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A PROJECT REPORT ON
INSURANCE IN WEALTH MANAGEMENT
OF
ADITYA BIRLA MONEY
SUBMITTED TO -:
SUBMITTD BY-:
[2]
DECLARATION
PLACE: JAIPUR
DATE:
(M.B.A.)
[3]
ACKNOWLEGEMENT
I would like to express my sincere gratitude to the branch manager of Wealth management
department, Mrs. Sangeeta Upadhyay and project guide Ms. NEHA ARORA for her guidance
and support throughout my training at Wealth Management Department (ABM).
I would also like to show my greatest appreciation to all those who have directly & indirectly
supported me with their encouragement & guidance. Without their encouragement & guidance
this project would not have been a success.
Finally, I thank my institute Apex Institute of Management and Science for making this
experience of summer training in an esteemed organization like ABM.
[4]
TABLE OF CONTENTS
S.NO.
CHAPTER
PAGE NO.
7-8
Company Profile
14-20
company
6
INTRODUCTION OF INSURANCE
27-61
62
63
Research
64-65
10
66
11
Bibliography
67
12
Annexure
68
13
Questionnaire
69-71
[5]
[6]
INTRODUCTION
The term wealth management now a days having very importance. So many financial
institutions are engaged in the business of wealth management. Now a days, Wealth
Management has very craze in the business world. In a survey, it was found that India
had 100,000 milliners day end of year 2006 is now growing up by 21% from a year
earlier (Asia pacific Wealth report).
Wealth management services area in financial sector has been witnessing more
attention during last couple of years. Capgemini Merrill Lynch Wealth Report 2007 cites
number of HNIs (high net worth individuals) globally to be around 9.5 million with wealth
held by them totaling to US$37.2 trillion in year 2006. Value of wealth held by HNIs
represents an increase of around 11.4% since 2005.
Considering long-term high value business proposition, number of banks and niche
players has started offering full range of wealth management services targeted to HNIs
and emerging affluent
While growing volume of premium services to affluent clients becomes the key driver for
most of the service provider firms, many unique elements inherent to wealth
management services requires completely different service offering model than the
existing model for transactional services.
Greatly accustomed in offering commoditized financial services so far, demand of
unconventional form of service model poses a big challenge in charting growth path for
these wealth management firms.
[7]
[8]
There are two aspects to the wealth management process; protecting assets from
creditors, market crashes or slowdowns, taxes, lawsuits and other unexpected events,
and growing asset values through methods that actively manage risk and reward
profiles to clients needs.
The term wealth Management formed with two words Wealth & Management. The
meaning of management they have already seen in the steering introduction. The
meaning of wealth is Funding, assets, investments and cash. It means the term
Wealth Management deft with fund assets, instrument, cash, and any other item of
similar nature. While defining the Wealth Management, they have to think in planned
manner. Wealth Management is an all inclusive set of strategies that aims to grow,
manage, protect and distribute assets in a much planned systematic and integrated
manner.
[9]
DEFINITION:
Wealth management is a practice that in its broadest sense describes the combining of
personal investment management, financial advisory, and planning disciplines directly
for the benefit of high-net-worth clients.
In the narrowest context, a wealth manager helps a client construct an entire investment
portfolio and advises on how to prepare for present and future financial needs. The
investment portion of wealth management normally entails both asset allocation of a
whole portfolio as well as the selection of individual investments. The planning function
of wealth management often incorporates tax planning around the investment portfolio
as well as estate planning.
A type of financial service that combines personal investments, tax planning strategies,
estate planning and legal counsel. It is designed to provide a broad array of services
within the confines of one office.
[10]
[11]
[12]
[13]
[14]
Supermarkets
Financial services
Cellular services
Insulators
Iron ore
Carbon black
Fibres, fabrics
Cement
[15]
[16]
KEY MANAGEMENT:
AJAY SRINIVASAN, CHIEF EXECUTIVE- FINANCIAL SERVICES
He has been with the Aditya Birla Group since July 2007
He sets the vision and provides strategic direction and leadership for the Groups
Financial Services Business.
[17]
COMPANYS PHILOSOPHY:
Some might say investing is a science, one that follows a fixed discipline, with
well defined principles and rules. But calculations and numbers will only take
ones to a certain point. Beyond that, its the expertise that counts.
For ABM creating the perfect portfolio is a skill; that we have polished and
mastered over the years. Picking the right investments, identifying growth
opportunities and knowing when to enter and quit the market, requires immense
skill and a keen sense of timing. Aditya Birla Money Wealth Management, offers
an expert panel of professionals who help to mould the goals and expectations
into sound investment strategies. With their guiding factors like capital protection
and strategic asset allocation, they help in translating ones financial dreams into
reality by carefully crafting individually specific portfolios that are Centered on
ones profile, risk appetite and of course aimed at getting the optimum out of
ones investment.
Deciding where to invest ones hard earned money can be a daunting task for
many people. But it doesnt have to be when they are with the ABM. With Aditya
Birla Money Wealth Management, one have a dedicated Relationship Manager
who not only ensures that his/her financial goals are met but also exceeds their
expectations at every step.
