a project report on comparitive study of unit linked policies and its market research

COMPARITIVE STUDY OF UNIT LINKED POLICIESANDITS MARKET RESEARCH

CONTENTS

PART I1. Industry overview 1

2. Company profile 15

3. Comparison study 21

PART II

1. Research methodology 27

Problem definition

Objectives

Sample profile

Sample size

Sampling technique

Data collection procedure

Data analysis technique

Limitations of the survey

Scope of the project

2. Findings 32

3. Analysis 39

Respondents in general

Respondents whose income is more than Rs 3,00,000

Respondents who knows about Unit Linked Policy

4. Suggestions 57

5. Conclusions 60

6. Bibliography 62

7. Appendix 64

BABASAB PATIL PROJECT REPORT ON MARKETING


EXECUTIVE SUMMARY

After privatization and liberalization in 1991,private sector is growing very fast

across wide spectrum of Indian economy. A major part of such liberalization process is

finance sector.

That is also applicable to Insurance Industry. Large number of multinational

companies in collaboration with the Indian companies is competing with the strong LIC.

At the same time bank rates are going down. So investors are going for

alternatives. They are investing in market for good returns.

This report titled Comparison study of unit linked policies and its market research

contains detail study of unit-linked policies and comparison unit linked schemes of

different companies and also their market potential in Bangalore city.

The main object behind taking this project is to find outstanding terms and

conditions of different companies who issue unit linked policies and market potential for

unit linked policies.

At the same time we are interested to know

1. Whether people are aware about unit linked policies or not?

2. What factor they are consider while purchasing unit linked policy?

3. What is their expectation from unit linked policy?

4. How much they want to invest in Life Insurance?

5. In which type of fund they prefer to invest.?

Based on this an appropriate questionnaire was prepared. Data was collected

through market survey . The data is analyzed using code sheet, percentages, averages,

sums and weightages .



Findings

1. 96% of the people know about life insurance and 18% know about unit linked

policy

2. Responded people ranked LIC as first, ICICI as second and Allianz Bajaj as third

3. Most people want to invest in Life insurance in the range of Rs 300000 to

Rs 500000

4. The Responded people mostly want to invest in balanced fund.

Above study shows that awareness of Allianz Bajaj is very low.

But there is a potential market for unit-linked policies. So ALBJ should come up with

some salient features to tap the market. They should come up with some special offers

like giving bonus or fixing some minimum guarantee amount.



BACKGROUND



AN INTRODUCTION:

The insurance industry in India is evolving and assuming different

proportions since it was privatized. There was a time when only traditional insurance

products used to dominate the arena, but with innovation coming into play,

unit-linked/market-linked products have also found a place.

It is worth mentioning here that world over unit-linked products

constitute quite a substantial chunk of the total portfolio of insurance companies.

The emergence of unit-linked insurance policies combines the

characteristics of both endowment insurance policies and mutual funds. With falling

interest rates questioning the economics of traditional products, most insurers are

launching unit-linked policies.

In the developed market, products more in common with mutual

funds have overtaken traditional life insurance products. Customers too are looking for

products that give stability of returns in the long run and total protection.

In India, Birla Sun Life, ICICI Prudential, Allianz Bajaj, LIC are

the some life insurance companies dealing in unit-linked insurance products.



HOW THE UNIT LINKED PLAN WORKS?

Unit linked plans combines the protection of life insurance and

benefits of mutual fund .The main reason for increasing interest towards unit linked plans

is that they allow you to earn more return on your investment in this declining interest

scenario, and at the same time offer financial protection to your family in unfortunate

event of your death. They also allow you the flexibility of withdrawing or surrendering

your unit wholly or partially to meet any contingency like your children’s education

marriage, etc.

Unit linked plans come in the form of units where the premium

paid by you is used to buy units and an investment fund is allotted to you. Most of the

companies offer two or more options to you with regard to the fund. The choice of the

fund allows you to determine as to how much premium paid by you should be invested

and in which financial instrument. The performance of the fund depends upon the current

value of units in the market.

For e.g. if current value of unit is Rs 10/- and you pay annual

premium of Rs 10000/-, than the number of units you buy with this premium is 1000

units. If the market is bullish and the value of a unit become Rs 13 /- then you can

surrender the units for a profit.



According to the IRDA, a company offering unit linked plans must

give the investor an option to choose among debt, balanced and equity funds.

If you opt for a unit-linked endowment policy, you can choose to

invest your premiums in debt, balanced or equity funds. If you choose a debt fund, the

majority of your premiums will get invested in debt securities like gilts and bonds.

If you choose equity, then a major portion of your premiums will

be invested in the equity market. The type of fund you choose would depend on your risk

profile and your investment need.

In case of death during the premium paying term or the term of the

policy, the sum assured, or value of policy fund, whichever is higher, is paid to the

beneficiaries.

In case of survival up to maturity, the value of the fund is paid out.

