Final Project on HDFC
Transcript of Final Project on HDFC
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A STUDY OF PRODUCT PROFILE OFHDFC STANDARD LIFE INSURANCE &
SALES PROMOTION
A PROJECT REPORT
In partial fulfillment for the award of the degree
Of
BACHELOR OF BUSINESS ADMINISTRATION
Submitted by: Project Guide:JYOTI DAHIYA Urvashi sharmaB.B.A V1 SEMENROLL NO-1262151708
CHANDERPRABHU JAIN COLLEGE OF HIGHER STUDIES& SCHOOL OF LAW
GURU GOBIND SINGH INDRAPRASTHA UNIVERSITYDWARKA,NEW DELHI
May 2011
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CERTIFICATE
This is to certify that Report entitled A STUDY OF PRODUCT PROFILE OF HDFC
STANDARD LIFE INSURANCE &SALES PROMOTION which is submitted by
JYOTI DAHIYA in partial fulfillment of the requirement for the award of degree
BACHELOR OF BUSINESS ADMINITRATION to GGSIP University, Dawarka, Delhi is
a record of the candidate own work carried out by her under my/our supervision. Thematter embodied in this is original and has not been submitted for the award of any other
degree
Date: PROJECT GUIDE:
(Dr Urvashi Sharmra)
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DECLARATION
I, hereby declare that the project report titled A STUDY OF PRODUCT PROFILE OF
HDFC STANDARD LIFE INSURANCE &SALES PROMOTION is my own original
research work and this report has not been submitted to any University/Institute for the
award of any professional degree or diploma.
(JYOTI DAHIYA) URVASHI SHARMA
(Project guide)
BBA 6th SEM Date:
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ACKNOWLEDGEMENT
With profound sense of gratitude and regard, I express my sincere thanks to my guideDr.
Urvashi Sharma for her valuable guidance and the confidence she instilled in me, that
helped me in the successful completion of this project report. Without her help, this project
would have been a distant affair. Her thorough understanding of the subject and the
professional guidance is indeed of immense help to me.
I convey my heartfelt affection to all those people who helped and supported me during the
course, for completion of my Project Report.
Many a name and incident I still remember and they have become a part apart of my and
those whom I cant recall to have enriched me directly or indirectly.
My heartfelt thanks go to all the executives who helped me gain knowledge about the
actual working and the processes involved in various departments.
JYOTI DAHIYA
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Table of Contents
Title P.g. No
Preface 7
Executive Summary 8
Research Objective. 9
Research Methodology 10-11 Type of Research..10 Data Collection..10 Sampling Unit and Size..10-11 Limitations..11
Chapter - 1 Industry Profile... 12 - 35 Overview and Historical perspective..13 Insurance sector reforms..14
Nature of Industry..17 Indian Insurance Industry..20 Importance of Liberalization..21 Current Scenario..25 SWOT Analysis..32 Conclusion...33
Chapter 2 Company Profile... 34 - 50 HDFC ltd:
I) Introduction..35II) Subsidiary & Associate Companies..37
HDFC StandardI) Introduction..38II) Key Personnel..40III) Knowledge Management..42IV) Product Mix..45V) Current Sales..48
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VI) Future Plans..50
Chapter -3 Financial Planning 51-57
Financial Planning..52 360` Financial Planning..52 Consumption Pattern..56 Objectives & Sales Procedure..57
Chapter 4 Data Analysis & Findings 60 - 68Chapter 5 Conclusion &Recommendation. 69- 73
Conclusion..70 Recommendation..72
Appendices 74 80
Questionnaire..75 Glossary..78 Bibliography..80
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PREFACE
There are number forces that make marketing an endlessly changing activity. Theconstantly activity sociological, psychological and political environment may represent the
uncontrollable marketing factors. To understanding these factors in better way marketing
research is of utmost importance.
This Research Report has been completed in fulfillment of my Management Program
Bachelor of Business Administration (in the company HDFC STANDARD LIFE
INSURANCE. The objective of my Research was TO KNOW THE PUBLIC
AWARENESS OF FINANCIAL PLANNING IN EMERGING INDIAN MARKET.
HDFC STANDARD LIFE is the name which is working as one of the best private
insurance company in insurance sector.
With such large population and the untapped market of populations insurance happens to
be very big opportunity in India. Today it stands as a business growing at the rate of 15-20
percent annually. Together with banking services, It adds about 7 percent to the countrysGDP. In spite of all this growth the statistics of the penetration of the insurance in the
country is very poor. Nearly 80% of Indian populations are without Life Insurance cover
and the Health Insurance. This is an indicator that growth potential for the insurance sector
is immense in India
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EXECUTIVE SUMMARY
Overall, the life insurance and pension sector is set for rapid changes and growth in the
years ahead. Delivering service, building trust and being innovative are key areas in which
any company will have to excel in order to do well in the long road ahead. Different
companies will take different approaches and it would be myriad of solutions that will be
found to delight the Indian customer.
Market Research was done through various activities and tele-calling which are discussed
further in the report. Activities led to practical exposure and taught me the aspects of
customer dealing.
Finally, interesting conclusions were drawn out of the data collected regarding the
Awareness of Financial Planning among the people in todays environment.
It was great experience because selling an insurance product demands a great deal of
confidence and product knowledge.
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RESEARCH OBJECTIVES
To study the awareness of Financial Planning among the people.
To study the importance of Insurance in todays scenario.
Brand awareness of various private insurance companies.
Preference among different investment tools.
Purpose of buying insurance.
Preference in choosing channel for buying life insurance.
Quality of service provided by agents and clients satisfaction
level.Customers perception of improvements brought in by entry of
Private Insurance Companies.
To generate leads for Unit Linked Insurance and the Unit LinkedPension Plans, by interacting with walking and existing customers of the company.
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RESEARCH MEHODOLOGY
The study of awareness about Financial Planning among the people and particularly the
insurance sector covers data collection through observation, questionnaire and interview of
consumers.
Type of research:
EXPLORATORY:
Type of research carried out was EXPLORATORY in nature; the objective of such
research is to determine the approximate area where the drawback of the company lies and
also to identify the course of action to solve it. For this purpose the information proved
useful for giving right suggestion to the company.
Data Collection:
Primary data
Secondary data
Data used for the research work was primary in nature.
Sample unit: -
The research process was done by interacting with number of customers during the
activities performed, which included, markets, cold calling, canopies, etc. Sample Design
consists of Random Sampling.
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Sample size: - 100
Method of collection: -
Field procedure for gathering primary data included observation and interview schedule in
which the questionnaires were filed by the interviewer.
Personal interviews through self administered survey was done to collect the data, market
research was undertaken, that was accomplished by performing various activities designed.
Research Instrument:
Questionnaire
The questionnaire was formulated by keep in mind the following Points: -
Giving the respondents clear comprehension of the question.
Inducing the respondents to co-operate.
Giving instructions as to what is wanted.
Identifying the needs to be known.
Limitations:
The following were the limitations that were there during the course of the study:
1. Limited time period.
2. Less number of respondents.
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3. Biasness of the respondents.
Chapter 1Industrys Profile
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INDUSTRY PROFILE
Overview
With largest number of life insurance policies in force in the world, Insurance happens to
be a mega opportunity in India. Its a business growing at the rate of 15-20 per cent
annually.
Together with banking services, it adds about 7 percent to the countrys GDP .In spite of all
this growth the statistics of the penetration of the insurance in the country is very poor.
Nearly 80 per cent of Indian population is without life insurance cover while health
insurance and non-life insurance continues to be below international standards. And this
part of the population is also subject to weak social security and pension systems withhardly any old age income security. This it-self is an indicator that growth potential for the
insurance sector is immense.
Historical Perspective
The insurance came to India from UK; with the establishment of the Oriental Life
insurance Corporation in 1818.The Indian life insurance company act 1912 was the first
statutory body that started to regulate the life insurance business in India. By 1956 about
154 Indian, 16 foreign and 75 provident firms were been established in India. Then the
central government took over these companies and as a result the LIC was formed. Since
then LIC has worked towards spreading life insurance and building a wide network across
the length and the breath of the country.
