Summer Training Project LIFE MAKER PREMIUM

7/30/2019 Summer Training Project LIFE MAKER PREMIUM

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SUMMER TRAINING PROJECT REPORT

MAX NEW YORK LIFE INSURANCE CO.

LTD.

SUBMITTED IN PARTIAL FULFILLMENT OF REQUIREMENT

OF BACEHLER OF BUSSINESS ADMINISTRATION (BBA)

GURU JAMBHESHWAR UNIVERSTY, HISAR

LIFE MAKER PREMIUM

Training Supervisor Submitted By:



PREFACE

Why is insurance necessary? The question contains the answer within itself. After all, life

is fraught with tensions and apprehensions regarding the future and what it holds for the

individual. Despite all the planning and preparation one might make, no one can

accurately guarantee or predict how or when death might result and the circumstances

that might ensue in its aftermath. None of us know what is going to happen to us in the

future but what we do know is that accidents happen. This is the simple idea that the

insurance industry is founded on.

Insurance is vital to a free enterprise economy. It protects society from the consequences

of financial loss from death, accidents, sicknesses, and damage to property, and injurycaused to others. The person seeking to transfer risk, the insured ( policyholder ), pays a

relatively small amount, the premium, to an insurance company, the insurer , which issues

an insurance policy in which the insurer agrees to reimburse the insured for any losses

covered by the policy. Insurance is the process of spreading the risk of economic loss

among as many as possible subject to the same kind of risk and is based on the laws of

probability (chance of a given outcome happening) and large numbers (enables the laws

of probability to work).There are many perils (causes of loss) that society faces, some

natural (e.g., earthquakes, hurricanes, tornados, flood, drought), some human (e.g., arson,

theft, fraud, vandalism, contamination, pollution, terrorism), and some economic(e.g.,

expropriation, inflation, obsolescence, depressions/recessions). Insurers are able to

provide coverage for virtually any predictable loss.

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ACKNOWLEDGEMENT

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CONTENTS

S.NO. TITLE PAGE NO.1. INTRODUCTION

1.1 OVERVIEW OF THE INDUSTRY

1.2 PROFILE OF THE COMPANY

1.3 PROBLEMS OF THE COMPANY

1.4 COMPETITION INFORMATION

1.5 S.W.O.T ANALYSIS

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31

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2. OBJECTIVE AND RESEARCH METHODOLOGY

2.1 SIGNIFICANCE

2.2 MANAGERIAL USEFULNESS OF THE STUDY

2.3 OBJECTIVE OF THE STUDY

2.4 SCOPE OF THE STUDY

2.5 METHODOLOGY

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3. CONCEPTUAL DISCUSSION 39

4. DATA ANALYSIS 515. CONCLUSION 62

6. RECOMMENDATIONS 64

7. APPENDIX 66

8. BIBLIOGRAPHY 70

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Chapter 1

Introduction

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Chapter 1- Introduction

A well development and evolved insurance sector is needed for economic development as

it is provides long term funds for infrastructure development and the same time

strengthen the risk taking ability.

Life insurance is also now being regarded as a versatile financial planning tool in India.

India being a country having a huge population of around one billion people with only

33.2% of the insurance population in India possessing life insurance. The country has a

vast potential that has been left untapped till now.

Therefore, what this has led to is the flooding of life insurance market with a number of private players which in collaboration with recognized foreign company’s promises to

deliver the best of services at the least price. All these companies are trying to grasp the

maximum of market share in life insurance sector. For that they are developing a channel

i.e. recruiting world-class insurance advisors/agents who sell their products or policies.

But what a consumer needs or what he perceives about life insurance still needs to be

answered these are some questions I have tried to answer in the project.

This report is trying to give the detail about Consumer Perception about Life Insurance in

India. Thus by going through the report one will get to know about the life insurance and

the opinion in the mind of the consumer about his judgment and perceptions.

1.1 OVERVIEW OF THE INSURANCE INDUSTRY

Insurance, in law and economics, is a form of risk management primarily used to hedge

against the risk of a contingent loss. Insurance is defined as the equitable transfer of the

risk of a potential loss, from one entity to another, in exchange for a premium. Insurer,

in economics, is the company that sells the insurance. Insurance rate is a factor used to

determine the amount, called the premium, to be charged for a certain amount of

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insurance coverage. Risk management, the practice of appraising and controlling risk, has

evolved as a discrete field of study and practice.

Indemnification

An entity seeking to transfer risk (an individual, corporation, or association of any type,

etc.) becomes the 'insured' party once risk is assumed by an 'insurer', the insuring party,

by means of a contract, called an insurance 'policy'. Generally, an insurance contract

includes, at a minimum, the following elements: the parties (the insurer, the insured, the

beneficiaries), the premium, the period of coverage, the particular loss event covered, the

amount of coverage (i.e., the amount to be paid to the insured or beneficiary in the event

of a loss), and exclusions (events not covered). An insured is thus said to be

"indemnified" against the loss events covered in the policy.

When insured parties experience a loss for a specified peril, the coverage entitles the

policyholder to make a 'claim' against the insurer for the covered amount of loss as

specified by the policy. The fee paid by the insured to the insurer for assuming the risk is

called the 'premium'. Insurance premiums from many insureds are used to fund accounts

reserved for later payment of claim, in theory for a relatively few claimants, and for

overhead costs. So long as an insurer maintains adequate funds set aside for anticipatedlosses (i.e., reserves), the remaining margin is an insurer's profit.

INSURANCE AS A PRODUCT

• Insurance is a contingent product whose utility is tested only in the event of an

accident or a disaster.

• It always has a negative connotation in the mind of the buyer—it deals with losses

to the buyer.

• It is a product of future delivery and subject to benefit realization only on the

occurrence of the contingent event.

• It is a technical product that has a lot of legal jargon and with numerous legal

principles peculiar to it making it difficult to comprehend.

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• It is a contingent financial promise made by the security provider and its benefit

can be realized only after fulfilling a number of stipulations, often, unexplained at

the time of commencement of contract.

• It is a product or service that has to be resold annually to the same buyer and

hence personal relationship and mutual trust are essential.

• As with all service products it has limitations, whose import is highlighted only

after the event. The fine print in the policy assumes a big role in the event of a

claim.

• Both the contractual parties have passive roles unless an unfortunate claim event

of a claim.

• There is no emotional or psychological satisfaction in the purchase of insurance.

It is a sense of relief.

• Since claim amounts vary substantially both the contractual parties are wary of

each other’s interest , motives and actions.

• Experience of each customer is highly individualized with no standards to judge

the performance and reputation of an insurer.

• Moral hazard on either side plays an important role in claim negotiation.

• Product innovations to keep abreast of changes in technology, political, economic,

and social spheres provide a far wider market.

LIFE INSURANCE

One of the major types of insurance is life insurance. Life insurance companies sell life

insurance, annuities and pensions products.

Life insurance provides a monetary benefit to a decedent's family or other designated

beneficiary, and may specifically provide for burial, funeral and other final expenses.

Life insurance policies often allow the option of having the proceeds paid to the

beneficiary either in a lump sum cash payment or an annuity.

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In most countries, life insurers are subject to different regulatory regimes and different

tax and accounting rules.

Insurance companies are generally classified as either mutual or stock companies. This is

more of a traditional distinction as true mutual companies are becoming rare. Mutual

companies are owned by the policyholders, while stockholders (who may or may not own

policies) own stock insurance companies.

Global insurance premiums grew by 9.7% in 2004 to reach $3.3 trillion. This follows

11.7% growth in the previous year. Life insurance premiums grew by 9.8% during the

year, thanks to rising demand for annuity and pension products.

NEED FOR LIFE INSURANCE

As life insurance became more established, it was realized what a useful tool it was for a

number of situations, including –

I) Temporary needs/ threats - The original purpose of life insurance remains an

important element, namely providing for replacement of income on death etc.

Typically in the case of the breadwinner dying an early death.

II) Regular Saving - Providing for ones family and oneself, as a medium to long-term

exercise (through a series of regular payment of premiums). This has become

more relevant in recent times as people seek financial independence from their

family.

III) Investment - Put simply, the building up of savings while safeguarding it from the

ravages of inflation. Unlike regular saving products, investment products are

traditionally lump sum investment, where the individual makes a one-time

payment.

