Comparative Study of Ulip Plans Offered by Icici Prudential and Other Life Insurance Companies - Icici Pro
Comparative Study of Ulip Plans Offered by Icici Prudential and Other Life Insurance Companies - Icici Pro
Comparative Study of Ulip Plans Offered by Icici Prudential and Other Life Insurance Companies - Icici Pro
PROJECT REPORT
ON
We can very well understand the concept of corporate advertising by taking the
example of ICICI Prudential communication. When Company first began operations,
the task was to present the visiting card of the company to the public at large and
build credibility and stature and to give the consumer the confidence that ''here is a
company that can be trusted to invest funds with.''
This required a corporate campaign - to establish the brand, build awareness and give
the brand a larger-than-life image.
The advertising idea, which was encapsulated in symbols of protection from the initial
print campaign, culminated in the corporate film where sindhoor was used as an
endearing and lasting symbol of protection. Once the corporate image and brand
identity were established, and as the company expanded and its product range grew,
the next phase of communication was to give the
consumer a rational and tangible reason to buy - first of all insurance and secondly
from ICICI Prudential Life. This was tackled through product-specific advertising,
such as for ICICI Pru Smart Kid, retirement solutions or LifeTime.
Key Summery
Boost both employee management relation & employee morale enabling all
EXECUTIVE SUMMARY
3
Title of the project:
Study ULIP in current market scenario/ Study customer response towards ULIP
Objectives:
Working of the unit linked insurance plans
Swot analysis of the product
Comparative study of the competition
Study tax planning solutions available in the market
Study asset allocation through insurance plans
Market interface
Research Methodology:
Primary data collected by personally visiting these leading insurance players. Eg:
LIC, Max New York Life Insurance, Bajaj Alliance, Birla Sunlife, HDFC Stan life.
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Data Collection:
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CHAPTER-1
6
INTRODUCTION TO INSURANCE
‘Insurance’ is basically a sharing device. The losses to assets resulting from natural
calamities like fire, flood, earthquake, accidents, etc. are met out of the common pool
contributed by large number of persons who are exposed to similar risks. This
contribution of many is used to pay the losses suffered by unfortunate few. However
the basic principle is that loss should occur as a result of natural calamities or
unexpected events which are beyond the human control. Secondly insured person
should not make any gains out of insurance.
It is natural to think of insurance of physical assets such as motor car insurance or fire
insurance but often we forget that creator of all these assets is the human being whose
efforts have gone a long way in building up the assets. In that sense, human life is a
unique income generating assets. Unlike the physical assets, which decrease in value
with passage of time, the individual becomes more experienced and more matured as
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he advances in age. This raises his earning capacity and the purpose of life insurance
is to protect the income in the event of his premature death. The individual himself
also needs financial security for the old age or on his becoming permanently disabled
when his income will stop. Insurance also has an element of savings in certain cases.
Suppose there are 1000 persons all aged 35 years and healthy lives. They are insured
for one year against the risk of death. Each person is insured for Rs. 50,000. If the
past experience indicated that 4 out of 1000 persons, at this age are expected to die
during the year, expected amount of death claim to be paid to the family of four
persons would come to Rs. 2,00,000. The contribution to be paid by each of the 1000
persons will come to Rs. 200 per year. Thus, all the 1000 persons share loss caused to
the 4 unfortunate families. 996 persons who survived till one year have not lost
anything as they secured peace of mind and a feeling of security of their family.
While insurance cannot prevent accidents or premature death, it can help protect the
family of the decreased against the loss of income caused by the death of the main
breadwinner. In return for specified payments, insurance will provide protection
against the incidence of an uncertain event- such as premature death. The business of
insurance company called insurer is to bring together persons who are exposed to
similar risks, collect contribution (premium) from them on some equitable basis and
pay the losses (claims) to the unfortunate few who suffer.
Classification of Insurance
Insurance business can be divided into two broad categories, life and non-life. Life
insurance is concerned with making provision for a specific event happing to the
individual, such as death whereas non life (or general insurance) is more commonly
concerned with the provision for a specific event which affects a property, such as
fire, flood, theft etc. In this course we will only cover life insurance. So, let us now
move on to the definition of life insurance.
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Definition of Life Insurance
According to the U.S. Life Office Management Association Inc. (LOMA), life
insurance is defined as follows: ‘Life insurance provides a sum of money if the person
who is insured dies whilst the policy is in effect”.
Risks and uncertainties are part of life's great adventure -- accident, illness, theft,
natural disaster - they're all built into the workings of the Universe, waiting to happen.
Insurance then is man's answer to the vagaries of life. If you cannot beat man-made
and natural calamities, well, at least be prepared for them and their aftermath.
Insurance is a contract between two parties - the insurer (the insurance company) and
the insured (the person or entity seeking the cover) - wherein the insurer agrees to pay
the insured for financial losses arising out of any unforeseen events in return for a
regular payment of "premium".
These unforeseen events are defined as "risk" and that is why insurance is called a
risk cover. Hence, insurance is essentially the means to financially compensate for
losses that life throws at people - corporate and otherwise.
The principle of insurance works on the concept of a large number of people exposed
to a similar risk making a contribution to a common fund. Those who suffer losses
due to the occurrence of these events are compensated for them from this fund.
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ROLE OF LIFE INSURANCE
Insurance is an attractive option for investment. While most people recognize the risk
hedging and tax saving potential of insurance, many are not aware of its advantages as
an investment option as well. Insurance products yield more compared to regular
investment options, and this is besides the added incentives offered by insurers.
