A PROJECT REPORT ON

__________________________________________________
AT
_____________________________________________
HYDERABAD
A PROJECT REPORT SUBMITTED TO

OSMANIA UNIVERSITY
HYDERABAD
IN PARTIAL FULFILLMENT OF THE REQUIREMENTS
FOR THE AWARD OF THE DEGREE IN
BACHELORS OF BUSINESS ADMINISTRATION
SUBMITTED
BY
_________________________________
_______________________________
VILLA MARIE PG COLLEGE FOR WOMEN;
SOMAJIGUDA- 82
2014-2016

DECLARATION
I the undersigned solemnly declare that the report of the summer training
work entitled study on _____________________________________________ is based on
my work carried out during the course of my study under the supervision of
________________________________

_____________________________________&

Mrs_______________________________, Faculty, Department of Management. Villa

Marie Degree College
I assert that the statements made and conclusions drawn are an outcome of
the project work. I further declare that to the best of my knowledge and believe
the project report does not contain any part of any work which has been submitted
for the award of any other degree/ diploma/ certificate in this university or any
other university.
_______________________
(Signature of the student)
DATE:
PLACE:

ACKNOWLEDGMENT
I would like to thank my project guide, Mr. Dinesh Gangwani Sales
Development Manager HDFC Standard Life Insurance, Jaipur for guiding me
through my summer internship and research project. His encouragement, time and
effort are greatly appreciated.
I would like to thank Prof. Man Chand Khandela-Director of S.I.M.C.S. & Mrs.
Swati Jain, my project supervisor for supporting me during this project and
providing me an opportunity to learn outside the class room. It was a truly
wonderful learning experience.
I would like to dedicate this project to my parents. Without their help and
constant support this project would not have been possible.
Lastly I would like to thank all the respondents who offered their opinions and
suggestions through the survey that was conducted by me in Jaipur.

(MOHAMMED SHAHID)

Abstract
BBA student gain theoretical knowledge only through their books.
Only theoretical knowledge is not sufficient for absolute mastery in any field.
Theoretical knowledge given its performance implementation. It has been
experienced that theoretical knowledge is volatile in nature however practical
makes solid foundation our mind.
To accomplish this aspect, the Rajasthan University has include performance
training is compulsory for every student of every student of management college
according to the syllabus each student required to under go a practical training of
45 days. It is very difficult to know about this INSURANCE Industry.
I am thankful to my teacher Mrs. Swati Jain.
But I am trying to write what I learnt in the HDFC STD. LIFE INSURANCE in
training period. In this report all data are collected from the research.

DECLARATION

I, MOHAMMED SHAHID, Student of BBA IIIrd Session 2009-2010, declares that

the present work titled MARKET AND COMPETITIVE ANALYSIS".
From HDFC STANDARD LIFE INSURANCE, JAIPUR is an original work. All the
data given in the report is true to the best of my knowledge and all references
whether of any person or organization can be cross checked.

(MOHAMMED SHAHID)

Table of Contents
No

Page No.

Topic

5 - 10

01

Introduction to Insurance

02

Company Profile of HDFC SLIC

11 23

03

Company Profile of Tata AIG LIC

24 27

04

Research Design

28 31

05

Points of Parity and Difference b/w HDFC SLIC & TATA AIG

32 36

06

Competitive analysis

37 41

07

SWOT Analysis

42 44

08

Marketing Problems

45 46

09

Analysis and Interpretation

47 65

10

Conclusion

66 67

11

Recommendation & Suggestions

68 70

Appendix
Bibliography

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 32-34 per cent annually and presently is of the order of US $ 41 billion
(for the year 2009). Together with banking services, it adds about 7% to the
countrys Gross Domestic Product (GDP). The gross premium collection is nearly
4.1% of GDP in the year 2009.
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

www.indiacore.com)

HISTORICAL PERSPECTIVE

the

country.

(Source:

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 contributed 4.1 per cent to the GDP of the economy in
2009, a huge rise since the sector was thrown open to the private sector in 1999.
The sector has contributed US$ 1.3 billion in foreign direct investment (FDI), even
as the government is likely to reintroduce the Insurance Bill on FDI cap to increase
the cap from 26 per cent to 49 per cent in the next Parliament session.
There are around 10 million registered vehicles in the country and the total
insurance premium collected in 2008-09 was US$ 6.62 billion.
The total number of life insurers registered with the Insurance Regulatory
Development Authority (IRDA) has gone up to 23, with registration of India First