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IV) Retirement - Provision for one’s own later years becomes increasingly necessary,

especially in a changing cultural and social environment. One can buy a suitable

insurance policy, which will provide periodical payments in one’s old age.

ADVANTAGE OF LIFE INSURANCE

(I) It is superior to a traditional saving vehicle

As well as providing a secure vehicle to build up savings etc, it provides peace of mind to

the policyholder. In the event of untimely death, of say the main earner in the family, the

policy will pay out the guaranteed sum assured, which is likely to be significantly more

than the total premiums paid. With more traditional savings vehicles, such as fixed

deposits, the only return would be the amount invested plus any interest accrued.

(II) It encourages saving and forces thrift

Once an insurance contract has been entered into, the insured has an obligation to

continue paying premiums, until the end of the term of the policy; otherwise the policy

will lapse. In other words, it becomes compulsory for the insured to save regularly and

spend wisely. In contrast savings held in a deposit account can be accessed or stopped

easily.

(III) It provides easy settlement and protection against creditors

Once a person is appointed for receiving the benefits (nomination) or a transfer of rights

is made (assignment), a claim under the life insurance contract can be settled easily. In

addition, creditors have no rights to any monies paid out by the insurer, where the policy

is written under trust. Under the Married Women’s Property Act (M.W.P Act), the money

available from the policy forms a kind of trust which cannot be attached by judgment

creditors.

(IV) It helps to achieve the purpose of the Life Assured

If someone receives a large sum of money, it is possible that they may spend the money

unwisely or in a speculative way. To overcome this, the person taking the policy can

instruct the insurer that the claim amount is given in installments.

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(V) It can be encashed and facilitates quick borrowing:

Some contracts may allow the policy to be surrendered for a cash amount, if a

policyholder is not in a position to pay the premium. A loan, from certain policies, can be

taken for a temporary period to tide over the difficult. Some lending institutions will

accept a life insurance policy as collateral for a personal or commercial loan.

(VI) Tax Relief

The policyholder obtains Income Tax rebated by paying the insurance premium. The

specified forms of saving which enjoy a tax rebate, under section 88 of the Income Tax

Act, include Life Insurance Premiums and contributions to a recognized Provident Fund

etc., section 10 (10D) & other sub-sections of Section 80 of the Income Tax Act.

INSURANCE SECTOR IN INDIA

Introduction

The insurance sector is of considerable importance to every developing economy; it

inculcates the savings habit, which in turn generates long-term invest able funds for

infrastructure building. The nature of insurance business ensures constant inflow of funds

- the payout is staggered and contingency related - thereby making it readily available for

investment on infrastructure building.

Insurance is one sector whose contribution to GDP is quite significant. Post

independence, the Indian Government nationalized the private life insurance companies

with a view to raise funds for the infrastructure developments, which lagged behind

pathetically. The scatter of general insurance companies was brought under one umbrella

– the General Insurance Company in 1972.

Nationalization however brought with it the public sector bureaucracies, cumbersome

procedures and inefficiencies but still these nationalized companies managed to have

millions of policyholders who had no other options. Any attempt to even suggest private

participation with a view to instill healthy competition and efficient services was only

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met with stiff resistance. While the early 90s brought forth liberalization on all major

economic fronts, the insurance was left untouched. But before long, the passage of IRDA

bill in 1999 paved the way for the liberalization of the Indian insurance sector.

History

Insurance is a federal subject in India and has a history dating back to 1818. Life and

general insurance in India is still a nascent sector with huge potential for various global

players with the life insurance premiums accounting to 2.5% of the country's GDP while

general insurance premiums to 0.65% of India's GDP. The Insurance sector in India has

gone through a number of phases and changes, particularly in the recent years when the

Govt. of India in 1999 opened up the insurance sector by allowing private companies to

solicit insurance and also allowing FDI up to 26%. Ever since, the Indian insurance sector

is considered as a booming market with every other global insurance company wanting to

have a lion's share. Currently, the largest life insurance company in India is still owned

by the government.

Insurance in India has its history dating back till 1818, when Oriental Life Insurance

Company was started by Europeans in Kolkata to cater to the needs of European

community. Pre-independent era in India saw discrimination among the life of foreignersand Indians with higher premiums being charged for the latter. It was only in the year

1870, Bombay Mutual Life Assurance Society, the first Indian insurance company

covered Indian lives at normal rates.

At the dawn of the twentieth century, insurance companies started mushrooming up. In

the year 1912, the Life Insurance Companies Act, and the Provident Fund Act were

passed to regulate the insurance business. The Life Insurance Companies Act, 1912 made

it necessary that the premium rate tables and periodical valuations of companies should

be certified by an actuary. However, the disparage still existed as discrimination between

Indian and foreign companies.

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The insurance sector went through a full circle of phases from being unregulated to

completely regulated and then currently being partly deregulated. It is governed by a

number of acts, with the first one being the Insurance Act, 1938.

The Insurance Act, 1938

The Insurance Act, 1938 was the first legislation governing all forms of insurance to

provide strict state control over insurance business.

Life Insurance Corporation Act, 1956

Even though the first legislation was enacted in 1938, it was only in 19 January 1956, that

life insurance in India was completely nationalized, through the Life Insurance

Corporation Act, 1956. There were 245 insurance companies of both Indian and foreign

origin in 1956. Nationalization was accomplished by the govt. acquisition of the

management of the companies. The Life Insurance Corporation of India was created on

1st September, 1956, as a result and has grown to be the largest insurance company in

India as of 2007.

General Insurance Business (Nationalisation) Act, 1972

The General Insurance Business (Nationalisation) Act, 1972 was enacted to nationalise

the 100 odd general insurance companies and subsequently merging them into four

companies. All the companies were amalgamated into National Insurance, New India

Assurance, Oriental Insurance, United India Insurance which were headquartered in each

of the four metropolitan cities.

Insurance Regulatory and Development Authority (IRDA) Act, 1999

Till 1999, there were not any private insurance companies in Indian insurance sector. The

Govt. of India then introduced the Insurance Regulatory and Development Authority Act

in 1999, thereby de-regulating the insurance sector and allowing private companies into

the insurance. Further, foreign investment was also allowed and capped at 26% holding

in the Indian insurance companies.

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Opening doors for private players and FDI

The insurance premium in India accounted for a mere 2% of GDP as against the world

average of 7.8% and G-7 average of 9.2% during 90s. The insurance premium as a

percentage of savings in India is 5.95% as compared to 52.5% in UK. The nationalized

insurance companies could barely unearth the vast potential of the Indian population

since the policies lacked flexibility and the Indian life insurance products are not linked

to the contemporary investment avenues.

LIC had a total premium income of $5 billion during 1995-96 and General Insurance

recorded a net premium of $1.3 billion. LIC’s income has grown substantially on an

average of 10% as against the industry’s 6.7% in the rest of Asia. LIC has catered its

services to more than 5 million people living below poverty line with a subsidized

premium rate. Claim settlement ratio of LIC stood at 95% and GIC at 74% which much

higher than the global average of 40%.

But the other side of the coin gives a dismal picture. Large-scale operations and

bureaucracies entangled in the public sector companies were the main areas of concern of

the nationalized insurers. The state owned insurance companies did not show any

initiative to venture into the rural areas to sell crop insurance or any other personal

insurance.

Another area, which requires an in-depth study, is the pension segment. Indian demand

for pension products will be huge keeping in mind the lack of a comprehensive social

security system leading to an upward trend in the savings sentiments. But LIC despite its

optimal performing abilities brought in pension premium only to the tune of $22 million.

Hence innovative measures to convert the pension products into lucrative savinginstruments became the need of the day by which the investors would be allowed to

deploy funds before the annuities commence and to invest them in different schemes that

would yield a relatively higher income.

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Another potential area insufficiently served was the health insurance and other personal

insurance products such as householders, shopkeepers, personal accident, travel insurance

and professional indemnity covers, which constitute only 12 per cent of Indian general

insurance premium. General Insurance Company’s Mediclaim scheme served only 2.5%

of the total population. The Indian health insurance products were not comprehensive in

nature – there was no cover against disability.

More liberalised reforms are inevitably essential not only to drive the Indian economy

towards an annual growth rate of 7% to 8% but also to sustain the growth. A faster

growth would attract foreign direct investment (FDI) inflow of $10 billion every year as

against the current FDI in the range of $3 billion. Given the saving scenario in India,

there is much more growth potential and the liberalised insurance sector will mobilise thelong-term funds for infrastructural investments.

