Abhishek Kumar ppt Roll No 62

A PROJECT REPORT ON

“COMPARATIVE STUDY OF UNIT LINKED INSURANCE PLAN (ULIP) OF FOUR INSURERS”

SUBMITTED TO UNIVERSITY OF PUNE

BY

ABHISHEK KUMAR SINHA BBA III

ROLL NO – 62

STESSINHGAD COLLEGE OF COMMERCE

KONDHWA, PUNE-411048*2008-2009*

INTRODUCTION

OBJECTIVES OF THE STUDY1. To evaluate ULIPs of four Insurers on the basis of following parameters

– Cost of ULIP i.e. Charges Deductible under the Policy – Performance of ULIP vs Benchmark Performance– Annual Premium– Availability of Fund Options– Payment on premature surrender– Limitations and exclusions– Lapsation and its consequences– Illustration benefits payable in two scenarios of 10 %

2. To find out the best ULIP judged on the basis of above parameters.

3. To compare the returns generated by the ULIPs against benchmarks to see if indeed the cost of management is justified.

LIMITATION OF THE STUDY

• ULIPs are complicated products. The Investment Funds offered by ULIPs are many. So in a given time frame and absence of data base, it is practically impossible to compare their performances.

• The industry lacks standardization and benchmarks for comparison. IRDA has not prescribed any norms for comparison.

• The study is limited to only four plans of four prominent insurers while hundreds of plans are available in the market.

CONCEPT & METHODOLOGY

CONCEPT & METHODOLOGY

Research is a systematic design, collection, analysis and reporting of data and findings relevant to research problem.

RESEARCH DESIGNIt is the conceptual structure with in which research is conducted. It constitutes collection, measurement and analysis of data.

Research process is as follows:

(1.) Definition of the Research Problem & Research Objectives

The objectives of the study were to evaluate the ULIPs of four different Insurers on the defined parameters and to find out the best plan among them.

(2.) Developing Research Plan The second stage of the research called for developing the most

efficient plan for gathering needed information.

DATE COLLECTION METHOD:

PRIMARY DATA: There are several methods of collecting primary data. The important tool

employed for collecting primary data was contacting the Insurers and taking their interviews through questionnaire and schedules.

SECONDARY DATA:

Secondary data may either be published or unpublished data. Usually published data is available in journals, magazines, newspapers, public records, etc.

The secondary data for my project was collected through magazines, information leaflets and internet.

(3.)DATA ANALYSIS TECHNIQUES:

There are several statistical tools for data analysis. The techniques help in analysis of data collected. In this project, the data has been analyzed with the help of Pie Charts, Bar Diagrams, Tabulation and with the help of graphs. Mathematical equations have been employed to calculate IRR.

PARAMETERS OF COMPARISION

• Protection Cover• Net Yield• Fund Option• Fund Switching• Premium Allocation Charges• Mortality Charges• Fund Management Fees• Policy Administration Charges• Surrender Charges• Fund Switching Charges• Other Charges

PRODUCTS ANALYSED

1. Prudential ICICI Life InsuranceLife Time Gold Plan

2. HDFC Standard Life InsuranceULEP II

3. Birla Sun Life InsuranceClassic Life Premier

4. Kotak Life InsuranceKotak Smart Advantage

DATA ANALYSIS & TABULATION

PARTICULARSINSURERPrudential ICICI Life InsurancePLANLifeTime Gold

INSURERHDFC Standard Life InsurancePLANULEP II

INSURERBirla Sun Life Insurance PLANClassicLife Premier

INSURERKotak Life InsurancePLANKotak Smart Advantage

Minimum Premium Amount (INR)

20,000/- per annum (Yearly)24,000/- per annum (Half Yearly; Monthly)

12,000/- per annum (Yearly; Half Yearly)18,000/-per annum (Monthly)

25,000/- per annum

10,000/- per annum – RPPT36,000/- per annum - LPPT

Minimum - Maximum Maturity Age

19 - 75 years 18 - 55/65 Minimum30 days for 20 and 30 term; 8 Years for 10 term; and 30 Years for Whole Life.MaximumFor 10 Years term 60 Years; For 20 Years term 50 Years; For 30 Years term 40 Years, For Whole Life term 60 Years.

0 - 65 years





Minimum / Maximum Policy Term

10 – 75 Years 10 - 30 Years 10 / 20 / 30 or Whole Life

Regular10 / 15 / 20 / 25 / 30 YearsFor MinorMinimum Term 10 Yrs or 18 less entry age at last birthday, whichever is higher, rounded to next higher policy tern available

Minimum Sum Assumed

Annual Premium x 5

Annual Premium x 5

200,000 INR Annual Premium x 5

Maximum Sum Assured

Depends upon age and premium amount

Annual Premium x 40







Fund OptionAvailable

8 Funds 7 Funds 6 Funds 3 Funds

Top-up Premiums (Minimum Amount)

2000 INROption of increase in sum assured of either 125% or 500% of the top up amount

10,000 INR 10,000 INR 10,000 INR

Switching between Funds

4 free switches allowed every year; subsequent switches are charged at Rs. 100 per switch.

