PROJECT REPORT : - SHAMIM BAAA NO NO

CRITICAL STUDY OF ING LIFE INSURANCE

WITH THE HELP OF

Buying Behavior and Risk Appetite Of Consumers in

Insurance Industry

AProject Report

on

Buying Behavior and Risk AppetiteOf

Consumers in Insurance IndustryVIS-A-VIS

SUBMITTED IN PARTIAL FULFILLMENT OF

POST GRADUATE DIPLOMA IN BUSINESS MANAGEMENT PROGRAMME(Approved by AICTE, Ministry of HRD, Govt. of India)

UNDER THE GUIDANCE OF

Mr. AMIT BAHL(Relationship Manager – ING Vysya Life Insurance Co. Pvt.

Ltd.)

FACULTY GUIDE

Prof. R. L. Raghvan

Submitted byARUN AHUJAPGDBM (2004-2006)Roll No: 15-B

ACKNOWLEDGEMENT

First and foremost, I would like to thank Mr. Amit Behl (Relationship Manager) and Ms. Sonu Ghai (Training Manager) for giving me an opportunity to do my project in ING Vysya Life Insurance Company Pvt. Ltd. I wish to express my profound gratitude and deep regards for their valuable guidance and constant encouragement throughout the course of this study.

I must also thank them for giving me this assignment and for providing me all the support, necessary facilities as well as valuable suggestions and guidance towards the successful completion of this project work, without whose help this project would have not seen the light of the day.

I deem it a pleasure to express my reverence to my faculty guide, Prof. R. L. Raghvan at the institute for sparing the much needed time required for the successful completion of this project work.

It is both my pleasure and a duty to acknowledge with all humility, my grateful thanks and indebtedness to the various employees at ING Vysya Life Insurance Company Pvt. Ltd. From whose distinguished works, I learnt so much, whose ideas and valuable suggestions and contributions in their field have been so helpful to me in the preparation of this project work.

CONTENTS

1. Introductiona. Insurance in India 1b. IRDA 2c. Life Insurance & its History 3-17d. Impact of Budget on Insurance 18e. ING Group 19f. ING Vysya Life Insurance Co. Pvt. Ltd. 19-20g. Organisation Structure 21h. Selecting the Plan 22i. Products at a Glance 23-42j. Need of the Project 43k. Scope of the Project 44

2. Research Methodologya. Aspects of Consumer Behavior 45b. Research Design 46-48c. Primary and Secondary Data Collection

Methods and Instruments 49d. Places under Study 50

3. Findings and Analysisa. Secondary data 51b. Analysis of Secondary Data 52c. Results from Primary data 53-55d. Life Planner Format 56e. Case 57

4. Conclusions and Recommendationsa. Conclusion 58b. Recommendation 59

5. Bibliography 60

6. Appendix

INSURANCE IN INDIA

The insurance sector in India has come a full circle from being an open competitive market to nationalisation and back to a liberalised market again. Tracing the developments in the Indian insurance sector reveals the 360 degree turn witnessed over a period of almost two centuries.

Insurance business is divided into four classes:1) Life Insurance2) Fire Insurance3) Marine Insurance4) Miscellaneous Insurance.

Life Insurers transact life insurance business; General Insurers transact the rest.

Life Insurance:

Popular Products: Endowment Assurance (Participating), and Money Back (Participating). More of the life insurance business was from these products, but now days equal emphasis is being given on pension plans and unit linked plans.

General Insurance:

Fire and Miscellaneous insurance businesses are predominant. Motor Vehicle insurance is compulsory.

THE INSURANCE REGULATORY AND DEVELOPMENT AUTHORITY

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 decisions taken simultaneously to provide the supporting systems to the insurance sector and in particular to the life insurance companies was the launch of the IRDA’s online service for issue and renewal of licenses to agents.The approval of institutions for imparting training to agents has also ensured that the insurance companies would have a trained workforce of insurance agents in place to sell their products, which are expected to be introduced by early next year.

Since being set up as an independent statutory body the IRDA has put in a framework of globally compatible regulations. In the private sector 12 life insurance and 6 general insurance companies have been registered.

The IRDA was delegated most of the government’s regulatory powers. The government does, however, retain the right to control policy. Directions given by the government will bind the IRDA on policy, but issues relating to technical or administrative matters are not deemed to be questions of policy. This leaves open the question of whether a policy relates to a technical or administrative matter.

The IRDA bill transferred most of the powers of the Controller of Insurance to the IRDA. The IRDA can:

issue and withdraw licences, specify qualifications, codes of conduct, and training for intermediaries and

agents, specify the form and manner in which books of account shall be maintained, regulate investment of insurance funds, regulate the maintenance of solvency margins, specify the percentage of life insurance business to be undertaken by the

insurer in both rural and social sectors, approve the appointment of the managing director, remove managers, and appoint additional directors.

The IRDA is expected to frame regulations by May 2000 and may begin accepting applications for licences by the end of June. Companies applying for a licence must submit to the IRDA a copy of any Memorandum of Understanding that was agreed upon, along with a business plan. The details of the regulations are not yet available, but they are expected to be similar to the regulations that apply in the UK.

Mr. Rangachary, chairman of the IRDA, indicated that the first licences may be issued by October or November of this year, and that licences would be issued to all those who comply with the regulatory framework. An amendment to the bill was added to ensure that priority be given to health insurance providers, when granting licences. Insurers entering the health market should consider the potential ethical risks associated with this type of business.

LIFE INSURANCE & ITS HISTORY

"Selling of trust" is an interesting proposition but what is 'trust' and in what way does it affects a consumer's purchasing behavior would be instrumental in building the brand of an insurance company. This is particularly true for life insurance which is a long term promise.

People in the rest of the world take insurance as an investment. Indians are very emotional when it comes to insurance. As there isn't any social security for the aged to rely on. Young parents look at insurance products for children's education and support for spouse after oneself. The paper work after maturity or demise for the beneficiary should be simple. Trust is what matters most.

The biggest challenge facing the insurance industry is to differentiate themselves by making attractive and customized products which suit the specific requirements of the prospective policy buyers. This can be done to a great extent by giving a totally tailored policy - according to a customer's requirement.

A brief history of the Insurance sector The business of life insurance in India in its existing form started in India in the year 1818 with the establishment of the Oriental Life Insurance Company in Calcutta.

Some of the important milestones in the life insurance business in India are:

1912: The Indian Life Assurance Companies Act enacted as the first statute to regulate the life insurance business.

1928: The Indian Insurance Companies Act enacted to enable the government to collect statistical information about both life and non-life insurance businesses.

1938: Earlier legislation consolidated and amended to by the Insurance Act with the objective of protecting the interests of the insuring public.

1956: 245 Indian and foreign insurers and provident societies taken over by the central government and were nationalized. LIC formed by an Act of Parliament, viz. LIC Act, 1956, with a capital contribution of Rs. 5 crore from the Government of India.

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 recognising 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:

i) 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. All the insurance companies should be given greater freedom to operate.

ii) Competition Private Companies with a minimum paid up capital of Rs.1bn should be

allowedto enter the industry. No Company should deal in both Life and General Insurance through a

singleentity. Foreign companies may be allowed to enter the industry in collaboration with

thedomestic companies. Postal Life Insurance should be allowed to operate in the rural market. Only one State Level Life Insurance Company should be allowed to operate

ineach state.

iii) Regulatory Body The Insurance Act should be changed. An Insurance Regulatory body should be set up. Controller of Insurance (Currently a part from the Finance Ministry) should

bemade independent.

iv) Investments Mandatory Investments of LIC Life Fund in government securities to be

reducedfrom 75% to 50% . GIC and its subsidiaries are not to hold more than 5% in any company

(Therecurrent holdings to be brought down to this level over a period of time).

v) 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. Computerisation of operations and updating of technology to be carried out in

theinsurance industry. The committee emphasised that in order to improve the customer services and

increase the coverage of the insurance industry should be opened up to competition. But at the same time, the committee felt the need to exercise caution as any failure on the part of new players could ruin the public confidence in the industry.

Hence, it was decided to allow competition in a limited way by stipulating the minimum capital requirement of Rs.100 crores. The committee felt the need to provide greater autonomy to insurance companies in order to improve their performance and enable them to act as independent companies with economic motives. For this purpose, it had proposed setting up an independent regulatory body.

IMPACT OF LIBERALIZATION

Nationalized insurance companies have not been able to target niche markets that are currently served poorly or not at all. Life insurance products provide a good example. They compete with investment and savings options like mutual funds. It is imperative that they should offer comparable returns and flexibility. For instance, pure protection products like term assurance account for up to 20 per cent of policies sold in developed countries. In India, the figure is less than one percent because policies are inflexible. Besides, no Indian life assurance product is linked to non-traditional investment avenues such as stock market indices. Therefore, returns are lower than those on other savings instruments.

The introduction of private players in the industry has added to the colors in the dull industry. The initiatives taken by the private players 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 75% of the insurance sector but the upcoming natures of these private players are enough to give more competition to LIC in the near future.

DISTRIBUTION CHANNELS

Retail segment or personal lines insurance, especially in general insurance is another area unexplored. Currently personal insurance, including health, householders, shopkeepers, personal accident, travel insurance and professional indemnity covers, constitute only 12 per cent of Indian general insurance premium. This poor figure is largely due to the lack of adequate distribution channels rather than a lack of products. By tapping such under-served niches, new entrants can expand the market substantially. Since service and speed will be valued, a price premium is also possibleTill 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 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 sellingCorporate agentsGroup sellingBrokers and cooperative societiesBancassurance

To make all these channels a success the companies have to be very alert and skillful to know how to use these channels in a proper way. Bancassurance is on of the most upcoming channels of distribution and therefore is being discussed in details.