Therefore, the risk here is transferred to the policyholder and nothing is guaranteed. So, if

the fund value falls below the amount invested, the policyholder will receive a lower

amount.

Taking a closer look at charges and feesone comes to knows that,

there is an initial administrative charge deducted every month from units. This could be

very high, around 15% per annum in the first year, around 7% p a in the second and

around 2-3% p a thereafter.

Suppose you buy a policy wherein the annual premium works out

to Rs 10,000, in the first year, Rs 1,500 would be deducted towards administrative

charges, Rs 700 in the second year and around Rs 300 from the third year. These rates

vary from company to company but are more or less in this range.



There is an investment management charge too, which would vary

according to the fund selected; for instance, an equity fund would attract a higher

investment management fee of around 1% p a compared with a debt fund that might

attract a fee of 0.25%.

So continuing with the same example, a sum of Rs 100 would be

deducted from the annual premium if an equity fund is opted for. Next, companies charge

an annual administration charge. In case of some companies this charge is a flat rate, say,

Rs 20 per month. In the case of others, this charge is again a percentage of net assets for

each fund.

Finally, there is a deduction for risk cover. This goes towards

contribution to the sum assured or the life insurance cover. It is based on mortality rates

as calculated by actuaries. For comprehensively summarising our example, we will

assume the age of the male policyholder to be 30 years and sum assured Rs 1,00,000.

Of a total premium of Rs 10,000 paid in the first year, Rs 1,500 is

deducted towards initial administration fees, Rs 100 towards investment management

fees (assuming the fund opted for is equity) and Rs 240 towards annual administration

fees.

That leaves a balance of Rs 8,160 in the first year. Out of this, Rs

169 would be deducted towards risk cover. Hence, finally Rs 7,991 would be invested in

the fund. In the second year, the figure would stand at Rs 8,791 and third year onwards,

around Rs 9,191 for the term of the policy. So, every time you make your premium

payment, only a part of it is actually invested in the fund of your choice.



Combination of mutual fund and insurance cover:

Unit-linked plans are a combination of an investment fund and an

insurance policy. A major part of the premium amount received on such policies is

invested in the stock market by the insurer in select funds depending on the risk level

chosen by the customer. Mind you, this is after deducting administration charges and

management expenses that may vary from one fund to the other.

Choice of Funds:

The customer has the option of choosing from debt, balance and equity funds. If the

individual chooses a debt fund, a major part of his premia is invested in debt securities

like gilts and bonds. But if it is equity, a major portion goes towards investments in the

stock market. So depending on the risk profile the individual may choose his investment

option.

Survival Benefits:

As regards survival benefits the fund value as on that date is paid to the individual.

Death Benefits:

In case of death the individual is paid higher of the sum assured or the fund value

standing to his account.

Fund Value:

The fund value is the value of your investment as on a given date. This is influenced by

the ups and downs in the sensex.

So Fund Value = Unit Price x Number of Units



Switching between Funds:

The advantage one gets in case of a unit linked fund is that the working is similar to a

mutual fund. One can ship out of a fund if he feels its performance is not up to the mark.

Companies allow certain number of free switches in a year. For any more switches one

may have to pay.

Risk Element:

On the face of it investment in unit-linked plans are not entirely safe. An

element of risk is definitely in the hands of the individual. An individual choosing to park

his funds in equities stands to gain or lose depending on the bull run in the stock market.

When the market is buoyant he stands to gain handsomely but on the other hand he may

lose heavily when it tanks out.

Unit-linked insurance plans are all of a sudden much talked about,

publicized and sold. While these are not a recent phenomenon, since a number of

insurance companies already had these products as a part of their portfolio, of late these

plans have seen sudden frenzy.

It is perhaps the bull phase or the lure of market-linked returns that

insurance companies have been shouting hoarse about that is responsible for these

products outselling others.

While this is not to dissuade from purchasing unit linked covers it would

be once own interest to take a peek at the ‘market linked returns’ you can expect. And if

you think that the entire premium you pay is invested in avenues chosen by you to

maximize returns you could be wrong.

Expenses during the first year:



The insurance company towards various charges reducing the investable

amount considerably deducts a substantial amount from your premium income. In the

first year Allianz Bajaj through its Unit Gain SP Plus claims to allocate 100 percent of the

single premium you invest but cancels units on a monthly basis towards various charges

from your fund.

Accordingly Kotak Safe Investment Plan allocates 86 percent and

LifeTime of ICICI Pru Life allocates 80 percent for amounts less than Rs 50,000 and 82

percent for those above Rs 50,000 towards investments.

Administration expenses:

The fund expense is the highest in the first year. ICICI Pru Life charges

administration expenses of 20 percent of the premium for amounts below Rs 50,000 and

18 percent for amounts over Rs 50,000 in the first year while it is 7 percent for amounts

upto Rs 20,000 in case of Kotak Safe Investment plan.

Again there are annual administrative charges that are as high as 1.25

percent per annum of net assets on Life Link of ICICI Pru Life and on Unit Gain SP Plus

of Allianz Bajaj Life Insurance.

