A REPORT

ON

ANALYSIS OF CONSUMER PERCEPTIONTOWARDS

LIFE INSURANCE

By

Aakash Shaw

09BSHYD0533

Pnb MetlifePeace of mind guaranteed

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A REPORTON

ANALYSIS OF CONSUMER PERCEPTION

TOWARDS LIFE INSURANCE

By

Aakash Shaw

ENROLLMENT NO.: 09BSHYD0533

A report submitted in partial fulfillment of the requirement of

MBA Program of IBS Hyderabad

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AUTHORISATION

The following Summer Project Report titled "Analysis of consumer perception towards Life Insurance” done by “Aakash Shaw” is hereby approved as a certified study in management carried out and presented in a manner satisfactory to warrant its acceptance as a prerequisite for the award of “Bachelor of Business Management” for which it has been submitted. It is understood that by this approval the undersigned do not necessarily endorse or approve any statement made, opinion expressed or conclusion drawn therein but approve the Summer Internship Report only for the purpose it is submitted. This Summer Internship Report has the requisite standard and to the best of my knowledge the work done in this report is authentic.

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ACKNOWLEDGEMENTS

At the end of my Summer Internship Program I would like to express my sincere appreciation to all those people who made this learning experience worthwhile. My abundant and most heartfelt gratitude goes to Mr. Vikas Kejriwal (Regional Manager Pnb Metlife) without whose authorization it would have not been possible for me to perform my allotted task successfully and in such a passionate manner.

Further, I would like to give my special thanks to my Company guide Ms. Shradha Agarwal who helped me to make this project and comprehend various concepts in a better way. Without her assistance, support and advice’s the endeavor made would not have been possible. She always motivated me to put my best foot forward by setting sky-scraping standards. Hence this project is a testament to the desire for gaining knowledge that she has ignited in me.

I would like to express my gratefulness towards Dr. Sunil Bhardwaj sir (Faculty Guide) for extending his helping hand to solve my problems and giving valuable suggestions during internship period.

I am also indebted to all the employees of Pnb Metlife India Pvt Ltd for giving me valuable information during my project.

Finally I would like to thank all the people who gave their precious time to respond to the questionnaires and hence helped me gaining valuable information and complete the survey successfully.

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EXECUTIVE SUMMARYIndian insurance companies play a major role in the economy of India as well as on the lives of the people of this country. As the population of India is getting more affluent and globalized these days, the insurance sector, is growing at an enviable pace. There is an increase in responsiveness among the people about Life Insurance and its nuances. With an increasing market, one can find the presence of good number of companies in the Indian insurance market, which leads to stiff competition amongst them.

At present there are 22 private companies in the insurance sector. The success rate of any of these companies will depend on the kind of strategy adopted by them due to the pressure of aggressive competition. Every company has to think of something innovative and out of the box to provide to the customer. Keeping this in mind, this study endeavors to understand the insurance industry and its nuances. The study delves into the minds of consumer. To elucidate, it analyses consumer’s awareness about privatization, their expectations from emerging private companies and whether private insurance companies have been able to attain consumer confidence.

The project progresses by covering the products offered and strategies followed by Pnb Metlife. It also covers the 7 P’s of service marketing and the marketing mix strategies in relation to Pnb Metlife. The SWOT analysis of the company has been done along with competitive analysis.

A survey is conducted to find out the percentage of income saved by different age group. Different investment alternatives available and fundamental criterion that people think about before investing in a Life Insurance Policy are also analyzed. This survey would also help us to find out the presence of Pnb Metlife amongst the people. The project also intends to find out if there is a gender bias involved in investing in Life Insurance or not.

Finally the report is anticipated to cover how Pnb Metlife could experiment and introduce new ground-breaking rural products, pricing policy and the delivery channels to grab a larger pie of the under-penetrated rural India.

The value addition to the company would be:

The result of this research would help the company to have a better understanding about the consumer’s perception towards life insurance.

The study categorizes consumers of different ages and income levels which will help the company to identify and allocate apt strategies for respective levels of customers.

The study also enables the company to focus on the consumer’s preference and expectations on the product which they offer.

In the period of 14 weeks, the business generated to the company was Rs. 1, 86,000 and 3 recruitments with licensing.

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TABLE OF CONTENTS

Authorization i Acknowledgement ii Executive Summary iii

1. Introduction 10

1.1 What is Life Insurance 10

1.2 Kinds of Life Insurance 10

1.3 Scope of the study 11

1.4 Objectives of the study 11

1.5 Research Methodology 12

1.6 Limitations of the study 13

1.7 Literature Review 14

2. About Pnb Metlife

15

2.1 Pnb Metlife Inc- A Global Brand

15

2.2 Pnb Metlife India

15

2.3 Company Profile 16

2.4 Management Team 17

2.5 Core Values 18

2.6 Vision and Mission 18

2.7 Pnb Metlife on a High

19

2.8 Factors for success 23

2.9 Achievements and Accolades 23

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2.10 Product Portfolio 24

3. Types of Life Insurance Products 28

3.1 Unit Linked Insurance Plan 28

3.1.1 Types of ULIPs 29

3.1.2 Traditional plans versus ULIP 30

3.1.3 ELSS versus ULIP 31

3.2 Single Premium investment plan 33

4. Tax Plan Assessment Year 2010-2011 34

5. Marketing of Life Insurance 36

5.1 Application Form Filling 36

5.2 Sales Process 37

5.3 Distribution Channel 39

6. Marketing Strategies 40

6. 1Marketing splash of Pnb Metlife

40

6.1.1 FA Recruitment Activity 40

6.1.2 Cut Your Tax Campaign 41

6.2 Marketing Tools 41

6.3 Marketing Problems 42

7. Marketing Concepts 42

7.1 Key Areas Of Concern ( 7 P’S of Marketing) 42

7.2 Product Hierarchy 45

7.3 Customer Buying Behavior 46

7.4 Growing the business 47

7.5 SWOT Analysis 48

8. Industry Profile 49

8.1 History of insurance 49

8.2 Insurance Industry in India 50

8.3 Need for Insurance 536 | P a g e

9. Underwriting 55

9.1 Types of Underwriting 55

9.1.1 Types of Risks 56

9.1.2 Financial Underwriting 56

9.1.3 Medical Underwriting 58

10. Life Insurance Claims 60

11. Insurers and Rural India 61

12. Competitive Analysis (2014) 63

13. Practical Exposure 69

13.1 Sales done during the project 70

13.2 In A Nutshell 71

14. Data Analysis 72

14.1 Segmentation of the respondents 72

14.2 Observations and interpretations 75

14.2.1 Savings of different age group 75

14.2.2 Different investment alternatives 76

14.2.3 Impact of privatization 79

14.2.4 Important parameters before 83

buying an insurance product

14.2.5 To check if there is a gender bias 91

15. Findings from the project 93

16. Recommendations 94

17. Conclusion 95

18. References 96

19. Annexure

19.1 Questionnaire 102

19.2 Pamphlets designed 107

24. Glossary 109

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INTRODUCTIONLife insurance was initially designed to protect the income of families, particularly young families in the wealth accumulation phase, in the event of the head of household's death. Today, life insurance is used for many reasons, including wealth preservation and tax planning.

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Life insurance provides the opportunity to protect oneself and the family from personal risk exposures like repayment of debts after death, providing for a surviving spouse and children, fulfilling other economic goals (such as putting their kids through college), leaving a charitable legacy, paying for funeral expenses, etc.  Life insurance protection is also important if a person is a business owner or a key person in someone else's business, where his/her death (or his/her partner's death) might wreak financial havoc.

Life insurance is a great financial planning tool, but should never be thought of as a savings vehicle. In general, there are often far better places to hold and grow money as one gets older.Life insurance protection comes in many forms, and not all policies are created equal.  While the death benefit amounts may be the same, the costs, structure, durations, etc. vary tremendously across the types of policies.

Whole Life

Whole life insurance provides guaranteed insurance protection for the entire life of the insured, otherwise known as permanent coverage. These policies carry a "cash value" component that grows tax deferred at a contractually guaranteed amount (usually a low interest rate) until the contract is surrendered. The premiums are usually level for the life of the insured and the death benefit is guaranteed for the insured's lifetime.

With whole life payments, part of the premium is applied toward the insurance portion of the policy, another part of the premium goes toward administrative expenses and the balance goes toward the investment, or cash, portion of the policy. The interest accumulated through the investment portion of the policy is tax-free until it is withdrawn (if that is allowed under the terms of the policy).

Universal Life

Universal Life Insurance, also known as flexible premium or adjustable life, is a variation of whole life insurance. Like whole life, it is also a permanent policy providing cash value benefits based on current interest rates. The feature that distinguishes this policy from its whole life cousin is that the premiums, cash values and level amount of protection can each be adjusted up or down during the contract term as the insured's needs change. Cash values earn an interest rate that is set periodically by the insurance company and is generally guaranteed not to drop below a certain level.

Term Life

One of the most frequently used policies is Term Life insurance. Term insurance can help protect the beneficiaries against financial loss resulting from the death; it pays the face amount of the policy, but only provides protection for a definite, but limited, amount of time. Term policies do not build cash values and the maximum term period is usually 30 years. Term policies are useful when there is a limited time needed for protection and when the dollars available for coverage are limited. The premiums for these types of policies are significantly lower than the costs for whole life. Unfortunately, the cost of premiums increases as the policy owner gets older and as the end of the specified term nears.

SCOPE OF THE STUDY

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The result of this research would help the company to have a better understanding about the consumer’s

perception towards life insurance.

The study helps the company by creating awareness about the consumers of different ages and income

levels.

The study also enables the company to focus the consumer’s preferences and expectations on the

product which they offer.

OBJECTIVES OF THE STUDY To understand the impact of privatization in the Indian insurance industry. To know about the various Investment alternatives that is mostly preferred by the

people. To find out the important criteria that people think about before investing in a life

Insurance policy. To find out whether gender bias is involved in investing in life insurance or not.

RESEARCH METHODOLOGYTHE STUDY

The study was exploratory in nature with survey method being used to complete the study.

SAMPLING DESIGN

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POPULATION:The population included educated working class in Kolkata .

SAMPLING TECHNIQUE The sampling technique that was adapted to conduct the survey was ‘Convenient Random Sampling’. The survey was conducted by visiting different places like different banks, schools and corporate offices.

SAMPLE SIZE

Sample size was 150 respondents.

TOOLS USED FOR DATA COLLECTION

Self designed questionnaire was used for the evaluation of factors affecting consumer’s perception towards insurance.

TOOLS USED FOR DATA ANALYSIS

Simple percentage analysis, ranking method, factor analysis, discriminant analysis and chi-square are the main statistical tool used for the study.

SIMPLE PERCENTAGE ANALYSIS

Percentage refers o a special kind of ratio in making comparison between two or more data and to describe relationships. Percentage can also be used to compare the relation terms between two or more sources of data.

Percentage of respondents = Number of respondents * 100 Total respondents This method was used to find out the percentage of income usually saved by people of different age group.

RANKING METHOD

This technique was used to rank out the opinion about the consumers preference towards different investment alternatives. The order of merit given by the respondents was converted into ranks on the basis of the modal frequency.

FACTOR ANALYSIS

Factor analysis is used to uncover the latent structure (dimensions) of a set of variables. It reduces attribute space from a larger number of variables to a smaller number of factors and as such is a "non-dependent" procedure (that is, it does not assume a dependent variable is specified).

DISCRIMINANT ANALYSIS

Discriminant analysis is a technique use to build a predictive model of group membership based on observed characteristics of each case. Discriminant analysis generate functions from a sample of cases for which group

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membership is known; the functions can then be applied to new cases with measurements for the predictor variables but unknown group membership.

CHI-SQUARE TEST

Chi Square is a statistical measure used in the context of sampling analysis for comparing the variance to a theoretical variance. In order to judge the significance of association between two attributes, we make use of chi square test by finding the values of chi square using the chi square distribution.

LIMITATIONS The sample size of the study is only 150. This would not represent the true picture. The research got confined to the city of Kolkata. The respondent belonged only to Kolkata and not

others who were out of Kolkata. Nearly 76% of the respondent belonged to the age group of 20-50 years and only 24% were above 50

years. So, the responses and the opinions of the experienced and aged were not available. So, the findings may not be correct when we think about the opinion of the elderly people about the life insurance.

The competitive analysis is done for the year 2014 but this assessment is dynamic in nature as the industry scenario changes rapidly.

LITERATURE REVIEW

1) Gupta (1996) says that insurance sector reforms are a part of the government’s priorities. A package of reforms is very much in the offering. There is an immediate need of a regulatory framework to open up the insurance industry. Jha (1999) comments that improvement in life span and advancement in medical science have changed customers’ needs for insurance products worldwide. The focus of the insurers in matured markets of the West has shifted to pension, health care and protection products.

2) Hasanbanu and Nagajyothi (2007) argue that there is a significant relationship between age, educational qualification, gender, occupation, income of respondents and their level of investment,

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while taking LIC policies, further concluding that there is no significant relation between marital status, family type, family size and level of investment, while taking LIC policies.

3) Joseph et al, 2003It has been observed that insurance agents should constantly monitor the level of satisfaction among his/her customers to keep themselves close to the customers for fulfilling their needs.

4) Tam and Wong,2001

Customer satisfaction and the salesperson’s orientation significantly influences the future business opportunities and as the salespersons are able to enhance their relations with their clients as clients are more satisfied and are willing to trust and thus secures the long term demand for the services.

5) Headen & Lee (1974) studied the effects of short run financial market behavior and consumer expectations on purchase of ordinary life insurance and developed structural determinants of life insurance demand. They concluded that life insurance demand is inelastic and positively affected by change in consumer sentiments; interest rates playing a role in the short run as well as in the long run.

Pnb Metlife Inc- A GLOBAL BRANDWith over 140 years of experience, the Pnb Metlife companies are a leading innovator and a recognized leader in protection planning and retirement and savings solutions around the world. It has established a strong presence in the Americas, Europe and Asia Pacific through organic growth, acquisitions, joint ventures and other partnerships. It is strengthening the global brand Pnb Metlife by extending core products and competencies to markets around the world which is an important driver of growth for the enterprise.

