A Comparative Analysis of ULIP of Bajaj Allianz Life
Insurance Co. Ltd with Mutual und
MI!I P"#$%C& "%P#"&
'u(mitted (y
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st
1ear MBA
2A"U!1A U!I)%"'I&1
Under the 3uidance of
Ms. P.M. A!U'*IA
L%C&U"%"
2A"U!1A 'C*##L # MA!A+%M%!&
2A"U!1A U!I)%"'I&1
C#IMBA&#"% 4 560006
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8%CLA"A&I#!
I, Rajeev Joseph, do hereby declare that this project work entitled “A
Comparative Analysis of ULIP of Bajaj Allianz Life Insurance Co. Ltd
with Mutual und9 is an outcome of my study and is submitted in partial
fulfillment of the requirement for the award of the degree of Master of
usiness !dministration, "arunya #niversity$
I also declare that this report has not been submitted by me fully or
partially for the award of any degree, diploma, title, recognition or any other
fellowship of any other university before$
%lace& 'hanganacherry
(ate& )*+,-+),,. "A$%%) $#'%P*
AC2!#:L%8+%M%!&
Initially, let me thank the almighty /od for guiding me all through the
project work$
I e0press my deep and sincere gratitude to Ms$ %$M$ !nushia, 1aculty
guide for providing the necessary assistance for the project$
I sincerely acknowledge my gratitude to Mr$ Justin %aul, ranch Manager
of ajaj !llian2 3ife Insurance 'ompany 3td, 'hanganacherry branch
and Mr$ iju 4ebastian ,4ales Manager for giving me an opportunity to
do this project$
I also owe my sincere thanks to all the staff in ajaj !llian2 3ife
Insurance 'ompany 3td, 'hanganacherry branch, and the faculties of the
(epartment of usiness !dministration, "!R#56! #5I78R4I96 for
their valuable guidance and suggestion in the preparation of this report
and completing the same successfully$
C*AP&%" C#!&%!& PA+% !o,
0 %;ecutive 'ummary 0
Introduction /
#(jectives <
Limitation <
/ Indian Insurance Industry 6
< Industry Profile 00
Unit Lin=ed Insurance Policy >ULIP? 0@
Mutual und //
6 8ata Interpretation and Analysis 60
indin3s and 'u33estion A0
Conclusion and "ecommendations A<
Bi(lio3raphy A6
@ Anne;ture A.
%B%CU&I)% 'UMMA"1
“A comparative Analysis of ULIP plans of Bajaj Allianz Life Insurance with mutual
funds in Chan3anacherry Branch: an analysis to be done be by Rajeev Joseph,
student;M!< of "arunya #niversity, 'oimbatore$
9otal Investment scenario is changing, in past people were not interested in investment
because there were no good options available for investment$ 5ow there are many
options available for investment like life Insurance, Mutual fund, 8quity market, Real
estate, etc$
9oday people want more services and more return on their investment$ 4o, most of the
insurance companies are providing more value = added services with the basic insurance
operation$
!nother option for investment available is Mutual 1und$ Mutual 1unds are providing
good returns$ 4o while investing people tend more to words mutual fund as they are
providing more returns than Insurance also, with a good investment portfolio$ Mutual
fund companies are providing more liquidity$
9he project was taken to know about, what are the main aspects in ajaj !llian2 3ife
Insurance 'ompany, and its #4% ;#nique 4elling %repositionhich gives it highest
business and customers$ 'ustomers always prefer to invest in a good option and in a
company which is market leader$
!fter survey and analysis I came to know that most of the people go for #3I% insurance
policies to cover the risk of life, and invest it in a good %ortfolio but there is big portion
of customers have taken the policies to save the ta0es$ !nd people are aware about the ta0
benefits they get for insurance policies$ 9herefore, while investing in any Investment
option investor checks whether his money is safe or not, Mutual funds provides good
returns but investments are directly e0posed to risk$ !s in #3I% returns are related to
stock market but they are having some insurance benefit and IR(! regulates the
investment$
Many people are getting the ta0 benefits in #3I%$ In Mutual 1und they have to invest
their money in ta0 saving funds to get the ta0 benefit$
I!&"#8UC&I#!
9o make comparison of #3I% plans with Mutual funds in ajaj !llian2 3ife Insurance
'o$ 3td$ and to 'reate awareness about #nit 3inked Insurance %lan ;#3I%< enefits$ 9he
overall goal of this project was to create awareness about investments$ 9he !bove
problem arises because every life insurance company has their products having different
positive and negative aspects$
3ife Insurance is booming sector in today?s economy$ 4o the responsibilities of the
insurance companies have been increased as compare to the past$ ecause in past people
were taking insurance policies for protection tool only$ In present scenario insurance
sector is providing more services with the basic life insurance$ ajaj !llian2 3ife
Insurance has number of products, which gives the right way to save the money and earn
good profit by invested premium$ 9oday people want more services and more return on
their investment$ 4o this insurance company is providing more value = added services
with the basic insurance operation$
y doing this type of study in this Insurance sector and looking at the vast scope and
opportunity to study this booming field of 3ife Insurance and the growing awareness
among the public regarding insuring their life through 3ife insurance policies as well as
the growing contribution of Insurance in /(% of country with the number of private
players making entrance in this booming industry of Insurance$
! Mutual 1und is a trust that pools the savings of a number of investors who share a
common financial goal$ 9he money thus collected is then invested in capital market
instruments such as shares, debentures and other securities$ 9he income earned through
these investments and the capital appreciations reali2ed are shared by its unit holders in
proportion to the number of units owned by them$ 9hus a Mutual 1und is the most
suitable investment for the common man as it offers an opportunity to invest in a
diversified, professionally managed basket of securities at a relatively low cost$
#B$%C&I)%'
• 9o understand the reason for which customers prefer #3I% as one of the best
insurance investment mode rather than Mutual fund$
• 9o find the significance difference between customers of different income with
that of investment mode$
• 9o 'ompare Investment @ptions of customers in #3I%s and Mutual 1unds$
LIMI&A&I#!'
• 9he middle class people do not know basic concept of #3I% so creating
awareness is a big challenge for me$
• 9he findings of my research is from a small sample si2e$
• 5arrow minded thinking of middle class people as investment is not their cup of
tea$
• Many customers are thinking that investment in share market is very risky$ !s
#3I% and Mutual fund both are related to share market$
• ! general preference to 3I' and 4I over private players$
• Aesitations on the part of respondents to disclose financial information.
I!8IA! I!'U"A!C% I!8U'&"1
9he history of life insurance in India dates back to *B*B when it was conceived as a
means to provide for 8nglish >idows$ Interestingly in those days a higher premium was
charged for Indian lives than the non+Indian lives as Indian lives were considered more
riskier for coverage$ 9he ombay Mutual 3ife Insurance 4ociety started its business in
*BC,$ It was the first company to charge same premium for both Indian and non+Indian
lives$ 9he @riental !ssurance 'ompany was established in *BB,$ 9he /eneral insurance
business in India, on the other hand, can trace its roots to the 9riton ;9ital< Insurance
'ompany 3imited, the first general insurance company established in the year *BD, in
'alcutta by the ritish$ 9ill the end of nineteenth century insurance business was almost
entirely in the hands of overseas companies$Insurance regulation formally began in India
with the passing of the 3ife Insurance 'ompanies !ct of *.*) and the provident fund !ct
of *.*)$ 4everal frauds during ),Es and F,Es sullied insurance business in India$ y *.FB
there were *C- insurance companies$ 9he first comprehensive legislation was introduced
with the Insurance !ct of *.FB that provided strict 4tate 'ontrol over insurance business$
9he insurance business grew at a faster pace after independence$ Indian companies
strengthened their hold on this business but despite the growth that was witnessed,
insurance remained an urban phenomenon$
9he /overnment of India in *.D-, brought together over )G, private life insurers and
provident societies under one nationali2ed monopoly corporation and 3ife Insurance
'orporation ;3I'< was born$ 5ationali2ation was justified on the grounds that it would
create much needed funds for rapid industriali2ation$ 9his was in conformity with the
/overnmentEs chosen path of 4tate lead planning and development$9he ;non+life<
insurance business continued to thrive with the private sector till *.C)$ 9heir operations
were restricted to organi2ed trade and industry in large cities$ 9he general insurance
industry was nationali2ed in *.C)$ >ith this, nearly *,C insurers were amalgamated and
grouped into four companies+ 5ational Insurance 'ompany, 5ew India !ssurance
'ompany, @rientalInsurance 'ompany and #nited India Insurance 'ompany$ 9hese were
subsidiaries of the /eneral Insurance 'ompany ;/I'ULIP?
