied
agency lies in an aggressive strategy of expanding and procuring quality business. With focus on sales &
people development, tied agency has emerged as a robust, predictable and sustainable business model.

The various research instruments at the hands of the researcher are as follows: -

34
 1. Observations: Under this the information is sought by way of investigators, own direct
observation without asking the respondents.
2. Interview: It involves presentation, oral-verbal, stimuli and reply in terms of oral-verbal
responses. This method can be used through personal interviews and if possible, through
telephone interviews.
3. Questionnaires: It consists of number of questions printed or typed in a definite order on a form
or a set of forms; the respondents have to answer the questions themselves.

For my survey I used the entire three Instruments.

35
Types of questionnaires:-
Questionnaires can be of 2 types.
Structured: It is one in which all questions and answers are specified and comments in the
respondents own words are held to the minimum.
Unstructured: It is one in which the answers to the questions can be framed in the
respondents own words.
My questionnaire was a structured one.

Types of questions: -
Open Ended and Closed Ended

Sample Plan
A sample plan is a definite plan for obtaining a sample from a given population. It refers to the technique
or the procedure the researcher would adopt in selecting items for the sample. It includes the following:
Sample size:-
This refers to the number of items to be selected from the universe to constitute a sample.
For my research the sample size 100 customers surveyed.

Sampling procedure
There are 2 main sampling procedures.
1. Probability Sampling
2. Non-Probability Sampling

36
 CHAPTER IV
DATA ANALYSISI
AND
INTERPRETATION

37
ULIPS Vs MUTUAL FUNDS

ULIPS as an investment avenue are closest to mutual funds in terms of their structure and functioning. As
is the case with mutual funds, the insurance company allots units investors in ULIPS and a net asset value
(NAV) is declared for the same on a daily basis. Similarly ULIPS investors have the potion of investing
across various schemes similar to the ones found in the mutual fund domain i.e. diversified equity funds,
balanced funds and debt funds to name a few. Generally speaking, ULIPS can be termed as mutual fund
schemes with an insurance component.

However it should not be construed that barring the insurance element there is nothing differentiating
mutual funds form ULIPs. Despite the seemingly comparable structures there are various factors wherein
the two differ. In this article we evaluate the two avenues on certain common parameters and find out
how they measure up.

Mode of investment/investment amounts

Mutual fund investors have the option of either making lump sum investments or investing using the
systematic investment plan (SIP) route, which entail commitments over longer time horizons. The fund
house lays out the minimum investment amounts.
ULIP investors also have the choice of investing in a lump sum (single emium) or using the
Conventional route i.e. making premium payments On an annual, half-yearly, quarterly or monthly basis.
In ULIPs, determining the premium paid is often the starting point for the investment act vity. This is in
stark contrast to conventional insurance Plans where the sum assured is the starting point And premiums
to be paid are determined thereafter.
ULIP mium amounts during the tenure. For example an Individual with access to surplus funds can
enhance The contribution thereby ensuring that his surplus
Funds are gainfully invested; conversely an individual Faced with a liquidity crunch has the option of
paying a lower amount (the difference being adjusted in the Accumulated value of his ULIP). The
freedom to modify premium payments at ones convenience Clearly gives ULIP investors an edge over
there investors also have the flexibility to alter the Premutual fund counterparts .

38
Expenses

With mutual funds, expenses charged for various activities like fund management, sales and marketing,
administration among others, are subject to limits are prescribed by the Securities and Exchange Board of
India (SEBI). For example equity-oriented funds can charge a maximum of 2.5% per annum on a
recurring basis for all expenses; any expense above the prescribed limit is borne by the fund house and
not the investors. Similarly funds also charge their investors entry and exit loads (in most cases, either is
applicable). Entry loads are charged at the timing of making an investment while the exit load is charged
at the time of sale.

Insurance companies have a free hand in levying expenses on their ULIP products with no upper limits
being prescribed by the regulator i.e. the Insurance Regulatory and Development Authority (IRDA). This
explains the complex and at times unwieldy expense structures on ULIP offerings. The only restraint
placed is that insurers are required to notify the regulator of all the expenses that will be charged on their
ULIP offerings. Expenses can have far-reaching consequences on investors since higher expenses
translate into lower amounts being invested and a smaller corpus being accumulated. ULIP-related
expenses have been dealt with in detail in the article Understanding ULIP expenses.

