EXECUTIVE SUMMARY

Aviva Life insurance is the oldest life insurance company in the world. It is the
largest insurer in the UK and is the 28 th largest company in the world. In India,
the company is marketing life insurance products and unit linked investment
plans. From my research at Aviva, I found that the company has a lot of
competition from other private insurers like ICICI, HDFC, Birla Sun Life and
Tata Aig. It also faces competition from LIC. To compete effectively Aviva
could launch cheaper and more reasonable products with small premiums
and short policy terms (the number of years premium is to be paid). The
ideal premium would be between Rs. 5000 Rs. 25000 and an ideal policy
term would be 10 20 years.
Aviva must advertise regularly and create brand value for its products and
services. Most of its competitors like HDFC, ICICI, Reliance and LIC use
television advertisements to promote their products. The Indian consumer
has a false perception about insurance they feel that it would not benefit
them if they do not live through the policy term. Nowadays however, most
policies are unit linked plans where a customer is benefited even if their
death does not occur during the policy term. This message should be
conveyed to potential customers so that they readily invest in insurance.
Family responsibilities and high returns are the two main reasons people
invest in insurance. Optimum returns of 16 20 % must be provided to
consumers to keep them interested in purchasing insurance.
On the whole Aviva life insurance is a good place to work at. Every new
recruit is provided with extensive training on unit linked funds, financial
instruments and the products of Aviva. This training enables an advisor/ sales
manager to market the policies better. Aviva was ranked 13 in the Best Places
to Work survey. The company should try to create awareness about itself in
India. In the global market it is already very popular. With an improvement in
the sales techniques used, a fair bit of advertising and modifications to the

existing product portfolio, Aviva would be all set to capture the insurance
market in India as it has around the globe.

TABLE OF CONTENTS
Introduction

to

Insurance.1
Research
Design
5
Company
Profile.
.10
Financial
Analysis
.34
Competitive
analysis..3
6
Marketing
problems
40
Analysis

and

Interpretation42

Future

line

of

research.58
Conclusion
..59
References
..60
Appendix
..61

ACKNOWLEDGMENT
I would like to thank my project guide _____________________________________,
Sales Manager Aviva Life Insurance for guiding me through my internship and
research

project.

appreciated.

Her

encouragement,

time

and

effort

are

greatly

I would like to thank Professor ___________________________ for supporting me

during this project and providing us an opportunity to learn outside the class
room. It was a truly wonderful learning experience.
Lastly I would like to thank all the respondents who offered their opinions and
suggestions through the survey that was conducted by me.

CHAPTER I

INDIAN INSURANCE
INDUSTRY
AN OVERVIEW

THE INSURANCE INDUSTRY IN INDIA

AN OVERVIEW
With the largest number of life insurance policies in force in the world,
Insurance happens to be a mega opportunity in India. Its a business growing
at the rate of 15-20 per cent annually and presently is of the order of Rs 450

billion (for the financial year 2004 2005). Together with banking services, it
adds about 7% to the countrys Gross Domestic Product (GDP). The gross
premium collection is nearly 2% of GDP and funds available with LIC for
investments are 8% of the GDP.
Even so nearly 80% of the Indian population is without life insurance cover
while health insurance and non-life insurance continues to be below
international standards. A large part of our population is also subject to weak
social security and pension systems with hardly any old age income security.
This in itself is an indicator that growth potential for the insurance sector in
India is immense.
A well-developed and evolved insurance sector is needed for economic
development as it provides long term funds for infrastructure development
and strengthens the risk taking ability of individuals. It is estimated that over
the next ten years India would require investments of the order of one trillion
US dollars. The Insurance sector, to some extent, can enable investments in
infrastructure development to sustain the economic growth of the country.
(Source: www.indiacore.com)

HISTORICAL PERSPECTIVE
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 risky to cover. The Bombay Mutual
Life Insurance Society started its business in 1870. It was the first company
to charge the 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 Triton
Insurance Company Limited, the first general insurance company established
in the year 1850 in Calcutta by the British. Till the end of the 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 the 1920's and 1930'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 the 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 the much needed funds for rapid
industrialization. This was in conformity with the Government's chosen path
of State led 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 grouped into four
companies- National Insurance Company, New India Assurance Company,
Oriental Insurance Company and United India Insurance Company. These
were subsidiaries of the General Insurance Company (GIC).

KEY MILESTONES

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: Earlier legislation consolidated and amended by the Insurance Act with
the objective of protecting the interests of the insuring public.
1956: 245 Indian and foreign insurers along with provident societies were
taken over by the central government and nationalized. LIC was formed by an
Act of Parliament- LIC Act 1956- with a capital contribution of Rs. 5 crore from
the Government of India.

INDUSTRY REFORMS
Reforms in the Insurance sector were initiated with the passage of the IRDA
Bill in Parliament in December 1999. The IRDA since its incorporation as a
statutory body in April 2000 has fastidiously stuck to its schedule of framing
regulations and registering the private sector insurance companies. Since
being set up as an independent statutory body the IRDA has put in a
framework of globally compatible regulations.
The other decision taken simultaneously to provide the supporting systems to
the insurance sector and in particular the life insurance companies was the
launch of the IRDA online service for issue and renewal of licenses to agents.
The approval of institutions for imparting training to agents has also ensured
that the insurance companies would have a trained workforce of insurance
agents in place to sell their products.

PRESENT SCENARIO - LIFE INSURANCE INDUSTRY IN INDIA

The life insurance industry in India grew by an impressive 36%, with premium
income from new businesses at Rs. 253.43 billion during the fiscal year 20042005. Though the total volume of LIC's business increased in the last fiscal
year (2004-2005) compared to the previous one, its market share came down
from 87.04 to 78.07%.
The 14 private insurers increased their market share from about 13% to
about 22% in a year's time. The figures for the first two months of the fiscal
year 2005-06 also speak of the growing share of the private insurers. The
share of LIC for this period has further come down to 75 percent, while the
private players have grabbed over 24 percent.
With the opening up of the insurance industry in India many foreign players
have entered the market. The restriction on these companies is that they are
not allowed to have more than a 26% stake in a companys ownership.
Since the opening up of the insurance sector in 1999, foreign investments of
Rs. 8.7 billion have poured into the Indian market and 14 private life
insurance companies have been granted licenses.
Innovative products, smart marketing, and aggressive distribution have
enabled fledgling private insurance companies to sign up Indian customers
faster than anyone expected. Indians, who had always seen life insurance as
a tax saving device, are now suddenly turning to the private sector and
snapping up the new innovative products on offer. Some of these products
include investment plans with insurance and good returns (unit linked plans),
multi purpose insurance plans, pension plans, child plans and money back
plans. (www.wikipedia.com)

CHAPTER II
RESEARCH DESIGN

RESEARCH DESIGN
INTRODUCTION
A Research Design is the framework or plan for a study which is used as a
guide in collecting and analyzing the data collected. It is the blue print that is
followed in completing the study. The basic objective of research cannot be
attained without a proper research design. It specifies the methods and
procedures for acquiring the information needed to conduct the research
effectively. It is the overall operational pattern of the project that stipulates
what information needs to be collected, from which sources and by what
methods.

