SECTOR-55

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Project On

________________________________________________________________________________________________

Master of Business Administration (Marketing)

Submitted in partial fulfillment of the requirements for award of

Master of Business Administration of

Tilak Maharashtra University, Pune.

Submitted by

________Sunil Kumar____________

Roll no-09-Ait-Mba-131

PRN No.

of Ansal Institute of Technology Gurgaon

Guided By Prof._____________________

Tilak Maharashtra University Gultekdi, Pune 411037

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PREFACE

Tilak Maharashtra University, Pune(Deemed Under Section 3 of UGC Act 1956 Vide Notification No. F.9-19/85-U3 dated 24th April 1987 By the Government of India.)

Vidhyapeeth Bhavan, Gultekdi, Pune-411037.

CERTIFICATE

This is to Certify that the project titled __________________________________ is a bonafide work carried our by Mr./ Ms. ____________________________ a student of Master of Business Administration Semester 3rd, Specialization ____________________PRN.__________________ under Tilak Maharashtra University, in the year 2010.

Head of the Department ExaminerExaminer

Internal ExternalDate:

Place: University Seal

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TABLE OF CONTENTS

ACKNOWLEDGEMENTS

PREFACE

PART-1

CHAPTERS1. INTRODUCTION

A. INTRODUCTION TO LIFE INSURANCE…………………………………………………5

B. INSURANCE IN INDIA……………………………………………………………………..9

C. PRE AND POST LIBERALISED INSURANCE IN INDIA………………………………22

D. BENEFITS OF LIFE INSURANCE………………………………………………………..26

E. RESISTANCE TO LIFE INSURANCE……………………………………………………30

2. IRDA – REGULATIONS & CONTROL AND TRAINING…………………………………31

3. BAJAJ ALLIANZ – AN OVERVIEW

A. COMPANY PROFILE……………………………………………………………………..39

B. PRODUCTS OF BAJAJ……………………………………………………………………41

C. ORGANISATIONAL STRUCTURE………………………………………………………

PART-2

4. RESEARETHODLOGY……………………………………………………………………….53

5. COMPARATIVE STUDY

A. TYPES OF LIFE INSURANCE POLICIES………………………………………………..70

B. COMPARATIVE ANALYSIS OF THE PRODUCTS……………………………………..74

6. ANALYSIS OF THE SURVEY

A. QUESTIONNAIRE DESIGNIING…………………………………………………………88

B. DIAGRAMMATIC REPRESENTATION OF THE DATA……………………………….93

7. CONCLUSION………………………………………………………………………………...103

8. SUGGESTIONS……………………………………………………………………………….105

9. BIBLIOGRAPHY…………………………………………………………………………..…107

10. ANNEXURE………………………………………………………………………………….109

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Introduction

People in all walks of life are exposed to risk and uncertainty. An untimely death,

loss of goods due to theft and natural calamities like floods, earthquake are some

examples of the risk that everybody on earth faces. As days progress, man is

becoming exposed to more and more dangers both natural and man-made. Insurance

is the universal panacea that offers to provide against such risk and uncertainty.

Insurance does not profess to eliminate loss but it compensates, to some extent, the

loss, which arises from uncertain events.

The Nature of Insurance

Insurance is essentially a co-operative endeavor. Under any insurance arrangement,

basically, a large number of persons, in effect, agree to share a loss, which a few of

them are likely to incur in future. Such sharing has the advantage that the in the

individual share of loss is relatively small. When the sharing is done amongst a large

number of persons, the individual share remains fairly steady from year to year. Such

association of persons for sharing anticipated losses may be brought about voluntarily

by all participants or may be organized by a few individuals or by an insurance

organization.

The function of insurance in its various forms is to protect the few against the heavy

financial impact of anticipated misfortune by spreading the loss among many who are

exposed to the risk of similar nature. While it is not possible to predict which

individuals among the many participants are likely to be the victims of misfortune, it

is often possible to forecast the quantum of the loss, which the group as a whole may

suffer. The sharing of such loss loss among the participants ensure that the victims

are compensated for the loss suffered by them. As a consequence, the heavy and

uncertain loss to some is neutralized by the definite contribution of moderate

amounts, which every participant is required to make.

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Every member who wants to have the benefit of insurance enters into a contract with

the insurer. The evidence of contract is the policy document, which specifies the

obligation of each party. The members who obtain life insurance protection on

agreeing to ‘pay premiums’ are referred to as the policy holders. The insurer makes

administrative and financial arrangements for giving effect to the contract. Such

contracts entered into between the policy holders and the insurers are governed by the

prevailing laws.

Life Insurance Business-definition

Life insurance is the business of effecting contracts of insurance upon human life,

including any contract whereby the payment of money is assured on death (except

death by accident only) or the happening of any contingency dependent on human

life and any contract which is subject to the payment of premiums for a term

dependent on human life and shall be deemed to include.

a) The granting of disability and double or triple indemnity accident

benefits, if so provided in the contract of insurance.

b) The granting of annuities on human life, and

c) The granting of superannuating allowance and annuities payable out of

any fund applicable solely to the relief and maintenance of persons

engaged or who have been engaged in any particular profession, trade or

employment or of the dependents of such persons.

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History of insurance

The insurance sector in India dates back to 1818, when Oriental Life Insurance

Company was incorporated at Calcutta. Thereafter, few other companies like

Bombay Life Assurance Company, in 1823 and Tritron Insurance Company, for

General Insurance, in 1850 were incorporated. Insurance Act was passed in 1928 but

it was subsequently reviewed and comprehensive legislation was enacted in 1938.

The nationalisation of life insurance business took place in 1956 when 245 Indian

and Foreign Insurance provident societies were first merged and then nationalised. It

paved the way towards the establishment of Life Insurance Corporation (LIC) and

since then it enjoyed a monopoly over the life insurance business in India. General

Insurance followed suit and in 1968, the insurance act was amended to allow for

social control over the general insurance business. Subsequently in 1973, non-life

insurance business was nationalized and the General Insurance Business

(Nationalization) Act, 1972 was promulgated. The General Insurance Corporation

(GIC) in its present form was incorporated in 1972 and maintained a very strong hold

over the non-life insurance business in India. Due to concerns of

(a) Reliatively low spread of insurance in the country.

(b) The efficient and quality functioning of the Public Sector insurance companies.

(c) The untapped potential for mobilizing long-term contractual savings funds for

infrastructure.

The (Congress) government set up an Insurance Reforms committee in April 1993.

The Committee submitted its report in January 1994, recommended a phased

program of liberalization, and called for private sector entry and restructuring of the

LIC and GIC. The United Front government moved an insurance bill but it did not

pass. The BJP government moved an insurance bill again in 1998, which had also to

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be referred back to a select committee of parliament. But now the parliament has

given a nod to the Insurance Regulatory and Development Authority (IRDA) bill

with some changes in the original structure.

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Liberalization

The decision to allow private companies to sell insurance products in India rests with

Indian Parliament. Opening up the insurance sector required crossing at least two

legislative hurdles. These were the passage of the insurance Regulatory authority

(IRA) bill, which would make IRA a statutory regulatory body and the amendment of

the LIC and GIC Acts, which would end their respective monopolies.

Subsequently in pursuance to the announcement made by the Union Finance Minister

in his budget speech of 1998-99. The Insurance Regulatory and Development

Regulatory Bill, 1999, was passed by both houses of Parliament. The Bill was

assented to by the president and notified on December 29, 1999. With the Insurance

Regulatory and Development Authority Act, 1999 coming into force the insurance

industry has been opened up for the private sector.

The Act provides for the establishment of a statutory IRDA to protect the interest of

insurance policy holders and to regulate, promote and ensure orderly growth of

insurance industry. The IRDA was formed by an act of the Parliament on April 19,

2000. The IRDA Act also seeks to amend the Life Insurance Act, 1956, the General

Insurance Business (Nationalisation) Act, 1972, and the consequential provisions of

the Insurance Act, 1938 with a view to seizing the exclusive privilege of LIC and

GIC in the life and non-life businesses respectively.

Under the IRDA Act, an “Indian insurance company” will be allowed to conduct

insurance business provided it satisfies the following conditions:

It must be formed and registered under the Companies Act, 1956; the aggregate

holdings of equity shares by a foreign company, either by itself or through its

subsidiary companies, should not exceed 26% paid up equity share capital of an

insurance company.

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Its sole purpose must be to carry on life insurance business or general insurance

business or reinsurance business.

It has also been provided in the IRDA Act that on or after the commencement of the

act no insurer will be allowed to carry on life insurance and general insurance

business in India unless it has a paid up equity capital of rupees 1 billion. For

carrying on the reinsurance business, the minimum paid up equity capital has been

prescribed as Rs. 2 billion. The Reserve Bank of India (RBI) has also issued

guidelines for banks entry into the insurance business.

Following the passage of the IRDA Act, by March 2001, thirteen new life insurers

have received licence from IRDA. Although Private insurance companies have

commenced operations, the nationalised insurance companies are expected to

dominate the market in the near future.

The limiting factor for prospective private insurers will be the extensive and costly

distribution structure required. The new entrants can not expect to duplicate the

extensive distribution network of the nationalised insurance companies. Building a

distribution network is expensive and time consuming.

Policies that provide a money-back policy after reduced durations : 5 or 10 years.

Funds from this payout may be expended or reinvested in other saving programs or in

other life insurance plans.

Medical Insurance

In anticipation of unexpected events that create the need for medical goods and

services, Indian consumers may purchase medical insurance for the following types

of coverage: Heart attacks, strokes, diseases, prolonged illnesses, and loss of limb,

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eye, or other parts of the body due to accident. They may also purchase mediclaim

policies that cover medicines, operations, scanning, X-rays, hospital charges, etc.

Demographics

Country Profile

Population

1996-97 948 million

1997-98 952 million [estimated]

Estimated 2011-12 1,179 million

Average population growth

(1980-92) 2.0%

[1995-2111] 1.8% estimated

Estimated 2011-12 1,179 million

Average population growth

(1980-92) 2.0%

[1995-2111] 1.8% estimated

Production (USD)

Total GDP (1997-98) USD 320 billion

Per Capital GDP USD 418

Average GDP growth (1998) 5.5%

Economic Indicators

Inflation rate (1998) 5.5%

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Foreign direct investment USD 3.7 billion (1997)

USD 4.0 billion (1998)

Estimated growth 7.81% (over the previous year)

External debt USD 92 billion 12/1998 Total)

USD 11 billion (short-term)

Budget deficit USD 81 billion (1997)

Industrial production growth 3.8% (1997-98)

Indian Scenario in Light of the Insurance Sector

Premiums

In 1996, the volume of worldwide life insurance premiums amounted to USD 2.1

trillion with almost 57 percent accounted for by life insurance and the remainder

accounted for by non-life. Industrialized nations accounted for the vast majority

(around 90 percent) of the premiums. The largest life insurance markets were the

U.S. (31 percent and USD 653 billion) and Japan (24.7 percent and USD 520 billion).

India, with annual gross life insurance premiums of USD 3 billion accounted for less

than 0.2 percent of global premiums.

Global Life Insurance Premiums

Regional/Country USD (billions) Percentage

North America 689.2 32.7

Latin America 653.0 31.0

Europe 32.9 1.6

Asia 647.1 30.7

India 3.0 0.15

World 2105.8 100.0

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Growth

Although India averaged 20 percent annual insurance premium growth in the past,

growth has declined to approximately 15 percent recently.

Insurance Penetration

Compared to developed and industrialized countries, India is at the lower end of the

spectrum when it comes to penetration of the market. Among countries in the lower

per capita income band of less than USD 2,000 per annum, India is second only to

Zimbabwe.

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Density

Switzerland is the world’s largest per capita insurance spender (USD 4,663 per

inhabitant), ahead of Japan (USD 4,132 per inhabitant) and far ahead (200 percent

more) of North America, and even further ahead (250 percent more) of Western

Europe. India is ranked near the bottom of the list of countries on insurance spending

with USD 6 per inhabitant.

Population Demographics

India has a young demographic profile; nearly two thirds of the population is under

30. Yet, about 10 percent of the population is over 60. This proportion is expected to

rise sharply. By 2030, the Indian population is expected to stabilize at about 1.1

billion, about 20 percent of which will be over 60. Therefore, a key problem will be

providing support for over 220 million senior citizens—many of whom will be quite

fit and likely to enjoy two decades or more of old age (Source: World Development

Indicators, 1997).