Portfolio Disclosure
Mutual fund houses are required to statutorily declare their portfolios on a quarterly basis, albeit most
fund houses do so on a monthly basis. Investors get the opportunity to see where their monies are being
invested and how they have been managed by studying the portfolio.
There is lack of consensus on whether ULIPs are required to disclose their portfolios. In our interactions
with leading insurers we came across divergent views. While one view was that disclosing portfolios on a
quarterly basis is mandatory, the other view was that there is no legal obligation to do so and insurers are
required to disclose portfolios only on demand.

39
1. Flexibility in altering the asset allocation
As stated earlier, offerings in mutual funds and ULIPs are largely comparable. For example plans that
invest their entire corpus in equities (diversified equity funds), a 60:40 allotment in equity and debt
instruments (balanced funds) and those investing only in debt instruments (debt funds) can be found in
both ULIPs and mutual funds.
If a mutual fund investor in a diversified equity fund wishes to shift his corpus into a debt from the
same fund house, he could have to bear an exit load and/ or entry load. On the other hand most insurance
companies permit their ULIP investors to shift investments across various plans/asset classes either at a
nominal or no cost(usually, a couple of switches are allowed free of charge every year and a cost has to
be borne for additional switches). Effectively the ULIP investor is given the option to invest across asset
classes as per his convenience in a cost-effective manner.
This can prove to be very useful for investors, for example in a bull market when the ULIP
investors equity component has appreciated, he can book profits by simply transferring the requisite
amount to a debt-oriented plan.

Tax benefits
ULIP investments qualify for deductions under section 80C of the Income Tax Act. This holds good,
irrespective of the nature of the plan chosen by the investor. On the other hand in the mutual funds
domain, only investments in tax-saving funds (also referred to as equity-linked savings schemes) are
eligible for Section 80C benefits.

Maturity proceeds from ULIPs are tax-free. In case of equity-oriented funds (for example diversified
equity funds, balanced funds), if the investments are held for a period over 12 months, the gains are tax
free; conversely investments sold within a 12 month period attract short-term capital gains tax @ 10%.
Similarly, debt-oriented funds attract a long-term capital gains tax @ 10%, while a short-term capital gain
is taxed at the investors marginal tax rate.
Despite the seemingly similar structures evidently both mutual funds and ULIPs have their unique set of
advantages to offer. As always, it is vital for investors to be aware of the nuances in both offerings and make
informed decisions

The ULIPs vs. MUTUAL FUNDS face-off

40
 ULIPs MUTUAL FUNDS
Investment Amounts Determined by the investor Minimum investment
and can be modified as well. amounts are determined by
the fund house.

Expenses No upper limits, expenses Upper limits for expenses

determined by the insurance chargeable to investors have
company. been set by the regulator.

Portfolio Disclosure Not mandatory* Quarterly disclosures are

mandatory.

Modifying asset allocation Generally permitted for free Entry/exit loads have to
or at a nominal cost borne by the investor.

Tax Benefits Section 80C benefits are Section 80C benefits are
available on all ULIP available only on investments
investments in tax-saving funds.

* There is lack of consensus on whether ULIPs are required to disclose their portfolios. While some
insurers claim that disclosing portfolios on a quarterly basis is mandatory. Others state that there is no
legal obligation to do so.

41
TYPES OF FUNDS:
Index Funds - Invests 20 to 80 % in equity market and 0 to 20 % in debt and money markets. This fund will
have high level of risk and returns. This fund is running with a returns in the line of Stock Market index like Nifty.

Secure Fund - invests 100% in high quality fixed income securities issued by the Government of
India, or companies or other bodies corporate with a high credit rating. This fund will have low level of
risk and return.

Conservative Fund - invests largely in high quality fixed income securities issued by the
Government of India or companies or other bodies corporate with a high credit rating. A small portion of
the fund, not exceeding 15%, may be invested in high quality Indian equity stocks. This fund will have a
low to moderate level of risk and return.

Balanced Fund - invests in both high quality fixed income securities issued by the Government of
India or companies or other bodies corporate with high credit rating, as well as in high quality Indian
equity stocks. However, the investment in equities will not exceed 40% of the size of the fund. This fund
will have a moderate level of risk and return.