Factors changed due to privatization:

(I) MARKET EXPANSION:

There has been an overall expansion in the market. This has been possible due to

improved awareness levels thanks to the large number of advertising campaigns launched

by all the players. The scope of expansion is still unlimited as virtually all the players are

concentrating on large cities and towns-except by LIC to an extent there was no

significant attempt to tap the rural markets but the private companies are also targeting

the untapped rural market.

(II) NEW PRODUCT OFFERINGS:

There has been a plethora of new and innovative products offered by the new players,

mainly from the stable of their international partners. 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

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from which they can choose. More customers are buying products and services based on

the true needs and not just traditional money-back policies, which is not considered very

appropriate for long-term protection and savings. However, there are still some key new

products yet to be introduced.

(III) CUSTOMER SERVICE:

Not unexpectedly, this was one area that witnessed the most significant change with the

entry of new players. There is an attempt to bring in international best practice in service

and operational efficiency through use of latest technologies. Advice and need based

selling is emerging through much better trained sales force and advisors. There is

improvement in response and turnaround times in specific areas such as delivery of first

policy receipt, policy document, premium notice, final maturity payment, settlement of

claims etc. However, there is a long way to go and various customer surveys indicate that

the standards are still below customer expectation levels.

(IV) CHANNELS OF DISTRIBUTION:

Till two years back, the only mode of distribution of life insurance products was through

Agents. While agents continue to be the predominant distribution channel, today anumber of innovative alternative channels are being offered to consumers. Some of them

are banc assurance, brokers, Internet and direct marketing. Though it is too early to

predict, the wide spread of bank branch network in India could lead to banc assurance

emerging as a significant distribution mechanism.

If any one analyses the history of the growth of insurance since reforms, it is marked by

all- round growth of all players. More or less all players (including the market leader

LIC) have aggressively recruited and trained advisors, appointed agents, launched new

products, improved customer service standards and revamped/expanded their distribution

networks. If at all there are major difference between players it was only in time lag in

launching of service. Every player will like the customers to believe that its service

standards are the best or that its agents are the most informed and ethical, but it is

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debatable whether there are any significant differences. In other words, each company is

trying to be “everything to everybody”.

Our argument is that the strategy of being everything to everybody is risky. Some players

justify the above strategy on the basis that the Indian market is huge and it can

accommodate everybody. Still, in a market where it is difficult to distinguish one self

sufficiently on services or on any other parameter to be able to change a premium, it will

lead to unmitigated price competition to the detriment of all players. One may achieve

sales turnover, but margins and profitability will suffer severely. In the insurance industry

where large amounts of capital are required, this is risky.

While there is room for a few scale players with a finger in every pie, it is profitable for

other players to focus on different segments to survive and thrive in a multi-firm open

environment. While each company has to choose its own unique positioning on its unique

strengths, the below-mentioned generic positioning alternatives appear worth

considering. Needless to say the positioning choices discussed here are not mutually

exclusive and can be overlapping.

Global investors prefer Indian insurance markets:

Multinational insurers are keenly watching the transformation of the Indian insurance

sector, mainly because the domestic markets have become saturated for the respective

insurer. International insurers capture a significant part of their business from their

multinational operations only. UK’s largest life and non-life insurers acquired 40% to

60% of their total premium from their multinational operations. The foreign investors are

finding the Indian market more attractive because even a small share of a growing market

looks lucrative.

The other reason as to why the global insurers are interested in investing their funds is the

nature of the Indian markets. Generally insurance companies operate on the principle of

spreading. Spreading the area of operations over a wide geographical area would

eliminate sudden dips in earnings due to the unexpected risk spread. Sigma Report

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presented by the world’s second largest reinsure Swiss Re on global insurance, reports

complete saturation of international market.

Effects of global insurance

More job opportunities: Opening of the insurance sector to the foreign investors has led

to a renaissance in the Indian economy. Job opportunities show bright signals. The people

working in insurance sector in India are approximately the same as in the UK, which has

1/7th of Indian population. There is the new concept that has paved the way for more job

opportunities in the financial sector. There would be demand for specialists in the area of

marketing, finance and human resource management apart from the demand for technical

expertise from professionals in the field of underwriting and claims management

subjects.

Inflow of foreign capital: There would be huge inflow of funds into the country with

foreign capital splurging in the Indian insurance companies as start up capital.

Indigenous reinsurance: Even the reinsurance sector looks for opulence with global

players like Swiss Re and Munich Re keen on entering into the insurance industry in

India. While there will be a deep fall in the outward reinsurance, India would receive

inflow of funds from the neighboring countries. If the legislative support offers a

congenial atmosphere, a la Lloyds in India is not far off.

Technology transfer: Apart from the above monetary aspects, there would also be a

revolution in the transfer of technologies and knowledge from the global participants in

the fields of training, risk management, underwriting, introduction of new policies etc.

With more participants in the market, there would be healthy competition with increased

advertisement expenditure for brand building. There would be scientific pricing methods.

In the liberalized insurance era, we have 14 life insurance players apart from the public

sector Life Insurance Corporation of India and 9 general insurance companies apart from

the 4 state owned companies viz. The United India Insurance, New India Assurance,

Oriental Insurance, National Insurance Company. The private insurers have already

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proved their success by way of performance during the current financial year by way of

71% growth in the premium income. The investors worldwide are keeping their fingers

crossed pending the announcement of the increased cap in the FDI investment in the

Indian insurance companies to 49% from 26%.

IRDA

The Insurance Regulatory and Development Authority (IRDA) is a national agency of

the Government of India, based in Hyderabad. It was formed by an act of Indian

Parliament known as IRDA Act 1999, which was amended in 2002 to incorporate some

emerging requirements. Mission of IRDA as stated in the act is "to protect the interests of

the policyholders, to regulate, promote and ensure orderly growth of the insurance

industry and for matters connected therewith or incidental thereto."

Reasons for Incorporation

The law of India has following expectations from IRDA

1. To protect the interest of and secure fair treatment to policyholders.

2. To bring about speedy and orderly growth of the insurance industry (including

annuity and superannuation payments), for the benefit of the common man, and to

provide long term funds for accelerating growth of the economy.

3. To set, promote, monitor and enforce high standards of integrity, financial

soundness, fair dealing and competence of those it regulates.

4. To ensure that insurance customers receive precise, clear and correct information

about products and services and make them aware of their responsibilities and

duties in this regard.

5. To ensure speedy settlement of genuine claims, to prevent insurance frauds and

other malpractices and put in place effective grievance redressal machinery.

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6. To promote fairness, transparency and orderly conduct in financial markets

dealing with insurance and build a reliable management information system to

enforce high standards of financial soundness amongst market players.

7. To take action where such standards are inadequate or ineffectively enforced.

8. To bring about optimum amount of self-regulation in day to day working of the

industry consistent with the requirements of prudential regulation.

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1.2 COMPANY PROFILE

Max India Limited is a multi-business corporate, driven by the spirit of enterprise,

focused on knowledge, people and service-oriented businesses of healthcare and life

insurance. It also maintains interests in clinical research, telecom services and speciality

plastic products business.

About New York Life

New York Life Insurance Company, a Fortune 100 company, is the largest mutual life

insurance company in the United States and one of the largest life insurers in the world.

Founded in 1845 and headquartered in New York City, New York Life and its affiliates

offer life insurance, annuities and long-term care insurance. New York Life Investment

Management, LLC, a New York Life affiliated, provides institutional asset management,

retirement plan and trust services. Other New York Life affiliates provide an array of

securities products and services, as well as institutional and retail mutual funds.

New York Life International offers insurance products through its subsidiaries and

affiliates in Argentina, Hong Kong, India, Mexico, the Philippines, South Korea, Taiwan,

Thailand and China. The company also has a representative office in Hanoi, Vietnam.

Corporate Profile of Max New York Life Insurance

Max New York Life Insurance Company Ltd is a Joint Venture between New York Life,

a Fortune 100 company and Max India Limited, one of India’s leading Multi-business

Corporation. Through its wide network of highly competent life insurance Agent

Advisors and flexible products and solutions, Max New York Life is committed to

creating a partnership for life with its customers in India. In line with its values of

financial responsibility, Max New York Life has adopted prudent financial practices toensure safety of policyholder’s funds. It invests only in debt instruments and meets both

Indian and international disclosure norms. The Company’s paid up capital is Rs. 300

crore, which makes it among the highest capitalized its primary channel of distribution.

