Project on Metlife Insurance[1]

8/2/2019 Project on Metlife Insurance[1]

http://slidepdf.com/reader/full/project-on-metlife-insurance1 1/74

68

INTRODUCTION

INTRODUCTION TO THE STUDY

Everyone is exposed to various risks. Future is very uncertain, but there is way to

protect one’s family and make one’s children’s future safe. Life Insurance

companies help us to ensure that our family’s future is not just secure but also

prosperous. Life Insurance is particularly important if you are the sole

breadwinner for your family. The loss of you and your income could devastate

your family. Life insurance will ensure that if anything happens to you, your loved

ones will be able to manage financially. This study titled “Unit Linked Insurance

Plan Product of Metlife India Insurance Co. Ltd.” enables the Life Insurance

Companies to understand how consumer’s perception differs from person to

person. How a consumer selects, organizes and interprets the service quality andthe product quality of different Life Insurance Policies, offered by various Life

Insurance Companies.

WHAT IS INSURANCE ?

It is a commonly acknowledged phenomenon that there are countless risks in every

sphere of life for property, there are fire risk; for shipment of goods. There are

perils of sea; for human life there are risk of death or disability; and so on .the

chances of occurrences of the events causing losses are quite uncertain because

these may or may not take place. Therefore, with this view in mind, people facing

common risks come together and make their small contribution to the common

fund. While it may not be possible to tell in advance, which person will suffer the



68

losses, it is possible to work out how many persons on an average out of the group,

may suffer losses. When risk occurs, the loss is made good out of the common

fund .in this way each and every one shares the risk .in fact they share the loss by

payment of premium, which is calculated on the likelihood of loss .in olden time,

the contribution make the above-stated notion of Insurance.

DEFINITION OF INSURANCE

Insurance has been defined to be that in, which a sum of money as a premium is

paid by the insured in consideration of the insurer’s bearings the risk of paying a

large sum upon a given contingency. The insurance thus is a contract whereby:

a. Certain sum, termed as premium, is charged in consideration.

b. Against the said consideration, a large amount is guaranteed to be paid by the

insurer who received the premium.

c. The compensation will be made in certain definite sum, i.e., the loss or the

policy amount which ever may be.

d. The payment is made only upon a contingency more specifically, insurance may

be defined as a contact between two parties, wherein one party (the insurer) agrees

to pay to the other party (the insured) or the beneficiary, a certain sum upon a

given contingency (the risk) against which insurance is required.

TYPES OF INSURANCE

Insurance occupies an important place in the modern world because of the risk,

which can be insured, in number and extent owing to the growing complexity of

present day economic system. The different type of insurance have come about by

practice within insurance companies, and by the influence of legislation controlling

the transacting of insurance business, broadly, insurance may be classified into the

following categories:



68

1. Classification from business point of view

a) Life insurance, and

b) General insurance

2. Classification on the basis of nature of insurance

a) Life insurance

b) Fire insurance

c) Marine insurance

d) Social insurance, and

e) Miscellaneous insurance

3. Classification from risk point of view

a) Personal insurance

b) Property insurance

c) Liability insurance

d) Fidelity general insurance

THE IMPORTANCE OF INSURANCE

Insurance benefits society by allowing individuals to share the risks faced by many

people. But it also serves many other important economic and societal functions.

Because insurance is available and affordable, banks can make loans with the

assurance that the loan’s collateral (property that can be taken as payment if a loan

goes unpaid) is covered against damage. This increased availability of credit helps

people buy homes and cars. Insurance also provides the capital that communities

need to quickly rebuild and recover economically from natural disasters, such as

tornadoes or hurricanes. Insurance itself has become a significant economic force

in most industrialized countries. Employers buy insurance to cover their employees



68

against work-related injuries and health problems. Businesses also insure their

property, including technology used in production, against damage and theft.

Because it makes business operations safer, insurance encourages businesses to

make economic transactions, which benefits the economies of countries. In

addition, millions of people work for insurance companies and related businesses.

In 1996 more than 2.4 million people worked in the insurance industry in the

United States and Canada. Insurance as an investment that offers a lot more in

terms of returns, risk cover & as also that tax concessions & added bonuses Not all

effects of insurance are positive ones. The possibility of earning insurance

payments motivates some people to attempt to cause damage or losses. Without the possibility of collecting insurance benefits, for instance, no one would think of

arson, the willful destruction of property by fire, as a potential source of money.

THE INSURANCE INDUSTRY TODAY

The insurance business has grown dramatically and undergone tremendous

changes. As a result of the deregulation of financial services businesses—

including insurance, banking, and securities trading—the roles, products, and

services of these formerly distinct businesses have become blurred. For instance,

citizens in the U.S. state of California voted in 1988 to allow banks to sell

insurance in that state. In Canada, banks may also soon be allowed to sell

insurance. Advances in communications technology have also allowed traditionally

distinct financial businesses to keep instantaneous track of developments in other

businesses and compete forsome of the same customers. Some insurance

companies now offer deposit accounts and mortgages. In the United States, life

insurance companies now sell more pension plans and other asset management

services than they do conventional life insurance. Developments in computer

technology that have given insurance providers the ability to quickly access and



68

process information have allowed them to custom-design policies to fit the needs

of individual customers. But the increasing complexity of policies has also made

some aspects of buying and selling insurance more difficult. In addition,

improvements in geological and meteorological technology have the potential to

change the way property insurers calculate risks of damage. For example, as

scientists improve their abilities to predict severe weather patterns, such as

hurricanes, and geological disturbances, such as earthquakes, insurers may change

how they provide protection against losses from such events.

EVOLUTION OF INSURANCE IN INDIA

The marine insurance is the oldest form of insurance. If we trace Indian history

there are evidence that marine insurance was practiced here about three thousand

years ago. The code of Manu indicates that there was the practice of marine

insurance carried out by the traders in India with those of Srilanka, Egypt and

Greece .it is wonderful to see that Indians had even anticipated the doctrine of

average and contribution. Fright was fixed according to season and was then very

much at the mercy of the wind and other elements. Travelers by sea and land were

very much exposed to the risk of losing their vessels and merchandise because of

piracy on open seas and highway robbery of caravans was very common. The

practice of insurance was very common during the rule of Akbar to Aurangzeb, but

the nature and coverage of the insurance in this period is not well known. It was

the British insurer who introduced general insurance in India in the modern form.

The Britishers opened general insurance in India around the year 1700. The first

company known as the sun insurance office was set up in Calcutta in the year

1710. This was followed by several insurance companies like London assurance

and royal exchange assurance (1720), Phoenix Assurance Company (1782). Etc.

Life insurance business in the country was nationalized in 1956. More than 100



68

non-life insurance companies including branches of foreign companies operating

within the country were amalgamated and grouped into four companies, viz., the

National Insurance Company Ltd., the New India Assurance Company Ltd., the

Oriental Insurance Company Ltd., and the United India Insurance Company Ltd.

with head offices at Calcutta, Bombay, New Delhi and Madras, respectively. Life

insurance in the current form came in India from united kingdom with the

establishment of a British firm, oriental life assurance company in 1818 followed

by Bombay life assurance company in 1823, the madras equitable life insurance

society in 1829 and oriental life assurance company in 1874.prior to 1871, Indian

lives were treated as sub standard and charged an extra premium of 15% to 20%.Bombay mutual life assurance society, an Indian insurer that came in to existence

in 1871, was the first to cover Indian lives at normal rates. The Indian insurance

company Act 1923 was enacted inter alia, to enable the government to collect

statistical information about life and nonlife insurance business transacted in India

by Indian and foreign insurer, including the provident insurance societies. The first

half of the 20th century marked by two world war, the adverse affects of the World

War I and World War II on the economy of India, and in between them the period

of world wide economic crises triggered by the Great depression. The first half of

the 20th century was also marked by struggles for India’s independence. The

aggregate effect of these events led to a high rate of bankruptcies and liquidation of

life insurance companies in India. This had adversely affected the faith of the

general public in the utility of obtaining life cover.

In this background, the Parliament of India passed the Life Insurance of India Act

on 19th June 1956, and the Life Insurance Corporation of India was created on 1st

September, 1956, by consolidating the life insurance business of 245 private life

insurers and other entities offering life insurance services. Since 1972, the

insurance sector has been totally under the control of government of India through



68

LIC and GIC and its subsidiaries. As a result, revenue of both of them increased in

the last years .the amount of savings pooled by LIC increased from Rs.2704 crores

in 1974 to Rs .57670 in 1994 with an annual growth rate of 16.53%. Similarly

premium underwritten by GIC rose from 280 crores in 193 to 7647 crores in1998

showing an annual growth rate of 25.18%. Despite increase in premium collected

by both LIC and GIC their were inefficiency and red tapeisum creeped in to the

insurance sector. Apart from that a major policy shift by the government of India

during 1990’s.the Indian economy opened for foreign competition .In this

background The government of India in 1993 had set-up a high powered

committee by R.N Malhothra , former governor reserve bank of India, to examinethe structure of Indian insurance sector and recommended changes to make it more

efficient and competitive keeping in view structural changes in other part of the

financial system of the country. Insurance sector has been opened up for

competition from Indian private insurance companies with the enactment of

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

the provisions of IRDA Act, 1999, Insurance Regulatory and Development

Authority (IRDA) was established on 19th April 2000 to protect the interests of

holder of insurance policy and to regulate, promote and ensure orderly growth of

the insurance industry. IRDA Act 1999 paved the way for the entry of private

players into the insurance market, which was hitherto the exclusive privilege of

public sector insurance companies/ corporations.

