GROWTH OF UNIT LINKED INSURANCE PLANS IN INDIAN INSURANCE INDUSTRY AT ICICI PRUDENTIAL LIFE

INSURANCE COMPANY LIMITED

A PROJECT REPORT SUBMITTED TO THE

SRM SCHOOL OF MANAGEMENT

IN PARTIAL FULFILLMENT OF THE DEGREE

OF

MASTERS OF BUSINESS ADMINISTRATION

BY

DEEPAK KUMAR (Reg. No. 35080128)

UNDER THE GUIDANCE OF

PROF. S.SHENTHIL KUMAR

SRM SCHOOL OF MANAGEMENT SRM UNIVERSITY

KATTANKULATHUR 603203 (May 2010)

1

BONAFIDE CERTIFICATE Certified that this project titled " GROWTH OF UNIT LINKED INSURANCE PLANS IN

INDIAN

INSURANCE INDUSTRY AT ICICI PRUDENTIAL LIFE INSURANCE COMPANY

LIMITED

is a bonafide work of DEEPAK KUMAR (Reg no:-(35080128) who carried out the research

under my supervision. Certified further, that to the best of my knowledge the work reported

herein does not from part of any other project or dissertation on the basis of which a degree or

award was conferred on an earlier occasion on this or any other candidate.

Signature of the guide: Signature of HOD:

Signature of the External Examiner:

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Acknowledgement

I owe everything in my life to other. A person single headed can achieve nothing. In my

attempt to do the project many people have graciously extend their guidance, advice and

criticism to improve our work.

I wish to express my heartful thanks to our Dean Dr.Jayashree Suresh for providing

infinite facilities and gave me an opportunity to do this project work to be successful.

I express my sincere thanks to my project internal guide Mr. S.Senthil Kumar for his

guidance and valuable suggestions, which made this project, a successful one.

I express my heartful gratitude to ICICI PRUDENTIAL LIFE

INSURANCE(DELHI).for providing me the opportunity to undertake this project in

their esteemed organization.

My gratitude also extends to the staffs of departments whose words of encouragements

kept the spirits high throughout the course of my project.

DATE- DEEPAK KUMAR

PLACE

3

ABSTRACT The project titled GROWTH OF UNIT LINKED INSURANCE PLANS IN INDIAN

INSURANCE INDUSTRY was aimed at studying its potential and growth in the market. Before knowing the

growth and market potential, we had to study the functions, features, advantages & benefits of ULIP (Unit

Linked Insurance Plan). This motivated me to first study the types of products and its range. This enabled me

to know the nature of the plans through the booklets of the insurance companies and from the magazines.

The project thus passed the initial stages and it had to find out the market growth of ULIP in

order to complete the project successfully. This was possible only through a market research.

That data were analysed thoroughly and it was compared and interpreted in order to find out the

solutions to the problems. Thus the study ensured that the problems were arrived at solutions and were able to

provide suggestions in this report.

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TABLE OF CONTENTS

CHAPTER NO.

CONTENTS PAGE NO.

1 INTRODUCTION 1

2 COMPANY PROFILE 3

3 STATEMENT OF PROBLEM 11

4 OBJECTIVE OF STYDY 12

5 REVIEW OF LITRETURE 13

6 RESEARCH METHODOLOGY 18

7 ANALYSIS OF INTERPRETATION 23

8 FINDING 52

9 SUGGESTION 53

10 CONCLUSION 54

BIBLIOGRAPHY 55

QUESTIONNAIRES 56

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LISTS OF TABLES

Table No. Contents Page no.

1 Table shows Age classification of the respondents 23

2 Table shows Gender classification of the respondents 24

3 Table shows Education qualification of respondents 26

4 Table shows Occupation of the respondents 28

5 Table shows Annual income of the respondents 29

6 Table shows Respondents awareness of insurance companies

30

7 Table shows Purpose of investment in insurance 32

8 Table shows Willingness of the respondents to take the risk while investing in insurance

33

9 Table shows Investment in other avenues 34

10 Table shows Awareness of market link plans of ICICI Prudential

35

11 Table shows Investment in the market link plans of ICICI Prudential

37

12 Table shows Amount of investment in market link plans of ICICI Prudential

38

13 Table shows Educational qualification of the respondent who have invested in market link plans

39

14 Table shows Annual income of the respondents who have invested in market link plans

41

15 Table shows Occupation of the respondents who have invested in market link plans

42

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LISTS OF FIGURE:

Fig. no Contents Page no.

1 Chart shows Percentage Age of the respondents 24

2 Chart shows Percentage of male and female 25

3 Chart shows Percentage of respondents education qualification

27

4 Chart shows Percentage of respondents occupation 29

5 Chart shows No and percentage of respondents annual income

30

6 Chart shows Percentage of respondents awareness of insurance companies

31

7 Chart shows Purpose of investment in insurance 32

8 Chart shows Investment risk Percentage 34

9 Chart shows Percentage of respondents who investments in other avenues

35

10 Chart shows Percentage of respondents who aware about market link plans

36

11 Chart shows Percentage of respondents invested in market link plans

37

12 Chart shows Amount invested in market link plans 39

13 Chart shows Percentage of respondents educational qualification who have invested in market link plans

40

14 Chart shows Annual income of respondents who have invested in market link plans

42

15 Chart shows No of respondents occupation who have invested in market link plans

43

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CHAPTER 1

INTRODUCTION "Insurance" is basically a sharing device. The losses to assets resulting from natural calamities like fire, flood,

earthquake, accidents, etc., are met out of the common pool contributed by large number of persons who are

exposed to similar risks. Thus contribution of many is used to pay the losses suffered by unfortunate few.

However the basic principle is that loss should occur as a result of natural calamities or unexpected events

which are beyond human control. Moreover the insured person should not make any gains out of insurance.

