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A PROJECT REPORT ON A STUDY ON CONSUMERS PERCEPTION ON INSURANCE PRODCUTS OF KOTAK MAHINDRA LIFE INSURANCE LIMITED IN PARTIAL FULFILLMENT OF THE AWARD OF MASTER OF BUSINESS ADMINISTRATION SUBMITTED TO

JAWAHARLAL NEHRU TECHNOLOGICAL UNIVERSITY

BY K.SRAVANTHI ROLL. No: - (10B61E0054)

(Under Guidance of Mr.V.V.SUBBA RAO)

Nalla Malla Reddy Engineering College

(Affiliated to JNTU, Hyderabad)

Divya Nagar, near Narapally, KachavaniSingaram Ghatkesar Mandal, R R Dist, A.P

2010- 11

DECLARATION

I hereby declare that this project entitled A Study on Consumers Perception on Insurance Products of Kotak Mahindra Life Insurance Limited has been carried out by means under the able guidance of Mr.V.V.SUBBA RAO, NALLA MALLA REDDY ENGINEERING COLLEGE. This project report is submitted in partial fulfillment of the requirement for the award of Master of Business Administration Degree. I also declare that this project is a result of my own efforts and has not been submitted to any other university for any other degree or diploma.

K.SRAVANTHI

ACKNOWLEDGEMENT

I wish to thank to KOTAK MAHINDRA for their kind gesture of allowing me to undertake this project and its various employees who lent their helping hand towards the completion of this study. I am particularly indebted to Mr. Santhosh.R.Reddy (Relationship Manager) of KOTAK MAHINDRA for giving me the opportunity to undertake this project in their esteemed organization I thank A.RAJASHEKAR, M.COM, M.Phil (H.O.D) and all my faculty members who motivated me in the completion of this project Special thanks to my faculty cum guide Mr.V.V.SUBBA RAO, for the helpful comments and information regarding the logic and documentation of the project. Last but not least, I am thankful to my parents and to all my friends for their wholehearted support and suggestions, which helped me in completing this project. (K.SRAVANTHI)

ABSTRACT OF THE STUDY The present project work is undertaken to understand the Consumer perception on insurance products of Kotak Mahindra Life Insurance Products as well as to evaluate the performance of the company. This project report consists of: CHAPTER 1: Introduction: This chapter focuses on the concept, Objectives of the study, Need. Scope,, Research methodology and Limitations. CHAPTER 2: Deals with review of literature. CHAPTER 3: Deals with Industry profile and Company profile. CHAPTER 4: Deals with Data analysis and Interpretation. CHAPTER 5: Deals with Findings, Suggestions, and Conclusions.

CONTENTS_
CHAPTER NUMBERS CHAPTER 1.1NAME PAGE NOS INTRODUCTION 6 8 9 11 12 13 1.2OBJECTIVES 1.3- SCOPEOF THE STUDY 1.4- METHODOLOGY 1.5LIMITATIONS LITERATURE SURVEY

CHAPTER 1

CHAPTER 2

INDUSTRY PROFILE CHAPTER 3 COMPANY PROFILE CHAPTER 4 DATA ANALYSIS AND INTERPRETATION 5.1FINDINGS CHAPTER 5 5.25.3SUGGESTIONS CONCLUSION BIBILOGRAPHY

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77 78 79 81

INTRODUCTION Perception is the process through which a person forms an opinion about the various stimuli he receives from his sensory organs. In marketing, perception is concerned with understanding how the consumer views a

product or service. The five senses of a person help him in this process. The marketer uses various props to stimulate the consumer, that is, through the use of colors, sound, touch, taste, or smell, to observe the product. The marketer must distinguish his message from the competitors message. This is when Just Noticeable difference (JND) comes to their aid. JND is the minimum difference that the consumer can detect between two stimuli he receives. It helps the consumer to distinguish changes in prices among purchase alternatives. Marketers thus use stimuli to grab customers attention and most often these efforts are clearly visible and known to the customer However, they sometimes use indiscernible stimuli that are just below a consumers threshold so as to influence him. This is called subliminal message. Of all the stimuli a consumer comes into contact with, he pays attention to only a few and interprets the messages that he remembers. This is called the process of perception and has the three steps: 1) exposure, 2) attention, and 3) interpretation. How well the consumer pays attention will depend on the stimulus, and also the consumers interest and need for that product.

The consumer interprets the information in two ways:

The literal meaning or the semantic meaning The psychological meaning.

Marketers make use of perception to formulate marketing strategies. The marketers use a perceptual map, wherein they find out the attributes or the characteristics that the consumer associates with the product and they create the product accordingly. Thus, development of a brand or the logo of the product, packaging of the product, etc., have to be made keeping the consumers perception in mind.

Learning is a behavioral modification that occurs through experience or conditioning. Researchers have carried out studies to understand consumer learning. According to the behavioral learning theory, learning occurs from exposure to external stimuli such as advertising and according to the cognitive learning theory, consumer learning takes place by a process of internal knowledge transfer.

OBJECTIVES

1.

To study the history, growth & development of kotak Mahindra and their various insurance products.

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To study and find out the consumer perception on insurance products of kotak Mahindra life insurance product and find out the market share of kotak Mahindra. .

3.

To find out the effectiveness of service delivery in kotak Mahindra and to find out satisfaction levels of consumer To make suitable suggestions, if any.

4.

NEED OF THE STUDY Today in India there is 110 core population and only 8 core people have Life Insurance Policy. There are around 16 Life Insurance companies

operating in India. Among all the players in insurance market in India, LIC is the leading one and have high market share in life insurance sector. LIC is Public Sector Company and all other are private sector companies. The reason behind the LIC having high market share, it has its roots in India more than 50 years and brand name it created in minds of customer. The people of India have more trust in LIC than any other private insurance. The reason why LIC have high market share is its flexible payment options, benefits offered, low premium of policies and its relation and coordination with all the public sector undertakings. But the private Life Insurance companies are unable to grab the insurance market, because the people do not have trust in private sector. A customer will have his/her own choice of preferences to purchase a product. The preferences may be as quality, quantity, price, and brand name, additional features from other products and long term services, guarantee, warranty. According to the choice preference and need for the product only, the customer will purchase a particular product. For different products and services the preferences will be different base on time, situation, and need. But finally what the customer needs is value of the money he/she paid for the product i.e. enough returns (services, benefits) by using the product. The case is same even in the insurance sector also. There are various factors which influence and customer prefers in taking an Insurance policy. Factors are premium of policy, benefits of the policy, flexible payment options, brand name the company have in market. So among the above factors which when is preferred more by the customer is to be analyzed. The life insurance companies should market their products properly, and Make people aware of the company and its various policies, benefits.

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RESEARCH METHODOLOGY

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Research design is the arrangement of conditions for collection and analysis of data in a manner that aims to combine revenue to research purpose with economy in procedure. This primary data is collected through personal interviews with the help of questionnaire / suggestions: This secondary data is collected with the help of companys previous records, documents, different departments, competitor annual reports. All the necessary were collected through primary and secondary data. Primary data were collected through questionnaire personal interview schedule. Secondary data were collected from companys records and registers. The sample size taken for the study is 100 convenience sampling method was used for selecting the customers. The study was conducted during the period between May 2008 to June 2008.
.

LIMITATIONS

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Convenience sampling technique was employed as the study being made of academic importance and due to limited time and financial resources.

All the care was taken to design the questionnaire and administering the questionnaire errors to creep in. The conclusion drawn may not hold good to pass judgment for the entire market as the convenience sampling has been taken. The respondents (consumers) are not giving the correct information and some agents are not responding at all.

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Review of literature
Perception is the process through which a person forms an opinion about the various stimuli he receives from his sensory organs. In marketing, perception is concerned with understanding how the consumer views a product or service. The five senses of a person help him in this process. The marketer uses various props to stimulate the consumer, that is, through the use of colors, sound, touch, taste, or smell, to observe the product. The marketer must distinguish his message from the competitors message. This is when Just Noticeable difference (JND) comes to their aid. JND is the minimum difference that the consumer can detect between two stimuli he receives. It helps the consumer to distinguish changes in prices among purchase alternatives. Marketers thus use stimuli to grab customers attention and most often these efforts are clearly visible and known to the customer However, they sometimes use indiscernible stimuli that are just below a consumers threshold so as to influence him. This is called subliminal message. Of all the stimuli a consumer comes into contact with, he pays attention to only a few and interprets the messages that he remembers. This is called the process of perception and has the three steps: 1) exposure, 2) attention, and 3) interpretation.

How well the consumer pays attention will depend on the stimulus, and also the consumers interest and need for that product. The consumer interprets

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the information in two ways: 1) the literal meaning or the semantic meaning and 2) the psychological meaning. Hence we are guided by our learning as well as the semantic meaning of a word. A consumer also interprets the symbols and other physical features of the product on the basis of his experience and cultural beliefs. This is called semiotics. Marketers make use of perception to formulate marketing strategies. The marketers use a perceptual map, wherein they find out the attributes or the characteristics that the consumer associates with the product and they create the product accordingly. Thus, development of a brand or the logo of the product, packaging of the product, etc., have to be made keeping the consumers perception in mind.

