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Comparative Analysis of Different Unit Linked Insurance Plans inLife Insurance

CONTENTS

PART-I PROJECT

Page No

Abstract 3

Chapter I 4 - 9

Introduction

Objectives Methodology

Limitations

Chapter II 10 -19

Industry Profile

History of Insurance Types of Insurance Insurance sector performance Role of IRDA

Chapter III 20-31

COMPANY PROFILE OF ICICI PRUDENTIAL LIFE INSURANCE

About ICICI PRUDENTIAL

Vision

Products

Recent developments

Promotion

Brand values

COMPANY PROFILE OF BIRLA SUN LIFE INSURANCE [BSLI] About the History of BSLI Vision Mission Values

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COMPANY PROFILE OF HDFC STANDARD LIFE INSURANCE

About the HDFC and partnership Mission Values Incorporation of HDFC life insurance

Chapter IV 32-39

THEORETICAL BACKGROUND

Unit Linked Insurance Plan [ULIP]

ULIP-Key Features

Cover plus

Market Factoid

How to pick the best ULIP fund category

Chapter V 40-100

Data collection Analysis

Chapter VI 101-104

Findings Suggestions

Conclusion

References

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ABSTRACT

The insurance industry provides protection against financial lossesresulting from a variety of perils. By purchasing insurance policies,

individuals and businesses can receive reimbursement for losses due tounforeseen accidents, theft of property, and fire and storm damage;medical expenses; and loss of income due to disability or death.

ICICI Prudential Life Insurance Company Limited is a 74:26 joint venturebetween ICICI Bank and Prudential plc UK. The company brings togetherthe local market expertise and financial strength of ICICI Bank andPrudentials international life insurance experience. The company wasgranted a Certificate of Registration by the IRDA on November 24,2000and issued its first policy on December 12,2000

Unit Linked Insurance Plan [ULIP]: A policy which provides for lifeinsurance where the policy value at any time varies according to the valueof the underlying assets at the time.

ULIP is life insurance solution that provides the client with the benefits ofprotection and flexibility in investment.

ULIP came into play in the 1960s and became very popular because of thetransparency and the flexibility, which it offers to the clients.

For the present comparative study I have chosen two private players inlife insurance-Birla Sun Life Insurance [BSLI] and HDFC Standard Life

Insurance .The comparative study helps the investors to know thequalitative and quantitative features of the different ULIP plans providingby these companies.

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Introduction

Objectives

Methodology

Limitations

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INTRODUCTION

INSURANCE

"Insurance is a contract between two parties whereby one partycalled insurer undertakes in exchange for a fixed sum calledpremiums, to pay the other party called insured a fixed amount ofmoney on the happening of a certain event."

Insurance is a protection against financial loss arising on thehappening of an unexpected event. Insurance companies collectpremiums to provide for this protection. A loss is paid out of thepremiums collected from the insuring public and the InsuranceCompanies act as trustees to the amount collected.

For Example, in a Life Policy, by paying a premium to the Insurer, thefamily of the insured person receives a fixed compensation on thedeath of the insured.

Similarly, in a car insurance, in the event of the car meeting with anaccident, the insured receives the compensation to the extent ofdamage.

It is a system by which the losses suffered by a few are spread over many,

exposed to similar risks.

TYPES OF INSURANCE:

LIFE INSURANCE

Life insurance is a critical part of your long term financial planning.Every person with dependents should have life insurance. Life Insurance isparticularly important if you are the sole breadwinner for your family. The

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loss of you and your income could devastate your family. Life insurance

will ensure that if anything happens to you, your loved ones will be able tomanage financially.

Life insurance is all about making sure your family has adequatefinancial resources to make those plans and dreams come true. Itprovides financial protection to help your family or business tomanage after your death.

SUB TYPES OF LIFE INSURANCE:

Whole life policies - Cover the insured for life. The insured does notreceive money while he is alive; the nominee receives the sumassured plus bonus upon death of the insured..

Endowment policies - Cover the insured for a specific period. Theinsured receives money on survival of the term and is not coveredthereafter.

Money back policies - The nominee receives money immediately ondeath of the insured. On survival the insured receives money atregular intervals during the term. These policies cost more thanendowment with profit policies.

Annuities / Children's policies - The nominee receives aguaranteed amount of money at a pre-determined time and notimmediately on death of the insured. On survival the insured receivesmoney at the same pre-determined time. These policies are bestsuited for planning children's future education and marriage costs.

Pension schemes - are policies that provide benefits to the insuredonly upon retirement. If the insured dies during the term of the policy,his nominee would receive the benefits either as a lump sum or as apension every month.

Since a single policy cannot meet all the insurance objectives, oneshould have a portfolio of policies covering all the needs.

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INSURANCE GENERAL:

Every asset has a value and the business of general insuranceis related to the protection of economic value of assets. Assets wouldhave been created through the efforts of owner, which can be in theform of building, vehicles, machinery and other tangible properties.Since tangible property has a physical shape and consistency, it issubject to many risks ranging from fire, allied perils to theft androbbery.

Concepts of insurance have been extended beyond the coverage oftangible asset. Now the risk of losses due to sudden changes incurrency exchange rates, political disturbance, negligence andliability for the damages can also be covered.

But if a person judiciously invests in insurance for his property prior toany unexpected contingency then he will be suitably compensated forhis loss as soon as the extent of damage is ascertained.

SUB TYPES OF GENERAL INSURANCE:

Property Insurance: The home is most valued possession. Thepolicy is designed to cover the various risks under a single policy. Itprovides protection for property and interest of the insured andfamily.

Health Insurance: It provides cover, which takes care of medicalexpenses following hospitalization from sudden illness or accident.

Personal Accident Insurance: This insurance policy provides

compensation for loss of life or injury (partial or permanent) causedby an accident. This includes reimbursement of cost of treatment andthe use of hospital facilities for the treatment.

Travel Insurance: The policy covers the insured against variouseventualities while traveling abroad. It covers the insured againstpersonal accident, medical expenses and repatriation, loss of checkedbaggage, passport etc.

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Liability Insurance: This policy indemnifies the Directors or Officers

or other professionals against loss arising from claims made againstthem by reason of any wrongful Act in their Official capacity.

Motor Insurance: Motor Vehicles Act states that every motorvehicle plying on the road has to be insured, with at least Liabilityonly policy. There are two types of policy one covering the act ofliability, while other covers insurers all liability and damage caused toone's vehicles.

Since a single policy cannot meet all the insurance objectives, oneshould have a portfolio of policies covering all the needs

OBJECTIVES

TO know what is insurance, how it works and to get practical

knowledge of work.

To know what is ULIP and how it works.

Proper understanding and analysis the ULIP PLANS OF ICICI

PRUDENTIAL .

To know the qualitative and quantitative benefits of different ULIP

plans.

To know who are the active competitors to ICICI PRUDENTIAL.

To know the ULIP products offered by the competitors.

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To study how ICICI Prudentials ULIP products different from its

competitors ULIP products.

METHODOLOGY OF THE STUDY

In order to achieve the objective set out above, the following

methodology was adopted and data will be collected from two sources,

they are-

PRIMARY DATA: data which is collected for the first time keeping in viewthe objective of study is known as primary data. It is collected from the

respective Company Guide of ICICI Prudential and visited competitors

company and discussed with Advisors of respective companies about the

ULIP Plans offering by them.

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SECONDARY DATA: data available from certain publications or reports

are called secondary data. Such data are already collected by some other

agencies in the past for some other purpose but used for the investigation

of current problem. The sources of secondary data are magazines,

research papers, newspapers, government publication, Internet etc. For

the current study it was collected from the respective company

brochures and company website.