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Around the world, the Pnb Metlife companies offer life, accident and health insurance, retirement and savings and reinsurance products through agents, third-party distributors such as banks and brokers, and direct marketing channels. They work with families, corporations and governments to provide them with solutions that offer financial guarantees in their lives. The name is recognized and trusted by more than 70 million customers worldwide and over 90 of top 100 FORTUNE 500 companies in the United States. They have the experience, global resources and vision to provide financial certainties for an uncertain world.

Pnb Metlife Ranked 39 on the FORTUNE 500 list 2008. Ranked 6th In Fortune Magazine 2014 List of “America’s Most Admired Companies” Named by Forbes magazine as “The Best Managed Insurance Company in America (2008)”

ABOUT Pnb Metlife INDIAPnb Metlife India Insurance Company Limited (Pnb Metlife) is an affiliate of Pnb Metlife, Inc. and was incorporated as a joint venture between Pnb Metlife International Holdings, Inc., The Jammu and Kashmir Bank, M. Pallonji and Co. Private Limited and other private investors. Pnb Metlife commenced operations on 11th April, 2001. Pnb Metlife is one of the fastest growing life insurance companies in the country.

It serves its customers by offering a range of innovative products to individuals and group customers at more than 700 locations through its bank partners and company-owned offices. Pnb Metlife has more than 55,000 Financial Advisors, who help customers achieve peace of mind across the length and breadth of the country.

The company specialises in Individual, Health, Annuities, Group Insurance & Employee benefits. It provides a comprehensive product portfolio based on researched customer needs.

PROFILE OF THE COMPANY

Year of Establishment: 11th April, 2001

Headquarter: Brigade Seshamal, 5, Vani Vilas Road, Baavanagudi,

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Bangalore- 560 004.

Nature of Business: Selling Insurance

Customer Service: 24 Hour Helpline Toll Free Number 1800-425-6969. Convenient payment options. SMS status Medical network

Number of Employees: More than 7800 employees More than 69,000 employees

Website: www.pnb Metlife.co.in

Slogan: Peace of mind guaranteed

Pnb Metlife INDIA MANAGEMENT TEAM

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Figure 1

CORE VALUES Integrity and Honesty Financial Strength Innovation Partnership Personal Responsibility People Count

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VISION AND MISSIONThe vision of the company is:

To be a formidable player in the Indian Life Insurance Industry.

F- Fastest growingO- Operationally the bestR- Responsive to customerM- Market share growth I- Innovative productsD- Dominant playerA- Agile processesB- Brand with a guaranteeL- Leader in new marketE- Employee talent best in class

The mission of the company is to work with utmost integrity, fairness and financial prudence in all its dealings.

FACTORS FOR SUCCESS Strong parental support

Pnb Metlife India benefits from its parent company’s global presence in the field of insurance, track record of establishing successful insurance operations in emerging markets and the unique strengths of its other Indian promoters. Strong parental support has enabled Pnb Metlife to quickly launch innovative products customised specifically for Indian markets. For example, Pnb Metlife India has launched ‘Met Smart Life’, a universal

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life insurance policy that combines elements of protection and accumulation simultaneously and provides ready access to the accumulated cash value.

Using technology as business enabler

Pnb Metlife India has translated all its underwriting rules into a software module, Aura, to automatically process an insurance proposal and issue the policy, both in medical and non-medical cases. The module ensures quick turnaround time, in addition to consistency and accuracy of decisions. Focus on technology and significant investments in training its sales-force have also helped Pnb Metlife in maintaining high standards of customer service. This in turn has led to Pnb Metlife having one of the highest persistency ratios in the Indian industry.

Using full-time agents on a commission basis to reduce fixed costs

Pnb Metlife India is focusing on building a strong network of professional agency representatives who will sell its policies. Unlike other insurers, all Pnb Metlife agents are full-timers working on a commission basis. For every 15 agents, Pnb Metlife has an agency manager. This has helped Pnb Metlife in keeping its fixed costs low. Pnb Metlife India also launched a FA Recruitment Activity and hopes to reap benefits of higher market penetration in the future.

ACHIEVEMENTS AND ACCOLADESMilestone Achievement 2014

1 million policies Issued consolidate Pnb Metlife as one of the fastest growing Life insurer in India. The Assets Under Management (AUM) of Pnb Metlife India crossed Rs. 5000 crores as on Nov 23,

2014 representing an annualized growth of approximately 100%. With the launch of MMIP (Met Monthly Income Plan), Pnb Metlife pioneers the niche

“GUARANTEED MONTHLY INCOME” space. Entry into health insurance segment with Met Health Care. Big bang in pure term insurance space with the cheapest advisor-assisted plan for non-smokers with

Met Suraksha Plus.

PRODUCT PORTFOLIO

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Pnb Metlife India offers a range of innovative, customer-centric products that meet the needs of customers at every life stage. Its products can be enhanced with up to 4 riders, to create a customized solution for each policyholder.

CHILD PLAN

Every parent would dream of fulfilling the child's need. Expenses are on the rise everyday, thus ensuring a good future for the child in increasingly becoming difficult. The child insurance plans of Pnb Metlife secure the future of the child such that you do not have to think tomorrow.

Met Bhavishya

A guaranteed money back plan that pays out funds to help one meet the education and career milestones of their children. With this plan, the Life Insured is that of the parent. The plan also has inbuilt guaranteed additions to add value to the policy over its term.

Met Junior Endowment

A flexible endowment plan that combines savings and security. For every parent, children's well-being is the highest priority. So we offer a plan which offers both timely and efficient "Return on Investment".

Met Junior Money Back

A plan which offers both timely and efficient "return on investment" with payouts at different milestones

Met Magic Plus

A unit linked Non-Medical Regular Premium Life Insurance plan with which one can secure their child's future. A flexible plan, Met Magic Plus provides the benefit of insurance protection to your family, particularly your child, even when you are not around.

RETIREMENT PLAN

New beginnings, new joys and the opportunity to explore the unfulfilled dreams of the past - these are the essential elements of a post retirement life. Financial independence is very important at this stage. The exhaustive retirement plans of Pnb Metlife guarantee a financially secure retirement.

Met Growth

A Unit-Linked solution that helps to plan for the golden years. It is specially designed to provide financial security for your future requirements. This plan allows to plan immediately by ensuring the safety of the first year premiums. It also helps create the retirement fund faster by giving 100% allocation from the second year onwards, coupled with attractive loyalty additions into your fund.

Met Pension Plus

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A Unit Linked Pension Plan (Non Par), a plan that gives you this freedom to help you achieve your aspirations by giving you return on investment and an opportunity to venture out in life, that you truly deserve. Now, you can live life the way you want to, today and in the future.Met Pension Plus, when you stop working for money and money starts working for you.

Met Pension-Par

Met Pension (Par) serves as a friendly helping hand so one can stay financially independent even after retirement. It helps to build up a fund for golden years.

SAVINGS PLAN

Everybody dreams. And dreams can take any shape - be it the wedding of your child, buying a house or a car and anything. The savings plans of Pnb Metlife help realize the dreams and secure the future.

Met Sukh

A guaranteed Money-Back Policy which provides guaranteed periodic survival benefits at the end of 5, 10, 15 & 20 years and guaranteed additions of 10% of the Sum Assured for the entire term. It not only covers life, but also guarantees cash payments at various milestones along with guaranteed growth of your savings.

Met Suvidha

A Flexible Endowment Plan that combines savings and security. In addition to providing protection till the maturity of the plan, it helps to save for specific long term financial objectives. This long term savings-cum-protection plan comes at affordable premiums.

Met Saral

A simple savings plan which gets a person into the savings habit without any medical tests. All one needs to do is fill in a simple application form and they are ensured a guaranteed maturity amount of Rs 1,00,000, even in the case of their death during the term.

Met 100

A whole life policy where one pays premiums for 15, 20 or 25 years. It helps create a legacy for the children, leaving money for a dependant spouse and, more importantly, provides insurance cover at affordable rates.

PROTECTION PLAN

The protection plans of Pnb Metlife Insurance relieve you from the burden of home loans, EMIs and similar responsibilities.

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Met Suraksha

It is a life insurance plan that gives complete protection to enjoy life to the fullest. One can further customize the plan with two riders – Accidental Death Benefit and Critical Illness

Met Suraksha TROP

It is a life insurance plan that gives complete protection to enjoy life to the fullest. One can further customize their plan with two riders – Accidental Death Benefit and Critical Illness.

Met Suraksha Plus

It is designed for people who want to take care of their financial commitments, should anything unfortunate happen, at a nominal cost. To put it simply, it is a life insurance plan that gives the complete protection so that you one enjoy life to the fullest.

RURAL PLAN

The rural plans of Pnb Metlife Insurance shield the loved ones against financial obligations and also assist you to save for tomorrow. The rates of premium are quite affordable.

Met Vishwas

A single premium, micro insurance, non- participating term assurance plan which provides life cover at a nominal cost. On survival, you get 110% or 125% of the premium.

Met Suvidha-Rural

A participating flexible Endowment Plan that combines savings and security. In addition to providing protection up to maturity, it helps to save for specific long term financial objectives. This long term savings-cum-protection plan comes at affordable premiums.

INVESTMENT PLAN

The Unit-Linked Insurance Plans of Pnb Metlife guarantees that your wealth is enhanced. Offering protection and wealth optimization at the same time, they are customized to meet your requirements.

Met Easy Plus

A simplified unit-linked plan which offers an opportunity to systematically build wealth and protection.

Met Gold Plus

Unit-Linked wealth creation cum protection plan for the well-heeled, specially conceived so that you can get a plan to match your own financial requirements.

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Met Wealth Plus

A Unit Linked Life Insurance Plan (Non Par), that not only optimizes the return on investment but also gives an option to guarantee the investments. This plan offers higher allocation of the premium for investments which ensures more money is invested for higher wealth creation.

Met Smart Life

a Unit-Linked Whole Life Plan that helps you take care of long term financial needs. This plan covers you up to 99 years of age and provides you the opinion of choosing Sum Assured multiples of up to 110 times the Annualized Premium thus providing you to the ideal balance between protection and investment as your need be.

Met Fortune

A short term investment cum protection single premium plan which comes with a unique Return Guarantee Fund -II, which guarantees the minimum NAV with an upside potential.

HEALTH PLAN

Met Health Care is a long term health insurance plan from Pnb Metlife which covers the following:

1. Against Hospitalization disbursements by offering you a Daily Cash benefit. 2. Against 10 major vital illnesses by giving you a lump sums benefits. 3. Against Total & Permanent Disability due to accident by allowing you a lump sums benefits.

MONTHLY INCOME

Pnb Metlife offers 'Met Monthly Income Plan' a participating plan which guarantees a monthly regular income when you are there and even if you are not there for 15 years or till end of the policy term. Moreover you choose the monthly income that you want and we guarantee you that amount.

UNIT LINKED INSURANCE PLANULIPs are a category of goal-based financial solutions that combine the safety of insurance protection with wealth creation opportunities. In ULIPs, a part of the investment goes towards providing life cover. The

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residual portion of the ULIP is invested in a fund which in turn invests in stocks or bonds; the value of investments alters with the performance of the underlying fund opted by you.Simply put, ULIPs are structured in such that the protection element and the savings element are distinguishable, and hence managed according to the specific needs. In this way, the ULIP plan offers unprecedented flexibility and transparency.

ULIP offers:

Investment Liquidity Personal Account Benefit Flexibility Life Protection Transparency Savings Tax benefits Choice

Figure 2

The pie-chart below illustrates the split of ULIP premium: 

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Figure 3

ULIP = Life Insurance + Mutual Fund

MULTIPURPOSE

PROTECTION ACCUMULATION RETIREMENT NEED

TYPES OF ULIP

TYPE I: Death benefit = Sum Assured or Fund Value ( whichever is higher)

TYPE II: Death benefit = Sum Assured + Fund Value ( both)

TRADITIONAL PRODUCTS VERSUS ULIP

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FEATURES TRADITIONAL PRODUCTS ULIPs

Time Horizon of Investment Long Term Short – Medium – Long

Risk Owner Company Customer

Returns Inclined Towards Guarantee Non – Guaranteed

Transparency in Investment Low High

Flexibility Low High

Liquidity of Money Low High

Loans Allowed (if Applicable) Not Allowed

Table 1

ELSS VERSUS ULIP

ULIP ELSS -Equity Linked Saving Scheme

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Tax free Contribution

Available Available

Tax free Income

Not Applicable Available

Tax free Maturity

Available Available

Future Investment

Compulsion Optional

Annual Returns

15-40%

Lock in Period

3 years 3 years

Maturity 5-10 years 3 years

Post Maturity Investment

Not Available Available

Allocation charge 1st Year: 15-75%2nd & 3rd Year: 5-15%Onwards: 2.5-5%

Entry Load 2.25 % on contribution

Fund Management fee 0.75-1.5% 1.25 %

NAV Calculation Effectively pre-deduction of expenses

Net of all expenses

Table 2

ULIP GUIDELINES 2010

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Figure 4

SINGLE PREMIUM INVESTMENT PLAN

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Fortune knocks at every man’s door once in a life - Mark Twain

A single pay investment plan is the easiest plan to sell. In 2000-2001, the contribution of single premium policies to the total sales of LIC was 7.8%. In 2014-2010 (till January), this contribution has increased to 57%. There is a similar rise in the figures for other life insurance companies as well. Single Premium plans are popular because:

Easy to understand. No commitment beyond the first pay. The benefits under the plan are ensured for the entire term It is an easy buying process. Generally without requirement for medical tests.

The most popular savings instrument in India continues to be the ubiquitous fixed deposit. In 1990-91, aggregate deposits stood at Rs. 1, 92,541 crores. In December 2014 this figure had grown to a whooping Rs. 42, 10,745 crores. That translates into a 20% CAGR for the last 18 years. Or a 21 times growth over 18 years.Since a single premium investment plan resembles a fixed deposit very closely, this could be another reason for its growth in popularity.

Pnb Metlife has the following single premium ULIPs currently available: Met Wealth Plus Single Pay Met Pension Plus Single Pay Met Fortune

Pnb Metlife’s unit linked funds have now completed 5 years. It is important to know the historical performance of their various funds. While past performance is no guarantor or predictor of future performance, it is an important input in the investment decision making process. A snapshot of the fund’s performance is given below:

Five Year Return (as on 11th February 2010)

INCEPTION DATE NAV RETURNPreserver 10-Feb-05 6.05%Moderator 8-Feb-05 9.32%Balancer 8-Feb-05 12.70%Accelerator 7-Feb-05 15.93%Multiplier 7-Feb-05 16.57%Protector 4-Feb-05 6.89%

Table 3

TAX PLAN ASSESSMENT YEAR 2010-2011

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Tax benefits are subject to changes in the tax laws. The basic terminologies to be remembered are:

ASSESSEEA person by whom any tax or any other sum of money (penalty or interest) is payable under the Income Tax Act.

