Académique Documents
Professionnel Documents
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STUDIES,
DEVI AHILYA VISHWAVIDYALAYA
PROJECT TITLE
Signature of Guide:
Date:
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ACKNOWLEDGEMENT
I would like to thank my family, without their help and constant support; this
project would not have been possible.
I would like to thank all my friends who offered their valuable opinions and
suggestions and sometimes critical views throughout the survey which made
me constantly update myself and come out with a successful project.
Pratiksha Rajani
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DECLARATION
Pratiksha Rajani
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CONTENTS
• Abstract
• Introduction
o Insurance and ULIPs
o Company profile
• Objectives
• Literature Review
• Research Methodology
• Analysis
o Comparison of Plans
o Survey Analysis
• Findings
• Recommendations
• Conclusion
• Limitations
• Bibliography
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• Enclosures
ABSTRACT
The project aims to make a detailed study of Unit Linked Insurance Plans
(ULIPs) in the Indian context, a comparative analysis of ULIPs of some well
known selected companies and in the process identify the strengths and
weaknesses of IDBI FORTIS. The different selected companies apart from
IDBI FORTIS on which the project is entirely focused are namely:
a. ICICI PRUDENTIAL
b. BAJAJ ALLIANZ
c.. LIFE INSURANCE CORPORATION OF INDIA
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INTRODUCTION
INSURANCE
Insurance may be described as a social device to reduce or eliminate risk of
loss to life and property. Under the plan of insurance, a large number of
people associate themselves by sharing risks attached to individuals. The
risks which can be insured against include fire, the perils of sea, death and
accidents and burglary. Any risk contingent upon these, may be insured
against at a premium commensurate with the risk involved. Thus collective
bearing of risk is insurance.
LIFE INSURANCE
As is evident from its very name, it deals with insurance of human life. “Life
insurance corporation of India”- a public sector undertaking has the
monopoly in this sector since its nationalization.
In our wordily life, whenever there is uncertainty, there is an involvement of
risk. The instinct for security against such risk is one of the basic motivating
forces determining human attitudes.
As a squeal to this quest for Security, the concept of insurance must have
been born. The urge to provide insurance or protection against the loss of
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life & property must have prompted people to make some sort of sacrifice
willingly in order to achieve security through “COLLECTIVE CO-
OPERATION”, in this sense; story of insurance is probably as old as the
story of mankind.
All life insurance companies in India have to comply with the strict
regulations laid out by Insurance Regulatory and Development Authority of
India (IRDA). Therefore there is no risk in going in for private insurance
players. In terms of being rated for financial strength like international
players, only ICICI Prudential is rated by Fitch India at National Insurer
Financial highest claims paying ability rating.
The private companies are coming out with better products which are more
beneficial to the customer. Among such products are the ULIPs or the Unit
Linked Insurance Plans which offer both life cover as well as scope for
savings or investment options as the customer desires.
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Further, these types of plans are subject to a minimum lock-in period of
three years to prevent misuse of the significant tax benefits offered to such
plans under the Income Tax Act.
Unlike the mutual fund product that has a very simple cost structure, ULIPs
carry a greater number of costs (administration and mortality), in addition to
the others. So comparing ULIPs with mutual funds is erroneous.
Unit linked insurance plan (ULIP) is a life insurance solution that provides
the client with the benefits of protection and flexibility in investment. It is a
solution which provides for life insurance where the policy value at any time
varies according to the value of the underlying assets at the time. The
investment is denoted as unit and is represented by the value that it has
attained called as
Net Asset Value (NAV).
ULIPs are a category of goal-based financial solutions that combine the
safety of insurance protection with wealth creation opportunities. In ULIPs,
a part of the investment goes towards providing a life cover. The residual
portion of the ULIP is invested in a fund which in turn invests in stocks or
bonds; the value of investments alters with the performance of the
underlying fund opted by the customer. Simply put, ULIPs are structured in
such that the protection element and the savings element are distinguishable,
and hence managed according to your specific needs. In this way, the ULIP
plan offers unprecedented flexibility and transparency.