LIMITATIONS OF THE STUDY

Collecting the information regarding ULIP plans is difficult.

The numbers of ULIP Plans providing by all the companies is more,

for the current study I have chosen 3 Products of ICICI Prudential

and compared within the products and taken 2 more products of

ICICI Prudential and compared 2 products with Competitors.

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It is difficult to compare one ULIP plan with another ULIP plan.

The given time for doing project is limited.

The data collected for the study is inadequate.

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Industry Profile

History of Insurance

Types of Insurance

Insurance sector performance

Role of IRDA

INDUSTRY PROFILE:

THE HISTORY OF INSURANCE:

As with so many things in so many things in so many facts of ourlife, insurance too was born out of a primal need and shaped by socioeconomic realities of the time. The story goes back to around 2100 BC,the time ancient civilization of Babylon and a business practice calledBottomry. For all practical purposes a form of marine insurance,

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bottomry enabled ship owners to borrow money against their ships to pay

for the trip. With piracy rampant of high seas, traders and seafarers werereluctant to sale to other lands for fear of their lives and goods. Bottomrygive them some semblance of security. The arrangement was that only iftheir ship returned did trader have to repay the loan, along with interest,which was pegged at an above market rate for risk covered. So, if theirship failed to make it back, they did not have to repay loan, there bycovering some or the loss.

The insurance sector in India has come a full circle from being anopen competitive market to nationalization and back to a liberalizedmarket again. Tracing the developments in the Indian insurance sector

reveals the 360 degree turn witnessed over a period of almost twocenturies.

The business of life insurance in India in its existing form started inIndia in the year 1818 with the establishment of the Oriental LifeInsurance Company in Calcutta.

Some of the important milestones in the life insurancebusiness in India are:

1912: The Indian Life Assurance Companies Act enacted as the first

statute to regulate the life insurance business.

1928: The Indian Insurance Companies Act enacted to enable thegovernment to collect statistical information about both life and

nonlife insurance businesses.

1938: Earlier legislation consolidated and amended to by the InsuranceAct with the objective of protecting the interests of the insuring public.

1956: 245 Indian and foreign insurers and provident societies taken overby the central government and nationalized. LIC formed by an Act of

Parliament, viz. LIC Act,1956, with a capital contribution ofRs.5crore

from the Government of India.

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The General insurance business in India, on the other hand, can

trace its roots to the Triton Insurance Company Ltd., the first generalinsurance company established in the year 1850 in Calcutta by theBritish.

Some of the important milestones in the generalinsurance business in India are:

1907: The Indian Mercantile Insurance Ltd. set up, the first company totransact all classes of general insurance business.

1957: General Insurance Council, a wing of the Insurance Association of

India, frames a code of conduct for ensuring fair conduct andsound business practices.

1968: The Insurance Act amended to regulate investments and setminimum solvency margins and the Tariff Advisory Committee set up.

1972: The General Insurance Business (Nationalization) Act, 1972nationalized the general insurance business in India with

effect from 1st January 1973.107 insurers amalgamated and grouped into four companies viz.

the National

Insurance Company Ltd., the New India Assurance Company Ltd.,theOriental Insurance Company Ltd. and the United India InsuranceCompany. GIC incorporated as a company.

INSURANCE SECTOR REFORMS

In 1993, Malhotra Committee headed by former Finance Secretaryand RBI Governor R.N. Malhotra, was formed to evaluate the Indianinsurance industry and recommend its future direction. The Malhotra

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committee was set up with the objective of complementing the reforms

initiated in the financial sector.The reforms were aimed at creating a more efficient and competitivefinancial system suitable for the requirements of the economy keeping inmind the structural changes currently underway and recognizing thatinsurance is an important part of the overall financial system where it wasnecessary to address the need for similar reformsIn 1994, the committee submitted the report and some of the keyrecommendations included:

i) Structure

Government stake in the insurance Companies to be brought downto 50%

Government should take over the holdings of GIC and itssubsidiaries so that these subsidiaries can act as independentcorporations

All the insurance companies should be given greater freedom tooperate

ii) Competition

Private Companies with a minimum paid up capital of Rs.1bn shouldbe allowed to enter the industry

No Company should deal in both Life and General Insurance througha single entity

Foreign companies may be allowed to enter the industry incollaboration with the domestic companies

Postal Life Insurance should be allowed to operate in the ruralmarketOnly one State Level Life Insurance Company should be allowed to operate in each state

iii) Regulatory Body

The Insurance Act should be changed

An Insurance Regulatory body should be set up Controller ofInsurance (Currently a part from the Finance Ministry) should bemade independent

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iv) Investments

Mandatory Investments of LIC Life Fund in government securities to be reduced from 75% to 50%

GIC and its subsidiaries are not to hold more than 5% in any company (There current holdings to be brought down to this levelover a period of time)

v) Customer Service

LIC should pay interest on delays in payments beyond 30 days

Insurance companies must be encouraged to set up unit linked pension plans

Computerization of operations and updating of technology to be carried out in the insurance industry The committee emphasizedthat in order to improve the customer services and increase thecoverage of the insurance industry should be opened up tocompetition. But at the same time, the committee felt the need toexercise caution as any failure on the part of new players could ruinthe public confidence in the industry.

Hence, it was decided to allow competition in a limited way by

stipulating the minimum capital requirement of Rs.100 crores. Thecommittee felt the need to provide greater autonomy to insurancecompanies in order to improve their performance and enable them to actas independent companies with economic motives. For this purpose, ithad proposed setting up an independent regulatory body.

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INSURANCE REGULATORY AND DEVELOPMENT

AUTHORITY ACT - 1999. (I.R.D.A)

Mission: To protect the interests of the

policyholders, to regulate, promote and ensure

orderly growth of the insurance industry and for

matters connected therewith or incidental thereto.

Reforms in the Insurance sector were initiated with the passage of the

IRDA Bill in Parliament in December 1999. The IRDA since its

incorporation as a statutory body in April 2000 has fastidiously

stuck to its schedule of framing regulations and registering the

private sector insurance companies.

The other decisions taken simultaneously to provide the supporting

systems to the insurance sector and in particular the life insurance

companies was the launch of the IRDAs online service for issue and

renewal of licenses to agents.

The approval of institutions for imparting training to agents has also

ensured that the insurance companies would have a trained workforce of

insurance agents in place to sell their products.

Since being set up as an independent statutory body the IRDA has put in a

framework of globally compatible regulations. In the private sector 13 lifeinsurance and 6 general insurance companies have been registered.

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Duties, Powers and functions of Authority:

The powers and functions of the authority include registration of

insurers, intermediaries and agents regulations of terms and

conditions of contract of insurance, promoting and regulating

professional organizations connected with the insurance, monitoring

investment of funds and solvency margin of insurance companies.

The authority is to be advised by a committee to be known as the

insurance advisory committee, which shall consists of not more than

25 members including ex-officio members in the insurance sector. The

insurance advisory committee is expected to advice the authority on

matters relating to making of the regulations

An Indian insurance company has been defined as a company

incorporated under the Companies Act - 1956 and the paid capital ofGeneral Insurance business will have to be not less than Rs 100/-

Crores and in case of companies wanting to transact reinsurance

business the paid capital will have to not less than Rs 200/- Crores.

It has also been notified that every insurance company will have to

appoint an Actuary to be approved by I.R.D.A. The duty of the Actuary

is to insure that

The assets are valued in appropriate manner

The liabilities are evaluated as required

The prescribed margin for maintaining solvency is complied with.

