MINOR PROJECT REPORT ON AVIVA LIFE INSURANCE

Submitted in partial fulfillment of the requirements for the award of the degree of BACHELOR OF BUSINESS ADMINISTRATION to Guru Gobind Singh Indraprastha University, Delhi

Under the Guidance of Name of Faculty Guide Designation

Submitted by Name of Student BBA-III Sem Enrollment No.

Session 2011 12

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ACKNOWLEDGEMENT
It is well-established fact that behind every achievement lays an unfathomable sea of gratitude to those who have extended their support and without whom the project would never have come into existence. I express my gratitude to ______________ for providing me an opportunity to work on this thesis as a part of the curriculum. Also, I express my gratitude to Prof. _____________and Prof. __________on the completion of my project.

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EXECUTIVE SUMMARY
The forces of globalization and technological change have opened up new Opportunities as well as change to the industries, to serve the needs of the commercial enterprise, government organization, institutions and individual customers. The business environment has changed more in the last five years than it did in the previous five decades. Winning in todays business climate requires more than just providing high-quality, low-cost products to customers, when and how the customers want them. The ability to respond to new customer needs and seize market opportunities as they arise at the right time, without compromising on the profitability of the organization is critical for the success of any organization. Today the economy is changing its pace shifting economic needs. Companies are continuously trying to fulfill market need at very fast pace. They highly emphasizes on targeting the market by delivering the right thing at the right time & of course at the right time. This 20th century requirement of reaching the market as fast as you can with optimum efficiently lead to the rapid change of Sales & Distribution Management. Here in this project I try to unveil the Sales force management technique used by AVIVA LIFE INSURANCE with all its aspect.

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CONTENTS
EXECUTIVE SUMMARY CHAPTER I: INTRODUCTION CHAPTER-II LITRATURE REVIEW CHAPTER III: RESEARCH METHODOLOGY CHAPTER IV: DATA REDUCTION, PRESENTATION & ANALYSIS CHAPTER V: DATA INTERPRETATION CHAPTER VI: SUMMARY & CONCLUSIONS SUMMARY BIBLIOGRAPHY QUESTIONNAIRE 3 5 29 51 53 61 80 81 82 83

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CHAPTER I: INTRODUCTION
The insurance sector in India has come a full circle from being an open competitive. Market to nationalization and back to a liberalized market again. Tracing the Developments in the Indian insurance sector reveals the 360 degree turn witnessed over period of almost two centuries. Insurance was nationalized. First, the life insurance companies were nationalized in 1956, and then the general insurance business was nationalized in 1972. Only in 1999 private insurance companies have been allowed back into the business of insurance with a maximum of 26% of foreign holding. In what follows, we describe how and why of regulation and deregulation. The entry of the State Bank of India with its proposal of banc assurance brings a new dynamics in the game. We study the collective experience of the other countries in Asia already deregulated their markets and have allowed foreign companies to participate. If the experience of the other countries is any guide, the dominance of the Life Insurance Corporation is not going to disappear any time soon. The Indian insurance market, with a population of over one billion, offers tremendous opportunities and can easily sustain 100 insurers. The development of the insurance sector will result in higher domestic savings and investments, significant expansion of the capital market, enhanced infrastructure financing and increased foreign capital inflow and employment. The opening up of the Indian insurance sector has been hailed as a groundbreaking move towards further liberalization of the Indian economy. The size of the existing insurance market is growing at a rate of ten per cent per year. The estimated potential of the Indian insurance market in terms of premium was around Rs3, 44,000 crores (US$86 billion) in 1999. The Indian players have tapped only ten per cent of the market share and the remaining 90 per cent of the market remains untapped. The Indian Government has recently enacted the Insurance Regulatory Development Authority Act 1999, which amends existing insurance laws dating from 1938. The Act establishes an authority called the Insurance Regulatory Development Authority, designed to regulate the insurance sector. THE INSURANCE INDUSTRY - WITH A NEW LOOK Competition has well and truly set in the fast-growing insurance sector, barely a year after the doors were opened for the re-entry of private players.

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The new face of the Indian insurance industry is craving for attention. Hoardings and billboards of the new joint venture private companies gaze at you from everywhere. Advertisements in newspapers and on television, insurance agents and direct mailers form part of the campaign vehicle. The dozen-odd life and non-life companies in the private sector are fighting a quiet but intense battle to make their presence felt to the Indian consumer. Not to be undone, the public sector companies are trying to match the moves of the private companies. They are shedding their old ways and donning a sprightlier and market-friendly exterior to make sure that they do not lose the advantage of a head start. Life insurance is a form of insurance that pays monetary proceeds upon the death of the insured covered in the policy. Essentially, a life insurance policy is a contract between the named insured and the insurance company wherein the insurance company agrees to pay an agreed upon sum of money to the insured's named beneficiary so long as the insured's premiums are current. With a large population and the untapped market area of this population insurance happens to be a very big opportunity in India. Today it stands as a business growing at the rate of 1520% annually. Together with banking services, it adds about 7 percent to the countries GDP. In spite of all this growth statistics of the penetration of the insurance in the country is very poor. Nearly 80% of Indian populations are without life insurance cover and the health insurance. This is an indicator that growth potential for the insurance sector is immense in India. It was due to this immense growth that the regulations were introduced in the insurance sector and in continuation Malhotra Committee was constituted by the government in 1993 to examine the various aspects of the industry. The key element of the reform process was participation of overseas insurance companies with 26% capital. Creating a more competitive financial system suitable for the requirements of the economy was the main idea behind this reform. Since then the insurance industry has gone through many changes. The liberalization of the industry the insurance industry has never looked back and today stand as one of the most competitive and exploring industry in India. The entry of the private players and the increased use of the new distribution are in the limelight today. The use of new distribution techniques and the IT tools has increased the scope of the industry in the longer run. Insurance is the business of providing protection against financial aspects of risk, such as those to property, life health and legal liability. It is one method of a greater concept known

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as risk management which is the need to mange uncertainty on account of exposure to loss, injury, disadvantage or destruction. Insurance is the method of spreading and transfer of risk. The fortunate many who are exposed to some or similar risk shares loss of the unfortunate. Insurance does not protect the assets but only compensates the economic or financial loss. In insurance the insured makes payment called premiums to an insurer, and in return is able to claim a payment from the insurer if the insured suffers a defined type of loss. This relationship is usually drawn up in a formal legal contract. Insurance companies also earn investment profits, because they have the use of the premium money from the time they receive it until the time they need it to pay claims. This money is called the float. When the investments of float are successful they may earn large profits, even if the insurance company pays out in claims every penny received as premiums. In fact, most insurance companies pay out more money than they receive in premiums. The excess amount that they pay to policyholders is the cost of float. An insurance company will profit if they invest the money at a greater return than their cost of float. An insurance contract or policy will set out in detail the exact circumstances under which a benefit payment will be made and the amount of the premiums. Classification of insurance The insurance industry in India can broadly classified in two parts. They are. 1) Life insurance. 2) Non-life (general) insurance. 1) Life insurance: Life insurance can be defined as life insurance provides a sum of money if the person who is insured dies while the policy is in effect. In 1818 British introduced to India, with the establishment of the oriental life insurance company in Calcutta. The first Indian owned Life Insurance Company; the Bombay mutual life assurance society was set up in 1870.the life insurance act, 1912 was the first statuary measure to regulate the life insurance business in India. In 1983, the earlier legislation was consolidated and amended by the insurance act, 1938, with comprehensive provisions for detailed effective control over insurance. The union government had opened the insurance sector for private participation in 1999, also allowing the private companies to have foreign equity up to 26%. Following the opening up of the insurance sector, 12 private sector companies have entered the life insurance business.

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Benefits of life insurance Life insurance encourages saving and forces thrift. It is superior to a traditional savings vehicle. It helps to achieve the purpose of life assured. It can be enchased and facilitates quick borrowing. It provides valuable tax relief. Thus insurance is found to be very useful in the lives of the person both in short term and long term. Fundamental principles of life insurance contract; 1) Principle of almost good faith: A positive duty to voluntary disclose, accurately and fully, all facts, material to the risk being proposed whether requested or not. 2) Principle of insurable interest: Relationships with the subject matter (a person) which is recognized in law and gives legal right to insure that person. 2) Non-life (general) Insurance: Triton insurance co. ltd was the first general insurance company to be established in India in 1850, whose shares were mainly held by the British. The first general insurance company to be set up by an Indian was Indian mercantile insurance co. Ltd., which was stabilized in 1907 . there emerged many a player on the Indian scene thereafter. The general insurance business was nationalized after the promulgation of General Insurance Corporation (GIC) OF India undertook the post-nationalization general insurance business.

CONCEPTUAL BACKGROUND Satisfaction is defined as . . . A persons feeling of pleasure or disappointment resulting from comparing a products perceived performance (or outcome) in relation to his or her expectations. Customer Satisfaction can be defined as supplying or gratifying all wants or wishes, fulfilling conditions or desires, or the state of the mind anything that makes a customer feel pleased or contented. Consumer Behavior: Consumer behavior is defined as the behavior that consumers display in searching for, purchasing, using, evaluating and disposing of products and services that they expect will satisfy their needs.

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The study of the processes involved when individuals or groups select, purchase, use, or dispose of products, services ideas, or experiences to satisfy needs and desires Customer value: The ratio between the customerss perceived benefits (economic, functional and psychological) and the resources (momentary, time, effort, psychological) used to obtain those benefits. Customer satisfaction: Customer satisfaction is the individuals perception of the performance of the product or service in relation to his or her expectations. Motivation: The processes that account for an individuals intensity, direction, and persistence of effort toward attaining a goal. Personality can be described ad the psychological characteristics that both determine and reflect how person responds to his or her environment. Perception is defined as the process by which an individual selects, organizes, and interprets stimuli into a meaningful and coherent picture of the world. Consumer learning is the process by which individuals acquire the purchase and consumption knowledge and experience they apply to future related behavior.

INTRODUCTION TO THE COMPANY AVIVA LIFE INSURANCE Aviva is UKs largest and the worlds fifth largest insurance Group. It is one of the leading providers of life and pensions products to Europe and has substantial businesses elsewhere around the world. With a history dating back to 1696, Aviva has a 45 million-customer base with presence in 27 countries. It has 359 billion of assets under management. In India, Aviva has a long history dating back to 1834. At the time of nationalisation it was the largest foreign insurer in India in terms of the compensation paid by the Government of India. Aviva was also the first foreign insurance company in India to set up its representative office in 1995. In India, Aviva has a joint venture with Dabur, one of India's oldest, and largest Group of companies. A professionally managed company, Dabur is the country's leading producer of traditional healthcare products. In accordance with the government regulations Aviva holds a 26 per cent stake in the joint venture and the Dabur group holds the balance 74 per cent share. With a strong sales force of over 35,000 Financial Planning Advisers (FPAs), Aviva has initiated an innovative and differentiated sales approach to the business. Through the

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Financial Health Check (FHC) Avivas sales force has been able to establish its credibility in the market. The FHC is a free service administered by the FPAs for a need-based analysis of the customers long-term savings and insurance needs. Depending on the life stage and earnings of the customer, the FHC assesses and recommends the right insurance product for them. Aviva pioneered the concept of Bancassurance in India, and has leveraged its global expertise in Bancassurance successfully in India. Currently, Aviva has Bancassurance tie-ups with ABN Amro Bank, The Lakshmi Vilas Bank Ltd., Punjab & Sind Bank, IndusInd Bank, Cooperative Banks and Regional Rural Banks. When Aviva entered the market, most companies were offering traditional life products. Aviva started by offering the more modern Unit Linked and Unitised With Profit products to the customers, creating a unique differentiation. Avivas products have been designed in a manner to provide customers flexibility, transparency and value for money. It has been among the first companies to introduce the more modern Unit Linked products in the market. Its products include: whole life (LifeLong and LifeLine), endowment (LifeSaver, EasyLife Plus,LifeSaver Plus and ), child policy (Aviva Little Master) single premium (LifeBond and LifeBond Plus), Pension (PensionPlus and Secure Pension), Term (LifeShield), fixed term protection plan (Freedom LifePlan), health insurance (Aviva Health Plus), traditional endowment (Dhan Vriddhi, Aviva Money Back) and a tax efficient investment plan with limited premium payment term (LifeBond5). Aviva products are modern and contemporary unitised products that offer unique customer benefits like flexibility to choose cover levels, indexation and partial withdrawals. Avivas Fund management operation is one of its key differentiators. Operating from Mumbai, Aviva has an experienced team of fund managers and the range of fund options includes Unitised With-Profits Fund and seven Unit Linked funds: - Protector Fund, Secure Fund, Balanced Fund, Growth Fund,Enhancer Fund,Index Fund and Bond Fund Vision Aviva - where exceeding expectations through innovative solutions is "our" way of life. This is the compelling vision that Aviva India has created through the active contribution of its employees. These lines not only define the way we live and work but also serve as a reminder to deliver the best to our customers, shareholders, colleagues, partners & employees at all times.Embedded in this vision are the core values of Integrity, Customer centricity, Passion for winning, Innovation and Empowered team that we have collectively defined and committed to working towards.