Key Indian Census Statistics

2016 1995 1991 1981 1971Population (millions) 1,263 934 846 683 548

Urban population [million] 218 159 109 - -

Urban as percent of total 25.7 23.3 19.9 - -

Birth rate [per 1000] [1] 28.3 32.4 37.2 41.2 -

Death rate {per 1000} 9.0 11.4 15.0 19.0 -

Life expectancy at birth

[years] [2] 60.0 58.2 50.5 45.6 -

Infant Mortality rate

[Per 1000 live births] [3] 74 80 110 129 -

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[1] Estimators further predict a sharp drop in this category by the year 2016.

[2] Rough estimates point toward this static reaching 75 years and higher over the

next few decades.

[3] Better medical and health facilities may produce a further drop in this statistic,

with the rate reaching half of 1971 in the near-term.

Age Distribution by Population

Age Group

Population Population(Millions) Percent (Millions) Percent[Years] 1991 19810 - 4 110.9 13.1 83.8 12.65 – 14 196.3 23.2 179.3 26.9

15-9 91.4 10.8 64.0 9.620-24 81.12 9.6 57.3 8.625-34 128.6 15.2 93.2 14.035-44 93.9 11.1 73.1 11.045-54 68.6 8.1 54.7 8.255-59 26.2 3.1 16.4 2.5Above 60 50.8 6.0 43.2 6.5

Total 846.3 100.0 665.0 100.0

The above figures show the changing trends with population in the age group 5-14

dropping as birth rates decline and population in the 20-44 brackets increasing.

Unfortunately, at present only about 6 percent of Indian residents above 20 years of

age are covered by some form of pension scheme. (Employee Provident Fund

Organization data.) More Demographic Trends in traditional societies such as India,

the joint family system provided an insurance umbrella for surviving family

members. In modern times, such arrangements are made increasingly through the

market mechanism by buying insurance. Thus, individuals pay a price (a (premium()

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to insurance companies for such a contractual arrangement, and insurance companies,

in turn, provide compensation if a specified event occurs. By making such contractual

arrangements with a large number of individuals and organizations, insurance

companies can spread risk. This gives insurance a (social ( characteristic, in the sense

that it entails the pooling of individuals risks, such as longevity (i.e. the risk of

outliving other sources of income) and disease and sickness (health insurance). Two

relatively modern trends in the India context affect the life insurance business

significantly. First, with nuclear families becoming the rule, there is a greater demand

for life insurance to cover the breadwinner of the family.

Second, there are greater numbers of the elderly (due to increased life expectancy)

and the elderly are increasingly having to fend for themselves.

Thus, future senior citizens look to plan for their old age, rather than be a burden to

their children. There is a greater awareness of planning for old age and the need for

pensions and annuities. These two trends portend a large and growing market for life

insurance in India. In fact the growth rates of premiums in developed countries are

barely 5 percent, while they are nearly 20 percent in many developing countries. One

factor that is facilitating this development is the increase in the size of India’s (middle

class. (With an estimated size of 250 million, it is at least four times as large as the

current coverage of LIC. Other developments effecting this trend include a healthy

growth rate of the economy (greater savings), proliferation of saving instruments, a

trend toward economic liberalization, greater consumer awareness, and greater

awareness about insurance. Indian’s increased use of insurance can also help solve

another major problem in the country: Inadequate infrastructure. The 1997 Rakesh

Mohan Report documents the need for reliable capital markets to finance

infrastructure projects. Infrastructure projects are almost always long-term. Funds of

long tenure are best raised from contractual savings such as pension funds, provident

funds and life insurance. At present, the total annual accrual to all such funds is about

USD 2.4 billion. The Rakesh Mohan report estimates a current requirement of USD

2,823 billion for infrastructure over the next ten years.

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The bulk of this must be raised domestically, requiring a huge expansion of the life

insurance and pension fund industry. It is evident that two problems—future old age

security and present and future infrastructure needs – can be solved simultaneously.

The Demand for Pension Plans Pension reform in India was initiated when the Union

Finance Minister announced in his 1997 Budget speech that the monopoly in the

issuance of annuities that was enjoyed by the Life Insurance Corporation (LIC)

would end. He indicated that the Unit Trust of India (UTI) would enter pension fund

management and that the LIC and UTI would be free to enter into joint ventures

pension fund management. Also, he was quoted widely as having approved the

(Chilean Experiments). In much of the developed world, pension funds represent an

important form of financial assets in the economy. In India however, with the

exception of employees in the organized sector, few workers have social security

coverage.

Currently there are three forms of old age security: Provident funds, gratuities, and

pensions. The Employee’s Provident Fund Scheme (EPFS), which began in 1952, is

the largest of all provident fund programs. It covers almost 20 million employees in

the organized sector and has over USD 13.2 billion in assets. The fund, which is

administered by a Central Board of Trustees (CBT), is restricted severely in its

choices of investment options. Other provident fund programs include the Coal

Mines Provident Fund Scheme, the Central Government Employee’s Group

Insurance Scheme, and the Public Provident Fund Scheme. Under the gratuity

program, gratuities are distributed upon retirement, death or resignation, and benefits

are in accordance with the Payment of Gratuity Act, 1972. The cost of a gratuity is

entirely borne by the employer and is paid on a cash basis or funded by the employer

during the service period of an employee.

The fund is administered by a trust or contributions are paid to the LIC under its

Group Gratuity Scheme. The third form of social security is pensions. The LIC

provides pension programs, but the premiums received from such programs form

only a very small portion of its total premium income. Institutions that provide

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pensions to their employees either set up an internal fund and purchase a life annuity

from the LIC (only) when an employee retires, or they purchase a group pension

policy from the LIC. This monopoly of the LIC in providing annuities for employers

with private pension arrangements was relaxed in 1997 when Unit Trust of India

(UTI) was also allowed to sell annuities. The lack of growth of Indian pension plans

is due to inadequate tax relief for pension funds combined with restrictions on

pension fund investments that yield low returns. Furthermore the virtual monopoly of

LIC, which reflects a lack of innovation and marketing in the pension plan field, has

ensured that pensions remain a very under developed sector in India.

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Indian Pension Fund Total Assets

(In billions of U.S. dollars)

Pension Program Total AssetsThe Employee’s Provident fund

Scheme, 1952 18.82

Public Sector and Armed

Forces Superannuation Scheme 4.70

The Employee’s Pension Scheme,

1995 1.69

The Employee’s Deposit Linked

Insurance Scheme 0.24

Gratuity 5.88

Private Sector Superannuation

Scheme 3.53

Public Provident Fund 2.82

Individual Pension Plans 0.05

Total 37.73

Annual Accruals 2.35

Provident fund yields have been on the order of 12 percent per annum before

inflation. However, these government ordered nominal yields can not be sustained

because the instruments presently available in the market offer less than 12 percent

per annum yields. In any case, the real yield could vanish if inflation returns to the

double digit level common in the 70s and 80s; the average real yield from 1980 to

1990 was only 0.3 percent per annum. Notably, the government is a major part of the

organized sector and most Indian Government employee security programs are on a

pay-as-you-go basis. Another reason for the lack of popularity of pensions in India

(also pointed out by the Insurance Reforms Committee) is that the tax relief allowed

on contributions to pension/annuities is much less in India than in developed

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countries like the U.S. and U.K. Another tax anomaly that needs to be corrected is the

asymmetric treatment of LIC versus employer funded pensions.

Although India started a social security program of sorts almost seventy years ago,

achievements have lagged behind intentions and coverage is still limited. Recent

experiences in manufacturing and services show the advantages of competition to

customers and to Indians at large : Better service, a larger and a better choice of

products, and market deepening and widening. South America’s recent experience

confirms that competition could work wonders wonders for worker’s security in

India, while providing funds for infrastructure and financial market development.

Changes in the Insurance Sector in the Pre & Post Liberalization Scenario

PRE PURCHASE PROCESS

Pre Liberalization Post Liberalization

Motivating Factors for Considering Insurance

* Security 43%* Savings 14%* Tax Rebate 43%

* Security 50%* Savings 34%* Tax Rebate 16%

Sources of Information on Insurance & Product Awareness

* Friends, Colleagues, Relatives andAgent* Low awareness of several insuranceproducts due to poor communication inspite of availability

* Additionally from direct mailers,consumer meets, internet & media (massmedia & out door)* Rising level of awareness of new productsof both LIC and private companies

Choice of First Policy* Money Back 60%* Endowment 40%* Whole Life 0%

* Money Back 42%* Endowment 48%* Whole Life 10%

Approach of the Agent and Consumer’s Experience

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* Approach of Agent – Informal andthrough referral* Long term family type of relationship* Often selling insurance as commodity* Average communication skills

* Approach – more professional, sometimesaggressive* Proactive in contacting prospects directly,often has to start from selling concept ofinsurance rather than product* Conducts financial health check up andthen offers suitable products/solutions* Better communicator & presenter* Handles larger number of queries

PURCHASE PROCESS

Pre Liberalization Post LiberalizationRole of Agent and Customer’s Experience

Medical Examination : in several cases details filled by the agent, medical examination very perfunctory, sometime no formal examination.

Purchase experience with agent reasonably satisfactory, but often agent not in touch later

Medical Examination : Both LIC and private company customers undergo through formal medical examination, arranged by agent

Experience more satisfactory, agent maintains regular contact in post purchase phase also

Product Offering Limited product choices and

less flexible products Choice often determined by

agent’s push

Products with multiple rider – medical, accident, waiver of premium rider

Pension/retirement benefit plan, security plans.

Discount Offering Practices Number of customers getting

discounts : 50% Customers getting discount : 33%

(highest in Delhi)

Rate of discount : 25% - 50% of first year premium

Rate of discount : More or less the same

Policy Delivery Mode- Registered post for LIC, handdelivered by agent in 23%cases Time taken

- Up to 1 week0%

Mode- Registered post for LIC- Courier for Private companies

In both cases, policy comes in attractive, protective plastic jacket

Time taken LIC Pvt Co.Up to 1 week 5%

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- One month65%

- > One month35%

85%Up to 1 month 77%15%> 1 month 18%0%

POST PURCHASE PROCESS

Pre Liberation Post LiberalizationPremium Notice Intimation from Company/ Reminder from Agent

Notice from Company42%

Reminder form Agent47%

Reminder from Agent67%

Notice form Company 77%

Mode of Premium Payment Cash

43% Cheque

57%

Cash41%

Cheque49%

Credit Card10%

No case of payment through internet was observed, due to low awareness and security apprehensions.

Who Deposits Premium Self Self

44% Agent

49% Salary saving scheme

7%

37% Agent

49% Salary saving scheme

14%Correspondence (other than premium notice) from Company/Agent

Generally no correspondence from either

Mailers from both private companies and LIC on products and services, greeting

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company or agent except for late premium payment reminder from company

Agent maintained informal contact with close customers

cards on birthdays, anniversary and new year

Phone calls form private company call centers

Agent in regular contact for offering new products

Delay in Premium Payment Incidence of delay high

30%(Due to irregular receipt of premium notice from company/reminder from agent)

Incidence of delay low 15%(More regular receipt of premium notice from company / reminder from agent)

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BENEFITS OF INSURANCE

The various benefits from Insurance are as follows :-

1. Insurance would assist businesses to operate with loss volatility and risk

of failure and provide for greater financial and societal stability from the

growth pangs of an estimated growth rate over 8% in GDP.

2. Besides government provides for social security programs, there is

considerable impact upon the government. Insurance substantially steps in

to provide these services. The effect would be to reduce the strain on the

tax payer and assist in efficient allocation of social resources.

3. Facilities trade, business and commerce by flexible adaptation to changing

risk needs particularly of the burgeoning services sector.

4. Like any other financial institution, insurance companies generate savings

form insurance sector within the economy and make available the same in

well directed areas of economy deserving investment ; a sector with a

potential for business as in case with Indian insurance provides incentive

to develop it all the more faster.

5. It enables the risk to be managed more efficiently through risk pricing and

risk transfers and this is an area that provides unlimited opportunities in

the Indian context for consulting, broking and education in post.-

privatization phase with newer employment opportunities.

6. The insurance industry expertise in understanding losses assists it to share

the experience across the economy this enabling better loss control and

preservation of national assets.

