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CHAPTER-1

INTRODUCTION

BIRLA SUN LIFE INSURANCE

Birla Sun Life Insurance Company Limited (BSLI) is a joint venture between the Aditya Birla

Group and Sun Life Financial Inc., a leading international financial services organization. The

local knowledge of the Aditya Birla Group combined with the expertise of Sun Life Financial

Inc., offers a formidable value proposition to customers. Sun Life Financial and its partners

today have operations in key markets worldwide, including India, Canada, the United States, the

United Kingdom, Hong Kong, Philippines, Japan, Indonesia, China and Bermuda. Sun Life

Financial Inc. had assets under management of over US$ 386.82 billion, as on 31 March 2007.

Sun Life Financial Inc. is a leading performer in the life insurance market in Canada.

BSLI in its five successful years of operations has contributed significantly to the growth and

development of the life insurance industry in India. It pioneered the launch of Unit Linked Life

Insurance plans amongst the private players in India. It was the first player in the industry to sell

its policies through the Bank assurance route and through the internet. It was also the first private

sector player to introduce a pure term plan in the Indian market. This was supported by sales

practices, which brought a degree of transparency that was entirely new to the market. The

process of getting sales illustrations signed by customers, offering a free look period on all

policies, which are now industry standards were introduced by BSLI.

Being a customer centric company, BSLI has invested heavily in technology to build world class

processing capabilities. BSLI has covered more than one and a half million lives since inception

and its customer base is spread across 100 cities in India. All this has assisted the company in

cementing its place amongst the leaders in the industry in terms of new business premium

income. Birla Sun Life Insurance (BSLI), one of the leading private life insurers in India today

announced the inimitable achiever, cricketer Kapil Dev as their corporate brand ambassador. The

cricketing supreme will be endorsing BSLI in all its marketing initiatives. Birla Sun Life

Insurance is a value-driven brand which has a national brand recall of 70 per- cent. The objective

of appointing a brand ambassador is to grow its brand recall as it goes national in its distribution

reach and fuel business growth. As a brand ambassador, Kapil Dev will play a key role in the

brand and product marketing and promotional activities. BSLI has always used an integrated

marketing approach, which will be strengthened further.

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Commenting on the association with Kapil Dev, Mr. S. K. Mitra, Director, Financial Services,

Aditya Birla Group and currently in charge of BSLI expressed, "The Birla Sun Life Insurance

business distribution network is national in nature covering more than 1000 points across the

country .We have made our entry in several tier I and tier II towns. It is therefore very important

for the brand to connect at the grass root level and create trust. We believe that our association

with Kapil Dev as our brand ambassador will help us create this connects in a shorter period of

time. We therefore now have two strong connects — our parent brand Birla and our brand

Ambassador Kapil Dev".

Kapil Dev, also known as the Haryana Hurricane, was born on 6 January 1959 in Chandigarh.

He played his first competitive game of cricket at the age of 13 years and made his test debut on

16 October 1978 at Faisalabad against Pakistan. Kapil Dev remained India's top strike bowler for

almost 15 years. His extraordinary test match figures of more than 5000 runs and 434 wickets

along with 64 catches show that he was a world class cricketer and an all-rounder. He has raised

the mantle of India to sporting glory by winning us the World Cup.

In a study conducted by BSLI, Kapil Dev connected extremely well with the life insurance

category and had high acceptance by the masses. Our survey suggests that he is seen as a very

good fit for the BSLI brand. He is very much loved and respected by a vast majority of the

population.

On 26 November 2006, Birla Sun Life hosted the annual golf tournament at the Chembur Golf

Club in Mumbai where Kapil Dev participated.

About Birla Sun Life Insurance

Birla Sun Life Insurance Company Limited is a joint venture between the Aditya Birla Group,

one of the largest business houses in India and Sun Life Financial Inc., a leading international

financial services organization. The local knowledge of the Aditya Birla Group combined with

the expertise of Sun Life Financial Inc., offers a formidable protection for your future.

Birla Sun Life Insurance (BSLI), in its five successful years of operations, has contributed

significantly to the growth and development of the life insurance industry in India. It pioneered

the launch of unit linked life insurance plans amongst the private players in India. It was the first

player in the industry to sell its policies through the banc assurance route and through the

internet. It was the first private sector player to introduce a pure term plan in the Indian market.

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This was supported by sales practices which brought a degree of transparency that was entirely

new to the market. The process of getting sales illustrations signed by customers and offering a

free look period on all policies, which are now industry standards, were introduced by BSLI.

Being a customer-centric company, BSLI has invested heavily in technology to build world class

processing capabilities. BSLI has covered more than a million lives since inception and its

customer base is spread across more than 1000 towns and cities in India. All this has assisted the

company in cementing its place amongst the leaders in the industry in terms of new business

premium income. The company's current capital base is Rs.520 crore.

About the Aditya Birla Group

The Aditya Birla Group has a turnover close to Rs.38,000 crore (as on 31 March 2008) and is

one of the largest business houses in India. It enjoys a leadership position in all the sectors in

which it operates. With over 75 business units spanning the South East Asian belt, Africa,

Canada and the UK among others, it is reckoned as India's first multinational corporation. The

group is anchored by 72,000 employees and has seven lakh shareholders, with a market

capitalization of Rs.53,400 crore.

About Sun Life Financial Inc.

Sun Life Financial Inc. is a leading international financial services organization providing a

diverse range of wealth accumulation and protection products and services to individuals and

corporate customers. Tracing its roots back to 1865, Sun Life Financial and its partners today

have operations in key markets worldwide, including Canada, the United States, the United

Kingdom, Hong Kong, the Philippines, Japan, Indonesia, India, China and Bermuda. As of 31

March 2008, the Sun Life Financial group of companies had total assets under management of

US$ 343 billion. Sun Life Financial Inc. trades on the Toronto (TSX), New York (NYSE) and

Philippine (PSE) stock exchanges under ticker symbol "SLF".

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Key peoples of organisation

Board of Directors

Mr. Kumar M Birla

Mr. Donald A Stewart,

Mr. Bishwanath N Puranmalka

Mr. Ajay Srinivasan

Mr. Gary M Comerford

Mr. Suresh N Talwar

Mr. Gian P Gupta

His Highness Maharaja G Singh

Mr. Stephan Rajotte

Dr. Bharat K Singh

Investment Committee

Mr. B. N. Puranmalka

Mr. Eugene Lundrigan

Mr. Ajay Srinivasan

Mr. Vikram Mehmi

Mr. Mayank Bathwal

Mr. Fabien Jeudy

Mr. Vikram Kotak

Ms. Keerti Gupta

Management Team

Mr. Vikram Mehmi

President & Chief

Executive Officer

Mr. Mayank Bathwal

Chief Financial Officer

Mr. Mario Braganza

Chief Operating Officer

Mr. E.N. Goveia

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Head - Direct Sales Force

Mr. Amit Punchhi

Senior Vice President - Third Party Distribution

Mr. Bhavesh Sanghvi

Head - Group Life & Pensions

Mr. Snehal Shah

Senior Vice President - Operations

Ms. Anjana Grewal

Senior Vice President - Marketing & Communications

Mr. Rajesh Bhojani

Senior Vice President - DSF Expansion

Mr. K.H. Venkatachalam

Vice President – Human Resource

Mr. Fabien Jeudy

Vice President, Chief & Appointed Actuary

Mr. Lalit Vermani

Vice President - Compliance

Mr. Melvyn D'souza

Vice President – Risk Management and Internal Audit

Mr. Vikram Kotak

Vice President - Investments

Mr. Bhalachandra Nayak

Vice President – Strategy

Competitors:-

Life insurance corporation

ING vysya life insurance

Max network life insurance

MetLife insurance

Aviva life insurance

Bharathi Axa life insurance

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Bajaj Allianz life insurance

Tata AIG life insurance

ICICI Prudential Life Insurance

Reliance life insurance

Kotak Mahindra life insurance

Competitors in Detail:-

Aviva life insurance: Aviva Life Insurance Company India Pvt. Ltd. is a joint venture

between Aviva of UK and Dabur, one of India's leading producers of traditional healthcare

products. Aviva holds a 26 per cent stake in the joint venture and the Dabur group holds the

balance 74 per cent share.

Bajaj Allianz: Bajaj Allianz is a joint venture between 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. Bajaj Allianz is into both life insurance and general insurance. 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

HDFC Standard Life Insurance Co. Ltd: is a joint venture between HDFC Ltd., India's

largest housing finance institution and Standard Life Assurance Company, Europe's largest

mutual life company. It was the first life insurance company to be granted a certificate of

registration by the IRDA on the 23rd of October 2000.

