Professional Documents
Culture Documents
EXECUTIVE SUMMARY
All assets in this world have some economic value and some amount of risk
carrying with them. All assets have some expected life also and if its get lost
or destroyed there are many chances that owner will suffer some amount of
loss which can be financial or in any other form. So to protect the owner from
suffering a huge amount of loss we can assure these assets.
Insurance is a contract between the insurer and insured in return for a
premium, the insurance company promises to pay a specified amount to the
insured on the happening of a specific event.
India economy is growing at the rate of 5.4% with a significant rise in working
population and has a large potential for the development in the field of
insurance sector. A large amount of population in India is still uninsured. It is
also estimated that the sector will grow at a rate of 15-20% in next 10 years.
The project has been undertaken to know about different types of risk that can
covered by insurance policies and how to analyse and mange those risks as
there are various types of risk that a person can suffers in his life term.
The project talks about what are the various things that customer should
consider before buying an insurance policy and various steps that need to
consider before buying it.
Introduction
India is the second largest country in the world in the respect of population.
The GDP growth of India was 5.4% in year 2013.the insurance sector is
expected to grow at a very high rate in next 10-154 years and its contribution
in GDP is going to rise in ahuge manner as a large amount of population is
still uninsured especially in urban areas.
What is Insurance?
Insurance is a contract between the insurance company (insurer) and the
policyholder (insured). In return for a consideration (the premium), the
insurance company promises to pay a specified amount to the insured on the
happening of a specific event. We all need insurance because it not only
transfer the risk but also have other benefits like tax saving.
The first Indian insurance company was formed in the year 1818 which was
oriental life insurance company and the Indian life assurance companies act
1912 was the first statutory measure to regulate life business which was
finally amended in the year 1938. In the year 1999 Insurance Regulatory and
Development Authority (IRDA) was constituted as an autonomous body to
regulate all the insurance companies in India which came in power in the year
April 2000. Under the current regulation a foreign companies cannot have
more than 26% of stake in joint venture.
Benefits of insurance
Investment option
Tax benefits
Loan on insurance
Habits of saving
Employment
generation
Social benefits
Table 1.1
Types of life insurance polices
The different types of life insurance policies are following:
Risk
A person carries various types of risk in his life term and it can be classified in
many ways. But first we need to understand the meaning of risk. It is difficult
to give the exact definition of risk but it can be defined in the respect of
insurance sector as the possibilities of unfavourable event happing like death
or physical damage.
The various types of the risks are following:
Market risk
Interest rate risk
Inflation risk
Political risk
Financial risk
Pure risk
Particular risk
These are the three risks which can be insured by having insurance policies
and the insured persons can transfer his risk to insurer.
Risk analysis and Risk management:
As there are different types of in insurance police in the market it becomes
difficult for a customer to understand the actual value of its life i.e. Human Life
Value. Before buying an insurance police a person should to knowing the
purpose for which he is buying the insurance and how to analyse its value.
It might be confusing for many that for what value they should buy an
insurance policies i.e. how they are worth for.
There are two methods to calculate the human life value
Income replacement method
Simple method
Income replacement method:This method takes into consideration the
future income earning potential of a person during the remaining years of their
working life. It is a two-step method:
Step 1: Calculate the income of person in the future working years.
Step 2: this is its HLV, now take inflation in account and calculate how much
should be enough for his family in case of his death.
Simple method:In this method we consider the present interest rate in a fixed
deposit in a bank and then we calculate that how much amount person should
get insured.
But we always need to keep in mind that HLV in not a onetime calculation and
it should get revised from time to time.
Now as there are many insurance policies in the market it becomes difficult to
decide which will be suited best for you. So it is always best for anyone to
take the polices which is best suited for them. Anyone can easily find out
which policies best suited for them by following these three steps:
Step 1: Identify your needs: you always need to understand you goals and
need after considers these factors:
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marital status
future financial goals
number and age of dependants on you
employment status
income which includes salary, business income and income from
year 2000 with the formation on IRDA. IRDA is a regulatory body to manage
working of all the insurance company in India.Foreign companies were
allowed ownership of up to 26% and invest in insurance policies in India. The
insurance sector is a colossal one and is growing at a speedy rate of 15-20%.
Together with banking services, insurance services add about 7% to the
countrys GDP. Life insurance Company has acquired in India.With the entry
of new private players insurance sector has seen a huge growth in last five
years and it is expected to grow in future.
The various data which is represents the market share of top five insurance
companies in India
Sales
7%
ICICI Prudential
7%
4%
2%
SBI Life
HDFC Standard
Bajaj Allianz
Lic
79%
Figure 1.1
Most of the Indian population are without life insurance cover and still a huge
amount of growth is possible in Indian environment. At presentpeople do not
prefer to invest their saving in insurance policies but it is expected to change
in future.
