A PROJECT REPORT ON COMPARATIVE STUDY ON ULIPS IN THE INDIAN INSURANCE MARKET FOR TATA AIG LIFE INSURANCE COMPANY

LTD BY MISS DELNAAZ. PARVEZ. DOCTOR MBA SEMESTER III Project Guide Prof Vaishampayam In Partial Fulfillment of the Requirement of the Two Year Full Time PGDM Programme Of the SMVIM, PUNE. AY 2007-081 PREFACE As an essential and obligatory part of my course, I have undergone two months summer training at Tata AIG Life Insurance Company Ltd, Pune. This training has helped me in getting the practical knowledge into the business environment. I got the knowledge about the Insurance industry. In this report I have said about the current position of the insurance sector in India. This report includes a deep study made on the ULIPs in the insurance market and its impact on the persons income. 2 TABLE OF CONTENTS S.NO. CONTENTS PAGE NO. 1. Acknowledgement 3 2. Certificate from the company 4

Certificate from the college 5 3. Introduction 6 4. Company Profile 7-9 5. Research Methodology 10 6. Introduction to Insurance 11-17 7. About ULIPs 19-26 8.. Distinction between ULIPs & Mutual Funds Comment on the Distinction 27-30 9. Comparative Analysis of ULIPs( Tata AIG with others) Growth & Returns Fund Performance 31-43,4446, 47-51 10 Overall Data Analysis and Findings 52 11. Understanding the working of ULIPs of TATA AIG 53-56 12. Market Survey on ULIPs of TATA AIG 57-62 13. Integrated Financial Planning for Life Insurance 63 14. Conclusion 64 15. Recommendations 65 16. Bibliography 66-67 17. Questionnaire 68-69 3 ACKNOWLEDGEMENT It has been an immense pleasure and truly enriching experience doing my project with TATA-AIG LIFE INSURANCE COMPANY LTD, PUNE I take this opportunity to thank all those people who have made this experience a

memorable one.. Firstly, I would like to extend my sincere and hearty thanks to: Mr.Parikshit Abroal (Cluster Head Agency, Tata-AIG Life Insurance), and Mr. Nitish Beohar (Senior Manager BA) who gave me an opportunity to associate myself with the Tatas.

I would like to thank my guide Miss.Anamika Dikshit (Assistant Business Manager, Tata-AIG Life Insurance) without whose help it would be difficult to complete this

project. I am very grateful to her for being a constant trainer and motivator for me for successful completion of the project. During the course of time she has given me valuable tips related with my project and she was more like a friend who guided me throughout the project. This gratitude will remain uncompleted if I wont mention the names of other persons Who helped me not only in my projects but also motivated me. I would like to thank Mr. Rahul Bendre (Business Manager Tata- AIG Life Insurance), Mr. Kaizad S. (DCM, Kotak Mahindra Old Mutual Life Insurance Ltd.) and Mrs.Benaifer.S (Senior Officer, Finance Control, Societe Generale Corporate and Investment Banking) who provided me guidance and support from time to time.

Last but not the least I extend my special gratitude to The Advisors of Tata-AIG Life Insurance Mr. Shrikant Verma, Mr. Sudhir Chavan, Mr. Dattatray.Phule and Mr.Vikram Balwadkar who have contributed a lot in my project completion and the other advisors who co- operated with me to carry out the market research and the library staff of St.Miras College.

Delnaaz Doctor 4 Certificate from the Company 5

C6 INTRODUCTION The insurance plays a major role in the life of the humanity. Slowly people stared to realize the necessity of the insurance and these needs are unending as long as life exists. In fact insurance is not restricted for any category neither of the society nor in term of cast, ages or life styles. Also many people have a notion that Insurance is very good form of an investment, which is not right. Insurance is just creating a protection for you and your family. As Indian investors are now more exposed to the capital markets and have started understanding its working, they want to multiply their money rapidly. This can be done through Unit Linked Insurance Plans (market linked plans ) introduced by the Insurance Players. Therefore the only reasons for selecting this topic are To get more knowledge about insurance sector in India To undergo a comprehensive study of ULIPs. To get experienced of corporate scenario. 7 COMPANY PROFILE Getting associated with a brand like Tata AIG for just 2 months was really a prestigious and a memorable period in my MBA tenure. Growth has been the main objective of the company and will continue to be the driving force in the years to come by spreading the wings wider in India and contribute in the economic and social development. Tata- AIG LIFE Insurance Company is a joint venture between Tata Group and American International Group (AIG.) Lets throw light on the facts of both the high profile and prestigious companies. Some of the features of TATA are: Over 260,000employees Operates in 130 countries worldwide Trusted by over 3 million shareholders

 Diversified business interest ( 92 companies) Largest FOREX earner Revenues of US $ 14.25 billion Deep rooted commitment towards society. The Group: TATAThe name trusted all over the country over the years. For over 130 yrs The TATA name has stood for Leadership with Trust. As a business group it has traversed 3 centuries and has emerged as Indias most respectable corporate group. It is a strong believer in ethics and its profits are placed in philanthropic trusts. 8

Some of the features of AIG are: In business since 1919, Over 80,000 employees worldwide Presence in over 130 countries Over 50 million customers worldwide Revenues over US $ 81.3 billion Ranks 4 th on the FORBES 500 LIST OF 2003. Deals in General and life insurance, asset management, financial services. Tata-AIG LIFE INSURANCE It is a joint venture between TATA and AIG. It provides insurance cover for both for life and group. It deals in all kinds of products. And now concentrates more on UNIT LINKED PLANS. It is Tata-AIG which consumers trust the more when it comes to giving exact claim valuation, best in consumer satisfaction and trusted as the best in quick disposal of claims.

Its working is based on Business brought up by Business Associates who are the advisors/agents for the company. Areas of business Tata AIG Life Insurance products include a broad array of life insurance coverage to both individuals and groups. For groups, the company has life products whereas for individuals, it has term products, endowment products as well as money-back products. For groups and individuals, various types of add-ons and options are available to give consumers flexibility and choice. The company has also designed specific products for the financially challenged and underprivileged. The Group: AIG American International Group is a leading US based international insurance and financial services organization and the largest underwriter of commercial and industrial insurance in the United 9 Some of the features are: 74% Stake of TATAs and 26% of AIG Licensed to operate on February 12, 2001 Has over 190 branches and planning to increase the number to 120 plus by August 2007 , and 300 plus by November 2008.