It is natural to think of insurance of physical assets such as motor car insurance or fire insurance but often we

forget that creator of all these assets is the human being whose efforts have gone a long way in building up the

assets. In that sense, human life is a unique income generating asset. Unlike the physical assets, which

decrease in value with passage of time, the individual becomes more experienced and more matured as he

advances in age. This raises his earning capacity. The purpose of life insurance is to protect the income of

individual and provide financial security to his family, which is dependent on his income in the event of his

premature death. The individual himself also needs financial security for the old age or on his becoming

permanently disabled when his income will stop. Insurance also has an element of savings in certain plans.

Features of MARKET LINK Plans:

Market link plans distinguishes itself through the multiple benefits it provides to the customer the plan is a one

stop solution providing

1. Life protection

2. Investment and savings

3. Flexibility

4. Transparency

5. Liquidity

6. Tax planning

8

In a falling interest rate scenario and boom experienced in the equity markets, market link policies are

becoming popular and favoured by market savy and high networth individuals.

Competition has spurred the usage of technology in the insurance industry. While earlier obtaining the status

of life insurance policy was a time consuming process, customers can now get their policy status and other

information through call centers, interactive voice response systems and through the internet. The creation of

the insurance Regulatory and Development Authority (IRDA) has helped customers vastly as the authority

now specifies time limits for documentation and settlement of claims. The regulator has also made it

mandatory for insurers to have a premium calculator on their website, which makes it easier for the customer

to compare products across companies.

In the last seven years of liberalization, promoters of private insurance companies have demonstrated their

long-term commitment to the Indian market in the best way. The total investment in private life insurance

companies is now over Rs.3, 000 crore, which is much more than investments by promoters in any other

segment of the financial sector.

The insurance industry has also played a significant role in mobilizing the savings of the individuals, providing

cover against unforeseen contingencies and is investing these funds for economic development of the country.

With only one fourth of the insurable population been provided insurance protection there is vast scope of

growth for all the private companies in the future as untapped potential is still very large. CHAPTER 2 COMPANY PROFILE

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

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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, 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.

. Since the liberalization of Indian Insurance sector, ICICI Prudential Life Insurance has

been one of the earliest private players. Since the time, ICICI Pru Life has been the

leader in terms of market share as indicated by the IRDA (Insurance Regulatory and

Development Authority, the regulator for Indian Insurance Industry) at its website.

Arguably the most innovative Indian Life insurer in terms of customer services and

products, ICICI Prudential has one of the largest distribution and servicing network with

over 2,000 proprietary offices & customer touch points across India. The 30,000

employee strong organization has one of the largest agency distribution in the industry.

With a growing product range to match the complex needs of the demanding customers

in a growing economy, the organization also has a history of successful.

During 2007-08, the organization's focus on rural business has proved its complex

project execution capability and strong partnerships for customer servicing.

In June, 2009 ICICI Prudential Life Insurance has decided to snap its tie up with TTK

Healthcare to settle insurance claims of its users

Distribution:

10

ICICI Prudential has one of the largest distribution networks amongst private life insurers in India, having

commenced operations in 62 cities and towns in India.

About the Promoters:

11

ICICI Bank is India's second-largest bank with total assets of Rs. 3,634.00 billion (US$

81 billion) at March 31, 2010 and profit after tax Rs. 40.25 billion (US$ 896 million) for

the year ended March 31, 2010. The Bank has a network of 2,000 branches and about

5,219 ATMs in India and presence in 18 countries. ICICI Bank offers a wide range of

banking products and financial services to corporate and retail customers through a

variety of delivery channels and through its specialised subsidiaries in the areas of

investment banking, life and non-life insurance, venture capital and asset management.

The Bank currently has subsidiaries in the United Kingdom, Russia and Canada,

branches in United States, Singapore, Bahrain, Hong Kong, Sri Lanka, Qatar and Dubai

International Finance Centre and representative offices in United Arab Emirates, China,

South Africa, Bangladesh, Thailand, Malaysia and Indonesia. Our UK subsidiary has

established branches in Belgium and Germany.

ICICI Bank's equity shares are listed in India on Bombay Stock Exchange and the

National Stock Exchange of India Limited and its American Depositary Receipts

(ADRs) are listed on the New York Stock Exchange (NYSE).

Corporate Profile

ICICI Bank is India's second-largest bank with total assets of Rs. 3,562.28 billion (US$ 77

billion) as on December 31, 2009.

INDUSTRY PROFILE

Insurance is primarily collective cooperation to share a particular risk. This concept is as old as the dawn of

human civilization. The joint family system in India is an example of concept of life insurance. Marine

insurance is considered to be the oldest branch of insurance for providing protection against loss/damage in

sea voyages.

Life insurance in its modem form came to India from England in 1818 with the formation of Oriental Life

insurance Company in Calcutta mainly by Europeans to help widows of their kin. By 1968 there were 285

companies doing business of insurance in India. These companies were insuring European lives. Indians were

12

treated substandard lives and were offered insurance with an extra premium of 15 to 20% over European

lives.

Bombay life Assurance Society was the first Indian Company started in 1870 that started insuring Indians at

standard rates. Oriental Govt Security Life Assurance Company established in 1874 became a leading Indian

insurance Company.

Life Insurance business in India was nationalized by an Ordinance on 19 Jan 1956. LIC Act was passed in July

1956 LIC of India started in operation on 01 Sep 1956. Prior to nationalization of life insurance business there

were 245 companies. Which were merged with LIC.

General insurance industry in India was nationalized in the Year 1972 by merging 107 companies. With effect

from 1st Jan 1973. GIC of India and its four subsidiary companies i.e. New India Assurance Company,

Oriental Insurance Company, National Insurance Company, United India Insurance Company started

operations in General Insurance Business.

With the passing of IRDA Act 1999, the insurance sector was opened up, and Private insurance Companies

were allowed to enter life/Non life insurance business with a maximum of 26% participation by a foreign

partner.

Presently there are 14 Life insurance Companies and 14 Non-life insurance Companies operating in the

insurance market.

PRODUCT PROFILE

ICICI Prudential Life Insurance Offers a range of innovative, customers- centric products that meet the needs

of customers at every life stage. Its 19 products can be enhanced with up to 6 riders, to create a customized

solution for each policyholder.

Saving Solutions:

Secure Plus is a transparent and feature packed savings plan that offers 3 levels of protection.

