neww........a comparative analysis of ulip of bajaj allianz life insurance co

7/31/2019 Neww........a Comparative Analysis of ULIP of Bajaj Allianz Life Insurance Co

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Chapter- 1

INTRODUCTION

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capital appreciations realized are shared by its unit holders in proportion to the number of units

owned by them.

INDIAN INSURANCE INDUSTRY

The history of life insurance in India dates back to 1818 when it was conceived as a means to

provide for English Widows. Interestingly in those days a higher premium was charged for Indian

lives than the non-Indian lives as Indian lives were considered more riskier for coverage. The

Bombay Mutual Life Insurance Society started its business in 1870. It was the first company to

charge same premium for both Indian and non-Indian lives. The Oriental Assurance Company was

established in 1880. The General insurance business in India, on the other hand, can trace its roots

to the Triton (Tital) Insurance Company Limited, the first general insurance company established

in the year 1850 in Calcutta by the British. Till the end of nineteenth century insurance business

was almost entirely in the hands of overseas companies.Insurance regulation formally began in

India with the passing of the Life Insurance Companies Act of 1912 and the provident fund Act of

1912. Several frauds during 20's and 30's sullied insurance business in India. By 1938 there were

176 insurance companies. The first comprehensive legislation was introduced with the Insurance

Act of 1938 that provided strict State Control over insurance business. The insurance business

grew at a faster pace after independence. Indian companies strengthened their hold on this business

but despite the growth that was witnessed, insurance remained an urban phenomenon.

The Government of India in 1956, brought together over 240 private life insurers and provident

societies under one nationalized monopoly corporation and Life Insurance Corporation (LIC) was

born. Nationalization was justified on the grounds that it would create much needed funds for rapid

industrialization. This was in conformity with the Government's chosen path of State lead planning

and development.The (non-life) insurance business continued to thrive with the private sector till

1972. Their operations were restricted to organized trade and industry in large cities. The general

insurance industry was nationalized in 1972. With this, nearly 107 insurers were amalgamated and

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grouped into four companies- National Insurance Company, New India Assurance Company,

OrientalInsurance Company and United India Insurance Company. These were subsidiaries of the

General Insurance Company (GIC).The general insurance business was nationalized after the

promulgation of General Insurance Business (Nationalizations) Act, 1972. The post-nationalization

general insurance business was undertaken by the General

Insurance Corporation of India (GIC) and its 4 subsidiaries:

Oriental Insurance Company Limited; New India Assurance Company Limited; National Insurance

Company Limited; and United India Insurance Company Limited.

Some of the important milestones in the life insurance business in India are:

1850:

Non life insurance debuts with triton insurance company.

1870:

:Bombay mutual life assurance society is the first Indian owned life insurer

1912:

The Indian Life Assurance Companies Act enacted as the first statute to regulate the life insurance

business.

1928 :

:The Indian Insurance Companies Act enacted to enable the government to collect statistical

information about both life and non-life insurance businesses.

1938:

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Earlier legislation consolidated and amended to by the Insurance Act with the objective of

protecting the interests of the insuring public.

1956:

245 Indian and foreign insurers and provident societies taken over by the central government and

nationalized. LIC formed by an Act of Parliament, viz. LIC Act, 1956, with a capital contribution

of Rs. 5 Crore from the Government of India. The General insurance business in India, on the other

hand, can trace its roots to the Triton Insurance Company Ltd., the first general insurance company

established in the year 1850 in Calcutta by the British.

Some of the important milestones in the general insurance business in India are:

1907:

The Indian Mercantile Insurance Ltd. set up, the first company to transact all classes of general

insurance of India.

1957 :

General Insurance Council, a wing of the Insurance Association of India, frames a code of conduct

for ensuring fair conduct and sound business practices.

1968 :

The Insurance Act amended to regulate investments and set minimum solvency margins and the

Tariff Advisory Committee set up.

1972 :

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The General Insurance Business (Nationalization) Act, 1972 nationalized the general insurance

business in India with effect from 1st January 1973. 107 insurers amalgamated and grouped into

four companies viz. the National Insurance Company Ltd., the New India Assurance Company

Ltd., the Oriental Insurance Company Ltd. and the United India Insurance Company Ltd. GIC

incorporated as a company.

1993: Malhotra Committee- headed by former Finance Secretary and RBI Governor R.N.

Malhotra- was formed to evaluate the Indian insurance industry and recommend its future

direction. The Malhotra committee was set up with the objective of complementing the reforms

initiated in the financial sector.

1997 : Insurance regulator IRDA set up.

2000: IRDA starts giving licenses to private insurers:Kotak Life Insurance ,ICICI potential and

HDFC standard Life insurance are the first private insurers to sell a policy.

2001: Royal Sundaram Alliance first non life insurer to sell a policy 2002 Banks allowed to sell

insurance plans.

INSURANCE MARKET PRESENT

The insurance sector was opened up for private participation seven years ago. For years now, the

private players are active in the liberalized environment. The insurance market have witnessed

dynamic changes which includes presence of a fairly large number of insurers both life and non-

life segment. Most of the private insurance companies have formed joint venture partnering well

recognized foreign players across the globe.

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LIFE INSURANCE COMPANIES

Sl. No. Insurer Foreign Partners

1 HDFC Standard Life Insurance Co. Ltd. Standard Life Assurance, UK

2 Standard Life Assurance, UK New York Life, USA

3 ICICI-Prudential Life Insurance Co. Ltd. Prudential , UK

4 Om Kotak Life Insurance Co. Ltd. Old Mutual, South Africa

5 Birla Sun Life Insurance Co. Ltd. Sun Life, Canada

6 Tata-AIG Life Insurance Co. Ltd. American International Assurance Co., USA

7 SBI Life Insurance Co. Ltd. BNP Paribas Assurance SA, France

8ING Vysya Life Insurance Co. Ltd. ING Insurance International B.V.,

Netherlands

9 Allianz Bajaj Life Insurance Co. Ltd. Allianz, Germany

10 Metlife India Insurance Co. Ltd. Metlife International Holdings Ltd., USA

11 Reliance Life Insurance Co. Ltd.

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12 AVIVA Aviva International Holdings Ltd., UK

13 Sahara Life Insurance Co. Ltd.

14 Shriram Life Insurance Co. Ltd. Sanlam, South Africa

15 Bharti AXA Life Insurance Co. Ltd. AXA Holdings, France

16 Future Generali India Life Insurance

Company Ltd

Pantaloon Retail Ltd.; Sain Marketing

Network Pvt. Ltd. (SMNPL), Generali, Italy

17 IDBI Fortis Life Insurance Company Ltd. Fortis, Netherlands

18 Canara HSBC OBC Life Insurance

Company Ltd.

HSBC, UK

19 Aegon Religare Life Insurance Company

Ltd.

Religare, Netherlands

20 DLF Pramerica Life Insurance Co. Ltd. Prudential of America, USA

21 Life Insurance Corporation of India

TOP 10 LIFE INSURANCE COMPANIES IN INDIA

LIC (Life Insurance Corporation of India) still remains the largest life insurance company

accounting for 64% market share. Its share, however, has dropped from 74% a year before, mainly

owing to entry of private players with innovative products and better sales force.

ICICI Prudential Life Insurance Co Ltd is the biggest private life insurance company in India. It

experienced growth of 58% in new business premium, accounting for increase in market share to

8.93% in 2007-08 from 6.97% in 2006-07.

Bajaj Allianz Life Insurance Co Ltd has reported a growth of 52% and its market share went up to

6.98% in 2007-08 form 5.66% in 2006-07. The company ranked second (after LIC) in number of

policies sold in 2007-08, with total market share of 7.36%.

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SBI Life Insurance Co Ltd in terms of new number of policies sold, the company ranked 6th in

2007-08. New premium collection for the company was Rs 4,792.66 crore in 2007-08, an increase

of 87% over last year.

Reliance Life Insurance Co Ltd Total collected was Rs 2,792.76 crore and its market share went

up to 2.96% from 1.23% a year back. It now ranks 5th in new business premium and 4th in number

of new policies sold in 2007-08.