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Important milestones in the life insurance business in India:
1912: The Indian Life Assurance Companies Act enacted as the first statute to regulate the
life insurance business.
1956: 245 Indian and foreign insurers and provident societies were taken over by the
central government and nationalized. LIC formed by an Act of Parliament- LIC Act 1956-
with a capital contribution of Rs.5 cr. from the Government of India.
Important milestones in the general insurance business in India are:
1907: The Indian Mercantile Insurance Ltd. set up- the first company to transact all classes
of general insurance business.
1957: General Insurance Council, a wing of the Insurance Association of India, frames a
code of conduct for ensuring fair conduct and sound business practices.
1972: The general insurance business in India nationalized through The General Insurance
Business (Nationalization) Act, 1972 with effect from 1st January 1973. 107 insurersamalgamated and grouped into four companies- the National Insurance Company Limited,
the New India Assurance Company Limited, the Oriental Insurance Company Ltd. and the
United India Insurance Company Ltd. GIC incorporated as a company
Insurance Sector Reforms
Prior to liberalization of Insurance industry, Life insurance was monopoly of LIC.
In 1993, Malhotra Committee- headed by former Finance Secretary and RBI Governor
R.N. Malhotra- was formed to evaluate the Indian insurance industry and recommend its
future direction. The Malhotra committee was set up with the objective of complementing
the reforms initiated in the financial sector. The reforms were aimed at creating a more
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efficient and competitive financial system suitable for the requirements of the economy
keeping in mind the structural changes currently underway and recognizing that insurance
is an important part of the overall financial system where it was necessary to address the
need for similar reforms. In 1994, the committee submitted the report and some of the key
recommendations included:
Structure
Government stake in the insurance Companies to be brought down to 50%. Government
should take over the holdings of GIC and its subsidiaries so that these subsidiaries can act
as independent corporations.
Competition
Private Companies with a minimum paid up capital ofRs.1 billion should be allowed to
enter the sector. No Company should deal in both Life and General Insurance through a
single entity. Foreign companies may be allowed to enter the industry in collaboration with
the domestic companies.
Regulatory Body
The Insurance Act should be changed. An Insurance Regulatory body should be set up.
Controller of Insurance- a part of the Finance Ministry- should be made independent
Investments
Mandatory Investments of LIC Life Fund in government securities to be reduced from 75%
to 50%. GIC and its subsidiaries are not to hold more than 5% in any company (there
current holdings to be brought down to this level over a period of time)
Customer Service
LIC should pay interest on delays in payments beyond 30 days. Insurance companies must
be encouraged to set up unit linked pension plans. Computerization of operations and
updating of technology is to be carried out in the insurance industry.
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STATISTICS (INDIAN & GLOBAL)
This section gives the users important and detailed statistics of the Indian as well as the
Global insurance industry. These statistics would give important insights of where the
respective markets are headed for.
The global life insurance market stands at $1,521.2 billion while the non-life
insurance market is placed at $922.4 billion.
The United States itself accounts for about one-third of the $2443.6 billion global
insurance market and Japan stands next with a 20.62% share.
India takes the 23rd position with US $9.933 billion annual premium collections
and a meager 0.41% share.
Out of one billion people in India, only 35 million people are covered by insurance.
India's life insurance premium as a percentage of GDP is just 1.77 per cent.
The income derived by GIC and its subsidiary companies through investment was
Rs.2491.76 crore and the investable fund generated was Rs.2843 crore in 1999-
2000.
Indian insurance market is set to touch $25 billion by 2010, on the assumption of a
7 per cent real annual growth in GDP.
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NATURE OF INDUSTRY
The insurance industry provides protection against financial losses resulting from a variety
of perils. By purchasing insurance policies, individuals and businesses can receive
reimbursement for losses due to car accidents, theft of property, and fire and storm damage;
medical expenses; and loss of income due to disability or death.
The insurance industry consists mainly ofinsurance carriers (or insurers) and insurance
agencies and brokerages. In general, insurance carriers are large companies that provideinsurance and assume the risks covered by the policy. Insurance agencies and brokerages
sell insurance policies for the carriers.
Insurance companies assume the risk associated with annuities and insurance policies and
assign premiums to be paid for the policies. In the policy, the companies states the length
and conditions of the agreement, exactly which losses it will provide compensation for, and
how much will be awarded.
The premium charged for the policy is based primarily on the amount to be awarded in case
of loss, as well as the likelihood that the insurance carrier will actually have to pay. In
order to be able to compensate policyholders for their losses, insurance companies invest
the money they receive in premiums, building up a portfolio of financial assets and
income-producing real estate which can then be used to pay off any future claims that may
be brought.
There are two basic types of insurance carriers:Direct and Reinsurance.
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Direct carriers are responsible for the initial underwriting of insurance policies and
annuities, while Reinsurance carriers assume all or part of the risk associated with the
existing insurance policies originally underwritten by other insurance carriers
Direct insurance carriers offer a variety of insurance policies.
Life insurance provides financial protection to beneficiariesusually spouses and
dependent childrenupon the death of the insured.
Disability insurance supplies a preset income to an insured person who is unable to work
due to injury or illness
Health insurance pays the expenses resulting from accidents and illness.
AnAnnuity(a contract or a group of contracts that furnishes a periodic income at regular
intervals for a specified period) provides a steady income during retirement for the
remainder of ones life.
Property-casualty insurance protects against loss or damage to property resulting from
hazards such as fire, theft, and natural disasters.
Liability insurance shields policyholders from financial responsibility for injuries to others
or for damage to other peoples property. Most policies, such as automobile and
homeowners insurance, combine both property-casualty and liability coverage. Companies
that underwrite this kind of insurance are called property-casualty carriers.
What is Life Insurance?
Human life is subject to risks of death and disability due to natural and accidental causes.
When human life is lost or a person is disabled permanently or temporarily, there is a loss
of income to the household. The family is put to hardship. Risks are unpredictable.
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Death/disability may occur when one least expects it. There are a number of life insurance
products which offer protection and also coupled with savings.
A Term insurance product provides a fixed amount of money on death during the period
of contract.
A Whole Life insurance product provides a fixed amount of money on death.
An Endowment Assurance product provided a fixed amount of money either on death
during the period of contract or at the expiry of contract if life assured is alive.
A Money Back Assurance product provides not only fixed amounts which are payable on
specified dates during the period of contract, but also the full amount of money assured ondeath during the period of contract.
An Annuityproduct provides a series of monthly payments on stipulated dates provided
that the life assured is alive on the stipulated dates.
A Linked product provides not only a fixed amount of money on death but also sums of
money which are linked with the underlying value of assets on the desired dates.
There are a variety of life insurance products to suit to the needs of various categories of
peoplechildren, youth, women, middle-aged persons, old people; and also rural people,
film actors and unorganized laborers.
Life insurance products could be purchased from registered life insurers notified by the
IRDA. Insurers appoint insurance agents to sell their products.
As per regulations, insurers have to give the various features of the products at the point of
sale. The insured should also go through the various terms and conditions of the products
and understand what they have bought and met their insurance needs. They ought to
understand the claim procedures so that they know what to do in the event of a loss..
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INDIAN INSURANCE SECTOR
REGULATORY BODY
Insurance is a federal subject in India. The primary legislation that deals with insurance
business in India is: Insurance Act, 1938, and Insurance Regulatory & Development
Authority Act, 1999.
The Insurance Regulatory and DevelopmentAuthority (IRDA)
Reforms in the Insurance sector were initiated with the passage of the IRDA Bill in
Parliament in December 1999. The IRDA since its incorporation as a statutory body in
April 2000 has fastidiously stuck to its schedule of framing regulations and registering the
private sector insurance companies.
The other decision taken simultaneously to provide the supporting systems to the insurance
sector and in particular the life insurance companies was the launch of the IRDAs online
service for issue and renewal of licenses to agents. Since being set up as an independent
statutory body the IRDA has put in a framework of globally compatible regulations.