You cannot compare an insurance product with other investment schemes for the
simple reason that it offers financial protection from risks, something that is missing
in non-insurance products. In fact, the premium you pay for an insurance policy is an
investment against risk. Thus, before comparing with other schemes, you must accept
that a part of the total amount invested in life insurance goes towards providing for
the risk cover, while the rest is used for savings.
In life insurance, unlike non-life products, you get maturity benefits on survival at the
end of the term. In other words, if you take a life insurance policy for 20 years and
survive the term, the amount invested as premium in the policy will come back to you
with added returns. In the unfortunate event of death within the tenure of the policy,
the family of the deceased will receive the sum assured.
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TYPES OF LIFE INSURANCE PLANS
One of your most important responsibilities as a parent is to ensure that your child
gets the best possible education that can be provided.
ICICI Prudential offers a wide portfolio of education insurance plans that are designed
to provide peace of mind to you, as a parent, that your child's education will be
secure. These plans ensure that money is made available at the crucial junctures in a
child's education - Class X, Class XII, graduation and post-graduation - to fund
crucial commitments for the child's future.
Importantly, education insurance plans ensure that in the unfortunate event of the
death of a parent, the child's education continues unhampered.
Under the education insurance plans platform, ICICI Prudential brings the following
products to you. Please click on the product name to know more about the plans.
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Wealth Creation Plans
Wealth Creation Plans give the customer the dual benefit of protection along with the
potentially higher returns of market-linked instruments. The most important benefit of
ULIPs is the flexibility they give the customer in choosing the premium amount and
also choosing the underlying fund in which this money is to be invested. Wealth
creation plans also offer the customer more liquidity options as compared to
traditional plans. As such, ULIPs are ideal for customers who want the protection of a
life cover to be allied to the returns of market linked instrument – giving them an
unmatched combination of benefits.
Under the wealth creation platform, ICICI Prudential brings the following products to
you. Please click on the product name to know more about the plans.
The latest addition to the life insurance product portfolio of ICICI Prudential is the
Premium Guarantee plan - InvestShield Life New. Premium Guarantee plans are the
ideal insurance-cum-investment option for customers who want to enjoy the
potentially higher returns of a market linked instrument, but without taking any
market risk.
Under the Premium Guarantee Plans platform, ICICI Prudential brings to you the
following products:
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Plan Name Plan Type
Protection Plans
The sole objective of these plans, as their name indicates, is to serve the protection
needs of the customer and by doing so, safeguard one’s family from the financial
implications of unfortunate circumstances than one cannot foresee.
Under the Protection Plans platform, ICICI Prudential brings to you the following
products:
LifeGuard Traditional
Save'n'Protect Traditional
CashBak Traditional
Home Assure Traditional
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THE INSURANCE REGULATORY AND DEVELOPMENT
AUTHORITY (IRDA)
Reforms in the Insurance sector were initiated with the passage of the IRDA Bill in
Parliament in December 1999. The IRDA since its incorporation as a statutory body
in April 2000 has fastidiously stuck to its schedule of framing regulations and
registering the private sector insurance companies.
The other decision taken simultaneously to provide the supporting systems to the
insurance sector and in particular the life insurance companies was the launch of the
IRDA’s online service for issue and renewal of licenses to agents.
The approval of institutions for imparting training to agents has also ensured that the
insurance companies would have a trained workforce of insurance agents in place to
sell their products, which are expected to be introduced by early next year. Since
being set up as an independent statutory body the IRDA has put in a framework of
globally compatible regulations. In the private sector 12 life insurance and 6 general
insurance companies have been registered.
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WHY PRIVATE INSURANCE?
All the private companies have a lock in period of 3 yrs hence no disinvestments
possible.
Minimum net worth of 500 Cr required for acquiring license with a minimum paid
up capital of 100 Cr in their insurance venture.
Commitment to increase the paid up capital manifold in next five years.
Re insurance for all its policies worth more than 5 lakhs. Reinsurance partners,
best and the largest in the world – general cologne and Swiss reinsurance.
Audit of accounts by at least 2 independent approved auditors each year.
Products and pricing are cleared by IRDA, which looks into the financial visibility
of the product and the financial implication.
IRDA is now proposing a Pvt. Policy Protection fund.
Funds to be invested in only regulated and controlled areas with close to
80%being pumped into only gilts thereby assuring safety of funds.
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16
RESEARCH METHODOLOGY
SAMPLE DESIGN:
Social phenomenon being very vast, it becomes impossible to contact each and every
individual of population due to limitation of essential resources like time and money.
Therefore, the study is preferably narrowed down to a representative sample to make
the study more manageable. Quota sampling is adopted in the exploratory study. It is
a non-probability study in which various insurance players are taken.
SAMPLING UNIT:
The data can be collected from primary sources. The basic premises of my study are
primary data but at the same time it is supplemented with the secondary data.
Sampling unit is a unit which would be considered for the purpose of study to conduct
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the comparative study of the ICICI Prudential and other insurance companies with
special reference to Unit Link Plans.
SAMPLING SIZE:
It refers to the number of items to be selected from the universal, to constitute a
sample. To commence the study various insurance players are taken.
SAMPLE SIZE
A sample size of 100 customers was selected to do this project, which was random
sampling keeping in mind the basic criteria.