In its risk pricing and investment decisions the insurance industry sets the

tone for investment by others in the economy. Informed assessment by

insurance companies thus signals allocation of resources by others

contributing to the efficiency in allocation. In India visibility of LIC and GIC

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have been dwarfed by government’s actions and other high profile

institutions like ICICI, IDBI and UTI.

SIX BENEFITS OF STRONG LIFE INSURANCE MARKET TO

ECONOMIC DEVELOPMENT

A study by the United Nations Conference on Trade and development

(UNCTAD) noted that a strong and efficient life insurance market could aid

in overall economic development in the following ways :

Life insurance can contribute to social stability by permitting individuals to

minimize financial stress and worry.

Life insurance can reduce the financial burden on the state of caring for the

aged and for those made financially destitute because of death of a family

breadwinner.

Though the accumulation from thousands of policyholders of small amounts of

private savings, life insurance can accumulate sums to be invested in public

and private sectors. This can benefit an economy by creating a source of

financing for new businesses, for new homeowners, and for farmers and their

equipment.

The life insurance business generates employment.

Life insurance can permit more favorable credit terms to borrow-both

individuals and business-and can decrease the risk of default. Life insurance

can also minimize the financial disruption to business caused by the death of

key employees and owners.

By making available a variety of employee plans ………life insurance

companies can promote better employee/employer relations and can provide

low-cost benefits to a broad spectrum of persons who may otherwise have been

unable to obtain such protection.

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The UNCTAD study introduction then notes: “Because of the forgoing reasons,

the expansion and development of life insurance has been actively encouraged in

many countries.

MARKET SEGMENTATION

The organization must decide about the homogeneous group which will constitute

the market for the said product. The process of deciding about the particular part

of the total market which is primary target for a given product is called the process

of market segmentation. Most of the organizations normally market a number of

products and, therefore, have to decide about the market segments for each one of

their products. Moreover any one of such articles or products manufactured by the

organization may have different users in the eyes of the consumers and may, thus,

be marketed differently to different market segments. Market segmentation can

also be made on the basis of some important characteristics of consumer groups

such as their requirements, buying habits, etc. thus a market segment does not

denote a group of people having, say, common age or income or staying in a given

area but is deemed to be constituted of persons to whom a particular product

appeals for the fulfillment of a similar need and who are amenable to similar

communication or promotional appeals.

Market segmentation for consumer goods and services can be made on the basis

of either consumer goods or services can be made on the basis of either consumer

characteristics or consumer characteristics or consumer responses.

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Multi attribute Grid to help identify the Target Market for life insurance

Higher

Middle

Low

Wage Agriculturists Traders ProfessionalsEarners

After identifying the target market segments in a suitable manner, an organization

should formulate appropriate specialty tailored marketing programs suited to the

identified needs of different markets being served or proposed to be served. The

process of market segmentation includes projecting the image of a product in a

particular manner so as to match it with the needs of a homogenous group,

deciding about extension of an organization’s activities to a market it might not

have been operating, as well as developing a special tailor made product so as to

suit the changing or newly perceived needs of an existing or a newly identified

homogenous group of customers. Proper market segmentation represents the

ultimate extension of the marketing concept. It not only starts with consumers and

what they want, but it recognizes the fact that not all people are alike and one

person’s mousse au chocolate is another person’s plain chocolate pudding. It goes

without saying that segmentation of any market is not permanent. Changes in any

factors of the macro and micro environment of the organization will consequently

require the organization to consider alternate methods of segmenting the market.

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RESISTANCE TO INSURANCE

The concept of insurance being intangible and abstract and somewhat conflicting

with our ingrained patterns of traditions, cultural, benefits, the need is not readily

felt and understood, felt and accepted.

The sacrifice involved in payment of premiums is immediate and real whereas the

benefits are perceived as contingent and distant, leading to a tendency to

procrastinate and delay decision-making.

People resist in taking a life insurance policy, as the commitment is long term.

They prefer investing their money in other avenues like mutual fund, bonds,

shares etc., where they expect higher returns. People do not readily accept the fact

that they are prone to the risk of death.

It is important for the people to understand the importance of life insurance. Risk

coverage is the essential feature of an insurance policy, the investment aspect is

secondary. Now a days insurance companies are offering policies designed purely

for investment purpose, which also have an insurance element in them. Such

policies are attracting people for their investment needs, though the element of

risk coverage is not sufficient.

It is said that the life of every person must be insured up to the human life value

(HLV) of that person. Human life value means the value of his potential net

earnings estimated for the period for which he is going to earn less the amount of

money he spends on his self-maintenance. Therefore it becomes important for

every earning individual to insure himself up to the amount of his HLV. But not

many people understand the relevance of insurance, therefore they resist to buy a

life insurance policy.

29

30

INSURANCE REGULATORY AND DEVELOPMENT AUTHORITY

(LICENCING OF INSURANCE AGENTS) REGULATIONS, 2000

In exercise of power as conferred by sub-section (6) section- 42 and clauses (k),

(i), (m), (n), (o), and (p) of sub-section 114A of the Insurance Act, 1938(4 of

1938), the Authority in consultation with the Insurance advisory Committee,

hereby makes the following regulations, namely :-

Short title and commencement

1. (1) These regulations may be called Insurance Regulatory and Development

Authority (Licensing of Insurance Agents) Regulations, 2000.

(2) They shall come into force on the date of their publication in the official

Gazette.

Definitions.

2. In these regulations, unless the context otherwise requires, -

(a) “Act” means the Insurance Act, 1948

(b) “Approved Institution” means an institution engaged in education and/or

training particularly in the area of insurance sales, services and marketing,

approved and notified by the authority;

(c) “Authority” means the Insurance Regulatory and Development Authority

established under the provisions of section 3 of the Insurance Regulatory and

Development Authority Act, 1999

(d) “Composite Insurance Agent” means an insurance agent who holds a license to

act as an insurance agent for a life insurer and a general insurer;

(e) “Corporate Agent” means a person other than an individual as specified in

clause

(i)

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(f) “Designated by an insurer, and authorized by the authority to issue or renew

licenses under these regulations;

(g) “Examination Body” means an institution, which conducts, pre-recruitment

tests for insurance agents and which is duly recognized by the Authority;

(h) “Licence” means a certificate of licence to act as an insurance agent issued

under these regulations ;

(i) “Person” means –

(i) an individual;

(ii) a firm

(iii) a Company formed under Companies Act 1956

(j) “Practical training” includes orientation, particularly in the area of insurance

sales, service and marketing, through training modules as approved by the

authority;

(k) “Proposal form” means an application for purchase of insurance product which

shall be the basis of insurance contract.

(l) “Prospect” means a potential purchaser of an insurance product;

(m) “Recognized board or institution” means such board or institution as may be

recognized by any State Government or the Central Government.

(2) All words and expressions used herein and not defined but defined in the

Insurance Act, 1938, or in the Insurance Regulatory and Development Authority

Act, 1999, shall have the meanings respectively assigned to them in those acts.

32

Issue and renewal of licence.

3. (1) A person desiring to obtain or renew a license (hereinafter referred to as

“the applicant”) to act as an insurance agent or a composite insurance agent shall

“proceed’ as follows:-

(a) the applicant shall made an application to a designated person –

(i) in Form IRDA-Agents-VA, if the applicant is an individual;

(ii) in Form IRDA-Agents-VC, if the applicant is a firm or a company;

Provided that the applicant, who desires to be a composite insurance agent, shall

make two separate applications.

(b) The fees payable by an applicant to the Authority shall be as specified in

Regulation

7.

(2) The designated person may, on receipt of the application along with evidence

of the application along with the evidence of payment of fees to the authority, and

on being satisfied that the applicant,-

(i) possesses the qualifications as specified under Regulation 4;

(ii) possesses the practical training as specified under Regulation 5;

(iii) has passed the examination as specified under Regulation 6;

(iv) has furnished the application complete in all respects;

(v) has the requisite knowledge to solicit and procure insurance business; and

(vi) is capable of providing the necessary service to the policy holder;

grant or renew, as the case may be, a licence in Form IRDA-Agents-VB, along

with identity card in Form IRDA-Agents-VZ:

Provided that in the case of a corporate agent, the identity card shall be in Form

IRDA-Agent-VY.

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(3) If the designated person refuses to grant or renew a licence under this renew a

licence under this regulation, he shall give the reasons therefore to the applicant.

Qualifications and applicant

4. The applicant shall possess the minimum qualification of a pass in 12 th

Standard or equivalent examination conducted by any recognised

Board/Institution, where the applicant resides in a place with a

population of five thousand or more as per the last census, and a pass in

10th standard or equivalent examination from a recognized

Board/Institution if the applicant resides in any other place.

Practical Training

5. (1) The applicant shall have completed from an approved institution, at

least, one hundred hours’ practical training in life or general insurance

business, as the case may be, which may be spread over three to four

weeks, where such applicant is seeking licence for the first time to act

as an insurance agent.

Provided that the applicant shall have completed from an approved

institution, at least one hundred and fifty hours’ practical training in

life and general insurance business which may be spread over six to

eight weeks, where such applicant is seeking licence for the first time

to recognize as a composite insurance agent.

Examination.

6. The applicant shall have passed the pre-recruitment examination in life

or general insurance business, or both as the case may be, conducted

by the Insurance Institute of India, Mumbai or any other examination

body.

34

Fees payable.

7. (1) The fees payable to the Authority for issue or renewal of licence to

act as an insurance agent or a composite insurance agent shall be

rupees two hundred and fifty.

Code of Conduct

8. (1) Every person holding a licence, shall adhere to the code of conduct

specified below :-

(i) Every insurance agent shall -

(a) identify himself and the insurance company of whom he is an

insurance agent;

(b) disclose his licence to the prospect on demand;

(c) disseminate the requisite information in respect of insurance

products offered for sale by the insurer and take into account

the needs of the prospect while recommending a specific

insurance plan;

(d) disclose the scales of commission in respect of the insurance

product offered for sale, if asked by the prospect;

(e) indicate the premium to be charged by the insurer for

insurance

product offered for sale;

(f) explain the prospect the nature of information required in the

proposal form by the insurer;

(g) bring to notice of the insurer any adverse habits or income

inconsistency of the prospect;

(h) inform promptly the prospect about the acceptance or rejection

of the proposal by the insurer;

(i) obtain the requisite documents at the time of filling the

proposal form by the insurer;

35

(k) render necessary assistance to the policy holders or claimants

or beneficiaries in complying with the requirements for

settlement of claims;

(l) advise every policy holder to effect nomination and

assignment;

(ii) No insurance agent shall –

(a) solicit or procure insurance business without holding a valid

licence;

(b) induce the prospect to omit any material information in the proposal

form;

(c) induce the prospect to submit wrong information in the proposal

form or documents submitted to the insurer;

(d)behave in a discourteous manner with the prospect;

(e) interfere with any proposal introduced by any other insurance

agent;

(f) offer different rates, advantages, terms and conditions other than

those offered by his insurer;

(g)demand or receive a share of proceeds from the beneficiary under

an insurance contract;

(h) force a policy holder to terminate the existing policy and to effect a

new proposal from him within three years from the date of such

termination;

(i) have, in case of a corporate agent, a portfolio of insurance business

under which the premium is in the excess of fifty percent of total

premium produced;

(j) apply for fresh licence to act as an insurance agent, if his licence

was earlier cancelled by the designated person;

(k)become a remain the Director of an insurance company;

36

(iii) Every insurance agent shall, with a view to conserve the insurance

business already procured through him, make every attempt to ensure

remittance of the premiums by the policy holders within the stipulated

time, by giving time to the policy holder orally or in writing;

Cancellation of licence

9. The designated person may cancel a licence of an insurance agent if

the insurance agent suffers, at any time during the currency of the

licence, from any of the disqualifications mentioned in sub-section (4)

of section 42 of the Act, and recover form him the licence and the

identity card issued earlier;

Issue of duplication licence

10. The Authority may issue a duplicate licence replace a licence lost,

destroyed, or multilated on payment of rupees fifty

Non-application to existing insurance

11. Nothing contained in Regulations 4 to 6 of these Regulations shall

apply to the existing agent before the commencement of these

Regulations.

