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APROJECT REPORT
ON
Submitted in Partial Fulfillment of the Requirement forMaster of Business Administration
SUBMITTED TO: SUBMITTED BY:IILM-BUSINESS SCHOOL Sanjay Kumar SharmaNEW DELHI July2008-10 Batch
ROLL NO.-820850229
PUNJAB TECHNICAL UNIVERSITY
JALANDHAR
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PREFACE
There are number forces that make marketing an endlessly changing activity.
The constantly activity sociological, psychological and political environment
may represent the uncontrollable marketing factors. To understanding these
factors in better way marketing research is of utmost importance.
This Project Report has been completed in Partial fulfillment of my Management
Program, Master of Business Administration in the company HDFC STANDARD
LIFE INSURANCE. The objective of my project was Enhancement of
Channel Distribution.
HDFC STANDARD LIFE is the name which is working as one of the best private
insurance company in insurance secto33r.
With such large population and the untapped market of populations insurance
happens to be very big opportunity in India. Today it stands as a business
growing at the rate of 15-20 percent annually. Together with banking services,
It adds about 7 percent to the countrys GDP. In spite of all this growth thestatistics of the penetration of the insurance in the country is very poor. Nearly
80% of Indian populations are without Life Insurance cover and the Health
Insurance. This is an indicator that growth potential for the insurance sector is
immense in India.
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CONTENTSPage No
ACKNOWLEDGEMENT 7-8
EXECUTIVE SUMMARY 15
PROJECT OBJECTIVE 16
RESEARCH METHODOLOGY 17-24
Section 1 : INDUSTRY PROFILE 26-48
1) Overview & Historical Perspective
2) Insurance Sector Reforms
3) Nature of Industry4) Indian Insurance Industry
Regulatory Body : IRDA
5) Impact of Liberalization
Market share of various players
6) Current Scenario
7) SWOT Analysis of Industry
8) Conclusion
Section 2 : COMPANYS PROFILE 50-68
HDFC Ltd. : 1) Introduction
2) Subsidiary & Associate Companies
HDFC STANDARD LIFE
1) Introduction
2) Key Personnel
3) Knowledge Management
Life Stages
4) Product Mix
5) Current Sales
6) Future Plans
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Section 3 : MAIN SECTION 69-79
1) Financial Planning
2) 360 Financial Planning
3) Consumption Pattern
4) Objective & Sales Procedure
Section 4 : DATA ANALYSIS AND FINDINGS 80-92
Section 5 : CONCLUSIONS & RECOMMENDATIONS 93-98
APPENDICES 99-111
1) Questionnaire
2) Tables3) Glossary
4) Bibliography
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Acknowledgement
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ACKNOWLEDGEMENT
On the successful completion of this project I would like to
express my gratitude to all the people who have helped me
throughout the project.
At first, I owe my debt of thanks to HDFC Standard Life,
which gave me an opportunity to do this project work.
I wish to extend my deep and sincere gratitude to Mr. Rajeev
Ranjan Dixit (AM) who provided me with their guidance from
day one and also helped me whole heartedly to achieve the
ultimate goal of the project.
I would also like to thank all the employees of HDFC SLIC
New Delhi zonal office for their expert guidance and
encouragement they have given me in spite their demanding
schedule. Their informal discussions and constructive criticism
of has helped this project a rewarding experience for me.
My sincere thanks goes to Mrs. Charu Verma (Placement
Cell), IILM-BS(International Institute for Learning in
Management,New Delhi for continuous encouragement &
suggestions offered by her.
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I am also indebted to the Institute faculty members for
providing me with this learning opportunity.
Last but not least , I must acknowledge the encouragement
and help given by my beloved parents, friends, teachers,
family members, whose best wishes and emotional support
have enabled me to completed this project.
SANJAY KUMARSHARMA
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Declaration
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DECLARATION
The summer project on Distribution Enhancement in
HDFC Standard Life Insurance is the original work done
by me. This is the property of the institute and use of this
report without prior permission of the institute will be
considered illegal and actionable.
Date:
Place: NEW DELHI SANJAY KUMAR SHARMA
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Certificate
OfApproval
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CERTIFICATE OF APPROVAL
The following Summer Project report titled DISTRIBUTIONEENHANCEMENT is hereby approved as a certified study inmanagement carried out and presented in a manner satisfactory towarrant its acceptance as prerequisite for the award ofMASTER OFBUSINESS ADMINISTRATION for which it has been submitted. It isunderstood that by this approval the undersigned do not necessarilyendorse or approve any statement made, opinion expressed orconclusion drawn therein but approve the summer project report onlyfor the purpose it is submitted.
Summer Project Report Examination Committee for evaluation ofsummer project report.
Name Signature
MBA Summer Project __________ _____________Coordinator
Approval by HDFD-SLIC ---------------- ----------------------
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Executive
Summary
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EXECUTIVE SUMMARY
Overall, the life insurance and pension sector is set for rapid changes and
growth in the years ahead. Delivering service, building trust and being
innovative are key areas in which any company will have to excel in order to do
well in the long road ahead. Different companies will take different approaches
and it would be myriad of solutions that will be found to delight the Indian
customer.
During the first part, I was given complete classroom training about the various
Commission and Renewal structure, Club Membership-Additional benefit which
the company offers.
Later, Market Research was done through various activities and tele-calling
which are discussed further in the report. Activities led to practical exposure
and taught me the aspects of people dealing.
Finally, interesting conclusions were drawn out of the data collected regardingthe Awareness of Financial Planning among the people in todays environment.
It was great experience because conveing general people to make him
Financial Consultant are a great deal of confidence.
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ProjectObjective
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PROJECT OBJECTIVES
To Enhance Distribution Channel through generate Financial
Consultant.
To study the awareness of Financial Planning among the people.
To study the importance of Insurance in todays scenario.
Brand awareness of various private insurance companies.
Preference among different investment tools.
Purpose of buying insurance.
Preference in choosing channel for buying life insurance.
Quality of service provided by agents and clients satisfaction
Level.
Customers perception of improvements brought in by entry of
Private Insurance Companies.
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Research
Methodology
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RESEARCH METHODOLOGY
D.1 JOB PROFILE
Working in HDFC-SLIC was of a very good learning experience for me. I
learned a lot from my unit manager. He taught me different aspects of
corporate world and how to make the sales effective. He made sure that
I put in my best efforts and gave me the deep insight of insurance
sector. From the very beginning he told me that he wont provide mewith any kind of leads and databases, so that I put my efforts and
generate my own leads and complete my targets in the given time.
During my training I interacted with customers who were very much
unknown to me and in the nascent stages I was having a little bit of
hitch but later on I started enjoying while interacting with the
customers.
D.2 RESEARCH DESIGN:
. The research design applied here was exploratory research and
descriptive research.
Exploratory Research is one in we dont know about the problem, we
have to find about the problem and then work on solving the problem.
Whereas in case of descriptive research, we know the problem, we just
have to find the solution to the problem. Generally descriptive research
design is applied after exploratory research design. As in first case we
tried to find out the problem area, as in initially there was problem in
pitching the right thing to the customer and finding out the right
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customer who is actually interested in entering into the insurance
market. Once the problem was known, then descriptive research was
applied as to what benefits and extra thing could be given to customer
so as to attract the customer.
D.3 SAMPLE SIZE:
To complete the research, the questionnaire was filled by minimum 100
(hundred) personals.
D.4 RESEARCH TOOL AND QUESTIONNAIRE
Research tool:
In this project we have used primary data as well as secondary data.
