Life Insurance MBA Project at ING Vysya

Description
The aim of this Life Insurance MBA Project at ING Vysya Final Year Case study is to examining a client’s personal situation, financial resources, financial objectives and financial problems in a comprehensive manner, monitoring the plan performance to take corrective action as necessary to assure that results match the plan projections. So this study is also intended to find whether people are aware of ING Vysya Life Insurance.

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Chapter 1
Abstract Objective Review of literature Introduction

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ABSTRACT
In India, Life Insurance sector plays a major role in savings of a person. There are many players in life insurance sector and LIC is the leading as it has roots in India from more than 50 years. To purchase any thing in this world a customer has his/her own choice of preferences. The project study of ING Vysya unit linked as a part of financial planning. The aim of study is to examining a client’s personal situation, financial resources, financial objectives and financial problems in a comprehensive manner, monitoring the plan performance to take corrective action as necessary to assure that results match the plan projections. So this study is also intended to find whether people are aware of ING Vysya Life Insurance. The method of study is market research with structured questionnaire consisting of multiple choice questions. The sample is 100 collected from persons having Life Insurance Policy. The Private Insurance companies are also able to create brand value and trust in customers. So they have only 42% (approx.) market share in Life insurance sector.

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OBJECTIVE


Examining a client’s personal situation, financial resources, financial objectives and financial problems in a comprehensive manner.



Developing an impartial, integrated plan to utilize the resources to meet objectives and solve problems, taking the steps to implement that plan once approved by the client.



Monitoring the plan performance to take corrective action as necessary to assure that results match the plan projections.

• To find out how best an Unit Linked Plan can become a necessary part of the financial planning for the individuals. • To check that among the price of the premium, benefits of policy, brand name the company has, which is more preferred by a person to take insurance policy.

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REVIEW OF LITERATURE
Marketing Research:
Marketing research is defined as the “Systematic design, collection, analysis, and reporting of data and findings relevant to a specific marketing situation facing the company. According to ESOMAR the world association of opinion and market research professionals. A company can hire the services of a marketing research firm or conduct research in creative and affordable ways such as: • Engaging professors or students to design and conduct studies. Many large companies hire summer trainees from management institutions for cost effective market research year after year. Awarding live projects to MBA students as part of their course work is also a common practice. • Monitoring published information and actions systematically. This may be done by examining news papers, web sites, and industry reports and by visiting competitive outlets. Effective marketing research involves five steps. They are:
• • • • •

Step 1: define the problem and the research objectives Step 2: collect the information Step 3: analyze the information Step 4: present the findings Step 5: make the decision.

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INTRODUCTION ABOUT LIFE INSURANCE
What is Life Insurance? “Insurance is a contract between two parties where by one party called insurer undertakes in exchange for a fixed sum called premiums, to pay the other party called “insured” a fixed amount of money on the happening of a certain event.” Insurance is a protection against financial loss arising on the happening of an unexpected event. Insurance companies collect premium to provide for this protection. A loss is paid out of the premiums collected from the insuring public and the insurance companies act as trustees to the amount collected. For example, in a life policy, by paying a premium to the insurer, the family of the insured person receives a fixed compensation on the death of the insured. Similarly, in car insurance, in the event of the car meeting with an accident, the insured receives the compensation to the extent of damage. Why should you take Insurance? Insurance is designed to safeguard oneself and one’s family against possible losses on account of risks and perils. It provides financial compensation for the losses suffered due to the happening of any unforeseen event. By taking life insurance a person can have peace of mind and need not worry about the financial consequences in case of any untimely death. Certain insurance contracts are also made compulsory by legislation. For example, motor vehicles act 1988 stipulates that a person driving a vehicle in a public place should hold a valid insurance policy

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covering “act” risks. Another example of compulsory insurance pertains to the environmental protection act, wherein a person using or carrying hazardous substances (as defined in the act) must hold a valid public liability (act) policy. Who provides Insurance? In India, prior to liberalization insurance protection was made available through public sector insurance companies, namely, life insurance Corporation of India (LIC) and the four subsidiaries of General Insurance Corporation of India (GIC). By the passing of the IRDA Bill, the Insurance sector has been opened up for private companies to carry on Insurance business. Insurance contracts are based on good faith i.e. the details furnished by the proposals are accepted in good faith and this will form the basis of the contract. Types of Life Insurance Policies: • Term Life Insurance • Endowment Insurance • Whole Life Insurance Term Life Insurance: Term Life Insurance furnishes protection for a limited number of years ate the end of which the policy expires. The face amount of the policy is payable only if the insured’s death occurs during the stipulated term, and nothing is paid in case of survival. Term product prices are more easily compared than prices of other life products as term policies are usually simpler than other policies.

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Types of Term Life Insurance: • Level Face Amount • Non-Level Face Amount Endowment Life Insurance: Endowment policies, promises not only to pay the policy face amount on the death of the insured during fixed term of years, but also to pay the full face amount at the end of the term if the insured survives the term. Types of Endowment Policies:
• • •

Single Premium Endowment Policy Semi Endowment Policy Modified Endowment Policy

Whole Life Insurance: Whole life insurance is intended to provide insurance protection over one’s entire life time. I t provides the payment of the face amount upon the insured’s death regardless of when death occurs. It is insurance for the whole of the life. Types of whole life Insurance:
• • • •

Ordinary Life Insurance. Limited Payment whole Life Insurance Current Assumption whole Life Insurance Unit-Linked Life Insurance.