STRUCTURE OF ULIP
ULIP offered by different insurers have varying charge structures. Broadly
the different TYPES OF FEES AND CHARGES are given below.
However the insurers have the right to revise or cancel the fees and charges
over a period of time.
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• Policy/ Administration Charges: These are the fees for administration
of the plan and levied by cancellation of units. This could be flat
throughout the policy term or vary at a pre-determined rate
ADVANTAGES OF ULIPS
ULIP distinguishes itself through the multiple benefits that it provides to the
consumer. The plan is a one stop solution for everything the customers want.
Unit Linked Insurance Plans (ULIPs) are different from traditional plans
purely because, they are much more transparent, various charges are shared
with the customer before the sale of the product, so as to enable the customer
to make an informed decision. Customers have the flexibility to choose
their life cover. Also the customers have the choice of multiple fund options
based on their risk appetite, thereby enabling an investor to make the desired
returns from the investment.
The following are some of the advantages of Unit linked plans:
a. Life protection
c. Tax Planning
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d. Flexibility of cover continuance
e. Transparency
g. Liquidity
• Partial withdrawals during the term
• At maturity
i. Premium holiday
j. Allow Top-ups
COMPANY PROFILE
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ABOUT IDBI FORTIS
IDBI Fortis Life Insurance Co Ltd is a joint venture between three leading
financial conglomerates – India’s premier development and commercial
bank, IDBI Bank, one of India’s leading private sector banks, Federal Bank
and Europe’s banking and insurance giant, Fortis, each of which enjoys a
significant status in their respective business segments. In this venture, IDBI
Bank owns 48% equity while Federal Bank and Fortis own 26% equity each.
IDBI Fortis launched its first set of products across India in March 2008,
after receiving the requisite approvals from the Insurance Regulatory
Development Authority (IRDA). The company offers its services through a
vast nationwide network across the branches of IDBI Bank and Federal
Bank in addition to a sizeable network of advisors and partners.
At IDBI Fortis, people endeavor to deliver products that provide value and
convenience to the customer. Through a continuous process of innovation in
product and service delivery the company intends to deliver world-class
wealth management, protection and retirement solutions to Indian customers
IDBI Ltd. continues to be, since its inception, India’s premier industrial
development bank.
Created in 1956 to support India’s industrial backbone, IDBI has since
evolved into a powerhouse of industrial and retail finance. Today, it is
amongst India’s foremost commercial banks, with a wide range of
innovative products and services, serving retail and corporate customers in
all corners of the country from over 490 branches and more than 600 ATMs.
The Bank offers its customers an extensive range of diversified services
including project financing, term lending, working capital facilities, lease
finance, venture capital, loan syndication, corporate advisory services and
legal and technical advisory services to its corporate clients as well as
mortgages and personal loans to its retail clients. As part of its development
activities, IDBI has been instrumental in sponsoring the development of key
institutions involved in India’s financial sector – such as the Securities and
Exchange Board of India (SEBI), National Stock Exchange of India Limited
(NSE) and National Securities Depository Ltd.
Federal Bank is one of India’s leading private sector banks, with a national
network and dominant presence in the state of Kerala. It has a strong
network of over 550 branches and 450 ATMs spread across India. The bank
provides over four million retail customers with a wide variety of financial
products. Federal Bank is one of the first large Indian banks to have an
entirely automated and interconnected branch network. They operate on the
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core banking platform and are RTGS/ NEFT enabled through which the
Bank offers state-of-the-art technology enabled products and services.
VISION
MISSION
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VALUES
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OBJECTIVE
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LITERATURE REVIEW
Till today a lot of research has been done on the Indian insurance industry
especially the life insurance sector.