! unit linked insurance policy is one in which the customer is provided with a life
insurance cover and the premium paid is invested in either debt or equity products or a
combination of the two$ In other words, it enables the buyer to secure some protection for
his family in the event of his untimely death and at the same time provides him an
opportunity to earn a return on his premium paid$ In the event of the insured personEs
untimely death, his nominees would normally receive an amount that is the higher of the
sum assured ;insurance cover< or the value of the units ;investments%< and dividend reinvestment plans, you can systematically invest
or withdraw funds according to your needs and convenience$
C. Choice of 'chemes, Mutual 1unds offer a variety of schemes to suit your varying
needs
over a lifetime$
0-. :ell "e3ulated, !ll Mutual 1unds are registered with 48I and they function within
the
provisions of strict regulations designed to protect the interests of investors$9he
operations
of Mutual 1unds are regularly monitored by 48I$
8I'A8)A!&A+%' # MU&UAL U!8' &
N !o +uarantees, 5o investment is risk free$ If the entire stock market declines in
value, the value of mutual fund shares will go down as well, no matter how balanced the
portfolio$ Investors encounter fewer risks when they invest in mutual funds than when
they buy and sell stocks on their own$ Aowever, anyone who invests through a mutual
fund runs the risk of losing money$
N ees and commissions& !ll funds charge administrative fees to cover their day+to+
day e0penses$ 4ome funds also charge sales commissions or OloadsO to compensate
brokers, financial consultants, or financial planners$ 8ven if you donEt use a broker or
other financial adviser, you will pay a sales commission if you buy shares in a 3oad
1und$
N &a;es& (uring a typical year, most actively managed mutual funds sell anywhere from
), to C, percent of the securities in their portfolios$ If your fund makes a profit on its
sales, you will pay ta0es on the income you receive, even if you reinvest the money you
made$
N Mana3ement ris=& >hen you invest in a mutual fund, you depend on the fundEs
manager to make the right decisions regarding the fundEs portfolio$ If the manager does
not perform as well as you had hoped, you might not make as much money on your
investment as you e0pected$ @f course, if you invest in Inde0 1unds, you forego
management risk, because these funds do not employ managers$
! measurement of an option position or premium in relation to the underlying instrument$
In mutual fund also there is certain amount of risk+return factor associated according to
the investment option these are as follows,
RI4" R89#R5
8quity *i3h *i3h
alanced Medium Medium
(ebt Low Low
&1P%' # MU&UAL U!8',
I. Closed7end or #pen7end
#pen7end unds, !n open+end fund is one that has units available for sale and
repurchase at all time$ !n investor can buy or redeem units from the fund itself at a price
based on the 5et !sset 7alue ;5!7< per unit$
Close7end unds, ! close ended fund makes a one+time sale of a fi0ed number of unit$ It
does not allow investors to buy or redeem units directly from the funds$ Aowever, to
provide liquidity to investors many closed+end funds get themselves listed on stock
e0change$ 1unds do offer “buy+back of fundsPunits: thus offering another avenue for
liquidity to closed+end fund investor$
II. Load vs. !o Load, Marketing of a new mutual fund scheme involves initial
e0pense$ 9hese e0penses may be recovered from the investors in different ways at
different times$ 9hree usual ways in which a fund?s sales e0penses may be recovered
from the investors are&
*$ !t the time of investor?s entry into the fundPscheme, by deducting a specific amount
from his initial contribution& front+end or entry load$
)$ y charging the fundPscheme with a fi0ed amount each year, during the stated number
of years& deferred load$
F$ !t the time of the investor?s e0it from the fundPscheme, by deducting a specific amount
from the redemption proceeds payable to the investor& back end or e0it load 9hese
charges made by the fund managers to the investors to cover distributionPsalesPmarketing
e0penses are often called “loads:$ 1unds that charge front+end, back+end or deferred
loads are called load funds$ 1unds that make no such charges or loads for sales e0penses
are called no+load funds$
In India, 48I has defined a “load: as the one+time fee payable by the investor to allow
the fund to meet initial issue e0penses including brokers?Pagents?Pdistributors?
commissions, advertising and marketing e0penses$
! load fund?s declared 5!7 does not include load charges
III. &a;7e;empt vs. !on7&a; e;empt unds, /enerally, when a fund invests in
ta0+e0empt securities, it is called a ta0+e0empt fund$ In India, after the *... #nion
/overnment udget, all of the dividend income received from any of the mutual funds is
ta0+free in the hands of the investors$ Aowever, funds other than 8quity 1unds have to
pay a distribution ta0, before distributing income to investors$ In other words, equity
mutual fund schemes are ta0+e0empt investment avenues, while other funds are ta0able
for distributable income$
(ifferent types of mutual fund
&ypes of Mutual und,
@nce we have reviewed the fund classes, we are ready to discuss more specific fund
types$ 1unds are generally distinguished from each other by their investment objectives
and types of securities they invest in$
A. Broad und &ypes (y !ature of Investments
Mutual funds may invest in equities, bonds or other fi0ed income securities, or short+term
money market securities$ 4o we have 8quity, onds and Money Market 1unds. !ll of
them invest in financial assets$ ut there are funds that invest in physical assets$ 1or
e0ample, we may have /old or other %recious Metal 1unds, or Real 8state 1unds.
B. Broad und &ypes (y Investment #(jective
Investors and hence the mutual funds pursue different objectives while investing$ 9hus,
+rowth unds invest for medium to long term capital appreciation$
Income unds invest to generate regular income, and less for capital appreciation$
)alue unds invest in equities that are considered under+valued today, whose value will
be unlocked in the future$
C. Broad und &ypes (y "is= Profile
9he nature of a fund?s portfolio and its investment objective imply different levels of risk
undertaken$ 1unds are therefore often grouped in order of risk$ 9hus, 8quity 1unds have a
greater risk of capital loss than a (ebt 1und that seeks to protect the capital while looking
for income$ Money Market 1unds are e0posed to less risk than even the 1or internal use
by 9raining (epartment of %rudential I'I'I Mutual 1und ond 1unds, since they invest
in short+term fi0ed income securities, as compared to longer+term portfolios of ond
1unds$
Money Mar=et unds, 3owest rung in the order of risk level, Money Market 1unds
invest in securities of a short+term nature, which generally means securities of less than
one+year maturity$
+ilt unds, /ilts are government securities with medium to long+term maturities,
typically of over one year ;under one+year instruments being money market securitiesor Income unds?, 5e0t in the order of risk level, we have the general
category (ebt 1unds$ (ebt funds invest in debt instruments issued not only by
governments, but also by private companies, banks and financial institutions and other
entities such as infrastructure companiesPutilities$
8iversifies 8e(t unds, ! debt fund that invests in all available types of debt securities,
issued by entities across all industries and sectors is a properly diversified debt fund. !