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Chapter 2
IRDA Unit Linked Plan Financial Planning

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Composition of Authority under IRDA Act, 1999
As per the section 4 of IRDA Act' 1999, Insurance Regulatory and Development Authority (IRDA, which was constituted by an act of parliament) specify the composition of Authority The Authority is a ten member team consisting of (a) (b) (c) a Chairman; five whole-time members; four part-time members,

Duties, Powers and Functions of IRDA

Section 14 of IRDA Act, 1999 lays down the duties, powers and functions of IRDA. 1) Subject to the provisions of this Act and any other law for the time being in force, the Authority shall have the duty to regulate, promote and ensure orderly growth of the insurance business and re-insurance business. 2) Without prejudice to the generality of the provisions contained in sub-section (1), the powers and functions of the Authority shall include, a) b) issue to the applicant a certificate of registration, renew, modify, withdraw, suspend or cancel such registration; protection of the interests of the policy holders in matters concerning assigning of policy, nomination by policy holders,

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insurable interest, settlement of insurance claim, surrender value of policy and other terms and conditions of contracts of insurance;
c)

specifying requisite qualifications, code of conduct and practical training for intermediary or insurance intermediaries and agents; specifying the code of conduct for surveyors and loss assessors; promoting efficiency in the conduct of insurance business; promoting and regulating professional organizations connected with the insurance and re-insurance business; levying fees and other charges for carrying out the purposes of this Act; calling for information from, undertaking inspection of, conducting enquiries and investigations including audit of the insurers, intermediaries, insurance intermediaries and other organizations connected with the insurance business;

d) e) f) g) h)

i)

control and regulation of the rates, advantages, terms and conditions that may be offered by insurers in respect of general insurance business not so controlled and regulated by the Tariff Advisory Committee under section 64U of the Insurance Act, 1938;

j)

specifying the form and manner in which books of account shall be maintained and statement of accounts shall be rendered by insurers and other insurance intermediaries;

k) l)
m)

regulating investment of funds by insurance companies; regulating maintenance of margin of solvency; adjudication of disputes between insurers and intermediaries or insurance intermediaries; supervising the functioning of the Tariff Advisory Committee;

n)

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o)

specifying the percentage of premium income of the insurer to finance schemes for promoting and regulating professional organizations referred to in clause (f);

p)

specifying the percentage of life insurance business and general insurance business to be undertaken by the insurer in the rural or social sector;

q)

exercising such other powers as may be prescribed;

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ABOUT UNIT LINK PLAN
Most insurers in the year 2004 have started offering at least a few unit-linked plans. Unit-linked life insurance products are those where the benefits are expressed in terms of number of units and unit price. They can be viewed as a combination of insurance and mutual funds. The number of units that a customer would get would depend on the unit price when he pays his premium. The daily unit price is based on the market value of the underlying assets (equities, bonds, government securities, et cetera) and computed from the net asset value. The advantage of unit-linked plans is that they are simple, clear, and easy to understand. Being transparent the policyholder gets the entire upside on the performance of his fund. Besides all the advantages they offer to the customers, unit-linked plans also lead to an efficient utilization of capital. Unit-linked products are exempted from tax and they provide life insurance. Investors welcome these products as they provide capital appreciation even as the yields on government securities have fallen below 6 per cent, which has made the insurers slash payouts. According to the IRDA, a company offering unit-linked plans must give the investor an option to choose among debt, balanced and equity funds. If you opt for a unit-linked endowment policy, you can choose to invest your premiums in debt, balanced or equity plans. If you choose a debt plan, the majority of your premiums will get invested in debt securities like gilts and bonds. If you choose equity, then a major portion of your premiums will be invested in the equity market.

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The plan you choose would depend on your risk profile and your investment need. The ideal time to buy a unit-linked plan is when one can expect long-term growth ahead. This is especially so if one also believes that current market values (stock valuations) are relatively low. So if you are opting for a plan that invests primarily in equity, the buzzing market could lead to windfall returns. However, should the buzz die down, investors could be left stung. If one invests in a unit-linked pension plan early on, say when one is 25, one can afford to take the risk associated with equities, at least in the plan's initial stages. However, as one approaches retirement the quantum of returns should be subordinated to capital preservation. At this stage, investing in a plan that has an equity tilt may not be a good idea. Considering that unit-linked plans are relatively new launches, their short history does not permit an assessment of how they will perform in different phases of the stock market. Even if one views insurance as a long-term commitment, investments based on performance over such a short time span may not be appropriate. Unit-linked life insurance offers the interesting option of combining protection and tax advantages of life insurance with the attractive prospects of investing in equities. A unit-linked plan works on a minimum premium basis and not on a sum assured one. You decide the amount you can contribute at regular intervals. ULIP offers you insurance cover till your insurance needs are fulfilled, beyond that it becomes an investment avenue.

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How they compare? To explain how ULIP works we will compare HDFC ULIP Endowment plan with HDFC Endowment plan. Premium In case of: ULIP, you pay a minimum premium of Rs 10,000 per annum irrespective of age and term of the policy. Premiums levels can be either reduced or increased if premiums have been paid regularly for three years and the unit fund value is at least Rs 15,000. The flexibility of increasing premium contributions in an existing account helps policyholders manage their cash flows. In normal/traditional endowment plans the premium is calculated on the basis of age and the term and the amount you pay, as premium remains the same for the full term. The minimum premium is Rs 1,500 annually. Sum assured The sum assured depends on your age and the cover you take in case of ULIP. Depending on your age at entry, you may choose between 3 levels of cover - low, medium or high. In the traditional plan, the sum assured is calculated by age and term of the policy to which premium factor is applied. Top-ups Apart from your regular contributions, in case of ULIP, you can also make additional payments to increase the savings component. These

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top-ups do not affect the sum assured. Normal endowment policy does not offer you these benefits. Investment You choose the fund where you want to invest your money. HDFC offers a choice of five funds - liquid, defensive, secure managed, secure defensive and growth. The Liquid Fund is the least risky with investments in bank deposits and short-term money market instruments. Growth Fund is the riskiest with an investment of up to 100% in equities. In traditional insurance plans your money is invested keeping in view the IRDA specification i.e. minimum 85% in debt with the balance in equities. Charges ? As is the case with unit-linked plans, this plan, too, imposes charges, on both the funds invested by the policyholder and by cancellation of units. These charges vary depending on the kind of premium payment option chosen (single or regular). Other charges include a fund management charge of 0.80% of the fund value per annum, apart from a flat fee of Rs 15 per month deducted by cancellation of units In case of ULIP, for the first 2 years the investment content rate is 73% of the premium and for the remaining years 99%. Risk cover charges (for death sum assured, critical illness, accidental death) are charged for canceling units on each monthly charge date, based on the person's age at that time.

