suni project

8/8/2019 Suni Project

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BARKATULLAH UNIVERSITYBHOPAL

DEPARTMENT OF M.B.A

BANSAL MBA COLLEGE BHOPALBATCH-2008-10

A PROJECT REPORT ON

analysis of the pension plans defference between

two company LIC and ICICI PRUDENTIAL .

UNDER THE GUIDENCE OF: SUBMITTED BY:Mr. Ashish Shahu sunil vishwakarma(Lect. Of MBA DEPT.) (MBA IVth Sem)


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A REPORTON

analysis of the pension plans difference between

two company LIC and ICICI PRUDENTIAL .

BANSAL MBA COLLEGE BHOPAL

BY

Sunil vishwakarma

A REPORT SUBMITTED IN PARTIAL

FULFILLMENT OF

THE REQUIREMENT OF

MBA PROGRAM OF

BANSAL MBA COLLEGE

BHOPAL


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DECLARATION

I Hereby declare that the training report entitled analysis of the

pention plan difference between two company LIC and

ICICI PRUDENTIAL submitted for the degree of Master of

Business Administration, is my original work and the training report

has not formed the basis for the award of any diploma, degree,

associate ship, fellowship or similar other titles. It has not been

submitted to any other university or institution for the award of any

degree or diploma.

Date SUNIL VISHWAKARMAPlace : (MBA IVth Sem)


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ACKNOWLEDGEMENT

As any one who has written a project work, or research work, it is quite

impossible to acknowledge by name every individual who has played

some part in this work. I feel it difficult to express in words my

profound sense of gratitude to most respected persons who helped me

to make this work possible.

This project report is a sincere attempt to carefully and systematically

gather facts about analysis of the pention plan difference

between of two company LIC and ICICI PRUDENTIAL

as part of course curriculum of Master of Business Administration

(MBA)Degree. I acknowledge my gratitude to respected faculty

Prof. Ashish Shahu (Department of M.B.A) who has been kind enough

to suggest improvement of this work and make it broad, based.

Finally of course great debts are owed to my all-friends whose

wholehearted support has given me the inspiration and dedication to

complete this work.


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CCERTIFICATE

This is to certify that the report entitled analysis the pention

plan difference between two company LIC and ICICI

PRUDENTIAL being submitted to BANSAL MBA COLLEGE Bhopal in

partial fulfillment of the requirement for the award of MASTER OF

BUSINESS ADMINISTRATION (MBA) and an original work carried out by

sunil vishwakarma under the guidance of Prof. Ashish Shahu.The

matter embodied in this report is a genuine work done by the aforesaid

student and has not been submitted either to this University or to any

other University / Institute for the partial fulfillment of the requirement

of any course of study.

Signature of the guide


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C

ONTENTS

1.1. ACKNOWLEDMENTACKNOWLEDMENT

2.2. DECLARATIONDECLARATION

3.3. CERTIFICATCERTIFICAT

4.4. EXECUTIVE SUMMARYEXECUTIVE SUMMARY

5.5. INTRODUCTION TO THE TOPICINTRODUCTION TO THE TOPIC

6.6. HISTORY OF INSURANCE IN INDIAHISTORY OF INSURANCE IN INDIA

7.7. LIC LIFE INSURANCE CORPORATION OF INDIALIC LIFE INSURANCE CORPORATION OF INDIA

OBJECTIVEOBJECTIVE

VISION AND MISSIONVISION AND MISSION

WHAT IS PANSION PLANWHAT IS PANSION PLAN

TYPE OF PENSION PLANTYPE OF PENSION PLAN

JEEVAN NIDHIJEEVAN NIDHI

JEEVAN AKSHAYJEEVAN AKSHAY

NEW JEEVAN DHARANEW JEEVAN DHARA

NEW JEEWAN SURAKSHNEW JEEWAN SURAKSH

8.8. ICICI PRODENTIALICICI PRODENTIAL

COMPANY PROFILECOMPANY PROFILE

VISION AND VALUESVISION AND VALUES


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VARIOUS RETIRMENT SOLUTIONVARIOUS RETIRMENT SOLUTION

9.9. ULIP (UNIT LIKED INSURANCE PLANE)ULIP (UNIT LIKED INSURANCE PLANE)

WHAT IS ULIPWHAT IS ULIP

RETIRMENT PLAN IN ULIPRETIRMENT PLAN IN ULIP

WHEN ULIP WORK BESTWHEN ULIP WORK BEST

10.10. RESEARCH SECTIONRESEARCH SECTION

RESEARCH PROBLEMRESEARCH PROBLEM

RESEARCH METHOLOGYRESEARCH METHOLOGY

HYPOTHESISHYPOTHESIS

WHY PENSION PLAN OFFER BEST RETIREMENT SOLUTIONWHY PENSION PLAN OFFER BEST RETIREMENT SOLUTION

PENSION PLAN IS RISE ON INSURANCE COMPANY PORTFOLIOPENSION PLAN IS RISE ON INSURANCE COMPANY PORTFOLIO

11. COMPARITIVE ANALYSIS AND INTERPRETATIONCOMPARITIVE ANALYSIS AND INTERPRETATION

12.12. FINDINGSFINDINGS

13. RECOMMANDATIONRECOMMANDATION

14.14. BIBLIOGRAPHYBIBLIOGRAPHY
http://www.iciciprulife.com/public/default.htm


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EXECUTIVE SUMMARYEXECUTIVE SUMMARY

Executive summary

The objective of the project was to study and evaluate present market share of two

leading insurance company LIC and ICICI PRUDENTIAL.

To complete the project the study has been conducted which based on the secondary data

which is collected through the various books, magazine, journal and websites.

The main purpose of the study to know that how and what manner people attract towards

the company and how they decide which one should be chosen.

Finding and recommendation made on the basis of survey most depicts on the point that

insurance plan and policies should be more customer centric ,as many customer are not

aware about the policies and plan and are not able to decide which policies or plan is

better for them. so that they can give proper knowledge to the customers. Frequent

change of customers should not be done on the routes.


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INTRODUCTIONTO THE TOPICINTRODUCTIONTO THE TOPIC

A.A.RESEARCH OBJECTIVERESEARCH OBJECTIVE

B.B. INTRODUCTION TO THE TOPICINTRODUCTION TO THE TOPIC

RESEARCH OBJECTIVE

1) To establish an interface between the policy/plans makers and policy takers, that

how and in what manners they show there reaction towards policy and plan.

Through the study we try to study and analysis the different pension plans

of the two company LIC and ICICI PRUDENTIAL . How people choose the

suitable pension plan for them from LIC.

2) We also want to know that how and in what manners the different pension plan

attract different age and salary group.


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INTRODUCTION TO THE TOPIC

Introduction seeks to introduce the readers to the backgrounds of the study, people

involved in the research scope of the study. It is a brief rationale as why we did our study

on Comparative Study On Pension Of Leading Life Insurance Company ( LIC and

ICICI Prudential) .

Background and People InvolvedIn India LIC and ICICI Prudential are the leading Insurance Company. LIC is from

government sector and whereas ICICI prudential is a joint venture of ICICI Bank of India

and prudential Insurance of U.K.

Mainly pension is provided by the government to its employees. But there is a large no as

people who work with private sector industry, after the retirement the first thing which

worry them is how they survive and how theirs needs and requirements fulfilled?

Scope as the Study

To know and understand the different pensions plans as policy as two leading

insurance company in insurance sector by study and analysis that how and

in what manner they attract the customers of different age and salary groups .