diversified debt fund is less risky than a narrow+focus fund that invests in debt securities
of a particular sector or industry$
ocused 8e(t unds, 4ome debt funds have a narrow focus, with less diversification in
its investment$ 80amples include sector, speciali2ed and offshore debt funds$ @ther
e0amples of focused funds include those that invest only in 'orporate (ebentures and
onds or only in 9a0 1ree Infrastructure or Municipal onds$
*i3h yield 8e(t unds, 9here are funds which seek to obtain higher interest rates by
investing in debt instruments that are considered “below investment grade:$ e$g$ Junk
ond 1unds$
Assured "eturn unds 4 an Indian )ariant, 9he 48I permits only those funds whose
sponsors have adequate net+worth to offer assurance of return$ 1or e$g$ MI%s$ Investors
have some lock+in period$
i;ed &erm Plan 'eries 4 Another Indian )ariant, 9hese are essentially closed+end$
9hese plans do not generally offer guaranteed returns$ 9his scheme is for short+term
investors who otherwise place money as fi0ed term bank deposits or inter corporate
bonds$
8quity 1und, !s investors move from (ebt 1und category to 8quity 1unds,
they face increased risk level$
• 5o guarantee returns
• Aigh potential for growth of capital
&ypes of %Fuity und
a< A33ressive +rowth und
• Ma0imum capital appreciation
• Invests in less researched or speculative shares$
• 7ery volatile Q riskier$
b< +rowth und
• /rowth fund invest in companies whose earnings are e0pected to
• Rise above average rate$ e$g$ 9echnology 1und
• 'apital appreciation in F = D years
• 3ess volatile then aggressive growth fund$
c< 'pecialty und
9hey invest in companies that meet predefined criteria$
i< 4ector 1unds
• 9echnology 1und
• %harmaceutical 1und
• 1M'/ 1und
ii< @ffshore 1unds
Invest in equities in one or more foreign countries$
iii< 4mall+'ap equity 1unds
Invest in shares of companies with relative lower market capital$
d< 8iversified %Fuity unds
! fund that seeks to invest only in equities, e0cept for a very small portion in liquid
money market securities, bur is not focused on any one or few sectors or shares, may be
termed a diversified equity fund$ >hile e0posed to all equity price risks, diversified
equity funds seek to reduce the sector or stock specific risks through diversification$
i< 8quity 3inked 4avings 4chemes& !n Indian 7ariant
Investment in these schemes entitles the investor to claim an income ta0 rebate, but
usually has a lock+in period before the end of which funds cannot be withdrawn$
e< %Fuity Inde; unds
!n inde0 fund tracks the performance of a specific stock market inde0$ 9he objective is
to match the performance of the stock market by tracking an inde0 that represents the
overall market$ 9he funds invest in share that constitute the inde0 and in the same
proportion on the inde0$
f< )alue unds
7alue 1unds try to seek out fundamentally sound companies whose shares are currently
under+prices in the market$ 7alue 1unds will add only those shares to their portfolios that
are selling at low price+earnings ratios, low market to book value ratios and are
undervalued by other yardsticks$ 1und concentrate on future growth prospect having
good potential$
g< %Fuity Income unds
9here are equity funds that can be designed to give the investor a high level of current
income along with some steady capital appreciation, investing mainly in shares of
companies with high dividend yields$
• *y(rid unds 4 Guasi %FuityHGuasi 8e(t, Many mutual funds mi0 these
;money market, debt and equity< different types of securities in their portfolios$
4uch funds are termed “hybrid funds: as they have a dual equityPbond focus$
• Commodity unds, >hile all of the debtPequityPmoney market funds invest in
financial assets, the mutual fund vehicle is suited for investment in any other+ for
e0amples+ physical assets$
• "eal %state unds, 4peciali2ed Real 8state 1unds would invest in Real 8state
directly, or may fund real estate developers, or lend to them, or buy shares of
housing finance companies or may even buy their securities assets$
ollowin3 are the different products and services #ffered (y Mutual
und Companies
• @pen ended schemes
• 'lose ended schemes
• /rowthP8quity oriented 4chemes
• IncomeP(ebt oriented 4chemes
• alanced 1unds
• Money market or liquid funds
• /ilt 1unds
• Inde0 1unds
• 80change 9raded 1unds
• 4ectoral 1unds
• 9hematic 1unds
• 'ommodity 1unds
• Real 8state 1unds
• 9a0 4aving 1unds
• Aybrid 1unds
9here are several ways for investment and disinvestments in mutual funds such as &
• 4ystematic Investment %lans ;4I%s<
• 7alue !veraging
• 4ystematic 9ransfer %lans ;49%s<
• 4ystematic >ithdrawal %lans;4>%s<
• !utomatic Reinvestment %lans$
• #pen ended fund
In an open+ended fund, sale and repurchase of units happen on a continuous basis,
at 5!7 related prices, from the fund itself$
9he corpus of open+ended funds, therefore, changes every day$
• Close ended fund
! closed+end fund offers units for sale only in the 51@$ It is then listed in the
market$
Investors wanting to buy or sell the units have to do so in the stock markets$
#sually closed+end funds sell at a discount to 5!7$
9he corpus of a closed+end fund remains unchanged$
• +rowth fund
%rovide capital appreciation over the medium to long+term
• Investor who does not require periodic income distribution can choose the
option, where the incomes earned are retained in the investment portfolio and
allowed to grow, rather than being distributed to investors$
• Investors with longer investment hori2ons and limited requirements for
income choose this option$
• 9he return to the investor who chooses a growth option is the rate at which
his initial investment has grown over a period for which he has invested in the
fund$
• 9he investor choosing this option will vary the 5!7 with the value of the
investments portfolio , while the no$ of units held with remains constant$
• Income fund
%rovide regular and steady income to investor
• Balanced fund
%rovide both growth and regular income$
• Money mar=et fund
%rovide easy liquidity, regular income and preserve the income
• &a; savin3 scheme
offer ta0 rebeats to the under specific provisions of the Indian income ta0 laws
Investment made under some schemes are allowed as deduction #P4 BB of the
income ta0 act $
• Automatic "einvestment Plans
Reinvestment of amount of dividend made by fund in the same fund$
In this option, the no$ of units held by the investor will change with every
reinvestment$
9he value of units will be similar to that under the dividend option
9here are four types of plans as follows
• Lump sum Investment
It is one time investment$$
Investors can invest particular amount one time for fi0ed time of period$
• 'ystematic Investment Plans> 'IP? 4 or re3ular investment
4I% is investing a fi0ed sum periodically in a disciplined manner for long term$
It gives benefit of Rupee 'ost averaging$
In 4I% monthly minimum Rs$D,, or Rs$*,, are invested$
Interest is calculating compoundly$
Many 4I% gives insurance benefits$
7!% is modified version of 4I%$ It is 7oluntary !ccumulation %lan$ It allows the
investor fle0ibility with respect to the amount and frequency of investment$
In 7!%, investor has to impose voluntary self discipline$
• 'ystematic :ithdrawal Plan > '
? 4 or re3ular income
9he lump sum amount is invested for one time and then fi0ed percent amount is
withdraw monthly$
Remaining amount will grow continuously$
9his plan is suitable for retired person, because it gives regular income$
• 'ystematic &ransfer Plan > '&P? =
9ransfer on a periodic basis a specified amount from one scheme to another
within the same fund family$
It gives option to the investor if the current fund performance in not satisfactory$
• 8ividend option
• Investors will receive dividends from the mutual fund , as an and when
dividends are declared$
• (ividends are paid in the form of warrants or are directly credited to the
investor?s bank accounts$
• In normal dividend plan , periodicity of dividends is left to the fund
managers, the timing of the dividend payout is decided by fund manager$
• Mutual funds provide the option of receiving dividends at pre+determined
frequencies,wich can vary from daily,weekly,monthly,quarterly,half+yearly
and annual$ Investors can choose the frequency of dividend distribution that
suits their requirements$
• Investors choosing this option have a fi0ed no$ of units invested in the fund
and earned incomes on this investment$
• 9he 5!7 of this investors holding will vary with changes in the value of
portfolio and the impact of the proportion of income earned by the fund to
what is actually distributed as dividend$
"%+ULA&#"' I! I!8IA
• '%BI + 9he capital markets regulators also regulates the mutual funds in India$
48I requires all mutual funds to be registered with them$ 48I issues guidelines
for all mutual funds operations + investment, accounts, e0penses etc$
• "BI as supervisor of banks owned mutual funds + !s banks in India came under
the regulatory jurisdiction of RI, bank owned funds to be under supervision of
RI and 48I$
• "BI as supervisor of Money Market Mutual 1unds + RI has supervisory
responsibility over all entities that operate in the money markets$ Aence in the
past Money Market Mutual 1unds scheme of Mutual funds had to be abide by
policies laid down by RI$
Recently, it has been decided that Money Market Mutual 1unds of registered mutual
funds will be regulated by 48I through 48I ;Mutual 1und< Regulations *..-$
C#MPA"I'#! # ULIP )' MU&UAL U!8
#nit 3inked Insurance %olicies ;#3I%s< as an investment avenue are closest to mutual
funds in terms of their structure and functioning$ !s is the cases with mutual funds,
investors in #3I%s are allotted units by the insurance company and a net asset value
;5!7< is declared for the same on a daily basis$
4imilarly #3I% investors have the option of investing across various schemes similar to
the ones found in the mutual funds domain, i$e$ diversified equity funds, balanced funds
and debt funds to name a few$ /enerally speaking, #3I%s can be termed as mutual fund
schemes with an insurance component$
Aowever it should not be construed that barring the insurance element there is nothing
differentiating mutual funds from #3I%s
0. Mode of investmentH investment amounts
Mutual fund investors have the option of either making lump sum investments or
investing using the systematic investment plan ;4I%< route which entails commitments
over longer time hori2ons$ 9he minimum investment amounts are laid out by the fund
house$
#3I% investors also have the choice of investing in a lump sum ;single premium< or using
the
conventional route, i$e$ making premium payments on an annual, half+yearly, quarterly or
monthly basis$ In #3I%s, determining the premium paid is often the starting point for the
investment activity$
9his is in stark contrast to conventional insurance plans where the sum assured is the
starting point and premiums to be paid are determined thereafter$
#3I% investors also have the fle0ibility to alter the premium amounts during the policyEs
tenure$ 1or e0ample an individual with access to surplus funds can enhance the
contribution thereby ensuring that his surplus funds are gainfully investedH conversely an
individual faced with a liquidity crunch has the option of paying a lower amount ;the
difference being adjusted in the accumulated value of his #3I% Mean 9i44erence
) ,ould li-e to inve%t money
in
P.