Primary data is one in which we find out the raw data through directly
contacting the people and asking them to fill in the questionnaire and
through some activities ands secondary data is by using the contacts
which are already available Primary data is applied as we have used thequestionnaire and through marketing activities, secondary data has been
used in form of yellow pages, various personal contacts.
Questionnaire:
Questionnaire contains around fifteen questions contain the information
about the financial consultants and their work. The questions relate to as
in what kind of difficulties do they face before becoming the financialconsultants and how much the company helps them to achieve their
goals.
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SPSS has used to fill in the data in excel and to analyze the data
collected.
D.5 ACTION PLANThe target given to me was to recruit 6(six) Insurance Advisors and
with the Guidance and Motivation of my sales development Manager I
achieved my target during my training of 8 Weeks and I recruited
6(six)Insurance Advisors, I Divided whole period of my training into
four parts:
1 Finding the data and appropriate leads
2 Fixing the appointments
3 Negotiating with customers
4 Closing the case
STEP 1:FINDING THE DATA AND APPROPIATE LEADS
Collection of data or leads is the first thing before making a customer
a client of HDFC STANDARD LIFE. I collected data by six ways:
1 Through Yellow Pages
2 Through marketing activities
3 Through Telephone Directory
4 Through Internet
5 Through Newspaper
6 Through cold calling
After collection of data my second job was to make cold calls and
door-to-door marketing. Which I did by making Tele calls from the
Company and went to different offices as well as to the court clients
about latest offer of part time Business opportunity as a life advisor.
In all, I collected data of about 100 customers. So Data Collection
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Means Looking for the Suspect who May or May Not be interested in
the Business Proposal.
STEP 2: FIXING THE APPOINTMENT
Data collection and cold calling are just the primary steps in marketing
of any product the real thing is to find out opportunities out of those
leads which one has generating. I got many opportunities where the
customer was interested in becoming the client of mine and I use to fix
meetings with these customers so that I can tell them the details of our
Part time Business Opportunity. In all I got 48 opportunities where the
customer was interested in becoming the Life Advisor. So these 40
Clients were those who were converted into Prospects of becoming a Life
Advisor.
STEP 3: NEGOTIATING WITH CUSTOMERS
After meeting with the customers and negotiating with them I tried to
convince them to become the Insurance Advisor of the best Private Life
insurance Company which already has more than 30,000 Insurance
Advisors. And through this interaction I came to know about the one to
one interaction skills. And at the end I closed the Deal by convincing
about 6 Clients for becoming the Corporate Agents of HDFC
STANDARD LIFE within a period of 8 weeks.
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AREA ASSIGNED
There was no as such a particular area was assigned. Out of six Advisors
which I have recruited from different areas of New Delhi. I use to fix
meetings by making Tele calls and then go to the residence or the office
of the clients, sometimes in Noida, and Often in New Delhi.
During my training I enjoyed both the in-house on job training but in
field was little problem for me as I dont know much areas in Delhi and
that I didnt had any of my personal conveyance to go. Sometimes it
was very frustrating when I use to go to the residence of my client and
he refuses to talk to me or he was not present at the given address. But
later I realized that life is a journey and you have to move on and on.
TARGET ASSIGNED
The Target assigned to me was to Recruit 6(six) Insurance Advisors for
HDFC STANDARD LIFE and to sell insurance policies. The Tenure of the
project was of 8 weeks. And due to Gods Grace I achieved the target
and Recruited 6(six) Insurance Advisors within 8 Weeks.
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D.6 MAJOR PROBLEMS FACED
Some people, even if hey are not interested, they directly dont
say NO rather they linger on and have a series of appointments
till the time the seller loses enthusiasm and makes sure that the
client is not going to give a sale.
Some of the prospects dont even listen to anything and straight
away say NO they dont even give you the chance to say what
one wants to ; most of these men were businessmen who perhaps
had less time to listen to sales pitch
I find difficulty in interacting with people due to negative
responses that made me demoralized sometimes
Some people dont even understand the concept of insurance the
worse is that they dont even want to know about it.
The other difficulty was sometimes the client was ready to become
the insurance advisor of HDFC STANDARD LIFE but it was difficult
to fetch out nine hundred for the examination fees.
I also faced difficulty in traveling to different areas of Delhi,
Gurgaun, Gr.Noida and Noida to meet the clients for part time
business proposal.
It was difficult to convince the clients to become insurance advisor
of HDFC STANDARD LIFE by paying nine hundred rupees when
some other companies were taking less or no fees for the
examination.
The difficulty was to maintain a continuous level of self-motivation
because we are giving our best shot but results dont come.
The sales pitch if delivered to a group of friends together, has a
more probability of landing up in a mockery, as then everyone in
group tries to out smart the salesperson.
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D.7 DATA ANALYSIS
The whole project work of 8 weeks gave an understanding that the
insurance is one of the most difficult products to sell because of its
nature being intangible but convincing peole to become the insurance
advisor is much more difficult then selling insurance policies. Insurance
sector has a huge potential in India to grow, keeping in mind the huge
unexplored market in India and increasing per capita income of the
country. People today are more educated and hence more aware and
receptive towards the concept of life insurance.
Private players in the market have really revolutionized the insurance
industry by providing immaculate services, unique policy options, great
distributions channels and greater awareness through advertisement.
The real difference today lies in how much the customers are aware of
the brand and how much do they have faith on the brand. The
distribution channel and reaching the customer first is also a major
aspect to counter the competition.
Insurance is a product that is sold by putting the hands over the nerve
of emotion so the products and the company should be positioned as a
family member to the client.
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Major thing is to do marketing at two levels both internal as well as
external. In this business, because the products are almost same for all
the companies, the real edge can be provided if the life advisors or
agents of the company themselves have real faith on their products and
integrity of the company. Only a well motivated and aware sales person
can make the great sales. The other type of marketing is external
marketing, which is done for the end customer of the product and this
marketing should also be appropriate providing the company a great
positioning in the minds of the customer.
The study of awareness about Financial Planning among the people and
particularly the insurance sector covers data collection through
questionnaire and interview of consumers.
Identify the course of action to solve it. For this purpose the information
proved useful for giving right suggestion to the company.
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INDUSTRY PROFILE
Overview
With largest number of life insurance policies in force in the world,
Insurance happens to be a mega opportunity in India. Its a business
growing at the rate of 15-20 per cent annually.
Together with banking services, it adds about 7 percent to the countrys
GDP .In spite of all this growth the statistics of the penetration of the
insurance in the country is very poor. Nearly 80 per cent of Indian
population is without life insurance cover while health insurance and
non-life insurance continues to be below international standards. And
this part of the population is also subject to weak social security and
pension systems with hardly any old age income
Historical Perspective
The insurance came to India from UK; with the establishment of theOriental Life insurance Corporation in 1818.The Indian life insurance
company act 1912 was the first statutory body that started to regulate
the life insurance business in India. By 1956 about 154 Indian, 16
foreign and 75 provident firms were been established in India. Then the
central government took over these companies and as a result the LIC
was formed. Since then LIC has worked towards spreading life insurance
and building a wide network across the length and the breath of thecountry.
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Important milestones in the life insurance business in India:
1912: The Indian Life Assurance Companies Act enacted as the first
statute to regulate the life insurance business.
1956: 245 Indian and foreign insurers and provident societies were
taken over by the central government and nationalized. LIC formed by
an Act of Parliament- LIC Act 1956- with a capital contribution of Rs.5
cr. from the Government of India.
Important milestones in the general insurance business in India are:
1907: The Indian Mercantile Insurance Ltd. set up- the first company to
transact all classes of general insurance business.
1957: General Insurance Council, a wing of the Insurance Association of
India, frames a code of conduct for ensuring fair conduct and sound
business practices.