EVOLUTION OF INSURANCE ORGANIZATION



68

With a view to serve the society, the insurance organizations have been developed

in different forms with innovation of insurance practice for social welfare and

development; some of these forms are outlined here.

a) Self-insurance

The arrangement in which an individual or concern sets up a private fund to meet

the future risk. If some losses happened in the future the firm meets the loss out of

the fund. While it may be called ‘self insurance’ it is not a single matter of fact,

insurance at all because there is no hedge, no shifting, or distributing the burden of

risk among larger Persons. It is merely a provision to meeting the unforeseen

event. Here the insured become the insurer for the particular risk. But it can be

effectively worked only when there is wide distribution of risks subjected the same

hazard.

b) Partnership

A partnership firm may also carry on the insurance business for the sake of profit.

Since it is not an entity distinct from the persons comprising it, the personal

liability of partners in respect to the partnership debts is unlimited. In case of huge

loss the partners may have to pay from their own personal funds and it will not be

profitable to them to starts insurance business .in the early period before the advent

of joint stock companies many insurance undertakings were partnership firms or

unincorporated companies.

c) Joint stock companies

The joint stock companies are those, which are organized by the shareholders who

subscribe the necessary capital to start the business. These are formed for earning



68

profits for the stockholders who are the real owners of the companies. The

management of a company is entrusted to a board of directors who is elected by the

shareholders from amongst themselves. The company can operate insurance

business and policyholders have nothing to do with the management of the

concern. But in life insurance it is the practice to share certain portion of profit

among the certain policyholders.

d) Mutual fund companies

The mutual fund companies are cooperative association formed for the purpose of

effecting insurance on the property of its members. The policyholders are

themselves the shareholders of the companies each member is insured as well as

insured. They have power to participate in management and in the profit sharing to

the full extent. Whenever the income is more than the expenses and claims, it is

accumulated I the form of saving and is entitled in reducing the rate of premium.

Since the insured are insurers also, they always try to reduce the management

expenses and to keep the business at sound level.

e) Co-operative insurance organizations

Cooperative insurance organizations are those concerns, which are incorporated

and registered under Indian cooperative societies Act. The concerns are also called

‘co operative insurance societies’ these societies like mutual fund companies are

non profit organization .the aim is to provide insurance protection to its members

at the lowest reasonable net cost .the Indian insurance Act. 1938, has provided

special provisions for the co-operative insurance societies, but after nationalization

the societies have ceased to exist.

f) Lloyd’s Association

Lloyd’s association is one of the greatest insurance institutions in the world.

Taking its name from the coffee house Lloyd where underwriters assembled to



68

transact business and pick-up news. The organization traces its origins to the latter

part of the seventeenth century .so it is the oldest insurance organization in existing

form in the world. In 1871,Lloyds Act was passed incorporating the members of

the association into a single corporate body with perpetual succession and a

corporate seal .the powers of Lloyds corporation were extended from the business

of marine insurance to the other insurance and guarantee business. The Lloyds

Association also publishes, Lloyds list and register of shipping for the information

of insuring public and the insurers.

g) State Insurance

The government of a nation, some times, owns the insurance and runs the business

for the benefit of the public. The sate insurance is defined as that insurance which

is under public sector. In Brazil, Japan and Mexico, the insurance are largely

nationalized. Previously, the state undertook only those insurances, which were

regarded as vital for the national interest.

INSURANCE SECTOR REFORMS

Having looked at the insurance sector, the efforts made by the government to make

the industry more dynamic and customer friendly. To begin with, the Malhotra

committee was set up with the objective of suggesting changes that would achieve

the much required dynamism.The Mallhotra Commiittee Report 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. In 1994, the committee submitted the report

and gave the following recommendations:

Structure



68

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. All the insurance companies

should be given greater freedom to operate.

Competition

Private Companies with a minimum paid up capital of Rs.1bn should be allowed to

enter the industry. 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. Postal Life Insurance should be

allowed to operate in the rural market. Only one State Level Life Insurance

Company should be allowed to operate in each state.

Regulatory Body

The Insurance Act should be changed. An Insurance Regulatory body should be set

up.Controller of Insurance (Currently a part from the Finance Ministry)

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 than5% 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 to be carried out in the

insurance industry. Overall, the committee strongly felt that in order to improve the



68

customer services and increase the coverage of the insurance industry should be

opened up to competition. But at the same time, the committee felt the need to

exercise caution as any failure on the part of new players could ruin the public

confidence in the industry.

Few Life Insurance policies are:

Whole life policies –

Cover the insured for life. The insured does not receive money while he is alive;

the nominee receives the sum assured plus bonus upon death of the insured.

Endowment policies –

Cover the insured for a specific period. The insured receives money on survival of

the term and is not covered thereafter.

Money back policies –

The nominee receives money immediately on death of the insured. On survival the

insured receives money at regular intervals during the term. These policies cost

more than endowment with profit policies.

Annuities / Children's policies –

The nominee receives a guaranteed amount of money at a pre-determined time and

not immediately on death of the insured. On survival the insured receives money at

the same pre-determined time. These policies are best suited for planning children's

future education and marriage costs.

Pension schemes –

That Pension schemes provide benefits to the insured only upon retirement. If the

insured dies during the term of the policy, his nominee would receive the benefits

either as a lump sum or as a pension every month. Since a single policy cannot



68

meet all the insurance objectives, one should have a portfolio of policies covering

all the needs.

ULIP-

It is a life insurance police which provides combination of life insurance protection

and investment. When people how investments in the capital market have grow

over the last few years, they prefer to use their funds in ways that help them to

participate in the boom in the capital market. Insurers have developed plans that

combine the benefits of life insurance as well as giving various options of

participating in the growth of the capital market. Such plans are called Linked Life

insurance plans. They are also called Unit Linked Insurance Plans or ULIPs, in

short. A ULIP is a life insurance policy which provides a combination of life

insurance protection and investments. ULIPs contribute nearly 50% of the

premium from some insurers and more than 85% of the premium for some others.

BACKGROUND OF THE STUDY

“Life Insurance is a contract for payment of a sum of money to the person assured

on the happening of the event insured against”. Usually the insurance contract

provides for the payment of an amount on the date of maturity or at specified dates

at periodic intervals or at unfortunate death if it occurs earlier. Obviously, there is a

price to be paid for this benefit. Among other things the contracts also provides for

the payment of premiums, by the assured. Life Insurance is universally

acknowledged as a tool to eliminate risk, substitute certainty for uncertainty and

ensure timely aid for the family in the unfortunate event of the death of the

breadwinner. In other words, it is the civilized world’s partial solution to the

problems caused by death. Life insurance helps in two ways dealing with

premature death, which leaves dependent families to fend for themselves and old

age without visible means of support. The most common types of life insurance are



68

whole life insurance and term life insurance. Whole life insurance provides a

lifetime of protection as long as you pay the premiums to keep the policy active.

They also accrue a cash value and thus offer a savings component. Term life

Policies are usually renewable at the end of the term. Few major players are

LIFE INSURANCE CORPORATION OF INDIA

METLIFE INSURANCE COMPANY

BIRLA SUN-LIFE INSURANCE COMPANY

HDFC STANDARD LIFE INSURANCE COMPANY

BIRLA SUN-LIFE INSURANCE COMPANY

ING VYSYA LIFE INSURANCE COMPANYSBI LIFE INSURANCE

BAJAJ ALLIANZ LIFE INSURANCE COMPANY

ICICI PRUDENTIAL LIFE INSURANCE COMPANY

MAX NEW YORK LIFE INSURANCE COMPANY

OM KOTAK MAHINDRA LIFE INSURANCE COMPANY



68

CHAPTER - 2

RESEARCH DESIGN

STATEMENT OF THE PROBLEM

This Study will enable us to understand the consumer’s perception about life

insurance companies and also will enable the companies to understand, how a

consumer selects, organizes and interprets the Quality of service and product

offered by life insurance companies.