37

38

COMPANY PROFILE

ALLIANZ AG JOINED FORCES WITH BAJAJ Auto Ltd. to offer both

general and life insurance products. Allianz’s joint venture partner is Bajaj

Auto, a respected Indian conglomerate with a strong market presence and

an excellent distribution network. Their two joint ventures are Bajaj Allianz

for General Insurance and Bajaj Allianz for Life Insurance.

Bajaj Auto Ltd. foundedin 1942 by (Late) Shri Jamnalal Bajaj, is India’s

largest two & three-wheeler manufacturer & Exporter producing 1.2 million

units, with Market Capitalization of Rs. 8000 Crore. Bajaj Auto has an

existing network of over 375 dealers across India & a Distributor network

in 60 cities.

Allianz AG is a Leading Global Insurance company Headquartered in

Munch, Germany, established in 1890, with a Global network extends to

over 73 countries across Europe, South 7 Northern America, Africa &

Middle East, Asia pacific, with over 700 subsidiaries & 119,000 employees

Worldwide. At current level company has assets under management of

USD 1000 billion, with global ratings-“AA+” –Standard & Poor’s.

Allianz’ links with India started in the 1920s. Allianz first arrived in India

in 1928 when it opened a branch in Delhi. In September 2001, Bajaj Allianz

received the license from the IRDA to start selling life products.

Bajaj Allianz Life Insurance Company Limited takes this opportunity to

welcome you our commitment to meet the needs of customer through

quality products, dependable service and ethical business standards. Trusted

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over decades, both Allianz AG and Bajaj Auto have experienced substantial

growth in demanding environment.

PRODUCTS OF BAJAJ ALLIANZ

At present, Bajaj Allianz is offering seven life insurance products, namely

Invest gain (an Endowment plan), Cash Care (Money Back plan), Lifetime

Care (A Whole life plan), Risk Care (Pure Term Insurance plan), Term

Care(Term plan with return of premium), Child Care (Children plan) and

Swarna Vishranti (Deferred Pension Plan). AI these plans are available in

combinations with additional benefits packages to match every individual’s

need.

For each plan category, an individual can choose from among four benefit

packages namely,

Economy : Basic plan, with no additional benefits

Protect : Basic plan along with cover against accidental risk-

Accidental Death Benefit, Accidental Permanent Total/Partial

Disability Benefit, Waiver of Premium.

Health : Basic plan along with cover against health related risks-

Critical Illness, Hospital Cash Benefit.

Total : Basic plan with cover against both accidental and health

related risks i.e. Both Protect & Health Pack.

These packages are structured keeping in min the varying needs of

insurance and the value-add that to match the flexibility for the policy

holder. These benefits can be attached to all plans offered by Bajaj

Allianz Life.

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INVEST GAIN(ENDOWMENT PLAN)

Product Definition : This is a with profit endowment plan. This is

not the conventional endowment plan, but is specially designed

and offers a unique combination of benefits to develop a sound

financial portfolio. Among many unique benefits, the most

significant is the Family Income Benefit (FIB) that sustains the

family by compensating the loss of income due to death or

permanent disability. The life is covered for a pre-specified term.

Maturity Benefits : The sum assured plus declares reversionary

bonus plus a possible terminal bonus is paid at maturity.

Eligibility : The minimum and maximum age of entry is 0(risk

commences at age seven) and 65. Minimum and maximum term

of the policy is 5 and 40 years.

Death benefits : The death benefit will be the sum assured plus

reversionary bonus plus interim bonus. In addition to these any

amount of sum assured taken, as rider will be paid. In case of

death or accidental total permanent disability, a guaranteed

monthly income of 1% of sum assured (12% per annum) is paid

till the end of policy term or at least for a period of 10 years,

whichever is higher, in case of Family Income Benefit.

Supplementary Death Benefit : (Available in 4 options: Single Cover,

Double Cover, Triple Cover and Quadruple Cover) available with each of the

additional benefit packages mentioned above. The quadruple death benefit is

a unique feature offered by Bajaj Allianz i.e. in event of natural death of

policy holder, the company will pay four times the basic sum assured plus

accrued bonuses.

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CASH CARE (MONEY BACK PLAN)

Product Definition : This is a with profit money back plan. Cash Care

plan offers high yield and liquidity ease. This plan also works as a self-

financing scheme on your insurance plan, whereby a substantial part of

the proceeds come back in the form of survival benefits.

Besides giving you regular cash benefits this plan is that it takes care of

your life insurance needs also. Irrespective of the cash benefits already

paid, the risk cover throughout the term of the plan remains equivalent to

the Basic Sum Assured.

Eligibility : The minimum and maximum age at entry are 12 and 55

years. The maximum age of maturity is 70 years.

Maturity Benefits : Due date and amount of survival/maturity benefits

depend upon – In case of survival to maturity all declared reversionary

bonuses plus interim bonus plus a possible terminal bonus is paid on

maturity in addition to 50% of sum assured.

Cash care plan offers 75% of the sum assured as four survival benefits at

equal intervals before maturity at an incremental rate.

Death Benefits : The death benefit will be the sum assured plus

declared reversionary bonuses plus interim bonus, irrespective of the

cash payouts already made. In addition to the above, the company may

pay an interim bonus if death occurs after the most recent bonus

declaration date.

LIFETIME CARE(WHOLE OF LIFE PLAN)

Product Definition : This is a with profit limited payment whole life

plan. This plan offers a limited premium option to those who seek

towards a long term cover with lower average cost. Lifetime care is

ideal for cover for selecting a premium paying term of your

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choice(minimum 10 & maximum 40 years) with a life cover

continuing up to the age 80.

Eligibility : Minimum and maximum age of entry are 15 & 60.

Maximum premium ceasing age is 80. the minimum term of the policy

is 10 years.

Maturity benefits : In case of survival to age 80, the sum assured plus

declared reversionary bonuses plus interim bonus plus a possible

terminal bonus is paid. Thereafter the policy terminates.

Death Benefits : The death benefit will be the sum assured plus

declared reversionary bonuses plus interim bonus. In case of death

after 15 full policy years, the company may pay terminal bonus.

RISK CARE (PURE TERM INSURANCE)

Product Definition : This is a non profit level premium and single

premium term insurance plan. The policy holder can opt for the

additional riders available.

This is a low cost high risk cover plan with those who are at the higher

end of the income bracket and strong financial holding.

Maturity benefit : There are no maturity benefits payable under his

plan, as this is a pure risk cover plan.

Death Benefit : In case of pre mature death during policy term, the

basic sum assured is paid to the nominee.

TERM CARE (WITH RETURN OF PREMIUM)

Product Definition : This is a non profit level premium or single

premium Term insurance (i.e. providing death cover equal to the sum

assured) with provision for return of the single premium at the time of

maturity as a loyalty payout.

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For the policy holder the plan highlights the low cost insurance cover

with tax benefits and return of premium, makes it a cost effective

insurance to the policyholders who look for some maturity proceeds.

Maturity Benefits : The amount of single premium or the sum total

of the annual premiums will be returned at the time of maturity as a

loyalty pay-out, only if the policy continues for the full term.

Death Benefits ; IN case of pre mature death during the policy term,

the basic sum assured is paid to the nominee.

Product : Bajaj Allianz Child Care is aimed at providing careful financial

planning to help fulfill the aspirations that people have for their children.

Bajaj Allianz “Child Care” offers a wide array of solutions that allows you

to plan for your child’s future by providing you with as many as 4 distinct

and unique options.

Option 1 : Child Care 21

Option 2 : Child Care 24

Option 3 : Child Care 21 Plus

Option 4 : Child Care 24 Plus

Common features in the 4 Options of Bajaj Allianz “Child Care” Solutions.

1. Limited Premium Payment Term which means that the premiums

are payable till your child attains age 18 years.

2. Your contributions grow by the way of compounded annual

bonuses, which will be paid to you with the first guaranteed payout

(policy anniversary following age 18 of your child), for in-force

policies. In addition to the annual bonuses, a terminal bonus may

also be paid.

44

3. You are also eligible for Tax Benefits under Section 88 and Section

(10 D) of the Income Tax Act.

4. Assuring Your Child’s Future : In an uncertain world, the prime

interest of your child cannot be jeopardized in any way. Which is

why we have built in some added benefits in all our plans to protect

the interests of your child’s future, by counter insuring you – the

policy holder.

5. Option to Purchase Further Insurance at Maturity : For

ensuring continuity of the valuable insurance protection that the

child was enjoying, we offer the child an option to purchase a with

profits endowment or an equivalent plan from Bajaj Allianz Life

Insurance Company for twice the amount of face value of this

policy, without any medical examination, on the premium rates

prevailing at that time (The application must be made within 6

months of maturity of this policy).

Unique Feature of Bajaj Allianz “Child Care” 21 Plus and 24 Plus

These packages offer you the choice of providing a unique Start of Life

Benefit for your child. For a nominal amount an additional Sum

Assured subject to a maximum limit of Rs. 10 lacs will become

payable to enable the child start his/her professional life smoothly, in

case of an unfortunate death or Accidental Permanent Total Disability

of the Policy Holder during the term of the policy. This benefit will not

be available in the event of accidental permanent total disability after

age 65 of the policy holder.

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Death Payout :

In the event of unfortunate death of the child during the policy term,

the payouts shall be as under :

Below 7 yearsPremiums paid will be refunded without interest and the policy will terminate.

Above 7 years and below 18 yearsSum assured with accrued bonuses will be paid and the policy will terminate

Above 18 years and below 24 years

Outstanding payouts will be paid as one lump sum and the policy will terminate

SWARNA VISHRANTI

Product :

You can take control of your future and ensure a retirement you can look forward to.

This plan helps you to prudently plan for your retirement today, so that you don’t

have to worry about inflation, declining interest rates and rising medical bills in the

future as also ensures the financial security of your family. The annuity payable

under this plan will ensure that your earnings never stop during your lifetime.

With Bajaj Allianz Swarna Vishranti, you have the option to choose the following

additional benefits :

You have the option to include a Term Cover in your policy, which will provide an

additional life insurance protection at a nominal cost. This also ensures that the

pension available to spouse is further supplemented.

The benefits on Vesting Date (the date you choose to retire)

46

1. The Sum Assured along with all accrued bonuses will be used to purchase an

immediately annuity. The immediate annuity will be purchased at rates prevailing at

that point of time.

2. Option to take lump sum : You have the option to take upto 33% of Sum Assured

plus accrued bonuses on the vesting date as a lump sum. This amount would be tax

free in your hand, as per current tax laws. The balance amount will be used to

purchase an immediate annuity.

3. Open Market Option : You have the option to purchase an immediate annuity from

Bajaj Allianz or from any other company. If the immediate annuity is purchased from

Bajaj Allianz, the amount available for purchase of the annuity will be marked up by

2%. At present, we offer our immediate annuity plan for life, Swarna Raksha, tied to

this plan 4. The minimum installment of annuity from Bajaj Allianz is Rs. 1000/-.

The annuity mode may be changed to make each installment more than the minimum

requirement. If it is still below the minimum, the Sum Assured + Accrued Bonuses

would be paid.

Added Assurance

In the unfortunate event of death during the deferment period, your spouse will have

the option to take the Sum Assured plus accrued bonuses as a lump sum or purchase

an annuity to get regular income for life. For the immediate annuity, your spouse will

have the Open Market Option as well. Bajaj Allianz immediate annuity, with a mark

up of 2% will be available only if the spouse is above 45 years of age. In all ages

lower than 45, the Sum Assured + Accrued bonuses would be paid out.

ADDITIONAL BENEFITS OF ALL THE PLANS

Apart from covering the risk of natural death, these plans also provide for the policy

holder to choose up to five additional benefits. One can select a specific combination

of additional benefits best suited to ones needs.

47

Combination – Protect : This is a comprehensive protection against the risk

related to accident and disabilities. This package offers three rider benefits,

namely, Accidental death Benefit, Accidental Total/Partial disablement Benefit

and Waiver of Premium Benefit.

Combination- Health : The health pack is a comprehensive coverage against

health relateds. It covers Critical illness Benefit and Hospital Cash Benefit.

Combination – Total : The total pack covers both accidental as well as health

related Benefits.

Riders

a) Family Income Benefit

You can select the unique Family Income Benefit form Bajaj Allianz that

ensures total financial protection for your loved ones. In case of death or

accidental total permanent disability, a guaranteed monthly income of 1% of the

sum assured (12% per annum) is paid till the vesting date or at least for a period

of 10 years, whichever is higher. Moreover, all future premiums are waived.