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In traditional plans, the charges are not disclosed. There is an annual fee of Rs. 150 for regular premium policies and Rs 300 for single premium ones. Returns In case of ULIP, in an eventuality you receive the sum assured or fund value whichever is higher and on maturity the fund value. In normal endowment plan, in either case you receive the same benefit i.e. the sum assured and vested bonus. In case you stop paying premiums? If this is in the first 3 years then in case of ULIP, on cancellation of the policy before paying regular premium for 3 years, there is a charge of 25% of the outstanding premiums due during this 3-year period. In case of normal endowment the policy lapses and nothing is paid back If you stop paying premiums after 3 years, in ULIP you have the option to make policy paid up, provided the policy has accumulated sufficient policy value. At present this amount is Rs 15,000. If the fund value of a paid up policy falls below Rs 15,000 then the policy is cancelled and the fund value is returned to you. The risk cover continues for the sum assured even though the policy has reached the paid up status. In traditional plan the policy becomes a paid up policy. Medicals In both the plans the norms for medicals are similar i.e. medicals are compulsory.

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Why Do You Need Life Insurance? That’s a common question. Why would you need Insurance? Simply put, Life brings with it many surprises, some pleasant and some not so and a Life Insurance Plan ensures that you are better prepared to face uncertainties. How? In a number of ways: Protection You need life insurance to be there and protect the people you love, making sure that your family has a means to look after itself after you are gone. It is a thoughtful business concept designed to protect the economic value of a human life for the benefit of those financially dependent on him. That’s a good reason. Suppose you are suffering an injury that keeps you away from earning? Would you like to be a financial burden on your family, already losing out on your salary? With a life insurance policy, you are protected. Your family is protected. Retirement Life insurance makes sure that you have regular income after you retire and also helps you maintain your standard of living. It can ensure that your post-retirement years are spent in peace and comfort. Savings and Investments Insurance is a means to Save and Invest. Your periodic premiums are like Savings and you are assured of a lump sum amount on maturity. A policy can come in really handy at the time of your child’s education or marriage! Besides, it can be used as supplemental retirement income! Tax Benefits

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Life insurance is one of the best tax saving options today. Your tax can be saved twice on a life insurance policy-once when you pay your premiums and once when you receive maturity benefits. Money saved is money earned!

Unit linked insurance plans are transforming into mutual funds. Which is better for you?
Unit linked insurance or mutual fund? Which should you get, when both potentially do very similar things. A mutual fund is a simple asset management company that pools investors' money and invests it with a view to maximising returns. A unit linked plan is an insurance product that can be used as a mutual fund vehicle and give market linked returns with almost nil protection or it can build in protection along with market linked returns. Assuming that we are comparing mutual funds with unit linked insurance plans with minimal protection, which is better? The answer to this lies in costs that the two charge and the tax breaks available. And here lies the problem. Mutual fund costs are simple, transparent and standardised and insurance costs are like a noodle soup.

What are these costs? Ever tried to pick a noodle out of soup with a fork? Working out costs of insurance is a similar exercise, just when you think you have it, it slips away. Costs vary across companies, across products in the same company and within the product, across premium cut-offs, categories, tenures and riders.

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Mutual fund costs, on the other hand, are simple, transparent and common across product categories. Front end or entry loads (the upfront deduction to take care of the distribution costs of a mutual fund) and exit loads have a total common limit of 7 per cent of the the net asset value (NAV), though the industry norm in equity is 2 per cent entry load today. Annual fees that a fund can charge is restricted to a maximum of 2.5 per cent per year (this rate is according to slabs and reduces as the fund size increases). There are no other charges. However, there is no tax rebate on a fund and though capital gains are exempt from tax for a year, its future is uncertain. Insurance costs and benefits

Because of the complexity of the insurance product and the cost differentiation we cannot tell you which product is the least cost. It depends on what you buy. However, we will give a handle with which to open the door to understanding unit linked costs. You will know what to ask the agent and how to compare costs. A unit linked product will have costs across five sub-heads: 1. Upfront costs. This is a percentage of your first premium that is deducted before the money is deployed. These costs can continue over the life of the product or terminate in a few years. 2. Regular charges. These include the annual asset management charges for managing your money and could include a per month charge towards the insurance part of the policy. 3. Switching costs. To switch, from one scheme within a plan to another, may carry a charge. 4. Exit costs. If you exit before a certain time period you may pay a heavy charge for that.