1972: The general insurance business in India nationalized through The
General Insurance Business (Nationalization) Act, 1972 with effect from
1st January 1973. 107 insurers amalgamated and grouped into four
companies- the National Insurance Company Limited, the New India
Assurance Company Limited, the Oriental Insurance Company Ltd. and
the United India Insurance Company Ltd. GIC incorporated as a
company.
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Insurance Sector Reforms
Prior to liberalization of Insurance industry, Life insurance was
monopoly of LIC.
In 1993, Malhotra Committee- headed by former Finance Secretary and
RBI Governor R.N. Malhotra- was formed to evaluate the Indian
insurance industry and recommend its future direction. The Malhotra
committee was set up with the objective of complementing the reforms
initiated in the financial sector. The reforms were aimed at creating a
more efficient and competitive financial system suitable for the
requirements of the economy keeping in mind the structural changes
currently underway and recognizing that insurance is an important part
of the overall financial system where it was necessary to address the
need for similar reforms. In 1994, the committee submitted the report
and some of the key recommendations included:
Structure
Government stake in the insurance Companies to be brought down to
50%. Government should take over the holdings of GIC and its
subsidiaries so that these subsidiaries can act as independent
corporations.
Competition
Private Companies with a minimum paid up capital of Rs.1 billion
should be allowed to enter the sector. No Company should deal in both
Life and General Insurance through a single entity. Foreign companies
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may be allowed to enter the industry in collaboration with the domestic
companies.
Regulatory Body
The Insurance Act should be changed. An Insurance Regulatory body
should be set up. Controller of Insurance- a part of the Finance Ministry-
should be made independent
Investments
Mandatory Investments of LIC Life Fund in government securities to be
reduced from 75% to 50%. GIC and its subsidiaries are not to hold more
than 5% in any company (there current holdings to be brought down to
this level over a period of time)
Customer Service
LIC should pay interest on delays in payments beyond 30 days.
Insurance companies must be encouraged to set up unit linked pension
plans. Computerization of operations and updating of technology is to be
carried out in the insurance industry
STATISTICS (INDIAN & GLOBAL)
This section gives the users important and detailed statistics of the
Indian as well as the Global insurance industry. These statistics would
give important insights of where the respective markets are headed for.
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The global life insurance market stands at $1,521.2 billion while
the non-life insurance market is placed at $922.4 billion.
The United States itself accounts for about one-third of the
$2443.6 billion global insurance market and Japan stands nextwith a 20.62% share.
India takes the 23rd position with US $9.933 billion annual
premium collections and a meager 0.41% share.
Out of one billion people in India, only 35 million people are
covered by insurance.
India's life insurance premium as a percentage of GDP is just 1.77per cent.
The income derived by GIC and its subsidiary companies through
investment was Rs.2491.76 crore and the investable fund
generated was Rs.2843 crore in 1999-2000.
Indian insurance market is set to touch $25 billion by 2010, on the
assumption of a 7 per cent real annual growth in GDP.
A variety of perils. By purchasing insurance policies, individuals and
businesses can receive reimbursement for losses due to car accidents,
theft of property, and fire and storm damage; medical expenses; and
loss of income due to disability or death.
The insurance industry consists mainly of insurance carriers (or
insurers) and insurance agencies (Financial Consultant) and
brokerages. In general, insurance carriers are large companies that
provide insurance and assume the risks covered by the policy. Insurance
agencies and brokerages sell insurance policies for the carriers.
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Insurance companies assume the risk associated with annuities and
insurance policies and assign premiums to be paid for the policies. In the
policy, the companies states the length and conditions of the agreement,
exactly which losses it will provide compensation for, and how much will
be awarded.
The premium charged for the policy is based primarily on the amount to
be awarded in case of loss, as well as the likelihood that the insurance
carrier will actually have to pay. In order to be able to compensate
policyholders for their losses, insurance companies invest the money
they receive in premiums, building up a portfolio of financial assets and
income-producing real estate which can then be used to pay off any
future claims that may be brought.
Direct insurance carriers offer a variety of insurance policies.
Life insurance provides financial protection to beneficiariesusually
spouses and dependent childrenupon the death of the insured.
Disability insurance supplies a preset income to an insured person
who is unable to work due to injury or illness
Health insurance pays the expenses resulting from accidents and
illness.
AnAnnuity(a contract or a group of contracts that furnishes a periodic
income at regular intervals for a specified period) provides a steady
income during retirement for the remainder of ones life.
Property-casualty insurance protects against loss or damage to
property resulting from hazards such as fire, theft, and natural disasters.
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Liability insurance shields policyholders from financial responsibility
for injuries to others or for damage to other peoples property. Most
policies, such as automobile and homeowners insurance, combine both
property-casualty and liability coverage. Companies that underwrite this
kind of insurance are called property-casualty carriers.
Nature of Industry
Human life is subject to risks of death and disability due to natural and
accidental causes. When human life is lost or a person is disabled
permanently or temporarily, there is a loss of income to the household.
The family is put to hardship. Risks are unpredictable. Death/disability
may occur when one least expects it. There are a number of life
insurance products which offer protection and also coupled with savings.
A Term insurance product provides a fixed amount of money on death
during the period of contract.
A Whole Life insurance product provides a fixed amount of money on
death.
An Endowment Assuranceproduct provided a fixed amount of money
either on death during the period of contract or at the expiry of contract
if life assured is alive.
A Money Back Assurance product provides not only fixed amounts
which are payable on specified dates during the period of contract, but
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INDIAN INSURANCE INDUSTRY
REGULATORY BODY
Insurance is a federal subject in India. The primary legislation that deals
with insurance business in India is: Insurance Act, 1938, and Insurance
Regulatory & Development Authority Act, 1999.
The Insurance Regulatory and DevelopmentAuthority (IRDA)
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Reforms in the Insurance sector were initiated with the passage of the
IRDA Bill in Parliament in December 1999. The IRDA since its
incorporation as a statutory body in April 2000 has fastidiously stuck to
its schedule of framing regulations and registering the private sector
insurance companies.
The other decision taken simultaneously to provide the supporting
systems to the insurance sector and in particular the life insurance
companies was the launch of the IRDAs online service for issue and
renewal of licenses to agents. Since being set up as an independent
statutory body the IRDA has put in a framework of globally compatible
regulations.
MISSION-IRDA
To protect the interests of the policyholders, to regulate,
promote and ensure orderly growth of the insurance industry
and for matters connected therewith or incidental thereto.
IMPACT OF LIBERALISATION
The introduction of private players in the industry has added to the
colors in the dull industry. The initiatives taken by the private players
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are very competitive and have given immense competition to the on
time monopoly of the market LIC. Since the advent of the private
players in the market the industry has seen new and innovative steps
taken by the players in this sector.
The new players have improved the service quality of the insurance. As
a result LIC down the years have seen the declining phase in its career.
The market share was distributed among the private players. Though
LIC still holds the 79% of the insurance sector but the upcoming natures
of these private players are enough to give more competition to LIC in
the near future. LIC market share has decreased from 95% (2002-03) to
81 %( 2004-05).
LIC has the current market share of 79%.
Among the private players ICICI Prudential has the maximum of appx5.60%
Followed by Bajaj Allianz (3.27 %) and HDFC Standard Life of about3.11%.
Below is the table that shows the market share of various players of theindustry.
The following companies have the rest of the market share of the
insurance industry.