Company profile
The AXA Group
AXA is a world leader in financial protection and wealth management, with
major operations in Western Europe, North America and the Asia/ Pacific
area. AXA services 102 million customers throughout the world. In total the
AXA group has approximately 160,000 employees and distributors, working in
around 50 countries.
The AXA group reported total revenue for the first half of 2013 of 37.8 billion.
AXA group has a strong, long standing history. The group can trace its roots
right back to the 18th century. After a successions of mergers, acquisitions
and name changes involving some of the leading insurance companies in the
UK and around the world, the name AXA was first introduced in 1985.
Today, 102 million clients in the world trust AXA and the AXA name. In 2003,
to provide a clearer vision of the transformation of its core business from
traditional insurance to the broader concept of financial protection, the AXA
group added the words financial protection as a base line to its logo.
BhartiEnterprises
Bharti Enterprises is a pioneer in telecom sector and the group is widening its
horizons by entering new business areas such as insurance and retail. Bharti
Enterprises has created a vantage position for itself in the global
telecommunications sector. BhartiAirtel Limited occupies good status in
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mobile telephony in India while its brand 'Beetel' is the largest manufacturer
and exporter of world class telecom terminals.
Founder of Bharti Group is Sunil Mittal. In 1983, Sunil Mittal entered into an
agreement with Germany's Siemens to manufacture the company's pushbutton telephone models for the Indian market. In 1986, Sunil Bharti Mittal
incorporated Bharti Telecom Limited (BTL) and his company became the first
in India to offer push-button telephones, establishing the basis of Bharti
Enterprises. This first-mover advantage allowed Sunil Mittal to expand his
manufacturing capacity elsewhere in the telecommunications market. By the
early 1990s, Sunil Mittal had also launched the country's first fax machines
and its first cordless telephones. In 1992, Sunil Mittal won a bid to build a
cellular phone network in Delhi. In 1995, Sunil Mittal incorporated the cellular
operations as Bharti Tele-Ventures and launched service in Delhi. In 1996,
cellular service was extended to Himachal Pradesh. In 1999, Bharti
Enterprises acquired control of JT Holdings, and extended cellular operations
to Karnataka and Andhra Pradesh. In 2000, Bharti acquired control of Skycell
Communications, in Chennai. In 2001, the company acquired control of Spice
Cell in Calcutta. Bharti Enterprises went public in 2002, and the company was
listed on Mumbai Stock Exchange and National Stock Exchange of India. In
2003, the cellular phone operations were rebranded under the single Airtel
brand.
August 26, 2005, New Delhi : Bharti Enterprises and AXA Asia Pacific
Holdings Limited (AXA) signed an agreement to establish a joint venture
named Bharti AXA Life Insurance Company Limited to carry on life insurance
business in India.
Under the agreement AXA has a 26% equity interest in the joint venture, while
Bharti holds the balance. AXA, a global leader in insurance business, enabled
the company to have access to AXAs global life insurance and asset
management expertise. Bharti brought its strong local market knowledge,
reputation and India-wide retail presence.
The insurance sector in India provides a mega opportunity for private players
like BhartiAxa Despite the strong growth witnessed by the sector in the recent
years, nearly 80% of the Indian population is without life insurance coverage.
As one of Indias leading business conglomerates having an established
brand and a significant presence in the retail space, Bharti has inherent
advantages in being a part of this growth story. In AXA, Bharti has a global
leader as its partner, one that is known for its expertise and best practice
across the world. More importantly, this new venture also fits into our strategy
of taking on projects that make a difference to the society at large.
This joint venture is an opportunity for AXA to enter the Indian life insurance
market, one of the most attractive emerging insurance markets. India is a fast
growing economy and a huge market with more than 1.1 billion people. This
coupled with a large middle class and increasing income levels will drive
growth in the insurance market. Bharti is a well-established and financially
strong group whose capabilities and network will be of significant value to the
joint venture. The joint venture invested in the region of Rs. 500 crores (115
Million USD) over the first three to four years of operations, reflecting both
partners commitment to quickly establish a strong foothold in the Indian
market. The joint venture commenced business in the first half of 2006,
subject to IRDA, FIPB and other statutory approvals.
Company Products
BHARTI AXA offers a range of innovative, customer-centric products that
meet the needs of customers at every life stage. Its 20 products can be
10
Bharti brought its strong local market knowledge, reputation and India.
20 million
11
Weakness
Opportunities
customers, this network can yield 48 lakh policies per year with sum assured
of nearly Rs 58000 cores.