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5. Other administration costs. Some periodic costs can be loaded under this head as well. On the plus side insurance gets tax breaks. Insurance premium gives you a tax rebate and the insurance lump sums are tax free

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Rush for unit-linked schemes
Om Kotak Mahindra Life Insurance has grossed Rs 25-50 lakh (Rs 2.5-5 million) from high net worth individuals for its unit-linked offering -- Kotak Safe Investment Plan. ICICI Prudential Life has seen an 88 per cent surge in the top-ups to its unit-linked policies in the second quarter. And Birla Sun Life Insurance has seen a 157 per cent growth in its unit-linked plans. What does this mean? Leveraging the current bull run, cash-rich policyholders are investing more than their annual premiums in unitlinked insurance plans, thereby topping up the investment portion of the policy. "There has been a surge in interest by high net worth individuals in investment-related risk products," says Abhay Aima, HDFC Bank country head, private banking. Unit-linked plans are similar to mutual fund schemes, where the premium is invested in various funds in keeping with policyholders' risk appetite. Some players allow for topping up the premium without affecting the sum assured (value of the base policy), allowing policyholders to purchase more units. Unlike traditional insurance products, unit-linked plans offer transparency in returns in terms of net asset value and flexibility in investment options in debt, equity and a mix of both. "Some people are buying because of the bull run. But the growth is largely due to the transparency and flexibility of the product," she adds

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High net worth individuals would like to protect themselves from the market volatility and unit-linked plans offer a safety net unlike other investment products, he adds. Even state insurer, the Life Insurance Corporation of India, has an unit-linked pension plan in the offing. "We have received a lot of interest from individuals and corporates for such a product." Today, LIC is aggressively positioning its earlier unit-linked plan -- Bima Plus hoping it will account for five per cent of the total business

Mutual Fund
A mutual fund is a company that brings together money from many people and invests it in stocks, bonds or other assets. The combined holdings of stocks, bonds or other assets the fund owns are known as its portfolio. Each investor in the fund owns shares, which represent a part of these holdings. Ulips comparison……….with mutual fund……… When it comes to comparison of ULIP it has to be with a pure insurance plan along with investments, why? Because a ULIP or Unit Linked Insurance Plan is a combination of Insurance and Investment and therefore the comparison has to be made with a pure insurance cover and investments in Mutual fund. It all boils down to the charges and the actual amount invested in the market. ULIP's usually have following charges built into it : a) Up-front Charges b) Mortality Charges ( Charges for providing the risk cover for life)

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c) Administrative Charges d) Fund Management Charges

Mutual Fund's have the following charges : a) Up-front charges ( Marketing, Advertising, distributors fee etc.) b) Fund Management Charges ( expenses for managing your fund)

Term Insurance have the following charges : a) Yearly premium ( for risk cover) b) Service charges

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ABOUT FINANCIAL PLAN
In general usage, a financial plan can be a budget, a plan for spending and saving future income. This plan allocates future income to various types of expenses, such as rent or utilities, and also reserves some income for short-term and long-term savings. A financial plan can also be an investment plan, which allocates savings to various assets or projects expected to produce future income, such as a new business or product line, shares in an existing business, or real estate. In business, a financial plan can refer to the three primary financial statements (balance sheet, income statement, and cash flow statement) created within a business plan. Financial forecast or financial plan can also refer to an annual projection of income and expenses for a company, division or department. A financial plan can also be an estimation of cash needs and a decision on how to raise the cash, such as through borrowing or issuing additional shares in a company. While a financial plan refers to estimating future income, expenses and assets, a financing plan or finance plan usually refers to the means by which cash will be acquired to cover future expenses, for instance through earning, borrowing or using saved cash.

What is financial planning… Financial planning is the process of meeting your life goals through the proper management of your finances. Life goals can include buying a home, saving for your child's education or planning for retirement.

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The financial planning process as described by CFP Board, consists of six steps that help you take a "big picture" look at where you are financially. Using these six steps, you can work out where you are now, what you may need in the future and what you must do to reach your goals. The process involves gathering relevant financial information, setting life goals, examining your current financial status and coming up with a strategy or plan for how you can meet your goals given your current situation and future plans. The Benefits of Financial Planning Financial planning provides direction and meaning to your financial decisions. It allows you to understand how each financial decision you make affects other areas of your finances. For example, buying a particular investment product might help you pay off your mortgage faster or it might delay your retirement significantly. By viewing each financial decision as part of a whole, you can consider its short and long-term effects on your life goals. You can also adapt more easily to life changes and feel more secure that your goals are on track.

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Financial planning process consists of the following six steps
1.

Establishing

and

defining

the

client-planner

relationship.

The financial planner should clearly explain or document the services to be provided to you and define both his and your responsibilities. The planner should explain fully how he will be paid and by whom. You and the planner should agree on how long the professional relationship should last and on how decisions will be made.
2.

Gathering

client

data,

including

goals.

The financial planner should ask for information about your financial situation. You and the planner should mutually define your personal and financial goals, understand your time frame for results and discuss, if relevant, how you feel about risk. The financial planner should gather all the necessary documents before giving you the advice you need.
3.

Analyzing

and

evaluating

your

financial

status.

The financial planner should analyze your information to assess your current situation and determine what you must do to meet your goals. Depending on what services you have asked for, this could include analyzing your assets, liabilities and cash flow, current insurance coverage, investments or tax strategies.
4.

Developing and presenting financial planning recommendations and/or The financial planner should offer alternatives. financial planning

recommendations that address your goals, based on the information you provide. The planner should go over the recommendations with you to help you understand them so that you can make informed decisions. The planner should also listen to your concerns and revise the recommendations as appropriate.

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5. Implementing the financial planning recommendations. You and the planner should agree on how the recommendations will be carried out. The planner may carry out the recommendations or serve as your "coach," coordinating the whole process with you and other professionals such as attorneys or stockbrokers.
6.

Monitoring

the

financial

planning

recommendations.

You and the planner should agree on who will monitor your progress towards your goals. If the planner is in charge of the process, she should report to you periodically to review your situation and adjust the recommendations, if needed, as your life changes.

Fundamentals of Financial Planning What Is It? Financial planning is the process of solving financial problems and achieving financial goals by developing and implementing a personalized "game plan." In order to be effective this "plan" must take into consideration an individual’s overall picture. It must be:
• • •

coordinated comprehensive continuous

Financial planning is like all other phases of life; it involves choices Spend now or save for later? Pay off existing bills or increase retirement savings? Focus savings dollars on short term or long term goals?