Life Insurance Company Limited, a joint venture life insurance company promoted
by Bank of Baroda and Andhra Bank, India and Legal & General Middle East
Limited, UK.
The new businesses of the life insurance companies grew 22 per cent to US$ 12
billion in April-November 2009-10, compared to the US$ 9.8 billion in the
corresponding period last year, according to IRDA data. Buoyed by a steep rise in
sale of single premium policies, the industry clocked a 53.25 per cent rise in
November 2009 alone.
The market share of Life Insurance Corporation (LIC) among 23 players in the
sector jumped to 66 per cent at US$ 7.9 billion during the first eight months of
2009-10, from US$ 5.5 billion during the same period last fiscal. The 22 private
insurers have collected US$ 4.1 billion first year premium during April-November
this fiscal, compared to US$ 4.35 billion during the same period last year.
The life insurance industry had earlier been expected to grow by 15 per cent this
fiscal and cross the US$ 54.1 billion mark in total premium income by March-end,
according to industry body, Life Insurance Council. This growth in premium income
includes new business as well as renewals, driven by increasing awareness on the
value of getting insured.
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)

10

COMPANY PROFILE
OF
HDFC STANDARD LIFE INSURANCE COMPANY LTD.

11

HDFC STANDARD LIFE INSURANCE COMPANY LIMITED

INTRODUCTION
HDFC Incorporated in 1977 with a share capital of Rs 10 Crores, HDFC has
since emerged as the largest residential mortgage finance institution in the
country. The corporation has had a series of share issues raising its capital to Rs.
119 Crores. The gross premium income for the year ending March 31, 2009 stood
at Rs. 5,564.69 Crores and We have covered over 1.6 million individuals out of
which over 5,00,000 lives have been covered through our group business tie-ups.

HDFC operates through almost 450 locations throughout the country with its
corporate head quarters in Mumbai, India. HDFC also has an International Office in
Dubai, UAE with service associates in Kuwait, Oman and Qatar. HDFC is the largest
housing company in India for the last 27 years.

SNAPSHOT-I

Incorporated in 1977 as the first specialized Mortgage Company in India.

Almost 90% of initial shareholding in the hands of domestic institutes and

retail investors. Current 77% of shares held by foreign institutional investors.

Besides the core business of mortgage HDFC has evolved into a financial
conglomerate with holdings In:
HDFC Standard Life insurance Company- HDFC holds 78.07 %.
HDFC Asset Management Company HDFC holds 50.1%
HDFC Bank- HDFC holds 22.25%.
Intel net Global (Business Process Outsourcing) HDFC holds 50%.
HDFC Chubb General Insurance Company HDFC holds 74%.

12

KEY PLAYERS
Mr. Deepak S Parekh is the Chairman of the Company. He is also the
Executive Chairman of Housing Development Finance Corporation Limited (HDFC
Limited). He joined HDFC Limited in a senior management position in 1978. He was
inducted as a whole-time director of HDFC Limited in 1985 and was appointed as
its Executive Chairman in 1993. He is the Chief Executive Officer of HDFC Limited.
Mr. Parekh is a Fellow of the Institute of Chartered Accountants (England & Wales).

Mr. Deepak M Satwalekar is the Managing Director and CEO of the

Company since November, 2000. Prior to this, he was the Managing Director of
HDFC Limited since 1993. Mr. Satwalekar obtained a Bachelors Degree in
Technology from the Indian Institute of Technology, Bombay and a Masters Degree
in Business Administration from The American University, Washington DC.

13

GROUP COMPANIES

HDFC Bank: World Class Indian Bank- among the top private banks in India.
HDFC AMC: One of the top 3 AMCs in India- Preferred investment manager.
Intelenet Global: BPO services for international customers.
CIBIL: Credit Information Bureau India Limited.
HDFC Chubb: Upcoming Private companies in the field of General Insurance.
HDFC Mutual Fund
HDFC reality.com: Helps to search properties in all major cities in India
HDFC securities

STANDARD LIFE
Standard Life is Europes largest mutual life assurance company. Standard
Life, which has been in the life insurance business for the past 175 years is a
modern company surviving quite a few changes since selling its first policy in
1825. The company expanded in the 19th century from kits original Edinburgh
premises, opening offices in other towns and acquitting other similar businesses.

14

Standard Life Currently has assets exceeding over 70 billion under its
management and has the distinction of being accorded AAA rating consequently
for the six years by Standard and Poor.
SNAPSHOT

Founded in 1875, company supporting generation for last 179 years.

Currently over 5 million Policy holders benefiting from the services offered.

Europes largest mutual life insurer.

JOINT VENTURE

HDFC Standard Life Insurance Company Limited was one of the first
companies to be granted license by the IRDA to operate in life insurance sector.
Reach of the JV player is highly rated and been conferred with many awards. HDFC
is rated AAA by both CRISIL and ICRA. Similarly, Standard Life is rated AAA both
by Moodys and Standard and Poors. These reflect the efficiency with which HDFC
and Standard Life manage their asset base of Rs. 15,000 Cr and Rs. 600,000 Cr.
respectively.
HDFC Standard Life Insurance Company Ltd was incorporated on 14 th August
2000. HDFC is the majority stakeholder in the insurance JV with 81.4% staple and
Standard of as a staple 18.6% Mr. Deepak Satwalekar is the MD and CEO of the
venture.
HDFC Standard Life Insurance Company Ltd. Is one of Indias leading Private
Life Insurance Companies, which offers a range of individual and group insurance
solutions. It is a joint venture between Housing Development Finance Corporation
Limited (HDFC Ltd.) Indias leading housing finance institution and the Standard
Life Assurance Company, a leading provider of financial services from the United

15

Kingdom. Both the promoters are will known for their ethical dealings and financial
strength and are thus committed to being a long-term player in the life insurance
industry- all important factors to consider when choosing your insurer.

