A

Project Study report

On
Training Undertaken at

HDFC Standard Life Insurance Company Limited

On

A Comparative Analysis of the Services of HDFC Standard

Life Insurance Company with its Major Competitors
Submitted in partial fulfillment for the
Award of degree of
Master Of Business Administration
Submitted To:Shailesh Jain
Submitted By:
NILIMA NILAYA NAYAK
ROLL NO: 12MBAS02043

Submited To:

DDCE, SAMBALPUR UNIVERSITY

DECLARATION
I hereby declare that the project report entitled HDFC Standard Life Insurance Company
Limited titled has been completed successfully and this project report submitted towards the partial
fulfillment of the requirement for the award of the degree of MASTER OF BUSINESS
ADMINISTRATION with specialization in finance. This project report has not been submitted
earlier either to this university or any other institution for fulfillment of the course.

Nilima Nilaya Nayak

SHANKAR CINEMA ROAD, ANGUL, DIST - ANGUL ANGUL ORISSA 759122

CERTIFICATE
This is to certify that this Project Report on HDFC Standard Life Insurance Company Limited
titled submitted in partial fulfillment of the requirement for the award of Master of Business
Administration under DDCE, Sambalpur University is a bona fide record, done by Nilima Nilaya
Nayak bearing Roll No. 12MBAS21364.

Shailesh Jain
(Branch Manager)

ACKNOWLEDGEMENT
I express my sincere thanks to my project guide MR. Shailesh Jain, SENIOR PUBLIC
RELATION OPERATION MANAGER (HDFC LIFE) for guiding me right from the inception
till the successful completion of the project.
I sincerely acknowledgement him for extending his valuable guidance, support for literature,
critical reviews of project and the report and above all the moral support he had provided to
me with all stages of this project.
I would also like to thank the supporting staff of VEER SURENDRA SAI INSTITUTE,
ANGUL for their help and cooperation throughout my project.

Nilima Nilaya Nayak

CERTIFICATE OF APPROVAL
This is to Certify that the Project Report Entitled:
HDFC Standard Life Insurance Company Limited titled

Submitted by Nilima Nilaya Nayak (Roll No. 12MBAS02043), Sambalpur University, Burla
towards partial fulfillment of the requirements for the award of the degree of Master of Business
Administration (MBA) is a bona fide record of the work carried out by him under the able guidance
of Binayak Behera, Faculty, Veer Surendra Sai Institute, Angul.

(Approval of the Center Director)

EXECUTIVE SUMMARY
HDFC Standard Life insurance is the oldest life insurance company in the world. It is the largest
insurer in the UK and is the 28th largest company in the world. In India, the company is marketing life
insurance products and unit linked investment plans. From my research at HDFC LIFE, I found that
the company has a lot of competition from other private insurers like ICICI, Aviva, Birla Sun Life and
Tata AIG. It also faces competition from LIC. To compete effectively HDFC SLIC could launch
cheaper and more reasonable products with small premiums and short policy terms (the number of
years premium is to be paid). The ideal premium would be between Rs. 5000 Rs. 25000 and an
ideal policy term would be 10 20 years.
HDFC must advertise regularly and create brand value for its products and services. Most of its
competitors like Aviva, ICICI, Max, Reliance and LIC use television advertisements to promote their
products. The Indian consumer has a false perception about insurance they feel that it would not
benefit them if they do not live through the policy term. Nowadays however, most policies are unit
linked plans where a customer is benefited even if their death does not occur during the policy term.
This message should be conveyed to potential customers so that they readily invest in insurance.
Family responsibilities and high returns are the two main reasons people invest in insurance.
Optimum returns of 16 20 % must be provided to consumers to keep them interested in
purchasing insurance.
On the whole HDFC standard life insurance is a good place to work at. Every new recruit is provided
with extensive training on unit linked funds, financial instruments and the products of HDFC. This
training enables an advisor/sales manager to market the policies better. HDFC was ranked 13 in the
Best Places to Work survey. The company should try to create awareness about itself in India. In
the global market it is already very popular. With an improvement in the sales techniques used, a
fair bit of advertising and modifications to the existing product portfolio, HDFC would be all set to
capture the insurance market in India as it has around the globe.

Table of Contents
1. Introduction to the Industry
2. Introduction to the Organization
3. Research Methodology
3.1 Title of the Study
3.2 Duration of the Project
3.3 Objective of Study
3.4 Type of Research
3.5 Sample Size and method of selecting sample
3.6 Scope of Study
3.7 Limitation of Study
4. Facts and Findings
5. Analysis and Interpretation
6. SWOT
7. Conclusion
8. Recommendation and Suggestions
9. Bibliography

THE INSURANCE INDUSTRY IN INDIA

AN OVERVIEW
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.[1]. 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
With the largest number of life insurance policies in force in the world, Insurance happens
to be a mega opportunity in India. Its a business growing at the rate of 15-20 per cent
annually and presently is of the order of Rs 1560.41 billion (for the financial year 2006
2007). Together with banking services, it adds about 7% to the countrys Gross Domestic
Product (GDP). The gross premium collection is nearly 2% of GDP and funds available with
LIC for investments are 8% of the GDP.
A well-developed and evolved insurance sector is needed for economic development as it
provides long term funds for infrastructure development and s trengthens the risk taking ability
of individuals. It is estimated that over the next ten years India would require investments of the
order of one trillion US dollars. The Insurance sector, to some extent, can enable investments in
infrastructure

development

to

sustain

the

economic

growth

of

the

country.

(Source:

www.indiacore.com)
INSURANCE INDUSTRY AND ITS CHRACTERISTICS
Nature of the Industry
Goods and services. The insurance industry provides protection against financial losses resulting
from a variety of perils. By purchasing insurance policies, individuals and businesses can receive
reimbursement for losses due to car accidents, theft of property, and fire and storm damage;
medical expenses; and loss of income due to disability or death.

Industry organization. The insurance industry consists mainly of insurance carriers (or insurers)
and insurance agencies and brokerages. In general, insurance carriers are large companies that
provide insurance and assume the risks covered by the policy. Insurance agencies and brokerages
sell insurance policies for the carriers. While some of these establishments are directly affiliated with
a particular insurer and sell only that carriers policies, many are independent and are thus free to
market the policies of a variety of insurance carriers. In addition to supporting these two primary
components, the insurance industry includes establishments that provide other insurance-related
services, such as claims adjustment or third-party administration of insurance and pension funds.
These other insurance industry establishments also include a number of independent organizations
that provide a wide array of insurance-related services to carriers and their clients. One such service
is the processing of claims forms for medical practitioners. Other services include loss prevention
and risk management. Also, insurance companies sometimes hire independent claims adjusters to
investigate accidents and claims for property damage and to assign a dollar estimate to the claim.
Insurance carriers assume the risk associated with annuities and insurance policies and assign
premiums to be paid for the policies. In the policy, the carrier states the length and conditions of the
agreement, exactly which losses it will provide compensation for, and how much will be awarded.
The premium charged for the policy is based primarily on the amount to be awarded in case of loss,
as well as the likelihood that the insurance carrier will actually have to pay. In order to be able to
compensate policyholders for their losses, insurance companies invest the money they receive in
premiums, building up a portfolio of financial assets and income-producing real estate which can
then be used to pay off any future claims that may be brought. There are two basic types of
insurance carriers: primary and reinsurance. Primary carriers are responsible for the initial
underwriting of insurance policies and annuities, while reinsurance carriers assume all or part of the
risk associated with the existing insurance policies originally underwritten by other insurance
carriers.
Primary insurance carriers offer a variety of insurance policies. Life insurance provides financial
protection to beneficiariesusually spouses and dependent childrenupon the death of the
insured. Disability insurance supplies a preset income to an insured person who is unable to work
due to injury or illness, and health insurance pays the expenses resulting from accidents and illness.
An annuity (a contract or a group of contracts that furnishes a periodic income at regular intervals
for a specified period) provides a steady income during retirement for the remainder of ones life.
Property-casualty insurance protects against loss or damage to property resulting from hazards
such as fire, theft, and natural disasters. Liability insurance shields policyholders from financial
responsibility for injuries to others or for damage to other peoples property. Most policies, such as

automobile and homeowners insurance, combine both property-casualty and liability coverage.
Companies that underwrite this kind of insurance are called property-casualty carriers.
Some insurance policies cover groups of people, ranging from a few to thousands of individuals.
These policies usually are issued to employers for the benefit of their employees or to unions,
professional associations, or other membership organizations for the benefit of their members.
Among the most common policies of this nature are group life and health plans. Insurance carriers
also underwrite a variety of specialized types of insurance, such as real-estate title insurance,
employee surety and fidelity bonding, and medical malpractice insurance.
Other organizations in the industry are formed by groups of insurance companies, to perform
functions that would result in a duplication of effort if each company carried them out individually.
For example, service organizations are supported by insurance companies to provide loss statistics,
which the companies use to set their rates.
Recent developments. Congressional legislation now allows insurance carriers and other financial
institutions, such as banks and securities firms, to sell one anothers products. More insurance
carriers now sell financial products such as securities, mutual funds, and various retirement plans.
This approach is most common in life insurance companies that already sold annuities, but property
and casualty companies also are increasingly selling a wider range of financial products. In order to
expand into one anothers markets, insurance carriers, banks, and securities firms have engaged in
numerous mergers, allowing the merging companies access to each other's client base and
geographical markets.
Insurance carriers have discovered that the Internet can be a powerful tool for reaching potential
and existing customers. Most carriers use the Internet simply to post company information, such as
sales brochures and product information, financial statements, and a list of local agents. However,
an increasing number of carriers are starting to expand their Web sites to enable customers to
access online account and billing information, and some carriers even allow claims to be submitted
online. Many carriers also provide insurance quotes online based on the information submitted by
customers on their Internet sites. In fact, some carriers will allow customers to purchase policies
through the Internet without ever speaking to a live agent.
In addition to individual carrier-sponsored Internet sites, several lead-generating sites have
emerged. These sites allow potential customers to input information about their insurance policy
needs. For a fee, the sites forward customer information to a number of insurance companies,
which review the information and, if they decide to take on the policy, contact the customer with an
offer. This practice gives consumers the freedom to accept the best rate.

10

Working Conditions
Hours. Many workers in the insurance industryespecially those in administrative support positions
work a 5-day, 40-hour week. Those in executive and managerial occupations often put in more
than 40 hours. There are several occupations in the insurance industry where workers may work
irregular hours outside of office settings. Those working in sales jobs need to be available for their
clients at all times. This accommodation may result in these individuals working 50 to 60 hours per
week. Also, call centers operate 24 hours a day, 7 days a week, so some of their employees must
work evening and weekend shifts. The irregular business hours in the insurance industry provide
some workers with the opportunity for part-time work. Part-time employees make up 8 percent of
the workforce.
Work environment. Insurance employees working in sales jobs often visit prospective and existing
customers homes and places of business to market new products and provide services. Others
working in the industry may need to frequently leave the office to inspect damaged property, and at
times can be away from home for days, traveling to the scene of a disastersuch as a tornado,
flood, or hurricaneto work with affected policyholders and government officials.
A small, but increasing, number of insurance employees spend most of their time on the telephone
working in call centers, answering questions and providing information to prospective clients or
current policyholders. These jobs may include selling insurance, taking claims information, or
answering medical questions.
As would be expected in an industry dominated by office and sales employees, the incidence of
occupational injuries and illnesses among insurance workers is low. In 2006, only 1.3 cases per 100
full-time workers were reported among insurance carriers, while just 0.7 cases per 100 full-time
workers were reported among agents and brokers. These figures compare with an average of 4.4
for all private industry.

Employment
The insurance industry had about 2.3 million wage and salary jobs in 2006. Insurance carriers
accounted for 62 percent of jobs, while insurance agencies, brokerages, and providers of other
insurance-related services accounted for 38 percent of jobs.