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Cash Plus is a transparent, feature packed savings plan that offers 2 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 meeting milestone expenses like a child's marriage,

expenses for a child's higher education or purchase of an asset.

Protection Solutions:

Life Guard is a protection plan, which offers life cover at very low cost. It is available in 3 options

level term assurance, level term assurance with return of premium and single premium.

Child Plans:

Smart Kid education plans provide guaranteed educational benefits to a child along with life insurance

cover for the parent who purchases the policy. The policy is designed to provide money at important

milestones in the child's life. Smart kid plans are also available in unit-linked form both single premium

and regular premium.

Market link Solutions:

Life Link II is a single premium market linked Insurance Plan which combines life insurance cover with

the opportunity to stay invested in the stock market.

Life Time II offer customers the flexibility and control to customize the policy to meet the changing

needs at different life stages. It offers 4 fund options preserver, protector, balancer and maximiser.

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

14

Retirement Solutions:

Forever Life is a retirement product targeted at individuals in their thirties.

Secure Plus Pension is a flexible pension plan that allows one to select between 3 levels of cover.

Life Time Pension II is a regular premium market linked pension plan.

Life Link Pension II is a single premium market linked pension's plan.

ICICI prudential also launched "Salaam Zindagi", a social sector group insurance policy targeted at the

economically underprivileged sections of the society.

Group Insurance Solutions ICICI Prudential also offers Group Insurance Solutions for companies seeking

to enhance benefits to their employees.

ICICI Pru Group Gratuity Plan: ICICI Pru's gratuity plan helps employers fund their statutory gratuity

obligation in a scientific manner. 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 flexible defined contribution superannuation

scheme to provide a retirement kitty for each member of the group. Employees have the option of choosing

from various annuity options or opting for a partial commutation of the annuity at the time of retirement.

ICICI Prudential has a wide array of insurance plans that have been designed with the

philosophy that different individuals are bound to have differing insurance needs.

The ideal insurance plan is one that addresses the exact insurance needs of the individual

that will depend on the age and life stage of the individual apart from a host of other

factors.

Life Insurance Plans:

15

Under Life insurance plans, ICICI Prudential offers plans under the following major

need categories:

Education insurance plans Wealth creation plan Protection plan

Pension & Retirement Solutions:

The primary objective of a pension plan is to help you provide for your financial needs

in your post retirement years. You will find a Pension Planning Calculator on the site,

meant to make your pension plan review as simple as possible. The calculator is the first

step in your Pension Plan scheme, there are other steps towards getting the Indian

pension policy you need.

ICICI Pru lifetime Pension maxima ICICI Pru lifestage pension advantage ICICI Pru Elite Pension II ICICI Pru Assure Pension ICICI Pru Forever life ICICI Pru Immediate Annuity

Health Product Suite:

Under Health Product Suite, ICICI Prudential offers plans under the following major

need categories:

Hospitalisation Plans

16

MediAssure Hospital care

Critical Illness Pans

Crisis cover

CHAPTER 3 STATEMENT OF PROBLEM The project envisages ascertaining the market potential of the life insurance industry by which the target

groups may be matched with the products by which the productivity level may be improved.

The project also finds out the need of various target groups which may help in improvement performance of

the advisors.

17

CHAPTER 4 OBJECTIVES OF THE STUDY

PRIMARY OBJECTIVE

1. To study the market potential of life insurance industry with special reference to ICICI Prudential Life

Insurance Company Limited.

SECONDARY OBJECTIVE

1. To find out the needs of the customers.

2. To find out the target segments which are left out by the organization.

3. To suggest ways to the management for targeting these segments.

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CHAPTER 5 REVIEW OF LITERATURE

MARKET POTENTIAL - AN OVERVIEW

In this section, the literature has been reviewed with especially a view to the market potential and how to

keep business with customers.

Market Potential:

The principles of determining market share and market potential are the same for all geographic areas. First

determine a customer profile (who) and the geographic size of the market (how many). This is the general

market potential. Knowing the number and strength of your competitors (and then estimating the share of

business you will take from them) will give you the market potential specific to your enterprise.

There is no doubt that the potential market for the buyers of insurance is significant in India and offers a great

scope of growth. First, while estimating the potential of the Indian insurance market we often tempt to look at

it from the perspective of macro-economic variables such as the ratio of premium to GDP which is indeed

comparatively low in India. For example, India's life insurance premium as a percentage of GDP is 1.3%

against 5.2% in the US, 6.5% in the UK or 8% in South Korea. But the fact is that the large part of the India's,

(the number of potential buyers of insurance) is certainly attractive. However, this ignores the difficulties of

approaching this population. New entrants in other mass industries such as consumer products or retail

19

banking have discovered this after burning their fingers. Much of the demand may not be accessible because

of poor distribution, large distances or high costs relative to returns.

Secondly most new entrants have a tendency to target the business of existing companies rather than

expanding the market, this is myopic. This not only leads to intense competition for the new players and their

much of their efforts is spent on trying to capture existing customers by offering better service or other

advantages. Yet, the benefits of this strategy are likely to be limited. For example, 50% of the current demand

for general insurance comes from the corporate segment. The corporates are likely to shop around for the best

rates, products and service. Nevertheless, the corporate segment, as a whole will not be a big growth area for

new entrants. This is because penetration is already good, companies receive good service because of their size

and rates are tariff-governed. In both volumes and profitability therefore, the scope for expansion is modest.

A better approach may be to examine specific niches where demand can be met or stimulated.

T h e g r o w t h s t r a t e g y f o r m a r k e t i n g : -

A n s o f f s p r o d u c t / m a r k e t m a t r i x

Introduction

The Ansoff Growth matrix is a tool that helps businesses decide their product and market growth strategy.

Ansoffs product/market growth matrix suggests that a business attempts to grow depend on whether it markets new or existing products in new or existing markets.

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The output from the Ansoff product/market matrix is a series of suggested growth strategies that set the direction for the business strategy. These are described below:

Market penetration

Market penetration is the name given to a growth strategy where the business focuses on selling existing products into existing markets.