24 free switches allowed every year; subsequent switches are charged at Rs. 100 per switch



Partial Withdrawals

Allowed after completion of 3 policy years

Allowed after completion of 5 years



PARTICULARS

INSURERPrudential ICICI Life InsurancePLANLifeTime Gold




Death BenefitThe nominee shall receive the higher of the Sum Assured or the Fund Value

The nominee shall receive the higher of the Sum Assured or the Fund Value

Below 5 YearsFund value shall be payableBetween 5 Yrs and 60 Years : Higher of Fund Value or the Sum Assured.

The nominee shall receive the higher of the Sum Assured or the Fund Value

Surrender Benefit Less than1 Year - 0 %1 - 2Yr - 25%2 - 3Yr - 40%Completed Policy Years3 Yrs - 98%4 Yrs - 99%5 Yrs - 100%

No. of Original Annualized Regular Premiums not paid in the first 5 Years4 - 95%3 - 35%2 - 15 %1 - 05%0 - NIL

No surrender charges payable after six completed policy yearsIf surrendered within three years, surrender value is paid

In case of discontinuance of premium within the 1st policy year, surrender value equal to 10% of premium received is payable. No s. c. after 8th Year onwards. Surrender charge equal to 8 – N as percentage of fund value will apply.

COMPARISION ON THE BASIS OF COST

ULIPs analyzed on basis of IRR. Higher the IRR, better the ULIP.

4 Plans of different insurers are considered. An annual premium of Rs. 1 lakh is paid for a period of 10 years and growth rate of 10% is assumed in each of the investment as mandated by IRDA..

Plan: Life Time GoldInsurer: ICICI Prudential Life

Annual Premium (Rs.) 1,00,000/-; Tenure 10 Years; Growth Rate Assumed 10%Fund Value (Rs.) 13,13,289/-

Plan: ULEP IIInsurer: HDFC Standard Life


Plan: Classic Life PremierInsurer: Birla Sun Life

Annual Premium (Rs.) 1,00,000/-Tenure 10 YearsGrowth Rate Assumed 10%Fund Value (Rs.) 14,75,615/-

Plan: Smart AdvantageInsurer: Kotak Mahindra Life


ANALYSIS

1.The lowest cost policy Classic Life Premier of Birla Sun Life gives back Rs. 14.75 lakh and the highest cost policy is Smart Advantage of Kotak Mahindra Life which gives back Rs. 12.72 lakh.

2.Classic Life Premier of Birla Sun Life is the best policy on the basis of cost.

3.Smart Advantage of Kotak Mahindra Life is the least preferred policy on the basis of cost.

FUND PERFORMANCEEQUITY ORIENTED

FUND PERFORMANCEBALANCED FUND

FUND PERFORMANCEDEBT FUND

FINDINGS

1. HDFC Standard Life Unit Linked Endowment Plus II Minimum Premium Amount is the least i.e. Rs. 12,000/- while Birla Sun Life Classic Life Premier has the highest Minimum Premium Amount i.e. Rs. 25,000/- in case of LPPT.

2. Minimum Age of entry is least for Kotak Smart Advantage i.e. 0 year while the Minimum Age in case of Prudential ICICI Life Time Gold is maximum i.e. 19 Years.

3. Minimum Policy Term is equal in all the policies. It is 10 years. While the Maximum Policy Term is 75 years for Prudential ICICI Life Time Gold which is maximum.

4. Minimum Sum Assured in case of Birla Sun Life Classic Life Premier is Rs. 200,000/- while in all the other three policies it is 5 times the Annual Premium.

5. As the death benefit, if it is below 5 years of age only fund value is payable and between 5 yrs and 60 yrs, higher of the fund value or the sum assured less partial withdrawals is payable in the policy of Birla Sun Life Classic Life Premier while in all the other three policies, the nominee shall receive higher of the fund value or sum assured.

6. Premium Allocation Charge is least in the policy of Birla Sun Life Classic Life Premier while it is maximum in the policy of HDFC Standard Life Unit Linked Endowment Plus II.

7. Mortality Charges deducted is maximum in the case of Kotak Smart Advantage while it is least in the case of HDFC Standard Life Unit Linked Endowment Plus II.

8. On the basis of cost, Birla Sun Life Classic Life Premier Plan is the least cost heavy while Kotak Smart Advantage Plan is most cost heavy. IRR is highest in the policy of Birla Sun Life while it is least in the policy of Kotak Life.

9. On the basis of Fund Performance, Kotak Opportunities has given best returns in equity category, Kotak Mahindra Dynamic Floor fund has best returns in balance fund category while in debt category, Birla Sun Life Protector has best returns.

SUGGESTIONS

1. Insurers should bring down the cost associated with ULIPs as they are very cost heavy.

2. The insurance industry lacks standardization and benchmarks for comparison. IRDA has not prescribed any norms for comparison. Insurers should set a benchmark as standard for the whole industry so that the performance of its funds can be compared to the benchmarks.

3. The Policy Allocation Charge should be substantially reduced. It should not be more than 10 % in any case.

4. The illustration given by the Insurers on the returns generated by ULIPs should also contain the disclosures about the fund value which is eaten as the Management Charges.

CONCLUSION

With a huge population base and large untapped market, insurance industry is a big opportunity area in India for national as well as foreign investors. India is the fifth largest life insurance market in the emerging insurance economies globally and is growing at 32-34% annually.

ULIPs comprise 90 % of the insurance market. And it is very complex to understand and compare. Yet they are invariably built with flexibility that can suit the need of every individual.

Thank You

Abhishek Kumar ppt Roll No 62

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