;qual variance% a%%umed 1# .657 .263
;qual variance% not a%%umed 1".000 .172 .263
) ,ould li-e to inve%t money
in mutual 4und%.
;qual variance% a%%umed 1# .372 !.632
;qual variance% not a%%umed 1".000 .010 !.632
I!&%"P"%&A&I#!,
9he above table shows the significance value of the relationship between
investment pattern and annual income is ,$)GC for #3I% and ,$,-* for
Mutual 1unds$>hich shows that there is no relationship between the
investment pattern and annual income level of the customers$>e can choose
5ull hypothesis because the significant value is greater than ,$,,D$Aence it
is very clear that the income level does not take part in the investment
decision$It may be change the premium of the policy,but not the decision$
I!8I!+' A!8 'U++%'&I#!'
!fter survey there are some findings and suggestions as follows$
• !s insurance sector is growing rapidly so most of the life insurance players are
selling #3I% plans$ !nd the awareness about #3I% is growing most of the people
knows the #3I% of life insurance$ 4ince last G+D years the returns provided by
#3I% were very good so people tend more towords #3I%
• Middle class people who are interested in investment but they are not aware of
such options so more awareness should be there, as main target customer are the
middle class peoples$
• >hile investing any insurance company customer prefers for good branded
company ajaj is India?s one of the most famous and richest family$ !nd second
preference is given to 4I life as many people perceive that 4I 3ife is a govt$
owned company so people want security for their investment$
• !s now till date people in India don?t wanted to invest in share market because
then were thinking that it is a bad thing but as the awareness about Mutual fund is
increasing as more and more private players are entering in the market$ 4o
awareness about M1 is not very good and it can be improved$
• >hile survey I found that many all customers had already invested in #3I% and
Mutual 1und some people had invested in both options$ *)J of people had
invested in Mutual 1und and )-J people had invested in #3I% and GJ people
had invested in both the options$
• >hile investing in mutual fund GGJ of the customers looks their return,G)J
customers observe the scheme?s performance in past years$
• 1irst reason or preference that why an investor is interested in #3I% is Investment
%urpose, and second is to its returns and after that they investing because they are
getting the ta0 benefit$ 9hen again there are some people who are investing for
pension planning and security$
• In future people will be more preferring to the security of their money means they
want a secured option which should provide good returns$ !s #3I% are the option
in which you can have the security also and good returns$ 9he second choice of
the investors is return of their money$
• DGJ of people given est rating to the ajaj !llian2 3ife Insurance #3I%, so from
this we can analy2e that ajaj !llian2 3ife Insurance is doing good but it is
having good potential in Market$ 9o improve its market share they should
improve the awareness level of the common people$
• Innovative %roducts and good brand name are the main success factor for ajaj
!llian2 3ife Insurance$ -J customers are attracted due to the high reputation of
the company$ 4o if !3I' wants to penetrate its market share they should
improve the marketing strategy, improving the distribution channel etc$
C#!CLU'I#! A!8H#" "%C#MM%!8A&I#!'
1rom above analysis and survey we can conclude as follows
• !wareness of #3I% is increasing as more number of private players are entering
in life
insurance industry$
• Mutual 1und is also getting more and more famous in Indian market as many
private
companies innovating new funds as the investors demand$
• #3I% differentiate from Mutual fund in respect of Insurance cover$
• Investors in ajaj !llian2 3ife #3I% will be getting the advantage of life
insurance cover$
• %eople are turning towords the #3I% as a good investment option but as #3I% is
in its
starting phase so customers are preferring only big brands$
• Mutual fund is having good growth but many customers from rural areas don?t
have any
knowledge about Mutual fund$9hey think it is very risky$
• 8ven investors from cities like 'hanganacherry don?t have that much of
"nowledge about fund selection they all are depend on rokers$
• %eople in 'hanganacherry are investing in only good branded companies as they
don?t believe on other financial companies for taking #3I%$
• 9here is a need for insurers to undertake a demand audit in order to understand
what the
policyholder wants and needs$
• (eriving the right feedback from customers and bringing out innovative products
which
cater to customer demands will go a long way in tapping the market potential of
the
insurance and Mutual fund sector$
• 1or ajaj !llian2 3ife Insurance 9hey should go for creating more awareness
about its #3I% as now also people are just investing because ajaj is India?s most
"nown and
1avorite brand in past$
• ajaj !llian2 should go for innovating more and more products and improving the
distribution channels as per the area of sales$
BIBLI#+"AP*1
"%%"%!C%,
*< Research Methodology, '$R "othari, )
nd
edition
)< @utlook Money, *D May ),,D, “#3I% Mania:$
F< 9he usiness 3ine, *, June ),,C, “"now all !bout #3I%4:$
:%B'I&%
www.irdaindia.3ov
www.(ajajallianzlife.co.in
www.Fuic=m(a.com
www.amfindia.com
www.m(a.com
www.article(ase.com
-U./0I122*IR.
I am R*3..4 31/.PH student of 5arunya /chool of
#anaement6 7oim!atore doing a project on 8A
C#MPA"A&I)% '&U81 # ULIP PLA!' # BA$A$ ALLIA!I LI%
I!'U"A!C% :I&* MU&UAL U!8'9 and this questionnaire is a part of
the project and the information collected through this questionnaire would be
used only for academic purposes and strictly confidential
P.R/122*L I2$1R#*0I12
&. 2ame9
+. :ender9
(a) Male (a) Female
,. #arital status9
(a) Married (b) Unmarried
;. *e9
(a) 20-30 (b) 30-40
(c) 40-0 (d) 0-!0
(e) !0-"0
5. 1ccupation9
(a) #o$ernment (b) %ri$ate
&er$ice
(c) 'usiness (d) ()Is
(e) *t+ers
6. *nnual Income9
(a) 'elo, 2 la-+s (b) 2-4
la-+s
(c) 4- ! la-+s (d) !-. la-+s
(e) /bo$e . la-+s
&. /ources that helps you in makin the investment
decisions.
(a) Financial journal (b)
0ele$ision
(c) 'ro-ers or agents (d)
Friends
(e) 1onsultants
+. $actors that in)uence your investment decisions in
a particular company.
(a) /ttracti$e sc+emes (b) 0a2
bene3ts
(c) 4ig+ reputation (d) )ate
of return
(e) 5ariet6 of products
,. o you view followin factors?sources of information
important while investin in #utual $unds.