BANCASSURANCEIndia has an extensive bank network established over the years. What Insurance companies have to do is to just take advantage of the customers' long-standing trust and relationships with banks. This is a mutually beneficial situation as banks can also expand their range of products on offer to customers, while the insurance company will also earn profits from the exposure. Another advantage is that banks, with their network in rural areas, help to fulfill rural and social obligations stipulated by the Insurance Regulatory and Development Authority (IRDA) recently. Insurance companies should see bancassurance as a tool for increasing their market penetration in India. It is also good for the one who sees bancassurance in terms of reduced price, high quality product and delivery at doorsteps. Everybody is a winner here. The creation of bancassurance operations has made an important impact on the financial services industry at large. This is though a new concept but it has gained a lot of importance in the industry at present and has a great future.

PRODUCT INNOVATION

There has been a plethora of new and innovative products offered by the new players. Customers have tremendous choice from a large variety of products from pure term (risk) insurance to unit-linked investment products. Customers are offered unbundled products with a variety of benefits as riders from which they can choose. More customers are buying products and services based on their true needs and not just traditional money- back policies, which is not considered very appropriate for long-term protection and savings. There is lots of saving and investment plans in the market. However, there are still some key new products yet to be introduced - e.g. health products.

RURAL MARKETING

Rural India seems to have an appetite for mobile phones, computers, and cars and to add to it we have insurance. In India with the private players having entered into the insurance industry, the expected explosion in job opportunities may not actually happen but for them the catchments area is the opportunities in the rural India.In India the insurance business can be said to be "a marathon, not a sprint". This is because of the nature of the business being long term. With merely two years of the industry being opened, not surprisingly, the new comers are making losses. The public sector companies, notably the LIC, have gained in strength, thanks to the deepening of the market consequent to the awareness created by the new companies. However this does not deterred the private sector, which knows know that the race is

a marathon, not a sprint. However it seems that they if not anything, are only increasing their spending, though only out of the capital.

Today, there are 18 insurance companies in India excluding the PSU’s, with 12 in the life insurance business and the rest in non-life .As insurance companies go more and more rural in search of business, there will be opportunities in the rural sector. Those who understand rural India better will be in demand. Already United India The rural consumer is now exhibiting an increasing propensity for insurance products. A research conducted exhibited that the rural consumers are willing to dole out anything between Rs 3,500 and Rs 2,900 as premium each year. In the insurance the awareness level for life insurance is the highest in rural India, but the consumers are also aware about motor, accidents and cattle insurance.

In a study conducted by MART the results showed that nearly one third said that they had purchased some kind of insurance with the maximum penetration skewed in favor of life insurance. The study also pointed out the private companies have huge task to play in creating awareness and credibility among the rural populace. The perceived benefits of buying a life policy range from security of income bulk return in future, daughter's marriage, children's education and good return on savings, in that order, the study adds.

Insurance Regulatory and Development Authority (IRDA) have set stiff rural targets for insurance companies. For the life sector, in the first year, 5 per cent of the total policies written should come from the rural sector. This will go up to 15 per cent in five years. Similarly, for the non-life sector, two per cent of the total gross premium income should come from the rural sector going up to 5 per cent in five years, according to the regulation. All these moves will make the investment the rural area a big start.

INFORMATION TECHNOLOGY AND INSURANCE

In the insurance industry today, there is a clear trend away from selling a broad range of products to a large volume of customers in a one –size-fits-all manners. Instead of focusing on their different products lines as silos (i.e., life, property and casualty etc) insurers are looking for ways to offer highly targeted insurance products that are tailored to the individuals customers with the highest propensity to buy them.

There is a evolutionary change in the technology that has revolutionized the entire insurance sector. Insurance industry is a data-rich industry, and thus, there is dire need to use the data for trend analysis and personalization.

With increased competition among insurers, service has become a key issue. Moreover, customers are getting increasingly sophisticated and tech-savvy. People today don’t want to accept the current value propositions, they want personalized interactions and they look for more and more features and add ones and better service

The insurance companies today must meet the need of the hour for more and more personalized approach for handling the customer. Today managing the customer

intelligently is very critical for the insurer especially in the very competitive environment. Companies need to apply different set of rules and treatment strategies to different customer segments. However, to personalize interactions, insurers are required to capture customer information in an integrated system.

With the explosion of Website and greater access to direct product or policy information, there is a need to developing better techniques to give customers a truly personalized experience. Personalization helps organizations to reach their customers with more impact and to generate new revenue through cross selling and up selling activities. To ensure that the customers are receiving personalized information, many organizations are incorporating knowledge database-repositories of content that typically include a search engine and lets the customers locate the all document and information related to their queries of request for services. Customers can hereby use the knowledge database to mange their products or the company information and invoices, claim records, and histories of the service inquiry. These products also may be able to learn from the customer’s previous knowledge database and to use their information when determining the relevance to the customers search request.

The insurance sector remains a very competitive market and those companies that are able to best utilize their data and provide their customer with the most personalized options will have the distinct competitive advantage. The insurers that come up to the top will be those who leverage the appropriate technology solutions effectively in order to foster customer loyalty, attract new customers and improve operational efficiency by providing common information across their lines of business.

MERGERS AND AQUISITIONS

This is an era of mergers and acquisitions. Private companies including MNC’s are amalgamating the world over to get more competitive edge. Currently, the general insurance industry has been opened up. The question here is that for over two years, eight private companies have operated and has the size of the cake expanded. We here find that this is not true. The insurers are doing enough to raise the level of risk awareness or are they merely content to compete in the markets organized and established. However sooner or later the private sector players will have to put in place strategies aimed not at winning the existing accounts of the public players but at diversifying markets penetration as a whole. The private players in the future would have to turn their attention to working in the unorganized and under served markets.

What is likely to happen is that the private players would continue to skim the profitable segments of the already organized business in the urban areas? The time has already come for the government of India to evaluate the performance of private companies’ vis- à-vis their declared objective of opening up the industry.

However it is high time for the government to realize that importance of merging the public sector general insurance companies into single entity. The resent scenario calls for a better performance from part of each of the public sector insurance companies against each other; or in other words a competition to be the best. The result what we see is the undercutting of premium to retain or wrest business and quoting an

uneconomical rate of premium. While this allows one of the Public Sectors Company to win a business form another in this manner. The others suffer a loss and the resultant effect is a cannibalization with a fall in the average premium of the public sector itself. This at many times brings advantage to the private players who grab the business because of the unethical competition among the public players.

The purpose of having four companies all subsidiaries of General Insurance Corporation of India (GIC)– National Insurance Company, New India Assurance Company, Oriental Insurance Company, And The United India Insurance Company; at the time of nationalization was to have competition among themselves –in service and products at the same price. The service provided by them was also equally good or bad depending on the experience of the customers.

Now with real competition coming in with most of the global insurance players setting footprints here, it is felt that the time for merger has come and to enjoy the benefits if the size. It is to be sated that size does matter in insurance business. All over the world’s mergers and acquisitions in the risk-underwriting sector is common. The benefits if the four insurance companies merge will be enormous. The merged entity will enjoy higher underwriting and risk retention capacity; increase in reinsurance premium, reduction in reinsurance outflow, healthy solvency margins, setting right the asset –liability mismatch and reduction in cost. The insurance market thus becomes a gambling place. Had the public sector companies made into a single entity, perhaps the total premium of the four public sector companies in the year 2003-04 would have gone up but 25 percent. But the public sector alone is forced to underwrite the loss making motor third party liability (TPL) insurance. The public insurance companies insured a loss of Rs 1943 crore on this portfolio on just one year (03-04). The cumulative loss under this portfolio is astronomical. The loss of profitable business in view of undeserved competition among the public sector companies is hampering the subsidization of social insurance including the motor TPL.It is thus clear that it is good for the public sector companies to merge immediately when they are still strong, lest a merger becomes inevitable later after the independent public sector companies fail one after another. This does not bid well for the public sector, nor fort he insuring public and not for the economic development either. For a progress me require merger of strong public sector companies. Else it would render public sector companies weak and destroy them.

NEED FOR GLOBAL INTEGRATION

Recent economic liberalization started few years ago have started bringing in new investments from global giants and the government was hard pressed to facilitate global integration by lowering trade barriers for the free flow of technology, intellectual and financial capital. Additionally, reforms are essential if the Indian economy is to achieve and sustain a growth rate of 7 to 8 per cent per annum. Reaching a faster growth path also implies attracting foreign direct investment inflows of $ 10 Billion every year, up from the current level of $ 3 to $ 3.5 Billion. Thus liberalization of insurance creates an environment for the generation of long term contractual funds for infrastructural investments.

The Rakesh Mohan Report on Infrastructure says that 85% of funds for infrastructure development have to come from the domestic industry. It further says that India would need $ 100 Billion over the next five years to meet its infrastructure needs. Given the rate of savings in India, there is much more room to grow and one can expect an additional revenue of about $ 10 Billion a year entering the market to enhance infrastructure. Insurance is definitely going to be one area that will assist in mobilization of these funds.

MULTINATIONALS' INTEREST

Multinational insurers are indeed keenly interested in emerging insurance because their home markets are saturated while emerging countries have low insurance penetrations and high growth rates. International insurers often derive a significant part of their business from multinational operations. As early as 1994, many of the UK’s largest life and general insurers derived 40 per cent to 60 per cent of their total premium from outside their home markets. The figure at Commercial Union was 76 per cent in that year.

While the impact of global operations on their business may be large, typically foreign insurers take only a small share of an individual country’s market. In Taiwan for example, foreign companies took only a 3 per cent share even seven years after opening up. In Korea, their share was 1 per cent after 20 years. In China, a large and complex market like India, private insurers have not made much headway.

Yet, new entrants find insurance attractive because even a small share of a large and growing market can be profitable. The Korean insurance market for example, was only the 30th largest market in the world by premium volume in 1971. It moved up to 6th largest in 1996. In any case, in India multinational insurers will be restricted to a minority shareholding in new companies. The new entrants will therefore be private Indian companies.