[18]
Asset protection: begins with your financial advisor trying to understand your
preferred lifestyle and then helping you deal with threats, such as taxes,
volatility, inflation, creditors and lawsuits, to maintaining this lifestyle.
Tax planning: helps in minimizing tax returns. This might include planning for
charity, supporting your favorite causes while also receiving tax benefits.
Estate planning: helps in protecting you and your estate from creditors,
lawsuits and taxes. This service is critical for every person whose net worth is
high.
Business planning: This service aims at optimizing the tax free advantages of
running your own business.
[19]
Mutual Funds
Insurance
Ipo
Fixed Deposits
BROKING SOLUTIONS
Equity Strategies
Commodity Desk
Derivative Strategy
Currency Trading
Margin Funding
ALTERNATIVE INVESTMENTS
Private Equity
Structured Products
Offshore Products
Gold
PROPERTY SERVICES
Commercial
Residential
Retail Shops
Secondary Sales
[20]
MUTUAL FUNDS
An investment vehicle that is made up of a pool of funds
collected from many investors for the purpose of investing in
securities such as stocks, bonds, money market instruments
&similar assets except hedge fund.
These are operated by money managers, who invest the funds capital and attempt to
produce capital gains & income for the funds investment. A mutual funds portfolio is
structured.
TYPES OF FUNDS:
Generally, mutual funds are open-ended and close- ended. These are defined as:
1. OPEN-END - The most common type, the open-end mutual fund, must be willing
to buy back its shares from its investors at the end of every business day at the
nav calculated that day.
2. CLOSE-END - Closed-end funds generally issue shares to the public only once,
when they are created through an initial public offering. Their shares are then
listed for trading on a stock exchange. Investors who no longer wish to invest in
the fund cannot sell their shares back to the fund (as they can with an open-end
fund). Instead, they must sell their shares to another investor in the market; the
price they receive may be significantly different from net asset value.
[21]
[22]
Hybrid funds
Hybrid funds invest in both bonds and stocks or in convertible securities. Balanced
funds, asset allocation funds, target date or target risk funds and lifecycle or lifestyle
funds are all types of hybrid funds.
[23]
Increased diversification
Daily liquidity
Government oversight
Ease of comparison
Economies of scale
DISADVANTAGES:
Fees
No opportunity to customize
Dilution(It is possible to have too much diversification because funds have small
holding in so many different companies, high returns from a few instruments
often dont make much difference on the overall return.)
Taxes
[24]
Choose from an array of more than 15 fund houses with various schemes like as:
Reliance mutual fund
Sundaram mutual fund
Kotak mutual fund
Religare mutual fund
Mirae mutual fund
SBI mutual fund
HDFC mutual fund
ICICI prudential mutual fund
Birla mutual fund
TATA mutual fund
AXIS mutual fund
UTI mutual fund
Franklin mutual fund
Fidelity mutual fund
DSP mutual fund
JM mutual fund
[25]
INTRODUCTION OF INSURANCE
Insurance is a form of risk management in which the
insured transfers the cost of potential loss to another
entity in exchange for monetary compensation known as
the premium.Insurance allows individuals, businesses
and
other
entities
to
protect
themselves
against
Insurance is a form of risk management in which the insured transfers the cost of
potential loss to another entity in exchange for monetary compensation known as the
premium.
Insurance allows individuals, businesses and other entities to protect themselves
against significant potential losses and financial hardship at a reasonably affordable
rate. We say "significant" because if the potential loss is small, then it doesn't make
sense to pay a premium to protect against the loss. After all, you would not pay a
monthly premium to protect against a $50 loss because this would not be considered a
financial
hardship
for
most.
Insurance is appropriate when you want to protect against a significant monetary loss.
Take life insurance as an example. If you are the primary breadwinner in your home, the
loss of income that your family would experience as a result of our premature death is
considered a significant loss and hardship that you should protect them against. It would
be very difficult for your family to replace your income, so the monthly premiums ensure
that if you die, your income will be replaced by the insured amount. The same principle
applies to many other forms of insurance. If the potential loss will have a detrimental
effect
on
the
person
or
entity,
insurance
makes
sense.
[26]
[27]
Research STATEMENT
The research statement studied is entitled, A comparative study of Life Insurance
Corporation of India and Private Life Insurance Companies in India. The present study
focuses on the analysis of the performance of public 52and all private life insurance
companies in India with the help of mean, percentage, ratios, ANOVA, Data
Envelopment Analysis and linear trend.
RESEARCH DESIGN
A Research design is a plan of action to be carried out in connection with a research
project. It is the conceptual structure within which research is conducted and it
constitutes the blue print for the collection, measurement and analysis of data. It is the
specification of methods and procedures for acquiring the information needed for
solving the problem. Decisions regarding what, where, when, how much, by what
means concerning an inquiry or a research study constitute a research design.
