Project Report on Reliance Life Insurance Comp. Ltd.

8/2/2019 Project Report on Reliance Life Insurance Comp. Ltd.

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Project Report On

RELIANCE LIFE INSURANCE

COMPANYLIMITEDSUBMMITED FOR

Partial fulfillment of the requirements of two years full time

Master of Business Management (MBA)2

CONTENTS

Preface--------------------------------------------------- (3)

Certificate------------------------------------------------ (4)Acknowledgement-------------------------------------- (5)Executive Summary------------------------------------- (6)Index----------------------------------------------------- (7)3

EXECUTIVE SUMMARY

Anil Dhirubhai Ambani Group (ADAG) announces the acquisition of

100

percent shareholding in AMP Sanmar Life Insurance Company Limited.

Reliance Life Insurance Company Limited is officially launched on

February 1, 2006. This was after obtaining the required regulatiry

approvals

from the Registrar of Companies and the Insurance Regulatory and

Development Authority. Reliance Life Insurance is the part of the

Reliance

Capital.

Reliance Life Insurance has plenty of plans on the anvil. It has

also 118branches, with strong presence in South and a bouquet of products

catering

savings protection and investment need of individuals and

corporate. The

head-office of it is at Chennai.


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The company has already added 600 employees in addition to the

1000 plus

staff of the erstwhile AMP Sanmar Life Insurance Company Limited.

Reliance Life Insurance aims to be the consumers preferred life

insurer byunderstanding and meeting his needs.

Think Bigger, Think Better!

INDEX

4

CHAPTER

NO.

SUBJECT PAGE

NO.

1 INSURANCE INDUSTRY1.1 Meaning of Insurance

1.2 Importance of Insurance

1.3 Difference between Insurance and Assurance

1.4 Principles of Insurance

1.5 History of Insurance

1.6 Time line in Insurance history

1.7 Meaning of Life Insurance

1.8 History of Life Insurance1.9 Key features of Life Insurance

1.10 Benefits of Life Insurance

1.11 Role of Life Insurance in the growth of economy

10

11

12

13

15

1719

20

24

27

28

2 INTRODUCTION TO THE COMPANY


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2.1 About Reliance Life Insurance

2.2 History

2.3 Journey so far

2.4 Role of IT at Reliance Life Insurance

2.5 Mission2.6 Core Values

2.7 Future Plans

2.8 HeadOffice

2.9 Branches

30

32

32

33

3636

37

37

38

3 PRODUCT MIX

3.1 Traditional Plans

3.2 Unit linked Plans

40

484 HUMAN RESOURCE MANAGEMENT

4.1 Recruitment

4.2 Selection

4.3 Training and Development

4.4 Career Development

4.5 Communication

4.6 Incentives

4.7 Services

4.8 Performance Appraisal

4.9 Organizational form and Structure

4.10 Department

53

53

56


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56

57

59

59

60

61

615

5 MARKETING DEPARTMENT

5.1 Distribution Channel

5.2 Promotional Programmes and Target segment

5.3 Comparative Study

63

66

71

6 RESEARCH METHODOLOGY

6.1 Objective of the study

6.2 Questionnaire

6.3 Sampling Method and Sampling Size

6.4 Limitations

6.5 Analysis of Questionnaire

6.6 SWOT Analysis

7979

80

82

83

96

7 FINANCE DEPARTMENT 99

8 CONLUSION 106

9 BIBLIOGRAPHY AND REFRENCES 108

10 APPENDIX 110

6

CHAPTER-1

INSURANCE INDUSTRY

1.1MEANING OF INSURANCE7


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Insurance may be described as a social device to reduce or

eliminate risk of

loss to life and property. Insurance is a collective bearing of

risk. Insurance

is a financial device to spread the risks and losses of few peopleamong a

large number of people, as people prefer small fixed liability

instead of big

uncertain and changing liability.

Insurance can be defined as a legal contract between two parties

whereby

one party called insurer undertakes to pay a fixed amount of money

on thehappening of a particular event, which may be certain or

uncertain. The

other party called insured pays in exchange a fixed sum known as

premium.

Insurance is desired to safeguard oneself and ones 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.

1.2 IMPORTANCE OF INSURANCE8

Insurance constitutes one of the major segments of the financial

market.

Insurance services play predominant role in the process of

financial

intermediary. Today insurance industry is one of the most growing

sectors inIndia. There is lot of potential in the Indian Insurance Industry.

There are many issues, which require study. The scope of the study

of

insurance industry of India would be very great as there are

ongoing


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developments in the industry after the opening of the sector.

The major issue right now is the hike in FDI (Foreign Direct

Investment)

limit from26% to 49%in the insurance sector. Government may in

nearfuture allow 49% FDI in Insurance. This would lead to more capital

inflow

by foreign partners.

Another major issue is the effects on LIC after the entry of

private players in

the market. Though market share of LIC has been affected, it has

improved

in terms of efficiency.There are number of other hot topics like penetration of Health

Insurance,

Rural marketing of insurance, new distribution channels, new

product

ranges, insurance brokers regulation, incentive scheme of

development

officers of LIC etc. So it offers lot of scope for studying the

insurance

industry.Right now the insurance industry has great opportunities in a

country like

India or China which huge population. Also the penetration of

insurance in9

India is very low in both life and non-life segment so there is

lot potential to

be tapped.Before starting the discussion on insurance industry and related

issues, we

have to start with the basics of insurance. So first we understand

what is

insurance?How the wordinsuranceis different from the word


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assurance?etc.

1.3 DIFFERENCE BEETWEN INSURANCEAND ASSURANCEAssurance is older in history and it was used to describe all

types ofinsurances. From 1826, the term assurance came to be used only for

the risks

covered by life insurance and the term insurance was exclusively

used to

denote the risks covered by marine, fire, etc.

The word assurance indicated certainty. In life insurance, there

is an

assurance from the insurance company to make payment under thepolicy

either on the maturity or at earlier death. On the other hand the

word

insurance was used to denote indemnity type of insurances where

the

insurance company was liable to pay only in case of the loss

damage the

property.