MISSION-IRDA
To protect the interests of the policyholders, to regulate, promote and ensure orderly
growth of the insurance industry and for matters connected therewith or incidental
thereto.
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IMPACT OF LIBERALISATION
The introduction of private players in the industry has added to the colors in the dull
industry. The initiatives taken by the private players are very competitive and have given
immense competition to the on time monopoly of the market LIC. Since the advent of the
private players in the market the industry has seen new and innovative steps taken by theplayers in this sector.
The new players have improved the service quality of the insurance. As a result LIC down
the years have seen the declining phase in its career. The market share was distributed
among the private players. Though LIC still holds the 79% of the insurance sector but the
upcoming natures of these private players are enough to give more competition to LIC in
the near future. LIC market share has decreased from 95% (2002-03) to 81 %( 2004-05).
LIC has the current market share of 79%.
Among the private players ICICI Prudential has the maximum of appx 5.60%
Followed by Bajaj Allianz (3.27 %) and HDFC Standard Life of about 3.11%.
Below is the table that shows the market share of various players of the industry.
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The following companies have the rest of the market share of the insurance industry.
COMPANY NAME MARKET SHARELIC 79.30
ICICI PRUDENTIAL 5.63BAJAJ ALLIANZ 3.27
HDFC STANDARD LIFE 3.11BIRLA SUNLIFE 2.32
TATA AIG 1.45SBI LIFE 1.24
MAX NEWYORK 0.90AVIVA LIFE 0.82ING VYSYA 0.66
OM KOTAK LIFE 0.54AMP SANMAR 0.38
METLIFE 0.33RELIANCE LIFE 0.05
The liberalization of the Indian insurance sector has opened new doors to private
competition and the new and improved insurance sector today promises several newjob
opportunities. With private players now in the field, there will be innovative products,
better packaging, improved customer service, and, most importantly, greater employment
opportunities.
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There are a number of options to choose from for a career in Insurance. Ideally an
insurance company will have openings in the following fields:
Actuaries
Underwriter Surveyor
Investment
Marketing & Distribution
Actuaries
Evaluates the risk for companies to be used for strategic management decisions.
Actuaries use their analytical skills to predict the risk of writing insurance policiesthrough the use of mathematical, statistical and economic models.
An actuary not only fixes the premium rates for new products, but also revises both
products and prices. They calculate costs to assume risk
Underwriters
Insurance underwriters review insurance applications and decide whether they
should be accepted or rejected based on the degree of risks involved in insuring the
people or objects of concern.
In the life insurance business, an underwriter is expected to filter the "bad or
substandard lives". Whereas, in the general insurance segment, he takes care of risk
management.
Agents/Brokers:
Insurance agentsmay work for one insurance company or as independent agents
selling for several companies. Insurance agents and brokers can find openings in the health insurance sector,
financial planning services, retirement planning counseling or even provide other
services, for e.g. sell mutual funds, annuities etc.
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Surveyor/Loss Assessor:
Surveyors are professionals who assess the loss or damage and serve as a link
between the insurer and the insured.
They usually function only in non life business. Their job is to assess the actual loss and avoid false claims.
Sales/Marketing:
And who can forget the guys who make and break a brand. They would be required in a
large number in order to promote the number of products that will be launched by
numerous companies in the insurance sector.
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CURRENT SCENARIO OF THE INDUSTRY
INSURANCE MARKET IN INDIA
India with about 200 million middle class household shows a huge untapped potential for
players in the insurance industry. Saturation of markets in many developed economies has
made the Indian market even more attractive for global insurance majors. The insurance
sector in India has come to a position of very high potential and competitiveness in the
market.
Innovative products and aggressive distribution have become the say of the day. Indians,
have always seen life insurance as a tax saving device, are now suddenly turning to the
private sector that are providing them new products and variety for their choice. Life
insurance industry is waiting for a big growth as many Indian and foreign companies are
waiting in the line for the green signal to start their operations. The Indian consumer should
be ready now because the market is going to give them an array of products, different in
price, features and benefits. How the customer is going to make his choice will determine
the future of the industry.
CUSTOMER SERVICE
Consumers remain the most important centre of the insurance sector. After the entry of the
foreign players the industry is seeing a lot of competition and thus improvement of the
customer service in the industry. Computerization of operations and updating of technology
has become imperative in the current scenario. Foreign players are bringing in international
best practices in service through use of latest technologies. The one time monopoly of the
LIC and its agents are now going through a through revision and training programs to catch
up with the other private players. Though lot is being done for the increased customer
service and adding technology to it but there is a long way to go and various customer
surveys indicate that the standards are still below customer expectation levels.
DISTRIBUTION CHANNELS
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Till date insurance agents still remain the main source through which insurance products
are sold. The concept is very well established in the country like India but still the
increasing use of other sources is imperative. It therefore makes sense to look at well-
balanced, alternative channels of distribution.
LIC has already well established and have an extensive distribution channel and presence.
New players may find it expensive and time consuming to bring up a distribution network
to such standards. Therefore they are looking to the diverse areas of distribution channel to
have an advantage. At present the distribution channels that are available in the market are:
Direct selling/Retail
Corporate agents
Group selling
Brokers and cooperative societies
Banc assurance
DIRECT SELLING/RETAIL
Direct selling or retail business is carried out by Agents of the company. This is the main
distribution channel due to the complexity of most insurance products (Endowment,
Whole of Life, Unit Linked). This tends to be the focus of most companies due to its pastsuccess as well as its ability to deliver the right advice. However, this channel can be
expensive and it is a time consuming sales process. An agent is the public face of an
Insurance company. Hence it is important that this face is always smiling and presentable
and the facts and figures at his/ her command are updated and correct. An agent should be a
pleasing personality with complete knowledge about the various plans and solutions which
the company has to offer and must also understand the customers psychology well to deal
in an efficient manner.
BANCASSURANCE
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Easy accesses for claims, as banks are a regular go.
Innovative and better product ranges
WHAT DOES LIFE INSURANCE HAVE TO OFFER?
Life insurance is many different things to many different people. For some, it is a premium
to be paid on time. For others it offers liquidity since cash can be borrowed when needed.
For the investment-minded, it denotes a constantly growing capital account and numerous
other benefits.
The contractual guarantee is the promise to pay, backed by one of the oldest and most
stably regulated financial industry operating in the Indian sub-continent today.
1) Insurance Buys Time and Money
People like to refer to life insurance as time insurance, the reason being that life insurance
proceeds are paid to the insured's beneficiaries in case of death. The money proffered by
life insurance helps buy time to adjust to the change of circumstances. Insurance provides
large amounts of cash that will keep the lifestyle for the survivors the way it was before the
insured's death.
2) Insurance Offers Peace of Mind
For the person who buys an insurance policy, it offers absolute and complete peace of
mind. He or she knows that the decision made by him will provide sound benefits in the
future, whether or not the individual may live to see it.
3) Multiple Applications
The future is uncertain for each and every one. No one knows how long he or she will live.
The investment benefit is paid to the insured's beneficiaries after his death or it can be used
during the life as well. Life insurance policy owners can turn to the cash value of the policy
in case of a financial emergency when all avenues are either blocked or denied.
4) Enduring Elasticity
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Since life insurance is flexible enough to serve several needs, the insured can keep several
long-term goals in mind once he or she invests in the insurance plan. The cash value of the
policy can be allocated towards augmenting the monthly income during the retirement
years. Leisure years should be turned into pleasure years. Permanent life insurance is
designed on the concepts of long-term flexibility.
5) Financial Security
The insurance policy offers contractual guarantees to people looking for peace of mind
when they buy life insurance. Life insurance offers complete financial security. The
purchase of life insurance demonstrates concern for a family's future financial well being.
6) Regard for FamilyThe purchase of life insurance clearly displays care and concern for the people the policy
owner loves.
7) Insurance is Safer
No financial institution can do what life insurance does. No industry can back its products
with reserves and surplus as sound as those of the insurance industry.