Learning is a behavioral modification that occurs through experience or conditioning. Researchers have carried out studies to understand consumer learning. According to the behavioral learning theory, learning occurs from exposure to external stimuli such as advertising and according to the cognitive learning theory, consumer learning takes place by a process of internal knowledge transfer. Motivation, cues, response, and reinforcement are the basic characteristics of learning. Conditioning can be defined as a learning process in which an organisms behavior becomes dependent on the occurrence of a stimulus in its environment. Ivan Pavlov a Russian physiologist, demonstrated conditioning by conducting experiments on dogs. The most important aspects of classical conditioning are repetition, stimulus generalization, and

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stimulus discrimination. Instrumental conditioning, like classical conditioning, also has an association between stimulus and response but in instrumental conditioning, the stimulus that provides the most rewarding response will be learned. B.F. Skinner, a behavioral scientist, conducted some experiments on pigeons to prove this point. When the environmental conditions reward a certain behavior it is said to be a positive reinforcement. When a particular behavior results in punishment or less satisfaction, the individual will try to avoid such behavior. This is called negative reinforcement. According to cognitive learning theory, the human mind processes the information it receives from the environment. There are three stages in the memory of a human being. They are sensory memory, shortterm memory, and long-term memory. Involvement theory is developed from research called split-brain theory. This theory views the human brain as being divided into left and right hemispheres. The left hemisphere functions rationally and logically, processing information pertaining to reading, writing, speaking, and such other forms of information and forms mental images based on this. The right hemisphere of the brain, unlike the left, is emotional and spontaneous, and is involved in analyzing nonverbal and pictorial representations of information.

If an individual resorts to information processing for purchasing a product then he is considered to be highly involved. Otherwise, he is said to be

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making a purchase with low involvement. There are five types of involvement Ego involvement, commitment, communication involvement, purchase importance, and response involvement. Brand loyalty can be considered as the conscious or unconscious decision of a consumer that is reflected in his/her expressed intent or behavior to purchase and repurchase a product on a continuous basis. The amount of additional income expected from a branded product over and above what might be expected from an identical, but unbranded product is called brand equity. Product positioning can be considered as a technique that marketers use to create an identity and image for their products. When marketers leverage on the brand equity by using the existing brand name for new products, it is called brand leverage. Attitudes have been understood as learned predispositions that project a positive or negative behavior consistently toward various objects of the world. The tangible and intangible objects, toward which one can form an attitude are called attitude objects. Attitudes influence the way we think and behave and are therefore important for the marketers who study them to understand how a consumer behaves. Attitudes have certain characteristics. They are formed as we grow up, based on the environment in which we grow up. Attitudes can be either of a high or low degree and the intensity depends on the strength of conviction with which the person believes in them. Attitudes serve various functions such as utilitarian function, value expressive function, Ego-defense function, and knowledge function. Attitude models were developed by psychiatrists to understand the relationship

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between attitudes and human behavior. These models help the marketer in understanding how attitudes influence a persons behavior as a consumer. These models are: Tri- component model, multi-attribute model, Theory of trying to consume, and Attitude toward the ad model. Attitudes are formed through classical conditioning, instrumental conditioning, and cognitive theory. Attitudes are measured using the Semantic differential scale and Linkers scale to understand how the consumer might behave toward a particular product. While it is generally accepted that attitudes influence behavior, there are some theories that state that behavior precedes attitudes. Such theories are cognitive dissonance theory, self-perception theory, social judgment theory, and balance theory. Attitudes toward a product can be changed by highlighting new functions of the product, or by associating them with celebrities, by changing the beliefs a consumer has regarding the products, or by getting the consumer more involved in the product. A reference group serves as a frame of reference for an individual and influences his/her behavior. Reference groups can be classified in many different ways, based on degree of influence (normative reference group and comparative reference group); type of interaction (direct reference group and indirect reference group); and type of influence (positive reference group and negative reference group). A reference group can have considerable influence on the consumption decisions of an individual consumer. An individuals reference group can

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range from family to a nation or a culture. There are three types of reference group influences informational influence (when advice is sought by a less knowledgeable individual from a more knowledgeable individual); utilitarian influence (conformism due to fear of penalty or appreciation from a significant few); and value-expressive influence (when an individual internalizes the group goals, beliefs, and aspirations, and acts accordingly). Some important reference groups are friends, shopping groups, work groups, virtual communities, brand communities, and consumer action-groups. Celebrity appeal, expert appeal, common man appeal, executive and employee appeal, and spokes-character appeal are some of the important reference group appeals used by marketers to influence consumers purchase decisions. Opinion leaders are individuals to whom an opinion seeker turns for advice or product related information while making purchase decisions. Opinion leadership can be a result of passive exchange of information in a group discussion or of information being actively exchanged. The major features of opinion leadership are credibility, exchange of information as well as advice related to one core-category and two-way flow of information. Opinion leaders are generally knowledgeable about one core category and some related categories. There are some special types of opinion leaders who differ in their area of knowledge and influence over the opinion seeker generalized opinion leaders (knowledgeable about multiple product categories), market mavens (knowledgeable about general market trends), surrogate buyers (experts hired to make product-related recommendations

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and even purchase on behalf of the consumer), and purchase pals (strong and weak tie people who accompany and assist an individual in shopping). There are four methods to identify an opinion leader self-designating method, sociometric method, key informant method, and objective method. Word-of-mouth is an interpersonal communication channel through which people share information. Word-of-mouth, if positive, can lead to huge gains for the marketer, and if negative, can ruin the brand image. Marketers use word-of-mouth in their favor by creating a buzz around a product to catch the attention of the target segment and influence sales. A family comprises two or more individuals, related by blood, marriage, or adoption, staying together. There are primarily three types of family structures married couple, nuclear family (married couple with children), and extended family (married couple with children and their grandparents). In recent times, various new kinds of family structures have emerged, like single-parent households, same sex households, voluntary childless couples, and unmarried couples. Pets, like cats and dogs, have also become a part of the family and in some countries, are treated as companions who can also be beneficiaries to guardian's (owners) property. The family has four primary functions economic well-being of the family members, emotional support, maintaining family lifestyle, and consumer socialization. Consumer socialization is one of the most important functions of the family and comprises processes through which people, especially children, acquire skills, knowledge, and attitudes, relevant to their functioning in the marketplace.

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This process is generally initiated by family, but media and friends are also the influencing factors. The family lifecycle provides an important segmentation tool to marketers based on its stages. The traditional family lifecycle stages are bachelorhood, honeymooners, parenthood, post parenthood, and dissolution. The knowledge of family decision-making is important for marketers to understand various family segments and their purchase motivations. There are four phases in the family purchase process problem or need recognition, information search and evaluation of alternatives, final decision to purchase, and post-purchase behavior. There are five major roles in the purchase process initiator, influencer, decider, buyer, and user. Household decision-making has three important players husband, wife, and children. Certain stereotypes have been set, which help to determine whether the decisions are taken by the husband or by the wife. Broadly there are four types of family decisions husband-dominated, wifedominated, completely autonomous decisions by either husband or wife, and joint decisions. In todays fast changing world, there has been a shift in economic, social, and cultural environments of countries, leading to a shift or, sometimes, complete reversal of the traditional husband-wife role, i.e., the wife is the bread earner and the husband, the child rearer.

The role of children as decision-makers has also changed. They are not only

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direct purchasers but also quite influential indirect purchasers, with the span of their influence ranging from items directly consumed by them to a large number of household purchase decisions. They also comprise a lucrative future market, which marketers are trying hard to capture in the present.

Behavioral economics focuses on the kinds of attitudes people have towards money and how they spend their money. Consumer sentiment is a significant influence which relates to consumer spending patterns; it depends on the employment scenario, the economy as a whole, the level of regular income, the quality of life, and stock market performance. Societies are generally divided into various hierarchical social strata, which are dependent on factors like education, occupation, and income. Different societies have different strata, which may vary from as low as two to as high as nine or ten. Most societies have three broad social classes upper class, middle class, and lower class. People belonging to one particular class can move to other classes, willingly or unwillingly, in an open society. Such moves can significantly affect their consumption behavior. Consumer tastes and preferences are influenced greatly by consumer socialization, as well as economic, social, and cultural capital. Marketers generally focus on affluent consumers, but recent trends have shown increasing penetration in middle and lower social classes. Many products and services are used by people as indicators of their social standing and are known as status symbols.