The I.R.D.A also issued regulations with regards to advertisement so as

to include almost any public communication for a sale of insurance

policy

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INSURANCE PLAYERS AND THEIR MARKET SHARE ININDIA[MAY,2005]

COMPANY PROFILE OF ICICI PRUDENTIAL LIFE INSURANCE

About ICICI PRUDENTIAL

Vision

Products

Recent developments

Promotion

Brand values

COMPANY PROFILE OF BIRLA SUN LIFE INSURANCE [BSLI]

About the History of BSLI

Vision

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Mission

Values

COMPANY PROFILE OF HDFC STANDARD LIFE INSURANCE

About the HDFC and partnership

Mission

Values

Incorporation of HDFC life insurance

COMPANY PROFILE

ICICI Prudential Life Insurance Company is a joint venture between ICICI

Bank, a premier financial powerhouse and Prudential plc, a leading

international financial services group headquartered in the United

Kingdom. ICICI Prudential was amongst the first private sector insurance

companies to begin operations in December 2000 after receiving approval

from Insurance Regulatory Development Authority (IRDA).

ICICI Prudential's equity base stands at Rs. 9.25 billion with ICICI Bank

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and Prudential plc holding 74% and 26% stake respectively. In the

financial year ended March 31, 2005, the company garnered Rs 1584

crore of new business premium for a total sum assured of Rs 13,780 crore

and wrote nearly 615,000 policies. The total sum assured crossed 30000

crores. The total policies are 1.4 million. The company has a network of

about 80,000 advisors; as well as 7 banc assurance and 150 corporate

agent tie-ups. For the past four years, ICICI Prudential has retained its

position as the No. 1 private life insurer in the country, with a wide range

of flexible products that meet the needs of the Indian customer at every

step in life.

VISION:

To make ICICI Prudential the dominant Life and Pensions playerbuilt on trust by world-class people and service.

This we hope to achieve by:

Understanding the needs of customers and offering themsuperior products and service

Leveraging technology to service customers quickly, efficientlyand conveniently

Developing and implementing superior risk management andinvestment strategies to offer sustainable and stable returns toour policyholders

Providing an enabling environment to foster growth and learning forour employees

And above all, building transparency in all our dealings.

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The success of the company will be founded in its unflinching commitment

to 5 core values -- Integrity, Customer First, Boundaryless, Ownership andPassion. Each of the values describe what the company stands for, thequalities of our people and the way we work. We do believe that we are onthe threshold of an exciting new opportunity, where we can play asignificant role in redefining and reshaping the sector. Given the quality ofour parentage and the commitment of our team, there are no limits to ourgrowth.

PRODUCTS

ICICI Prudentials ultimate promise is financial security. A strongbrand certainly boosts sales but without customer friendly innovativeproducts, even the best brand would not last long.

ICICI Prudentials product range has been developed on the understanding

that different people have their own sets of needs at various stages oftheir lives. It has thus built a flexible portfolio of products that can becustomized to cater to varying needs of people at each life stage, andthus ensure protection in every step of life. The companys philosophy hasbeen to help customers understand their financial needs and work closelywith them to customize a product that would meet this need.

Insurance Solutions for Individuals

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ICICI Prudential Life Insurance offers a range of innovative, customer-

centric products that meet the needs of customers at every life stage. Its20 products can be enhanced with up to 6 riders, to create a customizedsolution for each policyholder.

Savings Solutions

Secure Plus is a transparent and feature-packed savings plan thatoffers 3 levels of protection.

Cash Plus is a transparent, feature-packed savings plan that offers3 levels of protection as well as liquidity options.

Save?n?Protect is a traditional endowment savings plan that

offers life protection along with adequate returns. Cash Bak is an anticipated endowment policy ideal for meetingmilestone expenses like a child?s marriage, expenses for a child?shigher education or purchase of an asset.

LifeTime & LifeTime II offer customers the flexibility and controlto customize the policy to meet the changing needs at different lifestages. Each offer 4 fund options ? Preserver, Protector, Balancerand Maxi miser.

Life Link II is a single premium Market Linked Insurance Plan whichcombines life insurance cover with the opportunity to stay investedin the stock market.

Premier Life is a limited premium paying plan that offerscustomers life insurance cover till the age of 75.

Invest Shield Life is a Market Linked plan that provides capitalguarantee on the invested premiums and declared bonus interest.

Invest Shield Cash is a Market Linked plan that provides capital

guarantee on the invested premiums and declared bonus interestalong with flexible liquidity options.

Invest Shield Gold is a Market Linked plan that provides capitalguarantee on the invested premiums and declared bonus interestalong with limited premium payment terms.

Protection Solutions

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Lifeguard is a protection plan, which offers life cover at very low cost. It

is available in 3 options ? level term assurance, level term assurance withreturn of premium and single premium.Child PlansSmart Kid education plans provide guaranteed educational benefits to achild along with life insurance cover for the parent who purchases thepolicy. The policy is designed to provide money at important milestones inthe childs life. Smart Kid plans are also available in unit-linked form ?both single premium and regular premium.

Retirement Solutions

Forever Life is a retirement product targeted at individuals in theirthirties. Secure Plus Pension is a flexible pension plan that allows one to

select between 3 levels of cover.

Market-linked retirement products

LifeTime Pension II is a regular premium market-linked pensionplan

Life Link Pension II is a single premium market-linked pensionplan.

Invest Shield Pension is a regular premium pension plan with acapital guarantee on the ingestible premium and declared bonuses.

ICICI Prudential also launched ?Salaam Zindagi?, a social sector groupinsurance policy targeted at the economically underprivileged sections ofthe society.

Group Insurance Solutions

ICICI Prudential also offers Group Insurance Solutions for companiesseeking to enhance benefits to their employees.ICICI Pru Group Gratuity Plan: ICICI Pru?s group gratuity plan helpsemployers fund their statutory gratuity obligation in a scientific manner.

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The plan can also be customized to structure schemes that can provide

benefits beyond the statutory obligations.ICICI Pru Group Superannuation Plan: ICICI Pru offers a flexibledefined contribution superannuation scheme to provide a retirement kittyfor each member of the group. Employees have the option of choosingfrom various annuity options or opting for a partial commutation of theannuity at the time of retirement.ICICI Pru Group Term Plan: ICICI Pru?s flexible group term solutionhelps provide affordable cover to members of a group. The cover could beuniform or based on designation/rank or a multiple of salary. The benefitunder the policy is paid to the beneficiary nominated by the member onhis/her death.

RECENT DEVELOPMENTS

In keeping with the belief that a happy customer is the bestendorsement .ICICI Prudential has embraced the Six Sigma approachto quality, an exercise that begins and ends with the customer fromcapturing his voice to measuring and responding to his experiences.This initiative is currently helping the company improve processes,turnaround times and customer satisfaction levels. Another novelintroduction is the ICICI Prudential Lifestyle rewards Club, Indias firstrewards programme for Life Advisors it allows ICICI Prudential Advisors

to redeem points for items ranging from kitchenware to gold, whitegoods, and even international holidays.

PROMOTION

ICICI Prudential is a case study in how advertising and marketingcan play a vial role in re shaping an industry. It has demonstrated howan industry where the customer was nothing more than a policy

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number has changed to one where customer preference rules the

roost.Brand building in a complex category like life insurance is an

uphill and multi faceted task. At the time of launching operations, thecommunications task was to build credibility, so as to give thecustomer the confidence that it was a company that could be trustedto invest funds with . the aim was to encourage people to viewinsurance not as a compulsory tax saving instrument , but as a meansto lead a worry-free , secure life and in the process, create thedifferentiator for brand ICICI Prudential.