TITLE OF THE STUDY

A Study on Market Segmentation of the Insurance Industry in India
for Aviva Life Insurance India Pvt. Ltd.,

STATEMENT OF THE PROBLEM

This study was undertaken to identify which type of insurance plans Aviva
should market to particular market segments in India. A survey was
undertaken to understand the preferences of Indian consumers with respect
to insurance. While marketing policies the sole duty of an advisor/ agent is to
provide insurance plans as per customer requirements.
In effect plans (insurance products) should be flexible to suit individual
requirements. This research tries to analyze some key factors which influence
the purchase of insurance like the term of the policy, the type of company,
the amount of annual premium payable (capacity and willingness to spend),
risk

taking

ability

and

the

influence

of

advertising.

Solutions

and

recommendations are made based on qualitative and quantitative analysis of

the data.

OBJECTIVES OF THE STUDY

To find the market share of various life insurers in India
To suggest additions to the current product portfolio
To recognize the popular insurance plans
To showcase the influence of advertising
To suggest ideal policy term and premium for insurance
To showcase the consumers willingness to spend on life insurance
To showcase the factors that motivate purchase of insurance
policies
To understand the type of company preferred for investment
To understand the awareness level of consumers about unit linked
insurance plans

RESEARCH METHODOLOGY

TYPE OF DATA COLLECTED

There are two types of data used. They are primary and secondary data.
Primary data is defined as data that is collected from original sources for a
specific purpose. Secondary data is data collected from indirect sources.
(Source: Marketing Research, Sumathi and Saranavel)
PRIMARY SOURCES
These include the survey or questionnaire method, telephonic interview as
well as the personal interview methods of data collection.
SECONDARY SOURCES
These include books, the internet, company brochures, product brochures,
the company website, competitors websites etc, newspaper articles etc.

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

STUDY AREA
The samples referred to were residing in Bangalore City. The areas covered
were Koramangla, Frazer town, Maruthinagar, C.V. Raman Nagar, MG Road
and Whitefield.

LIMITATIONS OF THE STUDY

The study was limited only to the city of Bangalore
The study was conducted only for a short period of one month
The study is based on the assumption that information provided by the
respondents is true

OVERVIEW OF CHAPTER SCHEME

CHAPTER 1:
Introduction to insurance - An overview of the industry in India,
history, key milestones, reforms in the industry, present scenario in India.

CHAPTER 2:

Research Design - Introduction, title of the study, statement of the

problem, objectives of the study, research methodology, sampling, plan of
analysis, study area and limitations of the study.

CHAPTER 3:
Company Profile Introduction to Aviva, products and services, vision
and core values, human resource, organizational structure, introduction to
unit linked funds, national & international presence of the organization.

CHAPTER 4:
Financial Analysis Analysis of the income statement and balance
sheet, stock analysis to determine the profitability of the firm. The
advantages of investing in Aviva compared to other financial instruments.
CHAPTER 5:
Competitive analysis Information about the plans offered by LIC and
other private insurers in India. Comparisons between the plans to find the
most popular and beneficial plans which Aviva can incorporate into their
product portfolio.

CHAPTER 6:
Marketing problems - The techniques used to market insurance and
their

advantages

and

disadvantages

along

with

suggestions

for

improvement.
CHAPTER 7:
Analysis and Interpretation A survey on Segmentation of the
Insurance Industry in India.
CHAPTER 8:
Problems requiring more research Future line of work

CHAPTER 9:
Conclusion
References
Appendices

CHAPTER III
COMPANY PROFILE

COMPANY PROFILE
AVIVA LIFE INSURANCE
INTRODUCTION
Aviva plc was previously known as CGNU plc. The name change was effected
on 1st July 2002. Prior to the re branding, CGNU was using 50 trading names
across the world. The decision for the re branding was taken with the
objective of creating a strong and powerful international services brand.

HISTORY OF THE AVIVA GROUP

1696 The worlds oldest insurance company Hand in Hand formed in

London

1797 Norwich Union founded in London

1861 Commercial Union founded in London

1885 General Accident founded in Perth, Scotland

1998 CGNU formed with the merger of Commercial Union and

General Accident

2000 CGNU formed with the merger of CGU and Norwich Union

2002 CGNU re - branded as Aviva plc on 1 st July, 2002

KEY POINTS - AVIVA

5th largest insurance group in the world (Source: Fortune 500)

Largest insurer in the United Kingdom

28th largest company in the world

Premium income from new business 32 billion USD

Total premium income 36 billion pounds

Shareholders funds of 14.9 billion

Over 35 million satisfied customers worldwide

Listed on the London, Paris and Dublin stock exchanges

Top five positions in Holland, Ireland, Singapore, Spain, Turkey and

Poland

Long term savings and asset management account for 71% of

premiums

KEY POINTS - AVIVA LIFE INSURANCE INDIA

Got licensed on 14th May 2002 and started operations on 6th June 2006

Pioneered the concept of indexation

Pioneered the concept of unitization

Tie - ups with ABM Amro, American Express, Canara Bank & Lakshmi
Vilas Bank

26 million customers and over 67734 crores in deposits

Paid up capital of Rs.559 crores

Growth of 118% since the last year from new business

VISION

Aviva - Where exceeding expectations through innovative solutions

is our way of life

CORE VALUES

Passion for winning

Integrity

Innovation

Customer centricity

Empowered Team

PRODUCTS & SERVICES

The right investment strategies won't just help plan for a more comfortable
tomorrow -- they will help you get Kal Par Control. At Aviva, life insurance
plans are created keeping in mind the changing needs of you and your family.
Our life insurance plans are designed to provide you with flexible options that
meet both protection and savings needs. We offer our customers a full range
of transparent, flexible and value for money products. Aviva products are
modern and contemporary unitized products that offer unique customer
benefits like flexibility to choose cover levels, indexation and partial
withdrawals. (Source: www.avivaindia.com)

PLANS MAINLY FOR PROTECTION (LIFE COVER)

1) LIFE LONG
Life Long is designed to suit individual requirements, no matter which life
stage you are at, and changes as your needs change during your entire life.
For the same premium, you can opt for a higher life cover (protection) and
lower savings or lower life cover and higher savings. The choice of protection-

savings mix is yours, and the decision can be based on your priorities and
age. You can also cover your spouse under the same policy without any
additional expense through a joint life policy (first death basis).
The entry age is 18 60 years. If any rider is opted the maximum entry age is
55 years (last birthday). This is a whole life plan with premium payment age
up to 85 years. The minimum annual premium is Rs. 6000. The minimum sum
assured is 0.5* (70 entry age) * Annual premium and the maximum sum
assured is Annual premium * Cover level, where the cover level ranges from
10 to 100, depending upon age at entry.
Sample Cover Level