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Culture is a set of socially transmitted beliefs, values, and customs. It is a collective social phenomenon and influences the consumption behavior of individuals throughout the world. Consumer beliefs are related to consumers knowledge and both consumer beliefs and values help them in the evaluation of stores, products, and brands. Culture is dynamic in nature and changes with the changing needs of people. It influences all human dealings and is learned through socialization. Cultural meaning, in the context of consumer behavior, is believed to be present in three locations culturally constituted world, consumer goods, and individual consumer. The meanings are transferred from the world to goods through advertising and the fashion system; and then from the goods to the consumer through various rituals like possession ritual, exchange ritual, grooming ritual, and divestment ritual. Different cultures differ in their basic beliefs, values, and customs. The learning of ones own culture is known as enculturation while learning of a foreign culture is known as acculturation. Language, symbols and rituals are also important ingredients of a culture and play an important part in marketers communication to the target market, which may be a local community or a foreign market. There are three techniques to measure culture content analysis (the content of local communication is reflective of the cultural values and way of life of a society); consumer fieldwork (the use of qualitative and quantitative

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techniques of consumer research to understand the cultural behavior and its influence on consumption); value measurement survey instruments (directly asking people about their cultural values). There are three instruments of value measurement survey the Rokeach Value Survey, List of Values method (LOV), and Values and Lifestyle Survey (VALS). Every culture has some core values; however, in the context of consumer behavior, core values are determined on the basis of - acceptance by a majority of people in a society, endurance over a long period of time, and significant relationship with consumption behavior. Cultures are further divided into smaller cultural units known as sub-cultures. The basis of division can be nationality, social class, religion, region, language, occupation, age, sex, etc. An individual can be a member of one or more sub-cultures simultaneously. Consumers all over the world are from different nations and have different cultures. The world focus on free trade has led to a large number of marketers targeting consumers in foreign countries. These marketers need to understand that the purchase intention of the potential consumer is greatly influenced by the image of the country-of-origin. The image of the country can be related to some specific products or product categories. Consumers from different countries can have different perceptions of products from a country. The domestic consumers themselves may be greatly influenced by the image of the country and may prefer a foreign product from a country that they perceive to be good at producing such products. Sometimes, the international relations among nations also influence the

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purchase intentions of the potential consumers. Consumers of nations with a recent history of animosity may not buy products from each other even though they are aware of the better quality of these products/brands. Consumers may also feel that that it is immoral to buy foreign made product/brands (consumer ethnocentrism). Marketers often have to make choices on whether to adopt a global marketing strategy or a local marketing strategy. Global strategy means that there is no change in brand name, attributes and promotion strategy across nations. Many marketers, however, prefer a more flexible approach to marketing, using a mixture of both global and local strategies, i.e., a global strategy with local implementation. Marketers often make the mistake of ignoring the cultural differences in terms of consumer needs (product problems), promotion, pricing, and distribution, leading to failure.

INDUSTRIAL PROFILE

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INSURANCE: A state monopoly has little incentive to innovative or offers a wide range of products. It can be seen by a lack of certain products from LICs portfolio and lack of extensive risk categorization in several GIC products such as health insurance. More competition in this business will spur firms to offer several new products and more complex and extensive risk categorization. It would also result in better customer services and help improve the variety and price of insurance products. The entry of new players would speed up the spread of both life and general insurance. Spread of insurance will be measured in terms of insurance penetration and measure of density. With the entry of private players, it is expected that insurance business roughly 400 billion rupees per year now, more than 20 per cent per year even leaving aside the relatively under developed sectors of health insurance, pen More importantly, it will also ensure a great mobilization of funds that can be utilized for purpose of infrastructure development that was a factor considered for globalization of insurance. More importantly, it will also ensure a great mobilization of funds that can be utilized for purpose of infrastructure development that was a factor considered for globalization of insurance. With allowing of holding of equity shares by foreign company either itself or through its subsidiary company or nominee not exceeding 26% of paid up capital of Indian partners will be operated resulting into supplementing domestic savings and Increasing economic progress of

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nation. Agreements of various ventures have already been made to be discussed later on in this paper. It has been estimated that insurance sector growth more than 3 times the growth of economy in India. So business or domestic firms will attempt to invest in insurance sector. Moreover, growth of insurance business in India is 13 times the growth insurance in developed countries. So it is natural, that foreign companies would be fostering a very strong desire to invest something in Indian insurance business. Most important not the least tremendous employment opportunities will be created in the field of insurance which is burning problem of the present day today issues. GENERAL INSURANCE: British rule also introduced general insurance in India. Initially, this business was conducted through British and other foreign insurance companies. The first general insurance company in India TRITAN general insurance company limited was established at Calcutta in 1950. the first such type of company was established by Indians in Mumbai in 1907 with the name Indian mercantile insurance company limited at the time of independence, about 40% of the total general insurance business in India was done buy the British and other foreign insurance companies, but after independence this percentage continuously declined. In 1971, the government took over the management of all general insurance companies. General insurance business in the country was nationalized with effect from 1 January, 1973 by the general insurance Business (Nationalization) act, 1972. More than 100 non-life insurance companies including branches of foreign companies operating with in the country were amalgamated and

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grouped into four companies, viz., the national insurance company limited the new India assurance company limited the oriental insurance company limited and the united India insurance company limited with head office at Kolkata, Mumbai, New Delhi and Chennai, respectively. General insurance corporation (GIC) which was the holding company of the four public sector general insurance companies has since been delinked from the later and has been approved as the Indian Reinsure since 3 November 2000.the share capital of GIC and that of the four companies are held by the government companies registered under the companies act. The general insurance business has grown in spread and volume after nationalization. The four companies have 2,699 branch offices, 1,360 divisional offices and 92 regional offices spread all over the country. GIC and its subsidiaries have representation either directly through branches or agencies in 16 countries and through associate/locally incorporated subsidiary companies in 14 other countries. The net profit of the industry during 2001-200 amounted to 12,229 crore, as against Rs.10, 772 crore during 2000-2001 representing a growth of 1352 percent over the premium income of last year. Before nationalization, insurance business was centralized in urban areas only. GIC with its central office in Pune and seven zonal offices at Mumbai, Kolkata, Delhi, Chennai, Hyderabad, Kanpur and Bhopal operates through 100 divisional offices in important cities and 2048 branch offices. As on 31 march, 2003 GIC had 9.88 lakh agents spread over the country. GIC also entered the international insurance market and opened its offices in England, Mauritius and Fiji. The corporation has registered a joint venture company-life insurance corporation (Nepal) limited in Katmandu on 26 December, 2000 in

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collaboration with a local industrial group. An off-shore company GIC (Mauritius) off-shore limited has also been registered on 19 January, 2001 to tap the African insurance market. The total business of GIC during 2002-2003 was Rs 1,76,088 crore a sum assured under 239.3 lakh policies. GIC group insurance business during 2002-2003 was Rs.1645 crore providing covers to 18.32 lakh people LIFE INSURANCE: The Britishers introduced life insurance to India. A British firm in 1818 established the oriental life insurance company at Calcutta. In 1823, Bombay Life Insurance Company was established at Mumbai and in 1829 madras equitable life insurance society was established at madras (Chennai). Till 1871, these companies collected 15-20 percent more premiums from Indian as they treated Indians living standard below the normal, in 1871, Bombay mutual life assurance society was established which started life insurance of Indians on general premium rate for the first time. Indian insurance company act was implemented which aimed at collecting statistical information related to insurances of Indians and foreigners. In 1938, all previous acts were integrated and insurance act 1938 came into force. After independence, this act was amended in 1950. Till 1956, 154 Indian, 16 non-Indian insurance companies and 75 provident committees were working in life insurance business of the country. On January 19, 1956 central government tool over the charge of all these 245 Indian and foreign insurance companies and on September 1, 1956 these companies were nationalized. Under an act passed by the parliament on September 1, 1956 life insurance Corporation of India was established with the capital of Rs. 5 crores given by the government of India. Malhotra committee, constituted off making recommendations for insurance sector, in

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its report submitted in January 1994, recommended enhancing the capital base of Rs. 5 crore to Rs. 200 crore fro LIC, but the Government did not accept it. LIC was established to spread the message of life insurance savings for nation building activities. Keeping in view the recommendations of administrative Reform commission. Indian life insurance corporation accepted a few important objectives in 1974, which are as follows: to extend the sphere of life insurance and to cover every person eligible for insurance under insurance umbrella. Special attention will be provided to give life insurance cover to economically weaker section of the society on appropriate and bearable cost secondly, to mobilize maximum savings of the people by making insured savings more attractive thirdly, to ensure economic use of resources collected from policy holders and finally, under changing social and economic structure of the country efforts will be made to meet the life insurance requirements of Various stratas of the society. Reforms in insurance sector: Insurance sector constitutes an important segment to financial market in India and plays a predominant role in the formation of capital in the country. The reforms in the insurance sector started with the enactment of insurance regulatory and development authority act 1999. The act paved the way for the entry of private insurance companies into the insurance market and also constitution of insurance Regulation and Development Authority (IRDA).