HDFC Standard Life Insurance Co Ltd with an income of Rs 2,680 crore in FY2007-08,

registering a year-on-year growth of 64%. Its market share is 2.88% and it ranks 6 th among the

insurance companies and 5th amongst the private players.

Birla Sun Life Insurance Co Ltd market share of the company increased from 1.22% to 2.11% in

2007-08.

Max New York Life Insurance Co Ltd has reported growth of 73% in 2007-08. Total new business

generated was Rs 641.83 crore as against Rs 387.51 crore.

Kotak Mahindra Old Mutual Life Insurance Ltd the fiscal 2007-08, the company reported growthof 80%, moving from the 11th position to 9th. It captured a market share of 1.19% in 2007-

08. Aviva Life Insurance Company India Ltd ranking dropped to 10th in 2007-08 from 9th last

year. It has presence in more than 3,000 locations across India via 221 branches and close to 40

banc assurance partnerships. Aviva Life Insurance plans to increase its capital base by Rs 344

crore.

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MARKET SHARE OF VARIOUS LIFE INSURANCE COMPANIES IN

INDIA

Here is themarket share of various Life Insurance Companies in Indiaat the end of FY2008.

Company Name Market Share (in %)

LIC 48.1%

ICICI Prudential 13.7%

Bajaj Allianz 10.3%

SBI Life 6.2%

HDFC Standard 4.1%

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Birla Sunlife 3.4%

Reliance Life 3.4%

Max New York 2.4%

OM Kotak 1.9%

AVIVA 1.8%

Tata AIG 1.5%

MetLife 1.4%

ING Vysya 1.2%

Shriram Life 0.3%

Bharti Axa Life 0.2%

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BOOMING INSURANCE MARKET IN INDIA

With a huge population base and large untapped market, insurance industry is a big

opportunity area in India for national as well as foreign investors. India is the fifth

largest life insurance market in the emerging insurance economies globally and is

growing at 32-34% annually. This impressive growth in the market has been driven by

liberalization, with new players significantly enhancing product awareness and

promoting consumer education and information. The strong growth potential of the

country has also made international players to look at the Indian insurance market.

Moreover, saturation of insurance markets in many developed economies has made

the Indian market more attractive for international insurance players

This research report will help the client to analyze the leading-edge opportunities

critical to the success of insurance industry in India. Based on this analysis, the report

gives a future forecast of the market that is intended as a rough guide to the direction

in which the market is likely to move.

Total life insurance premium in India is projected to grow Rs 1,230,000 Crore by 2010-

11.

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1. Total non-life insurance premium is expected to increase at a CAGR of 25% for

the period spanning from 2008-09 to 2010-11.

2. With the entry of several low-cost airlines, along with fleet expansion by

existing ones and increasing corporate aircraft ownership, the Indian aviation

insurance market is all set to boom in a big way in coming years.

3. Home insurance segment is set to achieve a 100% growth as financial

institutions have made home insurance obligatory for housing loan approvals.

4. Health insurance is poised to become the second largest business for non-life

insurers after motor insurance in next three years.

COMPANY PROFILE

Bajaj Allianz Life Insurance is a union between Allianz SE, one of the largest Insurance Company

and Bajaj Finserv.

Allianz SE is a leading insurance conglomerate globally and one of the largest asset managers in

the world,managing assets worth over a Trillion(Over INR 55,00,000 Crores).Allianz SE has over

115 years of financial experience and is present in over 70 countries around the world.

At Bajaj Allianz Life Insurance, customer delight is the guiding principle. Their business

philosophy is to ensure excellent insurance and investment solutions by offering customized

products, supported by the best technology.

VISION

To be the first choice insurer for customers

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To be the preferred employer for staff in the insurance industry.

To be the number one insurer for creating shareholder value.

MISSION

As a responsible, customer focused market leader, we will strive to understand the insurance needs of the

consumers and translate it into affordable products that deliver value for money.

Accelerated Growth

Fiscal Year No. of policies sold New Business in FY

2001-2002(6 mths) 21,37 Rs. 7 cr.

2002-2003 1,15,965 Rs. 63.3 cr.

2003-2004 1,86,443 Rs. 180 cr.

2004-2005 2,88,189 Rs. 857 cr.

2005-2006 7,81,685 Rs. 2,717 cr.

2006-2007 20,79,217 Rs. 4,302 cr.

2007-2008 37,44,742 Rs. 6,674 cr.

Bajaj Allianz General Insurance received the Insurance Regulatory and Development Authority

(IRDA) certificate of Registration on 2nd May, 2001 to conduct General Insurance business

(including Health Insurance business) in India. The Company has an authorized and paid up capital

of Rs 110 crores. Bajaj Finserv Limited holds 74% and the remaining 26% is held by Allianz, SE.

As on 31st March 2009, Bajaj Allianz General Insurance maintained its premier position in the

industry by achieving growth as well as profitability. The company garnered a premium income of

Rs. 2866 crore, achieving a growth of 11 % over the last year. Bajaj Allianz has made a profit

before tax of Rs. 149.8 crore and has become the only private insurer to cross the Rs.100 crore

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mark in profit before tax in the last two years. The profit after tax was Rs.95 crores, which is also

the highest by any private insurer. The company ranked second (after LIC) in number of policies

sold in 2007-08, with total market share of 7.36%.

RESULTS FOR CURRENT FY TILL 31ST DECEMBER 2008

The Gross Written Premiums (GWP) for the nine months ended on 31st Dec 2008, is

Rs 6726 crores as compared to Rs 5219 crores in the corresponding period of the

previous year - growth of 29%. New Business premium for the nine months ended on

31st Dec 2008 is Rs. 3003 crores as compared to Rs. 3780 crores in the

corresponding period of previous year.

Commission on new business premium, which was 27% during nine months ended on

31st Dec 2007, came down to 20% during the current period.

Operating expenses came down to 20% of GWP for the current period of nine months

ended on 31st Dec 2008 as compared to 26% for the corresponding period of

previous year.

The Company posted a profit of Rs 364 lacs for the period ended 31st Dec 2008 as

compared to a profit of Rs 5358 lacs in the corresponding period of the previous year.

The policyholder surplus is Rs 15514 lacs (corresponding period of previous year Rs

18681 lacs) and the shareholders loss stands at Rs 15150 lacs (corresponding period

of previous year: Rs 13323 lacs).

Number of policies underwritten during the nine months ended 31st Dec 2008 were 18,08,495

(corresponding period of the previous year 23,62,496). Policies in force as on 31 st Dec 2008 is

around 70 lacs. The company ranked second (after LIC) in number of policies sold in 2007-08,

with total market share of 7.36%.

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The share capital (including share premium) is Rs. 1211 crores as on 31st December

2008. The solvency as on 31 st Dec 2008 stands at 261% (required solvency is 150%).

During the period ended 31st Dec 2008, no additional capital has been infused.

Despite challenging environment, the company has been able to not only reduce

commission but also operating expenses. The solvency margin of the company

continues to be very strong.

As on 31st Dec 2008, the Company employed on roll 22,129 staff as against 20,764

staff at 31st March 2008.The Company operates out of 1,138 offices as on 31 Dec

2008.

PRODUCTS PROFILE

Unit Linked Plan

1. New family gain

2. New unit gain plus

3. New unit gain premier

Traditional plan

1. Invest gain

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2. Cash gain

3. Child gain

Retirement Solutions

1. Swarna visranthi

2. New unit gain easy pension plus

Health Plan

1. Care first

2. Health care

Term Plan

1. Risk care

2. Term care

UNIT LINKED INSURANCE POLICY (ULIP)

A unit linked insurance policy is one in which the customer is provided with a life insurance cover

and the premium paid is invested in either debt or equity products or a combination of the two. In

other words, it enables the buyer to secure some protection for his family in the event of his

untimely death and at the same time provides him an opportunity to earn a return on his premium

paid. In the event of the insured person's untimely death, his nominees would normally receive an

amount that is the higher of the sum assured (insurance cover) or the value of the units

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(investments).However, there are some schemes in which the policyholder receives the sum

assured plus the value of the investments.