Age

20 years

30 years

40 years

50 years

Cover

97

82

54

30

Level
One can invest their monies in a With Profits Fund and 3 Unit Linked funds;
Protector, Growth and Balanced Funds. An individual can opt for riders like
accidental death and disbursement rider, critical illness and permanent total
disability rider and hospital cash benefit. There will be 5% extra allocation of
units on the 15th policy year.
How is the money invested?
Life Long offers a With Profits Fund and 3 Unit Linked Funds which give you
the flexibility of choosing how your money should be invested in terms of the
risk and the security of the return on the investment. You can invest 100% of
your premiums either in the With Profits Fund or in any of the Unit Linked
Funds. The minimum allocation in each selected unit linked fund must be
10%.
Changing Allocation Proportions

You have the option to change the allocation proportion of your premiums to
different funds at anytime, up to 2 times a year, for all future premiums. The
minimum allocation in each selected fund must be 10%. A policy holder can
switch accumulated funds from one investment fund to another (either partly
or fully). In case of a part switch, the minimum amount switched should be
Rs. 10,000 and the minimum balance in the fund after the switch should be
Rs. 5,000. The first 2 switches in a policy year are free of charge.
Allocation of Units

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

The unit price shall be calculated on a daily basis in accordance with

Insurance Regulatory and Development Authority (IRDA) guidelines
from time to time. The Unit Price will be calculated as follows: Unit
price for Unit Linked Funds is equal to the market value of
assets held by the fund plus the value of current assets and
accrued income minus the value of current liabilities, fund
management charges and provisions, if any, divided by the
total number of units outstanding

Unit price for With Profits Fund is calculated by applying the equivalent
daily rate to the current unit price on a daily compounding basis. The
equivalent daily unit growth rate = (1 + annual regular bonus
rate) ^ (1/365)*(1-fund management charge per annum /365) -

1. Aviva guarantees that the unit price in this fund will never
fall

Units shall be allocated on the day the proposal is completed and

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

In respect of premiums received within a time specified by IRDA

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

In respect of premiums received after the time specified by IRDA

through a local cheque or a demand draft, payable at par, at the place
where the premium is received, the closing NAV of the next business
day shall be applicable

In respect of premiums received through outstation cheque / demand

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

Extra Allocation of Units

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

applicable to units pertaining to the top-up premiums or additional regular

premiums.
Can I make lump-sum investments?
You have the flexibility of making lump-sum investments through top-up
premiums to increase the investment value of your policy without increasing
the sum assured provided all due premiums till date are paid. The minimum
top-up premium is Rs. 1,500.
The total of top-up premiums cannot exceed 25% of the total regular
premiums paid till date at any point in time. Units purchased from top-up
premiums will be used to allocate accumulation units to various investment
funds in the same proportion as selected by you for your regular premiums
Can I increase the sum assured?
You can increase your sum assured anytime before age 67 or the 27th policy
year, whichever is earlier, provided that all due premiums have been paid.
This is subject to the maximum increase allowed at that age. The sum
assured under the riders (except HCB) will also increase up to the maximum
limit allowed under each rider. Evidence of health may be required before
such an increase in sum assured is made.
Can I increase my regular premium?
You can increase your regular premiums through any of the 2 methods
mentioned below:
Indexation
You have the option to increase your regular premiums by an indexation rate
at any policy anniversary to protect the real value of your investment against
inflation. The rate of indexation will be in line with the increase in the Whole
Sale Price Index (or in the event that this Index ceases to be published such
other index as the Company may select for this purpose). The base sum

assured and sum assured of any attached rider (except HCB) would also be
increased by the corresponding indexation increase.
The maximum sum assured limits under the riders for the purchased policy
would not apply in this case. You can opt for indexation at the inception of the
plan only. Once opted for, this will become a default option unless altered by
you. The indexation benefit is available till age 67 or the 27th policy year,
whichever is earlier.
Additional Regular Premiums (ARP)
On every policy anniversary you have the option to increase the regular
premium amount through ARP at any time up to age 67 or the 27th policy
year, whichever is earlier. The minimum ARP is Rs. 1,000.
ARP will increase the sum assured automatically. The sum assured of any
attached rider (except HCB) would also increase provided the increased sum
assured is within the maximum limits allowed for the riders. Evidence of
health may be required before such an increase in sum assured is made.
When can I withdraw my money?
You have the flexibility of making partial withdrawals from accumulation units
in respect of regular premiums as well as top up premiums provided all due
premiums till date are paid. Any partial withdrawal will first be made from the
top up premium account (if any and if eligible for withdrawal) followed by the
regular premium account, if required.

Partial withdrawals from top-up premium account can be made after 3

years from the allocation date of that top-up premium

Partial withdrawals from units pertaining to regular premiums can be

made after completion of 3 policy years

Only 4 partial withdrawals are allowed in a policy year.

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

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

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

What are the riders that I can opt for?

Apart from the death cover under the base plan, Life Long offers extra
protection through optional riders:

Accidental Death and Dismemberment Rider (AD&D): Coverage from

risk of death or dismemberment due to an accident

Critical Illness and Permanent Total Disability Rider (CI&PTD): Coverage

against

contracting

critical

illness

or

becoming

totally

and

permanently disabled due to a disease or an accident

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

What happens if I die?

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

Higher of sum assured or fund value (value of initial and accumulation

units in respect of regular premiums) is payable

An additional sum assured would also be payable if AD&D rider has

been opted for and death is due to accident

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

The value of units attributable to the top-up premiums, if any, would

also be payable

If you have invested in the With Profits fund, a final bonus, if any, will
also be payable

What are the charges on my policy?

Policy Administration Charge (PAC): Rs. 67 per month, which will

increase by 5% p.a. on the 1st of January each year. PAC will be
deducted monthly by cancellation of units from the accumulation unit
account. If premiums are discontinued, this charge would reduce to
60% of the charge applicable for the premium paying policies

Initial Management Charge (IMC): 10% p.a. of initial units during

the first 30 years. IMC will be deducted monthly from initial units

Fund Management Charge (FMC): 1% p.a. on With Profits Fund, 1%

p.a. on Protector Fund, 1.25% p.a. on Balanced Fund and 1.50% p.a. on
Growth Fund. FMC will be applied on the fund while calculating NAV on

a daily basis. The maximum FMC on any fund is 2% p.a. subject to prior
approval by the IRDA

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

Rider Premium Charges: Rider charges will be made by monthly

cancellation of units from the policy accumulation unit account. The
AD&D rider charge will apply on Sum Assured; the CI&PTD rider charge
will apply on the Sum at Risk, while the HCB rider charge is a fixed
amount.