SAMPLE SELECTION
All private and public sector life insurance companies in India from 2000-01 to 2009-10
were selected for the study.The companies selected for the research work are as
follows:
Websites
Public Sector
Life Insurance Corporation of India
www.licindia.com
Private Sector
Allianz Bajaj Life Insurance Company
Limited
www.allianzbajaj.co.in
www.birlasunlife.com
www.hdfcinsurance.com
www.ingvysayalife.com
www.maxnewyorklife.com
www.metlife.com
www.omkotakmahnidra.com
www.sbilife.co.in
www.tata-aig.com
www.ampsanmar.com
[29]
GENERAL INSURERS
Public Sector
National Insurance Company Limited
New India Assurance Company Limited
Oriental Insurance Company Limited
United India Insurance Company Limited
www.nationalinsuranceindia.com
www.niacl.com
Private Sector
Bajaj Allianz General Insurance Co.
Limited
www.uiic.co.in
www.bajajallianz.co.in
www.icicilombard.com
www.itgi.co.in
www.ril.com
www.royalsun.com
www.tata-aig.com
www.cholainsurance.com
www.ecgcindia.com
[30]
TYPES OF INSURANCE
(A) LIFE INSURANCE:
Fire Insurance
Marine Insurance
Accident Insurance
(A)Life Insurance
Life Insurance is a contract providing for payment of a sum of money to the person
assured or, following him to the person entitled to receive the same, on the happening
of a certain event. It is a good method to protect your family financially, in case of
death, by providing funds for the loss of income.
A1. TERM LIFE INSURANCE: Under a Term Life contract, the insurance company
pays a specific lump sum to the designated beneficiary in case of the death of the
insured. These policies are usually for 5, 10, 15, 20 or 30 years.
Term life insurance are the most popular in advance countries but were not so popular
in India. However, after the entry of the private operators and aggressive marketing by
few players this kind of policies are becoming popular. The premium on such type of
policies is comparatively quite low when compared with other types of life insurance
policies, mainly due to the fact that these policies do not carry cash value.
PLUS OF TERM LIFE INSURANCE
- The premium payable on these policies is The premium on such policies keeps on
low as they do not carry any cash value.
increasing with age mainly because the risk
of death of older people is more. Over the
- One can afford for quite high value
page of 60, these policies become difficult
insurance policies
to afford.
[31]
[32]
Policy
A policy or insurance policy is a contract that states all the specific conditions of an
insurance plan. It is important to read and understand everything written in a policy
before buying the insurance so that you know what benefits you are getting and the
limitations of those benefits.
Losses
A loss is the cost of damage inflicted upon a piece of property or person. For
instance, if you get in a car crash where the vehicle is totally destroyed, the loss would
equal the full value of the car. While "damage" describes harm to a person or object, the
term "damages" can describe the amount of money a person is legally obligated to pay
another party for damage she caused. For instance, if you were the cause of an auto
accident, you may be obligated to pay the other driver damages for losses he suffered.
[33]
Deductibles
Deductibles are costs that a person must pay toward losses and damages before
an insurance company will pay. For instance, if your auto insurance has a $1,000
deductible on collisions and you get in a fender-bender that causes $1,250 worth of
damage to your car, you must pay the first $1,000 to fix the car and the insurance
company will pay the remaining $250. Deductibles protect insurance companies from
having to pay for small losses. Choosing higher deductibles usually reduces premiums
for the policyholder.
Insurance Specialists
Insurance specialists are individuals who know their specialties inside out. A specialist
can be defined as An expert who is devoted to one occupation or branch of learning.
There are insurance specialists in every area of insurance. This includes health
insurance, auto insurance, and life insurance and so on. Here we take a look at what an
auto insurance specialist does.
When you are preparing to purchase an auto insurance policy you will at some point in
the process work with an auto insurance specialist. A specialist in this capacity can help
you to find the absolute best insurance policy possible. First he will help you to
determine what you need in an auto insurance plan. Your driving habits will be taken
into consideration as will your lifestyle needs. This is necessary for a specialist to find a
plan that the customer can afford and one that is suitable to their needs.
Insurance specialists are there to make sure that you get what you want. As the
customer it is your job to provide as much information to the specialist as possible and
from there he can find you the absolute best deal he can on vehicle insurance. As a
specialist he is privy to information that you do not have access to on your own. That
makes him an expert at what he does which is what you require.
The auto specialist will take the information you have provided to him and use that to
find out what policies are out there and which ones are most suitable to your needs as
you have described them to him. He will then negotiate on your behalf to find you the
best deal possible. With a specialist working for you do not need to worry that you will
sign up for a vehicle policy that is too expensive or will not suit your needs. Insurance
specialists have the inside track on the industry and know exactly what to look for.
The number one goal of an insurance specialist is to find his or her customers the best
deal possible on auto insurance. This person needs to be able to effectively
communicate with you about your coverage and what you are looking for in a policy. He
or she should also be the first one to let you know if changes need to be made with your
insurance policy. If you have any questions then do not hesitate to ask the specialist.
That is what he or she is there for to do the best job possible to find you an auto
insurance policy that will suit you in every way possible.
[34]
1)
2)
3)
[35]
Insurance is a form is risk management in which the insured transfers the cost of
potential loss to another entity in exchange for monetary compensation known as
the premium.
Insurance works by pooling risks. Because the number of insured individuals is
so large, insurance companies can use statistical analysis to project what their
actual losses will be within the given class. This allows the insurance companies
to operate profitably and at the same time pay for claims that may arise.