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Aviva Life Insurance India is a private insurance company formed from a collaboration between the Aviva insurance group of UK and the Dabur group, one of India's oldest and top producer of traditional health care products . Aviva's products are meant to provide customers flexibility, transparency and value for money. History Aviva insurance group in UK with a history dating back to 1696, today stands as one of the leading provider of life and pension products to Europe and other parts of the world. The history of Aviva Life Insurance India starts at 1834 during nationalization when Aviva was the largest foreign insurance group in terms of the compensation paid by the Indian Government. In 1995 Aviva was the first foreign insurance company to start its representative office in India. At present in Aviva Life Insurance India, the Aviva group is a 26% share holder and the Dabur group holds 74% shares in the joint venture. Programme highlights Aviva Life Insurance India has 40 Branches in India, including rural branches supporting its distribution network. With over 27,000 Financial Planning Advisers (FPAs) and the Financial Health Check (FHC) programme it has been successful in setting up its position in the Indian market. The FHC is a free service administered by the FPAs which analyses the customer's long-term savings and insurance needs and depending on the life stage and earnings of the customer it selects the proper insurance product for them. Aviva Life Insurance India initiated the concept of Bancassurance in India and at present it has Bancassurance tie-ups with ABN Amro Bank, American Express Bank, Canara Bank, Centurion Bank of Punjab, The Lakshmi Vilas Bank Ltd. and Punjab & Sind Bank, 11 Cooperative Banks in Gujarat, Rajasthan, Jammu & Kashmir, Bihar, West Bengal, Andhra Pradesh and Maharashtra and one regional Bank in Sikkim. This has helped to distribute Aviva products in nearly 378 towns and cities across India. Aviva Life Insurance India offers more modern Unit Linked and Unitized With Profit money products to the customers. Following the IRDA guidelines, with effect from 1 July 2006, these unit - linked products have been modified. The products of Aviva insurance group of India are: LifeLong LifeSaver or EasyLife Plus Young Achiever LifeBond and LifeBond Plus

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 PensionPlus LifeShield Freedom LifePlan LifeBond5 The fund management operations of Aviva Life Insurance India is controlled from Mumbai and the fund options includes Unitized With-Profits Fund and four Unit Linked funds: Protector Fund - The fund comprises of debt securities in the range of 60-100%, equities in the range of 0-20% and money market and cash in the range of 0-20%. Secure Fund - The fund comprises of debt securities in the range of 50-100%, equities in the range of 0-20% and money market and cash in the range of 0-20%. Balanced Fund - The fund comprises of debt securities in the range of 50-90%, equities in the range of 0-45% and money market and cash in the range of 0-10%. Growth Fund - The fund will comprise of debt securities in the range of 0-50%, equities in the range of 0-85% and money market and cash in the range of 0-20%. These fund provides investment security to the capital of the customers. Through their association with Basix (a micro financial institution) and other NGOs, Aviva Life Insurance India have been able to reach out to those underprivileged who had no access to insurances till day. In Aviva Life Insurance India , thus , by combining protection and long term savings the customers can safeguard and provide life products for their family with their changing needs. Product Portfolio of Aviva Life Insurance Investments in life insurance provide the dual benefit of saving for your future financial requirements as well as financial security for your dependants in case of your death. Unlike other investment instruments (term deposits, mutual funds and stock market securities etc.), the nature of life insurance products is such that they are designed for the long term (10 years or more) and provide the best results when they are continued for their full term. The right investment strategies won't just help you plan for a more comfortable tomorrow -they will help you get Kal Par Control. At Aviva, life insurance plans are created keeping in mind your changing needs and your family's. Our life insurance plans are designed to provide you with flexible options that meet both protection and savings needs. Aviva offer our customers a full range of transparent, flexible and value for money products that include whole life (LifeLong, Aviva LifeLine), endowment (LifeSaver, SaveGuard, EasyLife Plus, LifeSaver Plus, LifeSaver Super,Aviva Sachin Century) and traditional

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endowment (Dhan Vriddhi, Aviva Moneyback), child plan (Aviva Little Master) single premium (LifeBond Plus), pension (PensionPlus,Secure Pension), term (LifeShield), fixed term protection cum savings plan (Freedom LifePlan), health plan (Aviva Health Plus),with profits plan (Aviva Money Back) and a short-pay recurring premium investment cum protection plan (LifeBond5). Aviva products are modern and contemporary unitized products that offer unique customer benefits like flexibility to choose cover levels, indexation, partial withdrawals and unique investment options like a Systematic Transfer Plan to get the benefit of systematic investments and an Automatic Asset Allocation Plan which changes the risk structure on your investments as your age increases. We also have 3 rural plans which are a low cost term plan Amar Suraksha and 2 endowments Anmol Suraksha and Jana Suraksha. We also offer you a choice of investment options. You can choose between our Unit Linked Fund and our With Profits Fund (only on PensionPlus). The With Profits Fund guarantees that the selling price of the units will never fall. The unit value of this fund is increased by crediting bonuses on a daily compounding basis. The fund provides investment security to your capital. The Unit Linked Funds are designed to provide relatively more progressive capital growth wherein you automatically receive the benefit related to the investment performance of the fund. Under our Unit-Linked Insurance Plans we offer a choice of Unit-Linked Fund options: Bond Fund: To generate a steady income through investment in high quality fixed income securities. The fund comprises of 100% debt and money market and no equities. Protector Fund: Progressive returns on your investment by investing higher element of assets in debt securities, with minimum exposure to equities. The fund comprises of debt securities in the range of 60-100%, equities in the range of 0-20% and money market and cash in the range of 0-40%. Secure Fund: The investment objective of this fund is to provide progressive return on your investment with a minimum guarantee on maturity. The fund comprises of debt securities in the range of 50-100%, equities in the range of 0-20% and money market and cash in the range of 0-40%. Initially the equity exposure will be 10 %. Balanced Fund: The investment objective of this fund is to provide capital growth by availing opportunities in debt and equity markets and providing a good balance between risk and return. The fund comprises of debt securities in the range of 50-90%, equities in the range of 0-45% and money market and cash in the range of 0-40%. Growth Fund: The investment objective of this fund is to provide high capital growth by investing higher element of assets in the equity market. The fund will comprise of debt

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securities in the range of 0-50%, equities in the range of 30-85% and money market and cash in the range of 0-40%. Index Fund: To generate returns in line with the stock market index NIFTY. The fund comprises of debt and money market securities in the range of 0-20% and equities in the range of 80-100%. Enhancer Fund: To provide aggressive, long term capital growth with high equity exposure. The fund will comprise of debt and money market in the range of 0-40% and equities in the range of 60-100%. Aviva also offers a whole range of group insurance and savings products catering to pensions, gratuities, credit protection and pure protection. We have a dedicated team that works with corporates across the country. Individual At Aviva we are dedicated to helping you make the most out of your life, and that includes all your savings and protection requirements. We are here when you need to make informed financial decisions - for you, and for your loved ones. Aviva offer products under the following six categories for individuals 1. Whole Life As the name suggests, these products continue throughout your life and pay out to your dependants only upon your death. These are useful if you want to create a financial corpus for your family. LifeLong Aviva Lifeline 2. Pure Term Pure term products are designed to provide your dependants financial protection at a low cost in case of your death. Life Shield 3. Endowments Endowment products are meant to help you create a corpus to meet financial needs during your lifetime. These products also provide a financial cover in case of death EasyLife Plus LifeBond LifeSaver SaveGuard LifeSaver Plus LifeSaver Super

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 Freedom LifePlan Aviva DhanVriddhi Anmol Suraksha Aviva Sachin Century Aviva Money Back 4. Single Premium single premium products are meant for lump sum investments. These products are meant for maximizing your investment returns while providing tax benefits on your investment. Life Bond Plus 5. Pension Plans pension products as the name suggests are meant for retirement planning and aim to maximize your post retirement income PensionPlus Secure Pension 6. Child Plans child plans are meant for investments benefiting your child when he/ she needs them. Investments in these plans can be used for needs like funding higher education, setting up a business, marriage expenses etc. Aviva LittleMaster 7. Health Products -When it comes to healthcare there can be no compromises. Even though healthcare comes with huge cost implication and at most unexpected of times. One must at all time be prepared to meet this contingency by setting aside a certain sum of money in form of saving or premiums for health assurance. Aviva Health Plus Group Aviva Group products are designed keeping in mind the special requirements of organisations and large groups CorporateLife CreditNet Superannuation Aviva Money Back Aviva IndiaBond Group Gratuity CreditPlus LoanSuraksha

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 GroupShield Rural At Aviva we have specially designed products for the rural sector Amar Suraksha Jana Suraksha Innovative Products and services: Life Insurance I. Individual II. Corporate General Insurance I. Individual (a) Motor Vehicle (b) Accident and Health (c) Overseas Travel (d) Home II. Corporate (a) Energy (b) Accident and Health (c) Property (d) Marine (e) Contingency Distribution Channel of insurance Industry in India The insurers must refine and exploit the market segment product distribution system linkage. This will lead to distribution system pluralism; many different distribution systems will be implemented across companies rather than across the industry. Distribution channels:Why it is needed. 1 Distribution - the key differentiator It has been two years since the Indian insurance market has opened up, and the new entrants into the market have set up shop in every major city. The public sector companies have already established themselves in the market. But there are multiple challenges faced by these insurance companies, of which two are critical:

Designing of products suiting the market

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Using the right distribution channel to reach the customer

While the companies have been quite successful in dealing with the first of these challenges using the existing product features and leveraging the technical know-how of their partners, most are still grappling with the right channel mix for reaching potential customers. This paper discusses the distribution channels from the perspective of the socio-cultural ethos of the market and how these channels fit into it, along with where the various companies face challenges and bottlenecks. Whenever any debate arises about the intermediaries and distribution channels, the discussion veers to technology and its impact on distribution. However, the authors believe that the basic existential problems being faced by the channels in this market needs to be looked into first, and then the question of enablers technology, tools, training, learning etc. -- is to be taken up. 2 Challenging of intermediaries Insurance has to be sold the world over, and the Asian Market is no exception. The touch point with the ultimate customer is the distributor or the producer (as they are known in certain markets), and the role played by them in insurance markets is critical. It is the distributor who makes the difference in terms of the quality of advice for choice of product, servicing of policy post sale and settlement of claims. In the Asian markets, with their distinct cultural and social ethos, these conditions will play a major role in shaping the distribution channels and their effectiveness. In today's scenario, insurance companies must move from selling insurance to marketing an essential financial product. The distributors have to become trusted financial advisors for the clients and trusted business associates for the insurance companies. This calls for leveraging multiple distribution channels in a cost effective and customer friendly manner. For example, in the developed markets producers (brokers and agents) form the major channels of distribution, while the web as a complementary channel is catching up slowly. According to a Forrester survey, 88% of the Life insurance executives responding identified agents as the primary channel of distribution.1 Scenario demanding role transformation

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The distinction of channels in the developed markets is: personal distribution systems and direct response systems. Personal distribution systems include all channels like agencies of different models and brokerages, bancassurance, and work site marketing. Direct response distribution systems are the method whereby the client purchases the insurance directly. This segment, which utilizes various media such as the Internet, telemarketing, direct mail, call centers, etc., is just beginning to grow. 3 What should the companies look at? Basically companies have to take a look at the intermediaries they are using, whether it is optimal to use them, and what are the alternatives? The new companies have attempted appealing only to the middle, upper middle and elite classes in the major cities. Contrasted with Public sector insurance companies, with their offices across the country, the new companies have miles to go before they reach anywhere. They must overcome the mindset of the customer that life insurance is Life Insurance Corporation of India (LIC) and general insurance is General Insurance Corporation of India

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(GIC) if they hope to grow in the market. Meanwhile, the public sector companies are going to great lengths to revamp their image to look and feel more contemporary. Both the public and new private sector companies are fighting their own battles from the perspective of customer perception management: Public Sector Companies Private Sector Companies

Identity is well established, but the Have to build their identity in a market perception of " poor service providers" where the public does not distinguish is a stigma. them.

Products are not attractive and flexible Remove the perception that anything enough but expensive. that looks good is expensive

To retain their creamy layer clientele Work against the people's mindset that who are the most likely to be wooed by they are not here for the long term the new companies Retain and attract good intermediaries Attract intermediaries especially agents with the requisite qualifications and attributes who can market the company and the product. Match the aura created by the new Run the risk of tapping an already companies in the urban market insured market for repeat insurance instead of tapping new virgin pockets in the market In this process all are targeting the same market --the existing pie is being cut up further, but no attempt is being made to increase the size of the pie. For example, while attempts are made to complete the quota of rural insurance in percentage terms, the rural market potential is yet to be tapped, as the new insurers are not able to attract the right kind of talent into their distribution force to address this. Intelligent segmentation of distribution channels to match the market segmentation is what will help the companies to move in this direction 4 Distribution Scenario in the Indian market In today's Indian insurance market, the challenge to insurers and intermediaries is twopronged:

Building faith about the company in the mind of the client Intermediaries being able to build personal credibility with the clients

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Traditionally tied agents have been the primary channels for insurance distribution in the Indian market; the public sector insurance companies have their branches in almost all parts of the country and have attracted local people to become their agents. The agents are from various segments in society and collectively cover the entire spectrum of society. A person who has lived in the locality for many years sells the products of the insurance company with a local branch nearby. This ensures the last mile touch point being closer to the customer. Of course, the profile of the people who acted as agents suggests they may not have been sufficiently knowledgeable about the different products offered, and may not have sold the best possible product to the client. Nonetheless, the customer trusted the agent and company. This arrangement worked adequately in the absence of competition. In today's scenario agents continue as the prime channel for insurance distribution in India, as is the case in most markets, supported by call centers to a small extent. Almost all the new players follow this model primarily because the regulations for other channels are yet to be put in place. However there is great excitement in the industry over the impending broker regulations, and companies are planning possible channels in their enthusiasm to increase volumes. The belief that all these channels will grow and seamlessly integrate to bring in business seems a fallacy. What has emerged is a much more difficult and evolving market scene with existing players, more new players coming in, and global marketing practices and ideas being tested. But none of this has changed the fundamental character of the market, which we believe will take more time than expected

As the insurance market in India is liberalized, the pattern of distribution is likely to undergo some changes with new channels being introduced A quantum jump in insurance business in terms of premium, policies, lives covered, etc would necessitate a corresponding increase in the capacity of the distribution channels. The cost of effectiveness of certain channels would induce insurers to start using them. There are sectors of market for whom the agency channel may not be the most efficient and introduction of new channel will help to increase the penetration of insurance products.