Over 5 lac + policy holders. Tata AIG is all set to scale greater heights and has arrived at a vision of making it A BILLION DOLLAR COMPANY BY 2009 A glimpse at the Joint Venture TATA (74%) Ratan Tata Chairman CEO AIG (26%) Martin J. Sullivan

President & Chairman Tata- AIG INSURANCE Farrokh K Kavarana Chairman Tata-AIG LIFE INSURANCE Trevor Bull Managing Director Tata-AIG GENERAL INSURANCE Dalip Verma Managing Director 10 RESEARCH METHODOLOGY Research design descriptive Data sources- primary data and secondary data Research approach face to face interview, observation, individual depth interview Research instrument questionnaire. Data Collection: Primary Data: 1) Use of a Questionnaire for carrying out a survey 2) Presentation given by the Advisors of Tata AIG life. 3) Data explaining the working of the ULIPs. Secondary Data: 1) Books 2) Newspapers 3) Magazines 4) Newsletter

5) Internet 6) Television 7) Booklet 8) Policy Brochures This project is about studying the insurance industry which is on the boom. The introductory part contains the meaning of insurance, its evolution, some, Statistics of Indian insurance Industry. The project deals the comprehensive analysis of the ULIP schemes, what is ULIP all about, its NAV performance, the Growth, performance of the policies since their inception, its working, its popularity and a market survey. The project contains various graphs, tables and questionnaire to further. elaborate on the explanations. 11 INTRODUCTION TO INSURANCE Today, only one business, which affects all walks of life, is insurance business. Thats why insurance industry occupies a very important place among financial services operative in the world. Owing to growing complexity of life, trade and commerce, individuals as well as business firms are turning to insurance to manage various risks. Therefore a proper knowledge of what insurance is and what purpose does it serve to individual or an organization is therefore necessary. The future is never certain . So its rightly said, AN INSURANCE POLICY IN HAND KEEPS THE TENSION AWAY. Insurance, essentially, is an arrangement where the losses experienced by a few are extended over several who are exposed to similar risks. Insurance is a protection against financial losses arising on the happening of an unexpected event. Insurance companies collect premium to provide security for the purpose. In simple words it is spreading of risks amongst many people.

i) LIFE INSURANCE: It is a fundamental part of a sound financial plan which helps to insure your loved ones. Life insurance the only instrument that takes care of these 3 probabilities and 2 priorities Dying too soon Living too long Childrens education & ma iage Wealth creation Living death Life insurance the only instrument that takes care of these 3 probabilities and 2 priorities Dying too soon Living too long Childrens education & ma iage Wealth creation Living death12 ii) Benefits: 1) SAVINGS For unforeseen circumstances. 2) EDUCATION For childs education and for higher studies. 3) RETIREMENT Facilitates adequate savings for worry free retired life. iii) Insurance ------------a Flash back: The earliest transaction of insurance as practiced today can be traced back to the 14 th century AD. The business of insurance started with marine business by Traders who

used to gather in the Lloyds coffee house in London, wherein they had agreed to insure their ships in transit. The 1 st Life Insurance Policy was issued on 18 th June, 1583, on the life of William Gibbons for a period of 12 months. Life Insurance in its current form came in India from the UK, with the establishment of British firm, Oriental Life insurance Company, in 1818 The 1 st Indian insurance company was the Bombay Mutual Assurance Society Ltd, formed in 1870. By the year 1956, when the life insurance business was nationalized and the Life Insurance Corporation Of India ltd (LIC) was formed on 1 st September, 1956 and there were 245 companies existing at that time in India. By 31.3.2002, eleven new insurers had been registered and had begun to transact Life insurance business in India. 13 IV) INSURANCE CLASSIFICATION Life Term Endowment Unit-linked Money-back

V) INSURANCE INDUSTRY POTENTIAL 1) Asia is amongst the worlds largest insurance markets contributing nearly 39% of global insurance business. 2)The Life Insurance Industry has grown by 27% p.a. over the last 5 years and by about 62% in the first eleven months of 2006 -07. Source IRDA Journal (April 2007) 3) Global Life Insurance Market: $1,521 billion, Global Non-Life Insurance Market: $922 billion 4) India is 23 rd in insurance business with 0.41% share 5) Out of one billion people in India, only 35 million people are covered by insurance. 6) Indias life insurance premium as a percentage of GDP is just 1.8% 7) Indian insurance market is set to touch $50 billion by 2010, on the assumption of a 7% growth in GDP (CII Projections 2001-2002) 8) The Insurance premium as a % of GDP in 2005 increased to 3.14% and is set to touch 4.3% in 2008. (Source Lifeline 26 th Dec 2006) 14 Growth Rate of Insurance sector Public Sector: 5.5% Private Sector: 57.4% Indian Insurance is growing at the rate of 80%. LIFE INSURANCE COMPANIES IN INDIA 1.Life Insurance Corporation of India

Private Players 2. Tata AIG Life Insurance Company Ltd 3. Kotak Mahindra Old Mutual Life Insurance Ltd 4. Birla Sun Life Insurance 5. ICICI Prudential Life Insurance 6. Aviva Life Insurance 7. Allianz Bajaj 8. Max New York Life Insurance 9. Bharti Axa Life Insurance 10. SBI Life Insurance 11. Reliance Life Insurance 12. ING Vysya Life Insurance 13. Sahara India Life Insurance 14. HDFC Standard Life Insurance 15. Shriram Group 15 MARKET SHARE FOR 5 YEARS. 2001-02 2002-03 2003-04 2004-05 2005-06 LIC 98% 94% 87% 78% 71% Private Player 2% 6% 13% 22% 29% MARKET SHARE OF INDIAN INSURANCE PLAYERS

Market Share of public sector and Private sector Insurance Companies for 2006-07 market share LIC 74%

PRIVATE 26% LIC PRIVATE16

MARKET SHARE OF PRIVATE INSURANCE COMPANIES 2006-07 6.97% 0.96% 0.85% 4% 0.82% 1.17% 0.62% 0.46% 5.66% 0.24% 2.15% 0.06% 3.40% 0.01% 1.22% ICICI Prudential life Aviva Life Tata AIG Life Reliance Life Kotak Mahindra Birla Sun Life ING Vysya Life

Met Life Bajaj Allianz Life Shriram Life HDFC Standard Life. sahara Life SBI Life Bharati AXA life Max New York Source: ESCOLIFE (Insurance newspaper by Ritu Nanda, June 2007) Thus we can say that LIC has the highest market share of 74% (public sector) and ICICI Life Insurance has a highest market share of 6.97%(private sector) 17 COMPETITORS COMPARISION LIC ranks 1 st (public sector) in case of the premiums followed by ICICI PRU in the private Sector whereas Tata AIG Ranks 10 th . 18 Comparative Study on ULIPS In the Indian Insurance Market 19 CHAPTER 1

ABOUT UNIT LINKED INSURANCE PLANS 1.1) INTRODUCTION

ULIPS also known as UNBUNBLED, VARIABLE INSURANCE PLANS has possibly been the single largest innovation in the field of life insurance in the past several decades. It wasnt too long back, when the good old endowment plan was the preferred way to insure oneself against an eventuality and to set aside some savings to meet ones financial objectives. Then insurance was thrown open to the private sector. The result was the launch of a wide variety of insurance plans, including the ULIPs. Two factors were responsible for the advent of ULIPs on the domestic insurance horizon. First was the arrival of private insurance companies on the domestic scene. ULIPs were one of the most significant innovations introduced by private insurers. The other factor that saw investors take to ULIPs was the decline of assured return endowment plans.