Every insurance company has four to five ULIPs with varying investment options, charges and

conditions for withdrawals and surrender. Moreover, schemes have been tailored to suit different

customer profiles and, in that sense, offer a great deal of choice.

The advantage of ULIP is that since the investments are made for long periods, the chances of

earning a decent return are high.

Just as in the case of mutual funds, buyers who are risk averse can buy into debt schemes whilethose who have an appetite for risk can opt for balanced or equity schemes. However, the charges

paid in these schemes in terms of the entry load, administrative fees, underwriting fees, buying and

selling charges and asset management charges are fairly high and vary from insurer to insurer in

the quantum as also in the manner in which they are charged.

Tax benefits

The premiums paid for ULIPs are eligible for tax rebates under section 80 which allows a a

maximum of Rs. 1,00,000 premiums paid for taxable income below Rs 8,50,000 and Proceeds

from ULIPs are tax-free under section 10(10D) unlike those from a mutual fund which attract short

term capital gains tax.

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Key features

Premiums paid can be single, regular or variable. The payment period too can be regular or

variable. The risk cover (insurance cover) can be increased or decreased.As in all insurance

policies, the risk charge (mortality rate) varies with age. However, for an individual the risk charge

is always based on the age of the policyholder in the year of commencement of the policy. These

charges are normally deducted on a monthly basis from the unit value. For instance, if there is an

increase in the value of units due to market conditions, the sum at risk (sum assured less the value

of investments) reduces and so the risk charges are lower. The maturity benefit is not typically a

fixed amount and the maturity period can be advanced (early withdrawal) or extended.

Investments can be made in gilt funds (government securities), balanced funds (part debt, part

equity), money-market funds; growth funds (equities) or bonds (corporate bonds).

The policyholder can switch between schemes (for instance, balanced to debt or gilt to equity). The

investment risk is transferred to the policyholder.The maturity benefit is the net asset value of the

units. The value would be high or low depending on the market conditions during the period of the

policy and the performance of the fund manager.

POINTS TO REMEMBER ABOUT ULIP

First-year charges: Usually, a minimum of 15 per cent. However, high premiums attract lower

charges and vice versa. Charges can be as high as 70 per cent if the scheme affords a lot of

flexibility. Subsequent charges: Usually lower than first-year charges. However, some insurers

charge higher fees in the initial years and lower them significantly in the subsequent years.

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Administration charges: This ranges between Rs 15 per month to Rs 60 per month and is levied

by cancellation of units and also depends on the nature of the scheme.

Risk charges: The charges are broadly comparable across insurers.

Asset management fees: Fund management charges vary from 0.6 per cent to 0.75 per cent for a

money market fund, and around 1.5 per cent for an equity-oriented scheme. Fund management

expenses and the brokerage are built into the daily net asset value.

Switching charges: Some insurers allow four free switches in every year but link it to a minimum

amount. Others allow just one free switch in each year and charge Rs 100 for every subsequentswitch. Some insurers don't charge anything.

Top-ups: Usually attracts 1 per cent of the top-up amount. Top-up normally goes directly into your

investment account (units) unless you specifically ask for an increase in the risk cover.

Surrender value of units: Insurers levy certain charges if the policy is surrendered prematurely.

This levy varies between insurers and could be around 75 per cent in the first year, 60 per cent in

the second year, 40 per cent in the third year and nil after the fourth year.

Fund performance: You could check out the performance of similar schemes (balanced with

balanced; equity with equity) across insurance companies.

Look at NAV performance over a period of at least two to three years. This can only give you

some indication about the credibility of the fund manager because past performance is no

guarantee to future returns, especially in insurance products where the emphasis is on long-term

performance (10 years or more).

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Since insurance is a product, which entails a long-term commitment on the part of the insurer, it is

important not to go only by the features or the cost advantages of schemes but by the parentage of

the insurer as well.

Comparing schemes based on costs is a fairly complex exercise. As a rule, the higher the initial

years' expenses the longer it takes for the policy to outperform its peers with low initial years' costs

and slightly higher subsequent year expenses.

Retire unhurt

Pension plans are essentially tailored to meet old age financial requirements. But there are certain

advantages in joining a pension plan.

First of all, contribution to pension funds upto Rs 10,000 is eligible for tax deduction under section

80CCC. In other words, your pension contribution will get deducted from your taxable income.

So if you are in the top tax bracket, liable to pay to a 30.6 per cent tax, then your tax savings will

be that much.

All life insurance companies offer pension products - both conventional and unit-linked. In both

cases you pay a certain premium amount for a specified length of time.

Usually, the minimum entry age is 18 years and the maximum age is 60 years. You can choose to

pay the premium for five to 30 years. When the policy matures, you receive one-third of the value

of the accumulated amount as a lump-sum payment.

For the remaining, you can buy annuities either from the existing insurer or any other insurer.

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While in a conventional scheme, your money is managed through the insurer's pooled investment

account and you are entitled to bonuses every year, in a ULIP you receive the value of the

investment in your individual account.

In a ULIP you have the flexibility to choose between a conservative scheme or an aggressive

scheme with high allocation to equities. Pension policy imposes huge penalties for early

termination.

HOW DOES ULIP WORK

Sara is a thirty-year old who wants a product that will give him market-linked returns as well as alife cover. He wants to invest Rs 50,000 a year for 10 years in an equity-based scheme. Based on

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this premium, the sum assured works out to Rs 532,000, the exact amount of premium being Rs

50,032.

Based on the current NAV of the plan that Sara chooses to invest in, he is allotted units in the

scheme. Then, units equivalent to the charges are deducted from his portfolio.

The charges in the first year include a 14 per cent sales charge, an administration charge (7 per cent

for the first Rs 20,000 and 3 per cent for the remaining Rs 30,000) and underwriting charges,

which are deducted monthly.

Besides, mortality charges or the charges for the life cover are also deducted. For the remaining

nine years a 3.5 per cent sales charge and an administrative charge of 4 per cent (for the first Rs

20,000 and 2 per cent for the remaining Rs 30,000) are levied in addition to mortality charges.

Fund management fee of 1.5 per cent (equity) and brokerage are also charged. This cost is built

into the calculation of net asset value.

On maturity - that is, after 10 years - Sara would receive the sum assured of Rs 532,000 or the

market value of the units whichever is higher.

Assuming the growth rate in the market value of the units to be 6 per cent per annum Sara would

receive Rs 581,500; assuming the growth rate in the market value of the units to be 10 per cent,

Sara would receive Rs 7,24,400.

In case of Sara's untimely death at the end of the ninth year, his beneficiaries would receive the

sum assured of Rs 532,000 or the market value of the units whichever is higher. Assuming the

growth rate in the market value of units is 6 per cent per annum, the value of investment would be

Rs 510,200.

However, his family will get Rs 532,000 as it is the sum assured.

Assuming a growth rate of 10 per cent per annum, the value of units at the end of the ninth year

would be Rs 621,900. Hence, the beneficiaries would get Rs 621,900.

ADVANTAGES OF ULIP

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1. Can easily rebalance your risk between equity and debt without any tax implications.

1. Best suited for medium risk taking individuals who wish to invest in equity and debt funds

(at least 40% or higher exposure to debt). No additional tax burden for those investing

mainly in debt unlike in MFs.

RISKS ASSOCIATED WITH ULIPS

ULIPS as the name suggests are directly linked with the investments made by the insured. Though

he does not have a direct say in this but he does offer his choice in the form of investment.

With stock markets soaring high a few months back, ULIPs were offering a good rate of return, but

now with a sudden downfall of the stocks, ULIPs are bound to become negative investments.

At present, a policy-holder cannot understand the growth of his investments vis--vis other funds in

the market, since there is no benchmark to measure one fund against the other. Usually a policy-

holder could ask his investment in a ULIP to be, for example, 55 per cent in equity and 45 per cent

in debt. These components can be mixed according to his risk-taking ability. An investor,

therefore, would have to look at quarterly statements, where the fund would be compared with

benchmarks. However, this may not be a true representation of the NAV, as the ULIP could be a

mix of debt, liquid and equity investments.