The other reason why these large MNCs are interested in India is the economies of the insurance market. Insurance companies survive on the principle of spreading of risk. No matter what the size of each player, an insurer cannot afford to operate in a niche market. Operating in a particular region would expose them to the economic downtrends in the region and derail their profits.

Insurance companies, being long-term players, also have to avoid sudden dips in earnings to inspire confidence among investors to invest long-term funds. This can be achieved by spreading their operations over a wide geographical area. Moreover, for them, big is not just beautiful, but essential for survival. Which brings us to the avenues for growth.

According to the Sigma report on global insurance brought out by the world’s second largest reinsurer Swiss Re - the international market is completely saturated. In the developed world, the growth in life insurance premium has been a meager 1.5%. As compared to this, LIC despite all its handicaps has been growing at a healthy clip of around 20%.

NATIONALIZED SECTOR: A PERFORMANCE REVIEW

In 1995-96, LIC had a total income from premium and investments of $ 5 Billion while GIC recorded a net premium of $ 1.3 Billion. During the last 15 years, LIC's income grew at a healthy average of 10 per cent as against the industry's 6.7 per cent growth in the rest of Asia (3.4 per cent in Europe, 1.4 per cent in the US).

LIC has even provided insurance cover to five million people living below the poverty line, with 50 per cent subsidy in the premium rates. LIC's claims settlement ratio at 95 per cent and GIC's at 74 per cent are higher than that of global average of 40 per cent. Compounded annual growth rate for Life insurance business has been 19.22 per cent per annum and for General insurance business it has been 17 per cent per annum.

However, there is other side of the coin too. Their large scale of operations, public sector bureaucracies and cumbersome procedures hampers nationalized insurers. The field staff and the agents of the GIC and its four wholly owned subsidiary companies have seldom bothered to venture out into the rural hinterland to sell crop or any other personal line insurance. Given the woeful lack of penetration of the rural market by the GIC subsidiaries, it is hardly surprising that a growing number of farmers across the country are resorting to the extreme remedy of suicide when their usually uninsured crops fail

The highest paid employees of the public sector, the estimated half-a-million employees of the nationalized insurance companies, are characterized by abysmal productivity, utter ignorance of the basic principles of the insurance business, endemic corruption, gross indiscipline and sheer laziness.

Dominating the inevitably weak management of the nationalized insurance companies, the militant and strongly unionized employees of the nationalized monopoly insurance companies have transformed Indian insurance from volume-driven into class-based business.

The domestic insurance companies, despite meeting their social objectives of going into the deepest interiors of the country, have lagged behind in meeting customer expectations in products and services.

PRIVATIZATION: START UP STRATEGY

Potential private entrants therefore expect to score in the areas of customer service, speed and flexibility. They point out that their entry will mean better products and choice for the consumer. Critics counter that the benefit will be slim, because new players will concentrate on affluent, urban customers as foreign banks did until recently.

This might seem a logical strategy from the point of view of new players. Start-up costs-such as those of setting up a conventional distribution network-are large and

high-end niches offer better returns. However, in the long run 'middle-market' offers the greatest potential as in terms of it is the second largest market in the world. This may still be an urban market but goes beyond the affluent segment.

Insurance, even more than banking, is a volume game. A very exclusive approach is unlikely to provide meaningful numbers. Therefore, private insurers would be best served by a middle-market approach, targeting customer segments that are currently untapped.

REGULATORY ISSUES

The IRDA Bill lays down that the Indian promoter must dilute the stake in the private insurance firms from 74 per cent to 26 per cent in ten years. The bill stipulates tough solvency margins -- Rs 500 million for life insurance firms, Rs 500 million or a sum equivalent to 20 per cent of net premium income for general insurance and Rs 1 billion for reinsurance business.

The insurer has to maintain separate accounts relating to fund of shareholders and policyholders. The funds of policyholders should be retained within the country but does not cover repatriation of profits and dividends. Insurance companies under the new regime will have to have exposure to rural and social sectors. Foreign investment in insurance, the bill states, is crucial to financing infrastructure and better insurance cover.

The key to success in opening up the insurance sector in India is regulation. An example of how poor regulation can destroy a market is the mutual fund industry. A combination of improper marketing practice and unrealistic promises has resulted in a loss of investor faith in that industry. Incidentally, the insurance industry in India itself has gone through the same phase.

One of the reasons for nationalization of the insurance industry (LIC in 1956 and GIC in 1973) was the mismanagement and malpractice of erstwhile private players. But if the statements of IRDA officials are anything to go by, the new regulations are expected to be on the right track. N I Rangachary, chairman, IRDA, has already provided the time table for the changes once the Bill is passed. The IRDA has already indicated that it will have tough norms for new participants.

PRIVATE LIFE INSURERS

S.No. Name of the Company Date of Reg.

1 HDFC Standard Life Insurance Company Ltd. 23.10.2000

2 Max New York Life Insurance Co. Ltd. 15.11.2000

3 ICICI Prudential Life Insurance Company Ltd. 24.11.2000

4 Kotak Mahindra Old Mutual Life Insurance Limited 10.01.2001

5 Birla Sun Life Insurance Company Ltd. 31.01.2001

6 Tata AIG Life Insurance Company Ltd. 12.02.2001

7 SBI Life Insurance Company Limited . 30.03.2001

8 ING Vysya Life Insurance Company Private Limited 02.08.2001

9 Bajaj Allianz Life Insurance Company Limited 03.08.2001

10 Metlife India Insurance Company Pvt. Ltd. 06.08.2001

82.5

5.6

2.6

2.0

1.8

1.4

1.3

0.9

0.8

0.5

0.4

0.2

0.00 20.00 40.00 60.00 80.00 100.00

LIC

ICICIPRUDENTIAL

BIRLA SUNLIFE

BAJAALLIANZ

SBI LIFE

HDFCSTANDARD

TATA AIG

MAX NEWYORK

AVIVA

OM KOTAKMAHINDRA

ING VYASA

METLIFE

Market Share %

REPOSITIONING BY NATIONALIZED SECTOR

Floodgates of competition opened up by the privatization of insurance industry did throw a challenge to the well-protected nationalized sector and it seems they have picked up the gauntlet. LIC and GIC, both are trying to reposition themselves by having re-engineering done on the structure and operations of their respective organizations.

Life Insurance Corporation is at present going through presentations from top management consultants. These consultants have been asked to narrate their experiences in countries where the insurance sector has been opened up for private competition so that the public sector player can draw lessons. Based on these, LIC will appoint a consultant which can provide them broad terms of reference on what changes are required to tackle the impending competition.

GIC has already identified the areas that need to be activated and given a shape through the four subsidiary companies. Foremost is the area of providing health insurance services. A change in the GIC Act will enable the corporation to float a joint venture company for health insurance. Other areas that the GIC is looking at are savings-linked insurance products and use of alternate distribution channels including bancassurance. Also in progress is the co-ordination of all foreign operations of the group.

Even state-owned entities, SBI and UTI have serious plans for insurance sector as the banks have unsurpassed advantages over any other player. The intermediaries are also getting more organized with a little nudging from the IRA. The Reinsurance Consultants Association is planning to convert itself into the Insurance Brokers Association of India in anticipation of the laws being amended to allow insurance broking.

CROSS BORDER EXPERIENCE

Cross-country experience shows that nowhere in the world has the entry of foreign firms threatened the position of domestic companies. Whether it is Malaysia, where the insurance sector has been open for more than 50 years and foreign companies account for about 10 per cent of market penetration or it is Indonesia, Thailand, China or the Philippines, where the market has been opened more recently, the total market share of foreign companies is less than 10 per cent except in Indonesia where it is about 20 per cent. Closer home, we have the experience of the banking sector where despite the presence of 42 foreign banks, their share in total banking assets is less than 10 per cent.

Today hardly 20 per cent of the population in India is insured and insurance premium (life as well as non-life) account for just 2 per cent of GDP as against the G-7 average of 9.2 per cent. Consequently, the fear that new companies will displace public companies is misplaced. There is room for more for not only the existing companies but also for any number of competitors.

In China, insurance premium accounted for just over 1 per cent of China's GDP in 1995 but in the four years since the market has been liberalized (albeit partially), spending on insurance has grown at a compound annual rate of 33 per cent. It is not just foreign companies alone that have grown but also the national PICC as well. The story is no different in S Korea. There, the opening of the sector saw the Big Six domestic players, who initially controlled the entire market, increase their business from 7 to 37 trillion won by 1997. Meanwhile foreign companies were not able to capture more than a miniscule 0.7 per cent of the market.

CONCLUSION

The size of the market has grown and the size of the insurable population in India is indeed vast and the existing player has managed to cover about one-fourth of it. The opportunities before the players are therefore a plenty in terms of target audience.

The falling interest rates, the collapse of many small-time financial institutions, the scope for entering related areas like banking and pensions in a bid for synergy and the promise of e-commerce are some of the other opportunities knocking at the doors of the insurance majors.

There is a probability of a spurt in employment opportunities. A number of web-sites are coming up on insurance, a few financial magazines exclusively devoted to insurance and also a few training institutes being set up hurriedly. Many of the universities and management institutes have already started or are contemplating new courses in insurance. Health insurance, which is still in its infancy, is also likely to get a major boost, ultimately leading to improvement in the quality of medical treatment and facilities in the country.

Life insurance has today become a mainstay of any market economy since it offers plenty of scope for garnering large sums of money for long periods of time. A well-regulated life insurance industry which moves with the times by offering its customers tailor-made products to satisfy their financial needs is, therefore, essential if we desire to progress towards a worry-free future.

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 market even 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.