&trongl6
agree
/gree (eutral :isagree &trongl6
disagree
(
Insurance Co. Ltd with Mutual und
MI!I P"#$%C& "%P#"&
'u(mitted (y
"A$%%) $#'%P*
"%+.!#,-.BA-/-
0
st
1ear MBA
2A"U!1A U!I)%"'I&1
Under the 3uidance of
Ms. P.M. A!U'*IA
L%C&U"%"
2A"U!1A 'C*##L # MA!A+%M%!&
2A"U!1A U!I)%"'I&1
C#IMBA&#"% 4 560006
/--.7/-0-
8%CLA"A&I#!
I, Rajeev Joseph, do hereby declare that this project work entitled “A
Comparative Analysis of ULIP of Bajaj Allianz Life Insurance Co. Ltd
with Mutual und9 is an outcome of my study and is submitted in partial
fulfillment of the requirement for the award of the degree of Master of
usiness !dministration, "arunya #niversity$
I also declare that this report has not been submitted by me fully or
partially for the award of any degree, diploma, title, recognition or any other
fellowship of any other university before$
%lace& 'hanganacherry
(ate& )*+,-+),,. "A$%%) $#'%P*
AC2!#:L%8+%M%!&
Initially, let me thank the almighty /od for guiding me all through the
project work$
I e0press my deep and sincere gratitude to Ms$ %$M$ !nushia, 1aculty
guide for providing the necessary assistance for the project$
I sincerely acknowledge my gratitude to Mr$ Justin %aul, ranch Manager
of ajaj !llian2 3ife Insurance 'ompany 3td, 'hanganacherry branch
and Mr$ iju 4ebastian ,4ales Manager for giving me an opportunity to
do this project$
I also owe my sincere thanks to all the staff in ajaj !llian2 3ife
Insurance 'ompany 3td, 'hanganacherry branch, and the faculties of the
(epartment of usiness !dministration, "!R#56! #5I78R4I96 for
their valuable guidance and suggestion in the preparation of this report
and completing the same successfully$
C*AP&%" C#!&%!& PA+% !o,
0 %;ecutive 'ummary 0
Introduction /
#(jectives <
Limitation <
/ Indian Insurance Industry 6
< Industry Profile 00
Unit Lin=ed Insurance Policy >ULIP? 0@
Mutual und //
6 8ata Interpretation and Analysis 60
indin3s and 'u33estion A0
Conclusion and "ecommendations A<
Bi(lio3raphy A6
@ Anne;ture A.
%B%CU&I)% 'UMMA"1
“A comparative Analysis of ULIP plans of Bajaj Allianz Life Insurance with mutual
funds in Chan3anacherry Branch: an analysis to be done be by Rajeev Joseph,
student;M!< of "arunya #niversity, 'oimbatore$
9otal Investment scenario is changing, in past people were not interested in investment
because there were no good options available for investment$ 5ow there are many
options available for investment like life Insurance, Mutual fund, 8quity market, Real
estate, etc$
9oday people want more services and more return on their investment$ 4o, most of the
insurance companies are providing more value = added services with the basic insurance
operation$
!nother option for investment available is Mutual 1und$ Mutual 1unds are providing
good returns$ 4o while investing people tend more to words mutual fund as they are
providing more returns than Insurance also, with a good investment portfolio$ Mutual
fund companies are providing more liquidity$
9he project was taken to know about, what are the main aspects in ajaj !llian2 3ife
Insurance 'ompany, and its #4% ;#nique 4elling %repositionhich gives it highest
business and customers$ 'ustomers always prefer to invest in a good option and in a
company which is market leader$
!fter survey and analysis I came to know that most of the people go for #3I% insurance
policies to cover the risk of life, and invest it in a good %ortfolio but there is big portion
of customers have taken the policies to save the ta0es$ !nd people are aware about the ta0
benefits they get for insurance policies$ 9herefore, while investing in any Investment
option investor checks whether his money is safe or not, Mutual funds provides good
returns but investments are directly e0posed to risk$ !s in #3I% returns are related to
stock market but they are having some insurance benefit and IR(! regulates the
investment$
Many people are getting the ta0 benefits in #3I%$ In Mutual 1und they have to invest
their money in ta0 saving funds to get the ta0 benefit$
I!&"#8UC&I#!
9o make comparison of #3I% plans with Mutual funds in ajaj !llian2 3ife Insurance
'o$ 3td$ and to 'reate awareness about #nit 3inked Insurance %lan ;#3I%< enefits$ 9he
overall goal of this project was to create awareness about investments$ 9he !bove
problem arises because every life insurance company has their products having different
positive and negative aspects$
3ife Insurance is booming sector in today?s economy$ 4o the responsibilities of the
insurance companies have been increased as compare to the past$ ecause in past people
were taking insurance policies for protection tool only$ In present scenario insurance
sector is providing more services with the basic life insurance$ ajaj !llian2 3ife
Insurance has number of products, which gives the right way to save the money and earn
good profit by invested premium$ 9oday people want more services and more return on
their investment$ 4o this insurance company is providing more value = added services
with the basic insurance operation$
y doing this type of study in this Insurance sector and looking at the vast scope and
opportunity to study this booming field of 3ife Insurance and the growing awareness
among the public regarding insuring their life through 3ife insurance policies as well as
the growing contribution of Insurance in /(% of country with the number of private
players making entrance in this booming industry of Insurance$
! Mutual 1und is a trust that pools the savings of a number of investors who share a
common financial goal$ 9he money thus collected is then invested in capital market
instruments such as shares, debentures and other securities$ 9he income earned through
these investments and the capital appreciations reali2ed are shared by its unit holders in
proportion to the number of units owned by them$ 9hus a Mutual 1und is the most
suitable investment for the common man as it offers an opportunity to invest in a
diversified, professionally managed basket of securities at a relatively low cost$
#B$%C&I)%'
• 9o understand the reason for which customers prefer #3I% as one of the best
insurance investment mode rather than Mutual fund$
• 9o find the significance difference between customers of different income with
that of investment mode$
• 9o 'ompare Investment @ptions of customers in #3I%s and Mutual 1unds$
LIMI&A&I#!'
• 9he middle class people do not know basic concept of #3I% so creating
awareness is a big challenge for me$
• 9he findings of my research is from a small sample si2e$
• 5arrow minded thinking of middle class people as investment is not their cup of
tea$
• Many customers are thinking that investment in share market is very risky$ !s
#3I% and Mutual fund both are related to share market$
• ! general preference to 3I' and 4I over private players$
• Aesitations on the part of respondents to disclose financial information.
I!8IA! I!'U"A!C% I!8U'&"1
9he history of life insurance in India dates back to *B*B when it was conceived as a
means to provide for 8nglish >idows$ Interestingly in those days a higher premium was
charged for Indian lives than the non+Indian lives as Indian lives were considered more
riskier for coverage$ 9he ombay Mutual 3ife Insurance 4ociety started its business in
*BC,$ It was the first company to charge same premium for both Indian and non+Indian
lives$ 9he @riental !ssurance 'ompany was established in *BB,$ 9he /eneral insurance
business in India, on the other hand, can trace its roots to the 9riton ;9ital< Insurance
'ompany 3imited, the first general insurance company established in the year *BD, in
'alcutta by the ritish$ 9ill the end of nineteenth century insurance business was almost
entirely in the hands of overseas companies$Insurance regulation formally began in India
with the passing of the 3ife Insurance 'ompanies !ct of *.*) and the provident fund !ct
of *.*)$ 4everal frauds during ),Es and F,Es sullied insurance business in India$ y *.FB
there were *C- insurance companies$ 9he first comprehensive legislation was introduced
with the Insurance !ct of *.FB that provided strict 4tate 'ontrol over insurance business$
9he insurance business grew at a faster pace after independence$ Indian companies
strengthened their hold on this business but despite the growth that was witnessed,
insurance remained an urban phenomenon$
9he /overnment of India in *.D-, brought together over )G, private life insurers and
provident societies under one nationali2ed monopoly corporation and 3ife Insurance
'orporation ;3I'< was born$ 5ationali2ation was justified on the grounds that it would
create much needed funds for rapid industriali2ation$ 9his was in conformity with the
/overnmentEs chosen path of 4tate lead planning and development$9he ;non+life<
insurance business continued to thrive with the private sector till *.C)$ 9heir operations
were restricted to organi2ed trade and industry in large cities$ 9he general insurance
industry was nationali2ed in *.C)$ >ith this, nearly *,C insurers were amalgamated and
grouped into four companies+ 5ational Insurance 'ompany, 5ew India !ssurance
'ompany, @rientalInsurance 'ompany and #nited India Insurance 'ompany$ 9hese were
subsidiaries of the /eneral Insurance 'ompany ;/I'ULIP?