INTRODUCTION OF MUTUAL FUNDS:

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A mutual fund is simply a financial intermediary that allows a group of investors to pool their

money together with a predetermined investment objective. The mutual fund will have a fund

manager who is responsible for investing the pooled money into specific securities (usually stocks

or bonds). When you invest in a mutual fund, you are buying shares (or portions) of the mutual

fund and become a shareholder of the fund.

Mutual funds are one of the best investments ever created because they are very cost efficient and

very easy to invest in (you don't have to figure out which stocks or bonds to buy).

By pooling money together in a mutual fund, investors can purchase stocks or bonds with much

lower trading costs than if they tried to do it on their own. But the biggest advantage to mutual

funds is diversification.

ACCORDING TO AMFI (ASSOCIATION OF MUTUAL FUND OF INDIA):

A Mutual Fund is a trust that pools the savings of a number of investors who share a common

financial goal. The money thus collected is then invested in capital market instruments such as

shares, debentures and other securities. The income earned through these investments and the

capital appreciation realized is shared by its unit holders in proportion to the number of units

owned by them.

CHARACTERISTICS OF A MUTUAL FUND:

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1. Investors own the mutual fund.

2. Professional managers manage the affairs for a fee.

3. The funds are invested in a portfolio of marketable

4. Securities, reflecting the investment objective.

5. Value of the portfolio and investors holdings, alters with

6. Change in market value of investments.

ADVANTAGES OF MUTUAL FUNDS:

The advantages of investing in a Mutual Fund are:

1. Professional Management:You avail of the services of experienced and skilled professionals

who are backed by a dedicated investment research team which analyses the performance and

prospects of companies and selects suitable investments to achieve the objectives of the scheme.

2. Diversification: Mutual Funds invest in a number of companies across a broad cross section of

industries and sectors. This diversification reduces the risk because seldom do all stocks decline at

the same time and in the same proportion.You achieve this diversification through a Mutual Fund

with far less money than you can do on your own.

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3. Convenient Administration: Investing in a Mutual Fund reduces paperwork and helps you

avoid many problems such as bad deliveries, delayed payments and unnecessary follow up with

brokers and companies. Mutual Funds save your time and make investing easy and convenient.

4. Return Potential:Over a medium to longterm, Mutual Funds have the potential to provide a

higher return as they invest in a diversified basket of selected securities.

5. LowCosts: Mutual Funds are a relatively less expensive way to invest compared to directly

investing in the capital markets because the benefits of scale in brokerage, custodial and other fees

translate into lower costs for investors.

6. Liquidity: In open-ended schemes, you can get your money back promptly at AssetValue

(NAV) related prices from the Mutual Fund itself.With close-ended schemes, you can sell your

units on a stock exchange at the prevailing market price or avail of the facility of repurchase

through Mutual Funds at NAV related prices which some close-ended and interval schemes

offer you periodically.

7. Transparency: You get regular information on the value of your investment in addition to

disclosure on the specific investments made by your scheme, the proportion invested in each

class of assets and the fund managers investment strategy and outlook.

8. Flexibility: Through features such as Systematic Investment Plans (SIP), Systematic

Withdrawal Plans (SWP) and dividend reinvestment plans, you can systematically invest or

withdraw funds according to your needs and convenience.

9. Choice of Schemes:Mutual Funds offer a variety of schemes to suit your varying needs

over a lifetime.

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DISADVANTAGES OF MUTUAL FUNDS:

No Guarantees: No investment is risk free. If the entire stock market declines in value, the

value of mutual fund shares will go down as well, no matter how balanced the portfolio. Investors

encounter fewer risks when they invest in mutual funds than when they buy and sell stocks on their

own. However, anyone who invests through a mutual fund runs the risk of losing money.

Fees and commissions: All funds charge administrative fees to cover their day-to-day

expenses. Some funds also charge sales commissions or "loads" to compensate brokers, financial

consultants, or financial planners. Even if you don't use a broker or other financial adviser, you will

pay a sales commission if you buy shares in a Load Fund.

Taxes: During a typical year, most actively managed mutual funds sell anywhere from 20 to 70

percent of the securities in their portfolios. If your fund makes a profit on its sales, you will pay

taxes on the income you receive, even if you reinvest the money you made.

A measurement of an option position or premium in relation to the underlying instrument. In

mutual fund also there is certain amount of risk-return factor associated according to the

investment option these are as follows,

RISK RETURN

Equity High High

Balanced Medium Medium

Debt Low Low

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TYPES OF MUTUAL FUNDS:

I. Closed-end or Open-end

Open-end Funds: An open-end fund is one that has units available for sale and repurchase at all

time. An investor can buy or redeem units from the fund itself at a price based on the Net Asset

Value (NAV) per unit.

Close-end Funds: A close ended fund makes a one-time sale of a fixed number of unit. It does not

allow investors to buy or redeem units directly from the funds. However, to provide liquidity to

investors many closed-end funds get themselves listed on stock exchange. Funds do offer buy-

back of funds/units thus offering another avenue for liquidity to closed-end fund investor.

II. Load vs. No Load: Marketing of a new mutual fund scheme involves initial expense.

These expenses may be recovered from the investors in different ways at different times. Three

usual ways in which a funds sales expenses may be recovered from the investors are:

1. At the time of investors entry into the fund/scheme, by deducting a specific amount from his

initial contribution: front-end or entry load.

2. By charging the fund/scheme with a fixed amount each year, during the stated number of years:

deferred load.

3. At the time of the investors exit from the fund/scheme, by deducting a specific amount from the

redemption proceeds payable to the investor: back end or exit load These charges made by the fund

managers to the investors to cover distribution/sales/marketing expenses are often called loads.

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Funds that charge front-end, back-end or deferred loads are called load funds. Funds that make no

such charges or loads for sales expenses are called no-load funds.

In India, SEBI has defined a load as the one-time fee payable by the investor to allow the fund to

meet initial issue expenses including brokers/agents/distributors commissions, advertising and

marketing expenses.

A load funds declared NAV does not include load charges

III. Tax-exempt vs. Non-Tax exempt Funds: Generally, when a fund invests in tax-

exempt securities, it is called a tax-exempt fund. In India, after the 1999 Union Government

Budget, all of the dividend income received from any of the mutual funds is tax-free in the hands

of the investors. However, funds other than Equity Funds have to pay a distribution tax, before

distributing income to investors. In other words, equity mutual fund schemes are tax-exempt

investment avenues, while other funds are taxable for distributable income.

Different types of mutual fund

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Types of Mutual Fund:

Once we have reviewed the fund classes, we are ready to discuss more specific fund types. Funds

are generally distinguished from each other by their investment objectives and types of securities

they invest in.

A. Broad Fund Types by Nature of Investments

Mutual funds may invest in equities, bonds or other fixed income securities, or short-term money

market securities. So we have Equity, Bonds and Money Market Funds. All of them invest in

financial assets. But there are funds that invest in physical assets. For example, we may have Gold

or other Precious Metal Funds, or Real Estate Funds.

B. Broad Fund Types by Investment Objective

Investors and hence the mutual funds pursue different objectives while investing. Thus,

Growth Funds invest for medium to long term capital appreciation.

Income Funds invest to generate regular income, and less for capital appreciation.

Value Funds invest in equities that are considered under-valued today, whose value will be

unlocked in the future.

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C. Broad Fund Types by Risk Profile

The nature of a funds portfolio and its investment objective imply different levels of risk

undertaken. Funds are therefore often grouped in order of risk. Thus, Equity Funds have a greater

risk of capital loss than a Debt Fund that seeks to protect the capital while looking for income.

Money Market Funds are exposed to less risk than even the For internal use by Training

Department of Prudential ICICI Mutual Fund Bond Funds, since they invest in short-term fixed

income securities, as compared to longer-term portfolios of Bond Funds.

Money Market Funds: Lowest rung in the order of risk level, Money Market Funds invest in

securities of a short-term nature, which generally means securities of less than one-year maturity.