FIELD WORK
The research was done for a period of 2 months in (students, government employee &
other) ambala. I started with MY MARKET 100 and thereafter I used to give cold
calls from the company’s database and if seemed interested I take along with me the
representatives of the company for further information gathering.
1) Study of Secondary Data: The quickest and the most economical way for
researchers to find possible hypothesis is to take the advantage of the work done
earlier and thus utilize their efforts.
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OBJECTIVE OF THE STUDY
The project undertaken by me as a part of my Summar Training of M.B.A.course is an
effort made to study the ULIP policies and activities in ICICI PRUDENTIAL with
special emphasis on unit linked products of the company.
In this era of cut throat competition, any organization needs to select and retain the
best talent. People selected should have positive attitude, ability to inspire others and
must be dynamic.
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CHAPTER-2
INDUSTRY PROFILE
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Background
In 1912, the Indian life insurance companies Act was passed . This was the first
observed that the provisions of Indian Company’s Act did not meet the purpose. A
further legislation was passed in 1928, But a comprehensive legislation was passed in
1938. The amendments in the act were made in 1956 when insurance was nationalized
Life insurance business was nationalized with effect from 19 January 1956
and 256 companies were merged. Insurance Act was further amended in 1999 and
IRDA was formed in view of the circumstances arising out of opening up of insurance
As we enter into the new millennium, economies of the world over are getting
redefined and remodeled with the new mindsets, new technologies, new riles and new
directions. Financial sector reforms received top priority ever since the Govt. of India
initiated the process of economic liberalization. These reforms are extending the
horizons of the financial services sector and have been transforming our capital
insurance business. Yet, market oriented dynamism was missing as evidenced by the
lack of
technology.
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The insurance sector reforms have encouraged Blue-Bloods of Indian corporate sector
largest insurance majors to capture slice of the country’s potential insurance market.
This has brought abuzz activities in insurance business. New players are wooing the
customer with promises of better services and customized products. The LIC and GIC
are countering the competition on the strength of their track records, distribution
This new scenario will witness financially sound and experienced players
transforming the industry with best products in service and product development ,
As a result, the insurance business can become global with e-business applications.
awkward as selling the likelihood of an event people do not want crossing their minds
. in India, it is rather a shrub. For this reason alone life insurance is no ordinary
longer sell life insurance as a product that meets a basic need , many of them sell
though the appeal of a wide variety of add on benefits ranging from tax saving to
So far the market has been shaped by LIC . it is only recently that private
insurers with 74:26 joint ventures between Indian and foreign companies have
been formed under the watch of IRDA. ICICI prudential, HDFC slandered life
and Max New York Life were first off the block, followed by Kotak
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Mahindra, Royal Sundram,TATA Aig,Birla Sunlife,SBI Life and ING Vyasa
market distinguishes itself in other ways too, most notably in the areas of
market move and what could be the winning strategies. Basic premise is clear
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LIFE INSURERS
LTD.
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Life Insurance Companies
20,2000.The authorized capital of the company is Rs 2300 million and the paid up
capital is Rs 1500 million. The Company is joint of ICICI (74%) and Prudential
plc UK (26%)
The company was granted certificate of registration for carrying out life insurance
one of the first few private sector players to enter the liberalized arena. ICICI
Prudential collected Rs.1584 corers as their premium during 2004-05 & the
market share of ICICI pru. as per their premium is 5.63% as a whole but in the pvt
ING Group: Over the last 150 years, ING Group has grown to become one of the
largest life insurance organizations in the world. Today it touches the lives of over
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KOTAK MAHINDRA LIFE INSURANCE COMPANY LTD.
Investment Banking, the company caters to the financial needs of individuals and
corporates.
Old Mutual
insurance business, has the largest financial services business in South Africa,
through its life assurance, asset management, banking and general insurance
operations. Being listed in London Stock Exchange and included in FTSE 100 list
of companies, old Mutual’s assets under management are worth $208 billion.
Tata AIG General Insurance Company Ltd and Tata AIG Life Insurance Company
Ltd (collectively “Tata AIG”) are joint venture companies between the Tata group
India’s most trusted industrial house and American International grouping (AIG), the
Both promoters have a deep and abiding interest in India’s Insurance sector. Prior to
nationalization, the Tanta’s pioneered private insurance in India when Sir Dorab Tata
set
the Tata company had a global presence with 56 overseas offices. Aig too has always
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considered the Indian insurance sector to be of significance. The AIG companies
entered India in 1954 and had offices in several Indian cities prior to nationalization.
largest housing finance provider, HDFC and Europe’s largest mutual life assurance
company The Standard Life Assurance Company (UK). HDFC Standard Life
Insurance Company Limited is the first private sector life insurance company to be
granted a license.
Standard Life, UK, found in 1825. The UK insurance industry for 175 years
by combining sound financial judgment with integrity and reliability. It is the largest
mutual life company in Europe and has total assets of Rs.5,50,000 crore sit is one of
the very few insurance companies in the world to have ‘AAA’ rating from two of the
leading international credit rating agencies, Moody and Standard and Poor’s. Standard
Life was recently voted ‘company of the decade’ in UK by the independent Brokers
called IFAs.
years ago with a view to provide an insurance cover against various risks in life .A
synonymous with life insurance.Its main asset is its staff strength of 1.24 lakhs
employees and 2048 branches and over six-lakh agency force. LIC has hundred
divisional offices and has established extensive training facilities at all levels .At
the apex, is the Management Development Institute, Seven Zonal Training centers
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At the industry level, along with the Government and GIC, it has helped established
grants housing loans through its subsidiary; and markets saving and investment
products through its mutual fund. It payoff about Rs 6000 crore annually to 5.6
million policyholders. Market share of LIC which is 82.3%.By the LIC 1.09 crores
policies has been sold that was in the 2004-05 & the total premium that are
Allianz AG with over 110 years of experience in over 70 countries and Bajaj
Auto, trusted for over 55 years in the Indian market ,together are committed to
India. The Market share of Bajaj Allianz in 2003-04 was .95% which has been
increases in 2004-05 and it is know 2.03% which depicts the financial position of
the co.