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Creation of awareness and demand as a result of the increasing distribution channels. Dissatisfaction with the existing channels.

Key issue in increasing the number of policies sold would be; The number of agents Public awareness Public perception of the need for protection and long term savings. Favourable tax treatment Professionalism of financial advisors Quality and range of products. Favourable tax treatment Profetionalism of financial advisors Quality and range of products.

The distribution channels would play an important role in meeting the increased volumes.Traditionally, the life insurers have been working primarily on the agency distribution force, while the general insurance business has depended primarily on the development officer. The private players are bringing with them international experience, new technology, new channels of distribution and of course, new products. The ground rules in the insurance business are being redefined. Even the existing public sector players are gearing up with matching strategies to face competition. Earlier there was only one distribution channel Tied Agent of LIC*Tied agents attached to development officers * Direct agents/career agents supervised by ABM(S)/BM/Sr.B.M

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Branch Manager

Direct Agents Development officer Career Agents (presently not in practice) Full time Part time Agents

Changes in distribution pattern of life insurance after IRDA came into existence. FROM TIDE AGENTS TO

MULTIPLE CHANNELS

BANKS CORPORATES/ INSTITUTIONS BROKERS TELEMARKETING/ WORK-SITE MKTG./ DIRECT MKTG. INTERNET

5 Focus on multiple distribution channels Though a multi-channel strategy is better suited for the Indian market as well, it is important to keep in mind that this market is really a conglomeration of multiple markets. Each of the markets within this conglomeration requires a different approach. Apart from geographical spread the socio-cultural and economic segmentation of the market is very wide, exhibiting different traits and needs. Let us look at the various insurance distribution channels and the challenges faced by them from these perspectives.

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5.1 Agents Today's insurance agent has to know which product will appeal to the customer, and also know his competitor's products in the same space to be an effective salesman who can sell his company, the product, and himself to the customer. To the average customer, every new company is the same. Perceptions about the public sector companies are also cemented in his mind. The new companies are looking for educated, aware individuals with marketing flair, an elite group who can be attracted only with high remuneration and the lure of a fashionable job, all of which may not be possible in this business with its price pressures and the complexity of selling insurance. Unable to attract this segment, they have started easing recruitment conditions as against the stringent norms they had earlier, thereby diluting the process. While the public sector companies are able to attract agents, they continue to suffer from high attrition rates due to indiscriminate agent appointment. The most successful of these companies' tied agents are hardly of the elite variety of salesman. They are still the neighborhood do good -- the postman, the school teacher, and the shopkeeper -- who know the people and are themselves known in the community. The challenge here is the lack of knowledge of the competitive market and the inability to do intelligent comparisons with the competitor's products. Educating and training these agents is a serious challenge for the insurance company. The relevance of this kind of agent continues even today as agents are sought or contacted by families by word of mouth. Insurance companies are advised not to follow the path of FMCG's/credit card companies, believing that a suited and booted customer care consultant or financial consultant will necessarily appeal to the average Indian customer. This is the main distribution channel due to complexity of most insurance products (Endowment, Whole of life, Unit-linked). Social feature in the market is the considerable respect for age in Indian society and a belief that an older person knows better. A very young up-market agent who is a typical salesman may not appeal to a large segment of the middle class, which is looking for a solid trustworthy person from whom they can buy insurance. In this context it might be a rewarding exercise to recruit some older people (who have taken VRS from banks and other financial institutions) to sell some lines of products like pension plans, annuities etc. Gender of agents is another relevant feature in the rural context that makes a difference, especially for the female population. Women to whom the customers can relate --e.g., nurses,

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gram sevikas -- can target the female segment of the population more effectively. What is applicable for the rural women and children health programs and population control programs is equally applicable for insurance selling also. Max New York Life has adopted a version of this strategy by appointing gram sahayaks to sell and service the rural customers. With this kind of segmentation of intermediaries the challenge for the insurance company lies in training and educating these people to become effective sales persons. But this in no way diminishes the benefits of intermediary segmentation. Advantage Past experience as well as ability to deliver right advises. Disadvantage- This channel can be expensive and it is a time consuming sales process. Product- Endowment, whole of life, Unit-linked, pension plans, annuities etc.

5.2 Banks Banks in India are all pervasive, especially the public sector banks. Can they also become the foremost channel for distribution of insurance? Perhaps in the future. The public sector banks, with their vast branch networks, are also plagued by a rigid unionized workforce and archaic systems, and lack vision of a broader service spectrum encompassing non-banking products. The newer banks are constrained by their lack of reach and meager branch strength. For banks to become a predominant channel for selling insurance will require a paradigm shift. But the encouraging fact for insurance companies waiting for bancassurance to take off is that bank branches are here to stay, and customers do want them. A customer survey by Deloitte Consulting in the western developed markets found that for banking activities, customers place high importance on having convenient branches in their banking relationships. This is good news for the Indian banks with their many branches, and also makes a strong case for taking up bancassurance. Product- The major lines of business that can be sold through bancassurance successfully are term insurance, creditor insurance, and non-life products like Property, Motor and Personal accident, Homeowners comprehensive insurance etc. Process- (Distribution technique) In general distribution can be made through a quick and convenient sale such as during loan application process. However bank may act as a source of financial planning advice therefore, the use of highly trained advisor is very important. The bank staff at all levels to be able to serve the customer properly must also support this advisor. In no case should the advisor be marginalized as an out-siderfrom the banks stand point. Simple straightforward product with the right amount of protection (e.g loan

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amount) sufficient. for Example the process may identify a need for life insurance, medical insurance as well as saving for education for child. An example is SBI Life, has plan to take advantage from the brokers regulation to be put in place in order to move ahead aggressively with the bancassurance model. One of their major product lines is creditor insurance, and they have launched their first creditor insurance product, which covers the liabilities of the creditor in case of death of debtor. SBI Life is planning a similar product for home loan borrowers of State Bank of India. This model has high relevance in the Indian context with far-flung villages where the insurance potential is in volume and not in high per capita premiums. Some advantages and disadvantages are:

Advantages of bancassurance High credibility (as

Disadvantages of bancassurance

trustworthy Economic viability for the banks to take up as bancassurance is a volume business

caretakers of money) with the public

A ready customer base

Training of people and lack of vision and awareness

Low cost channel for selling simple Useful for selling only certain lines of vanilla products products

Extensive reach including the rural Initial investment in systems and pockets processes and people training

The strategy should be to use multiple banks according to their presence in different regions. Success would come by using bancassurance where it will be most effective i.e., selling simple, cheap products to the masses at a low cost. This awareness is growing and is evident from the fact that nearly every insurance company has partnered with one or many banks to implement bancassurance. 5.3 Brokers With the broker regulation 2002 come into effect this could be the next hope, especially for the urban market. This will be a new experience for the insurance customer, accustomed to brokers in financial services, real estate, and travel and tourism. For historical reasons the image that 'broker' carries in the minds of the customer is not very favorable. Thus the new breed of insurance brokers face the challenge of establishing credibility.

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The positives are that brokers in the urban arena can attract the elite and the upper middle class customer. Brokers represent the customer and will sell the products of more than one company. They seek to determine the best fit for the client and can effectively address the mind block faced by the public about the various companies. This is applicable in the case of life insurance for the high-end and corporate/group segment. In the non-life segment, broking is not entirely new, as reinsurance brokers were arranging exotic covers. For individual customers also, with a wide range of competitive products, the broker can get a good deal. The corporate broking companies will have to play a prominent role. If NGOs based in rural areas can be attracted into the rural sector cooperatives arena, they stand a good chance of succeeding and can help the new players get a foothold in the rural market. These are the players with the potential to make the difference, as they have the trust of the people. We envisage scenarios like that in Bangladesh's micro lending growth and the milk co-operatives in Gujarat selling insurance in addition to milk production and distribution. It would be a new dawn in Indian insurance distribution! With the right impetus the Indian rural insurance scenario could be one with high business volume and tremendous growth potential.

ICICI Prudential Insurance and HDFC Standard Life Insurance have already partnered with NGOs to sell some low cost insurance in rural areas. Product products for this channel must match the distribution technique whole life policies and general insurance policies should be offer that enable the broker to offer a lot of choice and options to the client. Process- (Distribution technique) Insurance brokers are organisations who assess the complete insurance needs of client and then work out back to back policies with insurers to give a complete solution to the client. However, the challenge lies in establishing regulations that protect the customer and attract the right players into the brokerage market rather than creating another middlemen segment eroding the premium. 5.4 Work site marketing This area needs to be tapped, as in any country one of the biggest markets is through the worksite. With changes in human resources management polices and compensation packages, group products or work site products do have a definite market that cannot be ignored.

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Here the advantages would be:

o o o o

Captive customer base Potential to sell individual insurance and group insurance High trust factor High hit ratio for the intermediaries

The challenges would be the cost effectiveness, product customization and efficient post sales servicing, which would determine continued business. Technology has a key role to play in worksite marketing to ensure cost benefits. Banks and financial institutions have been successfully marketing credit cards and other financial products using this channel. If not an identical model a similar approach can be used for selling insurance. 5.5 Internet Though India is joining the fast growing breed of net users, using net for transactions has not yet caught up. Though a few banks provide online banking, the usage is still a small fragment. The insecurity associated with transactions over the net is still an inhibiting factor. At present most of the insurance companies have product information and/or illustrative tools on the web. We do not see the web evolving into a means for direct selling of insurance in the current scenario. In the Indian market, where insurance is sold after considerable persuasion even after face-to-face selling, the selling over the net, which must be initiated by the client, would take some more time. While the technology capability is there, improvements in bandwidth and infrastructure are needed. Also needed are simpler products where auto-underwriting is feasible. Automobile insurance, one of the segments of insurance purchased "off the shelf" in India, would be the ideal segment to start with. On the life side, term assurance for standard lives with simplified underwriting is a possibility. These channels by themselves will not be able to overcome the mindset of the people, but rather can only be enablers for the human channels. Drect marketingProcess- Direct marketing if done properly can be a great source of distribution It is a great way to reach a large population. Typically , Direct Mail(DM) or Telemarketing is used.It is important to target the right customer with the right affinity and message Product- Product tend to be simple with simple underwriting, personal accident policies, terms policies and other simple product tend to work better than complex participating or unit linked product.

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Other distribution channelOther distribution channels that have promise are department stores/Post offices, Retail chain. Basically, these channels provide the convenient features and simple underwriting. These channels can also be used to generate leads for a more complex sale.

5.6 Invisible Insurer In this model, the insurance company or its representative is not the entity marketing the products. The insurance cover is sold by an automobile /credit card company as an add-on product leveraging the brand of the retailer. The risk is carried by the insurance company, which underwrites it. . Products like creditor insurance, automobile insurance, and credit card related insurance could be distributed using this channel. This model can be adopted in all market segments for the lines of business mentioned. It is already prevalent in some areas like credit card insurance and crop insurance for agricultural loans. The new players are also attempting this model. The venture of Maruti into insurance by setting up two subsidiaries MIDS and MIBL to sell automobile insurance is a case in point. These firms will largely arrange insurance cover for Maruti's captive customer base. MIDS has been registered as a corporate agent with an exclusive arrangement with Bajaj Allianz General Insurance, while MIBL has linked up with state-owned National Insurance Company Limited. What makes these arrangements attractive is the low distribution cost and captive customer base. However, repeat business or renewal of business cannot be assured. In the life segment, group creditor insurance may be the most suitable product for this

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CHAPTER-II LITRATURE REVIEW

Insurance is a social device where uncertain risks of individuals may be combined in a group and thus made more certain small periodic contribution by the individuals provide a fund, out of which those who suffer losses may be reimbursed. In addition to being a means to protect oneself, the Insurance Industry is an effective conduit for the savings of people to be channeled towards economic growth. In India, the Insurance Industry is more than 150 years old. It was monopolized by two Public Sector Undertakings in their respective fields of Life and General Insurance. Insurance plays a very important role in the day-to-day activities of the common man, business houses, industries, agriculturists and other service providers. Insurance not only provides protection for individual and industry through risk coverage; it also mobilizes funds for economic activity and encourages savings. Thus an insurance cover is considered an important tool for economic stability. The insurance industry is a key sector in the economy of any country. The liberalization of the financial sectors was started in 1991 and carried forward by successive governments. These reforms were carried out in a phased manner and affected the entire financial sector. The insurance sector had been left out of this reform process for a very long time. The passage of the IRDA bill in December 1999 has paved the way for the entry of private players into this long neglected aspect of the Indian economy. However, the opening up of this sector does not mean that its character will undergo a sea change. The public sector behemoths will continue to enjoy a huge market share. It is up to the new players to device innovative strategies to both grab business from the existing companies as well as expand the size of their pie. The new entrants will look for new channels of distribution for their products. Banks will play a very important part as they likely to act as interfaces between the insurance companies and their prospective customers. The main benefits of this new competitive environment will be to the consumer, who till now, has had to put up with shoddy products and even shoddier service. The report gives a brief background of the sector and proceeds to highlight the shortcomings of the existing setup and players. The benefits of a liberalized sector are enumerated. The report also tried to identify the market potential for insurance products and the strategies that can be employed to exploit the same.