The insured event was bound to happen sooner or later underassurance but

the event insured against may or may not happen under insurance.10

The principle of indemnity applies to insurance

contracts(non-life) only.

The scope of the word, insurance is wider.

1.4 PRINCIPLES OF INSURANCE

An insurance contract is based on some basic principles ofinsurance.

(1) Principle of Uberrima Fides or Principle of utmost good

faith

It means maximum truth. Both the parties should disclose all

material information regarding the subject matter of insurance.

(2) Principle of indemnity


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This means that if the insured suffers a loss against which the

policy has

been made, he shall be fully indemnified only to the extent of

loss. In

other words, the insured is not entitled to make a profit on hisloss.

(3) Principle of subrogation

This means the insurer has the right to stand in the place of the

insured

after settlement of claimsin so far as the insureds right of

recovery from

an alternative source is involved. The insurer before the

settlement of the

claim may exercise the right. In other words, the insurer is

entitled to

recover from a negligent third party any loss payments made to the11

insured. The purposes of subrogation are to hold the negligent

person

responsible for the loss and prevent the insured from collecting

twice for

the same loss. The concept of Third Party Claims is based onthe same

principle.

(4) Principle of causa proxima

The cause of loss must be direct and an insured one in order to

claim of

compensation.

(5) Principle of insurable interest

The assured must have insurance interest in the life or property

insured.

Insurable interest is that interest which considerably alters the

position of

the assured in the event of loss taking place and if the event

does not take

placed, he remains in the same old position.


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1.5 HISTORY OF INSURANCE12

The concept of insurance is believed to have emerged almost 4500

years ago

in the ancient land of Babylonia where traders used to bear riskof the

carvanby giving loans, which were later repaid with interest when

the goods

arrived safely.

The concept of insurance as we know today took shape in 1688 at a

place

called LloydsCoffee House in London where risk bearers used to

meet to

transact business. This coffee house became so popular that

Lloyds became

the one of the first modern insurance companies by the end of the

eighteenth

century.

Marine insurance companies came into existence by the end of the

eighteenth century. These companies were empowered to write fire

and life

insurance as well as marine. The Great Fire of London in 1966caused huge

loss of property and life. With a view to providing fire insurance

facilities,

Dr. Nicholas Barbon set up in 1967 the first fire insurance

company known

as the Fire office.

The early history of insurance in India can be traced back to the

Vedas. TheSanskrit term Yogakshema (meaning well being), the name of

Life

Insurance Corporation of Indias corporate headquarters, is found

in the Rig


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Veda. The Aryans practiced some form of community insurance

around

1000 BC.

Life insurance in its modern form came to India from England in

1818. TheOriental Life Insurance Company was the first insurance company to

be set

up in India to help the widows of European community. The

insurance13

companies, which came into existence between 1818 and 1869,

treated

Indian lives as subnormal and charged an extra premium of 15 to 20

per

cent. The first Indian insurance company, the Bombay Mutual Life

Assurance Society, came into existence in 1870 to cover Indian

lives at

normal rates.

The Insurance Act, 1938, the first comprehensive legislation

governing both

life and non-life branches of insurance were enacted to provide

strict statecontrol over insurance business. This amended insurance Act looked

into

investments, expenditure and management of these companies.

By the mid- 1950s there were 154 Indian insurers, 16 foreign

insurers, and

75 provident societies carrying on life insurance business in

India. Insurance

business flourished and so did scams, irregularities and dubiousinvestment

practices by scores of companies. As a result the government

decided to

nationalize the life assurance business in India. The Life

Insurance


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Corporation of India (LIC) was set up in 1956. The nationalization

of life

insurance was followed by general insurance in 1972.

1.6 TIME LINE IN INSURANCE HISTORY

(MAJOR LANDMARKS)1818British introduced the life insurance to India with the14

establishment of the Oriental Life Insurance Company

. in Calcutta.

1850Non life insurance started with Triton Insurance

Company.

1870Bombay Mutual Life Assurance Society is the first India

owned life insurer.

1912The Indian Life Assurance Company Act enacted to

regulate the life insurance business.

1938The Insurance Act was enacted.

1956Nationalization took place. Government took over 245

Indian and foreign insurers and provident societies.

1972Non-life business nationalized, General Insurance

Corporation(GIC) cameinto being.

1993Malhotra committee was constituted under the

chairmanship of former RBI chief R. N. Malhotra todraw a blue print for insurance sector reforms.

1994Malhotra committee recommended reentry of private

players.15

1997IRDA (Insurance Regulatory and Development

Authority) was set up as a regulator of the insurance

market in India.

2000IRDA started giving license to private insurers. ICICI

Prudential,HDFCwere first private players to sell

insurance Policies.

2001Royal Sundaram was the first non-life private player to

sell an insurance policy.

2002Bank allowed to sell insurance plans as TPAs enter the


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scene, insurers start setting non-life claims in the

cashless mode.

1.7 MEANING OF LIFE INSURANCEThere are three parties in a life insurance transaction: the

insurer, theinsured, and the owner of the policy (policyholder), although the

owner and16

the insured are often the same person.

Another important person involved in a life insurance policy is

the

beneficiary. The beneficiary is the person or persons who will

receive the

policy proceeds upon the death of the insured.

Life insurance may be divided into two basic classesterm and

permanent.

Term life insurance provides for life insurance coverage for a

specified term of years for a specified premium. The policy does

not

accumulate cash value.

Permanent life insurance is life insurance that remains in force

untilthe policy matures, unless the owner fails to pay the premium when

due.

Whole life insurance provides for a level premium, and a cash

value

table included in the policy guaranteed by the company. The

primary

advantages of whole life are guaranteed death benefits, guaranteed

cash values, fixed and known annual premiums, and mortality andexpense charges will not reduce the cash value shown in the

policy.

Universal life insurance (UL) is a relatively new insurance

product

intended to provide permanent insurance coverage with greater


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flexibility in premium payment and the potential for a higher

internal

rate of return. A universal life policy includes a cash account.

Premiums increase the cash account.