ASSESSMENT YEAR The financial year immediately following the previous year; 2010-11 is Assessment Year for Previous Year 2014-10.

PREVIOUS YEAR The financial year in which the income is earned is known as the previous year. The financial year begins 01 April 1st and ends on 31 March.

DEDUCTIONMoney paid from taxable income and reduced from the taxable income for tax calculations.

EXEMPTIONMoney received but not included (exempted) as part of taxable income.

TYPES OF ASSESSEE

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Figure 5

GOLDEN RULES

Figure 6

APPLICATION FORM FILLINGCertain points to be remembered while filling the application form are:

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Only black pen to be used.

All corrections and changes to be countersigned.

Photocopy of proofs should be clear and attested.

Details of age mentioned in form should match with that mentioned in proofs.

Previous insurance details should be mentioned completely.

Family medical history should be recorded accurately.

Deformity questionnaire to be submitted if applicable.

Family member’s insurance should be mentioned

SALES PROCESS STEPS IN A SALE:

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Figure 7

1) PROSPECTING

Before we sell, we prospect. Prospecting is the conscious, directed and continuing activity of seeking, observing and identifying people. The prospect would be one who has a need, who can qualify for the coverage, who can afford the coverage and one who can be approached. The methods of prospecting would be through networking, personal observation, central of influence and mo0st important referrals. Out of these, referrals are the most valuable for the following reasons:

Referrals Fastens the Sales Cycle

You get Qualified Leads

Referrals Show More Trust on You

Referrals Extend the Network

Referrals Reduce Sales Expense

2) APPROACH AND FACT FINDING

Approach is the process after prospecting a customer in which we have to make an approach to the customer for an appointment at his/her convenient time. The customer should be informed about the

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company’s name and advantages. Fact finding is the process of gathering relevant information about prospects to identify his/her need. We need to find out the personal and family information, assets and liabilities and household expenditure. We also try to gather subjective information of the client like his attitude, level of risk capacity and financial goal.

3) SOLUTION

This is the step in which we have to find out the perfect product which will solve the requirement of the customer. To present the solution, we should remember the AIDA model.

A-Attention I-Interest D-Desire A-Action

This means first the advisor should try and gain the customer’s attention and then create an interest in him for the product, then create a desire in him and then act.

TECHNIQUES FOR EFFECTIVE PRESENTATION

We should focus on relevant Product features & Benefits We should keep our Client Involved by Asking questions Insist all decision Makers are present Show Benefits Illustrations, brouchers, Articles, We should use influential names who took your services

DISTRIBUTION CHANNEL

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Insurers market various insurance covers either directly or through various distribution channels. The marketer in the distribution network is in direct interface with the prospect and the customer. Distribution channels in insurance sector helps in increasing the penetration of insurance and helps in reducing the cost of insurers. It also helps the company to retain and attract new customers to expand business.

1) BANCASSURANCE

Banks acting as corporate agents is known as bancassurance. Banks can sell the policies to their existing as well as prospective clients. This is becoming quite popular these days and the bank earns huge fund based income. Pnb Metlife is a pioneer in offering life insurance solutions through banks and alliances. The business philosophyat B&A is to leverage distribution synergies with their partners and add value to its customers and partners. Flexibility, adaptation and experimenting with new ideas are the hallmarks of this channel. The bancassurance channel partners of Pnb Metlife are:

o Axis Banko Barclayso J&K Banko Karnataka Bank Ltd.o Dhanalakshmi Bank

2) CORPORATE PARTNERS

Any corporate may apply for license to sell insurance after complying with the requirements of IRDA. The active partners of Pnb Metlife are:

o Geojit

o India Infoline

o Net worth stock broking

o Bajaj Capital

o Bonanza Insurance consultants.

3) BROKERS

They are like corporate agents with only difference that they can sell the products of more than one insurance company. For example Srei.

4) AGENTS (FINANCIAL ADVISORS)

Agency is the largest distribution channel of Pnb Metlife comprising a large advisor force that targets various customer segments. The strength of agency lies in an aggressive strategy of expanding and procuring quality business. With focus on sales and people development, agency has emerged as a robust, predictable and sustainable business model. Anybody possessing the minimum qualification of 10+2 after completing 50 hrs of compliance sales

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training given by Pnb Metlife approved by IRDA can sell life insurance products. These advisors work under the leadership of sales manager, who motivate them in every step by providing them guidance.

RECOMMENDATIONS:

Tie-ups with retailers like LIC and ICICI Prudential have with Suvidhaa Info serve. Tie-ups with post offices is another delivery channel that is under exploration. Max New Life has tie ups with microfinance institutions and non-gazatted organizations. Financial Advisors generally have a tendency of joining a company and restricting themselves to selling

the products only to their friends and family. This way they get their commission and then leave the company. Hence, it should be kept in mind to know the intention of the advisors while recruiting them.

MARKETING STRATEGIES Developing a sound sales plan and management strategy Developing strong and innovative distribution channel Bancassurance Brand building Product Development Public Relations and Internal Communication Recruiting dynamic and high quality sales professional

MARKETING SPLASH OF PNB METLIFE

FA RECRUITMENT ACTIVITY Lead generation activity was launched in up-country locations (Gujarat, Haryana, Up, Kerala and Tamil Nadu) with the objective of Financial Advisor recruitment. The activity showcased key benefits of association with Pnb Metlife along with enhancing visibility about Pnb Metlife in smaller towns which can be serviced by a Pnb Metlife branch within 30km radius and establishing brand salience. More than 2000 leads were generated within four weeks of the launch.

The creative theme for the activity was-

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‘Join the Pnb Metlife Family for a prosperous future’

Another activity was done by my Company Guide and the employees working under her. This was done in Howrah (Kolkata). We had put up a canopy and we distributed the pamphlets to people at random.

The activity proved to be beneficial as it helped us: In recruiting potential advices In creating a good database Creating brand awareness

The creative theme for the activity was-‘Are you the next Met Royale???’

‘CUT YOUR TAX’, CAMPAIGN FOR CORPORATE

Leveraging the January, February and March quarter where the focus is on tax saving, Pnb Metlife launched ‘Cut your Tax’, Campaign among Corporates. The key products in focus were Met Monthly Income Plan which gives tax benefit under 80C and Met Health Care which gives tax benefit under 80D. More than 2000 leads were collected during eight activities across five cities.

The creative theme for the activity was-‘Cut Your TAX Worries and Ensure Your Take Home is more’

MARKETING TOOLS TELE MARKETING

Direct Marketing in which sales person uses telephone to solicit prospective customers to buy products and services.

DATABASE MARKETING

Analyze customer database and use the results to form future projection that help to improve efficiency and develop new products.

BANCASSURANCE

Selling of insurance through a bank’s established distribution channels. Pnb Metlife is penetrating in to the rural market using Bancassurance medium only. The bancassurance channel partners of Pnb Metlife are:

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Axis Bank Barclays J&K Bank Karnataka Bank Ltd.

MARKETING PROBLEMSThe old and outdated technique of telemarketing is used to prospect customers. More modern techniques should be adopted. The company must sponsor shows and give presentations in corporate houses.

Some of the main problems in marketing the policies are: Large amount of competition (22 players) Other brands are well advertised and have a better recall value. LIC is considered a safer option. Competition faced from mutual funds. High premium policies are difficult to market. Incorrect perception about insurance. Short term plans are only available at large premiums. Consumers don’t want to take medical examination. Large amount of documentation.

KEY AREAS OF CONCERNThe insurance business deals in selling services with the aim of building customer relation and generating profit by creating customer satisfaction. Due weightage in the formation of marketing mix is to be given in the insurance industry. The marketing mix that includes the 7P’s of service marketing are Product, Price, Place, Promotion, People, Process and Physical evidence. The 7P’s can be used for marketing of insurance products in the following manner:

PRODUCT

The core function of the marketing force of an insurance company is developing new products and generating awareness about its product among the target customer. The company should keep in mind the individual requirements of the customers in order to differentiate itself from its competitors.

The concept of riders, partial withdrawal benefit and other additional benefits has been a huge innovation in Pnb Metlife, which has led to the customization of products suiting the individual needs. The accidental death benefit rider, permanent disability rider and critical illness riders are worth mentioning.

The products introduced in the year 2010 are:

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Met Gold Plus ( Jan ) Met Easy Plus ( Feb ) Met Magic Plus ( March ) Met Smart Life ( March )

PRICE

This is the price or amount that the customer needs to giveaway in exchange of the product or service that the company is offering. Price of a product in insurance industry is defined by the amount of premium to be paid. Any premium which is charged carries 3 components-

Investment that a customer makes, Company’s expenses and Charges.

The pricing of all the insurance products which has the Insurance cover is based on the Mortality Table and is based on Mathematical and Statistical Data which again comes from the following calculation – No. of people dying at any particular age in a year/1000.

PLACE

It is one of the key elements, in the sense that the service provider should be easily accessible to the customer. Locating an insurance branch depends on various facets like business area and smooth accessibility. Proper management of the insurance branches is significant. The environment should be conducive and professional so that the productivity increases. The branches should be technically equipped so that internal communication becomes smooth.Pnb Metlife serves its customers by offering a range of innovative products at more than 640 locations through its bank partners and company-owned offices.It has its office set in all the major cities of India.With latest expansion Pnb Metlife, which is one of India's largest growing insurance companies, has increased its presence in 13 of the 14 districts in Kerala. The company has now established a network of 27 branches across 23 cities in Kerala. The new branches would be opened in Kochi, Kottayam, Kannur, Thodupuzha, Kottarakkara, Adoor, Kodungallur, Ottappalam, Perinthalmanna, Mavelikkara, Edappal and Irinjalakkuda.

PROMOTION

Promotion includes all the ways we tell your customers about our products or services and how we then market and sell to them.Pnb Metlife promotes itself majorly through advertisements and publicity through newspapers, business magazines and television.To promote any new product, Pnb Metlife organizes conferences and seminars .One major strategy is the different kind of promotional activities that the company does .For example: In Kolkata pamphlets and brochures are distributed early in the morning at large forums like Victoria memorial and other parks where the denizens of Kolkata come for morning walks.

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Large banners and canopies are set up in malls, exhibitions, trades, fares and kirtans as well. Publicity via mobile phones and through internet is also a common practice.Pnb Metlife brings in small changes in the way it promotes and sells its products which helps the company to bring about dramatic changes in the results.

PEOPLE

A service industry involves high level of interaction. Building good customer relationship is very important in an insurance sector.Pnb Metlife imparts a lot of training on soft skills, product knowledge and competition analysis.The training department is equipped with solutions that can help them conduct trainings simultaneously across multiple locations, without actually traveling to those locations to increase effectiveness.This helps in increasing the productivity of all its agents. Pnb Metlife plans to hire 2000 sales manager and increase the number of financial advisors from 30000 to 60,000.

PROCESS

Pnb Metlife follows a very smooth and customer friendly process in delivering its services. The operation department of Pnb Metlife provides quick and accurate payment to its clients. In 2004, Operations & Technology focused on six strategic themes to increase the value of Pnb Metlife: operational excellence, investing for growth and innovation, enhancing service delivery, modernizing technology and increasing agility, gaining efficiencies, and improving quality and controls.

PHYSICAL DISTRIBUTION

Distribution channels in insurance sector helps in increasing the penetration of insurance and helps in reducing the cost of insurers. It also helps the company to retain and attract new customers to expand business. The distribution channel of Pnb Metlife consists of:

o Bancassurance

o Corporate Partners

o Brokers

o Agents

PRODUCT HIERARCHYNEED FAMILY

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The core need that underlies the product family. Example: Security

PRODUCT FAMILY

All the product classes that can satisfy a core need with more or less effectiveness.Example: Savings and Income

PRODUCT CLASS

A group of products within the product family that are recognized as having a certain functional coherence.Example: Financial Instruments

PRODUCT LINE

A group of products within a product class that are closely related because they function in a similar manner, or are sold to the same customer groups, or are marketed through the same kind of outlets, or fall within given price ranges.Example: Life Insurance

PRODUCT TYPE

Those items within a product line that share one of several possible forms of the product.Example: Term Plans

BRAND

The name associated with one or more items in the product line that is used to identify the source or character of the items.Example: MET associated with different products of Pnb Metlife

ITEM

A distinct unit within a brand or product line that is distinguishable by size, service providing price appearance or some other attribute. The item is called the stock keeping unit or product variant.Example: Met Magic Plus

CUSTOMER BUYING BEHAVIOURIndian life Insurance industry being in nascent stage has been found very sensitive to myriads of issue particularly in the case of buying pattern of consumers.

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It is indispensable for a marketer to identify consumer buying behavior, so that he or she is in a better position to target products and services at them. Buyer behavior is focused upon the needs of individuals, groups and organizations. A consumer’s buying behavior is influenced by Psychological, Economical, Social and Demographic factors.

PSYCHOLOGICAL FACTORS

Here purchase decision in influenced by those issues that affect the lifestyle of the consumer or in the other that reflects the status. . For e.g.: purchase decision related to buying of car and that to Mercedes Benz. Talking specifically about the insurance sector, here the customer will buy only that policy that has got high premium or that type of policy which company is promoting to limited high-income level group only. For example, the Met Monthly Income Plan where a client wants to pay for 5 years premium paying term and wants it for 5 years term then his yearly premium would be Rupees One Lakh Forty Nine Thousand Twelve.

ECONOMICAL FACTORS

These factors affect the purchase decision by influencing the issues pertaining to money and income level of the individual. Consumer will buy only that policy which will not demand a huge premium from his income but at the same time give a greater sum assured. For example, Met Suraksha which is a traditional plan whose minimum annualised premium is rupees One Thousand One hundred.

SOCIAL FACTORS

Consumers are also influenced by social factors for example; reference group, family and social role and status.

