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    Chapter No. 01

    1.1. INTRODUCTION

    1.1.1. INSURANCE INDUSTRY

    The history of life insurance in India dates back to 1818 when it was conceived as a

    means to provide for English Widows. Interestingly in those days a higher premium was

    charged for Indian lives than the non-Indian lives as Indian lives were considered more

    risky for coverage. The Bombay Mutual Life Insurance Society started its business in

    1870. It was the first company to charge same premium for both Indian and non-Indian

    lives. The Oriental Assurance Company was established in 1880. The General insurance

    business in India, on the other hand, can trace its roots to the Triton (Total) Insurance

    Company Limited, the first general insurance company established in the year 1850 in

    Calcutta by the British. Till the end of nineteenth century insurance business was almost

    entirely in the hands of overseas companies .Insurance regulation formally began in

    India with the passing of the Life Insurance Companies Act of 1912 and the provident

    fund Act of 1912. Several frauds during 20's and 30's sullied insurance business in India.

    By 1938 there were 176 insurance companies. The first comprehensive legislation was

    introduced with the Insurance Act of 1938 that provided strict State Control over

    insurance business. The insurance business grew at a faster pace after independence

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    Indian companies strengthened their hold on this business but despite the growth that was

    witnessed, insurance remained an urban phenomenon.

    The Government of India in 1956, brought together over 240 private life insurers and

    provident societies under one nationalized monopoly corporation and Life Insurance

    Corporation (LIC) was born. Nationalization was justified on the grounds that it would

    create much needed funds for rapid industrialization. This was in conformity with the

    Government's chosen path of State lead planning and development. The (non-life)

    insurance business continued to thrive with the private sector till 1972. Their operations

    were restricted to organized trade and industry in large cities. The general insurance

    industry was nationalized in 1972. With this, nearly 107 insurers were amalgamated and

    grouped into four companies- National Insurance Company, New India Assurance

    Company, Oriental Insurance Company and United India Insurance Company. These

    were subsidiaries of the General Insurance Company (GIC).The general insurance

    business was nationalized after the promulgation of General Insurance Busines

    (Nationalizations) Act, 1972.The post-nationalization general insurance business was

    undertaken by the Genera

    1.1.2. About the project

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    The project deals with comparative analysis of different insurance products offered by

    Insurance companies.

    1.1.3. Purpose of the project

    The main purpose of the project is to do comparative analysis of different insurance

    products, check the awareness level and perception of insurance by the individuals. The

    project would also help in understanding preference of people regarding private and

    public insurance companies.

    The main objective of the research is

    Making comparative analysis between:-

    i) Reliance life insurance with life insurance Corporation of India.

    ii) Reliance life insurance with Tata AIG life insurance.

    iii) National Health Plan with Reliance Health Wise Policy.

    finding out the features and benefits of these plans

    To find out the awareness level of insurance in Varanasi

    To determine customer preference towards private insurance

    companies and public insurance companies.

    Marketing of different insurance products.

    1.1.4. Scope of the project

    The entry of foreign MNCs and the conductive business environment fostered by the

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    government, it is no wonder that the re-entry of private insurance has marked a second

    coming for the sector. In just five years, the sector has undergone a makeover, offering

    more choice, better services, quicker settlement, tighter regulation and greater

    awareness s the environment become more and more competitive and services and

    products become alike, creating a differentiation is becoming extremely tough. Thus, the

    main objective of my project was to find out the preference of people regarding insurance

    companies, which would help R.L.I. employees to market their product. The study then

    goes on to evaluate and analyze the findings so as to present a clear picture of recent

    trends in the Insurance sector.

    Chapter No. 2

    2. REVIEW OF LITERATURE

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    2.1. About Insurance Industry

    "Insurance is a contract between two parties whereby 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 premiums 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 a car insurance, in the event of the car meeting with an

    accident, the insured receives the compensation to the extent of damage. It is a system by

    which the losses suffered by a few are spread over many, exposed to similar risks.

    2.2. Logic of insurance

    It is a system by which the losses suffered by a few are spread over many, exposed to

    similar risks. Insurance is a protection against financial loss arising on the happening of

    an unexpected event. Insurance companies collect premiums to provide for this

    protection. A loss is paid out of the amount premiums collected from the insuring public

    and the Insurance Companies act as trustees to the collected.

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    2.3. Need of insurance

    Insurance is desired 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 events. 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 covering Act" risks. Another example of

    compulsory insurance pertains the Environmental Protection Act, wherein a person using

    or to carrying hazardous substances (as defined in the Act) must hold a valid public

    liability (Act) policy.

    2.4 Insurance in India

    Insurance is a federal subject in India and has a history dating back to 1818. Life and

    general insurance in India is still a nascent sector with huge potential for various global

    players with the life insurance premiums accounting to 2.5% of the country's GDP while

    general insurance premiums to 0.65% of India's GDP. The Insurance sector in India has

    gone through a number of phases and changes, particularly in the recent years when the

    Govt. of India in 1999 opened up the insurance sector by allowing private

    companies to solicit insurance and also allowing FDI up to 26%. Ever since, the Indian

    insurance sector is considered as a booming market with every other global insurance

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    company wanting to have a lion's share. Currently, the largest life insurance company in

    India is still owned by the government.

    2.5. History of Insurance in India

    Insurance in India has its history dating back till 1818, when Oriental Life Insurance

    Company was started by Europeans in Kolkata to cater to the needs of

    European community. Pre-independent era in India saw discrimination among the life of

    foreigners and Indians with higher premiums being charged for the latter. It was only in

    the year 1870, Bombay Mutual Life Assurance Society, the first Indian

    insurance company covered Indian lives at normal rates. At the dawn of the twentieth

    century, insurance companies started mushrooming up. In the year 1912, the Life

    Insurance Companies Act, and the Provident Fund Act were passed to regulate the

    insurance business. The Life Insurance Companies Act, 1912 made it necessary that the

    premium rate tables and periodical valuations of companies should be certified by an

    actuary. However, the disparage still existed as discrimination between Indian and

    foreign companies. The oldest existing insurance company in India is National Insurance

    Company Ltd, which was founded in 1906 and is doing business even today. The

    Insurance industry earlier consisted of only two state insurers: Life Insurers i.e. Life

    Insurance Corporation of India (LIC) and General Insurers i.e. General Insurance

    Corporation of India (GIC). GIC had four subsidiary companies. With effect from

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    http://en.wikipedia.org/wiki/Kolkatahttp://en.wikipedia.org/wiki/Life_Insurance_Corporation_of_Indiahttp://en.wikipedia.org/wiki/Life_Insurance_Corporation_of_Indiahttp://en.wikipedia.org/wiki/General_Insurance_Corporation_of_Indiahttp://en.wikipedia.org/wiki/General_Insurance_Corporation_of_Indiahttp://en.wikipedia.org/wiki/Kolkatahttp://en.wikipedia.org/wiki/Life_Insurance_Corporation_of_Indiahttp://en.wikipedia.org/wiki/Life_Insurance_Corporation_of_Indiahttp://en.wikipedia.org/wiki/General_Insurance_Corporation_of_Indiahttp://en.wikipedia.org/wiki/General_Insurance_Corporation_of_Indiahttp://en.wikipedia.org/wiki/General_Insurance_Corporation_of_India
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    December 2000, these subsidiaries have been de-linked from parent company and

    made as independent insurance companies: Oriental Insurance Company Limited

    New India Assurance Company Limited, National Insurance Company Limite

    and United India Insurance Company Limited.

    2.6. Life Insurance Corporation Act, 1956

    Even though the first legislation was enacted in 1938, it was only in 19 January 1956, that

    life insurance in India was completely nationalized, through a Government

    ordinance; the Life Insurance Corporation Act, 1956 effective from 1.9.1956

    was enacted in the same year to, inter-alia, form LIFE INSURANCE CORPORATION

    after nationalization of the 245 companies into one entity. There were 245

    insurance companies of both Indian and foreign origin in 1956. Nationalization was

    accomplished by the govt. Acquisition of the management of the companies

    The Life Insurance Corporation of India was created on 1 September, 1956, as a result

    and has grown to be the largest insurance company in India as of 2006 .