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CHAPTER-3
29
COMPANY PROFILE
Overview
India’s Number One private life insurer, ICICI Prudential Life Insurance Company is a
joint venture between ICICI Bank-one of India’s foremost financial services
companies-and Prudential plc- a leading international financial services group
headquartered in the United Kingdom. Total capital infusion stands at Rs. 20.60 billion,
with ICICI Bank holding a stake of 74% and Prudential plc holding 26%.
We began our operations in December 2000 after receiving approval from Insurance
Regulatory Development Authority (IRDA). Today, our nation-wide team comprises of
over 580 offices, over 234,000 advisors; and 22 bancassurance partners.
ICICI Prudential was the first life insurer in India to receive a National Insurer
Financial Strength rating of AAA (Ind) from Fitch ratings. For three years in a row,
ICICI Prudential has been voted as India’s Most Trusted Private Life Insurer, by The
Economic Times – AC Nielsen ORG Marg survey of ‘Most Trusted Brands’. As we
grow our distribution, product range and customer base, we continue to tirelessly
uphold our commitment to deliver world-class financial solutions to customers all over
India.
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Vision & Values
Our vision:
To make ICICI Prudential the dominant Life and Pensions player built on trust by
world-class people and service.
This we hope to achieve by:
The success of the company will be founded in its unflinching commitment to 5 core
values – Integrity, Customer First, Boundary less, Ownership and Passion. Each of the
values describe what the company stands for, the qualities of our people and the way
we work.
We do believe that we are on the threshold of an exciting new opportunity, where we
can play a significant role in redefining and reshaping the sector. Given the quality of
our parentage and the commitment of our team, there are no limits to our growth.
Our values :
Every member of the ICICI Prudential team is committed to 5 core values: Integrity,
Customer First, Boundary less, Ownership, and Passion. These values shine forth in
all we do, and have become the keystones of our success.
The ICICI Prudential edge comes from our commitment to our customers, in all that we
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do – be it product development, distribution, the sales process or servicing. Here’s a
peek into what makes us leaders.
1. Our products have been developed after a clear and thorough understanding of
customers’ needs. It is this research that helps us develop Education plans that offer the
ideal way to truly guarantee your child’s education, Retirement solutions that are a
hedge against inflation and yet promise a fixed income after you retire, or Health
insurance that arms you with the funds you might need to recover from a dreaded
disease.
2. Having the right products is the first step, but it’s equally important to ensure that our
customers can access them easily and quickly. To this end, ICICI Prudential has an
advisor base across the length and breadth of the country, and also partners with leading
banks, corporate agents and brokers to distribute our products
3. Robust risk management and underwriting practices form the core of our business.
With clear guidelines in place, we ensure equitable costing of risks, and thereby ensure
a smooth and hassle-free claims process.
4. Entrusted with helping our customers meet their long-term goals, we adopt an
investment philosophy that aims to achieve risk adjusted returns over the long-term.
5. Last but definitely not the least, our 16,000 plus strong team is given the opportunity
to learn and grow, every day in a multitude of ways. We believe this keeps them
engaged and enthusiastic, so that they can deliver on our promise to cover you, at every
step in life.
Promoters
ICICI Bank
ICICI Bank (NYSE:IBN) is India’s second largest bank and largest private sector
bank with
over 50 years presence in financial services and with assets of over Rs 3446.58 bn
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(USD 79 billion) as on March 31, 2007. The Bank offers a wide range of banking
products and financial services to corporate and retail customers through a variety of
delivery channels and through its 33pecialized subsidiaries in the areas of investment
banking, life and non-life insurance, private equity and asset management. ICICI Bank
is a leading player in the retail banking market and services its large customer base
through a network of over 950 branches and extension counters, 3300 ATMs, call
centers and internet banking (www.icicibank.com) to ensure that customers have access
to its services at all times.
Prudential Plc
Established in London in 1848, Prudential plc, through its businesses in the UK and
Europe, the US and Asia, provides retail financial services products and services to
more than 20 million customers, policyholder and unit holders and manages over £251
billion of funds worldwide (as of 31 December 2006). In Asia, Prudential is the leading
European life insurance company with life operations in China, Hong Kong, India,
Indonesia, Japan, Korea, Malaysia, the Philippines, Singapore, Taiwan, Thailand,
Vietnam. Prudential is the second largest retail fund manager for Asian sourced assets
ex-Japan as at June 2006. Its fund management business has expanded into a total of ten
markets : China, Hong Kong, India, Japan, Korea, Malaysia, Singapore, Taiwan,
Vietnam and United Arab Emirates.
t Sheet
THE Company
ICICI Prudential Life Insurance Company is a joint venture between ICICI Bank,
a premier financial powerhouse, and Prudential plc, a leading international
financial services group headquartered in the United Kingdom. ICICI Prudential
was amongst the
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first private sector insurance companies to begin operations in December 2000
after receiving approval from Insurance Regulatory Development Authority
(IRDA).