ING Vysya Life Insurance Company Limited: is a joint venture between Vysya Bank and

ING Group of Holland, the world's 4th largest financial services group, with presence across

50 countries, and a heritage of over 150 years.

Kotak Mahindra Old Mutual Life Insurance Ltd: is a joint venture between Kotak

Mahindra Bank Ltd. (KMBL), and Old Mutual plc. Kotak Mahindra is one of India's leading

financial institutions and offers a range of financial services such as commercial banking.

Life Insurance Corporation of India: (LIC) is an autonomous body authorized to run the

life insurance business in India with its Head Office at Mumbai. It has been established by an

act of the Parliament and started functioning from 1/9/1956.

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ICICI Prudential Life Insurance : ICICI Prudential life insurance is a part of ICICI Bank.

Max New York Life Insurance Company Limited is a joint venture between Max India

Limited, a multi-business corporate, and New York Life International, a global expert in life

insurance. New York Life is a Fortune 100 company that has over 160 years of experience in

the life insurance business.

MetLife India Insurance Co. Pvt Ltd is a joint venture between MetLife Group and its

Indian partners. The Indian partners include J&K Bank, Dhanalakshmi Bank, Karnataka

Bank, Karvy Consultants, Geojit Securities, Way2Wealth, and Mini Muthoothu.

Reliance Life Insurance Company Limited is a part of Reliance Capital Ltd. of the Reliance

- Anil Dhirubhai Ambani Group. The company acquired 100 per cent shareholding in AMP

Sanmar Life Insurance Company in August 2005. Taking over AMP Sanmar Life provided

Reliance Life Insurance a readymade infrastructure and a portfolio.

SBI Life Insurance is a joint venture between the State Bank of India and Cardiff SA of

France. SBI Life Insurance is registered with an authorized capital of Rs 500 crore and a paid

up capital of Rs 350 cores.

Tata AIG Life Insurance Company Limited is a joint venture between Tata Group and

American International Group, Inc. (AIG). Tata Group is one of the oldest and leading

business groups of India. Tata Group has had a long association with India's insurance sector

having been the largest insurance company in India prior to the nationalization of insurance.

The Late Sir Dorab Tata was the founder Chairman of New India Assurance Co. Ltd., a

group company incorporated way back in 1919.

Shriram Life Insurance Company Ltd is a joint venture between the Chennai-based

Shriram Group and the South African insurance major Sanlam. The company launched its

operation in India in December 2005

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STRENGTH:

Multi-channel distribution and one of the largest distribution networks in India.

Implementing Six-Sigma process.

Customer centric products and services.

Superior investment and risk management framework

1 Million Policies sold within 3 and half years.

Company has maximum number of MDRT as well as good number of HNI advisors.

Training process of the company is very strong.

Different plan for different peoples.

According to the change in surrounding environment like changes in customer requirement.

WEAKNESS:

COMPANY does not penetrate on the rural market at a time.

There is no plan for the low income group.

Fees for the advisor is high than the other company.

OPPORTUNITY:

Insurance market is very big, where company can expand its horizon in insurance industry.

Though good investment and insurance it is easy to top Indian customers.

The huge insurance market (77%) is left so company has opportunity to expand our products.

To associate with the more number of HNI.

THREATS:

OLD HABITS DIE HARD’: It’s still difficult task to win the confidence of public towards

private company.

The company is facing major threats from LIC -which is an only government company.

Plans for all income groups are not available which can create adverse effect later on the

market share of the company.

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1.2 INTRODUCTION TO THE PROJECT

EVALUATION OF INSURANCE

The evaluation of insurance dates back as early as the commencement of trade between two

countries in England, especially between the European countries. During the transportation of

goods, there were chances of the ship being drowned in the rough sea conditions or attacked by

the pirates, leading to huge loss to the party sending goods. The traders of England devised a

way whereby the loss of the goods would be compensated by every trader putting in some

amount as per their financial strength so that a single party may not be the loser; this is the earlier

concept of insurance. This concept is taking shape for the last 300 years, yet in India the first

insurance company was established in 1818 with the advent of European widows. The name of

the company was oriental life insurance company.

WHAT IS INSURANCE?

Insurance is a mechanism that ensures an individual to thrive on adverse consequences by

compensating the individual, his/her loss financially. Every individual in the world and all

activities connected with him/her, be it life, profession, business, travel or any other pursuits are

subject to unforeseen and uncalled for hazards or dangers. The benefit that an individual enjoys

in his life by owning a car or a house or a factory can be snatched by sudden accident which can

render even the individual immobile, and his family vulnerable. At this critical juncture, only

insurance helps him not only to survive but recover his loss and continue his life in a normal

manner, which would otherwise be unthinkable.

The concept of insurance is quite simple. People, who are in similar trade and are exposed to the

same risks, congregate and some to an agreement that if any individual member suffer a loss,

then the loss will be shared by others and minimized in order to enable the individual member

recover from the loss and cover his ground. Similarly the different kinds of risks can be

identified and separate groups can be formed to counter such risks and reduce to impact to

manageable proportion, in which the share could be collected from the members either after the

loss or in advance, at the time of admission to the group. This is an exemplary sign of humanity

and insurance therefore serve the mankind to a great extent; a point most of the individual tend to

overlook, since monetary aspect is involved. Now such is for tangible assets.

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The concept of insurance has been extended beyond the coverage of tangible assets. Exporters

run the risk of importers in other country defaulting as well as losses due to sudden fluctuations

in the currency exchange rates, economic policies turmoil. The risk are not insured. Doctors run

the risk of being charged with negligence and can subsequently liable for damage. The amount in

question can be fairly large, beyond the capacity of the individual to bear. These are insured.

Thus insurance is extended to intangible assets. In some countries even the voice of a singer ,

legs of the footballer can be insured, even though the advantage of spread may not be available

in these cases. Satisfaction of economics needs requires generation of income from some

sources. If the property, which is the source of such income, were lost fully or partially,

permanently, or temporarily, the income too would stop. The purpose of insurance is to

safeguard against such misfortune few, through the help of the fortune many, who were exposed

to the same risk , but saved from the misfortune . Thus the essence of insurance is to share losses

substitute certainty by uncertainty.

The different types of human activities that come under the umbrella of insurance are as follows.

1. House/office/factory or any moveable object destroyed in life - Fire insurance

2. Shipment or transportation of goods - Marine insurance

By ship, destroyed in catastrophe.

3. jewellery /cash/ household goods - Burglar insurance

Stolen or robbed

4. Goods in transit by roads or railways destroyed. - Carrier insurance

5. Theft or accident of vehicles - Vehicle insurance

6. Financial cover in ailment /surgery etc - Health insurance

All these are non-life insurance. In conclusion one can safely say that the purpose of insurance

be it or non-life is to transfer the financial loss to the insurance company who spreads in over to

the policyholders.

Life insurance

Life insurance (Life Assurance in British English) is a type of insurance. As in all insurance, the

insured transfers a risk to the insurer. The insured pays a premium and receives a policy in

exchange. The risk assumed by the insurer is the risk of death of the insured.

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How life insurance works

There are three parties in a life insurance transaction; the insurer, the insured, and the owner of

the policy (policyholder), although the owner and the insured are often the same person. For

example, if John Smith buys a policy on his own life, he is both the owner and the insured. But if

Mary Smith, his wife, buys a policy on John's life, she is the owner and he is the insured. The

owner of the policy is called the grantee (he or she will be the person who will pay for the

policy). Another important person involved is the beneficiary. The beneficiary is the person or

persons who will receive the policy proceeds upon the death of the insured. The beneficiary is

not a party to the policy, but is designated by the owner, who may change the beneficiary unless

the policy has an irrevocable beneficiary designation. With an irrevocable beneficiary, that

beneficiary must agree to changes in beneficiary, policy assignment, or borrowing of cash value.

The policy, like all insurance policies, is a legal contract specifying the terms and conditions of

the risk assumed. Special provisions apply, including a suicide clause wherein the policy

becomes null if the insured commits suicide within a specified time for the policy date (usually

two years). Any misrepresentation by the owner or insured on the application is also grounds for

nullification. Most contracts have a contestability period, also usually a two-year period; if the

insured dies within this period, the insurer has a legal right to contest the claim and request

additional information before deciding to pay or deny the claim.