Insurance Regulatory and Development Authority:

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The insurance regulatory and development authority was constituted on 19 April 2000 to protect the interest of the holders of insurance policies and to regulate, promote and ensure orderly growth of the insurance industry. The authority consists of a chairperson, four whole-time members and part-time members. For regulations the insurance sector, the authority has been issuing regulations covering almost the entire segment of insurance industry namely, regulation on insurance agents, solvency margin, re-insurance, registration of insurers, obligation of insurers to rural and social sector, accounting procedure, etc. Insurance (amendment) act, 2002: The government, functioning of the opened up insurance sector, has enacted insurance act, 2002. The act relates to introduction of brokers as intermediaries, allowing more flexile in the eligibility qualification for corporate agents, allowing more flexible mode of payment of premium through credit cards, smart cards, over interknit, etc. Change in the allocation of surplus between share holders and policy holders, direct entry of co-operatives in the insurance sector and some other consequential amendments which are of a technical nature for the smooth functioning of the opened up sector. General Insurance Business (Nationalization) Amendment Act, 2002: With the enactment of IRDI act, 1999 it was necessary to nominate Indian re-insurer under insurance act, 1938. The government decided that general insurance companies should be declared as Indian Re-insurer. Since under the act, a re-insurer cannot underwrite general insurance business.

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Recommendations of Malhotra Committee for improving insurance sector:

The government of India constituted a committee for recommending improvements in insurance sector under the chairmanship of Dr. R. N. Malhotra, Ex-Governor of RBI, in April 1993. On January 7, 1994 the committee submitted its recommendations to the finance minister. Some of the important recommendations are as follows. Liberalization of insurance industry: The committee has recommended for liberalizing insurance industry:
The private sector should also be permitted in insurance sector, but the

same company should not permit to perform both life insurance and general insurance business. The minimum paid-up capital for the now company should be Rs. 100 crore included a minimum subscription of 26% and maximum of 40% from promoters. No other equity holder, excluding the promoters of private insurance companies, Should be granted equity share exceeding 1% of total equity. Co-operative societies at state level should be permitted to perform business with the minimum paid-up capital of Rs.100 crore Foreign insurance companies should be permitted to operate in India on selective basis and they should be granted permission only of they perform business by establishing a joint enterprise with Indian promoters.

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Restructuring of insurance industry: The committee also put recommendations for restructuring insurance industry:
(a) All the four associate companies of GIC should be granted permission to

perform their business independently and GIC should work only as Reinsurance Company. (1) The existing share capital of GIC should be increased from Rs. 107.5 crore to Rs.200 crore, which should included 50% share of the government and the rest shares should be opened for the general public (through a certain percentage of share should be reserved for the employees of the corporation) (2) The existing paid-up capital for all associate companies of GIC (which is at present Rs.40 crore for every company and fully financed by GIC) should be increased up to Rs.100 crore. The capital of all these companies should include the government share of 50% and the remaining share should be opened for the general public. (3) The committee also recommended to increase the paid-up capital of LIC form existing level of Rs.5 crore to Rs.200 crore (again 50% for the government and rest for the public) Regulation of insurance business: The committee has put following recommendations for regulation insurance business (i) (ii) All old and new insurance companies should be regulating under insurance act. Controller of insurance should be given all the responsibilities under insurance act.

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(iii)

Insurance regulatory authority (IRA) should be established in insurance sector on the lines of SEBI and IRA should be granted complete functional autonomy.

(iv)

IRA should have a permanent source for financing its activities and for this IRA should be permitted to charge a levy of 0.5% on annual incomes of insurance companies.

Rural insurance:
1) New insurance companies entering into insurance industry should

perform a minimum predetermined insurance in rural sector and they should attain this limit compulsorily. Postal life insurance should be used to promote life insurance business in rural areas. Insurance surveyors: License system for insurance surveyors should be abolished and insurance companies should be granted permission to recruit the surveyors of their own
At present, any claim of Rs.20, 000 or above comes under the

enquiry of the surveyor. The committee has recommended extending this minimum limit on Rs.1 lakh.
Insurance companies should be permitted to settle the claims up to

Rs.1 lakh on primary survey basis. INSURANCE TODAY: In 1993, Malhotra Committee, headed by former Finance Secretary and RBI Governor R. N. Malhotra, was formed to evaluate the Indian insurance industry and recommend its future direction. The Malhotra committee was set up with the objective of complementing the reforms initiated in the financial sector.

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With the setup of Insurance Regulatory Development Authority (IRDA) the reforms started in the Insurance sector. It has became necessary as if we compare our Insurance penetration and per capita premium we are much behind then the rest of the world. The table above gives the statistics for the year 2000. With the expected increase in per capita income to 6% for the next 10 year and with the improvement in the awareness levels the demand for insurance is expected to grow. As per an independent consultancy company, Monitor Group has estimated a growth form Rs.218 Billion to Rs.1003 Billion by 2008. The estimations seems achievable as the performance of 13 life Insurance players in India for the year 2002-2003 (up to October, based on the first year premium) is Rs.66.683 million being LIC the biggest contributor with Rs. 59,187 million. As of now LIC has 2050 branches in 7 zones with strong team of 5, 60,000 agents. IMPACT OF GLOBALISATION: The introduction of private players in the industry has added colours to the dull industry. The initiatives taken by the private players are very competitive and have given immense competition to the on time monopoly of the market LIC. Since the advent of the private players in the market the industry has seen new and innovative steps taken by the players in the sector. The new players have improved the service quality of the insurance. As a result LIC down the years have seen the declining in its career. The market share was distributed among the private players. Though LIC still holds 75% of the insurance sectors the upcoming nature of these private players are enough to give more competition to LIC in the near future. LIC market share has decreased from 95% (2002-03) to

35

81% (2004-05). The following company holds the rest of the market share of the insurance industry. PRESENT SCENARIO OF GLOBALISATION: In a tough battle to expand market shares the private sector life insurance industry consisting of 14 life insurance companies at 26% have lost 3% of market share to the state owned Life Insurance Corporation (LIC) in the domestic life insurance industry in 2006-07. According to the figures released by Insurance Regulatory & Development Authority, the total premium of these 14 companies have shot up by 90% to Rs 19,471.83 crore in 2006-07 from Rs 10, 252 crore. Though ICICI Prudential Life Insurance remained as the No 1 private sector life insurance company during the year. Bajaj Allianz overtook ICICI Prudential in terms of monthly market share in March, for the first time ever. Bajaj's market share among private players in non-single premium for March stood at 29.1% vs. ICICI Prudential's 23.8%. Bajaj gained 4.6 percentage point market share among private sector players for FY07. Among other private players, SBI Life and Reliance Life continued to do well, each gaining 4% market share in FY07. SBI Life's growth was driven by increasing contribution from ULIP premiums. Another notable development of the 2006-07 performance has been the expansion of retail markets by the life insurance companies. Bajaj Alliannz Life insurance has added 20 lakh policies while ICICI Prudential has expanded over 19 lakh policies during the year. 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

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Rs450 billion. Together with banking services, it adds about 7 per cent to the countrys GDP. Gross premium collection is nearly 2 per cent of GDP and funds available with LIC for investments are 8 per cent of GDP. Yet, nearly 80 per cent of Indian population is without life insurance cover while health insurance and non-life insurance continues to be below international standards. And this part of the population is also subject to weak social security and pension systems with hardly any old age income security. This it is an indicator that growth potential for the insurance sector is immense. A well-developed and evolved insurance sector is needed for economic development as it provides long term funds for infrastructure development and at the same time strengthens the risk taking ability. It is estimated that over the next ten years India would require investments of the order of one trillion US dollar. The Insurance sector, to some extent, can enable investments in infrastructure development to sustain economic growth of the country. CHALLENGES BEFORE THE INDUSTRY: New age companies have started their business as discussed earlier. Some of these companies have been able to float 3 or 4 products only and some have targeted to achieve the level of 8 or 10 products. At present, these companies are not in a position to pose any challenge to LIC and all other four companies operating in general insurance sector, but if we see the quality and standards of the products which they issued, they can certainly be a challenge in future. Because the challenge in the entire environment caused by globalization and liberalization the industry is facing the following challenges.