    2.7. General Insurance Business (Nationalization) Act, 1972

    The General Insurance Business (Nationalization) Act, 1972 was enacted to nationalize

    the 100 odd general insurance companies and subsequently merging them into four

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    http://en.wikipedia.org/wiki/December_2000http://en.wikipedia.org/wiki/Oriental_Insurance_Company_Limitedhttp://en.wikipedia.org/wiki/Oriental_Insurance_Company_Limitedhttp://en.wikipedia.org/wiki/New_India_Assurance_Company_Limitedhttp://en.wikipedia.org/w/index.php?title=National_Insurance_Company_Limited&action=edit&redlink=1http://en.wikipedia.org/wiki/United_India_Insurance_Company_Limitedhttp://en.wikipedia.org/wiki/January_19http://en.wikipedia.org/wiki/1956http://en.wikipedia.org/wiki/1956http://en.wikipedia.org/wiki/Life_Insurance_Corporation_of_Indiahttp://en.wikipedia.org/wiki/1972http://en.wikipedia.org/wiki/December_2000http://en.wikipedia.org/wiki/Oriental_Insurance_Company_Limitedhttp://en.wikipedia.org/wiki/Oriental_Insurance_Company_Limitedhttp://en.wikipedia.org/wiki/New_India_Assurance_Company_Limitedhttp://en.wikipedia.org/w/index.php?title=National_Insurance_Company_Limited&action=edit&redlink=1http://en.wikipedia.org/w/index.php?title=National_Insurance_Company_Limited&action=edit&redlink=1http://en.wikipedia.org/wiki/United_India_Insurance_Company_Limitedhttp://en.wikipedia.org/wiki/January_19http://en.wikipedia.org/wiki/1956http://en.wikipedia.org/wiki/Life_Insurance_Corporation_of_Indiahttp://en.wikipedia.org/wiki/Life_Insurance_Corporation_of_Indiahttp://en.wikipedia.org/wiki/1972
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    companies. All the companies were amalgamated into National Insurance, New India

    Assurance, Oriental Insurance, and United India Insurance which were headquartered in

    each of the four metropolitan cities.

    Chapter No. 3

    3.1. Insurance Regulatory and Development Authority (IRDA) Act, 1999

    Till 1999, there were not any private insurance companies in Indian insurance sector. The

    Govt. of India then introduced the Insurance Regulatory and Development Authority Act

    in 1999, thereby de-regulating the insurance sector and allowing private companies into

    the insurance. Further, foreign investment was also allowed and capped at 26% holding

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    in the Indian insurance companies. In recent years many private players

    entered in the Insurance sector of India. Companies with equal strength

    started competing in the Indian insurance market. Currently, in India only 2

    million people (0.2 % of total population of 1 billion), are covered under

    Medical claim, whereas in developed nations like USA about 75 % of the tota

    population are covered under some insurance scheme. With more and more private

    players in the sector this scenario may change at a rapid pace

    Chapter No. 4

    4.1. Different Insurance Companies

    Insurance is an upcoming sector, in India the year 2000 was a landmark year for life

    insurance industry, in this year the life insurance industry was liberalized after more than

    fifty years. Insurance sector was once a monopoly, with LIC as the only company, a

    public sector enterprise. But nowadays the market opened up and there are many private

    players competing in the market. There are fifteen private lives insuran

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    companies has entered the industry. After the entry of these private players, the market

    share of LIC has been considerably reduced. In the last five years the private players is

    able to expand the market (growing at 30% per annum) and also has improved their

    market share to 18%.For the past five years private players have launched many

    innovations in the industry in terms of products, market channels and

    advertisement of products, agent training and customer services etc. The various life

    insurers entered India:-

    1. Bajaj Allianz Life Insurance Company Limited

    2. Birla Sun Life Insurance Co. Ltd

    3. HDFC Standard life Insurance Co. Ltd

    4. ICICI Prudential Life Insurance Co. Ltd.

    5. ING Vysya Life Insurance Company Ltd.

    6. Max New York Life Insurance Co. Ltd

    7. Met Life India Insurance Company Ltd.

    8. Kotak Mahindra Old Mutual Life Insurance Limited

    9. SBI Life Insurance Co. Ltd

    10. Tata AIG Life Insurance Company Limited

    11. Reliance Life Insurance Company Limited.

    12. Aviva Life Insurance Co. India Pvt. Ltd.

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    http://en.wikipedia.org/w/index.php?title=Bajaj_Allianz_Life_Insurance_Company_Limited&action=edit&redlink=1http://en.wikipedia.org/w/index.php?title=Birla_Sun_Life_Insurance_Co._Ltd&action=edit&redlink=1http://en.wikipedia.org/w/index.php?title=HDFC_Standard_life_Insurance_Co._Ltd&action=edit&redlink=1http://en.wikipedia.org/w/index.php?title=ICICI_Prudential_Life_Insurance_Co._Ltd.&action=edit&redlink=1http://en.wikipedia.org/w/index.php?title=ING_Vysya_Life_Insurance_Company_Ltd.&action=edit&redlink=1http://en.wikipedia.org/w/index.php?title=Max_New_York_Life_Insurance_Co._Ltd&action=edit&redlink=1http://en.wikipedia.org/w/index.php?title=Met_Life_India_Insurance_Company_Ltd.&action=edit&redlink=1http://en.wikipedia.org/w/index.php?title=Kotak_Mahindra_Old_Mutual_Life_Insurance_Limited&action=edit&redlink=1http://en.wikipedia.org/w/index.php?title=SBI_Life_Insurance_Co._Ltd&action=edit&redlink=1http://en.wikipedia.org/w/index.php?title=Tata_AIG_Life_Insurance_Company_Limited&action=edit&redlink=1http://en.wikipedia.org/w/index.php?title=Reliance_Life_Insurance_Company_Limited.&action=edit&redlink=1http://en.wikipedia.org/w/index.php?title=Aviva_Life_Insurance_Co._India_Pvt._Ltd.&action=edit&redlink=1http://en.wikipedia.org/w/index.php?title=Bajaj_Allianz_Life_Insurance_Company_Limited&action=edit&redlink=1http://en.wikipedia.org/w/index.php?title=Birla_Sun_Life_Insurance_Co._Ltd&action=edit&redlink=1http://en.wikipedia.org/w/index.php?title=HDFC_Standard_life_Insurance_Co._Ltd&action=edit&redlink=1http://en.wikipedia.org/w/index.php?title=ICICI_Prudential_Life_Insurance_Co._Ltd.&action=edit&redlink=1http://en.wikipedia.org/w/index.php?title=ING_Vysya_Life_Insurance_Company_Ltd.&action=edit&redlink=1http://en.wikipedia.org/w/index.php?title=Max_New_York_Life_Insurance_Co._Ltd&action=edit&redlink=1http://en.wikipedia.org/w/index.php?title=Met_Life_India_Insurance_Company_Ltd.&action=edit&redlink=1http://en.wikipedia.org/w/index.php?title=Kotak_Mahindra_Old_Mutual_Life_Insurance_Limited&action=edit&redlink=1http://en.wikipedia.org/w/index.php?title=SBI_Life_Insurance_Co._Ltd&action=edit&redlink=1http://en.wikipedia.org/w/index.php?title=Tata_AIG_Life_Insurance_Company_Limited&action=edit&redlink=1http://en.wikipedia.org/w/index.php?title=Reliance_Life_Insurance_Company_Limited.&action=edit&redlink=1http://en.wikipedia.org/w/index.php?title=Aviva_Life_Insurance_Co._India_Pvt._Ltd.&action=edit&redlink=1
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    13. Sahara India Life Insurance Co, Ltd.

    14. Shriram Life Insurance Co, Ltd.

    15. Bharti AXA Life Insurance Company Ltd.

    16. Future General Life Insurance Company Ltd.

    17. IDBI Fortis Life Insurance Company Ltd.

    18. Canara HSBC Oriental Bank of Commerce Life Insurance Co. Ltd

    19. AEGON Religare Life Insurance Company Limited.

    20. DLF Pramerica Life Insurance Co. Ltd.

    21. Star Union Dai-ichi Life Insurance Comp. Ltd.

    The various other general Insurance Companies are as under:-

    1. National Insurance Company Limited.

    2. Reliance General Insurance.

    3. Star Health Plus Insurance.

    4. Oriental Insurance Company.

    5. United India Insurance Company Ltd.

    6. Bajaj Allianz General Insurance Company Ltd.

    7. Future General Insurance Company Ltd.

    8. ICICI Lombard General Insurance Ltd.

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    4.1.1. TOP 10 LIFE INSURANCE COMPANIES IN INDIA

    1. Life Insurance Corporation of India

    LIC (Life Insurance Corporation of India) still remains the largest life insurance

    company accounting for 64% market share. Its share, however, has dropped from

    74% a year before, mainly owing to entry of private players with innovative

    products and better sales force.