COMPANY NAME MARKET SHARE
LIC 79.30ICICI PRUDENTIAL 5.63
BAJAJ ALLIANZ 3.27
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HDFC STANDARD LIFE 3.11
BIRLA SUNLIFE 2.32TATA AIG 1.45SBI LIFE 1.24
MAX NEWYORK 0.90
AVIVA LIFE 0.82ING VYSYA 0.66OM KOTAK LIFE 0.54AMP SANMAR 0.38
METLIFE 0.33RELIANCE LIFE 0.05
The liberalization of the Indian insurance sector has opened new doors
to private competition and the new and improved insurance sector today
promises several new job opportunities. With private players now in
the field, there will be innovative products, better packaging, improved
customer service, and, most importantly, greater employment
opportunities.
CURRENT SCENARIO OF THE INDUSTRY
INSURANCE MARKET IN INDIA
India with about 200 million middle class household shows a huge
untapped potential for players in the insurance industry. Saturation of
markets in many developed economies has made the Indian marketeven more attractive for global insurance majors. The insurance sector
in India has come to a position of very high potential and
competitiveness in the market.
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Innovative products and aggressive distribution have become the say of
the day. Indians, have always seen life insurance as a tax saving device,
are now suddenly turning to the private sector that are providing them
new products and variety for their choice. Life insurance industry is
waiting for a big growth as many Indian and foreign companies are
waiting in the line for the green signal to start their operations. The
Indian consumer should be ready now because the market is going to
give them an array of products, different in price, features and benefits.
How the customer is going to make his choice will determine the future
of the industry.
CUSTOMER SERVICE
Consumers remain the most important centre of the insurance sector.
After the entry of the foreign players the industry is seeing a lot of
competition and thus improvement of the customer service in the
industry. Computerization of operations and updating of technology has
become imperative in the current scenario. Foreign players are bringing
in international best practices in service through use of latest
technologies. The one time monopoly of the LIC and its agents are now
going through a through revision and training programs to catch up with
the other private players. Though lot is being done for the increased
customer service and adding technology to it but there is a long way to
go and various customer surveys indicate that the standards are still
below customer expectation levels.
DISTRIBUTION CHANNELS
Till date insurance agents still remain the main source through which
insurance products are sold. The concept is very well established in the
country like India but still the increasing use of other sources is
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imperative. It therefore makes sense to look at well- balanced,
alternative channels of distribution.
LIC has already well established and have an extensive distribution
channel and presence. New players may find it expensive and time
consuming to bring up a distribution network to such standards.
Therefore they are looking to the diverse areas of distribution channel to
have an advantage. At present the distribution channels that are
available in the market are:
Direct selling/Retail
Corporate agents Group selling
Brokers and cooperative societies
Bancassurance
DIRECT SELLING/RETAIL
Direct selling or retail business is carried out by Agents (Financial
Consultant) of the company. This is the main distribution channeldue to the complexity of most insurance products (Endowment,
Whole of Life, Unit Linked). This tends to be the focus of most
companies due to its past success as well as its ability to deliver the
right advice. However, this channel can be expensive and it is a time
consuming sales process. An agent is the public face of an Insurance
company. Hence it is important that this face is always smiling and
presentable and the facts and figures at his/ her command are updatedand correct.
A Financial Consultant should be a pleasing personality with complete
knowledge about the various plans and solutions which the company has
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to offer and must also understand the customers psychology well to
deal in an efficient manner.
BANCASSURANCE
Bancassurance is the distribution of insurance products through the
bank's distribution channel. It is a phenomenon wherein insurance
products are offered through the distribution channels of the banking
services along with a complete range of banking and investment
products and services. To put it simply, Bancassurance, tries to exploit
synergies between both the insurance companies and banks.
Advantages to banks
Productivity of the employees increases.
By providing customers with both the services under one roof,
they can
improve overall customer satisfaction resulting in higher customerretention
levels.
Increase in return on assets by building fee income through the
sale of
insurance products.
Can leverage on face-to-face contacts and awareness about the
financialconditions of customers to sell insurance products.
Banks can cross sell insurance products e.g.: Term insurance
products with
loans.
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Advantages to insurers
Insurers can exploit the banks' wide network of branches for
distribution of products. The penetration of banks' branches into
the rural areas can be utilized to sell products in those areas.
Customer database like customers' financial standing, spending
habits, investment and purchase capability can be used to
customize products and sell accordingly.
Since banks have already established relationship with customers,
conversion ratio of leads to sales is likely to be high. Further
service aspect can also be tackled easily.
Advantages to consumers
Comprehensive financial advisory services under one roof. i.e.,
insurance services along with other financial services such as
banking, mutual funds, personal loans etc.
Enhanced convenience on the part of the insured
Easy accesses for claims, as banks are a regular go.
Innovative and better product ranges
WHAT DOES LIFE INSURANCE HAVE TO OFFER?
Life insurance is many different things to many different people. For
some, it is a premium to be paid on time. For others it offers liquidity
since cash can be borrowed when needed. For the investment-minded, it
denotes a constantly growing capital account and numerous other
benefits.
The contractual guarantee is the promise to pay, backed by one of the
oldest and most stably regulated financial industry operating in the
Indian sub-continent today.
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1) Insurance Buys Time and Money
People like to refer to life insurance as time insurance, the reason being
that life insurance proceeds are paid to the insured's beneficiaries in
case of death. The money proffered by life insurance helps buy time toadjust to the change of circumstances. Insurance provides large
amounts of cash that will keep the lifestyle for the survivors the way it
was before the insured's death.
2) Insurance Offers Peace of Mind
For the person who buys an insurance policy, it offers absolute and
complete peace of mind. He or she knows that the decision made by himwill provide sound benefits in the future, whether or not the individual
may live to see it.
3) Multiple Applications
The future is uncertain for each and every one. No one knows how long
he or she will live. The investment benefit is paid to the insured's
beneficiaries after his death or it can be used during the life as well. Lifeinsurance policy owners can turn to the cash value of the policy in case
of a financial emergency when all avenues are either blocked or denied.
4) Enduring Elasticity
Since life insurance is flexible enough to serve several needs, the
insured can keep several long-term goals in mind once he or she invests
in the insurance plan. The cash value of the policy can be allocated
towards augmenting the monthly income during the retirement years.
Leisure years should be turned into pleasure years. Permanent life
insurance is designed on the concepts of long-term flexibility.
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5) Financial Security
The insurance policy offers contractual guarantees to people looking for
peace of mind when they buy life insurance. Life insurance offers
complete financial security. The purchase of life insurance demonstratesconcern for a family's future financial well being.
6) Regard for Family
The purchase of life insurance clearly displays care and concern for the
people the policy owner loves.
7) Insurance is Safer
No financial institution can do what life insurance does. No industry can
back its products with reserves and surplus as sound as those of the
insurance industry.
The proof of strength and safety that insurance companies have ensured
even under the most adverse of conditions is a matter of pride for the
entire insurance industry. For generation after generation, life insurance
has been acclaimed as the very benchmark of security against which the
other industries are measured.
OPPORTUNITIES FOR INSURANCE COMPANIES
In the now open sector on insurance, the following is what I feel will
determine the success of the company in particular and the industry in
general:
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A change in the attitude of the population
Indians have always been wary of employing their hard-earned money
in a venture that will pay them on their death. Insurance has always
been used as a Tax saving tool. No more, no less. It is depend upon
the Financial Consultant to educate the people to secure/insure their
future against any unknown calamity and make a shield around their
families and businesses.
An open and transparent environment created under the IRDA.
The reason for this being on the top of our understanding is that when
ever we have seen any sector open up in India there are always grey
areas and unsure policies. These are not exactly what any player, be it
Indian or foreign, looks for. It creates an air of uncertainty in all the
decision making process. Insurance as a sector requires players who are
strong financially and are willing to wait for returns. Their confidence can
be bolstered only if there is an open and a transparent policy guidelines.