If you want insurance protection only, and not a savings andinvestment

product, buy a term life insurance policy.17

If you want to buy a whole life, universal life, or other cash

value policy,

plan to hold it for at least 15 years.

Canceling these policies after only a few years can more than

double your

life insurance costs. Check the National Association of Insurance

Commissioners website (www.naic.org/cis) or your local library for

information on the financial soundness of insurance companies.

1.8 HISTORY OF LIFE INSURANCERisk protection has been a primary goal of humans and institutions

throughout history. Protecting against risk is what insurance is

all about.

Over 5000 years ago, in China, insurance was seen as a

preventativemeasure against piracy on the sea. Piracy, in fact, was so

prevalent, that as a

way of spreading the risk, a number of ships would carry a portion

of

another ship's cargo so that if one ship was captured, the entire

shipment

would not be lost.

In another part of the world, nearly 4,500 years ago, in theancient land of

Babylonia, traders used to bear risk of the caravan trade by

giving loans that

had to be later repaid with interest when the goods arrived

safely. In 2100


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BC, the Code of Hammurabi granted legal status to the practice. It

formalized concepts of bottomry referring to vessel bottoms

and

respondentia referring tocargo. These provided the

underpinning formarine insurance contracts. Such contracts contained three

elements: a loan

on the vessel, cargo, or freight; an interest rate; and a

surcharge to cover the

possibility of loss. In effect, ship owners were the insured and

lenders were

the underwriters.18

Life insurance came about a little later in ancient Rome, where

burial clubs

were formed to cover the funeral expenses of its members, as well

as help

survivors monetarily. With Rome's fall, around 450 A.D., most of

the

concepts of insurance were abandoned, but aspects of it did

continue through

the Middle Ages, particularly with merchant and artisan guilds.These

provided forms of member insurance covering risks like fire,

flood, theft,

disability, death, and even imprisonment.

During the feudal period, early forms of insurance ebbed with the

decline

of travel and long-distance trade. But during the 14th to 16th

centuries,transportation, commerce, and insurance would again reemerge.

Insurance in India can be traced back to the Vedas. For instance,

yogakshema, the name of Life Insurance Corporation of India's

corporate


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headquarters, is derived from the Rig Veda. The term suggests that

a form of

"community insurance" was prevalent around 1000 BC and practiced

by the

Aryans.And similar to ancient Rome, burial societies were formed in the

Buddhist

period to help families build houses, and to protect widows and

children.

Modern Insurance

Illegal almost everywhere else in Europe, life insurance in

England was

vigorously promoted in the three decades following the Glorious

Revolution

of 1688. The type of insurance we see today owes it's roots to

17th century

England. Lloyd's of London, or as they were known then, Lloyd's

Coffee19

House, was the location where merchants, ship owners and

underwriters met

to discuss and transact business deals.While serving as a means of risk-avoidance, life insurance also

appealed

strongly to the gambling instincts of England's burgeoning middle

class.

Gambling was so rampant, in fact, that when newspapers published

names of

prominent people who were seriously ill, bets were placed at

Lloyds on

their anticipated dates of death. Reacting against such practices,

79 merchant

underwriters broke away in 1769 and two years later formed a New

Lloyds


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Coffee House that became known as the real Lloyds. Making

wagers on

people's deaths ceased in 1774 when parliament forbade the

practice.

Insurance moves to AmericaThe U.S. insurance industry was built on the British model. The

year 1735

saw the birth of the first insurance company in the American

colonies in

Charleston, SC. The Presbyterian Synod of Philadelphia in 1759,

sponsored

the first life insurance corporation in America for the benefit of

ministers

and their dependents. And the first life insurance policy for the

general

public in the United States was issued, in Philadelphia, on May

22, 1761.

But it wasn't until 80 years later (after 1840), that life

insurance really took

off in a big way. The key to its success was reducing the

opposition from

religious groups.In 1835, the infamous New York fire drew people's attention to the

need to

provide for sudden and large losses. Two years later,

Massachusetts became

the first state to require companies by law to maintain such

reserves. The20

great Chicago fire of 1871 further emphasized how fires can cause

huge

losses in densely populated modern cities. The practice of

reinsurance,

wherein the risks are spread among several companies, was devised

specifically for such situations.


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With the creation of the automobile, public liability insurance,

which first

made its appearance in the 1880s, gained importance and

acceptance?

More advancement was made to insurance during the process ofindustrialization. In 1897, the British government passed the

Workmen's

Compensation Act, which made it mandatory for a company to insure

its

employees against industrial accidents.

During the 19th century, many societies were founded to insure the

life and

health of their members, while fraternal orders provided low-cost,membersonly

insurance. Even today, such fraternal orders continue to provide

insurance coverage to members, as do most labor organizations.

Many

employers sponsor group insurance policies for their employees,

providing

not just life insurance, but sickness and accident benefits and

old-age

pensions. Employees contribute a certain percentage of the premiumfor

these policies.

Final Thoughts

Even though the American insurance industry was greatly influenced

by

Britain, the US market developed somewhat differently from that of

the

United Kingdom. Contributing to that was America's size; landdiversity

and the overwhelming desire to be independent. As America moved

from a

colonial outpost to an independent force, from a farming country

to an


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21

industrial nation, the insurance business developed from a small

number of

companies to a large industry.

Insurance became more sophisticated, offering new types ofcoverage and

diversified services for an increasingly complex country.

1.9 KEY FEATURES OF LIFE INSURANCE1) Nomination: -

When one makes a nomination, as the policyholder you continue to

be the

owner of the policy and the nominee does not have any right under

the

policy so long as you are alive. The nominee has only the right to

receive the

policy monies in case of your death within the term of the policy.

2) Assignment: -

If your intention is that your policy monies should go only to a

particular

person, you need to assign the policy in favor of that person.

3) Death Benefit: -

The primary feature of a life insurance policy is the deathbenefit it provides.

Permanent policies provide a death benefit that is guaranteed for

the life of

the insured, provided the premiums have been paid and the policy

has not

been surrendered.

4) Cash Value: -22

The cash value of a permanent life insurance policy is accumulatedthroughout the life of the policy. It equals the amount a policy

owner would

receive, after any applicable surrender charges, if the policy

were

surrendered before the insured's death.