    2. ICICI Prudential Life Insurance Company Ltd.

    ICICI Prudential Life Insurance Co Ltd is the biggest private life insurance

    company in India. It experienced growth of 58% in new business premium

    accounting for increase in market share to8.93% in 2007-08 from 6.97% in 2006-

    07.

    3. Bajaj Allianz Life Insurance Company Ltd.

    Bajaj Allianz Life Insurance Co Ltd has reported a growth of 52% and its market

    share went up to 6.98% in 2007-08 form 5.66% in 2006-07. The company ranked

    second (after LIC) in number of policies sold in 2007-08, with total market share

    of 7.36%.

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    4. SBI Life Insurance Company Ltd

    SBI Life Insurance Co Ltd in terms of new number of policies sold, the company

    ranked 6th in2007-08. New premium collection for the company was Rs 4,792.66

    carore in 2007-08, an increase of 87% over last year

    5. Reliance Life Insurance Company Ltd.

    Reliance Life Insurance Co Ltd Total collected was Rs 2,792.76 crore and its

    market share went up to 2.96% from 1.23% a year back. It now ranks 5th in new

    business premium and 4th in number of new policies sold in 2007-08.

    6. HDFC Standard Life Insurance Company Ltd.

    HDFC Standard Life Insurance Co Ltd with an income of Rs 2,680 crore in

    FY2007-08,registering a year-on-year growth of 64%. Its market share is 2.88%

    and it ranks 6th among the insurance companies and 5th amongst the private

    players.

    7. Birla Sun Life Insurance Company Ltd.

    Birla Sun Life Insurance Co Ltd market share of the company increased from

    1.22% to 2.11% in 2007-08.

    8. Max New York Life Insurance Company Ltd.

    Max New York Life Insurance Co Ltd has reported growth of 73% in 2007-08.

    Total new business generated was Rs 641.83 crore as against Rs 387.51 crore.

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    9. Kotak Mahindra Old Mutual Life Insurance Ltd.

    Kotak Mahindra Old Mutual Life Insurance Ltd the fiscal 2007-08, the company

    reported growth of 80%, moving from the 11th position to 9th. It captured a market

    share of 1.19% in2007-08.

    10.Aviva Life Insurance Company India Ltd.

    Aviva Life Insurance Company India Ltd ranking dropped to 10th in 2007-08 from

    9thlast year. It has presence in more than 3,000 locations across India via 221

    branches and close to40 banc assurance partnerships. Aviva Life Insurance plans to

    increase its capital base by Rs 344 crore

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    4.2. Market Share of Indian Insurance Companies

    L.I.C.

    ICICI Prudential

    Bajaj Allianz

    SBI Life

    HDFC Standard

    Birla sun life

    Reliance life insurance

    Max Newyork

    Om kotak

    AVIVA

    TATA AIG

    Figure No. 1

    S. No. Company Market share1 L.I.C. 48.10%

    2 ICICI Prudential 13.70%

    3 Bajaj Allianz 10.30%

    4 SBI Life 6.20%

    5 HDFC Standard 4.10%

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    6 Birla sun life 3.40%

    7 Reliance life insurance 3.40%

    8 Max Newyork 2.40%

    9 Om kotak 1.90%

    10 AVIVA 1.80%11 TATA AIG 1.50%

    12 MetLife 1.40%

    13 ING Vysya 1.20%

    14 Shriram Life 0.30%

    Table No. 1

    4.3. BOOMING INSURANCE MARKET

    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. This impressive growth in the market has been driven by liberalization,

    with new players significantly enhancing product awareness and promoting consumer

    education and information. The strong growth potential of the country has also made

    international players to look at the Indian insurance market. Moreover, saturation of

    insurance markets in many developed economies has made the Indian market more

    attractive for international insurance players. This research report will help the client to

    analyze the leading-edge opportunities critical to the success of insurance industry in

    India. Based on this analysis, the report gives a future forecast of the market that is

    intended as a rough guide to the direction in which the market is likely to move. Total life

    insurance premium in India is projected to grow Rs 1,230,000 Crore by 2010-11.

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    Total non-life insurance premium is expected to increase at a CAGR of 25% for the

    period spanning from 2008-09 to 2010-11.

    With the entry of several low-cost airlines, along with fleet expansion by existing ones

    and increasing corporate aircraft ownership, the Indian aviation insurance market is all set

    to boom in a big way in coming years.

    Home insurance segment is set to achieve a 100% growth as financial institutions have

    made home insurance obligatory for housing loan approvals

    A booming life insurance market has propelled the Indian life insurance agents into the

    top 10 country list in terms of membership to the Million Dollar Round Table (MDRT)

    an exclusive club for the highest performing life insurance agent.

    Chapter No. 5

    5.1 ADVANTAGES OF LIFE INSURANCE

    5.1.1 Protection against risk of untimely death

    Life insurance is a product, which offers protection against the risk of

    death

    The full sum assured is made available under a life assurance policy,

    whereas under

    Other savings schemes, the total accumulated savings alone will be

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    available.

    5.1.2. Educational requirements and charity

    The object of insurance may be to serve as a security to educational funds in

    respect of loans advanced for educational purpose or to provide donations to

    charitable institutions like hospital and school.

    5.2.3. Nomination and assignment

    The life insured can name the person or persons to whom the policy money

    would be payable in the event of his death .the proceeds of a life insurance

    policy can be protected against the claims of the creditors of the life insured by

    effecting a valid assignment of the policy. The beneficiaries are fully protected

    from creditors expect to the extent of any interest in the policy

    retained by the insured.21Marketability and suitability for borrowing After

    3 years, if the policyholder finds that he is unable to continue payment of

    premiums he can surrender a policy for a cash sum. A life

    insurance policy is accepted as a security for a commercial loan.

    5.2.4. Loans from the insurance company

    Reliance Life Insurance Co. LTD. | 19

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    A policy holder can take a loan from his insurance company against the

    Security of his life insurance policy provided the terms of the terms of his

    policy allow such a loan. This loan can be taken usually after a

    period of 3 years from commencement of the policy and is a percentage

    of its surrender value.

    Reliance Life Insurance Co. LTD. | 20

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    5.2.5 Investment options

    The unit link products gives comprehensive insurance solutions that cater to an

    individuals dual need of earning potentially high returns as well as stay for life. Thus there

    is an option to invest money in the products that combine the best of

    insurance and investment. In a volatile market conditions it is possible to secure both as one

    can hedge the investment with saver investment vehicles that provide a diversified portfolio.

    5.2.6. Tax benefits

    The Indian income tax act provides tax concessions to the policyholder both on payment of

    premium and on the maturity amount. Under sec 88 the tax benefits on premium paid by an

    individual for life insurance policies on his own life\on the life of spouse \children minor or

    major, including married daughters. Under sec 6 of the married womens property act if a

    married man takes a policy of life insurance on his own life and expenses on the face of it to

    be for the benefit of his wife or of his wife and children or any of them, then it shall be

    deemed to be a trust for the benefit of his wife and children or any of them, According to the

    interest so expressed and shall not so long as any object of trust remains be subject to the

    control of the husband or to his creditors or form part of his estate. An insurance policy taken

    by a married man in the above manner is ideal way to protect the interest of his wife and

    children, even after his untimely death.

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    Chapter No. 6

    6.1 Types of insurance products

    6.1.1. Term assurance plan-

    In insurance language this is a pure risk cover and can be described as an insurance or risk

    management product in its purest and simplest form. In case of your untimely death, your

    dependents will receive the risk-cover amount or the sum assured. On the other hand, there

    is no survival benefits if you survive the policy term, and you also do not get back the

    premiums paid.