The proof of strength and safety that insurance companies have ensured even under the
most adverse of conditions is a matter of pride for the entire insurance industry. For
generation after generation, life insurance has been acclaimed as the very benchmark of
security against which the other industries are measured.
OPPORTUNITIES FOR INSURANCE COMPANIES
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In the now open sector on insurance, the following is what I feel will determine the success
of the company in particular and the industry in general:
A change in the attitude of the population
Indians have always been wary of employing their hard-earned money in a venture that will
pay them on their death. Insurance has always been used as a Tax saving tool. No more, no
less. It is upon the insurers to educate the people to secure/insure their future against any
unknown calamity and make a shield around their families and businesses.
An open and transparent environment created under the IRDA.
The reason for this being on the top of our understanding is that when ever we have seenany sector open up in India there are always grey areas and unsure policies. These are not
exactly what any player, be it Indian or foreign, looks for. It creates an air of uncertainty in
all the decision making process. Insurance as a sector requires players who are strong
financially and are willing to wait for returns. Their confidence can be bolstered only if
there is an open and a transparent policy guidelines. This will also help the consumers feel
safe that the regulatory is an active one and cares to do everything possible to keep things
under control and help the insurance environment grow maturely.
A well-established distribution network.
To cater to the largest democracy in the world is by no means a cakewalk. Insurance profits
are directly related to number of insured and this is in turn related to the reach.
Trained professionals to build and sell the product.
It is said that the insurance agent is the best salesman in the world. He makes you pay,regularly, an amount promising to pay back only on your death. Thus the players will
require an excellent sales team to sell their products in the now competitive environment.
Encouragement of new and better products and letting the hackneyed ones die
out.
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This will itself ensure the market grows. And that every class/society gets a product that
best suits them.
SPECIAL PROVISIONS
The Income Tax Act and Life Insurance policies
Under Section 10(10D), any sum received under a Life Insurance policy (not being
a Key Man policy) is also exempt from taxation. But it is wise to remember that
Pensions received from Annuity plans are not exempted from Income Tax.
Section 80C provides a deduction up to Rs.1,00,000/- to an individual assessee for
any amount paid as a premium.
POLICYHOLDERS GRIEVANCES
Policyholders may have complaints against insurers either in respect of their policies or
their claims. As per Regulations for Protection of policyholders interests, 2002, every
insurer should have in place, a grievance redressal system to address the complaints of
policyholders. The IRDA has a Grievance Redressal Cell which plays a facilitative role by
taking up complaints against insurers with the respective companies for speedy resolution.
The IRDA however does not adjudicate on complaints.
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SWOT ANALYSIS OF INSURANCE INDUSTRY
STRENGTH1.Best returns with the added advantage of 100% life insurance coverage.
2. Good option for new investors into the market as all the money is invested
by best fund managers so with less knowledge also they can earn good
returns.
3. Best commission charges paid to the agents which vary from 12% to 35%
which is much higher as compared to mutual funds i.e. , only 2-2.5%.
WEAKNESS
1. HDFC SLIC could not able to match LIC in remote areas services.
2. Misleading facts given by life advisors about the returns of ULIPs.
3. Hidden charges taken by the companies.
4. Less Promotional Campaigns.
OPPORTUNITY
1. 80 percent of Indian population is still under insured. So there is a
big opportunity for insurance companies.
2. As the stock market can be under the mark any time so it can bring loss to
the investors but as in ULIPs there is proper mixture of debt securities and
equity so the loss is incurred during dark trading days also.
3. Unit-linked products are exempted from tax and they provide life insurance.
4. Increasing consumer awareness about Insurance and its use.
THREAT
1. Cannibalism within the industry by providing misleading figures to the investors.
2. Govt.s instability has a long term repercussions affecting companys policies and its
growth.
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CONCLUSION
With largest number of life insurance policies in force in the world, Insurance happens to
be a mega opportunity in India, which is growing at the rate of 15-20 per cent annually.
Nearly 80 per cent of Indian population is without life insurance cover while health
insurance and non-life insurance continues to be below international standards. And this
part of the population is also subject to weak social security and pension systems with
hardly any old age income security.
And also the changing attitude and increasing awareness level of the population is an
indicator that growth potential for the insurance sector is immense
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Chapter 2
Companys Profile
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COMPANYS PROFILE
INTRODUCTION
Helping Indians experience the joy of home ownership.Incorporated in 1977 with a share
capital of Rs. 10 crores, HDFC has since emerged as the largest residential mortgage
finance institution in the country. The corporation has had a series of share issues raising its
capital to Rs. 119 crores. HDFC operates through 75 locations throughout the country with
its Corporate Headquarters in Mumbai, India.
OBJECTIVES AND BACKGROUND
Background
HDFC was incorporated in 1977 with the primary objective of meeting a social need that
of promoting home ownership by providing long-term finance to households for their
housing needs. HDFC was promoted with an initial share capital of Rs. 100 million.
Business Objectives
The primary objective of HDFC is to enhance residential housing stock in the country
through the provision of housing finance in a systematic and professional manner, and topromote home ownership. Another objective is to increase the flow of resources to the
housing sector by integrating the housing finance sector with the overall domestic financial
markets..
ORGANIZATION AND MANAGEMENT
HDFC is a professionally managed organization with a board of directors consisting of
eminent persons who represent various fields including finance, taxation, construction andurban policy & development. The board primarily focuses on strategy formulation, policy
and control, designed to deliver increasing value to shareholders.
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FOUNDER Mr. Hasmukhbhai Parekh
BOARD OF DIRECTORS
Mr. D S Parekh Chairman
Mr. Keshub Mahindra Vice Chairman
Ms. Rene S. Karnad Executive Director
Mr. K M Mistry Managing Director
Mr. Shirish B. Patel
Mr. B S Mehta
Mr. D M Sukthankar
Mr. D N Ghosh
Dr. S A Dave
Mr. S Venketaraman
Dr. Ram S. Tarneja
Mr. N M Munjee
Mr. D M Satwalekar
HDFC has a staff strength of 1029, which includes professionals from the fields of finance,
law, accountancy, engineering and marketing.
SUBSIDIARY & ASSOCIATE COMPANIES
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HDFC Bank
HDFC Mutual Fund
HDFC Standard Life
Intelenet Global Services Ltd.
HDFC Chubb General Insurance Company Ltd.
HDFC Reality
Other Companies Co-Promoted by HDFC
HDFC Trustee Company Ltd.
HDFC Developers Ltd.
HDFC Venture Capital Ltd.
HDFC Ventures Trustee Company Ltd.
HDFC Investments Ltd.
HDFC Holdings Ltd.
Home Loan Services India Pvt. Ltd.
Credit Information Bureau (India) Ltd
HDFC STANDARD LIFE INSURANCE
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INTRODUCTION
HDFC Standard Life Insurance Company Limited was one of the first companies to be
granted license by the IRDA to operate in life insurance sector. Each of the JV player is
highly rated and been conferred with many awards. HDFC is rated 'AAA' by both CRISIL
and ICRA. Similarly, Standard Life is rated 'AAA' both by Moody's and Standard and
Poors. These reflect the efficiency with which HDFC and Standard Life manage their asset
base of Rs. 15,000 Cr and Rs. 600,000 Cr respectively.
HDFC Standard Life Insurance Company Ltd was incorporated on 14th August 2000.
HDFC is the majority stakeholder in the insurance JV with 81.4 % stake and Standard Life
has a stake of 18.6%. Mr. Deepak Satwalekar is the MD and CEO of the venture.
THE PARTNERSHIP:
HDFC and Standard Life first came together for a possible joint venture, to enter the Life
Insurance market, in January 1995. It was clear from the outset that both companies shared
similar values and beliefs and a strong relationship quickly formed. In October 1995 the
companies signed a 3 year joint venture agreement.Around this time Standard Life
purchased a 5% stake in HDFC, further strengthening the relationship.