DEMOGRAPHICAL FACTORS

A consumer’s decision is also influenced by personal characteristics, for example buyer’s age, occupation, gender, marital status and income level. It cannot be denied that buying decision of the individual who is unmarried and is into business, having the income level of the range Rs. 2.5 lakh per annum, is into the age group of say 25 years will have the entirely different approach towards purchase of the life insurance policy with the individual who is into service and is married, is into the age group of, say 35, and is earning Rs.3.5lakh per annum. Here the unmarried person with 2.5 lakh annual income would prefer a plan like Met Easy which is a long term plan and where a coverage of 5 times is given. Whereas, the married person would prefer a plan like Met Smart Life which gives lifelong coverage of 99 years. This plan would fulfill any kind of requirements of the individual. It could be used as a retirement plan as well as child plan.

GROWING THE BUSINESS….

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The secret lies in how to grow the business effectively. The strategies that Pnb Metlife can use to grow its business:

1) Attract more new customers.2) Increase the average sales amount.3) Make the customers buy more often.4) Hold on to the customers for life.

ATTRACT NEW CUSTOMERS

The insurance industry is facing an unprecedented number of business challenges brought on by a volatile economy, diminishing investment returns and greater agent expectations. Intense competition and declining loyalty are continually eroding insurer’s profitability. In this turbulent world, it is essential for insurance companies to acquire new customers and retain existing ones.

Select a niche market that they can easily contact and dominate on it. Expand their business horizons to rural areas. Create a systematic referral program. The reasons referrals will be powerful is because it would

come from a credible-third party that has experienced first hand the benefits of the company.

INCREASE THE AVERAGE SALES AMOUNT

Up-sell their customers to high quality products and services. Suggest top-ups and riders benefit that would compliment the customer’s purchase.

MAKE THE CUSTOMERS BUY MORE OFTEN

Establish ongoing communications with the customer. Follow up with their customers to see how they are enjoying the benefits of the new product and

suggest products and services that would increase their satisfaction. Track the customer’s buying pattern to suggest purchases right before they actually need them. For

example: suggesting a pension plan to a 40 year old customer.

HOLD ON TO THE CUSTOMERS FOR LIFE

Perform surveys with their customers from time to time to gauge their satisfaction. Offer diversified product range to its existing customers. Offer them gifts on special occasions like presenting the clients with a calendar of Pnb Metlife in

the new year.

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SWOT ANALYSISSTRENGTH

Paid up capital of Rs.1950 crores More than 50,000 advisors Quality Products and Services Quality Distribution Channels Strong Underwriting Growth rate of 156% Strong Brand Name

WEAKNESS

Limited market penetration Low market share FDI allowed only up to 26%

OPPORTUNITIES

Cross sell financial services are untapped Untapped rural market Brand and Line extension Niche market Opening of pension sector and establishment of new pension regulator

THREAT

New entrants. Government Regulations and political situations. Increasing interest rate.

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HISTORY OF INSURANCEThe insurance industry in India over the past century has gone through big changes. In India this industry reveals the 360 degree turn. 360 degree turn means that it started in India from being an open competitive market to nationalization and back to a liberalized market again.

Insurance industry in India started as a fully private system with no restriction on foreign participation in the Nineteenth Century. Before independence, a few British insurance companies dominated the Market. Life insurance was first set up in India through a British company called the Oriental Life Insurance Company in 1818, followed by the Bombay Assurance Company in 1823 and the Madras Equitable Life Insurance Society in 1829.All of these companies operated in India but did not insure the lives of Indians. They were there insuring the lives of Europeans living in India. Some of the companies that started later did provide insurance for Indians. But, they were treated as "substandard" and therefore had to pay an extra premium of 20% or more. The first company that had policies that could be bought by Indians with "fair value" was the Bombay Mutual Life Assurance Society starting in 1871.

The first general insurance company, Triton Insurance Company Ltd., was established in 1850. It was owned and operated by the British. The first general insurance company was the Indian Mercantile Insurance Company Limited set up in Bombay in 1907.By 1938; the insurance market in India had nearly 176 companies (both life and non-life).

After the independence, the industry went to the other extreme. It became a state-owned monopoly. The industry started to witness a problem like fraud. Hence many regulations were put in place to reduce and control the problems in the industry. After which Insurance was nationalized. In 1956, the then finance minister S. D. Deshmukh announced nationalization of the life insurance business and then the general insurance business was nationalized in 1972. Only in 1999 private insurance companies have been allowed back into the business of insurance with a maximum of 26% of foreign holding.

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INSURANCE INDUSTRY IN INDIAWith the largest number of Life Insurance policies in force in the world, insurance happens to be a mega opportunity in India. The Indian insurance market in spite of having a history covering almost two centuries took a turn after the establishment of the Life insurance Corporation in India in 1956. From being an open competitive market to being nationalized and then back to a liberalized market again, the insurance sector has witnessed all aspects of contest. The Indian insurance market traditionally focused around life insurance until recently, a various range of other insurance policies covering sectors like medical, automobile, health and other classes falling under general insurance came up, generally provided by the private companies. The life insurance of India added 4.1% to the GDP of the economy in 2014, an immense growth since 1999, when the gates were opened for the private company in the market. Indian life insurance industry is considered the fifth largest life insurance market, and growing at a rapid pace of 32-34 per cent annually, according to the Life Insurance Council. This impressive growth in the market has been driven by liberalization, with new players significantly enhancing product awareness and promoting consumer education and information. The strong growth potential of the country has also made international players to look at the Indian insurance market. Moreover, saturation of insurance markets in many developed economies has made the Indian market more attractive for international insurance players.

The total number of life insurers registered with the Insurance Regulatory Development Authority (IRDA) has gone up to 23.

Some of the major insurance companies in public sector are: Life Insurance Corporation (LIC) of India National Insurance Company Limited Oriental Insurance Limited

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The insurance companies in Private sector are:

SERIAL NO.

NAME OF THE COMPANY

INDIAN PROMOTER/ PARTNER

FOREIGN INSURER

FDI(%)

1.Reliance Life Insurance Company Limited.

RELIANCE GROUP(ADAG)

None 0

2.Aviva Life Insurance Co. India Pvt. Ltd.

Dabur Aviva (UK) 26

3.Bajaj Allianz Life

Insurance Company Limited

Bajaj Auto Allianz (Germany)

26

4.Birla Sun Life Insurance

Company Ltd.Aditya Birla Group SunLife

(Canada)26

5.HDFC Standard Life

Insurance Company Ltd.HDFC StandardLife

(UK)18.9

6.ICICI Prudential Life

Insurance Company Ltd.ICICI Bank Prudential (UK) 26

7.ING Vysya Life

Insurance Company Private Limited

Vysya Bank ING Ins.(Netherlands)

26

8.Kotak Mahindra Old

Mutual Life Insurance Limited

Kotak Mahindra Bank

OldMutual (South Africa)

26

9.Max New York Life Insurance Co. Ltd.

Max India NewYorkLife (US)

26

10.Pnb Metlife India Insurance Company Ltd.

J&K BankDhanlaxmi Bank

Met Life (US) 26

11.Sahara India Insurance

Company .LtdSahara India None 0

12.SBI Life Insurance Company Limited

SBI Cardiff (France) 26

Tata AIG Life Insurance TATA Group AIG (US) 26

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13. Company Ltd

14.Shriram Life Insurance

Company Ltd.Shriram Sanlam Life Ins.

15.Bharti AXA Life

Insurance Company Ltd.Bharti Group AXA(Australia)

16.Future Generali India

Life Insurance Company Limited

Future Group Generali Group(Italy)

17.IDBI Fortis Life

Insurance Company Ltd.IDBI Bank and Federal Bank

Fortis (Europe) 26

18.Canara HSBC Oriental

Bank of Commerce Life Insurance Company Ltd.

Canara Bank and Oriental Bank of

Commerce

HSBC Insurance (Asia Pacific)

26

19.Aegon Religare Life

Insurance Company Ltd.Coleman and

CompanyAegon and Religare

20.DLF Pramerica Life

Insurance Company Ltd.DLF Pramerica

(United States)

21.Star Union Dai-ichi Life

Insurance Co. LtdBank Of India and

Union Bank Of IndiaDai-ichi Mutual Life Insurance

Company(Japan)

26

22. India First Life Bank Of Baroda and Andhra Bank

Legal and General (UK)

26

Table 4

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NEED FOR LIFE INSURANCENot everybody needs life insurance. If a person is single and has no dependents, it may not be worth the expense. If, however, the person has anyone who financially depends on him even partially, life insurance might be suitable then.

The need for life insurance will depend on the personal circumstances, including the current income and the current expenses, current savings and the families’ goals. Rules of thumb might indicate that purchasing life insurance that covers six to 10 times the gross annual income is the correct sum of coverage.  But one’s family may need more or less than that. When deciding how much coverage is necessary, one should lay out the details of what he/she has versus what goals he/she would like for his/her family once he/she is gone, keeping in mind that their security can often carry a higher price tag than he/she originally thought.

Apart from this, life insurance is a unique investment avenue that helps to meet the dual needs of life- saving for life's important goals, and protecting the assets.

ASSET PROTECTION

From an investor's point of view, an investment can play two roles - asset appreciation or asset protection. While most financial instruments have the underlying benefit of asset appreciation, life insurance is unique in that it gives the customer the reassurance of asset protection, along with a strong element of asset appreciation. The core benefit is that the financial interests of one’s family remain protected from circumstances such as loss of income due to critical illness or death of the policyholder. Simultaneously, insurance products also have a strong inbuilt wealth creation proposition. The customer therefore benefits on two counts and life insurance occupies a unique space in the landscape of investment options available to a customer.

GOAL BASED SAVINGS

Each of us has some goals in life for which we need to save. For a young, newly married couple, it could be buying a house. Once, they decide to start a family, the goal changes to planning for the education or marriage of their children. As one grows older, planning for one's retirement will begin to take precedence. Clearly, as the life stage and therefore the financial goals change, the instrument in which one should invest should offer corresponding benefits pertinent to the new life stage.Life insurance is the only investment option that offers specific products tailor made for different life stages. It thus ensures that the benefits offered to the customer reflect the needs of the customer at that particular life stage, and hence ensures that the financial goals of that life stage are met. 

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The table below gives a general guide to the plans that are appropriate for different life stages.

Life Stage 

Primary Need Life Insurance Product

Young & Single Asset creation Wealth Creation plans

Young & Just married Asset creation & protectionWealth creation and mortgage protection plans

Married with kidsChildren's education, Asset creation and protection

Education insurance and wealth creation plans

Middle aged with grown up kids

Planning for retirement & asset protection

Retirement solutions

Across all life-stages Health plans Health insurance

 Table 5

 

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UNDERWRITING

Insurance underwriting is the process of choosing who and what the insurance company decides to insure. This is based on a risk assessment. It is pretty much the "behind the scenes" work in an insurance company where they determine who is insured and how much in insurance premiums they will charge the insured person. Insurance underwriting also involves choosing who the insurance company will not insure.

Types of underwriting

Figure 8

Underwriting is necessary:

To charge right Premiums according to risk.

To protect company from insuring Lives whose Risk is not acceptable & avoid frauds

To offer cover to a wide group of lives

To remain competitive

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TYPES OF RISKS

Figure 9

SOURCES OF INFORMATION FOR UNDERWRITER

Application Form

Age Proof- An important requirement for acceptance of Life Insurance proposal. It is also essential to calculate the exact Premium. Age is also recorded as per Proof submitted. The age forms the basis of premiums to be paid by client.

Financial Advisor Report

Medical Examiner’s Report

Financial Documents (if Required)

Questionnaires based on health/occupation/Avocation/habits /Client Assessment Form (if Applicable)

Additional Medical Evidence (if required)

FINANCIAL UNDERWRITING

A process which ensures….

The Life Insurance cover requested is appropriate

Avoid giving excessive cover

Premium Paying capacity of the customer

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FINANCIAL UNDERWRITING CALCULATES

HUMAN LIFE VALUE

Figure 10

PREMIUM PAYING CAPACITY

Figure 11

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DIFFERENT UNDERWRITING DECISIONS

Figure 12

MEDICAL UNDERWRITING

It is a process of Calculation of Risk involved in Insuring Life on the basis Of:

Information in Application Form

Information in Questionnaires (if any)

Findings of Medical Tests

MEDICAL GRID

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Table 6

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LIFE INSURANCE CLAIMS “Claims are the desideratum for insurance.”

Claim settlement serves to draw the benchmark for an insurance company’s customer orientation and contributes to the company’s market reputation. Hence in any insurance organisation claims department’s functions are paramount.

The purpose of taking a policy is only to get the claim on the happening of the insured event. For a life insurance policy, normally it is either surviving till maturity or on unfortunate death if it is earlier. Therefore, if the claim is not settled expeditiously when it falls due it creates lot of dissatisfaction to the customer.

The claims philosophy of any company should be to provide fair, quick, transparent and efficient claims service. Payment of claims in time is the delivering of the promise made by the company, and is therefore indeed a culmination of the cycle, which completes the obligations placed upon the insurer. It is the insurer redeeming his promises. The claims settlement efficiency and fairness will be the yardstick with which the insurer’s efficiency is measured. Good practices in claim settlement are really an effective unpaid publicity for the company.To be eligible to get the claim the policy should be kept current by paying the due premiums. If premiums are not paid in time the policy lapses. If at least three yearly premiums have been paid the policy will acquire proportionate paid up value and that will be paid as claim along with bonus.There are basically two types of claims in life insurance:

MATURITY CLAIM

Majority of claims paid are those arising out of completion or surviving the insurance policy term under endowment type of policy and these claims are paid to the surviving policyholder. Survival benefits, which are a percentage of policy amounts under Money back type of policies, are also included in this category. If the policy is issued with participation in profits, the bonus amounts are also added and paid along with the maturity claim. If a loan was taken on the policy it is deducted and paid.

DEATH CLAIM

When a policyholder dies the contract comes to an end and the insured amount in full with bonus (if eligible) is paid as claims settled to the nominee or legal heirs. The death claim settlement procedure and the requirements depend according to the duration of the policy from the date of risk. When death occurs after three years from the date of risk the claims are called “non early” death claims and such claims are paid without any extra requirements.

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INSURERS AND RURAL INDIAThe country’s private life and general insurance companies are experimenting and innovating new rural products, pricing policy and the delivery channels to grab a larger pie of the under-penetrated rural India.

According to a Max New York Life NCAER survey, only 19% of the country’s rural households have life insurance cover, compared with the figure of 38% for urban families and challenge here is to find delivery channels to cater to these markets.