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The existing insurer, LIC and GIC, have created a large group of dissatisfied customers due to the poor quality of service. Hence there will be shift of large number of customers from LIC and GIC to the private insurers. 1) LIC may face problem of surrender of a large number of policies, as new insurers will woo them by offer of innovative products at lower prices. 2) The corporate clients under group schemes and salary savings schemes may shift their loyalty from LIC to the private insurers. 3) There is a likelihood of exit of young dynamic managers from LIC to the private insurer, as they will get higher package of remuneration. 4) LIC has overstaffing and with the introduction of full computerization, a large number of the employees will be surplus. However they cannot be retrenched. Hence the operating costs of LIC will not be reduced. This will be a disadvantage in the competitive market, as the new insurers will operate with lean office and high technology to reduce the operating costs. 5) GIC and its four subsidiary companies are going to face more challenges, because their management expenses are very high due to surplus staff. They cant reduce their number due to service rules. 6) Management of claims will put strain on the financial resources, GIC and its subsidiaries since it is not up the mark. 7) LIC has more than to 60 products and GLC has more than 180 products in their kitty, which are outdated in the present context as they are not suitable to the changing needs of the customers. Not only that they are not competent enough to complete with the new products offered by foreign companies in the market. 8) Reaching the consumer expectations on par with foreign companies such as better yield and much improved quality of service particularly in the

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area of settlement of claims, issue of new policies, transfer of the policies and revival of policies in the liberalized market is very difficult to LIC and GIC. 9) Intense competition from new insurers in winning the consumers by multi-distribution channels, which will include agents, brokers, corporate intermediaries, bank branches, affinity groups and direct marketing through telesales and interest.
10) The market very soon will be flooded by a large number of products by

fairly large number of insurers operating in the Indian market. The existing level of awareness of the consumers for insurance products is very low. It is so because only 62% of the Indian population is literate and less than 10% educated. Even the educated consumers are ignorant about the various products of the insurance. 11) 12) 13) The insurers will have to face an acute problem of the redressal of the Increasing awareness will bring number of legal cases filled by the Major challenges in canalizing the growth of insurance sector are consumers, grievances for deficiency in products and services. consumers against insurers is likely to increase substantially in future. product innovation, distribution network, investment management, customer service and education.

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ESSENTIALS TO MEET THE CHALLENGES: 1) Indian insurance industry needs the following to meet the global challenges 2) Understanding the customer better will enable insurance companies to design appropriate products, determine price correctly and increase profitability.
3) Selection of right type of distribution channel mix along with prudent

and efficient FOS [Fleet on Street] management. 4) An efficient CRM system, which would eventually create sustainable competitive advantages and build a long-lasting relationship 5) Insurers must follow best investment practices and must have a strong asset management company to maximize returns. 6) Insurers should increase the customer base in semi urban and rural areas, which offer a huge potential.
7) Promoting health insurance and using e-broking to increase the

business Overview of Insurance: Life insurance has traditionally been looked upon pre-dominantly as an avenue that offers tax benefits while also doubling up as a saving instrument. The purpose of life insurance is to indemnify the nominees in case of an eventuality to the insured. In other words, life insurance is intended to secure the financial future of the nominees in the absence of the person insured. The purpose of buying a life insurance is to protect your dependants from any financial difficulties in your absence. It helps individuals in providing them with the twin benefits of insuring themselves while at the same time acting as a compulsory savings instrument to take care of their

40

future needs. Life insurance can aid your family on a rainy day, at a time when help from every quarter is welcome and of course, since some plans also double up as a savings instrument, they assist you in planning for such future needs Traditionally, buying life insurance has always formed an integral part of an individuals annual tax planning exercise. While it is important for individuals to have life cover, it is equally important that they buy insurance keeping both their long-term financial goals and their tax planning in mind. This note explains the role of life insurance in an individuals tax planning exercise while also evaluating the various options available at ones disposal. Life is full of dangers, but with insurance, you can at least ensure that you and your dependents dont suffer. Its easier to walk the tightrope if you know there is a safety net. You should try and take cover for all insurable risks. If you are aware of the major risks and buy the right products, you can cover quite a few bases. The major insurable risks are as follows: 1 Life 2 Health 3 Income 4 Professional Hazards 5 Assets 6 Outliving Wealth 7 Debt Repayment

41

Types of Insurance Policies:

A) Term Plans: A term plan is the most basic type of life insurance plan. It is the most cost-effective life insurance product. Unlike other plans that come with an investment or savings component, term plans are products that cover only your life. This means your dependents or nominees get the sum assured on your death. A term plan offers life cover at a very nominal cost. This is due to the fact that term plan premiums include only mortality charges and sales and administration expenses. There is no savings element. B) Money Back Plan: A money back plan aims to give you a certain sum of money at regular intervals; simultaneously it also provides you with life cover. Money back plans are especially useful in case you need money at regular intervals for your childs education, marriage, etc. C) Unit Linked Insurance Plans (ULIPS): ULIPs basically work like a mutual fund with a life cover thrown in. They invest the premium in market-linked instruments like stocks, corporate bonds and government securities (gsecs). The basic difference between ULIPs and traditional insurance plans is that while traditional plans invest mostly in bonds and gsecs, ULIPs mandate is to invest a major portion of their corpus in stocks. However, investments in ULIP should be in tune with the individuals risk appetite. ULIPs offer flexibility to the policy holder the policy holder can shift his money between equity and debt in varying proportions. D) Pension / Retirement Plans:

42

Planning for retirement is an important exercise for any individual. A retirement plan from a life insurance company helps an individual insure his life for a specific sum assured. At the same time, it helps him in accumulating a corpus, which he receives at the time of retirement. E) Endowment Plans: Individuals with a low risk appetite, who want an insurance cover, which will also give them returns on maturity could consider buying traditional endowment plans. Such plans invest most of their money in specified debt instruments like corporate bonds, government securities (gsecs) and the money market.

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COMPANY PROFILE Kotak Mahindra is one of India's leading financial organizations, offering a wide range of financial services that encompass every sphere of life. From commercial banking, to stock broking, to mutual funds, to life insurance, to investment banking, the group caters to the diverse financial needs of individuals and corporate. The group has a net worth of over Rs. 6,327 crore and has a distribution network of more than 1300 branches, franchisees, representative offices and satellite offices across cities and towns in India and offices in New York, London, San Francisco, Dubai, Mauritius and Singapore. The Group services around 5.9 million customer accounts. Group Management Mr.UdayKotak Mr. Dipak Gupta Our Story: The Kotak Mahindra Group was born in 1985 as Kotak Capital Management Finance Limited. This company was promoted by Uday Kotak, Sidney A. A. Pinto and Kotak & Company. Industrialists Harish Mahindra and Anand Mahindra took a stake in 1986, and that's when the company changed its name to Kotak Mahindra Finance Limited. Since then it's been a steady and confident journey to growth and success. 1986 Kotak Mahindra Finance Limited starts the activity of Bill Discounting Executive Vice Chairman & Managing Director Mr.Jayaram

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1987Kotak Mahindra Finance Limited enters the Lease and Hire Purchase market 1990The Auto Finance division is started 1991The Investment Banking Division is started. Takes over FICOM, one of India's largest financial retail marketing networks 1992Enters the Funds Syndication sector 1995: Brokerage and Distribution businesses incorporated into a separate company - Kotak Securities. Investment banking division incorporated into a separate company - Kotak Mahindra Capital Company 1996 : The Auto Finance Business is hived off into a separate company Kotak Mahindra Prime Limited (formerly known as Kotak Mahindra Primus Limited). Kotak Mahindra takes a significant stake in Ford Credit Kotak Mahindra Limited, for financing Ford vehicles. The launch of Matrix Information Services Limited marks the Group's entry into information distribution. 1998: Enters the mutual fund market with the launch of Kotak Mahindra Asset 2000: Kotak Mahindra ties up with Old Mutual plc. For the Life Insurance business. Kotak Securities launches its on-line broking site (now www.kotaksecurities.com). Commencement of private equity activity through setting up of Kotak Mahindra Venture Capital Fund. 2001: Matrix sold to Friday Corporation Launches Insurance Services 2003: Kotak Mahindra Finance Ltd. converts to a commercial bank - the first Indian company to do so. 2004: Launches India Growth Fund, a private equity fund.

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2005: Kotak Group realigns joint venture in Ford Credit; Buys Kotak Mahindra Prime (formerly known as Kotak Mahindra Primus Limited) and sells Ford credit Kotak Mahindra. 2006: Launches a real estate fund bought the 25% stake held by Goldman Sachs in Kotak Mahindra Capital Company and Kotak Securities Kotak Mahindra Old Mutual Life Insurance Ltd. Kotak Mahindra Old Mutual Life Insurance is a 74:26 joint venture between Kotak Mahindra Bank Ltd. and Old Mutual plc. Kotak Mahindra Old Mutual Life Insurance is one of the fastest growing insurance companies in India and has shown remarkable growth since its inception in 2001. Old Mutual, a company with 160 years experience in life insurance, is an international financial services group listed on the London Stock Exchange and included in the FTSE 100 list of companies, with assets under management worth $ 400 Billion as on 30th June, 2006. For customers, this joint venture translates into a company that combines international expertise with the understanding of the local market. Kotak Mahindra Groups: Kotak Mahindra is one of India's leading financial organizations, offering a wide range of financial services that encompass every sphere of life. From commercial banking, to stock broking, to mutual funds, to life insurance, to investment banking, the group caters to the diverse financial needs of individuals and corporate.

46

The group has a net worth of over Rs. 6,327 crore and has a distribution network of more than 1300 branches, franchisees, representative offices and satellite offices across cities and towns in India and offices in New York, London, San Francisco, Dubai, Mauritius and Singapore. The Group services around 5.9 million customer accounts. The journey so far

In October 2005, Kotak Group acquired the 40% stake in Kotak Prime held by Ford Credit International (FCI) and FCI acquired the stake in Ford Credit Kotak Mahindra (FCKM) held by Kotak Group. In May 2006, Kotak Group bought 25% stake held by Goldman Sachs in Kotak Capital and Kotak Securities.