The Company places a lot of emphasis on its selection process, which comprises four

stages – screening, psychometric test, career seminar and final interview. The agents are

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trained in-house to significantly in its training programme and each agent is trained for

152 hours as opposed to the mandatory 100 hrs stipulated by the IRDA before beginning

to sell in the marketplace. Training is a continuous process for agents at Max New York

Life and ensures development of skills and knowledge through a structured programme

spread over 500 hours in two years. This focus on continuous quality training has

resulted in the company having amongst the highest agent pass rate in IRDA

examinations and over 45 of its agents qualifying to be nominated to the MDRT, which is

among the highest suite of flexible products. It now has 13 life insurance products and 9

options & riders that can be customized to over 400 product combinations enabling

customers to choose the policy that best fits their need.

Leadership Team

Analjit Singh

(Chairman, Max India Limited)

Gary G. Benanav(Chairman and Chief Executive Officer, New York Life International Inc.)

Anuroop ‘Tony’ Singh(Chief Executive Officer and Managing Director of Max New York Life)

Vision

Become the most admired Life Insurance Company in India.

Mission

Become one of the top 3 new Life Insurance Companies

Become a National Player – Dominant in North India

Be the Brand of FIRST choice among all stakeholders

Become the employer of Choice

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Be the principal of Choice for Agents

The Company Objectives

The company believes in building relationships with the people they serve so that their

customers enjoy the highest quality of service in life insurance. Towards this the

company spells out its defining qualities as under:

1. They are experts in life insurance: That's all they do.

2. New York Life has over 156 years of experience in the life insurance business. It

is a Fortune 100 company that has been trusted by millions worldwide, across

generations.3. Their existence is rooted in their commitment to financial strength, integrity and

responsibility. They have doubled their capitalization requirement to Rs. 200

crore from the initial Rs. 100 crore that has been stipulated by the Insurance

Regulatory and Development Authority (IRDA). Their investments are confined

only to debt instruments and they meet both Indian and US reporting norms. Max

New York Life also deposits 1% of the premium income with the RBI, towards

Contingency Funds.

4. They like to believe they have the best Agent Advisors in the business. Backed by

the best training and infrastructure, their Agent Advisors will spend time

evaluating client needs rather than just selling. They are professionals who will

thoroughly understand client needs before recommending the policy tailored to fit

their unique needs.

5. They Endeavour to offer the best products with Flexibility as their cornerstone, so

the customer can buy just what he needs. With their various Products and Riders

& Options, the customer has more than 200 product combinations to choose from.

6. They would like Transparency to be the bedrock of the way they do business.

Which is why they customize a Personal Insurance Plan, which gives the

customer a broad overview of the details of his policy along with a year-on-year

summary, even before he buys. And with the free look option the client even has

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the unconditional right to return the policy, if he so wishes, within 10 days of

receiving it.

7. They offer multiple bonus options, which includes options such as annual bonus,

bonus accumulated and paid on maturity, bonus used to offset premiums, bonus

utilized to buy Paid up additions and bonus used to buy one-year term insurance.

So the customer can decide how he wants to use his bonus payments.

8. They take their social responsibility seriously. Every policy sold by them benefits

a needy child at SOS Children's Villages of India. They also provide life

insurance to the rural and socially underprivileged.

9. They have a national presence with a network in the 9 cities of Delhi, Mumbai,

Kolkata, Chennai, Bangalore, Hyderabad, Ahmedabad, Pune and Chandigarh

Max New York Life Insurance Company has a vision of being the ‘Most Admired Life

Insurance Company of India’. Our constant endeavor is to provide high quality

products and services to our Customers. To serve our Customers effectively and to their

satisfaction , we are steadily on a journey of ‘Quality and Business Excellence’.

Amongst the many initiatives that we are taking for our Customers, present and future,

we are constantly working towards making our policies and procedures simpler and

Customer friendly.

ACHIEVEMENTS

Max New York Life is the first life insurance company in India to be awarded the IS0

9001:2000 certification.

Max New York Life was among the top 25 companies to work with in India,according to

2003 Business World magazine, "Great Workplaces In India", Max New York Life was

ranked at the 20th position. This survey is the local version of the "Great Places To

Work" survey carried out every year in 22 countries.

We were among top five most respected private life insurance companies in India

according to a 2004 Business World survey.

21



We have truly built an enviable sales force. With 201 agents becoming members of the

MDRT in 2005, Max New York Life has moved up in the Top 50 MDRT global list.

RECORD GROWTH

Max Life records 122 pc growth 20 Apr 2004, 1515 hrs IST,Narayan B Bhatt ,TNN

AHMEDABAD: Max New York Life (MNYL) has recorded a 122 per cent growth in its

total premium income for the fiscal ending March 31, 2004, to Rs 214 crore from Rs 97

crore last year.

The company has distributed cumulative insurance worth over Rs 11,000 crore and has

sold more than 285,000 policies.

MNYL attributes the strong growth to its focus on building a quality business and to its

leadership in realigning the Indian market towards protection-based life insurance

products. MNYL CEO and Managing Director Anuroop 'Tony' Singh said, "It is evident

from our consistent performance that we are setting standards in the marketplace and are

well-positioned to be a long-term player in the life insurance space. Our performance has

exceeded our business plans and our agency distribution system is the envy of our

competitors."

•

MNYL has built an outstanding agency force in excess of 5,500. Its agent advisors have

the highest productivity among private insurers and the company also has among the

highest average sum assured per policy sold. The quality of MNYL's agency force is

adequately reflected in its dominance of the Million Dollar Round Table (MDRT), which

is an exclusive congregation of the world's top selling life insurance agents. MDRT

membership is internationally recognized as the standard of excellence in the life

insurance business. After 26 MDRT agents in 2002 and 45 last year, 81 agents have

qualified for the MDRT this year.

22



THE MAX FLAME

Company’s logo is the Max Flame. Rooted in the Indian idiom, it is suitable for an

organization proud of its origins. It is rendered in an international, contemporary style,

representative of our global orientation. It is an appropriate face for a group that is firmly

on the fast growth track, but for which, commitment to principles and values will always

remain ascendant.

The Max flame is representative of many qualities. As it

burns, it represents Enterprise and Ambition. Its

steadfast quality embodies Hope, Commitment, Care, and Service. As a giver of light, it is the flame of Knowledge.

The base of the flame is a "Diya"(traditional earthen

lamp).

This symbolizes the “Earth” , and the fact that common

denominators bind the world together .

The story of Max is the story of Enterprise, Perseverance, and Credibility. These have

enabled our birth, energized our life, and continue to define our path forward. We have

tempered Enterprise with Knowledge, Perseverance with Systems and Processes,

Credibility with Values and Operating Principles, to create business acumen and culture,

uniquely our own. This has led us to believe in People. To recognize human capital as our

most vital resource and our greatest intrinsic worth.

Enterprise and Knowledge have led us to find the 'new' through the 'unknown' . We

have grown with a 'hands on' approach. With the building blocks of Enterprise,

Knowledge, and People, we have created diverse businesses from the ground up. Each of

these, has emerged as a distinguished organization. Our mature businesses enjoy

23



leadership positions in their area of activity; our emerging businesses are well on their

way to creating industry benchmarks.

THE WORLD OF MAX

OUR BRAND EMBASSADOR

24



MAX ACHIEVEMENTS

25



Max New York Life is the first life insurance company in India to be awarded the IS0

9001:2000 certifications.

Max New York Life was among the top 25 companies to work with in India, according to

2003 Business World magazine, "Great Workplaces In India", Max New York Life was

ranked at the 20th position. This survey is the local version of the "Great Places to Work"

survey carried out every year in 22 countries.

They were among top five most respected private life insurance companies in India

according to a 2004 Business World survey.

We have truly built an enviable sales force. With 201 agents becoming members of the

MDRT in 2005, Max New York Life has moved up in the Top 50 MDRT global list.

Analjit Singh

( Chairman, Max India Limited )

26



Gary R. Bennett

( Managing Director and Chief Executive Officer,

Max New York Life Insurance Company Ltd.)

Anuroop'Tony'Singh

(Vice Chairman)

Max New York Life Insurance Company Ltd.)