These were the two factors most instrumental in marking the arrival of ULIPs, but another factor that has helped their cause is a booming stock market. While this now appears as one of the primary reasons for their popularity, it is believed that ULIPs have some fundamental positives like enhanced flexibility and merging of investment and insurance in a single entity that have really endeared them to individuals. ULIPs came to play in the 1960s and became very popular in western Europe and Americas. 20 1.2) MEANING OF ULIPS A policy, which provides for life insurance where the policy value at any time varies according to the value of the underlying assets at the time. ULIP is life insurance solution that provides for the benefits of protection and flexibility in investment. The investment is denoted as units and is represented by the value that it has attained called as Net Asset Value (NAV). In order to offset the erosion of money, ULIPS are introduced. The Sum Assured is expressed in units whose price is linked to an inflation related index. In todays times, ULIP provides solutions for insurance planning, financial needs, financial planning for childrens future and retirement planning. Features of ULIPs distinguish itself through the multiple benefits that it provides to

the customer which are as follows Life protection Investment and Savings Flexibility Adjustable Life Cover Investment Options Transparency Options to take additional cover against- Death due to accident- Disability- Critical Illness- Surgeries Liquidity Tax benefits. According to Vijay Sinha, Asst Director Agency, Tata AIG LIFE Insurance, ULIPs is ideal for some one who is looking for a long term investment product, is under insured and is averse to taking a traditional life plan. ULIP should be looked at from both an investment as well as insurance point of view and not in isolation. Today many individuals are adding ULIPs to their portfolios to generate wealth. and protection over a long time. 21 1.3 ) ULIPS VERSUS ENDOWMENT The following points help us to get a better idea how ULIPs differ from Traditional (Endowment Plans) 1) SUM ASSURED: This is the most fundamental difference between ULIPs and the traditional plans. In case of endowment the agent will ask you HOW MUCH INSURANCE COVER DO YOU NEED? & the premium is calculated as per the estimated sum assured. In case of ULIPs you are asked HOW MUCH PREMIUM CAN YOU PAY? & accordingly the Sum Assured is estimated.

2) INVESTMENTS: Endowment plans invest in Government Securities Corporate bonds Money market instruments ( no investment in the stock market) ULIPs invest in Equities Bonds G-secs Money market. 3) FLEXIBILITY: In case of ULIPs the investor can choose the fund in which he wants to allocate his portfolio. He can go for pure Equity, or a combination of debtequity ,depending on his requirements. The investor also has the option of switching from one fund to another . Usually Free switches are given during the year. This option is not available in case of Endowment. 22 4) TOP UP FACILITY: A top up is a one time additional investment in the ULIP over and above the annual premium. This feature works well when you have a surplus that you are looking to invest in a market linked avenue, rather than keeping in an FD or Savings account. This feature is not for Endowment. 5) TRANSPARENCY: ULIPs are more transparent than Endowment Plans as their NAV is declared EVERYDAY. As a result you can know how your ULIP has performed. In case of Endowment, the insurance company sends you an annual statement of bonus

declared during the YEAR. , which gives us an idea how our plan is performing. 6) LIQUIDITY: Since ULIPs investments are NAV based it is possible to withdraw a portion of Your investments before maturity (after 3yrs lock in period is over).The withdrawal is possible provided the minimum fund value is maintained. In case of Endowment, you can only Surrender your policy, but you wont get everything that you have earned on your policy in terms of premium and bonus. The Surrender Value is much less than the Sum Assured and the Bonus is also not paid. THUS investing in ULIPs or in ENDOWMENT depends on the persons RISK taking ability. A Risk Averse person may go for an Endowment, Whereas a person who wants his corpus to appreciate and is ready to take risks can go for ULIPs. Therefore we can say that investing in ULIPs is the best in a growing Economy as compared to the TRADITIONAL PLANS. 23 1.4) ULIPS AND YOU IRDA has played a part in making ULIPs more investor friendly. Today more individuals are opting for ULIPs to create wealth over a long term. Over here I have outlined how ULIPs can help you to fulfill that responsibility. 1.4.1) If you are between 25 35 years of age ULIPs help you to save for your childs education, marriage, planning for your retirement and providing for your family in case of your absence. ULIPs Child plan ------------- --------for your childs education, marriage. ULIPs Endowment plan------------- for helping you to meet investment objectives like buying a house or setting up a business. ULIPs Pension plan-------------------for your retirement. A long term retirement planning could be done with an Equity push, as it is necessary to build up a strong corpus to face your rigorous retirement. 1.4.2) If you are between 35 45 years of age

If you havent invested in ULIPs, it is not too late even now. You can opt for some ULIPs as mentioned earlier. Remember ,unlike Endowment ,which gets really expensive at an advanced age, ULIPs because of the way they are , do not turn out to be expensive. 1.4.3) If you are above 45 years of age In this age bracket, you have to review your insurance cover, taking into consideration the changes of your life style, income needs, etc. By this time your ULIP pension plan must have matured, so now you can opt for an Annuity (immediate or deferred) depending on your need. 24 1.5) EXPENSES IN ULIPs Following expenses have to be incurred for ULIPs: a) Mortality charges: charged by the company to cover the risk of an eventuality to an individual. b) Administration Charges: charged by the company to cover the daily expenses, overhead costs, agents commission etc. c) Fund Management charges: are levied by Insurance companies to cover the expenses incurred by them in managing ULIP monies. Charges are high for managing monies in an Equity Fund. d) ULIP Fund switch charges: Such are borne by the individuals when they decide to switch their money form one type of find to another. e) Top up Charges: A certain % is deducted from the Top up amount to recover the expenses incurred on managing the same. f) Cancellation/ Surrender charges: It is charged when an individual wishes to surrender his ULIP policy. 25 1.6) HOW ULIPS MANAGE MONEY ULIPs are different from traditional plans. They invest their monies in Shares, bonds, G-secs, money market instruments in

varied proportions. Insurance companies usually maintain 4 types of funds. Growth Fund: 100% equity Balanced Fund: 60% equity, 40% debt. Debt Fund: 100% debt. Money Market Funds 100% MM instruments for a period of one year

RISKS RETURNS In case of equity, the risk and return is the highest, and vice verse for Money market instruments. It is a principle of Financial management, the higher the risks you take , the higher the return you get. Money Market Debt Balance d Equity 26 1.7) STEPS FOR ULIP SELECTION Understand what ULIPs are all about. Focus on your need and risk profile Compare ULIP products from various insurance companies Go for an experienced Insurance advisor It is estimated that Indias economy will become the 3 rd

largest economy within a few yrs, with a high GDP growth and a low inflation rate, followed by booming stock market (SENSEX soaring as high as 20,000 points). So right time to increase your wealth and become rich starts from today. And ULIPS are the best to invest in. 27 CHAPTER 2 DIFFERENCE BETWEEN ULIPS & MUTUAL FUNDS:Points of Difference ULIPS(Unit Linked Insurance Plans) MFs(Mutual Funds) 1) Meaning :These are the Insurance policies which are linked to units of Mutual Fund.

It is an investment organization with a main objective of collecting funds from various segments of people and investing the same in a variety of securities. 2) Primary Objective :Its main objective is investment & protection Its objective is only investments. 3) Investment Duration:It works out for long term investment only . It works out to medium term, long term, & short term. Risky for short term investors. 4) Insurance Cover :- ULIPs provide insurance cover (except annuity products which may be issued with/ without risk cover) and from the amount invested in ULIPs after netting out the risk premium for life risk cover and administrative expenses, the insurer invests the balance as per the objective of the specific ULIP product.