ICICI Prudential's capital stands at Rs. 20.60 billion with ICICI Bank and
Prudential plc holding 74% and 26% stake respectively. As of March 31, 2007, the
company garnered Rs. 4,843 crore of weighted retail + group new business
premiums and wrote over 1.96 million retail policies. The company has assets held
to the tune of over Rs. 15,000 crore.
ICICI Prudential is also the only private life insurer in India to receive a National
Insurer Financial Strength rating of AAA (Ind) from Fitch ratings. The AAA (Ind)
rating is the highest rating, and is a clear assurance of ICICI Prudential's ability to
meet its obligations to customers at the time of maturity or claims.
For the past six years, ICICI Prudential has retained its position as the No. 1
private life insurer in the country, with a wide range of flexible products that meet
the needs of the Indian customer at every step in life. To know more about the
company, please visit
Distribution
ICICI Prudential has one of the largest distribution networks amongst private life
insurers in India. As of March 31, 2007 the company has over 580 offices across
the country and over 234,000 advisors.
The company has over 22 bancassurnace partners, having tie-ups with ICICI
Bank, Federal Bank, South Indian Bank, Bank of India, Lord Krishna Bank,
Idukki District Co-operative Bank, Jalgaon Peoples Co-operative Bank, Shamrao
Vithal Co-op Bank, Ernakulam Bank, 9 Bank of India sponsored Regional Rural
Banks (RRBs), Sangli Urban Co-operative Bank, Baramati Co-operative Bank,
Ballia Kshetriya Gramin Bank, The Haryana State Co-operative Bank.
Flexible Rider Options
ICICI Pru Life offers flexible riders, which can be added to the basic policy at a
marginal cost, depending on the specific needs of the customer.
during the term of the policy, the beneficiary receives an additional amount
equal to the rider sum assured under the policy. If an accident results in total
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and permanent disability, 10% of rider sum assured will be paid each year, from
the end of the 1st year after the disability date for the remainder of the base
policy term or 10 years, whichever is lesser. If the death occurs while traveling
in an authorized mass transport vehicle, the beneficiary will be entitled to twice
the sum assured as additional benefit.
2. Critical Illness Benefit: protects the insured against financial loss in the event
of 9 specified critical illnesses. Benefits are payable to the insured for medical
expenses prior to death.
accident, the future premiums continue to be paid by the company till the time
of maturity. This rider is available with LifeTime Super, LifeTime Super
Pension and CashPlus.
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European life insurance company with life operations in China, Hong Kong, India,
Indonesia, Japan, Korea, Malaysia, the Philippines, Singapore, Taiwan, Thailand,
Vietnam. Prudential is the second largest retail fund manager for Asian sourced
assets ex-Japan as at June 2006. Its fund management business has expanded into
a total of ten markets : China, Hong Kong, India, Japan, Korea, Malaysia,
Singapore, Taiwan, Vietnam and United Arab Emirates.
The ICICI Prudential Life Insurance Company Limited Management team comprises
reputed people from the finance industry both from India and abroad.
Ms. Shikha Sharma, Managing Director & CEO
Mr. N. S. Kannan, Executive Director
Mr. Bhargav Dasgupta, Executive Director
Ms. Anita Pai, EVP – Customer Service & Technology
Mr. Azim Mithani, Chief Actuary
Mr. Puneet Nanda, Chief Investments Officer
Mr. Binayak Dutta, Chief – Sales and distribution
Mr. N. S. Kannan
Executive Director
ICICI Prudential
Life Insurance Company Limited
N. S. Kannan joined ICICI Prudential Life Insurance Company Ltd as Executive Director
in August 2005, where he has overall responsibility for sales, marketing, investments,
group business and business intelligence. Prior to joining ICICI Prudential, Kannan was
the Chief Financial Officer and Treasurer of ICICI Bank Limited where he was
responsible for investor relations and for the finance, performance management, accounts,
taxation, risk management, secretarial and credit middle office functions. The treasury
operations of ICICI Bank include Balance Sheet Management and Asset and Liability
Management. ICICI Bank is the second largest bank in India with an asset base of about
US$ 55 billion. The bank is listed on Indian national stock exchanges and the New York
stock exchange. Kannan joined ICICI group in 1991 as a project officer. During his
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tenure at ICICI group, he has handled project finance operations, infrastructure financing,
structured finance and treasury operations. Prior to his current assignment, he has headed
the Telecom & Transportation group and Structured Finance group of the bank.Kannan is
a postgraduate in management from the Indian Institute of Management, Bangalore with a
gold medal for best all-round performance. He is also a Chartered Financial Analyst from
the Institute of Chartered Financial Analysts of India and an Honours graduate in
Mechanical Engineering. His work experience includes 3 years of industrial experience
with a large engineering group in India.
STRENGTHS
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Greater transparency- policyholder knows what is happening to his
money and where the company has invested the money.
Liquidity option: you can make partial or complete withdrawals
anytime after 3 years.
Life insurance plans are eligible for deduction under Sec. 80C.
The proceeds or withdrawals of life insurance policies are exempt
under Sec 10(10D), subject to norms prescribed in that section.
Riders are provided to give the policyholder the additional protection
at marginal cost- Accident and Disability rider, Critical Illness Rider,
Accidental benefit rider.
Loan against the policy: After the policy has acquired a surrender
value
one can avail loan against the policy.