Joseph Gilmour

(President and Chief Executive Officer,New York Life International)

27



The company donates a part of the total money collected on all policies sold,

to SOS Children's Villages of India at the end of the year.

Max New York Life has been instrumental in changing the paradigm of life

insurance in India. It is the first life insurance company in India to introduce cause

related marketing.

28



Children are at the very heart of Max New York Life's strategy. SOS Children's Villages

of India is internationally recognized for its work in giving underprivileged children a

wholesome life.The mission of SOS is "to help orphaned and abandoned children, by

providing them with a family, a permanent home, education and strong foundation for an

independent life." It's mission ties in with Max New York Life's philosophy of helping

people secure the future of their near and dear ones.

MNYL employees at a painting competition at SOS Village

Max New York Life employee visits to SOS Villages are organized regularly to generate

a sense of ownership and involvement among employees.

Anuroop 'Tony' Singh, making an annual commitment to SOS

Max New York Life has also instituted the David Allen trophy for the Most Socially

Responsible Student at SOS Children's Villages. David Allen, an employee of New York

Life, has donated Rs. 50,000 towards the rolling trophy, which will be awarded to a

29



student, of the Herman Gmeiner (SOS) School at Faridabad, who displays and shows

caring and a social responsibility towards his/her schoolmates or on a larger stage.

Shortly after inception, Max New York Life saw Gujarat being devastated by a ruinous

earthquake. The Max India Family and New York Life International contributed Rs.86.25

lakh towards the permanent care of children affected by the earthquakes in Gujarat

Tsunami

More recently, in March 2005, New York Life made a donation of Rs. 17 lakh to SOS

Children’s Villages of India for the long-term rehabilitation of survivors of the Tsunami

disaster in Tamil Nadu. The funds will be used by SOS Children’s Villages of India for

the reconstruction of permanent dwellings for fishing communities severely affected by

the Tsunami waves in December 2004. A few weeks earlier, New York Life joined its

joint venture partner Max India in making a donation of Rs. 75 lakh to the Prime

Minister’s National Relief Fund. The Chairman of Max New York Life, Analjit Singh,

met Prime Minister Man Mohan Singh to personally hand over the cheque.

Shortly after inception, Max New York Life saw Gujarat being devastated by a ruinous

earthquake. The Max India Family and New York Life International contributed

Rs.86.25 lakh towards the permanent care of children affected by the earthquakes in

Gujarat

30



SOME OF THE IMPORTANT MILESTONES IN THE LIFE INSURANCE BUSINESS IN INDIA

ARE:

1818: Oriental Life Insurance Company, the first life insurance company on Indian soil

started functioning.

1870: Bombay Mutual Life Assurance Society, the first Indian life insurance company

started its business.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 are taken over by the

central government and nationalised. LIC formed by an Act of Parliament,

viz. LIC Act, with a capital contribution of Rs. 5 crore from the Government

of India.

On 1st September 1956, there were 170 companies and 75 provident fund societies

transacting life insurance business in India.

1999: after amendments to the relevant laws, the LIC did not have the exclusive privilege

of doing life insurance business in India.

By 31.03.2002,eleven new insurers had been registered and had begun to transact life

insurance business in India.

1.3 PROBLEMS OF THE ORGANIZATION

• Service delivery / Logistics perception is weak

31



• Negative Environment

• Top management takes large amount of time to approve high value loan borrowers.

1.4 COMPETITORS INFORMATION

LIBERALISATION OF INSURANCE SECTOR IN INDIA IN 2000

Life Insurance in India was nationalized by incorporating Life Insurance Corporation

(LIC) in 1956. All private life insurance companies at that time were taken over by LIC.

In 1993 the Government of Republic of India appointed RN Malhotra Committee to lay

down a road map for privatization of the life insurance sector.

While the committee submitted its report in 1994, it took another six years before the

enabling legislation was passed in the year 2000, legislation amending the Insurance Act

of 1938 and legislating the Insurance Regulatory and Development Authority Act of

2000. The same year that the newly appointed insurance regulator - Insurance Regulatory

and Development Authority IRDA -- started issuing licenses to private life insurers.

Life Insurer in Public Sector

1. Life Insurance Corporation of India

Life Insurers in Private Sector

1. Bajaj Allianz Life

2. ICICI Prudential Life Insurance

3. HDFC Standard Life

4. Birla Sunlife

5. SBI Life Insurance

6. Kotak Mahindra Old Mutual Life Insurance

7. Aviva Life Insurance

8. Reliance Life Insurance Company Limited

32



9. Tata AIG Life

10. Metlife India Life Insurance

11. ING Vysya Life Insurance

12. Max Newyork Life Insurance

13. Sahara Life Insurance - Now they are not into business

14. Shriram Life Insurance

1.5 S.W.O.T ANALYSIS

Both Strengths and Weaknesses are inherent with the company while

opportunities and. Threats are usually outside factors, which affect the existence of the

company at large. Let us make the SWOT Analysis for Max Newyork life Insurance

company.

Strengths

• The early bird advantage

• More penetration in the rural part of India

• The trust they have created so far

• Established agency network during the last decades

• The incomparable supremacy in the number of agents

• More awareness among the people

33



Weakness

• The marketing approach is not that much professional

• The sluggishness of the activities has given at time a bad repute

• Insurance companies are often slow to respond to changing needs.

• Indian saving rate is for about 22% but less than 7% of it is spent on

insurance

• There are more competitors for agencies to complete with banks and

internet players.

Opportunities

• The ability to cross self financial services is barely being tapped

• Technology is improving to the point that paperless transactions are available

• The client’s increasing need for an “insurance consultant” can open new ways to

service the client and generate income

Threats

• Increasing expenses and lower profit margins will hit hard on the smaller agencies

and insurance companies.

• As the number of agents are considerably huge, efficient management of all the

field force need greater strain and effort

• The aggressive style of marketing by the private players is a threat to LIC.

• More and companies are coming into the field and the existing ones have to

struggle hard to keep the customers loyal and to get more customers.

34



Chapter 2

Research

methodology

35



2.1 SIGNIFICANCE

1) The life maker premium remains an important element, mainly Providing

for replacement of income on death.

2) It provides easy settlement on death and protection against creditor.

3) It helps to achieve the purpose of the life assured.

4) It can be enchased and facilitates performing.

5) It provides tax benefit.

2.2 MANAGERIAL USEFULNESS OF THE STUDY

This project is useful to find out various efforts that an insurance company has to do in

selling its life insurance products. To cover, all the major issues & aspects, so as to bring

forth the exacts of this crucial work of an insurance company. To ascertain the feasibility

of the project for MNYL, so as to see, as to what the exact worth of the borrowing party

is & how much loan it should be forwarding.

2.2 RESEARCH OBJECTIVE

The summer internship program was carried out with two prime objective in mind.

The entire internship program was divided into two parts.

• To find out various efforts that an insurance company has to do in selling its life

insurance products.

• To find out different strategies involved in selling life insurance products.

2.4 SCOPE OF STUDY

• To know how these factors influence the success of a PRIVATE insurance

company.

36



2.5 RESEARCH METHODOLOGY

The methodology of research indicates the general pattern for organizing the procedure to

assemble effective data for the problems to understudy. The study tries to find out thekind of strategies and methods that would further enhance the insurance business.

Insurance business mainly aims at selling our product in the competitive market and

Increasing insurance industry.

Data Source

The universe of study was limited to a particular region that created some problems while

collecting data. The universe was divided in different segments. The process of segmentation was primarily aimed at simplifying the universe into smaller parts so each

segment can be handled according to its unique features. There can be different areas

where different marketing strategies could be used in selling life insurance products.

These segments were as follows:

• Rural areas

• Urban AND metropolitan areas like Delhi, Mumbai, etc

Further these segments were divided into several sub-segments because there is

heterogeneity in population of respective areas that needs different marketing strategies

to be adopted in selling insurance products. These were:

• Education of person

• Income of person

• Living style

• Influence of social factors, etc.

These factors were considered at the time of collecting the data and information.

37



Sample Area:

New Delhi:

East of Kailash

Green Park

Panchsheel

South Extension

Quota Sample:

Government Servants

Professionals

Housewives

Businessmen

Self Employed.