Gilt Funds: Gilts are government securities with medium to long-term maturities, typically of over

one year (under one-year instruments being money market securities).

Debt Funds (or Income Funds): Next in the order of risk level, we have the general category

Debt Funds. Debt funds invest in debt instruments issued not only by governments, but also by

private companies, banks and financial institutions and other entities such as infrastructure

companies/utilities.

Diversifies Debt Funds: A debt fund that invests in all available types of debt securities, issued by

entities across all industries and sectors is a properly diversified debt fund. A diversified debt fund

is less risky than a narrow-focus fund that invests in debt securities of a particular sector or

industry.

Focused Debt Funds: Some debt funds have a narrow focus, with less diversification in its

investment. Examples include sector, specialized and offshore debt funds. Other examples of

focused funds include those that invest only in Corporate Debentures and Bonds or only in Tax

Free Infrastructure or Municipal Bonds.

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High yield Debt Funds: There are funds which seek to obtain higher interest rates by investing in

debt instruments that are considered below investment grade. e.g. Junk Bond Funds.

Assured Return Funds an Indian Variant: The SEBI permits only those funds whose sponsors

have adequate net-worth to offer assurance of return. For e.g. MIPs. Investors have some lock-in

period.

Fixed Term Plan Series Another Indian Variant: These are essentially closed-end. These

plans do not generally offer guaranteed returns. This scheme is for short-term investors who

otherwise place money as fixed term bank deposits or inter corporate bonds.

Equity Fund: As investors move from Debt Fund category to Equity Funds,

they face increased risk level.

1. No guarantee returns

2. High potential for growth of capital

Types of Equity Fund

a) Aggressive Growth Fund

1. Maximum capital appreciation

2. Invests in less researched or speculative shares.

3. Very volatile & riskier.

b) Growth Fund

1. Growth fund invest in companies whose earnings are expected to

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2. Rise above average rate. e.g. Technology Fund

3. Capital appreciation in 3 5 years

4. Less volatile then aggressive growth fund.

c) Specialty Fund

They invest in companies that meet predefined criteria.

i) Sector Funds

1. Technology Fund

2. Pharmaceutical Fund

3. FMCG Fund

ii) Offshore Funds

Invest in equities in one or more foreign countries.

iii) Small-Cap equity Funds

Invest in shares of companies with relative lower market capital.

d) Diversified Equity Funds

A fund that seeks to invest only in equities, except for a very small portion in liquid money market

securities, bur is not focused on any one or few sectors or shares, may be termed a diversified

equity fund. While exposed to all equity price risks, diversified equity funds seek to reduce the

sector or stock specific risks through diversification.

i) Equity Linked Savings Schemes: An Indian Variant

Investment in these schemes entitles the investor to claim an income tax rebate, but usually has alock-in period before the end of which funds cannot be withdrawn.

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e) Equity Index Funds

An index fund tracks the performance of a specific stock market index. The objective is to match

the performance of the stock market by tracking an index that represents the overall market. The

funds invest in share that constitute the index and in the same proportion on the index.

f) Value Funds

Value Funds try to seek out fundamentally sound companies whose shares are currently under-

prices in the market. Value Funds will add only those shares to their portfolios that are selling atlow price-earnings ratios, low market to book value ratios and are undervalued by other yardsticks.

Fund concentrate on future growth prospect having good potential.

g) Equity Income Funds

There are equity funds that can be designed to give the investor a high level of current income

along with some steady capital appreciation, investing mainly in shares of companies with high

dividend yields.

1. Hybrid Funds Quasi Equity/Quasi Debt: Many mutual funds mix these (money

market, debt and equity) different types of securities in their portfolios. Such funds are

termed hybrid funds as they have a dual equity/bond focus.

2. Commodity Funds: While all of the debt/equity/money market funds invest in financial

assets, the mutual fund vehicle is suited for investment in any other- for examples- physical

assets.

3. Real Estate Funds: Specialized Real Estate Funds would invest in Real Estate directly, or

may fund real estate developers, or lend to them, or buy shares of housing finance

companies or may even buy their securities assets.

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Following are the different products and services Offered by Mutual Fund

Companies

1. Open ended schemes

2. Close ended schemes

3. Growth/Equity oriented Schemes

4. Income/Debt oriented Schemes

5. Balanced Funds

6. Money market or liquid funds

7. Gilt Funds

8. Index Funds

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9. Exchange Traded Funds

10. Sectoral Funds

11. Thematic Funds

12. Commodity Funds

13. Real Estate Funds

14. Tax Saving Funds

15. Hybrid Funds

There are several ways for investment and disinvestments in mutual funds such as :

1. Systematic Investment Plans (SIPs)

2. Value Averaging

3. Systematic Transfer Plans (STPs)

4. Systematic Withdrawal Plans(SWPs)

5. Automatic Reinvestment Plans.

1. Open ended fund

In an open-ended fund, sale and repurchase of units happen on a continuous basis, at NAV related

prices, from the fund itself.

The corpus of open-ended funds, therefore, changes every day.

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2. Close ended fund

A closed-end fund offers units for sale only in the NFO. It is then listed in the market.

Investors wanting to buy or sell the units have to do so in the stock markets. Usually closed-end

funds sell at a discount to NAV.

The corpus of a closed-end fund remains unchanged.

3. Growth fund

Provide capital appreciation over the medium to long-term

1. Investor who does not require periodic income distribution can choose the option, where

the incomes earned are retained in the investment portfolio and allowed to grow, rather than being

distributed to investors.2. Investors with longer investment horizons and limited requirements for income choose this

option.

3. The return to the investor who chooses a growth option is the rate at which his initial

investment has grown over a period for which he has invested in the fund.

4. The investor choosing this option will vary the NAV with the value of the investments

portfolio , while the no. of units held with remains constant.

5. Income fund

Provide regular and steady income to investor

6. Balanced fund

Provide both growth and regular income.

7. Money market fund

Provide easy liquidity, regular income and preserve the income

8. Tax saving scheme

offer tax rebeats to the under specific provisions of the Indian income tax laws

Investment made under some schemes are allowed as deduction U/S 88 of the income tax act .

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9. Automatic Reinvestment Plans

Reinvestment of amount of dividend made by fund in the same fund.

In this option, the no. of units held by the investor will change with every reinvestment.

The value of units will be similar to that under the dividend option

There are four types of plans as follows

10. Lump sum Investment

It is one time investment..

Investors can invest particular amount one time for fixed time of period.

11.Systematic Investment Plans( SIP) For regular investment

SIP is investing a fixed sum periodically in a disciplined manner for long term.

It gives benefit of Rupee Cost averaging.

In SIP monthly minimum Rs.500 or Rs.100 are invested.

Interest is calculating compoundly.

Many SIP gives insurance benefits.

VAP is modified version of SIP. It is Voluntary Accumulation Plan. It allows the investor

flexibility with respect to the amount and frequency of investment.

In VAP, investor has to impose voluntary self discipline.

12. Systematic Withdrawal Plan ( SWP) For regular income

The lump sum amount is invested for one time and then fixed percent amount is withdraw

monthly.

Remaining amount will grow continuously.

This plan is suitable for retired person, because it gives regular income.

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13. Systematic Transfer Plan ( STP)

Transfer on a periodic basis a specified amount from one scheme to another within the

same fund family.

It gives option to the investor if the current fund performance in not satisfactory.

14. Dividend option

15. Investors will receive dividends from the mutual fund , as an and when

dividends are declared.

16. Dividends are paid in the form of warrants or are directly credited to the

investors bank accounts.17. In normal dividend plan , periodicity of dividends is left to the fund

managers, the timing of the dividend payout is decided by fund manager.

18. Mutual funds provide the option of receiving dividends at pre-determined

frequencies,wich can vary from daily,weekly,monthly,quarterly,half-yearly and

annual. Investors can choose the frequency of dividend distribution that suits their

requirements.

19. Investors choosing this option have a fixed no. of units invested in the fund

and earned incomes on this investment.

REGULATORS IN INDIA

1. SEBI - The capital markets regulators also regulates the mutual funds in India. SEBI

requires all mutual funds to be registered with them. SEBI issues guidelines for all mutual

funds operations - investment, accounts, expenses etc.