Market penetration seeks to achieve four main objectives:

Maintain or increase the market share of current products this can be achieved by a combination of competitive pricing strategies, advertising, sales promotion and perhaps more resources dedicated to personal selling

Secure dominance of growth markets

Restructure a mature market by driving out competitors; this would require a much more aggressive promotional campaign, supported by a pricing strategy designed to make the market unattractive for competitors

Increase usage by existing customers for example by introducing loyalty schemes A market penetration marketing strategy is very much about business as usual. The business is focusing on markets and products it knows well. It is likely to have good

21

information on competitors and on customer needs. It is unlikely, therefore, that this strategy will require much investment in new market research.

Market development

Market development is the name given to a growth strategy where the business seeks to sell its existing products into new markets.

There are many possible ways of approaching this strategy, including:

New geographical markets; for example exporting the product to a new country

New product dimensions or packaging: for example

New distribution channels

Different pricing policies to attract different customers or create new market segments

Product development

Product development is the name given to a growth strategy where a business aims to introduce new products into existing markets. This strategy may require the development of new competencies and requires the business to develop modified products which can appeal to existing markets.

Diversification

Diversification is the name given to the growth strategy where a business markets new products in new markets.

This is an inherently more risk strategy because the business is moving into markets in

which it has little or no experience.

Growth Of Insurance Sector:-

Indian insurance sector is likely to register unprecedented growth of 200% and attain a

size of Rs. 2000 billion by 2009-10, in which a private sector insurance business will

achieve a growth rate of 140% as a result of aggressive marketing technique being

adopted by them against 35-40% growth rate of state owned insurance companies.

The aforesaid findings are made by The Associated Chambers of Commerce and

Industry of India (ASSOCHAM) on `Insurance in Next 2 Years, saying that in the last

22

couple of years, the insurance sector has grown by CAGR of around 175% and the trend

will emerge still better because of potential factor. Currently, the insurance sector size is

estimated at Rs.500 billion.

On account of intense marketing strategies adopted by private insurance players, the

market share of state owned insurance companies like GIC, LIC and others have come

down to 70% in last 4-5 years from over 97%.

The private insurance players despite the sector is still regulated has been offering rate of

return (RoR) to its policy holders which is estimated at about 35% as against 20% of

domestic insurance companies. This factor is mainly responsible for hike in private

insurance market share which will grow further which is why the ASSOCHAM

estimates that its growth rate could even exceed 140%.

Secondly, the state owned insurance companies such as LIC and GIC have limited

number of policies to offer to their subscribers while in case of private insurance

companies, their policy numbers are many more and the premium amount as well as the

maturity period is much competitive as against those of government insurance

companies. Interestingly, said Mr. Dhoot that the private sector insurance players have

started exploring the rural markets in which until recently, the state owned companies

had the monopoly.

The Chamber has projected that in rural markets, the share of private insurance players

would increase substantially as these have been able to generate a faith among their rural

consumers.

Estimating the potential of the Indian insurance market from the perspective of macro-

economic variables such as the ratio of premium to GDP, ASSOCHAM reveals that

Indias life insurance premium, as a percentage of GDP is 1.8% against 5.2% in the US,

6.5% in the UK or 8% in South Korea.

CHAPTET 6

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RESEARCH METHODOLOGY Introduction: According to the oxford advanced Learners Dictionary of current English the meaning of research is a

"Careful Study or investigation especially in order to discover new facts or information".

Research is defined as movement from the known to the unknown. It is an effort to discover something.

According to Clifford Woody "Research comprise defining and redefining problems formulating hypothesis or

suggested solutions, collecting/ organizing and evaluating data making deduction & research conclusions and

at last carefully testing the conclusion to determine whether they fit the formulation hypothesis.

5.1 HYPOTHESIS

Quite often a research hypothesis is a predictive statement, capable of being tested by scientific

methods that relates and independent variable to some dependent variable. The following hypothesis were set in order to achieve the objectives.

There is no significant relationship between the purpose of investment in

insurance and the annual income.

There is no significant relationship between the risk taken while investing and the

amount invested.

There is no significant relationship between age of the respondent and the risk taken by them while

investing.

5.2 Research design: Research design is a plan of action that guides the entire research. There are four types of research design

available. They are

1 Exploratory Research Design

2 Descriptive Research Design

3 Diagnostic Research Design

4 Experimental Research Design

In my Study Descriptive Research Design has been adopted.

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5.2 Sampling Method:

Simple random sampling method was adopted to select sample customer.

Under this sampling design, every item of the universe has an equal chance of inclusion

in the sample.

It is, so to say, a lottery method in which individual units are picked up from the whole group not

deliberately but by some mechanical process.

The list of 2400 customers of ICICI Bank in the Dwarka (New Delhi) Branch has been given .Every

customer has been given the numbers and the sample size of 120 has been selected by placing all these

numbers in a box and the numbers are picked up randomly.

5.3 Pre-testing:

Pre-testing as it is known is a method which has to be followed strictly. Once questionnaire is drafted it

should be field tested before finalizing.

The responses are studied to determine the need for restructuring the questionnaire. Pre-testing was done

on a group of 15 respondents. With the result of the pre-testing the researcher has reframed some of the

questions.

5.4 Period of Study :

The period of study is for two months i.c., march to april 2010

5.5 Method of Data Collection:

The data collected for the study includes both primary and secondary data in order to attain the objectives

of the study.

25

Apart from this information regarding the company, future prospects etc have been collected from

websites, clipping, from newspapers, magazines, journals, books.

5.6 Questionnaire Design:

Quite often questionnaire is considered as the heart of a survey operation. Hence it should be very

carefully constructed. Questionnaire was prepared with the combinations of various types of questions

which have been listed below.

5.7 Statistical Tools Used:

The role of statistics in research is to furnish as a tool in designing research, analyzing its data and drawing

conclusions there from. As every individual clearly knows that a researcher cannot ignore the science and

statistics. Tools used are as follow. Chi-Square test:

The objective of the chi-square test is to determine whether there is any significant difference exists

among the various groups. Chi-square test involves comparison of expected frequency (Ei) with observed

frequency (Oi) to determine whether the difference between the two is greater than the tabulated value

that might occur by chance. There are 5 steps in using chi-square test.