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A true financial plan does not focus one aspect or product, but instead seeks to take all areas of planning into consideration when making financial decisions. What is Included?


Cash Flow Management This aspect of planning deals with the day to day allocation of income; and its effective use in paying for current living expenses and in accumulating assets which will be used in meeting financial goals.



Tax Planning and Management This area focuses on the understanding of and application of federal and state income tax law, estate and inheritance taxes; and, when possible, minimizing these taxes.



Risk Planning and Management This area of planning deals with the risk of losing life, income, or property. It includes the use of insurance products and strategies.



Investment Planning and Management Almost everyone has accumulation goals for which investments must be made and managed. These could include buying a home; planning for college; or providing for retirement.



Retirement Planning and Management

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By far the most common accumulation goal is the ability to become financially independent. Retirement strategies encompass the understanding of the Social Security system; employersponsored retirement plans; and personal savings accumulation plans.


Estate Planning and Management The final phase of planning is for the transfer of assets to our heirs with minimization of taxes and other costs.

Why Plan? Anyone who has financial challenges to solve or financial goals to achieve needs financial planning. Financial Planning can help to achieve both greater wealth and financial security. Inadequate or improper planning can be financially disastrous. An uninsured loss can wipe out accumulated wealth; insufficient savings for retirement can force a reduced lifestyle and/or postponement of retirement; and improper tax planning can result in higher than necessary taxes causing dollars to be lost to an accumulation plan or to one’s heirs. Why Do People Fail to Plan?


They may feel they do not have enough income or financial assets to consider planning. They may believe that they are too young/old to begin planning. They may be reluctant to consider some of the less pleasant aspects of planning such as thinking about death, disability, illness, etc. They may believe that financial planning is too expensive They may procastinate (The Number One Reason For Failure)

• •

• •

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The Steps in Financial Planning
• • • • • •

Identify Goals and Objectives Gather the necessary data Analyze present situation and consider alternatives Develop strategies to achieve goals. Implement the strategies Review and Revise periodically

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Chapter 3
Company profile History of Insurance in India Methodology Limitations

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INDUSTRY PROFILE
ING Vysya Life entered the private life insurance industry in India in September 2001, and has established itself as a distinctive life insurance brand with an innovative, attractive and customer-friendly portfolio ranging from protection, savings, retirement and investment plans; which it sells through a unique tool - The Life Maker.

ING Vysya Life is headquartered in Bangalore, and is a part of the ING group. The ING group is a 150-year-old global financial institution of Dutch origin offering banking, insurance and asset management to over 60 million private, corporate and institutional clients in 50 countries. We are the world's Largest Financial Services Group and the world's Largest Life Insurance Provider.

ING Group has wide and deep experience in setting up companies in new markets, which require substantial investments underlining ING's long-term commitment. In the last 20 years, ING Group has established successful life insurance companies in 15 countries contributing to the development of insurance services in these countries successfully.

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Management Team
Board of Directors (as on January 18, 2008)

Mr. Rajan Raheja Mr. Kshitij Jain Mr. N.N. Joshi Mr. Satish Raheja Mr. Rajesh Kapadia Mr. S.B. Ganguly Mr. Ron Van Oijen

Chairman of the Board Managing Director & C.E.O. Director Director Director Director Director

Senior Management Team
Kshitij Jain Amit Gupta Hemamalini Ramakrishnan Marco Fredriks Rahul Agarwal T K Uthappa Y V D V Prasad Managing Director & C.E.O. Director; Marketing & Communication. Appointed Actuary & Chief Investment Risk Officer (CIRO) Financial Controller Customer Services & Risk Sales, Tied Agency Business Development

Partners :
a. ING Group b. Exide Industries Limited c. Gujarat Ambuja Cements Limited. d. Enams Group

History of Insurance in India

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In India, insurance has a deep-rooted history. It finds mention in the writings of Manu ( Manusmrithi ), Yagnavalkya ( Dharmasastra ) and Kautilya ( Arthasastra ). The writings talk in terms of pooling of resources that could be re-distributed in times of calamities such as fire, floods, epidemics and famine. This was probably a pre-cursor to modern day insurance. Ancient Indian history has preserved the earliest traces of insurance in the form of marine trade loans and carriers’ contracts. Insurance in India has evolved over time heavily drawing from other countries, England in particular. 1818 saw the advent of life insurance business in India with the establishment of the Oriental Life Insurance Company in Calcutta. This Company however failed in 1834. In 1829, the Madras Equitable had begun transacting life insurance business in the Madras Presidency. 1870 saw the enactment of the British Insurance Act and in the last three decades of the nineteenth century, the Bombay Mutual (1871), Oriental (1874) and Empire of India (1897) were started in the Bombay Residency. This era, however, was dominated by foreign insurance offices which did good business in India, namely Albert Life Assurance, Royal Insurance, Liverpool and London Globe Insurance and the Indian offices were up for hard competition from the foreign companies. In 1914, the Government of India started publishing returns of Insurance Companies in India. The Indian Life Assurance Companies Act, 1912 was the first statutory measure to regulate life business. In 1928, the Indian Insurance Companies Act was enacted to enable the Government to collect statistical information about both life and non-life business transacted in India by Indian and foreign insurers including