The majority of establishments in the insurance industry were small; however, a few large
establishments accounted for many of the jobs in this industry. Insurance carriers tend to be large
establishments, often employing 250 or more workers, whereas agencies and brokerages tend to be
much smaller, frequently employing fewer than 20 workers (chart 1).

11

Many insurance carriers home and regional offices are situated near large urban centers. Insurance
workers who deal directly with the public are located throughout the country. Almost all of those
working in sales work out of local company offices or independent agencies. Many others in the
industry work for independent firms in small cities and towns throughout the country.

Occupations in the Industry

About 44 percent of insurance workers are in office and administrative support jobs such as those
found in every industry (table 1). Many office and administrative support positions in the insurance
industry, however, require skills and knowledge unique to the industry. About 29 percent of
insurance workers are in management or business and financial operations occupations. About 16
percent of wage and salary employees in the industry are sales workers, selling policies to
individuals and businesses. Several others are employed in computer and mathematical science
occupations.
Office and administrative support occupations. Office and administrative support occupations in
this industry include secretaries, typists, word processors, bookkeepers, and other clerical workers.
Secretaries and administrative assistants perform routine clerical and administrative functions such
as drafting correspondence, scheduling appointments, organizing and maintaining paper and
electronic files, or providing information to callers. Bookkeeping, accounting, and auditing clerks
handle all financial transactions and recordkeeping for an insurance company. They compute,
classify, update, and record numerical data to keep financial records complete and accurate.
Insurance claims and policy processing clerks process new policies, modifications to existing
policies, and claims forms. They review applications for completeness, compile data on policy
changes, and verify the accuracy of insurance company records. Customer service representatives
have duties similar to insurance claims and policy processing clerks, except they work directly with
customers by processing insurance policy applications, changes, and cancellations over the phone.
They may also process claims and sell new policies to existing clients. These workers recently are
taking on increased responsibilities in insurance offices, such as handling most of the continuing
contact with clients. A growing number of customer service representatives work in call centers that
are open 24 hours a day, 7 days a week, where they answer clients questions, update policy
information, and provide potential clients with information regarding the types of policies the
company issues.
Management, business, and financial operations occupations. Top executives direct the
operations of an independent insurance agency, brokerage, or a large insurance carrier. Marketing
managers direct carriers development of new types of policies that might appeal to the public and
strategies for selling them to customers. Sales managers direct the activities of the sales workers in

12

local sales offices of insurance carriers and independent agencies. They sell insurance products,
work with clients, and supervise staff. Other managers who work in their companies' home offices
are in charge of functions such as actuarial calculations, policy issuance, accounting, and
investments.
Claims adjusters, appraisers, examiners, and investigators decide whether claims are covered by
the customers policy, estimate and confirm payment, and, when necessary, investigate the
circumstances surrounding a claim. Claims adjusters work for property and liability insurance
carriers or for independent adjusting firms. They inspect property damage, estimate how much it will
cost to repair, and determine the extent of the insurance companys liability; in some cases, they
may help the claimant receive assistance quickly in order to prevent further damage and begin
repairs. Adjusters plan and schedule the work required to process claims, which may include
interviewing the claimant and witnesses and consulting police and hospital records. In some
property-casualty companies, claims adjusters are called claims examiners, but in other companies,
a claims examiners primary job is to review claims to ensure that proper guidelines have been
followed. Only occasionallyespecially when disasters suddenly increase the volume of claimsdo
these examiners aid adjusters with complicated claims.
In the offices of life and health insurance carriers, claims examiners are the counterparts of the
claims adjuster who works in a property and casualty insurance firm. Examiners in the health
insurance carriers review health-related claims to see whether the costs are reasonable based on
the diagnosis. Examiners check claim applications for completeness and accuracy, interview
medical specialists, and consult policy files to verify information on a claim. Claims examiners in the
life insurance carriers review causes of death and also may review new applications for life
insurance to make sure that the applicants have no serious illnesses that would prevent them from
qualifying for insurance.
Insurance investigators handle claims in which companies suspect fraudulent or criminal activity,
such as suspicious fires, questionable workers disability claims, difficult-to-explain accidents, and
dubious medical treatment. Investigators usually perform database searches on suspects to
determine whether they have a history of attempted or successful insurance fraud. Then, the
investigators may visit claimants and witnesses to obtain a recorded statement, take photographs,
inspect facilities, and conduct surveillance on suspects. Investigators often consult with legal
counsel and are sometimes called to testify as expert witnesses in court cases.
Auto damage appraisers usually are hired by insurance companies and independent adjusting firms
to inspect the damage to a motor vehicle after an accident and to provide unbiased estimates of
repair cost. Claims adjusters and auto damage appraisers can work for insurance companies, or

13

they can be independent or public adjusters. Insurance companies hire independent adjusters to
represent their interests while assisting the insured, whereas public adjusters are hired to represent
the insureds interests against insurance carriers.
Management analysts, often called loss control representatives in the insurance industry, assess
various risks faced by insurance companies. These workers inspect the business operations of
insurance applicants, analyze historical data regarding workplace injuries and automobile accidents,
and assess the potential for natural hazards, dangerous business practices, and unsafe workplace
conditions that may result in injuries or catastrophic physical and financial loss. They might then
recommend, for example, that a factory add safety equipment, that a house be reinforced to
withstand environmental catastrophes, or that incentives be implemented to encourage automobile
owners to install air bags in their cars or take more effective measures to prevent theft. Because the
changes they recommend can greatly reduce the probability of loss, loss control representatives are
increasingly important to both insurance companies and the insured.
Underwriting is another important management and business and financial occupation in insurance.
Underwriters evaluate insurance applications to determine the risk involved in issuing a policy. They
decide whether to accept or reject an application, and they determine the appropriate premium for
each policy.
Sales and related occupations. Insurance sales agents, also referred to as producers, may work
as exclusive agents, or captive agents, selling for one company, or as independent agents selling
for several companies. Through regular contact with clients, agents are able to update coverage,
assist with claims, ensure customer satisfaction, and obtain referrals. Insurance sales agents may
sell many types of insurance, including life, annuities, property-casualty, health, and disability
insurance. Many insurance sales agents are involved in cross-selling or total account
development, which means that, besides offering insurance, they have become licensed to sell
mutual funds, annuities, and other securities. These agents usually find their own customers and
ensure that the policies sold meet the specific needs of their policyholders.
Professional and related occupations. The insurance industry employs relatively few people in
professional and related occupations, but they are essential to company operations. For example,
insurance companies lawyers defend clients who are sued, especially when large claims may be
involved. These lawyers also review regulations and policy contracts. Nurses and other medical
professionals advise clients on wellness issues and on medical procedures covered by the
companys managed-care plan. Computer systems analysts, computer programmers, and computer
support specialists are needed to analyze, design, develop, and program the systems that support
the day-to-day operations of the insurance company.

14

Actuaries represent a relatively small proportion of employment in the insurance industry, but they
are vital to the industrys profitability. Actuaries study the probability of an insured loss and
determine premium rates. They must set the rates so that there is a high probability that premiums
paid by customers will cover claims, but not so high that their company loses business to
competitors
Table 1. Employment of wage and salary workers in insurance by occupation, 2006
and projected change, 2006-2016.
(Employment in thousands)
Employment,

Percent

2006
Occupation

change,
Number Percent
2006-16

All occupations

Management, business, and financial occupations

General and operations managers
Marketing and sales managers
Computer and information systems managers
Financial managers
Claims adjusters, examiners, and investigators
Insurance appraisers, auto damage
Human resources, training, and labor relations specialists
Management analysts
Accountants and auditors
Financial analysts
Insurance underwriters

Professional and related occupations

Computer programmers
Computer software engineers

15

2,316

100.0

7.4

661

28.6

8.3

41

1.8

-1.9

20

0.9

7.2

14

0.6

5.9

24

1.0

6.6

218

9.4

10.8

12

0.5

12.0

28

1.2

10.9

29

1.2

5.4

40

1.7

7.8

16

0.7

16.9

91

3.9

5.6

258

11.2

8.6

21

0.9

-15.1

28

1.2

24.7

Table 1. Employment of wage and salary workers in insurance by occupation, 2006

and projected change, 2006-2016.
(Employment in thousands)
Employment,

Percent

2006

Occupation

Number Percent change,

Computer support specialists

Computer systems analysts
Actuaries
Market research analysts
Lawyers
Title examiners, abstractors, and searchers
Registered nurses

Sales and related occupations

First-line supervisors/managers of non-retail sales workers
Insurance sales agents

Office and administrative support occupations

19

0.8

6.8

33

1.4

15.5

11

0.5

5.4

12

0.5

6.5

12

0.5

5.6

23

1.0

-5.5

25

1.1

6.2

367

15.8

14.4

18

0.8

3.8

313

13.5

15.7

1,009

43.6

4.0

62

2.7

-6.0

18

0.8

-2.5

47

2.0

8.9

266

11.5

19.2

15

0.7

-45.3

24

1.0

10.0

57

2.4

8.2

62

2.7

-1.5

First-line supervisors/managers of office and administrative

support workers
Billing and posting clerks and machine operators
Bookkeeping, accounting, and auditing clerks
Customer service representatives
File clerks
Receptionists and information clerks
Executive secretaries and administrative assistants
Secretaries, except legal, medical, and executive

16

Table 1. Employment of wage and salary workers in insurance by occupation, 2006

and projected change, 2006-2016.
(Employment in thousands)
Employment,

Percent

2006

Occupation

Number Percent change,

Data entry keyers
Insurance claims and policy processing clerks
Mail clerks and mail machine operators, except postal service
Office clerks, general

22

0.9

-13.5

222

9.6

-2.6

14

0.6

-21.0

106

4.6

7.8

Note: Columns may not add to due to omission of occupations with small employment

Training and
Advancement
A few jobs in the insurance industry, especially in office and administrative support occupations,
require no more than a high school diploma. However, employers prefer to hire workers with a
college education for most jobs, including sales, managerial, and professional jobs. When
specialized training is required, it usually is obtained on the job or through independent study during
work or after-work hours. Many insurance companies expect their employees to take continuing
education courses to improve their people skills and their knowledge of the industry. Opportunities
for advancement are relatively good in the insurance industry.
Office and administrative support occupations. Graduation from high school or a 2-year
postsecondary business program is adequate preparation for most beginning office and
administrative support jobs. Courses in word processing and business math are assets, and the
ability to operate computers is essential. On-the-job training usually is provided for clerical jobs such
as customer service representatives. Because representatives in call centers must be
knowledgeable about insurance products in order to provide advice to clients, more States are
requiring customer service representatives to become licensed. Several years of experience and
training can help beginners advance to higher paying positions. Office and administrative support
workers may also advance to higher paying claims adjusting positions and entry-level underwriting
jobs.

17

Management, business, and financial operations occupations. Management, business, and

financial jobs require the same college training as similar jobs in other industries. Managerial
positions usually are filled by promoting college-educated employees from within the company.
However, some companies prefer to hire liberal arts graduates at a lower cost, and many insurers
send them to company schools or enroll them in outside institutes for professional training. A
masters degree, particularly in business administration or a related field, is an asset for
advancement into higher levels of management.
For beginning underwriting jobs, many insurance companies prefer college graduates who have a
degree in business administration or a related field. As an underwriters
career develops, it becomes beneficial to earn one of the voluntary professional certifications in
underwriting. For example, the National Association of Health Underwriters offers two certification
programs: the Registered Health Underwriter (RHU) designation and the Registered Employee
Benefits Consultant (REBC) designation.
The American Institute for Chartered Property-Casualty Underwriters (AICPU) offers the CPCU
program, which includes courses covering a broad range of insurance, risk management, and
general business topics involving both personal and commercial loss exposures. Earning the CPCU
designation requires passing 8 exams, meeting a requirement of at least three years of insurance
experience, and abiding by the AICPUs and CPCU Societys code of professional ethics. In
conjunction with the Insurance Institute of America, the AICPCU offers 22 insurance-related
educational programs, including claims, underwriting, risk management, and reinsurance.
In almost every State, those working as a claims examiner or adjuster must obtain a license.
Licensing requirements for these workers vary by State and can include prelicensing education or
passing a licensing exam. In some cases, professional designations may be substituted for the
exam requirement. Separate or additional requirements may apply to public adjusters. For example,
some States may require public adjusters to file a surety bond. Often, claims adjusters working for
companies can work under the company license and not need to become licensed themselves.
Most companies prefer to hire college graduates and those with previous experience or who have
obtained licensure for claims adjuster and examiner positions. No specific college major is required,
although most workers in these positions have a business, accounting, engineering, legal, or
medical background. In addition, many adjusters and examiners choose to pursue certain
certifications and designations to distinguish themselves. Many State licenses and professional
designations require continuing education for renewal. Continuing education is important because
adjusters and examiners must be knowledgeable about changes in the laws, recent court decisions,
and new medical procedures.