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Despite innumerable delays the sector has finally opened up for private competition. The threat of private players shaking and giving the run for incremental market share for the Public Sector mammoths has been overplayed. The number of potential buyers of insurance is certainly attractive but much of this population might not be accessible. New insurers must segment the market carefully to arrive at the appropriate products and pricing. Since distribution will be a key determinant of success for all insurance companies regardless of age or ownership; a total change is expected in the distribution network. As the product move towards the mature stages of communization (increased awareness and popularity) they could then a host of new channels like grocery stores, direct mails. Regulators must formulate strong and fair guidelines and ensure that old and new players are subject to the same rules and at the same time the government should ensure that the IRDA (Insurance Regulatory and Development Authority of India) does not become yet another toothless tiger like CEA or TRAI. INSURANCE ON THRESHOLD The liberalization of the Indian insurance sector has been the subject of much heated debate for some years. The policy makers where in the catch 22 situation wherein for one they wanted competition, development and growth of this insurance sector which is extremely essential for channeling the investments in to the infrastructure sector. At the other end the policy makers had the fears that the insurance premium which are substantial, would seep out of the country; and wanted to have a cautious approach of opening for foreign participation in the sector. As one of the rare occurrences the entire debate was put on the back burner and the IRDA saw the day of the light thanks to the maturing polity emerging consensus among factions of different political parties. Though some changes and some restrictive clauses as regards to the foreign participation were included the IRDA has opened the doors for the private entry into insurance. Whether the insurer is old or new, private or public, expanding the market will present multitude of challenges and opportunities. But the key issues, possible trends, opportunities and challenges that insurance sector will have still remain under the realms of the possibilities and speculation. What is the likely impact of opening up Indias insurance sector? BROADENING OF BENEFITS The large scale of operations, public sector bureaucracies and cumbersome procedures hamper nationalized insurers. Therefore, potential private entrants expect to score in the areas

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of customer service, speed and flexibility. They point out that their entry will mean better products and choice for the consumer. The critics counter that the benefit will be slim, because new players will concentrate on affluent, urban customers as foreign banks did until recently. This seems to be a logical strategy. Start-up costs-such as those of setting up a conventional distribution network are large and high-end niches offer better returns. However, the middle-market segment too has great potential. Since insurance is a volumes game. Therefore, private insurers would be best served by a middle-market approach, targeting customer segments that are currently untapped. UNREALISTIC - FEARS An often-voiced concern is that private players, especially foreign ones, will swamp the market, grabbing a large share. A similar threat was overplayed in the case of basic telephone services and when the private players started their operations the dominance and might of DoT has remain unaltered. This hypothesis that the private players would swamp the market has been disproved in many emerging markets worldwide not only in case of the insurance but in numerous different sectors (Power, Energy, Telecom, Insurance etc.). Yet, multinational insurers are keenly interested in emerging insurance because their home markets are saturated while emerging countries; like India have low insurance penetrations and high growth rates. International insurers often derive a significant part of their business from multinational operations. As early as 1994, many of the UKs largest life and general insurers derived 40% to 60% of their total premium from outside their home markets. Though the global operations of the multinational insurers have an immense impact on their typically foreign insurers take only a small share of an individual countrys market. For example in Taiwan the foreign companies took only a 3% share even seven years after opening up while in Korea, their share was barely 1% after 20 years. In India, therefore, the new entrants would face the challenge of playing within a small share of a large and growing market which could be possibly profitable. UNTAPPED OPPORTUNITIES There is no doubt that the potential market for the buyers of insurance is significant in India and offers a great scope of growth. First, while estimating the potential of the Indian insurance market we often tempt to look at it from the perspective of macro-economic variables such as the ratio of premium to GDP which is indeed comparatively low in India. For example, Indias life insurance premium as a percentage of GDP is 1.3% to 1.5% against 5.2% in the US, 6.5% in the UK or 8% in South Korea. But the fact is that; the large part of the Indias, (the number of potential buyers of insurance) is certainly attractive. However, this

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ignores the difficulties of approaching this population. New entrants in other mass industries such as consumer products or retail banking have discovered this after suffering heavy losses. Much of the demand may not be accessible because of poor distribution, large distances or high costs relative to returns. Secondly most new entrants have a tendency to target the business of existing companies rather than expanding the market, this is myopic. This not only leads to intense competition for the new players but also much of their effort is spent on trying to capture existing customers by offering better service or other advantages. Hence, the benefits of this strategy are likely to be limited. For example, 50% of the current demand for general insurance comes from the corporate segment. The corporate are likely to shop around for the best rates, products and service. Nevertheless, the corporate segment, as a whole will not be a big growth area for new entrants. This is because penetration is already good, companies receive good service because of their size and rates are tariff-governed. In both volumes and profitability therefore, the scope for expansion is modest. A better approach may be to examine specific niches where demand can be met or stimulated. KEY - INNOVATION & VARIETY OF PRODUCTS The new entrants would be best served by micro-level two pronged strategies. First, is to introduce innovative products offering a right mix of flexibility/risk/return depending which will suit the appetite of the customers and the secondly they would target specific niches, which are poorly served or are not served at all The first prong of a new insurers strategy could be to stimulate demand in areas that are currently not served at all. For example, Indian general insurance focuses on the manufacturing segment. However, the services sector is taking a large and growing share of Indias GDP. This offers immense opportunities for expansion opportunities. For example, revenue from remote processing activities in information technology is estimated at US $50 billion in the next ten years. Insurers could respond with various liability covers. Being the agrarian economy again there are immense opportunities for the new entrants to provide the liability and risks associated in this sector like weather insurance, rainfall insurance, cyclone insurance, crop insurance etc. Next, the financial sector is aggressively targeting retail investors. Housing finance, auto finance, credit cards and consumer loans all offer an opportunity for insurance companies to introduce new products like creditor insurance etc. Similarly, organized sector sale of TVs, refrigerators, washing machines and audio systems in 1998 was around Rs.110 billion. Only a

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negligible portion of these purchases was insured. Potential buyers for most of this insurance lie in the middle class. Existing players can also profitably exploit these areas. In case there are products, which are not serving adequately new products many of them, which are already prevalent in different markets can be customized to the Indian markets and used to expand the markets. For example life insurance products provide a good example. Life Insurance products have to compete with savings and mutual funds hence should offer various dimensions of risk/return/flexibility so they can be linked to stock market indices, inflation etc. making them more competitive and appropriate risk/return appetite for different investors at present there are no such products. Similar problems apply to pensions. For instance, pure protection products like term assurance account for up to 20% of policies sold in developed countries. In India, the figure is less than one percent because policies are inflexible. They compete with investment and savings options like mutual funds. It is imperative that they should offer comparable returns and flexibility and there is immense scope of developing pure insurance products with flexibility. The lack of a comprehensive social security system combined with a willingness to save means that Indian demand for pension products will be large. However, current penetration is poor. Making pension products into attractive saving instruments would require only simple innovations already prevalent in other markets. For example, their returns might be tied to index-linked funds or a specific basket of equities. Buyers could be allowed to switch funds before the annuities begin and to invest different amounts at different times Health insurance is another segment with great potential because existing Indian products are insufficient. Till now, LICs Mediclaim scheme covered only 2.50 million people. Indian products do not cover disability arising out of illness or disability for over 100 weeks due to accident. Neither do they cover a potential loss of earnings through disability DISTRIBUTION A PARADIGM SHIFT Since distribution will be a key determinant of success for all insurance companies regardless of age or ownership. The nationalized insurers currently have an advantage because of their large reach and presence. New entrants cannot and does not expect to supplant or duplicate such a network. Building a distribution network is expensive and time consuming. Yet, if insurers are to take advantage of Indias large population and reach a profitable mass of customers, new distribution avenues and alliances will be imperative. This is also true for the nationalized corporations, which must find fresh avenues to reach existing and new customers. There would be substantial shifts in the distribution of insurance in India. Many of these changes will echo international trends. Worldwide, insurance products move along a

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continuum from pure service products to pure commodity products then they could be sold through the medical shops, groceries, novelty stores etc. Once communization, popularity and awareness of the products are attained then the products can move to remote channels such as telephone or direct mail. In UK for example, retailer Marks & Spencer now sells insurance products. At this point, buyers look for low price. Brand loyalty could shift from the insurer to the seller. Recognizing this trend, the financial services industry worldwide has successfully used remote distribution channels such as the telephone or the Internet to reach more customers, cut out intermediaries, bring down overheads and increase profitability. INSURANCE AGENCY Agents form the lifeline of life insurance distribution system in India. Agents are essential for soliciting business because of the following reasons: a) Clarification of an idea to the proposer b) Assignment of needs of the potential insured c) Personalised Guidance to the potential insured d) Assessment of risk for the insurer Who are Agents? Agents in a legal sense means a person who is employed to perform and act on half of others (principal) for a price called as commission. Agents in life insurance context means the person holding a valid license from Insurance Regulatory Development Authority (IRDA) issued in accordance with the IRDA Regulations. Minimum conditions to be fulfilled to become an agent (As per IRDA Regulations) Qualifications Qualifications of the Applicant: The applicant shall possess the minimum qualification of a pass in 12th Standard or equivalent examination conducted by any recognised Board/Institution, where the applicant resides in a place with a population of five thousand or more as per the last census, should have passed in 10th Standard or equivalent examination from a recognised Board/Institution if the applicant resides in any other place. Practical Training: (1) The applicant shall have completed from an approved institution, at least, one hundred hours' practical training in life or general insurance business, as the case may be, which may be spread over three to four weeks, where such applicant is seeking license for the first time to act as insurance agent. Provided that the applicant shall have completed from an approved institution, at least, one hundred fifty hours' practical training in life and general insurance business, which may be

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spread over six to eight weeks, where such applicant is seeking license for the first time to act as a composite insurance agent. 2. Where the applicant, referred to under sub-regulation (1), is: (i) An Associate/Fellow' of the Insurance Institute of India, Mumbai; (ii) An Associate/Fellow of the Institute of Chartered Accountants of India, New Delhi; (i) An Associate/fellow of the Institute of Costs and Works Accountants of India, Kolkata. (ii) An Associate/Fellow of the Institute of Company Secretaries of India, New Delhi. (iii) An Associate/Fellow of the Actuarial Society of India, Mumbai; (vi) A Master of Business Administration of any Institution/University recognised by any State Government or the Central Government; or (vii) Possessing any professional qualification in marketing from any Institution/University recognized by any State Government or the Central Government: He shall have completed, at least, fifty hours' practical training from an approved institution. Provided that such applicant shall have completed from an approved institution, at least, seventy hours' practical training in life and general insurance business, where such applicant is seeking license for the first time to act as a composite insurance agent. 3. An applicant, who has been granted a license after the commencement of these regulations, before seeking renewal of license to act as an insurance agent, shall have completed, at least twenty-five hours' practical training in life or general insurance business, as the case may be, from an approved institution. Provided that such applicant before seeking renewal of license to act as a composite insurance agent shall have completed from an approved institution, at least, fifty hours' practical training in life and general insurance business. Allocation of Units

Units purchased with the first years premium and the first incremental regular premium due to indexation and / or additional regular premium will be used to allocate initial units. Units purchased from the second years premium onwards and after the first incremental regular premium due to indexation and / or additional regular premium will be used to allocate accumulation units

The unit price shall be calculated on a daily basis in accordance with Insurance Regulatory and Development Authority (IRDA) guidelines from time to time. The Unit Price will be calculated as follows: Unit price for Unit Linked Funds is equal to the market value of assets held by the fund plus the value of current assets and

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accrued income minus the value of current liabilities, fund management charges and provisions, if any, divided by the total number of units outstanding

Unit price for With Profits Fund is calculated by applying the equivalent daily rate to the current unit price on a daily compounding basis. The equivalent daily unit growth rate = (1 + annual regular bonus rate) ^ (1/365)*(1-fund management charge per annum /365) - 1. Aviva guarantees that the unit price in this fund will never fall

Units shall be allocated on the day the proposal is completed and results into a policy by adjustment of application money towards premium. The premium shall be adjusted on the due date even if it has been received in advance

In respect of premiums received within a time specified by IRDA through a local cheque or a demand draft, payable at par, at the place where the premium is received, the closing NAV of the day on which premium is received shall be applicable. Currently, this time is 4:15 p.m.

In respect of premiums received after the time specified by IRDA through a local cheque or a demand draft, payable at par, at the place where the premium is received, the closing NAV of the next business day shall be applicable

In respect of premiums received through outstation cheque / demand draft, at the place where the premium is received or through direct debit / ECS, the closing NAV of the day on which the cheque / demand draft / money is realized, shall be applicable

Extra Allocation of Units On the 15th policy anniversary, Life Long gives you a 5% Extra Allocation on existing units. These units are given if all the due premiums have been paid. The additions will apply to the units attributable to regular premiums existing at the end of the specified policy anniversary. This benefit will not be applicable to units pertaining to the top-up premiums or additional regular premiums.

Can I make lump-sum investments? You have the flexibility of making lump-sum investments through top-up premiums to increase the investment value of your policy without increasing the sum assured provided all due premiums till date are paid. The minimum top-up premium is Rs. 1,500. The total of top-up premiums cannot exceed 25% of the total regular premiums paid till date at any point in time. Units purchased from top-up premiums will be used to allocate

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accumulation units to various investment funds in the same proportion as selected by you for your regular premiums Can I increase the sum assured? You can increase your sum assured anytime before age 67 or the 27th policy year, whichever is earlier, provided that all due premiums have been paid. This is subject to the maximum increase allowed at that age. The sum assured under the riders (except HCB) will also increase up to the maximum limit allowed under each rider. Evidence of health may be required before such an increase in sum assured is made.