SCOPE OF THE STUDY

This study is limited to the consumers within the limit of Puri. The study will be

able to reveal the preferences, needs, perception of the customers regarding the life

insurance products, It also help the insurance companies to know whether the

existing products are really satisfying the customers needs.



68

NEED FOR THE STUDY

1) The deeper the understanding of consumer’s needs and perception, the earlier

the product is introduced ahead of competitors, the expected contribution margin

will be greater .Hence the study is very important.

2) Consumer markets and consumer buying behavior can be understood before

sound product and marketing plans are developed.

3) This study will help companies to customize the service and product, according

to the consumer’s need.

4) This study will also help the companies to understand the experience and

expectations of the existing customers.

OBJECTIVE OF THE STUDY

To ascertain the profile and characteristics of potential buyers.

To have an insight into the attitudes and behaviors of customers.

To find out the differences among perceived service and expected service.

To produce an executive service report to upgrade service characteristics of life

insurance companies.

To access the degree of satisfaction of the consumers with their current brand of

Insurance products.

REVIEW OF LITERATURE:

The literature review section critically examine the recent or historically significant

studies, company data or industry reports that acts as a basis for proposed studies

to begin with the research discussion of the related literature and relevant

secondary data from a comprehensive prospective, moving to more specific



68

studies, that are associate with research problem. Basically the literature should be

applied to the study, than the researcher proposes. The literature may also explain

the needs for the proposed work to appraise the short comings and informational

gaps in secondary data sources. To carry the research work the researcher has gone

through a few reports, books, journals and websites. The details regarding Life

Insurance Industry, history, origin and growth of the industry is also taken from

some books, magazines etc. The sources of this information are as follows:

Catalogues and Broachers from various life insurance companies.

Articles from magazines and news paper.

Information from various websites.

RESEARCH DESIGN:

A research design is a basic plan, which guides the researcher in the collection and

analysis of data required for practicing the research. Infect the research design is

the conceptual structure where the research is conducted. It constitutes the ‘Blue

Print’ for the collection, measurement and analysis of the data. The study is carried

out to understand the Consumer Perception about life insurance companies in Puri

city. For this study the researcher used exploratory research design. This research

covers 50 consumers in Puri city, belonging to various age groups.

SAMPLE DESIGN:

The process of drawing a sample from a large population is called sampling.Population refers to the total of items about which information is defined. Well-

selected samples may reflect fairly and accurately the characteristics of the

population.

Sampling Unit:



68

The sample unit of this survey was the customers having life insurance policies inPuri city.

Sample Size:

The sample size was 50 customers of different life insurance companies, from the

various parts of the Puri city.

SOURCES OF DATA:

After identifying and defining the research problem and determining specific

information required to solve the problem the researcher will look for the type and

sources of data which may yield the desired results, while deciding about themethod of data collection to be used for the study, there are two types of data.

Secondary Data:

Secondary data means data that are already available i.e. they refer to the data

which have been collected and analyzed by someone and can save both money and

time of the researcher. Secondary data may be available in the form of company

records, trade publications, libraries etc. Secondary data sources are as follows:

Company Reports

Daily Newspaper

Standard Textbook

Various Websites

Primary Data:

Primary data are those, which are collected for the first time. Primary data is

collected by framing questionnaires. The questionnaire contained questions, which

are both opened and closed-ended. Open-ended questions are questions requiring

answers in the responder’s own words. Closed-ended questions are those wherein

the respondent has to merely check the appropriate answer from a list of options



68

available. Any doubts raised by the respondents were clarified to get the perfect

answers from the distributors. Opened questions yielded more insightful

information, whereas closed-Ended questions were relatively simple to tabulate

and analyze.

FIELD WORK:

An interview-schedule and well-structured questionnaire is administered to the

target respondents to collect primary data (Copy of questionnaire is attached in the

appendix) Open and close-ended questions are used in the questionnaire. The

orders of the questions are in such a manner that they begin with simple questions

and lead on the questions that needed more involvement from respondents. The

secondary data are collected from periodicals, magazines, journals and Internet.

OPERATIONAL DEFINITIONS OF THE STUDY

Marketing:

Marketing is a social and managerial process by which individuals and group

obtain what they need and want through creating, offering and exchanging

products of value with others.

Marketing Management:

Marketing Management is the process of planning and executing the conception,

pricing, promotion and distribution of individual and organizational goals.

Marketing Research:

Marketing research is the systematic and objective search for, and analysis of

information relevant to the identification and solution of any problems in the field

of marketing.

Consumer Research:

Consumer research is the methodology used to study consumer behaviour.



68

Consumer Behaviour:

Consumer behaviour is the study of how individuals make decisions to spend their

available resources [time, money, efforts] on consumption related items.

Market Segmentation:

Market segmentation is the process of dividing a market in the distinct subsets of

consumer with common needs or characteristics and selecting one or more

segments to target with distinct marketing mix.

Positioning:

Positioning is the act of designing the company’s offering and image so that they

occupy a meaningful and distinct competitive position in the target consumer’s

mind.

Perception:

Perception is the process by which an individual selects, organizes, and interprets

information input to create a meaningful picture of the world. For a marketer to

influence a motivated buyer to buy their products rather than competitors they

must be careful to take the perception process into account while designing their

marketing campaigns. Perception therefore influence what product consumer buys.

Attitude:

An attitude is a person enduring favorable or unfavorable evaluation, emotional

feeling, and action tendencies towards some object or idea.

Attributes:



68

Attributes are the strengths and weaknesses of a brand that create attitudes and are

used by consumers to choose between brands that are relatively similar or

functionally equivalent.

Values:

A value is a concept of the desirable. An internalized standard of evaluation a

person possession.This standard determines or guide an individual evaluation of

the many objects encountered in everyday life.

Brand:

A brand is a name, term, sign, symbol, or design or a combination of them, used to

identify the goods or services of one seller or group of seller and the differentiatethem from those of competitors.

LIMITATIONS OF THE STUDY

Although the study was carried out with extreme enthusiasm and careful planning

there are several limitations, which handicapped the research viz.

Time Constraints:

The time stipulated for the project to be completed is less and thus there are

chances that some information might have been left out, however due care is taken

to include all the relevant information needed.

Sample size:

Due to time constraints the sample size was relatively small and would definitely

have been more representative if I had collected information from more

respondents.

Accuracy:



68

It is difficult to know if all the respondents gave accurate information; some

respondents tend to give misleading information.

CHAPTER-3



68

PROFILE OF THE INDUSTRY

INSURANCE AND BUSINESS ENVIRONMENT

Insurance is considered as one of the important segment of the economy for its

growth and development. This industry provides long term funds which are

essential for the growth and development of the nation .so the growth of insurance

industry largely depends up on the environment in which they exists. Here I would

like to mention about Indian business environment and their impact on insurance

sector. There are two type of environment which affect the business one is

environment which is internal to the organization (internal environment) and the

other one which is external to the organization (external environment). Internal

environment includes management, technology, competitors, employees,

shareholders, policyholders, marketing intermediary etc. The external environment

of insurance business has been classified in four parts, namely legal, economic,

financial, and commercial. let us discus them in detail by taking one by one.



68

THE INSURANCE REGULATORY AND DEVELOPMENT AUTHORITY

(IRDA)

The Malhotra Committee felt the need to provide greater autonomy to insurance

companies in order to improve their performance and enable them to act as

independent companies with economic motives. For this purpose, it had proposed

setting up an independent regulatory body- The Insurance Regulatory and

Development Authority. Based on the Malhotra committee report in April 2000

IRDA was incorporated. Since being set up as an independent statutory body the

IRDA has put in a framework of globally compatible regulations. Section 14 of the

IRDA Act 1999, lays the duties, power and functions of the authority .the authority

shall have the duty to regulate, promote and ensure orderly growth of the insurance

business and reinsurance business.

Reforms and Implications

The liberalizations of the Indian insurance sector has been the subject of much

heated debate for some years. The sector is finally set to open up to private

competition. The Insurance Regulatory and Development Authority bill will clear

the way for private entry into insurance, as the government is keen to invite private

sector participation into insurance. To address those concerns, the bill requires

direct insurers to have a minimum paid-up capital of Rs. 1billion, to invest

policyholder’s funds only in India; and to restrict international companies to a

minority equity holding of 26 percent in any new company. Indian Promoters will

also have to dilute their equity holding to 26 percent over -year period. Over the



68

past three year, around 30 companies have expressed interest in entering the sector

and many foreign and Indian companies have arranged alliances. Whether the

insurer is old or new, private or public, expanding the market will present

challenges. A number of foreign Insurance Companies have set up representative

offices in India and have also tied up with various asset management companies.

Some of the Indian companies, which have tied up with International partners, are.