The insurance contract is a legal document that spells out the coverage,
features, conditions and limitations of an insurance policy.
Homeowners insurance typically covers the dwelling (the structure), personal
property and contents, and some forms of personal liability. The policy may cover
direct and consequential loss resulting from damage to the property itself, loss or
damage to personal property, and liability for unintentional acts arising out of the
non-business, non-automobile activities of the insured and members of that
insured's household.
Health insurance is a type of insurance that pays for medical expenses in
exchange for premiums. The way it works is that you pay your monthly or annual
premium and the insurance policy contracts healthcare providers and hospitals to
provide benefits to its members at a discounted rate.
PPOs are a group of healthcare providers that contract with an insurance
company, third-party administrators, or others (like employers) to provide medical
care services at a reduced fee.
Disability insurance can replace a portion of the salary you were making before
you became disabled and unable to work after a serious injury or illness.
Disability insurance providers rate their premiums based on your job and the
level of risk involved in doing that job.
The reason to buy long term care insurance is to protect your assets in case you
need to pay for assisted living, home care or a nursing home stay.
Life insurance provides you with the opportunity to protect yourself and your
family from personal risk exposures like repayment of debts after death,
providing for a surviving spouse and children, fulfilling other economic goals
(such as putting your kids through college), leaving a charitable legacy, paying
for funeral expenses, etc.
[36]
Whole life insurance provides guaranteed insurance protection for the entire life
of the insured, otherwise known as permanent coverage. These policies carry a
"cash value" component that grows tax deferred at a contractually guaranteed
amount (usually a low interest rate) until the contract is surrendered.
Universal life insurance, also known as flexible premium or adjustable life, is a
variation of whole life insurance. Like whole life, it is also a permanent policy
providing cash value benefits based on current interest rate.
If an estate owner has not accumulated enough assets for his family,
Insurance quote helps create an instant estate for the sake of the Familys
security.
Life Insurance provides the option to pass equal assets to the children who are
not active in the Family business at the time the family business is passed on.
Life Insurance policies can help secure the future of children for
college/educational purposes as the amount of life Insurance Policy increases on
a minors or parents life.
The growth of a cash-value policy is tax-deferred - you do not pay taxes on the
cash value accumulation until you withdraw funds from the policy.
Life Insurance can be useful in paying estate taxes, along with other estate
settlement amounts. Federal Estate Taxes are due nine months after death.
If theres a Business Transfer, life insurance can provide ready cash to finance a
transaction between business owners who are ready to buy the deceased
owners share from his or her estate after death.
If theres a home mortgage, one can pass the family residence to their
spouse/children to free them of any mortgage if one has a Life Insurance Policy
for the same. It is preferred to have a decreasing term policy that decreases in
face amount as the mortgage balance is paid down.
Life Insurance helps retain your Business from the loss of a key employee.
Untimely death of a key employee can pose severe financial loss to the business.
The right insurance proceeds can provide liquidity to pay off personal loans or
business loans.
[37]
Who will take care of my family if tomorrow something unfortunate happens to me? If
this
question
bothers
you,
then
Life
Insurance
is
the
answer.
Of course, under any circumstances, the loss of a loved one is a traumatic
experience. But, if your family is also left without sufficient money to meet basic living
needs or prepare for future goals, they will have to cope with a financial crisis at the
same time. A Life Insurance plan ensures that your family is financially secure even if
tomorrow you are no longer around to care for them.
Today, there is no shortage of investment options for a person to choose from. Modern
day investments include gold, property, fixed income instruments, mutual funds and of
course, life insurance. Given the plethora of choices, it becomes imperative to make the
right choice when investing your hard-earned money. Life insurance is a unique
investment that helps you to meet your dual needs - saving for life's important goals,
and protecting your assets.
Asset Protection:
From an investor's point of view, an investment can play two roles - asset appreciation
or asset protection. While most financial instruments have the underlying benefit of
asset appreciation, life insurance is unique in that it gives the customer the reassurance
of asset protection, along with a strong element of asset appreciation.
The core benefit of life insurance is that the financial interests of ones family remain
protected from circumstances such as loss of income due to critical illness or death of
the policyholder. Simultaneously, insurance products also have a strong inbuilt wealth
creation proposition. The customer therefore benefits on two counts and life insurance
occupies a unique space in the landscape of investment options available to a
customer.
Goal based savings:
Each of us has some goals in life for which we need to save. For a young, newly
married couple, it could be buying a house. Once, they decide to start a family, the goal
changes to planning for the education or marriage of their children. As one grows older,
planning
for
one's
retirement
will
begin
to
take
precedence.
Clearly, as your life stage and therefore your financial goals change, the instrument in
which you invest should offer corresponding benefits pertinent to the new life stage..
[38]
[39]
Life Stage
Primary Need
Asset creation
Children's education,
Married with kids Asset creation and
protection
You're married
You're married with kids
You're a single parent
You're a stay-at-home parent
You have grown children
You're retired
You're a small business owner
You're single
I
F someone will suffer financially when you die, chances are you need life insurance. Life
insurance provides cash to your family after your death. This cash (known as the death
benefit) replaces your income and can help your family meet many important financial
needs like funeral costs, daily living expenses and college funding. What's more, there is
no federal income tax on life insurance benefits.