IRDA guidelines stipulate that an insurance company starting operations need to have atleast 7% of its clients from rural areas in the first year. The share of rural policies needs to grow to 20% in the tenth year. The insurers which depend on banks have an advantage in terms of distribution infrastructure. In depth local market knowledge and formidable network of bank branches in rural and semi-urban areas comes handy for insurers.

Some players such as Aviva are banking on the network of cooperative banks in rural areas for distributing their products. Some others are exploring more innovative channels. DLF Pramerica Life Insurance is partnering with Srei Sahaj E- Village to reach some 27,000 villages. Prudential Life Insurance is tie ups with retailers such as Suvidhaa Infoserve, which runs close to 13,000 kirana stores across 400 locations. Tie-ups with post offices is another delivery channel that is under exploration. ICICI Prudential has tied up with India Post recently to reach out to rural markets through 16,159 post offices across Andhra Pradesh. Max New York Life Insurance is banking on delivery channels such as microfinance institutions and non-gazatted organisations. From the agricultural income, rural economy getting more and more independent, growth is expected to remain robust for the country’s insurers.

Drivers of rural insurance development

Demand sideThe main economic drivers for general insurance are growth in income, savings and education. The same drivers apply in the rural sector. A survey was conducted by Forte Group in 2003 of 1172 rural households to examine the characteristics of insurance-buying households in the rural sector. Firstly, the survey divided the households into three different groups based on the educational achievements of the chief wage earners (including women). Group A represents households where the chief wage earner has 10 or more years of education, B 5 to 9 years and C no more than 4 years. Education of the chief wage earner was highly correlated with the income of the households. Not surprisingly, in Group A, 44% of the households had some life insurance policies, whereas in Group C, only 15% did. The incidence of buying non-life insurance was less than half in all groups. Among the group of people who did not buy insurance, almost a third of the low-education group did consider buying insurance, even though some 51% confessed no intention to purchase any insurance at all. This points to a large disposition towards buying insurance in all income groups. For Group A households, 78% saved in formal institutions (mainly in Post Office savings accounts and in banks). In Segment B and C, the proportion of households saving in institutions was 49% and 43% respectively. When other forms of saving are included, the proportion tops 70% in all groups. In terms of the proportion of income saved (among the households that did save), it is above 35% in all groups. Surprisingly, the savings rates are high for all households regardless of their level of education. These findings demonstrate that the key economic elements driving insurance buying in the rural sector are in place. What did people save for in the past? The

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most often-quoted reason (18% of savings) was for a daughter’s wedding. In India, the daughter’s family is expected to pay a dowry to the groom’s family (even though the practice is illegal). Upgrading housing was done with another 10% of the savings. Buying land and medical expenses ate up another 7% each. Awareness is another important factor driving demand for insurance. The awareness of the need for life insurance is high across all segments. Awareness of the need for motor and accident insurance follows the same pattern: more than 70% of the respondents in Group A are well aware of the need for them, more than 60% in Group B and 45% in Group C. For other kinds of insurance, the levels of awareness are somewhat lower. In general, the rural population is much more aware of life insurance than non-life insurance. It is quite common to refer to a life insurance policy as an “LIC” in the rural areas.

Supply side

There are two critical elements to success on the supply side of insurance in rural areas: products that are suitable for the rural population and an adequate distribution mechanism. The development of rural insurance products should have the specific needs and capacity of the rural population in mind. Firstly, the income pattern in rural areas is different from in urban areas. Specifically, income follows crop cycles. There are two main crops during a calendar year. Thus, in many parts of rural India, a semi-annual payment of premiums is preferred. However, this pattern of income is not universal across all regions. Therefore, policies have to be region-specific. Secondly, the general buying capacity is lower in the rural areas. Consumer goods have been marketed very successfully in the rural markets by lowering the “unit size”. For insurance products, this means selling life insurance with a lower minimum face value. Thirdly, the level of education is lower in the rural areas. Therefore, simplified products would be preferable for most customers. Fourthly, verification of age and fixed address may be cumbersome in t he rural areas. Using wider age bands for life insurance policies would simplify the procedure. A number of insurance companies are already following one or more of these avenues. Traditional agents are still the most effective means to penetrate rural areas, although the use of bank branches is on the rise. There is a great variation in rural distribution of insurance among life insurers. For life insurance, the LIC has roughly the same number of agents in the rural and the urban sectors. Not surprisingly, the total number of agents in the LIC is far higher than for any other provider. For all private life insurers, the number of urban agents outnumbers the number of rural agents by a factor of four or more. For private non-life insurers, the proportion of agents in urban areas is five to ten times more. For public companies, there is a two- to three-fold difference.

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COMPETITIVE ANALYSIS (2014)The new business premium (NBP) during 9MFY10 recorded 29.2% increase to Rs.625 billion compared to Rs.522 billion during the same period last fiscal, mainly driven by 50% NBP growth by LIC. Private insurers managed to record a modicum growth of 2.1% in NBP during the quarter period from October2014-December 2014.Private insurers accounted for 90% of the market share in terms of NBP for regular premium ULIP policies. The renewal premium has recorded 44% growth to Rs.268 bn during 9MFY10. The growth in renewal premiums is largely due to initiatives taken to improve persistency over the last one year.

DISTRIBUTION

The strategy of business expansion does not seem to work for private players and now the focus is shifting to improve channel productivity and also closing down non performing branches. Most insurers are now focusing on adding new distributor relationship through tie-ups with corporate agents and brokers.

The industry has added only 116 branches during 9MYF10 to take the total branch strength to 11,931 branches from 11,815 branches as on March 31, 2014. Private insurers have a network of 8,709 branches in India and have closed down 76 branches during the above mentioned period. Most of the large private insurers are on a consolidation phase and are closing down non performing branches in order to improve operational efficiency. The private insurers have recorded a negative growth during the first two quarters of 2014 compared to a 38% growth during Q3FY10 when compared with Q3FY09.

Reliance and SBI Life have added branches during the 9MFY10 while ICICI Prudential, Aviva, HDFC Standard, Birla Sun Life and Bajaj Allianz have closed down some of their branches. Smaller and new entrants are waiting for the revival of the economic activity and improvement in overall industry outlook before they can resume building their distribution network.

On agency recruitment most insurers have either maintained or reduced their agency strength. The focus is more on improving the productivity of existing agency force. The total number of agents as on 31 December 2014 is at 29, 84,287 agents of which LIC has 14, 21,077 agents while private players have 15, 63,210 agents.

CAPITAL AND ASSET UNDER MANAGEMENT

Slowdown in new business during quarter one and two of year 2014 has prompted many insurers to go slow on their expansion plan. As a result of which the capital requirement for the industry has gone down. The life insurance industry is capitalized at Rs.276.2 billion as on 31 December, 2014. Most of the private insurers have refrained from infusing fresh capital during the first nine months of the financial year.

Among large insurers HDFC Standard, Birla Sun Life and Reliance have infused fresh capital. Strong renewal premium growth together with efficient expense management has kept the capital requirement low. However with business growth during the last quarter of FY10, the industry is expected to see some infusion of fresh capital.

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The asset under management for the industry has gone up by 43% to Rs.12,230 billion as on 31 December, 2014. For private players the majority of the asset under management is held under ULIP business and in equities. The recovery in the stock market over the last couple of months has significantly increased the asset under management of private insurers.

Now let’s look at the performance of the major players since their inception in short.

Life Insurance Corporation Of India: LIC completes 53 years of its services to its customer. The state-owned insurance giant posted a 50% growth in new premium collection in the first nine months of the 2010 fiscal, increasing its market share to 65 per cent from 56 per cent a year ago. LIC’s new premium collection touched US$ 9.58 billion in the April-December 2014 period.

The total number of branches and number of advisors as on 31st December 2014 was 3222 and 1421077 respectively.

ICICI Prudential Life Insurance Co Ltd: ICICI Pru continues to be the market leader among the private players. The company has registered 27% growth in total premium to Rs.4031 bn during Q3FY10 as against Rs.31.73 bn during Q3FY09 backed by 20% growth in renewal premium. However the company has recorded 18% dip in new business premium during the 9MFY10 (Rs.38.33 bn) as compared to 9MFY09.

Till date the company has infused a capital of Rs.47.8 bn. The asset under management is at Rs.536 bn as on December 31, 2014. The company has managed to lower its expense ratio to 8.3% during Q3FY10 as against12% during Q3FY09. The new business profit is at Rs.2.82 bn during Q3FY10 with new business margin at 18.9%.

Bajaj Allianz Life Insurance: The company has reported a net profit of Rs.1.54 bn The company has reported a net profit of Rs 1.54 bn during Q3FY10 as against Rs 0.3 bn during Q3FY09. The company has registered 14% growth in total premium collection to Rs 27.6 bn during Q3FY10 as against Rs 24.2 bn Q3FY09 backed by 16% growth in renewal premium during the quarter. The renewal premium collected during Q3FY10 is at Rs 16.7 bn against Rs 14.3 during Q3FY09.

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The new business premium resulted de-growth of 16% to Rs 25.3 bn during 9MFY10 as against Rs 30.03 bn during 9MFY09 due to downturn in equity market which have pulled down ULIP sales. Ratio of new business commission to new business premium has come down marginally to 19% during 9MFY10 as against 20% during 9MFY09. The ratio of management expense to total premium has come down by 1% to 19% during 9MFY10. The asset under management is at Rs 305 bn as on Dec 31st, 2014.

The paid up capital is at Rs 12.11 bn. The company has not infused any capital during the financial year so far. The company has a network of 1,151 offices.The company diversified its product mix by introducing new products and small ticket size micro insurance products.

Reliance Life Insurance: The company has registered 40% growth in total premium collection to Rs 16 bn during Q3FY10 as against Rs 11.5 bn during Q3FY09 backed by a strong growth in renewal premiums. The renewal premium has gone up by 115% during Q3FY10 to Rs 6.8 bn as against Rs 3.2 bn in Q3FY09. In terms of new business premium the company has registered 6% decline at Rs 21.7 bn during 9MFY10 as against Rs 23 bn during 9MFY09.The Company has not infused fresh capital during the quarter. It capital base is at Rs 28.1bn. The asset under management is at Rs 112.6 bn as on Dec 31st, 2014 recording 150% growth. The company has opened 73 new branches during the quarter to take the total branch strength to 1,247 offices and 192,347 advisors. The focus is to improve productivity, cost control, customer initiatives, technological improvements, keeping the renewal premium flow.The company also increased the share of traditional products by 5%. It also increased its distribution network to tier 3 and tier 4 cities.

Birla Sun Life Insurance: The company has registered 51% growth in total premium to Rs 14.7 bn during Q3FY10 as against Rs 9.7 bn during Q3FY09 backed by a strong growth of renewal premiums. The renewal premium collected during Q3FY10 has goneup by 43% to Rs 9.5 bn against Rs 6.1 bn during Q3Y09. The new business premium has recorded 14% growth to Rs 20.4 bn during 9MFY10 as against Rs.17.8 bn during 9MFY09 backed by strong growth in group business. During the third quarter of FY10, the Company has infused Rs 1000 mn taking the total capital infusion to Rs 22.75 bn. The asset under management is at Rs.147 bn as on Dec 31st, 2014.The company has reduced its net loss from Rs 1658 mn to Rs 1428 mn during the quarter mainly due to higher profitability arising out of in-force business and declining expense ratio.

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Max New York Life Insurance: The company has registered 30% growth in total premium to Rs 12.7 bn during Q3FY10 as against Rs 9.8 bn during Q3FY09 backed by strong growth in renewal premium. The renewal premium collected during Q3FY10 has gone up by 40% to Rs 7.5 bn against Rs 5.4 bn during Q3FY09.

In terms of new business premium the company has registered 3% growth to Rs.12.09 bn in 9MFY10 as against Rs 11.76 bn in 9MFY09. The asset under management is at Rs 90 bn as on Dec 31st, 2014. MNYL has a agency strength of 75,832 agents. The distribution reach expands to 715 offices across 391 locations. This includes 139 offices dedicated to rural business.

Kotak Life Insurance: The company has reported a PAT of Rs 185 mn during Q3FY10 as against a profit of Rs 90 mn during Q3FY09 driven by lower new business strain and reduction in expenses helped the company post profits. The company has registered 18.4% growth in weighted adjusted premium collection to Rs 16.58 bn during 9MFY10 as against Rs 14 bn during 9MFY09 backed by strong growth in renewal premium. The renewal premium collected during 9MFY10 has gone up by 79% to Rs 10.12 bn against Rs 5.65 bn during 9MFY09. New business premium has declined by 17.6% to Rs 7.2 bn during 9MFY10 as against Rs 8.7 bn during 9MFY09. The company has a network of 214 offices in 142 cities. Kotak group contributed to 28% of the sales and increased the share of tied agency to 50%.

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SBI Life Insurance: The company has posted a net profit of Rs 2 bn during 9MFY10 driven by efficient management of expenses, expansion in distribution network, customer centric product offering & spread into tier III & tier IV cities. The company maintains the lowest expense to gross written premium ratio in industry of 7.99%.The company has registered 32% growth in total premium collection to Rs 60.9 bn during 9MFY10 as against Rs 41.4 bn during 9MFY09 backed by a strong growth of renewal premiums. The new business premium has recorded 19% growth to Rs 44 bn during 9MFY10 as against Rs 36 bn during 9MFY09.

HDFC Standard Life InsuranceHDFC Standard Life Insurance

HDFC Standard Life Insurance: The company has recorded 14.5% growth in total premium income of Rs 55.65 bn during 9MFY10 as against Rs 315 mn during 9MFY09. The new business premium has recorded 8.6% growth to Rs 20 bn during 9MFY10 as against Rs.18.4 bn during 9MFY09. HDFC Standard Life has agency strength 190000 agents. The distribution reach expands to 592 offices across 1000 locations. Tied agency contributed around 42% of the new business premium.

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PRACTICAL EXPOSURE

I learnt about the functioning of Pnb Metlife India Insurance Company Limited. The company has two levels at every branch. One part is the Sales Agency (related to the marketing division and which is my area of interest) and the other part is Bank Assurance (relating to the financial decision making division).

I also learnt how to fill in the insurance policy forms and the recruitment form. I was told about when and where to mention about the policy owner and when about the nominee.