68

PROFILE OF THE ORGANISATIONS:

Indian Partners International Partners

Bombay Dyeing General Accident, UK

Tata American Int. Group, US

Dabur Group Liberty Mutual Fund, US

ICICI Prudential, UK

Sundaram Finance Winterthur Insurance, Switzerland

Hindustan Times Commercial Union, UK

Ranbaxy Cigna, US

HDFC Standard Life, UK

CK Birla Group Zurich Insurance, Switzerland

DCM Shriram Royal Sun Alliance, UK

Godrej J Rothschild , UK

M A Chidambaram Met Life

Cholamandalam Guardian Royal Exchange, UK

SK Modi Group Legal and General, Australia

20th Century Finance Canada Life



68

MET LIFE INSURANCE COMPANY

MetLife India Insurance Company Limited (MetLife) is an affiliate of MetLife,

Inc. and was incorporated as a joint venture between MetLife International

Holdings Inc., The Jammu and Kashmir Bank, M. Pallonji and Co. Private Limited

and other private investors. MetLife is one of the fastest growing life insurance

companies in the country. It serves its customers by offering a range of innovative

products to individuals and group customers at more than 700 locations through its

bank partners and company-owned offices. MetLife has more than 55,000

Financial Advisors, who help customers achieve peace of mind across the length

and breadth of the country. MetLife Inc., through its affiliates, reaches more than70 million customers in the. Americas, Asia Pacific and Europe. Affiliated

companies, outside of India, include the number one life insurer in the United

States (based on life insurance inforce), with over 140 years of experience and

relationships with more than 90 of the top one hundred FORTUNE 500®1

companies. The MetLife companies offer life insurance, annuities, automobile and

home insurance, retail banking and other financial services to individuals, as well

as group insurance, reinsurance and retirement and savings products and services

to corporations and other institutions.

For almost 137 years, Metropolitan Life Insurance Company has been

insuring the lives of the people who depend on them. Their success is based on

their long history of social responsibility, strong leadership, sound investments,

and innovative products and services. MetLife Begins The origins of Metropolitan

Life Insurance Company (MetLife) go back to 1863, when a group of New York

City businessmen raised $100,000 to found the National Union Life and Helping

and Healing People In 1909, MetLife Vice President Haley Fiske announced that

"insurance, not merely as a business proposition, but as a social program" would be

the future policy of the company Supporting Country and Community Over the



68

years, MetLife has made a difference by supporting urban renewal projects and

community financing. The company's social commitment and its commitment to

the security of its policyholders have proven to be good business. MetLife Today

In 2010 MetLife is the first insurance company to establish a financial holding

company with a nationally chartered bank. Products Offered by the company are

1) Whole Life

Met 100 Non par

Met 100 Gold par

Met 100 Platinum par

2) Endowment

Met Gold par

Met Platinum par

Met Junior par

Met junior Non par

3) Money Back

Met Sukh

Met Junior MB

4) Term

Met Mortagage Protector

Met Riders

Accidental death

5) ULIP

Met smart platinum

Met smart one

ABOUT ULIP



68

When people how investments in the capital market have grow over the last few

years, they prefer to use their funds in ways that help them to participate in the

boom in the capital market. Insurers have developed plans that combine the

benefits of life insurance as well as giving various options of participating in the

growth of the capital market. Such plans are called Linked Life insurance plans.

They are also called Unit Linked Insurance Plans or ULIPs, in short. A ULIP is a

life insurance policy which provides a combination of life insurance protection and

investments. ULIPs contribute nearly 50% of the premium from some insurers and

more than 85% of the premium for some others.

In linked policies, the SA may be expressed as an integrated benefit, which means

that on the happening of the event, the SA or the value of units in the fund,

whichever is higher, is payable. In this case, the life cover will reduce as the value

of the units increases. As the risk cover decreases, the premium adjusted towards

the cover will decrease and the amount allocated to investments will increase.

The alternative to the integrated benefit, is to pay a fixed SA as an additional

benefit on death, in addition to the value of the units in the fund. In this case, the

charge for the risk cover will increase and the allocation to the fund will decrease

every year. This is sometimes called the ‘ Double Death Benefit’ Insurers offer

policy holders a choice of funds in which their moneys may be invested like:-

Equity Funds: in this type of fund, some times also called Growth Funds, there

would be more investments in equities which are shares / sticks traded in the stock

market.



68

Debt Funds: in this type of fund, also called Bond Funds, the investments are

primarily in government and government guaranteed securities and such safe debt

and other high investment grade cooperate bonds.

Money Market Funds: in this type of fund, sometimes also called Liquid funds,

the investment may be more in short- term money market instruments such as

treasury bills, commercial papers, etc.

Balanced Funds: in this type of funds, the investments are in both equity as well

as debt.

The two types of ULIP product of Metlife India Insurance Co. Ltd. Are as

follows:

A.MET SMART PLATINUM :-

You have always wanted the best for yourself in life. Not surprisingly, your wealth

creation & protection needs, which keep changing with your life stage, also

deserve the best. Met Smart Platinum, a Unit – Linked Plan gives you the platinum

edge by providing you with a complete control over your investments.

TRANSPARENCY

There are no hidden charges attached to your investment.

WEALTH CREATION

Competitive charges along with an option to pay-up premiums allows you to

generate wealth for your financial goals

Eligibility Criteria



68

Minimum Age at Entry (LBD#) 7years

Maximum Age at Entry (LBD) 70 years

Premium Payment Term (Years) 5 pay/ 10 pay / entire term of the policy

Minimum Annualized Premium in Rupees30,000 for annual mode 60,000 for other modes

Premium Payment Modes Annual, Semi-annual, Monthly, Quarterly

Flexibility

This feature of increase or decrease in Sum Assured allows you to customize this

plan as per your changing life-stage needs and lets you be in control.

Innovative Auto Rebalancing

Capitalize on opportunities arising out of market movements, while staying

protected from the market downside.

Death Benefit*

In case of unfortunate demise of the insured, the benefit payable will be higher of

the Sum Assured (reduced by applicable partial withdrawals) or Fund Value or

105% of the total premiums paid under the policy.

Maturity Benefit*

The policy matures at the Insured attaining 99 years of age and the benefit

payable is the total Fund Value under the policy.

B.Met Smart One



68

Unit –Linked life Insurance Plan (Non-Par) You work hard to fulfill your family

dreams and wish everything that is best for them, whether it is your children’s

education or your child’s marriage or buying your child’s marriage or buying your

dream house. We at MetLife understand that your hard earned money should work

equally harder for you. Hence we bring to you Met Smart One, Which is

investment cum protection single premium plan which along with its various

investment management options facilitates accelerated wealth creation with

Loyalty Additions.

Key Benefits of Met Smart One

Single pay investment cum protection plan

Choice of 7 Funds including NAV Guarantee Fund

2 Investment Strategies Auto Rebalancing option and Self Managed option

Unique stop Loss Option to protect you from market downswings

Accelerated wealth creation with Loyalty Additions.

Liquidity with partial Withdrawals

Death Benefit: In case of any unfortunate demise of the insured, Death

Benefit will be paid as defined in “ Death Benefit” section

Maturity Benefit: At the time of maturity, you will receive the Total fund

Value

Enhanced protection with Accidental Death Benefit Rider

Tax Benefit as per Income Tax Act 1961 ( Please refer to “Tax Benefit

Section” for details.



68

Your Benefits in Detail

Choice of 2 Investment Strategies

Met Smart One offers you 2 investment strategies to manage your investments

1. Self Managed Option

2. Auto Rebalancing Option

1. Self Managed Option

In case you feel that you can actively manage your portfolio, then this option is

best suited for you. Under this investment strategy, you may manage your

investments by choosing among the 7 Unit-Linked Fund options available under

this plan. You have an option of switching among various Funds depending on

your changing risk appetite and market condition.



68



68

NAV Guarantee Fund (NGF)

The NAV Guarantee Fund (NGF) is a Unit-Linked Fund option that provides you

minimum guaranteed Net Asset Value at the end of 5 year period (called as lock-in

period) from the period of subscription. The guarantee is applicable on the Units

remaining in the Unit Account attached to this Fund at the end of lock-in period.

No Guarantee is applicable if the amount is withdrawn (i.e. surrender or benefit

payout) out of this Fund before expiry of the five year period. However, if death or

maturity coincides with the last day of the lock-in period, the guaranteed NAV

will be applied to arrive at the death and maturity benefit. The NGF would be a

limited period offer and would be available in tranches. At the launch of each

tranche, the Net Asset Value of the Fund would be Rs. 10. Subscription to a

tranche of the NAV Guarantee Fund (NGF) would terminate on a specified date.

Each tranche would terminate at the end of 5 years from the date of close of

subscription. The minimum guarantee applicable for the NAV Guarantee Fund will

be specified at the beginning of the subscription period.

How does NGF work ?