[40]
Most Americans need life insurance. To figure out if you need life insurance, you need to
think through the worst-case scenario. If you died tomorrow, how would your loved ones
fare financially?
The truth is, it's always a struggle when you lose someone you love. But your emotional
struggles don't need to be compounded by financial difficulties. Life insurance helps make
sure that the people you care about will be provided for financially, even if you're not there
to care for them yourself.
To help you understand how life insurance might apply to your particular situation, we've
outlined a number of different scenarios below. So whether you're young or old, married or
single, have children or don't, take a moment to consider how life insurance might fit into
your financial plans.
You're Married
When you're married, you share everything with your significant other,
including your financial obligations. Many people mistakenly believe that they don't need to
think about life insurance until they have children. Not true. What it one of you was to die
tomorrow? Even with the surviving spouse's income, would that person be able to pay off
debts like credit-card balances and car loans, let alone cover the monthly rent and utility
bills. If you're planning to have children, you'll want to buy life insurance right away and not
wait until the mom-to-be is pregnant. Some companies won't issue a policy to a woman
during her pregnancy. Since health complications sometimes arise, they'll want to wait
until after the baby is born to issue the policy. Buying insurance before a baby is on the
way helps avoid this potential problem.
You're Married With Kids
Most families depend on two incomes to make ends meet. If you died
suddenly, could your family maintain their standard of living on your spouse's income
alone? Probably not. Life insurance makes sure that your plans for the future don't die
when you do.
[41]
Just because you don't earn a salary doesn't mean you don't make a
financial contribution to your family. Childcare, transportation, cleaning, cooking and other
household activities are all important tasks, the replacement value of which is often
severely underestimated. Surveys have estimated the value of these services at over
$40,000 per year. Could your spouse afford to pay someone for these services? With life
insurance, your family can afford to make the choice that best preserves their quality of
life.
As the years go by, you may feel your need for life insurance has passed. But
just because the kids are through college and the mortgage is paid off doesn't necessarily
mean that Social Security and your savings will take care of whatever lies ahead. If you
died today, your spouse will still be faced with daily living expenses. What if your spouse
outlives you by 10, or even 30 years, which is certainly possible today. Would your
financial plan, without life insurance, enable your spouse to maintain the lifestyle you
worked so hard to achieve? And would you be able to pass on something to your children
or grandchildren?
[42]
You're Retired
Did you know that depending on the size of your estate, your heirs could be
hit with a large estate tax payment after you die (45% of your estate). The proceeds of a
life insurance policy are payable immediately, allowing heirs to take care of estate taxes,
funeral costs, and other debts without having to hastily liquidate other assets, often at a
fraction of their true value. And life insurance proceeds are generally income tax free and
can be arranged to avoid probate. Finally, if your insurance program is properly structured,
the proceeds from your life insurance policy won't add to your estate tax liability.
You're a Small Business Owner
Besides taking care of your family, life insurance can also protect your
business. What would happen to your business if you, one of your fellow owners, or
perhaps a key employee, died tomorrow? Life insurance can help in a number of ways.
For instance, a life insurance policy can be structured to fund a "buy-sell" agreement. This
would ensure that the remaining business owners have the funds to buy the company
interests of a deceased owner at a previously agreed upon price. That way, the owners
get the business and the family gets the money. To protect a business in case of the death
of a key employee, "key person insurance," payable to the company, provides the owners
with the financial flexibility needed to either hire a replacement or work out an alternative
arrangement.
You're Single
Most single people don't need life insurance because no one depends on them
financially. But there are exceptions. For instance, some single people provide financial
support for aging parents or siblings. Others may be carrying significant debt that they
wouldn't want to pass on to family members who survive them. Insurability is another
reason to consider life insurance when you're single. If youre young, healthy and have a
good family health history, your insurability is at its peak and youll be rewarded with the
best rates on life insurance. If you anticipate a need for life insurance down the road (e.g.,
youre the marrying type) and you can fit the premiums into your budget, it might make
sense to lock in coverage while you're young and single.
[43]
2. At the Workplace:
Obtaining life insurance through your employer is another option to consider. Your
first step should be to make sure you understand how much coverage your
employer provides at no cost to you. Many employers provide, at their own
expense, a "basic" life insurance benefit, often equal to one to two times your base
salary. While this is a nice benefit to have, insurance experts believe that most
people need somewhere in the range of 10 to 20 times their net income and
sometimes even more than that. Check to see if your employer offers you the
option to purchase additional coverage through its group plan. Many employers do.
To qualify for additional coverage, you may have to answer a few basic questions
about your health. Its important to keep in mind that if you have group coverage
and you leave your job, you generally are not able to take the coverage with you.
[44]
[45]
Types of life insurance:There are two major types of life insuranceterm and whole life. Whole life is
sometimes called permanent life insurance, and it encompasses several subcategories,
including traditional whole life, universal life, variable life and variable universal life. In
2003, about 6.4 million individual life insurance policies bought were term and about 7.1
million
were
whole
life.
Life insurance products for groups are different from life insurance sold to individuals.
The information below focuses on life insurance sold to individuals.