This will also help the consumers feel safe that the regulatory is an
active one and cares to do everything possible to keep things under
control and help the insurance environment grow maturely.
A well-established distribution network.
To cater to the largest democracy in the world is by no means a
cakewalk. Insurance profits are directly related to number of insured and
this is in turn related to the reach.
Trained professionals to build and sell the product.
It is said that the insurance agent (Financial Consultant) is the best
salesman in the world. He makes you pay, regularly, an amount
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promising to pay back only on your death. Thus the players will require
an excellent sales team to sell their products in the now competitive
environment.
Encouragement of new and better products and letting the
hackneyed ones die out.
This will itself ensure the market grows. And that every class/society
gets a product that best suits them.
SPECIAL PROVISIONS
The Income Tax Act and Life Insurance policies
Under Section 10(10D), any sum received under a Life Insurance
policy (not being a Key Man policy) is also exempt from taxation. But
it is wise to remember that Pensions received from Annuity plans are
not exempted from Income Tax.
Section 80C provides a deduction up to Rs.1,00,000/- to an
individual assessee for any amount paid as a premium.
POLICYHOLDERS GRIEVANCES
Policyholders may have complaints against insurers either in respect of
their policies or their claims. As per Regulations for Protection of
policyholders interests, 2002, every insurer should have in place, a
grievance redressal system to address the complaints of policyholders.
The IRDA has a Grievance Redressal Cell which plays a facilitative role
by taking up complaints against insurers with the respective companies
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for speedy resolution. The IRDA however does not adjudicate on
complaints.
SWOT ANALYSIS OF INSURANCE INDUSTRY
STRENGTH
1. Best returns with the added advantage of 100% life insurance
coverage.
2. Good option for new investors into the market as all the money isinvested
by best fund managers so with less knowledge also they can earn
good
returns.
3. Best commission charges paid to the agents which vary from 12% to
40%
which is much higher as compared to mutual funds i.e. , only 2-2.5%.
WEAKNESS
1. HDFC SLIC could not able to match LIC in remote areas services.
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2. Misleading facts given by Financial Consultant about the returns of
ULIPs.
3. Hidden charges taken by the companies.
4. Less Promotional Campaigns.
OPPORTUNITY
1. 80 percent of Indian population is still under insured.
So there is a big opportunity for insurance companies.
2. As the stock market can be under the mark any time so it can bring
loss to
the investors but as in ULIPs there is proper mixture of debt securities
and
equity so the loss is incurred during dark trading days also.
3. Unit-linked products are exempted from tax and they provide life
insurance.
4. Increasing consumer awareness about Insurance and its use.
THREAT
1. Cannibalism within the industry by providing misleading figures to the
investors.
2. Govt.s instability has a long term repercussions affecting companys
policies and its growth.
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CONCLUSION
With largest number of life insurance policies in force in the world,
Insurance happens to be a mega opportunity in India, which is growing
at the rate of 15-20 per cent annually.
Nearly 80 per cent of Indian population is without life insurance cover
while health insurance and non-life insurance continues to be below
international standards. And this part of the population is also subject to
weak social security and pension systems with hardly any old age
income security.
And also the changing attitude and increasing awareness level of the
population is an indicator that growth potential for the insurance sector
is immense.
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COMPANYS PROFILE
INTRODUCTION
Helping Indians experience the joy of home ownership.
Incorporated in 1977 with a share capital of Rs. 10 crores, HDFC has
since emerged as the largest residential mortgage finance institution in
the country. The corporation has had a series of share issues raising its
capital to Rs. 119 crores. HDFC operates through 75 locations
throughout the country with its Corporate Headquarters in Mumbai,
India.
OBJECTIVES AND BACKGROUND
Background
HDFC was incorporated in 1977 with the primary objective of meeting a
social need that of promoting home ownership by providing long-term
finance to households for their housing needs. HDFC was promoted with
an initial share capital of Rs. 100 million.
Business Objectives
The primary objective of HDFC is to enhance residential housing stock in
the country through the provision of housing finance in a systematic and
professional manner, and to promote home ownership. Another
objective is to increase the flow of resources to the housing sector by
integrating the housing finance sector with the overall domestic financial
markets..
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SUBSIDIARY & ASSOCIATE COMPANIES
HDFC Bank
HDFC Mutual Fund
HDFC Standard Life
Intelenet Global Services Ltd.
HDFC Chubb General Insurance Company Ltd.
HDFC Reality
Other Companies Co-Promoted by HDFC
HDFC Trustee Company Ltd.
HDFC Developers Ltd.
HDFC Venture Capital Ltd.
HDFC Ventures Trustee Company Ltd.
HDFC Investments Ltd.
HDFC Holdings Ltd.
Home Loan Services India Pvt. Ltd.
Credit Information Bureau (India) Ltd
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HDFC STANDARD LIFE INSURANCE
INTRODUCTION
HDFC Standard Life Insurance Company Limited was one of the first
companies to be granted license by the IRDA to operate in life insurance
sector. Each of the JV player is highly rated and been conferred with
many awards. HDFC is rated 'AAA' by both CRISIL and ICRA. Similarly,
Standard Life is rated 'AAA' both by Moody's and Standard and Poors.
These reflect the efficiency with which HDFC and Standard Life manage
their asset base of Rs. 15,000 Cr and Rs. 600,000 Cr respectively.
HDFC Standard Life Insurance Company Ltd was incorporated on 14th
August 2000. HDFC is the majority stakeholder in the insurance JV with
81.4 % stake and Standard Life has a stake of 18.6%. Mr. Deepak
Satwalekar is the MD and CEO of the venture.
THE PARTNERSHIP :
HDFC and Standard Life first came together for a possible joint venture,
to enter the Life Insurance market, in January 1995. It was clear from
the outset that both companies shared similar values and beliefs and a
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strong relationship quickly formed. In October 1995 the companies
signed a 3 year joint venture agreement.
Around this time Standard Life purchased a 5% stake in HDFC, further
strengthening the relationship.
In October 1998, the joint venture agreement was renewed and
additional resource made available. Around this time Standard Life
purchased 2% of Infrastructure Development Finance Company Ltd.
(IDFC). Standard Life also started to use the services of the HDFC
Treasury department to advise them upon their investments in India.
Towards the end of 1999, the opening of the market looked very
promising and both companies agreed the time was right to move the
operation to the next level. Therefore, in January 2000 an expert team
from the UK joined a hand picked team from HDFC to form the core
project team, based in Mumbai.
Around this time Standard Life purchased a further 5% stake in HDFC
and a 5% stake in HDFC Bank.
COMPANYS MISSION:
To be the top life insurance company in the market.
This not only means being the largest or the most productive companyin the market, but a combination of several things like-
Customer service of the highest order
Value for money for customers
Professionalism in carrying out business
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Innovative products to cater to different needs of different
customers
Use of technology to improve service standards
Increasing market share
COMPANYS VISION:
The most successful and admired life insurance company. Whichmeans that We are the most trusted company, the easiest to dealwith offer the best value for money, and set the standards in theindustry.
IN SHORT:- The most obvious choice for all .
COMPANYS VALUES:
SECURITY: Providing long term financial security to our policy
holders will be our constant endeavor. This is done by offering life
insurance and pension products. TRUST: Company appreciates the trust placed by our policy
holders in us. Hence, company will aim to manage their
investments very carefully and live up to this trust.
INNOVATION: Recognizing the different needs of our customers,
company will be offering a range of innovative products to meet
these needs.
Companys mission is to be the best new life insurance company in India
and these are the values that will guide us in this.