The face amount of the policy is normally the amount paid when the policy matures, although

policies can provide for greater or lesser amounts. The policy matures when the insured dies or

reaches a specified age. The most common reason to buy a life insurance policy is to protect the

financial interests of the owner of the policy in the event of the insured's demise. The insurance

proceeds would pay for funeral and other death costs or be invested to provide income replacing

the deceased's wages. Other reasons include estate planning and retirement. The owner (if not the

insured) must have an insurable interest in the insured, i.e. a legitimate reason for insuring

another person’s life. The insurer (the life insurance company) calculates the policy prices with

intent to recover claims to be paid and administrative costs, and to make a profit. The cost of

insurance is determined using mortality tables calculated by actuaries.

Actuaries are professionals who use actuarial science which is based in mathematics (primarily

probability and statistics). Mortality tables are statistically based tables showing average life

expectancies. The three main variables in a mortality table are age, gender, and use of tobacco.

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The mortality tables provide a baseline for the cost of insurance. In practice, these mortality

tables are used in conjunction with the health and family history of the individual applying for a

policy in order to determine premiums and insurability. The current mortality table being used by

life insurance companies in the United States and their regulators was calculated during the

1980s. There is currently a measure being pushed to update the mortality tables by 2008.

The current mortality table assumes that roughly 2 in 1,000 people aged 25 will die during the

term of coverage. This number rises roughly quadratically to about 25 in 1,000 people for those

aged 65. So in a group of one thousand 25 year old males with a $100,000 policy, a life

insurance company would have to, at the minimum, collect $200 a year from each of the

thousand people to cover the expected claims. The insurance company receives the premiums

from the policy owner and invests them to create a pool of money from which to pay claims, and

finance the insurance company's operations. Contrary to popular belief, the majority of the

money that insurance companies make comes directly from premiums paid, as money gained

through investment of premiums will never, in even the most ideal market conditions, vest

enough money per year to pay out claims. Rates charged for life insurance increase with the

insured's age because, statistically, a people are more likely to die as they get older. Since

adverse selection can have a negative impact on the financial results of the insurer, the insurer

investigates each proposed insured (unless the policy is below a company-established minimum

amount) beginning with the application, which becomes part of the policy. Group Insurance

policies are an exception. This investigation and resulting evaluation of the risk is called

underwriting. Health and lifestyle questions are asked, and the answers are dutifully recorded.

Certain responses by the insured will be given further investigation. Life insurance companies in

the United States support The Medical Information Bureau, which is a clearinghouse of medical

information on all persons who have ever applied for life insurance. As part of the application,

the insurer receives permission to obtain information from the proposed insured's physicians.

Life insurance companies are never required by law to underwrite or to provide coverage on

anyone. They alone determine insurability, and some people, for their own health or lifestyle

reasons, are uninsurable. The policy can be declined (turned down) or rated. Rating means

increasing the premiums to provide for additional risks relative to that particular insured.

Many companies use four general health categories for those evaluated for a life insurance

policy. These categories are Preferred Best, Preferred, Standard and Tobacco. Preferred Best

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means that the proposed insured has no adverse medical history is not under medication for any

condition, and his family (immediate and extended) has no history of early cancer, diabetes or

other conditions. Preferred is like Preferred Best, but it allows that the proposed insured is

currently under medication for the condition and may have some family history. Most people are

in the Standard category. Profession, travel, and lifestyle also factor into not only which category

the proposed insured falls, but also whether the proposed insured will be denied a policy. For

example, a person who would otherwise be in the Preferred Best category will be denied a policy

if he or she travels to a high risk country.

Upon the death of the insured, the insurer will require acceptable proof of death before paying

the claim. The normal minimum proof is a death certificate and the insurer's claim form

completed, signed, and often notarized. If the insured's death was suspicious and the policy

amount warrants it, the insurer may investigate the circumstances surrounding the death, before

deciding whether there is a legal obligation to pay the claim.

Proceeds from the policy may be paid in a lump sum or as an annuity paid over time in regular

recurring payments for either for the life of a specified person or a specified time period.

Contribution of life insurance in development of economy

Contribution of Life Insurance Sector in the Economy

Flow of Insurance Industry in India

Structure of insurance industry: Snap Shot

Industry

Aggregation of long term savings

Spread of financial services in rural Areas

Long term funds for infrastructure development of capital Markets/ Economic Growth

Employment generation

Special Futures

Growth Potential

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DETAILS OF PRODUCTS

PRODUCTS

Life is unpredictable. But in face of adversity, our responsibilities towards our parents, children

and loved ones need not be compromised. Insurance planning equips you to smooth out the

uncertainties and adversities that life might send your way, so that the best that life has to offer,

secure in the knowledge that your beloved ones are well provided for. BSLI offers a complete

range of insurance products

1. Protection Plans

2. Savings Plans

3. Child Plans

4. Investment Plans

5. Retirement Plans

6. Group Plans

7. Rural Plans

Insurance Plans

BSLI offers Lifeguard - a set of pure protection plans. Choose from amongst three different

product structures to insure your life and provide total security to your family, at a very

affordable cost.

Level Term Assurance with return of premium

On death the entire sum assured will be paid.

On maturity, all the premiums paid will be returned.

Level Term Assurance without return of premium

On death the entire sum assured will be paid.

No survival or maturity benefits.

You can also enhance the above two policies by adding Accident

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& Disability Benefit Rider and Waiver of Premium Rider (WOP)

Level Term Assurance - Single premium:

On death the entire sum assured will be paid.

No survival or maturity benefits.

Protection Plans

BSLI offers a variety of policies that give you the benefits of protection and the opportunity to

save for important assets or events, like a home, a car or a wedding.

A regular premium unit-linked insurance plan with an assurance of Capital Guarantee# with the

added advantage of flexible liquidity option. An ideal plan for long term planning with the

benefit of liquidity.

The key features of the plan are:

Flexibility to choose a specific level of protection (Sum Assured), based on a multiple of the

annual premium. You can also choose the term of the plan.

At the end of the term, the higher of the value of units or the guaranteed value is paid. On

death, Sum Assured along with the higher of value of units or the guaranteed value is

payable.

Facility to make withdrawals from the 6th policy year onwards till the end of the policy term.

Every year withdraw up to 10% of the value of units.

Additional credits payable as a percentage of the initial annual premium are paid along with

the death or maturity benefit.

Additional insurance for 10 years after the maturity, for an amount of 50% of the Sum

Assured

Savings Plans

Flexibility to make additional investment with the help of the top-up facility.

Flexibility to increase / decrease your annual premium Amount

Facility of Automatic Premium Payment- With this facility you can take a temporary break

from premium payment.

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Total transparency with the premium allocations, and other charges declared upfront.

The guaranteed value of the unit fund is the value of all invested premiums (premiums net of

all charges) along with the declared bonus interests.

With Automatic Premium Payment facility, you can avail a temporary break from premium

payment for a maximum of 1 year. This facility is available once if the premium paying term is

less than 15 years and twice, if it is 15 years or more. You can also enhance your policy by

adding Accident & Disability Benefit Rider , Waiver of Premium Rider and Critical Illness Rider

.A regular premium unit-linked insurance plan with an assurance of Capital Guarantee# An ideal

plan for your long-term savings and protection requirement.

The key features of the plan are:

Flexibility to choose a specific level of protection (Sum Assured), based on a multiple of the

annual premium. You can also choose the term of the plan.

At the end of the term, the higher of the value of units or the guaranteed value is paid. On

death, Sum Assured along with the higher of value of units or the guaranteed value is payable

Additional credits payable as a percentage of the initial annual premium are paid along with

the death or maturity benefit.

Additional insurance for 10 years after the maturity, for an amount of 50% of the Sum

Assured.

Flexibility to make additional investment with the help of the top-up facility.

Flexibility to increase / decrease your annual premium amount

Facility of Automatic Premium Payment- With this facility you can take a temporary break

from premium payment.

Total transparency with the premium allocations, and other charges declared upfront. The

guaranteed value of the unit fund is the value of all invested premiums (premiums net of all

charges) along with the declared bonus interests.

With Automatic Premium Payment facility, you can avail a temporary break from premium

payment for a maximum of 1 year. This facility is available once if the premium paying term is

less than 15 years and twice, if it is 15 years or more.

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The capital guarantee is applicable only on the invested premium and the declared bonus

interests. You can also enhance your policy by adding Accident & Disability Benefit Rider,

Waiver of Premium Rider and Critical Illness Rider.

A unit-linked insurance plan with an assurance of Capital Guarantee which offers you the benefit

of a limited premium payment term. An ideal plan for protection with wealth creation that offers

the flexibility of a limited premium paying term.