MF schemes do not cover the life risk and the amount invested, net of expenses, gets invested as per the investment objective of the scheme. 5) Expenses :Insurance companies have a relatively free hand in levying expenses on their ULIP products with no upper limits being prescribed by the regulator, the Insurance Regulatory and Development Authority (IRDA) In MFs, expenses charged for various activities like sales/marketing, administration and fund management are capped (for example in equityoriented mutual funds, expenses are capped at 2.5% 28 per annum) as per the guidelines of the Securities and Exchange Board of India (SEBI). Similarly funds usually charge their investors entry (at the timing of making an investment) and exit (at the time of sale) loads. 6) Flexibility :Flexibility is limited to moving across different funds offered with policy. Correcting mistakes can turn out to be expensive. Moving funds from one ULIP to another ULIP of a different fund house can be expensive. Very flexible. Plenty of scope to correct mistakes if any wrong investment decisions are made. Portfolios can be easily shuffled in MFs. 7) Liquidity :Limited liquidity .It need to stay invested for minimum years before redeeming.

Very liquid. MF units can be sold any time(except ELSS). 8) Investment Objective :ULIPs can be used for achieving only long term objectives (Children education, marriage, Retirement planning). MFs can be used as vehicle for investments to achieve different objectives.(E.g.: Buying a car three years from now. Down payment for a home five years from now. Childrens education 10 years from now. Childrens marriage 15 years from now. Retirement planning 25 years from now. Medical expenses after retirement 25 years from now). 9) Flexibility of Switchovers :Insurance companies permit their ULIP investors usually 3-4 switch overs free of charge and thereafter every additional switch over beyond the permissible limit is permitted at some cost. In MFs an investor usually is subjected to exit load and/or entry load when he/she exercises a switch over option. 10) Minimum Lock- in Period ULIPs currently are with a minimum lock-in of three years. MF schemes (except ELSS which has a lock-in of

three years) do not have any such lock in. 29 11) Investment styles and Portfolio Disclosures :Insurance companies declare their portfolios once in a quarter and their investment style are less aggressive and they resort to less churning. Most MFs usually declare their portfolios on monthly basis and MFs are generally known to be more active in fund management 12) Tax benefits and implications :Irrespective of the nature of the plan chosen by the investor, all ULIP investments qualify for deductions up to one lakh under Section 80C of the Income Tax Act. In the case of ULIPs the maturity proceeds are tax-free. In the case of mutual funds, only investments in taxsaving funds i.e Equity-linked savings schemes (ELSS) are eligible for Section 80C benefits

On the other hand, in the case of equity-oriented mutual funds, if the investments are held for a period over 12 months, the gains are tax free and if sold within a 12-month period they attract short-term capital gains tax @ 10 percent. Similarly, debt-oriented funds attract long-term capital gains tax @ 10 percent while short-term capital gain is taxed at the investors marginal tax

rate. Mutual funds are essentially short to medium term products. The liquidity that these products offer is valuable for investors. ULIPs, in contrast, are now positioned as long-term products and going ahead, there will be separate playing fields for ULIPS and MFs, with the product differentiation between them becoming more pronounced. ULIPs now do not seek to replace mutual funds, they offer protection against the risk of dying too early, and also help people save for retirement. Insurance has to be an integral part of ones wealth management portfolio. ULIPs and mutual funds are, therefore, not likely to cannibalise each other in the long run. While ULIPs as an investment avenue is closest to mutual funds in terms of their functioning and structure, the first and foremost purpose of insurance is and will always be protection. The value that it provides cannot be downplayed or underestimated. As an instrument of protection, insurance provides benefits that no investment can offer. It is important for an investor to understand his financial goals and horizon of investment in order to make an informed investment decision. The decision to invest in either a mutual fund or a ULIP should depend on the time period of investment, individual financial goals as well as risk taking appetite, and its about time the industry and customer realize it.31 CHAPTER 3 COMPARATIVE ANALYSIS OF ULIPS This chapter covers the comparison of ULIPs of 4 Insurance companies, how much growth the fund has showed since its Inception, returns for a period of one month compared with the market and tracking of the NAVs for a period of one month. Initially ULIPs were started by a few private players way back in 2001-02. But now almost every Insurance company has got ULIPS suiting the varied requirements of

the customers. If one has to choose among the ULIP schemes provided by the insurance, it is necessary to do a through comparison to choose the right one for you. ULIPs of 4 top performing insurance are taken for comparison. 1) TATA-AIG--------------------- Invest Assure II

2) ICICI PRUDENTIAL--------- Life Time Super 3) RELIANCE LIFE ------------- Automatic Investment Plan 4) LIC-------------------------------- Market Plus Besides these TATA AIG also provides some other ULIPs which are as follows: Invest Assure Gold Invest Assure Plus Invest Assure 32 Tata AIG Life Insurance Company (Invest Assure II) ICICI Prudential (Life Time Super) Reliance Life (Automatic Investment Plan) Life Insurance Corporation (Market Plus) 1) Policy objective :It is a unique, flexible insurance plan which combines security of life with the opportunity to exploit

the upside of the market returns by investing in different kinds of securities through multiple fund options. A regular unit linked insurance policy that offers flexible investment options along with the benefit of life insurance cover, and an opportunity to earn potentially higher returns on your investment without sacrificing the protection of your family. The plan promises enhanced life cover with complete flexibility to gain control over your investments in tune with your financial needs and your risk appetite. The unique plan promises a safe and a tension free life along with a good amount of wealth creation. 2) Eligilibility Criteria (Minimum, Maximum age at entry):-

Min age= 30 days

Max age= 45,55,65 years Min age= 0 Max age= 65 years Min age= 0 Max age= 65 years Min age= 18 years complete Max age= 70 years (age nearer birthday) 3) Policy term :-

15, 20, 30 years 10- 75 years 40- 75 years 5-30 years 4) Premium (Minimum):33 Rs 12000 pa Rs 18,000 pa Rs. 10000 pa Rs 5000 pa 5) Mode of Premium Payment:-

Annually, half yearly, quarterly, monthly. Annually, half yearly, monthly. Annually, half yearly, quarterly, monthly Annually, half yearly, quarterly. 6) Sum Assured (Minimum, Maximum):-

It is the multiple of annual regular premium payable.

Min: Annual Premium* Term/2, subject to a min of Rs.100, 000. Min: Annualized premium for 5 yrs or annualized for half of the policy term, whichever is the highest. Max: no limit Min: Rs 50000 for regular premium Max: 20 times of the annualized premium. 7) Benefits :-

Maturity: Total Fund Value + Top up if any. Death: Fund Value or Sum assured whichever is higher Sum Assured is a multiple of regular premium payable. Maturity: Total Fund Value + Top up if any. Death: Fund Value or Sum assured whichever is higher Maturity: Total Fund Value + Top up if any. Death: Fund Value or Sum assured whichever is higher

Maturity: Total Fund Value + Top up if any. Death: Fund Value or Sum assured whichever is higher 8)Riders :-

Accidental Death Benefit Accidental Death & Dismemberment Accident & Disability Benefit Critical Illness Waiver of premium Accident Death & Accidental Total & Permanent Disablement benefit. Accident Benefit. 34 Waiver of premium Payor Benefit Critical Illness Term life insurance benefit 9) Fund options :-

Option of choosing from 5 funds or a combination of them. Equity fund: Equity shares.(100%) Income fund: Government Bonds & Fixed Income Instruments. .