WEAKNESSES
OPPORTUNITIES
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As the industry is growing the whole market is virgin.
The whole private sector is open to be tapped even though the competition is
fierce from government owned insurance companies.
It’s a volume business that is even if the company has few good corporates
the turnover ceases to increase by manifold.
PRODUCTS:
Preserver fund looks good due to comfortable liquidity in the economy
and there is little chance of any hike in short-term rates by RBI.
Finance minister unveiled a budget-favoring consumer spending,
boosting demand and therefore higher economic growth
THREATS
The Govt. players will become aggressive thus growth is going to be tough.
Entry of other new players is not ruled out
Apprehension towards ICICI PRUDENTIAL being a private life insurance
company.
We expect the industry to rationalize in future that is mergers and acquisitions
will happen which will impact the industry and ICICI PRUDENTIAL
fortunes.
PRODUCTS:
Past performance of these plans is not indicative of the future performance
of the plan
The sum invested in the funds is subject to market risks and there can be
no assurance that the objective of the plans will be achieved.
All benefits payable under the policy are subject to the tax laws and other
financial enactment, as they exist from time to time
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Review of Literature
40
MEANING OF ULIP
A policy, which provides for life insurance where the policy value at any time varies
according to the value of the underlying assets at the time. ULIP is life insurance
solution that provides for the benefits of protection and flexibility in investment. The
investment is denoted as units and is represented by the value that it has attained
called as Net Asset Value (NAV).
Contribution
Less charge
Life cover
Investment represented as
units
41
FEATURES OF ULIP
ULIP distinguishes itself through the multiple benefits that it provides to the
consumer. The plan is a one-stop solution providing:
· Life protection
· Investment and Savings
· Flexibility
- Adjustable Life Cover
- Investment Options
· Transparency
· Options to take additional cover against
- Death due to accident
- Disability
- Critical Illness
- Surgeries
· Liquidity
· Tax planning
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generate the same returns prevailing in the market. But here the insurance company
evens out returns to ensure that policyholders do not hold money in a bad year. In that
sense they are safer. ULIPs also offer flexibility. For instance a policyholder can ask
the insurance company to liquidate units in his account to meet to mortality charges if
he is unable to pay any premium installment. This eats into savings but ensures that
the policy will continue to cover his life.
ULIP came into play in the 1960s and became very popular in Western Europe and
Americas. The reason that is attributed to the wide spread popularity of ULIP is
because of the transparency and the flexibility which it offers. Unit- linked plans are a
contemporary product: transparent and flexible. Individuals have greater control over
their investments. The popularity of ULIPS stems from the fact that they offer
customers “integrated financial solutions with a transparent charge structure”. In
today’s times, ULIP provides solutions for insurance planning, financial needs,
financial planning for children’s future and retirement planning. Unit-linked insurance
plans (ULIPs) have become something of a rage with their 'promise' of market-linked
returns combined with the dual benefit of insuring your life from eventualities.
Why do insurers prefer ULIPs?
Insurers love ULIPs for several reasons. Most important of all, insurers can sell these
policies with lesser capital of their own than what would be required if they sold
traditional policies. In traditional ‘with profits’ policies the insurance company bears
the investment risk to the extent of insured amount. In ULIPs the policyholder bears
most of the investment risk. Since ULIPs are designed to mobilize savings, they give
insurance companies an opportunity to get a large chunk of asset management
business which has been traditionally dominated by mutual funds. ULIPs are suitable
for individuals who are already adequately insured and are reasonably well-informed
and savvy to take active investment decisions by using the `switch option' that is
provided to a ULIP policyholder. Also policyholders with regular endowment plans
who are not satisfied with the 4-6% returns can consider taking a ULIP with a lower
equity component. It is best if insurance-seekers tread the middle path and choose
balanced plans (with about 50-60% equity
component). Ideally they need to avoid taking the aggressive 100% equity ULIP,
which could needlessly expose their assets to market volatility. So if insurances-
seekers/investors play their cards right, they can make this marriage work.
43
WORKING OF UNIT LINKED INSURANCE PLANS
UNIT LINKED PLANS
Premium: The minimum premium to be invested is Rs. 10,000 per annum. After
deducting premium allocation charges from the premium, the remaining amount will
be invested in a fund of your choice.
Sum Assured: The minimum Sum Assured that the policyholder can opt for is Term
* Annual Premium/2, subject to a minimum of Rs 1 Lac
Policy term: The term of the policy will be calculated as the difference between your
child's current age and the age of your child when the policy matures.
Regular payouts: As your child approaches key educational milestones such as 12th
standard or graduation exams, he or she will receive regular payouts, guaranteeing he
or she continues to study, no matter what the circumstance.
Death Benefit: Your child will receive the Sum Assured immediately, should
something happen to you. ICICI Prudential will pay the remaining premiums,
ensuring your child continues to receive policy benefits, as always.
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Income Benefit Rider: You can choose to add the benefits of this rider to your child's
education plan. Should you depart before your son's or daughter's education is
complete, you child will receive 10% of Rider Sum Assured, for the balance term of
the policy.
Add-on riders: 'Accidental Death and Disability Rider' and 'Waiver of Premium
Rider' ensure your child stays doubly protected, at all times. You can choose to add
these to your child's education policy.
Tax benefits: Premiums you pay for a SmartKid policy are eligible for tax savings
[u/s 80(C)]. Maturity and death benefits are eligible for tax exemptions [u/s 10(10D)].