Flexibility to choose a premium payment term of 5, 7 or 10 years for a maturity term of 10,

15 or 20 years respectively.

Flexibility to choose a specific level of protection (Sum Assured), based on a multiple of the

annual premium.

At the end of the term (maturity), the higher of the value of units or the guaranteed value is

paid. On death, Sum Assured along with the higher of value of units or the guaranteed value

is payable.

Additional credits payable as a percentage of the initial annual premium are paid along with

the death or maturity benefit.

Facility to make withdrawals from the 6th policy year onwards till the end of the policy term.

Every year withdraw up to 10% of the value of units

Flexibility to make additional investment with the help of the top-up facility.

Flexibility to increase / decrease your annual premium amount

Total transparency with the premium allocations, and other charges declared upfront.

The guaranteed value of the unit fund is the value of all invested premiums (premiums net of

all charges) along with the declared bonus interests.

The capital guarantee is applicable only on the invested premium and the declared bonus

interests. You can also enhance your policy by adding Accident & Disability Benefit Rider

and Critical Illness Rider.

Presenting Premier Life – The Preferred plan for the Preferred Customer. The key features of

the plan are:

Limited premium payment option: Choose from among a 3, 5, 7 or 10 year premium paying

term.

Choice of sum assured: Choose a sum assured, which is a minimum multiple of 1 and a

maximum multiple of 25 times the annual contribution.

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Additional allocation of units on a periodic basis.

Facility to top-up your investment any time you have surplus funds.

Choose from among four funds, based on your investment objective and risk appetite.

Flexibility to decrease your sum assured.

Add-on riders to protect you against any eventuality.

Loans against the policy.

You can also enhance your policy by adding Critical Illness

Rider, Accident & Disability Benefit Rider.

Presenting Life Time – unit –linked plans that meet your changing needs

over a lifetime. These solutions have been developed to meet your savings, protection

and investment needs at every stage in life.

Protection

Choose a specified level of protection (available only with Lifetime).

Two levels of Sum Assured to choose from (available only with Lifetime II).

Flexibility to increase or decrease your sum assured.

Add-on riders to protect you against any eventuality.

Savings

Flexibility to increase or decrease your contribution.

Facility of Premium Holiday, wherein the policy continues even if there is a temporary break

in the payment of annual contribution (available only with Life Time).

Facility of Automatic Cover Continuance, wherein the policy continues even if there is a

temporary break in the payment of annual contribution

Facility to top-up your investment any time you have surplus funds.

Additional allocation of units on a periodic basis.

Loans against the policy.

Investment:

Choose from among four funds, based on your investment objective and risk appetite.

Choice to switch between investments options (4 free switches every policy year).

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You can also enhance your policy by adding Critical Illness Rider, Major Surgical Assistance

Rider, Accident & Disability Benefit Rider, Accident Benefit Rider (available only with Life

Time) and Waiver of Premium Rider. An insurance plan that gives added protection, savings

and multiple options, all in one!

The flexibility to choose your premium contribution.

The flexibility to choose amongst three levels of cover (in the form of sum assured) for the

same amount of total annual contribution.

The flexibility of shifting between the three levels of cover, as you require.

The flexibility of receiving your maturity proceeds as a lump sum or in equal annual

installments over 3 or 5 years.

You can also enhance your policy by adding Variety of Riders An insurance plan that gives

you added protection, savings, multiple options, plus the power of liquidity.

The flexibility to choose your premium contribution.

The flexibility to choose amongst three levels of cover (in the form of sum assured) for the

same amount of total annual contribution.

The flexibility of shifting between the three levels of cover, as you require.

The flexibility of receiving your maturity proceeds as a lump sum or in equal annual

installments over 3 or 5 years.

The flexibility of withdrawing up to 10% of the accumulated value of your policy, after the

first 5 policy years.

You can also enhance your policy by adding Variety of Riders An ideal plan for those who

want to accumulate funds on a regular basis while enjoying insurance protection.

Guaranteed Benefits: Guaranteed additions @ 3.5% of the Sum Assured, compounded

annually for the first 4 years of the policy.

Extended Life Cover: An extended cover for 5 years after the maturity of the policy, for

50% of the sum assured, at no extra cost.

Maturity Benefit: At the end of the term, the policyholder receives the full sum assured, the

guaranteed additions and the vested bonuses.

Death Benefit: The beneficiary receives the sum assured, the guaranteed additions and the

vested bonuses in case the life assured were to meet with an unfortunate event. In case the life

assured is aged 7 years or less, the basic premium paid will be returned.

20

You can also enhance your policy by adding Critical Illness Rider, Major Surgical Assistance

Rider, Accident & Disability Benefit Rider, Waiver of Premium Rider (WOP) As a responsible

parent, you will always strive to ensure a hassle-free, successful life for your child. However, life

is full of Uncertainties and even the best-laid plans can go wrong. Here’s how you can give your

child a 100% safe and assured tomorrow, whatever the uncertainties. Smart Kid is especially

designed to provide flexibility and safeguard your child’s future education and lifestyle, taking

all possibilities into account. Choose from amongst a basket of 4 plans:

Smart Kid regular premium

Smart Kid unit-linked regular premium

Smart Kid unit-linked regular premium II

Smart Kid unit-linked single premium II

CHILD PLANS

All these plans offer you:

Financial Benefits: Regular payments at critical stages in your child’s life, like Board

examinations, Graduation and Post-graduation.

Total peace of mind, even if you are not around

Sum Assured is paid immediately: Ensures that your loved ones stay financially secure,

even in your absence.

All future premiums are waived: Ensuring that your family is not financially burdened in

your absence.

Policy benefits continue: The educational benefits of the policy continue, ensuring that your

child can realize his or her dreams without any hassles.

Development Allowance: Smart Kid guarantees regular income to secure your child’s

educational career and also ensures his or her all-round development, for a nominal additional

amount. The Income Benefit Rider takes care of this through an annual payment of 10% of

the sum assured, to your child, till the maturity of the policy, in the unfortunate event of the

death of the parent. All Smart Kid plans can be enhanced with the Accident & Disability

Benefit Rider and Income Benefit Rider . You can also an Accident Benefit Rider to a

21

Smart Kid Regular Premium policy, and a Waiver of Premium Rider (WOP) to Smart Kid

unit-linked regular premium policy.

Life Link II is a unique plan that combines the security of a life insurance policy with the

opportunity of enjoying high returns on your investments, without the market

risks compromising on the protection of your family!

Death Benefit: The Sum Assured under the product has 2 options, either 500% of the initial

premium or 105% of the initial premium. In the event of an unfortunate death, the beneficiary

will receive higher of the value of units or the initial death benefit, less any withdrawals.

Withdrawal Benefit: One can make partial withdrawals from the accumulated value of the

policy after completion of one policy year.

Flexibility: Choose from four fund options, based on your investment objective and risk

appetite. If at a later stage your financial priorities change, you can switch between the various

fund options, absolutely free, 4 times a year.

Investment Plans

Life Expectancy has been rising rapidly and today you can expect to live longer than your earlier

generations. For you, this increase will mean a longer retirement life, stretching into a couple of

decades. BSLI Retirement Solutions that combine the best of insurance and investment. These

solutions are developed to ensure your peace of mind for the years to come.

1. Why plan for retirement?

2. How much should I set aside for retirement?

3. The impact of inflation on your retirement savings

4. Why plan early?

5. About Annuities

Why plan for retirement?

For too many people, the joy of retirement after years of hard work is eclipsed by the financial

uncertainties that it brings. Despite all the planning and saving, you can never sure whether your

money will last a lifetime. Retirement planning offers a way to ensure a more enjoyable, stress

free tomorrow. A prudent plan will ensure that increasing life expectancy, higher inflation and

increasing taxes do not eat away into your hard earned savings.

22

Retirement Plans

How much must I set aside for retirement?

To ensure a comfortable retired life, you would be wise to invest money into additional avenues

like pension plans. How much you need to invest can be answered by answering some questions

such as:

1. How long do you have to save that amount before retirement?

2. Where can you invest your retirement money?

3. How much risk are you willing to take on your investments?

In an era of competitive parity, the only asset that makes a decisive difference between corporate

success and failure is the quality of human capital. Employee benefits have proven to be an

excellent tool to optimize the retention of talent and improve an organization’s bottom-line. The

quality of an organization’s employee benefits establishes and maintains a company's image as a

caring employer. Optimum care of employees is a long-term investment that results in a

sustained competitive advantage for an organization in the times to come.

BSLI Group Solutions Advantage:

An integrated basket of employee benefits solutions that offer incomparable flexible benefits.