Can I increase my regular premium? You can increase your regular premiums through any of the 2 methods mentioned below:

Indexation You have the option to increase your regular premiums by an indexation rate at any policy anniversary to protect the real value of your investment against inflation. The rate of indexation will be in line with the increase in the Whole Sale Price Index (or in the event that this Index ceases to be published such other index as the Company may select for this purpose). The base sum assured and sum assured of any attached rider (except HCB) would also be increased by the corresponding indexation increase.

The maximum sum assured limits under the riders for the purchased policy would not apply in this case. You can opt for indexation at the inception of the plan only. Once opted for, this will become a default option unless altered by you. The indexation benefit is available till age 67 or the 27th policy year, whichever is earlier.

Additional Regular Premiums (ARP) On every policy anniversary you have the option to increase the regular premium amount through ARP at any time up to age 67 or the 27th policy year, whichever is earlier. The minimum ARP is Rs. 1,000.

ARP will increase the sum assured automatically. The sum assured of any attached rider (except HCB) would also increase provided the increased sum assured is within the maximum limits allowed for the riders. Evidence of health may be required before such an increase in sum assured is made.

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When can I withdraw my money? You have the flexibility of making partial withdrawals from accumulation units in respect of regular premiums as well as top up premiums provided all due premiums till date are paid. Any partial withdrawal will first be made from the top up premium account (if any and if eligible for withdrawal) followed by the regular premium account, if required.

Partial withdrawals from top-up premium account can be made after 3 years from the allocation date of that top-up premium

Partial withdrawals from units pertaining to regular premiums can be made after completion of 3 policy years

Only 4 partial withdrawals are allowed in a policy year. The minimum partial withdrawal is Rs. 5,000 and the fund value should not be less than two times the annual premium

Till age 58 years, the total partial withdrawal with respect to regular premiums in a policy year should not exceed 25% of the fund value pertaining to regular premiums at the beginning of the policy year.

Post age 58 years this restriction does not apply. There is no restriction on the maximum amount of partial withdrawal with respect to top-up premiums.

What are the riders that I can opt for? Apart from the death cover under the base plan, Life Long offers extra protection through optional riders:

Accidental Death and Dismemberment Rider (AD&D): Coverage from risk of death or dismemberment due to an accident

Critical Illness and Permanent Total Disability Rider (CI&PTD): Coverage against contracting a critical illness or becoming totally and permanently disabled due to a disease or an accident

Hospital Cash Benefit Rider (HCB): The Company will make fixed cash payments for each day of hospitalization. These riders can be attached to the base plan at inception only and the rider covers expire at 60 years of age.

What happens if I die? In the unfortunate event of your death or if your spouse dies before you (if jointly assured) the following payments would be made:

Higher of sum assured or fund value (value of initial and accumulation units in respect of regular premiums) is payable

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An additional sum assured would also be payable if AD&D rider has been opted for and death is due to accident

The sum assured as well as the rider sum assured will be reduced by all partial withdrawals made from regular premium account within the last 2 years prior to death. If death occurs after age 60, the sum assured will be reduced by all partial withdrawals made after age 58 till death

The value of units attributable to the top-up premiums, if any, would also be payable If you have invested in the With Profits fund, a final bonus, if any, will also be payable

What are the charges on my policy?

Policy Administration Charge (PAC): Rs. 67 per month, which will increase by 5% p.a. on the 1st of January each year. PAC will be deducted monthly by cancellation of units from the accumulation unit account. If premiums are discontinued, this charge would reduce to 60% of the charge applicable for the premium paying policies

Initial Management Charge (IMC): 10% p.a. of initial units during the first 30 years. IMC will be deducted monthly from initial units

Fund Management Charge (FMC): 1% p.a. on With Profits Fund, 1% p.a. on Protector Fund, 1.25% p.a. on Balanced Fund and 1.50% p.a. on Growth Fund. FMC will be applied on the fund while calculating NAV on a daily basis. The maximum FMC on any fund is 2% p.a. subject to prior approval by the IRDA

Mortality Charge: The Mortality Charge will apply on the Sum at Risk (SAR = Sum Assured less the Fund Value pertaining to regular premiums). It will be deducted by monthly cancellation of units from the accumulation unit account. The Mortality Charge shall remain guaranteed throughout the policy term.

Rider Premium Charges: Rider charges will be made by monthly cancellation of units from the policy accumulation unit account. The AD&D rider charge will apply on Sum Assured; the CI&PTD rider charge will apply on the Sum at Risk, while the HCB rider charge is a fixed amount.

Rider charges may change based on the Companys claims experience and approval by the IRDA. The Company shall charge the applicable service tax over and above the mortality charge and rider premium charge mentioned above

Surrender Charge on Initial Units: [1-(1/1.10^N)] * value of initial units, at the unit price, on the date of surrender on Accumulation Units pertaining to regular

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premiums: [1-{1/(1 + x)}^N] * value of accumulation units, at their unit price, on the date of surrender. What are the tax benefits I get? Tax benefits will be as per Section 80C & Section 10(10D) of the Income Tax Act, 1961. Insurance is tax free up to Rs. 100000 per annum and the returns on investment on maturity of the policy are also tax free. 2) LIFE SHIELD Life Shield is an ideal life insurance plan that helps you protect your family's future. While there can be no compensation for the loss of life, Life Shield ensures that your family's financial needs are met should something unfortunate happen to you. Its aim is to pay out a guaranteed cash amount in the unfortunate event of your death during the term of the policy. Key Features of Life Shield

Life Shield is a low cost life insurance plan which guarantees to pay a lump sum amount in case of your death during the term of the policy.

Life Shield can be purchased for any life between 18 to 55 years of age. However, the maximum age of the life insured at expiry of the policy is 65 years.

The minimum and maximum policy terms are 5 years and 40 years, respectively. The minimum annual premium is Rs.2000 and the minimum sum insured is Rs.500000.

The sum insured of the policy can be increased (only up to 40 years of age) once by 50% (subject to maximum increase of Rs.1,000,000) during the term of the policy, without submitting any evidence of good health, if: You decide to increase the sum insured within three months of your marriage. You decide to increase the sum insured within three months of the birth of your child.

This option to increase the sum insured is available if the policy has been accepted on standard rates. It can be exercised only when outstanding term of the policy is at least 5 years and the policy is in force for full sum insured.

What are the benefits of this plan?

The plan pays out a sum insured in the unfortunate event of your death before the maturity date.

We offer preferred rates to customers opting for higher sum insured and to Pension Plus policyholders of Aviva.

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You will receive a discount of Rs. 0.50 per thousand of sum insured on standard premium rates if you are opting for a sum insured of Rs. 1,000,000 and above.

If you are a Pension Plus policyholder, you will get an additional discount of 7.5% on the premium rate stated in the Premium Rate Table of Life Shield, provided your Life Shield policy has been accepted on standard rates.

Illustration This illustration is of a 30 year old, who pays premiums annually for a sum insured of Rs. 1,000,000. Policy Term Base Annual Base Annual Discount* Base Premium for @50 Annual Annual Premium

(Years) Premium Pension Plus paisa/'000 Premium for Pension (Rs.) Policyholder (with 7.5% (Rs.) (Rs.) Plus Policyholder (Rs.) 500 500 500 3160 3390 3620 2423 2636 2849

discount)(Rs.) 10 15 20 3160 3390 3620 2923 3136 3349

PLANS MAINLY FOR SAVINGS & INVESTMENT

1) EASY LIFE PLUS Easy Life Plus is a simple unit linked endowment plan with the benefit of life protection. By choosing an appropriate premium level and term, you can match the maturity date of the plan to a specific savings need such as your childs education, wedding or any other financial need. Easy Life Plus also offers an extra protection against accident without requiring you to undergo any medical examinations. The entry age for the policy is 18 50 years. The policy term is 10, 15, 20 or 25 years. Maximum age at maturity is 60 years. The minimum annual premium is Rs. 6000 and maximum is Rs. 50000. Sum assured is calculated as higher of 10 times the annual premium and 0.5 * policy term * annual premium subject to a minimum of Rs. 60,000 and a maximum

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of Rs. 50,000. The investment fund options available are protector, growth and balanced funds. On maturity, you can either take out the maturity proceeds (fund value in respect of regular premiums) and terminate the policy or opt for a settlement option wherein all or part of maturity proceeds would be paid out to you as structured payouts in accordance with the settlement option then offered by the Company. The settlement option is available only on Unit Linked funds and only if all due premiums have been paid.

Sample Illustration: This illustration is for a 30 year old male who pays premiums annually for a period of 20 years: Annual Premium Sum Assured With Profits Fund Unit Fund) Projected Maturity Value (Rs.) assuming gross returns 6% 7500 15000 25000 50000 75000 150000 250000 500000 186041 398277 680616 1386459 10% 263391 563041 961711 1958382 6% 195678 421045 718325 1461524 10% 308956 662236 1128244 2293258 Linked (Balanced

What happens if I die? In case of a non accidental death in the first policy year 50% of the sum assured or fund value which ever is higher is paid. From the 2nd policy year, higher of sum assured or fund value is payable. In case of accidental death an additional sum assured is payable.

What are the charges on my policy?

Policy Administration Charge (PAC): Rs. 43 per month, which will increase by 5% p.a. on the 1st of January each year. PAC will be deducted monthly by cancellation of units from the accumulation unit account. If premiums are discontinued, this charge will reduce to 60% of the charge applicable for the premium paying policies

Initial Management Charge (IMC): 5% p.a. of initial units during the policy term. IMC will be deducted monthly from initial units

Fund Management Charge (FMC): 1% p.a. on With Profits Fund, 1% p.a. on Protector Fund, 1.25% p.a. on Balanced Fund and 1.50% p.a. on Growth Fund. FMC

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will be applied on the fund while calculating NAV on a daily basis. The maximum FMC on any fund is 2% p.a. subject to prior approval by the IRDA

Mortality Charge: The Mortality Charge will apply on the Sum at Risk (SAR = Sum Assured less the Fund Value). It will be deducted by monthly cancellation of units from the accumulation unit account. The Mortality Charge shall remain guaranteed throughout the policy term. The charge for the ADPTD benefit will apply on Sum Assured and will remain flat throughout the term of the policy.

Premium Allocation Charge: Allocation rate

Annual Premium

Yearly and half yearly Quarterly and Monthly premium frequency premium frequency 92% 93% 94%

< Rs. 7500 Rs. 7500 Rs. 9999 Rs. 10,000 and above

93% 94% 95%

2) YOUNG ACHIEVER Young Achiever is a regular premium life insurance product designed to meet the financial needs of your children - be it higher education, marriage, starting a career or a business, or any other need. The plan can be purchased on the life of any one of the parents with the child as the nominee. Through this policy, you save regularly to meet your childrens needs, and at the same time their financial needs are taken care of should something unfortunate happen to you. The entry age for this policy is 21 55 years. The term of the policy is 8 to 21 years (maximum age at maturity 65 years). If your childs age is between 0 13 years, the policy term will be 21 minus the age of your child at entry. For example if the age of your child is 10 years at the time of purchasing the policy, the policy term will be 11 years (21 10). The minimum annual premium payable is Rs. 6000. The minimum sum assured is Rs. 36000 and maximum sum assured is Rs. 10,000,000. For each policy term there is a low and high sum assured to choose from ranging from 6 to 21 times the annual premium. Can I withdraw my money during the policy term? You have the flexibility of making partial withdrawals from accumulation units in respect of regular premiums as well as top up premiums provided all due premiums till date are paid.

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Any partial withdrawal will first be made from the top up premium account (if any and if eligible for withdrawal) followed by the regular premium account, if required. Time Frame 4th Last policy year 3th Last policy year 2th Last policy year Last policy year Partial Withdrawals as a cumulative % of Sum Assured Up to25 % Up to50 % Up to75 % Up to 100 %

Partial withdrawals from top-up premium account can be made after 3 years from the allocation date of that top-up premium

Partial withdrawals from units pertaining to regular premiums can be made in the last 4 policy years. There is no restriction on the maximum amount of partial withdrawal with respect to top-up premiums

The minimum partial withdrawal is Rs. 5,000 and the fund value should not be less than two times of annual premium

Only 4 partial withdrawals are allowed in a policy year No partial withdrawal can be made from the initial units

What are the charges on my policy? Policy Administration Charge (PAC): Rs. 57 per month, which will increase by 5% p.a. on the 1st of January each year. PAC will be deducted monthly by cancellation of units from the accumulation unit account. If premiums are discontinued, this charge would reduce to 60% of the charge applicable for the premium paying policies Initial Management Charge (IMC): 10% p.a. of initial units during the policy term. IMC will be deducted monthly from initial units Fund Management Charge (FMC): 1% p.a. on With Profits Fund, 1% p.a. on Protector Fund, 1.25% p.a. on Balanced Fund and 1.50% p.a. on Growth Fund. FMC will be applied on the fund while calculating NAV on a daily basis. The maximum FMC on any fund is 2% p.a. subject to prior approval by the IRDA

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Mortality Charge: The Mortality Charge will apply on the Sum Assured. It will be deducted by monthly cancellation of units from the accumulation unit account. The Mortality Charge shall remain guaranteed throughout the policy term.