Underwent Compliance & Sales Training as per company’s guidelines. The Sales Process involves the following steps:

Prospecting Approach Fact Find Solution References

My company guide told me to remember a mnemonic “AIDA”:

A –ATTENTION I -INTEREST D -DESIRE A –ACTION

This means first the advisor should try and gain the customer’s attention and then create an interest in him for the product, then create a desire in him and then act.

A new product was launched, Met MAGIC PLUS. It is a Unit Linked Insurance Plan for children. All the employees were given the training. The term of the plan is 10, 15, 20 or 25 years. The maximum premium that a customer can pay is Rs.1, 00,000. The sum assured that a customer gets is 5 times the premium paid. This plan also enjoys the benefit of partial withdrawal. Here after paying a minimum premium till 5 years, the customer can withdraw 10% of the fund value. I tried and analyzed the product and compared it with other insurance companies.

Similar Plans available in the market are:

BSLI Sal Children’s Plan Max New York Life Shiksha Plan Kotak Mahindra’s Headstart Plan

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I took the IRDA examination and cleared it acquiring 64%.

With my company guide’s assistance, I was able to clear the customer’s query. This also helped me learn about the various investment tools in the markets. I learnt that selling insurance policies is not very easy. People in Kolkata still have a bent of mind that nothing is better than LIC. This is due to the various investment options and the aggressive competition of new entrants in the market.

I gained a comprehensive understanding of the other private players present in the market in the study of competitive analysis.

One of the best exposure that I got was the recruitment activity that we carried out in Howrah. I designed a leaflet in Microsoft Power Point. The best learning for me was in interacting with common people at random and explaining them the benefits of working at Pnb Metlife.

The morning clinics held at Pnb Metlife enhanced my practical knowledge to a larger scale.

SALES DONE DURING THE PROJECT

I made several calls and was able to close a few of them giving the company a business of One Lakh Eighty Six Rupees.

The products that I sold were:

Met Easy Plus Met Gold Plus and Met Suraksha

I also recruited 3 financial advisors for the company.

IN A NUTSHELL

Points Covered Observations RecommendationsComments(Of the Company Guide)

SWOT analysis of the company

Inspite of the various strengths, Pnb Metlife has a very low market share. The opportunities are abundant for the company to augment its share.

 Should concentrate on niche segment and go for product, brand and line extension.

Pnb Metlife was never looking at becoming the number 1 in terms of market share as the focus was on a steady growth and not on market share which can very well be

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observed from low budget advertising strategy (which has been based on small pockets). We as an organization are keen on growing in the longer version of time.

Competitive Analysis

 Pnb Metlife had a growth of -7.5% from year 2008 to 2014.The market share for April-Dec FY10 is 0.9.Jeevan Anand product of LIC is one of the best products in the Indian insurance industry.

 Negative growth means the company should improvise on its current products and marketing strategies.

 I would not agree on any product being the best as each and every product might be fit for an individual as per his current and future requirement. It is quite difficult to analyze products as all are governed by the same Body.

 Distribution channel

 The company has strong banc assurance and corporate partners.

 Keeping in mind the competition, the company should also go for tie-ups with retailers and post offices.

 We strongly agree that there should be more no. of retailer’s to enhance the distribution channel for Pnb Metlife.

 7 P’s Of Marketing

 People, Promotion, Process and Physical Distribution is convincing and satisfying.

 Pnb Metlife should focus on the other three P’s ; that is Product, Price and Place

 Pricing is a concern along with the expansion to remote areas is also what has to be taken care of.

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DATA ANALYSIS Segmentation of the respondents on the basis of certain criteria:

Now, let us turn our attention towards the respondent who were covered under this study. These respondents can be categorized on the basis of certain important criteria like age group, annual income and occupation.

1. AGE GROUP

Table 7

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Age Group No of Respondent

Percentage (%)

Below 30 Yrs

31-40 Yrs

41-50 Yrs

51-60

Above 60 Yrs

34

48

32

21

15

23

32

21

14

10

Total 150 100

Figure 13

2. ANNUAL INCOME

Table 8

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Annual Income Level

No of Respondent

Percentage (%)

Below 1 Lakh

1.0 - 3 Lakh

3.01 - 5 Lakh

Above 5 Lakh

34

59

21

36

23

39

14

24

Total 150 100

Figure 14

3. OCCUPATION

Occupation No of Responden

t

Percentage (%)

Employed

Self Employed

Others

81

50

19

54

33

13

Total 150 100

Table 9

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Figure 15

OBSERVATION AND INTERPRETATION

The first step towards my research is to find out the percentage of the income that different age group people usually save. The method used is simple percentage analysis method.

Percentage (%) Of Income

Age Group Below

30

Age Group 31-40

Age Group 41-50

Age Group 51-60

Age Group >60

<20% 20(58.8%)

33(68.75%)

5(15.62%)

0 6(40%)

20%-25% 7 (20.5 %)

7 (14.58%)

6(18.75%)

0 5(33.33%)

25%-30% 3 (8.82%)

5(10.42%)

17(53.12%)

7 (33.33%)

2(13.33%)

>30% 4 (11.76%)

3 (6.25%)

4(12.5%)

14(66.67%)

2(13.33%)

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Total (150) 34 48 32 21 15

Table 10

Figure 16

It can be interpreted that the average percentage of income saved increases with increasing age. The modal percentage for age up to 40 is less than 20% while the same hovers between 25-30% in the age group 41-50 and soars above greater than 30% in the age group of 51-60. There is again a decline in percentage savings for age group greater than 60. The above is perfectly in tandem with life cycle hypothesis of consumption. The proportion of income consumed is high in the initial years when an individual builds up on his basic amenities of life. In the age group between 41-60 he is at a stage where most of his capital investments such as (home building, providing for children’s education, etc) have been taken care of and he is also at a fairly mature stage of his career when his income is at the peak. However, subsequently post retirement his income plummets and he leaves out of his past savings as a result of which the percentage of his savings drop. Therefore the age group between 41-60 is the best possible target group in terms of affordability of insurance product.

CONSUMER PREFERENCE TOWARDS DIFFERENT INVESTMENT AVENUES

Next step is to find out the various investment alternatives available to customers and the investment tool most preferred by Indian consumers.

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I used the ranking method technique to rank out the opinion about the consumers preference towards different investment alternatives. I used this method to compare each option with each other option, one-by-one. Following are the steps to use the technique:

First, I placed the different investment opportunities vertically and the rankings horizontally in the increasing order (from 1 to 9).

The next step was to calculate the modal rank of the different avenues on the basis of the modal frequency.

Finally, on the basis of the modal rank given by the respondents, the investment avenues were ranked.

The following table shows the ranking of the different investment tools as per customer preferences:

Investment Alternatives

Modal

Rank

Rank

Fixed Deposits 1 I

Mutual fund 2 II

Insurance 3 III

Real Estate 4 IV

Public Provident Fund(PPF)

5 V

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Equity/Shares 6 VI

Gold & Silver 7 VII

Post office 8 VIII

Bond & Debentures 9 IX

Table 11

From the above it can be observed that the investment avenues preferred by the customers are:

Fixed Deposit- IMutual Fund- IIInsurance- IIIReal Estate-IVPPF- VEquity/Shares- VIGold and Silver- VIIPost Office- VIII Bonds and Debentures- IX

Fixed Deposits happen to be the most trusted investment opportunity because of the guarantee of principal, interest and timing .Furthermore, guarantee rates go up to 9% in the current market conditions making it the most lucrative investment.

Mutual Fund merges to be the second most popular investment avenue because of its prospects of generating much higher returns and professional fund management by experts which takes care of the risk factor.

Insurance because of the protection that it uniquely offers along with prospects of high return in ULIP plans which offers the same flavor as mutual funds coupled with entry and exit tax benefits.

Real Estate-The popularity of real estate as an investment opportunity has soared with the real estate price boom that has prevailed in the market in the last decade and also because a sizeable proportion of the young population doesn’t need to investment in housing for occupancy.

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Public Provident Fund- The relatively low popularity of the same Inspite of 8% guarantee return is because of the 8 years lock in period contingent to it.

Equity/ Shares features at the seventh position because of the risks involved in it as our retail investors are not matured enough to handle the risk factor.

Gold n Silver- This has been a traditional mode of investment and its comparatively lower popularity can be attributed to the stigma against selling away of household gold or silver. As a result the value of the asset cannot be realized in terms of money. However this scenario would change with the introduction of gold traded funds.

Post Office-Inspite of guarantee return of 8.5% its popularity is on the lower side because of the lock in period associated and the returns being taxable.

Bonds and Debentures features at the ninth rank because of the complexity of the instrument and lack of awareness. The comparatively lower return is yet another reason for its lowest rank.

IMPACT OF PRIVATISATION IN INDIAN INSURANCE INDUSTRY

Private Life Insurance companies provide better investment products than LIC.

NUMBER OF PEOPLE

Strongly Agree 9 (6%)

Moderately Agree 36 (24%)

Neutral 16 (11%)

Disagree 39 (26%)

Strongly Disagree 50 (33%)

Total 150

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Table 12

Figure 17

INTERPRETATION

It can be observed that 59% of the respondents believe that private life insurance companies are too new in the market and could be unreliable. The recent recession in the world wide market and the failure of giant insurance companies like AIG have left them more confused and further shy from the private insurance players.

Private Life Insurance companies provide better service products than LIC.

NUMBER OF PEOPLE

Strongly Agree 38 (25%)

Moderately Agree 20 (13%)

Neutral 6 (4%)

Disagree 28 (19%)

Strongly Disagree 58 (39%)

Total 150

Table 13

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Figure 18

INTERPRETATION

25% of the sample population feel that private insurers have been able to force LIC to give a better level of service which was not there before the insurance sector was opened to the private players. 58% of the population disagrees regarding positive service of private players. The complaint in this regard is due to the agents in the private insurance companies who are not properly educated regarding the products and hence not in a position to sell a product properly and in case the product is sold they are no longer interested in providing proper service which they had committed earlier.

LIC would lose its monopoly against the private players.

NUMBER OF PEOPLE

Strongly Agree 0

Moderately Agree 21 (13%)

Neutral 27 (19%)

Disagree 39 (26%)

Strongly Disagree 63 (42%)

Total 150

Table 14

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Figure 19

INTERPRETATION

68% of the sample population believes that LIC would not lose its monopoly. This is due to the presence of LIC since 55 years and also it has the backing of the government which gives it a huge monopolistic positioning.

How has privatization of Life Insurance benefitted you?

NUMBER OF PEOPLE

New Products 17 (11%)

Wider choice of insurance schemes

72 (48%)

Higher Returns 9 (6%)

Better investment options

12 (8%)

No Difference 40 (27%)

Total 150

Table 15

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Figure 20

INTERPRETATION

The major advantage that people got with the entry of private players was that they got a wider choice of investment products. New and innovative products came into being. 48 % of the total respondents consider that they got wider choice of insurance schemes whereas 27% found no difference.

CONCLUSION

Despite the fact that new private companies have bought lot of new innovative products in the market, they lag behind in the reliability factor which has been earned by LIC over the last 55 years. If we really look into the four pie charts above and the interpretations thereof, we can generally say that LIC outplays the private players in 6:4 ratio.

ATTRIBUTES TO BE CONSIDERED BEFORE BUYING AN INSURANCE PRODUCT

As we have seen that due to the new entrants and the plethora of products available in the market, the players are becoming very aggressive to sustain in the market. The consumer comes to a decision of buying an insurance product by considering some important factors like:

1) Brand name of the company2) Premium3) Policy term4) Claim settlement history5) Responsiveness

6) Riders 7) Charges

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SPSS was used to carry out Factor Analysis to find out the most important attribute that people consider before buying an insurance product. The preferences of the Respondents have been measured on a scale of 1 to 5 where ‘5’ refers to Very Important‘4’ refers to Important‘3’ refers to Neutral‘2’ refers to Less Important‘1’ refers to Not Important

For factor analysis first of all KMO and Bartlett’s Test have been done to understand that whether the data set is suitable for factor analysis or not.

KMO and Bartlett's Test

Kaiser-Meyer-Olkin Measure of Sampling Adequacy. .543

Bartlett's Test of Sphericity

Approx. Chi-Square 108.289df 21Sig. .000

Table 16

Bartlett’s test:

H0: The factor analysis is not valid.

H1: The factor analysis is valid.

The KMO statistic varies between 0 and 1. A value of 0 indicates that the sum of partial correlations is large relative to the sum of correlations, indicating diffusion in the pattern of correlations (hence factor analysis is likely to be inappropriate). A value close to 1 indicates that patterns of correlations are relatively compact and so factor analysis should yield distinct and reliable factors. For the above data the value is 0.543, so we can say that factor analysis is appropriate for the data.

Bartlett’s measure tests the null hypothesis that the original correlation matrix is an identity matrix. The significance value should be less than 0.05. For these data, Bartlett’s test is highly significant as the significance value is less than 0.01 and therefore we reject Ho and conclude that the Factor Analysis is valid.

Communality

Initial Extraction

BRAND 1.000 .625

PREMIUM 1.000 .801

POLICY_TERM 1.000 .526

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CLAIM_SETTLEMENT 1.000 .632

RESPONSIVENESS 1.000 .539

RIDERS 1.000 .675

CHARGES 1.000 .598

Extraction Method: Principal Component Analysis.

Table 17

Communalities indicate the amount of variance explained in each variable. Initial communalities are estimates of the variance in every variable explained by factors. It is always 1 when we do principal components analysis. Extraction communalities indicate estimates of the variance in each variable explained by the factors. Small values indicate variables that do not fit well with the factor solution, and should possibly be dropped from the analysis. Here in this output the communality for all factors is very high. Therefore we can say that Factor Analysis will give a relevant solution.

Total Variance Explained

Component Initial Eigen valuesExtraction Sums of Squared

LoadingsRotation Sums of Squared

Loadings

Total% of

VarianceCumulative

% Total% of

VarianceCumulative

% Total% of

VarianceCumulativ

e %1 1.752 25.023 25.023 1.752 25.023 25.023 1.654 23.631 23.631

2 1.597 22.818 47.841 1.597 22.818 47.841 1.551 22.153 45.784

3 1.047 14.950 62.791 1.047 14.950 62.791 1.191 17.008 62.791

4 .836 11.949 74.741

5 .695 9.929 84.669

6 .628 8.969 93.638

7.445 6.362

100.000

Extraction Method: Principal Component Analysis. Table 18The above table lists the Eigen values associated with each linear factor before extraction, after extraction and after rotation. The eigen values associated with each factor represent the variance explained by that particular linear component. Here the eigen value is also explained in terms of percentage of variance explained. So factor 1explains 25.023% of total variance. If we look at Eigen value table It is seen that only 3 factors have Eigen values above 1. So we conclude that the variables can be reduced to 3 factors.The three factors also show a cumulative variance explanation of 62.791%, which means a good factor analysis has been done.