Sound investment management that focuses on safety, stability and profitability of the

portfolio.

Personalized financial planning for your employee that takes care of his/her changing

financial needs at every stage of life.

Quality service initiatives and transparency across all operations, promising superlative

operational efficiency.

Group Solutions

Group Term Assurance: Helps provide affordable cover to members of a group.

Group Gratuity Plan: Helps employers fund their statutory gratuity obligation in a flexible and

hassle-free manner.

Group Superannuation Plan: A flexible scheme (defined benefit and defined contribution) to

provide a retirement kitty for each member of the group.

23

Group Term Assurance:

BSLI flexible group term solution helps provide affordable cover to members of a group. The

cover could be uniform or based on designation/rank or a multiple of salary, and can be extended

to all employees between the ages of 18 and 65 years.

The benefit under the policy is paid on the event of the member’s death to the beneficiary

nominated by the member. It is a one-year renewable policy where one master policy covers all

proposed employees comprising the group, with a minimum group size of 25 persons. New

members can join the group and outgoing members can leave the group at any point during the

policy term.

Highlights include:

Greater convenience for the employees with relaxed underwriting and medical

requirements.

"Free Cover Limits" with simplified underwriting depending upon the number of

employees in the group and the level of cover chosen.

Guaranteed benefit: On death during the term of the contract (while in Service), the sum

assured will be paid to the beneficiary of the employee.

Choice of additional coverage in form an Accident and Disability Benefit Rider and Critical

Illness Cover

Premium is viewed as a business expense in the year of payment.

Group Gratuity Plan:

BSLI group gratuity plan helps employers fund their gratuity obligation in a scientific manner.

Employers can avail of the tax benefits as applicable to approved gratuity funds. The plan can

also be customized to structure schemes that can provide benefits beyond the statutory

obligations. Highlights include:

Wider choice of investments with Market Linked Plans - to meet the diverse financial

goals. We offer 4 investment options (short-term debt, debt and balanced and capital

guarantee plan) where investments will be made in accordance with the fund objectives.

Transparency through Daily disclosure of Unit Value and regular disclosure of the portfolio

of each of the investment option

24

Flexibility through switching and contribution redirection option to enable reshuffling of

portfolio

Bundled Life Cover greater value to the employee by packaging life insurance covers with

the gratuity, with minimal amount of underwriting.

Actuarial services to provide a scientific estimation of the gratuity liability.

Low explicit charge structure with the conditions for exit specified upfront.

Enhanced service levels through faster claim settlement, easier access to information and

regular statements.

Complete end to end solution in the legal and regulatory approval process for scheme set up or

transfer

Employee Benefits:

The contribution made by the employer is not included in the value of taxable perquisites in

the hands of the employee.

Gratuity received up to Rs 350000 is exempt from Income tax under Sec 10(10)

Annual contribution up to 8.33% of salary bill in a financial year is allowed a deduction for the

purpose of computation of profits and gains of business.

Contribution towards past service liability is allowed as deduction as per the Income Tax rules.

Group Superannuation Plan:

BSLI Superannuation Scheme (for both Defined Benefit and Defined Contribution funds)

offers substantial benefits to both employers and employees. The employer and employee can

avail of tax benefits applicable to an approved superannuation trust. The scheme will provide for

a retirement fund for each participating employee. An employee would be able to choose from

various annuity options or opt for partial commutation of corpus at retirement.

Highlights include:

Wider choice of investments with Market Linked Plans – to meet the diverse financial

goals. We offer 5 investment options (short-term debt, debt, balanced, growth and capital

guarantee plan) where investments will be made in accordance with the fund objectives.

25

Control - Each member/employer can exercise greater control over investments by choosing

one or more of the investment options.

Multiple Annuity Options - 5 annuity options and open market option

Transparency - Transparency through Daily disclosure of Unit Value and regular disclosure

of the portfolio of each of the investment option

Flexibility - Flexibility through switching and contribution redirection option to enable

reshuffling of portfolio

Low explicit charge structure with conditions for exit specified upfront.

Enhanced service levels through faster claim settlement, easier access to information and

regular statements.

Complete end to end solution in the legal and regulatory approval process for scheme set up

or transfer BSLI Rural Products are designed to meet the needs of the rural consumers. These

products offer the following features:

1. Low and Affordable Premiums

2. Life Cover

3. Savings Option

4. Hassle free procedure

BSLI offers 2 specially designed rural plans.

a) BSL I – Endowment Plan

b) BSLI - Regular Premium

BSLI Endowment Plan:

BSLI offers the following features:

Rural Plans

Life Cover and Savings

Regular Premiums

Age at entry 18 - 45 Yrs

Premium Mode Half Yearly / Yearly

Term 5,10,15 Yrs

Sum Assured Rs.5,000 -20,000

26

Premium / Year Rs. 507 - 553 ( SA: Rs.10,000)

Maturity/Death benefit Sum Assured

BSLI - Regular Premium:

BSLI is a regular premium policy with the following features:

Individual policy

Only Life cover

Term - 3 & 5 Yrs

Age independent premium

Age at entry 18 - 45 Yrs

Sum Assured Single

Premium / Year Rs 50 – 200

Maturity/Death benefit Rs.5,000 - 20,000

Death Benefit Sum Assured

IRDA:

The insurance sector has been opened up in India, as there was an urgent need. The international

experience indicates those country with a liberalized insurance sector have witnessed a rapid

growth in premium volumes enhancing the domestic saving rate. This happened in China,

Malaysia and Singapore where a competitive market has led to improvement in Services and

quicker settlement of claims. It is also important to note that competition will bring about

advancement in information, communication and technology. And rightly therefore a decision

was taken by the Government of India to open up Insurance sector. The establishment of IRDA

in the month of April 2000 has been important development in this direction, making the end of

monopoly in the insurance sector.

WHY INSURANCE IN INDIA:

Only 22% of the insurance population has been extended cover. Market penetration is low

and the potential to exploit is high.

Insurance premium per capita is very low.

27

Lack of comprehensive social system benefit and welfare means that demand for pension

products is high.

Huge middle class of approximately 300 Million.

Existing insurance company score low on customer service front.

The insurance market registered growth in the Asian region even though India’s share in global

insurance is less than 0.5% (1988) as compared to USA (24.2%) and Japan (21%). Studies have

revealed that in an emerging market, as disposable income rises, Insurance premiums as a ratio

of GDP shoots up. The confederation of Indian Industry projected a growth of Life Insurance

premiums from Rs.350 Billion at present to Rs.140 Billion. The

Growth of non-life insurance premium is expected to increase from 75 billion to 375 billion. Out

of which, only 10% is tapped by the existing insurer.

Insurance even more than banking is a volume game. A very exclusive approach in view is

unlikely to provide meaningful numbers. Currently, insurance is bought for the purpose of tax-

benefits. A higher percentage of business is in the rural market. The share of rural new

Business insurance total new business is 55% in terms of policies and 47% in terms of sum

assured. However, this needs to be viewed in the light of some recent issues that have been

raised regarding as to what constitutes the rural market. Therefore, private insurers will be best

served by middle market approach, targeting the customer segments that are presently

unexploited.

How many Indians are aware that LIC has more than 60 Products and GIC has more than 180

Products? Not only there is a reduction in the premiums of Life Insurance products have long

overdue since Indian morality rate has decreased three folds in the last 50 years. There is also

scope to increase the yield on life insurance policies (presently 6%) with proper risk management

in place.

It is been debated that insurance business does not produce profit in the first five years cross

subsidization is a feature of Indian market. Even the first portfolio vote that is considered

profitable, cross subsidizes other departments. Tariffs reduction is likely to reduce profits; further

insurers have to institute proper claims management progress in order to extract efficiencies. At

present life insurance business in the country is taxed at 12.5% of the profit in financial year. The

government is soon to present a new model of taxing life insurance companies at international

28

rates. New entrants should be well advised to look ahead to the stage where brand strength will

be a competitive advantage and sketch their alliances accordingly. In fact, we believe that

alliance related to distribution rather than to produce or technology will prove most valuable in

the long run.

Banks and financial companies will emerge, as attractive distribution channel for this insurance

trend will be led by two factors, which already apply in other world market. First Banking food

insurance, fund management and other financial services companies are being to increase their

profitability and provide maximum value to their customers. Therefore, they are themselves

looking for a range of products to distribute. In other market notably Europe; this has resulted in

bank assurance. Bank entering into the insurance business in India to bank hope to maximize

expensive existing network by selling a range of products more of a loss alliance between

insurance and bank than a formal ownership. Some Indian entrants like ICICI, HDFC and

Reliance hope to ride their existing network and customer bases.