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provident insurance societies. In 1938, with a view to protecting the interest of the Insurance public, the earlier legislation was consolidated and amended by the Insurance Act, 1938 with comprehensive provisions for effective control over the activities of insurers. The Insurance Amendment Act of 1950 abolished Principal Agencies. However, there were a large number of insurance companies and the level of competition was high. There were also allegations of unfair trade practices. The Government of India, therefore, decided to nationalize insurance business. An Ordinance was issued on 19th January, 1956 nationalising the Life Insurance sector and Life Insurance Corporation came into existence in the same year. The LIC absorbed 154 Indian, 16 non-Indian insurers as also 75 provident societies—245 Indian and foreign insurers in all. The LIC had monopoly till the late 90s when the Insurance sector was reopened to the private sector. The history of general insurance dates back to the Industrial Revolution in the west and the consequent growth of sea-faring trade and commerce in the 17th century. It came to India as a legacy of British occupation. General Insurance in India has its roots in the establishment of Triton Insurance Company Ltd., in the year 1850 in Calcutta by the British. In 1907, the Indian Mercantile Insurance Ltd, was set up. This was the first company to transact all classes of general insurance business. 1957 saw the formation of the General Insurance Council, a wing of the Insurance Associaton of India. The General Insurance Council framed a code of conduct for ensuring fair conduct and sound business practices.

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In 1968, the Insurance Act was amended to regulate investments and set minimum solvency margins. The Tariff Advisory Committee was also set up then. In 1972 with the passing of the General Insurance Business (Nationalisation) Act, general insurance business was nationalized with effect from 1st January, 1973. 107 insurers were amalgamated and grouped into four companies, namely National Insurance Company Ltd., the New India Assurance Company Ltd., the Oriental Insurance Company Ltd and the United India Insurance Company Ltd. The General Insurance Corporation of India was incorporated as a company in 1971 and it commence business on January 1sst 1973. This millennium has seen insurance come a full circle in a journey extending to nearly 200 years. The process of re-opening of the sector had begun in the early 1990s and the last decade and more has seen it been opened up substantially. In 1993, the Government set up a committee under the chairmanship of RN Malhotra, former Governor of RBI, to propose recommendations for reforms in the insurance sector.The objective was to complement the reforms initiated in the financial sector. The committee submitted its report in 1994 wherein , among other things, it recommended that the private sector be permitted to enter the insurance industry. They stated that foreign companies be allowed to enter by floating Indian companies, preferably a joint venture with Indian partners. Following the recommendations of the Malhotra Committee report, in 1999, the Insurance Regulatory and Development Authority (IRDA) was constituted as an autonomous body to regulate and develop the insurance industry. The IRDA was incorporated as a statutory body in

37

April, 2000. The key objectives of the IRDA include promotion of competition so as to enhance customer satisfaction through increased consumer choice and lower premiums, while ensuring the financial security of the insurance market. The IRDA opened up the market in August 2000 with the invitation for application for registrations. Foreign companies were allowed ownership of up to 26%. The Authority has the power to frame regulations under Section 114A of the Insurance Act, 1938 and has from 2000 onwards framed various regulations ranging from registration of companies for carrying on insurance business to protection of policyholders’ interests. In December, 2000, the subsidiaries of the General Insurance Corporation of India were restructured as independent companies and at the same time GIC was converted into a national re-insurer. Parliament passed a bill de-linking the four subsidiaries from GIC in July, 2002. Today there are 14 general insurance companies including the ECGC and Agriculture Insurance Corporation of India and 14 life insurance companies operating in the country.

PROBLEM AREA AND NEED FOR STUDY

38

Today in India there is 110 crore population and only 8 crore people have Life Insurance Policy. There are around 16 Life Insurance companies operating in India. Among all the players in insurance market in India, LIC is the leading one and have high market share in life insurance sector. LIC is Public Sector Company and all other are private sector companies. The reason behind the LIC having high market share, it has its roots in India more than 50 years and brand name it created in minds of customer. The people of India have more trust in LIC than any other private insurance. The reason why LIC have high market share is its flexible payment options, benefits offered, low premium of policies and its relation and coordination with all the public sector undertakings. But the private Life Insurance companies are unable to grab the insurance market, because the people do not have trust in private sector. A customer will have his/her own choice of preferences to purchase a product. The preferences may be as quality, quantity, price, and brand name, additional features from other products and long term services, guarantee, warranty. According to the choice preference and need for the product only, the customer will purchase a particular product. For different products and services the preferences will be different base on time, situation, and need. But finally what the customer needs is value of the money he/she paid for the product i.e. enough returns (services, benefits) by using the product. The case is same even in the insurance sector also. There are various factors which influence and customer prefers in taking an Insurance policy. Factors are premium of policy, benefits of the policy, flexible payment options, brand name the company have in market. So among the above factors which when is preferred more by the customer is to be analyzed.

39

The life insurance companies should market their products properly, and make people aware of the company and its various policies, benefits.

Method of the Study & Investigation
• The sample size is 100.

40 •

This survey helps us to know what benefits are looked by the consumer in Insurance Product and awareness of ING Vysya Life Insurance.

• A structured questionnaire with multiple choice questions are given to consumers of age group of 25-50. • The respondents are mostly corporate, professional, executives and business men who like latest trends. • The source of primary data is questionnaire consisting of 10 questions. • The secondary data has been taken from internet and books related to insurance, marketing, and finance. • Scope of project is explanatory and descriptive study.

LIMITATIONS
The limitations of the study are:

41

• The research is limited with in Hyderabad city. • The data is collected from the people having life insurance policy only. • The time period for the study is limited. • The statistical report presented in the project is of year 2004-2006 only. The updated report is not available. • In study of a unit linked plan as a part of financial planning and customer preference in taking life insurance policy, price of the policy is majorly considered because money is major constraint for each and every person.


Only ING Vysya life insurance is chosen for analyzing the awareness of the company and study of unit linked plan and even for studying the promotional activities role in educating the people about company.

42

Chapter 4
Analysis of Data Findings Recommendations Conclusions

ANALYSIS OF DATA
1. Which company you have Life Insurance Policy?