Mortality charges:

While the annual administrative charges stand at 1.25 percent of net assets for ICICI Pru

Life and Allianz Bajaj Life Insurance the differences in mortality charges is quite a bit.

ICICI Pru Life charges 1.48 per thousand of sum assured at age 30 while Allianz Bajaj

charges 1.29 at age 31.

Switching:

Now what if you plan to switch from one fund to the other. ICICI Pru Life



offers only one free switch every year and charges a switching fee of 1 percent for extra

switches. In contrast Allianz Bajaj offers three switches free with subsequent switches

charged at the rate of 1% of switch amount or Rs 100 which ever is higher while with

OM Kotak’s Safe Investment plan you can switch any number of times at no extra cost.

Besides there are fund management charges that varies depending on the

type of fund you choose to park your funds. OM Kotak charges 0.6 percent if you choose

to invest in money market funds, on gilt funds it is 1 percent, on balanced funds it is 1.3

percent and on growth funds it is 1.5 percent.

Transaction costs:

Also Allianz Bajaj charges transaction costs at 0.5 percent but not

exceeding 0.7 percent of the equity investment while it is 0.1 percent not exceeding 0.2

percent of the debt investments. Moreover, there exist underwriting charges on the basis

of the age of the individual.

Know that when you buy unit-linked insurance products, a major part of

the risk is transferred to you from the insurance company. Unit linked risk products may

not be a good investment option when taken into account the high costs and the risk

associated with volatile markets.

These products will entail regular monitoring since they are market linked

and may perhaps be a good bet when the market is at a peak but if the market bottoms out

you may lose heavily. So know that you are playing with your risk cover.

Unit-linked vs. traditional insurance products.



While in a unit-linked insurance product part of the premium paid

by the policyholder goes towards administrative and mortality charges (that provides life

cover) and the balance into an investment account, in a traditional policy (with or without

profit policy), the premiums are put in a common fund, part of which is invested and part

goes into paying for the risk cover.

However, the entire profit from investment is not declared as

bonus in a traditional policy. Some is held back by the insurance company to build

reserves to pay end bonus and other returns.

Also, there is a chance of using the money to cross-subsidise other

products i.e. paying more returns towards single premium products. The performance of

the investible portion of premium in a unit-linked scheme is monitored in the form of

mutual fund units.

Unit-linked insurance products allow policyholders to define their

underlying investment with choices varying from a conservative to an aggressive option.

In effect, a customer can create his/her own personal investment

plan backed by an insurance policy with at least a minimum guaranteed return, in some

cases. On the contrary, a traditional policyholder has to rely on the investment manager.

Besides, unit-linked products offer benefits like transparency,

liquidity and flexibility. The insured has the flexibility of changing the investment option

after completing one policy year taking advantage of market movements to plan

investments and earn returns, giving him complete control of his funds.



Thus, in a scenario when the equity market is not performing well,

a policyholder with high exposure to equities can switch to the option, which has a high

proportion of fixed income instruments.

Above all, as in the case of other insurance products, the premiums

are taxing deductible and the benefits i.e. the maturity benefit, withdrawal, surrender and

death benefits are all tax-free.

Mode of premium payment:

Paying single premium or regular premium in the form of yearly

/half yearly, quarterly and monthly installment and premium paid by you is used to buy

units.

Hence unit linked policies multiply your profits and brings you the

return and liquidity of the stock market and the safety of the insurance at the same time.

Allianz Bajaj Life Insurance Company Limited



Allianz Bajaj Life Insurance Co. Ltd. is a joint venture between

two leading conglomerates- Allianz AG, one of the world's largest insurance companies,

and Bajaj Auto, one of the biggest 2 and 3 wheeler manufacturers in the world.

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

offering you financial solutions that provide all the security needed for once family and

oneself

Allianz Bajaj Life Insurance

Is the fastest growing private life

Insurance company in India

Currently has over Rs 3,00,000 p.a. satisfied customers

Is backed by a network of 68 Customer Care Centers spanning 55 locations

across the country

One of India's leading private life insurance companies

COMPANY PROFILE

Allianz Group



Allianz Group is one of the world's leading insurers and financial services providers.

Founded in 1890 in Berlin, Allianz is now present in over 70 countries with almost

174,000 employees. At the top of the international group is the holding company, Allianz

AG, with its head office in Munich.

Allianz Group provides its more than 60 million customers worldwide with a

comprehensive range of services in the areas of

Property and Casualty Insurance,

Life and Health Insurance,

Asset Management and Banking.

ALLIANZ AG- A GLOBAL FINANCIAL POWERHOUSE

Worldwide 2nd by Gross Written Premiums - Rs.4, 46,654 cr.

3rd largest Assets Under Management (AUM) & largest amongst Insurance cos. -

AUM of Rs.51, 96,959 cr.