(100%) Aggressive growth fund: Equity (50-80%), Government Bonds (2050%). Stable Growth Fund: Government Bonds (50-70%), Equity (30-50%) Short Term Fixed Income Fund: Government securities & Fixed Income Instruments (100%), Money Market Instruments (20%). We offer you 6 investment funds. Flexi Growth: Equity & Related Securities Debt, Money Market & Cash (80-100%). Maximiser: Equity & Equity Related Securities Debt, Money Market & Cash (25%-100%) Flexi Balanced: Equity & Related Securities Debt, Money Market & Cash (60-100%) Balancer: Equity & Equity Related Securities Debt, Money Market & Cash (40-100%) Protector: Debt, Money Market & Cash (100%) Tailor made and Readymade funds.

Tailor Made: Money Market (100%) Gilt (100%) Corporate (100%) Equity ( 100%) Readymade: Fund A Fund B Fund C Growth Fund: Debt (0-40%) Equity (60-80%) Balanced Fund: Debt (0-70%) Equity (30-50%) Secured Fund: Debt (0-85%) Equity (15-35) Bond Fund: Debt (100%) Equity (0%) 35 Preserver: Debt, Money Market & Cash (50-100%) 10) Surrender option/ partial withdrawal option :-

Allowed only after 3 years form the date of issuance of the policy. Surrender charges are a percentage of regular premiumsFund value. Charge Applicable for 6 yrs---20 or

30 yr policy Charge Applicable for 5 yrs----15 yr policy Surrender & partial withdrawal available Min of up to 4 partial withdrawals available. Allowed only after 3 years form the date of issuance of the policy and on payment of full 3 yrs premium . Partial withdrawal can be done up to min of Rs 2000. Surrender & partial withdrawal available Allowed only after 3 years form the date of issuance of the policy and on payment of full 3 yrs premium The surrender value or the partial withdrawal value is equal to the Fund value. Surrender & partial withdrawal available Allowed only after 3 years form the date of issuance of the

policy and on payment of full 3 yrs premium. Partial withdrawal facility is not available. 11) Reinstatement/ Revival :-

In case the policy lapses, you can reinstate it within 5 years from the date of lapse. If you are unable to reinstate the policy within 5 years, If full premium for the first 3 policy years is not paid, the policy lapses. Therefore the policy has to be You may revive the policy within 3 years from the 1st unpaid premium. If not revived, then the policy A lapsed policy can be revived within 2 years fro the date of the first unpaid premium. Or gets surrendered. 36 then the policy will be surrendered. In case of lapse, only the Fund Value will be given on death. (no SA) revived within a period of 2

years, if not then the policy will be surrendered. In case of lapse, only the Fund Value will be given. (no SA) . will be terminated.. And the policy will be surrendered. 12) Premium Holiday:-

After completion of 3 years of the policy, if you are unable to pay the premium within the grace period, then a Premium Holiday facility is given with a charge of 3% of the regular premium. 13) Free look Period :This option is available here, which ensures that your life insurance cover continues incase you are unable to pay the premium, after completion of 3 years of the policy. The option here is called A Cover Continuance option. The policy brochure has no mention of premium holiday The policy brochure has no

mention of premium holiday. The policy can be cancelled within a free look period of 15 days form the date of receipt of the policy. The market value of the invested premiums along with the charges paid will be refunded after making some nominal deductions. The policy can be cancelled within a free look period of 15 days form the date of receipt of the policy The policy can be cancelled within a free look period of 15 days form the date of receipt of the policy. The market value of the invested premiums along with the charges paid will be refunded after making some nominal deductions The policy can be cancelled within a free look period of 15 days form the date of receipt of the policy37 14) Grace Period: -

Here the grace period provided is

for 31 days. Nothing is mentioned about the grace period in the policy brochure. For regular premiums the grace period is for 30 days, For monthly premiums grace period is for 15 days Nothing is mentioned about the grace period in the policy brochure. 15) Settlement Benefits :-

You have the option to receive your maturity benefit either in lumpsum or in the from of periodical payments over period of time. This period will not exceed 5 years from the maturity date. On maturity of the policy, you can choose to take the fund value. You can opt to get payments on yearly, half yearly, quarterly or monthly (through ECS) basis, for a period of 1,2,3,4 or 5 yrs, post maturity. At any time during settlement

period, you have the option to withdraw the remaining fund value. You have the option to receive your maturity benefit either in lumpsum or in the from of periodical payments over period of time . This period will not exceed 5 years from the maturity date. 16) Premium Redirection: -

Re direction of all the future premiums under a policy, in an alternative proportion to the various Fund units is available No benefit Re direction of all the future premiums under a policy, in an alternative proportion to the various Fund units is available. No benefit 38 17)Top Up premium:-

Minimum top up amount is Rs 10,000 Amount not mentioned. Minimum top up amount is Rs 2500

Minimum top up amount is Rs 1000. 18) Tax Benefits:-

Premiums paid under the policy are eligible for tax benefit u/s 80C of the Income Tax Act, 1961. Life insurance proceeds are tax free u/s 10(10D). Premiums paid under the policy are eligible for tax benefit u/s 80C of the Income Tax Act, 1961. Life insurance proceeds are tax free u/s 10(10D) Premiums paid under the policy are eligible for tax benefit u/s 80C of the Income Tax Act, 1961. Life insurance proceeds are tax free u/s 10(10D). Premiums paid under the policy are eligible for tax benefit u/s 80C of the Income Tax Act. Life insurance proceeds are tax free u/s 10(10D). 39 19)CHARGES

Most of the life insurance companies incur certain charges which are as follows: a) MORTALITY CHARGES b) FUND MANAGEMENT CHARGES c) SWITCH OVER CHARGES d) POLICY ADMINISTRATION CHARGES A GRAPHICAL REPRESENTATION WILL MAKE THE CHARGES UNDERSTANDABLE AND EASY TO COMPARE40 a) MORTALITY CHARGES

MORTALITY CHARGES 0 2 4 6 8 10 12 14 16 18 20 20yrs 30yrs 40yrs 50yrs AGE RATES (RS) Reliance ICICI Tata AIG

Interpretation: The mortality charges of Reliance (Automatic Investment Plan) are the highest whereas The charges of Tata AIG (Invest Assure II) is the least. MORTALITY CHARGES (Rs) AGE Tata AIG ( Invest Assure II) ICICI (Life Time Super) Reliance(Automatic Investment Plan) 20yrs 1.05 1.33 1.117 30yrs 1.17 1.46 1.287 40yrs 2.15 2.48 2.36 50yrs 5.53 5.91 6.08541 b) FUND MANAGEMENT CHARGES (Only for Equity Fund) FMC CHARGES 1.75% 2.25% 1.50% 1.50% 0.00% 0.50% 1.00% 1.50% 2.00% 2.50% Tata AIG ICICI Reliance LIC

COMPANY RATES % pa CHARGES Interpretation: ICICI have the highest FMC whereas Charges of Tata AIG are comparatively higher than the other two. FMC (pa) FOR EQUITY FUND ONLY Tata AIG ( Invest Assure II) 1.75% ICICI (Life Time Super) 2.25% Reliance (Automatic Investment Plan) 1.50% LIC (Market Plus) 1.50% 42 c) SWITCH OVER CHARGES SWITCH OVER CHARGES 250 2000 100 100 Tata AIG ICICI Reliance LIC Interpretation: Even in this case ICICI has got the highest switch over charge, whereas charge of Tata AIG are comparatively than the other two. Over here Reliance proves to be superior as it provides 52 switches free as compared to just 4 switches offered by others and its charges are