This unique regular income benefit can act as an important supplement to the

pension available to the spouse in case of death.

b) Comprehensive Accident Protection

This benefit provides comprehensive cover in case of an accident. It comprises

of :

Accidental Death Benefit

Accidents are always sudden and sometimes fetal. You can’t lessen the emotional

shock but you can certainly soften the financial one. Bajaj Allianz Accidental

Death Benefit gives the loved ones something to start with after the permanent loss

of income by paying an amount equal to the Sum Assured. (Subject to a maximum

of Rs. 50,00,000/- under all policies with Bajaj Allianz taken together).

48

Accidental Permanent Total/Partial Disability Benefit

Accidents are unpredictable and so are the consequences. They may lead to a

disability – partial or total. This benefit provides a financial cushion against such

misfortunes. One will get 50% of the Sum Assured in case of partial disability and

100% in case of total disability. (Subject to a maximum of Rs. 25,00,000/- for

partial and Rs. 50,00,000/- for total disability under all policies with Bajaj Allianz

taken together).

Waiver of Premium Benefit

An accident may lead to permanent total disability, limiting one’s ability to earn.

Bajaj Allianz of Premium Benefit is a helping hand when one needs it most. It

waives off all future premiums while keeping the valuable life insurance cover

alive, thus enabling you to life up to your commitments.

d) Critical Illness Benefit

Some illnesses are critical. They not only alter your life’s pattern but also result in

a financial drain. Bajaj Allianz Critical Illness Benefit softens the impact on the

family by paying out the Critical Illness Benefit under the plan immediately, while

other policy benefits continue (excluding Hospital Cash Benefit). We cover 11

critical illnesses. You have the flexibility of choosing Critical Illness cover up to

the basic Sum Assured selected by you (Minimum Rs. 50,000).

(e) Hospital Cash Benefit

The worry of setting hospital bills (room charges) adds to the trauma of

hospitalization. Bajaj Allianz Hospital Cash Benefit reduces this financial burden

and helps recovery with peace of mind.

49

ADDITIONAL FEATURES

Flexibility in Coverage

At Bajaj Allianz, we believe in offering benefits and not just products. We realize

that you are unique and your needs for insurance vary with time. We therefore offer

you the flexibility of inclusion of coverage or exclusion of coverage at each policy

anniversary, subject to conditions relating to such inclusions and exclusion.

“Comprehensive Accident Protection” can be included and excluded at each policy

anniversary. Family Income Benefit, Critical Illness Benefit and Hospital Cash

Benefit can be taken at inception only. CI & HC can be reduced or excluded

subsequently at any policy anniversary. Once reduced or excluded, they can not be

increased or included subsequently.

Increase in risk coverage

Every added responsibility in your life calls for increase in your risk cover. We

provide you the option to increase coverage upto 50% of the basic Sum Assured on

each of the following happy moments in your life.

Your marriage

the birth of your first child

the birth of your second child

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51

RESEARH METHODOLOGY

According to Clifford woody research comprises defining and redefining problems,

formulating hypothesis or suggested solutions: collecting organizing and evaluating

data; making deductions and reaching conclusions; and at last carefully testing the

conclusions to determine whether they fit the formulating hypothesis. ''Marketing

research is the systematic design, collection, analysis and reporting of data and

findings and relevant to specific situations facing the company." Research is, thus, an

original contribution to the existing stock of knowledge making for its advancement

it is the pursuit of truth with the help of study, observation, comparison and

experiment, in short, the research of knowledge through objectives and systematic

method of finding solution to a problem is research. The systematic approach

concerning generalization and the formulation of theory is also research.

Objective of Research

The main aim of research is to find out the truth which Is hidden and which has

not been discovered yet Though each research study has its own specific purpose,

these can be-

1. To gain familiarity with a phenomenon or to achieve new insights into it

(exploratory and formative research studies).

2. To portray the accurately the characteristics of a particular individual, situation

or a group (descriptive research).

3. To determine the frequency with which something occurs or with which it is

associated with something else.

52

4. To test a hypothesis of a casual relationship between variables (hypothesis-

testing research)

Types of Research

The basic types of research are as follows --

1. Descriptive Research

The major purpose of this research is description of the state of affairs as it

exists at present.

2. Analytical Research

In this research the researcher has to use facts or information already available

and analyse these to make a critical evaluation of the material.

3. Applied Research:

it aims at finding a solution for an immediate problem facing a society or an

industrial business organization.

4. Fundamental Research:

It is mainly concerned with generalization and with the formulation of a

theory.

5. Quantitative Research:

It is based on the measurement of quantity or amount It is applicable to

phenomenon that can be expressed in terms of quantity.

6. Qualitative Research:

It is concerned with the qualitative phenomenon, i.e. phenomenon

relating to or involving quality or Kind.

53

7. Conceptual Research:

It is related to some abstract ideas or theory

8. Empirical Research:

It is data based research, coming with conclusions, which are capable oT being

verified by the observation and experiment.

9. Diagnostic Research:

Such a research follow a case study method or in depth approaches to reach the

basic casual relation.

10. Exploratory Research:

The objective of this research is the development of hypothesis rather their

testing.

Research Design:

A research design is the arrangement of conditioned for collection and analyses

of data in a manner that aims to combine relevance To the research purpose which

economy in procedures.

So it is clear from the above definition thai vnry first step in the process of

marketing research is systematic design which can be defined as a specification of

methods and procedure for acquiring the information needs to structure or solve

problems.

The main characteristics of research design can summarize in two words

• Anticipation

• Specification

54

Functions of research design:

1. Statement of evidence needed to solve the problem.

2. Anticipation of what will be done with data to provide answer to problems

3. Specification of evidence from where it will he obtained and how.

4. Statement of basic schemes whereby answers will be reveaied and validated.

5. A guide for the calculation and approval of the feasibility and cost of the

project.

6. Provision of blue print or plan Eor guiding the work

Types of research design

There are three types of research design:

1. Research design in case of exploratory research studies.

2. Research design in case of descriptive and diagnostic research studies.

3. Research design in case of hypothesis testing research studies.

RESEARCH DESIGN IN CASK OF EXPLORATORY RESEARCH

STUDIES:

Exploratory research studies are also termed as formulative research studies. The

main purpose of such studies is that of formulating the problem for more precise

investigation or of developing the working hypothesis from an operational point of

view the major emphasis is such studies is on the discovery of ideas and insights as

such the research appropriate for such studies more flexible enough to provide

opportunity for considering different aspect of the problem under study inbuilt

flexibility in research design is needed because the research problem, broadly defined

initially, is transformed into one with more precise meaning is exploratory studies

which fact may necessitate changes in the research procedure for gathering relevant

data Generally, the following three methods in the context of research design for such

studies are talked about.

55

(a) The survey of concerning literature happens to be the most simple and

fruitful method of formulating precisely the research problem or developing

hypothesis and their usefulness be evaluated as a bases for further research. It may

also be considered whether the already stated hypothesis suggest new hypotheses. In

this way the researcher may review and build upon the work already done by the

others, but in oases where hypotheses have not yet been formulated, his track to

review the available material for deriving the relevant hypotheses from it.

Besides, the bibliographical survey of studies, already made in one area of

interest may as well as made by the researcher for precisely formulating the problem.

He should also made an attempt to apply concepts and theory developed in different

research context to the area in which he is himself working. Some times the works of

creative writers also provide a fertile ground ' for hypotheses formulation and as such

ma be looked into by the researcher.

(b) Experience survey means the survey of people who have had practical

experience with the problem to be studied. The object of such a survey is to obtain

insight into the relationship between variables and new ideas relating to the research

problem. For such survey people who are competent and can

contribute new ideas may be carefully selected may then be interviewed by the

investigator. The researcher must prepare an interview schedule for the systematic

questioning of information But the interview must ensure flexibility in the sense that

the respondent should be allowed to raise issues and questions which the investigator

has not previously considered. Generally the experience collecting interview is likely

to be long and may last few hours. Hence it is often considered desirable to send the

copy of the questions to be discussed to the respondents for doing some advance

thinking over the various issues involved so that at the time of interview, they may

able to contribute effectively. Thus, an experience survey may enable the researcher

56

to define the problem more concisely and help in the formulation about the practical

possibilities for doing different types of research

(b) Analysis of insight stimulating examples is also a fruitful method for

suggesting hypotheses for research It is particularly suitable in areas where there is

little experience to serve as a guide. This method consists of the intensive study of

selected instances of the phenomenon in which one is interested. For this purpose the

existing records, if any, may be examined. The unstructured interviewing may take

place, or some other approach may be adopted Attitude of the investigator, the

intensity of the study and the ability of the researcher to draw together diverse

information into a unified interpretation are the main features which make this

method an appropriate procedure for evoking.

Experience indicates that for particular problems certain types of instances are more

appropriate then others. One can mention few examples of insight stimulating cases

such as the reactions of marginal individual, the study of

individuals who are in transition from one stage to another, the reaction of individuals

from different social strata and the like, in general cases that provide sharp contrasts

or have striking features are considered relatively more useful while adopting this

method of hypotheses formulation Thus in an exploratory formulation research study

which merely leads to insights or hypotheses. It must continue to remain flexible so

that many different facets be a problem may be considered as and when they arise

and come to the notice to the researcher

57

Qs. 1) What is your source of Income?

Business 52%

Govt. Job 18%

Others 30%

58

Qs. 2) What do your prefer to invest?

Govt. Security 27%

Mutual Funds 18%

Shares 21%

Insurance 22%

Others 11%

59

Qs. 3) How much can you per year?

<10000 37%

10000-15000 26%

15000-20000 17%

>20000 20%

60

Qs. 4. On which criteria do you invest ?

<10000 37%

10000-15000 26%

15000-20000 17%

>20000 20%

61

Qs. 5) On which criteria do you invest?

Expert 43%

Friendly Advice 27%

Guess Work 30%

62

Qs. 6) Do you have life insurance policy ?

Yes 32%

No 68%

63

Qs. 7) What type of plan would you prefer ?

Endowment 25%

Pure Risk 09%

Money Back 18%

Term Insurance 48%

64

Qs.8) What attribute attracts you most while taking an insurance plan ?

Tax Relief 30%

Risk Cover 08%

Children’s Education 22%

Investment 25%

Others 05%

65

Qs.9) For what duration would you like hold the policy ?

> 5 Year 22%

5-10 year 52%

10-20 year 17%

> 20 year 09%

66

Qs.10) Which insurance companies brand would you perfer ?

Lic 68%

Others 32%

67

Qs.11) What is your main expectation from the insurance company ?

Security 38%

Innovative Product 06%

Good Return 19%

Service 20%

Flexibility 09%

Liquidity 08%

68

Qs. 12) Are you satisfied by the service offered by the isurance company ?

Yes 60%

No 40%

69

Qs.13)What additional benefit do you want from your plicy ?

Accidental 38%

Critical Illness 22%

Start of Life 19%

Family Income Benefit 21%

70

Qs.14) Awareness of Bajaj Allianz Life Insurance Co. in India ?

Rural 2%

Semi-Urban 5%

Urban 39%

Metro City 54%

71

72

LIFE INSURANCE PRODUCTS

INTRODUCTION

The nature of needs for life assurance varies from person to person. Apart from the

basic need to insure one’s life, there may be a specific need for fixed sums of money

for other purposes. Savings through insurance can be broken into two main

component parts viz., life insurance protection and Survival benefit.

MAJOR CLASSIFICATION

a. Endowment assurance plan

b. Whole life assurance plan

c. Term assurance plan

d. Plans for children

e. Pension plans

The plans are discussed below –

a. Endowment assurance plan

This is the most popular form of assurance at the present time. Under this plan the

sum assured is payable on the date of maturity i.e., at the end of the fixed term of

years or on the death of the life assured, should that occur previously.

The plan is an ideal combination of both family protection and the savings element

and answers most of the needs of the insuring public. It provides cover against the

death of the bread-winner of the family during the term of the policy and offers an

accumulated savings at the end of the term should the life assured survive the term of

the policy.

Endowment plan is really a combination of life assurance and investment.

b. Whole life assurance plan

This plan is a permanent contract, premiums may be payable throughout life or up to

a certain age and sum assured is payable only on death. The element of protection is

the dominating element and that of provision for old age is totally absent.