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5) Dividends: -

Many life insurance companies issue life insurance policies that

entitle the

policy owner to share in the company's divisible surplus.

6) Paid-Up Additions: -Dividends paid to a policy owner of a participating policy can be

used in

numerous ways, one of which is toward the purchase of additional

coverage,

called paid-up additions.

7) Policy Loans: -

Some life insurance policies allow a policy owner to apply for a

loan against

the value of their policy. Either a fixed or variable rate of

interest is charged.

This feature allows the policy owner an easily accessible loan in

times of

need or opportunity.

8) Conversion from Term to Permanent: -

When in need of temporary protection, individuals often purchase

term life

insurance. If one owns a term policy, sometimes a provision isavailable that

will allow her to convert her policy to a permanent one without

providing

additional proof of insurability.

9) Disability Waiver of Premium23

Waiver of Premium is an option or benefit that can be attached to

a life

insurance policy at an additional cost. It guarantees thatcoverage will stay in

force and continue to grow

1.10 BENEFITS OF LIFE INSURANCE1) Risk cover: -


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Life Insurance contracts allow an individual to have a risk cover

against any

unfortunate event of the future.

2) Tax Deduction: -

Under section 80C of the Income Tax Act of 1961 one can get taxdeduction

on premiums up to one lakh rupees. Life Insurance policies thus

decrease the

total taxable income of an individual.24

3) Loans: -

An individual can easily access loans from different financial

institutions by

pledging his insurance policies.4) Retirement Planning: -

What had provided protection against the financial consequences of

premature death may now be used to help them enjoy their

retirement years.

Moreover the cash value can be used as an additional income in the

old age.

5) Educational Needs: -

Similar to retirement planning the cash values that flow from ones

life

insurance schemes can be utilized for educational needs of the

insurer or his

children.

1.11 ROLE OF LIFE INSURANCE IN THEGROWTH OF THE ECONOMYThe Life Insurance Industry has an enviable track record among

public

sector units. It has a Consistent profit and dividend payingrecord

accompanied by a steady growth in its financial resources. Through

investments in the Government sector and socially- oriented

sectors the


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Industry has contributed immensely to the nation's development.

The

industry is recognized as one of the largest financial

Institutions in the

country. The ventures initiated by the industry in the areas ofMutual Fund,25

Housing Finance has done exceedingly well in recent years. To

protect the

country's foreign exchange reserves, the reinsurance arrangement

are so

organized that maximum retention is made possible within the

country while

at the same time protecting interests of the policy holders.

CHAPTER-2

INTRODUCTION TO THE COMPANY

26

2.1 ABOUT RELIANCE LIFE INSURANCEReliance Life Insurance Company Limited is a part of Reliance

Capital Ltd.

of the Reliance - Anil 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 terms27

of net worth. Reliance Capital has interests in asset management

and mutual

funds, stock broking, life and general insurance, proprietaryinvestments,

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 45-

IA of


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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

thisindustry and offer fully integrated financial services.

Reliance Life Insurance is another steps forward for Reliance

Capital

Limited to offer need based Life Insurance solutions to

individuals and

Corporate.

2.2 HISTORY

Reliance Capital Limited announced the launch of its lifeinsurance business

on February 1, 2006. This was after obtaining the required

regulatory

approvals from the Registrar Of Companies and the Insurance

Regulatory

and Development Authority.

It was in August 2005 that the ball was set rolling when Reliance

Capital

Limited, the financial arm of RelianceAnil Dhirubhai AmbaniGroup28

(ADAG)announced the requisition of 100% shareholding in AMP

Sanmar

Life Insurance Company Limited; and the formal transfer of shares

took

place in October 2005. The company will issue all policy contracts

under theReliance Life Insurance Company limited name. All the existing

policy

contracts also stand transferred to the Reliance Life Insurance

entity with all

the original contractual terms and commitments intact.


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2.3 JOURNEY SO FAR2005

August:Anil Dhirubhai Ambani Group (ADAG) announces the

acquisition of 100 percent shareholding in AMP Sanmar Life

InsuranceCo Ltd.

2006

January 17:Mr. Nandgopal participates in a one-day conference on

Optimising growth opportunities through Distribution Matrix:29

Emerging Bancassurance organized by the Asia Insurance Post at

the

Taj President, Mumbai.

February 1:Rliance Life Insurance officially launched.

February 16, 17, 18:Strategy meet at the Reliance Management

Institute. Amongst those who participate are the CEO, COO,

Functional

Heads, Regional Managers and Regional Sales Managers.

February 26:A Puja held at the Churchgate office situated in

Express

Building, 4thFloor, 14 E Road, Mumbai.

March 1:Churchgate office inaugurated by Mr. AmitabhJhunjhunwala, Mr. Amitabh Chaturvedi and Mr. Nandgopal.

March 6:Shifting to the new premises at Churchgate commences.

March 7:The new office at Chennai, at the Trapezium, First Floor,

#

39, Nelson Manickam Road, inaugurated by their CEO Mr. Nandgopal,

Mr. KV Srinivasan and Mr. Sureshbabu also graced the occasion.

2.4 ROLE OF IT AT RELIANCE LIFEINSURANCE1) World Class Data Centre: -

They plan to establish a Primary Data Centre at Navi Mumbai

(Dhirubhai Ambani Knowledge City) which will cater to their

company

needs across India, with fail-over capability to their Chennai

Data Centre


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30

within the same business day in occurance if an incident or

Disaster

happens.

2) Inter Office Connectivity: -All their Branch / Area and Regional offices will be

interconnected to their Data Centre with a 24x7 access to Core

Applications like Lotus Mail, Life-Asia and Internet Applications.

This

will enable their associates to work faster and better with high-

speed

Internet connectivity and also ensure faster Turn Around Time for

their

customers.

3) Customer Care Centre: -

They will host a centralized Customer Care Centre at

Dhirubhai Ambani Knowledge City at Navi Mumbai, which cater

services to internal and external queries and complications. A

customer

Relationship Management Tool (CRM) and Lead Management System

(LMS) are in progress.