! unit linked insurance policy is one in which the customer is provided with a life
insurance cover and the premium paid is invested in either debt or equity products or a
combination of the two$ In other words, it enables the buyer to secure some protection for
his family in the event of his untimely death and at the same time provides him an
opportunity to earn a return on his premium paid$ In the event of the insured personEs
untimely death, his nominees would normally receive an amount that is the higher of the
sum assured ;insurance cover< or the value of the units ;investments%< and dividend reinvestment plans, you can systematically invest
or withdraw funds according to your needs and convenience$
C. Choice of 'chemes, Mutual 1unds offer a variety of schemes to suit your varying
needs
over a lifetime$
0-. :ell "e3ulated, !ll Mutual 1unds are registered with 48I and they function within
the
provisions of strict regulations designed to protect the interests of investors$9he
operations
of Mutual 1unds are regularly monitored by 48I$
8I'A8)A!&A+%' # MU&UAL U!8' &
N !o +uarantees, 5o investment is risk free$ If the entire stock market declines in
value, the value of mutual fund shares will go down as well, no matter how balanced the
portfolio$ Investors encounter fewer risks when they invest in mutual funds than when
they buy and sell stocks on their own$ Aowever, anyone who invests through a mutual
fund runs the risk of losing money$
N ees and commissions& !ll funds charge administrative fees to cover their day+to+
day e0penses$ 4ome funds also charge sales commissions or OloadsO to compensate
brokers, financial consultants, or financial planners$ 8ven if you donEt use a broker or
other financial adviser, you will pay a sales commission if you buy shares in a 3oad
1und$
N &a;es& (uring a typical year, most actively managed mutual funds sell anywhere from
), to C, percent of the securities in their portfolios$ If your fund makes a profit on its
sales, you will pay ta0es on the income you receive, even if you reinvest the money you
made$
N Mana3ement ris=& >hen you invest in a mutual fund, you depend on the fundEs
manager to make the right decisions regarding the fundEs portfolio$ If the manager does
not perform as well as you had hoped, you might not make as much money on your
investment as you e0pected$ @f course, if you invest in Inde0 1unds, you forego
management risk, because these funds do not employ managers$
! measurement of an option position or premium in relation to the underlying instrument$
In mutual fund also there is certain amount of risk+return factor associated according to
the investment option these are as follows,
RI4" R89#R5
8quity *i3h *i3h
alanced Medium Medium
(ebt Low Low
&1P%' # MU&UAL U!8',
I. Closed7end or #pen7end
#pen7end unds, !n open+end fund is one that has units available for sale and
repurchase at all time$ !n investor can buy or redeem units from the fund itself at a price
based on the 5et !sset 7alue ;5!7< per unit$
Close7end unds, ! close ended fund makes a one+time sale of a fi0ed number of unit$ It
does not allow investors to buy or redeem units directly from the funds$ Aowever, to
provide liquidity to investors many closed+end funds get themselves listed on stock
e0change$ 1unds do offer “buy+back of fundsPunits: thus offering another avenue for
liquidity to closed+end fund investor$
II. Load vs. !o Load, Marketing of a new mutual fund scheme involves initial
e0pense$ 9hese e0penses may be recovered from the investors in different ways at
different times$ 9hree usual ways in which a fund?s sales e0penses may be recovered
from the investors are&
*$ !t the time of investor?s entry into the fundPscheme, by deducting a specific amount
from his initial contribution& front+end or entry load$
)$ y charging the fundPscheme with a fi0ed amount each year, during the stated number
of years& deferred load$
F$ !t the time of the investor?s e0it from the fundPscheme, by deducting a specific amount
from the redemption proceeds payable to the investor& back end or e0it load 9hese
charges made by the fund managers to the investors to cover distributionPsalesPmarketing
e0penses are often called “loads:$ 1unds that charge front+end, back+end or deferred
loads are called load funds$ 1unds that make no such charges or loads for sales e0penses
are called no+load funds$
In India, 48I has defined a “load: as the one+time fee payable by the investor to allow
the fund to meet initial issue e0penses including brokers?Pagents?Pdistributors?
commissions, advertising and marketing e0penses$
! load fund?s declared 5!7 does not include load charges
III. &a;7e;empt vs. !on7&a; e;empt unds, /enerally, when a fund invests in
ta0+e0empt securities, it is called a ta0+e0empt fund$ In India, after the *... #nion
/overnment udget, all of the dividend income received from any of the mutual funds is
ta0+free in the hands of the investors$ Aowever, funds other than 8quity 1unds have to
pay a distribution ta0, before distributing income to investors$ In other words, equity
mutual fund schemes are ta0+e0empt investment avenues, while other funds are ta0able
for distributable income$
(ifferent types of mutual fund
&ypes of Mutual und,
@nce we have reviewed the fund classes, we are ready to discuss more specific fund
types$ 1unds are generally distinguished from each other by their investment objectives
and types of securities they invest in$
A. Broad und &ypes (y !ature of Investments
Mutual funds may invest in equities, bonds or other fi0ed income securities, or short+term
money market securities$ 4o we have 8quity, onds and Money Market 1unds. !ll of
them invest in financial assets$ ut there are funds that invest in physical assets$ 1or
e0ample, we may have /old or other %recious Metal 1unds, or Real 8state 1unds.
B. Broad und &ypes (y Investment #(jective
Investors and hence the mutual funds pursue different objectives while investing$ 9hus,
+rowth unds invest for medium to long term capital appreciation$
Income unds invest to generate regular income, and less for capital appreciation$
)alue unds invest in equities that are considered under+valued today, whose value will
be unlocked in the future$
C. Broad und &ypes (y "is= Profile
9he nature of a fund?s portfolio and its investment objective imply different levels of risk
undertaken$ 1unds are therefore often grouped in order of risk$ 9hus, 8quity 1unds have a
greater risk of capital loss than a (ebt 1und that seeks to protect the capital while looking
for income$ Money Market 1unds are e0posed to less risk than even the 1or internal use
by 9raining (epartment of %rudential I'I'I Mutual 1und ond 1unds, since they invest
in short+term fi0ed income securities, as compared to longer+term portfolios of ond
1unds$
Money Mar=et unds, 3owest rung in the order of risk level, Money Market 1unds
invest in securities of a short+term nature, which generally means securities of less than
one+year maturity$
+ilt unds, /ilts are government securities with medium to long+term maturities,
typically of over one year ;under one+year instruments being money market securitiesor Income unds?, 5e0t in the order of risk level, we have the general
category (ebt 1unds$ (ebt funds invest in debt instruments issued not only by
governments, but also by private companies, banks and financial institutions and other
entities such as infrastructure companiesPutilities$
8iversifies 8e(t unds, ! debt fund that invests in all available types of debt securities,
issued by entities across all industries and sectors is a properly diversified debt fund. !