12th largest corporation in the world

49.8 % of global business from Life Insurance

Established in 1890, 110 yrs of Insurance expertise

70 countries, 173,750 employees worldwide

Bajaj Group



Bajaj Auto Ltd, the flagship company of the Rs. 8000 crore Bajaj group is the

largest manufacturer of two-wheelers and three-wheelers in India and one of the largest in the world.

A household name in India, Bajaj Auto has a strong brand image & brand

loyalty synonymous with quality & customer focus.

A STRONG INDIAN BRAND- HAMARA BAJAJ

One of the largest 2 & 3 wheeler manufacturer in the world

21 million+ vehicles on the roads across the globe

Managing funds of over Rs 4000 cr.

Bajaj Auto finance one of the largest auto finance cos. in India

Rs. 4,744 Cr. Turnover & Profits of 538 Cr. in 2002-03

It has joined hands with Allianz to provide the Indian consumers with a distinct.

Option in terms of life insurance products

As a promoter of Allianz Bajaj Life Insurance Co. Ltd., Bajaj Auto has the

following to offer - Financial strength and stability to support the Insurance

Business

A strong brand-equity.

A good market reputation as a world-class organization.

An extensive distribution network.

Adequate experience of running a large organization.



Shared Vision

A household name in India teams up with a global conglomerate...

Bajaj Auto Ltd, the flagship company of the Rs. 8000 crore Bajaj

group is the largest manufacturer of two-wheelers and three-wheelers in India and one of

the largest in the world.

A household name in India, Bajaj Auto has a strong brand image

& brand loyalty synonymous with quality & customer focus. With over 15,000

employees, the company is a Rs. 4000 crore auto giant, is the largest 2/3-wheeler

manufacturer in India and the 4th largest in the world. AAA rated by Crisil, Bajaj Auto

has been in operation for over 55 years. It has joined hands with Allianz to provide the

Indian consumers with a distinct option in terms of life insurance products.

As a promoter of Allianz Bajaj Life Insurance Co. Ltd., Bajaj

Auto has the following to offer

Financial strength and stability to support the Insurance Business.

A strong brand-equity.

A good market reputation as a world class organization.

An extensive distribution network.

Adequate experience of running a large organization.

A 10 million strong base of retail customers using Bajaj products.

Advanced Information Technology in extensive use.

Experience in the financial services industry through Bajaj Auto Finance Ltd



BOARD OF DIRECTORS OF ALLIANZ BAJAJ ARE

1. Rahul Bajaj

2. Niraj Bajaj

3. Sanjivnayan Bajaj

4. Ranjit Gupta

5. Govind Prasad Laddha

6. J.Shridhar

7. Bajaj Auto Limited

8. Dr Wemer Zedelius

9. Heinz Dollberg

10. Don Nguyen

11. Alan Wilson



Allianz Bajaj brings several innovative products, the details of which as followes

ALLIANZ BAJAJ’S PRODUCTS

Individual Plans

UNITGAIN

A Unit Linked Plan

UNITGAIN SP

A Single Premium Unit Linked Plan

INVESTGAIN

An Endowment Plan

CHILDGAIN

Children's Policy

CASHGAIN

Money Back Plan

SWARNA VISHRANTI

Retirement Plan

RISK CARE

Pure Term Plan

TERM CARE

Term Plan with Return-of-Premium

LIFETIME CARE

Whole Life Plan

SAVE CARE ECONOMY SP

Single Premium Endowment Plan

LOAN PROTECTOR

A Mortgage Reducing Term Insurance Plan

KEYMAN INSURANCE

A Promising Business Opportunity

.


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Group Plans

GROUP CREDIT CARE

Available for Employer - Employee Groups

and Non Employer-Employee Groups

GROUP TERM LIFE

Available for Employer - Employee Groups

and Non Employer-Employee Groups

GROUP TERM LIFE SCHEME

in lieu of EDLI (Employees Deposit Linked Insurance)

COMPARISON STATEMENT

Particulars Allianz Bajaj Birla sun life ICICI LIC

1) Types of

policy

Issued

a) Unit Gain

b) Unit Gain SP

a) Flexi Save Plus

Endowment Plan

b) Flexi cash flow

money back Plan

c) Flexi Life Line

a) Lifetime

b) Life link

a) Life Time

b) Life Time SP


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Plan

2)

Eligibility

From 1year to 60

years

From 30 days to

65 years

From 0year to

60 years

From 12 years to

55 years

3)Minimum

premium

amount

( in Rs)

Rs 10,000 regular

Rs 25,000 single

premium

50,000 for minor

75,000 for adults

18,000 p.a. or

9,000 for half

yearly and 1,500

for monthly.

5,000regular

20,000 single

4) Term of

the Plan

Death or low balance

whichever is first

As per policy term

5,10,15,20,25or30

or as per maturity

age 15,20,25,30or

35years for minor

& 60,65,70,80 for

adult

At the age of

100

10 years

5) Premium

payment

frequency

Yearly, Half yearly,

Quarterly and Single

premium

[Monthly –with salary

deduction scheme.]