29

30

CHAPTER-2

REVIEW OF LITERATURE

REVIEW OF LITERATURE

Ramkumar D(2003) studied the role of relationship marketing in life insurance sector. In

today’s impersonal marketplace, customer satisfaction, retention and loyalty are rapidly become

the thing of the past. Relationship marketing brings them back to the forefront, providing easy-

to-apply solutions and strategies for establishing meaningful bonds with customers and turning

them into reliable, life-long partners. Relationship marketing can be defined as the process to

“identify and establish, maintain and enhance and, when necessary, terminate relationships with

customers and other stakeholders at a profit so that the objective of all parties involved are met;

and this is done by mutual exchange and fulfillment of promises”. The important objectives of

relationship marketing are to acquire new customer s, maintain and enhance existing

relationships with existing customers, reactivation of ex-customers, and handling of customer

terminations. The key objective of relationship marketing is to establish a one to one relationship

with all the customers. This may sound like a daydream few years ago; but thanks to the

technology breakthrough and technological solutions providers it is very much of reality.

Rajesham Ch(2004) revised that insurance sector has not only been playing a leading role

within the financial system in India but also has significant socio-economical function, making

inroads into the interiors of the economy and is being considered as one of the fast developing

area in the Indian financial sector too. It has also been facilitating economic development with an

objective to build an efficient, effective and a stable insurance business in India as well as a

strong base to both the needs of the real economy and socio-economic objective of the country. It

has been mobilizing long term saving through life- insurance to support economic growth and

also facilitating economic development, insurance cover to a large segment of people, while the

non-life insurance and reinsurance firms in India are main providers of risk financing for

manmade disasters and natural catastrophes. Thus, both life insurance and non-life insurance are

found playing a significant role in avoiding or facing the risk of life and business enterprises and

also aiding to certain extents for their smooth sailing. Therefore, an attempt is made in this paper

to highlight the developments of insurance sector in India in a phased manner and to examine the

reasons for the entry of private and foreign insurance players into Indian insurance market and to

present the changing scenario of insurance business in India. It is also attempted to examine the

growth of Indian insurance sector during the period of pre and post liberalization and finally to

31

suggest the strategies and challenges need to be adopted by Indian insurance sector in the light of

global scenario so as to enhance its market share.

Mehra J(2005) studied that economic growth in the emerging markets has time and again

outpaced the developed and industrialized countries. Alongside the rising importance of

emerging economics, their life insurance sectors are also drawing more attention. It’s been four

years since the life insurance sector was opened up for private players in India. The reasons that

prompted the government to bring in reform in this sector are well known. While the public

sector life insurance companies made enormous contribution in the spread of awareness about

insurance, and expanded the market, it was recognized that their reach was still limited, the range

of product offered restricted to the services to the consumer inadequate. It was also felt that the

rapid economic growth witnessed in the 90s couldn’t be sustained without a thriving insurance

sector.

Today, the private accounts for nearly 20% of the market. The market share of the private

players has to be seen in the context of this enlarged market. There has been a flurry of private

players providing a wide range of innovation products, services and customized solutions.

Emerging markets-such as China, India, Mexico, and Russia- are home to some 86% of the

world’s population. Collectively, they account for 23% of world economic output. Yet, insurance

business is underdeveloped in these markets.

In fact, India as a country is under-insured. Only 35% of the 250 million insurable population is

insured. Exploiting the growth potential of emerging insurance market- India and China are in

the spotlight. Both the countries currently attract a lot of attention due to their size, strong growth

performance and favorable regulatory changes. To begin with, India and China are the most

populous countries and both have sustained impressive economic growth in the last decade.

Between 1993 and 2003, annual real GDP growth averaged 8.9% in china and 5.9% in India.

Interestingly, both markets have gone through a similar period of nationalization of their

insurance business, although China revoked state monopoly earlier than India.

Calandro j, J flynn R (2005) studied that many insurance companies vigorously pursue top-line

growth, even though it has the potential to develop unprofitably over time. The time lag(or tail)

between when insurance is sold and when claims are paid generates risks unique to insurance

32

companies. Furthermore, the insurance market is both mature and efficient (i.e. its level of

completion is very high), which means that profitable opportunities are both rare and untenable

unless protected by competitive advantage. There currently no practical measure available ( of

which the authors are aware ) at the business unit level to evaluate insurance premium growth in

the face of the industry’s risk, impairing executives’ ability to assess segment opportunities (and

hazards), thus hampering strategies decision making. The purpose of this paper is to introduce a

practical measure developed by the authors called Underwriting Return (UWR) which aims at

helping to alleviate this situation. The paper introduces UWR which was developed during the

course and scope of the authors’ work in the insurance industry, and their research into applying

value-based management to that industry. The paper finds that UWR is a practical measure that

property and casualty executives can use at the business unit level to help quantify market

segments to grow, hold, harvest and abandon. A variety of strategies analysis tools, such as the

popular Boston Consulting Group matrix, are utilized today. In general, the application of such

tools is hampered by an imprecision of measurement but each can add a level of insight to

executive’ resource allocation options. UWR can further aid insurance executive in strategic

analysis by helping to quantify in which segments to compete, and which ones to abandon. The

paper demonstrates the utility of the measure in an example based on an actual analysis.

Anon (2005) studied all the aspects of the Indian insurance industry along with an outlook for

potential developments. The report examines the trends in industry, besides the competitive

landscape offers a brief analysis on the main players in the industry. It contains an assessment

based on PEST analysis, covering the relevant political, economic, social and technological

factors that have implications for the development of the industry. The report also evaluates the

industry within th Michael porter framework. It goes on to describe the competitive landscape

and provides a comparative financial study of the major players in the industry. Insurance

constitutes an important and increasing proportion of the gross financial savings of the household

sector in india. The private sector, in life as well as the non-life segments gained more

prominent in the life insurance sector. The factors that have driven change include: > Increasing

Gross Financial Household Savings. > Deregulation in the Indian Insurance Market. > Increase

in dependency ratio However, dearth of new products represents a major implication.

33

Sethi N (2005) studied the concept of banc assurance in India. Banc assurance has mostly been

a phenomenal success and , although slow to gain pace, is now taking off across Asia, especially

now that banks are starting to become more diverse financial institutions, and the concept of

universe banking is being accepted. In India, the signs of initial success are already there despite

the fact that it is completely new phenomenon. The factor and principles of why it is a success

elsewhere exists in India, and there is no doubt that banks are set to become a significant

distributor of insurance related products and services in the years to come.

Rao (2005) analyzed that the insurance industry has grown by 83 percent since the opening up

the sector. Remarking on the performance of the insurance industry, C S Rao, chairman,

insurance regulatory & development authority, said public sector players have not suffered with

the opening up of the sector. Insurance premium income has risen to Rs 82,415 crore (Rs 824.15

billion) in 2003-2004, against Rs 45,000 crore (Rs 450 billion) in 2000-01. Rao expects premium

income in the life insurance sector to rise further by 15-16 percent and non-life insurance

premium by 14 percent in 2005-06. The growth comes on the back of healthy demand from the

manufacturing sector.

Kannan k.v (2006) reviewed in their study that the market potential for private insurance

companies is found to be greater in the long run as most of the Indians are of the opinion that,

private insurance companies would be able to perform well in the future. The private and foreign

insurance companies have too immediate steps in appointing more number of agents and/or

advisors in addition to the employees as it has found that agents are the best channel to reach the

general public regarding selling of insurance products. The private and foreign insurance

companies have to concentrate on the factors like ‘prevention of loss’, ‘assured returns’ and

‘long term investment’. They can also focus on an insurance amount of Rs. 1-2 lakhs with

‘money back policies’. Hence, the market has potential. The private and foreign insurance

companies that are taking immediate steps can tap it.

Sasidharan Sanjeev (2006) studied that the insurance sector in India has come a full circle from

being an open competitive market to nationalization and back to a liberalized market again.

34

Tracing the developments in the Indian insurance sector reveals the 360-degree turn witnessed

over a period of almost two centuries.