Rider charges may change based on the Companys claims experience

and approval by the IRDA. The Company shall charge the applicable
service tax over and above the mortality charge and rider premium
charge mentioned above

Surrender Charge on Initial Units: [1-(1/1.10^N)] * value of initial

units, at the unit price, on the date of surrender on Accumulation
Units pertaining to regular premiums: [1-{1/(1 + x)}^N] * value of
accumulation units, at their unit price, on the date of surrender.

What are the tax benefits I get?

Tax benefits will be as per Section 80C & Section 10(10D) of the Income Tax
Act, 1961. Insurance is tax free up to Rs. 100000 per annum and the returns
on investment on maturity of the policy are also tax free.

2) LIFE SHIELD
Life Shield is an ideal life insurance plan that helps you protect your family's
future. While there can be no compensation for the loss of life, Life Shield
ensures that your family's financial needs are met should something
unfortunate happen to you. Its aim is to pay out a guaranteed cash amount in
the unfortunate event of your death during the term of the policy.
Key Features of Life Shield

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

Life Shield can be purchased for any life between 18 to 55 years of

age. However, the maximum age of the life insured at expiry of the
policy is 65 years.

The minimum and maximum policy terms are 5 years and 40 years,
respectively.

The minimum annual premium is Rs.2000 and the minimum sum

insured is Rs.500000.

The sum insured of the policy can be increased (only up to 40 years of

age) once by 50% (subject to maximum increase of Rs.1,000,000)
during the term of the policy, without submitting any evidence of good
health, if:
-

You decide to increase the sum insured within three months of

your marriage.

You decide to increase the sum insured within three months of

the birth of your child.

This option to increase the sum insured is available if the policy has
been accepted on standard rates. It can be exercised only when

outstanding term of the policy is at least 5 years and the policy is in

force for full sum insured.
What are the benefits of this plan?

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

We offer preferred rates to customers opting for higher sum insured

and to Pension Plus policyholders of Aviva.
-

You will receive a discount of Rs. 0.50 per thousand of sum

insured on standard premium rates if you are opting for a sum
insured of Rs. 1,000,000 and above.

If you are a Pension Plus policyholder, you will get an additional

discount of 7.5% on the premium rate stated in the Premium
Rate Table of Life Shield, provided your Life Shield policy has
been accepted on standard rates.

PLANS MAINLY FOR SAVINGS & INVESTMENT

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

The investment fund options available are protector, growth and balanced
funds.
On maturity, you can either take out the maturity proceeds (fund value in
respect of regular premiums) and terminate the policy or opt for a settlement
option wherein all or part of maturity proceeds would be paid out to you as
structured payouts in accordance with the settlement option then offered by
the Company. The settlement option is available only on Unit Linked funds
and only if all due premiums have been paid.
What happens if I die?
In case of a non accidental death in the first policy year 50% of the sum
assured or fund value which ever is higher is paid. From the 2 nd policy year,
higher of sum assured or fund value is payable. In case of accidental death
an additional sum assured is payable.

What are the charges on my policy?

Policy Administration Charge (PAC): Rs. 43 per month, which will

increase by 5% p.a. on the 1st of January each year. PAC will be
deducted monthly by cancellation of units from the accumulation unit
account. If premiums are discontinued, this charge will reduce to 60%
of the charge applicable for the premium paying policies

Initial Management Charge (IMC): 5% p.a. of initial units during the

policy term. IMC will be deducted monthly from initial units

Fund Management Charge (FMC): 1% p.a. on With Profits Fund, 1%

p.a. on Protector Fund, 1.25% p.a. on Balanced Fund and 1.50% p.a. on
Growth Fund. FMC will be applied on the fund while calculating NAV on

a daily basis. The maximum FMC on any fund is 2% p.a. subject to prior
approval by the IRDA

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

Premium Allocation Charge:

Allocation rate

Annual Premium

Yearly and half yearly

Quarterly and Monthly

premium frequency

premium frequency

< Rs. 7500

93%

92%

Rs. 7500 Rs. 9999

94%

93%

Rs. 10,000 and above

95%

94%

2) YOUNG ACHIEVER
Young Achiever is a regular premium life insurance product designed to meet
the financial needs of your children - be it higher education, marriage,
starting a career or a business, or any other need. The plan can be purchased
on the life of any one of the parents with the child as the nominee. Through
this policy, you save regularly to meet your childrens needs, and at the same
time their financial needs are taken care of should something unfortunate happen to
you.

The entry age for this policy is 21 55 years. The term of the policy is 8 to 21
years (maximum age at maturity 65 years). If your childs age is between 0
13 years, the policy term will be 21 minus the age of your child at entry. For
example if the age of your child is 10 years at the time of purchasing the
policy, the policy term will be 11 years (21 10). The minimum annual
premium payable is Rs. 6000. The minimum sum assured is Rs. 36000 and
maximum sum assured is Rs. 10,000,000. For each policy term there is a low
and high sum assured to choose from ranging from 6 to 21 times the annual
premium.
Can I withdraw my money during the policy term?
You have the flexibility of making partial withdrawals from accumulation units
in respect of regular premiums as well as top up premiums provided all due
premiums till date are paid. Any partial withdrawal will first be made from the
top up premium account (if any and if eligible for withdrawal) followed by the
regular premium account, if required.

Partial withdrawals from top-up premium account can be made after 3

years from the allocation date of that top-up premium

Partial withdrawals from units pertaining to regular premiums can be

made in the last 4 policy years. There is no restriction on the maximum
amount of partial withdrawal with respect to top-up premiums

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

Only 4 partial withdrawals are allowed in a policy year

No partial withdrawal can be made from the initial units

What are the charges on my policy?

Policy Administration Charge (PAC): Rs. 57 per month, which

will increase by 5% p.a. on the 1st of January each year. PAC will be

deducted monthly by cancellation of units from the accumulation

unit account. If premiums are discontinued, this charge would
reduce to 60% of the charge applicable for the premium paying
policies

Initial Management Charge (IMC): 10% p.a. of initial units

during the policy term. IMC will be deducted monthly from initial
units

Fund Management Charge (FMC): 1% p.a. on With Profits Fund,

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

3) LIFE SAVER
Life saver is a flexible endowment savings plan. Its entry age is 18 65
years. This policy can be taken jointly with your spouse. The sum assured
is calculated as annual premium * cover level; where cover level ranges
from 5 68 depending upon the age at entry and the policy term. Since it
is an endowment plan the sum assured is fixed right from the acceptance
of the policy. The minimum policy term is 5 years and maximum age at
maturity is 70 years. The policy term may be selected according to the
goals of the prospect.
The minimum premium payable is Rs. 6000 and there is no maximum
limit. This is a contribution based plan. It means that the customer can
decide how much money he wants to set aside in his investment. The
premium payment term is the same as the policy term and it encourages
disciplined savings. Top up premiums are allowed with a minimum top up

of Rs. 1500 and a maximum of up to 25% of the total regular premium

paid. The allocation rate for the top up premium is 96%.
A policy holder can avail a premium holiday 6 months after the 5 th policy
year for 4 times during the policy term. During this time the policy does
not lapse. A grace period of 30 extra days are given to the policy holder to
pay premium beyond the premium paying due date. On the death of the
policy holder the higher of the sum assured or fund value is paid. The sum
assured protects the policy holder and their corpus whereas invest able
premiums grow the savings component.
The customer has the option to return the policy within 15 days and no
surrender penalty would be levied on the same. You can experience the
service and if you are not satisfied you have a chance to cancel the policy.
This is called the free look period. Tax free partial withdrawal is allowed
after the three policy years. No surrender value is payable in the first
three policy years. If the policy has lapsed it can be reinstated within two
years from the date of the first unpaid premium. The settlement option is
available at maturity.