Sample Mortality Charges Age (Male) 25 years 35 years 45 years 55 years

Annual charges

Mortality 1.197 per 1000

1.50675

3.4377

9.4731

sum assured

3) LIFE SAVER Life saver is a flexible endowment savings plan. Its entry age is 18 65 years. This policy can be taken jointly with your spouse. The sum assured is calculated as annual premium * cover level; where cover level ranges from 5 68 depending upon the age at entry and the policy term. Since it is an endowment plan the sum assured is fixed right from the acceptance of the policy. The minimum policy term is 5 years and maximum age at maturity is 70 years. The policy term may be selected according to the goals of the prospect. The minimum premium payable is Rs. 6000 and there is no maximum limit. This is a contribution based plan. It means that the customer can decide how much money he wants to set aside in his investment. The premium payment term is the same as the policy term and it encourages disciplined savings. Top up premiums are allowed with a minimum top up of Rs. 1500 and a maximum of up to 25% of the total regular premium paid. The allocation rate for the top up premium is 96%. A policy holder can avail a premium holiday 6 months after the 5th policy year for 4 times during the policy term. During this time the policy does not lapse. A grace period of 30 extra days are given to the policy holder to pay premium beyond the premium paying due date. On the death of the policy holder the higher of the sum assured or fund value is paid. The sum assured protects the policy holder and their corpus whereas invest able premiums grow the savings component. The customer has the option to return the policy within 15 days and no surrender penalty would be levied on the same. You can experience the service and if you are not satisfied you have a chance to cancel the policy. This is called the free look period. Tax free partial

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withdrawal is allowed after the three policy years. No surrender value is payable in the first three policy years. If the policy has lapsed it can be reinstated within two years from the date of the first unpaid premium. The settlement option is available at maturity.

4) LIFE BOND A wide age band can opt for this policy. The eligibility is 1 65 years. There are no riders available with this policy. The minimum sum assured is Rs. 31,250 and there is no maximum limit. The minimum premium payable is Rs. 25000 and there is no maximum limit. The customer decides how much money he wants to set aside in this investment. Only single premium is allowed. No additional regular premiums are allowed. The minimum top up premium is Rs. 6250 and the maximum top up premium is 25% of the total regular premiums paid. The allocation rate for top ups is illustrated as below: Premium amount (Rs.) < Rs. 35000 Rs. 35000 Rs. 99999 Rs. 100000 Rs. 149999 Rs. 150000 and above Policy Charges Policy administration charge: 1.5% p.a. of the single premium for the first year and 1% p.a. thereafter. This is also true for the top up premiums. Fund management charges: 1% on with profit and protector, 1.25% on the balanced fund and 1.5% on the growth fund. Mortality Charges: Apply on the sum at risk which is the sum assured less the fund value 5) SAVE GUARD This policy is a limited premium paying term whole life plan. The eligibility age for this plan is 18 50 years. The minimum premium payable is Rs. 12000 and the maximum is Rs. 360000. Annual premiums have to be multiples of 6000. The sum assured is calculated as 0.5*PT*AP and the maximum is Rs. 18,00,000 for 10, 15 years term and 12,00,000 for 20, 25 and 30 years term. The premium paying term is 10, 15, 20, 25 and 30 years. The minimum policy term is 10 years and maximum is 30 years. The maximum age at maturity is 70 years. The three funds available for investment are secure fund, balanced fund and growth fund. Allocation Rate (%) 97% 99% 101% 102%

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Policy proceeds are tax free under the section 10 (10D) of the Income Tax Act, 1961 (provided the total premium paid in any policy year does not exceed 20% of the capital sum assured). A tax deduction is also applicable under section 80C of the Income Tax Act, 1961. 6) TREASURE PLUS Treasure plus is a savings cum protection plan. The entry age is 18 to 50 years. The maximum age at maturity is 65 years. This policy has various premium payment terms of 10, 15 and 20 years. The minimum annual premium is Rs 12000/- and the minimum sum assured is 10 times annual premium subject to a maximum of 6 lakhs. The investment option available is 100% investment in secure fund. The composition of the fund is 0-20% equity 50-100% debt and 0-20% money market. The maturity benefit is higher of the fund value or minimum maturity value where minimum maturity value is equal to annual premium into policy term. The administration charges is Rs 38/- per month. The initial management charge of 7% per annum will be charged on initial units during the premium paying term. Mortality charges are based on gender, age and term of the policy. 7) FREEDOM LIFE PLAN Freedom life plan is a limited payment term investment cum protection plan. The eligibility age is 18 60 years. This policy can cover you and your spouse for the same premium amount. The maximum age at maturity is 70 years. The policy term is 10 30 years. The minimum premium payable is Rs. 25000 p.a. for 10, 15, 20, 25 or 30 years and a minimum of Rs. 200000 p.a. for 3 or 5 years. The minimum sum assured is 0.5*PT*AP and the maximum sum assured is 1.25*PT*AP. There is an option of increasing the sum assured before the age of 40 years by 50%, within 3 months of marriage or within 3 months of the birth of the child. This feature helps the policy holder to alter the policy to suit his life stage and need. There are guaranteed loyalty additions of 5% on the 10th policy year and 3% on every subsequent 5th policy anniversary till the date of maturity. The HCB, CIPTD and ADD riders are available.

Composition of funds Security Equity Debt Money market Secure 0% 20% 50% - 100% 0% - 30% Balanced 0% - 45% 50% - 90% 0% - 30% Growth 20% - 60% 0% - 50% 0% - 30%

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8) PENSION PLUS It is a regular savings personal pension plan. The eligibility age is 18 65 years. The term of the policy is equal to the premium paying term (maximum up to the age of 70 years). You have the option to choose term based on retirement age. The minimum premium is Rs. 6000 per annum for regular premium and Rs. 100,000 for single premium. The term of the policy is subject to a maximum of 70 years. The minimum vesting is 40 years and maximum vesting age is 70 years. You have the provision to start your pension from as early as 40 years of age. The allocation rate is 98% for below Rs.500, 000 and 99% for above Rs. 500,000. The maturity benefit is 100% of the corpus used to purchase regular pension from the annuity options available and commutation of 33.33% and the balance for purchasing pension from Aviva or the open market.

HUMAN RESOURCE With a strong sales force of over 16,000 Financial Planning Advisers (FPAs), Aviva has initiated an innovative and differentiated sales approach to the business. Through the Financial Health Check (FHC) Avivas sales force has been able to establish its credibility in the market. The FHC is a free service administered by the FPAs for a need-based analysis of the customers long-term savings and insurance needs. Depending on the life stage and earnings of the customer, the Financial Health Check assesses and recommends the right insurance product for them.

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ORGANIZATION STRUCTURE

Branch Manager

Senior Sales Manager

Sales Manager

HR Department

Operations Department

Financial Planning Advisors (team)

Tele callers (Recruiting)

General Staff

At Aviva in South Delhi, the internal structure of the organization was as given above. The branch manager was the next person in authority. All strategic decisions about the firms future were taken by the branch manager. There job profile was to monitor the performance of the organization and see that all the operations were going smoothly. The HR department was responsible for recruiting new financial planning advisors. The department was headed by a HR Manager. The main sales force comprised of the sales managers and the advisors. The sales managers had to manage teams of 15 20 advisors. They would help in filling out applications, providing relevant databases to prospect customers, accompany advisors on their sales calls and make sure everyone in the team is motivated. The financial planning advisors are the main link between the customer and the company. They are the individuals who try to market the insurance policies to prospects. They are provided training for the same. Every advisor must pass the insurance examination as specified by the IRDA. Only a licensed advisor is allowed to procure business for the firm. Apart from this training is provided on unit linked funds and the savings/ protection products Aviva offer. INTROUCTION TO UNIT LINKED FUNDS Unit linked plans are based on the component of the premium or the contribution of the customer towards the plan. This contribution can be in different modes like yearly, half

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yearly, quarterly and monthly. Unit linked plans have multiple benefits like life protection, rider protection, savings, transparency, investment choices, liquidity and planning for taxes. These plans work like mutual funds. The premium is collected from the policy holder. He is allotted a certain number of units based of his contribution. The Net Asset Value is the value of each unit of the fund. It is found by subtracting the charges and current liabilities from the current assets and investments and dividing this number by the total number of outstanding units. Let us take an example. There are 100 investors and each invests Rs. 10 in a fund. The total value of the fund is Rs. 1000 and each person is allotted 1 unit of Rs 10. Now the money (Rs. 1000) is invested in the debt or equity market. Suppose the fund value increased by 20%. As a result the Rs. 1000 invested became Rs. 1200. Hence the value of every investor is now Rs. 12 and not Rs. 10.

PICTORIAL REPRESENTATION
PREMIUM CONTRIBUTION

(LESS) CHARGES

(LESS) MORTALITY CHARGES

INVESTIBLE PREMIUM INVESTED AFTER UNITIZATION LIFE PROTECTION FUND VALUE

NATIONAL & INTERNATIONAL PRESENCE Aviva has over 59000 employees serving 40 million customers worldwide. It is present in the United Kingdom, Asia, Australia, Canada, China, France, Germany, Cyprus, Greece, Hong Kong, Hungary, India, Ireland, Italy, Luxembourg, Netherlands, Poland, Romania, Russia, Singapore, Spain, Sri Lanka, Turkey and USA. Aviva has 113 branches in India supporting its distribution network. Aviva products are available is 497 towns and cities across India thanks to the Bancassurance partner locations.

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CHAPTER III: RESEARCH METHODOLOGY

a. Statement of the problem This study was undertaken to identify which type of insurance plans Aviva should market to particular market segments in India. A survey was undertaken to understand the preferences of Indian consumers with respect to insurance. While marketing policies the sole duty of an advisor/ agent is to provide insurance plans as per customer requirements. In effect plans (insurance products) should be flexible to suit individual requirements. This research tries to analyze some key factors which influence the purchase of insurance like the term of the policy, the type of company, the amount of annual premium payable (capacity and willingness to spend), risk taking ability and the influence of advertising. Solutions and recommendations are made based on qualitative and quantitative analysis of the data. OBJECTIVES OF THE STUDY To find the market share of various life insurers in India To suggest additions to the current product portfolio To recognize the popular insurance plans To showcase the influence of advertising To suggest ideal policy term and premium for insurance To showcase the consumers willingness to spend on life insurance To showcase the factors that motivate purchase of insurance policies To understand the type of company preferred for investment To understand the awareness level of consumers about unit linked insurance plans RESEARCH DESIGN TYPE OF DATA COLLECTED There are two types of data used. They are primary and secondary data. Primary data is defined as data that is collected from original sources for a specific purpose. Secondary data is data collected from indirect sources. (Source: Marketing Research, Sumathi and Saranavel)

a.

PRIMARY SOURCES

These include the survey or questionnaire method, telephonic interview as well as the personal interview methods of data collection.

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b. SECONDARY SOURCES These include books, the internet, company brochures, product brochures, the company website, competitors websites etc, newspaper articles etc. SAMPLING METHODOLOGY Sampling refers to the method of selecting a sample from a given universe with a view to draw conclusions about that universe. A sample is a representative of the universe selected for study.

Convenience sampling is used in exploratory research where the researcher is interested in getting an inexpensive approximation of the truth. As the name implies, the sample is selected because they are convenient. This non probability method is often used during preliminary research efforts to get a gross estimate of the results, without incurring the cost or time required to select a random sample. (Source: www.statpac.com) a. Sample size The sample size for the survey conducted was 130 respondents. b. Sampling technique Convenience sampling technique was used in the survey conducted.

c. Plan of analysis Tables were used for the analysis of the collected data. The data is also neatly presented with the help of statistical tools such as graphs and pie charts. Percentages and averages have also been used to represent data clearly and effectively.

d. Study area The samples referred to were residing in South Delhi .