BUSINESS GROWTH
Track Record so far
The gross premium income for the year ending March 31, 2009 stood at Rs.
5,564.69 Crores and We have covered over 1.6 million individuals out of which over
5, 00,000 lives have been covered through our group business tie-ups.

KEY STRENGTH
Financial Expertise
As a joint venture of leading financial services groups. HDFC standard Life
has the financial expertise required to manage long-term investments safely and
efficiently.
Range of Solutions
HDFC SLIC has a range of individual and group solutions, which can be easily
customized to specific needs. These group solutions have been designed to offer
complete flexibility combined with a low charging structure.
Strong Ethical Values:
HDFC SLIC is an ethical and Cultural Organization. False selling or false
commitment with the customers is not allowed.
Most respected Private Insurance Company

16

HDFC SLIC was awarded No-1 Private Insurance Company in 2004 by the
World Class Magazine Business World for Integrity, Innovation and Customer Care.
CORPORATE OBJECTIVE
Vision
'The most successful and admired life insurance company, which means that
we are the most trusted company, the easiest to deal with, offer the best value for
money, and set the standards in the industry'.
'The most obvious choice for all'.

Values
.Integrity
.Innovation
.Customer centric
.People Care One for all
.Teamwork
.Joy and Simplicity

PRODUCTS & SERVICES

The right investment strategies won't just help plan for a more comfortable
tomorrow -- they will help you get Sar Utha ke Jiyo. At HDFC SLIC, life insurance
plans are created keeping in mind the changing needs of family. Its life insurance
plans are designed to provide you with flexible options that meet both protection
and savings needs. It offers a full range of transparent, flexible and value for
money products. HDFC SLIC products are modern and contemporary unitized

17

products that offer unique customer benefits like flexibility to choose cover levels,
indexation and partial withdrawals. (Source: www.hdfcslic.com)

PLANS THAT ARE OFFERED BY HDFC STANDARDS

LIFE INSURANCE

Individual Products
Protection Plans
A person can protect his family against the loss of his income or the burden of a
loan in the event of his unfortunate demise, disability or sickness. These plans
offer valuable peace of mind at a small price. Protection range includes our
Term Assurance Plan & Loan Cover Term Assurance Plan.
Investment Plans
HDFC SLICs Single Premium Whole of Life plan is well suited to meet long
term investment needs. This provides attractive long term returns through
regular bonuses.
Pension Plans
Pension Plans help to secure financial independence even after retirement.
Pension range includes Personal Pension Plan, Unit Linked Pension, Unit
Linked Pension Plus.
Savings Plans
Savings Plans offer a flexible option to build savings for future needs such as
buying a dream home or fulfilling your childrens immediate and future needs.

18

Savings range includes Endowment Assurance Plan, Unit Linked

Endowment, Unit Linked Endowment Plus, Unit Linked Endowment Plus
II, Money Back,
Unit Linked Enhanced Life Protection II, Children's Plan, Unit Linked
Young Star, Unit Linked Young Star Plus, Unit Linked Young Star Plus II.

Group Products
One-stop shop for employee-benefit solutions
HDFC Standard Life has the most comprehensive list of products for progressive
employers who wish to provide the best and most innovative employee benefit
solutions to their employees. It offers different products for different needs of
employers ranging from term insurance plans for pure protection to voluntary
plans such as superannuation and leave encashment.
HDFC SLIC offers the following group products to esteemed corporate clients:
Group Term Insurance
Group Variable Term Insurance
Group Unit-Linked Plan
An investment solution that provides funding vehicle to manage corpuses
with Gratuity, Defined Benefit or Defined Contribution Superannuation or
Leave Encashment schemes of your company
Also suitable for other employee benefit schemes such as salary saving
schemes and wealth management schemes

19

Social Product
Development Insurance Plan
Development Insurance plan is an insurance plan which provides life cover to
members of a Development Agency for a term of one year. On the death of any
member of the group insured during the year of cover, a lump sum is paid to those
member beneficiaries to help meet some of the immediate financial needs
following their loss.
Eligibility
Members of the development agency and their spouses with:
- Minimum age at the start of the policy 18 years last birthday
- Maximum age at the start of policy 50 years last birthday
Employees of the Development Agency are not eligible to join the group. The
group to be covered is only eligible if it contains more than 500 members.
Premium Payments
The premium to be paid will be quoted per member in the group and will be the
same for all members of the group.
The premium can only be paid by the Development Agency as a single lump sum
that includes all premiums for the group to be covered. Cover will not start until
the premium and all the member information in our specified format has been
received.