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INSURANCE IN INDIA

Insurance is a federal subject in India and has a history dating back to 1818. Life and

general insurance in India is still a nascent sector with huge potential for various global

players with the life insurance premiums accounting to 2.5% of the country's GDP while

general insurance premiums to 0.65% of India's GDP.[1]. The Insurance sector in India

has gone through a number of phases and changes, particularly in the recent years when

the Govt. of India in 1999 opened up the insurance sector by allowing private companies

to solicit insurance and also allowing FDI up to 26%. Ever since, the Indian insurance

sector is considered as a booming market with every other global insurance company

wanting to have a lion's share. Currently, the largest life insurance company in India is

still owned by the government.

History of Insurance in India

Insurance in India has its history dating back till 1818, when Oriental Life Insurance

Company was started by Europeans in Kolkata to cater to the needs of European

community. Pre-independent era in India saw discrimination among the life of foreigners

and Indians with higher premiums being charged for the latter. It was only in the year

1870, Bombay Mutual Life Assurance Society, the first Indian insurance company

covered Indian lives at normal rates.

At the dawn of the twentieth century, insurance companies started mushrooming up. In

the year 1912, the Life Insurance Companies Act, and the Provident Fund Act were

passed to regulate the insurance business. The Life Insurance Companies Act, 1912 made
http://en.wikipedia.org/wiki/Insurancehttp://en.wikipedia.org/wiki/Indiahttp://en.wikipedia.org/wiki/Insurance_in_India#cite_note-0http://en.wikipedia.org/wiki/Insurance_in_India#cite_note-0http://en.wikipedia.org/wiki/FDIhttp://en.wikipedia.org/wiki/Kolkatahttp://en.wikipedia.org/wiki/Insurancehttp://en.wikipedia.org/wiki/Indiahttp://en.wikipedia.org/wiki/Insurance_in_India#cite_note-0http://en.wikipedia.org/wiki/FDIhttp://en.wikipedia.org/wiki/Kolkata


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it necessary that the premium rate tables and periodical valuations of companiesshould

be certified by an actuary. However, the disparage still existed asdiscrimination between

Indian and foreign companies. The oldest existing insurance company in India is National

Insurance Company Ltd, which was founded in 1906 and is doing business even today.

The Insurance industry earlier consisted of only two state insurers: Life Insurers i.e. Life

Insurance Corporation of India (LIC) and General Insurers i.e. General Insurance

Corporation of India (GIC). GIC had four subsidiary companies.

With effect from December 2000, these subsidiaries have been de-linked from parent

company and made as independent insurance companies: Oriental Insurance Company

Limited,New India Assurance Company Limited,National Insurance Company Limited

and United India Insurance Company Limited.

Related Acts:-

The insurance sector went through a full circle of phases from being unregulated to

completely regulated and then currently being partly deregulated. It is governed by a

number of acts, with the first one being the Insurance Act, 1938.

The Insurance Act, 1938

The Insurance Act, 1938 was the first legislation governing all forms of insurance to

provide strict state control over insurance business.
http://en.wikipedia.org/wiki/Life_Insurance_Corporation_of_Indiahttp://en.wikipedia.org/wiki/Life_Insurance_Corporation_of_Indiahttp://en.wikipedia.org/wiki/General_Insurance_Corporation_of_Indiahttp://en.wikipedia.org/wiki/General_Insurance_Corporation_of_Indiahttp://en.wikipedia.org/wiki/December_2000http://en.wikipedia.org/wiki/Oriental_Insurance_Company_Limitedhttp://en.wikipedia.org/wiki/Oriental_Insurance_Company_Limitedhttp://en.wikipedia.org/wiki/New_India_Assurance_Company_Limitedhttp://en.wikipedia.org/w/index.php?title=National_Insurance_Company_Limited&action=edit&redlink=1http://en.wikipedia.org/wiki/United_India_Insurance_Company_Limitedhttp://en.wikipedia.org/wiki/Life_Insurance_Corporation_of_Indiahttp://en.wikipedia.org/wiki/Life_Insurance_Corporation_of_Indiahttp://en.wikipedia.org/wiki/General_Insurance_Corporation_of_Indiahttp://en.wikipedia.org/wiki/General_Insurance_Corporation_of_Indiahttp://en.wikipedia.org/wiki/December_2000http://en.wikipedia.org/wiki/Oriental_Insurance_Company_Limitedhttp://en.wikipedia.org/wiki/Oriental_Insurance_Company_Limitedhttp://en.wikipedia.org/wiki/New_India_Assurance_Company_Limitedhttp://en.wikipedia.org/w/index.php?title=National_Insurance_Company_Limited&action=edit&redlink=1http://en.wikipedia.org/wiki/United_India_Insurance_Company_Limited


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Life Insurance Corporation Act, 1956

Even though the first legislation was enacted in 1938, it was only in 19 January1956, that

life insurance in India was completely nationalized, through a Government ordinance; the

Life Insurance Corporation Act, 1956 effective from 1.9.1956 was enacted in the same

year to, inter-alia, form LIFE INSURANCE CORPORATION after nationalization of the

245 companies into one entity. There were 245 insurance companies of both Indian and

foreign origin in 1956. Nationalization was accomplished by the govt. acquisition of the

management of the companies. The Life Insurance Corporation of India was created on 1

September, 1956, as a result and has grown to be the largest insurance company in India

as of 2006.[2]

General Insurance Business (Nationalization) Act,1972

The General Insurance Business (Nationalization) Act, 1972 was enacted to nationalize

the 100 odd general insurance companies and subsequently merging them into four

companies. All the companies were amalgamated into National Insurance, New India

Assurance, Oriental Insurance, and United India Insurance which were headquartered in

each of the four metropolitan cities.[3]
http://en.wikipedia.org/wiki/January_19http://en.wikipedia.org/wiki/1956http://en.wikipedia.org/wiki/Life_Insurance_Corporation_of_Indiahttp://en.wikipedia.org/wiki/Insurance_in_India#cite_note-1http://en.wikipedia.org/wiki/1972http://en.wikipedia.org/wiki/Insurance_in_India#cite_note-2http://en.wikipedia.org/wiki/January_19http://en.wikipedia.org/wiki/1956http://en.wikipedia.org/wiki/Life_Insurance_Corporation_of_Indiahttp://en.wikipedia.org/wiki/Insurance_in_India#cite_note-1http://en.wikipedia.org/wiki/1972http://en.wikipedia.org/wiki/Insurance_in_India#cite_note-2


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Insurance Regulatory and Development Authority(IRDA) Act, 1999

Till 1999, there were not any private insurance companies in Indian insurance sector. The

Govt. of India, then introduced the Insurance Regulatory and Development Authority Act

in 1999, thereby de-regulating the insurance sector and allowing private companies into

the insurance. Further, foreign investment was also allowed and capped at 26% holding

in the Indian insurance companies. In recent years many private players entered in the

Insurance sector of India. Companies with equal strength competing in the Indian

insurance market. Currently, in India only 2 million people (0.2 % of total population of 1

billion), are covered under Mediclaim, whereas in developed nations like USA about

75 % of the total population are covered under some insurance scheme. With more and

more private players in the sector this scenario may change at a rapid pace.