73

This type of assurance provides a large amount of life cover than any other

permanent type of life assurance and is therefore the most inexpensive type of

permanent protection for dependants. It has the disadvantage that the premiums

continue in old age when the ability to pay will be less.

c. Term assurance plan

This plan is designed to cater to the need of the public who require risk cover for a

short period. The sum assured is payable only on death of the life assured during the

term of the policy. There is no maturity value to a pure term plan.

Insurers are now offering two types of term assurance plans-with return of premium

and without return of premium. In a with return of premium plan all the premiums

paid by the policy holder during the term of the policy are returned on maturity,

without any interest. Whereas nothing is paid on maturity of a pure term assurance

plan.

Convertible term assurance plans are also being offered by many insurers, designed

to meet the needs of young people who are on the threshold of their careers and have

prospects of increase in income after a short period. The objective is to provide

maximum insurance at minimum cost and at the same time offer a flexible contract

which can be altered into endowment assurance after some years.

d. Plans for Children

Many of the insurance companies are offering special plans for children under which

money is provided at various intervals or as choosen according to the needs. These

policies also provide for protection in case of a sudden demise of the guardian. The

amount of money saved through such a plan may be utilized for the education or

marriage of the child.

e. Pension plans

Plans under this envisage payment of annuity. An annuity is a periodic payment

made, in exchange for purchase money, for the remainder of the lifetime of the

named person or for a specified period irrespective of the duration of human life. The

annuities do not participate with the profit of the insurer.

74

All the insurers, except LIC are offering deferred annuity plans which provide

monthly pension after the vesting date during the lifetime of an annuitant and also

allow for return for a lump sum if opted. LIC is offering immediate annuity where

under in return for a lump um consideration called purchase price, the proposer will

receive monthly pension.

Comparative Chart of Endowment plans

Name of the Company

Bajaj Allianz Aviva Birla Sunlife HDFC Standard

Name of the Plan

Invest Gain Life Saver Flexi Save Plus

Endowment Assurance Plan

Min/Max Age of Enttry

0/65 18/65 1/65 12/60

Max age of Maturity

70 70 80 75

Min/Max Term

5/40 5/? 5/30 10/30

Min Sum Assured

50000 ? 75000 20,000

Max Sum Assured

No Limit ? No Limit No Limit

Riders Family Income Benefit, ADB, Accidental permanent total/partial disability benefit, CIB, WOP, Hospital Cash

ADB, CIB, Accidental permanent total/partial disability benefit, Hospital Cash.

ADB, CIB Term Benefit, Accidental permanent total/partial disability benefit

ADB, Double Sum Assured, CIB, WOP.

Indicative Annual Premium for Male (30), Term 20, SA 100,000

Rs. 3,950 Rs. 5000 Rs. 5,004 Rs. 4,835

75

Comparative Chart of Endowment plans

Name of the Company

ICICI Prudential

LIC Om Kotak Mahindra

SBI Life

Name of the Plan

Save ‘n’ Protect

Bhavishya Jeevan

Endowment Plan

Sudarshan

Min/Max Age of Enttry

0/60 18/60 18/65 12/65

Max age of Maturity

70 70 75 70

Min/Max Term

10/30 5/55 10/30 5/30

Min Sum Assured

50000 20,000 20,000 25,000

Max Sum Assured

10,00,000 1 Crore No Limit 1 Crore

Riders ADB, Accidental permanent total/partial disability benefit, CIB, Major Surgical Riders

ADB, WOP, Accidental permanent total/partial disability benefit.

ADB, Accidental permanent total/partial disability benefit, Term Benefit, CIB, Life Guardian, WOP.

ADB, Accidental permanent total/partial disability benefit, CIB, Term

Indicative Annual Premium for Male (30), Term 20, SA 100,000

Rs. 4,847 Rs. 4,796 Rs. 4,640 Rs. 4,336

76

Comparative Chart of Money Back plans

Name of the Company

Allianz Bajaj

Birla Sunlife

HDFC Standard

ICICI Prudential

LIC Om Kotak Mahindra

Name of the Plan

Cash Care Flexi Cash Flow

Money Back Plan

Cash Back Jeevan Surabhi

Kotak Money Back Plan

Min/Max Age of Entry (20 Yr. term)

14/50 1/65 12/60 16/55 14/50 18/60

Max age of Maturity

70 75 75 75 70 75

Terms available

15,20,25,30 10,15,20,25 10 to 30 15,20 12,15,20,25 15,20,25

Min Sum Assured

50,000 75,000 25,000 75,000 40,000 Min Pm yearly Rs. 4,000

% of SA Paid (20yr. term)

125% Unit Linked

120% 130%

Riders ADB, Accidental permanent total/partial disability benefit, CIB, WOP, Hospital Cash.

ADB, CIB, Term Benefit, Accidental permanent total/partial disability benefit.

ADB, Double Sum Assured, CIB, WOP.

ADB, Accidental permanent, total/partial disability benefit, CIB, Major Surgical Riders.

ADB, WOP, Family Benefit

ADB, Accidental permanent total/partial disability benefit, Term Benefit, CIB, WOP

Indicative Annual Premium for Male (30), Term 20, SA 100,000

Rs. 6,157 Rs. 5,856 Rs. 7,585 Rs. 6,900 Rs. 6,280 Rs. 7,120

77

Comparative Chart of Term plans

Name of the Company

Bajaj Allianz Bajaj Allianz Aviva Birla Sunlife

Name of the Plan

Term Care (with return of premium)

Risk Care (without return of premium)

Secure Life Term Plan

Min/Max Age of Enttry

18/50 18/50 18/55 18/55

Max age of Maturity

65 65 65 70

Min/Max Term

5/40 5/40 5/25 5/25

Min Sum Assured

100,000 100,000 300,000 250,000

Max Sum Assured

10,00,000 10,00,000 50,00,000

Riders ADB, Accidental permanent total/partial disability benefit, CIB, WOP, Hospital Cash

ADB, WOP, Accidental permanent total/partial disability benefit, CIB, WOP, Hospital Cash

ADB, Accidental permanent total/partial disability benefit, Hospital Cash.

ADB, CIB, Accidental permanent total/partial disability benefit.

Indicative Annual Premium for Male (30), Term 20, SA 100,000

Rs. 1,100 Rs. 528 Rs. 7,320 (SA-10 Lac)

Rs. 1,128 (SA-2 Lac)

78

Comparative Chart of Term plans

Name of the Company

HDFC Standard

ICICI Prudential

LIC Om Kotak Mahindra

Name of the Plan

Term Assurance Plan

Life Guard Bima Sandesh (premium back plan)

Kotak Term Plan

Min/Max Age of Enttry

18/60 18/50 18/50 18/60

Max age of Maturity

65 65 65

Min/Max Term

5/40 5/25 5/25 5/30

Min Sum Assured

200,000 50,000 -

Max Sum Assured

10,00,000 1 Crore -

Riders ADB, Double Sum Assured, CIB, WOP

ADB, WOP, Accidental permanent total/partial disability benefit, WOP

ADB, WOP ADB, CIB, Accidental permanent total/partial disability benefit.

Indicative Annual Premium for Male (30), Term 20, SA 100,000

Rs. 510 Rs. 834 Rs. 1,075 Rs. 1,200 approx

Comparative Chart of Children plans

Name of the Bajaj Allianz Birla Sunlife HDFC ICICI

79

Company Standard PrudentialName of the Plan

Child Care Smart Scholar Children’s Plan

Smart Kid

Min/Max Age of Enttry

0/13 1/8 0/12

Max age of Maturity

20/50 18/55 18/60 20/60

Min/Max Term

10/25 15/20 10/25 10 to 25

Min Sum Assured

100,000 75,000 - 100,000

Max Sum Assured

50,00,000 10,00,000 - 30,00,000

Min Premium

4,850 - - 8,000

Riders WOP, Start of life benefit, Family income, convertible at maturity.

Double Accident cover, ADB, CIB, Term, AT/PD.

WOP Income benefit, Accidental death & disability benefit, WOP

Indicative Annual Premium for Child (2), Parent (30), Term 20, SA 200,000

Rs. 10,454 Rs. 8,064 approx.

Rs. 10,000 approx.

Rs. 11,108

Comparative Chart of Children plans

Name of the Om Kotak LIC SBI Life

80

Company MahindraName of the Plan

Child Advantage Plan

Komal Jeevan Scholar

Min/MaxAge of Enttry

0/17 0/10 0/15

Min/Max age of Policy Holder

- -/60 20/60

Min/Max Term

10/30 16/26 7/21

Min Sum Assured

- 100,000 50,000

Max Sum Assured

25,00,000 25,00,000 50,00,000

Min Premium

4,000 2,850

Riders Life Guardian Benefit, Accidental Disability guardian Benefit, WOP

Double Accident Death Benefit, CIB

Double Accident Death Benefit, AT/PD, WOP.

Indicative Annual Premium for Child (2), Parent (30), Term 20, SA 200,000

Rs. 11,504 Rs. 16,421 Rs. 6,566

Comparative Chart of Whole Life plans

Name of the Company

Om Kotak Mahindra

LIC SBI Life Birla Sunlife

LIC

81

Name of the Plan

Lifetime Care

Life Long Flexi Whole life Plan

Single Premium Whole life

Aajeevan Bima Policy

Min/MaxAge of Entry

15/60 18/60 18/65 18/70 15/60

Max premium Ceasing Age

80 85 100 Single Premium

80

Min Term 10 - 5 5Min Sum Assured

- - 75,000 250,000 30,000

Max Sum Assured

- - No Limit 50,00,000 No Limit

Riders ADB, Accidental permanent total/partial disability benefit, CIB, WOP, Hospital Cash.

ADB, CIB, Hospital Cash, Accidental permanent total/partial disability benefit.

Accidental permanent total/partial disability benefit, Terminal illness benefit.

ADB, Accidental permanent total/partial disability benefit, CIB, WOP

ADB

Indicative Annual Premium for Male (30), Term 20, SA 100,000

Rs. 2,687 Rs. 6,700 Rs. 8,964 - Rs. 3,224

Name of the Company

Bajaj Allianz AVIVA HDFC Standard

ICICI Prudential

Name of the Plan

Swarna Visranti

Pension Plus Personal Pension (RP)

Forever Life

Min/Max 18/65 18/65 18/60 18/60

82

Age of EnttryMax age of Maturity

45/70 50/70 50/70 50/70

Min/Max Term

5/40 5/52 10/35 5/30

Min/Max Contribution

Y/HY/Q/M YPRs. 5000

Y/HY/Q/M YPRs. 6000

Y: Rs. 1800 Min SA: Rs. 50000

Guaranteed Returns

- 103% , 104%, 105%

No SA @ 3.5% p.a. for the first year

Death Benefit

SA+Acc. Bonus

SA+Acc. Bonus

Contribution refunded @ 8% p.a.

SA+Acc. Bonus

Extra additional contribution

- Yes Min Rs. 1000

No No

Surrender value

Y 1/2/3 : 030% of Premium

? Y1/2/3:0Y4++:50%P-1st

Y1/2/3:0Y4++:35%PP – 1st

YPFree choice of annuity provider

Yes Yes Yes Yes

Comparative Chart of Pension plans

Name of the Company

ICICI Prudential

LIC Om Kotak SBI Life

Name of the Life link (RP) New Jeevan Kotak Lifelong

83

Plan Suraksha Retirement Plan

Pensions (RP)

Min/Max Age of Enttry

18/60 18/65 18/60 18/65

Min/ Max Vesting age

50/70 50/69 45/65 50/70

Min/Max Term

10/52 2/35 5/30 2/52

Min/Max Contribution

SA: Rs. 40,000

YP:Rs. 2,500 Y/HY/QYP:Rs. 4,000

Rs. 3,000 p.a.(Min. Rs. 500)

Guaranteed Returns

No No only in case of death

No 4% for first seven years

Death Benefit

100%/105% PPPA

Contribution paid @ 5% p.a.

SA-PDue+PPA

PPA

Extra additional contribution

No No Max 25% SA pa

YesMin. Rs. 500

Surrender value

Y1/2/3:0Y4++:50% P-1st YP

Y1/20, Y3++:90%P 1st

YP+VB

Policy term more than 6Y:Y1/2/3:0Y4++:85%PPA

Free choice of annuity provider

Yes No Yes Yes

84

Questionnaire Designing

Since the questionnaire had a very important role in the project the following things

were kept in mind while designing it –

85

The language used was simple and easy to understand.