Benefits
On the death of each member covered by the policy during the year of cover a
lump sum equal to the sum assured will be paid to their beneficiaries or legal
heirs. Where the death is as a result of an accident, an additional lump sum will
20

be paid equal to half the sum assured. There are no benefits paid at the end of
the year of cover and there is no surrender value available at any time.
The role of the Development Agency
Due to the nature of the groups covered, HDFC Standard Life will be passing
certain administrative tasks onto the Development Agency. By passing on these
tasks the premium charged can be lower. These tasks would include:
Submission of member data in a specified computer format
Collection of premiums from group members
Recording changes in the details of group members
Disbursement of claim payments and the mortality rebate (if any) to group
members
These tasks would be in addition to the usual duties of a policyholder such as:
Payment of premiums
Reporting of claims
Keeping policy holder information up to date
Training and support will be available to give guidance on how to complete the
tasks appropriately. Since these additional tasks will impose a burden on the
Development

Agency,

the

Development

Agency

may

charge

Rs.

administration fee to their members.

Prohibition of rebates
Section 41 of the Insurance Act, 1938 states
No person shall allow or offer to allow, either directly or indirectly, as an
inducement to any person to take out or renew or continue an insurance in
respect of any kind of risk relating to lives or property in India, any rebate
of the whole or part of the commission payable or any rebate of the
premium shown on the policy, nor shall any person taking out or renewing
or continuing a policy accept any rebate, except such rebate as may be
allowed in accordance with the published prospectus or tables of the
insurer.

21

10

If any person fails to comply with sub regulation (previous point) above, he
shall be liable to payment of a fine which may extend to rupees five
hundred

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.
UNIT LINKED VERSUS OTHER FINANCIAL INSTRUMENTS
Parameters

RBI Bonds

Fixed

Mutual

Unit linked

Safety

High

Deposits
High

Funds
Medium

High

22

Liquidity

None

High

High

High

Returns

Low

Low

High

High

Life Cover

1 time

1 time

1 time

10 times

Tax

amount
Tax free

amount
Taxed

amount
Taxed

Tax free

benefits
We find that life insurance unit linked plans is a good area to invest money
in as it provides liquidity, safety, high returns, life cover and tax benefits in
a single plan. HDFC SLIC offers the option of indexation to beat inflation.
Risk is reduced to a large extent as the company invests in a diversified
portfolio of stocks.
Tax Benefits

INCOME

TAX GROSS

SECTION

Sec. 80C

HOW

MUCH HDFC STANDARD

ANNUAL

TAX CAN YOU LIFE PLANS

SALARY

SAVE?

Across
income Slabs

All Upto Rs. 33,990 All

saved

the

life

on insurance plans.

investment of
Rs. 1,00,000.
Sec. 80 CCC

Across
income slabs.

all Upto Rs. 33,990 All

the

saved

on plans.

Investment

of

pension

Rs.1,00,000.
Sec. 80 D

Across
income slabs

all Upto Rs. 3,399 All

saved

the

health

on insurance

riders

Investment of

available with the

Rs. 10,000.

conventional plans.

23

TOTAL SAVINGS
Rs37,389

POSSIBLE

Rs. 33,990 under Sec. 80C and under Sec. 80 CCC ,

Rs.3,399 under Sec. 80 D, calculated for a male with
gross

annual

income

exceeding Rs. 10,00,000.

Sec. 10 (10)D

Under Sec. 10(10D), the benefits you receive are

completely tax-free, subject to the conditions laid down
therein.

24

COMPANY PROFILE
OF
TATA AIG LIFE INSURANCE COMPANY LTD.

25

TATA AIG LIFE INSURANCE COMPANY LIMITED

Introduction
Tata AIG Life Insurance Company Limited (Tata AIG Life) is a joint venture
company, formed by the Tata Group and American International Group, Inc. (AIG).
Tata AIG Life combines the Tata Groups pre-eminent leadership position in India
and AIGs global presence as the worlds leading international insurance and
financial services organization. The Tata Group holds 74 per cent stake in the
insurance venture with AIG holding the balance 26 percent. Tata AIG Life provides
insurance solutions to individuals and corporate. Tata AIG Life Insurance Company
was licensed to operate in India on February 12, 2001 and started operations on
April 1, 2001.
THE TATA GROUP
The Tata Group is one of India's largest and most respected business
conglomerates, with revenues in 2004-05 of $17.8 billion (Rs. 799,118 million), the
equivalent of about 2.8 per cent of the country's GDP. Tata companies together
employ some 215,000 people. The Group's 32 publicly listed enterprises - among
them standout names such as Tata Steel, Tata Consultancy Services, Tata Motors
and Tata Tea - have a combined market capitalization that is the highest among
Indian business houses in the private sector, and a shareholder base of over 2
million. The Tata Group has operations in more than 40 countries across six
continents, and its companies export products and services to 140 nations.
AIG
American International Group, Inc. (AIG), world leaders in insurance and
financial services, is the leading international insurance organization with
operations in more than 130 countries and jurisdictions. AIG companies serve
commercial, institutional and individual customers through the most extensive
worldwide property-casualty and life insurance networks of any insurer. In addition,
AIG companies are leading providers of retirement services, financial services and