. also less Tata AIG ( Invest Assure II) ICICI (Life Time Super) Reliance (Automatic Investment Plan) LIC (Market Plus) The first 4 switches per policy will be free. The first 4 switches per policy will be free. The first 25 switches per policy will be free. The first 4 switches per policy will be free. Charge (Rs) Tata AIG ( Invest Assure II) 250 ICICI (Life Time Super) 2000 Reliance (Automatic Investment Plan) 100 LIC (Market Plus) 100 43 d) POLICY ADMINISTRATION CHARGES

Charges( Rs /month) Tata AIG ( Invest Assure II) 38 ICICI (Life Time Super) --Reliance (Automatic Investment Plan) 40 LIC (Market Plus) 20 38 40 60 0 10 20 30 40 50 60 RATES Tata AIG Reliance LIC COMPANY POLICY ADMINISTRATION CHARGES per month (RS) CHARGES per month Interpretation: In this case charges of Tata AIG are higher than LIC but lower than Reliance.44 GROWTH & RETURNS THE GROWTH RATE OF ULIPS THE NAVs taken over here only belong to The Equity Fund of the Policies. (No other fund taken into consideration) Growth rate of ULIPs (Equity Fund) of the 4 Insurance companies

Date of Inception NAV as on inception Rs NAV as on July,20 2007 Rs Increase Growth % Tata AIG ( Invest Assure II) 24 Jan, 2004 10 30.45 20.45 204.5 ICICI (Life Time Super) 16 Nov,2001 10 53.32 43.32 433.2 Reliance (Automatic Investment Plan) 28 May,2007 10 10.98 0.98 9.8 LIC (Market Plus) 5 July, 2006 10 11.89 1.89 18.9 From the tabular compilation, it can be observed that the Equity Fund of the policies has performed very well over the years. In case of Tata AIG--------the Equity Fund has grown up to 204.5% in 3 years from the

date of inception. In case of ICICI--------the Equity Fund has grown up to 433.2% in 5 years from the date of inception.

Also Reliance Equity Fund has increased to 9.8% in a short span of 2mths. LIC has also done a good job with a growth up to 18.9% in 1 year. 45 COMPARISON OF RETURNS RETURNS OF Tata AIG Equity Fund, ICICI equity fund, Reliance equity fund, LIC equity fund, V/s BSE SENSEX & NSE NIFTY. PERIOD OF 1 MONTH FROM JUNE 20, 2007 TO JULY 20, 2007 Particulars From To Increase By Return % Rank Tata AIG Equity Fund 28.25 30.45 2.20 7.79 4 ICICI Equity Fund 48.43 53.32 4.89 10 1 Reliance Equity Fund 10.14 10.98 0.84 8.2 2 LIC Equity Fund 11.25 11.89 0.64 5.6 6 BSE SENSEX 14411.95 15565.55 1153.55 8 3 NSE NIFTY 4248.65 4566.05 317.4 7.4 5 46 RETURNS 7.79%

10% 8.20% 5.60% 8% 7.40% 0.00% 2.00% 4.00% 6.00% 8.00% 10.00% 12.00% Tata AIG Equity Fund ICICI Equity Fund Reliance Equity Fund LIC Equity Fund BSE SENSEX NSE NIFTY RATES ICICI Equity Fund has outperformed all others giving the highest returns, followed by Reliance. Tata AIG Equity Fund has marginally outperformed NIFTY. Also it is very close to SENSEX.. LIC Equity Fund has given the least returns. 47 FUND PERFORMANCE (Only of Equity Fund) Period: 1month From 20

th June, 2007--------20 th July, 2007 NAVs of the Equity Fund (Rs) Tata AIG (Invest Assure II) ICICI (Life Time Super) Reliance (Automatic Investment Plan) LIC ( Market Plus) 20-Jun 28.24 48.43 10.14 11.25 21-Jun 28.49 48.44 10.15 11.26 22-Jun 28.49 48.75 10.13 11.13 25-Jun 28.61 48.85 10.15 11.35 26-Jun 28.77 48.95 10.22 11.45 27-Jun 28.62 48.66 10.21 11.3 28-Jun 28.841 48.45 10.27 11.31 29-Jun 29.13 48.33 10.33 11.39 30-Jun 29.14 49.1 10.34 11.4 2-Jul 29.39 50.52 10.38 11.45 3-Jul 29.57 50.25 10.48 11.46 4-Jul 29.54 50.49 10.54 11.52

5-Jul 29.53 50.45 10.53 11.57 6-Jul 29.69 51 10.63 11.59 9-Jul 29.89 51.47 10.73 11.64 10-Jul 29.65 51.22 10.72 11.64 11-Jul 29.59 51.5 10.69 11.65 12-Jul 30 52 10.83 11.72 13-Jul 30.34 52.6 10.93 11.73 16-Jul 30.26 52.3 10.94 11.81 17-Jul 30.65 52.45 10.87 11.82 18-Jul 30.94 52.39 10.85 11.85 19-Jul 30.34 53.21 11.5 11.93 20-Jul 30.45 53.32 10.98 11.8948 CONSOLIDATED FUND PERFORMANCE SHOWN GRAFICALLY. FUND PERFORMANCE 0 10 20 30 40 50 60 6/20 /200 7 6/22/2007 6/24/2007 6/26 /2007 6/28/200 7

6/30/2007 7/2/2 7 7/4/2007 7/6/2007 7/8/2007 7/10/2007 7/12 /2007 7/14 /200 7 7/16/2007 7/18/2007 7/20 /2007 1 MONTH (20JUNE--20JULY) NAV(RS) Tata AIG (Invest Assure II) ICICI (Life Time Super) Reliance (Automatic Investment Plan) LIC ( Market Plus)49 INDIVIDUAL EQUITY FUND PERFORMANCE TATA AIG Invest Assure Super Life Time ICICI

ICICI (Life Time Super) 45 46 47

48 49 50 51 52 53 54 6 /20 /20 0 7 6 /2 2 /20 0 7 6 /2 4 /2 7 6 /2 6 /2 7 6 /28 /2 0 0 7 6 /30 /20 0 7 7 /2 /2 0 07 7/4 /2 0 0 7 7 /6 /2 7 7 /8 /2 0 0 7 7 /10 /2 0 0 7 7 /12 /20 0 7 7 /1 4 /2 0 0 7 7 /1 6 /2 0 0 7 7 /1 8 /2 7 7 /20 /20 0 7 Dates navRs ICICI (Life Time Super) Tata AIG (Invest Assure II)

26.5 27 27.5 28 28.5 29 29.5 30 30.5 31 31.5 6 /2 0 /2 0 0 7 6 /2 2 /2 00 7 6 /2 4 /2 00 7 6 /2 6 /2 00 7 6 /2 8 /2 00 7 6 /3 0 /2 00 7 7 /2 /2 0 0 7 7 /4/2 00 7 7 /6/2 0 0 7 7 /8 /2 00 7 7 /1 0 /2 00 7 7 /1 2 /2 00 7 7 /1 4 /2 00 7 7 /1 6 /2 00 7 7 /1 8 /2 00 7 7 /2 0 /2 0 0 7