2. RBI as supervisor of banks owned mutual funds - As banks in India came under the

regulatory jurisdiction of RBI, bank owned funds to be under supervision of RBI and SEBI.

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3. RBI as supervisor of Money Market Mutual Funds - RBI has supervisory responsibility

over all entities that operate in the money markets. Hence in the past Money Market Mutual

Funds scheme of Mutual funds had to be abide by policies laid down by RBI.

Recently, it has been decided that Money Market Mutual Funds of registered mutual funds will be

regulated by SEBI through SEBI (Mutual Fund) Regulations 1996.

COMPARISON OF ULIP VS MUTUAL FUND

Unit Linked Insurance Policies (ULIPs) as an investment avenue are closest to mutual funds in

terms of their structure and functioning. As is the cases with mutual funds, investors in ULIPs are

allotted units by the insurance company and a net asset value (NAV) is declared for the same on a

daily basis.

Similarly ULIP investors have the option of investing across various schemes similar to the ones

found in the mutual funds domain, i.e. diversified equity funds, balanced funds and debt funds to

name a few. Generally speaking, ULIPs can be termed as mutual fund schemes with an insurance

component.

However it should not be construed that barring the insurance element there is nothing

differentiating mutual funds from ULIPs

1. Mode of investment/ investment amounts

Mutual fund investors have the option of either making lump sum investments or investing using

the systematic investment plan (SIP) route which entails commitments over longer time horizons.

The minimum investment amounts are laid out by the fund house.

ULIP investors also have the choice of investing in a lump sum (single premium) or using the

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conventional route, i.e. making premium payments on an annual, half-yearly, quarterly or monthly

basis. In ULIPs, determining the premium paid is often the starting point for the investment

activity.

This is in stark contrast to conventional insurance plans where the sum assured is the starting point

and premiums to be paid are determined thereafter.

ULIP investors also have the flexibility to alter the premium amounts during the policy's tenure.

For example an individual with access to surplus funds can enhance the contribution thereby

ensuring that his surplus funds are gainfully invested; conversely an individual faced with a

liquidity crunch has the option of paying a lower amount (the difference being adjusted in the

accumulated value of his ULIP). The freedom to modify premium payments at one's onvenienceclearly gives ULIP investors an edge over their mutual fund counterparts.

2. Expenses

In mutual fund investments, expenses charged for various activities like fund management, sales

and marketing, administration among others are subject to pre-determined upper limits as

prescribed by the Securities and Exchange Board of India.

For example equity-oriented funds can charge their investors a maximum of 2.5% per annum on a

recurring basis for all their expenses; any expense above the prescribed limit is borne by the fund

house and not the investors.

Similarly funds also charge their investors entry and exit loads (in most cases, either is applicable).

Entry loads are charged at the timing of making an investment while the exit load is charged at the

time of sale.

Insurance companies have a free hand in levying expenses on their ULIP products with no upper

limits being prescribed by the regulator, i.e. the Insurance Regulatory and Development Authority.

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This explains the complex and at times 'unwieldy' expense structures on ULIP offerings. The only

restraint placed is that insurers are required to notify the regulator of all the expenses that will be

charged on their ULIP offerings.

Expenses can have far-reaching consequences on investors since higher expenses translate into

lower amounts being invested and a smaller corpus being accumulated.

3. Portfolio disclosure

Mutual fund houses are required to statutorily declare their portfolios on a quarterly basis, albeit

most fund houses do so on a monthly basis. Investors get the opportunity to see where their moniesare being invested and how they have been managed by studying the portfolio.

There is lack of consensus on whether ULIPs are required to disclose their portfolios. During our

interactions with leading insurers we came across divergent views on this issue.

While one school of thought believes that disclosing portfolios on a quarterly basis is mandatory,

the other believes that there is no legal obligation to do so and that insurers are required to disclose

their portfolios only on demand.

Some insurance companies do declare their portfolios on a monthly/quarterly basis. However the

lack of transparency in ULIP investments could be a cause for concern considering that the amount

invested in insurance policies is essentially meant to provide for contingencies and for long-term

needs like retirement; regular portfolio disclosures on the other hand can enable investors to make

timely investment decisions.

4. Flexibility in altering the asset allocation

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As was stated earlier, offerings in both the mutual funds segment and ULIPs segment are largely

comparable. For example plans that invest their entire corpus in equities (diversified equity funds),

a 60:40 allotment in equity and debt instruments (balanced funds) and those investing only in debt

instruments (debt funds) can be found in both ULIPs and mutual funds.

If a mutual fund investor in a diversified equity fund wishes to shift his corpus into a debt from the

same fund house, he could have to bear an exit load and/or entry load.

On the other hand most insurance companies permit their ULIP inventors to shift investments

across various plans/asset classes either at a nominal or no cost (usually, a couple of switches are

allowed free of charge every year and a cost has to be borne for additional switches).Effectively the ULIP investor is given the option to invest across asset classes as per his

convenience in a cost-effective manner.

This can prove to be very useful for investors, for example in a bull market when the ULIP

investor's equity component has appreciated, he can book profits by simply transferring the

requisite amount to a debt-oriented plan.

5. Tax benefits

ULIP investments qualify for deductions under Section 80C of the Income Tax Act. This holds

good, irrespective of the nature of the plan chosen by the investor. On the other hand in the mutual

funds domain, only investments in tax-saving funds (also referred to as equity-linked savings

schemes) are eligible for Section 80C benefits.

Maturity proceeds from ULIPs are tax free. In case of equity-oriented funds (for example

diversified equity funds, balanced funds), if the investments are held for a period over 12 months,

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the gains are tax free; conversely investments sold within a 12-month period attract short-term

capital gains tax @ 10%.

Similarly, debt-oriented funds attract a long-term capital gains tax @ 10%, while a short-term

capital gain is taxed at the investor's marginal tax rate.

Despite the seemingly similar structures evidently both mutual funds and ULIPs have their unique

set of advantages to offer. As always, it is vital for investors to be aware of the nuances in both

offerings and make informed decisions.

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Chapter- 2

REVIEW OF LITERATURE

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REVIEW OF LITERATURE

Mr.Madhu(1949) T, made a study on ULIPs hold edge over mutual funds.The findings showsthat distributors would push unit linked insurance plans (ULIPs) to earn better commission. ULIPs

offer attractive frontend commissions to agents. However, independent financial advisors believe

that though there is a possibility of some distributors favoring ULIPs in the short term, the new

directive would be beneficial for both the industry and investors in the long run.(Mr.Madhu T, The

Economic Times,June2009).

Mr.Deepak Shenoy(1950) ,in his article Comparing ULIP returns to Mutual Funds, he reveals

that,over the last three years, their growth mutual fund has given better returns than the"MAXIMISER" option of their ULIPs.(Deepak Shenoy, The Indian Investors Blog, August 2006).

Mr.Murthaza and Sony(1961), in their article An Overview on ULIP, This article is an initiative

from Bajaj Allianz to create better understanding of ULIPs and its benefits so that investors can

avail maximum returns from their investments.

Mr.Bernz Jayma P(1962), made a study on Mutual Fund disadvantages. He suggested that ,If

you're new to stock market investing you may have heard that mutual funds would be a good way

for you to get started. That's actually good advice, but mutual funds have their own pitfalls to

watch out for.

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Chapter- 3

Research

Methodology

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RESEARCH DESIGN

Descriptive research procedure is used for describing the resent situations in the

organization and analytical research to analyze the results by using research tools.

Descriptive Research:

This research includes surveys and facts finding enquires of different kinds. The major

purpose of descriptive research is that the research can only describe the state of affairs existing at

present in the organization. The main feature of this method is that the researcher has no control

over the extraneous variables called the respondents as they are going to interview the employees

of the organization in order to perform study. They can only report what happened or what is

happening. In social science and business research, we quiet often use the terms ex-post facto

research for descriptive research studies, the researcher can discover and describe the causes for

various situations but they cannot control the situations.