Growth Fund - invests largely in high quality Indian equity stocks. A small portion of the fund may be
invested in high quality fixed income securities issued by the Government of India or companies or other
bodies corporate with high credit rating. This fund will have a moderate to high level of risk and return.
In addition, a small portion of each fund may be invested in cash or cash equivalents to facilitate day-to-
day running of the fund.

42
Asset Types Secure Conservative Balanced Growth Index
% % % % %
Govt.Securities 50-100 50-80 20-50 0-30 0 20
Corporate Bond 0-50 0-50 20-30 0-30 0 - 20
(Investment Grade)
Money Market 0-20 0-20 0-20 0-20 0 20
Instrument/Cash
Equities Nil 0-15 10-40 20-70 20 80

The customers can make partial or full withdrawals to meet their monetary needs. Partial withdrawals can
be made after 3 policy years. If the customer has chosen
level insurance cover, the sum assured may reduce on partial withdrawal. Full surrender can be made
anytime. However, in the first 2 policy years,
there is a surrender charge of one year's premium, and of half of one
years premium if surrendered in the 3rd policy year. There are no surrender charges after 3 policy years.

Attractive Tax Benefits:

All premiums (including all top-ups) paid are eligible for a tax rebate
under Section 80C of the Income Tax Act of 1961.
All premiums on the Dread Disease rider are eligible for a tax rebate
under Section 80D of the Income Tax Act of 1961.
All maturity benefits are tax free under Section 10 (10D) of the Income
Tax Act of 1961.
All switches are tax free

43
Other unmatched benefits
Handpicked, highly trained agent advisors
With a team of certified and highly trained agent advisors, supported by a team of specialists, the
company is fully equipped to meet the customers unique financial goals.

COMPARATIVE ANALYSIS

TOP 10 OVERALL FUNDS

Annualized NAV as on
Company Name Returns % 31/5/2016
Bajaj Allianz Equity Midcap
55.95 16.78
Plus Fund
Tata Aig - Equity Fund 52.03 20.22
ICICI Prudential Life Time
49.85 19.87
Maximiser (Growth) Plan
Bajaj Allianz - Equity Plus
48.38 21.04
Fund
Reliance Market Return Plan
46.14 17.8
- Equity Fund
Bajaj Allianz - Equity Index
46.02 18.34
Fund
ICICI LIFE PRUDENTIAL
36.47 16.99
Life Insurance Fund
SBI Life - Unit Plus Regular
36.93 14.09
Growth Fund*
Tata Aig - Growth Fund 35.82 16.38
Max New York Life - Growth
33.1 15.89
Fund
* Returns since 24th Nov 2015

ANNUALISED RETURN

44
 60 Bajaj Allianz Equity
Midcap Plus Fund
Tata Aig Equity Fund
50
ICICI Prudential -
Maximiser (Growth)
40 Plan
Bajaj Allianz Equity
Plus Fund
Reliance Market
30 Return Plan Equity
Fund
Bajaj Allianz Equity
Index Fund
20
Aviva Life Insurance
Fund
10 SBI Life Unit Plus
Regular Growth Fund
Tata Aig Growth Fund
0

Max New York Life

Insurance Companies Growth Fund

KEY FEATURES

45
 ICICI BAJAJ
PARTICULARS MNYL PRULIFE ALLIANZ
MIN AGE OF ENTRY 0 0 0
MAX AGE OF
ENTRY 60 60 60
MIN AGE OF COVER 7 7 7
MAX AGE OF
COVER 70 70 70
MIN INVESTMENT 15000 18000 15000
CHOICE OF FUNDS 4 4 5
FREE SWITCH OFF 2 4 3
MIN SUM ASSURED 5 7 5
MAX SUM
ASSURED - 150 125
PARTIAL
WITHDRAWAL 3 YEARS 3 YEARS 3 YEARS

FINANCIAL PLANNING

Ever since unit-linked insurance plans (ULIPS) made their debt, they have become a subject of munch
discussion and debate. On the one hand, they were a trifle too complicated for individuals not yet
exposed to the stock markets; on the other hands, they were much-maligned because of the unusually
high costs. As ULIPS made their presence felt, insurers were more open to discussing the costs and how
they evened out over the long term. This and flexibility that ULIPs offer became important points that
made individuals consider adding them to their portfolios. Today more individuals are open to using the
ULIP way to create wealth over the long term. Over here, we have outlined exactly how ULIPs can help
you fulfill that responsibility.