diversified debt fund is less risky than a narrow+focus fund that invests in debt securities
of a particular sector or industry$
ocused 8e(t unds, 4ome debt funds have a narrow focus, with less diversification in
its investment$ 80amples include sector, speciali2ed and offshore debt funds$ @ther
e0amples of focused funds include those that invest only in 'orporate (ebentures and
onds or only in 9a0 1ree Infrastructure or Municipal onds$
*i3h yield 8e(t unds, 9here are funds which seek to obtain higher interest rates by
investing in debt instruments that are considered “below investment grade:$ e$g$ Junk
ond 1unds$
Assured "eturn unds 4 an Indian )ariant, 9he 48I permits only those funds whose
sponsors have adequate net+worth to offer assurance of return$ 1or e$g$ MI%s$ Investors
have some lock+in period$
i;ed &erm Plan 'eries 4 Another Indian )ariant, 9hese are essentially closed+end$
9hese plans do not generally offer guaranteed returns$ 9his scheme is for short+term
investors who otherwise place money as fi0ed term bank deposits or inter corporate
bonds$
8quity 1und, !s investors move from (ebt 1und category to 8quity 1unds,
they face increased risk level$
• 5o guarantee returns
• Aigh potential for growth of capital
&ypes of %Fuity und
a< A33ressive +rowth und
• Ma0imum capital appreciation
• Invests in less researched or speculative shares$
• 7ery volatile Q riskier$
b< +rowth und
• /rowth fund invest in companies whose earnings are e0pected to
• Rise above average rate$ e$g$ 9echnology 1und
• 'apital appreciation in F = D years
• 3ess volatile then aggressive growth fund$
c< 'pecialty und
9hey invest in companies that meet predefined criteria$
i< 4ector 1unds
• 9echnology 1und
• %harmaceutical 1und
• 1M'/ 1und
ii< @ffshore 1unds
Invest in equities in one or more foreign countries$
iii< 4mall+'ap equity 1unds
Invest in shares of companies with relative lower market capital$
d< 8iversified %Fuity unds
! fund that seeks to invest only in equities, e0cept for a very small portion in liquid
money market securities, bur is not focused on any one or few sectors or shares, may be
termed a diversified equity fund$ >hile e0posed to all equity price risks, diversified
equity funds seek to reduce the sector or stock specific risks through diversification$
i< 8quity 3inked 4avings 4chemes& !n Indian 7ariant
Investment in these schemes entitles the investor to claim an income ta0 rebate, but
usually has a lock+in period before the end of which funds cannot be withdrawn$
e< %Fuity Inde; unds
!n inde0 fund tracks the performance of a specific stock market inde0$ 9he objective is
to match the performance of the stock market by tracking an inde0 that represents the
overall market$ 9he funds invest in share that constitute the inde0 and in the same
proportion on the inde0$
f< )alue unds
7alue 1unds try to seek out fundamentally sound companies whose shares are currently
under+prices in the market$ 7alue 1unds will add only those shares to their portfolios that
are selling at low price+earnings ratios, low market to book value ratios and are
undervalued by other yardsticks$ 1und concentrate on future growth prospect having
good potential$
g< %Fuity Income unds
9here are equity funds that can be designed to give the investor a high level of current
income along with some steady capital appreciation, investing mainly in shares of
companies with high dividend yields$
• *y(rid unds 4 Guasi %FuityHGuasi 8e(t, Many mutual funds mi0 these
;money market, debt and equity< different types of securities in their portfolios$
4uch funds are termed “hybrid funds: as they have a dual equityPbond focus$
• Commodity unds, >hile all of the debtPequityPmoney market funds invest in
financial assets, the mutual fund vehicle is suited for investment in any other+ for
e0amples+ physical assets$
• "eal %state unds, 4peciali2ed Real 8state 1unds would invest in Real 8state
directly, or may fund real estate developers, or lend to them, or buy shares of
housing finance companies or may even buy their securities assets$
ollowin3 are the different products and services #ffered (y Mutual
und Companies
• @pen ended schemes
• 'lose ended schemes
• /rowthP8quity oriented 4chemes
• IncomeP(ebt oriented 4chemes
• alanced 1unds
• Money market or liquid funds
• /ilt 1unds
• Inde0 1unds
• 80change 9raded 1unds
• 4ectoral 1unds
• 9hematic 1unds
• 'ommodity 1unds
• Real 8state 1unds
• 9a0 4aving 1unds
• Aybrid 1unds
9here are several ways for investment and disinvestments in mutual funds such as &
• 4ystematic Investment %lans ;4I%s<
• 7alue !veraging
• 4ystematic 9ransfer %lans ;49%s<
• 4ystematic >ithdrawal %lans;4>%s<
• !utomatic Reinvestment %lans$
• #pen ended fund
In an open+ended fund, sale and repurchase of units happen on a continuous basis,
at 5!7 related prices, from the fund itself$
9he corpus of open+ended funds, therefore, changes every day$
• Close ended fund
! closed+end fund offers units for sale only in the 51@$ It is then listed in the
market$
Investors wanting to buy or sell the units have to do so in the stock markets$
#sually closed+end funds sell at a discount to 5!7$
9he corpus of a closed+end fund remains unchanged$
• +rowth fund
%rovide capital appreciation over the medium to long+term
• Investor who does not require periodic income distribution can choose the
option, where the incomes earned are retained in the investment portfolio and
allowed to grow, rather than being distributed to investors$
• Investors with longer investment hori2ons and limited requirements for
income choose this option$
• 9he return to the investor who chooses a growth option is the rate at which
his initial investment has grown over a period for which he has invested in the
fund$
• 9he investor choosing this option will vary the 5!7 with the value of the
investments portfolio , while the no$ of units held with remains constant$
• Income fund
%rovide regular and steady income to investor
• Balanced fund
%rovide both growth and regular income$
• Money mar=et fund
%rovide easy liquidity, regular income and preserve the income
• &a; savin3 scheme
offer ta0 rebeats to the under specific provisions of the Indian income ta0 laws
Investment made under some schemes are allowed as deduction #P4 BB of the
income ta0 act $
• Automatic "einvestment Plans
Reinvestment of amount of dividend made by fund in the same fund$
In this option, the no$ of units held by the investor will change with every
reinvestment$
9he value of units will be similar to that under the dividend option
9here are four types of plans as follows
• Lump sum Investment
It is one time investment$$
Investors can invest particular amount one time for fi0ed time of period$
• 'ystematic Investment Plans> 'IP? 4 or re3ular investment
4I% is investing a fi0ed sum periodically in a disciplined manner for long term$
It gives benefit of Rupee 'ost averaging$
In 4I% monthly minimum Rs$D,, or Rs$*,, are invested$
Interest is calculating compoundly$
Many 4I% gives insurance benefits$
7!% is modified version of 4I%$ It is 7oluntary !ccumulation %lan$ It allows the
investor fle0ibility with respect to the amount and frequency of investment$
In 7!%, investor has to impose voluntary self discipline$
• 'ystematic :ithdrawal Plan > '
? 4 or re3ular income9he lump sum amount is invested for one time and then fi0ed percent amount is
withdraw monthly$
Remaining amount will grow continuously$
9his plan is suitable for retired person, because it gives regular income$
• 'ystematic &ransfer Plan > '&P? =
9ransfer on a periodic basis a specified amount from one scheme to another
within the same fund family$
It gives option to the investor if the current fund performance in not satisfactory$
• 8ividend option
• Investors will receive dividends from the mutual fund , as an and when
dividends are declared$
• (ividends are paid in the form of warrants or are directly credited to the
investor?s bank accounts$
• In normal dividend plan , periodicity of dividends is left to the fund
managers, the timing of the dividend payout is decided by fund manager$
• Mutual funds provide the option of receiving dividends at pre+determined
frequencies,wich can vary from daily,weekly,monthly,quarterly,half+yearly
and annual$ Investors can choose the frequency of dividend distribution that
suits their requirements$
• Investors choosing this option have a fi0ed no$ of units invested in the fund
and earned incomes on this investment$
• 9he 5!7 of this investors holding will vary with changes in the value of
portfolio and the impact of the proportion of income earned by the fund to
what is actually distributed as dividend$
"%+ULA&#"' I! I!8IA
• '%BI + 9he capital markets regulators also regulates the mutual funds in India$
48I requires all mutual funds to be registered with them$ 48I issues guidelines
for all mutual funds operations + investment, accounts, e0penses etc$
• "BI as supervisor of banks owned mutual funds + !s banks in India came under
the regulatory jurisdiction of RI, bank owned funds to be under supervision of
RI and 48I$
• "BI as supervisor of Money Market Mutual 1unds + RI has supervisory
responsibility over all entities that operate in the money markets$ Aence in the
past Money Market Mutual 1unds scheme of Mutual funds had to be abide by
policies laid down by RI$
Recently, it has been decided that Money Market Mutual 1unds of registered mutual
funds will be regulated by 48I through 48I ;Mutual 1und< Regulations *..-$
C#MPA"I'#! # ULIP )' MU&UAL U!8
#nit 3inked Insurance %olicies ;#3I%s< as an investment avenue are closest to mutual
funds in terms of their structure and functioning$ !s is the cases with mutual funds,
investors in #3I%s are allotted units by the insurance company and a net asset value
;5!7< is declared for the same on a daily basis$
4imilarly #3I% investors have the option of investing across various schemes similar to
the ones found in the mutual funds domain, i$e$ diversified equity funds, balanced funds
and debt funds to name a few$ /enerally speaking, #3I%s can be termed as mutual fund
schemes with an insurance component$
Aowever it should not be construed that barring the insurance element there is nothing
differentiating mutual funds from #3I%s
0. Mode of investmentH investment amounts
Mutual fund investors have the option of either making lump sum investments or
investing using the systematic investment plan ;4I%< route which entails commitments
over longer time hori2ons$ 9he minimum investment amounts are laid out by the fund
house$
#3I% investors also have the choice of investing in a lump sum ;single premium< or using
the
conventional route, i$e$ making premium payments on an annual, half+yearly, quarterly or
monthly basis$ In #3I%s, determining the premium paid is often the starting point for the
investment activity$
9his is in stark contrast to conventional insurance plans where the sum assured is the
starting point and premiums to be paid are determined thereafter$
#3I% investors also have the fle0ibility to alter the premium amounts during the policyEs
tenure$ 1or e0ample an individual with access to surplus funds can enhance the
contribution thereby ensuring that his surplus funds are gainfully investedH conversely an
individual faced with a liquidity crunch has the option of paying a lower amount ;the
difference being adjusted in the accumulated value of his #3I% Mean 9i44erence
) ,ould li-e to inve%t money
in
P.;qual variance% a%%umed 1# .657 .263
;qual variance% not a%%umed 1".000 .172 .263
) ,ould li-e to inve%t money
in mutual 4und%.