TYPES OF RESEARCH:-

Descriptive research attempts to describe systematically a situation, problem, phenomenon,

service or programmed, or provides information about , say, living condition of a community, or

describes attitudes towards an issue.

Correlation research attempts to discover or establish the existence of a relationship/

interdependence between two or more aspects of a situation.

Explanatory research attempts to clarify why and how there is a relationship between two ormore aspects of a situation or phenomenon.

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Exploratory research is undertaken to explore an area where little is known or to investigate the

possibilities of undertaking a particular research study (feasibility study / pilot study)

RESEARCH TOOLS

Data Source : Primary & Secondary Data

Research Approach : Survey method

Research Instrument: Questionnaire

Sampling scheme : Simple random sampling

Contact method : Personal / Direct

Sample size : 50

DATA SOURCES AND COLLECTION METHODS

There are two type for collecting data

1. Primary data

2. Secondary data

PRIMARY DATA

Primary data are those which are collected a fresh and for the first time & thus

happen to be original in character. Primary data is obtained by the study specially designed to

fulfill the data needs to problem hand. Such data are original in characters generated by the

way of conducting survey.

SECONDARY DATA

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Secondary data are those which have already been collected by someone else and which

have already been passed through the statistical process. The Secondary data consist of reality

available compendices already complied statistical statements. Secondary data consists of not only

published records and reports but also unpublished record

OBJECTIVES

1. To understand the reason for which customers prefer ULIP as one of the best

insurance investment mode rather than Mutual fund.

2. To find the significance difference between customers of different income with thatof investment mode.

3. To Compare Investment Options of customers in ULIPs and Mutual Funds.

LIMITATIONS

1. The middle class people do not know basic concept of ULIP so creating awareness is a big

challenge for me.

2. The findings of my research is from a small sample size.

3. Narrow minded thinking of middle class people as investment is not their cup of tea.

4. Many customers are thinking that investment in share market is very risky. As ULIP andMutual fund both are related to share market.

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5. A general preference to LIC and SBI over private players.

6. Hesitations on the part of respondents to disclose financial information.

Chapter- 4

DATA INTERPRETATION

AND

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ANALYSIS

(A) Gender:

Gender

Frequency Percent Valid Percent

Cumulative

Percent

Valid Male 37 74.0 74.0 74.0

Female 13 26.0 26.0 100.0

Total 50 100.0 100.0

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INTERPRETATION :

The above graph shows that , out of 50 customers, 74% of the respondents are male policy holders

and the rest 26% are female policy holders.

(B) Marital Status:

Marital


Cumulative

Percent

Valid Married 33 66.0 66.0 66.0

Unmarried 17 34.0 34.0 100.0

Total 50 100.0 100.0

INTERPRETATION :

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From a sample of 50 customers, 66% of the policy holders are unmarried and the rest 34% of the

policy holders are married.

(C) Age:

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Age


Cumulative

Percent

Valid 20-30 6 12.0 12.0 12.0

30-40 14 28.0 28.0 40.0

40-50 17 34.0 34.0 74.0

50-60 11 22.0 22.0 96.0

60-70 2 4.0 4.0 100.0

Total 50 100.0 100.0

INTERPRETATION :

The graph shows that majority of the sample respondents were in the age group of 40-50 yrs

ie,34%, 12% were in the age group of 20-30 yrs & 28% of them were 30-40 yrs, 22% were in the

age group of 50-60 yrs and 4% were in the age group of 60-70 yrs.

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(D) Occupation:

Occupation


Cumulative

Percent

Valid Government 18 36.0 36.0 36.0

Private service 14 28.0 28.0 64.0

Business 11 22.0 22.0 86.0

NRIs 3 6.0 6.0 92.0

Others 4 8.0 8.0 100.0

Total 50 100.0 100.0

INTERPRETATION :

The graph shows that majority of the policy holders are working in the Government sector i.e.36%

, 28% of them are engaged in Private service, 22% of them are business field, 6% of them are NRIs

and 8% of them are engaged other works.

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(E) Annual Income:

Annual income


Cumulative

Percent

Valid Below 2 lakhs 19 38.0 38.0 38.0

2-4 lakhs 23 46.0 46.0 84.0

4-6 lakhs 6 12.0 12.0 96.0

6-8 lakhs 2 4.0 4.0 100.0

Total 50 100.0 100.0

INTERPRETATION :

The graph shows that 46% of the policy holders get a salary of 2-4 lakhs, 38% of the policy holders

get a salary of below 2 lakhs, 12% of the policy holders get a salary of 4-6 lakhs, 3 of the policy

holders get a salary below 2 lakhs and 4% of them above 6-8 lakhs.

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Sources that helps you in making investment decision.

Sources that helps you in making the investment decisions.


Cumulative

Percent

Valid Financial journal 5 10.0 10.0 10.0

Television 2 4.0 4.0 14.0

Brokers/Agent 27 54.0 54.0 68.0

Friends 13 26.0 26.0 94.0

Consultants 3 6.0 6.0 100.0

Total 50 100.0 100.0

I would like to invest money in ULIP.

I would like to invest money in ULIP.


Cumulative

Percent

Valid Strongly agree 2 4.0 4.0 4.0

Agree 33 66.0 66.0 70.0

Neutral 8 16.0 16.0 86.0

Disagree 5 10.0 10.0 96.0

Strongly disagree 2 4.0 4.0 100.0

Total 50 100.0 100.0

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INTERPRETATION :

From a sample of 50 customers, 66% agree, 4% of them strongly supporting that fact, and 16% has

no opinion about it. And 4% strongly disagreed, remaining 10% also disagree with investment in

ULIP.

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7. Reason for choosing ULIPs because of insurancecoverage.

Reason for choosing ULIPs because of insurance coverage.


Cumulative

Percent


Agree 32 64.0 64.0 92.0

Neutral 2 4.0 4.0 96.0

Disagree 2 4.0 4.0 100.0

Total 50 100.0 100.0

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INTERPRETATION :

From a sample of 50 customers,26% of the customers agree with that fact,6% of the customers

strongly support it,and 28% customers have no idea about it.And remaining 10% disagreed,out of

this 10%, 4% strongly disagreed with it.

9. Mutual funds are more risky than ULIP products.

Mutual funds are more risky than ULIP products.


Cumulative

Percent


Agree 27 54.0 54.0 88.0

Neutral 4 8.0 8.0 96.0

disagree 2 4.0 4.0 100.0

Total 50 100.0 100.0

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INTERPRETATION :

From a sample of 50 customers, majority of the customers agree i.e. 42%, 12% strongly agree with

that fact. And 32% disagree,4% strongly disagree, and remaining 10% neither agree nor disagree

with that statement.

15. Past schemes performance influence your investment

decision in ULIP.

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past scheme's performance


Cumulative

Percent


Agree 8 16.0 16.0 32.0

Neutral 7 14.0 14.0 46.0

Disagree 23 46.0 46.0 92.0


Total 50 100.0 100.0

INTERPRETATION :

From a sample of 50 customers, majority of the customers disagree i.e. 46%, 8% strongly disagree

with that fact. And 16% strongly agree,16% agree, and remaining 14% neither agree nor disagree

with that statement

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16. Advertisement influence the investment decision in

ULIP.

Advertisement


Cumulative

Percent


Agree 11 22.0 22.0 40.0

Neutral 19 38.0 38.0 78.0

Disagree 5 10.0 10.0 88.0


Total 50 100.0 100.0

INTERPRETATION :

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From a sample of 50 customers, 22%agree, 18% strongly agree with that fact. And 10%

disagree,12% strongly disagree, and remaining 38% neither agree nor disagree with that statement.

17. Do you think the safety factor is important in your investment in mutual

fund.

Safety


Cumulative

Percent


Agree 4 8.0 8.0 12.0

Neutral 8 16.0 16.0 28.0

Disagree 30 60.0 60.0 88.0


Total 50 100.0 100.0

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HYPOTHESIS-1

H0: There is no relationship between investment of ULIP and Insurance

coverage.

H1: There is relationship between investment of ULIP and insurance coverage.

CORRELATIONS

Correlations

I would like to

invest money in

ULIP.