18

Auto damage appraisers typically begin as auto body repairers and then are hired by insurance
companies or independent adjusting firms. Most companies prefer auto damage appraisers to have
formal training, and many vocational colleges offer 2-year programs on how to estimate and repair
damaged vehicles. Some States require them to be licensed, and certification may be required or
preferred. Computer skills also are an important qualification for many auto damage appraiser
positions. As with adjusters and examiners, continuing education is important for appraisers,
because many new car models and repair techniques are introduced each year.
Licensing requirements to become an insurance investigator may vary among States. Most
insurance companies prefer to hire former law enforcement detectives or private investigators as
insurance investigators. Many experienced claims adjusters or examiners also can become
investigators. Most employers look for individuals with ingenuity and who are persistent and
assertive. Investigators must not be afraid of confrontation, should communicate well, and should be
able to think on their feet. Good interviewing and interrogation skills also are important and usually
are developed in earlier careers in law enforcement.
Sales and related occupations. Although some employers hire high school graduates with
potential or proven sales ability for entry-level sales positions, most prefer to hire college graduates.
All insurance sales agents must obtain licenses in the States in which they plan to sell insurance. In
most States, licenses are issued only to applicants who complete specified courses and pass
written examinations covering insurance fundamentals and State insurance laws. New agents
receive training from their employer, either at work or at the insurance companys home office.
Sometimes, entry-level employees attend company-sponsored classes to prepare for examinations.
The National Alliance for Insurance Education and Research offers a wide variety of courses in
health, life, and property and casualty insurance for independent insurance agents. Others study on
their own and, as on-the-job training, accompany experienced agents when they meet with
prospective clients. After obtaining a license, agents must earn continuing education credits
throughout their careers in order to remain licensed insurance sales agents.
Insurance sales agents wishing to sell securities and other financial products must meet State
licensing requirements in these areas. Specifically, they must pass an additional examination
either the Series 6 or Series 7 licensing exam, both of which are administered by the Financial
Industry Regulatory Authority (FINRA). The Series 6 exam is for individuals who wish to sell only
mutual funds and variable annuities; the Series 7 exam is the main FINRA series license and
qualifies agents as general securities representatives. To demonstrate further competency in
financial planning, many agents also find it worthwhile to obtain a certified financial planner (CFP) or
chartered financial consultant (ChFC) designation.

19

Sales workers may advance by handling greater numbers of accounts and more complex
commercial insurance policies. They may also choose to start an independent insurance agency.
Many also obtain related designations such as the CPCU underwriting designation, offered by the
AICPCU.
Professional and related occupations. For actuarial jobs, companies prefer candidates to have
degrees in actuarial science, mathematics, or statistics. However, candidates with degrees in
business, finance, or economics are becoming more common. Actuaries must pass a series of
national examinations to become fully qualified. Completion of all the exams takes from 5 to 10
years. Some of the exams may be taken while an individual is in college, but most require extensive
home study. Many companies grant study time to their actuarial students to prepare for the exams.

Earnings
Industry earnings. Weekly earnings of nonsupervisory workers in the insurance industry averaged
$798 in May 2006, considerably higher than the average of $568 for all private industry. Earnings of
the largest occupations in insurance in May 2006, appear in table 2
Table 2. Median hourly earnings of the largest occupations in insurance, May 2006
Occupation

Insurance

General and operations managers

Insurance underwriters

All
industries

$53.02

$40.97

25.29

25.17

24.36

20.92

23.42

24.36

18.70

17.90

15.55

14.69

14.97

14.96

14.79

13.62

12.65

13.20

11.38

11.40

First-line supervisors/managers of office and administrative

support workers
Claims adjusters, examiners, and investigators
Executive secretaries and administrative assistants
Bookkeeping, accounting, and auditing clerks
Insurance claims and policy processing clerks
Customer service representatives
Secretaries, except legal, medical, and executive
clerks, general

20

The method by which insurance sales agents are paid varies greatly. Most independent sales
agents own their own businesses and are paid a commission only. Sales agents who Office are
employees of an agency may be paid a salary only, a salary plus commission, or a salary plus a
bonus. An agents earnings usually increase rapidly with experience. Many agencies also pay an
agents expenses for automobiles and transportation, travel to conventions, and continuing
education.
Benefits and union membership. Insurance carriers offer attractive benefits packages, as is
frequently the case with large companies. Yearly bonuses, retirement investment plans, insurance,
and paid vacation often are standard. Insurance agencies, which generally are smaller, offer less
extensive benefits.

21

HISTORICAL PERSPECTIVE
The history of life insurance in India dates back to 1818 when it was conceived as a means to
provide for English Widows. Interestingly in those days a higher premium was charged for Indian
lives than the non - Indian lives, as Indian lives were considered more risky to cover. The Bombay
Mutual Life Insurance Society started its business in 1870. It was the first company to charge the
same premium for both Indian and non-Indian lives.
The Oriental Assurance Company was established in 1880. The General insurance business in
India, on the other hand, can trace its roots to Triton Insurance Company Limited, the first general
insurance company established in the year 1850 in Calcutta by the British. Till the end of the
nineteenth century insurance business was almost entirely in the hands of overseas companies.
Insurance regulation formally began in India with the passing of the Life Insurance Companies Act
of 1912 and the Provident Fund Act of 1912. Several frauds during the 1920's and 1930's sullied
insurance business in India. By 1938 there were 176 insurance companies.
The first comprehensive legislation was introduced with the Insurance Act of 1938 that provided
strict State Control over the insurance business. The insurance business grew at a faster pace after
independence. Indian companies strengthened their hold on this business but despite the growth
that was witnessed, insurance remained an urban phenomenon.
The Government of India in 1956, brought together over 240 private life insurers and provident
societies under one nationalized monopoly corporation and Life Insurance Corporation (LIC) was
born. Nationalization was justified on the grounds that it would create the much needed funds for
rapid industrialization. This was in conformity with the Government's chosen path of State led
planning and development.
The non-life insurance business continued to thrive with the private sector till 1972. Their operations
were restricted to organized trade and industry in large cities. The general insurance industry was
nationalized in 1972. With this, nearly 107 insurers were amalgamated and grouped into four
companies- National Insurance Company, New India Assurance Company, Oriental Insurance
Company and United India Insurance Company. These were subsidiaries of the General Insurance
Company (GIC).

22

KEY MILESTONES
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 by the Insurance Act with the objective of
protecting the interests of the insuring public.
1956: 245 Indian and foreign insurers along with provident societies were taken over by the central
government and nationalized. LIC was formed by an Act of Parliament- LIC Act 1956- with a capital
contribution of Rs. 5 crore from the Government of India.

INDUSTRY REFORMS
Reforms in the Insurance sector were initiated with the passage of the IRDA Bill in Parliament in
December 1999. The IRDA since its incorporation as a statutory body in April 2000 has fastidiously
stuck to its schedule of framing regulations and registering the private sector insurance companies.
Since being set up as an independent statutory body the IRDA has put in a framework of globally
compatible regulations.
The other decision taken simultaneously to provide the supporting systems to the insurance sector
and in particular the life insurance companies was the launch of the IRDA online service for issue
and renewal of licenses to agents. The approval of institutions for imparting training to agents has
also ensured that the insurance companies would have a trained workforce of insurance agents in
place to sell their products

23

Most of the present day Life Insurance Companies in India are joint ventures between Indian groups
and conglomerates and global insurance companies. The terms of the joint ventures include a
majority stake holding of Indian partner in the JV. The life insurance deals include a detail
information guide to the customer from the insurance agent or broker citing the various insurance
plans and policies available, the insurance premium estimates and estimate of the prices of the
insurance policy short listed, the guidelines and terms of the insurance company and many such
info.
The life insurance companies work in close association with the life insurance agents and brokers.
Special training and education is provided to each insurance agent or broker about the facts of life
insurance, how it works, industry info, insurance leads, types of insurance policies on offer, claims
settlements, life insurance laws in India, knowledge about the return of premium procedure of the
life insurance company and the tax savings the insurance policy would provide.
Besides the usual life insurance services covering individual insurance, group life insurance, family
insurance, health insurance and medi claims, Life insurance products in India are also designed for
special target groups like:

For seniors over 50, over 65 etc

For kids or children

For diabetics

For the elderly

For HIV patients

The ratings and reviews of the Life Insurance Companies in India are available online where you
can check the rankings and rating of the insurance company you wish to buy a policy from. You can
make comparison among the various life insurance policies on offer by the life insurance companies
of India.
A comprehensive list of the major insurance companies has been provided here with compete
profile of the company, their insurance products and policies, the terms and statistics of the
insurance providers etc.
Every company has different policy to offer. You just need to choose which is the best for you. The
amount for which you want to take the policy, the tenure of policy and the amount you want to pay in
each installments, all these factors you need to keep in mind and then choose the company which
fulfills all your needs and provides full transparency

24

PRESENT SCENARIO - LIFE INSURANCE INDUSTRY IN INDIA

The life insurance industry in India grew by an impressive 47.38%, with premium income at Rs.
1560.41 billion during the fiscal year 2006-2007. Though the total volume of LIC's business
increased in the last fiscal year (2006-2007) compared to the previous one, its market share came
down from 85.75% to 81.91%.
The 17 private insurers increased their market share from about 15% to about 19% in a year's time.
The figures for the first two months of the fiscal year 2007-08 also speak of the growing share of the
private insurers. The share of LIC for this period has further come down to 75 percent, while the
private players have grabbed over 24 percent.
With the opening up of the insurance industry in India many foreign players have entered the
market. The restriction on these companies is that they are not allowed to have more than a 26%
stake in a companys ownership.
Since the opening up of the insurance sector in 1999, foreign investments of Rs. 8.7 billion have
poured into the Indian market and 19 private life insurance companies have been granted licenses.
Innovative products, smart marketing, and aggressive distribution have enabled fledgling private
insurance companies to sign up Indian customers faster than anyone expected. Indians, who had
always seen life insurance as a tax saving device, are now suddenly turning to the private sector
and snapping up the new innovative products on offer. Some of these products include investment
plans with insurance and good returns (unit linked plans), multi purpose insurance plans, pension
plans, child plans and money back plans. (www.wikipedia.com)

25

Introduction to the Organization

HDFC STANDARD LIFE INSURANCE COMPANY LIMITED
Life insurance
Life insurance or life assurance is a contract between the policy owner and the insurer, where the
insurer agrees to pay a sum of money upon the occurrence of the insured individual's or individuals'
death or other event, such as terminal illness or critical illness. In return, the policy owner agrees to
pay a stipulated amount called a premium at regular intervals or in lump sums. There may be
designs in some countries where bills and death expenses plus catering for after funeral expenses
should be included in Policy Premium. In the United States, the predominant form simply specifies a
lump sum to be paid on the insured's demise.
As with most insurance policies, life insurance is a contract between the insurer and the policy
owner whereby a benefit is paid to the designated beneficiaries if an insured event occurs which is
covered by the policy.
The value for the policyholder is derived, not from an actual claim event, rather it is the value
derived from the 'peace of mind' experienced by the policyholder, due to the negating of adverse
financial consequences caused by the death of the Life Assured.
To be a life policy the insured event must be based upon the lives of the people named in the policy.
Insured events that may be covered include:

Serious illness

Life policies are legal contracts and the terms of the contract describe the limitations of the insured
events. Specific exclusions are often written into the contract to limit the liability of the insurer; for
example claims relating to suicide, fraud, war, riot and civil commotion.
Life-based contracts tend to fall into two major categories:

Protection policies - designed to provide a benefit in the event of specified event, typically a

lump sum payment. A common form of this design is term insurance.