4) Web Portal: -This portal will be an interface between both internal employees

and their external users. Some of the functions included in their

portal are

Policy Tracking Systems, Corporate News, Quality Checking System,

Under Writing Medical System, and Agent Management System etc.

5) R World: -31

Reliance Mobile R-World will provide online information about

their Company, Products, and Policy Services to their existingcustomers,

Agents/Advisors and Lead Generators.

6) SMS Alerts: -

SMS Alerts will be provided to their Sales Managers about the


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latest happenings like Contests and Campaigns, Employee Alerts

will

include Company News and Welcome/Birthday/Anniversary message

etc. Customer Alerts will include Welcome/Birthday/Anniversary

message, Policy Dispatch Details, Policy Servicing SMS likePremium

Receipt and Renewal Premium reminders etc.

7) Life and Group Asia: -

Single Life and Group Life details will be captured and managed

by Life and Group Asia. A common middleware between these

applications will enable Group Life Customers to view their

individual

Single Life Insurance Plan details taken with Reliance Life

Insurance and

vice versa.

8) Advisor Lounge: -

It is a dedicated area for Reliance Life Insurance

Agents/Advisors in all the branches across India. This Lounge will

be

equipped with desktops and printers with Internet connectivity,

where

their Advisors can bring in the prospects and can have discussionsacross

the table and they can create and print quotes. The

Agents/Advisors can

use this area to service their existing customers.

9) Document Management System: -32

DMS will enable both policy issuance and contract servicing

through an automated workflow, which yields a faster Turn around

Time

to both internal and external users. This application will enable

them to

have a paperless office and thus mitigate the risk of losing vital

records/papers.

10) Wireless Data Access: -


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This will enable identified Top Sales Managers and Top Advisors

to access real time data for both LMS and CRM on the fly through

Handheld

PDA device.

11) SAPERP Modules: -SAP (Finance and HR Modules), will automate the Expense,

Travel and Leave Management Systems.

2.5 MISSIONThe mission of Reliance Life Insurance Company Limited is to be

the best in

every sphere- business results, customer care and employee focus.

The aim

of the company is to Think Bigger and Think Better.

2.6 CORE VALUESReliance Life Insurance Company Limited has some core values which

are

listed as follows:33

1) Result Oriented

2) Performance Driven

3) Customer Focused

4) Learning and Development Oriented5) Employee Centric

6) Informal and Fun

2.7 FUTURE PLANS

Forty-four new branches to be opened across the country in the

coming months; and a pan India presence with 162 branches in the

coming year.

A state-of-the-art customer care centre will provide continuous,

responsive services to the caller and promptly address queries,

collate

feedback and suggestions from the caller, who may be both

prospective and existing clientele and from channel partners in

Chennai and Mumbai.

It will be launching additional products aimed at providing

unparalleled service to its valued clientele.


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2.8 HEAD OFFICE34

Reliance Life Insurance Company Limited,

The Trapezium,

39, First Floor,Nelson Manickam Road,

Chennai600 029.

2.9 BRANCHESThey have so many branches and substations in the India. They have

around

160 branches in the India. And they have planned to open more

branches

across the country in the coming months.35

CHAPTER3

PRODUCT MIX

36

3.1 TRADITIONAL PLAN:-Life insurance products are designed to suit the requirements

of customers. Fundamentally the product provide for:

Risk cover

Investment

Health cover37

In every product, to a certain degree, risk cover is imperative

for it to fall under the category of insurance. Based on the

coverage of the

product, the premiums are calculated and the customer pays

accordingly. In

order to suggest the right product, it is essential for an agentto understand

the requirements of the customer well.

Reliance Life Insurance Company Limited has offered 9

traditional plans to the customers, which are listed as follows:

1) Reliance Term Plan


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2) Reliance Whole Life Plan

3) Reliance Child Plan

4) Reliance Endowment Plan

5) Reliance Special Endowment Plan

6) Reliance Cash Flow Plan7) Reliance Credit Guardian Plan

8) Reliance Special Credit Guardian Plan

Each of the above traditional plans is discussed as follows:

1) Reliance Term plan: -

This insurance policy is designed for those who only want life

cover for the

protection of their family, and do not wish to save for

themselves. It can alsobe useful to business firms that wish to provide financial

security to their

business against the sudden loss of partners or valuable manpower.

Since38

there is no saving element or bonus provision, the premium is very

low.

Hence, this is a high-risk plan with a low premium.

Features: -a) Purely a term plan

b) Entry age minimum 18 years and maximum 65 year

c) Maximum premium paying term is 30 year

d) Loan facility N.A.

e) Maturity amount = Sum assured

2) Reliance Whole Life Plan: -

This insurance policy is designed for people who do not wish to

avail of any

benefits themselves but wish to create an immediate estate to

protect their

family by availing of insurance cover on their life at a very low

cost.

Features: -

a) It is a whole life insurance policy with profits


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b) Low cost life cover

c) Maturity age is 85 year or 99 years last birthday as chosen

d) Maturity amount = Sum assured + Vested bonus

e) Tax benefit is available

393) Reliance Child Plan: -

This insurance policy is designed for people who wish to save

money for a

future time when there will be a recurring need for substantial

amounts of

money. This is especially true when it comes to paying large sums

of money

for higher education as and when your son or daughter is studying

to become

an Engineer, a Doctor or specialize in some other field, or is

perhaps

planning to go abroad.

This money is payable in equal installments over the last 4 years

of the

policy term.

Features: -

I. Minimum entry age is 20 year and maximum 60 yeara) Minimum sum assured is Rs. 25,000.

b) Minimum premium paying term is 5 year and maximum

20 year

c) Tax benefit is available

d) Maturity amount = Four equal installment of sum insured

in last four year plus vested bonus in the last year

e) Loan facility is available

4) Reliance Endowment Plan: -40

Reliance Life InsurancesReliance Endowment Plan is the key to

all your

financial needs. It is an inexpensive and easy way to protect you,

your

family or your business.