General Insurance Business (Nationalization) Act,1972

The General National Insurance, New India Assurance, Oriental Insurance, United India

Insurance which were headquartered in each of the four metropolitan cities.[3]LIC:- LIFE

INSURANCE CORPRATION OF INDIA )
http://en.wikipedia.org/wiki/Insurance_in_India#cite_note-2http://en.wikipedia.org/wiki/Insurance_in_India#cite_note-2


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A.COMPANY PROFILE OF LICA.COMPANY PROFILE OF LIC

B.OBJECTIVEB.OBJECTIVE

C.VISION AND MISSIONC.VISION AND MISSION

D.WHAT IS PENSION PLAND.WHAT IS PENSION PLAN

BRIEF HISTORY OF LIFE INSURANCE

CORPORATION (LIC)

Bharat Insurance Company (1896) was also one of such companies inspired by

nationalism. The Swadeshi movement of 1905-1907 gave rise to more insurance

companies. The United India in Madras, National Indian and National Insurance in

Calcutta and the Co-operative Assurance at Lahore were established in 1906. In 1907,

Hindustan Co-operative Insurance Company took its birth in one of the rooms of the

Jorasanko, house of the great poet Rabindranath Tagore, in Calcutta. The Indian


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Mercantile, General Assurance and Swadeshi Life (later Bombay Life) were some of the

companies established during the same period. Prior to 1912 India had no legislation to

regulate insurance business. In the year 1912, the Life Insurance Companies Act, and the

Provident Fund Act were passed. The Life Insurance Companies Act, 1912 made it

necessary that the premium rate tables and periodical valuations of companies should be

certified by an actuary. But the Act discriminated between foreign and Indian companies

on many accounts, putting the Indian companies at a disadvantage.

The first two decades of the twentieth century saw lot of growth in insurance business.

From 44 companies with total business-in-force as Rs.22.44 crore, it rose to 176

companies with total business-in-force as Rs.298 crore in 1938. During the mushrooming

of insurance companies many financially unsound concerns were also floated which

failed miserably. The Insurance Act 1938 was the first legislation governing not only life

insurance but also non-life insurance to provide strict state control over insurance

business. The demand for nationalization of life insurance industry was made repeatedly

in the past but it gathered momentum in 1944 when a bill to amend the Life Insurance

Act 1938 was introduced in the Legislative Assembly. However, it was much later on the

19th of January, 1956, that life insurance in India was nationalized. About 154 Indian

insurance companies, 16 non-Indian companies and 75 provident were operating in India

at the time of nationalization. Nationalization was accomplished in two stages; initially

the management of the companies was taken over by means of an Ordinance, and later,

the ownership too by means of a comprehensive bill. The Parliament of India passed the

Life Insurance Corporation Act on the 19th of June 1956, and the Life Insurance

Corporation of India was created on 1st September, 1956, with the objective of spreading

life insurance much more widely and in particular to the rural areas with a view to reach


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all insurable persons in the country, providing them adequate financial cover at a

reasonable cost.

LIC had 5 zonal offices, 33 divisional offices and 212 branch offices, apart from its

corporate office in the year 1956. Since life insurance contracts are long term contracts

and during the currency of the policy it requires a variety of services need was felt in the

later years to expand the operations and place a branch office at each district headquarter.

re-organization of LIC took place and large numbers of new branch offices were opened.

As a result of re-organization servicing functions were transferred to the branches, and

branches were made accounting units. It worked wonders with the performance of the

corporation. It may be seen that from about 200.00 crores of New Business in 1957 the

corporation crossed 1000.00 crores only in the year 1969-70, and it took another 10 years

for LIC to cross 2000.00 crore mark of new business. But with re-organization happening

in the early eighties, by 1985-86 LIC had already crossed 7000.00 crore Sum Assured on

new policies.

Today LIC functions with 2048 fully computerized branch offices, 100 divisional offices,

7 zonal offices and the corporate office. LICs Wide Area Network covers 100 divisional

offices and connects all the branches through a Metro Area Network. LIC has tied up

with some Banks and Service providers to offer on-line premium collection facility in

selected cities. LICs ECS and ATM premium payment facility is an addition to customer

convenience. Apart from on-line Kiosks and IVRS, Info Centers have been

commissioned at Mumbai, Ahmedabad, Bangalore, Chennai, Hyderabad, Kolkata, New

Delhi, Pune and many other cities. With a vision of providing easy access to its


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policyholders, LIC has launched its SATELLITE SAMPARK offices. The satellite

offices are smaller, leaner and closer to the customer. The digitalized records of the

satellite offices will facilitate anywhere servicing and many other conveniences in the

future.

LIC continues to be the dominant life insurer even in the liberalized scenario of Indian

insurance and is moving fast on a new growth trajectory surpassing its own past records.

LIC has issued over one crore policies during the current year. It has crossed the

milestone of issuing 1,01,32,955 new policies by 15th Oct, 2005, posting a healthy

growth rate of 16.67% over the corresponding period of the previous year.

From then to now, LIC has crossed many milestones and has set unprecedented

performance records in various aspects of life insurance business. The same motives

which inspired our forefathers to bring insurance into existence in this country inspire us

at LIC to take this message of protection to light the lamps of security in as many homes

as possible and to help the people in providing security to their families.

Life Insurance Corporation of India

Some Areas- The traditional life insurance business for the LIC has beena little more than a savings policy. Term life (where the insurance company pays a

predetermined amount if the policyholder dies within a given time but it pays

nothing if the policyholder does not die) has accounted for less than 2% Life

Insurance.

Corporation of IndiaSome Areas of Future Growth

Life Insurance


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The traditional life insurance business for the LIC has been a little more than a savings

policy of the insurance premium of the LIC (Mitra and Nayak, 2001). For the new life

insurance companies, term life policies would be the main line of business.

Health Insurance

Health insurance expenditure in India is roughly 6% of GDP, much higher than most

other countries with the same level of economic development. Of that, 4.7% is private

and the rest is public. What is even more striking is that 4.5% are out of pocket

expenditure (Berman, 1996). There has been an

almost total failure of the public health care system in India. This creates an opportunity

for the new insurance companies.

Thus, private insurance companies will be able to sell health insurance to a vast number

of families who would like to have health care cover but do not have it.

Pension

The pension system in India is in its infancy. There are generally three forms of plans:

provident funds, gratuities and pension funds. Most of the pension schemes are confined

to government employees (and some large companies). The vast majority of workers are

in the informal sector. As a result, most workers do not have any retirement benefits to

fall back on after retirement. Total assets of all the pension plans in India amount to less

than USD 40 billion.


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OBJECTIVES OF LIC

Spread Life Insurance widely and in particular to the rural areas and to the

socially and economically backward classes with a view to reaching all insurable

persons in the country and providing them adequate financial cover against death

at a reasonable cost.

Maximize mobilization of people's savings by making insurance-linked savings

adequately attractive.

Bear in mind, in the investment of funds, the primary obligation to its

policyholders, whose money it holds in trust, without losing sight of the interest

of the community as a whole; the funds to be deployed to the best advantage of

the investors as well as the community as a whole, keeping in view national

priorities and obligations of attractive return.

Conduct business with utmost economy and with the full realization that the

moneys belong to the policyholders.

Act as trustees of the insured public in their individual and collective capacities.

Meet the various life insurance needs of the community that would arise in the

changing social and economic environment.


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achievement of Corporate Involve all people working in the Corporation to the

best of their capability in furthering the interests of the insured public by

providing efficient service with courtesy.

Promote amongst all agents and employees of the Corporation a sense of

participation, pride and job satisfaction through discharge of their duties with

dedication towards the achievementof the goal.

VISION AND MISSION

VisionTo be the best Housing Finance Company in the country.