;qual variance% a%%umed 1# .372 !.632
;qual variance% not a%%umed 1".000 .010 !.632
I!&%"P"%&A&I#!,
9he above table shows the significance value of the relationship between
investment pattern and annual income is ,$)GC for #3I% and ,$,-* for
Mutual 1unds$>hich shows that there is no relationship between the
investment pattern and annual income level of the customers$>e can choose
5ull hypothesis because the significant value is greater than ,$,,D$Aence it
is very clear that the income level does not take part in the investment
decision$It may be change the premium of the policy,but not the decision$
I!8I!+' A!8 'U++%'&I#!'
!fter survey there are some findings and suggestions as follows$
• !s insurance sector is growing rapidly so most of the life insurance players are
selling #3I% plans$ !nd the awareness about #3I% is growing most of the people
knows the #3I% of life insurance$ 4ince last G+D years the returns provided by
#3I% were very good so people tend more towords #3I%
• Middle class people who are interested in investment but they are not aware of
such options so more awareness should be there, as main target customer are the
middle class peoples$
• >hile investing any insurance company customer prefers for good branded
company ajaj is India?s one of the most famous and richest family$ !nd second
preference is given to 4I life as many people perceive that 4I 3ife is a govt$
owned company so people want security for their investment$
• !s now till date people in India don?t wanted to invest in share market because
then were thinking that it is a bad thing but as the awareness about Mutual fund is
increasing as more and more private players are entering in the market$ 4o
awareness about M1 is not very good and it can be improved$
• >hile survey I found that many all customers had already invested in #3I% and
Mutual 1und some people had invested in both options$ *)J of people had
invested in Mutual 1und and )-J people had invested in #3I% and GJ people
had invested in both the options$
• >hile investing in mutual fund GGJ of the customers looks their return,G)J
customers observe the scheme?s performance in past years$
• 1irst reason or preference that why an investor is interested in #3I% is Investment
%urpose, and second is to its returns and after that they investing because they are
getting the ta0 benefit$ 9hen again there are some people who are investing for
pension planning and security$
• In future people will be more preferring to the security of their money means they
want a secured option which should provide good returns$ !s #3I% are the option
in which you can have the security also and good returns$ 9he second choice of
the investors is return of their money$
• DGJ of people given est rating to the ajaj !llian2 3ife Insurance #3I%, so from
this we can analy2e that ajaj !llian2 3ife Insurance is doing good but it is
having good potential in Market$ 9o improve its market share they should
improve the awareness level of the common people$
• Innovative %roducts and good brand name are the main success factor for ajaj
!llian2 3ife Insurance$ -J customers are attracted due to the high reputation of
the company$ 4o if !3I' wants to penetrate its market share they should
improve the marketing strategy, improving the distribution channel etc$
C#!CLU'I#! A!8H#" "%C#MM%!8A&I#!'
1rom above analysis and survey we can conclude as follows
• !wareness of #3I% is increasing as more number of private players are entering
in life
insurance industry$
• Mutual 1und is also getting more and more famous in Indian market as many
private
companies innovating new funds as the investors demand$
• #3I% differentiate from Mutual fund in respect of Insurance cover$
• Investors in ajaj !llian2 3ife #3I% will be getting the advantage of life
insurance cover$
• %eople are turning towords the #3I% as a good investment option but as #3I% is
in its
starting phase so customers are preferring only big brands$
• Mutual fund is having good growth but many customers from rural areas don?t
have any
knowledge about Mutual fund$9hey think it is very risky$
• 8ven investors from cities like 'hanganacherry don?t have that much of
"nowledge about fund selection they all are depend on rokers$
• %eople in 'hanganacherry are investing in only good branded companies as they
don?t believe on other financial companies for taking #3I%$
• 9here is a need for insurers to undertake a demand audit in order to understand
what the
policyholder wants and needs$
• (eriving the right feedback from customers and bringing out innovative products
which
cater to customer demands will go a long way in tapping the market potential of
the
insurance and Mutual fund sector$
• 1or ajaj !llian2 3ife Insurance 9hey should go for creating more awareness
about its #3I% as now also people are just investing because ajaj is India?s most
"nown and
1avorite brand in past$
• ajaj !llian2 should go for innovating more and more products and improving the
distribution channels as per the area of sales$
BIBLI#+"AP*1
"%%"%!C%,
*< Research Methodology, '$R "othari, )
nd
edition
)< @utlook Money, *D May ),,D, “#3I% Mania:$
F< 9he usiness 3ine, *, June ),,C, “"now all !bout #3I%4:$
:%B'I&%
www.irdaindia.3ov
www.(ajajallianzlife.co.in
www.Fuic=m(a.com
www.amfindia.com
www.m(a.com
www.article(ase.com
-U./0I122*IR.
I am R*3..4 31/.PH student of 5arunya /chool of
#anaement6 7oim!atore doing a project on 8A
C#MPA"A&I)% '&U81 # ULIP PLA!' # BA$A$ ALLIA!I LI%
I!'U"A!C% :I&* MU&UAL U!8'9 and this questionnaire is a part of
the project and the information collected through this questionnaire would be
used only for academic purposes and strictly confidential
P.R/122*L I2$1R#*0I12
&. 2ame9
+. :ender9
(a) Male (a) Female
,. #arital status9
(a) Married (b) Unmarried
;. *e9
(a) 20-30 (b) 30-40
(c) 40-0 (d) 0-!0
(e) !0-"0
5. 1ccupation9
(a) #o$ernment (b) %ri$ate
&er$ice
(c) 'usiness (d) ()Is
(e) *t+ers
6. *nnual Income9
(a) 'elo, 2 la-+s (b) 2-4
la-+s
(c) 4- ! la-+s (d) !-. la-+s
(e) /bo$e . la-+s
&. /ources that helps you in makin the investment
decisions.
(a) Financial journal (b)
0ele$ision
(c) 'ro-ers or agents (d)
Friends
(e) 1onsultants
+. $actors that in)uence your investment decisions in
a particular company.
(a) /ttracti$e sc+emes (b) 0a2
bene3ts
(c) 4ig+ reputation (d) )ate
of return
(e) 5ariet6 of products
,. o you view followin factors?sources of information
important while investin in #utual $unds.
&trongl6
agree
/gree (eutral :isagree &trongl6
disagree
(