With such a large population and the untapped market area of this population Insurance happens to be a very big opportunity in India. Today it stands as a business growing at the rate of 15-20 per cent annually. Together with banking services, it adds about 7 per cent to the country’s GDP .In spite of all this growth the statistics 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. It was due to this immense growth that the regulations were introduced in the

insurance sector and in continuation “Malhotra Committee” was constituted by the government in 1993 to examine the various aspects of the industry. The key element of the reform process was Participation of overseas insurance companies with 26% capital. Creating a more efficient and competitive financial system suitable for the requirements of the economy was the main idea behind this reform.

Since then the insurance industry has gone through many sea changes .The competition LIC started facing from these companies were threatening to the existence of LIC.since the liberalization of the industry the insurance industry has never looked back and today stand as the one of the most competitive and exploring industry in India. The entry of the private players and the increased use of the new distribution are in the limelight today.

The use of new distribution techniques and the IT tools has increased the scope of the industry in the longer run.

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.

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

IMPACT OF BUDGET ON INSURANCE

The 2005-06 Budget has dampened the spirit of insurance companies. Hardly any changes have been made in the general insurance sector. The change in the tax structure may have some impact on the life insurers. With the removal of the Section 88 relief there is not much for the insurance players to cheer for.

FDI hike in insurance sector:The Finance Minister commended on the growth in the insurance sector, there was no mention of the steps being taken for increasing FDI in insurance sector. There is a dire need to attract more foreign capital in the sector. However it seems that the Union Finance Ministry is looking at proposals to delink the FDI limit from the Insurance Act, when it is amended. This move would empower any future government to increase the FDI limit through an executive order without taking the issue to the Parliament.

Removal of Sec 88 tax relief: With the removal of the Section 88 tax relief on life insurance products there would be a sever blow on the life insurance companies. Removal of tax relief will have an adverse impact on the flow of investments into life insurance products.

Continuation of Sec 10(10) (d): The continuations of this section create sever blow for the insurance players. Here by the life insurance companies for availing the optimum benefit under this section need to change their strategy. Till now, life insurers were selling life insurance products mostly on tax-benefit grounds. However, now they will have to sell products with an investment pitch.

The investment limit in pension plans is unaltered at Rs 10,000 so these plans may not enjoy the luxury of the expanded limit of Rs 1 lakh allowed for investments/expenditures that could be claimed as a deduction from income. This is likely to have an adverse impact on the overall growth of the sector. Pension plans are the only Investment Avenue where specific limits continue to apply.

ING GROUP

ING Group is known for its philosophy of ‘keeping it simple’. This thought is the result of ING Group’s 150 years of understanding of customers’ needs and fulfilling them.

ING is a global financial institution of Dutch origin offering banking, insurance and asset management to over 60 million private, corporate and institutional clients in 50 countries. With a diverse workforce of over 112,000 people, ING comprises a broad spectrum of prominent companies that increasingly serve their clients under the ING brand. It has made ING Group as the world’s fourth largest financial services Group and the world’s second largest Life Insurance Provider.

Over the last 150 years, ING Group has grown to become one of the largest life insurance organizations in the world. Today it touches the lives of millions of people across 50 countries. It offers a range of financial services including insurance, pensions, banking and asset management.

ING Group has wide and deep experience in setting up companies in new markets, which require substantial investments underlining ING's long-term commitment. In the last 20 years, ING Group has established successful life insurance companies in 15 countries contributing to the development of insurance services in these countries successfully.

ING Vysya Bank Limited (formerly The Vysya Bank)

ING Vysya Bank was formed with the coming together of erstwhile, The Vysya Bank Ltd, a premier bank in the Indian Private Sector and a global financial powerhouse, ING Group, during October 2002. It is one of India’s premier private sector banks with a heritage of over 70 years, which has been effectively transformed into modern technology driven Indian foreign Bank. With 1.5 million customers, 480 outlets and 6000 employees it is known for its innovative banking services and for pioneering several products and services. ING Vysya Bank strength lies in its long-standing relationship with its customers and deep understanding of the Indian market.

ING VYSYA LIFE INSURANCE

ING Vysya Life Insurance Company Private Limited (the Company) entered the private life insurance industry in India in September 2001, and in a short span of 3 years has established itself as a distinctive life insurance brand with an innovative, attractive and customer friendly product portfolio and a professional advisor force. It also distributes products in close cooperation with the ING Vysya Bank network. Currently, it has over 10,000 active advisors working from 46 branches (in 30 cities) across the country and over 1200 employees.

The Company with a customer base of over 1,50,000, is headquartered at Bangalore and has established a national presence in the following cities: Ahmedabad, Bangalore, Baroda, Belgaum,  Bhopal, Calicut, Chandigarh, Chennai, Cochin, Coimbatore, Delhi, Goa, Guntur, Gurgaon, Hubli, Hyderabad, Indore, Jaipur, Kolkata, Ludhiana, Mangalore, Mumbai, Mysore, Nagpur, Pune, Secunderabad, Surat, Trivandrum, Vadodara, Vijaywada, Vizag

According to Mr. Frank J.E. Koster (MD and CEO) “The Company aims to make customers look at life insurance afresh, not just as a tax saving device but as a means to add protection to life. The one thing we hold in highest esteem is 'life' itself. We believe in enhancing the very quality of life, in addition to safeguarding an individual's security. Our core values are therefore defined as Professional, Entrepreneurial, Trustworthy, Approachable and Caring.

The Company’s portfolio offers products that cater to every financial requirement, at any life stage with a spirit of continuously developing customer-driven products and services and value being accessible and responsive to the needs of our customers.”

Board of Directors (as on 2nd Feb 2005)

Mr. K.R.V. Subrahmanian - ChairmanMr. Frank J.E. Koster - Managing Director & Chief Executive OfficerMr. Chris Davies - DirectorMr. A. P. Rao - DirectorMr. K.Balasubramanian - DirectorMr. K.R.Ramamoorthy - DirectorMr. N.N. Joshi - DirectorMr. Peter Smyth - DirectorMr. Steven Billiet - Director

Management Team

Frank J.E. Koster - Managing Director & Chief Executive Officer Adriaan de Graaf - Chief Operating OfficerGreg Brennan - Chief Financial Officer Kshitij Jain - Director-Sales Gautam Sharma - Vice President & Head-Marketing Aloke Chatterjee - Vice President & Head-Employee Benefits K R Subramanian - Vice President & Head-Customer Services Ravishankar Subramanian - Vice President & Head-ITS Ramesh Dasary - Vice President & Head-Human Resources Hemamalini Ramakrishnan - AVP, Appointed Actuary & Chief Insurance

Officer Arpita Sen - Legal Counsel, Head LCCS

ORGANISATIONAL STRUCTURE

SELECTING THE PLAN

The LifeMaker tool that assists you in building a complete financial plan for life by helping you understand the basic needs for buying life insurance- Protection, Saving and Investment.

Protection First, life insurance helps you to protect your income and your family’s financial future in case you are not around.

SavingSecond, life insurance works as a long term saving, thus giving you the financial strength to achieve your life goals. It also gives you tax benefits.

InvestmentThird, life insurance is a long-term investment. At the end of the term, you or your family will get an added return on your investment, but of course subject to market swings.

Depending on a customer’s personal needs, priorities and individual responsibilities, he can go for a protection, saving or investment plan or a combination.

Protection Conquering Life

Saving Reassuring Life (Cash Bonus)Reassuring Life (Reversionary Bonus)Creating LifeMaximising LifeSafal Jeevan

Investment Rewarding LifePowering LifeFulfilling LifeBest Years Freedom PlanFuture Perfect

PRODUCTS AT A GLANCE

I) The Conquering Life Plan is a comprehensive critical illness cover that helps bear the financial burden of a critical illness. This is a unique health insurance benefit that helps you to protect yourself and your family against health and lifestyle risks.

The Conquering Life Plan is ideal because it provides protection to you and safeguards your family's lifestyle through an easily affordable, pure risk life cover. And more importantly, it covers you against ten life- threatening critical illnesses- Cancer, Heart Attack, Coronary Artery Bypass Graft, Stroke, Kidney Failure, Major Organ Transplant, Brain Tumor, Paralysis, Coma and Blindness.

Key Features

Complete Protection Against 10 Critical Illnesses And Death Money When You Need it Most (Critical Illness Claims Paid on Diagnosis) Free Life Cover After a Critical Illness Claim

Product Features

Eligibility Minimum age for application: 18 yearsMaximum age for application: 50 yearsMaximum age up to which premium can be paid: 65 years

Premium Payment TermChoose premium paying terms of 10-25 years

Coverage TermSame as the Premium Payment Term

Premium Payment OptionsAnnual, half-yearly or quarterly

Minimum Premium Payable Annual Rs. 2, 500Half-Yearly Rs. 1, 500Quarterly Rs. 1, 000

Processing Fee Rs. 700 (non-refundable one time fee)

Benefits

Illness Benefits

A critical illness cover of up to 50% of the sum assured is paid to you in the event of a confirmed diagnosis of any one of the critical illnesses covered. This sum can be up to a maximum of Rs. 20 lakhs.

The critical illness cover is only valid for the first critical illness suffered and not any that follow.

In the event of critical illness, the remaining premium payments for the period of the policy will be waived.

Death Benefits

Your family will get the total sum assured, or Your family will receive the difference between the total sum assured and the Critical illness claim paid, if any.

II)

It is an endowment plan that arms you for tomorrow. It helps you bear those heavy expenses while building your home and providing for your children's education and marriage. And while it helps make your post-retirement years carefree and secure, it also takes care of your near and dear ones in the event of your untimely death.

Key Features Lump Sum Benefit At Maturity Unique Annual Cash Bonus Multiple Bonus Management Options (Re-invest, Withdraw, Offset

Premiums)

Product Features

Eligibility Minimum age for application: 12 yearsMaximum age for application: 55 yearsMaximum maturity age: 65 years

Premium Payment Term You can choose premium paying terms from 10 - 30 years (i.e. 10,11,12...20...30)

Life Coverage TermSame as the premium payment term

Premium Payment OptionsAnnual, half-yearly, quarterly or monthly

Minimum Premium Payable Annual Rs. 4, 000Half-Yearly Rs. 2, 000Quarterly Rs. 1, 000Monthly Rs. 500

Benefits

Survival BenefitsA large financial asset for you and your beneficiaries once the policy matures, so you can meet large expenses – like funding higher education for your kids, building a house or even organizing your child’s wedding.