Investment policies - where the main objective is to facilitate the growth of capital by regular
or single premiums. Common forms (in the US anyway) are whole life, universal life and
variable life policies.

Overview
Parties to contract
There is a difference between the insured and the policy owner (policy holder), although the owner
and the insured are often the same person. For example, if Joe buys a policy on his own life, he is
both the owner and the insured. But if Jane, his wife, buys a policy on Joe's life, she is the owner
and he is the insured. The policy owner is the guarantee and he or she will be the person who will
pay for the policy. The insured is a participant in the contract, but not necessarily a party to it.

26

The beneficiary receives policy proceeds upon the insured's death. The owner designates the
beneficiary, but the beneficiary is not a party to the policy. The owner can change the beneficiary
unless the policy has an irrevocable beneficiary designation. With an irrevocable beneficiary, that
beneficiary must agree to any beneficiary changes, policy assignments, or cash value borrowing.
In cases where the policy owner is not the insured (also referred to as the celui qui vit or CQV),
insurance companies have sought to limit policy purchases to those with an "insurable interest" in
the CQV. For life insurance policies, close family members and business partners will usually be
found to have an insurable interest. The "insurable interest" requirement usually demonstrates that
the purchaser will actually suffer some kind of loss if the CQV dies. Such a requirement prevents
people from benefiting from the purchase of purely speculative policies on people they expect to
die. With no insurable interest requirement, the risk that a purchaser would murder the CQV for
insurance proceeds would be great. In at least one case, an insurance company which sold a policy
to a purchaser with no insurable interest (who later murdered the CQV for the proceeds), was found
liable in court for contributing to the wrongful death of the victim (Liberty National Life v. Weldon,
267 Ala.171 (1957)).

Contract terms

Special provisions may apply, such as suicide clauses wherein the policy becomes null if the
insured commits suicide within a specified time (usually two years after the purchase date;
some states provide a statutory one-year suicide clause). Any misrepresentation by the
insured on the application is also grounds for nullification. Most US states specify that the
contestability period cannot be longer than two years; only if the insured dies within this
period will the insurer have a legal right to contest the claim on the basis of
misrepresentation and request additional information before deciding to pay or deny the
claim.

The face amount on the policy is the initial amount that the policy will pay at the death of the insured
or when the policy matures, although the actual death benefit can provide for greater or lesser than
the face amount. The policy matures when the insured dies or reaches a specified age (such as 100
years old).
Costs, insurability, and underwriting
The insurer (the life insurance company) calculates the policy prices with intent to fund claims to be
paid and administrative costs, and to make a profit. The cost of insurance is determined using
mortality tables calculated by actuaries. Actuaries are professionals who employ actuarial science,

27

which is based in mathematics (primarily probability and statistics). Mortality tables are statisticallybased tables showing expected annual mortality rates. It is possible to derive life expectancy
estimates from these mortality assumptions. Such estimates can be important in taxation regulation
The three main variables in a mortality table have been age, gender, and use of tobacco. More
recently in the US, preferred class specific tables were introduced. The mortality tables provide a
baseline for the cost of insurance. In practice, these mortality tables are used in conjunction with the
health and family history of the individual applying for a policy in order to determine premiums and
insurability. Mortality tables currently in use by life insurance companies in the United States are
individually modified by each company using pooled industry experience studies as a starting point.
In the 1980s and 90's the SOA 1975-80 Basic Select & Ultimate tables were the typical reference
points, while the 2001 VBT and 2001 CSO tables were published more recently. The newer tables
include separate mortality tables for smokers and non-smokers and the CSO tables include
separate tables for preferred classes.
Recent US select mortality tables predict that roughly 0.35 in 1,000 non-smoking males aged 25 will
die during the first year of coverage after underwriting. Mortality approximately doubles for every
extra ten years of age so that the mortality rate in the first year for underwritten non-smoking men is
about 2.5 in 1,000 people at age 65.Compare this with the US population male mortality rates of 1.3
per 1,000 at age 25 and 19.3 at age 65 (without regard to health or smoking status).
The mortality of underwritten persons rises much more quickly than the general population. At the
end of 10 years the mortality of that 25 year-old, non-smoking male is 0.66/1000/year.
Consequently, in a group of one thousand 25 year old males with a $100,000 policy, all of average
health, a life insurance company would have to collect approximately $50 a year from each of a
large group to cover the relatively few expected claims. (0.35 to 0.66 expected deaths in each year
x $100,000 payout per death = $35 per policy). Administrative and sales commissions need to be
accounted for in order for this to make business sense. A 10 year policy for a 25 year old nonsmoking male person with preferred medical history may get offers as low as $90 per year for a
$100,000 policy in the competitive US life insurance market.
The insurance company receives the premiums from the policy owner and invests them to create a
pool of money from which it can pay claims and finance the insurance company's operations.
Contrary to popular belief, the majority of the money that insurance companies make comes directly
from premiums paid, as money gained through investment of premiums can never, in even the most
ideal market conditions, vest enough money per year to pay out claims

28

Rates charged for life insurance increase with the insurer's age because, statistically, people are
more likely to die as they get older.
Given that adverse selection can have a negative impact on the insurer's financial situation, the
insurer investigates each proposed insured individual unless the policy is below a companyestablished minimum amount, beginning with the application process. Group Insurance policies are
an exception.
This investigation and resulting evaluation of the risk is termed underwriting. Health and lifestyle
questions are asked. Certain responses or information received may merit further investigation. Life
insurance companies in the United States support the Medical Information Bureau (MIB), which is a
clearinghouse of information on persons who have applied for life insurance with participating
companies in the last seven years. As part of the application, the insurer receives permission to
obtain information from the proposed insured's physicians.[5]
Underwriters will determine the purpose of insurance. The most common is to protect the owner's
family or financial interests in the event of the insurer's demise. Other purposes include estate
planning or, in the case of cash-value contracts, investment for retirement planning. Bank loans or
buy-sell provisions of business agreements are another acceptable purpose.
Life insurance companies are never required by law to underwrite or to provide coverage to anyone,
with the exception of Civil Rights Act compliance requirements. Insurance companies alone
determine insurability, and some people, for their own health or lifestyle reasons, are deemed
uninsurable. The policy can be declined (turned down) or rated Rating increases the premiums to
provide for additional risks relative to the particular insured
Many companies use four general health categories for those evaluated for a life insurance policy.
These categories are Preferred Best, Preferred, Standard, and Tobacco
Preferred Best is reserved only for the healthiest individuals in the general population. This means,
for instance, that the proposed insured has no adverse medical history, is not under medication for
any condition, and his family (immediate and extended) has no history of early cancer, diabetes, or
other conditions. Preferred means that the proposed insured is currently under medication for a
medical condition and have a family history of particular illnesses
Most people are in the Standard category. Profession, travel, and lifestyle factor into whether the
proposed insured will be granted a policy, and which category the insured falls. For example, a
person who would otherwise be classified as Preferred Best may be denied a policy if he or she

29

travels to a high risk country.Underwriting practices can vary from insurer to insurer which provide
for more competitive offers in certain circumstances.
Life insurance contracts are written on the basis of utmost good faith. That is, the proposer and the
insurer both accept that the other is acting in good faith. This means that the proposer can assume
the contract offers what it represents without having to fine comb the small print and the insurer
assumes the proposer is being honest when providing details to underwriter.
Death proceeds
Upon the insured's death, the insurer requires acceptable proof of death before it pays the claim.
The normal minimum proof required is a death certificate and the insurer's claim form completed,
signed (and typically notarized If the insured's death is suspicious and the policy amount is large,
the insurer may investigate the circumstances surrounding the death before deciding whether it has
an obligation to pay the claim.
Proceeds from the policy may be paid as a lump sum or as an annuity, which is paid over time in
regular recurring payments for either a specified period or for a beneficiary's lifetime.
Insurance vs Assurance
The specific uses of the terms "insurance" and "assurance" are sometimes confused. In general, in
these jurisdictions "insurance" refers to providing cover for an event that might happen (fire, theft,
flood, etc.), while "assurance" is the provision of cover for an event that is certain to happen.
"Insurance" is the generally accepted term, however, people using this description are liable to be
corrected. In the United States both forms of coverage are called "insurance", principally due to
many companies offering both types of policy, and rather than refer to themselves using both
insurance and assurance titles, they instead use just one.
Types of life insurance
Life insurance may be divided into two basic classes temporary and permanent or following
subclasses - term, universal, whole life and endowment life insurance.

30

TEMPORARY TERM
Term assurance: provides for life insurance coverage for a specified term of years for a specified
premium. The policy does not accumulate cash value. Term is generally considered "pure"
insurance, where the premium buys protection in the event of death and nothing else.
The three key factors to be considered in term insurance are: face amount (protection or death
benefit), premium to be paid (cost to the insured), and length of coverage (term).
Various insurance companies sell term insurance with many different combinations of these three
parameters. The face amount can remain constant or decline. The term can be for one or more
years. The premium can remain level or increase. A common type of term is called annual
renewable term. It is a one year policy but the insurance company guarantees it will issue a policy of
equal or lesser amount without regard to the insurability of the insured and with a premium set for
the insured's age at that time. Another common type of term insurance is mortgage insurance,
which is usually a level premium, declining face value policy. The face amount is intended to equal
the amount of the mortgage on the policy owners residence so the mortgage will be paid if the
insured dies.
A policy holder insures his life for a specified term. If he dies before that specified term is up, his
estate or named beneficiary receives a payout. If he does not die before the term is up, he receives
nothing. In the past these policies would almost always exclude suicide. However, after a number of
court judgments against the industry, payouts do occur on death by suicide (presumably except for
in the unlikely case that it can be shown that the suicide was just to benefit from the policy).
Generally, if an insured person commits suicide within the first two policy years, the insurer will
return the premiums paid. However, a death benefit will usually be paid if the suicide occurs after
the two year period.

Permanent Life Insurance

Permanent life insurance is life insurance that remains in force (in-line) until the policy matures
(pays out), unless the owner fails to pay the premium when due (the policy expires OR policies
lapse). The policy cannot be canceled by the insurer for any reason except fraud in the application,
and that cancellation must occur within a period of time defined by law (usually two years).
Permanent insurance builds a cash value that reduces the amount at risk to the insurance company
and thus the insurance expense over time. This means that a policy with a million dollar face value

31

can be relatively expensive to a 70 year old. The owner can access the money in the cash value by
withdrawing money, borrowing the cash value, or surrendering the policy and receiving the
surrender value.
The four basic types of permanent insurance are whole life, universal life, limited pay and
endowment.
Whole life coverage
Whole life insurance provides for a level premium, and a cash value table included in the policy
guaranteed by the company. The primary advantages of whole life are guaranteed death benefits,
guaranteed cash values, fixed and known annual premiums, and mortality and expense charges will
not reduce the cash value shown in the policy. The primary disadvantages of whole life are premium
inflexibility, and the internal rate of return in the policy may not be competitive with other savings
alternatives. Riders are available that can allow one to increase the death benefit by paying
additional premium. The death benefit can also be increased through the use of policy dividends.
Dividends cannot be guaranteed and may be higher or lower than historical rates over time.
Premiums are much higher than term insurance in the short-term, but cumulative premiums are
roughly equal if policies are kept in force until average life expectancy.
Cash value can be accessed at any time through policy "loans". Since these loans decrease the
death benefit if not paid back, payback is optional. Cash values are not paid to the beneficiary upon
the death of the insured; the beneficiary receives the death benefit only. If the dividend option: Paid
up additions is elected, dividend cash values will purchase additional death benefit which will
increase the death benefit of the policy to the named beneficiary.
Universal life coverage
Universal life insurance (UL) is a relatively new insurance product intended to provide permanent
insurance coverage with greater flexibility in premium payment and the potential for a higher internal
rate of return. There are several types of universal life insurance policies which include "interest
sensitive" (also known as "traditional fixed universal life insurance"), variable universal life
insurance, and equity indexed universal life insurance.
A universal life insurance policy includes a cash account. Premiums increase the cash account.
Interest is paid within the policy (credited) on the account at a rate specified by the company.
Mortality charges and administrative costs are then charged against (reduce) the cash account. The
surrender value of the policy is the amount remaining in the cash account less applicable surrender
charges, if any.