Athma Prashanta(2007) reviewed that in globalization policy, insurance company face a

dynamic global business environment. The existing insurers are facing challenges from non-

traditional competitors who are entering into the retail market with new approaches and through

new channels. While quality of service is the main influencing factor in the finance market, in

the insurance market, product attributes are the main factors that influence the success of

insurance companies. Though, there has been growth in life insurance industry over the past few

years, comparatively, insurance penetration in India has not increased in spite of the considerable

growth potential of Indian life insurance market. With liberalization, many insurance players

have entered this field from the year 2000, and the task before them now is to identify what

factors influence in decision-making. In this context, this study assumes importance. The main

objective of the paper is to identify the factor s which the consumers take into consideration

before selecting life insurance products and determine the extent to what these factors are taken

into consideration for choosing the life insurance products. This research is carried out by

collecting primary data from 200 policyholders of Life Insurance Corporation on India through

self-structured questionnaires. The sample consists of 100 policyholders from urban area and 100

policyholders from rural area. C2 test is employed to test if there is any association is used to

find out which factor has more influence. Both, product and non-product attributes have been

found to be important in selecting a policy but they have been rated differently. Rating is

different in urban and rural areas.

Hsieh An (2008) investigated the relationship between customer perception of public relations

(PR) and customer loyalty to test for the moderating role of brand image in that relationship.

Data were collected in a survey of customers of the insurance industry in Taiwan, using a

questionnaire designed on the basis of focus-group discussions with 30 consumers. Hierarchical

regression analysis of data from 367 respondents was used to test two hypotheses. The results

show that consumers’ perception of an organization’s PR practice is an antecedent of loyalty.

The impact of public relation perception (PRP) on customer loyalty is stronger and more

significant when the brand image is favorable. The effect of PRP on customer loyalty is

35

negligible. This study extends previous research by examining the moderate of brand image.

Further research is indicated, to identify the key moderators of the driving force of PR in relation

to customer relationship marketing. This paper proposes an original eight-item scale for the

assessment of customer PRP activity, which can be applied in practice to measure its

effectiveness under different brand-image conditions.

Andreassen Tor (2008) studied the impact of customers’ perception of customer service

(bad/good) on variables that are known to drive revenue, i.e. customer satisfaction, perceived

relative attractiveness, and commitment. Data were collected through a survey among bank

customers. Two groups were sampled: customers who have experienced good or bad customer

service. The hypotheses were tested by applying structural equation modeling and running two

group analysis using the PLS and LISREL software’s. Customers that experience bad customer

service do take into account the same variables in their evaluation as do customers that

experience good customer service. They do however, put different weights on every factor in the

evaluation process. Also the strength of the relationship between the variables seems to differ.

Typically, analyses showed that customers experiencing bad customer service tend to consider

more thoroughly all aspects of the service; the relationships between the variables were stronger

and the explained variance of each construct higher, than in the group of customers experiencing

good customer service. However, the paths are not different across the groups. The paper has

only tested the model and hypothesis in one industry. Future research should test the same model

using different industries reflecting different customer involvement levels. Practical implications

from this study, service managers can learn that investing in customer service in ongoing

customer relations is “the right thing to do” as it is linked to customer equity through customers’

commitment to the firm. Second, as customer service in such relationships drives perceived

relative attractiveness, saving the bottom line by cutting back on the human side of the customer

interaction, may harm the firm’s competitive position in the marketplace.

36

37

CHAPTER-3

NEED, SCOPE & OBJECTIVES OF THE STUDY

3. NEED SCOPE & OBJECTIVE OF THE STUDY

NEED

Life insurance is chiefly a risk management tool, meant to offer financial protection to your

dependents in the unfortunate event of your death. But in India, as the most other developing

market, life insurance has come to present more than just risk cover. This particular study is

conducted on the topic titled “to study customer perception regarding Birla sun life insurance

company. The aim of this research study is to know about life insurance. It is done to know the

banc assurance in India. Banc assurance has mostly been a phenomenal success and, although

slow to gain pace, is now taking across Asia, especially now that banks are starting to become

more diverse financial institutions, and the concept of universal banking is being accepted. In

India, the signs of initial success are already there despite the fact that it is a completely new

phenomenon.

SCOPE

The study is restricted to Navi-Mumbai region only. The study also analyses the preferences

regarding different life insurance policies of Birla-sun life insurance. For this study 100

respondents of Navi-Mumbai are chosen. Now days there are lot of private companies in market

so it’s important to know what motivates the customer to buy the policy. Birla sun life is the

fastest growing private insurance company in India. It determines market share of the various

private companies in India.

OBJECTIVES

To determine and analyze the Market Potential of the Birla Sun Life Insurance Company.

To determine whether the customers are satisfied with the policies of the company.

To know the the customer awareness regarding the Birla-sun life insurance and its products.

To study and determine the competitor position in the market.

To know the future plans of the people for buying the policies.

Proper understanding and analysis of life insurance industry.

Conduct market survey on a sample selected from the entire population and derived opinion

on that research

38

39

CHAPTER-4

RESEARCH METHODOLOGY

Research methodology

Research means a search for knowledge or gain some new knowledge and methodology can

properly refer to the theoretical analysis of the methods appropriate to a field of study or to the

body of methods and principles particular to a branch of knowledge.

Research Design : A research design is the arrangement of conditions for the collections and

analysis of data in a manner that aims to combine relevance to research purpose with economy in

procedure.

Universe

The universe of the study is Navi-Mumbai.

Sample Unit

The sample unit pertaining to the study is 100 respondents of Navi-Mumbai region.

Sample Size

The sample size of 100 served the purpose of the study.

Sample Method

The sampling method used is non-probability convenience sampling

Methods of data collection

Data collection

The word data means any raw information, which is either quantitative or qualitative in nature,

which is of practical or theoretical use. The task of data collection begins after a research

problem has been defined and research design chalked out. While deciding about the method of

data collection, the researcher should keep in mind that there are two types of data primary and

secondary.

Primary data

This is those, which are collected afresh and for the first Time, and thus happen to be original in

character. There are many ways of data collection of primary data like observation method,

interview method, through schedules, pantry Reports, distributors audit, consumer panel etc. The

Team Managers and employees of both the Department were consulted to get information about

procedure of both the online and off line share trading. But the method used by us for the

primary data collection was through questionnaires.

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Questionnaire method

For the collection of primary data I used questionnaire method. A formal list of questions, which

are to be asked, is prepared in a questionnaire and questions are asked on those bases. There are

some merits and demerits of this method. These as under: -

Merits: -

1. Low cost even when universe is large.

2. It is free from bias of interviewer.

3. Respondents have proper time to answer.

4. Respondents who are not easily approachable can also be reachable.

5. Large samples can be made.

Secondary data

These are those data, which are not collected afresh and are used earlier also and thus they

cannot be considered as original in character. There are many ways of data collection of

secondary data like publications of the state and central government, reports prepared by

researchers, reports of various associations connected with business, Industries, banks etc. And

the method, which was used by us, was with the help of reports of the company.

Sample Size

I have met 250 people, to know about their perception regarding companies and there policies

after that I have taken 25 People they have fill up the questionnaire and given response.

LIMITATIONS OF INSURANCE

Lack of awareness among the people – This is the biggest limitation found in this sector.

Most of the people are not aware about the importance and the necessity of the insurance in

their life. They are not aware how useful life insurance can be for their family members if

something happens to them.

Perception of the people towards Insurance sector – People still consider insurance just as

a Tax saving device. So today also there is always a rush to buy an Insurance Policy only at

the end of the financial year like January, February and March making the other 9 months dry

for this business.

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Insurance does not give good returns – Still today people think that Insurance does not

give good returns. They are not aware of the modern Unit Linked Insurance Plans which are

offered by most of the Private sector players. They are still under the perception that if they

take Insurance they will get only 5-6% returns which is not true nowadays. Nowadays most

of the modern Unit Linked Insurance Plans gives returns which are many times more than

that of bank Fixed deposits, National saving certificate, Post office deposits and Public

provident fund.

Lack of awareness about the earning opportunity in the Insurance sector – People still

today are not aware about the earning opportunity that the Insurance sector gives. After the

privatization of the insurance sector many private giants have entered the insurance sector.

These private companies in order to beat the competition and to increase their Insurance

Advisors to increase their reach to the customers are giving very high commission rates but

people are not aware of that.

Increased competition – Today the competition in the Insurance sector has became very

stiff. Currently there are 14 Life Insurance companies working in India including the LIC

(life insurance Corporation of India). Today each and every company is trying to increase

their Insurance Advisors so that they can increase their reach in the market. This situation has

created a scenario in which to recruit Life insurance Advisors and to sell life Insurance Policy

has became very- very difficult.

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43

CHAPTER-5

DATA ANALYSIS AND INTERPRETATION

DATA ANALYSIS AND INTERPRETATION

1.Which Birla life plan do you have?