DATES NAVRS Tata AIG (Invest Assure II)50 RELIANCE LIC Market Plus Automatic Investment Plan Reliance (Automatic Investment Plan) 9 9.5 10 10.5 11 11.5 12 6 /2 0 /2 0 0 7 6 /2 2 /2 0 0 7 6 /2 4 /2 0 0 7 6 /2 6 /2 0 0 7 6 /2 8 /2 0 0 7 6 /3 0 /2 0 0 7 7 /2 /2 0 0 7 7 /4 /2 0 0 7 7 /6 /2 0 0 7 7 /8 /2 0 0 7 7 /1 0 /2 0 0 7 7 /1 2 /2 0 0 7

7 /1 4 /2 0 0 7 7 /1 6 /2 0 0 7 7 /1 8 /2 0 0 7 7 /2 0 /2 0 0 7 Dates navRs Reliance (Automatic Investment Plan)

LIC ( Market Plus) 10.6 10.8 11 11.2 11.4 11.6 11.8 12 6 /2 0 /2 0 0 7 6 /2 2 /2 0 0 7 6 /2 4 /2 0 0 7 6 /2 6 /2 0 0 7 6 /2 8 /2 0 0 7 6 /3 0 /2 0 0 7 7 /2 /2 0 0 7 7 /4 /2 0 0 7 7 /6 /2 0 0 7 7 /8 /2 0 0 7

7 /1 0 /2 0 0 7 7 /1 2 /2 0 0 7 7 /1 4 /2 0 0 7 7 /1 6 /2 0 0 7 7 /1 8 /2 0 0 7 7 /2 0 /2 0 0 7 Dates NavRs LIC ( Market Plus)51 From the above graphs, it can be seen that the NAV of Reliance Automatic Investment plan is fluctuating less as compared to the others. NAV of ICICI Life Time Super has fluctuated more as compared to the others. Tata AIG has moderate NAV Fluctuations Thus as far as NAV consistency is concerned, investing in Reliance Equity Fund can be a Prudent decision. It is expected that the NAVs will rise in the future, promising good returns for the Investors. It has been observed that the lesser the fluctuations in the NAV, the better it is for the fund. But the good thing is that all the NAVs are on a rising trend. which indicates the strength of the Equity Fund.52 OVERALL DATA ANALYSIS & FINDINGS This analysis is done by giving ranks to all the policies taking into consideration the following criteria (1= excellent, 2=good, 3=fair, 4=average) In the end, whichever fund has the least score will be the best buy From the above analysis it can be said that, ICICI and LIC have scored the least.

Therefore a person can either buy a ULIP form ICICI or from LIC. CRITERIA TATA AIG ICICI RELIANCE LIC Amount of Premium 3 4 2 1 Mode of premium payment 1 2 1 2 Revival of the Policy 1 3 2 3 Amount of Top up premium 1 Not given 2 3 Oldest policy 2 1 4 3 Policies issued 4 2 3 1 Premiums collected 4 2 3 1 Mortality charges 1 2 3 Not given FMC 2 3 1 1 Policy Administration charges 2 Not given 3 1 Switch over charges 2 3 1 1 Fund performance 2 1 3 4 Returns 3 1 2 4 Market share 4 2 3 1 TOTAL SCORES 32 26 34 26 53 CHAPTER 4:- UNDERSTANDING THE WORKING OF ULIPS of Tata AIG ULIPs are said to be the most lucrative from of investment, which not only give you high market returns but also protection from risk, and also secures the livelihood of your loved ones even after your death. Here is an illustration which explains how a ULIP makes your money work. Harder than you. SAMPLE SALES ILLUSTRATION OF INVEST ASSURE II (TATA AIG LIFE) Name of the proposed insured: Miss Dimple Solanki : 1577 Proposal no.

Age of the proposed insured : 23 yrs 15/7/07 Name of the policy holder : Rupees Age of the policyholder Annual Insurance plan Benefit period Premium Paying period Premium multiple Annual premium Modal premium Sum Assured (SA) Additional coverage Fund Invest Assure II 30 yrs 30yrs 22.50 12000 12000 270000 270000 Equity 100% 54 Note : 1)SA is the multiple of annual premium: 12000*22.50= 270,000 : Miss Dimple Solanki

Date

Currency

: 23 yrs

Payment Mode

2) Additional coverage given as Accident Death Benefit Rider taken by the policy holder. 3) Investment in Equity is 100%. Invest assure II 30 YEAR POLICY

Min Return on units=10%( non guaranteed) CHARGES: 1 st year= 50% of premium 2 nd year= 25% of premium 3 rd year= 1 %of premium YEAR 1 12000 premium 50% 50%= Rs 6000 Return =Rs 600 Total NAV =RS 10 No. of units =Rs 6600/10= 660units YEAR 2 12000 premium 25% 75% = Rs 9000 Return= Rs 900 Total = Rs 9900 =Rs 6600

NAV=RS. 20 (6600+9900)=Rs16500 No. of units = Rs16500/ 20= 825 units

YEAR 3 12000 premium 1% 99%= Rs 11880 Return= Rs 1188 Total = Rs 13068

NAV =RS 30 (16500+13068)=Rs 29568 No of units= Rs 29568/ 30=986 units Balance invested in the Equity fund 50% 75% 99% 55 TOTAL UNITS IN HAND: 660+825+986=2471 UNITS AFTER 3 YEARS. Therefore the units keep on increasing with the change in the NAVs. There is an inverse relation between the NAVs and the No. of Units. As the NAVs rises the no of units decrease. & As the NAVs fall, the No of Units increase. E.g.: In the 3 rd year, the investment was Rs 29568. NAV was Rs 30. So the no. of Units was 986. Now if the NAV Falls to Rs 20. Then the no. of Units would have been 1479. 56 Therefore the rising trend of NAV is not always a good sign, as your no of units decrease. Therefore if Miss Dimple Solanki continues with her policy for 30 years , she will get a Maturity benefit = existing Fund Value which is the sum of the

regular premium fund value On death = SA Rs 270000 or NAV whichever is higher

On Death due to Accident= Double the SA. 57 CHAPTER 7 MARKET SURVEY A questionnaire was prepared, wherein 10 advisors of Tata AIG were asked to fill it. The reason for carrying out a market survey was to know the opinion of the advisors and the popularity of ULIPs in the market. Questionnaire for Advisors of Tata AIG Q 1) What type or class of customers visits your office? a. salaried b. housewives c. self employed d. retired e. pensioner Salar ied, 50% house wif e, 10% self employed, 40% pensioner , 0% Salar ied house wif e self employed pensioner58 Q 2) Which policies the client opts for? a. Traditional

b. ULIPS 10% 90% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Traditional ULIPs Schemes Q 3) Are ULIP schemes popular? a. yes b. no c. cant say YES, 70% NO, 30% CAN'T SAY, 0% YES NO CAN'T SAY59

Q 4) Are the clients aware of ULIP schemes? a. less than 10% b. 10% --- 30% c. 30%---- 60% d. Above 60% 0% 30% 50% 20% Less Than 10% 10%- 30% 30%- 60% 60% & above Q 5) Out of ten , how many clients opt for ULIP ? ANS) On an average 6 clients out of 10 opt for ULIPs. Q 6) How much commission do you get from the company on ULIP policy? a. 0--- 10% b. 1120% c. 21---30% d. 31--- 40% 20% 10% 50%