Yearly, Half

yearly,

Quarterly and

Single premium

[Monthly –with

salary deduction

scheme.]

Yearly, Half

yearly, and

Monthly

Yearly, Half

yearly,

Quarterly and

Single premium

6) Maturity

benefit

Total value of that

you hold in fund

/funds

Total value of that

you hold in fund

/funds

Total value of

that you hold in

fund /funds

Bid value of the

fund along with

maturity bonus at

5% of sum

assured.

7) Death Sum assured chosen Face amount + Sum assured -Death in 1st



benefit or value of units

Whichever is higher

Policy fund chosen or value

of units

Whichever is

higher

6months –30% of

S.A+fund value

-Death in 2nd half

of 1st year –60%

of S.A + fund

value

-1st year & above

S.A + fund

Value

-On 10th year

5% bonus of SA

+ bid value of

fund```

8) Free

switches

Three free switches

every year.

One free switch

every year.

One free switch

every year.

Twice during the

term of plan.

9)Minimum

and

maximum

Sum

Assured

For Single Premium

Min=1.01 time the SP

Max=Y time the SP

Where Y as per following table

A

g

e

0-

30

31-

35

36-

40

41-

45

46-

60

Y 45 40 25 15 5

For Regular Premium

Min=5 time AP

Max=Y time the AP

Where Y as per following table

A 0- 31 36- 41- 46- 56

Amount

chosen by

the customer

For Single

Premium

Min =Rs

20,000

Max =Rs

10,00,000

For Regular

Premium

Min =Rs

50,000

Max =Rs



g

e

3

0

-

35

40 45 55 60

Y 1

2

5

10

5

75 55 30 20

10,00,000

10) Cash

withdrawal

option

You may withdraw money any

time after ‘3’ full years

You may

withdraw

money any

time after

‘4’full years

You may

withdraw

money any time

after ‘3’ full

years

After ‘3’

years the

policy

holder can

withdraw

max of

50%.

11)Investm

ent option

Equity Fund

Balanced fund

Debt fund

Cash fund

Protector

Builder

Enhancer

Maximiser

Protector

Balancer

Secured

fund

Balance

d fund

Risk

fund

The fund value is always depend upon the market

condition. On the total premium the deductions are

Allocation charges

Other charges

ALLOCATION RATES

Allianz Bajaj Birla Sunlife ICICI Om Kotak



Yearly

Alloca

tion

(%)

Cumulati

ve

Allocatio

n (%)

Comm

ission

(%)

Yearly

Alloca

tion

(%)

Cumul

ative

Alloca

tion

(%)

Comm

ission

(%)

Yearly

Alloca

tion

(%)

Cumul

ative

Alloca

tion

(%)

Co

mm

issi

on

(%)

Yearly

Alloca

tion

(%)

Cumulati

ve

Allocatio

n(%)

Commiss

ion

(%)