If you opt for the NGF at any time, provided the Fund is open for

subscription the entire single premium, net of allocation charges is invested

in the NGF

During the subscription period, daily NAV of this Fund would be declared

The fund will be invested in money market instruments for the period of

subscription Subscription into this fund will be allowed only if the minimum remaining

term of the Policy is at least 5 years plus the subscription period



68

At the end of the 5 years from the subscription period, the Fund would

reallocate the monies into the other Funds as per the choice of the customer

or if no choice is made by the maturity date, then the allocation will be made

in the fund proportion then existing

If the Policy is surrendered before the end of the term of the NGF, the NGF

Units are encashed at the NAV as on that date. The guarantee will cease to

apply on surrender

Kindly visit our website or contact our call center or visit our nearest branch

regarding the NGF availability and the applicable guaranteed NAV

(2) Auto Rebalancing OptionThis option is suitable for you if you do not want to manage your investment

portfolio directly on a regular basis. Under this option, your Funds are allocated

in the Flexi Cap Fund and the Protector II Fund in the proportions as per your

choice which you can exercise at the time of opting for the Auto Rebalancing

Option. In case of any market movement, to a trigger level as specified by you,

the mix of Flexi Cap Fund & Protector II Fund is automatically rebalanced to the

ratio chosen by you at inception. This ensures that your investment portfolio

stays exactly the way you wanted it to – without you having to keep an eye on

it on a regular basis – by capping off gains of one fund into the other or taking

larger exposure into one fund on market dips.Under this investment strategy, you

may choose your premium allocation only between 2 Unit-Linked Fund options as

given below.

1) Flexi Cap Fund



68

2) Protector II Fund

The minimum allocation should be 20% in either of the Funds and total of both

the Funds should always be 100%. As this strategy works on the trigger levels,

you are required to choose between 4 rebalancing options available, which will

be the trigger levels for rebalancing and they are as follows:

1) 10% of Total Fund Value




This option works as follows: You choose the allocation between Flexi Cap and Protector II Fund

depending on your risk appetite. For e.g. in case your risk appetite is lower

you may choose a ratio of 70%:30% between Protector II Fund & Flexi Cap

Fund respectively or in case of higher risk appetite you may choose a ratio

of 80%:20% between Flexi Cap Fund and Protector II Fund respectively.

You are also required to choose the trigger level as mentioned above

In case the chosen allocation between Flexi Cap and Protector II Fund is

80%:20% respectively and the chosen trigger level is 10%, then for any 10%

increase or decrease in Total Fund Value, a rebalancing between Flexi Cap

and Protector II Fund will be initiated to the extent of restoring the ratio

between Flexi Cap Fund and Protector II Fund as chosen by you at inception

(i.e. 80% in Flexi Cap Fund and 20% in Protector II Fund)

You can choose to opt in or out of this strategy once in a Policy Year free of

charge. Any subsequent change of the strategy in a given Policy Year will be

charged Rs. 250 per strategy switch

In case of any new transaction such as Payment of Top-up Premiums your

premiums will be allocated in the same proportions as prevailing at that time



68

In case of Partial Withdrawals, the Fund withdrawals will happen in the

same proportions prevailing at that time

No switching is allowed while Auto Rebalancing option is active, however

in case you opt out of the strategy, you may opt for Fund Switching

You can choose to stop this option anytime and can reallocate the remaining

Units in any fashion amongst the other Fund available under the Self

Managed Option. However, if you have chosen to discontinue this option,

you can restart it only once in a Policy Year free of cost. In case of any

subsequent opt-in into this strategy a fee of Rs. 250 will be charged

This option will not be available as long as any proportion of thePolicyholder monies are invested in NGF

Stop Loss Option

To cap off downside risk, you may opt for a Stop Loss Option on the Flexi Cap

Fund. This facility is available on both Single Premium and Top-up Premium

amounts invested in Flexi Cap Fund. To avail this option, you will be required to

choose a Stop Loss level of 10%, 15%, 20%, 25% or 30% of Net Asset Value of

Flexi Cap Fund (NAV). If the NAV of the Flexi Cap Fund falls to the Stop Loss

level, the Funds would be automatically switched to Protector II. This switch will

not be counted amongst the free switches available under the plan. You will be

allowed to change the Stop Loss percentage, change the base NAV for tracking the

Stop Loss and opt in for the Stop Loss Option once free every Policy Year

post which charges as defined under Miscellaneous Charges would be applicable.

However these charges will not be applicable if applied through the internet.

The minimum Fund allocation in Flexi Cap Fund to avail this option has to be

50%. Example: If the NAV at the time of entry is Rs. 10 and the Stop Loss level

chosen is 10%, then on the NAV breaching Rs. 9, the Units in the Flexi Cap Fund

would be switched to the Protector II Fund. However, if the NAV continues to rise



68

to Rs. 12, the strategy by itself will not do anything. You can however switch back

to Flexi Cap Fund. You can also change the base for the purpose of the Stop Loss

tracking from Rs. 10 to Rs. 12. When such an activity is initiated, 10% downside

would need to be tracked from Rs. 12 NAV. Both the above transactions will

continue to be free of cost if done online.

Death Benefit

In the unfortunate event of your demise, while the Policy is in force & before the

maturity date, your nominee will get the following Death Benefit.

i) If the death of the Person Insured occurs before the attainment of age 60

The Death Benefit payable will be higher of :

The Single Premium Fund Value (the value of Units pertaining to Base

Premium Account), or

The Base Sum Assured less all Partial Withdrawals (excluding any

withdrawals made from Top-up Premium Account), made in accordance

with the Partial Withdrawal provisions in the last 24 months preceding the

date of death of the Person Insured or 105% of the total Single Premium paid

ii) If the death of the Person Insured occurs on or after the attainment of age

60

The Death Benefit payable will be higher of:

The Single Premium Fund Value (the value of Units pertaining to Base

Premium Account) or

Base Sum Assured less all Partial Withdrawals (excluding any withdrawals

made from Top-up Premium Account) made in accordance with the Partial



68

Withdrawal provisions, during the last 24 months immediately preceding the

date of death or all Partial Withdrawals made in accordance with the Partial

Withdrawal provisions post attainment of age 60, whichever is higher or

105% of the Single Premium paid In addition to any of i) or ii) above, and

provided Top-up Premiums are paid the higher of:

The Top-up Fund Value (the value of Units pertaining to Top-up Premiums)

or

Top-up Sum Assured (less any Partial Withdrawals from Top-up Fund

Value, as per Partial Withdrawal provisions before and after age 60, as

stated above) 105% of the total Top-up Premiums paid shall also be payable.

Maturity Benefit & Settlement Option

On maturity of the Policy, you will receive the Total Fund Value as on the maturity

date. If you wish to defer your maturity proceeds, you may choose to do so with

the Settlement Option.

1. Under this option, you may choose to take your Total Fund Value in

installments within 5 years from the date of maturity or choose a combination of

part lump sum and part installment

2. At anytime during the settlement period you can take the outstanding Fund

Value by terminating the Policy

3. If you choose the settlement option, you will have to bear the risks involved

in the Unit-Linked Funds. The number of withdrawals in any calendar year

would be limited to 12. The minimum withdrawal during the Settlement

Option should be 5% of the Fund Value

4. The life insurance cover during this period would not be applicable, and in

case of death of the Policyholder during this period, the Fund Value as on

that date shall be paid, and the Policy will be terminated



68

5. If you wish to opt for the Settlement Option, you need to inform the

Company at least 90 days prior to the date of maturity

6. The Fund in Settlement Option will be subject to Policy Administration and

Fund Management Charges as defined under “Your charges” section. No

other charges will be deducted during the settlement period

Liquidity with Partial Withdrawals

You have the option to withdraw monies from your Policy to meet your liquidity

needs in case of any emergency after 5th Policy Anniversary. The minimum

amount of Partial Withdrawal should be Rs. 5,000 and the maximum amount of

Partial Withdrawal should not exceed 5% of the Total Fund Value. The Total Fund

Value after any withdrawal should be at least equal to 30% of the Single Premium.

You may make one Partial Withdrawal in a Policy Year (either from Single

Premium or Top-up Premium Account) free of charge. Partial Withdrawals are

allowed first from the Topup Premium Account and then from the Single Premium

Account. No Partial Withdrawals are allowed from the NAV Guarantee Fund.In

addition to the life cover, you may choose to enhance protection by opting for the

Accident Death Benefit Rider (117A011V01).The Premiums towards this rider

will be recovered by deducting Units from the Fund You will be eligible for

Loyalty Additions under the Policy subject to your Policy being in force. Loyalty

Additions (expressed as a % of the Average Single Premium Fund Value)

will be credited to your Policy at the end of every Policy Year from year 6 to year

10 (i.e. for five years). The percentage of Loyalty Addition varies in accordance

with the size of the Single Premium, as shown in the table below: Fund ValueLess than 50,000 0.0%

50,000 to 99,999 0.4%

1,00,000 to 1,99,999 0.6%

2,00,000 to 3,99,999 0.8%



68

4,00,000 to 5,00,000 1.0%

The Average Single Premium Fund Value taken for Loyalty Additions is the

average of Fund Values over last 36 months from the date of calculation.