1. Term:
Term Insurance is the simplest form of life insurance. It pays only if death occurs during
the term of the policy, which is usually from one to 30 years. Most term policies have no
other
benefit
provisions.
There are two basic types of term life insurance policieslevel term and decreasing
term.
Level term means that the death benefit stays the same throughout the duration
of the policy.
Decreasing term means that the death benefit drops, usually in one-year
increments, over the course of the policys term.
In 2003, virtually all (97 percent) of the term life insurance bought was level term.
2. Whole Life/Permanent:
Whole life or permanent insurance pays a death benefit whenever you dieeven if you
live to 100! There are three major types of whole life or permanent life insurance
traditional whole life, universal life, and variable universal life, and there are variations
within
each
type.
In the case of traditional whole life, both the death benefit and the premium are
designed to stay the same (level) throughout the life of the policy. The cost per $1,000
of benefit increases as the insured person ages, and it obviously gets very high when
the insured lives to 80 and beyond. The insurance company could charge a premium
that increases each year, but that would make it very hard for most people to afford life
insurance at advanced ages. So the company keeps the premium level by charging a
premium that, in the early years, is higher than whats needed to pay claims, investing
that money, and then using it to supplement the level premium to help pay the cost of
life
insurance
for
older
people.
[46]
By law, when these overpayments reach a certain amount, they must be available to
the policyholder as a cash value if he or she decides not to continue with the original
plan. The cash value is an alternative, not an additional, benefit under the policy.
In the 1970s and 1980s, life insurance companies introduced two variations on the
traditional whole life productuniversal life insurance and variable universal life
insurance.
Types of term insurance policies:Term insurance comes in two basic varietieslevel term and decreasing term. These
days, almost everyone buys level term insurance. The terms level and decreasing
refer to the death benefit amount during the term of the policy. A level term policy pays
the same benefit amount if death occurs at any point during the term.
Yearly renewable term, once popular, is no longer a top seller. The most popular type is
now 20-year term. Most companies will not sell term insurance to an applicant for a term
that
ends
past
his
or
her
80th
birthday.
If a policy is renewable, that means it continues in force for an additional term or
terms, up to a specified age, even if the health of the insured (or other factors) would
cause him or her to be rejected if he or she applied for a new life insurance policy.
Generally, the premium for the policy is based on the insured persons age and health
at the policys start, and the premium remains the same (level) for the length of the
term. So, premiums for 5-year renewable term can be level for 5 years, then to a new
rate reflecting the new age of the insured, and so on every five years. Some longer term
policies will guarantee that the premium will not increase during the term; others dont
make that guarantee, enabling the insurance company to raise the rate during the
policys
term.
Some term policies are convertible. This means that the policys owner has the right to
change it into a permanent type of life insurance without additional evidence of
insurability.
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Return of Premium
In most types of term insurance, including homeowners and auto insurance, if you
havent had a claim under the policy by the time it expires, you get no refund of the
premium. Your premium bought the protection that you had but didnt need, and youve
received fair value. Some term life insurance consumers have been unhappy at this
outcome, so some insurers have created term life with a return of premium feature.
The premiums for the insurance with this feature are often significantly higher than for
policies without it, and they generally require that you keep the policy in force to its term
or else you forfeit the return of premium benefit. Some policies will return the base
premium but not the extra premium (for the return benefit), and others will return both.
Different types of permanent policies:
Variable life:
This policy combines death protection with a savings account that you can invest
in stocks, bonds and money market mutual funds. The value of your policy may
grow more quickly, but you also have more risk. If your investments do not
perform well, your cash value and death benefit may decrease. Some policies,
however, guarantee that your death benefit will not fall below a minimum level.
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Insurance Claims
Insurance claims are the requests of the insured policyholder to the insurer or insurance
issuing company for financial reimbursement whenever s/he suffers a loss related to the
insured property, life, auto or health. But the insurance claim should be done in
accordance with the specifications of the insurance policy or contract.
Insurance claims vary from person to person and from policy to policy. The maximum
amount of redemption in case of an insurance claim depends on the scheme under
which a person has enrolled and the regular premium amount s/he is paying. At the time
of repayment of the claim to the policyholder, the insurance company is only giving back
the premium amount, either in entirety or in part.
Insurance Claims: Genuine Claims versus Fraudulent Ones
Some insurance claims are fraudulent in an attempt to defraud the insurance company.
So it is necessary for the insurer to carefully process every insurance claim before
approving it in order to avoid insurance fraud.
Expert Input:
A simple insurance claim usually involves only you and your insurance company.
However, depending on your circumstances, you also may need to pull in vendors or
contractors for quotes or even an attorney to complete the claim cycle. With auto
accidents, Police officers will need to file an accident report. Life insurance claims may
involve creditors, trustees and real estate tax agents. Your doctor, clinic or hospital may
need to be involved for health insurance claims.
Obligations:
Through the claim process, you and the insurance company both have obligations
under the contract. This means you and the insurance company must operate under
"duties of loyalty" and "duties of care," according to Tamar Frankel, author of "Fiduciary
Law." As the policy holder, you have the responsibility to initiate the claim and respond
cooperatively to any reasonable requests for information from the insurance company,
says Corey Harris, attorney with the Merlin Law Group. The insurance company must
process your claim in a timely fashion and under the same procedures as all other
clients.