The material for this study was collected from various internet sites, journals
and books by various authors. Similar research has been carried out by
Sathak Mohanty who worked on the risk profile of ULIPs and analyzed
insurance as an investment option. He says that Life Insurance Corporation
of India (LIC) is still the undisputed leader in the Indian context.
During the course of the project some official studies on the products of
Tata-AIG and HDFC standard Life have been referred to.
Also the author Heena Vasnani says that if you are one of those who are
interested in keeping their hands in the stock market as well as providing a
life time protection to their family, must go for a ULIP LINKED
INSURANCE PLAN.
Posted by Deepak Shenoy made the research study ULIP versus TERM
PLAN+INVESTMENT: The winner is clear.
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RESEARCH METHODOLOGY
The Research Methodology used in this research project includes both the
secondary data and primary data. The right design and timeline of the project
is developed to achieve the objectives of the project.
SOURCES OF DATA
In the data collection method, we have to collect both primary and secondary
data to meet our objectives.
Secondary Data - The secondary data will be collecting directly from the
companies and their websites and internet surveys. Also a lot of similar
research studies and journals have been referred to.
Primary Data -The primary data will be collecting by a survey based on the
questionnaire. It is formulated on the basis of information carefully gathered
by me about the various mindsets of the people. Following are various
variables
ANALYSIS
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About the Product
IDBI FORTIS different variety of schemes and a good range of ULIPs under
the flagship banner Wealthsurance. There are a lot of other ULIPs under
Bondsurance, Homesurance and Retiresurance but as our study is only
confined to the study and comparative analysis of ULIPs under
Wealthsurance we would just be discussing about the various plans under
Wealthsurance. As discussed earlier the Wealthsurance Foundation Plan
enables the customer to save and build wealth to meet your financial goals.
However, unlike other investment alternatives, it also enables him to achieve
his wealth goals even in the event of unexpected death, accidents,
disablement or serious illness. The Wealthsurance Foundation Plan can
ensure that his plans for wealth creation are achieved by protecting that plan
with insurance benefits. Wealthsurance is one of its kinds in India. The
company offer 11 investment options and 8 protection benefits under the
plan apart from tax benefits Under Wealthsurance there are a lot of different
funds available which are explained below:
WEALTHSURANCE
Comparison of Plans
MARKET PLUS
PROFIT PLUS
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Min entry age 0 yrs
Max entry age 65 yrs
Max Maturity age 70, 75 yrs
Min premium 20000
No of funds 04
Riders ADBR, CIBR
Min premium payment term 3 yrs
FORTUNE PLUS
Comparative Analysis
MARKET PLUS
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PROFIT PLUS
FORTUNE PLUS
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BAJAJ ALLIANZ LIFE INSURANCE COMPANY
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CENTURY PLUS
PENSION GUARANTEE
NM-Not Mentioned,
WOP-Waiver of Premium,
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FIB-Family Income Benefit,
Comparative Analysis
CENTURY PLUS
PENSION GUARANTEE
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LIFE LINK SUPER
LIFE STAGE
NM-Not Mentioned,
WOP-Waiver of Premium
SP-Single Premium
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Comparative Analysis
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• In Wealthsurance there is unlimited switching redirection and partial
withdrawal allowed absolutely free of charge.