43

POLICY IN AN INSURANCE COMPANY Insurance No.of Policy % of policy holders Company Holders LIC 65 65% ICICI 10 10% ING Vysya 12 12% HDFC 5 5% Others 8 8%

P licy in an in rance co p y o su m an
70 % of policy holders 60 50 40 30 20 10 0 LIC IC ICI IN G Vy a sy H DFC O ers th 10 12 5 65

8

Insurance C pany om

Interpretation : From the above sample graph and table, we can understand that most people opt and have insurance in LIC 65%. The Insurance Companies which people opt apart from LIC are ING Vysya-12%, ICICI-10%, HDFC-5% and others-8%. 2. Among various Insurance Companies, why did you chose the

above mentioned company?
Reason for choosing an Insurance Company Reason %of Responses Reputation 30% Price of premium 12%

44

Benefits flexible premium payment options

42% 16%

Reason for Choosing an Insurance Company

16% 30% reputation price of premium benefits flexible payments 42% 12%

Interpretation: Here the reason for choosing a particular Insurance Company is evaluated. Most people prefer an Insurance Company because of the benefits of Policy offered by company. The next preference is given to reputation the company has in the market. The minimum importance is given to flexible payment options and price of premium.

3. Is premium price of policy within your budget or not?

within budget Premium price 72

not within budget 28

45

Premium Price
80 70 respondents 60 50 40 30 20 10 0 within budget not within budget premium price

Interpretation: Out of total 100 samples 72% responded that the price of premium they paying towards Life Insurance is within their budget, and remaining 28% said that premium price is not within their budget.

4. Do you know about Unit Linked Life Insurance Plan?
Awareness of ULIP Yes No 57 43

46

Awarenss of ULIPS
60 50 No. of people 40 30 20 10 0 yes no Series1 57 43

Interpretation: Out of total 100 samples 57% responded that they know about ULIPS, and remaining 43% said that they do not know about ULIPs.

5. What is the best option of investment?

Best Option of Investment No. of Type of Investment Responses

47

Unit Linked Plan Life Insurance Mutual Fund Share Market

14 35 25 26

Best Option of Investment
40 35 No. of people 30 25 20 15 10 5 0 Unit Linked Life Insurance Mutual Fund Share Market Plan 14 35 25 26 Series1

Interpretation: Out of 100 samples 35% of respondents believe that best option is investing in Life Insurance, 26 % responded with share market, 25% responded that Mutual Funds are best and 14% respondents are saying ULIPS is the best option for investment.

6. How much percentage of your salary are you saving monthly?

Annual Savings in Income % of savings Respondents 10%-20% 60

48

20%-30% 30%-40% 40%-50%

25 10 5

Annual Savings in Income
70 no. of respondents 60 50 40 30 20 10 0 10%-20% 20%-30% 30%-40% 40%-50% % savings Series1 Series2 Series3

Interpretation: From the above chart, it is clear that out of 100 samples, 60 percent of people are saving 10%-20% of their annual income, 25% of people are saving 20%-30% , 10% people are saving 30%-40%, and remaining 5% people are saving 40%-50% of their annual income.

7. What is your expected price of premium of the policy?

Expected Premium per Annum Premium Price No.of Respondents less than 22

49

Rs.5000 Rs.5000Rs.10000 More than Rs.10000

63 15

Expected Premium per Annum

15

22 less than Rs. 5000 Rs. 5000-Rs.10000 More than Rs. 10000

63

Interpretation: Out of 100 samples, the expected price of premium per annum is less than Rs. 5000 for 22% of people, Rs. 5000-Rs.10000 for 63% of people and more than Rs. 10000 for 15% people.

8. Do you find advertisement of ING Vysya Life Insurance is informative or attractive?

Ads of ING Vysya No.of Responses

50

Informative attractive

35 65

Ads in ING Vysya
70 No. of respondents 60 50 40 30 20 10 0 1 2 3 35 Informative attractive 65

Interpretation: Out of 100 samples 65% of people found that advertisement of ING Vysya Life Insurance are attractive, and remaining 35% found that they are informative.

9. Which promotional media do you think is the best one to make people educate about an Insurance Policy?

Type of

Best Advertisment No. of Respondents

51

Promotional Activity TV advertisement Hoardings Paper Advertisement Banners

38 20 32 10

Best Advertisement
No. of Respondents 40 35 30 25 20 15 10 5 0
em

38 20

32 Series1

10

Ad ve rti se m en t

en t

gs

TV

ad ve rti s

Interpretation: Out of 100 sample 38% of people responded that TV advertisement is the best way for making people aware of insurance, 32% said that paper advertisement is better way, 20% of people said that Hoarding are better, remaining 10% said banners are helpful in making people aware of insurance.

10. Do you suggest your colleagues, relatives or any of your

friends about which is the best company to opt for an Insurance Policy?
Suggesting an Insurance Company yes no

Pa pe r

Ho ar di n

Ba nn e

rs

52

No. of respondents 88

12

Suggesting an Insurance Policy
100 90 80 70 60 50 40 30 20 10 0 88

No. of Respondents

Series1

12

yes

no

Interpretation: From the data and analysis it is found that 88% of people suggested about insurance to their friends, colleagues and relatives, and remaining 12% people are not suggested.

FINDINGS
From the project study and interpretation the findings are as follows:

53 1)

Our country India has a population of 117 crore and there are only 12 crore people have life insurance policy.

2)

Out of 100 samples, 65% people have insurance policy in LIC and remaining 35% people have insurance policy in other insurance companies.

3)

Most people have trust in LIC than any other insurance company and still LIC holds huge market share in LIFE INSURANCE sector in India.

4)

82% people are taking insurance policy only if it is within their budget and have flexible payment options and remaining is taking policy if it is not with the budget but due to benefits of policy and reputation company has.