Some Important Points Are:

Since ULIPs offer a lot of flexibility, you need to keep some points in mind to optimize
the benefits.

. Notice we have recommended ULIP child plans/pension plans and even term insurance for most
individuals. When you opt for these plans it is important that you take your insurance consultant

46
 In to confidence. He is the one who is going to help you with the numbers, so you need to tell him
exactly what you are looking for in an insurance plan.
Remember there is an insurance cover associated with ULIPS. Since it is also likely that you
have other insurance plans like term and/or endowment, it is important you have a clear idea of
exactly how much your insurance cover is worth after considering all your insurance plans. This
number will prove helpful when you review your insurance cover at regular intervals.
Likewise, ULIPs also have an investment element. You are likely to have investments in mutual
fund, stocks, bonds and fixed deposits a well. You need to add up the market value of all these
investment while calculating your investment worth. This number will prove useful when you
wish to beef up your investments in a particular asset.
ULIPs Derive their power to perform from equities. When you have a lot of aggressive ULIPs
In Your portfolio it means that you are overweight on equities. Add to this your investments in
stock and equity fund, and your exposure to equities increases even further. To tempter your

equity exposure, it is generally advisable to opt for conservative/balanced ULIPs (maximum

50%equity exposure).
Even if you are a high-risk investor, you must gradually shift your assets to a conservative ULIP
option as your age advances. Financial prudence dictates that risk reduces as age increases; this
needs to reflect in all your investments including ULIPS.
Like with all investments, it is prudent to diversify your ULIP investments. This is necessary due
to several reasons with financial prudence being the most important reason. Varying flexibility
levels in ULIPs across insurance companies is another factors that more than one insurance company.
Varying level of expenses in ULIPs is another reason to opt for ULIP across insurance companies to
keep expenses on the lower side.

What is Net Asset Value (NAV) OF A Scheme?

The performance of a particular scheme of a mutual fund is denoted by NET ASSET VALUE
Mutual fund invest the money collected from the investor in securities market. In simple words NAV is
the market value of the securities held by the scheme. Since market value of securities changes every day,
NAV of the scheme also varies on day to day basis. The NAV per unit is the market value of securities of
a scheme divided by the total no of units of the schemes on any particular date. For ex. If the market
value of securities of a mutual fund scheme is Rs.200 lacs and the mutual fund has issued 10 lacs units of

47
Rs.10 each to the investors, then the NAV per unit of the fund is Rs.20. NAV is required to be disclosed
by the mutual fund on a regular basis daily or weekly depending on the types of the scheme.

The demographic profile of the respondents is analyzed on the basis of age, gender, occupation,
educational qualification and annual income. The age distribution of sample is shown in Table 1 below:

48
Table 1- Age Group Distribution

Age Group Below 20 20-40 40-60 Above 60 Total

Number of

the 13 151 116 20 300

respondents

Percentage 4.3 50.3 38.7 6.7 100

Interpretation :

It is clear from Table 1; a vast majority of respondent (85%) falls in the age band of 20-60 years. Out of 300

respondents around 50%are between 20-40 years and 38% are between 40-60 years of age.

Table 2- Gender of Respondents :

49
 Gender Number of Respondents Percentage

Male 205 68.3

Female 95 31.7

Total 300 100

Sex of Respondents

Male-
68.3%

Female-31.7%

Male Female

Interpretation_ Out of the 300 samples drawn 205 (68%) are male and it depicts the domination men in

the life insurance sector. Only 95(32%) of them are females.

50
Table-3 Occupation distribution:

Occupation Number of Respondents Percentage

Professional 49 16.3
Employee 140 46.7
Business 48 19.3
Agriculture 53 17.7
Total 290 100

Interpretation :

Occupation wise, around 46% of respondents are employees and the rest are equally

represented by professionals, businessmen and agriculturists.

51
Table 4- Educational Qualification of Respondents :

Number of
Educational Qualification Percentages
Respondents
Up to High School 48 16

Intermediate 67 22.3

Degree & above 143 47.7

Technical 42 14

Total 300 100

Interpretation :

It is also revealed from Table 1, that more than 60% of the respondents are graduates or technically qualified.