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KEY MANAGEMENT PERSONNEL
Chairman
Mr. Deepak S. Parekh
Board Of Directors
Mr. K. M. Mistry
Ms. Renu S. Karnad
Mr. A. M. Crombie
Ms. Marcia D. Campbell
Mr. Norman Keith Skeoch
Mr. G. R. Divan
Mr. G. N. Bajpai
Mr. Ranjan Pant
Mr. Ravi Narain
Managing Director & CEO
Mr. D. M. Satwalekar
AUDIT COMMITTEE
Haribhakti & Company
Chartered Accountants
B.K. Khare & Co.
Chartered Accountants
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Bankers
HDFC Bank Ltd.
Union Bank of India
Indian Bank
The Saraswat Co-operative Bank Ltd.
Federal Bank
KNOWLEDGE MANAGEMENT
When Should One Go For Insurance?
Your insurance need will change as your life does, from starting to work
to enjoying your golden years and all the stages in between. Each one of
these stages may pose a different insurance need/cover for you. In this
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Your needs:
oSave for a home and wedding
oTax Planning
oSave for Golden years
Stage 2 - Just Married
Marriage brings about a significant change. New dreams and new
opportunities also bring in additional responsibilities. While both of you
look forward to a happy and secure life , it is equally important to ensure
that eventualities dont come in the way of shaping your dreams.
Your needs:
o Planning for home / securing your home loan
liability
o Save for vacation
o Save for your first child
Stage 3 - Proud Parents
Once you have children, your need for life insurance is even more. You
need to protect your family from an untoward incident. Ensure your
protection umbrella takes into account the future cost of securing your
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childs dream. You will want life to go on for your loved ones, and having
enough life insurance is a way to help ensure that.
Your needs:
o Provide for childrens education
o Safeguarding family against loan liabilities
o Savings for post-retirement
Stage 4 - Planning for Retirement
While you are busy climbing the ladder of success today, it is important
for you to take time and plan for your life after retirement. Having an
early start for retirement planning can make a significant difference to
your savings. Think about your golden years even before you have
reached them. The key is to think ahead and plan well using your time
and money.
Your needs:
o Provide for regular income post retirement
o Immediate Tax benefits
o Lead a secure, independent and comfortable
life style after retirement
PRODUCT MIX
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At HDFC Standard Life, there is a bouquet of insurance solutions to meet
every need. They cater to both, individuals as well as to companies
looking to provide benefits to their employees.
For individuals, they have a range of protection, investment, pension
and savings plans that assist and nurture dreams apart from providing
protection. One can choose from a range of products to suit ones life-
stage and needs.
For organizations they have customized solutions that range from Group
Term Insurance, Gratuity, Leave Encashment and Superannuation
Products.
PRODUCTS FOR INDIVIDUALS
PROTECTION - You can protect your family against the loss of your
income or the burden of a loan in the event of your unfortunate demise,
disability or sickness. These plans offer valuable peace of mind at asmall price.
Plans: Term Assurance Plan
Loan Cover Term Assurance Plan.
INVESTMENT - This includes a plan that is well suited to meet yourlong term investment needs. We provide you with attractive long term
returns through regular bonuses.
Plan : Single Premium Whole Of Life
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PENSION - Our Pension Plans help you secure your financial
independence even after retirement and live a relaxed retired life.
Plans : Personal Pension Plan
Unit Linked Pension
Unit Linked Pension Plus
SAVING- Our Savings Plans offer you flexible options to build savings
for your future needs such as buying a dream home or fulfilling your
childrens immediate and future needs.
Plans : Endowment Assurance Plan,
Unit Linked Endowment,
Unit Linked Endowment Plus,
Money Back Plan,
Childrens Plan,
Unit Linked Youngstar,
Unit Linked Youngstar Plus .
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period 2004-05, with a new business first year premium of Rs 1,029
crore.
In terms of effective premium income (EPI), which gives a 10% value to
a Single Premium policy and is an internationally-accepted indicator of
an insurance company's performance, the EPI grew by 103% to Rs 887
cr from Rs 436 crore.
HDFC Standard Life's growth in new business is a manifestation of the
number of lives insured as well as an increase in the average premium.
For the individual business, volume measured by the number of lives
insured witnessed a 32% growth.
The average premium also grew by 62% to Rs 27,500 in 2005-06 from
Rs 17,000 in 2004-05.
During the year the company issued over 3,97,000 policies and has
covered more than 22,50,000 lives
Table Showcasing Financial Results:
Parameters
April-
March
2004-05
(Rs. Cr)
April-March
2005-06
(Rs. Cr)
Growth
(%)
Total received
premium668.40 1532.21 129.23
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i. New Business 486.15 1028.94 111.65
ii. Renewal 182.25 503.27 176.14
Effective Premium
Income (Total) 436.08 887.30 103.47
Group Business
Premium (EPI) 49.40 135.15 173.58
FUTURE PLANS
HDFC has always been market-oriented and dynamic with respect to
resource mobilization as well as its lending program. This renders it
more than capable to meet the new challenges that have emerged. Over
the years, HDFC has developed a vast client base of borrowers,
depositors, shareholders and agents, and it hopes to capitalize on this
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FINANCIAL PLANNING
A comprehensive financial advisory service involving financial strategies,
tax, corporate/trust structures, estate planning, legal issues, family law,
asset allocation, asset protection and investment advice.
Financial Planning takes into account:
Desired asset allocation, risk profile and return expectations.
Building cash flows correlating all expenses and income. Inflationand outflows due to loans are considering in building the financial
plan.
Future goals like retirement, housing and children's education /
marriage or other needs.
Why do you need Financial Planning?
You may have many dreams, needs and desires. For example, you couldbe dreaming of:
Owning a new car,
Buying a dream house,
Providing your children with the best education,
Planning a grand wedding for your children
Having a great time after your retirement
But in today's world of skyrocketing costs and increasing inflation, how
many of these dreams can you hope to turn into reality? By planning
well, you can utilize your limited resources to the fullest.
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EXPERIENCE THE POWER 360 FINANCIAL PLANNING
The only thing permanent in life is change. Times change. People
change. So does life. You expect life to be much better tomorrow than it
is today. Tomorrow, you hope to fulfill all your dreams and aspirations.
But what happens if things take an untoward turn? Or, if there is an
eventuality? Perhaps it's time for you to change the way you plan your
investments...
How will 360 Financial Planninghelp?
Instead of investing in an ad-hoc
manner, 360 Financial Planning
helps you take a holistic, all-round
view. Briefly, 360 Financial Planning comprises:
Investment Planning
Cash Flow Planning
Tax Planning
Insurance Planning
Children Future Planning
Retirement Planning
INVESTMENT PLANNING: To make your wealth grow
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Everyone needs to save for a rainy day. Once you have saved enough to
take care of emergencies, you should start thinking about investing and
to make your money grow.
Investment Planning Service includes:
Risk Profiling
Asset Allocation and Portfolio Construction
Creation and Accumulation of Wealth through Systematic
Investment Plans (SIP)
Regular review of progress and Portfolio Rebalancing
CASH FLOW PLANNING: To provide for assets and meet the periodiccash requirements
In simple terms, cash flow refers to the inflow and outflow of money. It
is a record of your income and expenses.
Cash flow planning refers to the process of identifying the major
expenditures in future (both short-term and long-term) and making
planned investments so that the required amount is accumulated within
the required time frame.
TAX PLANNING: To save on taxes and increase your income
Proper tax planning is a basic duty of every person which should
be carried out religiously.
According to the Income Tax Act, 1961, One will be eligible for Tax
Benefits under Section 80C and Section 10(10D) of the act.