1. The difference between each observed frequency and each expected frequency is computed.

2. The difference is squared.

3. Each squared difference is divided by the respective expected frequency.

4. Their quotients are added together to obtain the computed chi square value.

5. This computed value is then compared to tabulate chi-square value.

If the computed x2 value is greater than the tabulated x2 value at a predetermined level of

significance and degrees of freedom, the hypothesis is rejected.

26

On the other hand, if the calculated x2 value is less than the tabulated valued, the

hypothesis is accepted.

X2 = (O-E)2/E

Where X2 = Chi-Square

O = Observed frequency

E = Expected frequency 5.9 Limitations of the Study:

The number of respondents who respond to the survey being limited there are chances for bias in the

output of the survey.

The respondents have little awareness over the private companies. So, it is difficult to find out the opinion

about the market link plans of the company.

Most of the respondents are not interested to give their suggestions for the survey.

27

\

CHAPTER 7

ANALYSIS AND INTERPRETATION

TABLE-1 AGE CLASSIFICATION OF RESPONDENTS

AGE NO.OFRESPONDENTS

PERCENTAGE %

1 25 30 10 8.3

2 31 35 24 20

3 36 40 33 27.5

4 41- 50 29 24.1

5 ABOVE 51 24 20

TOTAL 120 100

INFERENCE:

From the above table it can be inferred that 33 % respondents are between the age group above 46

years, 28% of the respondents were between the age group 20 25 , followed by 25 - 30 , 41- 45 and 31 - 35

with the percentages 23 %, 9 % and 9 %.

28

FIG. 11. AGE OF TTHE RESPOONDENTS

TAB

SNO

1

2

BLE- 2. G

GEND

MALE

FEMA

TOTA

24%

GENDER

DER

E

ALE

AL

%

2

25 30

R CLASSI

NO.OFRESPON

74

46

120

20%

0 31 35

29

IFICATIO

NDENTS

8

36 40

ON OF TH

8%

28%

41 50 A

HE RESP

PERCENT%

61.6

38.3

100

ABOVE51

20%

%

PONDEN

TAGE

NTS

INFERENCE:

From the above table it can be is inferred that 61.6% are male respondents and 38.3% are female

respondents.

FIG.2 GENDER CLASSIFICATION

62%

38%

MALE FEMALE

30

TABLE-3 EDUCATION QUALIFICATION OF THE RESPONDENTS

SNO EDUCATION NO.OFRESPONDENTS

PERCENTAGE %

1 HSC 23 19.1

2 GRADUATE 47 39.1

3 PG 33 27.5

4 OTHERS 17 14.1

TOTAL 120 100

INFERENCE:

From the table it can be inferred that 39.1% of the respondents are graduates, 27.5% are the post

graduates followed by Hsc and others with 19.1% and 14.1%

31

FIG.3 E

PG28%

EDUCATIOON QUALIIFICATIONN OF THE RESPONDDENTS

OTHERS14%

%OFR

32

S

RESPON

HSC19%

NDENTSS

GRADUATE39%

TABLE-4. OCCUPATION OF THE RESPONDENTS

SNO OCCUPATION NO.OFRESPONDENTS

PERCENTAGE%

1 SELF EMPLOYE 27 22.5

2 GOVERNMENT SERVANT 28 23.3

3 PRIVATE 32 26.6

4 HOUSE WIFE 11 9.1

5 RETIRED 14 11.6

6 OTHERS 8 6.6

TOTAL 120 100

INFERENCE:

From the table it can be inferred that 26.6% of private employees, 23.3% are government servants

followed by self employees, retired, house wife's and others.

33

FIG.4.OOCCUPAATION OFF RESPONDENTSS

TABL SNO

1

2

3

4

5

INFE

LE-5. ANNU

AN

BE

1-2

2-5

5-

AB

TO

ERENCE:

UAL INCOME

NNUAL INCO

ELOW 1 LAC

2 LAC

5 LAC

10 LAC

BOVE 10 LAC

OTAL

9%

12%

%OSELFEMPLO

PRIVATE

RETIRED

E OF THE R

OME

C

C

27%

%7%

OFRESPOYE

34

RESPONDEN

NO.OFRESPON

27

53

18

12

10

120

22%

23%

PONDENGOVERNM

HOUSEWI

OTHERS

NTS

.NDENTS

%

NTSMENTSERVANT

FE

PERCE%

22.5

44.1

15

10

8.3

100

T

ENTAGE

follow

From the t

wed by below 1

table it can be

1 lac, 2-5 lac, 5

inferred that 4

5-10 lac and ab

44% of the res

bove 10 lac.

pondents are iin the income group 1- 2 lacc,

FIGG.5 AN

TABCOM

SNO

1

2

3

4

BLE-6. MPANIE

0

10

20

30

40

50

60

B

NNUAL

CO

LIC

ICIC

BIR

SBI

RESPES.

ELOW1LAC

12

1

INCOM

MPANY

C

CI PRUDENT

RLA SUN LIF

I LIFE

PONDEN

2LAC 25L

2 3

ME O

TIAL

E

35

NTS AW

LAC 5 10LA

3 4

OF TH

NO.ORESPO

52

26

12

8

WARENES

AC ABOVE1LAC

5

HE RE

OF.ONDENTS

SS OF

0

N

P

ESPONDE

PER%

43.3

21.6

10

6.6

INSURA

NO.OF.RESPO

PERCENTAGE

ENTS

ONDENTS

%

ANCE

CENTAGE

5

ICICI

OTH

TO

I PRUDENTIA

FI

HERS

OTAL

From

AL, OTHERS

IG.6. AWAR

27

LIC

m the above t

S, BIRLA SUN

RENESS OF I

7%

12%

%OF.ICICIPRUDE

22

120

36

INFERENCE

able 43.3% of

N LIFE, and S

INSURANCE

8%

RESPONNTIAL BIR

E:

f the responde

SBI LIFE.