Complications:
Not all insurance claims proceed through the claims process smoothly. In some
cases like health or disability claims, the insurance company may accuse you of
malingering. As explained by the Wrong Diagnosis website, malingering is exaggeration
done for non-psychological reasons; a type of fraud usually intended to garner financial
gain. You may need testimony from witnesses or a physician to prove your claim is
accurate or that there is a medical reason for your complaints. Conflicting testimony or
reports also may hinder the claims cycle, as can lack of proficiency on the part of the
insurance agent. Medical status also may prevent moving forward with a claim. For
example, you may be unable to continue negotiation with your insurance company if
you need a serious medical procedure.
Future growth in life insurance:The performance of the market is forecast to decelerate, with an anticipated CAGR of
10.4% for the five-year period 2010 - 2015, which is expected to drive the market to a
value of $110,797.2 million by the end of 2015.
Introduction
Life Insurance in India industry profile provides top-line qualitative and quantitative
summary information including: market share, market size (value 2006-10, and forecast
to 2015). The profile also contains.
[51]
Features:Save time carrying out entry-level research by identifying the size, growth, major
segments, and leading players in the life insurance market in India
Use the Five Forces analysis to determine the competitive intensity and therefore
attractiveness
of
the
life
insurance
market
in
India
Leading company profiles reveal details of key life insurance market players global
operations
and
financial
performance
Add weight to presentations and pitches by understanding the future growth prospects
of the India life insurance market with five year forecasts
Macroeconomic indicators provide insight into general trends within the India economy.
[52]
Challenges in life insurance:From this context, life insurance undertakings are confronted with a number of
challenges:
Challenge#1:- Business growth and cost efficiency
Falling profits and deteriorating market capitalisation have spawned a situation, where
business growth and cost efficiency have become vital for the life insurance industry.
Business growth can be achieved by enhancing innovative products / services and
entering new or niche markets as well as new distribution channels. Cost efficiency can
be achieved by process optimisation and by a better use of IT as outlined below.
A continuously evolving regulatory environment and severe competition trigger the need
for transparency on products for clients as well as for intermediaries. At the same time,
disclosure requirements get more and more demanding. This ranges over several
reporting levels: MIS for local and group dimension, regulatory, clients and
intermediaries. Particularly group reporting becomes more and more complex
regardless of the size of the insurance undertaking.
Challenge#3: IT alignment
IT needs to align to the business issues triggered by the first two challenges and to the
business strategy. IT strategies must therefore be set up in a way that IT is not only
operationally efficient but also cost-effective. For this reason, CIOs are experiencing a
shift in their objectives from merely supporting the business by IT to increasing the
value added of IT and creating a competitive advantage. In particular, growing
complexity can significantly enlarge functional scope of an application and therefore
strengthens the need for flexible systems. Yet many existing systems were not
designed to withstand such an evolution. Rather often, data models and programme
modules are insufficient to match the new prerequisites.
[53]
PMS
Portfolio Management System is a unique way to build a customized portfolio of
Indian equities. Aditya Birla Money act as authorized distributors for various PMS
providers to meet the growing needs of investors and expand a portfolio beyond
equities and bonds.
Direct Equity
Aditya Birla Money offers a convenient, simple and efficient trading in Indian equities. It
provides a seamless platform to invest in the Indian secondary markets. Investors
Wealth Management advisor will provide them valuable advice based on ABMs inhouse research.
Structured Products
ABM brings a customized investment solutions, giving access to various asset classes.
Unlike most other structures, returns can be linked to a variety of asset types such as
equity indices, basket of stocks, and commodities.
Real Estate
It offers niche property investment services and bring in a combination of in-depth
market knowledge and real estate industry expertise to offer a range of specialized real
[54]
estate investment services. We provide expert advice and innovate real estate
solutions tailor made to the needs and objectives.
Gold
It provides investment in gold to make diversified and protective portfolio.
FINANCIAL SERVICES:
Aditya Birla Money provides various financial services like financial planning, research
process etc. The range of financial services are as:
Research
Their quality research provides clients with the information they need to make informed
investment decisions. The Aditya Birla Money research team is dedicated to keeping
you updated with access to the latest publications and a wide range of industry
happenings including: market depth, breaking commentary, long-term forecasts,
detailed daily updates and the latest financial news.
It includes Daily Market Update, Weekly update on mutual Funds and Event Based
SMS to keep you completely informed on the markets.
[55]
Wherever you are, our network works for you. The online portfolio ensures every detail
of your investments is at your fingertips. You can constantly monitor the composition of
your portfolio, so you always know if your long term objectives are being met.
Financial planning
Your portfolio undergoes regular reviews to ensure your money is constantly working in
your best interest, keeping your personal financial goals in sight. and towards your
personal financial goal.