One has to compare the advantages of several tax saving schemes and
depending upon your age, social liabilities, tax slabs and personal
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preferences, decide upon a right mix of investments, which shall reduce
your tax liability to zero or the minimum possible.
INSURANCE PLANNING: To protect yourself, your family and your
Assets.
"Insurance is not for the person who passes away, it for those
who survive," goes a popular saying that explains the importance of
Insurance Planning.
It is extremely important that every person, especially the breadwinner,
covers the risks to his life, so that his family's quality of life does not
undergo any drastic change in case of an unfortunate eventuality.Insurance Planning is concerned with ensuring adequate coverage
against insurable risks.
CHILDREN'S FUTURE PLANNING: To give your children a financially
secure future
Like every parent, you too must be overjoyed to watch your child grow.
All parents want to give the best possible upbringing to their children.
This includes good education and security, in case of any eventuality.
Soon, your little bundle of joy will grow up, and it will be time to provide
for his or her higher education and wedding.
The purpose of Children's Future Planning is to create a corpus for
foreseeable expenditures such as those on higher education and
wedding, and to provide for an adequate security cover during theirgrowing years.
RETIREMENT PLANNING: Because retirement is a time to relax, not toget worried
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Some like it. Some dont. But retirement is a reality for every working
person. Most young people today think of retirement as a distant reality.
However, it is important to plan for your post-retirement life if you wish
to retain your financial independence and maintain a comfortable
standard of living even when you are no longer earning. This is
extremely important, because, unlike developed nations, India does not
have a social security net.
CONSUMPTION PATTERN
*Source-Business world magazine 2nd week April 2006
73
40.10%
4.10%8.80%
6.90%
6.60%
3.90%
10.80%
2.30%
7.60%
2.10%0.80%
1.60%4.60%
Food & Grocery
Home Textiles
Personal Care
Saving & InvestmentClothing
Consumer Durable
Vacation
Eating out
Footwear
Movies & Theater
Entertainment
Accessories
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FIRST
CONVERSATION
APPOINTMENT
FILLING THE
PROPOSAL FORM
COLLECT THE
REQUIRED
DOCUMENTS AND
THE FIRST
PREMIUM
Follow Up
Follow Up
The consumption pattern is determined by the income so more would be
the income more would be the consumption. The consumption though
can differ in terms of areas where the money is actually spent. The
above representation tells us the consumption pattern of the consumer
in India i.e. where do they actually invest their money and in what
proportion do they spend in various areas. The chart shows that people
are spending 6.9% of their savings into savings and investments.
OBJECTIVE & SALES PROCEDURE:
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STEP 1: FIRST CONVERSATION WITH A KNOWN ORAN UNKNOWN CUSTOMER
This is the first time, when you interact with a person and try to get the
information from him about the industry or the company and understand
the customers insight i.e. what actually does a customer expects from
the companies.
The objective was to know the awareness about Financial Planning
among the customers and this was done by getting a questionnaire filled
by the people. The various activities performed were:
1) DELHI METRO : Here we interacted with the commuters &
collectedthe data.
2) MARKETS : (Cannaught Place & Karol Bagh) During
this
activity, we interacted with the shopkeepers as well as the
walking
people regarding their views about the industry.
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3) CANOPY AT GURGAON: This activity was designed to
target the people working in BPOs and other IT companies.
4) TELE-CALLING: This was random calling from the data
base provided by the company and the aim was to collect
information from them.
5) CORPORATE PRESENTATION: A presentation was
arranged for the employees of VED RAM AND SONS (Paras), to
make them aware about the importance of Financial Planning in
todays unpredictable environment.
STEP 2: APPOINTMENT
All the potential and interested customers of all the activities performed
are then followed up and an appointment is fixed for further details.
The motive is to explain the customer in detail, about the various plans
offered by the company. The customer is informed about the procedure
and the options he can opt for like:
1) Choose the premium he wish to invest
2) Select the Premium Payment Option i.e. annual mode, half yearly
mode, quarterly mode, or monthly mode.
3) Choose the amount of protection i.e. the sum assured, he desires.4) With Maturity Benefit, choose the additional benefits like:
a) Life option Death Benefit
b) Life & Health option Death Benefit +Accidental Death
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Benefit
c) Extra Life & Health option Death Benefit +Critical Illness
Benefit + Accidental DeathBenefit
5) Choose the Investment funds or funds one desires.
The various funds available are:
Liquid Fund
Secure Managed Fund
Defensive Managed Fund
Balanced Managed Fund
Equity Managed Fund
Growth Fund
6) Other information like:
a) Tax Benefit
b) Various Charges
c) Switching option
d) Surrendering
e) Terms & Conditions etc.
STEP 3: FILLING THE PROPOSAL FORM
After the second step, the interested customers are required to fill the
proposal form which requires the following information:
b) Personal details of the policy holder,
c) Personal details of Beneficiary or Nominee
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d) The Premium amount selected
e) The Term of the policy
f) The Fund choice for investment
STEP 4 : COLLECTING THE DOCUMENTS
Once the form is filled all the necessary documents are collected like :
a) Address proof,
b) DOB certificate etc.
And also the first premium amount in form of cheque or cash is
collected.
Within 15 days, the policy documents reach the customers place, and
the customer is required to read the documents carefully.
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AGE DISTRIBUTION
79
SECTION 4
SAMPLE SIZE: 100
Sample was collected on Random Basis
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AGE
24%
Highest number of Respondents (41%) from Age group 31
to 45 yrs.
35% respondents are of age below 30 yrs, small
percentage of which is unemployed.
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INCOME DISTRIBUTION
INCOME D
5
1 1
> 5 lacs
IN
COME
Highest, 16 respondents in income bracket below 1.5 lacs,
which mainly comprises of age group below 30 years.
Respondents of the age group 31-45 yrs, lie in all the
income slabs.
Minimum, 6 respondents in income bracket of above 5 lacs,
which are in age group of above 45 years.
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ARE YOU AWARE ABOUT FINANCIAL PLANNING ?
F
PEOPLE
D
F
98% of the respondents were aware about FinancialPlanning.
BRAND RECALL
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INVESTMENT PR
11%
21%
2
21% respondents prefer banks and post office schemes
as an investment tool preference.
Respondents of age group below 30 years prefer Mutual
Funds, as they provide higher returns than banking
investment tools.
Insurance ranks 2nd as an investment tool choice, which
itself includes various protection, saving and pension plans.
Govt. Bonds & securities are mostly preferred by people
of higher age group rather than young generation.
Property as an investment option is most lucrative
choice. However it is important to mention that majority of
respondents are in age group of above 30 years and people
with high income bracket prefers to invest in Real Estate.
INSURED PERCENTAGE
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13%
87 % of respondents were insured on own life and on life
of their family members. So we had 13 % of potential customers to approach.
COMPANY PREFERENCE
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COM
ONLY LIC
55% of respondents have insurance cover provided by
LIC only
15% of respondents have insurance cover provided by
Private Cos. only
Whereas 30% have got insurance from both LIC and
Private Companies.
Total number of LIC policies sums up to 85% and total
number of Pvt. Companies policies sold sums up to 45%.
Data provides that though LIC is still got a maximum
market share but Private Companies are making a fast move
in the market.
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TYPE OF PLAN BOUGHT
24 28%
Money back Policies have been most popular and also the
endowment plans.
As people today are more aware about financial
planning, so people of the age 30 years have planned for their
Retirement now.
ULIPs are fast gaining popularity as they provide investment
benefit with Insurance.
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PURPOSE OF BUYING INSURANCE
PUR
11%
2
14
Retirement
Planning
Risk cover remains the most important purpose for buying
insurance followed by option as Tax saving tools.