E COMPANI

NDENTSRLASUNLIFE

18.3

100

ents were awar

ES

53%

SSBILIFE

re of lIC follo

owed by

TABLE-7. PURPOSE OF INVESTMENT IN INSURANCE

SNO PURPOSE OF

INVESTMENT

NO.OF.RESPONDENT

PERCENTAGE %

1 LIFE COVERAGE 72 60

2 RETURNS 12 10

3 LIQUIDITY 8 6.6

4 INVESTMENT 22 18.3

5 OTHERS 6 5

TOTAL 120 100

INFERENCE:

From the table it can be inferred that 60% of the respondents have invested in insurance for life

coverage, followed by investments, returns, liquidity and others.

FIG.7. PURPOSE OF INVESTMENT IN INSURANCE

37

TABRIS

SNO

1

2

3

4

INFE

follow

BLE-8. WSK WHIL

ERENCE:

From the t

wed by risk ave

RETUR10%

LIQUIDITY7%

INVE

WILLINGLE INVE

INVE

HIGH

MODE

LOW

RISK

TOTA

table it can be i

erse, low risk ,

RNS%

ESTMENT18%

OTHERS5%

GNESS OFESTING I

ESTMENT RIS

H RISK

ERATE RISK

RISK

AVERSE

AL

inferred that 3

and high risk.

%OF.R

38

F THE REIN INSUR

SK

K

35.8% of the re

RESPON

ESPONDRANCE

NO.OF.RESPOND

18

43

28

31

120

espondents are

LIFECOV60

DENT

VERAGE0%

DENTS TO

DENTS

e willing to tak

O TAKE

THE

PERC%

15

35.8

23.3

25.8

100

CENTAGE

ke moderate rissk

FIG.8. INVESTMENT RISK

0

5

10

15

20

25

30

35

40

45

50

HIGHRISK MODERATERISK

LOWRISK RISKAVERSE

NO.OF.RESPONDENTS

PERCENTAGE%

TABLE-9. INVESTMENT IN OTHER AVENUES

SNO INVESTMENTS NO.OF.RESPONDENTS

PERCENTAGE%

1 MUTUAL FUNDS 25 20.8

2 FIXED DEPOSITS 47 39.1

39

3

4

5

INFE

From

funds

TABPRU

SHARES

REAL ESTA

OTHERS

TOTAL

ERENCE

the table it ca

, real estates an

BLE-10. UDENTIA

REALE15

an be inferred t

nd others.

FIG.9. IN

AWAREAL.

SHAR13%

ESTATES5%

ATES

16

18

14

12

that 39.1% of

VESTME

ENESS O

ES%

%OF

40

6

8

4

20

the responden

ENTS IN O

F MARK

OTHERS12%

F.RESPO

nts invested in

OTHER A

KET LIN

FIXED

ONDENT

13.3

15

11.6

100

fixed depositss followed by mmutual

AVENUESS

NK PLAN

MUTUALFUNDS21%

DDEPOSITS39%

TSL

NS OF ICICI

SNO AWARENESS NO.OF.RESPONDE NTS PERCENTAGE%

1 FULLY AWARE 32 26.6

2 PARTIALLY AWARE 52 43.3

3 NOT AWARE 20 16.6

4 CANT SAY 16 13.3

TOTAL 120 100

INFERENCE:

From the table it can be inferred that 43.3% of the respondents are partially aware of market link

plans followed by fully aware, not aware and can't say.

FIG.10. AWARENESS OF MARKET LINK PLANS

41

TABOF

SNO

BLE-11. IICICI PR

O INV

1 YES

NVESTMRUDENT

VESTMENT

S

NOTA1

MENT INTIAL

MADE

AWARE7%

C

%O

42

N THE M

NO.OF

47

PAA

CANTSAY13%

OF.RESP

MARKET

F.RESPOND

FULLY2

ARTIALLYAWARE43%

ONDEN

LINK PL

DENTS

NTS

YAWARE27%

LANS

PERCENTA%

39.1

AGE

2 NO

TOT

INFE

Only FIG.

TABOF

SNO

1

ERENCE:

From the a

39.1% respond.11.

BLE-12. ICICI

O AMO

INV

BEL

%

TAL

above table we

dents are awar

AMOUN PRUDE

OUNT

VESTED

LOW 25,000

NO61%

%.OF.RESM

73

120

e can infer that

re of the Mark

NT INVEENTIAL

SPONDEMARKET

43

t 60.9% of the

ket Link plans

ESTED

NO.OF.R

18

ENTSINLINKPL

respondents a

IN MAR

RESPONDEN

YES39%

NVESTEDLANS

60.9

100

are not aware oof market link plans.

RKET L

NTS

DIN

LINK PL

PERCEN%

38.2

LANS

NTAGE

2 25,000 - 50,000 11 23.4

3. 50,000-75,000 7 14.8

4. 75,000-1,00,000 6 12.7

5. ABOVE 1,00,000 5 10.6

TOTAL 47 100

INFERENCE:

From the above table it can be inferred that 38.2% of the respondents have

invested below 25000 followed by 25,000 - 50,000-75,000-1,00,000 and above 1,00,000.

FIG.12.AMOUNT INVESTED IN MARKET LINK PLANS

44

0

2

4

6

8

10

12

14

16

18

TABRESPLA

S.NO

1. 2 3. 4.

INFE

BLE-13. SPONDEANS.

O.

ERENCE:

0

2

4

6

8

0

2

4

6

8

EDUCENT WH

EDU

HSCGRAPG OTHTOT

NO

CATIONAHO HAV

UCATION

ADUATE

HERS TAL

O.OF.RE

45

AL QUVE INVE

NORE923301072

ESPOND

UALIFICAESTED

O.OF.ESPONDENT

DENTS

ATION IN MAR

TS P%13411

NO.OF.RESP

OF TRKET L

PERCENTAG% 12 32 42 14 100

ONDENTS

THE LINK

GE

From the table it can be inferred that Graduate's and post graduates are having good knowledge

about the market link plans.