3. SmartKid Regular Premium
Flexible investment option: Choose the amount of premium with which you wish to
safeguard your child's education.
Flexible policy tenure: The tenure of the plan will be calculated as the difference
between your child's current age and his or her age at which the policy matures.
Flexible premium options: The premium will be calculated based on 3 factors: Sum
Assured, policy tenure and your age.
Guaranteed bonus: A guaranteed bonus of 3.5% per annum is declared for the first 4
premium paying years plus an annual vested bonus declared in subsequent years.
LifeLink Super
that works best for investors who have in mind long-term financial goals, such as the
education of a child or the purchase of a larger home.
Apart from the potentially higher returns that you can earn, LifeLink Super insures
your family against misfortunes with its protective insurance cover.
Read more about the features and benefits of this plan, right away.
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LifeLink Super at a glance
2 options of Sum Assured: Choose to receive either 125% or 500% of the single
premium amount.
Flexible policy term: Decide how long you wish to invest in this policy. You can
invest for a minimum of 5 years and keep your investment growing for as long as you
wish after that.
Partial withdrawal of money: Withdraw funds in installments from the 4th year
onwards.
Attractive premium allocation rates: Enjoy 100% allocation for premium amounts
equal to or greater than Rs. 5 lacs.
Maturity benefit: Receive the Fund Value when your policy matures. Choose to take
46
this value as a single lump-sum amount or in monthly, bi-annual or annual
installments spread over 1 to 5 years.
Death benefit: Your family receives the higher of Fund Value or Sum Assured
should something happen to you.
As an individual who desires a lot from life-a car, a beautiful home and of course, the
comfort and contentment of your family-you would undoubtedly want to plan your
finances such that you can take care of all your requirements.
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Features and benefits of LifeTime Super
Flexible policy term: Decide for how long you want your policy. You can invest for
a minimum of 10 years and a maximum of 75 years.
Maturity benefit: Receive the Fund Value when your policy matures. Choose to take
this value as a single lump-sum amount or in monthly, bi-annual or annual
installments.
Death benefit: Your family receives the higher of Fund Value or Sum Assured
should something happen to you.
Switch benefit: Switch between funds anytime to adjust your portfolio, based on your
goals and risk profiles. You can switch funds 4 times a year, at no cost. For
subsequent switches, you will be required to pay a switch fee of Rs. 100.
It is important for us to know that what is the role that an advisor will play. At ICICI
Prudential, you are an advisor is to
1. Provide ongoing financial advice for his/her clients: You are an advisor and just
like a lawyer or a doctor you advice the client about insurance and finance.
2. Identify future clients: Life insurance is a business of contacts an the advisor
constantly need to know people so that his business expands.
3. Constantly make appointments: Just making contacts will not be enough to
develop a good life insurance business.
4. Advisor needs to meet these contacts and thus should make appointments on
constantly.
5. Conduct financial review meetings with prospects/ clients: As an advisor it is
necessary to meet with client not only for the purpose of selling but also to
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review the need of the client and prospects. Many people would not be in for life
insurance today but as time moves they can be requiring one. Similarly an
existing client may also be in need of more insurance as responsibilities and
liabilities increase.
Close sale:
Ultimately success is defined as sales. The advisor should lead each
appointment towards a sale and close it effectively where in the client is happy
on purchasing the insurance solution and feels satisfied with it.
CHAPTER-5
49
COMPARATIVE STUDY WITH THE
COMPETITORS
LIST:
50
LIFETIME SUPER VS LIC BIMAPLUS
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Investment options Maximiser, Balancer, Protector &
Preserver. Balanced, Secured & Risk
Increase / Decrease Available. Not available
of death benefit
52
IFETIME SUPER VS HDFC LINKED
53
Bonus units Available Not available
Top-up Available. Minimum top-up of Rs. Available
5000. Charges - 1% of top-up.
Switch 4 free switches a year, with the Switches are free as of now. But
minimum switch amount being Rs. the company reserves the right
2000. to put a charge on the switches.
Surrender value The policy will acquire a surrender The surrender charge is 25% of
value after 3 complete premium- 3 years outstanding regular
paying years. premium. No charges after 3
years
Initial Charge % Allocation of the premium Charges
18000- 49,999: 1st year - 80%; 2nd 1st yr-27%, 2nd yr- 27%, 3rd yr
year - 92.5%; 3rd year onwards - onwards- 1%
96%.
50000 and above: 1st year - 82%;
2nd year - 92.5%; 3rd year onwards -
96%.
Admin Charge None Admin charges of Rs.180 fixed
charge per annum.
Other Charges Not applicable Not applicable
Fund Management The annual administrative and fund Investment charge of 0.80% of
Charges management charge is 2.25% for the Fund Value across all the
Maximiser, 2.25% for Balancer, funds.
1.50% for Protector & 0.75% for
Preserver.
Rider ADBR, CIBR & MSAR ABR & CIBR
54
SUPER PREMIER LIFE VS BAJAJ ALLIANZ UNITGAIN PLUS
56
STUDY TAX PLANNING SOLUTIONS
AVAILABLE IN THE MARKET
Life insurance and retirement plans are effective ways of saving taxes. The tax breaks
that are available under various insurance and pension policies are described below:
Life insurance plans are eligible for deduction under Sec. 80C
Pension plans are eligible for a deduction under Sec. 80CCC
Health riders are eligible for deduction under Sec. 80D
The proceeds or withdrawals of life insurance policies are exempt
under Sec 10(10D), subject to norms prescribed in that section.