Mission

Provide secured housing finance at

affordable cost, maximizing shareholders

value with higher customer sensitivity.

ValuesFair and Transparent Business Practices.

Transformation to a Knowledge Organization.

Higher Autonomy in Operations.

Instilling a sense of Ownership amongst Employees.


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PENSION: - A BRIEF INTRODUCTION

What Is Pension

The pension system in India is in its infancy. There are generally three forms of plans:

provident funds, gratuities and pension funds. Most of the pension schemes are confined

to government employees (and some large companies). The vast majority of workers are

in the informal sector. As a result, most workers do not have any retirement benefits to

fall back on after retirement. Total assets of all the pension plans in India amount to less

than USD 40 billion.

Therefore, there is a huge scope for the development of pension funds in India. The

finance minister of India has repeatedly asserted that a Latin American style reform of the

privatized pension system in India would be welcome (Roy, 1997). Given all the pros and

cons, it is not clear whether such a wholesale privatization would really benefit India or

not (Sinha, 2000).

PENSION PLAN OF LIC:-

JEEVAN NIDHI

JEEVAN AKSHAY-VI

JEEVAN DHARA-I

NEW JEEVAN SURAKSHA-I


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Introduction to the Pension Plans of LIC.

Pension plan are Individual Plans that gaze into your future and foresee financial

stability during your old age. These policies are most suited for senior citizens and

those planning a secure future, so that you never give up on the best things in life.

Jeevan Nidhi

Jeevan Akshay-VI

New Jeevan Dhara-I

New Jeevan Suraksha-I

Jeevan Nidhi

LIC's JEEVAN NIDHI is a with profits Deferred Annuity (Pension) plan. On survival of

the policyholder beyond term of the policy the accumulated amount (i.e. Sum Assured +

Guaranteed Additions + Bonuses) is used to generate a pension (annuity) for the

policyholder. The plan also provides a risk cover during the deferment period. The USP

of the plan being the pension can commence at 40 years. The premiums paid are exempt

under Section 80CCC of Income Tax Act.

Salient Features:

a . Guaranteed Additions: Guaranteed Additions @ Rs.50/- per thousand Sum

assured for each completed year, for the first five years.
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b. Participation in profits: The policy shall participate in profits of the Corporation

from the 6th year onwards and shall be entitled to receive bonuses declared as per the

experience of the Corporation.

c. Benefit On Vesting:

1. Option to commute up to 1/3rd of the amount available on vesting, which

shall include the Sum Assured under the Basic Plan together with accrued Guaranteed

Additions, simple Reversionary Bonuses and Terminal Bonus, if any.

2 . Annuity as per the option selected: Annuity on the balance amount if

commutation is exercised, otherwise annuity on the full amount.

d. Annuity Options:

On vesting, the annuity instalment, mode of annuity payment and type of annuity which

shall be made available to the Life Assured (Annuitant) / Nominee will depend upon the

then prevailing Immediate Annuity plan of the Life Insurance Corporation of India and

its terms and conditions.

Currently the following options are available under LICs immediate annuities:

1. Annuity for life: The annuity is paid to the life assured as long as he/she is alive.

2. Annuity Guaranteed for certain periods: The annuity is paid to the life

assured for periods of 5 or 10 or 15 or 20 years as chosen by him/her, whether or not

he/she survives that period. After the chosen period, the annuity is paid to the life

assured as long as he/she is alive


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3. Annuity with return of purchase price on death:The annuity is paid to the

life assured as long as he/she is alive. On the death of the life assured, the purchase price

of the annuity is paid as death benefit. The purchase price includes the Sum Assured

under the Basic Plan, the accrued Guaranteed Additions and any accrued bonuses,

excluding the commuted value, if any.

4. Increasing annuity:The annuity is paid to the life assured as long as he/she is

alive. The amount of annuity increases every year at a simple rate of 3% per annum.

5. Joint Life Last Survivor Annuity:The annuity is paid to the life assured as

long as he/she is alive. On death of the life assured, 50% of the annuity is payable to the

nominated spouse as long as the spouse is alive.

6. Death Benefit on death before annuity vests: On the death of the Life

Assured during the deferment period of the policy, i.e. before the annuity vests, an

amount equal to the Sum Assured under the Basic plan along with the accrued

Guaranteed Additions, simple Reversionary Bonuses and Terminal Bonus, if any, will be

paid in a lump sum to the appointed nominee, provided the policy is in force for full Sum

Assured. Nominee will also have the option to purchase an annuity with this amount.

Jeevan Akshay VI


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Introduction:

It is an Immediate Annuity plan, which can be purchased by paying a lump sum amount.

The plan provides for annuity payments of a stated amount throughout the life time of the

annuitant. Various options are available for the type and mode of payment of annuities.

Options Available: The following options are available under the plan

Type of Annuity:

Annuity payable for life at a uniform rate.

Annuity payable for 5, 10, 15 or 20 years certain and thereafter as long as the

annuitant is alive.

Annuity for life with return of purchase price on death of the annuitant.

Annuity payable for life increasing at a simple rate of 3% p.a.

Annuity for life with a provision of 50% of the annuity payable to spouse during

his/her lifetime on death of the annuitant.

Annuity for life with a provision of 100% of the annuity payable to spouse during

his/her lifetime on death of the annuitant.

You may choose any one. Once chosen, the option cannot be altered.

Mode:Annuity may be paid either at monthly, quarterly, half yearly or yearly intervals.

You may opt any mode of payment of Annuity.

Salient features:

Premium is to be paid in a lump sum.

Minimum purchase price : Rs.50,000/= or such amount which may secure a

minimum annuity as under:


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Mode Minimum Annuity

Monthly Rs. 500 per month

Quarterly Rs. 1000 per quarter

Half-yearly Rs. 2000 per half year

Yearly Rs.3000 per year

No medical examination is required under the plan.

No maximum limits for purchase price, annuity etc.

Minimum age at entry 40 years last birthday and Maximum age at entry 79 years

last birthday.

Age proof necessary.

Annuity Rate:

Amount of annuity payable at yearly intervals which can be purchased for Rs. 1 lakh

under different options is as under:

Incentives for high purchase price:

Age last

birthdayYearly annuity amount under option

( i )( ii ) (15 years

certain)( iii ) ( iv ) ( v ) ( vi )

40 7510 7440 6930 5610 7310 7120

45 7770 7660 6960 5890 7500 7240

50 8140 7950 7000 6280 7760 7420

55 8650 8330 7050 6810 8130 7670

60 9350 8790 7110 7530 8640 8030

65 10410 9330 7180 8590 9400 8570

70 12080 9830 7260 10220 10560 9370

75 14510 10220 7360 12590 12240 10590


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If your purchase price is Rs. 1.50 lakh or more, you will receive higher amount of annuity

due to available incentives.

Cooling-off period

If you are not satisfied with the Terms and Conditions of the policy, you may return the

policy to us within 15 days from the date of receipt of the Policy Bond. On receipt of the

policy we shall cancel the same and the amount of premium deposited by you shall be

refunded to you after deducting the charges for stamp duty.

Paid-up value:

The policy does not acquire any paid-up value.

Surrender Value :

No surrender value will be available under the policy.

Loan :

No loan will be available under the policy.