Table 5.1 : Type Of Plan

Types of plan No of respondent Percentage

Life insurance plan 68 68%

Health insurance plan 10 10%

Retirement plan 22 22%

Total 100 100%

Figure. 5.1 : Type Of Plan

Analysis & Interpretation:

The objective of first question was people having an account with BSLI are having which type of

plan. In the survey of 100 people it was found that 68% have life insurance plan, 22% have

retirement plan and 10% were having health insurance plan.

2.Are you satisfied with the plan you have?

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Table 5.2 : Satisfaction With The Plan

People satisfied with plan No of respondent Percentage

Yes 72 72%

No 28 28%

Total 100 100%

Figure 5.2 : Satisfaction With The Plan

Analysis & Interpretation:

The objective of second question was to find out that how many people are satisfied with the

plan. In the survey of hundred people it was found that 72% people are satisfied with the plan

while 28% people are not satisfied with the plan.

3.Are you satisfied with the service provided by the company about new schemes and plans

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Table 5.3 : Satisfaction With The Services Of The Company

Are people satisfied with service

provided by company

No of respondent Percentage

Yes 82 82%

No 18 18%

Total 100 100%

Figure 5.3 : Satisfaction With The Services Of The Company

Analysis & Interpretation:

The objective of third question was to find out whether people are satisfied with the services

provided by the company. In the survey it was found that 82% people are satisfied with the

services provided by the company while 18% people are not satisfied with the services.

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4.Are you interested to make more investments in BSLI?

Table 5.4 : People Want To More Investment In Bsli

People want to more investment in BSLI No of respondent Percentage

Yes 67 67%

No 33 33%

Total 100 100%

Figure 5.4 : People Want To More Investment In Bsli

Analysis & Interpretation:

The objective of fourth question was to find out that do people want to invest more money. It

was found that 67% people want to invest more money while 33% people don’t want to invest

more money.

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5.Number of people have other insurance plan apart from BSLI

Table 5.5 : People Have Other Insurance Plan Apart From Bsli

People have other insurance

plan apart from BSLI

No. of people Percentage

Yes 78 78%

No 22 22%

Total 100 100%

Figure 5.5 : People Have Other Insurance Plan Apart From Bsli

Analysis & Interpretation:

The objective of fifth question was whether people have insurance plan apart from BSLI. In the

survey it was found that 78% people have insurance plan other than BSLI while 22% don’t have

any other plan.

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6.Percentage share of different companies in insurance sector.

Table 5.6 : Share of different companies

Name of different companies Percentage

Life insurance company 60%

Birla Sun Life Insurance 9%

Bajaj Aliyanz 11%

ICICI 8%

Other 12%

Total 100%

Figure 5.6 : Share of different companies

Analysis & Interpretation:

The objective of this study is to find out the percentage share of different companies in the

insurance sector. it was found that 60% is occupied by LIC,9% by BSLI,11% by Bajaj

aliyanz,8% by ICICI and 12% by other companies.

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7.Market share of private companies.

Table 5.7 : Market share of private companies

List of companies Percentage

ICICI pru 22.1%

Bajaj Alliaz 13.8%

SBI 9.8%

HDFC standard 7.7%

Birla sun life insurance 7.0%

Reliance life 8.0%

Max new York 8.0%

Tata AIG 7.0%

Aviva 3.1%

Kotak Mahindra 3.6%

Met life 5.3%

ING vysya 2.1%

Shriram life 1.1%

Other 1.1%

Total 100%

Figure 5.7 : Market share of private companies

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Analysis & Interpretation:

The objective of this study is to find out the market share of different companies in the insurance

sector. It was found that icici pru is having the maximum share that is 22.1%.

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52

CHAPTER-6

FINDINGS OF THE STUDY

FINDINGS

To be successful in marketing of insurance products, the entire business scenario has to be taken

into account.

During the study to be found that majority of people are aware of life insurance sector.

During the survey it was observed that major source of information for consumer are television

and newspaper and least preference are given to magazines, agents and friends.

Attractive schemes and brand image are the most important factor that influences the buying

behavior of the consumers.

Majority of respondents will shift to any other insurance company.

People are not satisfied with the opted insurance. It was found that the reason for the

dissatisfaction of consumer is high premium, delay in claim settlement and poor after sale

service.

So to achieve a greater insurance penetration, insurance sector companies have to create a more

vibrant and competitive industry, with greater efficiency, choice of products and value for

customers.

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54

CHAPTER-7

CONCLUSION

CONCLUSION

The market potential for private insurance companies is found to be greater in the long run as

most of the Indians are of the opinion that, private insurance companies would be able to

perform well in the future. The private and foreign insurance companies have to take immediate

steps in appointing more number of agents and/or advisors in addition to the employees as it has

been found out that agents are the best channel to reach the general public regarding selling of

insurance products. The private and foreign insurance companies have to concentrate on the

factors like 'Prevention of Loss', 'Assured Returns' and 'Long term Investment'. They can also

focus on an insurance amount of Rs. 1 – 2 lakhs with 'money back policies'. Hence, the market

has potential. The private and foreign insurance companies that are taking immediate steps can

tap it easily & rapidly.

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56

CHAPTER-8

RECOMMENDATIONS

RECOMMENDATIONS

1) Even though most of the policy holders are satisfied with policies, plans they have but some

new attractive insurance plans should be introduce to bind them not to switch over to other

companies insurance plans.

2) The company should find out the no. of people who are not having any of the insurance plans

through an intensive market research and motivate them to get insured.

3) Leveraging technology to service customers quickly, efficiently and conveniently.

4) Developing and implementing superior risk management and investment strategies to offer

sustainable and stable returns to our policyholders.

5) Company should target each and every class of the society

6) Company should provide full information to the customers before targeting so they can take

interest.

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58

BIBLIOGRAPHY

BIBLIOGRAPHY

Books :

Kothari C.R. (1990) Research Methodology : Method and Techniques, Wishva

Parkashan, New Delhi. PP115-117

Bodie. Z, Kane. A & Marcus. J : Essentials of Investments PP242-243

Websites :

http://www.economywatch.com/indianeconomy/indian-insurance-sector.html

www.birlasunlife.com/birlasunlife/insurance/bsli.../index5.aspx

http://www.indianmba.com/Occasional_Papers/OP85/op85.html

http://www.banknetindia.com/finance/insure2011.htm

http://www.financialexpress.com/news/the-indian-insurance-sector-ii/181428/

Journals :

Lect. D.ramkumar(2003), “Relationship Marketing – The new tantra for life insurance

sector”. Department Of Management Studies, N.M.S.S. Vallaichamy Nadir College,

Nagamalai, Madurai – 625019 available at http://www.google.co.in/interstitial?

url=http://www.indiaschools.com/marketing_029.htm last accessed on 07-08-2009.

Dr. Ch.rajesham (2004), “changing scenario of india insurance sector”, department of

commerce & Business Management, University P G college, Kakatiya University

Khammam, Andhra Pradesh available at

http://www.insuranceinstituteofindia.com/insuranceinst/publication/uploads/journal-jan-

jun-04/chapter10..pdf last accessed on 14-08-2009

J.Mehra (2005), “innovations in life insurance industry”, the financial express, new delhi

available at http://www.financialexpress.com/news/innovations-in-life-insurance-industry

last accessed on 15-08-2009.

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60

61

ANNEXURE

Questionnaire

Name:............................... Age:……………..

Occupation:…………………..

Ques.1 Which Birla Sun Life Scheme do you have?

Health

Retirement

Life

Health

Retirement

Life

Ques.2 Are you satisfied with the Insurance plan you have?

(a) Yes (b) No

Ques.3 what attract you towards Birla Sun Life Plans?

(a)

(b)

(c)

(d)

Ques.4 Are you satisfied with the services provided by the company

Regarding new plans and schemes?

(a) Yes (b) No

Ques.5 Are you interested to make more investments in Birla Sun Life ?

(a) Yes (b) No

Ques.6 Have you any other Insurance Plan apart from Birla Sun Life?

(a) Yes (b) No

Ques.7 If yes, then of which Life Insurance Company?

(a) LIC (b) Bajaj Allianz

(c) Birla Sunlife (d) Reliance

(e) Others

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Ques.8 If you get any attractive plan than are you ready to switch over?

(a) Yes (b) No

Ques.9 If you get any attractive plan than are you ready to switch over?

(a) Yes (b) No

Suggestions:

……………………………………………………………………………

……………………………………………………………………………

……………………………………………………………………………

……………………………………………………………………………

……………………………………………………………………………

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