Rotated Component Matrix

Component

1 2 3BRAND -.030 .507 -.605

PREMIUM -.157 .178 .863

POLICY_TERM .672 .254 -.101

CLAIM_SETTLEMENT .104 .775 .140

RESPONSIVENESS .123 -.719 .086

RIDERS -.763 .278 -.121

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CHARGES .754 -.042 -.166

Extraction Method: Principal Component Analysis. Rotation Method: Varimax with Kaiser Normalization.

a Rotation converged in 5 iterations.

Table 19

Looking at the above table we find that Policy Term, Riders and Charges are highly associated with the first factor, Claim Settlement and Responsiveness with the second factor and Brand and Premium are highly associated with the third factor.

Now these three factors were carefully analyzed and appropriate name was chosen for them like:

FACTOR 1The attributes which contributed highly to the first factor are:

Policy Term Riders Charges

The above three attributes are concerned with the product of the company. Hence we combine them into one factor called PRODUCT.

FACTOR 2The attributes which contributed highly to the second factor are:

Claim Settlement Responsiveness

The above two attributes are related to the service that an insurance company provides. So we can merge the two attributes into one factor called the SERVICE.

FACTOR 3The attributes which contributed highly to the third factor are:

Brand Premium

The above two attributes can be together called the COMPANY IMAGE.

Component Score Coefficient Matrix

Component

1 2 3BRAND -.054 .273 -.481

PREMIUM .007 .193 .752

POLICY_TERM .422 .199 .010

CLAIM_SETTLEMENT .127 .532 .209

RESPONSIVENESS .042 -.458 .018

RIDERS -.471 .125 -.162

CHARGES .448 .002 -.066

Extraction Method: Principal Component Analysis.

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Rotation Method: Varimax with Kaiser Normalization.

Table 20

Calculation of scores for each of the 3 factors:

Component 1 = (0.422*Policy Term)-(0.471*Riders) + (0.448*Charges)Component 2 = (0.532*Claim Settlement)-(0.458*Responsiveness)Component 3 = (-0.481*Brand) + (0.752*Premium)

DISCRIMINANT ANALYSIS

The tables of the analysis are given below with their interpretations followed with each table obtained by

applying discriminant analysis.

Analysis Case Processing Summary

Unweighted Cases N PercentValid 150 100.0

Excluded Missing or out-of-range group codes0 .0

At least one missing discriminating variable 0 .0

Both missing or out-of-range group codes and at least one missing

discriminating variable 0 .0

Total 0 .0

Total 150 100.0

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Table 25

The table above illustrates the authenticity of the data, or in other words, to what percentage is the data used appropriate for the analysis. As can be seen from the table above, the validity of the data is 100 which is a very good value to illustrate that the analysis has been done with appropriate data in the right perspective of the project objective.

Group Statistics

Dependent Mean Std. Deviation Valid N (listwise)

Unweighted Weighted

0 COMPONENT1 .08067 .798271 51 51.000

COMPONENT2 .27714 .932012 51 51.000

COMPONENT3 1.10233 .847225 51 51.000

1 COMPONENT1 2.25544 .835887 99 99.000

COMPONENT2 .18628 .728700 99 99.000

COMPONENT3 .91662 .762415 99 99.000

Total COMPONENT1 1.51602 1.319791 150 150.000

COMPONENT2 .21717 .801628 150 150.000

COMPONENT3 .97976 .794341 150 150.000

Table 26

The table above of group statistics provides with MEAN and STANDARD DEVIATION values under each category.The mean is the average value. The standard deviation measures the variability of the values. We can observe that the mean value of component 1 for the dependent variable 0 and 1 is 0.08067 and 2.25544 respectively and the large difference shows that the component 1 is the discriminating factor between those who prefer to select Pnb Metlife and those who don’t. The values of component 2 and component 3 for 0 and 1 are very close to each other. Whereas the values of component 1 have a big difference. Therefore, we can conclude that component 1 is the most important discriminating variable.

Summary of Canonical Discriminant Functions

Eigen values

Function Eigen value % of Variance Cumulative %Canonical Correlation

11.587(a) 100.0 100.0 .783

a First 1 canonical discriminant functions were used in the analysis. Table 27

Wilks' Lambda

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Test of Function(s)Wilks' Lambda Chi-square Df Sig.

1 .387 139.238 3 .000

Table 28

The above two tables shown below gives the percentage of the variance accounted for by the one discriminant function generated. The significant of the function is also shown.The Eigen value is the ratio of the between-groups sum of squares to the within-groups sum of squares.The canonical correlation measures the association between the discriminant scores and the groups.Wilks's lambda tests the significance of each discriminant function. It is used to test if the discriminant model as a whole is significant or not. Its value lies between 0 and 1. As seen from the output table above, we can conclude that there is a good degree of discrimination between the two sets. This is said so because of a high value of Wilks’s Lambda (.387) which lies between 0 and 1 as discussed.

Standardized Canonical Discriminant Function Coefficients

Function

1

COMPONENT1 1.001

COMPONENT2 .009

COMPONENT3 .003

Table 29

Standardizing the coefficients allows us to examine the relative standing of the measurements. The number of canonical variables is k-1 (where k is the number of groups) or p (the number of variables), whichever is smaller. The coefficients of the canonical variable are used to compute a canonical variable score for each case.

Structure Matrix

Function

1

COMPONENT1 1.000

COMPONENT3 -.089

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COMPONENT2 -.043

Pooled within-groups correlations between discriminating variables and standardized canonical discriminant functions Variables ordered by absolute size of correlation within function.

Table 30

This matrix provides another way to study the usefulness of each variable in the discriminant function.

Functions at Group Centroids

DEPENDENT

Function

1

0-1.743

1.898

Unstandardized canonical discriminant functions evaluated at group means Table 31

Functions at group centroids are the mean discriminant scores for each of the dependent variable categories. The group centroids are quite different for the two groups. For the first canonical variable, the average discriminant or canonical variable score for the dependent 0 is -1.743.

The last three tables from the output listing were generated from the optional selection of Summary table from the Classify options in the Discriminant Analysis dialog box. The last of the table provide an indication of the success rate for prediction of membership of the grouping variable's categories using the discriminant function developed from the analysis.

Classification Processing Summary

Processed 150

Excluded Missing or out-of-range group codes 0

At least one missing discriminating variable 0

Used in Output 150

Table 212

Classification Results(a)

Predicted Group Membership

DEPENDENT 0 1 TOTAL

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Original Count 0 46 5 51

1 6 93 99

% 0 90.2 9.8 100.0

1 6.1 93.9 100.0

a 92.7% of original grouped cases correctly classified.

Table 33

The last table shows that the 0 Dependent is the more accurately classified with 90.2% of the cases correct. For the Dependent 1, 6.1% of cases were correctly classified. Overall, 92.7% of the original cases was correctly classified. So the overall discriminant analysis is correct.

TO FIND WHETHER GENDER BIAS INFLUENCED FOR INVESTING IN LIFE INSURANCE

Table given below shows the data obtained during study of life insurance:

Table 34

Source: Primary Data

Null Hypothesis

(Ho): There is no gender bias for investing in insurance

Alternative Hypothesis

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Having insurance

Not having insurance

Total

Male 51 11 62

Female 75 13 88

Total 126 24 150

(H1): There is gender bias for investing in insurance.

Fo = Observed dataFe= (Row Total * Column Total) / n

Chi square calculations:

Fo Fe Fo-Fe (Fo-Fe)^2 [(Fo-Fe)^2]/Fe51 52.08 -1.08 1.1664 0.0223911 9.92 1.08 1.1664 0.1175875 73.92 1.08 1.1664 0.0157713 14.08 -1.08 1.1664 0.08284

Table 35

Chi square value= 0.02239 + 0.11758 + 0.01577 + 0.08284 = 0.23858

Chi square test

Factor Level of significance

Degree of freedom

Critical value

Chi square

Gender 5% 1 3.841 0.23858

Table 36

Degree of freedom = (Number of rows-1) * (Number of columns -1)

= (2-1) * (2-1) = 1

Result:

Chi square value is less than the chi square critical value.

Hence accept the null hypothesis (Ho)

We can conclude that gender bias doesn’t influence for investing in life insurance.

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FINDINGS FROM THE PROJECT

The findings that can be drawn from the survey conducted by us can be summarized in the following way:

a) The huge untapped market has to be targeted properly by designing products according to their specific requirements.

b) People who belong to different age groups have different perception regarding the most important

criteria before taking the decision on a life insurance policy.

c) People who belong to different income groups also have different perception regarding the important

criteria concerned with the life insurance.

d) Bank Deposits are the most preferred investment alternative which is available to people followed by

alternatives such as Mutual Fund, Insurance, Real Estate, Gold and Silver, etc.

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e) 22 respondents are interested to invest in Pnb Metlife because of the company’s brand image and the

transparency of the company.

f) It was found that nearly 43% of the respondents usually save less than 20 %.

g) Among the 150 respondents, around 38 people had policy of Pnb Metlife.

h) Since the discriminating factor is component 1, so instead of concentrating on all the factors the

company should pay special attention to its product as the result shows that this factor is the main

discriminating factor between those who select Pnb Metlife and those who don’t select it.

i) Gender bias does not influence for investing in life insurance.

RECOMMENDATIONS Consumer should be aware of company’s profile and returns associated with insurance.

The Financial advisor should be right enough to serve the consumers. The consumer should also be

aware of the advisor or others who is looking after their investments.

The company should launch more ULIP plans with small premium and short policy term.

Company should publish their performance by comparing it with their competitors.

Company should adopt strategies to explore that private insurance companies are safer and securer than

public insurance company like LIC.

Attract the youth of India with higher returns of investment as returns are the motivating factor for

purchase of insurance.

Middle income people suggest that premium can be collected on monthly basis instead of twice a year.

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Company’s reputation is more important because bad impression on image or brand name is considered

while decision making among consumers.

In today’s market only that product is sold which is recognized by its logo. The name of the company

should be on the tip of the tongue of all consumers. There are various ways of marketing of life

insurance. All the Integrative marketing communication channels should be used to create a positive

image in the minds of the customer.

CONCLUSIONPnb Metlife India is a young, evolving and a leapfrogging company. The company is on a growing scale. But the market share is still as low as around 4%. The company faces a large amount of competition. Competition will surely cause the market to grow beyond current rates, create a bigger pie and offer additional consumer choices through the introduction of products, services and price options. The company must promote its products through advertising and improve its selling techniques.

From the analysis done, we could understand that the company should target people of age group 41-60 and design products according to their needs. It is also concluded that policy term, riders and charges are the important parameters that people consider before investing in an insurance product. Pnb Metlife should concentrate on its products to sustain itself in the market. A company approaches to the customers through its distribution network. Pnb Metlife should educate and train their advisors in such a way that mis selling is avoided. The unit linked products should be specifically promoted. New innovative products should be launched with a relatively low premium amount and smaller policy term.

In the Indian life insurance market LIC is a major player and though its market share has reduced, the confidence of consumers in LIC is still prevalent. Consumers are very reluctant to invest in the private

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companies inspite of these companies promising more returns. I had to face the same difficulty while selling life insurance of Pnb Metlife to consumers. The market has become very erratic and so money has become dearer.Insurance companies need to come up with affordable investment schemes during such times. They also need to design products for the largely untapped rural markets.

REFERENCES Websites:

Pnb Metlife to milk recession, plans massive expansion [Online] (Updated November 17,2008) Available at: http://ibnlive.in.com/news/Pnb Metlife-to-milk-recession-plans-massive-expansion/78306-7.html

Insurance News [Online] Available at: http://www.indiainfoline.com/Markets/News/SectorNews/Insurance

Inside Pnb Metlife [Online] Available at:http://investor.Pnb Metlife.com/media_files/NYS/MET/reports/met_ar_04/docs/insidemet.html

Life Insurance [Online] Available at : http://www.investopedia.com/university/insurance/insurance7.asp Pnb Metlife India on massive expansion plan [Online] (Updated February 25, 2010) Available at:

http://www.thehindubusinessline.com/blnus/17251733.htm Forte Group, “Rural Insurance: Issues, Challenges and Opportunities”, 2003 [Online]. Available

at: www.docstoc.com/docs/6530475/Indian-Insurance-Market/ Life Insurers in India [Online] Available at : http://www.banknetindia.com/finance/icos.htm

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Life Insurers Turn Tide In February [Online] (March 23, 2010) Available at : http://www.business-standard.com/india/news/life-insurers-turn-tide-in-february/389410/

Life insurance industry gains 68% in new biz [Online] (Updated April,23,2010) Available at : http://www.business-standard.com/india/news/life-insurance-industry-gains-68-in-new-biz/392755/

Pnb Metlife Products [Online] Available at : http://www.pnb Metlife.co.in/Pnb MetlifeIndPlans_Childplan_landing.aspx

Pnb Metlife Management Team [Online] Available at: http://www.pnb Metlife.co.in/Pnb MetlifeAboutus_MgtTeam.aspx

Magazines:

Insurance World (November 2014 issue) Premium Volume 4 (February 2010 issue) Outlook Money (March 2010 issue)

Books:

Jack Kinder and Garry Kinder (ed.) , (November 1995) Secrets Of Successful Insurance Sales P.I. Majumdar and M.G. Diwan (ed.) ,(March 2006) Principles of Insurance IC-01, 12th edition Mr. S. Balachandran, (June 2006) Practice Of Life Assurance IC-02, 7th edition

ANNEXURE

NUMBER OF BRANCHES

INSURERSFOR Q1FY10 FOR Q2 FY10 FOR Q3FY10

ICICI Prudential

2074 2074 1956

Bajaj Allianz 1164 1164 1151 Reliance Life 1145 1174 1247 HDFC Standard

596 600 592

Birla Sun Life 600 600 651 Max New York

711 712 715

Tata AIG 500 500 500

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ING Life 300 300 -Aviva 224 224 208 SBI Life 450 424 500 Kotak Life 203 203 214 Met Life 192 192 195 Bharti Axa Life