4) LIFE BOND
A wide age band can opt for this policy. The eligibility is 1 65 years. There
are no riders available with this policy. The minimum sum assured is Rs.
31,250 and there is no maximum limit. The minimum premium payable is Rs.
25000 and there is no maximum limit. The customer decides how much
money he wants to set aside in this investment. Only single premium is
allowed. No additional regular premiums are allowed. The minimum top up
premium is Rs. 6250 and the maximum top up premium is 25% of the total
regular premiums paid.
Policy administration charge: 1.5% p.a. of the single premium for the first
year and 1% p.a. thereafter. This is also true for the top up premiums.

Fund management charges: 1% on with profit and protector, 1.25%

on the balanced fund and 1.5% on the growth fund.

Mortality Charges: Apply on the sum at risk which is the sum

assured less the fund value

5) SAVE GUARD
This policy is a limited premium paying term whole life plan. The eligibility
age for this plan is 18 50 years. The minimum premium payable is Rs.
12000 and the maximum is Rs. 360000. Annual premiums have to be
multiples of 6000.
The sum assured is calculated as 0.5*PT*AP and the maximum is Rs.
18,00,000 for 10, 15 years term and 12,00,000 for 20, 25 and 30 years term.
The premium paying term is 10, 15, 20, 25 and 30 years. The minimum policy
term is 10 years and maximum is 30 years. The maximum age at maturity is
70 years. The three funds available for investment are secure fund, balanced
fund and growth fund.
Policy proceeds are tax free under the section 10 (10D) of the Income Tax Act,
1961 (provided the total premium paid in any policy year does not exceed
20% of the capital sum assured). A tax deduction is also applicable under
section 80C of the Income Tax Act, 1961.
6) TREASURE PLUS
Treasure plus is a savings cum protection plan. The entry age is 18 to 50
years. The maximum age at maturity is 65 years. This policy has various
premium payment terms of 10, 15 and 20 years. The minimum annual
premium is Rs 12000/- and the minimum sum assured is 10 times annual
premium subject to a maximum of 6 lakhs. The investment option available is
100% investment in secure fund. The composition of the fund is 0-20% equity
50-100% debt and 0-20% money market.

The maturity benefit is higher of the fund value or minimum maturity value
where minimum maturity value is equal to annual premium into policy term.
The administration charges is Rs 38/- per month. The initial management
charge of 7% per annum will be charged on initial units during the premium
paying term. Mortality charges are based on gender, age and term of the
policy.
7) FREEDOM LIFE PLAN
Freedom life plan is a limited payment term investment cum protection plan.
The eligibility age is 18 60 years. This policy can cover you and your spouse
for the same premium amount. The maximum age at maturity is 70 years.
The policy term is 10 30 years. The minimum premium payable is Rs. 25000
p.a. for 10, 15, 20, 25 or 30 years and a minimum of Rs. 200000 p.a. for 3 or
5 years.
The minimum sum assured is 0.5*PT*AP and the maximum sum assured is
1.25*PT*AP. There is an option of increasing the sum assured before the age
of 40 years by 50%, within 3 months of marriage or within 3 months of the
birth of the child. This feature helps the policy holder to alter the policy to suit
his life stage and need. There are guaranteed loyalty additions of 5% on the
10th policy year and 3% on every subsequent 5 th policy anniversary till the
date of maturity. The HCB, CIPTD and ADD riders are available.
8) PENSION PLUS
It is a regular savings personal pension plan. The eligibility age is 18 65
years. The term of the policy is equal to the premium paying term (maximum
up to the age of 70 years). You have the option to choose term based on
retirement age. The minimum premium is Rs. 6000 per annum for regular
premium and Rs. 100,000 for single premium.
The term of the policy is subject to a maximum of 70 years. The minimum
vesting is 40 years and maximum vesting age is 70 years. You have the
provision to start your pension from as early as 40 years of age. The
allocation rate is 98% for below Rs.500, 000 and 99% for above Rs. 500,000.

The maturity benefit is 100% of the corpus used to purchase regular pension
from the annuity options available and commutation of 33.33% and the
balance for purchasing pension from Aviva or the open market.

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

ORGANIZATION STRUCTURE

Zonal Manager

Branch Manager

Sales Manager

Sales Manager

Financial Planning Advisors

(team)

HR
Department

Operations
Department

Tele callers
(Recruiting)

General
Staff

At Aviva in Bangalore, the internal structure of the organization was as given

above. The branch was headed by the zonal manager. He controlled the
south zone. The branch manager was the next person in authority. All
strategic decisions about the firms future were taken by these two
individuals. There job profile was to monitor the performance of the
organization and see that all the operations were going smoothly.
The HR department was responsible for recruiting new financial planning
advisors. The department was headed by a HR Manager. The main sales force
comprised of the sales managers and the advisors. The sales managers had
to manage teams of 15 20 advisors. They would help in filling out
applications, providing relevant databases to prospect customers, accompany
advisors on their sales calls and make sure everyone in the team is
motivated.
The financial planning advisors are the main link between the customer and
the company. They are the individuals who try to market the insurance
policies to prospects. They are provided training for the same. Every advisor
must pass the insurance examination as specified by the IRDA. Only a
licensed advisor is allowed to procure business for the firm. Apart from this
training is provided on unit linked funds and the savings/ protection products
Aviva offer.

INTROUCTION TO UNIT LINKED FUNDS

Unit linked plans are based on the component of the premium or the
contribution of the customer towards the plan. This contribution can be in
different modes like yearly, half yearly, quarterly and monthly. Unit linked
plans have multiple benefits like life protection, rider protection, savings,
transparency, investment choices, liquidity and planning for taxes. These
plans work like mutual funds.
The premium is collected from the policy holder. He is allotted a certain
number of units based of his contribution. The Net Asset Value is the value of
each unit of the fund. It is found by subtracting the charges and current

liabilities from the current assets and investments and dividing this number
by the total number of outstanding units.
Let us take an example. There are 100 investors and each invests Rs. 10 in a
fund. The total value of the fund is Rs. 1000 and each person is allotted 1 unit
of Rs 10. Now the money (Rs. 1000) is invested in the debt or equity market.
Suppose the fund value increased by 20%. As a result the Rs. 1000 invested
became Rs. 1200. Hence the value of every investor is now Rs. 12 and not
Rs. 10.