26

asset management around the world. AIG's common stock is listed on the New York
Stock Exchange as well as the stock exchanges in London, Paris, Switzerland and
Tokyo.
Tata AIG has strong brand name and recall factor which most of its
competitors lack in. Other than the public behemoth Life Insurance Corporation
(LIC) of India which has a major hold in the market share (of approximately 79%),
the private players too are having more and more

Opportunities to tighten their hold of the market. Of the private players, ICICI
Prudential comes first with an almost 4.50% of the market share followed by Tata
AIG with about 2.10% of the pie. The private players have everything to work for,
especially with LIC not meeting the needs of its clientele with respect to the
services they need. This provides a prospect for the private sector players to
increase their share of the market. Companies with a familiarity such as Tata AIG
can especially achieve their targets due to the brand image that the Tata group
has.
(Source: www.tata-aig-life.com)
A recent survey conducted by the Voluntary Organization in Interest of
Consumer Education (VOICE) revealed Tata AIG Life Insurance Company (Tata AIG
Life) as the clear winner in terms of customer satisfaction in the life
insurance category. This is India's first-ever customer satisfaction study for the
insurance sector.
The survey also revealed that Tata AIG Life had a high recall as a reputed
brand name. The ability to provide innovative and customer-focused service such
as allowing the maximum grace period for premium payment has not only further
distinguished Tata AIG Life from other life insurance companies but also appealed
to consumers.

27

PRODUCTS & SERVICES:

Corporate life insurance products:

Employee Benefits

Credit Life

Group Pensions

Workplace Solutions

Individual life insurance products:

Health First

Health Protector

Mahalife

Invest Assure II, Invest Assure Gold

Shubh life, Nirbhay life

With respect to individual life insurance products, Tata AIG has an array of
policies to suit the needs and requirements of all age groups viz, children,
students, adults, retirees etc.
The SUPPORT arm of Tata AIG Life is constituted of Operations, Human
Resources, Marketing, Corporate Training, Finance and Compliance.
Tata AIG Life possesses the philosophy and drive to customize retirement
obligations (for the company) which occur in the form of cash outflows, for the
maximum benefit of both the employer and the departing employee.
28

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

29

To Compare the products of HDFC Standard Life Insurance Company

Limited and Tata AIG Life Insurance Company Limited for HDFC Standard
Life Insurance Company Ltd.
STATEMENT OF THE PROBLEM
This study was undertaken to identify which type of insurance plans HDFC
SLIC should market to beat Tata AIG LIC 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 analysis the product details of HDFC Standard life Insurance Company
limited and Tata AIG life Insurance Company Limited.
To find Points of Parity and Points of Difference of HDFC Standard Life
Insurance Company Limited and Tata AIG Life Insurance Company Limited.
To find out factors that influence customers to purchase insurance policies
and give suggestions for further improvement.

30

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: Research
Methodology, By C. R. Kothari)
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.

SAMPLING
Sampling refers to the method of selecting a sample from a given universe
with a view to draw conclusions about that universe. A sample is a representative
of the universe selected for study.
SAMPLE SIZE
The sample size for the survey conducted was 270 respondents. This
sample size was taken on 95% confidence level and 6 significant level. Data
universe for this sample is 10,00,000 which is approx population of Jodhpur
excluding people below age of 18 years.

31

SAMPLING TECHNIQUE
Random sampling technique was used in the survey conducted.
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 Jaipur City. The areas covered were
Shastri Nagar, Ramgarh Mod, Subhash Chowk, City Area and C-Scheme.

POINTS OF PARITY
AND
POINTS OF DIFFERENCE
BETWEEN
HDFC SLIC AND TATA AIG

32

Points of Parity
Funds available with ULIP Plans

General Description

Nature of Investments

Risk Category

Primarily invested in company

Equity Funds

Income, Fixed

stocks with the general aim of

capital appreciation
Invested in corporate bonds,
government securities and

Interest
and Bond Funds

High

other fixed income

Medium

instruments
Sometimes known as Money
Market Funds invested in

Cash Funds

cash, bank deposits and

Low

money market instruments

Balanced Funds

Combining equity investment

with fixed interest instruments

Medium

Generally all life insurance companies have three types of fund which are
Equity fund, Debt fund and Balance fund. These funds have different risk profile.
Equity fund has high risk but it gives high return, Debt fund has low risk so it gives
low return and Balanced fund is combination of both Equity and Debt fund so risk is
medium and return is also low.
Both HDFC SLIC and Tata AIG LIC have 7 types of funds based on
combination of DebtEquity fund. These are liquid fund, stable managed fund,
secure managed fund, defensive managed fund, balanced managed fund, equity
managed fund, growth fund.
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
33

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 would also be increased by the corresponding
indexation increase.
Charges, Fees and Deductions in ULIP

Premium Allocation Charge

This is a premium-based charge. After deducting this charge from premiums,

the remainder is invested to buy units. The Allocation charges are guaranteed for
the entire duration of policy term.