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In a nutshell this plan will keep you financially prepared for all

the special

occasions in your life - your daughters wedding, your childs

university

education or even a new office for your business - by eliminatingthe burden

that a shortage of money creates.

In the event of your untimely death, Reliance Endowment Plan will

also

assist your loved ones through this difficult time by the

financial support that

it provides.

Reliance Endowment Plan also gives you the additional benefit ofparticipating in the companys profits, which you will receive at

the end of

the policy period.

Features: -

a) Entry age minimum is 5 year and maximum 65 year

b) Maturity age minimum is 18 year and maximum 75 year

c) Minimum premium paying term is 5 year and maximum 35

year in case of regular and in case of single 15 year

41d) Minimum sum assured is Rs. 25,000 or as determined by the

minimum premium

e) Maximum sum assured is Rs. 5,00,000 (entry age below 18

years and no limit for entry age 18 and above)

f) Premium mode annual, half yearly, quarterly and monthly

(by salary deduction only)

g) Loan up to 90% of the surrender value of the policy

h) Maturity amount = Guaranteed sum assured + Reversionary

bonus

5) Reliance Special Endowment Plan: -

This insurance policy is designed for people who wish to combine

savings


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with extended security. The unique feature of this policy is that

life

protection continues for five years after you have stopped the

payment of

premium. Payment of sum assured at the end of premium paying termand

extension of life cover thereafter for the full sum assured for a

period of 5

years, are characteristics of the policy.

This plan also participates in the profits.

Features: -

a) Entry age minimum 12 year and maximum 65 year

b) Minimum sum assured is Rs. 25,000

c) Minimum premium paying term is 10 year and maximum 40

year42

d) Unique feature of this policy is that five year life protection

continues after you have stopped the payment of premium

e) Tax benefit is available

f) Under this policy bonus is compounded yearly

g) Loan facility is available

h) Maturity amount = Full sum assured before maturity date +Vested bonus at the time of maturity date

6) Reliance Cash Flow Plan: -

This insurance policy is designed for those who have a recurring

need for

reinvestment in business or look for short-term investment

channels. The

advantage of the policy is that they need not part with a sizable

amount of

money at any one time, but create, through regular premium

payments, a

periodic return of lump sums which become available for

reinvestment at


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higher returns, while providing simultaneously, substantial life

cover.

Alternatively, it can be used to meet any immediate financial

crisis in the

family like your son's college admission, your daughter'sengagement, and

renovation of your home or perhaps, a holiday abroad.

The money is payable in installments. The first installment is

paid at the end

of the 4th year and thereafter at the end of every 3rd year.

Features:-

a) Plan with profits

b) Minimum entry age is 15 year and maximum is 63 year43

c) Maximum premium paying term is 34 year

d) Loan facility is not available

e) In case of death full sum assured + accrued bonuses up to

the date of death is payable immediately

f) In case of survival up to maturity date all premium paid

g) Rider accident death and critical illness

h) Mode of payment is available

7) Reliance Credit Guardian Plan: -This insurance policy is designed for those who not only

safeguards

individuals but also families and businesses from the financial

hardship that

could arise from unfortunate and unexpected death.

Features: -

a) Loan protection against home, home improvement, two

wheelers and four wheelers

b) In case of death remaining loan amount paid immediately

c) In case of survival no benefit is available

d) Premium payment option for single and regular is available

e) Premium paying term is 2/3 of loan period and remaining

period paid by the company

8) Reliance Special Credit Guardian Plan: -


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44

This insurance policy is designed for those who not only

safeguards

individuals but also families and businesses from the financial

hardship thatcould arise from unfortunate and unexpected death, disability or

critical

illnesses.

Features: -

a) Loan protection against home, home improvement, two

wheelers and four wheelers

b) In case of death remaining loan amount paid immediately

c) In case of survival no benefit is available

d) Premium payment option for regular and single is available

e) Premium payment term is 2/3 of loan period and remaining

period paid by the company

f) Maturity amount = All the premium paid amount

g) Tax benefit is available

3.2 UNIT LINKED PLANA unit-linked policy is a life assurance policy in which the

benefits

depend on the performance of a portfolio of shares.45

Each premium paid by the insured person is split: a part is used

to

provide life assurance cover, while the balance (after the

deduction of costs,

expenses, etc.) is used to buy units in a unit trust.

In this way, a small investor can benefit from investment in a

managed

fund without making a large financial commitment. As they are

linked to the

value of shares, unit linked policies can go up or down in value.

Policyholders can surrender the policy at any time and the

surrender value is


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the selling price of the units purchased by the date of

cancellation 9less

expense). A small part of the contribution is used for providing

life cover

and the balance is invested in unit. Legal heirs are entitled tothe amount of

insurance cover and entitled units in case of death of the

insured.

Reliance Life Insurance Company Limited has also offered the two

Unit Linked Plans, which are listed as follows:

1) Reliance Market Return Plan

2) Reliance Golden Years Plan

Amongst the above plans the Reliance Market Return Plan is thelargest selling plan of the Reliance Life Insurance Company

Limited. The

above two ULIP plans are discussed as follows:

1) Reliance Market Return Plan: -

Reliance Market Return Fund is the unit-linked product that helps

you invest

in the financial markets in a combination of investment

instruments of your

46

choice. You can enjoy the returns from the markets without the

trouble of

monitoring and managing your own investment portfolio and keeping

track

of the market movements. At the same time your investment premiums

provide you with insurance cover. Reliance Market Return Fund

unit-linked

insurance plan provides you with a basket of fund options thatbalances your

return and risk exposure while providing life cover at the same

time.