DATA COLLECTION

PRIMARY DATA:

The primary data that I collected were the first hand information, which I received

through personal interviews with the consumers and through questionnaires. This data

gave the most vital information for making my analysis of the prevailing banking

behavior of the consumers

SECONDARY DATA:

Secondary data involved in my research were the information that I collected through the

Punjab National Bank’s Internet service and through the various brochures and pamphlets

of the bank.

38



Sample Size

• 50 respondents

Sample Area

• North Delhi

39



Chapter 3

Conceptual

discussion

40



LIFE MAKER PREMIUM

A unit linked insurance plan that enables you to manage your investments and fulfill your

life’s needs.

Life gives you a lot of choices-especially when you’re looking for ways to protect your

family, build the business you aim to own and the life style you hope to establish. But

things may change along the way and you may have to adjust to the changes which life

brings to you and this adaptability should also be available with your life insurance plan.

Our Unit linked Life Insurance plan can be the financial cornerstone for your objectives.

Life Maker TM Premium Investment Plan provides you a solution to fulfill all your

dreams, whether you’re buying a home, starting a family, launching a business venture.

Max New York Life Insurance provides you a powerful investment-cum-insurance plan

that empowers you to manage your investments through your insurance policy. In this

unit linked plan, you can direct your investments in our customized unit linked funds,

which offer investments of different types: Fixed Income (e.g. Govt. Securities, Company

Debentures) and Equities (i.e. shares). Hence it is a one-stop option to fulfill all your

plans without the hassle of managing multiple products.

KEY BENEFITS

Protection

Attractive Returns

Liquidity

Tax Benefits

Flexible Investments

PROTECTION-This policy provides you comprehensive protection incase of Death.

41



Level Insurance Cover - In the unfortunate event of your death anytime during the tenor

of the plan, we will pay to your nominee(s) the higher of the Sum Assured or the Fund

Value in the policy.

Disability

Personal Accident Benefit (PAB) Rider – This rider provides a lump-sum amount if you

die by accident or are involved in an accident, which results in Total and Permanent

Disability.

Disease

Dread Disease (DD) Rider – This rider provides a lump-sum amount on you being

diagnosed with any of the ten dread diseases covered or your undergoing the surgery

covered.

Please note that the rider Sum Assured cannot exceed the Sum Assured of the base plan

and the rider Sum Assured is subject to limits.

RETURNS-This policy provides you competitive returns in the form of -

Maturity Benefit

On maturity, we will pay you the Fund Value. However, if you do not want the proceeds

on maturity (due to adverse market movements or to take advantage of a bull run etc.),

you may choose to defer it up to 5 year by opting for the Settlement option.

Loyalty Units

We will allocate free units (called Persistency Units) to your unit account on the 9th

policy anniversary and on every 3rd anniversary thereafter. These will be equal to 0.75%

of your fund values on the immediately preceding 36 monthiversaries.

42



LIQUIDITY- This policy provides you easy liquidity via-

Partial Withdrawal-Withdraw up to 20% of your Fund value as on previous policy

anniversary, to take care of any irregular expenses. Partial Withdrawals are allowed once

Policy completes 3 Years.

Surrenders- Incase of unforeseen needs ensures easy liquidity to you by accessing your

fund through surrender benefit. However, full surrender is possible only after the

completion of three policy years.

TAX BENEFITS- This plan entitles you to tax benefits under-

U/s 10(10D) of the Income Tax Act 1961 on the Maturity proceeds of the Policy

U/s 80C of the Income Tax Act 1961 on the Annual Premium on the Policy

FLEXIBILITY

Flexibility to Choose the Insurance Cover: You have the option to choose your sum

assured from a wide range of available limits. This feature gives you an opportunity to

direct your money towards investments or towards coverage, depending on your need.

High or low Sum Assured will not change the premium.

Flexibility to Choose Premium Payment Term: You have the flexibility to choose the

premium payment term between Regular Pay and Limited Pay (5/10/15 years). Suitable

for all kind of cash flows of any individual.

Flexibility to Choose Policy Term: You can choose the policy term from a wide range of

10 years to 30 years, subject to a maximum maturity age of 75.

Flexible Investment: You have the flexibility to direct your investments in any one or

more of the following five unit linked investment funds of the Company: SECURE,

CONSERVATIVE, BALANCED, GROWTH and GROWTH SUPER. These funds

invest in Fixed Income and equity assets as follows:

43



Costs. The front-end cost of the LMPIP, called the premium allocation charge, depends

on your premium amount and the policy year to which the premium pertains. For

premiums between Rs 20,000 and Rs 49,000, the first-year charge is 25 per cent. It keeps

falling with the premium amount and, for annual premiums over Rs 5 lakh, it is 21 per

cent. In the second and third year, the charge is 10 and 5 per cent respectively,

irrespective of the amount. From the fourth year onwards, the charge is 2 per cent for all

amounts. So, over the first 10 years, the total will be 53 per cent of one year’s premium.

That is competitive with other Ulips.

The annual fund management charge is 1.35 per cent of the fund value for the Growth

Super Fund. Mortality charges, deducted every month, are based on the sum at risk (the

difference of sum assured and fund value).

Plans that ask for lower front-end costs have started covering the gap under a different

head—policy administration charge (PAC). Instead of keeping the cost under this as a

fixed amount, LMPIP charges PAC between 9.5 per cent and 12 per cent of the premium

amount from the first to third year and this deduction is done from the value of the fund.

The charge from the fourth year is relatively lower.

Portfolio and performance. The portfolio gets published every quarter. The report for April-June says that on 31 March 2007, the growth fund had a well-diversified portfolio

with about 30.59 per cent invested in four sectors—IT, banking, telecom and capital

goods.

What to do. While Outlook Money prefers ulips that give both fund value and sum

assured as death benefit, LMPIP was worth examining since it is the only Ulip from Max

that has the option of investing all your money in equity and giving you somewhat higher

fund value growth. For returns we have considered the returns of the Growth fund option

as it has been in existence for over 2 years (see Performance Report). Make sure to keep

invested if you own such a plan to ensure wealth creation over the long term.;

44



All of us desire a lavish and comfortable life. Max New York Life wants you to think

beyond basic necessities of life i.e. Food, Clothes and Shelter. The latest Life Maker™

Premium Investment Plan gives you a lot of choices - especially when you are looking

for Great life style, Big Home, your own well established Business and top of all -

Protection for your family. Our Unit linked Life Insurance plan can be the financial

cornerstone for your objectives. Max New York Life Insurance provides you a powerful

investment-cum-insurance plan where you can direct your investments in the customized

unit linked funds such as equities, money market instruments, investment grade corporate

bonds, and government securities. These funds offer a wide range of returns basis market

returns. You can choose to invest your premiums in one or more of these funds, basis

your risk taking ability.

The switching feature of this policy provides you the facility to change the investment

pattern by moving from one fund to other fund(s) amongst the funds offered under this

contract and in case of unforeseen urgent needs; the plan ensures easy liquidity to you by

accessing your fund through surrender benefit.

Eligibility Criteria

Criteria Eligibility

Entry Age (age as at last birthday) Any age between 91 days to 65 years(maximum issue age is 50 years with DD rider and 55 years with PAB rider)

Premium Payment TermRegular Pay - Equal to Policy TermLimited Pay - 5/10/15 years

Policy Term (in whole years)

Regular Pay - Pick-a-tenor (10 years to 30years)Limited Pay – 5 pay – 10 years policy term10 pay – 20 years policy term15 pay – 30 years policyterm(Subject to maximum age at maturity of 75 years)

Maximum Maturity Age 75 years on last birthday

Minimum Sum Assured Rs. 100,000

Minimum Annual Target Premium Rs. 20,000

45



Maturity Benefit

• At maturity value , we will pay you the fund value.

In addition to this :• This plan also offers you the Settlement Option on maturity where your policy

will continue for a time period not exceeding five years but the insurance cover

will terminate on maturity

• Persistency Units - On paying regular premiums, we will allocate Persistency

Units to your unit account on the 9th policy anniversary and on every 3rd policy

anniversary thereafter provided your policy is in-force at that anniversary.Death Benefit

• Higher of the Sum Assured or the fund value of the policy on death

•

However, if the Life Insured dies before attaining age 10 years, we will only paythe fund value of the policy.