    6.1.2. Endowment assurance plans-

    It is a traditional investment-cum-insurance plan. In other words, it provides both life

    cover (in the event of death of life insured) or maturity benefits if he/she survives the

    policy term. Endowment plans are typically front-loaded. Therefore it makes sense for you to

    remain in the policy for at least 12-15 years.

    6.1.3. Money-back policy-

    It is a variant of the endowment assurance policy-the difference is that you get the

    survival benefits intermittently over the life of the policy. Thus taking care of his lump-sum

    monetary requirements to enable him to meet his financial goals and major commitments.

    The maturity benefit is the sum assured value less the survival benefits already paid under

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    the policy, plus bonuses accrued, if any. In case of untimely death the nominee wil

    receive the entire sum assured without considering the payouts already made to you

    before the unfortunate death.

    6.1.4. Whole life plan-

    This policy provides the life assurance cover for almost the entire life. Most of the insurance

    companies provide protection up to the age of 100 years. The sum assured is paid to you once

    you reach this age, and the policy is terminated. In this payment of premium is for whole life

    and the sum assured is paid to your nominee in the event of your death. In other words, this is

    equivalent to a term plan over your lifetime.

    6.1.5. Pension plan-

    A pension plan can be looked as more of an investment product offered by insurers to

    cater to the golden retirement years of an individual. Also referred to as

    retirement plans, these are designed to ensure that you are financially independent during

    your retirement years. Most of the pension plans also provide an optional life assurance cover

    in them.

    6.1.6. Child plan-

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    It basically aims at ensuring the achievement of life goals of your child. The goal can be

    higher education, financial help in establishing a business or profession, or even

    marriage. In a child plan, the life assured can be the parent or the child. The beneficiary for

    the policy, however, is the child. As a child is a minor, the life insurance contract is between

    the parent and the insurance company. In case of early death of the parent, the premium

    payment is waived off by the insurance company and the policy continues as originally

    planned.

    6.1.7. Unit Linked Insurance Plan-

    ULIPs have been the darling of insurance companies, intermediaries and the insured

    population alike over the last five years. The main reason for this popularity is the twin

    advantage of a pure life cover (insurance component) and a range of investment funds or

    options (savings component) to match your risk profile. While the pure life cover provides

    the much needed financial security to your dependents in the event of your untimely death,

    the savings component allows you to participate in the capital markets and build wealth over

    the long-term tenure of the policy.

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    Chapter No. 7

    7.1. Marketing Mix in Insurance Industry (7 P's)

    7.1.1. INTRODUCTION:

    Wherever there is uncertainty there is risk. We do not have any control over uncertainties

    which involves financial losses. The risks may be certain events like death, pension,

    retirement or uncertain events like theft, fire, accident, etc. Insurance is a financial service

    for collecting the savings of the public and providing them with risk coverage. The main

    function of Insurance is to provide protection against the possible chances of generating

    losses. It eliminates worries and miseries of losses by destruction of property and death.

    It also provides capital to the society as the funds accumulated are invested in productive

    heads. Insurance comes under the service sector and while marketing this service, due

    care is to be taken in quality product and customer satisfaction. While marketing the

    services, it is also pertinent that they think about the innovative promotional measures. It

    is not sufficient that you perform well but it is also important that you let others know

    about the quality of your positive contributions. The creativity in the promotiona

    measures is the need of the hour. The advertisement, public relations, word of mouth

    communication needs due care and personal selling requires intensive care.

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    7.1.2. INSURANCE MARKETING:

    The term Insurance Marketing refers to the marketing of Insurance services with the aim to

    create customer and generate profit through customer satisfaction. The Insurance

    Marketing focuses on the formulation of an ideal mix for Insurance business so that the

    Insurance organization survives and thrives in the right perspective.

    7.1.3. MARKETING MIX FOR INSURANCE COMPANIES:

    The marketing mix is the combination of marketing activities that an organization engages in

    so as to best meet the needs of its targeted market. The Insurance business deals in selling

    services and therefore due weight age in the formation of marketing mix for the Insurance

    business is needed. The marketing mix includes sub-mixes of the 7 Ps of marketing i.e

    the product, its price, place, promotion, people, process & physical attraction. The above

    mentioned 7 Ps can be used for Marketing of Insurance products, in the following

    manner:

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    7.1.3.1.PRODUCT:

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    A product means what we produce. If we produce goods, it means tangible product and when

    we produce or generate services, it means intangible service product. A product is both

    what a seller has to sell and a buyer has to buy. Thus, an Insurance company sells services

    and therefore services are their product. In India, the Life Insurance Corporation of India

    (LIC) and the General Insurance Corporation (GIC) are the two leading companies

    offering insurance services to the users. Apart from offering life insurance policies, they

    also offer underwriting and consulting services. When a person or an organization buys

    an Insurance policy from the insurance company, he not only buys a policy, but along

    with it the assistance and advice of the agent, the prestige of the insurance company and

    the facilities of claims and compensation. It is natural that the users expect a reasonable

    return for their investment and the insurance companies want to maximize their

    profitability. Hence, while deciding the product portfolio or the product-mix, the services

    or the schemes should be motivational. The Group Insurance scheme is required to be

    promoted, the Crop Insurance is required to be expanded and the new schemes and

    policies for the villagers or the rural population are to be included. The Life Insurance

    Corporation has intensified efforts to promote urban savings, but as far as rural savings

    are concerned, it is not that impressive. The introduction of Rural Career Agents Scheme

    has been found instrumental in inducing the rural prospects but the process is at infant

    stage requires more professional excellence. The policy makers are required to activate

    the efforts. It would be prudent that the LIC is allowed to pursue a policy of direct

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    investment for rural development. Investment in Government securities should be

    stopped and the investment should be channelized in private sector for maximizing

    profits. In short, the formulation of product-mix should be in the face of innovative

    product strategy. While initiating the innovative process it is necessary to take into

    consideration the strategies adopted by private and foreign insurance companies.

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    7.1.3.2.PRICING:

    In the insurance business the pricing decisions are concerned with:

    The premium charged against the policies,

    ii) Interest charged for defaulting the payment of premium and credit facility, and

    iii) Commission charged for underwriting and consultancy activities.

    With a view of influencing the target market or prospects the formulation of pricing strategy

    becomes significant. In a developing country like India where the disposable income in

    the hands of prospects is low, the pricing decision also governs the transformation of

    potential policyholders into actual policyholders. The strategies may be high or low

    pricing keeping in view the level or standard of customers or the policyholders. The

    pricing in insurance is in the form of premium rates. The three main factors used for

    determining the premium rates under a life insurance plan are mortality, expense and

    interest. The premium rates are revised if there are any significant changes in any of these

    factors.

    Mortality (deaths in a particular area):

    When deciding upon the pricing strategy the average rate of mortality is one of the main

    considerations. In a country like South Africa the threat to life is very important as it is

    played by host of diseases.

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    Expenses:

    The cost of processing, commission to agents, reinsurance companies as well as registration

    are all incorporated into the cost of installments and premium sum and forms the integral

    part of the pricing strategy.

    Interest:

    The rate of interest is one of the major factors which determines peoples willingness to

    invest in insurance. People would not be willing to put their funds to invest in insurance

    business if the interest rates provided by the banks or other financial instruments are

    much greater than the perceived returns from the insurance premiums.

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    7.1.3.3. PLACE:

    This component of the marketing mix is related to two important facets

    Managing the insurance personnel, and

    ii) Locating a branch.