In October 1998, the joint venture agreement was renewed and additional resource made
available. Around this time Standard Life purchased 2% of Infrastructure Development
Finance Company Ltd. (IDFC). Standard Life also started to use the services of the HDFC
Treasury department to advise them upon their investments in India.Towards the end of
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1999, the opening of the market looked very promising and both companies agreed the
time was right to move the operation to the next level. Therefore, in January 2000 an expert
team from the UK joined a hand picked team from HDFC to form the core project team,
based in Mumbai. Around this time Standard Life purchased a further 5% stake in HDFC
and a 5% stake in HDFC Bank.
COMPANYS MISSION:
To be the top life insurance company in the market.This not only means being the largestor the most productive company in the market, but a combination of several things like-
Customer service of the highest order
Value for money for customers
Professionalism in carrying out business
Innovative products to cater to different needs of different customers
Use of technology to improve service standards
Increasing market share
COMPANYS VALUES:
SECURITY: Providing long term financial security to our policy holders will beour constant endeavor. This is done by offering life insurance and pension products.
TRUST: Company appreciates the trust placed by our policy holders in us. Hence,
company will aim to manage their investments very carefully and live up to this
trust.
INNOVATION: Recognizing the different needs of our customers, company will
be offering a range of innovative products to meet these needs.
Companys mission is to be the best new life insurance company in India and these are the
values that will guide us in this.
KEY MANAGEMENT PERSONNEL
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Chairman
Mr. Deepak S. Parekh
Board Of Directors
Mr. K. M. Mistry
Ms. Renu S. Karnad
Mr. A. M. Crombie
Ms. Marcia D. Campbell
Mr. Norman Keith Skeoch
Mr. G. R. DivanMr. G. N. Bajpai
Mr. Ranjan Pant
Mr. Ravi Narain
Managing Director & CEO
Mr. D. M. Satwalekar
AUDIT COMMITTEE
Haribhakti & Company
Chartered Accountants
B.K. Khare & Co.
Chartered Accountants
Bankers
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HDFC Bank Ltd.
Union Bank of India
Indian Bank
The Saraswat Co-operative Bank Ltd.
Federal Bank
KNOWLEDGE MANAGEMENT
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When Should One Go For Insurance?
Your insurance need will change as your life does, from starting to work to enjoying your
golden years and all the stages in between. Each one of these stages may pose a differentinsurance need/cover for you. In this section, we have drawn up the basic life stages and
help you analyze various insurance needs accordingly.
Stage 1 : Young and Single
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This is an important stage where one lays down the foundation of a successful life ahead.
Take advantage of the time and power of compounding to ensure that you build up your
dreams, so start saving early.
Your needs:
oSave for a home and wedding
oTax Planning
oSave for Golden years
Stage 2 - Just Married
Marriage brings about a significant change. New dreams and new opportunities also bring
in additional responsibilities. While both of you look forward to a happy and secure life , it
is equally important to ensure that eventualities dont come in the way of shaping your
dreams.
Your needs:
o Planning for home / securing your home loan
liability
o Save for vacation
o Save for your first child
Stage 3 - Proud Parents
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Once you have children, your need for life insurance is even more. You need to protect
your family from an untoward incident. Ensure your protection umbrella takes into account
the future cost of securing your childs dream. You will want life to go on for your loved
ones, and having enough life insurance is a way to help ensure that.
Your needs:
o Provide for childrens education
o Safeguarding family against loan liabilities
o Savings for post-retirement
Stage 4 - Planning for Retirement
While you are busy climbing the ladder of success today, it is important for you to take
time and plan for your life after retirement. Having an early start for retirement planning
can make a significant difference to your savings. Think about your golden years even
before you have reached them. The key is to think ahead and plan well using your time and
money.
Your needs:
o Provide for regular income post retirement
o Immediate Tax benefits
o Lead a secure, independent and comfortable
life style after retirement
PRODUCT MIX
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At HDFC Standard Life, there is a bouquet of insurance solutions to meet every need. They
cater to both, individuals as well as to companies looking to provide benefits to their
employees. For individuals, they have a range of protection, investment, pension and
savings plans that assist and nurture dreams apart from providing protection. One can
choose from a range of products to suit ones life-stage and needs.For organizations they
have customized solutions that range from Group Term Insurance, Gratuity, Leave
Encashment and Superannuation Products.
PRODUCTS FOR INDIVIDUALS
PROTECTION - You can protect your family against the loss of your income or the
burden of a loan in the event of your unfortunate demise, disability or sickness. These plans
offer valuable peace of mind at a small price.
Plans : Term Assurance Plan
Loan Cover Term Assurance Plan.
INVESTMENT - This includes a plan that is well suited to meet your long term
investment needs. We provide you with attractive long term returns through regular
bonuses.
Plan : Single Premium Whole Of Life
PENSION - Our Pension Plans help you secure your financial independence even after
retirement and live a relaxed retired life.
Plans : Personal Pension Plan
Unit Linked Pension
Unit Linked Pension Plus
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SAVING - Our Savings Plans offer you flexible options to build savings for your future
needs such as buying a dream home or fulfilling your childrens immediate and future
needs.
Plans : Endowment Assurance Plan,
Unit Linked Endowment,
Unit Linked Endowment Plus,
Money Back Plan,
Childrens Plan,
Unit Linked Youngstar,
Unit Linked Youngstar Plus .
GROUP PLANS
HDFC Standard Life has the most comprehensive list of products for progressive
employers who wish to provide the best and most innovative employee benefit solutions to
their employees. They offer different products for different needs of employers ranging
from term insurance plans for pure protection to voluntary plans such as superannuation
and leave encashment.
Plans: Group Term Insurance with Riders
Group Term Insurance with Profit-ShareGroup Unit-Linked Plan
For Gratuity
For Defined Benefit Superannuation
For Defined Contribution Superannuation
Group Leave Encashment Plan
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RURAL CUSTOMER - According to research findings, there is keenness among rural
customers to invest in savings cum protection plan with a term of five years, especially, if
the premium amount is low and affordable. Keeping this in view, HDFC STD> LIFE has
plans like:
Plans : Bima Bachat Yojana.
Super Bachat Yojana
DISTRIBUTION OFFICES
In addition to the corporate office at Mumbai, your Company had 169 offices in over 135
cities/towns in the country. It has a widespread network of Financial Consultants,
Corporate Agents and Brokers servicing customers in these cities and towns.
FINANCIAL CONSULTANTS
The number of licensed Financial Consultants appointed by your Company increased from
over 23,000 in the previous year to over 33,000 in the current year. During the year, the
Company continued its
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CURRENT SALES-HDFC Standard Life
HDFC STANDARD LIFE PACING AHEAD
The Financial Express 15th May 2006
HDFC Standard Life has recorded a strong year-on-year growth of 112% for the period
April-March 2005-06, in comparison to the same period 2004-05, with a new business first
year premium of Rs 1,029 crore.
In terms of effective premium income (EPI), which gives a 10% value to a Single Premium
policy and is an internationally-accepted indicator of an insurance company's performance,
the EPI grew by 103% to Rs 887 cr from Rs 436 crore.
HDFC Standard Life's growth in new business is a manifestation of the number of lives
insured as well as an increase in the average premium. For the individual business, volume
measured by the number of lives insured witnessed a 32% growth.
The average premium also grew by 62% to Rs 27,500 in 2005-06 from Rs 17,000 in
2004-05.
During the year the company issued over 3,97,000 policies and has covered more than
5,80,000 lives
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Table Showcasing Financial Results:
Parameters
April-March
2004-05
(Rs. Cr)
April-March
2005-06
(Rs. Cr)
Growth
(%)
Total received premium 668.40 1532.21 129.23
i. New Business 486.15 1028.94 111.65
ii. Renewal 182.25 503.27 176.14
Effective Premium Income
(Total) 436.08 887.30 103.47
Group Business Premium
(EPI) 49.40 135.15 173.58
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FUTURE PLANS
HDFC has always been market-oriented and dynamic with respect to resource mobilizationas well as its lending program. This renders it more than capable to meet the new
challenges that have emerged. Over the years, HDFC has developed a vast client base of
borrowers, depositors, shareholders and agents, and it hopes to capitalize on this loyal and
satisfied client base for future growth. Internal systems have been developed to be robust
and agile, to take into account changes in the volatile external environment.