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.

Fund Management Charge

1% p.a. on With Profits Fund, 1% p.a. on Debt 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.

Policy Administration Charge

Rs. 60 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

34

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

Surrender Charge

This is the charge that applies when the policy is surrendered. It is equal to 50%
of the difference between regular premiums expected and those paid in the first
year of the contract.

Service Tax Deductions

12.36% service tax is applicable on the first premium of life insurance policy.

Tax Benefits
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.
Riders and Bonuses

Free Look Period

Reversionary Bonus
Terminal Bonus
TOP UP

HDFC Standard Life

Tata AIG Life

Insurance
15 days
Based on company's

Insurance
15 days
Based on company's

performance
Based on company's

performance
Based on company's

performance
Minimum Rs. 5000

performance
Minimum Rs. 5000

Gives on diagnosis of

Gives on diagnosis of

anyone

anyone

of 6 critical illness

of 12 critical illness

Riders
Critical Illness (CI)
Benefit

35

Additional Term
Benefit (ATB)
Accidental Death
Benefit (ADB)
Double Benefit
Triple Benefit
Payer Benefit Rider
(PBR)
Waiver of Premium
(WOP) Benefit

Provides

Provides

Provides

Provides

Provides
Provides

Does not provide

Does not provide

Does not provide

Provides

Provides

Provides

Points of Difference

Grace Period
Policy Administration
Charge

HDFC Standard Life

Tata AIG Life

Insurance
15 days

Insurance
31 days

Rs. 60 per month

Rs. 55 per month

Guaranteed Bonus

Does not give

Loyalty Bonus

0.1% every year

Total 24 free switches

Fund Switching

in a policy

Charge

after this Rs. 100 per

10% on sum-assured
after 10 year
0.25% after every 4th
year
4 free switches per
year after this
Rs. 250 per switch

Switch
50% of all premium

30% of all premium

paid excluding 1st

paid excluding 1st

Fund Management

premium
0.80% per annum

premium
1.75% per annum

Charge
Premium Redirection

on the fund value

Total 12 free Premium

on the fund value

First 2 Premium

Charge

Redirection

Redirection in a

in a policy after this

year is free after this

Rs. 250 per Premium

Rs. 1000

Redirection

per Premium

Guaranteed Surrender
value

36

Redirection
Last Year Return

42.70%

72%

We see that both the life insurance companies products are almost same.
They have same charges, fees and deductions. There is slightly difference in
charges and maximum limits of all charges are fixed by IRDA. Before buying any
life insurance policy one should check charges and fees on policy and companys
overall performance and return given to its consumer.

37

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

38

amounts which have already been paid. The bonus is also calculated on the full
sum assured.
HDFC SLIC 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. HDFC SLIC could diversify its product
portfolio. It could add more plans for high worth individuals and women.

ICICI PRUDENTIAL
ICICI Prudential is a stiff competitor for HDFC SLIC. 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 HDFC SLIC.
The returns on the growth fund were 46.28% compared to the 42.70% offered by
HDFC SLIC. Customers are attracted by higher returns and this is a plus point for
Prudential.
39

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

formidable

protection

for

your

future.

(Source:

www.birlasunlife.com)

The AUM of BSLI stood at Rs. 8165 coros as on February 28, 2009, while as
on March 31, 2009, the company has a robust capital base of Rs. 2000 coros. It has
over 1,75,000 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,
40

the Philippines, Japan, Indonesia, India, China and Bermuda. 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.
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 HDFC SLIC. The
entry age could be zero years which allow even new born babies to be insured.
(Source: www.bajajallianz.com)

41

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 HDFC
SLIC 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
HDFC SLIC 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)

42

SWOT ANALYSIS

SWOT ANALYSIS
HDFC and Standard life first came together for a possible joint venture, to
enter the life insurance market, in January 1995. It was clear from the outset that
both companies shared similar values and beliefs and a strong relationship quickly
formed. In October 1995, the companies signed a 3-year joint venture agreement.
STRENGTH:
1. Domestic image of HDFC supported by Prudentials international image is
strength of the company.
2. Strong and well spread network of qualified intermediaries and sales person.
3. Strong capital and reserve base.
4. The company provides customer service of the highest order.
5. Huge Basket of product range which are suitable to all age and income
groups.
6. Large pool of technically skilled manpower with in depth Knowledge and
understanding of the market.
7. The company also provides innovative products toe cater to different needs
of different customers.
WEAKNESS:
1. Heavy management expenses and administrative costs.
2. Low customer confidence on the private players.