167 196 203

Sahara Life 48 48 48 Shriram Life 120 132 -Future Generali

93 93 93

IDBI Fortis 35 35 54 Canara HSBC - 29 29 Aegon Religare

52 52 57

DLF sPramerica

22 22 29

Star Union Dai-ichi

3 - 3

LIC - 2048 3222

Table 37

NUMBER OF ADVISORS

INSURERS FOR Q1FY10 FOR Q2 FY10 FOR Q3FY10

Bajaj Allianz 360000 350000 210000 ICICI Prudential

225000 225000 291000

HDFC Standard

195000 207000 190000

Birla Sun Life 170000 166000 178000 Reliance Life 161093 185703 192347 Tata AIG 135000 150000 150000 Max New York

94600 91454 75832

ING Life 70000 65000 60000

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Kotak Life 40000 44415 33000 SBI Life 70000 70,000 70000 Aviva 30000 37000 37000 Met Life 60000 56072 100000 Shriram Life - 30000 32000 Bharti Axa Life

26400 33000 30000

Future Generali

25000 36000 40000

Sahara Life 13959 6000 6500 IDBI Fortis 7500 7500 8500 Aegon Religare

3500 1500 4500

Canara HSBC - - -DLF Pramerica

450 - 1780

Star Union Dai-ichi

- - 550

LIC 135000 1550000 1421077

Table 38

CAPITAL AND ASSET UNDER MANAGEMENT

INSURERS FOR Q1FY10 FOR Q2 FY10 FOR Q3FY10

ICICI Prudential 47800 47800 47800HDFC Standard 17960 18460 18460MAX New York 17820 17840 17840

Kotak Life 5620 5620 5620Birla Sun Life 20495 21745 22745

Tata AIG 6970 6970 6970SBI Life 10000 10000 10000

Bajaj AllianzING Life

1210710192

1210710192

1210710192

Pnb Metlife 14800 14800 -Reliance Life 27400 28100 28100

Aviva Life 14920 14920 14920

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Sahara Life 2320 2320 -Shriram Life 1250 1250 -

Bharti Axa Life 3930 3930 3930Future Generali 3350 3350 -

IDBI Fortis 4500 4500 4500Canara HSBC 5250 5250 6250

Aegon Religare DLF Pramerica

39501623

46501623

46501623

Star Union Dai-Ichi

- 2500 2500

India First Life - 2000 2000

Table 39

NEW BUSINESS PERFORMANCE

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Table 40

NUMBER OF POLICIES

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INSURERSAPRIL-

DEC FY10

APRIL-DEC FY09

GROWTH(%)

MARKET SHARE

APR-DECFY10

MARKET SHARE

APR-DECFY09

LIC 441,781 294,571 50.0% 65.4 56.3SBI Life 43,923 36,904 19.0% 6.5 7.1 ICICI Prudential 38,329 46,766 -18.0% 5.7 8.9 Bajaj Allianz 25,260 30,030 -15.9% 3.7 5.7 Reliance Life 21,704 23,030 -5.8% 3.2 4.4 Birla Sun Life 20,433 17,887 14.2% 3.0 3.4 HDFC Standard 19,987 18,397 8.6% 3.0 3.5 Max New York 13,658 13,741 -0.6% 2.0 2.6 Tata AIG Life 8,215 7,031 16.8% 1.2 1.3 Kotak Life 7,189 8,722 -17.6% 1.1 1.7 Met Life 6,402 6,921 -7.5% 0.9 1.3 Aviva Life 4,891 5,074 -3.6% 0.7 1.0 ING Life 4,404 4,795 -8.2% 0.7 0.9 Canara HSBC 4,251 1,455 192.1% 0.6 0.3 Star Union Dai-Ichi

2,868 - - 0.4 -

Future Generali 2,849 2,799 1.8% 0.4 0.5 Shriram Life 2,619 2,629 -0.3% 0.4 0.5 Bharti Axa 2,573 1,915 34.4% 0.4 0.4 IDBI Fortis 2,196 1,652 32.9% 0.3 0.3 Sahara Life 866 833 4.0% 0.1 0.2 Aegon Religare 745 116 544.2% 0.1 0.0 DLF Pramerica 191 4.8 3920.7% 0.0 0.0 India First ^ 24.4 - - 0.0 -Industry Total 390,466 347,693 12.3% 100 100

INSURERSAPRIL-DEC

FY10APRIL-DEC

FY09GROWTH

(%)

MARKET SHARE

APR-DECFY10

MARKET SHARE

APR-DECFY09

LIC 23,863,865 20,560,619 16.1 70.5 67.4Reliance Life 1,591,238 1,355,099 17.4 4.7 4.4 Bajaj Allianz 1,459,814 1,808,495 -19.3 4.3 5.9 ICICI Prudential 1,264,402 1,882,539 -32.8 3.7 6.2 Birla Sun Life 1,263,800 811,776 55.7 3.7 2.7 SBI Life 976,963 597,959 63.4 2.9 2.0 Max New York 732,304 900,000 -18.6 2.2 2.9 HDFC Standard 714,468 643,351 11.1 2.1 2.1 Tata AIG 491,943 479,156 2.7 1.5 1.6 Kotak Life 215,097 393,868 -45.4 0.6 1.3 Future Generali 208,365 27,833 648.6 0.6 0.1 ING Life 200,069 241,826 -17.3 0.6 0.8 Met Life 192,045 191,124 0.5 0.6 0.6 Aviva 161,718 257,153 -37.1 0.5 0.8 Bharti Axa Life 112,824 125,886 -10.4 0.3 0.4 Shriram Life 98,743 91,912 7.4 0.3 0.3 Star Union Dai-Ichi

69,666 - - 0.2 0.0

Canara HSBC 65,052 15,784 312.1 0.2 0.1 IDBI Fortis 56,715 46,509 21.9 0.2 0.2 Sahara Life 54,947 67,592 -18.7 0.2 0.2 Aegon Religare 25,100 11,219 123.7 0.1 0.0 India First ^ 13,578 - - 0.0 0.0 DLF Pramerica 11,646 601 1837.8 0.0 0.0 Industry Total 33,844,362 30,510,301 10.93 100 100

Table 41

QUESTIONNAIRE

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Dear Respondent,

This questionnaire is aimed at understanding your perception about life insurance .Your response will be dealt with strict confidentiality and it will be used only for academic purpose. Thank you for spending your valuable time to fill this questionnaire.

1. Name: Gender: Male Female

Contact No:

2. Age Group:

3. Educational Qualification:

4. Occupation:

5. Annual Income Level:

6. What percentage of your Salary do you usually save?

7. Rank these various investment alternatives according to your preferences (1 being highest and 10 lowest):

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41-50

Above 60

Below 30 31-40 51-60

Under Graduate Post Graduate

Others (Specify)………….

Graduate

Employed

Others (Specify)………….

Self Employed

Below 1 Lakh 3.0 - 5 Lakh

Above 5 Lakh

1.0 - 3 Lakh

Less Than 20% 25-30%

Greater Than 30%

20-25%

Serial No.

Investment Alternatives

Rank

1. Bonds and Debentures

2. Equity/Shares

3.Mutual Fund

4. PublicProvident Fund(PPF)

5. Post Office

6. Insurance

7. Bank Fixed Deposits

8. Real Estate

9. Gold & Silver

8. Do you have life Insurance Policy? ( If ‘NO’ then please go to question no. 15)

9. If ‘Yes’ Which Insurance Company Policy do you have?

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NoYes

LIC Birla Sun LifePnb Metlife

ICICI PrudentialOthers (Specify)…….

.

SBI Life

Strongly Disagree

Strongly Disagree

Strongly Disagree

Wider choice of insurance schemes

No Difference

10. Private Life insurance companies provide better investment products than LIC.

11. Private Life insurance companies provide better service products than LIC.

12. LIC would lose its monopoly against the private players?

13. How has privatisation of Life Insurance benefited you?

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Strongly Agree NeutralModerately AgreeDisagree

Strongly Agree NeutralModerately Agree

Disagree

Strongly Agree NeutralModerately Agree

Disagree

New products

Better investment options

Higher Returns

14. What parameters do you look into before you take up a life insurance Policy? And tick

the following parameter according to your importance.

Parameters considered before insurance policy

Highly Important

Important Neutral

Least Important

Not Important

Brand Name of the company

Premium

Policy Term

Claim settlement history

Responsiveness of the company post sales

Riders

Charges

15. Would you like to invest in Pnb Metlife?

16. If, ‘YES’ what will make you to invest in Pnb Metlife?

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Yes No

Brand image Products

Transparency Suitability

Returns

Claim settlement history

17. Among the following Life Insurance Companies in which company

you will be willing to take a life insurance? Rank according to your preference.

18. Suggestions _______________________________________

________________________________________________

________________________________________________

Thank you

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Pnb Metlife Birla SunlifeHDFC Standard Life

SBI Life TATA- AIGICICI Prudential

Reliance Max New YorkBajaj Allianz

Sahara ING Vysya Aviva Dabur

LIC Kotak Mahindra

AXA-Bharti

ING Vysya

Max New York

VARIOUS PAMPHLETS DESIGNED

Figure 21

Figure 22

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Figure 23

RANKING OF THE DIFFERENT INVESTMENT TOOLS

1 2 3 4 5 6 7 8 9 Modal RankBonds and debentures 2 4 21 26 47 9 Equity/ Shares 16 6 8 9 12 24 19 6 6 Mutual fund 9 21 18 9 17 5 6 10 5 2 Public Provident Fund 5 6 10 13 26 18 8 5 9 5 Post office 7 12 7 12 7 12 8 26 8 8 Insurance 19 15 29 20 4 3 2 8 3 Fixed Deposit 35 18 16 10 11 7 3 1 Real estate 9 13 12 21 4 12 8 13 8 4 Gold & silver 9 5 17 15 28 14 12 7

Table 42

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GLOSSARYAccidental Death Benefit - In a life insurance policy, benefit in addition to the death benefit paid to the beneficiary, should death occur due to an accident. There can be certain exclusions as well as time and age limits.

Actuary: The actuary is a specialist who coalesces an understanding of risks and mathematical technique to develop financial products to manage these risks, price these products. He helps in conniving insurance plans and then estimates the financial risk of the company which it takes while selling an insurance policy.

Claim: It is the sum which an insurer has to pay against a policy.

Endowment policy: Endowment policies entitle the insured to receive the amount of the policy on his reaching a certain age and premiums also stops. If death occurs earlier, amount of the policy will be paid at that time and payment of premium will also stop at that time.

Free Look Period: The free-look provision to a policy means a customer has 15 days from the date of the policy's receipt to revisit his purchase decision. This would essentially mean that the policyholder has the time to go through the policy fine print, understand how the policy is going to work and convince him that he needs such a policy before deciding to commit funds every year over the plan tenure. If a customer does decide within the 15-day free-look period that the policy he purchased is not suited to his requirements, the policy can be returned to the company. However, the entire premium paid by him will not be refunded. Costs incurred by the insurance company in the form of stamp duty charges and the cost of a medical check-up, if any, will be deducted before the payout is made.

Group insurance: In Group Insurance, a large number of persons are covered under one contract. The persons covered should belong to an identifiable group, like employees in an organization, members of a club or an organization. The insurance contract is between the insurer and the person representing the group.

Indemnity: Restoration to the victim of a loss by payment, repair or replacement.

Insurance density: Insurance density is defined as per capita expenditure on insurance premium i.e. premium per capita.

Insurance penetration: It is defined as insurance premium as a share of gross domestic product.

Partial Withdrawal: It is a facility provided by life insurance companies in case a person requires funds from the existing policy. There is a maximum cap available to it as per IRDA; a person can withdraw an amount maximum of 25 % of his annual premium subject to current year's premium paid. Here the sum assured can decrease as per proportion to the withdrawal made in some plans. Partial withdrawal is exempt from tax

Policy: The written contract effecting insurance or the certificate thereof, by whatever name called, and including all clause, riders, endorsements, and papers attached thereto and made a part thereof.

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Premium: A periodic payment made on an insurance policy.

Reinsurance: It refers to placing a part of the risk by an insurer with another insurer. The object is to reduce the possible loss to be borne by the original insurer, who pays premiums at the ordinary rates to the reinsurer. Reinsure must pay commission to the original insurer.

Rider: A rider is a clause or condition that is added to a basic policy providing an additional benefit, at the choice of the proposer. For example, a provision that in the event of death of the life assured by accident, the Sum Assured would be double, can be a rider on an Endowment policy. This rider can be added on to a policy under any plan.The option to participate in valuation surplus can also be offered as a rider.

Risk: It is defined as an uncertainty of a financial loss. It is the unintentional decline in or disappearance of value arising from contingency

Salary Savings Scheme (SSS): The SSS is intended to help salary earners. The SSS provides for deduction of the premium every month from the salary. The employee gets his salary only after deduction of premium. The employer sends to the insurer all premia deducted from all employees in a lump sum. The deduction becomes compulsory like Income Tax, Provident Fund and other statutory deductions.

Term Life Insurance Policy: Term life insurance policy covers risk only during the selected term period. If the policyholder survives the term, the risk cover comes to an end. Term life policies are primarily designed to meet the needs of those people who are initially unable to pay the larger premium required for a whole life or an endowment assurance policy. No surrender, loan or paid-up values are granted under term life policies because reserves are not accumulated. If the premium is not paid within the grace period, the policy lapses without acquiring any paid-up value.

Unit Linked Insurance Plans (ULIP): Unit linked insurance plan (ULIP) is life insurance solution that provides for the benefits of protection and flexibility in investment. The investment is denoted as units and is represented by the value that it has attained called as Net Asset Value (NAV). The policy value at any time varies according to the value of the underlying assets at the time.

Underwriting: Insurance underwriting is the process of choosing who and what the insurance company decides to insure. This is based on a risk assessment. It is pretty much the "behind the scenes" work in an insurance company where they determine who is insured and how much in insurance premiums they will charge the insured person. Insurance underwriting also involves choosing who the insurance company will not insure.

Waiver of Premium: A clause in an insurance policy that waives the policyholder's obligation to pay any further premiums should he or she become seriously ill or disabled. A waiver of premium allows people to benefit from an insurance policy, even when they cannot work.

Whole life policy: It is the policy under which the amount of policy will be paid only on death of the insured. Premiums may be payable throughout the life or for a limited period.

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