HDFC has developed a network of institutions through partnerships with some of the best
institutions in the world, for providing specialized financial services. Each institution is
being fine-tuned for a specific market, while offering the entire HDFC customer base the
highest standards of quality in product design, facilities and service.
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Chapter 3
Financial Planning
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FINANCIAL PLANNING
A comprehensive financial advisory service involving financial strategies, tax,
corporate/trust structures, estate planning, legal issues, family law, asset allocation, asset
protection and investment advice.
Financial Planning takes into account:
Desired asset allocation, risk profile and return expectations.
Building cash flows correlating all expenses and income. Inflation and outflows due
to loans are considering in building the financial plan. Future goals like retirement, housing and children's education / marriage or other
needs.
Why do you need Financial Planning?
You may have many dreams, needs and desires. For example, you could be dreaming of:
Owning a new car,
Buying a dream house,
Providing your children with the best education,
Planning a grand wedding for your children
Having a great time after your retirement
But in today's world of skyrocketing costs and increasing inflation, how many of these
dreams can you hope to turn into reality? By planning well, you can utilize your limited
resources to the fullest.
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EXPERIENCE THE POWER 360 FINANCIAL PLANNING
The only thing permanent in life is change. Times change. People change. So does life.
You expect life to be much better tomorrow than it is today. Tomorrow, you hope to fulfill
all your dreams and aspirations. But what happens if things take an untoward turn? Or, if
there is an eventuality? Perhaps it's time for you to change the way you plan your
investments...
How will 360 Financial Planning help?
Instead of investing in an ad-hoc manner, 360
Financial Planning helps you take a holistic,
all-round view. Briefly, 360 Financial
Planning comprises:
Investment Planning
Cash Flow Planning
Tax Planning
Insurance Planning
Children Future Planning
Retirement Planning
INVESTMENT PLANNING: To make your wealth grow
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Everyone needs to save for a rainy day. Once you have saved enough to take care of
emergencies, you should start thinking about investing and to make your money grow.
Investment Planning Service includes:
Risk Profiling
Asset Allocation and Portfolio Construction
Creation and Accumulation of Wealth through Systematic Investment Plans (SIP)
Regular review of progress and Portfolio Rebalancing
CASH FLOW PLANNING: To provide for assets and meet the periodic cash
requirementsIn simple terms, cash flow refers to the inflow and outflow of money. It is a record of your
income and expenses.
Cash flow planning refers to the process of identifying the major expenditures in future
(both short-term and long-term) and making planned investments so that the required
amount is accumulated within the required time frame.
TAX PLANNING: To save on taxes and increase your income
Proper tax planning is a basic duty of every person which should be carried out
religiously.
According to the Income Tax Act, 1961, One will be eligible for Tax Benefits under
Section 80C and Section 10(10D) of the act.
One has to compare the advantages of several tax saving schemes and depending upon your
age, social liabilities, tax slabs and personal preferences, decide upon a right mix of
investments, which shall reduce your tax liability to zero or the minimum possible.
INSURANCE PLANNING: To protect yourself, your family and your Assets.
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"Insurance is not for the person who passes away, it for those who survive," goes a
popular saying that explains the importance of Insurance Planning.
It is extremely important that every person, especially the breadwinner, covers the risks to
his life, so that his family's quality of life does not undergo any drastic change in case of an
unfortunate eventuality. Insurance Planning is concerned with ensuring adequate coverage
against insurable risks.
CHILDREN'S FUTURE PLANNING: To give your children a financially secure future
Like every parent, you too must be overjoyed to watch your child grow. All parents want to
give the best possible upbringing to their children. This includes good education andsecurity, in case of any eventuality. Soon, your little bundle of joy will grow up, and it will
be time to provide for his or her higher education and wedding.
The purpose of Children's Future Planning is to create a corpus for foreseeable
expenditures such as those on higher education and wedding, and to provide for an
adequate security cover during their growing years.
RETIREMENT PLANNING: Because retirement is a time to relax, not to get worried
Some like it. Some dont. But retirement is a reality for every working person. Most young
people today think of retirement as a distant reality.
However, it is important to plan for your post-retirement life if you wish to retain your
financial independence and maintain a comfortable standard of living even when you are
no longer earning. This is extremely important, because, unlike developed nations, Indiadoes not have a social security net.
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CONSUMPTION PATTERN
*Source-Business world magazine 2nd week April 2008
The consumption pattern is determined by the income so more would be the income more
would be the consumption. The consumption though can differ in terms of areas where themoney is actually spent. The above representation tells us the consumption pattern of the
consumer in India i.e. where do they actually invest their money and in what proportion do
they spend in various areas. The chart shows that people are spending 6.9% of their
savings into savings and investments.
40.10%
4.10%8.80%
6.90%
6.60%
3.90%
10.80%
2.30%
7.60%
2.10%0.80%
1.60%4.60%
Food & Grocery
Home Textiles
Personal Care
Saving & Investment
Clothing
Consumer Durable
Vacation
Eating out
Footwear
Movies & Theater
Entertainment
Accessories
Books & Music
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FIRSTCONVERSATION
APPOINTMENT
FILLING THEPROPOSAL FORM
COLLECT THEREQUIRED
DOCUMENTS AND
THE FIRSTPREMIUM
Follow Up
Follow Up
OBJECTIVE: To generate leads for various Unit Linked Plans offered
by the company, by interacting with walking and existing customers
and to know the awareness level of Financial Planning among them.
SALES PROCEDURE :
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STEP 1: FIRST CONVERSATION WITH A KNOWN ORAN UNKNOWN CUSTOMER
This is the first time, when you interact with a person and try to get the information fromhim about the industry or the company and understand the customers insight i.e. what
actually does a customer expects from the companies.The objective was to know theawareness about Financial Planning among the customers and this was done by getting aquestionnaire filled by the people. The various activities performed were:
1) DELHI METRO : Here we interacted with the commuters &
collectedthe data.
2) MARKETS : (Cannaught Place & Karol Bagh) During this
activity, we interacted with the shopkeepers as well as the walking
people regarding their views about the industry.
3) CANOPY AT NOIDA : This activity was designed to target the peopleworking in BPOs and other IT companies.
4) TELE-CALLING: This was random calling from the data base provided
by the company and the aim was to collect information
from them.
5) CORPORATE PRESENTATION: A presentation was arranged for the
employees of VED RAM AND SONS (Paras), to make them aware about the
importance of Financial Planning in todays unpredictable environment.
STEP 2: APPOINTMENT
All the potential and interested customers of all the activities performed are then followed
up and an appointment is fixed for further details.
The motive is to explain the customer in detail, about the various plans offered by the
company. The customer is informed about the procedure and the options he can opt for
like:
1) Choose the premium he wish to invest
2) Select the Premium Payment Option i.e. annual mode, half yearly
mode, quarterly mode, or monthly mode.
3) Choose the amount of protection i.e. the sum assured, he desires.
4) With Maturity Benefit, choose the additional benefits like:
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a) Life option Death Benefitb) Life & Health option Death Benefit + Accidental Death
Benefitc) Extra Life & Health option Death Benefit + CriticalIllness
Benefit + Accidental Death Benefit5) Choose the Investment funds or funds one desires.
The various funds available are:
Liquid Fund
Secure Managed Fund
Defensive Managed Fund
Balanced Managed Fund
6) Other information like:
a) Tax Benefit
b) Various Charges
c) Switching option
d) Surrendering
e) Terms & Conditions etc.
STEP 3: FILLING THE PROPOSAL FORM
After the second step, the interested customers are required to fill the proposal form which
requires the following information:
b) Personal details of the policy holder,
c) Personal details of Beneficiary or Nominee
d) The Premium amount selected
e) The Term of the policy
f) The Fund choice for investment
STEP 4 : COLLECTING THE DOCUMENTSOnce the form is filled all the necessary documents are collected like :
a) Address proof,
b) DOB certificate etc.
And also the first premium amount in form of cheque or cash is collected.