Year 1 30 30 40 35 35 35 80 80 8 86 86 10

Year 2 98 128 5 96.5 127.5 5 92.5 172.5 5 86.5 182.5 3.50

Year 3 99 227 5 95 222.5 5 96 268.5 3 86.5 279 3.50

Year 4 100 327 5 95 317.5 5 96 364.5 2 86.5 375.5 3.50

Year 5 100 427 5 95 412.5 5 96 460.5 2 86.5 472 3.50

Year 6 100 527 5 95 507.5 5 96 556.5 2 86.5 568.5 3.50

Year 7 100 627 5 95 602.5 5 96 652.5 2 86.5 665 3.50

Year 8 100 727 5 95 697.5 5 96 748.5 2 86.5 761.5 3.50

Year 9 100 827 5 95 792.5 5 96 844.5 2 86.5 858 3.50

Year 10 100 927 5 95 887.5 5 96 940.5 2 86.5 954.5 3.50

Year 11 100 1027 5 95 982.5 5 96 1036.5 2 86.5 1051 3.50

Year 12 100 1127 5 95 1077.5 5 96 1132.5 2 86.5 1147.5 3.50

Year 13 100 1227 5 95 1172.5 5 96 1228.5 2 86.5 1244 3.50

Year 14 100 1327 5 95 1267.5 5 96 1324.5 2 86.5 1340.5 3.50

Year 15 100 1427 5 95 1362.5 5 96 1420.5 2 86.5 1437 3.50

Year 16 100 1527 5 95 1457.5 5 96 1516.5 2 86.5 1533.5 3.50

Year 17 100 1627 5 95 1552.5 5 96 1612.5 2 86.5 1630 3.50

Year 18 100 1727 5 95 1647.5 5 96 1708.5 2 86.5 1726.5 3.50

Year 19 100 1827 5 95 1742.5 5 96 1804.5 2 86.5 1823 3.50

Year 20 100 1927 5 95 1837.5 5 96 1900.5 2 86.5 1919.5 3.50

Average

allocati

on per

year

1927/20

=

96.35%

1837.5

/20

=92%

1900.5

/20

=95%

1919.5/2

0

=96%

Non allocated amount

Particulars Allanz Bajaj Birla Sunlife ICICI Om Kotak

Year 1 70% 65% 20% 16%

Year 2 2% 7.5% 7.5% 3.5%

Year3 1% 5% 4% 3.5%

Year4 5% 4% 3.5%

Year5 5% 4% 3.5%



Year6 5% 4% 3.5%

Year7 5% 4% 3.5%

Year8 5% 4% 3.5%

Year9 5% 4% 3.5%

Year10 5% 4% 3.5%

Non allocation

charge(cumulative) 73% 112.5% 59.5 47.5

In the long run say 20 years, the non allocation will be

Particulars Allanz

Bajaj

Birla Sunlife ICICI Om Kotak

Non allocation

Charges(cumulative)

73% 162.5% 99.5% 82.5%

Average non

allocation per year

will be

3.65% 8.125% 5% 4.125%

The main determinant of how policy operates is allocation of fund

and growth rate of the company. The growth rates are available in the newspaper.

However, some insurers do guarantee a part of the return. Birla, for

instance, guarantees a minimum return of 6% in case of Protector option, 4.5% in Builder



and 3% in Enhancer. Birla, as of November 2003 has declared, since inception, a return

of 13.55 % on Protector, 18.23% on Builder and 25.61% on Enhancer.



RESEARCH

METHODOLOGY

RESEARCH METHODOLOGY

PROBLEM DEFINITION



` In the market, bank interest rates are coming down and peoples

prefer other investment avenues like mutual funds. The main focus of this project is to

know about unit-linked policy ( combination of mutual fund and life coverage), how this

plan works in the market and how people consider its attributes and factors.

OBJECTIVE

The main objective of the research is to find potential market for

the unit linked plans in Bangalore city.

SUB OBJECTIVES

1. To know potential market for life insurance.

2. To know awareness of different insurance companies.

3. To know which attributes people consider most important.

4. To know what factor people consider while purchasing unit linked policy.

5. To know the investment criteria

6. To know in which range people want to invest.

Keeping above objective in mind a questionnaire was designed and

field survey conducted in Bangalore city.

SAMPLE PROFILE



Businessmen, Employees and other are population for this project.

Efforts were made to get the respondents with income of Rs 3,00,000 & more. Sampling

units are taken from the Bangalore city.

SAMPLE SIZE

Sample size was 100 in Bangalore city

SAMPLING TECHNIQUE

Samples were chosen from different areas of Bangalore i.e. Jayanagar, M G

Road, Corporation area, Electronics city and tried to maintain 1:1:1 ratio of businessman,

employees and other among the respondents

DATA COLLECTION PROCEDURE

Data collection for unit linked policy

Secondary data collected from following source

1. Literature from Allianz Bajaj office

2. Articles from Economictimes

3. Article from Insurance Cover

Primary data was collected through field survey by framing the

questionnaire

DATA ANALYSIS TECHNIQUE



The data collected was consolidated, the sum average was

calculated. Various charts were prepared which helped to analyze the data better .Data

analysis involved converting of recorded observation in to descriptive statement.

LIMITATION OF THE STUDY

1. The findings are relevant only to Bangalore city , however a generalized view can

be applicable to cities with similar characteristics.

2. Since the sampling technique was random, the finding might not give an accurate

picture.

3. Since the time and cost were the a constraints, result may not be accurate, as

surveyor could not survey the entire customer and potential investors.

4. Some of the customers could not give an accurate response to some of the

questions

SCOPE OF THE STUDY



The project includes

1. Study of unit linked policy.

2. The eligibility criteria of the applicant

3. Brief idea about the company called Allianz Bajaj life insurance company

limited.

4. Comparison study of different unit inked policies of different companies

5. Terms and conditions of different companies unit linked policies

6. Different types of policies issued by Allianz Bajaj



FINDINGS

Findings:



1) Have you bought any Insurance policy/ know about unit linked policy?



2) Rank the Insurance companies you are aware of?

Respondents ranked life insurance companies as below

The ranking is

1. Life Insurance Corporation

2. ICICI

3. Allianz Bajaj Life Insurance Company Limited

4. Tata AIG Life Insurance Company Limited

5. Aviva Life Insurance Company Limited



3) Have you bought any unit linked policy?

Out of 100 samples only 2 people bought unit linked policy.



4) Are you interested in buying unit linked policy?



5)Rank the below attributes do you consider while purchasing?



6) Rank the factors do you consider while purchasing Life Insurance/Unit Linked

policy?



7) How much do you want to invest?



8) In which fund do you prefer to invest(rank them accordingly)



ANALYSIS

ANALYSIS HAS BEEN MADE IN THREE PARTS

Respondents in general

Respondents whose income is more than

Rs Rs 3,00,000 p.a.

