Synopsis

Student Details: Name: Manojkumar.S Batch: PGP/SS/2009-11 Group: Finance Phone No: 9786857775 E-Mail Id: manojlong@gmail.com Desired Area Of Interest: Marketing Title Of The Thesis : Strategic solutions for improving effectiveness in ULIP policy in Insurance Industry Problem Definition:
The Insurance Regulatory and Development Authoritys (Irda) new rules regarding various aspects of unit-linked insurance plans (Ulips) came into effect. A life insurance company is a major instrument for the mobilization of savings of people, particularly from the middle and lower income groups. These savings are channeled into investments for economic growth. The insurance Act has strict provisions to ensure that insurance funds are invested in safe avenues, like Government bonds, companies with record of profits and so on.

Since all Ulip policies have a lock-in period of five years, policyholders who discontinue their renewal premium payments in regular term policies in the first five years, cannot retrieve their investments before the lock-in period. While the lock-in period is applicable to single-premium policies too, there is no possibility of the funds getting locked in to a Discontinuance Fund at a minimum guarantee of 3.5%, and the customer continues to enjoy the investment opportunities of his/her chosen fund

Source: http://www.insurancereview.in/posts/list/articles-single-premium-ulips-be-sure-of-your-choice1050911.htm

Literature relating to the problem: Why Circulating Funds?

National Insurance Commissioner, Mrs. Nyamekah Kyiamah on Wednesday said life insurance was one of the best ways to mobilize long term funds for economic development. She said although some strides had been made over the years, it was expected that more could be achieved through innovative product designs and effective marketing strategies. For Example: Life Insurance Corporation of India will invest at least Rs 2 trillion in debt and equity instruments together this financial, a top official of the insurer said on 9/6/2010, Wednesday. "How much money will be in equity markets will be decided by the flow of money that is coming to us particularly from unit-linked insurance policies," Executive Director - Investment Operations N. Mohan Raj told reporters here today. Life Insurance Corporation of India invested Rs 1.92 trillion across all asset classes in 2009-10 (AprMar). The company invested Rs 614.63 billion in equity instruments last fiscal year. In Apr-May, the insurer's total investment was Rs 260 billion including equity investment of Rs 83.63 billion

Topic: LIC FY11 Total Investment Seen Minimum Rs 2 Trln, Says Aide

Published By: Ticker News Service Source: http://money.sulekha.com/lic-fy11-total-investment-seen-minimum-rs-2-trln-

says-aide_news_4418

.All life insurance companies have huge funds, accumulated through the payments of small amounts of premia of individuals. These funds are invested in ways that contribute substantially for the economic development of the countries in which they do business. The private insurers in India are new and have accumulate funds equal to about 1/8th of the public limited companies. But even their investments in various sectors and contributing directly and indirectly to the countrys economic development, would be of similar proportions.

A Life insurance companys funds are collected by way of premiums. Every premium represents a risk that is covered by that premium. In effect, therefore, these vast amounts represent pooling of risks. The funds are collected and held in trust for the benefit of the policyholders. The managements of life insurance companies are required to keep this aspect in mind and make all its decisions in ways that benefit the community. This applies also to its investments. That is why successful insurance companies would not be found investing in speculative ventures. Their investments, as in the case of the L.I.C. benefit the society at large.

Types of Insurance Fund: There are 4 funds available depending upon investment pattern in guaranteed and non guaranteed market. These are

i ii iii iv

Bond Fund. Secured Fund. Balanced Fund Growth Fund.

Scope of the Project

The National Defense Authorization Act for Fiscal Year 1998 mandates termination of the Ready Reserve Mobilization Income Insurance Program (RRMIIP). Despite this disappointment, Congress did provide continued insurance protection for insured members serving on covered service as of November 18, 1997, and for Reservists who, on or before November 18, 1997, have been issued an order directing performance of covered service. In either case, these Reservists will continue to pay the monthly premium amount as long as their insurance remains in effect and will receive benefits for the duration of their covered service. Circulation of the funds in the insurance industries is beneficial in various aspects.

? ? people. ? ? ? ? ?

Shift in income in lower and middle class families The number of working people in increased and young age people is high compared to older

People like to invest their money in the market through the insurance and mutual funds Recent scams happened in LIC and other insurance companies ULIP schemes are useful in circulation of money in Indian industry Insurance industry is helpful to raise the money for infrastructure industries SEBI has put lot of pressure on IRDA about the ULIP policies and the regulations.

Research Methodology: 1. Primary Research: Research Tool: Structured Questionnaires Data collection Technique: Direct interviews Sampling Technique: Simple random Sampling Sample Segment Group:
financial executive/Financial Managers, Experts opinion customers of Insurance companies

Experts opinion: To have a transcendent look over the subject, the topic will be discussed with the financial experts and customers of ULIP, Insurance Industry employees to understand the domestic circulation of funds and its significance. Secondary research

 Internet sources. Agent Reports annual Report of SEBI company specific portfolio management Sample Size: 100 Nos

Justification of this study:

Every asset has a value and the business of general insurance is related to the protection of economic value of assets. Assets would have been created through the efforts of owner, which can be in the form of building, vehicles, machinery and other tangible properties. Since tangible property has a physical shape and consistency, it is subject to many risks ranging from fire, allied perils to theft and robbery. The money invested by the people are borrowed by the industries through the bonds, securities and treasury bills etc. The circulation of funds in the insurance industry should be going to several politicians and other NGOs by the money is misappropriately used by the government people.

Summer Training Topic: LIFE INSURANCE IS A TOOL FOR TAXATION

Life Insurance is a tool for taxation and get benefits from the tax problems and also we get benefits through investment in the insurance field. Life insurance is necessary for each one to save our money and we will use it in future. The cash value growth in a life insurance policy generally enjoys deferral of

taxation while the policy remains in force. Policy loans, except those made from Modified Endowment Contracts, are generally NOT treated as taxable distributions. If the entire life insurance policy is surrendered for its cash value, the difference between the gross cash value and the taxpayer's basis in the policy, is generally subject to income tax. Partial surrenders from life insurance policies are taxable to the extent funds received exceed the taxpayer's basis in the policy. Funds coming out of a life insurance policy (other than as death proceeds) classified as a Modified Endowment Contract (MEC), are taxed differently than those not classified as a MEC. Under a MEC, distributions, including policy loans, are subject to income tax to the extent the gross cash value of the policy exceeds the taxpayer's basis in the contract. In addition, a 10% penalty tax may apply if the distribution was made prior to owner's age 59. In general, life insurance death proceeds are not subject to income taxation. This income tax exclusion makes life insurance a very attractive financial planning tool. The general information presented on various tax aspects of life insurance is not intended to be relied upon as tax advice. Individuals should seek the advice of a qualified tax professional regarding the taxation of life insurance as it applies to their particular situation. An even better idea may be to keep the life insurance policy to finance bequests to heirs, freeing up other property to be donated to charity. This arrangement works particularly well with qualified retirement plan accounts and IRAs. These retirement accounts can be subject to double taxation on death -- first estate tax, then income tax when funds are withdrawn by heirs. By donating such retirement accounts to charity, an estate can get a charitable deduction while heirs receive an incometax-free death benefit from the insurance, instead of taxable funds from the retirement plan.