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Within 15 days, the policy documents reach the customers place, and the customer is
required to read the documents carefully.
Chapter 4
AnalysisAnd
Finding
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SAMPLE SIZE: 100
Sample was collected on Random Basis
AGE DISTRIBUTION
AGEDISTRIBUTION(yrs.)
35%
41%
24%Below30
31 - 45
Above 45
Highest number of Respondents (41%) from Age group 31 to 45 yrs.
35% respondents are of age below 30 yrs, small percentage of which isunemployed.
MARITAL STATUS
MARITALSTATUS
19
4
16
3724
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Below30 31- 45 Above45
AGE(yrs)
SINGLE MARRIED
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98% of the respondents were aware about Financial Planning.
BRAND RECALL
100 % respondents mentioned first name to be LIC
Among private players, ICICI Prudential has the highest
Brand Recall i.e. 96%
HDFC Standard life has Brand Recall of 92%
INVESTMENT PREFERENCE
63
BRAND RECALL
100
96
92
8286
72
64
75
71
6051
LIC
ICICI Prudential
HDFCStd Life
TATAAIG
BIRLASUNLIFE
KOTAKMAHINDRA
SBI LIFE
AVIVA
MAX NEWYORK
METLIFE
INGVYSYA
INVESTMENTPREFERENCE
11%18%
21%
9%
20%
21%
Banks &Post
office
Share Market
Insurance
Bonds
Mutual Funds
Real Estate
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21% respondents prefer banks and post office schemes as an investment
tool preference.
Respondents of age group below 30 years prefer Mutual Funds, as they
provide higher returns than banking investment tools.
Insurance ranks 2nd as an investment tool choice, which itself includes
various protection, saving and pension plans.
Govt. Bonds & securities are mostly preferred by people of higher age
group rather than young generation.
Property as an investment option is most lucrative choice. However it is important tomention that majority of respondents are in age group of above 30 years and peoplewith high income bracket prefers to invest in Real Estate.
INSURED PERCENTAGE
87 % of respondents were insured on own life and on life of their family
members.
So we had 13 % of potential customers to approach.
64
ARE YOU INSURED?
87%
13%
YES
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COMPANY PREFERENCE
COMPANY PREFERENCE(in %)
55% 30% 15%
0 20 40 60 80 100 120
1
ONLY LIC BOTH ONLY PVT. COs
55% of respondents have insurance cover provided by LIC only
15% of respondents have insurance cover provided by Private Cos. only
Whereas 30% have got insurance from both LIC and Private Companies.
Total number of LIC policies sums up to 85% and total number of Pvt.
Companies policies sold sums up to 45%.
Data provides that though LIC is still got a maximum market share but
Private Companies are making a fast move in the market.
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TYPE OF PLAN BOUGHT
TYPE OF PLAN
26, 29%
20, 23%
24, 28%
17, 20% MONEY BACK
ENDOWMENT
PENSION PLAN
ULIPs
Money back Policies have been most popular and also the endowment
plans.
As people today are more aware about financial planning, so people of the
age 30 years have planned for their Retirement now.
ULIPs are fast gaining popularity as they provide investment
benefit with Insurance.
PURPOSE OF BUYING INSURANCE
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PURPOSE OF BUYINGINSURANCE
52%
11%
23%
14%
0 10 20 30 40 50 60
Risk Cover
Investment
Tax Benefit
Retirement
Planning
Risk cover remains the most important purpose for buying insurance followed
by option as Tax saving tools.
Retirement Planning in a early period is also gaining the market share.
ULIPs are responsible for increasing popularity of insurance as an investment
tool
DISTRIBUTION CHANNEL PREFERENCE
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CHANNEL PREFERENCE
56 17 14 9 4
0 20 40 60 80 100 120
1
Known/Current Advisor Friends & RelativesGroup Insurance Banccassurance
Telesales/unknown Advisor
According to the data, known/current Advisors remains the 1st choice for
buying Insurance.
In retail also known Advisors are preferred over referrals.
Bancassurance is emerging as a popular option for buying life Insurance. Group insurance is a channel which customers expect but it is not so popular
because only few employers have taken the initiative.
Buying insurance from a unknown person or getting a phone call is still not
preferred by most of the people
THE BARRIERS FACED DURING THE PROCESS:
The Attitudinal Barriers To Purchasing ..
Death - a taboo topic for discussion
Its quite ashubh talking about death
The belief in karma destiny
Jo kismet me likha hai wohi hoga, hum kya kar sakte hai
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The Product/ Service Barriers
Liquidity
What if I need my money urgently for some medical illness?
Service quality of the Agent
He disappears after he takes the first premium
Sanctity of the contract
What if my dependents do not get the money once I die?
Charges
Its better to invest in Mutual Funds, the charges there are very less
The Other Barriers.
Unsure about Pvt. Companies
Low rate of return
Better to put my money in PPF, at least I get fixed returns
Money gets tied up
High premiums
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Chapter 5
Conclusion&
Recommendations
CONCLUSION
The various conclusions drawn from the project are:
There has been a tremendous change in the insurance industry. And with it there has been
continuous growth in this sector both in Indian as well as world context.
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The opening up of the insurance sector has changed the whole look of the industry. While
the LIC, in order to face the competition is coming up with new strategies. New private
players are leading the sector due to their strategic management and tailored made projects.
From the research, we also conclude that though the awareness and people opting for LIC
plans are more as compared to other private players but the latter are gaining momentum
in the market day by day.
The demand for insurance is likely to increase with rising per-capita income, rising literacy
rates, and growth of service sector. In-fact opening up of the insurance sector is an integral
part of the liberalization process being pursued by many developing countries.
Life insurance as a form of protection is the single-most important financial product any
earning member of a family must have. Having said this, a well-diversified portfolio is one
of the first rules of financial planning, and as such one should consider differentinstruments as the ability to save increases.
Possible investment options range from bank deposits and government small saving
schemes to mutual funds, stocks and property.
Certainly ULIPs successfully combine the first and most important need of protection, with
savings, and hence are an excellent addition to your portfolio.
All financial products have a certain amount of risk and charges, be it a mutual fund,
property, or even a bank deposit. It would be unrealistic to assume that the features and
benefits of a ULIP come at no cost, though the charges are considerably lower than that of
a traditional product.
In fact, the very reason the product is transparent is because the customer knows the
charges and risks.
There is no right or wrong in this. The success of marketing insurance depends on
understanding the social and cultural needs of the target population, and matching the
market segment with the suitable intermediary segment.
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All intermediaries cant sell all lines of business profitably in all markets. There should be
clear demarcation in the marketing strategies of the company from this perspective. Clients
should also receive price differentials for using different channels.
The intermediaries need to be empowered with the right learning, training and sales tools
and technology enablers. Coupled with the right product mix, this
will help the insurers to survive and flourish in this competitive market scenario.
So lets conduct this business with utmost economy with the spirit of trusteeship;thereby making insurance widely popular.
RECOMMENDATION
Positioning insurance as a means to fulfilling ones duties during ones lifetime.
Fears relating to thefts, ailments, death could be addressed through sensitive
communication
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Fears relating to claims: Need to promote trust. Demonstrating claim
testimonials, positioning as worry free.
Low returns: Reposition insurance as a risk cover, security instrument rather than
a financial investment.
Lack of understanding: Training of Channels
To provide quality advice on products best suited
Lack of Knowledge: Ease of Process, simplifying the
product and the procedure
Need to promote the quality of awareness
The benefits:
Leverage on Risk Protection or Returns oriented or both
The product: catering
to life stages
Need for Branding in Insurance: Branding is more relevant in the Insurance
market which not only faces the problem of securing and retaining customers in an
increasingly competitive marketplace but also experiences the need for heightened
relevance of the brand proposition in a world where brand has been termed the new
religion.
In rural India, the LIC is especially synonymous with insurance. But in the
wake of competition insurance companies have to do a considerable brand
building exercise at least in urban India. Adequate time, investment and
longer-term management of the brand are essential, not only for success but also
survival. All brands need to be built around well-differentiated and
credible positioning that springs from the organizations history. The brand
must not only be believed but lived by management and employees.