52
Table 5- Annual Income of Respondents
Number of
Annual Income Percentage
Respondents
Below 60,000 60 20
60,000-1,20,000 119 39.7
1,20,000-1,80,000 51 17

1,80,000-2,40,000 37 12.3
Above 2,40,000 33 11

Total 300 100

Interpretation :
Around 60% of the respondents have an annual income below 1, 20,000 and only 17% have income in the
range of 1, 20,000-1, 80,000. Also 11% have income above
2,40,000.The basic details of the policy held by the respondents are highlighted in Table II. It is apparent that and
equal number of samples are drawn from both LIC and ICICI.

53
Table 6- Type of the policy :

Type of Policy Number of Respondents Percentage

Whole Life 13 4.3

Endowment 42 14
Money Back 55 18.3

Pension Fund 24 8
ULIP 155 51.7
Others 11 3.7

Total 300 100

Interpretation :

Out of the total population more than 50% of the respondents have unit linked insurance

plans (ULIP) and only 18% have money back policies and endowment plans are with only 14% of customers.

54
Table 7- Periodicity of the policy :

Periodicity of Policy Number of Respondents Percentage

5 Years 22 7.3
5-15 Years 125 41.7
15-25 Years 116 38.7

Above 25 Years 37 12.3

Total 300 100

Interpretation : The table spells that around 80% of the respondents have policies with a maturity period
Periodicity of Policy
of 5 to 25 years and only 12% have policies with a maturity period of more than 25 years.
140
120
100
80
Numbers of Respondents
60
40
20
0
5 Years 5-15 Years 15-25 Years Above 25
Years

55
Top Industry Allocation

Industry Percentage of funds

Cement 1.7%
Banking & Financial Services 3.8%
IT Consultancy & Services 6.1%
Automobiles 2.2%
Dairy products 0.9%
Diversified 3.5%
Drugs & Pharmaceuticals 1.6%
Metals 1.5%
Paints & varnishes 0.8%
Prime movers 1.7%
Refinery 3.5%
Textiles 0.4%
Media 0.5%
Telecom 1.2%
Other Equities 3.4%

CAPITAL GUARANTEE PRODUCTS

A few insurance companies also offer ULIPs with a capital guarantee. This product assures
to give back to the individual the premium, which he has paid over the policy tenure in case his fund
value is less than the premiums paid. (Capital guarantee, for most insurance companies, is applicable
usually on the premium, which is net of expenses and invested, and the applicable bonus, if any). Such
ULIPs are primarily balanced funds in nature with a difference: they invest up to 30% of their portfolio in
stocks and the remaining 70% in debt instruments. The safety of the capital guarantee stems from the
fact that 70%of the premium money is invested in relatively safe debt instruments, which moderates the
risks of investing in stocks.

56
DEBT FUND
These types of funds invest the premium money in debt instrument like gsecs, bonds and
AAA rated securities. Such funds are considered to be safe in nature when compared to their riskier
equity/balanced counterparts. The returns though, tend to be lower and steadier than the equity/balanced
fund.
Debt funds act as a good avenue for individuals to park their corpus in case they fell that
the stock markets are overheated and could be headed for a correction. They also fell that they have
attained their targeted returns and would now like to book profits by shifting a parts/whole of their
corpus into debt instruments. Besides, if one considers the tax benefits which life insurance offers to
individuals, then debt investments offer a good opportunity when compared to avenues such as bank
fixed deposits.

Conservative Fund
Portfolio as on 31 May 2016
Portfolio Breakup by Asset class

Fund Performance as on 31 May 2016

57
Period Absolute returns*
Last 1 year 11.5%
Last 5 months 3.5%

Top Industry Allocation

Industry Percentage of funds
Cement 0.62%
Banking & Financial Services 1.38%
IT Consultancy & Services 1.83%
Automobiles 0.85%
Dairy products 0.38%
Diversified 1.15%
Drugs & Pharmaceuticals 0.60%
Metals 0.54%
Paints & varnishes 0.30%
Prime movers 0.63%
Refinery 1.20%
Textiles 0.1%
Media 0.2%
Telecom 0.38%
Other Equities 1.04%