Top-up Premiums will not be eligible for Loyalty Additions. NAV Guarantee will

not be available on the Units allocated through Loyalty Additions. manage my

Flexibility to add Top-up Premiums

You have the flexibility to make additional investments (over and above the Single

Premium) with the help of Top-up Premiums, anytime during the coverage term.

The minimum amount of a single Top-up Premium is Rs. 5,000. There is no

maximum limit on Top-up Premiums. With every Top-up Premium, there will bean increase in Sum Assured, which will be to the extent of 125% of the Top-up

Premiums made. There are no maximum Limits on the Top-up Premiums.

Any Top-up Premiums paid would not be eligible for Partial Withdrawals for five

years from the date of such payment. Top-up Premiums are not allowed during last

5 years of the Policy Term. Top-up Premiums will not be allowed to be invested in

any series of tranches of NAV Guarantee Fund. However, if the entire Single

Premium is invested in NAV Guarantee Fund, Top-up Premiums will be allowed

to be invested in other Funds.

Maturity Benefit & Settlement Option

On maturity of the Policy, you will receive the Total Fund Value as on the maturity

date. If you wish to defer your maturity proceeds, you may choose to do so with

the Settlement Option.

1. Under this option, you may choose to take your Total Fund Value in

installments within 5 years from the date of maturity or choose a combination

of part lump sum and part installment

2. At anytime during the settlement period you can take the outstanding Fund

Value by terminating the Policy



68

3. If you choose the settlement option, you will have to bear the risks involved

in the Unit-Linked Funds. The number of withdrawals in any calendar year

would be limited to 12. The minimum withdrawal during the Settlement

Option should be 5% of the Fund Value

4. The life insurance cover during this period would not be applicable, and in

case of death of the Policyholder during this period, the Fund Value as on

that date shall be paid, and the Policy will be terminated

5. If you wish to opt for the Settlement Option, you need to inform the

Company at least 90 days prior to the date of maturity

6. The Fund in Settlement Option will be subject to Policy Administration andFund Management Charges as defined under “Your charges” section. No

other charges will be deducted during the settlement period

Liquidity with Partial Withdrawals

You have the option to withdraw monies from your Policy to meet your liquidity

needs in case of any emergency after 5th Policy Anniversary. The minimum

amount of Partial Withdrawal should be Rs. 5,000 and the maximum amount of

Partial Withdrawal should not exceed 5% of the Total Fund Value. The Total Fund

Value after any withdrawal should be at least equal to 30% of the Single Premium.

You may make one Partial Withdrawal in a Policy Year (either from Single

Premium or Top-up Premium Account) free of charge. Partial Withdrawals are

allowed first from the Topup Premium Account and then from the Single Premium

Account. No Partial Withdrawals are allowed from the NAV Guarantee

Fund.Enhanced protection with Accident Death Benefit Rider



68

Enhanced protection with Accident Death Benefit Rider

In addition to the life cover, you may choose to enhance protection by opting for

the Accident Death Benefit Rider (117A011V01).The Premiums towards this rider

will be recovered by deducting Units from the Fund.oyalty Additions

Loyalty Additions

You will be eligible for Loyalty Additions under the Policy subject to your Policy

being in force. Loyalty Additions (expressed as a % of the Average Single

Premium Fund Value) will be credited to your Policy at the end of every Policy

Year from year 6 to year 10 (i.e. for five years). The percentage of Loyalty

Addition varies in accordance with the size of the Single Premium, as shown in thetable below:

Single Premium Band (in Rs)

Loyalty Additions as a % of Average

SinglePremium Fund Value

Less than 50,000 0.0%

50,000 to 99,999 0.4%

1,00,000 to 1,99,999 0.6%

2,00,000 to 3,99,999 0.8%

4,00,000 to 5,00,000 1.0%

The Average Single Premium Fund Value taken for Loyalty Additions is the

average of Fund Values over last 36 months from the date of calculation. Top-up



68

Premiums will not be eligible for Loyalty Additions. NAV Guarantee will not be

available on the Units allocated through Loyalty Additions.

How can I manage my Investments ?

Flexibility to add Top-up Premiums

You have the flexibility to make additional investments (over and above the Single

Premium) with the help of Top-up Premiums, anytime during the coverage term.

The minimum amount of a single Top-up Premium is Rs. 5,000. There is no

maximum limit on Top-up Premiums. With every Top-up Premium, there will be

an increase in Sum Assured, which will be to the extent of 125% of the Top-up

Premiums made. There are no maximum Limits on the Top-up Premiums. AnyTop-up Premiums paid would not be eligible for Partial Withdrawals for five

years from the date of such payment. Top-up Premiums are not allowed during last

5 years of the Policy Term.

Top-up Premiums will not be allowed to be invested in any series of tranches of

NAV Guarantee Fund. However, if the entire Single Premium is invested in NAV

Guarantee Fund, Top-up Premiums will be allowed to be invested in other Funds.

Flexibility of switching between Unit-Linked Funds

You may wish to use this benefit to lock growth in your investments. You have the

benefit to switch partially or fully between the available Unit-Linked Fund options,

at any point of time during the coverage term. You will have the benefit of 4 (four)

free switches in every Policy Year, post which every switch in a Policy Year would

be levied a charge of Rs. 250. The minimum value of every switch should be Rs.

5,000. This facility is not allowed in case Auto Rebalancing option is chosen. No

switches are allowed from the NAV Guarantee Fund.

Surrender Benefit

The Policyholder may opt to surrender the Policy at any time after the first 5 years



68

of the Policy Term. Upon surrender of a Policy, the Total Fund Value will be

payable upon processing the surrender request. No surrender is allowed during the

first 5 years of the Policy Term (lock-in period). No Surrender Charges are

applicable under the Policy. In exceptional circumstances, the Company may defer

the surrender of the Policy for a period not exceeding 30 days from the date of

application with prior approval from IRDA. Examples of such circumstances are:

1. When one or more stock exchanges which provide a basis for valuation for a

substantial portion of the assets of the Fund are closed other than for ordinary

holidays.

2. When, as a result of political, economic, monetary or any circumstances that areout of the control of the Company, the disposal of the assets of the Unit-Linked

Fund(s) are not reasonable or would not reasonably be practicable without being

detrimental to the interests of the remaining Policyholders invested in the Unit-

Linked Fund(s)

3. During periods of extreme volatility of markets resulting into non-valuation

of Funds, during which surrenders would, in our opinion, be detrimental

to the interests of the existing Policyholders invested in the Unit-Linked

Fund(s)

4. In case of natural calamities, strikes, war, civil unrest, riots and bandhs

5. In event of any force majeure or disaster that affects our normal functioningther

Free Look Period

You have a period of 15 days from the date of receipt of the Policy Document

to review the terms and conditions of this Policy. If you have any objections to

any of the terms and conditions, you have the option to return the Policy stating

the reasons for the objections and you will be refunded an amount equal to

nonallocated premiums plus charges levied through cancellation of Units plus

Fund Value at the date of cancellation subject to deduction of expenses towards



68

medical examination, stamp duty and proportionate risk premium for the period of

cover.

Met Smart One at a GlanceBoundary Conditions Eligibility Criteria

Minimum Age at Entry (lbd) 0 Years (3 months)

Maximum Age at Entry (lbd) 65

Minimum / Maximum Age at Maturity 18 / 75 Years

Policy Term 10-20 Years

Minimum Premium 18,000

Maximum Premium 500,000

Sum Assured Multiple 5 times of SP in the First Policy Year & 1.25times of SP for the remaining term of the Policy

Premium Payment Modes Single

Your Policy Charges

(A) Premium Allocation Charges

This is a Premium-based charge. After deducting this charge from your Single

Premium, the remaining Premium is invested to buy Units. Premium Allocation

Charge will be deducted from the Single Premium received as shown below

Premium Band Premium Allocation Charge

Less than 50,000 3%

More than or equal to 50,000 2%

The Premium Allocation Charge for Top-up Premium is 2.0%

(B) Policy Administration Charges

The following Policy Administration Charge would be deducted by cancellation

of Units on a monthly basis .

Policy Year Policy AdministrationCharge as a % of Single Premium



68

Year 1 to 5 0.10% per month

Year 6 and above NA

The Policy Administration Charge would be deducted from the Unit-Linked Funds

by cancellation of appropriate number of Units from the Fund Value. If you have

chosen ‘Settlement Option’, you will be charged a Policy Administration Charge

of Rs. 40 per month during the Settlement Period.