Rate of tax
Total Income (Rs.)
Senior citizen Women below 65 Others
years
Upto Rs 1,00,000/- Nil Nil Nil
Above Rs 100,000/- to 145,000/- Nil Nil 10%
Above Rs 145,000/- to 150,000/- Nil 10% 10%
Above Rs 150,000/- to 195,000/- Nil 20% 20%
57
Above Rs 195,000/- to 250,000/- 20% 20% 20%
Above Rs 250,000/- 30% 30% 30%
Surcharge on Income Tax: In case where the Total Income exceeds Rs 10,00,000,
there would be a surcharge @ 10%.
Education Cess on Income Tax: Education Cess @2% will be payable on the
amount of income tax (including surcharge).
Benefits under insurance policy - Section 10(10D)
As per Section 10(10D) of Income tax Act, 1961, any sum received under a life
insurance policy, including the sum allocated by way of bonus on such policy is
exempt from tax. However, this rule does not apply to following amounts:
Sum received under Section 80DD (3), or
Any sum received under a Keyman Insurance Policy, or
Any sum received other than as death benefit under an insurance policy which has
been issued on or after April 1 2003 and if the premium paid in any of the years
during the term of the policy is more than 20% of the sum assured.
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CHAPTER-6
59
DATA ANALYSIS & FINDINGS
Yes 61%
No 22%
INTERPRETATION
The good thing is that atleast the corporates were quite eager to find out what ICICI
PRUDENTIAL has to offer whereas the major 39 % of the corporates were not even
interested in the products as they are quite satisfied by the LIC and they are not in
breaking their long relationship with them. The private players will have to play a
long battle in order to ensure that they are serious player in the market. Basically
corporates think that its too early to invest in private companies as they have just
entered the scene and they are unsure of the security they will have about their
investment.
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2). Are you satisfied with your present insurer?
YES 65%
No 35%
INTERPRETATION
Here is where the challenge is. Inevitably most of the players are very satisfied with
their present insurer which makes it more tough for the private players to attract the
corporates. The remaining 35 % are also not very dissatisfied by the services but they
are just open to new avenues and are looking forward that private companies come
with good offers so that they may shift to them. Thus private players will have to be
very proactive and in this regard since LIC is the leader and ICICI PRUDENTIAL is
lagging behind its competitors in terms of competition.
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LIC - 60
ICICI - 10
BAJAJ ALLIANZ - 5
TATA AIG - 15
SBI - 8
KOTAK MAHINDRA - 2
NO
OF
PEOPLE
COMPANIES
INTERPRETATION
Thus we see that the companies are comfortable in having business with govt. owned
companies as they feel its safe & secure to have business with them which is followed
by SBI as it is the biggest bank and then followed by TATA AIG as the name TATA
is associated with it which commands huge premium in the market . Whereas in the
case of ICICI PRUDENTIAL the figures represent mediocre performance after
compelling and coxing the corporates and creating a strong impression whether they
feel interested in doing business with the company.
4). What is people’s main concern while taking a insurance policy (ULIP)?
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A) Security 40%
B) Returns 28%
C) Tax rebate 32%
50%
40%
%AGE
30%
Series1
20%
10%
0%
SECURITY RETURNS TAX
REBATE
FACTOR
INTERPRETATION
63
Yes 58%
No 42%
%AGE OF PEOPLE
80%
60%
40% Series1
20%
0%
YES NO
RESPONSE
INTERPRETATION
The awareness level among the corporate about ICICI PRUDENTIAL offering
services is very low and the company needs to work on it. Today is the world of
marketing thus it is recommended that company should become more media friendly
by advertising more through television channels, radio, newspapers, magazines,
journals &editorials.
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CHAPTER-7
65
LIMITATIONS
The geographical area was very much limited to residential area & so the
results are not particularly reflection of the current behavior.
Due to limited time period and constrained working hours for most of the
respondents, the answers at times were vague enough to be ignored.
Most of the people in India take their policies in the period preceeding
March(for tax saving purposes) & so the response to initial contacts were not
all encouraging and that has been the primary reason in the inability to
quantify the results large enough so as to reduce any relevant outcomes.
Most of the results that are spelt out have been of qualitative aspects.
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67
RECOMMENDATIONS
The company should quite frequently send their agent to the customer so that
they should be aware of the latest offer.
The company should attempt to open more and more of its branches in the
country so as to promote their product publicity.
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69
CONCLUSION
LIC enjoys credibility over other private players in the industry People look
for security over returns in market linked plans .Lifetime is the most popular
product among the people who are aware about ICICI Prudential’s products.
People are now showing more interest in ULIP as compared to some of the
traditional plans.
ICICI PRUDENTIAL has to counter the distribution network of LIC .The
product profile of ICICI PRUDENTIAL is not very comprehensive
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71
BIBLOGRAPHY
www.iciciresearchcenter.org
www.tata-aig.com
www.iciciprulife.com
www.personalfn.com
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73
ANNEXURE
If Yes: -
Name of the Company ________________
Name of the plan _________________
Annual Amount of premium _________________
Term of plan _________________
2. Which are the main issues that you take into consideration while purchasing
any life insurance policy?
A) Security
B) Returns
C) Tax saving
D) Others please specify_________
3. Are you aware of Unit Linked Insurance Plans offered by various companies in
India?
A) ICICI B) OM KOTAK MAHINDRA
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4. Do you know how a Unit Linked Insurance Plan works?
A) YES B) NO
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