The brand proposition for all the campaigns was reflected in the line:Suraksha: Zindagi ke har kadam par. The campaign featured a

significant competitive advantage, the sound financial backing andcredentials of ICICI and Prudential, and showcased products from differentsegments. The advertising idea was encapsulated in the symbol ofprotection-the Sindoor. This campaign contributed extensively to raisingbrand awareness and creating a distinctive identity for the company.

At the same time the theme of protection was carried forward withICICI Prudentials Safe Puja contest where Puja Pandals contested to bethe Safest Puja Pandal. This beautifully tied in the concept of protectionwith the popular local event of Durga Puja. The refreshingly differentRetire from work, not life campaign succeeded in bringing retirementplanning into the consideration set of a younger target audience, and wona Silver Effie for its efforts. The media campaign was complemented by

seminars to spread awareness about the need for retirement planning.Very recently, the company launched a new corporate campaign-an

extension of the Sindoor communication which aims at reassuringcustomers that the company is committed to staying with them throughall the ups and downs in life, using marriage and the seven vows or SaatPheras as a metaphor for commitment. The campaign aims atstrengthening the brand by memorably bringing out the commitment forlife element continuous efforts to reach out to customers in new andinnovative ways, the company recently tied up with the Forbes Six Sigmarated Dabbawalla organisation in Mumbai for a direct marketing exercise.In a unique effort to create awareness about a tax-saving product, the

company attached a creative of a bitten apple to Mumbais ubiquitouslunchboxes. It worked wonderfully with Mumbais office-goers and onethat translated into substantial business for the company.

BRAND VALUES

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Market research reveals that the values people associate with ICICI

Prudential are, indeed, those that the company hopes to project:lifelong protection and value for money. The core value is protectingyour loved ones, throughout lifes ups and downs. It is a powerfulproposition: one, which ICICI Prudential, is taking into the marketplace.

THINGS DIDNT KNOW ABOUT ICICI PRUDENTIAL

The logo is the combination of ICICI Banks I-man and Prudentials

lady prudence. The I-man signifies the dynamic individual with drive

and conviction, while Prudence epitomizes wise conduct.

Every three minutes ICICI Prudential protects one more Indian life.

ICICI Prudential is the only Indian life insurance company to have an

equity base of more than rupees 5bn.

ICICI Prudential is the only life insurance company to implement a six

sigma quality programme.

Of the companys 2000+ employees, less than 5% have prior experience in the life

insurance industry.

The average age of its employees is 29 years.

COMPANY PROFILE

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BIRLA SUN LIFE INSURANCE

A collaboration of the US$ 6.0 billion Aditya Birla Group and the US$16.7billion Sun Life Financial of Canada, the group brings together global andIndian expertise to the area of financial services.

Vision

To be a world class provider of financial security to individuals andcorporates and to be amongst the top three private sector life insurancecompanies in India.

Mission

To be the first preference of our customers by providing innovative, needbased life insurance and retirement solutions to individuals as well ascorporates. These solutions will be made available by well-trainedprofessionals through a multi channel distribution network and superiortechnology.

Our endeavour will be to provide constant value addition to customers

throughout their relationship with us, within the regulatory framework. Wewill provide career development opportunities to our employees and thehighest possible returns to our shareholders.

VALUES

Integrity Transparency Customer Focus Excellence Innovation

Meritocracy Respect for the Individual

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COMPANY PROFILE

HDFC STANDARD LIFE INSURANCE

THE PARTNERSHIP

HDFC and Standard Life first came together for a possible joint venture, toenter the Life Insurance market, in January 1995. It was clear from theoutset that both companies shared similar values and beliefs and a strongrelationship quickly formed. In October 1995 the companies signed a 3

year joint venture agreement.

Around this time Standard Life purchased a 5% stake in HDFC, furtherstrengthening the relationship.

The next three years were filled with uncertainty, due to changes ingovernment and ongoing delays in getting the IRDA (Insurance Regulatoryand Development authority) Act passed in parliament. Despite this bothcompanies remained firmly committed to the venture.

In October 1998, the joint venture agreement was renewed and additional

resource made available. Around this time Standard Life purchased 2% ofInfrastructure Development Finance Company Ltd. (IDFC). Standard Lifealso started to use the services of the HDFC Treasury department toadvise them upon their investments in India.

Towards the end of 1999, the opening of the market looked verypromising and both companies agreed the time was right to move theoperation to the next level. Therefore, in January 2000 an expert teamfrom the UK joined a hand picked team from HDFC to form the coreproject team, based in Mumbai.

Around this time Standard Life purchased a further 5% stake in HDFC anda 5% stake in HDFC Bank.

In a further development Standard Life agreed to participate in the AssetManagement Company promoted by HDFC to enter the mutual fundmarket. The Mutual Fund was launched on 20th July 2000.

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INCORPORATION OF HDFC STANDARD LIFE INSURANCE COMPANYLIMITED:

The company was incorporated on 14th August 2000 under the name ofHDFC Standard Life Insurance Company Limited.

Our ambition from as far back as October 1995, was to be the first privatecompany to re-enter the life insurance market in India. On the 23rd ofOctober 2000, this ambition was realised when HDFC Standard Life wasthe only life company to be granted a certificate of registration.

HDFC are the main shareholders in HDFC Standard Life, with 81.4%, whileStandard Life owns 18.6%. Given Standard Life's existing investment inthe HDFC Group, this is the maximum investment allowed under currentregulations.

HDFC and Standard Life have a long and close relationship built uponshared values and trust. The ambition of HDFC Standard Life is to mirrorthe success of the parent companies and be the yardstick by which allother insurance company's in India are measured.

MISSION:

We aim to be the top new life insurance company in the market.

This does not just mean being the largest or the most productive companyin the market, rather it is a combination of several things like-

Customer service of the highest order Value for money for customers Professionalism in carrying out business Innovative products to cater to different needs of different

customers

Use of technology to improve service standards Increasing market share

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THEORETICAL BACKGROUND

Unit Linked Insurance Plan [ULIP]

ULIP-Key Features

Market Factoid

How to pick the best ULIP fund category

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UNIT LIKED INSURANCE PLAN (ULIP)

Insurance is a provision against risk and it is a device with which

man tries to protect himself from risk in life. The recent development inthe financial innovation is Unit Link Insurance Policy (ULIP), whichcovers the concept of insurance.

A Unit Link Insurance Policy (ULIP) is one in which the customer isprovided with a life insurance cover and the premium paid is invested ineither debt or equity products or a combination of the two. In other words,it enables the buyer to secure some protection for his family in the eventof his untimely death and at the same time provides him an opportunityto earn a return on his premium paid. In the event of the insured person'suntimely death, his nominees would normally receive an amount that isthe higher of the sum assured or the value of the units (investments). To

put it simply, ULIP attempts to fulfill investment needs of an investor withprotection/insurance needs of an insurance seeker. It saves theinvestor/insurance-seeker the hassles of managing and tracking aportfolio or products.

Various Schemes

However, there are some schemes in which the policyholder receives thesum assured plus the value of the investments. Various schemes have

been tailored to suit different customer profiles and, in that sense, offer agreat deal of choice. The advantage of ULIP is that since the investmentsare made for long periods, the chances of earning a decent return arehigh. Just as in the case of mutual funds, buyers who are risk averse canbuy debt schemes while those who have an appetite for risk can opt forbalanced or equity schemes.

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ULIP - Key Features

1. Premiums paid can be single, regular or variable. The paymentperiod too can be regular or variable. The risk cover can beincreased or decreased.

2. As in all insurance policies, the risk charge (mortality rate) varieswith age.

3. The maturity benefit is not typically a fixed amount and thematurity period can be advanced or extended.

4. Investments can be made in gilt funds, balanced funds, money

market funds, growth funds or bonds.