58
Fund Portfolio

Industry & Scrip % of Funds

Cement 0.62%
Associated Cement Companies Ltd. 0.27%
Gujarat Ambuja Cement Ltd. 0.14%
Madras Cement Ltd. 0.22%
Banking and Financial Services 1.38%
HDFC Bank Ltd. 0.19%
HDFC Ltd. 0.29%
ICICI Bank Ltd. 0.33%
Kotak Mahindra Bank Ltd. 0.23%
UTI Bank Ltd. 0.16%
State Bank of India Ltd. 0.18%
IT Consultancy & Services 1.83%
i-flex Solutions Ltd. 0.33%
HCL Technologies Ltd. 0.25%
Infosys Technologies Ltd. 0.82%
Satyam Computer Services Ltd. 0.20%
MPHASIS BFL Ltd. 0.22%
Automobiles 0.85%
Maruti Udhyog Ltd. 0.18%
Bajaj Auto Ltd. 0.27%
Hero Honda Motors Ltd. 0.26%
TVS Motor Co Ltd. 0.15%
Dairy Products 0.38%
Nestle India Ltd. 0.38%
Diversified 1.15%
Grasim Industries Ltd. 0.34%
Larson and Toubro Ltd. 0.37%
ITC Ltd. 0.44%
Drugs and Pharmaceuticals 0.60%
IPCA Laboratories Ltd. 0.17%
Torrent Pharmaceuticals Ltd. 0.23%
Wockhardt Ltd. 0.19%
Metals 0.54%
Tata steel Ltd. 0.25%
Hindalco Industries Ltd. 0.29%
Paint and varnishes 0.3%
Goodlass Nerolac Paints Ltd. 0.26%
Prime movers 0.63%
Bharat Heavy Electricals Ltd. 0.38%
Thermax Ltd. 0.14%
Cummins India Ltd. 0.10%
Refinery 1.20%
Bharat Petroleum Corporation Ltd. 0.13%
Reliance Industries Ltd. 0.60%

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Reliance Energy Ventures Ltd. 0.02%
Reliance Natural Resources Ltd. 0.01%
Oil and Natural Gas Corporation Ltd. 0.43%
Gujarat State Petronet Ltd. 0.01%
Textiles 0.10%
Mahavir Spinning Mills Ltd. 0.15%
Media 0.20%
New Delhi Television Ltd. 0.19%
Zee Telefilms Ltd. 0.01%
Telecom 0.38%
Bharti Televentures Ltd. 0.24%
Reliance Communication Ventures Ltd. 0.14%
Other Equities 1.04%

Secured Fund
Portfolio as on 31 May 2016
Portfolio Breakup by Asset class

Fund Performance as on 31 May 2015

Period Absolute returns*

Last 1 year 4.7%
Last 5 months 1.7%

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CHAPTER-V
FINDINGS,
SUGGESTIONS
&
CONCLUSION

61
62
FINDINGS:

In total, the awareness level of the customers on various aspects of insurance products of
ICICI Pru Life is far more better than the public sector.
The hypothesized in difference in the level of knowledge across different sectors is rejected.
Private sector insurance organization ICICI Pru Life provides better quality services to the
customers than the public sectors. The difference in mean scores is statistically significant at
5% level of significance.
The policyholders face multifarious problems and there is significant difference in the
extent of problems confronted by them.
Most of the respondents in the public sectors faced problems like hidden charges, delay in
settlement of claims, misleading information from the agents, etc.
Most of the respondents are not satisfied with the grievance redressal mechanism in ICICI
which calls for strong mechanism to settle the grievances. Research studies reveal that if
customer complaints are handled efficiently, 95% of these complaints return to do
business. Thus a no error attitude and complaints management leads to higher customer
satisfaction.
There is a scope to explore the market potential by proper market survey, followed by
systematic segmenting, targeting and positioning of products and services.
The rationale behind investment in life policies is almost same in both the sectors. The
significant factors are risk coverage, tax benefit influence of agents, childrens welfare and
growth and return on investment.
The staff and lower employee cadres requires more support and encouragement from the
upper management to back them and ICICI is providing sufficient extra funds to its
agents and development officers so that they can aggressively promote the products.