43

3. Vertical hierarchical reporting structure with many designations and cadres

leading to power politics at all levels without any exception.
4. Poor retention percentage of tied up agents.

OPPORTUNITIES:
1. Insurable population According to ING only 10% of the population is
insured, which represents around 30% of the insurable population. This
suggests more than 3000 people, with the potential to buy insurance, remain
uninsured.
2. There will be inflow of managerial and financial expertise from the worlds
leading insurance markets. Further the burden of educating consumers will
also be shared among many players.
3. International companies will help in building world class expertise in local
market by introducing the best global practices.
4. Insurance liberalization in India is expected to result in a wider choice of
major commercial insurance covers, such as fire, export credit.

MARKETING

44

PROBLEMS

MARKETING PROBLEMS
The old and out dated technique of tale 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 (18 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

45

 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

ANALYSIS
&
INTERPRETATION

ANALYSIS & INTERPRETATION

A SURVEY ON THE LIFE INSURANCE INDUSTRY IN INDIA

AGE GROUP OF SURVEYED RESPONDENTS

TABLE 1:

Age
18 26 36 -

group
25 years
35 years
49 years

No. of Respondents
127
67
46
46

50 - 60 years
More than 60 years

24
6

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.

47

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

193
48

Female

77

CHART 2:

CUSTOMER PROFILE OF SURVEYED RESPONDENTS

TABLE 3:
Customer profile
Student
Housewife

No. of respondents
62
5
49

Working Professional
Business
Self Employed
Government service employee

116
49
24
14

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.
NO. OF RESPONDENTS WHO HAVE LIFE INSURANCE POLICY IN THEIR NAME
TABLE 4:
Person who have life insurance policy
Yes
103
No
167
50

CHART 4:

ANALYSIS:
This graph shows that out of total 270 respondents only 103 or 38%
respondents have life insurance policy in their name. Rest all dont have a single
policy in their name. So there is a very big scope for life insurance companies to
cover these people. So in future business of life insurace will gro further.

MARKET SHARE OF LIFE INSURANCE COMPANIES

TABLE 5:

51

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

NUMBER OF POLICIES
4
3
6
7
55
6
12
6
2
2

CHART 5:

Analysis:

52

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.

ANNUAL PREMIUM PAID BY INDIVIDUALS FOR LIFE INSURANCE

TABLE 6:

Premium paid (p.a.)

No. of respondents

Rs. 5000 - Rs. 10000

40

Rs. 10001 - Rs. 15000

26

Rs. 15001 - Rs. 24900

18

Rs. 25000 - Rs. 50000

10

Rs. 50001 - Rs. 60000

Rs.60001 - Rs. 80000

Rs. 80001 - Rs. 100000

53

CHART 6:
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 HDFC SLIC would be

54

able to capture the market better if it introduced products/plans where the

minimum premium starts at Rs. 5000 per annum.
Only 19% of the respondents pay more than Rs. 25000 as premium and most
products sold by HDFC SLIC have Rs.12000 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 7:

Type of Plan

No. of Respondents

Term Insurance Plans

105

Endowment Plans

122

Pension Plans

16

Child Plans

Tax Saving Plans

19

CHART 7:
POPULAR LIFE INSURANCE PLANS

55

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

56

TABLE 8:
Awareness of Unit Linked Plans
Yes
No

No. of Respondents
154
116

CHART 8:
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

57

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 9:
Willingness to spend on

No. of

premium

respondents

Percentage

Less than Rs. 6,000

41

15%

Rs. 6,001 - Rs. 10,000

73

27%

Rs. 10,001 - Rs. 25,000

110

41%

Rs. 25,001 - Rs. 50,000

41

15%

Rs. 50,001 - Rs. 1,00,000

2%

CHART 9:
CONSUMER WILLINGNESS TO SPEND ON LIFE INSURANCE PREMIUM

58

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.
HDFC SLIC is faced with a large amount of competition. There are 18
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

59

TABLE 10:
Ideal policy term
3 - 5 years
6 - 9 years
10 - 15 years
16 - 20 years
21 - 25 years
26 - 30 years
More than 30 years
Whole life Policy

No. of respondents
51
41
95
38
24
5
3
13

CHART 10:
CHART SHOWING IDEAL POLICY TERM

60

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 HDFC SLIC 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.

61

FACTORS THAT MOTIVATE RESPONDENTS TO PURCHASE INSURANCE

TABLE 11:

Parameter
Advertisements
High returns
Advice from friends
Family responsibilities
Others

No. of Respondents
35
84
46
89
16

CHART 11:

62

Analysis:
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 now a
day 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 12:

Type of Company
Government Owned
Company
Public Limited
Company

No. of Respondents

Percentage

127

47%

62

23%

63

Private Company

49

18%

Foreign Company

32

12%

CHART 12:
PREFERRED COMPANY TYPE OF THE RESPONDENTS

Analysis:
From the graph above we find that 60% of the respondents preferred to
purchase insurance from a government owned company, 29% of the respondents
preferred to purchase insurance from a public limited company and only 4% of the
respondents preferred a foreign based company. Heavy advertising through
television, newspapers, magazines and radio is required.
MINIMUM EXPECTED RETURN ON INVESTMENT
TABLE 13:
Expected Returns
Less than 5%

No. of respondents
5
64

5% - 10%
11% - 15%
16% - 20%
21% - 25%
26% - 30%
31% - 40%
41% - 50%
More than 50%

39
46
49
46
27
22
14
22

CHART 13:

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

65

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.