Death BenefitFinancial support for your family in case anything were to happen to you.

Cash BonusThis plan has the advantage of annual cash bonus which you may receive based upon the performance of the company. You have the option to accumulate it, withdraw it or adjust it against payment of future premiums.

III)

Ideally, once your protection needs are met, consider a saving plan. The Reassuring Life Endowment Plan with reversionary bonus is one such offering. Besides being a savings option, it also acts as a highly reliable safety net for your family in case something happens to you.

The Reassuring Life Plan is ideal because it gives you the incredible benefit of a reversionary bonus which enhances your life cover, and hence your sum assured, dramatically, every year. So when the policy matures you can receive almost double the initial sum assured.

Key Features Lump Sum Benefit at Maturity Customised Life Covers Enhancing Life Cover (Attractive Reversionary Bonus)

Product Features

Eligibility Minimum entry age: 12 yearsMaximum entry age: 55 yearsMaximum maturity age: 65 years

Premium Payment Term You can choose paying premium terms fromPayment Term 10-30 years. (i.e. 10,11,12...20...30)

Life Coverage Term Same as the Premium Payment Term

Premium Payment Options Annual, half-yearly, quarterly or monthly

Minimum Premium Payable Annual : Rs. 6, 000Half-Yearly : Rs. 3, 000Quarterly : Rs. 1, 500Monthly : Rs. 750

Benefits

Survival Benefits A sizeable financial asset for you and your family once the policy matures, so

you can meet large expenses - like higher education for your kids, investment in a house, or organizing your child’s wedding.

A life cover that enhances rapidly, annually, thanks to the reversionary bonus feature. This basically means the bonus is earned not just on the original sum assured but also on the previously accumulated bonus - an amount which goes on increasing every year.

A final additional bonus.

Death BenefitYour family would receive a large sum which would include the sum assured and the accumulated reversionary bonus and final additional bonus. 

IV) This plan is perfect if you have small children. You can provide for their future by setting aside a small portion of your current income. The money you set aside will help your children pursue their dream even when you are not around to take care of them. Death cover will provide immediate relief and the maturity benefit will come to your child at the right time when they need it.

The Creating Life Child Protection Plan helps you ensure that your children’s future is secure and prosperous, so they can pursue their dreams no matter what the future brings.

Key Features Guaranteed Maturity Benefits (Payment in case of Death and at Maturity) Flexible Maturity Benefit Options Built-in Waiver of Premium Benefit

Product Features

Eligibility Minimum entry age: 18 yearsMaximum entry age: 55 yearsMaximum maturity age: 65 years

Premium Payment TermChoose premium paying terms of 10 - 25 years

Premium Payment OptionsAnnual, half-yearly, quarterly or monthly

Minimum Premium Payable Annual : Rs. 6, 000Half-Yearly : Rs. 3, 000Quarterly : Rs. 1, 500Monthly : Rs. 750

Benefits

Guaranteed maturity benefits

The sum assured and the accumulated compound reversionary bonus are paid on maturity.A final additional bonus based upon the performance of company is paid on maturity.

Death Benefits Your child will receive the sum assured in case of your death. The policy continues even after the sum assured on death is paid. No premiums have to be paid after the death of the parent

whose life is insured (Built-in waiver of premium benefit). Your child will be eligible for guaranteed maturity benefits

Maturity BenefitYour child can either receive a lump sum or receive the amount in 3 or 5 equal installments after the maturity date.

V)

The Maximising Life Money Back Plan gives you the benefits of protection and saving. It’s the perfect life span plan: With a flexible premium payment term, you get part of the sum assured back at regular intervals ( 20%,20%,20% and 40% on maturity) . Pay for the car, the down payment for the house and your child’s wedding. You also get an annual cash bonus, just like a fixed deposit.

This plan’s biggest advantage is that you receive a life cover plus periodic cash flows which takes care of your financial needs at different stages of your life.

Key Features Regular Cash Returns The Cash Bonus Advantage Money Back Plan with Loan Facility

Product Features

Eligibility Minimum entry age: 12 yearsMaximum entry age: 49 yearsMaximum maturity age: 65 years

Flexible Premium Payment Term You can opt for a 16, 20 or 24 year payment plan

Life Coverage Term Same as the premium payment term

Premium Payment Options Annual, half-yearly, quarterly or monthly

Minimum Premium Payable Annual : Rs. 6, 000Half-Yearly : Rs. 3, 000Quarterly : Rs. 1, 500Monthly : Rs. 750

Benefits

Survival BenefitsAt specific intervals of the Premium Payment Term (P.P.T.), you’d receive a certain percentage of the sum assured. Maturity Benefit You will receive 40% of the sum assured on maturity.

Death BenefitYour family will receive the sum assured if your death occurs during the coverage term.

Cash BonusThis plan has the advantage of an annual cash bonus which you may receive based upon the performance of the company. You have the option to accumulate it, withdraw it or adjust it against payment of future premiums.

VI)

A product that offers comprehensive protection and savings in an easy and hassle free manner. "Safal Jeevan" is the simplest life insurance plan giving you complete freedom to choose from pre-packaged solutions, and decide how much and how long you want to pay premiums. It offers death benefit, maturity benefit and has an in-built accident cover.

The plan provides for policy coverage terms of 10,15 and 20 years. Premium is payable annually, half yearly and quarterly.

Key Features Low Premium In-built Accident Premium No Medical Underwriting

Benefits

Death BenefitSum Assured with non-guaranteed bonuses, if any, payable on death of the Life Assured.

In-built Accident CoverIn case of death due to accident, an additional benefit equal to the basic Sum Assured is payable.

VII) Rewarding Life Whole of Life Plan is an offering that enables you to protect, save and invest. With this plan, you can create a sizeable financial asset to pass on to your family. The Rewarding Life Plan covers you for 85 years even after the premium paying term has ended. Your investment goes on increasing every year, thanks to a compound

reversionary bonus. This basically means that apart from the bonus earned on the sum assured, your accumulated bonus earns you an additional bonus.

Key Features Wealth Accumulation with Reversionary Bonus and ‘Final Additional Bonus’ Life Cover Till 85 Years Flexible Premium Payment Options

Product Features

Eligibility Minimum entry age: 12 yearsMaximum entry age: 50 yearsMaximum age up to which you can payyour premium: 65 years

Flexible Premium Payment Term Based upon your current age, you can choose premium payment terms of 15, 20 or 25 years

Life Coverage TermUp to the age of 85 years

Premium Payment Options Annual, half-yearly, quarterly or monthly

Minimum Premium Payable Annual Rs. 6, 000Half-Yearly Rs. 3, 000Quarterly Rs. 1, 500Monthly Rs. 750

Benefits

Survival BenefitA large lump sum payment to you and your family when you turn 85. This includes the full sum assured the vested compound reversionary bonus and the final additional bonus. The total amount could be as much as 10 times the sum assured!

Death BenefitYour family gets the sum assured, the compounded reversionary bonus and the final additional bonus.

Final Additional BonusThe additional bonus will be paid once the policy reaches its maturity benefit stage (at 85 years of age or earlier death).

VIII)

For those who have achieved financial success, ensuring that success is well protected and loved ones are cared for is an important necessity. The limited payment endowment plan does just that by allowing you to pay for the policy in a short period and to enjoy the life insurance coverage and maturity benefits for a long period.

The Powering Life Plan is ideal because you get a life cover and your family enjoys long term financial security. And thanks to a high reversionary bonus, your investment grows over time. You can even customise your coverage term and choose from a range of premium payment terms.

Key Features Safe Investment with High Tax Free Returns Customisable Premium Payment Term Enhancing Life Cover

Product Features

Eligibility Minimum entry age: 18 yearsMaximum entry age: 60 yearsMaximum maturity age: 70 years

Premium Payment Options Annual, half-yearly, quarterly or monthly

Minimum Premium PayableAnnual Rs. 24,000Half-Yearly Rs. 12,000Quarterly Rs. 6,000Monthly Rs. 3,000

Benefits

Survival Benefits A large lump sum payment to you when the policy matures. A life cover that enhances rapidly with the addition of a reversionary bonus

each year. A final additional bonus at the end of the term. Flexible life-cover term. Flexible premium payment options.

Death BenefitYour beneficiaries will receive the accumulated reversionary bonus and final additional bonus in addition to the sum assured.

IX)

Many insurance plans cover your life for a specified period of time. Usually the cover is for the specific period of premium payment. But when you stop paying premium the cover ends. A Whole of Life Insurance plan, as the name suggests, covers you for the whole of your life even after the premium paying term has ended.

The Fulfilling Life Plan provides your family security even after your death, apart from giving you regular cash returns during your life. The special feature of this plan is you receive 200% of the sum assured. The first 100% as money backs during the term, and the remaining 100% on death or maturity. That is why it is also known as Permanent Insurance.

Key Features One Plan, Two Benefits (Whole Life Cover till 85 years + Money back plan) Limited Premium Paying Term Wealth Accumulation with Reversionary Bonus

Product Features

Eligibility Minimum entry age: 18 yearsMaximum entry age: 49 yearsMaximum maturity age: 65 years

Premium Payment Options:  Annual, half-yearly, quarterly or monthly

Minimum Premium PayableAnnual Rs. 8, 000Half-Yearly Rs. 4, 000Quarterly Rs. 2, 000Monthly Rs. 1, 000

Benefits

Survival BenefitsA certain percentage of money is paid back every quarter of the premium term. The money can be reinvested elsewhere or used to meet large expenses during one's lifetime.