5)

Among various factors 55% of people are looking for benefits of policy, 25% people are looking for premium of policy and remaining 20% people are looking for brand name of insurance company.

6)

Only 10% of people are saving 31% to 40% of their income, 20% people are saving 21% to 30%, 70% people are saving 1% to 20% of their income.

7)

As there are many new players in the Indian market, there is huge competition among all insurance companies.

8)

Only 65% people are aware of ING Vysya life insurance and 35% people don’t know about ING Vysya life insurance.

54 9)

Mostly corporate people, professionals and business man are aware of ING Vysya life insurance in India. Common man (middle class and lower class) is not aware of ING Vysya life insurance.

10)

25% people gave response stating that advertisement of ING Vysya life insurance are attractive and informative and 75% people responded stating that ING Vysya life insurance advertisement are not attractive and not informative.

11)

Out of 100 respondents, 38% stated that TV advertisements is the best way for making people aware insurance company, 14% stated that setting up of stalls is the better way, 10% stated that paper advertisement is the better way, 5% stated that banners, pamphlets is the better way and 33% people stated that personal setting is the best way of making people aware and educate them about insurance company and its policies.

RECOMMENDATIONS

55

There is huge potential market for LIFE INSURANCE companies in India as out of 110 crore population only 8 crore people are insured. The insurance companies should educate people about insurance, its importance, different policies, and benefits of policies.

The people opt for policy by taking into consideration price of premium of policy, benefits of policy and least importance is given to brand name. So the life insurance companies should look over the price of premium, benefits of policy and even flexible payment options from the point of untapped potential market in India.

The price of premium of a policy must be within the budget of common man and life insurance companies should provide flexible payment options. By doing so, the private insurance companies can surely capture the untapped market along with creating brand name.

ING Vysya life insurance, it has huge past experience around the world. But coming to Indian perspective its positioning is not properly done in the customers mind. The advertisement of ING Vysya life insurance in TV should contain briefly relevant message about its policy and benefits of a policy. It should formulate strategies for attracting customers though good promotional activities and informative ads, so that common man can have an idea of what ING Vysya is offering in a policy. Though people generally to do the savings by various means, like Post Office, Fixed Deposit, Mutual Fund, Gold, Real Estate, and Share Market etc. This study focuses attention on the positive affect of Unit Linked Plan as a part of Financial Planning.

56

The result of the study proves that ULIPS can enhance the individual’s savings through their market investments. The study highlights ULIPS as a part of Tax Benefit for an individual. ING ULIPS products are good when taken as long term investment plans

CONCLUSIONS
From the project analysis and interpretation the conclusions are:

57

1)

Most untapped insurance market in India contains mostly middle class and lower class people.

2)

The customers gives preference more to premium of policy and benefits of the policy. Brand name and flexible payment options are given less importance.

3)

Even though the premium price is not within the customer budget, if the benefits offered by policy are good customers is ready to take the policy.

4)

The customers want the premium price to be within the budget, with good benefits.

5)

The private insurance companies are unable to tap the untapped insurance market certain strategies should be formulated to grab the market.

6)

Most customers feel that setting up of stalls at appropriate locations and providing information regarding various policies and benefits offered by the insurance company and create awareness about the insurance company.

7)

ING has an international brand image by their world wide advertisement like formula one race and many other sports events still it need to implement more marketing advertisement to attract the customers.

58

8)

The present study is an attempt to find the unit linked plan as a part of financial planning, moreover to determine whether the unit linked plan would help the people to avail the tax benefit, protection, and savings.

Chapter 5

59

Questionnaire Bibliography

QUESTIONNAIRE
A study of Unit Linked Life Insurance plan as a part of financial planning
Please fill the following details. Name: Age: Gender:

60

Qualification: Designation: Salary: Name of the Organization (Working): Phone No.: Email ID: 1. In which company you have Life Insurance Policy?
a) LIC b) ING Vysya

[ [ [ [ [

] ] ] ] ]

c) HDFC
d) ICICI

e) Others

2. Among various insurance companies why did you chose the above mentioned company a) Due to reputation of the company b) Due to Price of premium of policy c) Due to benefit of the policy d) Flexible premium payment options 3. Is the premium within your budget a) Yes b) No [ [ ] ] [ [ [ [ ] ] ] ]

4. Do you know about Unit Linked Life Insurance Plan? a) Yes b) No [ [ ] ]

5. What is the best option of investment?
a) Unit Linked Plan

[

]

61

b) Life Insurance c) Mutual Fund d) Share Market

[ [ [

] ] ]

6. How much percentage of your salary are you saving monthly a) 10%-20% b) 20%-30% c) 30%-40% d) 40%-50% [ [ [ [ ] ] ] ]

7. what is your expected price of premium of the policy
a) Less than Rs.5000

[ [ [

] ] ]

b) Rs.5000 to Rs.10000 c) more than Rs.10000

8. Do you find advertisement of ING Vysya life insurance are

informative and attractive a) Informative b) Attractive [ [ ] ]

9. Which promotional media do you think is the best one to make people educate about an insurance policy
a) TV advertisement b) Hoardings

[ [ [ [

] ] ] ]

c) Paper advertisement
d) Banners

62

10.Did you suggest your colleagues, relatives or any of your friends about which is the best company to opt for an insurance policy a) Yes b) No [ [ ] ]

If yes which company you suggested?

BIBLIOGRAPHY
Websites:

www.google.com www.ingVysyalife.com www.irdaindia.com www.bimaonline.com

63

www.marketresearch.com Books: Life & Health Insurance By Kenneth Black Jr., Harlod D. Skipper Jr. Marketing Management By Phillip Kotler & Kevin Lane Keller Financial Management By Prasanna Chandra



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