CONCLUSION

66

CONCLUSION
HDFC standard life insurance is first life insurance Company in India. It has
businesses spread out across the globe. It was registered on 23 rdDecember, 2000.
It currently ranks number 4 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 HDFC SLIC. 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.
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.
HDFC SLIC 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.

67

68

Recommendation
&
Suggestions

RECOMMENDATION AND SUGGESTION

As the people think that saving and investment is a tool to protect their family
& a tax saving device.
They are aware of the fact & realizing its, importance. The company should try
to expand & build up its infrastructure because there is a large potential for
more investment opportunities in India.

69

As seen from the survey that at present 30% of the customer are having
insurance policy out Of which 87.5% of the customer are planning for new
investments. So it can be a good potential for the company and they should
make an attempt to trap these customers. But if they should provide good and
unique products and services. The company should try to convince these
customers and get them in its favor.

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 HDFC SLIC as an Indian Company to build trust
HDFC SLIC 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

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71

A SURVEY ON INSURANCE INDUSTRY

Dear Sir/Madam,
I am a student of Subodh Institute of Management & Career Studies, Jaipur.
As part of the requirements for my Under Graduation Degree in Management I am
required to do a research based project. Kindly spend a few minutes of your
valuable time and fill in this questionnaire.
Do you have a life insurance policy/investment plan
in your name?
o Yes

o No

If yes which companys insurance policies do you

hold?
o Aviva Life Insurance
o HDFC Standard Life

o Bajaj

Insurance
o Birla

Sun

Allianz

Life

Insurance
Life

o LIC

Life

o ICICI Prudential Life

Insurance
o Tata

AIG

Insurance

Insurance

72

o ING

Vysya

Life

o Bharti

Insurance

Axa

Life

Insurance

o Others (specify name)

What is the approximate premium paid by you
annually (in Rupees)?
o Rs.

5,000

Rs.

o Rs.

10,000
o Rs.

10,001
15,001

Rs.

o Rs.

25,001

Rs.

60,001

Rs.

Rs.

80,000

Rs.

o Rs.

25,000
o Rs.

60,000

15,000
o Rs.

50,001

80,001

1,00,000

Rs.

50,000
o More than Rs. 1,00,000 (specify premium)
What kind of insurance policy would suit you best in
your current stage of life?
o Life Insurance

o Pension Plans

o Life Insurance and

o Child Plans

Investment Plans
o Tax saving plans

Are you aware of the new unit linked insurance

plans in the market?
o Yes

o No

73

How much would you be willing to spend per annum

if you were to go for an investment/insurance plan?
o Less than Rs. 6,000
o Rs.

6,001

o Rs.

10,001

o Rs.

Rs.

Rs.

50,000

Rs.

10,000
o Rs.

25,001
50,000

1,00,000

Rs.

o More

25,000

than

Rs.

1,00,000

Which according to you is an ideal policy term?

(Number of years you would be willing to pay
premium)
o 3 to 5 years

o 21 to 25 years

o 6 to 9 years

o 26 to 30 years

o 10 to 15 years

o More than 30 years

o 16 to 20 years

o Whole life policy

What

motivates

you

to

purchase

insurance/investment plans?
o Advertisements

o Advice from friends

o High Returns

74

o Family
responsibilities
o Others (specify)

In which kind of company would you prefer to make

a purchase of insurance?
o Government owned

o Private Company

company

o Foreign based

o Public Limited

company

Company

Typically what kind of returns would you look at

from your investments? (Please note: Higher returns
involve greater risk)
o Less than 5%

o 26% - 30%

6% - 10 %

o 31% - 40%

o 11% - 15 %

o 41% - 50%

o 16% - 20 %

o More than 50%

o 21% - 25%

75

Personal Details:
Name:
Address:
Age:

Contact No. :

Profile of respondent:

Student

Business

Housewife

Self Employed

Working Professional

Government Service
Employee

76

BIBLIOGRAPHY
www.hdfcslic.com
www.tata-aig-life.com
www.irdaindia.com
www.lic.com
www.money control.com
www.bajajallianz.com

77

www.icici.prulife.com
Magazine
Insurance World
The Outlook Money
Secrets of Successful Insurance Sales by Mr. Jack Kinder

Books
Kothari C.R.: Research Methodology Management, 2nd
Edition.
Kotler Philip: Marketing Management 9th Revised Edition.

78