Maturity benefits You pay premiums for a limited period of your choice while you get a risk

coverage upto the age of 85 years. At the age of 85 you will receive 100% of the sum assured plus a bonus.

Death BenefitYour family receives 100% of the sum assured, over and above the survival benefits you have received till then, plus a bonus.

X)

As the name suggests, this plan can ensure that your post-retirement years are spent in peace and comfort. And it extends the same comfort to your family by standing as a financial asset, in case you are not around. This long-term investment plan can truly ensure the best years of your life.

Key Features Investment Amount And Returns Declared Are Guaranteed Steady Returns With 80 CCC Balanced Fund Flexibility in Fund Accumulation Lower Management Fees Lower Minimum Contribution Limit

Product Features

Eligibility Minimum entry age: 18 yrsMaximum entry age: 65 yrsMinimum deferment period: 5 yrsMaximum deferment period: 52 yrsMinimum vesting age: 45 yrsMaximum vesting age: 70 yrs

Applicable ChargesInitial one-time charge Rs. 700

Contribution Related ChargesAll first year contributions 10%All subsequent contributions 3%

Annual Management fee will be levied on each 31st March on the IPA after crediting bonus interest. The Annual Management fee will depend on the size of balance in the IPA and will be as follows:

Balance in IPA Annual Management Fee p.a.Upto Rs. 50,000 2.5%50,001-75,000 2%75,001-1,00,000 1.75%Above 1,00,000 1.5%

Benefits

Capital Guarantee: Your contributions are transferred to your Individual Pension Amount(IPA).

Charges as applicable will then be deducted. The balance in your IPA will be invested in the ING Vysya Capital Guarantee

Plan.

Flexibility: To chose the regular contribution to be made each year. With regard to timing and frequency of contributions To start the pension whenever you wish. To postpone the retirement date to make best use of market conditions.0 

Spouse Pension Benefit: In case of death, your spouse can defer the purchase of annuity, if the age is

less than 45 years. To encash up to 5% of the outstanding benefit amount each year, upto age 45,

and then can purchase annuity from balance, if any. 

XI)

The ING Vysya Life Freedom Plan allows you to customize your insurance cover to suit your requirements. It gives you freedom to plan your investments to suit your preferences and risk profile. This plan also offers survival benefits at regular intervals.

The premiums and top-up amounts paid by you, less charges are credited to an account called the Individual Policyholders’ Account (IPA) and are used to purchase units in one or more investment plans as per your choice. At any point in time, the balance in the IPA is represented by the number of Units multiplied by the respective Unit Price of the Units held from time to time under all the Investment Plans under this Policy.

Key Features Flexible premiums Flexible life cover Flexible withdrwals Flexible investment options

Product Features

Flexibility in Premium and FrequencyYou can choose the amount of premium you wish to pay subject to certain minimum premium limits. The frequency of payment may be yearly, half yearly, quarterly or monthly. The minimum amounts of premium for different frequencies are: Yearly : Rs 15,000, Half-yearly : Rs 8,000, Quarterly : Rs.4,000 and Monthly : Rs 1,500.

Top-up Amount This plan provides you with an option to pay additional top-up amounts (subject to a minimum of Rs.5000) over and above your regular premiums as and when you wish allowing you to increase your investments and savings at your own pace.

Flexible Premium Payment Term You can choose the duration you wish to pay the premiums. The premium payment term can range from 5 to 25 years.

Flexible Investments You can choose one or more of the following Investment plans for investing your premium and top-up amount, net of applicable charges.

Investment Plan

Investment Pattern Objective

Debt Plan100% of the available funds are invested in debt instruments

Provides safety and growth with minimum risk

Secure fund

Up to a maximum of 20% of the available funds are invested in growth instruments like equity, property and the rest in debt instruments

Provides for growth with low risk

Balanced fund

Up to a maximum of 40% of the available funds are invested in growth instruments like equity, property and the rest in debt instruments

Provides for higher growth with reasonable security

Growth fund

Up to a maximum of 60% of the available funds are invested in growth instruments like equity, property and the rest in debt instruments

Provides for opportunity of high growth

Flexibility in Insurance Cover You can choose a life insurance cover starting from a minimum of Rs.75,000 and a maximum sum assured equal to one and half times of the total regular premiums payable under the Policy issued to you. For e.g. If you choose to pay a premium of Rs.20,000 per annum for term of 20 years the maximum sum assured that you may be eligible for will be Rs.6,00,000 and so you can choose any sum assured between Rs.75,000 to Rs.6,00,000.

Continued Insurance Cover This plan comes with a unique in-built safeguard against lapse of life insurance cover. If you are unable to pay your premium in any year, the life insurance cover under your policy will continue as long as the balance in your IPA is sufficient to pay the charges. However, if the premiums are not paid for two years and balance in your IPA is less than Rs.15,000, then the policy will be cancelled and balance in the IPA if any, after deducting charges will be refunded.

XII)

This Plan not only provides opportunity for having high protection in earlier years when you need it but also ensures regular income through regular Survival Benefit payments, with adequate protection in the later years. You can also plan your investments to suit your preferences and risk profile.

The premiums and top-up amounts paid by you, less charges, are credited to your account called the Individual Policyholders’ Account (“IPA”) and are used to purchase Units in one or more Investment Plans as per your choice. At any point in time, the balance in your IPA is represented by the number of Units multiplied by the respective Unit Price of the Units held from time to time in the Investment Plans under this Policy.

Key Features Flexible life cover Flexible investment options Tax Free Returns

Product FeaturesThe ING Vysya Life Future Perfect Plan gives you almost same benefits as were in Freedom except for a few differences that are :

Flexible Premium Payment Term Same as in Freedom Plan.

Flexibility in Insurance CoverYou can choose a life insurance cover starting from a minimum of Rs.75,000 and a maximum sum assured equal to one and half times of the total regular premiums payable under the Policy issued to you. Full life cover continues till the age of 60. After age 60, the Sum Assured shall stand reduced to 50% of the original Sum Assured.

Continued Insurance Cover Same as in Freedom Plan.

Flexible Investments Same as in Freedom Plan. Regular Survival Benefits after 60 years

This Plan has the unique feature of providing you regular annual survival benefits while maintaining adequate life cover, after you attain the age of 60 years. On your attaining the age of 60 years, you will be eligible every year for survival benefits starting at an initial rate of 5% of the balance in the IPA and increasing by 0.5% each policy year, thereafter.

RIDERS

Riders are the optional contracts, which offer additional benefits for policyholders. They are always attached to a basic policy. They cannot be bought separately or independently of a basic policy. Each Rider will have its own premium rate and separate policy conditions.

We offer the following Riders with our products: Term Rider Waiver of Premium Rider Accidental Death Rider Accidental Death, Disability and Dismemberment Rider

A) Term Rider  

This Rider amount is payable only on death during the application term. This amount will be in addition to the Sum Assured, under the basic policy to which this Rider is attached. However this benefit is not payable, in case of occurrence of death due to suicide, within one year of commencement of risk.

Features

Entry Age18 years (last birth date)

Last Premium Paying Age65 years (last birth date)

Premium Paying TermSame as base policy

Payment ModeFor individuals: yearly, half yearly, quarterlyFor group billing as a single cheque from a company: monthly facility availability

Modal Factor Yearly: 10.86Half yearly: 5.61Quarterly: 2.895

ExclusionThis Rider shall not cover death caused directly or indirectly due to suicide, while sane or insane, where such death occurs within one year of the Effective Date of the Rider.

Maximum CoverEqual to the Sum Assured under the basic policy, subject to an overall maximum of Rs. 20,00,000/-

Tax BenefitRebate under Section 88 and maturity benefit under Section 10(10 D)

B) Waiver of Premium Rider

Waiver of Premium Rider under the basic policy and all other Riders - in case of total disability occurring due to sickness or accident. The total disability should last for at least 6 consecutive months. No disability covers during the first 6 months of the policy.

Total DisabilityResulting from accident or sickness and disability occurring within 180 days of the accident or sickness. The disability should last for at least 180 consecutive days.Applicable only when the disability completely and continuously prevents the life assured from engaging in any occupation to earn any wages.

Features

Entry Age18 years (last birth date)

Last Premium Paying Age60 years (last birth date)

Premium Paying TermSame as base policy

Payment ModeFor Individuals: Yearly, Half-yearly, QuarterlyFor group billing as a single cheque from a company: monthly facility availability

Modal FactorYearly: 10.86Half yearly: 5.61Quarterly: 2.895

ExclusionsThis Rider shall not cover any disability caused directly or indirectly by any of the following:

i. Intentional self-inflicted injury, suicide or attempted suicide, while sane or insane.

ii. Life Assured being under the influence of alcohol, narcotics, psychotropic substances or drugs unless taken in accordance with the lawful directions and prescription of a qualified and registered medical practitioner.

iii. War (declared or undeclared), war-like operations, invasion, civil commotion, riots or revolution.

iv. Participation in any flying activity, except as a bonafide passenger in a commercially licensed aircraft.

v. Participation is a criminal or unlawful act.vi. Any injury sustained before the Effective Date of this Rider.

vii. Any physical/ medical condition not disclosed but found existing before the Effective date of this Rider.

viii. Participation in hazardous sports, hobbies or pastimes including (but not limited to) racing, parachuting, mountaineering etc.

ix. No premiums shall be waived if the sickness leading to disability occurs within 180 days after the Effective date of this Rider.

x. Atomic energy explosion or radiation of any kind.

Maximum CoverEqual to the Sum Assured under the basic policy, subject to overall maximum of Rs. 20,00,000/-

Tax BenefitRebate under Section 88 and maturity benefit under Section 10(10 D)

C) Accidental Death Rider

In case of death of the life assured, due to accident during the term of the policy, the Sum Assured under this Rider is paid along with the Sum Assured under the basic policy.

Definition of AccidentAn event or series of events of violent, external and visible nature causing bodily injury is defined as accident.