Threats
Industry.
companies.
12
Research methodology
Statement of the problem:
.As the insurance sector expected to grow around 15-20% in next 10 years it
is important for a customer to understand the basis steps to buy an insurance
policy. It is also going to help companies to understand that how can they
convince there customers to buy an insurance policies.The project has been
undertaken with the aim to analyse insurance firm and how to calculate your
need analysis.
Objective of the study:
To make people aware about thesteps they should consider before
buying insurance policies.
To know about various analytical tools that can value an insurance
policy.
To find whether need analysis is compulsory before buying an
insurance police.
SCOPE OF THE STUDY
. The scope of the study is limited to only insurance & no other financial
instruments were considered .The study will help us to know the perception of
customers about insurance policies. The various risks involves in buying an
insurance policy and how to tackle it. It will also help us to get a basic
knowledge about need analysis calculation and its requirement.
13
Methodology:
Primary data:
Primary data is the one which is collected specifically for the purpose of the
project, and can be obtained from various people working in the organization.
For this study the primary data was collected from following sources.
Questionnaires
Discussion with manager.
Secondary data:
It refers to the statistical material which is not originated by the investigator
himself but obtained from someone else's records, or when Primary data is
utilized for any other purpose at some subsequent enquiry it is termed as
Secondary data. However, it plays a significant role in the project. For this
study the secondary data was collected from the following sources.
Books related to risk management and insurance
Websites related to risk management and insurance
.Limitations
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Data analysis
Risk and Need analysis
As a customer you should always know your value in the market so that you
can take a police according to your exact value. Three various approaches
are used to determine the amount of life insurance to own:
1. Human life value approach
2. Needs approach
3. Capital retention approach
use for federal and state taxes, life and health insurance and his personal
needs. The remaining 15000 is used to support his family. What should be
value of insurance if discount rate is 6%?
Solution: Using the give discount rate the present value of Rs1 payable
annual for 40 years is Rs15.05
So Raj has a human life value of (15000*15.05)= Rs225750
Needs approach
The second method for estimating the amount of life insurance to own is the
needs approach. The various family needs that must be met if the family head
will die are analysed. The most important family needs are following:
10000
3000
12000
3000
28000
fund
Income needs
Readjustment period
Dependency period
Total income needs
Special needs
Mortgage redemption fund
Emergency Fund
College education fund
Total special need
Total need
14400
108000
122,400
235000
385400
16
10000
savings
Mutual fund and Securities
25,000
IRAS PLAN
4200
4500
10000
50000
Total assets
103400
385400
103700
281700
needed
The first part of worksheet shows the amount needed to meet various cash
needs, income needs and special needs. The second part analyse your
present financial assets for meeting these needs and the final part determine
the amount of life insurance needed.
17
125000
15000
45000
28000
2000
200000
20000
435000
Liabilities
Mortgage
100000
Auto loan
10000
5000
Total
115000
Total assets
435000
Less:
Mortgage payoff
Auto loan and credit
Credit card
Final expenses
Emergency fund
Educational fund
Non income producing capital
Total deduction
Capital income now available
550000
100000
15000
10000
10000
60000
185000
380000
18
30000
-33000
(55000*6%)
Social security survivor benefits
Income shortage
Total new capital Required(14700/00.6)
-12000
147000
245000
So these three analysis tools can be used by the customer to determine the
exact value of a life insurance required customer to support their family. It will
also help them to decide on which type of polices they should invest
according to their requirements.It will also help in determining amount of risk
in that policy.
19
Percentage analysis
QUESTION NO. 1)
Businessman
Professional
Students
Housewife
Table no. 4.1
54
35
6
5
Occupation of respondent
Businessman
Professional
65
35
Students
54
Housewife
Figure 4.1
Interpretation:
20
QUESTION NO. 2)
Particular
Response
Yes
92
No
8
Table no. 4.2
21
Insurance Already
8
Yes
No
92
Figure 4.2
Interpretation:
From above chart,we can infer that 92% respondents already have insurance
policies, whereas 8 % does not have insurance policies.
QUESTION NO. 3)
Awareness of life insurance companies
Option
a
b
c
d
Particular
Print media
Electronic media
Agents
Other
Table no. 4.3
Response
20
25
50
5
22
Print media
20
Electronic media
Agents
50
Other
25
Figure 4.3
Interpretation:
From this chart we can say that majority of respondents are aware of
insurance policies through agents, followed by electronic media, then print
media.