Reason for

choosing ULIPs

because of

insurance

coverage.

I would like to invest money

in ULIP.

Pearson Correlation 1 .729**

Sig. (2-tailed) .000

N 50 50

Reason for choosing ULIPs

because of insurance

coverage.

Pearson Correlation .729** 1

Sig. (2-tailed) .000

N 50 50

**. Correlation is significant at the 0.01 level (2-tailed).

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HYPOTHESIS-2

H0: There is no relationship between the investment pattern and annual

income of the customers.

H1: There is a relationship between the investment pattern and annual income

of the customers.

T-Test

Group Statistics

Annuaincome N Mean Std. Deviation Std. Error Mean


in ULIP.

Below 2 lakhs 19 2.26 .806 .185

6-8 lakhs 2 2.00 .000 .000


in mutual funds.

Below 2 lakhs 19 3.37 .955 .219

6-8 lakhs 2 4.00 .000 .000

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Independent Samples Test

Levene's Test for Equality ofVariances

t-test for Equalityof Means

F Sig. t


in ULIP.

Equal variances assumed 1.428 .247 .451

Equal variances not assumed 1.424


in mutual funds.

Equal variances assumed 3.956 .061 -.914

Equal variances not assumed -2.882

Independent Samples Test

t-test for Equality of Means

df Sig. (2-tailed) Mean Difference


in ULIP.

Equal variances assumed 19 .657 .263

Equal variances not assumed 18.000 .172 .263


in mutual funds.

Equal variances assumed 19 .372 -.632

Equal variances not assumed 18.000 .010 -.632

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Chapter-5

CONCLUSION

FINDINGS AND

SUGGESTIONS

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FINDINGS AND SUGGESTIONS

After survey there are some findings and suggestions as follows.

1. As insurance sector is growing rapidly so most of the life insurance players are selling

ULIP plans. And the awareness about ULIP is growing most of the people knows the ULIP

of life insurance. Since last 4-5 years the returns provided by ULIP were very good so

people tend more towords ULIP

1. Middle class people who are interested in investment but they are not aware of such options

so more awareness should be there, as main target customer are the middle class peoples.

2. While investing any insurance company customer prefers for good branded company Bajajis Indias one of the most famous and richest family. And second preference is given to SBI

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life as many people perceive that SBI Life is a govt. owned company so people want

security for their investment.

3. As now till date people in India dont wanted to invest in share market because then were

thinking that it is a bad thing but as the awareness about Mutual fund is increasing as more

and more private players are entering in the market. So awareness about MF is not very

good and it can be improved.

4. While survey I found that many all customers had already invested in ULIP and Mutual

Fund some people had invested in both options. 12% of people had invested in Mutual

Fund and 26% people had invested in ULIP and 4% people had invested in both the

options.5. While investing in mutual fund 44% of the customers looks their return,42% customers

observe the schemes performance in past years.

6. First reason or preference that why an investor is interested in ULIP is Investment Purpose,

and second is to its returns and after that they investing because they are getting the tax

benefit. Then again there are some people who are investing for pension planning and

security.

7. In future people will be more preferring to the security of their money means they want a

secured option which should provide good returns. As ULIP are the option in which you

can have the security also and good returns. The second choice of the investors is return of

their money.

8. 54% of people given Best rating to the Bajaj Allianz Life Insurance ULIP, so from this we

can analyze that Bajaj Allianz Life Insurance is doing good but it is having good potential

in Market. To improve its market share they should improve the awareness level of the

common people.

9. Innovative Products and good brand name are the main success factor for Bajaj Allianz

Life Insurance. 6% customers are attracted due to the high reputation of the company. So if

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BALIC wants to penetrate its market share they should improve the marketing strategy,

improving the distribution channel etc.

CONCLUSION AND RECOMMENDATIONS

From above analysis and survey we can conclude as follows

1. Awareness of ULIP is increasing as more number of private players are entering in life

insurance industry.

2. Mutual Fund is also getting more and more famous in Indian market as many private

companies innovating new funds as the investors demand.

3. ULIP differentiate from Mutual fund in respect of Insurance cover.

4. Investors in Bajaj Allianz Life ULIP will be getting the advantage of life insurance cover.

5. People are turning towords the ULIP as a good investment option but as ULIP is in its

starting phase so customers are preferring only big brands.

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1. Mutual fund is having good growth but many customers from rural areas dont have any

knowledge about Mutual fund.They think it is very risky.

2. Even investors from cities like Ghauran dont have that much of Knowledge about fund

selection they all are depend on Brokers.

3. People in Ghauran are investing in only good branded companies as they dont believe on

other financial companies for taking ULIP.

4. There is a need for insurers to undertake a demand audit in order to understand what the

policyholder wants and needs.

BIBLIOGRAPHY

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REFERENCE:

1) Research Methodology, C.R Kothari, 2nd edition

2) Outlook Money, 15 May 2005, ULIP Mania.

3) The Business Line, 10 June 2007, Know all About ULIPS.

WEBSITE

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www.irdaindia.gov

www.bajajallianzlife.co.in

www.quickmba.com

www.amfindia.com

www.mba.com

www.articlebase.com

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http://www.irdaindia.gov/http://www.bajajallianzlife.co.in/http://www.quickmba.com/http://www.amfindia.com/http://www.mba.com/http://www.articlebase.com/http://www.bajajallianzlife.co.in/http://www.quickmba.com/http://www.amfindia.com/http://www.mba.com/http://www.articlebase.com/http://www.irdaindia.gov/


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QUESTIONNAIRE

QUESTIONNAIRE

I am CHAMANDEEP KAUR student ofChandigarh university doing a

project on A COMPARATIVE STUDY OF ULIP PLANS OF BAJAJ ALLIANZ

LIFE INSURANCE WITH MUTUAL FUNDS and this questionnaire is a part of the

project and the information collected through this questionnaire would be used only for

academic purposes and strictly confidential

PERSONNAL INFORMATION

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1. Name:

2. Gender:

(a) Male (a) Female

3. Marital status:

(a) Married (b) Unmarried

4. Age:

(a) 20-30 (b) 30-40

(c) 40-50 (d) 50-60

(e) 60-70

5. Occupation:

(a) Government (b) Private Service

(c) Business (d) NRIs

(e) Others

6.Annual Income:

(a) Below 2 lakhs (b) 2-4 lakhs

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(c) 4- 6 lakhs (d) 6-8 lakhs

(e) Above 8 lakhs

1. Sources that helps you in making the investment

decisions.

(a) Financial journal (b)

Television

(c) Brokers or agents (d)

Friends

(e) Consultants

2. Factors that influence your investment decisions in a

particular company.

(a) Attractive schemes (b) Tax

benefits

(c) High reputation (d) Rate of

return

(e) Variety of products

3.You generally like to invest money.

(a) Insurance (b) Stock

Market

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(c) Mutual Fund (d) Bank

deposits

(e) Both insurance and mutual fund

4. According to you who among the following Life

Insurance companies is best.

(a) BAJAJ ALLIANZ (b) HDFC

STANDARDLIFE

(c) TATA AIG (d) AVIVA LIFE

INSURANCE

(e) SBI LIFE

5. How would you rate our products.

(a) Excellent (b) Good

(c) Fair (d)

Poor

(e) Very poor

6. I Would like to invest money in ULIP.

(a) Strongly agree (b) Agree

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(c) Neutral (d)

Disagree

(e) Strongly disagree

7. Reason for choosing ULIPs because of insurance

coverage.


(c) Neutral (d)

Disagree


8. Iwould like to invest money in Mutual Funds.


(c) Neutral (d)Disagree


9. Mutual funds are more risky than ULIP products.


(c) Neutral (d)

Disagree


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10. ULIPs have advantage over Mutual funds.


(c) Neutral (d)

Disagree


Do you view following factors/sources of information

important while investing in ULIP.

Strongly

agree

Agree Neutral Disagree Strongly

disagree

(11) Safety

(12) Liquidity

(13) Rate of

Return

neww........a comparative analysis of ulip of bajaj allianz life insurance co

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