Accidental DeathDeath, which results from bodily injury, occurs within 180 days from the date of injury resulting from an accident.

FeaturesEntry age18 years (last birth date)

Last Premium Paying Age65 years (last birth date)

Premium Paying TermSame as base policy

Payment ModeFor Individuals: Yearly, Half-Yearly, Quarterly

For group billing as a single cheque from a company: monthly facility availability

Modal FactorYearly: 10.86Half yearly: 5.61Quarterly: 2.895

Exclusions This Rider shall not cover the death, disability or dismemberment of the Life Assured being caused directly or indirectly by any of the following:

i. Any disease or infection.ii. Intentional self-inflicted injury, suicide or attempted suicide, while sane or

insane.iii. Life Assured being under the influence of alcohol, narcotics, psychotropic

substances or drugs unless taken in accordance with the lawful directions and prescription of a qualified and registered medical practitioner.

iv. War (declared or undeclared), war-like operations, invasion, civil commotion, riots or revolution.

v. Participation in any flying activity, except as a bonafide passenger in a commercially licensed aircraft.

vi. Participation is a criminal or unlawful act.vii. Any injury sustained before the Effective Date of this Rider.

viii. Participation in hazardous sports, hobbies or pastimes including (but not limited to) racing, parachuting, mountaineering etc.

ix. Atomic energy explosion or radiation of any kind.

Maximum CoverEqual to the Sum Assured under the basic policy, subject to an overall maximum of Rs. 20,00,000/-

Tax benefitRebate under Section 88 and maturity benefit under Section 10 (10 D)

D) Accidental Death, Disability and Dismemberment Rider

Death BenefitIn case of death due to accident, the Sum Assured under this Rider is payable along with the Sum Assured of the basic policy.

Definition of AccidentAn event or series of events of violent, external and visible nature causing bodily injury is defined as accident.

Total Permanent DisabilityResulting from an accident and occurring within 180 days of the date of accident and lasting for at least 180 consecutive days. Completely and continuously preventing the Life Assured from engaging in any occupation to earn any wages.

Definition of LossPhysical severance or total irrevocable loss of use which results from accident and occurs within 180 days from the date of the accident.

Dismemberment of limbs occurring within 180 days of accident- Physical severance of arm at or above wrist- Physical severance of leg at or above ankle- Physical severance of a thumb, an index finger, and at or above metacarpophenageal joint

Features

Entry age18 years (last birth date)

Last Premium Paying Age65 years (last birth date)

Premium Paying TermSame as base policy

Payment ModeFor Individuals: Yearly, Half-Yearly, Quarterly

For group billing as a single cheque from a company: monthly facility availability

Modal FactorYearly: 10.86Half yearly: 5.61Quarterly: 2.895

Exclusions This Rider shall not cover the death, disability or dismemberment of the Life Assured being caused directly or indirectly by any of the following:

i.Any disease or infection.

ii. Intentional self-inflicted injury, suicide or attempted suicide, while sane or insane.

iii. Life Assured being under the influence of alcohol, narcotics, psychotropic substances or drugs unless taken in accordance with the lawful directions and prescription of a qualified and registered medical practitioner.

iv. War (declared or undeclared), war-like operations, invasion, civil commotion, riots or revolution.

v. Participation in any flying activity, except as a bonafide passenger in a commercially licensed aircraft.

vi. Participation is a criminal or unlawful act.vii. Any injury sustained before the Effective Date of this Rider.

viii. Participation in hazardous sports, hobbies or pastimes including (but not limited to) racing, parachuting, mountaineering etc.

ix. Atomic energy explosion or radiation of any kind.

Maximum CoverEqual to the Sum Assured under the basic policy, subject to an overall maximum of Rs. 20,00,000/-

Tax benefitRebate under Section 88 and maturity benefit under Section 10 (10 D)

Section 41 of the Insurance Act, 1938 states: 1. No person shall allow or offer to allow, either directly or indirectly, as an

inducement to any person to take out or renew or continue an insurance in respect of any kind of risk relating to lives or property in India, any rebate of the whole or part of the commission payable or any rebate of the premium shown on the Policy, nor shall any person taking out or renewing or continuing a Policy accept any rebate, except such rebate as may be allowed in accordance with the published prospectuses or tables of the insurer.

2. Any person making default in complying with the provisions of this section shall be punishable with fine that may extend to five hundred rupees.

NEED OF THE PROJECT

The insurance companies usually follow the traditional direct selling technique for targeting the customers. ING VYSYA has recently launched a new form of providing the service, which was supposed to be tested and implemented. Our project serves the purpose of testing the new sales process, and of comparing that with existing one.

The project deals with analyzing the requirement of the people with respect to risk coverage, investment and tax planning. This process is called Need-Analysis, which depicted consumer’s various financial needs and risk taking attitude.

The company’s sales team required the recommendation based on this project to implement any future sales process changes.

SCOPE OF THE PROJECT

The scope of the project is to attain the maximum possible information and feedback from the respondents of insurance.

The scope of the project is also to find out the acceptance level of the newly launched need-analysis concept. The scope was attained with the help of market survey based on a questionnaire which comprised of customers need based questions.

For this we have constructed a short questionnaire, which helps us knowing the customer’s long term financial commitments and investment preferences. This in turn depicts how much potential is the customer to buy the insurance.

ASPECTS OF CONSUMER BEHAVIOR

EMOTIONAL QUOTIENT

Respondents of insurance are largely affected by the emotional quotient i.e, if they are targeted on a right time, right place and with a bit of emotional touch, the results would be more positive. Take a simple example of a customer being contacted on any holiday and discussing benefits of insurance in front of his family. At that point of time he would be actually looking at his family and the emotional attachment with family and their safety thoughts can drive him to insurance. When a consumer makes what is basically an emotional purchase decision less emphasis is placed on the search for prepurchase information. Instead, more emphasis is placed on current mood and feelings. This is not to say that emotional decisions are not rational. But most of the Insurance purchase decisions are emotional decisions.Consumer’s moods are also important to decision making. Mood can be defined as a “feeling state” or state of mind. It is likely to influence how the consumer responds to any sales call.

NEGATIVE MOTIVATION

“Insurance” is a financial tool with which we can replace the small risk of a catastrophic financial loss with the certainty of an affordable payment. Insurance companies help people achieve this objective by spreading and pricing risk. That risk motivates the consumers but the fear of death is a negative aspect which drives a person to buy insurance. Negative motivation works better in case of insurance products. A person may exercise to keep himself fit, positive motivation. Another man may exercise to not look fatty, negative motivation. To avoid the risk of death, and to safeguard the family’s interests, one is driven towards Insurance.

RESEARCH DESIGN

Definition : “A research design is an arrangement of conditions for collection and analysis of data in a manner that aims to combine the relevance of the research with economy in procedure”.

Different research design: For exploratory research study For descriptive and diagnostic research study For hypothesis testing research studies

For pursuing this particular project exploratory research study is the best suited keeping in view its objective. Thus exploratory research Design has been briefly explained below:

Exploratory research design : This design is also known as formulative research design. The main purpose of such studies is that of formulating a problem for more precise investigation or of developing the working hypothesis from the operational point of view. The major emphasis in such studies is on the discovery of view idea and insight.

Research design for exploratory study of the customers in insurance industry is as under.

Exploratory research study as already mentioned is also termed as formultive research studies. The main purpose of this study is formulative problems in the area of customers in insurance industry and also to attempt discovery of idea and insight to provide a platform and facilities solving of the problems. Clinically working on the ideas and insight so provided should lead to results which will serve as a solution to the problem so identified from this project.

Customer’s behavior has a high degree of co-relation with the selling strategy of any organization thus better understanding of customer’s buying behavior will lead to design the selling strategy in a better way (automatically) to some extent.

This research has been broadly classified into two phases: To know and understand the long term financial commitments of the

customers. To have insight and then suggest optimal solutions to them.

The first phase is purely of exploratory nature. This phase includes survey of potential customers, gather data, and explore the need of the customers. This phase also includes understanding; analyzing and co-relating of data to formulate a precise research

problem/intensifying the specific area for further research. In this phase we will also review hypothesis stated or research accomplished be earlier workers. Review of hypothesis will be useful to increase the precise in formulating the research problem.

In phase-II of the research we try to co-relate data. This can be done by comparing data from different sources, finding the interdependence of different data finding out the degree of co-relation among data sets so on and so forth. Some variables affecting the analysis will be neglected with a view to simplify the task. Co-relating the data and formulating the problem associated with the area of study (here customers need) will initiate the process of finding and suggesting solution. These solutions and ideas will be useful for the organization as it will serve as a platform for precise and elaborate investigation ultimately developing a working i.e., technically and financially feasible solution for the organization.

BASIS FOR THIS DESIGNMASLOW’S NEED HIERARCHY MODEL

According to Maslow, there are general types of needs (physiological, safety, love, and esteem) that must be satisfied before a person can act unselfishly. He called these needs "deficiency needs." As long as we are motivated to satisfy these cravings, we are moving towards growth, toward self-actualization. Satisfying needs is healthy, blocking gratification makes us sick or evil.Physiological needs are the very basic needs such as air, water, food, sleep, sex, etc. When these are not satisfied we may feel sickness, irritation, pain, discomfort, etc.Safety needs have to do with establishing stability and consistency in a chaotic world. These needs are mostly psychological in nature. We need the security of a home and family.Belonging Needs: Love and belongingness are next on the ladder. Humans have a desire to belong to groups: clubs, work groups, religious groups, family, gangs, etc.

There are two types of Esteem needs. First is self-esteem which results from competence or mastery of a task. Second, there's the attention and recognition that comes from others.The need for Self-actualization is "the desire to become more and more what one is, to become everything that one is capable of becoming." People who have everything can maximize their potential. They can seek knowledge, peace, esthetic experiences, self-fulfillment, oneness with God, etc.