Section 41 of Insurance Act 1938 :No person shall allow or offer to allow, either

directly or indirectly, as an inducement to any person to take out or renew or continue an

insurance in respect of any kind of risk relating to lives or property in India, any rebate of

the whole or part of the commission payable or any rebate of the premium shown on the

policy, nor shall any person taking out or renewing or continuing a policy accept any

rebate, except such rebate as may be allowed in accordance with the published

prospectuses or tables of the insurer: provided that acceptance by an insurance agent of


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commission in connection with a policy of life insurance taken out by himself on his own

life shall not be deemed to be acceptance of a rebate of premium within the meaning of

this sub-section if at the time of such acceptance the insurance agent satisfies the

prescribed conditions establishing that he is a bona fide insurance agent employed by the

insurer.

Any person making default in complying with the provisions of this section shall be

punishable with fine which may extend to five hundred rupees.

New Jeevan Dhara-I

Product summary:

These are Deferred Annuity plans that allow the policyholder to make provision for

regular income after the selected term.

Premiums:

Premiums are payable yearly, half-yearly, quarterly, monthly or through Salary

deduction, as opted by you, throughout the term of the policy or till earlier death.

Alternatively, the premium may be paid in one lump sum (single premium).

Tax Benefits:

Tax relief under Section 80ccc is available on premiums paid under New Jeevan

Suraksha I (Table No.147). The premiums paid under New Jeevan Dhara I (Table

No.148) qualify for tax relief under Section 88.

Bonuses:

These are with-profit plans and participate in the profits of the Corporations annuity /


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pension business. Policies get a share of the profits in the form of bonuses. Simple

Reversionary Bonuses are declared per thousand Sum Assured annually at the end of

each financial year. Once declared, they form part of the guaranteed benefits of the plan.

Final (Additional) Bonuses may also be payable provided policy has run for a certain

minimum period.

New Jeevan Suraksha -I

Product summary:

These are Deferred Annuity plans that allow the policyholder to make provision for

regular income after the selected term.

Premiums:

Premiums are payable yearly, half-yearly, quarterly, monthly or through Salary

deduction, as opted by you, throughout the term of the policy or till earlier death.

Alternatively, the premium may be paid in one lump sum (single premium)

Tax Benefits:

Tax relief under Section 80ccc is available on premiums paid under New Jeevan

Suraksha I (Table No.147). The premiums paid under New Jeevan Dhara I (Table

No.148) qualify for tax relief under Section 88.

Bonuses:

These are with-profit plans and participate in the profits of the Corporations annuity /


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pension business. Policies get a share of the profits in the form of bonuses. Simple

Reversionary Bonuses are declared per thousand Sum Assured annually at the end of

each financial year. Once declared, they form part of the guaranteed benefits of the plan.

Final (Additional) Bonuses may also be payable provided policy has run for a certain

minimum period.


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ICICI PRUDENTIAL

HISTORY OF ICICI PRUDENTIAL

VISION AND VALUES

VARIOUS RETIREMENT SOLUTION

HISTORY OF ICICI PRUDENTIAL

ICICI Prudential is a joint venture between ICICI Bank and Prudential

plc engaged in the business of life insurance in India. ICICI

Prudential is the largest private insurance company and second largest

insurance in India after LIC. 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 Life's capital stands at

Rs. 37.72 billion (as on March, 2008) with ICICI Bank and Prudential

plc holding 74% and 26% stake respectively. For the year ended March

31, 2008, the company garnered Retail New Business Weighted premium of

Rs. 6,684 crores, registering a growth of 68% over the last year and

has underwritten nearly 3 million retail policies during the period.

The company has assets held over Rs. 30,000 crore as on April 30,


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2008.ICICI Prudential Life is also the only private life insurer in

India to receive a National Insurer Financial Strength rating of AAA

(Ind) from Fitch ratings. The AAA (Ind) rating is the highest rating,

and is a clear assurance of ICICI Prudential's ability to meet its

obligations to customers at the time of maturity or claims.For the

past seven years, ICICI Prudential Life has retained its leadership

position in the life insurance industry with a wide range of flexible

products that meet the needs of the Indian customer at every step in

life.

Vision & Values

To be the dominant Life, Health and Pensions player built on trust by world-class people

and service.

This we hope to achieve by:

Understanding the needs of customers and offering them superior products and

service.

Leveraging technology to service customers quickly, efficiently and conveniently.

Developing and implementing superior risk management and investment

strategies to offer sustainable and stable returns to our policyholders.

Providing an enabling environment to foster growth and learning for our

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, Boundary less, Ownership and Passion. Each of the

values describes what the company stands for, the qualities of our people and the way we

work.

We do believe that we are on the threshold of an exciting new opportunity, where we can

play a significant role in redefining and reshaping the sector. Given the quality of our

parentage and the commitment of our team, there are no limits to our growth.

How to plan for retirement?

5 simple steps to arrive at an idealretirement plan

Step 1:Decide how much income you requireto live comfortably in your post-

retirement years. Remember to take into account aspects like increased medical costs,

vacations and gifts for family, but reduce costs like children's education and rent, if you

own your home. Use our easy Inflation Index Calculator to calculate the impact of

inflation

Step 2:Determine how much you need to save regularly, starting today. Use

ourRetirement Calculatorto determine how large a kitty you will need and how much

you need to save each year.

Step 3: Select the right retirement plan that enables you to meet your post-

retirement requirements. Preferably invest in market-linked plans, which can provide you

with potentially higher returns in the long run. OurLife Stage Profilerwill help you

select the plan that meets your criteria
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Step 4:Start saving nowso you have time on your side and can enjoy the power of

compounding. Use our simple Power of Compounding Calculator.

Step 5: Systematically invest a fixed amount every month for your post-

retirement years.

Why is retirement planning important?

Retire from work. Not from life.

A retirement planis an assurance that you will continue to earn a satisfying income

and enjoy a comfortable lifestyle, even when you are no longer working. To understand

why an increasing number of individuals have already started planning for

theirretirement, and why you should too, read on.

Independence is the new way of life: An increasing number of young Indian

professionals are moving away from the traditional joint family structure. Since support

no longer comes easily, parents have realized the need to provide for themselves during

their retirement years.

Costs set to soar:Skyrocketing costs throw even a well-salaried person off balance.

With rates rising everyday, you can imagine how high they will be when you are ready to

retire. Aretirement plan provides you with a steady income every month, to arm you in

the face of rising costs.
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To understand how inflation can impact your monthly expenses, use our special tool,

the Inflation Indexcalculator.

on-earning retirement phase is now longer: Only 4% of India working

population- mostly government employees are covered by pensions. The remaining

96% comprises self-employed and salaried professionals who do not have a formal,

mandated provision for pensions.

ICICI Prudential offers two key retirement plans, LifeLink Super Pension

andLifeTime Super Pension - flexible income cum insurance plans that ensure you

meet all your retirement requirements. So you can retire peacefully from work, but not

from life.

Retirement Solutions

To cater to the needs of a customer looking forretirement planning, ICICI Prudential

presents a wide array of products. These products have been designed to take into

account the diverse set of needs that characterize individual customers.

Plan Name Plan Type

LifeStage Pension

PremierLife Pension

LifeTime Super Pension

LifeLink Super Pension

ForeverLife

Unit Linked

Unit Linked

Unit Linked

Unit Linked

Traditional
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Immediate Annuity Traditional

Why Life Stage Pension

Retirementtime is the time to live your dream, dream that you have been putting off

as you never had the time for it. But your retirement dream has a cost attached to it. We

call this your retirement number.To help you achieve your retirement number ICICI

Prudential presents to you, LifeStage Pension.One of the most distinguishing features of

this policy is that it has no premium allocation charge for regular premiums which means

100% of your money is invested. Whats more, the policy provides you with a unique

lifecycle-based strategy that continuously re-distributes your money across various asset

classes based on your life stage and risk tolerance, eventually providing you with a

customized retirement solution.Invest today to attain your retirement number and fulfill

your dream

Why Premier Life Pension

You have strived hard to achieve your dreams and have attained the best comforts life

could offer. After having reached this enviable and secure position, wouldnt you like to

continue living life on your own terms even afterretirement? If you think so, then you

need a retirement solutionthat not only suits your needs but also lets you retire RICH.