32

With all life insurance, there are basically two functions that make it work. There's a mortality
function and a cash function. The mortality function would be the classical notion of pooling risk
where the premiums paid by everybody else would cover the death benefit for the one or two who
will die for a given period of time. The cash function inherent in all life insurance says that if a
person is to reach age 95 to 100 (the age varies depending on state and company), then the policy
matures and endows the face value of the policy.
Actuarially, it is reasoned that out of a group of 1000 people, if even 10 of them live to age 95, then
the mortality function alone will not be able to cover the cash function. So in order to cover the cash
function, a minimum rate of investment return on the premiums will be required in the event that a
policy matures.
Universal life insurance addresses the perceived disadvantages of whole life. Premiums are flexible.
Depending on how interest is credited, the internal rate of return can be higher because it moves
with prevailing interest rates (interest-sensitive) or the financial markets (Equity Indexed Universal
Life and Variable Universal Life). Mortality costs and administrative charges are known. And cash
value may be considered more easily attainable because the owner can discontinue premiums if the
cash value allows it. And universal life has a more flexible death benefit because the owner can
select one of two death benefit options, Option A and Option B.
Option A pays the face amount at death as it's designed to have the cash value equal the death
benefit at maturity (usually at age 95 or 100). With each premium payment, the policy owner is
reducing the cost of insurance until the cash value reaches the face amount upon maturity.
Option B pays the face amount plus the cash value, as it's designed to increase the net death
benefit as cash values accumulate. Option B offers the benefit of an increasing death benefit every
year that the policy stays in force. The drawback to option B is that because the cash value is
accumulated "on top of" the death benefit, the cost of insurance never decreases as premium
payments are made. Thus, as the insured gets older, the policy owner is faced with an ever
increasing cost of insurance (it costs more money to provide the same initial face amount of
insurance as the insured gets older).
Limited-pay
Another type of permanent insurance is Limited-pay life insurance, in which all the premiums are
paid over a specified period after which no additional premiums are due to keep the policy in force.
Common limited pay periods include 10-year, 20-year, and paid-up at age 65.
Endowments

33

Endowments are policies in which the cash value built up inside the policy, equals the death benefit
(face amount) at a certain age. The age this commences is known as the endowment age.
Endowments are considerably more expensive (in terms of annual premiums) than either whole life
or universal life because the premium paying period is shortened and the endowment date is earlier.
In the United States, the Technical Corrections Act of 1988 tightened the rules on tax shelters
(creating modified endowments). These follow tax rules as annuities and IRAs do.
Endowment Insurance is paid out whether the insured lives or dies, after a specific period (e.g. 15
years) or a specific age (e.g. 65).

Accidental Death
Accidental death is a limited life insurance that is designed to cover the insured when they pass
away due to an accident. Accidents include anything from an injury, but do not typically cover any
deaths resulting from health problems or suicide. Because they only cover accidents, these policies
are much less expensive than other life insurances.
It is also very commonly offered as "accidental death and dismemberment insurance", also known
as an AD&D policy. In an AD&D policy, benefits are available not only for accidental death, but also
for loss of limbs or bodily functions such as sight and hearing, etc.
Accidental death and AD&D policies very rarely pay a benefit; either the cause of death is not
covered, or the coverage is not maintained after the accident until death occurs. To be aware of
what coverage they have, an insured should always review their policy for what it covers and what it
excludes. Often, it does not cover an insured who puts themselves at risk in activities such as:
parachuting, flying an airplane, professional sports, or involvement in a war (military or not). Also,
some insurers will exclude death and injury caused by proximate causes due to (but not limited to)
racing on wheels and mountaineering.
Accidental death benefits can also be added to a standard life insurance policy as a rider. If this
rider is purchased, the policy will generally pay double the face amount if the insured dies due to an
accident. This used to be commonly referred to as a double indemnity coverage. In some cases,
some companies may even offer a triple indemnity cov

34

INTRODUCTION
HDFC Incorporated in 1977 with a share capital of Rs 10 Crores, HDFC has since emerged as the
largest residential mortgage finance institution in the country. The corporation has had a series of
share issues raising its capital to Rs. 119 Crores. The gross premium income for the year ending
March 31, 2007 stood at Rs. 2,856 Crores and new business premium income at Rs. 1,624 Crores.
The company has covered over 8,77,000 lives year ending March 31, 2007.

HDFC operates through almost 450 locations throughout the country with its corporate head
quarters in Mumbai, India. HDFC also has an International Office in Dubai, UAE with service
associates in Kuwait, Oman and Qatar. HDFC is the largest housing company in India for the last 27
years.

SNAPSHOT-I

Incorporated in 1977 as the first specialized Mortgage Company in India.

Almost 90% of initial shareholding in the hands of domestic institutes and retail investors.
Current 77% of shares held by foreign institutional investors.

Besides the core business of mortgage HDFC has evolved into a financial conglomerate with
holdings In:
HDFC Standard Life insurance Company- HDFC holds 78.07 %.
HDFC Asset Management Company HDFC holds 50.1%
HDFC Bank- HDFC holds 22.25%.
Intelenet Global (Business Process Outsourcing) HDFC holds 50%.
HDFC Chubb General Insurance Company HDFC holds 74%.

35

SNAPSHOT-II

Loan Approvals

Rs. 805 billion.

(up to Dec 2007)

(US $ 18.30 bn.)

Loan Disbursements

Rs.669 billion

(up to Dec. 2007)

Housing Units Financed

Distribution

(US $ 15.20 bn)

2.5 million.

Offices

181

Outreach Programs

90

KEY PLAYERS
Mr. Deepak S Parekh is the Chairman of the Company. He is also the Executive Chairman of
Housing Development Finance Corporation Limited (HDFC Limited). He joined HDFC Limited in a
senior management position in 1978. He was inducted as a whole-time director of HDFC Limited in
1985 and was appointed as its Executive Chairman in 1993. He is the Chief Executive Officer of
HDFC Limited. Mr. Parekh is a Fellow of the Institute of Chartered Accountants (England & Wales).

Mr. Deepak M Satwalekar is the Managing Director and CEO of the Company since November,
2000. Prior to this, he was the Managing Director of HDFC Limited since 1993. Mr. Satwalekar
obtained a Bachelors Degree in Technology from the Indian Institute of Technology, Bombay and a
Masters Degree in Business Administration from The American University, Washington DC.

36

GROUP COMPANIES

HDFC Bank: World Class Indian Bank- among the top private banks in India.
HDFC AMC: One of the top 3 AMCs in India- Preferred investment manager.
Intelenet Global: BPO services for international customers.
CIBIL: Credit Information Bureau India Limited.
HDFC Chubb: Upcoming Private companies in the field of General Insurance.
HDFC Mutual Fund
HDFC reality.com: Helps to search properties in all major cities in India
HDFC securities

37

STANDARD LIFE
Standard Life is Europes largest mutual life assurance company. Standard Life, which has been in
the life insurance business for the past 175 years is a modern company surviving quite a few
changes since selling its first policy in 1825. The company expanded in the 19 th century from kits
original Edinburgh premises, opening offices in other towns and acquitting other similar businesses.
Standard Life Currently has assets exceeding over 70 billion under its management and has the
distinction of being accorded AAA rating consequently for the six years by Standard and Poor.

SNAPSHOT

Founded in 1875, company supporting generation for last 179 years.

Currently over 5 million Policy holders benefiting from the services offered.

Europes largest mutual life insurer.

38

JOINT VENTURE

HDFC Standard Life Insurance Company Limited was one of the first companies to be granted
license by the IRDA to operate in life insurance sector. Reach of the JV player is highly rated and
been conferred with many awards. HDFC is rated AAA by both CRISIL and ICRA. Similarly,
Standard Life is rated AAA both by Moodys and Standard and Poors. These reflect the efficiency
with which HDFC and Standard Life manage their asset base of Rs. 15,000 Cr and Rs. 600,000 Cr.
respectively.
HDFC Standard Life Insurance Company Ltd was incorporated on 14 th August 2000. HDFC is the
majority stakeholder in the insurance JV with 81.4% staple and Standard of as a staple 18.6% Mr.
Deepak Satwalekar is the MD and CEO of the venture.
HDFC Standard Life Insurance Company Ltd. Is one of Indias leading Private Life Insurance
Companies, which offers a range of individual and group insurance solutions. It is a joint venture
between Housing Development Finance Corporation Limited (HDFC Ltd.) Indias leading housing
finance institution and the Standard Life Assurance Company, a leading provider of financial
services from the United Kingdom. Both the promoters are will known for their ethical dealings and
financial strength and are thus committed to being a long-term player in the life insurance industryall important factors to consider when choosing your insurer.

BUSINESS GROWTH
Track Record so far
The gross premium income of HDFC, for the year ending March 31, 2007 stood at Rs. 2,856 crores
and new business premium income at Rs. 1,624 crores.
The company has covered over 8,77,000 lives year ending March 31, 2007. Company also declared
our 5th consecutive bonus in as many years for our with profit policyholders.

KEY STRENGTH
39

Financial Expertise
As a joint venture of leading financial services groups. HDFC standard Life has the financial
expertise required to manage long-term investments safely and efficiently.
Range of Solutions
HDFC SLIC has a range of individual and group solutions, which can be easily customized to
specific needs. These group solutions have been designed to offer complete flexibility combined
with a low charging structure.
Strong Ethical Values:
HDFC SLIC is an ethical and Cultural Organization. False selling or false commitment with the
customers is not allowed.
Most respected Private Insurance Company
HDFC SLIC was awarded No-1 Private Insurance Company in 2004 by the World Class Magazine
Business World for Integrity, Innovation and Customer Care.

40

CORPORATE OBJECTIVE
Vision
'The most successful and admired life insurance company, which means that we are the most
trusted company, the easiest to deal with, offer the best value for money, and set the standards in
the industry'.
'The most obvious choice for all'.

Values
.Integrity
.Innovation
.Customer centric
.People Care One for all
.Teamwork
.Joy and Simplicity

PRODUCTS & SERVICES

The right investment strategies won't just help plan for a more comfortable tomorrow -- they will help
you get Sar Utha ke Jiyo. At HDFC SLIC, life insurance plans are created keeping in mind the
changing needs of family. Its life insurance plans are designed to provide you with flexible options
that meet both protection and savings needs. It offers a full range of transparent, flexible and value
for money products. HDFC SLIC products are modern and contemporary unitized products that offer
unique customer benefits like flexibility to choose cover levels, indexation and partial withdrawals.
(Source: www.hdfcslic.com)

41

PLANS THAT ARE OFFERED BY HDFC STANDARDS LIFE

INSURANCE
Individual Products
Protection Plans
A person can protect his family against the loss of his income or the burden of a loan in the
event of his unfortunate demise, disability or sickness. These plans offer valuable peace of
mind at a small price. Protection range includes our Term Assurance Plan & Loan Cover
Term Assurance Plan.

Investment Plans
HDFC SLICs Single Premium Whole of Life plan is well suited to meet long term investment
needs. This provides attractive long term returns through regular bonuses.
Pension Plans
Pension Plans help to secure financial independence even after retirement. Pension range
includes Personal Pension Plan, Unit Linked Pension, Unit Linked Pension Plus.