PICTORIAL REPRESENTATION

PREMIUM CONTRIBUTION

(LESS) CHARGES

(LESS) MORTALITY CHARGES

INVESTIBLE PREMIUM
INVESTED AFTER
UNITIZATION
LIFE PROTECTION
FUND VALUE

NATIONAL & INTERNATIONAL PRESENCE

Aviva has over 59000 employees serving 40 million customers worldwide. It is

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

CHAPTER V
COMPETITIVE

ANALYSIS

COMPETITIVE ANALYSIS
LIFE INSURANCE CORPORATION OF INDIA (LIC)
LIC has an excellent money back policy which provides for periodic payments
of partial survival benefits as long as the policy holder is alive. 20% of the
sum assured is payable after 5, 10, 15 and 20 years and the balance 40% is
payable at the 20th year along with accrued bonus. (www.lic.com)
For a 25 years term , 15% of the sum assured becomes payable after 5,10,15
and 20 years and the balance 40% plus the accrued bonus becomes payable
at the 25th year. An important feature of these types of policies is that in the
event of the death of the policy holder at any time within the policy term the
death claim comprises of full sum assured without deducting any of the
survival benefit amounts which have already been paid. The bonus is also
calculated on the full sum assured.

Aviva does not have a money back policy. It could offer a money back plan
and capture some portion of this market. While marketing insurance products
I found that many customers wanted to purchase these plans.
LIC offers 66 different plans; plans are formulated for specific occasions
whole life plans, term assurance plans, money back plan for women, child
plans, plans for the handicapped individuals, endowment assurance plans,
plans for high worth individuals, pension plans, unit linked plans, special
plans, social security schemes diversified portfolio of products. Aviva could
diversify its product portfolio. It could add more plans for high worth
individuals and women.
The minimum premium payable for an LIC policy is Rs. 5000 p.a. It increases
at Rs. 1000 per year. At Aviva minimum premium for easy life plus is Rs. 6000
which increases in multiples of 6000 per year. Hence Aviva should reduce the
minimum premium amount payable to compete with LIC. The guaranteed
sum assured in case of the death of the policyholder is larger in LIC than in
Aviva.
Switching from one fund to another is cheaper for LIC it is only Rs. 100 to
switch from one fund to another whereas at Aviva it is Rs. 500. More number
of switches is allowed free per year in the case of LIC.
There are however some drawbacks to investing in LIC. The allocation
charges are higher. Therefore the money invested in the fund is lower than
what Aviva will invest. This is true across all policies. Aviva covers its costs
over the policy term whereas LIC charges a high amount for the first five
years and then charges a very nominal amount from the 6 th year onwards.
The investment benefit is not as high as Aviva.
ICICI PRUDENTIAL
ICICI Prudential is a stiff competitor for Aviva. The company is a merger
between ICICI Bank which is the biggest private bank in India and Prudential
Plc which is a global life insurance company.

The company has an investment plan which is market related Invest Shield
Life. In this plan even if the market falls, the premium will be returned to
investors. It is a guaranteed plan which ensures the company carefully
invests your money. The stock market performance of ICICI Prudential is
much better than Aviva. The returns on the growth fund were 46.28%
compared to the 39.59% offered by Aviva. Customers are attracted by higher
returns and this is a plus point for Prudential.
The company is very well advertised. The advertisements are showcased in
movies, television, newspapers, magazines, bill boards, radio etc. The
company has an excellent brand ambassador Mr. Amitabh Bacchan. His
promotion of the company builds trust and faith in the minds of our people.
However the charges are very high in the plans offered by ICICI Prudential. It
is 35% during the first year, 15% in the next year and 3% from the third year
onwards. Also a higher minimum premium of Rs. 8000 is charged. Hence the
policies are not accessible to the lower strata of the society. (Source:
www.iciciprulife.com)

BIRLA SUN LIFE

Birla Sun Life Insurance Company Limited is a joint venture between The
Aditya Birla Group, one of the largest business houses in India and Sun Life
Financial Inc., a leading international financial services organization. The local
knowledge of the Aditya Birla Group combined with the expertise of Sun Life
Financial Inc., offers a formidable protection for your future. (Source:
www.birlasunlife.com)
The Aditya Birla Group has a turnover close to Rs. 33000 crores with a market
capitalization of Rs. 53400 crores (as on 31st March 2006). It has over 72000
employees across all its units worldwide. It is led by its Chairman - Mr. Kumar
Mangalam Birla. Some of the key organizations within the group are Hindalco
and Grasim.

Sun Life Financial Inc. and its partners today have operations in key markets
worldwide, including Canada, the United States, the United Kingdom, Hong
Kong, the Philippines, Japan, Indonesia, India, China and Bermuda. It had
assets under management of over US$343 billion, as on 31st March 2006.
The company is a leading player in the life insurance market in Canada.
Being a customer centric company, BSLI has invested heavily in technology
to build world class processing capabilities. BSLI has covered more than a
million lives since inception and its customer base is spread across more than
1000 towns and cities in India. All this has assisted the company in
cementing its place amongst the leaders in the industry in terms of new
business premium income. The company has a capital base of 520 crores as
on 31st July, 2006.
Its Flexi Life Line Plan offers life long insurance cover till the policy holder is
100 years of age. There are guaranteed returns of 3% p.a. net of policy
charges after every 5 years from the eleventh policy year onwards. However
the charges are very high. The initial charges for the first year are 65%.
Hence the fund value is greatly reduced.
BAJAJ ALLIANZ
Bajaj Allianz is a joint venture between Allianz AG with over 110 years of
experience in over 70 countries and Bajaj Auto, a trusted automobile
manufacturer for over 55 years in the Indian market. Together they are
committed to offering you financial solutions that provide all the security you
need for your family and yourself. Bajaj Allianz is the number one private life
insurer for the year 2005 2006. It is leading by 78 crores. It has experienced
a whopping growth of 216% in the last financial year.
The company has sold 13, 00,000 policies and is backed by 550 offices across
India. It offers travel insurance, motor insurance, home insurance, health and
corporate insurance. The mortality charges are lower than Aviva. The entry

age could be zero years which allow even new born babies to be insured.
(Source: www.bajajallianz.com)
TATA AIG
Tata Aig is a joint venture between the Tata group and American International
Group Inc. In one of the plans the company offers hospital cash benefit
wherein it will pay Rs. 2500 per day in case of hospitalization and Rs.12.5
lakhs in case the person suffers from any critical illness. Annual premium is
much less (about Rs. 6712) to avail such a good benefit. Charges are
relatively low compared to Aviva for some policies.
The company offers high coverage plans at low cost. There is a plan even for
a policy term of 1 year. Your family can continue to enjoy their current
lifestyle even in the case of something happening to you. These plans are
very flexible and Aviva could adopt this idea of insuring individuals for short
periods of time. For example; there is a family of four. The only earning
member is the father.
He has just taken a loan from a bank of 20 lakhs to purchase a new home. He
is able to repay the loan with his current salary in 15 years. The problem
arises if something were to happen to him within these fifteen years. Not only
will the family face the emotional and financial loss of their father but they
will also have to repay the home loan or risk being homeless. (Source:
www.tataaig.com)