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Key group companies and their businesses:

Kotak Mahindra Bank: The Kotak Mahindra Group's flagship company, Kotak Mahindra Finance Ltd which was established in 1985, was converted into a bankKotak Mahindra Bank Ltd in March 2003 becoming the first Indian company to convert into a Bank. Its banking operations offer a central platform for customer relationships across the group's various businesses. The bank has presence in Commercial Vehicles, Retail Finance, Corporate Banking, Treasury and Housing Finance. Kotak Mahindra Capital Company; Kotak Mahindra Capital Company Limited (KMCC) is India's premier Investment Bank. KMCC's core business areas include Equity Issuances, Mergers & Acquisitions, Structured Finance and Advisory Services. Kotak Securities: Kotak Securities Ltd. is one of India's largest brokerage and securities distribution houses. Over the years, Kotak Securities has been one of the leading investment broking houses catering to the needs of both institutional and non-institutional investor categories with presence all over the country through franchisees and coordinators. Kotak Securities Ltd. offers online and offline services based on well-researched expertise and financial products to non-institutional investors.

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Kotak Mahindra Prime: Kotak Mahindra Prime Limited (KMP) (formerly known as Kotak Mahindra Primus Limited) has been formed with the objective of financing the retail and wholesale trade of passenger and multi utility vehicles in India. KMP offers customers retail finance for both new as well as used cars and wholesale finance to dealers in the automobile trade. KMP continues to be among the leading car finance companies in India. Kotak Mahindra Asset Management Company: Kotak Mahindra Asset Management Company Kotak Mahindra Asset Management Company (KMAMC), a subsidiary of Kotak Mahindra Bank, is the asset manager for Kotak Mahindra Mutual Fund (KMMF). KMMF manages funds in excess of Rs 13,886 crore and offers schemes catering to investors with varying risk-return profiles. It was the first fund house in the country to launch a dedicated gilt scheme investing only in government securities. Kotak Mahindra Old Mutual Life Insurance Limited: Kotak Mahindra Old Mutual Life Insurance Limited is a joint venture between Kotak Mahindra Bank Ltd. and Old Mutual plc. Kotak Life Insurance helps customers to take important financial decisions at every stage in life by offering them a wide range of innovative life insurance products, to make them financially independent.

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Kotak's International Business: With a presence outside India since 1994, the international subsidiaries of Kotak Mahindra Bank Ltd. operating through offices in London, New York, Dubai, San Francisco, Singapore and Mauritius specialize in providing asset management services to specialist overseas investors seeking to invest into India. The offerings are differentiated India investment solutions that span all major asset classes including listed equity, private equity and real estate. The subsidiaries also lead manage and underwrite international issuances of securities. With its commendable track record, large presence on the ground and a team of dedicated staff in India, Kotaks international arm is suitably positioned for managing assets in the Indian Capital markets.

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PRODUCT PROFILE AND COMPETITATIVE STRATEGY

KOTAK TERM PLAN Overview of Insurance: Life insurance has traditionally been looked upon pre-dominantly as an avenue that offers tax benefits while also doubling up as a saving instrument. The purpose of life insurance is to indemnify the nominees in case of an eventuality to the insured. In other words, life insurance is intended to secure the financial future of the nominees in the absence of the person insured. The purpose of buying a life insurance is to protect your dependants from any financial difficulties in your absence. It helps individuals in providing them with the twin benefits of insuring themselves while at the same time acting as a compulsory savings instrument to take care of their future needs. Life insurance can aid your family on a rainy day, at a time when help from every quarter is welcome and of course, since some plans also double up as a savings instrument, they assist you in planning for such future needs Traditionally, buying life insurance has always formed an integral part of an individuals annual tax planning exercise. While it is important for individuals to have life cover, it is equally important that they buy insurance keeping both their long-term financial goals and their tax planning in mind. This note explains the role of life insurance in an individuals tax planning

51

exercise while also evaluating the various options available at ones disposal. Life is full of dangers, but with insurance, you can at least ensure that you and your dependents dont suffer. Its easier to walk the tightrope if you know there is a safety net. You should try and take cover for all insurable risks. If you are aware of the major risks and buy the right products, you can cover quite a few bases. The major insurable risks are as follows: 8 Life 9 Health 10 Income 11 Professional Hazards 12 Assets 13 Outliving Wealth 14 Debt Repayment

Types of Insurance Policies:

A) Term Plans: A term plan is the most basic type of life insurance plan. It is the most cost-effective life insurance product. Unlike other plans that come with an investment or savings component, term plans are products that cover only your life. This means your dependents or nominees get the sum assured on your death. A term plan offers life cover at a very nominal cost. This is due to the fact that term plan premiums include only mortality charges and sales and administration expenses. There is no savings element. B) Money Back Plan :

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A money back plan aims to give you a certain sum of money at regular intervals; simultaneously it also provides you with life cover. Money back plans are especially useful in case you need money at regular intervals for your childs education, marriage, etc. c) Unit Linked Insurance Plans (ULIPS): ULIPs basically work like a mutual fund with a life cover thrown in. They invest the premium in market-linked instruments like stocks, corporate bonds and government securities (gsecs). The basic difference between ULIPs and traditional insurance plans is that while traditional plans invest mostly in bonds and gsecs, ULIPs mandate is to invest a major portion of their corpus in stocks. However, investments in ULIP should be in tune with the individuals risk appetite. ULIPs offer flexibility to the policy holder the policy holder can shift his money between equity and debt in varying proportions. d) Pension / Retirement Plans: Planning for retirement is an important exercise for any individual. A retirement plan from a life insurance company helps an individual insure his life for a specific sum assured. At the same time, it helps him in accumulating a corpus, which he receives at the time of retirement. e) Endowment Plans: Individuals with a low risk appetite, who want an insurance cover, which will also give them returns on maturity could consider buying traditional endowment plans. Such plans invest most of their money in specified debt instruments like corporate bonds, government securities (gsecs) and the money market. You want to see your family secure and happy at all times. However, life is unpredictable. To protect your loved ones should anything unfortunate happen

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to you from the uncertainties of life and ensure that they are able to cope with the financial obligations, Kotak Life Insurance has designed the Kotak Term Plan. Kotak Term Plan is a pure risk cover plan that is truly an economical means of providing you with a high level of financial protection. Our special Kotak Preferred Term Plan offers special premium rates to non-tobacco users and women, for a sum assured of Rs. 25 lakhs or more. ADVANTAGES: Truly a low cost insurance plan that offers high cover at low premiums Special rates for tobacco users Choice of Premium Payment KEY FEATURE: The following non-participating value-adds for a nominal premium at the time of taking your policy, subject to aggregate premium on all value-adds (except Critical Illness Benefit) not exceeding 30% of the basic Kotak Term Plan premium, Truly a low cost insurance plan Kotak Term Plans offer the benefit of high life cover at economical prices. Special Premium Rates: Term Plan offers women and non-tobacco users with even lower premium rates for a sum assured of Rs. 25 lakhs and above. women and nonOptions regular, single and

limited premium payment Option to convert to any other plan.

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Flexibility in payment of premiums: Premium you may choose from the following premium payment terms - Single, Regular and Limited Payment (3 and 5 years) options. If you opt for limited premium payment option you can pay your premiums annually, half yearly, quarterly or monthly*.
DEATH BENEFITS:

In the event of death during the term, the beneficiary would receive the sum assured CONVERTION OPTIONS: Your Kotak Term Plan to any other plan offered by Kotak Life Insurance (except for another term plan) provided there are at least 5 years before cover ceases. Value Adds of Kotak Term Plan: You may avail of the following benefits for a nominal additional premium if you have selected regular premium payment option. Accidental Death Benefit (ADB) Permanent Disability Benefit (PDB) Critical Illness Benefit (CIB) Tax Benefits: You can avail of tax benefits under Section 80C and Section 10 (10D) of Income Tax Act, 1961. Premiums paid for Critical Illness Benefit (CIB) qualify for a deduction under Section 80D. Tax benefits are subject to change in the tax laws. You are advised to consult your Tax Advisor for details.