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

6. The maturity benefit is the net asset value of the units.

7. The costs in ULIP are higher because there is a life insurancecomponent in it as well, in addition to the investment component.

8. Insurance companies have the discretion to decide on theirinvestment portfolios.

9. They are simple, clear, and easy to understand.

10. Being transparent the policyholder gets the entire episode onthe performance of his fund.

11. Lead to an efficient utilisation of capital.

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12. ULIP products are exempted from tax and they provide life

insurance.

13. Provides capital appreciation.

14. Investor gets an option to choose among debt, balanced andequity funds.

Cover-Plus

In a sense, unit-linked plans work like endowment plans-they combineinsurance with investment. A part of the premium you pay goes towardsbuying you insurance cover and what's left of the rest (after deducting ahost of charges-from fund management to administration expenses) isinvested in equity and debt instruments. The investment component ofthe premium is converted into units-much like mutual fund units, to bebought and sold at the prevailing Net Asset Value (NAV); your premiums

are unitised through the policy tenure, typically 15 or 20 years.Investment gains will accrue from an appreciation in the value of yourunits, and information on this is put out regularly by insurers.

Expenses

One area where unit-linked plans come in for widespread criticism relatesto the expenses that insurers charge under three broad heads: mortalitycharges (which goes towards paying for your insurance cover), generalexpenses (agents' commissions and underwriting costs), and fundmanagement costs. The second head, general expenses, accounts for thebiggest component-typically, around 40 per cent (of the premium paid) in

the first two years, which goes down sharply in later years. The actualexpense structure may vary from one product to another depending on,among other things, the amount invested, the investment tenure and theperiod beyond which withdraws are permitted.

Should Investor Opt for ULIP

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First and foremost, investors need to understand that a ULIP is a bundled

product of their investment and their insurance proceeds. So if you have aULIP invest in equities, you are exposing your life insurance monies aswell as your investible surplus to the vagaries of equity market. While it isfine and even sensible to let your investible assets get an equity flavour,the same cannot be said about your life insurance monies, which to alarge extent should be scared.

A ULIP policyholder has the option to invest in a variety funds, dependingon his risk profile. If one does not have appetite to invest in equity, theycan choose a debt or balanced fund. However, the structure of a ULIPtakes care of quite a bit of the uncertainty in the markets. Insurance

companies understand the need to give insurance seekers the flexibility torethink their investment strategy in view of market histrionics. It is theinvestors to make the right switch they need to track markets actively andbe well informed, which is actually the job of the investmentadvisor/consultant.

ULIP is suitable for individuals who are already adequately insured and arereasonably well informed and savvy to take active investment decisionsby using the 'switch option' that is provided to a ULIP policyholder. Alsopolicyholders with regular endowment plans that are not satisfied with the4-6 per cent returns can consider taking a ULIP with a lower equitycomponent.

Market Factoid

1. The growth options of ULIP have recorded annualised returns ofover 20 per cent.

2. Various charges amounting to approximately 25 per cent in theinitial years in all the schemes.

3. Most companies normally allow customers to switch, a fixednumber of times annually from one fund to other fund. Later, theycharge approximately Rs.100 per switch.

4. Private insurance companies 50 per cent sales up because ofULIPs today.

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5. Individuals availing tax exemption under section 88 of Income

Tax Act.

6. New Schemes coming into the market, which covers lifeinsurance and accident insurance.

HOW TO PICK THE BEST ULIP FUND CATEGORY

ULIP's today offer fund options like equity, debt, balanced, money-market, gilt and many more. These funds require an individual to keephis funds locked in for a considerable period of time. It is a known factthat the two main categories of investments - debt and equities varyvastly in their risk and return profile. While debt is less risky and offerslow returns, equities are high risk but have the capacity to offer highreturns. Time period also is a factor. Equities, say experts, are learnt toprove much more profitable when invested in the long run.

It is your risk profile and appetite that will determine which fund wouldbe the best for you. And if you think risk cannot be measured, then youare only partly correct. Risk is a culmination of various factors. Thequantum or risk that you can take is linked to your responsibilities.Some of the parameters that you might want to consider in order toassess your risk capacity are whether you are single or you have adependent wife, whether you have dependent children, whether

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you have dependent parents, how many more working years do you

have in you and how long will it be before your retire. So rememberthat what fund may be good for your neighbor may not necessarily bethe best for you. Also remember that allocation would depend on theoverall outlook of the economy

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Insurance companies offer a very good way around this issue.Companies will allow you to shift between funds. So for instance, if youbuy a policy with an equity-linked option when you are young andsingle, few years later you can shift to a balanced fund and then whenyou think that you have taken enough risks, you can stay put in a debtfund.

Status Risk profile Who standsto lose if there is a loss

Assetallocation

Age 25 -Single

Can take onhigh risk

Only you but itsokay since youare still youngand have along way to go

85% equities5% bonds10% liquidassets

Age 30 -Married withno kids

Can still takeon high risksas you are stillyoung

You and yourwife

80% equities10% debt10% liquidassets

Age 33 -Married withdependentkids

Must balancerisks

You, your wifeand your kids(theireducation)


Age 58 Kidsare notdependentanymore

Cannot affordto take risks

You and yourwife but thistime its notokay since youwill retire soonand there will

be no incomeflow


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Data collection

Analysis

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PRODUCT DETAILS AND COMPARISON

COMPANY: ICICI PRUDENTIAL

PRODUCT: INVEST SHIELD CASH

Invest shield cash is a unit linked insurance product with capitalguaranty. The capital guaranty is on the invested premiums and thedeclared bonuses during the term of the product. This is an ideal solutionfor a long term protection and investment requirement. This productprovides a cost effective, transparent and value for money with the added

advantage of liquidity, financial solution to the customers by investing invarious debt instruments and providing the safety of a capital guaranty.

How to start

Choose a term from 10 to 30years and a minimum premium of:Rs.8, 000 p.a. for annual premium paymentRs.4, 000 for half-yearly premium paymentRs.667 per month for monthly premium payment

How does Invest Shield cash work?

1. Invest Shield cash provides an option to select a specific level ofInsurance amount (sum assured) as per the needs.

2. Premium paid by policy holder, net of all charges (initial charges,administration

charges, mortality charges etc.) is invested in unit funds.

3. The asset allocation under unit fund is 100% in debt.

4. Investment value is equal to no. of units allocated, multiplyby net asset value of the fund.

5. The guaranteed value of your unit fund is the value of your investedpremium (net of all the charges), along with all the accrued bonusinterest, this will remain guaranteed on death or maturity.

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BENEFITS

1. Death Benefit

In the unfortunate event of death, his familys financial future isProtected by an amount, which is equal to the sum of InsuranceAmount and higher of the value of your unit fund or the guaranteedValue of unit fund.

2. Maturity Benefit

At the end of the term, higher the value of your unit fund or theGuaranteed of your unit fund will be paid.

3. Liquidity BenefitWithdraw up to 10% of the value of unit fund every year from the

Sixth year onwards.

4. Enhanced savings with additional credits

To enhance the savings, additional credits are paid in lump sum on

death or maturity. Additional credit increases with the increase in termof the policy.

The additional credits structure would be as follows

Year of Additional Credits% of the InitialAnnual Premium

End of the 5 policy year 10%






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5. Surrender optionoption to completely withdraw from the policy after paying the 1 st

yearpremium.

6. Add on riders:Rider is an additional benefit along with the insurance amount to

give the policy holder total protection at a marginal extra premium .Theriders availableWith this plan are :

a) Accident and Disability Benefit Rider

b)Waiver of Premium Riderc) Critical Illness Rider

Flexibilities

1. Choice to invest any surplus cash

If a policy holder has any surplus funds which he want to investthen,Invest Shield Cash gives him an option to invest those surplus funds inexisting plan. This facility is called as top-up facility.