CHAPTER VI
MARKETING
PROBLEMS

MARKETING PROBLEMS
The old and out dated technique of tele marketing is used to prospect
customers. More modern techniques must be adopted. The company must
sponsor shows and give presentations in corporate houses. The financial
health check must be performed for every prospect to assess his/her true
financial position and needs. Some of the advisors skip this vital step and the

prospect ends up with a plan they do not appreciate and soon surrender or
discontinue.
Some of the main problems in marketing the policies are:
Large amount of competition (15 players in the market)
Other brands are well advertised and have higher recall value
LIC is considered a safer option
Face competition from banks and mutual funds
High premium policies are difficult to market
Incorrect perception about insurance
Interested prospects might have a lack of time and postpone
investments
Customers get defensive if you cold call
Short term plans are available only at large premium
Customers do not have risk appetite to invest in shares
Some prospects have already invested and are not interested in further
investments
Consumers dont want to undertake medical examinations
Large amount of documentation
Customers do not like their money locked up for many years
Lack of awareness about the unit linked funds in the market
No money back plan present in the product portfolio

SUGGESTIONS FOR IMPROVEMENT

 Advertise about the company and its products it motivates

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

CHAPTER VII
ANALYSIS
&
INTERPRETATION

ANALYSIS & INTERPRETATION

A SURVEY ON THE LIFE INSURANCE INDUSTRY IN INDIA

AGE GROUP OF SURVEYED RESPONDENTS
TABLE 1:
Age group

No. of Respondents

18 - 25 years

62

26 - 35 years

33

36 - 49 years

22

50 - 60 years

12

More than 60 years

CHART 1:

Analysis:
From the chart above we find that 47% of the respondents fall in the age
group of 18 25 years, 25% fall in the age group of 26 35 years and 17%
fall in the age group of 36 49 years.
Therefore most of the respondents are relatively young (below 26 years of
age). These individuals could be induced to purchase insurance plans on the

basis of its tax saving nature and as an investment opportunity with high
returns.
Individuals at this age are trying to buy a house or a car. Insurance could help
them with this and this fact has to be conveyed to the consumer. As of now
many consumers have a false perception that insurance is only meant for
people above the age of 50. Contrary to popular belief the younger you are
the more insurance you need as your loss will mean a great financial loss to
your family, spouse and children (in case the individual is married) who are
financially dependent on you.
GENDER CLASSIFICATION OF SURVEYED RESPONDENTS
TABLE 2:
Particulars

No. of Respondents

Male

113

Female

17

CHART 2:

CUSTOMER PROFILE OF SURVEYED RESPONDENTS

TABLE 3:
Customer profile

No. of respondents

Student

30

Housewife

Working Professional

55

Business

24

Self Employed

12

Government service employee

CHART 3:

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

MARKET SHARE OF LIFE INSURANCE COMPANIES

TABLE 4:
LIFE INSURER
HDFC STANDARD LIFE
BIRLA SUN LIFE
AVIVA LIFE INSURANCE
BAJAJ ALLIANZ
LIC
TATA AIG
ICICI PRUDENTIAL
ING VYSYA
BHARTI AXA
OTHERS

CHART 4:

Analysis:

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

In India, the largest life insurance company is Life Insurance Corporation of

India. It has been in existence in India since 1956 and is completely owned by
the Government of India. Today the organization has grown to 2048 offices
serving 18 crore policies and has a corpus of over 340000 crore INR.
The largest private insurance company in India is ICICI Prudential. It is a joint
venture between ICICI Bank and Prudential plc, a leading international
financial services group headquartered in the UK. In just 4 years time (till
March 31, 2004) the company has successfully sold 430000 policies with a
premium income in excess of 980 crores.
The second largest private life insurance company is Bajaj Allianz. It has more
than 550 offices and over 60000 insurance consultants. It had a premium
income of 221 crores as on March 31, 2004. This year it has gone past ICICI
Prudential to become the number one private life insurance company in India
with a premium of 3134 crores.

ANNUAL PREMIUM PAID BY INDIVIDUALS FOR LIFE INSURANCE

TABLE 5:
Premium paid (p.a.)

No. of respondents

Rs. 5000 - Rs. 10000

45

Rs. 10001 - Rs. 15000

29

Rs. 15001 - Rs. 24900

19

Rs. 25000 - Rs. 50000

12

Rs. 50001 - Rs. 60000

Rs.60001 - Rs. 80000

Rs. 80001 - Rs. 100000

CHART 5:

ANNUAL PREMIUM PAID BY INDIVIDUALS FOR LIFE INSURANCE

Analysis:
From the chart above we find that, 39% of the respondents surveyed pay an
annual premium less than Rs. 10001 towards life insurance. 25% of the
respondents pay an annual premium less than Rs. 15001 and 17% pay an
annual premium less than Rs. 25000. Hence we can safely say that Aviva Life
insurance would be able to capture the market better if it introduced
products/plans where the minimum premium starts at Rs. 5000 p.a.
Only 19% of the respondents pay more than Rs. 25000 as premium and most
products sold by Aviva have Rs.25000 as the minimum annual premium
amount. They should introduce more products like Easy Life Plus and Safe
Guard where the minimum premium is Rs.6000 p.a. and Rs. 12000 p.a.
respectively. This would definitely increase their market share as more
individuals would be able to afford the policies/plans offered.

POPULAR LIFE INSURANCE PLANS

TABLE 6:

Type of Plan

No. of Respondents

Term Insurance Plans

53

Endowment Plans

62

Pension Plans

Child Plans

Tax Saving Plans

10

CHART 6:
POPULAR LIFE INSURANCE PLANS

Analysis:
From the chart given above we can clearly see that 45% of the respondents
hold endowment plans and 39% of the respondents hold term insurance
plans. Endowment plans are very popular and serve two purposes life cover
and savings.

If the policy holder dies during the policy term the nominee gets the death
benefit that is, sum assured and accumulated bonus. On survival the policy
holder receives the survival benefit with a bonus.
A term plan is a pure risk cover plan wherein the insured pays a lower
premium for a higher sum assured. Term insurance is the cheapest form of
insurance and helps the policy holder insure himself for a relatively low
premium. For the returns sensitive investor term plans do not find favor as
they do not offer a return in case the individual does not die during the policy
term.