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KOTAK FLEXI PLAN

In this policy, the investment the investment portfolio is borne by the policyholder risk in. Overview: Managing one's finances judiciously remains a nightmare for most. It is not just about managing your current expenses, but also about creating wealth out of your current savings to meet your future financial and lifestyle goals when you need those most. Did anyone say it better be left to the experts. Kotak Flexi plan offers you an ideal market-linked investment plan that helps you create your own financial future by offering you the flexibility and control over your money. Not just that, it comes with a unique "Seal of Guarantee" to give you the best of bullish markets and ensure no capital erosion in case of bearish times. Advantages: Unlimited upside potential with no downside market risk Wide range of funds to suit your risk appetite Limited Premium or Regular premium payment option to suit your finances Add to your Investments any time through easy top-ups Tax-free switching to help you maximize returns Easy liquidity through partial withdraws. Key Features: Kotak Flexi Plan offers a wide range of fund options to help you plan for your financial goals vis--vis your risk appetite- Guaranteed/Dynamic

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Growth; Guaranteed/Dynamic Balanced; Guaranteed/Dynamic Bond; Guaranteed/Dynamic Gilt; Guaranteed/Dynamic Floating Rate; and Guaranteed/Dynamic Money Market Fund and Aggressive Growth. Available only for the Top-up Account. Note: The Guaranteed Funds are available only with the Main Account whereas the Dynamic Funds range is available only on the Top-up Account Seal Guarantee (of Maturity Benefit): The unique offer of this plan is its Guaranteed Maturity Value to make sure you enjoy unlimited upside potential from bull markets, while there is no downside risk in case of falling markets. At the time of maturity, higher of Guaranteed Maturity Value^ or fund value in the Main Account; plus fund value in the Top-Up Account will be payable. Protection for your family (Death Benefit): In the unfortunate event of death, your beneficiary would receive the higher of basic sum assured or the market value in the Main Account; higher plus fund value in top up accounts; if any. The plan also offers additional cover by way of 7 riders. Tax Benefits: Tax Benefit can be availed under section 80C and 10(10D) of Income Tax Act, 1961. Section 80D will apply in case Critical Illness benefit is opted for. Tax benefits are subject to change in tax laws. Please consult your tax advisor for details Kotak smart advantage plan In this policy, the investment risk in the investment portfolio is borne by the policyholder Overview:

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How you shape your tomorrow depends greatly on how you build on your today. Kotak Smart Advantage addresses you current financial needs so that you do not have to worry about building on for tomorrow. It provides an optimal mix of insurance and investments, thus protecting your family against any odds along with preparing a corpus for your future. Kotak Smart Advantage is an intelligent unit-linked plan that is based upon the idea of regular savings and systematic accumulation of wealth in the long term. It offers guaranteed returns coupled with the benefit of flexible life cover and up to 100% allocation of your money, making it best suited for an individuals financial needs. Advantages: Guaranteed returns of up to 275% of the first years premium at maturity Loyalty bonus at regular intervals to boost the fund value Up to 100% allocation of premiums Flexibility to choose Life Cover Unique funds offering you maximum opportunity for growth Key Features: Guaranteed Additions Kotak Smart Advantage Plan: It offers guaranteed returns. Your first years premium contributes towards guaranteeing you an Assured Addition Advantage that boosts your fund value at regular intervals throughout the term of the policy. The longer your premium paying term, the higher will be the value of the advantage.

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The Assured Addition Advantage is as a powerful combination of the following two benefits, both of which are paid, provided your policy is in force and all premiums are fully paid up to date:

Fixed Advantage: The Fixed Advantage benefit is an assured value guaranteed at the end of your premium payment term. This benefit is calculated as a percentage of your first year premium depending on the premium payment term chosen. DynamicAdvantage: The Dynamic Advantage benefit is an assured bonus addition credited to your fund value at the end of every 10th, 15th, 20th, 25th and 30th policy year. This benefit will be calculated as a percentage of the average value of funds in the three years preceding the benefit allocation. Wealth Maximization Avenue: This plan offers you 3 well-defined fund options to manage your capital according to your risk appetite over the term of the policy, Opportunities Fund, Dynamic Floor Fund Dynamic Bond Fund. High Premium Allocation: Kotak Smart Advantage Plan gives you 100% premium allocation for annual premium sizes equal to and above Rs.36,000, resulting in greater returns. Low premium allocation charges of up to 2% are charged for annual premiums below Rs.36,000. These charges reduce to 0% from the 11th year onwards. Protection for your family (Death Benefit):

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In the unfortunate event of death within the term of the policy, your beneficiary would receive the sum assured or the fund value in the Main Account plus the Fixed Advantage Benefit, whichever is higher, plus the fund value in the Top-up account. This plan offers you flexible life cover options to choose from for the same annual premium.

Tax Benefits: Tax Benefits can be availed under section 80C and 10(10D) of Income Tax Act, 1961. Tax benefits are subject to change in tax laws. Please consult your tax advisor for details. Kotak money back plan Overview This plan offers the key benefit of cash lump sums at periodic intervals of five years ensuring that you are able to meet any of your financial obligations. Besides protecting your life throughout the term, you are also entitled to a guaranteed addition and bonus on maturity. So not only do you enjoy regular cash flows during the policy term, but also get a substantial life cover, which increases every year. If you would like to receive cash lump sums at regular intervals to plan for expenses like children's education, purchase of an asset or to meet any other unforeseen contingency. If you are looking for guaranteed additions to your money along with a lump sum on maturity.

If you want a plan that offers you not just regular cash back and bonuses, but also a life cover that automatically increases each year.

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Advantages: Cash lump sums at intervals of 5 years Guaranteed Additions on maturity Death benefit increasing at 7% of sum assured at the end of each year Ebonuses on the plan. Key Features Bonus: The premiums paid by you, net of charges are deposited in the Accumulation Account and the bonus declared is credited to this account at the end of each financial year. During the term of the plan, returns are earned on a compounding basis accumulating to create a substantial corpus for you. This bonus will be over and above the Guaranteed Addition you receive on maturity. Maturity benefit: This is a participating plan that has been designed to offer you regular cash back at intervals of 5 years. IncreasingDeathBenefit: We realize that with increasing inflation, you are concerned about the eroding value of money and therefore the eroding value of your life cover. The Kotak Money Back Plan has been designed totakcare of this concern of yours. The insurance cover that you enjoy on the policy will automatically increase by 7% of sum assured at the end of each year so that your life cover can keep pace with the rate of inflation

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What makes this future attractive is that while we increase your cover by 7% of sum assured each year, you are neither required to undergo any further medical tests nor does your premium commitment change.

Tax Benefits: Section 80C, 10(10D) of Income Tax Act, 1961 would apply. Premiums paid for Critical Illness Benefit qualify for a deduction under Section 80D. Tax benefits are subject to change in tax laws. You are advised to consult your tax advisor for details. Kotak child advantage plan Overview: The Kotak Child Advantage Plan is an investment plan designed to meet your child's future financial needs. It's a plan that gives your child the "azaadi" to realize his dreams. This is a participating plan. If you have child below 17 years and are looking forward to planning his/her future. If you want to ensure that your child is secure even if you are no longer able to support him/her. Advantages: On maturity you would receive the higher of the basic sum assured or the Accumulation Account.

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The amount available in the Accumulation Account is invested in various financial instruments (as per IRDA regulations) so your money works hard to earn more for your child. The Automatic Cover Maintenance facility ensures the policy remains in force even if you miss premium payments. This facility is available after full premiums for the first three years are paid. You can take a loan against this plan, after the policy has been in force for at least three years. You have the option of paying premiums quarterly, half yearly or yearly. You have the benefit of a 15 day free look period. Death of Parent (Premium Payer) In case the parent has opted for the Life Guardian Benefit (LGB), all future premiums on the policy would be waived and the policy will continue till maturity. On maturity, the beneficiary would be entitled the higher of the basic sum assured or the Accumulation Account. If the policy has been in force for five years or if the life insured was at least 18 years old, the beneficiary will receive either the sujm assured or Accumulation Account whichever is higher, as on the date of death. If the death occurs within five years from commencement of policy and if the insured was less than 18 years old, the death benefit would be either the total of all premiums paid (excluding rider premiums) so far or the surrender value at that time, whichever is higher. Tax Benefits: Section 80C, 10(10D) of Income Tax Act, 1961 would apply. Tax

benefits are subject to change in tax laws. You are advised to consult your tax advisor for details.

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KOTAK RETIREMENT INVEST PLAN With the cost of living constantly on the rise, even the most basic commodities are likely to become costlier by the day. By the time you retire, the costs of essentials like milk and vegetables would probably be five fold and Medical costs would have doubled or more. Theres no better time than now to plan for what should be the best years of life - your retirement! An ideal retirement solution is one that gives you complete flexibility and peace of mind, not only while you save for your retirement but also after you retire. To help you plan better towards the golden years of your life, we present to you the Kotak Retirement Investment Plan. An investment plan designed to ensure that your hard earned money is safe from the vagaries of the capital markets, Kotak Retirement Investment Plan comes with Guaranteed Maturity Value^. A spectrum of fund options makes sure that your investments grow over the years, fetching handsome returns. How does this plan work?

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Step 1: Decide the amount of savings (premiums) you may wish to allocate to build your retirement kitty Step 2: Choose the retirement (vesting) age between the age of 45 and 99 years (subject to the minimum//maximum term criteria) Step 3: Select the fund options to balance your risk profile and the tenure of investment

DATA ANALYSIS AND INTERPRETATION

1. How many Genders in the life insurance sector? MALE FEMALE 58 42 (Table-1) INTERPRETATION: The above table showing 58% are male and 42%are female consumers

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The diagram showing how many genders in the insurence sector

58 42

60 50 40 30 20 10 0

Series1

Male

Fe male

(Graph 1)

2. How many professionals in the insurance sector?

EMPLOYEES STUDENTS OTHERS 38 20 42 (Table 2)

INTERPRETATION:

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The above table shows that professionals in the insurance sector as employees are 38%, students 20% and others 42%.