Features: -

a) Minimum entry age is 30 days and maximum entry age


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is 65 year

b) Maximum policy term 40 year and minimum policy

term 5 year

c) Mode of premium as annual, quarterly, half yearly and

monthly Rs. 1000 (for salary deduction only) and Rs.2500 (standing order/credit card)

d) Top up premium minimum Rs. 2500

e) Option of investment fund

i. Capital secure 100% fixed interest securities

ii. Balanced minimum 80% fixed interest securities

and maximum 20% in equity

iii. Equity 100% equity

iv. Growth minimum 60% fixed interest securities andmaximum 40% in equity

f) Loan facility is not available

g) One switches every year free and subsequent switches

charged 1% of the amount switched47

h) Partial withdrawals per year under regular and single

premium options is 2 times

i) Lock in period till today is 3 year

j) Minimum unit account balance after each withdrawalsis Rs. 10,000

2) Reliance Golden Years Plan: -

Reliance Golden Years Plan.. The Reliance Life Insurance no-

worry stay

happyretirementplan. Reliance Golden Years Plan is a flexible

package that

provides freedom of choice in choosing the type of investment,

life cover,vesting options such as commuting and annuity options.

Contributions

provide Income tax savings as well.

Reliance Golden Years Plan, a flexible pension product is

available for all


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individuals who are between the ages of 18 and 65.

Features: -

a) Entry age minimum is 18 year and maximum 65 year

b) Minimum premium amount Rs. 10,000 and maximum

is unlimitedc) Mode of premium payment is available

d) Pension plan with risk cover and without risk cover

e) Choice of investment48

i. Capital secure fund80% in equity and 20% in

government security

ii. Balanced fund80% in government and 20%

in equity

f) No loan facility is available

g) Tax benefit is available

h) Annuity options

i. Annuity payable for life

ii. Annuity payable for 5/10/15 years certain and

thereafter with life

iii. Annuity payable for life with return of capital

on death of the annuitant

CHAPTER4HUMAN RESOURCE MANAGEMENT

49

4.1 RECRUITMENTRecruitment is the process of finding and attracting capable

applicants for

employment. The process begins when new recruits are sought and

ends

when their applications are submitted. The result is a pool ofapplicants from

which new employees are selected.50

In this company the Sales Manager, who recruits the

advisors/agents for


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selling the products of the company, does the recruitment. The

advisors

should have at least passed the S.S.C. examination. They must pass

the prerecruitment

examination, which is conducted by the Insurance Institute ofIndia, Mumbai, or any other approved examination body. After

clearing the

examination the code will be provided to them and the license will

also be

given to them, the validity the license would be 3 years. After

all these

requirements, the person will become an insurance advisor in the

company.4.2 SELECTIONSelection is the process of picking individuals (out of the pool

of job

applications) with requisite qualifications and competence to fill

job in the

organization. In simple words, it is the process of

differentiating between

applicants in order to identify these with a greater likelihood of

success in ajob.

The Branch Manager, which includes-, will conduct the process of

selection

of Sales Manager

1) Personal Interview: -

The first step of selection of Sales Manager in the

Reliance Life Insurance Company Limited is to conduct a personal

interviewof an applicant by the Branch Manager.51

2) Project 40 Interview: -

After clearing the personal interview, the project 40

interview will be taken by the Branch Manager. In this step, the

applicant


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should have to make a list of 40 and then start the business with

them.

3) Interview with Regional Head: -

After clearing the project 40 interview, the applicant

should be interviewed by the Regional Head, who will check his/herperformance.

4) Negotiation: -

After clearing the interview with Regional Head, the

negotiation will be provided to the applicant.

5) Medical Examination: -

After that, the medical check up should e made to the

applicant.

6) Selection: -

After clearing all the above steps the applicant should beappointed/selected as a Sales Manager in the company.52

Requirements of Sales Manager:-

The Sales Manager should possess the

following things-

1. They should be an M.B.A.

2. The age of them should be between 25 to 35 years.

3. They should have good communication skill.

4. They should have at least sales experience of 3 years.

5. They should have the capability to handle the team.

6. Their job profile includes recruitment, training, guiding,

motivating

and in turn getting business out of a team.

4.3 TRAINING AND DEVELOPMENT:-Training and Development is any attempt to improve current or

future

employee performance by increasing an employees ability toperform

through learning usually by changing the employees attitude or

increasing

his/her skills and knowledge. The need for training and

development is


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determined by the employees performance deficiency, computed as

follows:53

Training & Development = Standard PerformanceActual Performance

They are providing 100 hours training to their advisors, whoare newly recruited. They are also providing the product training

to their

advisors and Sales Managers, who are newly recruited. The 100

hours

training is to be conducted at Net Bios Computer Academy whereas

the

product training is to be conducted at NIS SPARTA. The NIS SPARTA

Institute has more than 150 batches and is trained over 3000

agents for most

of the private insurance companies. This institute is approved by

IDRA to

train agents/advisors.

4.4 CAREER DEVELOPMENTThey are also providing career development plans, which will

identify

potential and create avenues for growth.

4.5 COMMUNICATIONCommunication is the process through which an individual can

exchange

their beliefs, things, information, and experience to others. In

simple words,

it is the process of exchanging the information from one person to

another.

They are providing an open environment, which enabling free

interactionbetween all levels. The communication is provided in the following

manner:54

55BRANCH

BRANCH BRANCH

REGIONAL


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C M O

REGIONAL

REGIONAL

CHANNEL

HEAD

C E O

56

Explanations of the diagram:-

The communication is flow between Branch to Branch.

Within a branch, it flows between Branch Manager to Sales Managers

and

Sales Managers to Agents/Advisors, and then Branch Head to

Regional

Head, then different Regional Head to Regional Head, then Regional

Head

to Channel Head, then to Chief Marketing Officer (CMO), then toChief

Executive Officer (CEO).

4.6 INCENTIVESIncentives are monetary benefits paid to workmen in recognition of

their

outstanding performance. They are providing an aggressive reward

and

recognition plans, which are including sales incentives.

4.7 SERVICESThey are offering following certain services to their employees.

1) They are providing knowledge sharing and certification

practices.

2) They are planned team building and fun events.

3) They are creating Reliance Life Insurance family, which

includes

employees, associates and their families.

574) Reliance Life Insurance in a team building mode and is looking

for

performance driven, achievement oriented and challenge loving

performance.