QUESTION NO. 4)
Main purpose to buy insurance policies
Option
A
B
C
D
E
Particular
Tax Saving
Savings
Protection
Pension
Investment
Response
24
15
49
10
2
Table no. 4.4
23
10 2
Tax
Saving
24
Protection
Pension
49
15
Investment
Figure 4.4
INTERPRETETION:
On the basis of above analysis,we can interpret that main reason for buying
insurance policies is because of security reasons as 49% of respondent
agreed with it.
QUESTION 5)
Your preference in buying Insurance policies
Option
a
b
c
d
e
Particular
Goodwill of the company
Range of products
Features of the product
Services offered by company
Returns of the bonds
Response
19
20
50
6
5
24
Range of products
19
Features of the
product
Services offered by
company
20
50
Figure 4.5
INTERPRETETION:
The graph shows that 50 out of 100 respondents buy an insurance policy after
looking at the features of the product which is followed by 20 respondent who
looks at different range of products and 19 looks at good will of companies.
So the products with good features have more demand among customers.
QUESTION 6)
you
purchase
an
insurance
police
under
Option
a
b
Particular
Yes
No
Table no. 4.6
Response
63
37
25
No
37
63
Figure 4.6
INTERPRETETION:
According to graph out of 100 respondent 63% agreed that they buy
insurance due to someone else influence not according to their requirement.
QUESTION 7)
Done need analysis before buying an
Option
a
b
insurance police
Particular
Response
Yes
No
Table no. 4.7
33
67
26
33
Yes
No
67
Figure 4.7
INTERPRETETION:
According to the graph out of 100 respondent 67 customers do not prefer to
do need analysis before buying insurance policies. It shows that customer do
not look at their needs before buying an insurance policies
QUESTION NO. 8)
Insurance plan you prefer to
buys
Option
a
b
c
d
Particular
Protection plan
Investment plans
Pension plan
children plan
Table no. 4.8
Response
57
9
10
24
27
Investment plans
Pension plan
children plan
57
10
9
Figure 4.8
INTERPRETETION:
On the basis of above analysis we can say that customers are more
interested in protection plan and children plan only. It shows that customers
do not think insurance as an investment opportunity.
QUESTION NO. 9)
Expectations from life insurance
companies
Option
a
b
c
Particular
Innovative Products
Attractive Riders
Reasonable Premium
Better Customer
d
e
Service
High Risk Coverage
Table no. 4.9
Response
5
2
47
24
22
28
Attractive Riders
52
Reasonable Premium
Better Customer
Service
24
47
Figure 4.9
INERPRETETION:
The graph shows out of 100 respondent 47 expect reasonable premium from
insurance companies. So it shows that people prefer to buy insurance policies
when the premium is low.
Option
a
b
c
29
Satisfied with previous insurance plan you bought (done need analysis)
yes
no
can't say
12
19
Respon
Option
a
b
ar
yes
no
can't
se
say
20
44
3
30
Response
3
20
44
Interpretation:
According to graph 20 out of 67 respondents who not did need analysis are
not satisfied with their insurance plan which is 27% and 19 out of 31
respondents who did need analysis are satisfied with their insurance plan
which is 61%. It shows that more percentage of people will satisfied with their
police if they will do need analysis.
Findings
The findings drawn during the project are as follows:
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policy.
Most of the customers looked for a reasonable premium before buying
an insurance policy.
Most of the customers purchase insurance policy under the influence of
someone else.
Customers who do need analysis before buying an insurance policy
SUGGESTIONS
Customers should be made more aware of need analysis as there is
low awareness level among them.
Insurance companies should take more effort in spreading awareness
about need analysis calculation.
Insurance companies should also give training to their advisors to
explain about need analysis calculation to customer properly as
customer how do need analysis are more satisfied with their policies.
Insurance companies should have a reasonable premium rate as most
of the customers prefer so.
32
CONCLUSION
33
NAME --------------------------------------------------------------------------AGE ----------- Nationality ----------------------- Income --------------Contact number -------------------------------Address----------------------------------------------------------------------------Q1) Occupation
a) Businessman [ ]
b) Professional [
]
c) Students [ ]
d) House
wife [ ]
Q.2) Do u have Insurance?
a)Yes[ ]
b) No[ ]
1 a)Print media[ ]
b)Electronic
media [ ]
c) Agents [ ]
d) Others [ ]
b) No[ ]
b) No [ ]
b) Investment plans [ ]
d) children plan [ ]
35
b) Attractive Riders [ ]
c) Reasonable Premium [ ]
d) Better Customer
service [ ]
e) High Risk Coverage [ ]
Q.10) Are you satisfied with previous insurance plan you bought ?
A) Customer who do need analysis:_
1 a) yes [ ]
b) no [ ]
2
3 c) cant say [ ]
5 a) yes [ ]
b) no [ ]
6
7 c) cant say [ ]
36
37
10
38
39
40