Savings Plans

Savings Plans offer a flexible option to build savings for future needs such as buying a dream
home or fulfilling your childrens immediate and future needs.
Savings range includes Endowment Assurance Plan, Unit Linked Endowment, Unit Linked
Endowment Plus, Unit Linked Endowment Plus II, Money Back,
Unit Linked Enhanced Life Protection II, Children's Plan, Unit Linked Young Star, Unit
Linked Young Star Plus, Unit Linked Young Star Plus II.

42

Group Products
One-stop shop for employee-benefit solutions

HDFC Standard Life has the most comprehensive list of products for progressive employers who
wish to provide the best and most innovative employee benefit solutions to their employees. It
offers different products for different needs of employers ranging from term insurance plans for
pure protection to voluntary plans such as superannuation and leave encashment.

HDFC SLIC offers the following group products to esteemed corporate clients:

Group Term Insurance

Group Variable Term Insurance
Group Unit-Linked Plan

An investment solution that provides funding vehicle to manage corpuses with

Gratuity, Defined Benefit or Defined Contribution Superannuation or Leave
Encashment schemes of your company

Also suitable for other employee benefit schemes such as salary saving schemes
and wealth management schemes

43

Social Product

Development Insurance Plan

Development Insurance plan is an insurance plan which provides life cover to members of a
Development Agency for a term of one year. On the death of any member of the group insured
during the year of cover, a lump sum is paid to those member beneficiaries to help meet some of
the immediate financial needs following their loss.

Eligibility
Members of the development agency and their spouses with:
- Minimum age at the start of the policy 18 years last birthday
- Maximum age at the start of policy 50 years last birthday
Employees of the Development Agency are not eligible to join the group. The group to be
covered is only eligible if it contains more than 500 members.
Premium Payments
The premium to be paid will be quoted per member in the group and will be the same for all
members of the group.
The premium can only be paid by the Development Agency as a single lump sum that includes
all premiums for the group to be covered. Cover will not start until the premium and all the
member information in our specified format has been received.

Benefits
On the death of each member covered by the policy during the year of cover a lump sum equal
to the sum assured will be paid to their beneficiaries or legal heirs. Where the death is as a
result of an accident, an additional lump sum will be paid equal to half the sum assured. There
are no benefits paid at the end of the year of cover and there is no surrender value available at
any time.
The role of the Development Agency

44

Due to the nature of the groups covered, HDFC Standard Life will be passing certain
administrative tasks onto the Development Agency. By passing on these tasks the premium
charged can be lower. These tasks would include:
Submission of member data in a specified computer format
Collection of premiums from group members
Recording changes in the details of group members
Disbursement of claim payments and the mortality rebate (if any) to group members
These tasks would be in addition to the usual duties of a policyholder such as:
Payment of premiums
Reporting of claims
Keeping policy holder information up to date
Training and support will be available to give guidance on how to complete the tasks
appropriately. Since these additional tasks will impose a burden on the Development Agency,
the Development Agency may charge a Rs. 10 administration fee to their members.

TATA AIG LIFE INSURANCE COMPANY LIMITED

Introduction
Tata AIG Life Insurance Company Limited (Tata AIG Life) is a joint venture company, formed by the
Tata Group and American International Group, Inc. (AIG). Tata AIG Life combines the Tata Groups
pre-eminent leadership position in India and AIGs global presence as the worlds leading
international insurance and financial services organization. The Tata Group holds 74 per cent stake
in the insurance venture with AIG holding the balance 26 percent. Tata AIG Life provides insurance
solutions to individuals and corporate. Tata AIG Life Insurance Company was licensed to operate in
India on February 12, 2001 and started operations on April 1, 2001.

THE TATA GROUP

The Tata Group is one of India's largest and most respected business conglomerates, with revenues
in 2004-05 of $17.8 billion (Rs. 799,118 million), the equivalent of about 2.8 per cent of the country's
GDP. Tata companies together employ some 215,000 people. The Group's 32 publicly listed
enterprises - among them standout names such as Tata Steel, Tata Consultancy Services, Tata
Motors and Tata Tea - have a combined market capitalization that is the highest among Indian
business houses in the private sector, and a shareholder base of over 2 million. The Tata Group has
operations in more than 40 countries across six continents, and its companies export products and
services to 140 nations.

45

AIG
American International Group, Inc. (AIG), world leaders in insurance and financial services, is the
leading international insurance organization with operations in more than 130 countries and
jurisdictions. AIG companies serve commercial, institutional and individual customers through the
most extensive worldwide property-casualty and life insurance networks of any insurer. In addition,
AIG companies are leading providers of retirement services, financial services and asset
management around the world. AIG's common stock is listed on the New York Stock Exchange as
well as the stock exchanges in London, Paris, Switzerland and Tokyo.
Tata AIG has strong brand name and recall factor which most of its competitors lack in. Other than
the public behemoth Life Insurance Corporation (LIC) of India which has a major hold in the market
share (of approximately 79%), the private players too are having more and more opportunities to
tighten their hold of the market. Of the private players, ICICI Prudential comes first with an almost
4.50% of the market share followed by Tata AIG with about 2.10% of the pie. The private players
have everything to work for, especially with LIC not meeting the needs of its clientele with respect to
the services they need. This provides a prospect for the private sector players to increase their
share of the market. Companies with a familiarity such as Tata AIG can especially achieve their
targets due to the brand image that the Tata group has.
(Source: www.tata-aig-life.com)
A recent survey conducted by the Voluntary Organization in Interest of Consumer Education
(VOICE) revealed Tata AIG Life Insurance Company (Tata AIG Life) as the clear winner in terms
of customer satisfaction in the life insurance category. This is India's first-ever customer
satisfaction study for the insurance sector.
The survey also revealed that Tata AIG Life had a high recall as a reputed brand name. The ability
to provide innovative and customer-focused service such as allowing the maximum grace period for
premium payment has not only further distinguished Tata AIG Life from other life insurance
companies but also appealed to consumers.

PRODUCTS & SERVICES:

Corporate life insurance products:
Employee Benefits
Credit Life
Group Pensions

46

 Workplace Solutions

Individual life insurance products:

Health First

Health Protector

Mahalife

InvestAssure II, InvestAssure Gold

Shubh life, Nirbhay life

With respect to individual life insurance products, Tata AIG has an array of policies to suit the needs
and requirements of all age groups viz, children, students, adults, retirees etc.
The SUPPORT arm of Tata AIG Life is constituted of Operations, Human Resources, Marketing,
Corporate Training, Finance and Compliance.
Tata AIG Life possesses the philosophy and drive to customize retirement obligations (for the
company) which occur in the form of cash outflows, for the maximum benefit of both the employer
and the departing employee.

47

Points of Parity
Funds available with ULIP Plans

General Description

Nature of Investments

Risk Category

Equity Funds

Primarily invested in company

stocks with the general aim of capital
appreciation

High

Income, Fixed Interest

and Bond Funds

Cash Funds

Balanced Funds

Invested in corporate bonds,

government securities and other fixed
income instruments
Sometimes known as Money
Market Funds invested in cash,
bank deposits and money market
instruments
Combining equity investment
with fixed interest instruments

Medium

Low

Medium

Generally all life insurance companies have three types of fund which are Equity fund, Debt fund
and Balance fund. These fund have different risk profile. Equity fund has high risk but it gives high
return, Debt fund has low risk so it gives low return and Balanced fund is combination of both Equity
and Debt fund so risk is medium and return is also low.
Both HDFC SLIC and Tata AIG LIC have 7 types of funds based on combination of DebtEquity
fund. These are liquid fund, stable managed fund, secure managed fund, defensive managed fund,
balanced managed fund, equity managed fund, growth fund.

Indexation
You have the option to increase your regular premiums by an indexation rate at any policy
anniversary to protect the real value of your investment against inflation. The rate of indexation will
be in line with the increase in the Whole Sale Price Index (or in the event that this Index ceases to
be published such other index as the Company may select for this purpose). The base sum assured
and sum assured of any attached rider would also be increased by the corresponding indexation
increase.
Charges, Fees and Deductions in ULIP

Premium Allocation Charge

48

This is a premium-based charge. After deducting this charge from premiums, the remainder is
invested to buy units. The Allocation charges are guaranteed for the entire duration of policy term.

Mortality Charge

The Mortality Charge will apply on the Sum at Risk (SAR = Sum Assured less the Fund Value
pertaining to regular premiums). It will be deducted by monthly cancellation of units from the
accumulation unit account. The Mortality Charge shall remain guaranteed throughout the policy
term.

Fund Management Charge

1% p.a. on With Profits Fund, 1% p.a. on Debt Fund, 1.25% p.a. on Balanced Fund and 1.50% p.a.
on Growth Fund. FMC will be applied on the fund while calculating NAV on a daily basis. The
maximum FMC on any fund is 2% p.a. subject to prior approval by the IRDA.

Policy Administration Charge

Rs. 60 per month, which will increase by 5% p.a. on the 1st of January each year. PAC will be
deducted monthly by cancellation of units from the accumulation unit account. If premiums are
discontinued, this charge would reduce to 60% of the charge applicable for the premium paying
policies

Surrender Charge

This is the charge that applies when the policy is surrendered. It is equal to 50% of the difference
between regular premiums expected and those paid in the first year of the contract.

Service Tax Deductions

12.36% service tax is applicable on the first premium of life insurance policy.
Tax Benefits

49

Tax benefits will be as per Section 80C & Section 10(10D) of the Income Tax Act, 1961. Insurance is
tax free up to Rs. 100000 per annum and the returns on investment on maturity of the policy are
also tax free.

50

RIDERS AND BONUSES

HDFC Standard Life
Insurance
15 days
Based on company's
performance
Based on company's
performance
Minimum Rs. 5000

Free Look Period

Reversionary Bonus
Terminal Bonus
TOP UP

Tata AIG Life Insurance

15 days
Based on company's
performance
Based on company's
performance
Minimum Rs. 5000

Riders
Critical Illness (CI) Benefit
Additional Term Benefit (ATB)
Accidental Death Benefit
(ADB)
Double Benefit
Triple Benefit
Payer Benefit Rider (PBR)
Waiver of Premium (WOP)
Benefit

Gives on diagnosis of
anyone
of 6 critical illness
Provides

Gives on diagnosis of
anyone
of 12 critical illness
Provides

Provides

Provides

Provides
Provides
Does not provide

Does not provide

Does not provide
Provides

Provides

Provides

POINTS OF DIFFERENCE
HDFC Standard Life
Insurance

Tata AIG Life Insurance

Grace Period

15 days

31 days

Policy Administration Charge

Rs. 60 per month

Rs. 55 per month

Guaranteed Bonus

Does not give

10% on sum-assured
after 10 year

Loyalty Bonus

0.1% every year

0.25% after every 4th year

Fund Switching Charge

Total 24 free switches in a

policy
after this Rs. 100 per Switch

Guaranteed Surrender value

50% of all premium

paid excluding 1st premium

4 free switches per year

after this
Rs. 250 per switch
30% of all premium
paid excluding 1st
premium

Fund Management Charge

0.80% per annum

on the fund value

51

1.75% per annum

on the fund value

Premium Redirection Charge

Total 12 free Premium

Redirection
in a policy after this Rs. 250
per Premium Redirection

First 2 Premium
Redirection in a
year is free after this Rs.
1000
per Premium Redirection

Last Year Return

42.70%

72%

We see that both the life insurance companies products are almost same. They have same
charges, fees and deductions. There is slightly difference in charges and maximum limits of all
charges are fixed by IRDA. Before buying any life insurance policy one should check charges and
fees on policy and companys overall performance and return given to its consumer.