(C) Mortality Charges

Mortality Charge will be deducted at the beginning of each month by cancellation

of an appropriate number of Units at the relevant Net Asset Value. Mortality

Charge will be based on the Age of the Person Insured, Cost of Insurance (CoI)

and the applicable Sum Assured.

For Single Premium

The calculation method will be as follows:

Mortality Charge = (Sum at Risk / 1000) * Cost of Insurance (CoI)

The Sum at Risk is defined as the Death Benefit (as defined in the Benefits section)

Minus the Fund Value (relating to Single Premium Account).

For Top-up Premium

Mortality Charge = (Sum at risk / 1000)*Cost of Insurance (CoI)

The Sum at Risk is defined as the Death Benefit (as defined in the Benefits section

for Top-up Premium Account) minus the Fund Value (relating to Top-up Premium

Account) in the Unit Account.

The sample monthly Cost of Insurance per 1000 Sum at Risk is as below:



68

Age/Gender 20 Years 30 Years 40 Years

Male 0.110067 0.126804 0.215000

Female 0.097067 0.125938 0.165700

These charges would be deducted at the beginning of each month by cancellationof an appropriate number of Units at the relevant Net Asset Value.

(D) Fund Management Charges

These charges are adjusted while calculating the Net Asset Value of the Unit-

Linked Funds each day. Following are the applicable charges for different Funds.

Fund Option Charges

Preserver II

Protector II

Balancer II

Virtue II

Multiplier II

Flexi Cap

NAV Guarantee Fund**

1.00% p.a.

1.00% p.a.

1.15% p.a.

1.25% p.a

1.25% p.a.

1.25% p.a

1.25% p.a

** The Fund Management Charges are 1.05% p.a. plus Cost of Guarantee of

0.20% p.a.

(E) Rider Premium Charge for Accidental Death Benefit Rider (ADB)

The Rider Premium Charges are deducted from Fund Value by adjusting number

of Units in the Unit Account. Service Tax and Education Cess on Rider Premium

will also be applicable at the rates then applicable.

(F) Switching Charge

The first four (4) switches between Funds in a Policy Year will be free of any

charge Thereafter a charge of Rs. 250 per switch will be levied. The switching

charges will be deducted by cancellation of Units of appropriate value from the

Fund Value.



68

(G) Partial Withdrawal Charge

One Partial Withdrawal in a Policy Year either from Top-up Fund or Single

Premium Fund will be free of any charge. For each subsequent Partial

Withdrawal in a Policy Year, a charge of Rs. 250 would be levied. The Partial

Withdrawal Charge will be deducted by cancellation of Units of appropriate

value from the Fund Value.

(H) Miscellaneous Charge

The Company has the option to charge Rs. 250 for any alterations requests

including but not limited to following list of alterations.

The Miscellaneous Charge will be deducted by cancellation of appropriatenumber of Units using the relevant Net Asset value of these Units.

1. Change in Name or Date of Birth or Address or Contact Details of Person

Insured / Policyholder

2. Issue of Duplicate Policy Document on request from the client

3. Change / updation of name or other particulars of Nominee / Appointee /

Assignee

4. Cheque bounce / cancellation of cheque / cancellation or fresh request for

ECS

5. Re-dispatch of Policy Document or other particulars due to incorrect or

outdated address details provided by client

6. Request for adhoc or additional Unit statement by client

7. Change in Bank details / Fund transfer requests for settlement of claims

8. Change in amount or frequency or option during settlement period

9. Switch in and out of Auto Rebalancing Strategy, change in trigger levels and

premium allocation proportion

10. Switch in and out of Stop Loss Option

(I) Service Tax Charge



68

This charge as notified by the Government from time to time will be made by

cancellation of appropriate number of Units at the relevant Net Asset Value.

Service Tax would be applied only on Mortality Charges and Fund Management

Charges currently. Service Tax on Fund Management Charge is applied at the

time of declaration of daily NAV on an FMC of 1.35%p.a., as specified by the

Government currently or the actual FMC if it is higher than 1.35% p.a.

In the event that in any given year, the number of Units in the Unit Account is

insufficient to enable the Company to recover the tax amount, the Company

reserves its right to recover such outstanding tax amount from the Unit Account

in the following years. MetLife reserves the right to recover any taxes imposed by any governmental authorities from the Policyholder’s Fund Value.

Note: The Company reserves the right to increase / decrease any of the aboveMiscellaneousCharges subject to an upper limit of Rs.2,000 with prior approval from the IRDA.

Tax Benefits

Tax benefits under this plan are available as per the provisions and conditions of

the Income Tax Act, 1961 and are subject to any changes made in the tax laws in

future. Please consult your tax advisor for advice on the availability of tax benefits

for the premiums paid and proceeds received under the Policy for more details.

Suicide Clause

In the event the Person Insured commits suicide, whether sane or insane at that

time, within one year from the date of commencement or date of policy issue or the

date of the last reinstatement whichever is later, we shall not be liable to pay the

Sum Assured, except refund of the Fund Value.

Policy Loan

We may, at our discretion, offer Policy loan facility under this Policy as per the

interest rates and conditions laid out by us from time to time. This facility will be



68

available only after completion of 2 Policy Years and subject to the following

limits:

Minimum limit: Rs. 5,000

Maximum limit:

i) 40% of the Surrender Value (i.e. Total Fund Value), if equity proportion is

more than 60% of the Total Fund Value at Policy level

ii) 50% of the Surrender Value (i.e. Total Fund Value), if proportion of debt

instruments is more than 60% of the Total Fund Value at Policy level

No Loan will be provided if monies are invested in NAV Guarantee Fund.

For more details on Policy Loan, please contact our representative or nearestMetLife branch.

Auto Foreclosure

In the event, the Total Fund Value reaches 20% of the Single Premium after

completion of 5 Policy Years, the Policy will terminate and the total Fund Value

will be paid to you.

Risks Inherent in the Unit-Linked Funds

Due to the nature of the Unit-Linked Funds, the Company does not guarantee the

price of the Units of any of the Unit-Linked Funds offered by it. Unit-Linked Life

Insurance products are different from the traditional insurance products and are

subject to the risk factors.

The Insured (and the Policyholder, if different) is aware that the investment inUnits is subject, interalia (amongst others), to the following risks:

The investments in the Units are subject to market and other risks and there

can be no guarantee that the objectives of any of the Unit-Linked Funds will be achieved. The Unit-Linked Funds do not offer a guaranteed or assuredreturn.

The premium paid in Unit-Linked Life Insurance Policies are subject toinvestment risks associated with capital markets. The Fund Value of each of the Unit-Linked Fund can go up or down depending on the factors & forces



68

affecting the financial markets from time to time including changes in thegeneral level of interest rates and the insured is responsible for his / her Decisions

The past performance of the Unit-Linked Fund(s) of the Company is not

necessarily indicative of the future performance of any of these Unit-LinkedFunds The name of the Product does not in any way indicate the quality of the

product, its future prospects or returns The names of the Unit-Linked Funds and their objectives do not in any

manner indicate the quality of the fund, their future prospects or returns

benefits payable under the Policy are subject to the tax laws and other

legislations / regulations as they exist from time to time

The following Policy Administration Charge would be deducted by cancellation

The ULIP product of MetLife and its comparison with two companies are as

follows:



68



68

CHAPTER -4

ANALYSIS AND INTERPRETATION

INTRODUCTION TO ANALYSIS:



68

In order to extract meaningful information from the data them. The analysis can be

conducted by using simple statistical tools like percentages, averages and measures

of dispersion. Alternatively the collected data may be analyzed, the data analysis is

carried out. The data are first edited, coded and tabulated for analyzing by using

diagrams, graphs, charts, pictures etc. Data analysis is the process of planning the

data in an ordered form, combining them with the existing information and

extracting from them. Interpretation is the process of drawing conclusions from the

gathered data in the study. In this research the researcher has analyzed the data

using percentages and graphs.

DATA ANALYSIS TOOLS USED:

In this research the data analysis tools used are percentages and graphs. The

various attributes were analyzed separately and the importance to each was

calculated on the basis of the percentage. The rank having the maximum

percentage was taken to be preferred importance to the particular attribute. After

looking at each attribute separately, all the attributes were considered together to

develop a map on the most preferred rank for all the attributes.

TABLE 1

AGE OF RESPONDENTS



68

SL.NO AGE IN YEARS NUMBER OF

RESPONDENTS

PERCENTAGE OF

RESPONDENTS

1. 19 – 28 24 48 %

2. 29 – 38 13 26 %

3. 39 – 48 6 12 %4. 49 – 58 6 12 %

5. 59 – 68 0 0 %

6. 69 – 78 1 2 %

TOTAL 50 100 %

SOURCE :- SURVEY DATA

INFERENCE: The above table classified the respondents according to their age

group. The majority of the respondents belong to the age group 19 to 28 years with

48% and the second age group is 29 to 38 years with 26%, followed by 39 to 48

years and 49 to 58 years with 12% each.