The sequencing of the questions was done carefully to elucidate the respondents in

answering the questions.

The questions used were open-ended so as to extract maximum information.

Most of the questions used were objective type, so as to make it easy and less time

consuming to answer.

The questions were carefully framed to gather the right kind of information needed.

The questionnaire was divided into two parts.

General information :

This part aimed at collecting the personal data of the respondents. This information

was very important as it helped in interpreting the insurability of the respondent. The

questions used in this part were –

1. Name

2. Address & Phone No.

3. Age

4. Gender

5. Marital Status

6. Educational Qualification

7. Occupation

8. Income

9. Family size

GENERAL INFORMATION

1. Name :

86

2. Address :

3. Phone No.

4. Age :

5. Gender : M/F

6. Marital Status Married/Single

7. Educational Qualification :

Matriculate/Intermediate/Graduate/P.G./Any other

8. Occupation : Govt. Service/Private Service/Self Employed

9. Income per month :

<Rs. 7500/Rs. 7501-Rs. 12500/Rs. 12501-Rs. 17500

10. Family size (if married)

a) Spouse : Working/House wife

If working, where ?

b) No. of children & their age

c) Any other dependants :

RESEARCH SPECIFIC INFORMATION :

87

This part of the questionnaire aimed at finding out the insurance status, preference

and awareness of the respondents. It also attempted to find out the potential market of

life insurance. The questions asked were as follows-

1. Do you have an insurance policy ?

This question would help to analyze the number of respondents who were already

insured, as against those not insured.

(a) If yes, then what type of policy & from which insurer ?

This question attempts to find out the preference of people as to the type of

insurance policy and the insurance company.

(b)What was your purpose of taking that policy ?

This question finds out the motivating factors that a person keeps in mind while

buying a life insurance policy.

(c) If no, then don’t you feel the need of taking a policy ?

This question is targeted towards the uninsured group of people. If a person was

not insured then what was the reason behind it.

2. Are you planning to take a policy in near future ?

This question aims at finding out the potential market of life insurance.

(a) If yes, then please specify the type of policy.

This question helps find out the preference of people towards a particular type

of policy in the future market.

(b)While taking a policy, what are the essential features you will keep in mind ?

This again finds out the motivating factors behind buying a life insurance

policy.

The next set of question aim at finding about the market awareness of Bajaj

Allianz. They analyze the reach of Bajaj Allianz among the people and the

percentage and type of market share it has acquired.

88

1. Do you have any Insurance policy ?

Yes/No

a) If yes, then what type of policy and from which insurer ?

b) What was your purpose of taking that policy ?

Risk coverage/Savings/Investment/Tax rebate/Special event

Management

c) If, no, then don’t you feel the need of taking a policy ?

2. Are you planning to take a life insurance policy in near future ?

Yes/No

a) If yes, please specify the type of the policy.

Term/Endowment/Whole life/Money back/Child Care/Pensionb) While taking a policy, what are the essential features you will keep in mind ?

Risk coverage

Tax benefit

Loan coverage

Premium charged

3. Have you heard about Allianz Bajaj Life Insurance Co. Ltd.

Yes/No

4. Which of the Bajaj Allianz policies have you heard about ?

Lifetime Gain

Invest Gain

89

Child Gain

Cash Gain

Risk Gain

Term Gain

Swarna Vishranti

5. Have you subscribed to any of these ?

Yes/No

6. If yes, which one ?

Policy term

Policy cover

Riders (if any)

7. Do you think that Bajaj Allianz is one of the leading Insurance company

in our country ?

Yes / No

8. Are you ever convinced by any Bajaj Allianz consultant to have an

Insurance Policy ?

Yes/ No

9. Are you satisfied with any Bajaj Allianz Insurance Policy ?

Yes / No

10. Are you satisfied with the returns of Bajaj Allianz policy ?

Yes / No

11. Do you think that selling Insurance policy is good as career ?

Yes / No

12. Please give your valuable suggestion what do you want in your Life

Insurance Plan

DIAGRAMMATIC REPRESENTATION OF THE DATA

90

The limiting factor for prospective private insurers will be the extensive and costly

distribution structure required. The new entrants cannot expect to duplicate the

extensive distribution network of the nationalised insurance companies. Building a

distribution network is expensive and time consuming.

Potential in the insurance sector

Scope of insurance business in India

The Malhotra Committee estimated that the insurance penetration in India is to the

extent of about 25% of the insurable population. As of 1999-2000, LIC’s insurance

Premium Income was approximately Rs. 32,000 crore. It is observed that currently

LIC has about 10 crore policies in force, which contribute a Premium of about 6% of

the GDS (Gross Domestic Savings ) of households in India.

Based on a report by the confederation of India industries (Cll), it is anticipated that

this figure of 10 crore policies in force is likely to double in the next decade. By the

year 2010, the premium income is expected to account for 18% of the GDS,

amounting to Rs. 512,000 crore.

91

The Decision Process

In general, the Indian community is very cautious when making business decision.

Consequently, Indian consumers will scrutinize vigorously products and services

offered by insurance companies. In addition, Indian consumers prefer a a wide-range

of options. Below, currently available options for various types of insurance are

presented. Given uncertainty about life’s duration and about increasing costs and

responsibilities, consumers may opt for a life insurance policy with the following

features.

Policies that meet an untimely accident or a premature death whereby

dependents are able to continue meeting financial obligations for some initial

period. This is very important because, in may Indian families, there is only one

earner in the household.

Policies that meet an untimely accident involving the loss of a limb,

creating a major disability.

Policies that avail owners of a tax rebate, a fixed rate of return on the

insurance investment, and a nontaxable payout upon maturity.

Policies that provide a bonus it insured has not withdrawn any sum of

money during the insured period, (certain sums can be withdrawn after the policy

has been in effect for specified periods of time).

Policies that provide for a housing loan at very favorable interest rates

after the insurance policy has been in effect for a specified duration.

92

Type of Policies Preferred

This survey shows that a majority of the people prefer Endowment and Money-back

policies. The preference for endowment policies though is more than money-back

plans. People in the private

sector have also started showing preference for pension plans. Term plans & Whole

life plans preference is quite low.

Motivating factors while considering Insurance

93

Type of Policy No. of Policies Percentage

Endowment 88 50.87%

Money Back 73 42.20%

Pesion 6 3.47%

Child Care 2 1.16%

Term 2 1.16%

Whole Life 2 1.16%

Security 25.60%

Saving 24.40%

Investments 21.30%

Tax Rebate 16%

Special event Management

12.70%

The distribution above shows that while buying a life insurance policy, a person

considers the security factor primary. It shows the highest percentage rating. A next

thing that a person considers is savings and investment element in the policy. A

person is concerned about the amount of returns that he would get on his money at

the time of maturity. Special

Sectoral Distribution of the S urvey

94

Out of a total sample survey of 110, the maximum respondents were from the

private sector, which covered 61.81% of the survey. Government sector employees

covered were 20.90% and self-employed people were 17.27% An attempt was made

to include a fair mix of people of all the three sectors so that the study the shows

relevant outputs.

events like education of children, marriage of daughter, providing for old age

pension etc. are also important considerations while buying a life insurance policy.

95

No. of inviduals

Percentage Coverage

Govt. Service 23 20.90%

Self

Employed 19 17.27%

Private

Service 68 61.81%

Market awareness of Bajaj Allianz

Awareness Percentage

Yes 71.43%

No 28.57%

96

Percentage-wise Breakup of Respondents to buy Insurance policy in Future

In the survey conducted around 60% of the respondents feel the need of insurance in

near future as they are either underinsured or uninsured. Around 40% of the

respondents feel that they do not need insurance in future as they are either

sufficiently insured or do not feel the need of getting insured.

97

Yes (Wants to buy Insurance in future )

59.52%

No (do not want to buy insurance in future )

40.48%

Company Preference of individuals

Name of Company

No. of Policies Percentage

LIC 85 65.38%

Allianz Bajaj 4 3.07%

ICICI

Prudential 4 3.07%

Birla Sunlife 2 1.53%

Metlife 1 0.76%

HDFC

Standard 1 0.76%

Max. New

York 1 0.76%

Aviva 1 0.76%

No Policy 31 23.84%

98

They survey conducted showed that the maximum number of existing policies

were from LIC, which shows 65.38% of the market share. Out of the private insurers

ICICI Prudential & Allianz Bajaj 3.07% of the market. Rest of the insurers also

shares a small portion of the market. The research shows the chunk of market share

enjoyed by LIC.

Chair Person/Managing Director

Chief Executive Officer

Chief Operating Officer

Heads of various Departments

Head HRD Head Sales. Head Finance Head IT Head Under& Marketing writing

TRAINING OPERATION

Delhi Chennai Kolkata MumbaiLucknow*(RSM) (RSM) (RSM) (RSM) (RSM)

Branch Manager

National Sales Training Manager

**RTM RTM RTM RTM RTM

Regional Trainers OfficeMarketing

Branch Supervisor Sales Team

99

Manager

Support Staff Insurance Care

Consultant* RSM – Regional Sales Manager** RTM- Regional Training Manager

100

CONCLUSION

The study aimed at finding out the market preference and makes a comparative

analysis of the products of various life insurers as compared with those of Bajaj

Allianz.

It was found that most of the people give preference to the products of Life Insurance

Corporation of India. LIC being a government backed undertaking and having been

in operation since a long time, it has gained the faith of people. Though now with the

privatization of the insurance sector the thinking pattern of people is changing day by

day, but we can not expect overnight miracles. People are buying life insurance from

private players because the services provided by them are of a better quality than that

of LIC. A person buys insurance basically for the purpose of risk coverage. If the

claims are not settled in time, it would defeat the whole purpose of insurance.

Another thing that was found was that there is a slow market shift. Traditionally,

people were taking up endowment and money back plans largely. But nowadays,

products such as pension plans and child care plans are much in demand. The pension

market is estimated to grow at a fast pace.

It was found that the market awareness of Bajaj Allianz is poor. Among private

insurers, people are more conversant with names such as ICICI and HDFC. They can

relate these to insurance, as they are already into financial services. On the other

hand, Bajaj Allianz is mostly related to Bajaj automobiles.

Bajaj Allianz policies were found to be competitive with those of other insurers. The

premium rates of Bajaj Allianz are quoted to be quite low as compared with those of

other insurers. The Family Income Benefit and Hospital Cash Benefit are unique in

their plans.

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SUGGESTION

Bajaj Allianz launched its pension plan Swarna Vishranti recently. It was an

appreciable step as the company recognized the potentials of the growing pension

market. This product would be helpful in tapping this market.

During the study, it was found that though the individuals in high-income bracket

were aware of Bajaj Allianz as a life insurer, the awareness among the mass was

found to be poor. People can not relate to Bajaj Allianz as a life insurer. They relate

to it to bajaj automobiles. Therefore, it is imperative that the company advertises

extensively.

Another trend that was found that people were more attracted towards unit linked

products, which many insurers are offering. People perceive insurance more as an

investment avenue than for risk coverage. Therefore companies like Birla sunlife,

Aviva, ICICI Prodential, Om Kotak Mahindra are offering unit linked products which

are attracting the customer. Thus it may be perceived that customers are getting

attracted towards unit-linked plans. Bajaj Allianz can also launch a policy, which

shall be a pure unit linked plan.

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BIBLIOGRAPHY

BOOKS – C.R.Kothari, RM method & techniques,

Insurance marketing by Mr. Satish Pandey,

WWW.Bajajallianzlife.insurance.com,

Business Today,

Economic Times,

Business Standards,

IRDA. Com

Annual Report of Bajaj Allianz Insurance Co. Ltd.,

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ANNEXURE

The Bajaj Allianz CashGain Plan

Your needs for insurance protection will vary at different stages of life. Sometime,

you may need to release a part of your savings from insurance commitments and

utilize it for other pressing needs. The Bajaj Allianz CashGain is ideal for those who

want to reap and enjoy the benefits of their life insurance policy at regular intervals

during their lifetime.

Bajaj Allianz CashGain is a specially designed plan that offers a host of additional

benefits you may choose to develop a sound financial portfolio for your family.