To help you achieve this, ICICI Prudential Life Insurance presents PremierLife

Pension Plan- a limited premium paying, unit-linked pension policy designed for

preferred customers like you.This unique policy helps you customize your investments by
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allowing you to decrease your premium contributions as well as allowing you to boost

your investment kitty by making top-ups at any time. Once you arrive at your retirement

age the accumulated value of your policy provides you with a regular income (pension)

for life

Why LifeTime Super Pension Plan

ICICI Prudential'sLifeTime Super Pension policy is especially designed to help you

systematically save towards a joyful and satisfying retirement.

LifeTime Super Pension Plan is a cost-effective pension plan that delivers great value

in the long run. A regular-premium unit-linked pension policy, LifeTime Super Pension

ensures you earn a fixed income, for your entire life afterretirement. So you can relax

and live moments that truly matter.

.Why LifeLink Super Pension

ICICI Prudential's LifeLink Super Pension Plan has been especially tailored for

individuals who would much rather make a lump-sum investment than pay premiums at

regular intervals for theirretirement planning. A cost-effective single premium unit-

linked pension policy,LifeLink Super Pension Plan provides potentially higher returns

that ensure your golden years are secure and peaceful.

Invest in LifeLink Super Pension Plan today and watch your money multiply everymonth, right up to the day you retire. Receive an assured income from your retirement

day, for the rest of your life. Read more about the features and benefits of this plan.

Why ForeverLife
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ICICI Prudential's ForeverLife is a complete insurance cum pension plan that performs

two crucial roles: it acts as a protective cover while you earn for yourretirement, and

provides you with regularpensions once you retire.
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Why Immediate Annuity

Security and comfort during retirement is a top priority for everyone. It forms the central

aspect of a dream that everyone hopes to achieve and realize at some point or the other

during his or her life as a senior citizen.

If you fear that you've missed the bus as far as retirement planning is concerned, there

is no reason to despair. With ICICI Prudential's Single Premium Product, you can start

earning an annuity income immediately after paying the premium. What's more, the

annuity income is guaranteed for life which means that the insurance company pays you

and your spouse (as the case maybe) a guaranteed pension till you live.

Tax Benefits on Insurance and Pension

Life insurance and retirement plans are effective ways to save taxes when doing your

year end tax planning.

To assist you in tax planning, the tax breaks that are available under our various

insurance and pension policies are described below:

Our life insurance plans are eligible for tax deduction under Sec. 80C.

1. Our Pension plans are eligible for a tax deduction under Sec. 80CCC.

2. Our health insurance plans/riders are eligible for tax deduction under Sec. 80D.

3. The proceeds or withdrawals of our life insurance policies are exempt under Sec

10(10D), subject to norms prescribed in that section.Invest in ICICI Prudential

Life insurance and retirement plans and avail of these tax planning services to

save tax at your year end tax planning!
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ULIPs : An Introduction

Most importantly, what are ULIPs? Here, you will find all the information you need to

set your mind at ease about how to invest in ULIPs, and which ULIP is right for you.

ULIPs 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 you life cover. The 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 your specific needs. In this

way, the ULIP plan offers unprecedented flexibility and transparency.

Working of ULIPs

It is critical that you understand how your money gets invested once you purchase a

ULIP:

When you decide the amount of premium to be paid and the amount of life cover you

want from the ULIP, the insurer deducts some portion of the ULIP premium upfront.

This portion is known as the Premium Allocation charge, and varies from product to

product. The rest of the premium is invested in the fund or mixture of funds chosen by

you. Mortality charges and ULIP administration charges are thereafter deducted on a

periodic (mostly monthly) basis by cancellation of units, whereas the ULIP fund

management charges are adjusted from NAV on a daily basis.

Since the fund of your choice has an underlying investment either in equity or debt or a


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combination of the two your fund value will reflect the performance of the underlying

asset classes. At the time of maturity of your plan, you are entitled to receive the fund

value as at the time of maturity. The pie-chart below illustrates the split of yourULIP

premium:


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Types of ULIPs

One of the big advantages that a ULIP offers is that whatever be your specific financial

objective, chances are that there is a ULIP which is just right for you. The figure below

gives a general guide to the different goals that people have at various age-groups and

thus, various life-stages.

Depending on your specific life-stage and the corresponding goal, there is a ULIP which

can help you plan for it.


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PLANNING ULIPS FOR RETIREMENT

Retirement is the end of active employment and brings with it the cessation of regular

income. Today an increasing number of people have stated planning for their retirement

for below mentioned reasons

Almost 96% of the working population has no formal provisions for retirement

With the growing nuclearisation of family structure, traditional support system of

the younger earning members is no longer available

Developments in the healthcare space has lead to an increase in life expectancy

Cost of living is increasing at an alarming rate

Pension plans from insurance companies ensure that regular, disciplined savings in such

plans can accumulate over a period of time to provide a steady income post-retirement.

Usually all retirement plans have two distinctive phases

The accumulation phase when you are saving and investing during your learning

years to build up a retirement corpus and

The withdrawal phase when you actually reap the benefits of your investment as

your annuity payouts begin

In a typical pension plan you have the flexibility to make a lump sum payment or a

regular contribution every year during your earning years. Your money is then invested in

funds of your choice. You can opt to receive the annuity at any time after vesting age

(age at which you become eligible for pension chosen by you at the inception of the

plan).
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Most of the Unit linked pension plans also come with a wide range of annuity options

which gives you choice in structuring the post-retirement benefit pay-outs. Also at the

time of vesting you can make a lump sum tax-exempted withdrawal of up to 33 per cent

of the accumulated corpus.

In aretirement plan the earlier you begin the greater you gain post retirement due to the

power of compounding.

Let us take an example of Gaurav & Hari. Both of them want to retire at the age of 60.

Gaurav starts investing Rs. 10,000 every year from the age of 25 till the time that he

retires. In all, he would have invested Rs. 350,000. If his

investments were to earn 7% return every year, at the time of his retirement, Gaurav will

have a retirement corpus of Rs. 13, 82,368.

Now, Hari starts investing 10 years later (i.e. at the age of 35) and in order to make up for

the lost time, invests Rs.15,000 every year (which is 50% more than Gauravs annual

investment). So, by the time of his retirement, he would have invested Rs. 3,75,000. And

assuming the same annual return of 7%, he will end up with a retirement corpus of Rs 9,

48,735.
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So, you see how despite setting aside more than 50% of Gauravs annual contribution,

Hari ends up with a retirement corpus which is almost a third lesser than Gauravs. That

is the power of compounding.