GRAPH 1

AGE OF RESPONDENTS



68

TABLE 2

DIFFERENCIATION OF THE RESPONDENTS INTO MALE AND FEMALE

SOURCE: - SURVEY DATA

TYPES OF

RESPONDENTS

NUMBER OF

RESPONDENTS

PERCENTAGE OF

RESPONDENTS

MALE RESPONDENTS 34 68%

FEMALERESPONDENTS

16 32%

TOTAL 50 100 %



68

INFERENCE: This table helps us to understand that there are more number of male

consumers with 68% market share than the female consumers with 32% Market

share.

GRAPH 2

DIFFERENCIATION OF THE RESPONDENTS INTO MALE AND FEMALE



68

TABLE 3

DIFFERENCIATION OF RESPONDENTS BASED ON THEIR OCCUPATION

SL.NO OCCUPATION NUMBER OF

RESPONDENTS

PERCENTAGE

OF

RESPONDENTS

1. STUDENTS 2 4 %

2. GOVERNMENT EMPLOYEES 20 40 %

3. PRIVATE EMPLOYEES 24 48 %

4. HOUSE WIVES 2 4 %5. RETIRED PERSONS 2 4 %

TOTAL 50 100 %

SOURCE :- SURVEY DATAINFERENCE: It could be inferred that majority of consumers of life insurance

policies are private employees with 48% and Government employees with 40%,

followed by students, house wives and retired persons with 4 % each.

GRAPH 3



68

TABLE 4

TABLE SHOWING ATTRIBUTES FROM RESPONDENTS

SL.NO ATTRIBUTE RESPONDENTS RANK

1. RETURN ON

INVESTMENT

17 1

2. COMPANY

REPUTATION

13 2

3. PREMIUM

OUTFLOW

10 3

4. SERVICE

QUALITY

7 4

5. PRODUCT

QUALITY

3 5


INFERENCE: This table shows the strengths and weaknesses of the company,

and what are the important criteria or attributes on which decision making is done.

From this table we can infer that consumers give more importance for Return on

investment, secondly they prefer company reputation, and then premium outflow

followed by service quality and product quality.



68

GRAPH -4



68

TABLE 5

VALUE OF RESPONDENTS LIFE INSURANCE POLICY

SOURCE :- SURVEY DATAINFERENCE: It can be inferred that majority of consumers buy the life insurance

policy which costs more than Rs. 1,00,000 followed by Rs. 50,000 to Rs.1,00,000,

followed by Rs. 25,000 to Rs. 50,000.

GRAPH-5

AMOUNT NUMBER OF

RESPONDENTS

PERCENTAGE OF

RESPONDENTS

1. < 10000 0 0 %

2. 10000 – 25000 5 10 %

3. 25000 – 50000 8 16 %

4. 50000-100000 15 30 %

5. > 100000 22 44 %



68

TABLE 6

RESPONDENTS PREFERENCE TO INVEST THEIR MONEY

NUMBER OF

RESPONDENTS

PERCENTAGE OF

RESPONDENTS

INSURANCECOMPANY

24 48 %

BANK 26 52 %

TOTAL 50 100 %


INFERENCE: From the table it is clear that majority of people (52%) prefer to

invest in Bank and others (48%) prefer to invest in Insurance companies.

GRAPH-6



68

TABLE 7

SATISFACTION OF RESPONDENTS WITH CURRENT LIFE INSURANCE

COMPANY

RESPONSE NUMBER OF

RESPONDENTS

PERCENTAGE OF

RESPONDENTS

YES 47 94 %

NO 3 6 %

TOTAL 50 100 %


INFERENCE: From this table it could be inferred that 94% of the consumers are

satisfied with the service and quality of products of their life insurance companies.

Only 6% of consumers are not satisfied.

GRAPH 7



68

TABLE 8

MARKET SHARE OF DIFFERENT LIFE INSURANCE COMPANIES

COMPANIES NUMBER OF

RESPONDENTS

PERCENTAGE OF

RESPONDENTS

LIC 39 78 %

TATA AIG 1 2 %

HDFC 3 6 %

ICICI 4 8 %MAX NEWYORK 1 2 %

KOTAK MAHINDRA 1 2 %

METLIFE 1 2 %

SOURCE: - SURVEY DATAINFERENCE: This table helps us to understand the market share of different life

insurance companies. LIC has a major share of 78 %, followed by ICICI Prudential

with 8% market share, followed by HDFC Standard Life with 6% market share

followed by met life with 2% market share.

GRAPH 8



68

TABLE 9

RATINGS OF THE SERVICES OFFERED BY THE RESPONDENT’S LIFEINSURANCE COMPANY

RATINGS NUMBER OF

RESPONDENTS

PERCENTAGE OF

RESPONDENTS

EXCELLENT 7 14 %

VERY GOOD 12 24 %

GOOD 20 40 %

AVERAGE 11 22 %

POOR 0 0 %

TOTAL 50 100 %

SOURCE: - SURVEY DATA

INFERENCE: From this table it could be inferred that 40% of the consumers have rated service

offered as good, 24% of them have rated them as very good, 22% of them have rated as average

and 14% of them have rated as excellent.

GRAPH 9



68

CHAPTER -5



68

FINDINGS, CONCLUSION AND SUGGESTIONS

FINDINGS

The majority of respondents belonged to the age group of 19 to 28 years

which formed 48% followed by age group of 29 to 38 years which formed

26%.

The male consumers capture the Market share with 68%, followed by the

female consumers with 32%.

The majority of the consumers of life insurance companies are private

employees with 48% and Government employees with 40%

The dominant income group having life insurance group belong to the group

of 10001 to 15,000 followed by 5,001 to 10,000.

LIC has a major market share of 78%.

The factors which influenced to select a life insurance company is the

personal factor, followed by family, friends, agents and advertisements.

The value of respondents life insurance policy costs more than 1, 00,000

followed by 50,000 to 1,00,000. Majority of the people (52%) prefer to invest in bank others (48%) prefer to

invest in insurance company.

Majority of consumers are satisfied with the service and quality of products

of their life insurance companies.

Majority of consumers (78%) would like to communicate the service offered

by life insurance companies.

Majority of consumers (58%) are aware about 5 to 7 life insurance

companies.

LIC stands first followed by ICICI prudential, followed by HDFC Standard

Life.



68

CONCLUSION

An Insurance policy is an investment oriented plan. As compared to other investment plans, the investment portfolio of the Insurance Policy functions like a

mutual fund and other investment. It is invested in a portfolio of debt and equity

instruments, in conformity with the announced investment policy. Hence it grows

or erodes in line with the performance of that portfolio.

From this study it reveals that the consumer’s attitude towards Insurance

Policy and Insurance Company changed a lot. A 5 years before the consumers and

the general public were not interested to take an Insurance Policy but now days

there are many options and choices in front of the customers. They are interested to

take high return policies in order to secure their lives. People are aware of all the

benefits and returns of insurance policies.

As a result of this new international and domestic companies are coming to

the Indian Market. Since there are many players in the Indian Insurance Market the

competition level is very high. So the companies are introducing new schemes.

From this it is found that The LIC is the major market share holder in the insurance

field. Even if there are many players in this field still it is an untapped market.

Only a few portion of Indian population is insured.



68

RECOMMENDATIONS AND SUGGESTIONS

With regard to insurance companies, consumers respond at different rates,

depending on the consumers characteristics. Hence Insurance companies

should try to bring their new product to the attention of potential early

adopters.

Due to the intense competition in the life insurance market, the life

insurance companies have to adopt better strategies to attract more

customers.

Keeping the cost, quality and return on investment in tact is necessary in

order to tackle the competition.

Life insurance products are taken mainly by middle and higher income

group. Hence they should be regarded as maim targeted income groups. Life

insurance products which are suitable for lower income group should also

be released so that the market share increases.

Return on investment, company reputation and premium outflow are most preferred attributes that are expected by the respondents. Hence greater

focus should be given to these attributes.

Private life insurance companies should adopt effective promotional

strategies to increase the awareness level among the consumers.

Life insurance companies should ask for their consumer feedback to know

whether the consumers are really satisfied or dissatisfied with the service

and product of the companies. If they are dissatisfied, then the reasons for

dissatisfaction should be found out and should be corrected in future.



68

The LIC brand name has earned a lot of goodwill and enjoys a high brand

equity. As there is intense competition in life insurance market, LIC should

work hard to maintain its top position and offer better service and product.

The Company should give more Advisement about the product.

The Company should Target to the person whose Income Less than

Rs20000.

The Company should give more awareness in rural areas through different

ways.

The women awareness programme is necessary.

Project on Metlife Insurance[1]

Documents

Transcript of Project on Metlife Insurance[1]