Talking this model into consideration we can easily figure out how our customer would respond to the insurance product that we offer him. The person for whom meeting both ends meet is tough would never think about life insurance policy. It is difficult for him to be certain whether he would be able to pay the regular premiums.

Another important application of this model can be while tackling with the person who is already safe on the insurance side. We cannot offer him normal plan, but he would certainly be motivated towards growth. This growth can be in terms of more funds because he can take more risk and can be offered unit link plan.

PRIMARY DATA COLLECTION

Primary data are those, which are collected afresh and for the first time, and thus happen to be original in character. Primary Data was collected by means of Survey.

Research Instrument Questionnaire

Research Method Survey Method

Sample Size 124

Target Segment Self Employed or Professionals in Delhi and NCR.

Primary data was collected by means of a survey. Since the aim was to find out the thoughts, feelings and attitudes of the respondents (People having insurance and non insured people), the questionnaire method was the obvious choice. Apart from being versatile, this method also afforded the advantages like economy and speed, the latter being a major advantage considering the limited time that was available for the research project. The questionnaire was structured in such a way so as to include close ended as well as open ended questions thus reducing the interviewer’s bias and producing results that were more reliable and more easily tabulated and interpreted.

SECONDARY DATA COLLECTION

Secondary data is the data, which already exists in the printed form of material easily accessible.Secondary data was colleted by the material supplied by the company in the form of brochures, pamphlets, magazines and Internet.

Places under Study:

The Places covered in New Delhi were Azadpur, Dwarka, Shahdra, Krishna Nagar, R.K. Puram, Palam, Uttam Nagar, Nehru Vihar, Mahipalpur, Patparganj, Shalimar Bagh, west Patel Nagar.

The Project also included some areas from Noida and Gurgaon.

PLACES UNDER STUDY

Area Penetration

10%

17%

73%

Gurgaon Noida New Delhi

FINDINGS AND ANALYSIS

SECONDARY DATA

The study shows the emergence of certain definite trends in the area of just who decides what. For example, the person in question seemed to play a major role in deciding the monthly budget or whether to take a loan, but when it came to deciding about child’s marriage it is more a joint decision.

Life insurance was found to be the biggest financial investment for most Indians, followed by the stock markets.

The research, conducted by market research agency NFO-MBL across six top metros and profiling 380,000 people, will greatly help media planners, agencies and advertisers to understand this particular horizon professional.

Self Spouse Joint Family Elders Children

Buying a house 25% 5.8% 20.8% 30.1% 14% 0.4%

Child's marriage 7.7% 5.9% 21.8% 18.7% 11.5% 4%

Own marriage 20.4% 2.5% 6.2% 22.4% 29.7% 0.9%

Child's education 15.1% 6.6% 34% 12.5% 5.6% 4.6%

Taking a loan or Insurance

31.4% 5% 24.3% 18.1% 9.2% 0.6%

Fixing monthly budget 24.2% 10.3% 33.3% 18.5% 11.2% 0.6%

Buying entertainment durables, like TVs

21.4% 8.2% 33.4% 26.7% 7.4% 1.6%

Buying durables like washing machines

19.3% 10.7% 33.3% 26.2% 8.2% 1%

Deciding on holiday destinations

20.6% 6.1% 28.4% 31.8% 4.5% 5.6%

The above table helps us knowing whom to target more for a particular type of commodity (product) e.g the companies who are manufacturing durables should focus more on families. In case of Insurance it is person himself or joint decision comes into play, but decisions like child’s education and marriage also indirectly affect decision to buy insurance as now a days insurance plans have been customized to meet these needs of people. Our questionnaire also focuses on these needs of the customers.

Decision Maker in Taking a loan or Insurance

Self36%

Spouse 6%Joint

27%

Family 20%

Elders 10%

Children1%

Analysis of secondary Data

It is evident from the results that any self dependent person, 36 % of the time decides himself whether to take insurance or not. Jointly his presence plays role 62% of the time which includes self and joint decisions.This shows that while trying to sell life insurance (or insurance), we have to target hold of the person himself.Of course spouse and family also have reasonable say, but it is difficult for any sales executive to discuss risk associated with life of any person with his/her family members and spouse. Thus focus stays on actual customer .

LIFE PLANNER

I PERSONAL DETAILS

a. Name: _______________________________________________________

b. Address: ______________________________________________________

______________________________________________________

c. Landline No. : __________________ Mobile Ph. No.: ___________________

d. Email Address: _________________________________________________

e. Date of Birth: ___________________________________________________

f. Occupation: ___________________________________________________

g. Marital Status: Single/Married

h. Children (if any): Name of Child: ______________ Date of Birth : _________

Name of Child: ______________ Date of Birth : __________

i. No. of family members you live with: ________________________________

j. Are you the sole financial provider for your family: Yes / No

II FINANCIAL COMMITMENTSTargetFund(Rs.)

Savings to date(Rs)

Difference (+/-) (Rs.)

Fund Required by

a. Monthly Contribution: Household

Expenses

b. Provision for Higher Education /

Professional courses for children

c. Provision for wedding expenses

of children

d. Provision for Medical emergencies

(self and family)

e. Provision for Retirement expenses

______

_

______

_

______

_

______

_

______

_

______

_

______

_

______

_

______

_

______

_

______

_

______

_

______

_

_______

_______

_______

_______

III INVESTMENT PREFERENCES

a. Liquidity of Investment: Not required / Moderately Important / Very Important

b. Low Risk, Low Returns / Medium Risk, Moderately High Returns / High Risk,

High Returns

c. Tax Benefit: Important / Not Important

Name of the Financial Advisor : Conatct No.:

CASE : Mr. AJAY KUMAR

To understand the concept and requirement of using the Need Analysis technique more deeply, we have selected a case and we will analyze how we recommend the solutions to the customers.

The customer’s name is Mr. Ajay Kumar, who is working as Senior Press Executive in a Cyber media company. First of all he is asked a bit of personal information and with that about his family (Children). By using his emotional attachment with the future of his children, we can make him ready to invest in the insurance.

We also have to understand how much a person is capable or willing to invest in a year. Looking into the financial commitments of Mr. Ajay, we can see that he is ready to start with Rs. 20,000 annually. His priority is to safeguard the finances for the higher education of his children. He requires around Rs 10 lac after 20 years .

Before deciding which plan to offer, we must also look at the investment preferences of Mr. Ajay, he doesn’t want recurring cash returns as he has mentioned that the liquidity of investment is not required. He can take medium risk, and the tax benefit is important for him.

Solution

Based on the information given by Mr. Ajay we would offer Child Protection Plan to him, because his first and foremost need is to safeguard the future (higher education) of his children “Mohini” . As he can pay Rs. 20,000 annually we can offer him a policy of 4 lac for which he would have to pay Rs 9,868 annually and we can double the sum assured by giving him ADDDB Rider. The total annual premium to be paid by Mr. Sanjeev is Rs. 20,296 which includes Rs 695 for ADDDB rider.

Benefits to Mr. Sanjeev Sharma’s familyGuaranteed Maturity Benefit : Rs 4 lac + bonus for 20 years + terminal

bonus

Death Benefit : Rs. 4 lac (Rs. 8 lac in case of accidental death) No premiums after death.

CONCLUSION

As market competition continues to accelerate, you need research-based market intelligence for a clear understanding of your consumers, emerging opportunities and threats and the likely market response to change.

How can I strengthen my relationship with my customers and keep them loyal?

How can I ensure my new product success? How can I reduce my operating costs? What new delivery channels will my customers use most? Are they hooked up

to the internet? What about mobile phone usage? How can I measure and grow my brand equity? How do I keep up to date with the latest competitive offerings? Are my competitors outperforming me on advertising?

Assessing the stimulus to purchase life insurance products entails a careful consumer profiling across potential markets. Though life insurance is relatively well penetrated in comparison to most other financial products, the possibility of actively investing individuals purchasing multiple policies means that the market potential is enormous.

Over the next year, 14% of policy holders claim they will purchase fresh policies, while a lower proportion (7%) indicate an intention to enter into fresh or additional bank fixed deposits. The greater proportion favoring life insurance schemes suggests that it is, perhaps, currently considered a viable companion to bank deposits in one’s personal investment portfolio. Non-bank retail investments form a very small proportion of overall GDP today. This change in intention is therefore quite heartening as it may well indicate that Indians are discarding their traditional reluctance to build up an ‘active’ personal investment portfolio.

The commitment to keep paying premia over years, for a person with variable income, influences his decision to invest. Concern whether the sum assured will be paid out to beneficiaries in an efficient manner when the investor has expired, is also an inhibitor to investing in life insurance. A significant portion of insurance communication focuses on the psychological benefits of investing in life insurance. Yet, the apprehensions articulated deal with operational impediments. Such information can help the industry to identify more effective communication routes to reassure investors on process efficiencies.

RECOMMENDATION

The life planner questionnaire is very carefully constructed and is quite efficient. If Need-analysis is properly done, it can bring very good results and can help to boost the sales. Out of the people who have been asked to share the information, almost all of them were more keen on knowing about insurance products, and those who already knew, were inclined towards ING Vysya.

The sample age graph shows that 65 % of the targeted people were of age between 25 to 45 years, which is considered to be the most suitable age for any customer for insurance.

There are several units in the market that can be analyzed. Our main thrust in this course is the consumer. However, we will also need to analyze our own firm’s strengths and weaknesses and with the help of our Need-analysis this can be done effectively.

As the project was done for a short duration of two months, the exact penetration of Life Planner Questionnaire could not be measured, but it is definitely changing the prospect’s minds and it should be adopted as a permanent sales process initiator.

Bibliography

1. Training Kit provided by ING Vysya Life Insurance Co. Pvt. Ltd2. Consumer Behavior by Schiffman, Kanuk3. www.rediff.com4. www.irda.com5. www.ingvysyalife.com