Key benefits

• Five attractive investment funds to choose from

• Flexibility to choose premium payment term

• Additional protection against disease and disability through riders

• Flexibility to invest a lump sum amount through top ups

• Free Loyalty Units

• Tax benefit on premiums and maturity value

Riders

The plan provides you an additional protection against disability and disease through

riders. The following riders are available:

• Personal Accident Benefit (PAB) Rider: This rider provides a lump-sum

amount if you die in an accident or are involved in an accident, which results in

Total and Permanent Disability.• Dread Disease (DD) Rider: This rider provides a huge amount on you being

diagnosed with any of the ten dread diseases covered or your undergoing the

surgery covered.

Flexibility

46



You have the flexibility to direct your investments in any one or more of the following

five unit linked investment funds of the Company: SECURE, CONSERVATIVE,

BALANCED, GROWTH and GROWTH SUPER. These funds invest in Fixed Income

and equity assets as follows :

Select any one or all of the mentioned funds

Fund SecureFund

ConservativeFund

BalancedFund

GrowthFund

GrowthSuper FundInvestment Type

Government Securities 50-100% 50 - 80% 20 - 50% 0 - 30% 0-20%

Corporate Bonds(investment grade)

0-50% 0 - 50% 20 - 40% 0 - 30% 0-20%

Money MarketInstruments / Cash 0-20% 0 - 20% 0 - 20% 0 - 20% 0-20%

Equities NIL 0 - 10% 10 - 40% 10 - 70% 70-100%

Flexibilities

Switching: We provide you with the facility to change the investment pattern by moving

from one fund to any other fund(s) amongst the funds offered under this contract. Every

policy year, we offer you six free switches.

Premium Re-Direction: This is the facility that allows you to modify the allocation of

premiums into an investment pattern that is different from the existing pattern. Every

policy year, we offer you three free redirections.

Partial Withdrawal: If you wish to withdraw a part of your fund, you can make partial

withdrawals up to 20% of surrender value in any policy year by cancellation of units

from your unit account. Partial withdrawals are allowed only after three policy years.

Surrenders: In case of unforeseen needs it ensures easy liquidity to you by accessing

your fund through surrender benefit. However, full surrender is possible only after an

amount equal to three years ATP has been paid.

Life maker premium provides customers flexibility in premium payment offering a

choice to decide proportion of investment and risk. The plan offers customers the death

47



benefit of level insurance cover. In the case of level insurance cover, the nominee will

receive higher of the sum assured or fund value. In addition, during the tenor of the plan,

depending on his life events and life stage needs, the customer has the flexibility to

increase his insurance cover.

Investment flexibility

Life marker premium offers customers the choice of investing their premium in five

investment funds offered by Max New York Life. The plan empowers the customer to

manage their investments by switching between funds without any tax liability, re-

directing future premiums and investing more through fund top-ups depending on

availability of additional funds with the customers. The switch option offered by Max

New York Life is one of the most flexible ones in the market where money from one

fund can be switched to multiple funds in a single switch. The plan offers 6 free switches

during the year. Life maker premium also offers flexibility in mode of premium payment

depending upon the customer’s cash flows.

Higher returns

Max New York Life allocates guaranteed persistency units to the customer’s unit account

on the 9th policy anniversary and on every 3rd anniversary thereafter. The persistency

units will be calculated based on the fund values of the policyholder on the immediately

preceding 36 monthiversaries. This increases the value of their fund value.

High quality of advice - sold through certified agent advisors Max New York Life has

always focused on high quality of advice. To help customers better understand and

manage their needs, MNYL has developed a special training programmed for its agent

advisors and employees. This certification course enables agent advisors to better

understand complex financial products, thus ensuring ethical selling and appropriateadvice to customers based on their risk-return profile.

Gary Bennett, Managing Director & CEO, Max New York Life Insurance Company said,

Max New York Life products are designed after understanding customer needs across the

market segments. This new product is an extension of our philosophy of offering a range

48

http://www.free-press-release.com/news/200705/1180507286.html




of products designed to meet customers with diverse backgrounds and at different life

stages. Our trained and certified agent advisors will ensure that this plan provides an

appropriate balance between protection, investment and liquidity needs based on the life

stages of their customers.

Life Maker Premium offers a wide age eligibility spectrum from 91 days-65 years with

maximum maturity age of 75 years and minimum maturity age of 18 years. The policy

offers limited pay option of 5/10/15 years and regular pay which will be equal to the

policy term with minimum premium of Rs. 20,000/-.

Speaking at the press conference, Debates Sarkar, director marketing, product

management and corporate affairs, Max New York Life said, the life maker premium is

targeted at the middle income group customers who want to invest lower premiums but

wish to harness the upside in the equity markets. With this launch, we now have a

comprehensive unit linked portfolio for our customers with different financial risk profile

and at different life stages.

Max New York Life also launched life maker gold a unit linked investment plan with

level death benefits and life maker platinum with increasing death benefit. Both the

products retain all other features of life maker that will be replaced by these two products.

Max New York Life has sold well over 1.53 million policies with more than Rs. 46,000

crore in sum assured. It has more than 25,300 agents, who are widely recognized as

among the best in the industry.

Choice of Protection Levels

LIFE MAKER TM PREMIUM provides customers flexibility in premium payment offering

a choice to decide proportion of investment and risk. The plan offers customers the death

benefit of Level Insurance Cover. In the case of Level Insurance Cover, the nominee will

receive higher of the sum assured or fund value. In addition, during the tenor of the plan,

depending on his life events and life stage needs, the customer has the flexibility to

increase his insurance cover. .

49





Max New York Life also launched Life Maker™ Gold a unit linked investment plan with

level death benefits and Life Maker™ Platinum with increasing death benefit. Both the

products retain all other features of Life Maker™ that will be replaced by these two

products.

Max New York Life has sold well over 1.53 million policies with more than Rs. 46,000

crore in sum assured. It has more than 25,300 agents, who are widely recognized as

among the best in the industry.

FUND ->SECURE

FUND

CONSERVATIVE

FUND

BALANCED

FUND

GROWTH

FUND

GROWTH

SUPER

FUND

INVESTMENT

TYPE

Govt.Securities 50-100% 50-80% 20-50% 0-30% 0-20%Corporate Bond

(Investment

Grade

0-50% 0-50% 20-40% 0-30% 0-20%

Money Market

Instrument/Cash0-20% 0-20% 0-20% 0-20% 0-20%

Equities Nil 0–10% 10-40% 10-70% 70-100%

Invest more through fund Top-ups to match your cash flows: You can invest extra money

in your policy through occasional top-ups at anytime post the policy commencement

dates. However, cumulative top ups will be allowed only up to 25% of the cumulative

Annual Target Premium till date. Top ups will not effect the Sum Assured.

Switch across funds: This plan allows you to switch between funds and allows you to

change your risk return profile of your existing investments. The switch option we offer

is one of the most powerful and flexible ones in the market where money from one fund

can be switched to multiple funds in a single switch. 6 Free switches are available to you

in a Policy Year.

50

http://www.moneycontrol.com/india/news/pressinsurance/max-new-york-life-launches-life-maker-tm-premium/08/41/284211/1






Re-direction: This plan allows you to re-direct your future premiums. You can invest your future

premiums in a fund different from your earlier fund, or to multiple funds in a ratio different from

your earlier ratio. 3 free re-directions are available to you in a policy year.

51



Chapter 4

Data analysis

52



4.2 DATA ANALYSIS

The data collected was analyzed as follows:

Q) DO YOU THINK TO INVEST IN LIFE MAKER PREMIUM OR

NOT?

INVEST OR NOT

54%

46% Yes

No

From above graph it is visible that 54% of people think that they should invest in life

maker premium and remaining 46% of people don’t want to invest. In this, we interpret

that there is a more number of people who think that they should invest in life maker

premium.

Invest or Not No.As a % of

total

Yes 13 0.54

No 11 0.46

24 1

53



Q) ARE YOU INSURED BY INVESTING IN LIFE MAKER

PREMIUM OR NOT?

Life InsuranceCover No.

As a % of total

Yes 10 0.42

No 14 0.58

24 1

LIFE INSURANCE COVER

42%

58%

Yes

No

From above graph it is visible that only 42% of the people think that they are insured by

investing in life maker premium. Whereas 58% of people think that Life maker premium

is not reliable for them. So From this data we interpret that there is a more number of

people who think that they are insured by investing in life maker premium.

54



Q) WHAT IS THE REASON FOR APPLYING THIS POLICY?