The diagram showing occupation

45 40 35 30 25 20 15 10 5 0 Emplyee Students Other 20 Series1 38 42

(Graph 2)

3. Are you aware of any life insurance products of kotak Mahindra?

YES NO Cant say

62 30 8 (Table - 3)

INTERPRETATION: The above table sows that people are aware of kotak

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products know people are62%,dont know people are 30% and cant say people are 8%.

aware of kotak products

70 60 50 40 30 20 10 0 yes no cont say 8 30 Series1 62

(Graph 3)

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4. Which company insurance youre using?

ICICI HDFC KOTAK Any other 40 22 26 12 (Table-4)

INTERPRETATION: The above table shows that using of different people in insurance sector ICICI 40%, HDFC 22%, KOTAK 26% and other are 12% users.
Which company your using
45 40 35 30 25 20 15 10 5 0 ICICI HDFC KOTAK Any other 12 22 26 Series1 40

(Graph 4)

5. What type of insurance plan youre using?

Traditional Plan Unit linked Plan 40 60

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INTERPRETATION: The above table shows that what type of plan using consumers they are using Traditional plan 40% and Unit linked plan using 60%.

The diagram showing the what type of insurence plan your using
70 60 50 40 30 20 10 0 Traditional plan Unit linked insurance plan 40 Series1 60

6. What makes you to purchase this insurance plan?

Innovation Returns Service Availability 16 58 18 8

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INTERPRETATION: The above table shows that what type of purchasing insurance plan that Innovation is 16%, Return 58%, service18% and Availability 8%.

THE DIAGRAM SHOWING PURCHASRS IN THE INSURENCE PLAN

60 50 40 30 20 10 0 16 Innovation Return 18 Service 8 Availability 58 Series1

7. How do you feel about the kotak insurance products?

Excellent Very good Good Poor 26 30 38 6

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INTERPRETATION: The above table shows that how do feel they kotak plans Excellent 26%, very good 30%, good 38%, poor 6%.

THE DIAGRAM SHOWING THE FEELING ABOUT THE PRODUCTS OF KOTAK INSURANCE
40 35 30 25 20 15 10 5 0 6 Series1 30 26 38

Excellent

Very good

Good

Poor

8. How did you came to know about it?

News papers Friends Advertisement Other 22 40 28 10

INTERPRETATION: The above table shows that how to know that kotak insurance plan News papers22%,Friends 40%,Advertisement 28%,other 10%.

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THE DIAGRAM SHOWING ABOUT HOW TO KNOW IT

10% 28%

22% NEWS PAPERS FRIENDS ADVERTISEMENT OTHER 40%

9. How is the response of the executives in the kotak Mahindra?

Excellent Very good Good Poor 14 36 46 04

INTERPRETATION: The above table shows how the response of kotak Excellent 14%,Very good 36%,good 46%, poor 04%.

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THE DIAGRAM SHOWING RESPONSE OF THE EXECUTIVES IN THE KOTAK MAHINDRA

4%

14% Exellent Very good Good 36% Poor

46%

10. Are Kotak able to meet all the request as per your expectation ?
Yes No Cant say 32 22 46

INTERPRETATION: The above table shows that how is expectation of kotak yes 32%,No 22% and cant say 46%.

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THE DIAGRAM SHOWING THAT MEET ALL THE REQUEST AS PER EXPECTATIONS
50 40 30 20 10 0 Yes No Cant say 32 22 Series1 46

11. Are you satisfied by the service delivery of Kotak?

Very satisfied Satisfied Not satisfied 28 58 14

INTERPRETATION; The above table shows that satisfaction of consumer Very satisfied 28%, Satisfied 58%, and not satisfied 14%.

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The diagram showing satisfaction of consumer

70 60 50 40 30 20 10 0 very satisfied Satisfied Not satisfied 28 14 Series1 58

12. Would you like to recommend the kotak insurance products your friends?
Yes No Cant say 38 28 34

INTERPRETATION: The above table shows that recommendation to your friends Yes 38%, No 28% and cant say 34%.

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THE DIAGRAM SHOWING THAT RECOMENDATION OF KOTAK PRODUCTS

34%

38%

Yes No Cant say

28%

13. Do you like to purchase kotak plans regularly?

Yes No 44 56

INTERPRETATION: The above table shows that purchase of kotak plans regularly Yes 44% and No 56%.

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The diagram showing do you like to purchase kotak products

60 50 40 30 20 10 0 Yes No Series1 44 56

FINDINGS
Our country India has a population of 117 crore and there are only 12

crore

people have life insurance policy.

Out of 100 samples, 65% people have life insurance policy in LIC and

remaining 35% people have life insurance policy in other insurance companies.
Most people have trust in LIC then any other life insurance company

and still LIC holds market share in LIFE INSURANCE sector in India.

78 82% people are taking life insurance policy only if it is within their

budget. Among various factors 55% of people are looking for benefits of policy,25% people are looking for premium of policy and remaining 20% people are looking for brand name of insurance company.
Only 10% of people are saving 315 to 40% of their income, 20%

people are saving 21% to 30%, and 70% people are saving 1% to 20% of their income
.Only 65% people are aware of KOTAK MAHINDRA LIFE

INSURANCE and 35% of people dont know about KOTAK MAHINDRA LIFE INSURANCE. As there are many new players in the Indian market, there is huge competition among all insurance companies

Out of 100 respondents, 38% stated that TV advertisements is the best

way for making people aware insurance company, 14% stated that setting up of stalls is the better way, 10% stated that PAPER advertisement is the better way,5% stated that BANNERS,PAMPLETS is the better way, and 33% people stated that personal setting is the best way of making people aware of educate them about insurance company policies.

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SUGGESTIONS

The company must go for good promotional strategy like

advertisement strategy.
The mobility frequency should be increased. The company should provide good margins to the agents. In todays business world company should increase quality, in

order to face the competition.

CONCLUSION__

There is huge potential market for LIFE INSURANCE companies in India as out of 110 core population only 8 core people are insured. The insurance companies should educate people about insurance, its importance, different policies, and benefits of policies. The people opt for policy by taking into consideration price of premium of policy, benefits of policy and least importance is given to brand name.

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So the life insurance companies should look over the price of premium, benefits of policy and even flexible payment options from the point of untapped potential market in India. The price of premium of a policy must be within the budget of common man and life insurance companies should provide flexible payment options. By doing so, the private insurance companies can surely capture the untapped market along with creating brand name. Kotak mahindra life insurance, it has huge past experience around the world. But coming to Indian perspective its positioning is not properly done in the customers mind. The advertisement of kotak mahindra life insurance in TV should contain briefly relevant message about its policy and benefits of a policy. It should formulate strategies for attracting customers though good promotional activities and informative ads, so that common man can have an idea of what kotak mahindra Life Insurance is offering in a policy. Though people generally to do the savings by various means, like Post Office, Fixed Deposit, Mutual Fund, Gold, Real Estate, and Share Market etc. This study focuses attention on the positive affect of Unit Linked Plan as a part of Financial Planning. The result of the study proves that can enhance the individuals savings through their market investments. The study highlights ULIPS as a part of Tax Benefit for individual products are good when taken as long term investment plans

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BIBILOGRAPHY

Web sites: WWW. Kotak mahindra insurance.com WWW.Market Research.Com WWW.Google.com

BOOKS:

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Philip kotlar, marketing research, vikas publications 9th edition. Marketing management, Kevin Lane Keller. Life & health insurance, by Kenneth block jr, Harold D. skipper jr.

QUESTIONNAIRE
Name: Address: Sex: Contact No: 1. Are you aware of any life insurance products of kotak Mahindra? (a) yes (b) no (c) cont say Profession: Age:

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2. Which company insurance youre using? (a) ICICI (b) HDFC (c) kotak (d) any other 3. What type of insurance plan youre using? (a) Traditional plan (B) Unit Linked Insurance plan 4. What makes you to purchase this insurance plan? (a) Innovation (b) returns (c) Service (d) Availability 5. How do you feel about the kotak insurance products? (a)Excellent (b) Very good (c) Good (d) Poor 6. How did you come to know about it? (a) Newspaper (b) Friends (c) Advertisement (d) other 7. How is the response of the executives in the Kotak Mahindra? (a) Excellent (b) very good (c) good (d) poor 8. Are kotak able to meet the entire request as per your expectations? (a) Yes (b) no (c) cant say 9. Are you satisfied by the service delivery of kotak? (a) Very satisfied (b) satisfied (c) not satisfied 10. Would you like to recommend the kotak insurance products your friend?

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(a) Yes (b) no (c) cant say 11. Do you like to purchase kotak plans regularly? (a) Yes (b) no