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    The management of agents and insurance personnel is found significant with the viewpoint of

    maintaining the norms for offering the services. This is also to process the services to the

    end user in such a way that a gap between the services- promised and services offered is

    bridged over. In a majority of the service generating organizations, such a gap is found

    existent which has been instrumental in making worse the image problem. The

    transformation of potential policyholders to the actual policyholders is a difficult task that

    depends upon the professional excellence of the personnel. The agents and the rural

    career agents acting as a link, lack professionalism. The front-line staff and the branch

    managers also are found not assigning due weight age to the degeneration process. The

    insurance personnel if not managed properly would make all efforts insensitive. Even if

    the policy makers make provision for the quality up gradation, the promised services

    hardly reach to the end users. It is also essential that they have rural orientation and are

    well aware of the lifestyles of the prospects or users. They are required to be given

    adequate incentives to show their excellence. While recruiting agents, the branch

    managers need to prefer local persons and provide them training and conduct seminars. In

    addition to the agents, the front-line staff also needs an intensive training programmed to

    focus mainly on behavioral management. Another important dimension to the Place Mix

    is related to the location of the insurance branches. While locating branches, the branch

    manager needs to consider a number of factors, such as smooth accessibility, availability

    of infrastructural facilities and the management of branch offices and premises. In

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    addition it is also significant to provide safety measures and also factors like office

    furnishing, civic amenities and facilities, parking facilities and interior office decoration

    should be given proper attention. Thus the place management of insurance branch offices

    needs a new vision, distinct approach and an innovative style. This is essential to make

    the work place conducive, attractive and proactive for the generation of efficiency among

    employees. The branch managers need professional excellence to make place decisions

    productive.

    7.1.3.4.PROMOTION:

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    The insurance services depend on effective promotional measures. In a country like India, the

    rate of illiteracy is very high and the rural economy has dominance in the national

    economy. It is essential to have both personal and impersonal promotion strategies. In

    promoting insurance business, the agents and the rural career agents play an important

    role. Due attention should be given in selecting the promotional tools for agents and rural

    career agents and even for the branch managers and front line staff. They also have to be

    given proper training in order to create impulse buying. Advertising and Publicity

    organisation of conferences and seminars, incentive to policyholders are impersona

    communication. Arranging Kittens, exhibitions, participation in fairs and festivals, rural

    wall paintings and publicity drive through the mobile publicity van units would be

    effective in creating the impulse buying and the rural prospects would be easily

    transformed into actual policyholders.

    7.1.3.5.PEOPLE:

    Understanding the customer better allows designing appropriate products. Being a service

    industry which involves a high level of people interaction, it is very important to use this

    resource efficiently in order to satisfy customers. Training, development and strong

    relationships with intermediaries are the key areas to be kept under consideration

    Training the employees, use of IT for efficiency, both at the staff and agent level, is one

    of the important areas to look into.

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    7.1.3.6.PROCESS:

    The process should be customer friendly in insurance industry. The speed and accuracy of

    payment is of great importance. The processing method should be easy and convenient to

    the customers. Installment schemes should be streamlined to cater to the ever growing

    demands of the customers. IT & Data Warehousing will smoothen the process flow. IT

    will help in servicing large no. of customers efficiently and bring down overheads.

    Technology can either complement or supplement the channels of distribution cost

    effectively. It can also help to improve customer service levels. The use of data

    warehousing management and mining will help to find out the profitability and potential

    of various customers product segments.

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    7.1.3.7.PHYSICAL DISTRIBUTION:

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    Distribution is a key determinant of success for all insurance companies. Today, the

    nationalized insurers have a large reach and presence in India. Building a distribution

    network is very expensive and time consuming. If the insurers are willing to take

    advantage of Indias large population and reach a profitable mass of customers, then new

    distribution avenues and alliances will be necessary. Initially insurance was looked upon

    as a complex product with a high advice and service component. Buyers prefer a face-to-

    face interaction and they place a high premium on brand names and reliability. As the

    awareness increases, the product becomes simpler and they become off-the-shelf

    commodity products. Today, various intermediaries, not necessarily insurance companies

    are selling insurance. For example, in UK, retailer like Marks & Spencer sells insurance

    products. The financial services industries have successfully used remote distribution

    channels such as telephone or internet so as to reach more customers, avoid

    intermediaries, bring down overheads and increase profitability. A good example is UK

    insurer Direct Line. It relied on telephone sales and low pricing. Today, it is one of the

    largest motor insurance operators. Technology will not replace a distribution network

    though it will offer advantages like better customer service. Finance companies and banks

    can emerge as an attractive distribution channel for insurance in India. In Netherlands

    financial services firms provide an entire range of products including bank accounts,

    motor, home and life insurance and pensions. In France, half of the life insurance sales

    are made through banks. In India also, banks hope to maximize expensive existing

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    networks by selling a range of products. It is anticipated that rather than forma

    ownership arrangements, a loose network of alliance between insurers and banks will

    emerge, popularly known as banc assurance. Another innovative distribution channel that

    could be used are the non-financial organizations. For an example, insurance for

    consumer items like fridge and TV can be offered at the point of sale. This increases the

    likelihood of insurance sales. Alliances with manufacturers or retailers of consumer

    goods will be possible and insurance can be one of the various incentives offered

    Chapter No. 8

    8.1 Customer for Reliance Life Insurance

    Life insurance is one of the best known insurance products today. People buy these products

    as investment tools and also as protection for themselves and their families. All the insurance

    companies the world over are looking at attracting the eye balls of customer and positioning

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    their solutions innovatively to cater to niche and specific markets. One of the most critical

    aspects both from the view point of the customer and the insurer is getting important and

    relevant leads that can be beneficial for both.

    There is a big need for market intelligence, database of products and services and secondary

    data that can be converted in to leads for the companies to tap. The customer also needs to

    have relevant life insurance lead information on products that give him the best value for his

    money. The Internet is the best repository for all relevant information both for the potentia

    customers as well as the insurance companies. The insurance companies can put up all kinds

    of data and information on their websites that a potential customer can conveniently use to

    arrive at a decision. On the other end of the spectrum, a customer can use relevant keywords

    to search for information on the Internet to get hold of a good insurance product. So, the key

    lies to getting Search Engine Optimization done by the insurance companies so that every

    time an insurance specific keyword is used to search the Internet, their website is one of the

    first to be displayed. This assures a large internet traffic that can help generate potential leads

    from the information and digital footprints left by the visitors and can be later converted to

    paying customers. Various B2B and B2C portals offer a host of innovative services that can

    be used as leads by the insurance companies and also the potential customers who are

    looking for a good deal in todays insurance jungle. Nowadays, banks have entered the

    insurance domain and since they have a variety of customers already in their folds, they can

    use their readily available database as leads to contact potential customers for their insurance

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    products. For consultants and insurance agents, it is imperative that they get associated for a

    symbiotic relationship with retail shops and chains via the internet as well as otherwise to

    gain maximum visibility and use tools such as advertisement, mailers, flyers and sales

    incentives to gather life insurance leads and convert them to potential customers. The

    customer gets the best of everything in the present scenario. All that a prospective client has

    to do is log on to the internet, or call a toll free number or walk into an office to get the best

    deal. However, it is always good to use all the resources, leads and information available to

    ensure that he decides on the best product available. There are many ways in which both the

    customer and the insurer can get access to all important life insurance lead. The trick lies in

    using the leads well to get the most out of a particular situation. The endeavor of a company

    is to position itself favorably so that the customer chooses him over other similar products

    while the job of the client is to use the leads in such an effective way so that there is no

    reason for him to repent later that he could have opted for a better deal.

    Chapter No - 9

    9.1 Changing face of Indian insurance industry

    Indian life-insurance market is the target market of all the companies who either want to

    Extend or diversify their business. To tap the Indian market there has been tie-ups

    Between the major Indian companies with other International insurance companies to start

    up their business. The government of India has set up rules that no foreign

    insurance company can setup their business individually here and they have to tie up with an

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    Indian company and this foreign insurance company can have an investment of only 24% of

    the total start-up investment. Indian insurance industry can be featured by:

    Low market penetration

    Ever growing middle class component in population.

    Growth of customers interest with an increasing demands for better insurance

    products.

    Application of information technology for business.

    Rebate from government in the form of tax incentives to be insured.

    Today, the Indian life insurance industry has a dozen private players, each of which is

    Making strides in raising awareness levels, introducing innovative products and increasing

    the penetration of life insurance in the vastly underinsured country. Several Of private

    insurers have introduced attractive products to meet the needs of their target Customers and

    in line with their business objectives.

    9.1.1. India: The Next Insurance Giant

    Market Performance & Forecast: In 2000, Indian insurance market size was $21.71

    Billion. Between 2000 and 2007, it had an increase of 120% and reached $47.89 billion.

    Between 2000 and 2007, total premiums maintained an average growth rate of 11.96%

    And the CAGR growth during this time frame has been 11.96%. It was one of the most

    Consistent growth patterns we have noticed in any other emerging economies in Asian

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    As well as Global markets.