52

COMPETITIVE ANALYSIS

LIFE INSURANCE CORPORATION OF INDIA (LIC)

LIC has an excellent money back policy which provides for periodic payments of partial survival
benefits as long as the policy holder is alive. 20% of the sum assured is payable after 5, 10, 15 and
20 years and the balance 40% is payable at the 20th year along with accrued bonus. (www.lic.com)
For a 25 years term , 15% of the sum assured becomes payable after 5,10,15 and 20 years and the
balance 40% plus the accrued bonus becomes payable at the 25 th year. An important feature of
these types of policies is that in the event of the death of the policy holder at any time within the
policy term the death claim comprises of full sum assured without deducting any of the survival
benefit amounts which have already been paid. The bonus is also calculated on the full sum
assured.
HDFC SLIC does not have a money back policy. It could offer a money back plan and capture some
portion of this market. While marketing insurance products I found that many customers wanted to
purchase these plans.
LIC offers 66 different plans; plans are formulated for specific occasions whole life plans, term
assurance plans, money back plan for women, child plans, plans for the handicapped individuals,
endowment assurance plans, plans for high worth individuals, pension plans, unit linked plans,
special plans, social security schemes diversified portfolio of products. HDFC SLIC could diversify
its product portfolio. It could add more plans for high worth individuals and women.

ICICI PRUDENTIAL
ICICI Prudential is a stiff competitor for HDFC SLIC. The company is a merger between ICICI Bank
which is the biggest private bank in India and Prudential Plc which is a global life insurance
company.
The company has an investment plan which is market related Invest Shield Life. In this plan even
if the market falls, the premium will be returned to investors. It is a guaranteed plan which ensures
the company carefully invests your money. The stock market performance of ICICI Prudential is
much better than HDFC SLIC. The returns on the growth fund were 46.28% compared to the

53

42.70% offered by HDFC SLIC. Customers are attracted by higher returns and this is a plus point
for Prudential.
The company is very well advertised. The advertisements are showcased in movies, television,
newspapers, magazines, bill boards, radio etc. The company has an excellent brand ambassador
Mr. Amitabh Bacchan. His promotion of the company builds trust and faith in the minds of our
people.
However the charges are very high in the plans offered by ICICI Prudential. It is 35% during the first
year, 15% in the next year and 3% from the third year onwards. Also a higher minimum premium of
Rs. 8000 is charged. Hence the policies are not accessible to the lower strata of the society.
(Source: www.iciciprulife.com)

BIRLA SUN LIFE

Birla Sun Life Insurance Company Limited is a joint venture between The Aditya Birla Group, one of
the largest business houses in India and Sun Life Financial Inc., a leading international financial
services organization. The local knowledge of the Aditya Birla Group combined with the expertise of
Sun Life Financial Inc., offers a formidable protection for your future. (Source: www.birlasunlife.com)
The Aditya Birla Group has a turnover close to Rs. 33000 crores with a market capitalization of Rs.
53400 crores (as on 31st March 2007). It has over 72000 employees across all its units worldwide.
It is led by its Chairman - Mr. Kumar Mangalam Birla. Some of the key organizations within the
group are Hindalco and Grasim.
Sun Life Financial Inc. and its partners today have operations in key markets worldwide, including
Canada, the United States, the United Kingdom, Hong Kong, the Philippines, Japan, Indonesia,
India, China and Bermuda. It had assets under management of over US$343 billion, as on 31st
March 2007. The company is a leading player in the life insurance market in Canada.
Being a customer centric company, BSLI has invested heavily in technology to build world class
processing capabilities. BSLI has covered more than a million lives since inception and its customer
base is spread across more than 1000 towns and cities in India. All this has assisted the company in
cementing its place amongst the leaders in the industry in terms of new business premium income.
The company has a capital base of 520 crores as on 31st July, 2007.

54

Its Flexi Life Line Plan offers life long insurance cover till the policy holder is 100 years of age. There
are guaranteed returns of 3% p.a. net of policy charges after every 5 years from the eleventh policy
year onwards. However the charges are very high. The initial charges for the first year are 65%.
Hence the fund value is greatly reduced.
BAJAJ ALLIANZ
Bajaj Allianz is a joint venture between Allianz AG with over 110 years of experience in over 70
countries and Bajaj Auto, a trusted automobile manufacturer for over 55 years in the Indian market.
Together they are committed to offering you financial solutions that provide all the security you need
for your family and yourself. Bajaj Allianz is the number one private life insurer for the year 2005
2006. It is leading by 78 crores. It has experienced a whopping growth of 216% in the last financial
year.
The company has sold 13, 00,000 policies and is backed by 550 offices across India. It offers travel
insurance, motor insurance, home insurance, health and corporate insurance. The mortality charges
are lower than HDFC SLIC. The entry age could be zero years which allow even new born babies to
be insured. (Source: www.bajajallianz.com)
TATA AIG
Tata Aig is a joint venture between the Tata group and American International Group Inc. In one of
the plans the company offers hospital cash benefit wherein it will pay Rs. 2500 per day in case of
hospitalization and Rs.12.5 lakhs in case the person suffers from any critical illness. Annual
premium is much less (about Rs. 6712) to avail such a good benefit. Charges are relatively low
compared to HDFC SLIC for some policies.
The company offers high coverage plans at low cost. There is a plan even for a policy term of 1
year. Your family can continue to enjoy their current lifestyle even in the case of something
happening to you. These plans are very flexible and HDFC SLIC could adopt this idea of insuring
individuals for short periods of time. For example; there is a family of four. The only earning member
is the father.
He has just taken a loan from a bank of 20 lakhs to purchase a new home. He is able to repay the
loan with his current salary in 15 years. The problem arises if something were to happen to him
within these fifteen years. Not only will the family face the emotional and financial loss of their father
but they will also have to repay the home loan or risk being homeless. (Source: www.tataaig.com)

55

MARKETING PROBLEMS
The old and out dated technique of tele marketing is used to prospect customers. More modern
techniques must be adopted. The company must sponsor shows and give presentations in
corporate houses. The financial health check must be performed for every prospect to assess
his/her true financial position and needs. Some of the advisors skip this vital step and the prospect
ends up with a plan they do not appreciate and soon surrender or discontinue.
Some of the main problems in marketing the policies are:
Large amount of competition (18 players in the market)

Other brands are well advertised and have higher recall value

LIC is considered a safer option

Face competition from banks and mutual funds

High premium policies are difficult to market

Incorrect perception about insurance

Interested prospects might have a lack of time and postpone investments

Customers get defensive if you cold call

Short term plans are available only at large premium

Customers do not have risk appetite to invest in shares

Some prospects have already invested and are not interested in further investments

Consumers dont want to undertake medical examinations

Large amount of documentation

56

 Customers do not like their money locked up for many years

Lack of awareness about the unit linked funds in the market

No money back plan present in the product portfolio

SUGGESTIONS FOR IMPROVEMENT

Advertise about the company and its products it motivates individuals to purchase
insurance
Create a positive perception about insurance

Speak about the good features a plan offers like high returns, life cover, tax benefits,
indexation, accident cover while prospecting customers
Try to sell the product/plan which the consumer requires and not the plan where the advisors
benefit is higher
Bring out policies with small premiums payable for short periods of time Rs. 5000 Rs.
10000 per annum for 10 years
Attract the youth of India with higher returns on investment as returns are the motivating
factor which influence purchase of insurance
Promote insurance in colleges and corporate houses

Promote HDFC SLIC as an Indian Company to build trust

57

58

CHAPTER-III
Research Methodology

59

RESEARCH METHODOLOGY
TITLE OF THE STUDY
To Compare the products of HDFC Standard Life Insurance Company Limited and Tata AIG Life
Insurance Company Limited for HDFC Standard Life Insurance Company Ltd.

DURATION OF THE PROJECT

The duration of the project was from 4 June to 18 July.

OBJECTIVES OF THE STUDY

1. To analysis the product details of HDFC Standard life Insurance Company limited and Tata
AIG life Insurance Company Limited.
2. To find Points of Parity and Points of Difference of HDFC Standard Life Insurance
Company Limited and Tata AIG Life Insurance Company Limited.
3. To find out factors that influence customers to purchase insurance policies and give
suggestions for further improvement.

TYPE OF RESEARCH
There are two types of data used. They are primary and secondary data. Primary data is defined as
data that is collected from original sources for a specific purpose. Secondary data is data collected
from indirect sources. (Source: Research Methodology, By C. R. Kothari)

PRIMARY SOURCES
These include the survey or questionnaire method.

SECONDARY SOURCES
These include books, the internet, company brochures, product brochures, the company website,
competitors websites etc, newspaper articles etc.

60

SAMPLE SIZE AND METHOD OF SELECTING SAMPLE

SAMPLING
Sampling refers to the method of selecting a sample from a given universe with a view to draw
conclusions about that universe. A sample is a representative of the universe selected for study.

SAMPLE SIZE
The sample size for the survey conducted was on 70 respondents. This sample size was taken on
95% confidence level and 6 significant level. Data universe for this sample is in approx population of
Angul excluding people below age of 18 years.

SAMPLING TECHNIQUE
Random sampling technique was used in the survey conducted.

SCOPE OF STUDY
It was done to get the in depth knowledge of

INSURANCE SECTOR
PAYING CAPACITY OF CONSUMERS
ADVERTISEMENTS ANS ITs IMPACTS.

LIMITATION OF STUDY
TEDIOUS TASK
FIGURES CAN FLUCTUATE
HIGH DEPENDENCY ON HIGH RETURNS

61

FACTS AND FINDINGS

We find that 47% of the respondents fall in the age group of 18 25 years, 25% fall in the
age group of 26 35 years and 17% fall in the age group of 36 49 years. Therefore most
of the respondents are relatively young (below 26 years of age). These individuals could be
induced to purchase insurance plans on the basis of its tax saving nature and as an
investment opportunity with high returns.
In India, the largest life insurance company is Life Insurance Corporation of India. It has
been in existence in India since 1956 and is completely owned by the Government of India.
Today the organization has grown to 2048 offices serving 18 crore policies and has a corpus
of over 340000 crore INR.
The outlook of insurance as a product should be changed from something which you pay for
your whole life (whole life policy) and do not receive any benefit (the nominee only receives
the benefit in case of your death) to an extremely useful investment opportunity with the
prospects of good returns on savings, tax saving opportunities as well as providing for every
milestone in your life like marriage, education, children and retirement.
HDFC SLIC is faced with a large amount of competition. There are 18 insurance companies
in India inclusive of LIC. Hence to capture a larger part of the market the company could
introduce more reasonable plans with lesser premium payable per annum.

62

ANALYSIS & INTERPRETATION

A SURVEY ON THE LIFE INSURANCE INDUSTRY IN INDIA
AGE GROUP OF SURVEYED RESPONDENTS
TABLE 1:

Age group

No. of Respondents

18 - 25 years

127

26 - 35 years

67

36 - 49 years

46

50 - 60 years

24

More than 60 years

CHART 1:

9% 2%
18 - 25 years
17%

26 - 35 years

47%

36 - 49 years
50 - 60 years
More than 60 years

25%

INTERPRETATION:
From the chart above we find that 47% of the respondents fall in the age group of 18 25 years,
25% fall in the age group of 26 35 years and 17% fall in the age group of 36 49 years.
Therefore most of the respondents are relatively young (below 26 years of age). These individuals
could be induced to purchase insurance plans on the basis of its tax saving nature and as an
investment opportunity with high returns.

63

Individuals at this age are trying to buy a house or a car. Insurance could help them with this and
this fact has to be conveyed to the consumer. As of now many consumers have a false perception
that insurance is only meant for people above the age of 50. Contrary to popular belief the younger
you are the more insurance you need as your loss will mean a great financial loss to your family,
spouse and children (in case the individual is married) who are financially dependent on you.
CUSTOMER PROFILE OF SURVEYED RESPONDENTS
TABLE 3:
Customer profile

No. of respondents

Student

62

Housewife

Working Professional

116

Business

49

Self Employed

24

Government service employee

14

CHART 3:

9%

5%
23%

Student
Housewife

18%

2%

Working Professional
Business
Self Employed
Government service
employee

43%

INTERPRETATION:
From the chart above it can clearly be seen that 43% of the respondents are working professionals,
23% are students and 18% are into business. Therefore the target market would be working
individuals in the age group of 18 25 years having surplus income, interested in good returns on
their investment and saving income tax.