LIMITATIONS OF THE STUDY The study was limited only to the city of Delhi The study was conducted only for a short period of one and a half month The study is based on the assumption that information provided by the respondents is true

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CHAPTER IV: DATA REDUCTION, PRESENTATION & ANALYSIS

MARKETING PROBLEMS The old and out dated technique of tele marketing is used to prospect customers. More modern techniques must be adopted. The company must sponsor shows and give presentations in corporate houses. The financial health check must be performed for every prospect to assess his/her true financial position and needs. Some of the advisors skip this vital step and the prospect ends up with a plan they do not appreciate and soon surrender or discontinue. Some of the main problems in marketing the policies are: Large amount of competition (15 players in the market) Other brands are well advertised and have higher recall value LIC is considered a safer option Face competition from banks and mutual funds High premium policies are difficult to market Incorrect perception about insurance Interested prospects might have a lack of time and postpone investments Customers get defensive if you could call Short term plans are available only at large premium Customers do not have risk appetite to invest in shares Some prospects have already invested and are not interested in further investments Consumers dont want to undertake medical examinations Large amount of documentation Customers do not like their money locked up for many years Lack of awareness about the unit linked funds in the market No money back plan present in the product portfolio

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SUGGESTIONS FOR IMPROVEMENT Advertise about the company and its products it motivates individuals to purchase insurance Create a positive perception about insurance Speak about the good features a plan offers like high returns, life cover, tax benefits, indexation, accident cover while prospecting customers Try to sell the product/plan which the consumer requires and not the plan where the advisors benefit is higher Improve the efficiency in operations Bring out policies with small premiums payable for short periods of time Rs. 5000 Rs. 10000 per annum for 10 years Attract the youth of India with higher returns on investment as returns are the motivating factor which influence purchase of insurance Promote insurance in colleges and corporate houses Promote Aviva as an Indian Company to build trust Aviva is actually Aviva Dabur Dabur has a good brand name and this brand name could be used to give a push to its products Aviva could have a brand ambassador or a mascot to promote its services Should have partial withdrawals from the first year onwards Tap the rural market where there is large potential Diversify product portfolio Make products more straight forward reduce complexities

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FINANCIAL ANALYSIS Aviva Life Insurance is listed on the Bombay stock exchange. The chart below gives the companies performance from 31 Dec 2009 31 Dec 2010. Net Sales Other Income Total Income Expenditure Operating Profit Interest Gross Profit Depreciation Profit before Tax Tax Profit after Tax Net Profit Equity Capital Reserves EPS 18.06 0.02 18.08 -17.79 0.3 0.29 -0.06 0.24 -0.04 0.2 0.2 14.99 0.13 46.96 0.04 47 -46.79 0.21 -0.01 0.2 0.15 0.34 -0.1 0.24 0.24 14.99 0.16 36.55 36.55 -36.05 0.5 0.5 -0.06 0.44 -0.01 0.43 0.43 14.99 0.29 15.06 10.5 25.56 -14.9 10.67 10.67 10.67 10.67 10.67 14.99 14.71 7.12

The chart below gives the performance from 31 Dec 2008 31 Dec 2009: Net Sales Other Income Total Income Expenditure Operating Profit Gross Profit Depreciation Profit before Tax Profit after Tax Net Profit Equity Capital Reserves EPS 15.06 10.5 25.56 -14.9 10.67 10.67 10.67 10.67 10.67 14.99 14.71 7.12 0.21 0.21 -0.13 0.08 0.08 0.08 0.08 0.08 14.99 0.05 2.45 2.45 -0.06 2.39 2.39 2.39 2.39 2.39 14.99 1.59 -0.35 -0.35 -0.35 -0.07 -0.42 -0.42 -0.42 14.99 0.02 0.02 0.02 0.02 0.02 0.02 0.02 14.99 -

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The companys total income is Rs. 18.06 million. Last year it was Rs. 25.56 million. This means that net income or net premium collected has decreased since the last year. The expenses have increased by 2.8 million but the net income has not. Hence the companies performance has fallen in the year 2009. Operating profits were only 0.3 million down from 10.67 million last year. Earnings per share also fell from Rs. 7.12 to Rs. 0.13. The company faces stiff competition from other private player like Bajaj Allianz, ICICI Prudential, HDFC Standard Life Insurance, Tata Aig and SBI. Now it will face additional competition from Bharti Axa and Reliance Life Insurance (both companies are into the telecom sector as well). ICICI, HDFC and SBI are large banks which also provide the service of insurance. Tata and Bajaj are mainly companies in the auto section and have diversified into this field. UNIT LINKED VERSUS OTHER FINANCIAL INSTRUMENTS Parameters Safety Liquidity Returns Life Cover Tax benefits RBI Bonds High None Low 1 time amount Tax free Fixed Deposits High High Low 1 time amount Taxed Mutual Funds Medium High High 1 time amount Taxed Unit linked High High High 10 times Tax free

We find that life insurance unit linked plans is a good area to invest money in as it provides liquidity, safety, high returns, life cover and tax benefits in a single plan. Aviva offers the option of indexation to beat inflation. Risk is reduced to a large extent as the company invests in a diversified portfolio of stocks.

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COMPETITIVE ANALYSIS

LIFE INSURANCE CORPORATION OF INDIA (LIC)

LIC has an excellent money back policy which provides for periodic payments of partial survival benefits as long as the policy holder is alive. 20% of the sum assured is payable after 5, 10, 15 and 20 years and the balance 40% is payable at the 20th year along with accrued bonus. (www.lic.com)

For a 25 years term , 15% of the sum assured becomes payable after 5,10,15 and 20 years and the balance 40% plus the accrued bonus becomes payable at the 25th year. An important feature of these types of policies is that in the event of the death of the policy holder at any time within the policy term the death claim comprises of full sum assured without deducting any of the survival benefit amounts which have already been paid. The bonus is also calculated on the full sum assured.

Aviva does not have a money back policy. It could offer a money back plan and capture some portion of this market. While marketing insurance products I found that many customers wanted to purchase these plans. LIC offers 66 different plans; plans are formulated for specific occasions whole life plans, term assurance plans, money back plan for women, child plans, plans for the handicapped individuals, endowment assurance plans, plans for high worth individuals, pension plans, unit linked plans, special plans, social security schemes diversified portfolio of products. Aviva could diversify its product portfolio. It could add more plans for high worth individuals and women.

The minimum premium payable for an LIC policy is Rs. 5000 p.a. It increases at Rs. 1000 per year. At Aviva minimum premium for easy life plus is Rs. 6000 which increases in multiples of 6000 per year. Hence Aviva should reduce the minimum premium amount payable to compete with LIC. The guaranteed sum assured in case of the death of the policyholder is larger in LIC than in Aviva.

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Switching from one fund to another is cheaper for LIC it is only Rs. 100 to switch from one fund to another whereas at Aviva it is Rs. 500. More number of switches is allowed free per year in the case of LIC.

There are however some drawbacks to investing in LIC. The allocation charges are higher. Therefore the money invested in the fund is lower than what Aviva will invest. This is true across all policies. Aviva covers its costs over the policy term whereas LIC charges a high amount for the first five years and then charges a very nominal amount from the 6th year onwards. The investment benefit is not as high as Aviva.

ICICI PRUDENTIAL ICICI Prudential is a stiff competitor for Aviva. The company is a merger between ICICI Bank which is the biggest private bank in India and Prudential Plc which is a global life insurance company. The company has an investment plan which is market related Invest Shield Life. In this plan even if the market falls, the premium will be returned to investors. It is a guaranteed plan which ensures the company carefully invests your money. The stock market performance of ICICI Prudential is much better than Aviva. The returns on the growth fund were 46.28% compared to the 39.59% offered by Aviva. Customers are attracted by higher returns and this is a plus point for Prudential.

The company is very well advertised. The advertisements are showcased in movies, television, newspapers, magazines, bill boards, radio etc. The company has an excellent brand ambassador Mr. Amitabh Bacchan. His promotion of the company builds trust and faith in the minds of our people.

However the charges are very high in the plans offered by ICICI Prudential. It is 35% during the first year, 15% in the next year and 3% from the third year onwards. Also a higher minimum premium of Rs. 8000 is charged. Hence the policies are not accessible to the lower strata of the society. (Source: www.iciciprulife.com)

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BIRLA SUN LIFE

Birla Sun Life Insurance Company Limited is a joint venture between The Aditya Birla Group, one of the largest business houses in India and Sun Life Financial Inc., a leading international financial services organization. The local knowledge of the Aditya Birla Group combined with the expertise of Sun Life Financial Inc., offers a formidable protection for your future. (Source: www.birlasunlife.com)

The Aditya Birla Group has a turnover close to Rs. 33000 crores with a market capitalization of Rs. 53400 crores (as on 31st March 2009). It has over 72000 employees across all its units worldwide. It is led by its Chairman - Mr. Kumar Mangalam Birla. Some of the key organizations within the group are Hindalco and Grasim.

Sun Life Financial Inc. and its partners today have operations in key markets worldwide, including Canada, the United States, the United Kingdom, Hong Kong, the Philippines, Japan, Indonesia, India, China and Bermuda. It had assets under management of over US$343 billion, as on 31st March 2009. The company is a leading player in the life insurance market in Canada.

Being a customer centric company, BSLI has invested heavily in technology to build world class processing capabilities. BSLI has covered more than a million lives since inception and its customer base is spread across more than 1000 towns and cities in India. All this has assisted the company in cementing its place amongst the leaders in the industry in terms of new business premium income. The company has a capital base of 520 crores as on 31 st July, 2009.

Its Flexi Life Line Plan offers life long insurance cover till the policy holder is 100 years of age. There are guaranteed returns of 3% p.a. net of policy charges after every 5 years from the eleventh policy year onwards. However the charges are very high. The initial charges for the first year are 65%. Hence the fund value is greatly reduced.

BAJAJ ALLIANZ Bajaj Allianz is a joint venture between Allianz AG with over 110 years of experience in over 70 countries and Bajaj Auto, a trusted automobile manufacturer for over 55 years in the

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Indian market. Together they are committed to offering you financial solutions that provide all the security you need for your family and yourself. Bajaj Allianz is the number one private life insurer for the year 2008 2009. It is leading by 78 crores. It has experienced a whopping growth of 216% in the last financial year.

The company has sold 13, 00,000 policies and is backed by 550 offices across India. It offers travel insurance, motor insurance, home insurance, health and corporate insurance. The mortality charges are lower than Aviva. The entry age could be zero years which allow even new born babies to be insured. (Source: www.bajajallianz.com)

TATA AIG

Tata Aig is a joint venture between the Tata group and American International Group Inc. In one of the plans the company offers hospital cash benefit wherein it will pay Rs. 2500 per day in case of hospitalization and Rs.12.5 lakhs in case the person suffers from any critical illness. Annual premium is much less (about Rs. 6712) to avail such a good benefit. Charges are relatively low compared to Aviva for some policies.

The company offers high coverage plans at low cost. There is a plan even for a policy term of 1 year. Your family can continue to enjoy their current lifestyle even in the case of something happening to you. These plans are very flexible and Aviva could adopt this idea of insuring individuals for short periods of time. For example; there is a family of four. The only earning member is the father.

He has just taken a loan from a bank of 20 lakhs to purchase a new home. He is able to repay the loan with his current salary in 15 years. The problem arises if something were to happen to him within these fifteen years. Not only will the family face the emotional and financial loss of their father but they will also have to repay the home loan or risk being homeless. (Source: www.tataaig.com)

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CHAPTER V: DATA INTERPRETATION

1. AGE GROUP OF SURVEYED RESPONDENTS Table 1: Age group 18 - 25 years 26 - 35 years 36 - 49 years 50 - 60 years More than 60 years No. of Respondents 62 33 22 12 2

Chart 1:

17% 9% 18 - 25 years 2% 25% 26 - 35 years 36 - 49 years 50 - 60 years More than 60 years 47%

Analysis: From the chart above we find that 47% of the respondents fall in the age group of 18 25 years, 25% fall in the age group of 26 35 years and 17% fall in the age group of 36 49 years.

Therefore most of the respondents are relatively young (below 26 years of age). These individuals could be induced to purchase insurance plans on the basis of its tax saving nature and as an investment opportunity with high returns.

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Individuals at this age are trying to buy a house or a car. Insurance could help them with this and this fact has to be conveyed to the consumer. As of now many consumers have a false perception that insurance is only meant for people above the age of 50. Contrary to popular belief the younger you are the more insurance you need as your loss will mean a great financial loss to your family, spouse and children (in case the individual is married) who are financially dependent on you.

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2. GENDER CLASSIFICATION OF SURVEYED RESPONDENTS

Table 2: Particulars Male Female No. of Respondents 113 17

Chart 2:
Gender of the respondents
120

113

100

No. of respondents

80

60 Male 40 Female

20

17

M ale

Fe male

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3. CUSTOMER PROFILE OF SURVEYED RESPONDENTS Table 3: Customer profile Student Housewife Working Professional Business Self Employed Government service employee No. of respondents 30 3 55 24 12 7

Chart 3:

5% 9% Student 23% Housewife Working Professional 18% 2% Business Self Employed Government service employee

43%

Analysis: From the chart above it can clearly be seen that 43% of the respondents are working professionals, 23% are students and 18% are into business. Therefore the target market would be working individuals in the age group of 18 25 years having surplus income, interested in good returns on their investment and saving income tax.

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4. MARKET SHARE OF LIFE INSURANCE COMPANIES

Table 4:

LIFE INSURER HDFC STANDARD LIFE BIRLA SUN LIFE AVIVA LIFE INSURANCE BAJAJ ALLIANZ LIC TATA AIG ICICI PRUDENTIAL ING VYSYA BHARTI AXA OTHERS

NUMBER OF POLICIES 5 4 8 9 64 8 14 7 3 2

Chart 4:

6%

2% 2% 4%

3% 6% HDFC STANDARD LIFE

11% 7%

BIRLA SUN LIFE AVIVA LIFE INSURANCE BAJAJ ALLIANZ

6%

LIC TATA AIG ICICI PRUDENTIAL ING VYSYA BHARTI AXA OTHERS

53%

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Analysis: In India, the largest life insurance company is Life Insurance Corporation of India. It has been in existence in India since 1956 and is completely owned by the Government of India. Today the organization has grown to 2048 offices serving 18 crore policies and has a corpus of over 340000 crore INR.

The largest private insurance company in India is ICICI Prudential. It is a joint venture between ICICI Bank and Prudential plc, a leading international financial services group headquartered in the UK. In just 4 years time (till March 31, 2009) the company has successfully sold 430000 policies with a premium income in excess of 980 crores.

The second largest private life insurance company is Bajaj Allianz. It has more than 550 offices and over 60000 insurance consultants. It had a premium income of 221 crores as on March 31, 2009. This year it has gone past ICICI Prudential to become the number one private life insurance company in India with a premium of 3134 crores.

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5. ANNUAL PREMIUM PAID BY INDIVIDUALS FOR LIFE INSURANCE

Table 5: Premium paid (p.a.) Rs. 5000 - Rs. 10000 Rs. 10001 - Rs. 15000 Rs. 15001 - Rs. 24900 Rs. 25000 - Rs. 50000 Rs. 50001 - Rs. 60000 Rs.60001 - Rs. 80000 Rs. 80001 - Rs. 100000 No. of respondents 45 29 19 12 5 2 3

Chart 5:

Rs. 5000 - Rs. 10000

4% 10% 39% 2% 3%

Rs. 10001 - Rs. 15000 Rs. 15001 - Rs. 24900 Rs. 25000 - Rs. 50000

17%

Rs. 50001 - Rs. 60000

25%

Rs.60001 - Rs. 80000 Rs. 80001 - Rs. 100000

Analysis: From the chart above we find that, 39% of the respondents surveyed pay an annual premium less than Rs. 10001 towards life insurance. 25% of the respondents pay an annual premium less than Rs. 15001 and 17% pay an annual premium less than Rs. 25000. Hence we can

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safely say that Aviva Life insurance would be able to capture the market better if it introduced products/plans where the minimum premium starts at Rs. 5000 p.a.