Which is why, it is never too early to invest in a ULIP forretirement planning

Tax Benefits of ulip

ULIPs are an efficient tax saving instrument too .The tax benefits that you can avail in

case you invest in ULIPs are described below:

Life insurance plans are eligible for deduction under Sec. 80C

Pension plans are eligible for a deduction under Sec. 80CCC

Health insurance plans and critical illness riders are eligible for deduction under

Sec. 80D

The maturity proceeds or withdrawals oflife insurance policies are exempt under Sec

10(10D), subject to norms prescribed in that section.
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RESEARCH SECTIONRESEARCH SECTION

A. RESEARCH OBJECTIVEA. RESEARCH OBJECTIVE

B. HYPOTHESISB. HYPOTHESIS

C. RESEARCH METHODOLOGYC. RESEARCH METHODOLOGY


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RESEARCH PROBLEM

1) To establish an interface between the policy/plans makers and policy takers, that

how and in what manners they show there reaction towards policy and plan.

Through the study we try to study and analysis the different pension plans

of the different company. How people choose the suitable pension plan for them

from LIC.

2) We also want to know that how and in what manners the different pension plan

attract different age and salary group.


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HYPOTHESISHYPOTHESIS

Hypothesis is couched in terms of the particular independent and dependent variables

that are going to be used in study. Research hypothesis are specific testable prediction

made about the independent and dependent variables in the study.

As data is not originally collected for use in the research project under consideration, but

rather for use some other project, by some other person in terms of secondary data.

Usually the literature review has given background material that justifies the

particular hypothesis that is to be tested.There exists two type of hypothesis that is to be :

Null hypothesis

Alternate hypothesis

In null hypothesis we assume that LIC pension plan work over the other private

insurance plan like ICICI prudential.

Alternate hypothesis if our assumption that the LIC pension plan work over the

other private company pension plan go wrong, alternate hypothesis exists. It

proves that ICICI prudential plan has greater share.


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RESEARCH METHODOLOGY

RESEARCH:-

Research is an organized and systematic way of finding answers to question.

Research is an enquiry or examination to discover new information or

relationship and to extent and to verify existing knowledge.

Redman & Mory define research as a systematized effort to gain new

knowledge.

Methodology is define as

1. The analysis of the principle of methods, rules, and postulates employed by a

discipline or

2. The development of methods, to be applied within a discipline

3. A particular procedure or set of procedure.

Research design

The framework of conducting research is known as research design.

Research design is the plan, structure, and strategy of investigation conceived

so as to obtain answers to research question and to control variance.

Types of research Design:-

There are three types of Research Design:-

1. Exploratory Research Design: - The major emphasis in exploratory

Research Design is on discovery of ideas and insights.


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Descriptive Research Design: - The descriptive Research Design study is

typically concerned with determining the frequency with which something occurs or

the relationship between two variables.

2. Causal Research Design: - A Causal Research Design is concerned with

determining cause and effect relationship.

3. For the study, Descriptive Research Design was undertaken as it draws the

opinion of employees/workers on specific aspect

Why pension plans offer the best retirement solutions

Mohan Shahs father Prakash retired last year from Central Bank of India. During his 29

years of service, he failed to opt for any pension scheme. And being the sole earning

member, Prakash retired with little savings. The little that was there in his bank account

was used up last December to pay for his second daughters wedding.

Today, he and his wife live with Mohan and are forced to rely on their children for

financial support. But for how long? Having turned 60 last month, and looking at the

mortality tables, Mohans father has probably another 15 to 20 years left. Added to daily

expenses, in January this year, Mohans mother was diagnosed with diabetes and has to

take insulin regularly.

This means medical expenses for Mohan. Health and medical costs have increased

manifold and will quadruple over the next 10 years. This is an additional expense for

Mohan, as doctors visits become a regular feature as one ages. Its not just medical costs

alone. Even daily expenses like food, petrol and transportation end up costing more. A


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kilo of potatoes used to cost just Rs 1.50 some time back. Today, a kilo costs Rs 8, and if

inflation rises at the annual rate of five to six per cent, 10 years from now potatoes could

cost Rs 43 a kilo! Petrol prices have equally shot up from Rs 17 a litre 10 years back to

Rs 34-35 plus today, and could well rise to Rs 60 a litre 10 years from now. Enter

pension, to reduce tension. Pension is all about insuring oneself financially against the

risk of living too long. It is about fund management, long-term savings, protection and

annuity income. Moreover, investment in pension plans offers taxpayers a direct tax

deduction of Rs 10,000 from ones taxable income under Section 80 CCC (1) of the

Income Tax Act. Unlike Section 88, the tax benefits under this section are available to

persons in all income brackets. Even for those eligible to save tax under Section 88, the

saving on an investment of Rs 10,000 is higher in the case of pension plans. The tax

saved is Rs 3,150, whereas under Section 88 a Rs 10,000 investment yields a maximum

tax rebate of Rs 2,000. However, one doesnt invest in pension schemes only for tax

savings. Considering the high cost of living and falling interest rates, people ought to be

saving far more than Rs 10,000 a year if they wish to retain their present lifestyles. Take

the Life Insurance Corporations (LIC) Jeevan Suraksha pension plan. A 30-year-old

paying Rs 10,238 every year for a term of 20 years will be entitled to a pension of just Rs

14,200 per month on retiring at the age of 50. LIC assumes an annual bonus rate of Rs 65

per Rs 1,000. This is purely an illustration, which could vary depending on interest rates

and investment strategies. A pension plan also allows a policyholder to withdraw a

certain percentage of the accumulated funds on retirement to take care of some large

expenses. Most of the private players - ICICI Prudential, HDFC Standard Life, Tata AIG

and Aviva Life - have followed in the LICs footsteps and offer a maximum withdrawal

of 25 per cent of the accumulated corpus at the time of retirement. OM Kotak Mahindra


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Life is the only one to offer a maximum withdrawal of 33 per cent of the accumulated

amount.

After withdrawal, policyholders have to buy an annuity plan from the balance amount

that will provide them with a monthly pension till they bid a final goodbye. By taking an

open market option, customers can, on maturity, buy an annuity product from any life

insurance company. Should a policyholder die within the accumulating period, most life

insurers return premium with interest, subject to a maximum of sum assured, plus

accumulated bonuses to date, say officials with HDFC Standard Life.

It is not easy to decide today how much annuity one should take 20 years later. Thats a

decision best left to be made at the time of retirement. Customers can choose from

various annuity options available, including options like annuity for husband and wife,

annuity with annual increment, annuity with return of purchase price and more. During

the accumulation phase, a customer can only decide how much he/she can contribute and

afford to put aside for post-retirement needs, says Tata AIG Life Insurance Company

managing director Ian Watts. Looking at the inflation rate and

increasing post-retirement costs in terms of healthcare needs, this means one should

ideally save longer and more if one wishes to preserve ones existing lifestyle. A few

ballpark numbers will help you figure out how much you should save in your

circumstances. If you save Rs 10,000 every year for a period of 30 years under LICs

Jeevan Suraksha, you can expect a pension of Rs 9,290 per month on retirement after

withdrawing Rs 3.93 lakh on retirement.

Should you not opt to withdraw a part of the accumulated corpus, you can expect a

monthly pension of Rs 12,388 based on LICs current indicative calculations. A lot,


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however, depends on interest rates at the point of retirement. A warning is in order,

though: The incentive to save more than Rs 10,000 is low because the balance has to

come from post-tax income.