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NO. OF RESPONDENTS WHO HAVE LIFE INSURANCE POLICY IN THEIR NAME

TABLE 4:
Person who have life insurance policy
Yes
103
No
167
CHART 4:

38%

Yes
No

62%

INTERPRETATION:
This graph shows that out of total 270 respondents only 103 or 38% respondents have life
insurance policy in their name. Rest all dont have a single policy in their name. So there is a very
big scope for life insurance companies to cover these people. So in future business of life insurace
will gro further.

MARKET SHARE OF LIFE INSURANCE COMPANIES

TABLE 5:

65

LIFE INSURER
HDFC STANDARD LIFE
BIRLA SUN LIFE
AVIVA LIFE INSURANCE
BAJAJ ALLIANZ
LIC
TATA AIG
ICICI PRUDENTIAL
ING VYSYA
BHARTI AXA
OTHERS

NUMBER OF POLICIES
4
3
6
7
55
6
12
6
2
2

CHART 5:
60%
50%
40%
30%
20% 4%
10%
0%

53%
3%

6%

7%

6%

11%

6%

2%

2%

Percentage

Company Name

INTERPRETATION:
In India, the largest life insurance company is Life Insurance Corporation of India. It has been in
existence in India since 1956 and is completely owned by the Government of India. Today the
organization has grown to 2048 offices serving 18 crore policies and has a corpus of over 340000
crore INR.

66

ANNUAL PREMIUM PAID BY INDIVIDUALS FOR LIFE INSURANCE

TABLE 6:

Premium paid (p.a.)

No. of respondents

Rs. 5000 - Rs. 10000

40

Rs. 10001 - Rs. 15000

26

Rs. 15001 - Rs. 24900

18

Rs. 25000 - Rs. 50000

10

Rs. 50001 - Rs. 60000

Rs.60001 - Rs. 80000

Rs. 80001 - Rs. 100000

CHART 6:
ANNUAL PREMIUM PAID BY INDIVIDUALS FOR LIFE INSURANCE

4%

Rs. 5000 - Rs. 10000

2% 3%
39%

10%

Rs. 10001 - Rs. 15000

Rs. 15001 - Rs. 25000

17%

Rs. 25001 - Rs. 50000

25%

Rs. 50001 - Rs. 60000

Rs.60001 - Rs. 80000
Rs. 80001 - Rs. 100000

INTERPRETATION:
From the chart above we find that, 39% of the respondents surveyed pay an annual premium less
than Rs. 10001 towards life insurance. 25% of the respondents pay an annual premium less than
Rs. 15001 and 17% pay an annual premium less than Rs. 25000. Hence we can safely say that
HDFC SLIC would be able to capture the market better if it introduced products/plans where the
minimum premium starts at Rs. 5000 per annum.
POPULAR LIFE INSURANCE PLANS

67

TABLE 7:

Type of Plan

No. of Respondents

Term Insurance Plans

105

Endowment Plans

122

Pension Plans

16

Child Plans

Tax Saving Plans

19

CHART 7:
POPULAR LIFE INSURANCE PLANS

3%
6%

7%
Term Insurance Plans
39%

Endowment Plans
Pension Plans
Child Plans
Tax Saving Plans

45%

INTERPRETATION:
From the chart given above we can clearly see that 45% of the respondents hold endowment plans
and 39% of the respondents hold term insurance plans. Endowment plans are very popular and
serve two purposes life cover and savings.
If the policy holder dies during the policy term the nominee gets the death benefit that is, sum
assured and accumulated bonus. On survival the policy holder receives the survival benefit with a
bonus.
AWARENESS OF UNIT LINKED INSURANCE PLANS

68

TABLE 8:

Awareness of Unit Linked Plans

Yes
No

No. of Respondents
154
116

CHART 8:
AWARENESS OF UNIT LINKED INSURANCE PLANS

43%
57%

Yes
No

INTERPRETATION:
From the chart given above we find that 57% of the respondents are aware of unit linked life
insurance plans and 43% are not aware of such plans. These plans should be promoted through
advertising.
The company can advertise through television, radio, newspapers, bill boards and pamphlets. This
would increase awareness and arouse curiosity in the minds of the consumer which would enable
the company to market its products more effectively.
Unit linked plans are those where the benefits are expressed in terms of number of units and unit
price. They can be viewed as a combination of insurance and mutual funds. The number of units a
customer would get would depend on the unit price .
CONSUMER WILLINGNESS TO SPEND ON LIFE INSURANCE PREMIUM
TABLE 9:

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Willingness to spend on premium

Less than Rs. 6,000
Rs. 6,001 - Rs. 10,000
Rs. 10,001 - Rs. 25,000
Rs. 25,001 - Rs. 50,000
Rs. 50,001 - Rs. 1,00,000

No. of respondents
41
73
110
41
5

Percentage
15%
27%
41%
15%
2%

CHART 9:
CONSUMER WILLINGNESS TO SPEND ON LIFE INSURANCE PREMIUM

50%
40%
30%
20%
10%
0%

15%

27%

41%
15%

2%

Percentage

Insurance Premium

INTERPRETATION:
From the graph above, we can clearly see that 41% of the respondents would be willing to spend
between Rs. 10001 Rs. 25000 for life insurance. 27 % would be willing to spend between Rs.
6001 Rs. 10000 per annum. Only 15% would be willing to spend more than Rs. 25000 per annum
as life insurance premium.
We could say that the maximum premium payable by most consumers is less than Rs. 25000 p.a.
This is further reduced as most customers have already invested with LIC, ICICI Prudential, Birla
Sun Life, Bajaj Allianz etc.

70

CHART SHOWING IDEAL POLICY TERM

TABLE 10:
Ideal policy term
3 - 5 years
6 - 9 years
10 - 15 years
16 - 20 years
21 - 25 years
26 - 30 years
More than 30 years
Whole life Policy

No. of respondents
51
41
95
38
24
5
3
13

CHART 10:
CHART SHOWING IDEAL POLICY TER

Percentage

40%
35%
30%
25%
20%
15%
10%
5%
0%

35%
19%

15%

14%

9%

2%

1%

5%

Years

INTERPRETATION:
From the chart given above it can be seen that 35% of the respondents prefer a policy term of 10
15 years, 19% prefer a term of 3 5 years and 15% prefer a term of 6 9 years. This means that
HDFC SLIC could introduce more plans wherein the premium paying term is less than 15 years.
FACTORS THAT MOTIVATE RESPONDENTS TO PURCHASE INSURANCE
TABLE 11:
Parameter
Advertisements

No. of Respondents
35

71

High returns
Advice from friends
Family responsibilities
Others

84
46
89
16

CHART 11:

6%

13%
Advertisements
High returns

33%

Advice from friends

31%

Family responsibilities
Others

17%

INTERPRETATION:
From the chart above it can be seen that 33% of the respondents purchase life insurance to secure
their families, 33% take life insurance to get high returns, 17% purchase insurance on the advice of
their friends and 13% purchase insurance because of the influence of advertisements.
The main purpose of insurance is to cover the financial or economic loss that occurs to the family in
case of the uncertain death of the policy holder. But now a days this trend is changing. Along with
protection (life cover), a savings element is being added to insurance.
With the introduction of the new unit linked plans in the market, policy holders get the option to
choose where their money will be invested. They can invest their money in the equity market, debt
market, money market or a combination of these. The debt and money markets usually have low
risk attached whereas the equity market is a high risk investment option.
PREFERRED COMPANY TYPE OF THE RESPONDENTS
TABLE 12:
Type of Company

No. of Respondents

72

Percentage

Government Owned
Company

127

47%

Public Limited Company

62

23%

Private Company

49

18%

Foreign Company

32

12%

CHART 12:
PREFERRED COMPANY TYPE OF THE RESPONDENTS

70%
60%
50%
40%
30%
20%
10%
0%

60%
29%
7%

4%

No. of Repondents (%)

Type of Company

INTERPRETATION:
From the graph above we find that 60% of the respondents preferred to purchase insurance from a
government owned company, 29% of the respondents preferred to purchase insurance from a
public limited company and only 4% of the respondents preferred a foreign based company. Heavy
advertising through television, newspapers, magazines and radio is required.

73

SWOT ANALYSIS OF HDFC STANDARD LIFE INSURANCE

Analysis of the industrys environment
(SWOT Analysis)
HDFC and Standard Life first came together for a possible joint venture, to enter the life Insurance
market, in January 1995. It was clear from the outset that both companies shared similar values and
beliefs and a strong relationship quickly formed. In October 1995, the companies signed a 3-year
joint venture agreement.

STRENGTH
1. Domestic image of HDFC supported by Prudentials international image is strength of
company.

the

2. Strong and well spread network of qualified intermediaries and sales person.
3. Strong capital and reserve base.
4. The company provides customer service of the highest order.
5. Huge basket of product range which are suitable to all age and income groups.
6. Large pool of technically skilled manpower with in depth knowledge and understanding of the
market.
7. The company also provides innovative products to cater to different needs of different customers.

WEAKNESS
1. Heavy management expenses and administrative costs.
2. Low customer confidence on the private players.
3. Vertical hierarchical reporting structure with many designations and cadres leading to power
politics at all levels without any exception.
4. Poor retention percentage of tied up agents.

OPPORTUNITIES
1. Insurable population According to ING only 10% of the population is insured, which represents
around 30% of the insurable population. This suggests more than 300m people, with the potential to
buy insurance, remain uninsured.
2. There will be inflow of managerial and financial expertise from the worlds leading insurance
markets. Further the burden of educating consumers will also be shared among many players.

74

3. International companies will help in building world class expertise in local market by introducing
the best global practices.

THREATS
1. Legislation could impact.
2. Great risk involved.
3. Very high competition prevailing in industry.
4. Lack of infrastructure in rural areas could constrain investment.

75

CONCLUSION
HDFC standard life insurance is first life insurance Company in India. It has businesses spread out
across the globe. It was registered on 23rd December 2000. It currently ranks number 4 amongst the
insurers in India (Source: annual premium provided by the company)
The company faces a large amount of competition. To sustain itself it must promote its products
through advertising and improve its selling techniques. Consumers must be aware of the new plans
available at HDFC SLIC. The medium of advertising used could be television since most of its
competitors use this tool to promote their products. The company must be promoted as an Indian
company since consumers seem to have more trust in investing in Indian firms.
The unit linked concept must be specifically promoted. The general perception of life insurance has
to change in India before progress is made in this field. People should not be afraid to invest money
in insurance and must use it as an effective tool for tax planning and long term savings.
HDFC SLIC could tap the rural markets with cheaper products and smaller policy terms. There are
individuals who are willing to pay small amounts as premium but the plans do not accept premiums
below a certain amount. It was usually found that a large number of males were insured compared
to females. Individuals below the age of 30 (mostly male) were interested in investment plans. This
was a general conclusion drawn during prospecting clients.

76

RECOMMENDATION AND SUGGESTIONS

There are few recommendations that are recommended if the project is to be conducted
again in future.
Employees should be trained according to the changing standards of the
organization.
Company should conduct survey from time to time to according to which changes
can be introduced in the organization to stay updated in the market.
They should introduce creativity into the work, so that the employees can do their
work active mindedly.
Employees should be given compensation in order to keep them loyal.

Employees should be more involved in decision making to become more

differentiated.
Company should provide incentives to shop keepers.

More and More dealers can be appointed, so that sell can be increased.

Distribution system should be based on wholesaler and retilers.

Channel length should be short so cost can be reduced.

77

BIBLOGRAPHY
Websites:
www.hdfcslic.com
www.tata-aig-life.com
www.irdaindia.com
www.lic.com
www.money control.com
www.bajajallianz.com
www.icici.prulife.com
BIBLOGRAPHY

Magazine & News Paper

Insurance World
The Outlook Money
Insurance Chronicle
Economic Times
The Times Of India

78