FIG.13. EDUCATION OF RESPONDENTS

12%

32%

42%

14%

%OF.RESPONDENTSHSC GRADUATE PG OTHERS

TABLE-14. ANNUAL INCOME OF THE RESPONDENT WHO HAVE INVENTED IN MARKET LINK PLACES:

46

S.NO ANNUAL INCOME NO.OF.RESPONDENTS

PERCENTAGE%

1 BELOW 1 LACK 14 19.4

2. 1-2 LACK 29 40.2

3. 2-5 LACK 15 20.8

4. 5 -10 LACK 8 11.1

5 ABOVE 6 8.3

TOTAL 72 100

INFERENCE:

From the table it can be inferred that the respondents whose annual income is between 1 - 2 lack had

made their investment in market link.

FIG.14. ANNUAL INCOME OF RESPONDENT

47

14

29

15

86

0

5

10

15

20

25

30

35

BELOW1LACK 12LACK 25LACK 510LACK ABOVE

NO.OF.RESPONDENTS

TABLE-15. OCCUPATION OF THE RESPONDENTS WHO HAVE INVENTED IN MARKET

LINK PLANS.

S.NO OCCUPATION NO.OF.

RESPONDENTS PERCENTAGE

1 SELF EMPLOYEE 12 16.7

2 GOVERNMENT SERVENT

14 19.4

3 PRIVATE EMPLOYEE 32 44.4

4 HOUSE WIFE 2 2.8

5 RETIRED 4 5.6

6 OTHERS 8 11.1

TOTAL 72 100

INFERENCE:

48

From the table it can be inferred that private employees have invested in market link plans in a large

number compared to others.

FIG.15.

0

5

10

15

20

25

30

35

OCCUPATIONOFRESPONDENTS

NO.OF.RESPONDENTS

STATISTICALS ANALYSIS:

49

( I )Chi-square test to find out the relationship between the purpose of investment in

insurance and the annual income of the respondent.

Null Hypothesis (Ho) : There is no significant relationship between the purpose of investment

in insurance and the annual income.

Alternate Hypothesis (H1) : There is significant relationship between the purpose of the

investment in insurance and the annual income.

PURPOSE OF INVESTMENT ANNUAL INCOME

Life

Coverage Returns Liquidity Investment Others Total

Below 1,00,000 12 5 3 6 1 27

1 to 2,00,000 28 7 2 11 5 53

2 to 5,00,000 15 0 1 2 0 18

5 to 10,00,000 9 0 2 12 0 12

Above 10,00,000 8 0 0 2 0 10

Total 72 12 8 22 6 120

Chi-Square Table

50

0 E (0-E)2

(0-E)2 E 12 16.2 17.64 1.088 5 2.7 5.29 1.959 3 1.8 1.44 0.8 6 4.95 1.025 0.222 1 1.35 0.1225 0.0907 28 31.8 14.44 0.454 7 5.3 2.89 0.545 2 3.53 2.3404 0.663

11 9.7 1.69 0.1742

5 2.65 5.5225 2.083

15 10.8 17.64 1.6333

0 1.8 3.25 1.8055

1 1.2 0.04 0.333

2 3.3 1.69 0.5121

0 0.9 0.81 0.9

9 7.2 3.24 0.45

0 1.2 1.44 1.2

2 0.8 1.44 1.8

1 2.2 1.44 0.654

0 0.6 0.36 0.6

8 6 4 0.666

0 1 1 1

0 0.66 0.4356 0.66

2 1.83 0.17 0.0928

0 0.5 0.25 0.5

Total = 20.5859

Degree of freedom = (r-1) (c-1)

=(5-1) (5-1)

= 16

51

52

The tabulated value of x2 at 16 degree of freedom and at 0.05 level of significanceis 26.296

Since the calculated value is less than the tabulated value our null hypothesis is accepted and alternate

hypothesis is rejected.

Inference: There is no significance relationship between the purpose of investment in insurance and the annual

income.

( II ). Chi-square test find out the relationship between the risk taken while investing and the

amount invested.

Null Hypothesis: There is no significant relationship between the risk taken while and the

amount invested.

Alternate Hypothesis: There is significance relationship between the risk taken while investing and the amount

invested.

RISK TAKEN WHILE INVESTMENT AMOUNT INVESTED

High Risk Moderate Risk

Low Risk Risk Averse Total

Below 25,000 6 5 5 2 18

25,000 - 50,000 3 2 4 2 11

50,000 - 75,000 2 3 2 0 7

75,000 - 1,00,000 2 3 0 1 6

Above 1,00,000 0 3 0 2 5

Total 13 16 11 7 47

53

Chi square test:

0 E (0-E)2 (0-E)2 E

6 5 1 0.2 5 6.1 1.21 0.19 5 4.2 0.64 0.15 2 2.7 0.49 0.18 3 3.04 0.0016 0.005 2 3.8 3.24 0.85

4 2.6 1.96 0.75

2 1.7 0.09 0.05

2 1.9 0.01 0.005

3 2.3 0.49 0.21

2 1.7 0.09 0.05

0 1.04 1.086 1.04

2 1.7 0.09 0.05

3 2.04 0.9216 0.45

0 1.4 1.96 1.4

1 0.9 0.01 0.01

1 1.3 0.01 0.01

3 1.7 1.69 0.9

0 1.1 1.21 1.1

0 0.7 0.49 0.7

TOTAL 8.3955

Degree of freedom:

= (4 - 1) (5-1)

= 12

The tabulated value of x2 at 12 degrees of freedom and at 0.05 level of significance is = 21.026

Since the computed value is less than the tabulated value Null Hypothesis is accepted and alternate hypothesis is

rejected.

54

Inference:

There is no significant relationship between the risk taken while investing and the amount invested.

( III ) Chi-Square table find out the relationship between the age of the respondents and the risk taken by the

respondent while investing.

Null Hypothesis:

There is no significant relationship between age of the respondent and the risk taken while investing.

Alternate Hypothesis:

There is significant relationship between the age of the respondent and the risk taken while investing.