Respondents who knows about Unit Linked Policy



RESPONDENTS IN GENERAL

INCOME OF THE RESPONDENTS

Four types of income group has been responded, accordingly respective percentage has

been given.

1. Below Rs 1,50,000 28%

2. Rs 1,50,000-Rs 3,00,000 p.a. 20%

3. Rs Rs 3,00,000 p.a.-5,00,000 30%

4. Above Rs 5,00,000 22%


In Rs


AWARENESS OF LIFE INSURANCE

Awareness of the life insurance is out of the 100 samples 2 peoples don’t know about the life insurance.



AWARENESS OF UNITLINKED POLICY

Out of 98 people 22% know about the unit linked policy.



RANKING OF LIFE INSURANCE COMPANIES

Respondents ranked life insurance companies as below

The ranking is

1. Life Insurance Corporation

2. ICICI

3. Allianz Bajaj Life Insurance Company Limited

4. Tata AIG Life Insurance Company Limited

5. Aviva Life Insurance Company Limited

Respondents ranked Allianz Bajaj as 3rd among 6 life insurance companies.That means

awareness is less about the company. Therefore company should take some measure to

create awareness.



While purchasing unit linked policy, people consider the attributes

like Creation of estate, Life coverage, Mode of paying premium, Withdrawal benefits, Saving

component echo much importance they give to each attribute is given below

While purchasing life insurance people considered most

important is life coverage than Creation of estate than saving component than other

attributes like maturity benefits, withdrawal benefits and mode of paying

premium .the least important attribute is charges levied.

As people consider most important as life coverage, in the

policy of Unit gain they should concentrate on Death benefits and life coverage period.



After consideration of attributes the next step towards the purchase of life

insurance by the prospective buyer are following factors

1. Brand Image

2. Risk Factor

3. Income

4. Age factor

5. Influence of relatives and friends

6. Market condition

Respondents considered very important as Risk factor than the

factors like Income, Age, and Market conditions. Brand image as less important and

Influence of relatives and friends as very least important.



As people are tend to avoid risk and give more importance to risk

factor it shows that people are willing to take risk.

PEOPLE’S INTEREST OF INVESTING IN LIFE INSURANCE

Respondents got a option of five categories as shown above. The response was

Below Rs 1,00,000 13%

Rs 1,00,000 –2,00,000 18%

Rs 2,00,000 – Rs 3,00,000 p.a. 27%

Rs Rs 3,00,000 p.a.- 5,00,000 29%

Above Rs 5,00,000 13%

Most peoples are interested in taking the policy of Rs 3,00,000

p.a. to 5,00,000.Next to it is the policy of Rs2,00,000 to Rs 3,00,000 p.a..



PEOPLE ‘S PREFERENCE OF INVESTING PREMIUM AMOUNT

Customer got several option to invest their premium .The preference according to

respondents are given below

Rankings are given below

1. Balanced fund 28%

2. Equity fund 25%

3. Cash fund 24%

4. Debt fund 23%



RESPONDENTS WHOSE INCOME IS MORE THAN

RS Rs 3,00,000 p.a.

Ranking according to respondents whose income is more than Rs 3,00,000 p.a.

1. LIC

2. ICICI

3. Birla Sunlife

4. Allianz Bajaj

5. Tata AIG

6. Aviva



Respondents whose income is more than Rs 3,00,000 p.a.

considered attributes as below

Respondents considered very important attribute as Creation of estate,

Saving components and life coverage. Next important as Mode of paying premium

and next is Withdrawal benefits next is Maturity benefits and the least important is

Charges levied.

Respondents even consider Saving component and creation of estate as

very important.



Respondents whose income is more than Rs 3,00,000 p.a. considered

factors affecting to buy life insurance as below

Respondent considered all the above-mentioned attributes as most

important In percentage most important is Age, Income, Market conditions, Risk

Factor and least important is Brand image and influence of relatives and friends.



Respondents whose income is more than Rs 3,00,000 p.a. considered the

investment criteria as follows

Respondent interested to invest money more between Rs3,50,000-5,00,000 p.a.

Next is Rs2,00,000-3,50,000 p.a. and same percentage of people wants to invest in

Rs1,00,000-2,00,000 p.a. and 19% want to invest in above Rs 5,00,000 p.a. and least

people want to invest in below Rs 1,00,000 p.a.



Respondents whose income is more than Rs 3,00,000 p.a. considered

investing their money in following funds



2. Cash fund 25%

3. Equity fund 22%

4. Debt fund 22%



OPINION OF THE RESPONDENTSWHO KNOW ABOUT

THE UNITLINKED POLICY.

Respondents considered very important attribute as Life coverage next

important as Withdrawal benefits next is Saving components and Creation of estate

next important as Maturity benefits next important attribute is Mode of paying

premium and the least important is Charges levied.

Here most important to note is every attribute is considered

important because all the percentage is more than 10%.