    Figure No. 2

    Indian Insurance Market

    Indian economy is the 12th largest in the world, with a GDP of $1.25 trillion and 3rd largest

    in terms of purchasing power parity. With factors like a stable 8-9 per cent annual growth

    rising foreign exchange reserves, a booming capital market and a rapidly expanding FDI

    inflows, it is on the fulcrum of an ever increasing growth curve. Insurance is one major sector

    which has been on a continuous growth curve since the revival of Indian economy. Taking

    into account the huge population and growing per capita income besides several other driving

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    factors, a huge opportunity is in store for the insurance companies in India. According to the

    latest research findings, nearly 80% 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 subjected to weak social security and pension systems with

    hardly any old age income security. As per our findings, insurance in India is primarily used

    as a means to improve personal finances and for income tax planning; Indians have a

    tendency to invest in properties and gold followed by bank deposits. They selectively invest

    in shares also but the percentage is very small 4-5%. This in itself is an indicator that growth

    potential for the insurance sector is immense. Its a business growing at the rate of 15-20%

    per annum and presently is of the order of $47.9 billion.India is a vast market for life

    insurance that is directly proportional to the growth in premiums and an increase in life

    density. With the entry of private sector players backed by foreign expertise, Indian insurance

    market has become more vibrant. Competition in this market is increasing with companys

    continuous effort to lure the customers with new product offerings. However, the market

    share of private insurance companies remains very low -- in the 10-15% range. Even to this

    day, Life Insurance Corporation (LIC) of India dominates Indian insurance sector. The heavy

    hand of government still dominates the market, with price controls, limits on ownership, and

    other restraints.

    Major Driving Factors

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    Growing demand from semi-urban population

    Entry of private players following the deregulation

    rising demand for retirement provision in the ageing population

    The opening of the pension sector and the establishment of the new pension

    Regulator

    Rising per capita incomes among the strong middle class, and spreading

    Affluence

    Growing consumer class and increase in spending & saving capacity

    Public private partnerships infrastructure development

    Dearth of innovative & buyer-friendly insurance products

    Emerging Areas

    Healthcare Insurance & Pension Plans

    Mutual fund linked insurance products

    Multiple Distribution Networks .i.e. Bank assurance

    The upward growth trend started from 2000 was mainly due to economic policies adopted by

    the then Indian government. This year saw initiation of an era of economic liberalization and

    globalization in the Indian economy followed by several reforms and long-term policies that

    created a perfect roadmap for the success of Indian financial markets. On the basis of severa

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    macroeconomic factors like increase in literacy rate & per capita income, decrease in death

    rate and unemployment, better tax rebates, growing GDP etc., we estimate that the Indian

    insurance sector will grow by $28.65 billion and reach $76.54 billion by 2011 with a CAGR

    (compounded annual growth rate) of 12.44% and a growth of 59.82%.

    Chapter No. 10

    10.1. Valuing the invaluable

    Both under insurance and over insurance can often be attributed to the lack of proper

    Understanding of the exact insurance needs for oneself and the family, and the failure to

    Spot and cover all liabilities properly and adequately, or being over-conservative in this

    Regard.

    10.1.1. Under Insurance

    Under insurance, typically occurs when the existing financial liabilities and insurance

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    Needs are fully taken care of. In the event of the untimely death of the only (or the main

    Earning) member of the family, his financial liabilities would obviously fall on his

    dependents, leaving them in a state of financial distress that could threaten their need of

    sustenance.

    10.1.2. Cover Insurance

    Conversely, there are also instances where individuals indulge in life insurance covers that

    far exceed in value than what is actually required. This is a classic case of over insurance,

    which leads to an unnecessarily higher premium payment, leaving you much poorer. It results

    in unnecessary expenditure that could otherwise be wisely invested elsewhere. The need for

    an adequate insurance cover is never static and keeps on varying with changes in the life

    stages and important events of an individual. The table below provides an insight into the

    various life stages and events when life insurance cover usually requires a revision.

    Busting some insurance myths

    With a range of products flooding the market, people today are more confused about

    insurance than ever. Here are a bagful of myths floating around and I have made an

    effort to bust a few of the significant ones.

    1. I dont want to put my hard-earned money into a pure term assurance plan if I dont even

    get back all the premiums paid on survival of the term.

    A pure term assurance plan is a risk mitigation tool and not an investment product. In the

    event of your untimely death during the policy term, your dependents get a sum assured to

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    enable them to continue living their existing lifestyle, repay loan liabilities and meet long-

    term financial goals. To achieve this, you only need to pay a premium amount that is a

    fraction of the sum assured. Moreover unlike investments, where it takes years to build a

    suitable corpus, the sum assured on your insurance policy is

    payable, in the event of your untimely death, from the date of its

    commencement.

    2. It would be enough if only the main breadwinner of the family takes life

    insurance.

    While the main breadwinner should take out a life insurance policy on a priority basis; the

    other members of the family should also be covered. If the wife is working, then she should

    be covered to the extent of loss of income to the family in the event of her untimely death. On

    the other hand, even if she is not working, she should be covered, albeit for a smaller sum,

    because her contribution to the family, in form of household services, has monetary value.

    3. I will get back all my premiums when I surrender my endowment policy

    Prematurely.

    You couldnt be more wrong! You only get back the surrender value, which is based on

    the paid-up value is a proportion of the original sum assured based on the number

    of years for which premium was paid against the total premium-paying years. The

    paid-up value of the policy is also calculated and available as per the policy conditions.

    4. Insurance is primarily useful as a tax-saving instrument.

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    Again, this is a huge misconception! While you do get attractive tax

    Breaks, the primary objective of insurance is risk mitigations followed by wealth creation for

    the long term. Many people end up taking this myth too seriously, particularly without

    considering the costs and benefits involved.

    5. After three years, I can walk away from any ULIP, along with the accrued

    investment or the fund value.

    Sure, you can do that! However, you need to remember that a ULIP, at least in the initia

    years, is very different from a mutual fund. While a mutual fund only charges o

    nominal fund management charge every year, a ULIP is front loaded. That means a

    significant chunk of your premium is allocated across various charges in the initial years of

    the policy and only the balance gets invested in a fund of your choice. As these charges taper

    off and average over time, it makes sense to stay in a ULIP for at least 15 years. Therefore, if

    your investment horizon is just 3-5 years, you better off in a mutual fund, and you can take

    out a separate term assurance plan for the required risk cover.

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    Chapter No. 11

    11.1. PROFILE OF ORGANIGATION

    RELIANCE LIFE INSURANCE

    FOUNDER

    Few men in history have made as dramatic a contribution to their countrys economic

    fortunes as did the founder of Reliance, Sh. Dhirubhai H. Ambani. Fewer still have left

    behind a legacy that is more enduring and timeless.

    As with all great pioneers, there is more than one unique way of describing the true

    genius of Dhirubhai: The corporate visionary, the unmatched strategist, the proud patriot

    the leader of men, the architect of Indias capital markets, and the champion of

    shareholder interest.

    But the role Dhirubhai cherished most was perhaps that of Indias greatest wealth

    creator. In one lifetime, he built, starting from the proverbial scratch, Indias largest

    private sector enterprise.

    When Dhirubhai embarked on his first business venture, he had a seed capital of barely

    US$ 300 (around Rs 14,000). Over the next three and a half decades, he converted this

    fledgling enterprise into a Rs 60,000 crore colossusan achievement which earned

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    Reliance a place on the global Fortune 500 list, the first ever Indian private company to

    do so.

    Dhirubhai is widely regarded as the father of Indias capital markets. In 1977, when

    Reliance Textile Industries Limited first went public, the Indian stock market was a place

    patronized by a small club of elite investors which dabbled in a handful of stocks.

    Undaunted, Dhirubhai managed to convince a large number of first-time retail investors

    to participate in the unfolding Reliance story and put their hard-earned money in the

    Reliance Textile IPO, promising them, in exchange for their trust, substantial return on

    their investments. It was to be the start of one of great stories of mutual respect and

    reciprocal gain in the Indian markets.