(PLEASE TICK THE APPROPRIATE ONE)

Reasons for Investment No.

Family Protection 8Personal Protection 4

Private ResidentialLoan Cover 3Others (pleasespecify) 2

17

REASONS FOR INVESTMENTS

46%

24%

18%

12%

Safety&security

Savings

Retirement

Others

From above graph it is visible that 46% of peoples get safety and security and 24% of

peoples think that savings is the main reason for applying in this policy. Whereas 18% of

peoples want to get retirement benefit and remaining people have other reason for

applying in this policy.

Therefore we interpret that the main reason for applying in this policy is to get safety and

security.

55



Q) Are you aware of Life Maker Premium?

Awareness about plan No.

Yes 12 No 5

17

12

5

Yes

No

From the above graph we interpret that Only 12 respondents out of 17 are aware about

life maker premium and remaining 5 peoples don’t have any knowledge about it.

Therefore there are more number of people who are aware of life maker premium.

56



Q) WHAT ARE THE FACTORS THAT CONSIDERED MOST

IMPORTANT WHILE INSURING LIFE?

Reasons for

Investment No.High returns 5Safety 4Liquidity 3Tax free proceeds 3Flexibility 2

17

5

43

3

2

High returns

Safety

Liquidity

Tax free proceeds

Flexibility

From the above graph it is visible that more of the people gets high returns which is the

most important factor that is considered by people while insuring life.

57



Q) WHICH COMPANY DO YOU TRUST?


LIC 10Others 7

17

10

7

LIC

Others

From above diagram it is visible that Out of 17 respondents, 10 says LIC is more reliable

than MNYL and Remaining 7 respondents thinks that MNYL is more reliable. So there

are more people who trust on LIC than other company.

58



Q) WHAT IS THE LEVEL OF INCOME?

Reasons for

Investment No.Above – 5 8Between 2-5 4Below 2 3

17

8

4

3

Above – 5

Between 2-5

Below 2

From above graph it is visible that most of those people invested in life maker premium

whose income level is above 5 lakh. Therefore those people, whose income level is below

2 lakh, less prefer to life maker premium.

59



Q) WHY ARE YOU GETTING LIFE INSURANCE?


Safety and Security 4Savings 8Retirement 3Others 2

17

REASONS FOR INVESTMENTS

46%

24%

18%

12%

Safety&security

Savings

Retirement

Others

From above graph it is visible that 46% respondents thinks that they get safely &

security, 24% respondents thinks that they are saving for their future, 18% respondents

thinks that they get retirement benefit and remaining have some other reason. Therefore

we interpret that the main motive of the people is to get safety and security by taking life

insurance.

60



Q) DO MARKETING STRATEGIES INFORCE THEM TO GET

INSURED?

Affect %

Yes 60%

No 35%

Others 5%

60%

35%

5%

Yes

No

Others

From the above graph it is visible that 60% of the people agreed that the strategy

enforced them to get insured. But 35% of the people do not agree. So we interpret that

there are more number of people who are agreed that the strategies enforced them to get

insured.

61



Q) WHAT IS THE AFFORDABLE PREMIUM FOR A

INSURANCE POLICIES?

Affect No.

5000 5

6000 4

7000 5

4000 3

5

4

5

3

0

1

2

3

4

5

6

5000 6000 7000 4000

From the above chart it is visible that there is a 5 respondents who pay Rs.7000 and other

5 respondent pay Rs 5000 for premium but only 3 respondents are pay Rs 4000.

Therefore the affordable amount of premium for insurance policies is Rs.5000.

62



Chapter 5Recommendations

63



RECOMMENDATIONS

There are certain flaws existing in this working of the insurance industry There are some

the recommendation I come across while doing this thesis. It will help to make

insurance more important sector in today’s economy.

• The need of the hour is to devise a comprehensive strategy that Will help the

firms face the challenges of the future. The financial service industry, around thc

world,. over is undergoing a major transformation. It is very important that trained

marketing professionals who are able to communicate specific features of the

policy should sell the policy.

• From the research I could find out that people are not aware about the policies and

features of insurance.

• The penetration of insurance in India is around 22%. This indicates that a vast

majority of rural population is not covered. The market player needs to explore

this untapped potential through their marketing and sales network.

•

The returns of the policies are not properly managed and never given in time. So,these areas must be looked at.

• Pricing of insurance products, as empirically available in India, shows that pricing

is not in consonance with market realities. Life Insurance premium is generally

perceived, as being too high while general insurance (especially motor insurance)

is priced too low.

•

Some insurance products, which are not available in India should, be introducedin market. There are area for new product development like Industry all risk

policies; large projects risk cover, Risk beyond a floor level, extended public and

product liability covered.

It should give proper Product knowledge and training to the trainees before assigning

them targets

64



Chapter 6

Conclusion

65



CONCLUSION

The Project study report has the following findings with it :

• Almost all respondents have an insurance policy.

• People have more number of life insurance policies as compared to non-

life insurance.

• Due to increased in consumerism new product is launched everyday thus

non-life/general insurance business is also going to have boom period.

•Due to the increasing concern of people towards their health/life the life

insurance business has good prospects.

• Majority of the respondent believed that larger risk conversance of their

policy was the main feature of their policy that attracted them to buy that policy.

Though low premium was the next important feature.

• Majority of the respondent preferred to have MAX policies than other

private companies.

• Not many people know about the IRDA Act

• Majority of the respondents believe that covering future uncertainty is the

most important benefit of an insurance policy.

• Protection is the most important instrument of insurance followed by

investment tax, greater returns and risk management.

66



ANNEXURE

67



ANNEXURE

1) DO YOU INVEST IN LIFE MAKER PREMIUM OR NOT?

a. Yes

b. No

2) ARE YOU INSURED BY INVESTING IN LIFE MAKER PREMIUM OR NOT?

a. Yes

b. No

3) WHAT IS THE REASON FOR APPLYING THIS POLICY? (PLEASE TICK THE

APPROPRIATE ONE)

a) Family Protection ( )

b) Personal Protection ( )

c) Private Residential Loan Cover ( )

d) Others (please specify) ( )

4) ARE YOU AWARE OF LIFE MAKER PREMIUM?

a) Yes

b) No

5) WHAT ARE THE FACTORS THAT ARE CONSIDERED MOST

IMPORTANT WHILE INSURING LIFE?:

a) High returns ( )

b) Safety ( )

68



c) Liquidity ( )

d) Tax free proceeds ( )

e) Flexibility ( )

6) Which Company do you Trust?

a) LIC ( )

b) Other ( )

7) WHAT IS THE LEVEL OF INCOME?

a) Above – 5 ( )

b) Between 2-5 ( )

c) Below 2 ( )

8) WHY ARE YOU GETTING LIFE INSURANCE?

a. Safety and Security

b. Savings

c. Retirement

d. Others

9) DO MARKETING STRATEGIES INFORCE THEM TO GET INSURED?

a. Yes

b. No

c. Others

69



10) WHAT IS THE AFFORDABLE PREMIUM FOR A INSURANCE POLICIES?

a. 5000

b. 6000

c. 7000

d. 4000

11. WHAT IS THE AMOUNT OF PREMIUM PAID EVERY YEAR?

a. Rs.5000-rs.25000

b. Rs.25001-rs.45000

c. Rs.45001-rs.75000

d. Rs.75000 and above

12. DOES ADVERTISEMENT PLAY ROLE WHILE BUYING LIFE MAKER

PREMIUM?

a. not important

b. moderately important

c. important

d. very important

70



Bibliography

71



BIBLIOGRAPHY

Books• Kotler Philips, Marketing Management: 11th Edition, 2004,Prentice Hall of India

Ltd., New Delhi.

• Jim Blythe, ‘The essence of consumer behaviour’, Prentice Hall, Europe Hertford

shire, 1997

• Philip Kotler, “Principles of Marketing”, Prentice Hall of India Pvt Ltd, New Delhi,

1985.

• Everett M. Rogers “Diffusion of Innovations”, 4th Edition, New York: Free Press,

1995.

Journal

• Business World

• Economics Times

Website

• www.irdaindia.org/

• www.finance.google.com/

• http://www.ficci.com/

• www.maxnewyorklife.com/

http://www.maxnewyorklife.com/

http://www.maxnewyorklife.com/

Documents

Summer Training Project LIFE MAKER PREMIUM