LIFE STAGE
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SURVEY ANALYSIS
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1. AGE OF THE RESPONDENTS AND PREFERENCE FOR ULIPs
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2. INCOME OF THE RESPONDENTS AND PREFERENCE FOR
ULIPs
Chi square = 3
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Options Frequenc (observed- (observed- (observed-
y expected expected)² expected)²/e
Govt. service 12 -.5 .25 .02
Businessman 7 -5.5 30.25 2.42
Private 22 9.5 90.25 7.22
company Job
Self employed 9 -3.5 12.25 .98
Total 50 10.64
Expected frequency= 50/4= 12.5
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Options Frequenc (observed- (observed- (observed-
y expected expected)² expected)²/e
0-5 % 26 9.4 88.36 5.32
5-10 % 13 -3.6 12.96 .78
10-15 % 11 -5.6 31.36 1.88
TOTAL 50 7.98
Expected frequency= 50/3 = 16.66
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Options frequenc Observed- (Observed- (observed-
y expected expected)² expected)²/e
Safety of 14 4 16 1.6
principal
Low risk 14 4 16 1.6
Higher 15 5 25 2.5
returns
Maturity 4 -6 36 3.6
period
Terms 3 -7 49 4.9
and
conditions
Total 50 14.2
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• The OBSERVED FREQUENCY is the response of the respondents
conducted through poll.
• The calculated value is then compared with the tabulated value which
can be found out by looking at chi square table at 4 degree of freedom
at 5% level of significance which comes out to be 9.488.
• Since the calculated value is greater than the tabulated value, the
NULL HYPOTHESIS is rejected which interprets that there is
association between the factors considered before making investment
and buying behavior. People mostly prefer high returns while making
investment.
8. PURPOSE OF INVESTMENT
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• The calculated value is then compared with the tabulated value which
can be found out by looking at chi square table at 3 degree of freedom
at 5% level of significance which comes out to be 7.815
• Since the calculated value is greater than the tabulated value, the
NULL HYPOTHESIS is rejected which interprets that there is
association between the two and people use to make investment
mostly for the purpose of children’s marriage.
FINDINGS
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The mode of information for choosing the insurance
company is very well explained and concluded that
advertisements are most popular.
Also,
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RECOMMENDATIONS
3. The company could also come out with a plan for both the
husband and wife where automatically the wife gets insured
along with her husband when her husband purchases the
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policy. This could also be the other way round. This could
be called the combo family plan. In simple words it means
buy one policy and get another free. No other company has
done something like this till now.
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STRENGTHS & WEAKNESSES
• The Fund allocation charges and fund management charges are very
low when compared to most of the other companies in the market.
• The tie-up of the well known IDBI bank with Fortis International and
Federal bank both of which are well established and good rated gives
the company a greater scope for good growth in the future.
• All the plans offered by the company especially under ULIPs are
really flexible as there are no charges charged for switching and a
customer can make use of the switching facility any number of times
he wants to free of charge. Also the premiums payable can be decided
by the customers themselves according to their feasibility and
capacity.
DEMERITS:
• IDBI Fortis has a limited presence right now so most of the people
know nothing about the company.
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forward successfully as it is always difficult for any new company to
capture the market very early.
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• Also with LIC still at the helm as the market leader it is really difficult
for the company to move anywhere closer to it because LIC is the
only public sector life insurance company and generally people would
prefer a public company rather than a private company.
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CONCLUSION
At the same time, investing in ULIP as investing avenue is good for people
who have interest in staying for longer period of time around 10 years and
above.
Also in the coming times ULIP will grow faster. ULIP are actually being
publicized more and also the other traditional endowment policies are
becoming unattractive because of lower interest rates.
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SCOPE FOR FURTHER RESEARCH
The ULIP has not been considered as a fruitful option in the market
nowadays when is compared with just a normal term plan+
investment, so further research can be made in this area.
LIMITATIONS
• The comparative analysis done here is just among the few companies
and many are left out. So, the results might not represent the real
situation.
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BIBLIOGRAPHY
• www.licindia.com
• www.idbifortis.com
• www.bajajallianz.com
• www.iciciprulife.com
• www.moneycontrol.com
• www.wikipedia.org
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ENCLOSURES
QUESTIONNAIRE
(This questionnaire is only of the sake of some research work being done on
insurance companies. Confidentiality would be maintained.)
Name:
________________________________________________________
Age Group:
Qualification:
Occupation:
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Your opinion about investment:
Advertisements Agents
Seminars Workshops
________________________________________________________
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