    Under Dhirubhais extraordinary vision and leadership, Reliance scripted one of the

    greatest growth stories in corporate history anywhere in the world, and went on to

    become Indias largest private sector enterprise.

    Through out this amazing journey, Dhirubhai always kept the interests of the ordinary

    shareholder uppermost in mind, in the process making millionaires out of many of the

    initial investors in the Reliance stock, and creating one of the worlds largest shareholder

    families.

    11.1.1. ABOUT RELIANCE

    R.L.I. Company Limited is a part of Reliance Capital Ltd. of the Reliance - Ani

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    Dhirubhai Ambani Group. Reliance Capital is one of Indias leading private sector

    financial services companies, and ranks among the top 3 private sector financial services

    and banking companies, in terms of net worth. Reliance Capital has interests in asset

    management and mutual funds, stock broking, and general insurance, proprietary

    investments, private equity and other activities in financial services

    Reliance Capital Limited (RCL) is a Non-Banking Financial Company (NBFC)

    registered with the Reserve Bank of India under section 45IA of the Reserve Bank of

    India Act, 1934.

    Reliance Capital sees immense potential in the rapidly growing financial services sector

    in India and aims to become a dominant player in this industry and offer fully integrated

    financial services.

    R.L.I. is another step forward for Reliance Capital Limited to offer need based Insurance

    solutions to individuals and Corporate.

    11.1.2. CORPORATE OBJECTIVE

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    At R.L.I. we strongly believe that as is different at every stage, insurance must offer

    flexibility and choice to go with that stage. We are fully prepared and committed to guide

    you on insurance products and services through our well-trained advisors, backed by

    competent marketing and customer services, in the best possible way.

    It is our aim to become one of the top private insurance companies in India and to

    become a cornerstone of RLI integrated financial services business in India.

    11.1.3. CORPORATE MISSION

    To set the standard in helping our customers manage their financial future.

    Below are few of the plans that are offered by Reliance Life insurance plans available

    1. Products (Individual Plans) Savings (Endowment)

    2.Reliance Endowment Plan (formerly Divya Shree)

    3. Reliance Special Endowment Plan (formerly Subha Shree)

    4. Reliance Cash Flow Plan (formerly Dhana Shree)

    5. Reliance Child Plan (formerly Yuva Shree)

    6. Reliance Whole Plan (formerly Nithya Shree)Pensions

    7.Reliance Golden Years Plan (formerly Bhagya Shree)Investments

    8.Reliance Market Return Plan (formerly Kanaka Shree)

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    9. Risk / Protection plan

    10. Reliance TermPlan(formerly Raksha Shree) Products (Group / Corporate

    Plans)

    Tax Benefits

    It is one kind on benefit from life insurance policy . Maximum people buy insurance

    because they want deduction in their income tax.

    Premiums paid for Life insurance - Deduction under Section 80C

    1. Category of assesses allowed deduction: Individual assessee and Hindu

    Undivided Family assesses.

    2. Eligible Savings: Premiums paid or deposited by assesses to effect or to keep in

    force insurance on the life of following persons:

    In case of individual assesses Himself/Herself, spouse, children of such

    individual

    In case of HUF assesses any member

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    3. 20% limit: If the amount of premium paid in a financial year for a policy is in

    excess of 20% of the actual capital sum assured, then deduction will be allowed

    only for premiums up to 20% of the sum assured.

    4. Limit on amount of deduction: Deduction will be restricted to investments upto

    Rs 100,000 in savings specified under Section 80C (including life insurance

    premiums). The limit of deduction under Section 80C will be part of the overal

    limit prescribed under Section 80CCE.

    5. Disallowance: This benefit will be reversed if the policy is terminated/cease to be

    inforce within 2 years after the date of commencement of policy.

    Premiums paid for Pension plans - Section 80CCC

    1. Permitted Deduction: Section 80CCC allows for deduction of premiums paid

    under a pension scheme. As per this Section, the whole of amount paid or

    deposited (excluding interest or bonus accrued or credited to the assessees

    account, if any) as does not exceed the amount of Rs 100,000 is eligible for

    deduction from the total income.

    2. Receipt under Policy: Amounts received on surrender (whole/part) of annuity

    plan, amounts received as Pension is taxed as income.

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    3. Limit: The limit of deduction under Section 80CCC will be part of the overall

    limit prescribed under Section 80CCE.

    Overall deduction limit - Section 80CCE

    As per this section, the maximum amount of deduction that an assessee can claim under

    Sections 80C, 80CCC and 80CCD will be limited to Rs 100,000.

    Premiums paid for medical insurance - Section 80D

    1. Category of assesses allowed deduction: Individual assessee and Hindu

    Undivided Family assessee.

    2. Eligible premiums: Premiums paid by assessee by any mode other than cash out

    of his taxable income to effect or to keep in force an insurance on the health of

    following persons:

    o In case of individual assessee Himself/Herself, spouse, dependent children

    and parent or parents. The condition of dependency of parent has been

    removed from FY 2008-09. In other words, even if the parent is

    independent, the individual can pay the premium and claim the deduction.

    o In case of HUF assessee any member of HUF

    3. Deduction and upper limit: The qualifying amounts under Section 80D for self,

    spouse and dependent children is upto Rs. 15,000/- and additional deduction upto

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    Rs. 15,000/- for the parents. However, a higher amount of upto Rs 20,000/- is

    permitted if the person, for whose health insurance the premium was paid, was

    aged 65 years or more at any time during the financial year in which the premium

    was paid. Such amounts of premium paid would be allowed as deduction from the

    total income of the assessee.

    Benefits under insurance policy - Section 10(10D)

    As per Section 10(10D) of Income tax Act, 1961, any sum received under a life insurance

    policy, including the sum allocated by way of bonus on such policy is exempt from tax.

    However, this rule does not apply to following amounts:

    sum received under Section 80DD(3), or

    any sum received under a Keyman Insurance Policy, or

    any sum received other than as death benefit under an insurance policy which has

    been issued on or after April 1 2003 and if the premium paid in any of the years

    during the term of the policy is more than 20% of the sum assured.

    Tax Rates for Individuals

    The rates of income-tax for FY 2010-11

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    Table No. 2

    Surcharge on Income Tax:

    Individual (except

    female/ senior citizen)

    Female (Below 65

    years)

    Senior citizen

    (Above 65 years)

    Rate

    0 160,000 0 - 190000 0 240000 Nil

    Rs. 160,001 to Rs. 500,000 Rs. 190,001 to Rs.

    500,000

    Rs. 240,001 to Rs.

    500,000

    10%

    Rs. 500,001 to Rs. 800,000 Rs. 500,001 to Rs.

    800,000

    Rs. 500,001 to Rs.

    800,000

    20%

    > Rs. 800,000 > Rs. 800,000 > Rs. 800,000 30%

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    No surcharge on Income Tax for the Financial Year 2009-10 for Individuals.

    Education Cess on Income Tax

    Edcuation Cess @3% will be payable on the amount of income tax (including

    surcharge).

    Secondary & Higher Education Cess on Income Tax

    Additional Education Cess @1% will be payable on the amount of Income tax (Including

    surcharge).

    Chapter No. 12

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    12.1 OTHERS PLAYERS

    12.1.1. Birla Sun Life Insurance

    Birla sun life Insurance Company limited is a joint venture between the Aditya

    Birla group, one of the largest business houses in India and Sun Life Financial Inc., as

    leading international financial services organization. The local knowledge of the Aditya

    Birla group combined with the expertise of Sun Life Financial Inc., offer a formidable

    protection for your future. The Aditya Birla group has a turnover of Rs. 1,33,875 corers

    (as on 31st march 2008). It has over 100,000 employees across all its units worldwide. It

    is led by its chairman Mr. Kumar Mangalam Birla. Some of its key companies are

    Hindalco, Grasim and Aditya Birla Nuvo. Sun Life Financial Inc. and its partners, have

    operations in key markets worldwide. These include Canada, U.S, U.K, Hong Kong, the

    Philippines, Japan, Indonesia, India, china and Bermuda. Sun Life Financial Inc. has

    assets under management of over us$ 404.7 BILLION (as on 31st March, 2008). It is a

    leading performer in the life insurance market in Canada. Birla sun life insurance

    (BSLI) has been operating for 7 years. It has contributed significantly to the

    growth and development of the life insurance industry in India. It pioneered the launch of

    unit linked life insurance plans amongst the private player in India. It pioneered the

    launch of united linked life insurance plans amongst the private players in India. It

    was the first player in industry to sell its policies through the Bancassurance

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    route and through the internet. It was the first private sector player to introduce a pure

    term plan in the Indian market. BSLI has covered more than 2 million lives since it

    commenced operations.