2. Flexible Premium

The policy holders have the option to increase/decrease his annualpremium.

3. Automatic Premium Payment

This is a facility provided by this plan where in the insurance coverUnder the policy continue even if there is a temporary break in thePayment of premium.

4. The limits or conditions applicable:

Minimum age at entry: 0 yearsMaximum age at entry: 65 yearsMaximum age at maturity: 75 yearsMinimum term: 10 yearsMaximum term: 30 yearsMinimum sum assured: Rs 1, 00,000

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5. Premium allocation and other charges:

a) Premium allocation:The premium allocation would be based on the annual premium. The

yearly allocation schedule would be as follows:

Premium inRupees

% Allocation of Premium

1st

year 2nd

year 3rd

year onwards

8,000-14,999 70% 90% 97%15,000-24,999 72% 92% 97%25,000-49.999 75% 92% 97%50,000+ 77% 92% 97%

b) Fixed charges

c) Fund related charges

d) Mortality charges

e) Top-up charges.

6.Tax Benefit:The premium paid by policyholder and any amount paid to

policyholder under this plan is eligible for tax benefit under Section 80Cand Section 10(10D) as per prevailing tax laws.

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PRODUCT: INVEST SHIELD LIFE

Invest shield life is a unit linked insurance product with capitalguaranty. The capital guaranty is on the invested premiums and thedeclared bonuses during the term of the product. This is an ideal solutionfor a long term protection and investment requirement. This productprovides a cost effective, transparent and value for money with the addedadvantage of liquidity, financial solution to the customers by investing invarious debt instruments and providing the safety of a capital guaranty.

How to start


How does Invest Shield life work?

1. Invest Shield life provides an option to select a specific level of

Insurance amount (sum assured) as per the needs.



3. The unit fund has the asset allocation of 70%(min) in debt & 30%(max) in equity.



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BENEFITS

1. Death BenefitIn the unfortunate event of death, his familys financial future is

Protected by an amount, which is equal to the sum of InsuranceAmount and higher of the value of your unit fund or the guaranteedValue of unit fund.

2. Additional protection with Extended Life CoverAfter the maturity of the policy, the policy holder has to be covered

for another 10 years for a 50% of Sum Assured.3. Maturity Benefit

At the end of the term, higher the value of your unit fund or theGuaranteed of your unit fund will be paid.


To enhance the savings, additional credits are paid in lump sum on

death or maturity. Additional credit increases with the increase in termof the policy.


Year of AdditionalCredits

% of the InitialAnnual Premium







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5. Loan against policyDuring the financial requirement, a policyholder can avail of a loan

against his Policy without terminating the policy.

6. Surrender option

option to completely withdraw from the policy after paying the 1st

yearpremium.

7. Add on riders:Rider is an additional benefit along with the insurance amount to


a) Accident and Disability Benefit Riderb)Waiver of Premium Rider

c) Critical Illness Rider

Flexibilities


If a policy holder has any surplus funds which he want to investthen,Invest Shield Cash gives him an option to invest those surplus funds inexisting plan. This facility is called as top-up facility.

2. Flexible Premium



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Minimum age at entry: 0 yearsMaximum age at entry: 55 years

Maximum age at maturity: 65 yearsMaximum cover ceasing age:75 years(including Extended Life Cover)Minimum term: 10 yearsMaximum term: 30 yearsMinimum sum assured: Rs 1, 00,000

5. Premium allocation and other charges:



Premium inRupees

% Allocation of Premium1st year 2nd year 3rd year onwards

< 15,000 70% 90% 97%15,000-24,999 72% 92% 97%25,000-49.999 75% 92% 97%50,000+ 77% 92% 97%

b) Fixed charges



e) Top-up charges.

6.Tax Benefit:

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The premium paid by policyholder and any amount paid to

policyholder under this plan is eligible for tax benefit under Section 80Cand Section 10(10D) as per prevailing tax laws.

PRODUCT: INVEST SHIELD GOLD

Invest shield gold is a limited premium paying unit linked insuranceproduct with capital guaranty. The capital guaranty is on the investedpremiums and the declared bonuses during the term of the product. Thisis an ideal solution for a long-term protection and investment requirementperiod. This product provides a cost effective, transparent and value formoney with the added advantage of liquidity, financial solution to thecustomers by investing in various debt instruments and providing thesafety of a capital guaranty.

How to start

Start with a minimum premium of.

Rs.25, 000 for annual premium paymentRs.12, 500 for half-yearly premium paymentRs.2, 084 per month for monthly premium payment

How does Invest Shield Gold work?

1. Invest Shield Gold provides you an option to select a specific level ofInsurance amount (sum assured) as per you needs.

2. Premium paid by policyholder, net of all charges (initial charges,administration

Charges, mortality charges etc.) is invested in unit funds.

3. The unit fund has the asset allocation of 70%(min) in debt & 30%(max) in equity.


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5. The guaranteed value of your unit fund is the value of your invested

premium (net of all the charges), along with all the accrued bonusinterest, this will remain guaranteed on death or maturity.

BENEFITS1. Death Benefit

In the unfortunate event of death, his familys financial future isProtected by an amount, which is equal to the sum of InsuranceAmount and higher of the value of your unit fund or the guaranteedValue of unit fund.

2.Maturity BenefitAt the end of the term, higher the value of your unit fund or the

Guaranteed of your unit fund will be paid.

3.Liquidity BenefitWithdraw up to 10% of the value of unit fund every year from the

Sixth year onwards.

4. Enhanced savings with additional creditsTo enhance your savings, additional credits are paid in lump sum on

Death or maturity. Additional credit increases with the increase in termOf the policy.

5.Limited premium paying terms

In order to avoid long term financial commitments, your have achoiceTo pay the premium within 5,7 & 10 years depending upon the termYou chose.

6. Loan against policyDuring financial requirement, policy holder can avail of a loan

against his Policy without terminating policy.

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year premium.

8. Add on riders

Rider is an additional benefit along with the insurance amount toGive the total protection at marginal extra premium .The riders availableWith this plan are :

a) Accident and Disability Benefit Riderb) Critical Illness Rider

Flexibilities

1. Choice to invest any surplus cashIf a policy holder has any surplus funds which he want to invest

then,Invest Shield Cash gives him an option to invest those surplus funds inexisting plan. This facility is called as top-up facility.

2. Flexible Premium

A policy holder has option to increase/decrease his annual premium.


This is a facility provided by this plan where in the insurance coverUnder the policy continue even if there is a temporary break in the

Payment of premium.


Minimum age at entry: 0 yearsMaximum age at entry: 65 yearsMaximum age at maturity: 75 years

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Minimum sum assured: Rs 1, 00,0005. Premium allocation and other

charges:

Charges


yearly allocation schedule would be as follo

Premium inRupees

% Allocation of Premium1st year 2nd -3rd year 4th-5th year

25,000-49,999 81% 90.5% 97%50,000-4,99,999 85% 95% 97%5,00,000+ 88% 95% 97%

b) Fixed charges



e) Top-up charges.

5.Tax Benefit:The premium paid by policyholder and any amount paid to

policyholder under this plan is eligible for tax benefit under Section 80Cand Section 10(10D) as per prevailing tax laws

PRODUCT: INVEST SHIELD PENSION

Invest shield pension is a unit linked insurance product with capitalguaranty; especially for the purpose of accumulation for retirementsavings. . The capital guaranty is on the invested premiums and thedeclared bonuses during the term of the product. This is an ideal solutionfor a long term protection and investment requirement.