20% 0% 10% 20% 30% 40% 50% 60% 0-10% 11%-20% 21%-30% 31%-40% C o mmissio n60 Q 7) How many clients have the background of finance? a.1020% b.2040% c. 40% & above 40% 60% 0% 10%20% 20%40% 40%above Q8 ) Mode of payment of premium. a. cheque b. Demand Draft c. Cash

cheque, 100% demand draft, 0% cash, 0% cheque demand draft cash61 Q9) What is the better positioning for ULIP? a. as a tax saving plan b. as a retirement plan c. as a child education plan d. as a security cum profitable plan. 20% 0% 10% 70% 0% 10% 20% 30% 40% 50% 60% 70% 80% as a tax saving plan

as a retirement plan as a child education plan as a security cum profitable plan Q 10) Qualifications a. HSC pass b. Graduate 30% 50% 20% 0% 10% 20% 30% 40% 50% 60% HSC Graduate MBA62 Q 11) How is ULIP different from the other policies? Please refer to pg 21 ULIPs v/s Endowment. Q 12) How does a client respond, if any new policy is suggested to him? ANS: According to the survey, the clients reaction depends upon the presentation that is given to him by the Advisor. Usually the client shows positive signs of buying the product, sometimes are reluctant to buy c.MBA

due to financial problems. According to most of the advisors the 1 st quest asked by the client is about the guarantee and returns. They want to know about the popularity of the policy as well as the insurance company. 63 CHAPTER 8 Integrated Financial Planning for Life Insurance Starting a job, Single individual Recently married, no kids Married, with kids Kids going to school, college Higher studies for child, marriage Children independent, nearing the golden years Your Need Low protection,

high asset creation and accumulation Reasonable protection, still high on asset creation Higher protection, still high on asset creation but steadier options, increase savings for child Higher Protection, high on asset creation but steadier options, liquidity for education expenses

Lump sum money for education, marriage. Facility to stop premium for 23 yrs for these extra expenses Safe accumulation for the golden yrs.Considera bly lower life insurance as the dependencies have decreased Flexibility Choose low death benefit, choose growth/balance d option for asset creation Increase death benefit,

choose growth/bala nced option for asset creation Increase death benefit; choose balanced option for asset creation. Choose riders for enhanced protection. Use top-ups to increase your accumulation Withdrawal from the account for the education expenses of the child Withdrawal from the account for

higher education/marri age expenses of the child. Premium holiday-to stop premium for a period without lapsing the policy Decrease the death benefitreduce it to the minimum possible. Choose the income investment option. Topups form the accumulation (with reduced expenses) for the golden yrs cash accumulation 64 CONCLUSION: From the above project , I would point out that the insurance industry is growing at a very

fast pace .The Insurance needs of the people are increasing. ICICI Prudential is a key player in the private sector and LIC is a leader in the public sector with the largest market share. The returns provided by ICICI is the highest as compared to other companies and is superior to others in all respects. Therefore a person can rightly choose to buy insurance from ICICI . Thus ULIPs are simple combination of Term assurance and investment. Synergy, flexibility, durable tax advantages, flexibity in debt- equity ratio, top up facility, transparency, subjected to market conditions, capital appreciation makes ULIPs structurally more effective for achieving long term financial goals. There is no other investment avenue which provides double the amount invested, in case of death due to accident or on death. Therefore insurance has and should be a part of every persons portfolio which satisfies twin objectives of protection against risks & to increase your wealth. Putting your money in the ULIP equity fund will give you a good return and capital appreciation. So relax and enjoy your life as ULIPs is there behind you. 65 RECOMMENDATIONS For the Company based on the above market survey. 1) The company should now target pensioners & housewives as they constitute only 10% in the selection of ULIPs. 2) The company can arrange a seminar for the existing clients informing them about the progress made by the company, and also give some lessons on understanding the basics of FINANCE. 3) Since ULIPs are less popular as a retirement plan, Tata AIG should advertise inorder to attract the attention of salaried people and to make them understand the importance of investing in ULIPS for retirement. Publicity on a large scale about the different policies to be given in all means of communication. (Basically on TV during prime hours)

For the changes in ULIPs: 1. The amount of premium should be reduced in order to cater to the lower income groups. 2. On maturity, the policy holder should receive the Fund value or the Sum Assured whichever is higher, (as in the case of death benefit.) 3. Reduction in the charges. 4. Commission structure to be revised 5. Give a Pure traditional plan along with the ULIPs. 6. Remove the charges on surrender or partial withdrawal. 7. Increase the number of Switch options. as four is not enough. 8. Design ULIPs for meeting short term investment goals. 9. The investment style should be more aggressive. 66 BIBLIOGRAPHY A. BOOKS 1. Insurance Principles & Practices -----M.N.Misra 2. Insurance ------ M.J.Mathew RBSA Publications. 3. Insurance Fundamentals, Environment & Procedures -------B.S.Bodla, M.C. Garg, K.P. Singh Deep & Deep Publications of 2003 4. Insurance Institute of India IC 33------S.J. Gidwani 5. Taxmann Life Insurance agent ---- P.R. Khanna , Taxmann Allied service pvt ltd 4 th edition 2005. B. NEWSPAPERS S Chand Publications.

1. Economic Times 2. Times Of India 3. ESCOLIFE PAPER on Insurance by Ritu Nanda Vol 2, Issue viii June, 2007. C. MAGAZINES 1. Money Simplified --Vol xxx ,Feb 2007 ULIPs how they fit in 2. Consumer Voice ---Vol 7, Issue 3 . 67 D. NEWSLETTER 1. Tata AIG Life Agency Newsletter Vol 1, Edition 6 , March ,2007. E. INTERNET www.tata-aig.com www.licofindia.com www.iciciprulife.com www.reliancelife.com www.moneycontrol.com www.personalfn.com www.et.com www.google.com (Note- The above Sites were logged on between 20 June,07 to 21 st July,2007 ) F. CNBC TV 18 G. BOOKLET on the Orientation Programme of Employees at Tata AIG H. Policy Brochures of Tata AIG, ICICI Prudential, Reliance Life & LIC. 68 QUESTIONNAIRE FOR ADVISORS

Q 1) What type or class of customers visit your office? salaried housewives self employed retired pensioner Q 2) Which policies the client opts for? Traditional ULIPS Q 3) Are ULIP schemes popular? yes no cant say Q 4) Are the clients aware of ULIP schemes? less than 10% 10% --- 30% 30%---- 60% Above 60% Q 5) Out of ten, how many clients opt for ULIP? Q 6) How much commission do you get from the company on ULIP policy? 0--- 10% 1120% 21---30% 31--- 40% Q 7) How many clients have the background of finance? 1020% 2040%

 40% & above. Q8) Mode of payment of premium. cheque Demand Draft Cash Q9) What is the better positioning for ULIP? 69 as a tax saving plan as a retirement plan as a child education plan as a security cum profitable plan. Q 10) Qualifications HSC pass Graduate MBA Q 11) How is ULIP different from the other policies? Q 12) How does a client respond, if any new policy is suggested to him? . 70 THANK YOU