Retirement Planning in a early period is also gaining the
market share.
ULIPs are responsible for increasing popularity of insurance
as an investment tool
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DISTRIBUTION CHANNEL PREFERENCE
C
According to the data, known/current Advisors remains the
1st choice for buying Insurance.
In retail also known Advisors are preferred over referrals.
Bancassurance is emerging as a popular option for buying
life Insurance.
Group insurance is a channel which customers expect but it
is not so popular because only few employers have taken the
initiative.
Buying insurance from a unknown person or getting a
phone call is still not preferred by most of the people
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assume that the features and benefits of a ULIP come at no cost, though
the charges are considerably lower than that of a traditional product.
In fact, the very reason the product is transparent is because the
customer knows the charges and risks.
There is no right or wrong in this. The success of marketing insurance
depends on understanding the social and cultural needs of the target
population, and matching the market segment with the suitable
intermediary segment.
All intermediaries cant sell all lines of business profitably in all markets.
There should be clear demarcation in the marketing strategies of thecompany from this perspective. Clients should also receive price
differentials for using different channels.
The intermediaries need to be empowered with the right learning,
training and sales tools and technology enablers. Coupled with the right
product mix, this
will help the insurers to survive and flourish in this competitive market
scenario.So lets conduct this business with utmost economy with thespirit of trusteeship; thereby making insurance widely popular.
RECOMMENDATION
Positioning insurance as a means to fulfilling ones duties during
ones lifetime.
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Fears relating to thefts, ailments, death could be addressed
through sensitive communication
Fears relating to claims: Need to promote trust.
Demonstrating claim testimonials, positioning as worry free.
Low returns: Reposition insurance as a risk cover, security
instrument rather than a financial investment.
Lack of understanding: Training of Channels
To provide quality advice on products best suited
Lack of Knowledge: Ease of Process,
simplifying the product and the procedure
Need to promote the quality of awareness The benefits:
Leverage on Risk Protection or Returns oriented or both
The product:
catering to life stages
Need for Branding in Insurance: Branding is more relevant in
the Insurance market which not only faces the problem of securing
and retaining customers in an increasingly competitive marketplacebut also experiences the need for heightened relevance of the brand
proposition in a world where brand has been termed the new religion.
In rural India, the LIC is especially synonymous with insurance. But in
the
wake of competition insurance companies have to do a considerable
brand
building exercise at least in urban India. Adequate time, investmentand
longer-term management of the brand are essential, not only for
success but also survival. All brands need to be built around well-
differentiated and
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Steps in the Development of the Survey Instruments
The main instruments required for survey was a well developedquestionnaire .The questionnaire development took place in a series of steps asdescribed below.
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99
Research objectives are being transformed intoinformation objectives.
The Appropriate data collection methods have been
determinedStep 2
Step 3The information required by each objective is being
determined.
Step
1
Step 4Specific Questions/Scale Measurement format is
developed.
Step 5
Question/Scale Measurements is being evaluated.
Step 6
The number of information needed is being determined.Step 7
The questionnaire and layout is being evaluated.Step 8
Step 9Revise the questionnaire layout if needed.
Step
10
The Questionnaire format is being finalized.
Research objectives are being transformed into
information objectives.
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Q5) Have you taken any life insurance policy on your own life or on life
of
any of your family member?
YES NO
(If no, switch to Q 9)
Q6) Which company(s) policy(s) you have?
LIC ICICI PRUDENTIAL
BIRLA SUNLIFE ING VYSYA
BAJAJ ALLIANZ SBI LIFE
HDFC STD. LIFE TATA AIG
MAX NEW YORK LIFE AVIVA
RELIANCE KOTAK MAHINDRA
MET LIFE OTHER ____________(specify)
Q7) which type of plan did you buy?
Money Back Plan
Endowment Plan
Pension Plan
ULIP
Q8) What was your purpose/will be your likely purpose of takinginsurance?
RANK THEM (1 being most ideal)
a) PROTECTIONOF FAMILY
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b) TAX BENEFIT
c) INVESTMENT
d) RETIREMENT
PLANNING
Q9) Have you ever been approached for Life insurance by any of thefollowing
(Please ), also Rank according to your preference from whomyou are most likely to buy insurance?
( Here) (Rank) 1) Known/Current Advisor
2) Advisors referred by friends/family
3) Telesales and subsequent visit by unknown Advisor
4) Schemes offered by your bank (Bancassurance)
5) Group Insurance Policies offered by your employer
Q10) Do you feel opening up of the sector has created more insurance
Awareness among the public?
YES NO
Q11) How many dependents do you have?
6
Q12) Do you really think insurance cover in todays scenario is not
Essential?
_____________________________________________________
_____________________________________________________
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THANK YOU FOR YOUR CONTRIBUTION
GLOSSARY
Accident Benefit
An add-on with a life policy. It compensates a policyholder in the event
of death or injury by accident
Annuity
An investment option that makes a series of regular payments to an
individual in exchange for a premium or a series of premium.
Asset allocation
How your investments are spread across various asset classes
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Bonus
The amount paid as return in a with-profit policy. The bonus, expressed
as a percentage of the sum assured, is generally declared every year.
The amount is linked to the profits earned by the insurer. Depending on
the time of withdrawal, there are two kinds of bonuses reversionary
and cash. A reversionary bonus can be encased only on maturity of the
policy; a cash bonus can be withdrawn when declared
Capital gains
Profit earned from the sale of stocks, mutual fund units and real estate.
Long-term capital gains arise from assets owned for more than a year
while short-term capital gains are made from assets owned for less than
a year.
Corpus
The amount of money available with a scheme for investing. If already
invested, the corpus is the current value of the schemes portfolio.
Cover
Another word for insurance; it also refers to the amount of insurance.
Critical illness rider
A rider that provides a policyholder financial protection in the event of a
critical illness
Death benefit
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The amount payable to the nominee on death of the policyholder. The
amount paid is the sum assured plus benefits applicable (if any) less
outstanding loans.
Endowment plans
An insurance plan that provides a policyholder risk cover and some
return on investment. Usually suitable for the risk-averse
ELSS (equity-linked savings schemes)
Diversified equity funds that additionally offer a tax deduction under
Section 80C on investments up to Rs.1 lakh.
Financial planning
It covers the essential elements of a persons financial affairs and is
aimed at achieving a persons financial goals.
Group Insurance
An insurance policy taken out by employers to provide life cover to their
employees. Usually the cheapest form of insurance.
Insured
The policyholder: The person who buys an insurance policy
Insurer
The insurance company
Investments
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Pension Plan
Investment products offered by insurance companies and mutual funds
that required the investor to make defined contributions over regular
periods, mostly every year. The contributions are invested according to
a pre-decided investment plan. At retirement, the accumulation is paid
out through regular pay-out options.
Policy
The legal document issued by an insurance company to a policyholder
that states the terms and conditions of an insurance contract.
Policy term
The period for which an insurance policy provides cover
Post office schemes
Also known as Small Savings schemes, they are offered at post offices
and carry the highest returns among fixed income instruments.
Government backing makes these instruments like Public Provident Fund
(PPF), National Savings Certificate (NSC), Kisan Vikas Patra (KVP) and
Post Office Monthly Income Scheme (POMIS) risk-free
Premium
The amount paid by the insured to the insurer to buy cover
Riders
Additional covers that can be added to a life policy, for a cost
Sum assured
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Whole-life plans
Class of life insurance policies that provide cover through your lifetime.
BIBLIOGRAPHY
Websites
www.rbi.org.inwww.irdaindia.orgwww.banknetindia.com
www.hdfcinsurance.comwww.businessworldonline.com
Other References:
Brochures of various plans
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