Focus on different segments to survive and thrive in a competitive environment.
Each company has to choose its own unique positioning based on its unique strengths.
Below-mentioned positioning alternatives can be worth considering.
VARIETY-BASED POSITIONING
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This type of positioning is based on varieties in products and services rather than
customer segments. It is a sensible strategy for those companies who have distinctive
advantages or strengths in offering certain products and services. In the insurance
industry too, it is possible to achieve a unique position by focusing on certain category
of products.
NEEDS-BASED POSITIONING
This is the most commonly understood positioning and is based on the differing needs
of different groups of consumers. This can be done successfully if a company has
unique strengths to service a group of customer needs better than others.
The insurance needs of customers vary significantly for different groups of customers.
The insurance needs of young family with small children will be quite different fromthat of a family in which the income-earner is close to retirement. However, in India
most of the life insurance companies have a wide variety of products tailored for
different customer needs and there is no company focusing on a particular customer
need.
ACCESS-BASED POSITIONING
Positioning of customers can also be done by the way they are accessible. That is
different groups of customers may be accessible in different ways even though they
may have similar needs. Access is typically a function of customer geography or
customer scale. There is excellent opportunity in the insurance industry to employ
access-based positioning by targeting the rural insurance sector.
The rural market for life insurance is very different from the urban market in terms of
needs, income levels and distribution (seasonality, for example), penetration of media
and so on. Rural market can be a highly profitable position if one is able to carefully
plan and tailor an entire set of low-cost activities of advertising, distribution, and
product design etc. to successfully exploit the potential.
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Appendices
Questionnaire
Glossary
Bibliography
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QUESTIONNAIRE
Awareness of Financial Planning and Consumers Perception about InsuranceIndustry
Name:________________________
Age:______
Gender: M F F
Marital Status: Married SingleOccupation : ___________________
Contact No : __________________
Annual Income (appx. in Rs.)
Upto 1.50 lacs 1.50 lacs-3 lacs
3 lacs-5 lacs Above 5 lacs
Q1) Are you aware about what is financial planning?
YES NO
Q2) Mention the names of Life insurance companies you have heard of:
1) ________________ 4) ________________ 2) ________________ 5) ________________3) ________________ 6) ________________
Q3) How much do you save approximately of your annual income?
Q4) Where do you invest/would like to invest your savings?(Rank in order of preference, 1 being most preferable)
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Banks Share Market
Insurance Bonds & Securities
Mutual Funds Real Estate/Property
Q5) Have you taken any life insurance policy on your own life or on life of anyof your family member?
YES NO
(If no, switch to Q 9 )
Q6) Which company(s) policy(s) you have?
LIC ICICI PRUDENTIAL
BIRLA SUNLIFE ING VYSYA
BAJAJ ALLIANZ SBI LIFE
HDFC STD. LIFE TATA AIG
MAX NEW YORK LIFE AVIVA
RELIANCE KOTAK MAHINDRA
MET LIFE OTHER ____________ (specify)
Q7) Which type of plan did you buy?
Money Back PlanEndowment Plan
Pension Plan
ULIP
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Q8) What was your purpose/will be your likely purpose of taking insurance?RANK THEM (1 being most ideal)
a) PROTECTIONOF FAMILY
b) TAX BENEFIT
c) INVESTMENT
d) RETIREMENTPLANNING
Q9) Have you ever been approached for Life insurance by any of the following(please ), also Rank according to your preference from whom you are mostlikely to buy insurance?
( here) (Rank) 1) Known/Current Advisor
2) Advisors referred by friends/family
3) Telesales and subsequent visit by unknown Advisor
4) Schemes offered by your bank (Bancassurance)
5) Group Insurance Policies offered by your employer
Q10) Do you feel opening up of the sector has created more insurance awarenessamong the public?
YES NO
Q11) How many dependents do you have?
6
Q12) Do you really think insurance cover in todays scenario is notessential?
_____________________________________________________
_____________________________________________________
THANK YOU FOR YOUR CONTRIBUTION
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GLOSSARY
Accident BenefitAn add-on with a life policy. It compensates a policyholder in the event
of death or injury by accident
AnnuityAn investment option that makes a series of regular payments to an individual in
exchange for a premium or a series of premium.
Asset allocationHow your investments are spread across various asset classes
BonusThe amount paid as return in a with-profit policy. The bonus, expressed as a
percentage of the sum assured, is generally declared every year. The amount is linked to
the profits earned by the insurer. Depending on the time of withdrawal, there are two kinds
of bonuses reversionary and cash. A reversionary bonus can be encashed only on
maturity of the policy; a cash bonus can be withdrawn when declaredCapital gainProfit earned from the sale of stocks, mutual fund units and real estate. Long-
term capital gains arise from assets owned for more than a year while short-term capital
gains are made from assets owned for less than a year.
CorpusThe amount of money available with a scheme for investing. If already invested,
the corpus is the current value of the schemes portfolio.
CoverAnother word for insurance; it also refers to the amount of insurance.
Critical illness riderA rider that provides a policyholder financial protection in the event
of a critical illness
Death benefitThe amount payable to the nominee on death of the policyholder. The
amount paid is the sum assured plus benefits applicable (if any) less outstanding loans.
Endowment plansAn insurance plan that provides a policyholder risk cover and some
return on investment. Usually suitable for the risk-averse
ELSS (equity-linked savings schemes)Diversified equity funds that additionally offer a
tax deduction under Section 80C on investments up to Rs.1 lakh.
Financial planningIt covers the essential elements of a persons financial affairs and is
aimed at achieving a persons financial goals.
Group InsuranceAn insurance policy taken out by employers to provide life cover to
their employees. Usually the cheapest form of insurance.
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InsuredThe policyholder: The person who buys an insurance policy
InsurerThe insurance company
InvestmentsAssets like fixed deposits, post office savings, bonds and stocks that are
acquired for the purpose of earning a return
LiquidityThe quality of assets that can be easily and quickly converted into cash without
any, or significant, loss in value.
Lock-in periodThe period of time for which investments made in an investment option
cannot be withdrawn.
Maturity dateThe date on which a policy term or fixed-income investment like fixed
deposit or bond comes to an end.
Money-back plansA variant of endowment plans in which survival benefits are disbursed
through the policy term, rather than in a lump sum at the end.Net asset value (NAV)The simplest measure of how a scheme is performing, it tells how
much each unit of it is worth at any point in time. A schemes NAV is its net assets (the
market value of the financial securities it owns minus whatever it owes) divided by the
number of units it has issued.
NomineeThe person(s) nominated by the policyholder to receive the policy benefits in the
event of his death.
Pension PlanInvestment products offered by insurance companies and mutual funds that
required the investor to make defined contributions over regular periods, mostly every year.
The contributions are invested according to a pre-decided investment plan. At retirement,
the accumulation is paid out through regular pay-out options.
PolicyThe legal document issued by an insurance company to a policyholder that states the
terms and conditions of an insurance contract.
Policy termThe period for which an insurance policy provides cover
Post office schemesAlso known as Small Savings schemes, they are offered at post offices
and carry the highest returns among fixed income instruments. Government backing makes
these instruments like Public Provident Fund (PPF), National Savings Certificate (NSC),
Kisan Vikas Patra (KVP) and Post Office Monthly Income Scheme (POMIS) risk-free
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BIBLIOGRAPHY
Websites
www.rbi.org.inwww.irdaindia.orgwww.banknetindia.comwww.hdfcinsurance.comwww.businessworldonline.comwww.google.com (search engine)
Other References:
Brochures of various plans
Business week
http://www.rbi.org.in/http://www.irdaindia.org/http://www.banknetindia.com/http://www.hdfcinsurance.com/http://www.businessworldonline.com/http://www.google.com/http://www.rbi.org.in/http://www.irdaindia.org/http://www.banknetindia.com/http://www.hdfcinsurance.com/http://www.businessworldonline.com/http://www.google.com/