63
 FEW AUTHORS ARE SAYING:

Mutual funds can generate higher returns than an ULIP : While the Indian mutual fund
industry has been evolving once the last few years, insurance too has kept pace with innovative products
like ULIPs, which bundle insurance with investment. First look at costs, ULIPs charge for life cover
(morality charges), administrative and fund management out of the premium paid by the investor. The
balance amount is then used to invest in either in stocks or bonds, or a combination of two. The
administrative charges in insurance are quite high during the first few years of the policy. This acts as a
dampener as the returns are affected due to lower levels of funds available for investment. By
comparison, the administrative charges of mutual funds are very low.
The investment strategy of the insurance company is a more cautious one compared to mutual
funds. Traditionally, ULIP have been found to invest in large cap and blue chip companies, while funds
invest across market caps and sectors depending on the investment objective of s particular scheme.
There fore mutual funds have the ability to generate higher returns than an ULIP.
Mutual funds are more liquid than ULIPs, which have a lock-in period of three years. And even after
that, an investor would stand to loose because of higher initial administrative charges. Mutual fund
schemes, apart from the ELSS schemes do not have any such lock-in period and the investor is free to
exit any time.
Although leading insurers do disclose their portfolio on a regular basis, the competitive pressure
and regulations in the mutual fund industry lead to higher disclosures-with investors knowing exactly
where their money is being invested. In conclusion, while there are merits and demerits to both products,
it would be fair to say that it is better to keep investment and insurance needs separate.

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SUGGESTIONS:
It is an old saying that more investment mistakes are made in good times than in bad times and
since the times are so good right now, the potential for making mistakes is that much higher.
Investment market change direction very quickly. Nothing prevents what look like good
investments today from turning out to be bad ones.

A large part of money that is being invested by individual small and medium investors is in
response to an active sales effort by mutual funds, portfolio managers and insurance companies.
Investors are not going out, doing their own knowledge gathering and then choosing. Rather,
there is a high pressure sales effort which is finding easy converts because the risk of the stock
markets.

Unfortunately this is leading to most investment going into those investments which bring the
maximum profit to the sales man, rather than to the one most suitable for the customer. In mutual
funds almost all new money is going into new funds which do not have a track record rather than
to tried and tested once. The reason is that fund companies are allowed to take out five percent of
the money collected as marketing expenses. Since this cannot be done with older funds,
companies find it profitable to continuously launch new funds that are just minor variations of
one. The sales man who sells you mutual funds could possibly be making five times the normal
amount for selling a new fund. No wonder his advice is always for buying new funds.

As for misguided investment that results from the doings of insurance companies, the less said the
better. Even though the insurance regulator IRDA has cracked down on the charade of very high-
priced mutual funds-unit linked plans- masquerading as insurance policies, for same reason it has
given insurance companies time till April, they had to clean up their act.
Investors who want good returns with in five years, its better to invest in mutual funds if not
ULIPs are preferable.

People who dont have life insurance cover, preferable to invest in ULIPs because it is insurance
with investment.

65
CONCLUSION:

Unit linked insurance plans were seen as a wonder product that simultaneously fulfilled an
individuals need for investment and insurance. ULIPs are modern products that are consumer friendly
and as any where in the world, these are gaining popularity and finding wide acceptance in India. Very
often it was poor selection that was responsible for the investor woes. A part from differences, while
ULIPs as an investment avenue is closet to mutual funds in terms of their functioning and structure, the
first and foremost purpose of insurance is and will always be protection. The value that it provides
cannot be down played or under estimated. As an instrument of protection, insurance provides benefits
that no investment can offer.

It is important for an investor to understand his financial goals and horizon of investment in
order to make an informed investment decision. Over a long term ULIPs are expected to provide
attractive returns and they also provide tax benefits as per existing tax laws. The decision to invest in
either a mutual fund or a ULIP should depend on the time period of investment, individual financial goals
as well as risk taking appetite. You can get clearer picture of a funds investment goals and policies by
reading its annual and semi annual reports to share holders. If you ask, the fund will send you these
reports. You can also research funds at most libraries or by using an online service

66
BIBLIOGRAPHY

67
BIBLIOGRAPHY

BOOKS:

LIFE INSURANCE PROGRAMME based on IRDA syllabus.

Product book of ICICI-Pru Life Insurance

Insurance material from bema online training centre

MAGAZINES:

BUSINESS TODAY

MUTUAL FUND INSIGHT

BUSINESS INDIA

ICFAI MAGAZINE

NEWS PAPERS:

ECONOMIC TIMES

TIMES OF INDIA

BUSINESS CHRONICLE

ICICI LIFE PRUDENTIAL INVESTOR

WEBSITES:

WWW.GOOGLE.COM

WWW.ICICI LIFE PRUDENTIALINDIA.COM

WWW.MONEYCONTROL.COM

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