Only 19% of the respondents pay more than Rs. 25000 as premium and most products sold by Aviva have Rs.25000 as the minimum annual premium amount. They should introduce more products like Easy Life Plus and Safe Guard where the minimum premium is Rs.6000 p.a. and Rs. 12000 p.a. respectively. This would definitely increase their market share as more individuals would be able to afford the policies/plans offered.

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6. POPULAR LIFE INSURANCE PLANS Table 6: Type of Plan Term Insurance Plans Endowment Plans Pension Plans Child Plans Tax Saving Plans No. of Respondents 53 62 8 4 10

Chart 6:

7% 3% 6% 39%
Term Insurance Plans Endow m ent Plans Pension Plans Child Plans Tax Saving Plans

45%

Analysis: From the chart given above we can clearly see that 45% of the respondents hold endowment plans and 39% of the respondents hold term insurance plans. Endowment plans are very popular and serve two purposes life cover and savings. If the policy holder dies during the policy term the nominee gets the death benefit that is, sum assured and accumulated bonus. On survival the policy holder receives the survival benefit with a bonus. A term plan is a pure risk cover plan wherein the insured pays a lower premium for a higher sum assured. Term insurance is the cheapest form of insurance and helps the policy holder insure himself for a relatively low premium. For the returns sensitive investor term plans do not find favor as they do not offer a return in case the individual does not die during the policy term.

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7. AWARENESS OF UNIT LINKED INSURANCE PLANS

Table 7: Awareness of Unit Linked Plans Yes No No. of Respondents 74 56

Chart 7:

43%
Yes

57%

No

Analysis: From the chart given above we find that 57% of the respondents are aware of unit linked life insurance plans and 43% are not aware of such plans. These plans should be promoted through advertising. The company can advertise through television, radio, newspapers, bill boards and pamphlets. This would increase awareness and arouse curiosity in the minds of the consumer which would enable the company to market its products more effectively. Unit linked plans are those where the benefits are expressed in terms of number of units and unit price. They can be viewed as a combination of insurance and mutual funds. The number of units a customer would get would depend on the unit price when they pay the premium.

When the policy matures the individual gets his fund value. The value of his fund is calculated by multiplying the net asset value and number of units held by them on that day.

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8. CONSUMER WILLINGNESS TO SPEND ON LIFE INSURANCE PREMIUM

Table 8: Willingness premium Less than Rs. 6000 Rs. 6001 - Rs. 10000 Rs. 10001 - Rs. 25000 Rs. 25001 - Rs. 50000 Rs. 50001 - Rs. 100000 to spend on No. respondents 20 35 54 20 2 of Percentage 15% 27% 41% 15% 2%

Chart 8:

60 50 40 30 20 10 0 Less than Rs. 6000 Rs. 6001 - Rs. 10000 Rs. 10001 - Rs. 25000 Rs. 25001 - Rs. 50000 Rs. 50001 - Rs. 100000

Analysis: From the graph above, we can clearly see that 41% of the respondents would be willing to spend between Rs. 10001 Rs. 25000 for life insurance. 27 % would be willing to spend between Rs. 6001 Rs. 10000 per annum. Only 15% would be willing to spend more than Rs. 25000 per annum as life insurance premium.

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We could say that the maximum premium payable by most consumers is less than Rs. 25000 p.a. This is further reduced as most customers have already invested with LIC, ICICI Prudential, Birla Sun Life, Bajaj Allianz etc.

Aviva is faced with a large amount of competition. There are 15 insurance companies in India inclusive of LIC. Hence to capture a larger part of the market the company could introduce more reasonable plans with lesser premium payable per annum.

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9. CHART SHOWING IDEAL POLICY TERM

Table 9: Ideal policy term 3 - 5 years 6 - 9 years 10 - 15 years 16 - 20 years 21 - 25 years 26 - 30 years More than 30 years Whole life Policy No. of respondents 25 20 46 18 12 2 1 6

Chart 9:

1% 2% 9%

5% 19%

3 - 5 years 6 - 9 years 14% 15% 10 - 15 years 16 - 20 years 21 - 25 years 26 - 30 years More than 30 years Whole life Policy

35%

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Analysis: From the chart given above it can be seen that 35% of the respondents prefer a policy term of 10 15 years, 19% prefer a term of 3 5 years and 15% prefer a term of 6 9 years. This means that Aviva could introduce more plans wherein the premium paying term is less than 15 years.

The outlook of insurance as a product should be changed from something which you pay for your whole life (whole life policy) and do not receive any benefit (the nominee only receives the benefit in case of your death) to an extremely useful investment opportunity with the prospects of good returns on savings, tax saving opportunities as well as providing for every milestone in your life like marriage, education, children and retirement.

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10. FACTORS THAT MOTIVATE RESPONDENTS TO PURCHASE INSURANCE

Table 10: Parameter Advertisements High returns Advice from friends Family responsibilities Others No. of Respondents 17 42 23 45 8

Chart 10:

6% 33%

13% Advertisements High returns 31% Advice from friends Family responsibilities Others

17%

Analysis: From the chart above it can be seen that 33% of the respondents purchase life insurance to secure their families, 33% take life insurance to get high returns, 17% purchase insurance on the advice of their friends and 13% purchase insurance because of the influence of advertisements. The main purpose of insurance is to cover the financial or economic loss that occurs to the family in case of the uncertain death of the policy holder. But nowadays this trend is changing. Along with protection (life cover), a savings element is being added to insurance.

With the introduction of the new unit linked plans in the market, policy holders get the option to choose where their money will be invested. They can invest their money in the equity market, debt market, money market or a combination of these. The debt and money markets usually have low risk attached whereas the equity market is a high risk investment option. 11. PREFERRED COMPANY TYPE OF THE RESPONDENTS

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Table 11: Type of Company Government Company Public Limited Company Private Company Foreign Company Owned 67 33 26 17 47% 23% 18% 12% No. of Respondents Percentage

Chart 11:
80 70 60 50 40 30 20 10 0 Government Owned Company Public Limited Company Private Company Foreign Company

Analysis: From the graph above we find that 47% of the respondents preferred to purchase insurance from a government owned company, 23% of the respondents preferred to purchase insurance from a public limited company and only 12% of the respondents preferred a foreign based company. Aviva could be promoted as an essentially Indian company with a foreign tie up. Its tie up with Dabur India, a trusted name in an Indian household and a pharmaceutical giant, could be used to give a push to its products/ services.

Heavy advertising through television, newspapers, magazines and radio is required. Very few people know that Aviva is one of the oldest insurance companies in the world. It was started

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in the year 1696. The company is over 300 years old. These facts would surely increase the customer base it currently possesses and thereby increase sales of Aviva products in the Indian insurance market.

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12. MINIMUM EXPECTED RETURN ON INVESTMENT

Table 12: Expected Returns Less than 5% 5% - 10% 11% - 15% 16% - 20% 21% - 25% 26% - 30% 31% - 40% 41% - 50% More than 50% No. of respondents 3 20 22 23 22 13 11 7 10

Chart 12:
8% 5% 2% 15% Less than 5% 8% 5% - 10% 11% - 15% 16% - 20% 21% - 25% 10% 17% 26% - 30% 31% - 40% 41% - 50% More than 50%

17% 18%

Analysis: From the chart above it can clearly been seen that 18% of the respondents would like 16 20% returns, 17% would like returns between 21 25% and 17% would like returns of 11 15% on their investments. Therefore the average return on investment should be at least 16 20 %.

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Most consumers are willing to adapt to some amount of risk but still want some guaranteed returns. Therefore the bulk of investment should be made in the balanced fund with 50% debt and 50% equity. The returns on the Secure Fund are guaranteed as these involve investment is government securities and the debt market. But the returns on these instruments are low (8 10%). If the company invests in shares, returns are higher (39%) but correspondingly risk borne by the policy holder is also higher. Therefore a good combination of the two instruments is often a wise choice.

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CHAPTER VI: SUMMARY & CONCLUSIONS

Aviva life insurance is one of the worlds largest and oldest life insurance companies. It has businesses spread out across the globe. It came to India in the year 2002. It currently ranks number 7 amongst the insurers in India (Source: annual premium provided by the company) The company faces a large amount of competition. To sustain itself it must promote its products through advertising and improve its selling techniques. Consumers must be aware of the new plans available at Aviva. The medium of advertising used could be television since most of its competitors use this tool to promote their products. The company must be promoted as an Indian company since consumers seem to have more trust in investing in Indian firms. Hence its association with Dabur should be showcased since Dabur is a trusted name in India and it could be used to provide a push to the products Aviva has to offer. The unit linked concept must be specifically promoted. The general perception of life insurance has to change in India before progress is made in this field. People should not be afraid to invest money in insurance and must use it as an effective tool for tax planning and long term savings. Aviva could tap the rural markets with cheaper products and smaller policy terms. There are individuals who are willing to pay small amounts as premium but the plans do not accept premiums below a certain amount. It was usually found that a large number of males were insured compared to females. Individuals below the age of 30 (mostly male) were interested in investment plans. This was a general conclusion drawn during prospecting clients.

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SUMMARY
The study has provided with the useful data from the respondents. There has a lot to be recommended. Following are the recommendations: There is a need for better promotion for the investment products & services. The bank should advertise its products through television because it will reach to the masses. More returns should be provided on Insurance plans. As the bank provides the Insurance facility to its customers. It should provide this facility by tie up with the other Insurance organizations as well. The main reason is that, the entire customers do not want Insurance of only one company. They should have choice while selecting a suitable Insurance plans. This will definitely add to the goodwill & profit for the bank.

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BIBLIOGRAPHY
Books Referred 1. Rustagi RP (2001) 'Financial Management - Theory, Concepts and Problems', Galgotia Publishing Company, New Delhi. 2. Brealey Richard A., & Myers Stewart C. (2000). 'Principles of Corporate Finance', Tata Mc Graw Hill, New Delhi. 3. I.M. Pandey. Principles of Financial Management, Vikas Publishing House 4. Aswath Damodaran. Investment Valuation for Determining the Value of Any Asset (2002), John Wiley and Sons 5. Anthony Bartzokas, Sunil Mani. Financial systems, corporate investment in innovation, and venture capital

Articles and Documents 1. NVCA and Venture Economics - 1999 National Venture Capital Yearbook. 2. McKinsey & Company - US Venture Capital Industry Industry Overview and Economics (Summary Document), September, 1998. 3. Indian Venture Capital Association - IVCA Venture Activity 2005. 4. The Securities Exchange Board of India - SEBI (Venture Capital Funds) Regulations, 1996. 5. The Economics Times 6. Financial Express 7. ICFAI Reader, Dec. 2002. 8. ICFAI Reader, Jan. 2004.

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QUESTIONNAIRE Personal Details:

Name: ..........................................................................

Gender: o Male o Female

Age group: o 18 25 years o 26 35 years o 36 49 years o 50 60 years o Above 60 years

Profile of respondent: o Student o Housewife o Working Professional o Business o Self Employed o Government Service employee

1. Do you own a life insurance policy/investment plan in your name? o Yes o No 2. If yes which company/ companys insurance policies do you hold? o HDFC Standard o Birla Sun Life o Aviva Life Insurance o Bajaj Allianz o LIC

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o Tata AIG o ICICI Prudential o ING Vysya o Bharti Axa o Others (specify name)

3. What is the approximate premium paid by you annually (in Rupees)? o Rs. 5000 Rs. 10000 o Rs. 10001 Rs. 15000 o Rs. 15001 Rs. 24900 o Rs. 25000 Rs. 50000 o Rs. 50001 Rs. 60000 o Rs. 60001 Rs. 80000 o Rs. 80001 Rs. 100000 o More than Rs. 100000 ( specify premium)

4. What kind of insurance policy would suit you best in your current stage of life? o Life Insurance o Life Insurance and Investment Plans o Pension Plans o Child Plans o Tax saving plans 5. Are you aware of the new unit linked insurance plans in the market? o Yes o No

6. How much would you be willing to spend per annum if you were to go for an investment/ insurance plan? o Less than Rs. 6000 o Rs. 6001 Rs. 10000 o Rs. 10001 Rs. 25000 o Rs. 25001 Rs. 50000 o Rs. 50000 Rs. 100000 o More than Rs. 100000

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7. Which according to you is an ideal policy term? (Number of years you would be willing to pay premium) o 3 to 5 years o 6 to 9 years o 10 to 15 years o 16 to 20 years o 21 to 25 years o 26 to 30 years o More than 30 years o Whole life policy

8. What motivates you to purchase insurance/ investment plans? o Advertisements o High Returns o Advice from friends o Family responsibilities o Others (specify)

9. In which kind of company would you prefer to make a purchase of insurance? o Government owned company o Public Limited Company o Private Company o Foreign based company 10. Typically what kind of returns would you look at from your investments? (Please note: Higher returns involve greater risk) o Less than 5% o 5% - 10 % o 11% - 15 % o 16% - 20 % o 21% - 25% o 26% - 30% o 31% - 40% o 41% - 50% o More than 50%

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