Very important Risk factor

Less important Income, age

Important Market conditions

Not important Brand image

Least important Influence of relatives &friends



Respondents got an option of five categories as shown above. The response was

Below Rs 1,00,000 09%

Rs 1,00,000 –2,00,000 00%

Rs 2,00,000 – Rs 3,00,000 p.a. 09%

Rs Rs 3,00,000 p.a.- 5,00,000 55%

Above Rs 5,00,000 27%





2. Equity fund 25%

3. Cash fund 23%

4. Debt fund 20%



SUGGESTIONS:

1. The above study showed that the awareness about Allianz Bajaj is less . People

ranked it 3rd in the life insurance companies .So companies should take some

measure to create awareness in the minds of customer .For that it may go for

aggressive advertising campaign or sponsor for some events, go for banners or

hoardings

2. The competitor companies of ALBJ is very strong in unit linked policies Birla

Sunlife and LIC are going extremely well in the market.their growth rates are very

high .So ALBJ should highlight their strong points like

Choosing the sum assured

Low allocation charges in the long run

Good service

Low switching charges

Term of policy is unlimited

Salary deduction schemes

3. The unit-linked policies are suitable to those who are active investors and at the

same time they want to cover their life.



4. There are various categories of people who can be differentiated like

Men and Women

Men usually take the risk, where as women hesitate to take risk. So this policy

is more suitable to men

Age factor

Young people are more willing to take the risk, where old people are not. So it

is suitable to young income people

Income group

If income of the person is high than he can take risk but low-income group

cant take the risk. So this policy is suitable to high-income group people.

5. Life insurance is the classical example of unsought goods. The nature of that is

the consumer does know about or does not normally think of buying.

It requires personal selling support. So agents should be fully informative and

they should be able to tell the entire information customer needed.

6. As awareness is less , Allianz Bajaj should open some more branches

so that acccess becomes easy. So that people can approach the company and take

service.

7. As people consider risk factor as very important company should give minimum

guarantee of money so that people may consider this policy as most secured and

also giving good profit.

8. Company should come up with group unit linked plans so that people may have

option to go for unit-linked policy.



CONCLUSION

In new economy things are moving at a nanosecond pace; that our markets are

characterised by hyper competition; that disruptive technologies are changing every

business and every business must adapt to the empowered consumer. In such an

environment ALBJ is performing on a consistence basis. It is not a result of luck, trick

plays or misfortune of the competitors, but service and attractive schemes of ALBJ.

Allianz Bajaj sustained efforts are yielding superior long-term result.

The above study showed that unit linked policy has attractive market. But main

problem is awareness. So Allianz Bajaj should create awareness among the people. They

should explain the advantages they are getting out of unit-linked policy. They should

come up with some salient features like different investment criteria, group investment

plans etc.In India people are not willing to invest their money in market but they make

idle investment. So it is the work of middlemen win the willingness of people to invest in

market. Also company should concentrate on death benefit and term of policy.



BIBLIOGRAPHY

1. Donald .S.Tull & Hawkins – Marketing research measurement and method,

Prentice Hall of India Private Limited,New Delhi-2001

2. Literature available at Allianz Bajaj Branch office, Bangalore.

3. www.AllianzBajaj.com

4. www.economictimes.com


http://www.allianzbajaj.com/


APPENDIX



MARKET SURVEY ON UNIT LINKED POLICIES

Sir/Madam,

I am MBA student studying in. I am doing survey on unit linked plans.

Please co-operate and spare a few minutes of your time to fill up the following

questionnaire. The information provided by you will be kept confidential since this project

is for academic purpose.

Name :

Address :

Ph .No :

Gender : Age : Profession/Occupation:

Annual income: a) below 150000 b)150000-300000 c) 300000-500000 d) above 500000



1. Have you bought any Insurance policy / know about unit linked policy?

Yes No

2. Rank the insurance companies you are aware off

L I C Allianz Bajaj

Birla Sunlife Aviva

I CI C I Tata AIG

3. Have you bought any unit linked policy?

Yes No

If Yes

Company name :

If No

4. Are you interested in buying unit linked policies

Yes No

If yes

From which company

And why

5 . Rank the below attributes do you consider while purchasing Life Insurance/ Unit

Linked policies (For very important 5 to least important 1)

Attributes 5 4 3 2 1Creation of estateLife coverage Mode of paying premiumWithdrawal benefitsMaturity benefitsSaving componentCharges levied



6. Rank the below factors are you consider while purchasing Life Insurance/ Unit Linked policies (For very important 5 to least important 1)

Factors 5 4 3 2 1Brand imageRisk factorIncome AgeRelatives and friendsMarket conditions

7. How much do you want to invest?Below -10000 100000-200000

10000-50000 Above 200000

50000-100000

8. In which fund do you prefer to invest (rank them accordingly)

Equity fund Cash fund

Debt fund Balance fund

Thank you


a project report on comparitive study of unit linked policies and its market research

Business

unitlinked insurance

linked insurance policies

linked products

comparison unit

emergence of unit

surrenderingyour unit

unit linked plan works

comparison study of