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STAGES OF LIFE:
Investment planning
Insurance protection
Retirement planning
Wealth protection
Estate planning
[57]
Investment planning
Retirement planning
Estate planning
Retired
Medical expenses
Lifestyle expenses
Estate planning
OCCUPATION:
Income protection
Investment planning
Annuity planning
Investment planning
Entrepreneur
Investment planning
Income protection
Annuity planning
Investment planning
[58]
ADVISORY PROCESS:
Young family has goals related to child education/marriage, asset building, event
planning. It helps in achieving these goals.
It helps mature family in retirement planning and pension/superannuation.
It
helps
in
businesses
by
maintaining
their
cash
flows
(income/expenses,
assets/liabilities), makes investment in mutual funds, direct equity, real estate and also
insures risk through insurance.
PORTFOLIO CONSTRUCTION:
Portfolio Construction is all about investing in a range of funds that work together to
create an investment solution for investors. Building a portfolio involves understanding
the way various types of investments work, and combining them to address your
personal investment objectives and factors such as attitude to risk the investment and
the expected life of the investment.
When building an investment portfolio there are two very important considerations.
The first is asset allocation, which is concerned with how an investment is spread
across different asset types and regions.
The second is fund selection, which is concerned with the choice of fund
managers and funds to represent each of the chosen asset classes and
sectors.
impact
on
the
variability
of
portfolio's
return.
To help in choosing a suitable asset allocation we have created a Risk Profiler that
helps identify your attitude to risk and therefore better identify a combination of
investments
to
build
portfolio.
With such a vast number of investment funds to choose from, spanning the full range of
asset classes and world markets it is easy to become confused when choosing which
investments to make. It is even more difficult to choose the right combination of
investment to potentially meet your investment goals.
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[60]
Analyse asset allocation as per client profile like debt, equity, alternate.
Analyse each asset class exposure level as per client profile on the basis
of sector exposure, market exposure, risk and maturity allocation.
Review each product on various factors like risk, returns, taxation, exit
load and other factors.
[61]
The customer can easily know the investment strategy and analyze return and
risk with the help of wealth management professional.
The Private wealth management professional provides the good service of tax
planning like how customers can minimize save and the tax more money.
Customer can also manage their estate with the help of wealth management
professional. Estate management provides protection of customers overall
estate.
The big limitation of Wealth management is that they do not show their actual
position to the customers. So, there may be chances of fraud and forgery with
customers.
As we know that wealth management is now only related with the rich people and
is not having any plans and solutions for poor, middle and lower class of people
of society.
Mostly customers do not know the actual position of market because everything
is done by some Wealth management professional. So, that results in inflation
and also there may be chances that the customers are in risk but they are
showing the false return etc.
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In this way the company makes its strategy on the basis of depth research of the
performance of assets in the current scenario and constructs portfolio
accordingly.
It also provides financial planning to their customers.
[63]
RESEARCH
Research process is done by Aditya Birla to make its strategies, provide financial
advisory, and to make risk diversify portfolio. To perform research they work on fund
evaluation property. They have advisory team expertise in the field of research and also
possess advanced technologies. They have direct excess to fund houses. The brief
description of these as:
TECHNOLOGY:
Lipper analytics- Portfolio allocation to deliver optimal results with low risks
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Monthly (investors)
[65]
RECOMMENDATION:
In the current scenario the market is full of risks. There is a lots of ups and downs in the
market in a second. So, to minimizes the loss the company that provides wealth
management services to investors have to analyse the market very well and take
decisions within a second as the market becomes changes in a second. The company
should provide weekly updates of the product to the investor as they can take decision
properly. There is a need of online access of such facilities. However some companies
provide such facilities but there is also some limitation like not timely updated
information, server down, etc. which should be removed.
[66]
ANNEXURE
The systematic and objective identification, collection, analysis, dissemination and use
of information for the purposes of assisting management in decision making relating to
the identification and solution of problems ( and opportunities) in marketing.
It is a way to systematically solve the research problem. In it we study various steps that
are generally adopted by a researcher in studying his research problem along with the
logic behind them. It is important for the researcher not only to understand the research
methods and techniques but also the methodology.
DATA COLLECTION:
In dealing with any real life problem it is often found that data at hand are inadequate
and hence, it becomes necessary to collect data that are appropriate. There are several
ways of collecting the appropriate data which differ considerably in context of money
costs, time and other resources at the disposal of the researcher.
I have taken both primary and secondary data in the project. Primary data through
questionnaire and secondary data through journals, office documents, and other
sources of published information like website of company. I have chosen survey
method because of some advantages.
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QUESTIONNAIRE
Ques.1. Which of the following best describes your current stage of life?
a) Single
b) Single with dependent parents
c) Young family
d) Mature family
e) Nearing retirement
f) Retired
[68]
Ques.5 When do you plan to start withdrawing money from your investments for major
needs? (other than provisions made as mentioned in question 4)
a) Within 1 year
b) Between 1 and 3 years
c) Between 3 and 5 years
d) Between 5 and 10 years
[69]
[70]
BIBLIOGRAPHY
Refrence:-principle of risk management and insurance 7 t h edition by
George E. Rejda
www.BirlaSunlife.com
www.irda.gov.in
Birlasunlife New Advisor Book
www.adityabirlagroup.com
www.adityabirlamoney.com
www.investopedia.com
www.wikipedia.com
www.google.com
Investime magazine of Aditya Birla
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