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This product provides a cost effective, transparent and value for

money with the added advantage of tax benefits under section 80 CCC(1), financial solution to the customers by investing in various debtinstruments and providing the safety of a capital guaranty.

How to start


How does Invest Shield pension work?1. Invest Shield pension provides an option to select a specific level ofInsurance amount (sum assured)or Zero insurance amount as per your

need.



3. The unit fund has the asset allocation of 70%(min) in debt & 30%(max) in equity4. Investment value is equal to no. of units allocated, multiply

by net asset value of the fund.


BENEFITS

1.Benefits on RetirementAt the end of the term of saving (at the retirement age), higher the

value of Unit Fund or the Guaranteed Value of Unit Fund will be used tobuy an pension as per choice.

2. Death BenefitIn the unfortunate event of death, his familys financial future is

Protected by an amount, which is equal to the sum of InsuranceAmount and higher of the value of your unit fund or the guaranteedValue of unit fund.

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To enhance the savings, additional credits are paid in lump sum ondeath or maturity. Additional credit increases with the increase in termof the policy.


Year of AdditionalCredits

% of the Initial

Annual Premium








yearpremium.

5. Add on ridersRider is an additional benefit along with the insurance amount to


a)Accident and Disability Benefit Riderb)Waiver of Premium Rider

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Flexibilities


If a policy holder has any surplus funds which he want to invest

then,Invest Shield pension gives him an option to invest those surplus funds inexisting plan. This facility is called as top-up facility.

2. Flexible Premium




4. Annuity optionsat the time of retirement (vesting date ) the policy holder can

choose to receive his pension in five different ways, sassed on his post-retirement needs.

5. The limits or conditions applicable

Minimum age at entry: 18yearsMaximum age at entry: 60 years (with sum assure plans),65 years (zerosum assured plans).Minimum age at vesting: 45 yearsMaximum age at vesting: 75 yearsMinimum term: 10 yearsMaximum term: 30 years

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6. Premium allocation and other charges



Premium inRupees

% Allocation of Premium1st year 2nd year 3rd to 10th year

= 50,000-24,999

77% 92% 98%

b) Fixed charges



e) Top-up charges.

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Features Invest Shield Life Invest Shield Cash Invest Shield GoldMin age at entry 0 0 0Max age at entry 55 60 60Max age atmaturity

65 75 75

Min term 10 10 Payment term: 05 10

Max term 30 30 Maturity term : 10 15Min premium 8000pa 8000pa 25000paMin sum assured Higher of premium

*5 or 1 lacHigher of premium*5 or 1 lac

1 lac

Fund Debt min 70%Equity max 30%

Debt 100% Debt min 70%Equity max 30%

Riders ADBR,WOPR,CIBR ADBR,WOPR,CIBR ADBR, CIBRPremium allocation Year 1 2-3 4-5 61 year


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ANALYSIS

The min age of entry in all the above plans is Zero.

The max age of entry in Invest Shield life is 55 and in case of InvestShield Cash & Gold is 60 years.

The max age at maturity in invest shield life is 65 yrs and 75 yrs ininvest shield cash and gold.

Maturity benefit Higher of value ofunit fund or theguaranteed value ofunit fund

Higher of value ofunit fund or theguaranteed value ofunit fund

Higher of value of unit funor the guaranteed value ounit fund

Additional credit(%of initialpremium)

10% of initialpremium at the endof 5th policy year andthereafter every 5th

year increment of5%

10% of initialpremium at the endof 5th policy year andthereafter every 5th

year increment of5%

PPT5 PPT7 PPT102%(5) 2.5%(7) 3%(10)2.5%(7) 3%(12) 3.5%(15)3%(10) 3.5%(15) 4%(20)

Extended lifecover

Post maturity 50% ofSA for next 10 years.

NA NA

Surrender values Possible after 1 year Possible after 1 year Possible after 1 yearLoan Available(on

surrender value)NA Available(on surrender value

Flexiblecontribution

Max decrease canbe 20% of initialpremium at no pointof time premiumcan be reduced tobelow min premiumor 80% of initialpremium whicheveris higher.

Max decrease canbe 20% of initialpremium at no pointof time premiumcan be reduced tobelow min premiumor 80% of initialpremium whicheveris higher.

Max decrease can be 20% oinitial premium at no poinof time premium can breduced to below mipremium or 80% of initiapremium whichever ihigher.

Automaticpremium payment

Only after 3 policyyears term15 twice

Only after 3 policyyears term15 twice

NA

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The min and max term in invest shield life and cash is 10 and 30 yrsrespectively, where as in invest shield gold the choice of a premiumpayment term is 5, 7 and 10 years with a corresponding coverageterm of 10, 15 and 20 years.

Min contribution in invest shield life and cash is Rs.8000pa where asRs.25000pa in invest shield gold, which covers extra life.

The asset allocation of unit fund is min 70% in Debt and max 30% in

equity, in invest shield cash 100% asset invest in Debt.

ADBR,WOPR & CIBR are providing in invest shield life and cash but

in case of invest shield gold WOPR is not possible.

In case of invest shield cash and gold from the sixth year onwards,

till the end of the term the policyholder has the option to withdraw

10% of the value of the units form his unit fund, but this withdrawal

facility is not available in invest shield life plan.

In case of death of the policyholder, sum assure + higher of value of

unit fund or the guaranteed value of unit fund will be given in all the

above three plans.

In maturity benefit, higher of value of unit fund or the guaranteed

value of unit fund will be given.

Additional credit facilities are available in all the above three plans.

In case of invest shield, after the maturity of the plan the

policyholder can receive an insurance cover for additional 10 years

@50% of sum assured ,but this facility is not available in invest

shield cash and gold.

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Surrender of policy is possible in all the three plans after the

completion of first year.

A policy holder can avail a loan benefit after the policy has acquired

a surrender value in invest shield life and gold but this benefit is not

available in case of invest shield cash.

A policy holder can increase or decrease his annual premium in allthe plans.

In case of invest shield life and cash automatic premium payment is

possible when policyholder is disable to pay premiums due to a

temporary financial constraint. But this facility is available in invest

shield gold.

Rebate and tax benefits available u/s 88 and sec.10(10) in all the

above three plans

Calculation of Risk, Return and Stability

Risk, Return and Stability helps the investors to know which product is

giving what return and how much risk is involved and what is the stability

of that product . For the calculation of Risk, Return and Stability, taken

monthly average Nat Asset Value of respective product.

ICICI PRUDENTIAL

MonthsISC(X)

ISL

(Y)

ISG

(Z)

_u = x - x

u2

_v = y - y

v2

_w = z - z

w2

April 10.05 9.99 9.99 -0.09 0.0081 -0.16 0.0256 -0.16 0.0256

May 10.14 10.07 10.07 0 0 -0.08 0.0064 -0.08 0.0064

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S.D.(STANDARD DEVIATION) = w2/n-(w/n)2

________________S.D.z = 0.0736/4-(0/4)2

= 0.135

CALCULATION OF STABILITY:

C.V.(Coefficient of Variation) = S.D./ Mean* 100

C.V.x = 0.06/10.14*100= 0.59%

C.V.y =` 0.135/10.15*100= 1.33%

C.V.z =` 0.135/10.15*100= 1.33%

Interpretation:

The returns of all the 3 plans are more are less same i.e. 10.14,10.15& 10.15 respectively.

When we compare risks, in ISC it is less, because in this plan theyare investing wholly in Debt instruments. Where as in ISL & ISG risk ismore because, in these 2 plans they are investing 70% in Debt and 30%

in equity market.The stability is good in ISC when compare to ISL & ISG.