Among the many unique benefits, the most significant is the Family Income

Benefit(FIB) that sustains the family by compensating the loss of regular income due

to death or permanent disability.

Available as :

Bajaj Allianz CashGain Economy : The basic package.

Bajaj Allianz CashGain Gold : With double protection

Bajaj Allianz CashGain Diamond : With triple protection

Bajaj Allianz CashGain Platinum : With quadruple protection

A Uniform Life Cover

Besides giving you regular Cash Benefits, this plan takes care of your life insurance

needs also. On death during the term of policy, the following would be paid

irrespective of the Cash Benefits already paid:

Bajaj Allianz CashGain Economy : Sum Assured + Bonuses

Bajaj Allianz CashGain Gold : Double Sum Assured + Bonuses

Bajaj Allianz CashGain Diamond : Triple Sum Assured + Bonuses

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Bajaj Allianz CashGain Platinum : Quadruple Sum Assured + Bonuses

Choice of Terms

Keeping your convenience in mind, we offer you the widest range of terms : 15, 20,

25 and 30 years.

The availability of Cash Benefits will be as under :

No. of years at the end of which Cash Benefit Becomes Due

Term 1st Cash Benefit

2nd Cash Benefit

3rd Cash Benefit

4th Cash Benefit

Maturity Benefit

15 3 6 9 12 1520 4 8 12 16 2025 5 10 15 20 2530 6 12 18 24 30

Additional Protection for you and your family

a) Family Income Benefit (FIB) – The Ultimate Protection – For Your Loved Ones

b) Comprehensive Accident Protection

Accidental Death Benefit

Accidental Permanent Total/Partial Disability Benefit

Waiver of Premium Benefit

c) Critical Illness Benefit (CI)

d) Hospital Cash Benefit (HC)

Flexibility in Coverage

Increase in risk coverage

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Every added responsibility in your life calls for increase in your risk cover. We

provide you the option to increase coverage upto 50% of the basic Sum Assured

on each of the following happy moments in your life:

Your marriage

The birth of your first child

The birth of your second child

Premium Payment Mode

For your convenience, we have provided 3 premium payment modes that can be

Yearly, Half-Yearly and Quarterly. We also offer a monthly premium payment

mode with salary deduction schemes. The premium for frequencies other than

yearly mode is the annual premium multiplied with the frequency factor (0.51 for

the half yearly mode, 0.26 for the quarterly mode, and 0.09 for the monthly

mode).

Tax Benefits

Premium paid are eligible for Tax Exemption under Section 88 of the Income Tax

Act. The periodic Cash benefits, maturity and death proceeds are Tax-Free under

Section 10 (10D) of the Income Tax Act. The premiums for the Critical Illness

Benefit and the Hospital Cash Benefit will be eligible for Tax Exemption under

Section 80 (D) of the Income Tax Act.

Surrender

While we do not encourage surrender of a policy as it breaks your security cover,

we realize the importance of availability of cash at a short notice in some

emergencies. Therefore, we provide you with a choice of surrendering the policy.

The guaranteed minimum surrender value in case of surrender before the first

survival benefit is 30% of all premiums paid excluding the first year premium and

the premiums for all additional benefits. The guaranteed minimum surrender value

in case of surrender after the first survival benefit is 30% of all premiums paid

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after receiving the latest survival benefit excluding the premiums for all additional

benefits.

What is Bajaj Allianz HealthCare?

This is a three-year health insurance plan, providing comprehensive health cover with life

insurance benefit. You can choose the amount of cover for each benefit separately in multiples

of the minimum cover amount, subject to a maximum multiple of 10.

Feature Minimum CoverLife Cover Rs. 10,000Hospital Cash (HC) Equal to Room charges (Max. Rs. 500

per day and Max Rs. 1000 per day in ICU), Maximum Rs. 30,000 in a policy year

Post Hospitalisation Benefit 50% of claim settled for HC per day, maximum 5 days in a policy year

Surgical Benefit Equal to surgical expenses, Rs. 50,000 per policy year

Critical Illness Cover Rs. 50,000 during the policy termAdditional Permanent Total/Partial Disability (APT/PD)

Rs. 50,000 payable on total disability and Rs. 25,000 payable on partial disability

Who is Eligible ?

All people who are between 18 and 57 years of age.

Premium Payment of Mode

For your convenience we have provided Yearly and Monthly premium modes. The

monthly mode is available only under Salary Savings Schemes (SSS) and ECS. The

minimum premium is Rs. 1000 for yearly mode and Rs. 100 for monthly mode.

Tax Benefits as per current tax laws

Contributions upto Rs. 10,000 will be eligible for tax benefits under Section 80D, as

per applicable tax laws.

15 day Free Look Period

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Within 15 days from the date of receipt of the policy, you have the option to review

the terms and conditions and return the policy, if you disagree to any of the terms &

conditions, stating the reason for your objections. You will be entitled to a refund of

the premium paid, subject only to a deduction of a proportionate risk premium for the

period on cover and expenses incurred on medical examination and stamp duty

charges.

The Bajaj Allianz UnitGain Plan

The Bajaj Allianz UnitGain comes with a host of features to allow you to have the

best of all worlds-Protection and Investment with flexibility like never before.

Some of the key features of this plan are :

Guaranteed death benefit

Choice of 6 investment funds with flexible investment management: you canchange funds at any time.

Attractive investment alternative to fixed-interest securities

Provision for full/partial withdrawls any time after three full years premiums arepaid.

Unmatched flexibility – to match your changing needs.

Benefits available under the plan

Death Benefit : In case of unfortunate premature death the beneficiaries are entitled

to the Sum Assured less withdrawls or the bid price of units, whichever is higher. If

the age of the insured person is less than 7 or above 70, then the bid price of units is

paid.

Cash withdrawl option :

There is no maturity date for this plan. There is a 100% surrender penalty on full or

partial surrender of units during the first three years. Anytime after payment of 3 full

years premiums, you may withdraw money, depending on your requirements,

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through partial or complete surrender of units. In case of partial withdrawl, a

minimum balance of Rs. 10,000 (at Bid Price) across all funds must be maintained,

and the minimum withdrawl amount is Rs. 1000 (at Bid Price).

Flexibility – to manage your investments

We offer you the flexibility to manage your investments. Initially, you can allocate

the premium into the 6 funds that are available in a proportion of your choice.

Subsequently, depending on the performance of funds, you can switch between funds

and also change the allocation of premium to various funds. We allow you three free

switches every policy year subject to a minimum switching amount of Rs. 5000 or

the fund value, whichever is lower. You can also change the proportion of premium

allocation to various funds at each policy anniversary.

Additional Protection for you and your family

You have the option to add the following five additional benefits, providing total

protection against uncertainties.

Accidental Death Benefit

Accidental Permanent Total/Partial Disability Benefit

Critical Illness Benefit (CI)

Hospital Cash Benefit (HC)

MahilaGain Rider Benefit (for women only). Refer the MahilaGain brochure.

Premium Payment Mode

Partial and Full Withdrawls

Free Look Period

Within 15 days from the date of receipt of the policy, you have the option to review

the terms and conditions and return the policy, if you discharge to any of the terms &

conditions, stating the reasons for your objections. You will be entitled to a refund of

the premium paid, subject only to a deduction of a proportionate risk premium for the

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period on cover and the expenses incurred on medical examination and stamp duty

charges.

Days of Grace

Before the payment of full 3 years premiums, premiums must be paid when due to

keep the policy in-force. Till such time the company receives 3 full years premiums,

30 days of grace period will be allowed for the yearly, half yearly and quarterly

modes and 15 days of grace will be allowed for the monthly mode.

Termination of the Policy

The policy will terminate on occurrence of any of the following :

The units in the policy are fully surrendered

The account value becomes Rs. 100/- or less

The account value is not sufficient to support the Cost of Insurance deductions

for a period of three months.

The death of the Life Assured.

The “Bajaj” Allianz Lifetime Care” Plan

You and your family deserve the very best in life, and the good life you lead should

last a lifetime. However, one cannot always avoid the unpleasant surprises, and

sometimes misfortunes, in life. The “Bajaj Allianz Lifetime Care” Plan provides you

with the comfort that your near and dear ones will continue to live their life without

financial worries, even when you are not around.

What does the “Bajaj Allianz Lifetime Care” offer you

This plan not only provides insurance protection, but also ensures that your valuable

savings grow by way of compounded annual bonuses. In addition, a terminal bonus

may be paid on survival till age 80 for in-force and fully paid up policies. In case of

death after 15 full policy years, the company may pay a terminal bonus for in-force

and fully paid-up policies.

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What are the 5 additional benefits ?

a) Accidental Death Benefit

Accidents are always sudden and sometimes fatal. You can’t lessen the emotional

shock, but you can certainly soften the financial one. Bajaj Allianz Accidental Death

Benefit gives your loved ones something to start with after the permanent loss of your

income by paying double the basic Sum Assured plus Accrued Bonuses, subject to a

maximum of Rs. 10,00,000/- under all policies with Bajaj Allianz taken together.

b) Accidental Permanent Total/Partial Disability Benefit

Accidents are unpredictable and so are the consequences. This may lead to a disability-partial or

total. The Bajaj Allianz Accidental Permanent Total/Partial Disability Benefit provides a financial

cushion against such misfortunes.

Type of disability BenefitPermanent Partial Disability 50% of the Sum AssuredPermanent Total Disability 100% of the Sum Assured

* subject to a maximum of Rs. 5,00,000/- under all policies with Bajaj Allianz takentogether** subject to a maximum of Rs. 10,00,000/- under all policies with Bajaj Allianz taken together

c) Waiver of Premium Benefit

An accident may lead to permanent total disability limiting your ability to earn. Bajaj

Allianz Waiver of Premium Benefit is a helping hand when you need it most. It keeps

your insurance cover alive by waiving future premiums and enables you to live up to

your commitments.

d) Critical Illness Benefit

Some illnesses are critical. They not only alter your life’s pattern but also result in a

financial drain. Bajaj Allianz Critical Illness Benefit softens the impact on your

family by paying out the Critical Illness Benefit under the plain immediately, while

other policy benefits continue (excluding Hospital Cash Benefit).

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We cover 11 Critical Illness. This benefit is available for the premium payment term

only.

e) Hospital Cash Benefit

The worry of setting hospital bills(room charges) adds to the trauma of

hospitalisation. Bajaj Allianz Hospital Cash Benefit reduces this financial burden and

helps you to recover with peace of mind. This benefit is available for the premium

payment term only.

Flexibility in Coverage

At Bajaj Allianz, we believe in offering benefits and not just products. We realize

that you are unique and your needs for insurance vary with time. We therefore offer

you the flexibility of including the following benefit combination at each policy

anniversary.

Increase in risk coverage

Every added responsibility in your life calls for increase in your risk cover. We

provide you the option to include additional death coverage of 50% of the Sum

Assured on each of the following happy moments in your life.

your marriage

the birth of your first child

the birth of your second child

This additional coverage is not subject to underwriting.

Eligibility

Conditions Lifetime Care Economy

Lifetime Care-Protect/Health/Total

Minimum Age at Entry

15 18

Maximum Age at Entry

60 50

Maximum Premium Ceasing Age

80 80

Minimum Term 10 10Minimum Premium(Rs.)

5000/- for yearly, 2500/- for Half Yearly. 2000/- for Quarterly and 700/- for Monthly*

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*by salary deduction only

Indicative Annual Premium Rates * for Lifetime Care Economy

TermSum AssuredRs. 3,00,00 Rs. 5,00,000 Rs. 10,00,000

15 years 9096 15000 2976020 years 7581 12475 2471025 years 6810 11190 2214030 years 6405 10515 20790

* The rates are for a healthy 30 year old male.

Premium Payment Mode

For your convenience we have provided 3 Premium Payment Modes that can be

yearly, half-yearly or quarterly. We also offer a Monthly Premium Payment Mode

with salary deduction schemes.

Tax Benefits

Premiums paid are eligible for Tax Exemption under Section 88 of the Income Tax

Act and maturity and death proceeds are Tax Free under Section 10(10D) of the

Income Tax Act.

Surrender

While we do not encourage surrender of a policy as it breaks your security cover, we

realise the importance of availability of cash at short notice in some emergencies.

Therefore, we provide you with a choice of surrendering the policy, provided 3 full

years premiums have been duly paid.

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