    12.1.2. Life Insurance Corporation Of India

    Mission

    "Explore and enhance the quality of life of people through financial security by providing

    products and services of aspired attributes with competitive returns, and by rendering

    resources for economic development."

    Vision

    "A trans-nationally competitive financial conglomerate of significance to societies and

    Pride of India Every day we wake up to the fact that more than 220 million lives are part

    of our family called LIC.We are humbled by the magnitude of the responsibility we carry

    and realize that the lives that are associated with us are very valuable indeed. Although

    this journey started five decades ago, we are still conscious of the fact that, while

    insurance may be a business for us, being part of millions of lives every day for the past

    52 years has been a process called TRUST.

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    12.1.3. National Insurance Company Limited

    National Insurance Company Limited was incorporated in 1906 with its registered office

    in Kolkata. Consequent to passing of the General Insurance Business Nationalization Act

    in 1972, 21 Foreign and 11 Indian Companies were amalgamated with it

    andNationalbecame a subsidiary of General Insurance Corporation of India (GIC) which

    is fully owned by the Government of India. After the notification of the Genera

    Insurance Business (Nationalization) Amendment Act, on 7th August 2002, Nationalhas

    been de-linked from its holding company GIC and presently operating as a Governmen

    of India undertaking. National Insurance Company Ltd (NIC) is one of the leading public

    sector insurance companies of India, carrying out non life insurance business

    Headquartered in Kolkata, NIC's network of about 1000 offices, manned by more than

    16,000 skilled personnel, is spread over the length and breadth of the country

    covering remote rural areas, townships and metropolitan cities. NIC's foreign

    operations are carried out from its branch offices in Nepal. National transacts

    general insurance business of Fire, Marine and Miscellaneous insurance. The

    Company offers protection against a wide range of risks to its customers. The

    Company is privileged to cater its services to almost every sector or industry in the Indian

    Economy viz. Banking, Telecom, Aviation, Shipping, Information Technology

    Power, Oil & Energy, Agronomy, Plantations, Foreign Trade, Healthcare, Tea

    Automobile, Education, Environment, Space Research etc. National Insurance is the

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    second largest non life insurer in India having a large market presence in Northern and

    Eastern India.

    12.1.4. Tata AIG life-A New Look at Life

    Tata AIG Life Insurance Company Limited (Tata AIG Life) is a joint venture company,

    Formed by the Tata Group and American International Group, Inc. The Tata Group

    holds 74 percent stake in the insurance venture with AIG holding the balance 26percent

    Tata AIG Life provides insurance solutions to individuals and corporate. Tata

    AIG Life Insurance Company was licensed t operates in India on February

    12,2001 and started operations on April 1, 2001. Tata AIG Life offers a broad array of

    life insurance coverage to both individuals and groups, providing various types of add-

    ons and options on basic life products to give consumers flexibility and choice.

    Chapter No. 13

    13.1. RESEARCH METHODOLOGY

    13.1 Sources

    The success of any Insurance company depends on how well they are able to align

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    with the objectives and needs of individual customers, and is able to

    provide proper solutions to them. To know how a company is performing and whethe

    they have any cutting edge advantage over competitors, an intensive study of the market

    is absolutely necessary. In order to understand the performance of different companies in

    the market, we did two types of surveys, primary survey and secondary survey.

    13.1.2. Primary survey

    Primary survey included:-

    Visiting websites and fixing appointments with their agents.

    Creation of database of prospective clients from different sources

    calling them up to fix appointment and then visiting them.

    Prepare a questionnaire for the market survey .

    Meeting different people to know their views, perception and

    preference of different insurance companies.

    13.1.3 Secondary survey

    Secondary survey included of consulting books, magazines, journals, internet and

    also taking reference from:-

    Library.

    Internet.

    R.L.I. reports

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    13.1.4. Methodology

    We would go in for a qualitative research as our objective is to judge the

    perception and preference of different insurance products. The research would be

    done from primary data.

    13.1.5. Sample Design

    Target population: The target population for the research would be people who are in the

    age group beyond 40 and age group between 25 to 40.We targeted this group of

    population because these populations are the potential customers of insurance.

    13.1.5.1. Sampling Frame:

    The research would be conducted in Varanasi. The survey has been conducted among the

    potential customers of R.L.I. from different sectors as Reliance deals in many sectors of

    business.

    13.1.5.2. Sampling Technique:

    The sampling technique that is adopted is the simple random sampling wherein

    every element in the target population has an equal chance or probability of getting

    selected in the sample. That means every unit of the population who is more is in the

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    above mentioned age group, have an equal chance of getting selected

    13.1.5.3 Sample Size:

    I did a survey among 100 people by taking two categories in consideration of

    50 each; that is

    1.) Age group beyond 40

    2) Age group between 25 to 40

    13.1.6. Data Collection:

    The research would be conducted from the source of primary data collection. Secondary

    data would help us in knowing the trends prevailing in the insurance market and would

    help us in analyzing and interpretation of the primary data.

    13.1.7. Findings and Interpretations

    We have presented below the findings and analysis of the questionnaire addressed to the

    respondents to gauge the attitude and perception of the people towards insurance.

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    Respondents having life Insurance

    The question was asked to the respondents to know how many of the respondents

    had a life insurance policy

    85%

    15%

    Life Insurance Policy

    Yes

    No

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    Figure No. 3

    No. ofrespondent

    Yes 85

    No 15Table No. 3

    From the survey it was found out that 85% of the respondents had a life insurance

    policy whereas 15% of the respondents didnt had a life insurance policy.

    In which company you believe most ?

    38%

    62%

    Insurance Company

    Private Company

    Public Company

    Figure No.4

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    CompanyNo. ofrespondent

    PrivateCompany 22PublicCompany 28

    Table No. 4

    Most of the people want to invest his money in public insurance company and in private

    insurance company only 22 respondent want to invest their money. Most of the people

    buy insurance from LIC and there are 24 private insurance company in India.

    Insurance policy taken from which company

    The question was asked to the respondents so as to get to know from which insurance

    company they have bought the policy

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    Figure No.5

    No. ofRespondents

    LIC 19

    ICICI Pru 12Reliance LifeInsurence 9

    Bajaj life Insurance 6Bharti AXA lifeINSURANCE 4

    Table No.5

    The finding which came out from the survey was that 40% of the respondents who have a

    life insurance cover bought life insurance from Life Insurance Corporation of India

    (LIC). LIC is the most preferred brand in the insurance industry because it is the only

    government company which offers insurance. People prefer to buy insurance from LIC

    because of the security being one of the prime factors. In the figure we can also see that

    nowadays people mindset have changed towards insurance.

    From whose suggestion have the respondents taken a policy?

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    It was asked to gain an insight from the respondents that on whose suggestion did they

    opt for a life insurance cover or policy.

    Figure No. 4

    After the survey it was found that most of the respondents took policy or life insurance

    cover from the suggestions of their friends or family.And only 23 respondents

    took policy on the recommendation of the agents.

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    Type of plan

    The respondents were asked which type of plan they go in for when they

    take up insurance cover or policy.

    Figure No. 7

    After the survey it was found that term plan was the most preferred plan. Next on

    the list was endowment plan. Pension plan and health plan are the

    least preferred by customers .

    Preference of insurance sector according to

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    age group:-

    Age group beyond 40

    Figure No.8

    Most of the people want to invest his money in public insurance company and in private

    insurance company only 7 to 8 respondent want to invest their money. Most of the people

    buy insurance from LIC and there are 24 private insurance companies in India.

    Age Group Between 25 40

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    Figure No. 9

    If we see the younger who doing job or business or making planning for his future thenthey are go with TATA AIG.

    Genral preference company by respondent

    Pie Chart

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    Figure No. 10

    Here we see that LIC have more number of market share. People believe more in LIC

    because this is public sector insurance company.LIC have 60% market