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COMPARISON OF ICICI PRODUCTSWITH COMPETITORS PRODUCTS

COMPANY: BIRLA SUN LIFE INSURANCE

PRODUCT: FLEXI SECURE LIFE RETIREMENT PLAN:

The Birla Sun Life Flexi Secure Life Retirement Plan brings two options

The Single Premium Plan and The Regular Premium Plan, whichoffers benefits to meet specific retirement planning needs.

About.the.PlanThe Birla Sun Life Flexi Secure Life Retirement Plan is a Unit Linkedplan. The plan is designed in two phases; the build up or the Accumulationphase and the Annuity or the payout phase. In the Accumulation phasethe policyholder make regular contributions to build an egg nest onretirement. He can utilize this amount to buy an Annuity which can takecare of the needs post retirement.

Deposit

In the accumulation phase, the minimum amounts can deposit are Rs.20,000 under the Single Premium Plan and Rs. 5,000 under the RegularPremium Plan.

Investment.optionsthe policyholder can choose from three Investment options depending onrisk appetite during the accumulation phase of plan.

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The three investment options are:

NourishGrowthEnrich

Entry.ageThe minimum age at entry should be 18 years and the maximum age forentry is 65 years for both Single Premium Plan and the Regular PremiumPlan.

Vesting-ageVesting age is the age at which the policy benefits will be available for

purchase of an annuity. The policy holder can choose from any of thevesting ages between 50 years and 70 years subject to the minimumtenure of the plan as under:

5 years for Single Premium Plan; and 10 years for Regular Premium Plan

Partial Surrenders

The plan gives you the option to make partial surrenders from the Policy Fund once every year

after the age of 55 years These can be made after the completion of three Policy Years

Upper limit of percentage of assets in:

Investment Fund OptionNourish Growth Enrich

Government andgovernment approvedsecurities

100% 100% 100%

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Rated corporate bonds 30% 30% 30%

Money market and otherliquid assets

20% 20% 20%

Infrastructure sector asdefined by the IRDA

25% 25% 25%

Listed equities 10% 20% 35%

PLAN BENEFITS:

On the date of vesting, the policy holder can either: Utilize the entire Policy Fund to purchase any annuity provided by

us then and at the then prevailing rates or buy an annuity from anyother company in the market.

Withdraw one third of the policy fund as a lump sum and utilise theremaining portion of the fund to purchase any annuity provided byus then and at the then prevailing rates or buy an annuity from anyother company in the market; or

The following annuity options are currently offered by theCompany:

Life Annuity guaranteed for 20 years and payable thereafter for life.

Life Annuity with return of purchase price less the payouts made tillthe death of the Annuitant.

Life-Insurance-CoverThe policy holder can opt for a life insurance cover in his Retirement Plantill the vesting age. The minimum face amount for the life insurance coverwill be Rs. 22,000 under the Single Premium Plan and Rs. 50,000 underthe Regular Premium Plan.

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Death-Benefit

1) Upon the death of the Life Insured under a Single Premium Policy whichprovides a Life Insurance Coverage, will be paid to the Claimant thehigher of:. The Policy Fund; or. The Life Insurance Coverage Face Amount

2) Upon the death of the Life Insured under a Regular Premium Policywhich provides a Life Insurance Coverage, we will pay to the Claimant thehigher of:.The Policy Fund; or. The Life Insurance Coverage Face Amount less any partial surrenders

made.

following options to utilize the death benefit:. Receive the entire amount as a lump sum . Receive one third of thebenefit as a lump sum and utilize the rest to purchase an Annuity*. Utilize the entire amount to purchase an Annuity.

Optional Riders

Critical Illness / Critical Illness Plus / Critical Illness Woman Level Term Assurance Accidental Death & Dismemberment

Tax Benefits

Premiums paid under this plan (currently up to Rs. 10,000) will be eligiblefor tax benefits as per Section 80 CCC(1) of the Income Tax Act, 1961.

Surrender-Benefitssurrender of policy is possible in the plan.

Policy-Fees-and-ChargesThe policy loading fee is an up-front charge and varies as per thepremium payment mode and the policy year:

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Charges: Charges towards cost of the insurance will be deducted by

cancellation of units at the prevailing unit price on a monthly basis.

Fund-switching-chargesIn a year two switches between Investment Fund options are free. Forevery additional switch, a charge not exceeding 1 percent (currently 0.5percent) of the amount transferred will be levied.

COMPANY: HDFC STANDARD LIFE INSURANCE CO. LTD.

PRODUCT: UNIT LINKED PENSION PLAN

Unit linked pension policy can greatly help you to meet the financialneeds after retirement. The unit linked pension plan is basically aninsurance contract, which is designed to provide a retirement income forlife.

The premiums are invested in units of the investment fund of choice,based on the prevailing unit price. On vesting the value of units will beused to buy your retirement benefits.

On earlier death, the beneficiary receives the value of your units plus acash lump sum of Rs. 1,000.

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Premiums

The policyholder can pay the premiums either, regularly, quarterly, half-yearly or annually, and it can be paid by cash, cheque or demand draft.

Investment funds

The policy is fully unitised with a range of funds to match the needs andapproach to risk. The policyholder can choose from the following funds:

Liquid fund Secure Managed

Defensive Managed Balanced Managed Growth Fund

Switching

The policyholder can switch his existing investments from any pensionunit linked fund to another pension unit linked fund.

BENEFITS

At the chosen vesting date, the unitised fund value will be available tosecure pension benefits. Subject to the prevailing regulations, part of thisvalue can be taken in the form of a cash lump sum and the rest convertedto an annuity at the rate then offered the company

On death, the unitised fund value will be paid along with a cash lump sumof Rs. 1,000. The beneficiary may use the proceeds to purchase pensionbenefits for the surviving spouse.

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Eligibility

The age and term limits for taking out a Unit Linked Pension Plan are:(years)

Alteration of the level of premiums

Regular premiums can be increased at any time. If needed, thepolicyholder can reduce the regular premium levels (even to zero ie thepolicy is converted to paid up status) provided:

3 years of regular premiums have been paid The monetary value of the unit holding across all funds is at least Rs

15,000.

Surrender of policy

The policyholder can surrender the policy at any point of time during thecontract term for regular premium paying.

Tax Benefits

Premiums paid under this plan are eligible for tax benefits under Section80CCC of the Income Tax Act, 1961.

MinimumTerm

Maximum Term

MinimumAge atEntry

Maximum Age atEntry

MinimumAge atVesting

MaximumAge atVesting

Regular

PremiumVersion

10 40 18 60 50 70

SinglePremiumVersion

5 40 18 65 50 70

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Charges

Investment Content Rate

Fund management charge.

Alteration to Charges

THE CHART SHOWING COMPARISON OFICICI PRODUCTS WITH COMPETITORS PRODUCTS

COMPANYS ICICI PRUDENTIAL BIRLA SUN LIFE

INSURANCE

HDFC STANDERD

LIFE INSURANCEFeatures INVEST SHIELD

PENSIONFLEXI SECURE LIFERETIREMENT

UNIT LIKED PENSIOPLAN

Age 18-60 years(65 yearsfor a zero deathbenefit option)

RP:18-60 yearsSP:18-60 years


Term 10-30years Minimum term of 10years


Sum assured Option of a zero sumassured. Thepolicyholder can also

opt for a sum assured,which should be a flatamount calculated asannual contributionterm, with theminimum sumassured being Rs 1lakh. However, nochange in the sumassured will beallowed once chosenat the time of inception of thepolicy.

Minimum sum assuredis Rs 50000. zero deathbenefit is also

available.

The unitized fund valuwill be availa

icici complete project mba 3

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