On the other hand, if you do save more and entitle yourself to higher pension, that

pension income will be taxed again as normal income. So, its a double whammy

double taxation of pension savings and pension income. Yet, Mohan, learning from his

fathers failure to save for post-retirement life, signed his first pay cheque away towards

the purchase of an ICICI Prudential pension plan. He plans to religiously put aside Rs

20,000 every year to get himself a worthwhile pension and in the hope that the

government will increase the tax deduction in the years to come. Meanwhile, his life gets

covered during the savings/ accumulation period. ICICI Prudential also offers a health

cover and guarantees capital protection during the accumulation phase. To be sure,

pension plans are not the only available instruments in the market today for long-term

savings. During the accumulation phase, one could opt for mutual funds, the

governments tax-free bonds, the public provident fund, or government securities. But

there is no tax exemption or inherent life cover in mutual funds; in the case of PPF, you

get section 88 benefits for incomes up to Rs 5 lakh, but not above. The interest is,

however, tax-free. Some infrastructure bonds also offer Section 88 benefits.

HOW MUCH PENSION?

In retirement planning, one needs to calculate backward to figure out how much one

should invest - with or without tax breaks. First, ask yourself when you wish to retire.

Then, what kind of income do you need to maintain your present standard of living. If


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you think you need Rs 10,000 a month (pre-tax) if you were to retire today, assuming a

six per cent inflation rate, you would need Rs 17,908 after 10 years, Rs 23,965 after 15,

and Rs 32,071 after 20 years. If you assume a more benign inflation rate of, say, four per

cent, the required amounts would be Rs 14,802, Rs 18,009 and Rs 21,911 after 10, 15 and

20 years of saving. You will then need to talk to your pension plan advisor and figure out

what you need to put away every year to achieve your targeted pension income. We have

to, of course, assume that taxation will be indexed to inflation - in which case your post-

tax income 20 years from now will be similar in real terms to what it is today for a

pension income of Rs 10,000 per month.


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Pension plans rise in insurance co portfolios

Can I lead a comfortable life after my retirement

? That's a question an increasing number of people are

asking themselves.

And that's the reason why pension plans today contribute about 30% of the insurance

industry's total business . The industry is seeing a 20%-25 % annual growth in pension

policies and a 50% growth in premium. "The average premium for pension plans is

higher ," says Amit Gupta, director for marketing in ING Vysya Life Insurance. At ING

Life, pension plans used to contribute 4%-5 % of business in 2006. But in 2008, that's

grown to about 10%. For Bharti AXA Life, the retirementproduct , which was launched

in January 2008, contributed 20% of the total premium in the year.

Most private companies do not offerpensions, and employees are typically dependent

only on their provident fund for retirement financing, which in most cases is insufficient

to maintain current living standards. That's the gap pension plans are seeking to fill.

"Pension plans are mainly targeted towards couples in the age group of 35 and 45 years.

Couples at this age would have completed saving for their protection needs, would have

children who are

slightly older and would be now interested in planning for retirement ," says Gupta.

Young couples are also beginning to plan for retirement, but this is still a relatively small

proportion and is largely seen in metros.

Financial planners say it is best to start investing in a pension plan early in life, like 25-35

years, in order to get a meaningful deferred annuity
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. As the gap reduces between the contribution period and the vesting period the pension

amount becomes smaller.

A global survey on retirement trends conducted by AXA in 2008 revealed that the

working population in India expects to have a better quality of life or at least maintain the

current life standards postretirement.

"The survey covered 26 countries and Indians were the most optimistic. The optimism is

not supported with financial planning, as 56% of the population hadn't started preparing

for retirement," says the survey. Insurance companies say major concerns among people

in pension planning relates to deciding the right time to inves t and choosing a plan that

provides payout beyond a certain age.

Companies are coming with products to cater to different needs. "We have a product that

allows people to increase contribution to the retirement kitty," says Shyamal Saxena,

chief marketing officer of Bharti AXA.
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Did you say retirement is all about surviving on a

meager pension?

Banish the thought. With the market flush with different types of schemes, you need not

walk into the twilight zone with empty pockets. In fact, retirement solutions are suddenly

in demand with people becoming more aware of the need to save for the sunset years.

Particularly in a country like India where, according to a survey by the Invest India

Economic Foundation, less than a sixth of those about to retire in the next 10 years are

covered by some form of pension, and only 2% of those not working in government

(where pensions are generous) being able to fund their retired lives even if they cut

expenses by half, the need for retirement plans is inevitable.

Surprisingly, in sharp contrast to times when only traditional pension plans were

available in the market, the entry of private insurance players has changed the scenario,

as also the profile of the products. Pension plans today are more oriented towards the

model of ULIPs (unit-linked insurance products) because of their ability to provide better

returns on the back of robust stock market performances, as is the norm abroad.

Says Bert Paterson, managing director, Aviva India: In the last 20-25 years, traditional

products have taken a back seat in the developed markets. Now more than 80%-90% of

people invest in unit-linked products for both pensions and life insurance.

This, however, is not the case with India. Here, the majority of people still rely on the

traditional pension schemes such as PF and post office plans. But taking a cue from the
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developed world, new age insurance companies have introduced a whole range of unit-

linked pension plans in the Indian market too, with their number growing by the day.

Aviva Indias PensionPlus, ICICI Prudentials LifeLink Super Pension and LifeTime

Super Pension, TaTa AIGs InvestAssure Gold, SBI Lifes Horizon II Pension and

Reliance Golden Years Plan are some of them. Furthermore, as the insurance companies

providing these plans have increased manifold, there are more product choices before

investors than ever before.

Even within the ULIPs, investors have choices in terms of varying their exposure to the

equity markets by choosing an aggressive or dominant pension fund, says Ashish Kapur,

CEO, Invest Shoppe India Ltd, adding that for instance, an aggressive pension scheme

would invest up to 60% in

equity and the rest in debt-oriented avenues, while the conservative plan would have a

nominal exposure of 10-15% to equity.

Conventional pension plans, on the other hand, invest a major portion of the premium

amount in bonds and government securities (G-Secs). That is why the returns are on the

lower side there, say investmentexperts. And if one were to factor into the equation an

annual inflation figure of approximately 5%-6% per annum, then the real return figures

look even more unimpressive. As against this, unit-linked pension plans are said to be

giving returns of 25-40% in some cases.

Better returns, however, are not the only reason for the growing popularity of ULIP

products. The reasons for the increasing popularity of ULIPs are that they are flexible,

transparent and provide value formoney. Whats more, they can be suited to the needs of
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all types of customers, from the risk averse to customers who seek higher returns with

some downside risk,informs Paterson.

ICICI Prudentials Life Time Pension Plan, for instance, allows one to choose from three

options Income, Balanced and Growth. While the Income fund is 100% invested in debt

instruments, the Balanced and Growth options provide flexibility to allocate up to 40%

and 90%. Likewise, Avivas

PensionPlus comes with three fund options Balanced, Growth and Secure. And the

same is the case with most other plans. Thus, depending upon their risk appetite, the

customers can choose which fund option to go for.

For a risk-averse customer, a Secure Fund or the Protector Fund is advisable as most of

the money is invested in government bonds. For someone wanting returns and willing to

take risks, a Growth fund is the best where most of the money is invested in equities,

says Paterson.

Thus, as against the conventional belief that ULIPs being market-linked products are

risky, it is possible to build in an element of guaranteed return within the unit-link

framework too. The key point is that customers can tailor their investment strategy to

suit their risk profile. Besides, the investment strategy is flexible and can be changed as

the customers needs and circumstances change, he adds.

Besides, according to experts, unit-linked products have distinct advantages over


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traditional ones. Firstly, they are transparent. A customer can track the value of his

investments on a daily basis as the NAV is published in leading

dailies and on the websites of the companies. Further, all charges on the policy are shown

to the customer.

Secondly, they are flexible. Every insurance company has four to five ULIPs with

varying investment options, charges and conditions for wit