AWARENESS OF UNIT LINKED INSURANCE PLANS

TABLE 7:
Awareness of Unit Linked Plans

No. of Respondents

Yes

74

No

56

CHART 7:
AWARENESS OF UNIT LINKED INSURANCE PLANS

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

CONSUMER WILLINGNESS TO SPEND ON LIFE INSURANCE PREMIUM

TABLE 8:

Willingness to spend on premium

No. of respondents

Percentage

Less than Rs. 6000

20

15%

Rs. 6001 - Rs. 10000

35

27%

Rs. 10001 - Rs. 25000

54

41%

Rs. 25001 - Rs. 50000

20

15%

Rs. 50001 - Rs. 100000

2%

CHART 8:

CONSUMER WILLINGNESS TO SPEND ON LIFE INSURANCE PREMIUM

Analysis:
From the graph above, we can clearly see that 41% of the respondents would
be willing to spend between Rs. 10001 Rs. 25000 for life insurance. 27 %
would be willing to spend between Rs. 6001 Rs. 10000 per annum. Only
15% would be willing to spend more than Rs. 25000 per annum as life
insurance premium.
We could say that the maximum premium payable by most consumers is less
than Rs. 25000 p.a. This is further reduced as most customers have already
invested with LIC, ICICI Prudential, Birla Sun Life, Bajaj Allianz etc.
Aviva is faced with a large amount of competition. There are 15 insurance
companies in India inclusive of LIC. Hence to capture a larger part of the
market the company could introduce more reasonable plans with lesser
premium payable per annum.

CHART SHOWING IDEAL POLICY TERM

TABLE 9:
Ideal policy term

No. of respondents

3 - 5 years

25

6 - 9 years

20

10 - 15 years

46

16 - 20 years

18

21 - 25 years

12

26 - 30 years

More than 30 years

Whole life Policy

CHART 9:
CHART SHOWING IDEAL POLICY TERM

Analysis:

From the chart given above it can be seen that 35% of the respondents prefer
a policy term of 10 15 years, 19% prefer a term of 3 5 years and 15%
prefer a term of 6 9 years. This means that Aviva could introduce more
plans wherein the premium paying term is less than 15 years.
The outlook of insurance as a product should be changed from something
which you pay for your whole life (whole life policy) and do not receive any
benefit (the nominee only receives the benefit in case of your death) to an
extremely useful investment opportunity with the prospects of good returns
on savings, tax saving opportunities as well as providing for every milestone
in your life like marriage, education, children and retirement.
FACTORS THAT MOTIVATE RESPONDENTS TO PURCHASE INSURANCE
TABLE 10:
Parameter
Advertisements
High returns
Advice from friends
Family responsibilities
Others

CHART 10:

Analysis:

No. of Respondents
17
42
23
45
8

From the chart above it can be seen that 33% of the respondents purchase
life insurance to secure their families, 33% take life insurance to get high
returns, 17% purchase insurance on the advice of their friends and 13%
purchase insurance because of the influence of advertisements.
The main purpose of insurance is to cover the financial or economic loss that
occurs to the family in case of the uncertain death of the policy holder. But
nowadays this trend is changing. Along with protection (life cover), a savings
element is being added to insurance.
With the introduction of the new unit linked plans in the market, policy
holders get the option to choose where their money will be invested. They
can invest their money in the equity market, debt market, money market or a
combination of these. The debt and money markets usually have low risk
attached whereas the equity market is a high risk investment option.

PREFERRED COMPANY TYPE OF THE RESPONDENTS

TABLE 11:
Type of Company

No. of Respondents

Percentage

Government Owned Company

67

47%

Public Limited Company

33

23%

Private Company

26

18%

Foreign Company

17

12%

CHART 11:

PREFERRED COMPANY TYPE OF THE RESPONDENTS

Analysis:
From the graph above we find that 47% of the respondents preferred to
purchase insurance from a government owned company, 23% of the
respondents preferred to purchase insurance from a public limited company
and only 12% of the respondents preferred a foreign based company. Aviva
could be promoted as an essentially Indian company with a foreign tie up.
Its tie up with Dabur India, a trusted name in an Indian household and a
pharmaceutical giant, could be used to give a push to its products/
services.
Heavy advertising through television, newspapers, magazines and radio is
required. Very few people know that Aviva is one of the oldest insurance
companies in the world. It was started in the year 1696. The company is over
300 years old. These facts would surely increase the customer base it
currently possesses and thereby increase sales of Aviva products in the Indian
insurance market.

MINIMUM EXPECTED RETURN ON INVESTMENT

TABLE 12:
Expected Returns

No. of respondents

Less than 5%

5% - 10%

20

11% - 15%

22

16% - 20%

23

21% - 25%

22

26% - 30%

13

31% - 40%

11

41% - 50%

More than 50%

10

CHART 12:

Analysis:
From the chart above it can clearly been seen that 18% of the respondents
would like 16 20% returns, 17% would like returns between 21 25% and
17% would like returns of 11 15% on their investments. Therefore the
average return on investment should be at least 16 20 %.
Most consumers are willing to adapt to some amount of risk but still want
some guaranteed returns. Therefore the bulk of investment should be made
in the balanced fund with 50% debt and 50% equity. The returns on the
Secure Fund are guaranteed as these involve investment is government
securities and the debt market. But the returns on these instruments are low
(8 10%). If the company invests in shares, returns are higher (39%) but
correspondingly risk borne by the policy holder is also higher. Therefore a
good combination of the two instruments is often a wise choice.

CHAPTER VIII
FUTURE LINE OF
RESEARCH

FUTURE LINE OF RESEARCH

The future topics for research in the organization could be setting up of an
appropriate ad campaign. It is very vital to the companies success that the

people of India know about Aviva, its products and their special features and
how insurance in general can help them in their future. The advertisements
have to be emotionally appealing. They might also include a celebrity. The
brand name of Dabur could be used to give a push to Aviva and its products.
The general perception of insurance as inauspicious should be done away
with and individuals and corporations accept insurance on power with other
investment opportunities.
The other area of research could be in the management of funds Aviva
possesses and how it can maximize returns for its investors. A research
project could be undertaken on how to ensure that the money gets invested
in the right companies and earns a medium high return on investment.
Another area of research could be an analysis of the sales and marketing
techniques used by Aviva. A large number of changes could be introduced
and this would help in saving operating costs and improving the efficiency of
the firm.

CHAPTER IX
CONCLUSION

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

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<http://www.lic.com>.
Stock price of Aviva." Money Control. 17 Apr. 2007 <http://www.money
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Unit Linked Plans." Tata aig. 16 Apr. 2007 <http://www.tataaig.com>.
Life Insurance." Bajaj allianz. 17Apr. 2007 <http://www.bajajallianz.com/
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