AGE RISK

25-30 31-35 35-40 41-50Above 51

Total

High Risk 3 5 6 3 1 18

Moderate Risk 4 12 19 5 3 43

Low Risk 2 3 4 9 10 28

Risk Averse 1 4 4 12 10 31

Total 10 24 33 29 24 120

Chi-Square Table

0 E (0-E)2 (0-E)2 E

3 1.5 2.25 1.5 5 3.6 1.96 0.54

55

6 5 1 0.2 3 4.35 1.8225 0.4 1 3.6 6.76 1.9

4 3.6 0.16 0.04

12 8.6 11.56 1.34

19 12 49 4.08

5 10.3 28.09 2.7

3 8.6 37.36 3.6

2 2.3 0.09 0.03

2 5.6 6.76 1.2

4 7.7 13.69 1.7

9 6.8 4.84 0.07

10 5.6 19.36 3.45

1 2.6 2.56 1

4 6.2 4.84 0.07

4 8.5 20.25 2.38

12 7.5 20.25 2.7

10 6.2 14.44 2.3

Total = 32.38

Degree of freedom = (r-1) (c-1)

= 4 x 5

= 21.026 The tabulated value of x2 at 12 degrees of freedom and at 0.05 level of significance is

21.026.

Since the tabulated value is less than the calculated value our alternate hypothesis is accepted and null hypothesis is

rejected.

56

Inference: There is significant relationship between the age of respondents and amount of risk taken while investing.

CHAPTER 8

FINDINGS

The respondents have wide knowledge about the market link plans of different insurance companies.

The respondents are willing to take moderate risk while investing in market link plans.

The education qualification of the respondent plays a vital role while investing in market link plans.

The respondent working in private organization are fully aware of the market link plans.

Most of the respondents doesn't have the complete knowledge about the equity market and the debt market.

57

Most of the male respondents spouses do not have insurance

More than 50% of the respondents have gone in for traditional plans than for market linked insurance and they are

also willing to take high or moderate risk.

The awareness towards key man insurance is very low among the private limited companies. But the opportunity

which was available in keyman insurance is lost because of the rule brought in by IRDA as only term products can

be given for Key man Insurance.

CHAPTER 9

SUGGESTIONS

1. The investors should be given monthly reports instead of quarterly reports.

2. ICICI prudential has to concentrate more on advertisement through news papers televisions etc., in order to

inform the customers about the different options available in market link plans.

3. Against the population 105 crores only 10 crores are covered by insurance. Private insurance companies have to

reach to all segment of market by winning the confidence of the public.

4. Many people are not willing to monitor the equity market for the funds maintained in market linked insurance

plan even though they have the knowledge of the market. Therefore ICICI Pru can come out with non

participating market linked products.

58

5. They can also concentrate on the lives of females whose life is also valuable both financially and mentally.

6. Now the whole Rs. 100000 can be invested in insurance which can offer a high rate of return than any other

segment.

7. They can also concentrate private limited companies for key man insurance and have a Niche product for the

same so that the penetration can be made easily which may include an annuity scheme which may be used for

superannuation.

CHAPTER 10

CONCLUSION

Life is uncertain and life insurance makes this uncertain as certain.

Even though the bread winner of the family dies, the family will not suffer and they can enjoy the life insurance

cover. Life insurance will protect the family and make them happy in future.

There is always a market potential for life insurance among the housewives segment where the penetration of life

insurance has been very low.

The additional tax benefits provided in the budget has also increased the potential of life insurance.

The awareness and penetration of key man insurance among the private limited companies is not even one

percentage. This may give a scope for a large market in this segment. But it can be given only as a pure insurance

product and not as an investment.

59

BIBLIOGRAPHY

BOOKS

S.P.GUPTA - Statistics D.N.ELHANCE - fundamentals of statistics WILLIAM G. ZIKMUND- Business research methods

Websites:

www.icicipru.com

www.icicibanks.com

www.google.co.in

60

QUESTIONNAIRE To study the GROWTH OF UNIT LINKED INSURANCE PLANS IN INDIAN

INSURANCE INDUSTRY AT ICICI PRUDENTIAL LIFE INSURANCE COMPANY

LIMITED

Name : Address :

1. Sex :

Male [ ] Female [ ] 2. Age:

25 - 30 [ ] 31 - 35 [ ] 36 - 40 [ ] 41 - 50 [ ] Above 51 [ ]

3. Education:

HSC [ ] Graduate [ ] PG [ ] Others [ ] 4. Annual Income:

61

Below1, 00,000 [ ] 1- to 2, 00,000 [ ] 2 to 5, 00,000 [ ] 5 to 10, 00,000 [ ]

Above 10, 00,000 [ ] 5. Occupation:

Self Employee [ ] Government Servant [ ] Private Employee [ ] House Wife [ ] Retired [ ] Others [ ]

6. If I say Life Insurance which company comes to your mind?

L.I.C. [ ] ICICI Prudential [ ] Birla Sun Life [ ] SBI Life [ ] Others [ ]

7. What is the purpose of your investment in insurance?

Life Coverage [ ] Returns [ ] Liquidity [ ] Investment [ ] Others [ ]

8. Have you invested in any of the following?

Mutual Funds [ ] Fixed Deposits [ ] Shares [ ] Real Estate [ ] Others [ ]

9. Are you aware of insurence plans of ICICI Prudential?

Fully aware [ ] Partially Aware [ ]

62

Not aware [ ] Cant Say [ ]

10. How did you come to know about these plans?

News Papers [ ] Media [ ] Advisors [ ] Friends [ ]

11. How much risk are you willing to take while investing insurance

High Risk [ ] Moderate Risk [ ]

Low Risk [ ] Risk Averse [ ]

12. Have you ever invested in the market link plan of ICICI PRUDENTIAL?

Yes [ ] No [ ]

13. If yes how much money have you invested?

63

64

Below 25,000 [ ] 25,000 - 50,000 [ ] 50,000-75,000 [ ]

75,000 - 1, 00,000 [ ] Above 1, 00,000 [ ] 14. Are you satisfied with the service provided by ICICI Prudential?

Yes [ ] No [ ] Cant Say [ ]