4.8 PERFORMANCE APPRAISAL


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Performance appraisal is the systematic evaluation of the

individual with

respect to his/her performance on the job and his/her potential

for

development. Performance appraisal is a formal, structured systemof

measuring and evaluating an employees job related behaviors and

outcomes

to discover how and why the employee is presently performing on

the job

and how the employee can perform more effectively in the future so

that the

employee, organization and society all benefit.They are providing a balanced scorecard approach for strategy

deployment

and performance measurement, which goals and measure financial,

customer

focused, process related and employee development related

initiatives. In

addition to this, the Branch Manager should measure the

performance of the

Sales Managers at every six months and the Sales Manager shouldmeasure

the performance of the advisors/agents. If the performance is best

then

he/she will be prompted.58

4.9 ORGANIZATION FORM ANDSTRUCTURE

4.10 DEPARTMENTThey are providing following areas or departments:1) Retail Sales

2) Under Writing

3) Actuarial

4) Insurance Operations


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5) Customer Service

6) Quality and Processes

7) Human Resources

CEO

CMOChannel Head

Regional Head

Branch Head

SalesC MEOanager

Advisors/Agents

Customers59

8) Finance

CHAPTER5

MARKETING DEPARTMENT

60

5.1 DISTRIBUTION CHANNELReliance Life Insurance Company Limited is using five types of

distribution channel, which are as follows:

1) Agency: -

Independent insurance agents represent a number of companies

and can research these companies products to find the right

combination

for their clients. Independent agents & insurance producer groups

are

growing in prevalence. Although producer groups are in their

infancy,

their emergence may potentially be realignment in the distribution

of

financial services. Independent shops realized that by poolingproduction

and funding a central support office, they had increased buying

power.

The one type of distribution channel, which Reliance Life


43/70

Insurance Co. Ltd is using, is an agency. This channel works as

follows:

Branch

Managers

AdvisorsCustomers61

2) Bank Assurance: -

While a lot of bank relationships with insurance companies

have been established, life insurance sales have been slower than

one

would expect he primary bank insurance activities have been the

distribution of annuities, credit life, and direct marketing

insurance.

Banks are failing to incorporate successful sales tactics used to

sell other

financial services like investments.

Another type of distribution channel is bank assurance. This

channel is tie up with banks. In this channel the advisors using

or

targeting the bank customers to make a business with them i.e., to

sell thepolicy of the company.

3) Corporate:-

To gain a better understanding of the demand amongst

independent advisors for trust services and to gain a better feel

for how

independent advisors handle trust services, a research was

performed

with independent advisors across several broker/dealers and

custodians.

The interviews revealed that demand is greatest for living trusts

among

independent advisors, followed by demand for corporate trustee

services.

Another type of distribution channel is corporate, which are


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for employee benefits. This channel is tie up with corporate or

small

enterprises. Through these small enterprises, the advisors will

sell the

products/policy to customers of the small enterprises.62

4) Rural Benefits:-

Brokerage firms have gained much of the institutional and

personal trust business lost by the banks. These firms have

steadily

captured assets, primarily at the expense of the banks. The number

of

non-bank trust companies has increased in recent years as

independent

trust companies have emerged and more broker/dealers are

integrated

services. Insurance companies view full-service brokers as a

potentially

new distribution channel as well.

Another type of distribution channel is rural benefits. This

channel works as a dealership. In this channel, the dealers will

sell thepolicy to the target customers.

5) Web World:-

Direct sales of life insurance are growing rapidly, but many of

the traditional full-serve players seem to be letting it go.

Across all

financial services, consumers are expressing a willingness to deal

with a

variety of providers on the web. Web sites are starting to pop up

offering

consumer insurance products especially designed for distribution

over the

web.

Another type of distribution channel is web world. This channel


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is tie up with customer database. In this channel, the advisors

will sell the

policy to the target customers, which are taken from the customer

database, are listed in the website.

635.2 PROMOTIONAL PROGRAMMES &TARGET SEGMENTPromotional programmes and target segment are related to each

other.

The promotional programmes are made to motivate the

advisors/agents

and sales managers to do more business i.e., to sell the more

policies. The

Reliance Life Insurance Co. Ltd has made three promotional

schemes,

which are as follows:

1) ShubhArambh:-

This promotional scheme is detailed as follows:

SLAB (WRP) REWARD

ACHIEVERS64

30,000 Reliance Life T-Shirt50,000 Table Top Clock

75,000 Leather Bag

1,00,000 World Space Radio

1,50,000 L.G. Microwave- 19L

2,00,000 DVD/VCD/MP3 Player

3,00,000 Sony Music System

SUPER ACHIEVERS

5,00,000 LG Refrigerators GL-233

7,50,000 LG Air Conditioner 1T10,00,000 Sony Digital Camcorder

15,00,000 Trip to Dubai 3D/4N

20,00,000 Hero Honda Splender

STAR ACHIEVERS

50,00,000 Maruti Alto Std.


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75,00,000 Maruti Swift Lxi

1,00,00,000 GM Aveo 1.4LS

Login: 1stApril to 31stMay 06

Issuance till 15thJune 06

2) R.A.R.E.:-The full form of R.A.R.E. is Reliance Advisors Reward

Experience. This programs consists of

1. New Advisor Incentive Program

2. Board of Advisors65

3. Annual Discovery Series

4. Advisor Career Progression

5. RARE ClubLoyalty Program

The above programs are described as follows

1. R.A.R.E. Program New Advisor Incentives:-

Criteria

There will be two levels in the New Advisor Incentive

program

A. Launch Pad

B. Take Off

2. R.A.R.E. Program Board of Advisors:-

CriteriaThere will be two levels in the Board of Advisors program

A. Time Period

B. Parameters

3. R.A.R.E. Program Discovery Series:-

Criteria

There will be six levels in the Discovery Series program

A. Qualification period

B. Business criteria66

C. The qualification criteria will be the same for both the Global

and the National Discovery Series

D. Qualification for the Global Discovery Series

E. Qualification for the National Discovery Series

F. The top 150 will bb calculated based on WRP (Weighted Recd


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Premium)

4. R.A.R.E. Program Advisor Career Progression:-

Advisor Career Progression

A. Business Associate

B. Sales Manager5. R.A.R.E. Privilege Club:-

Levels

A. The RARE Club will have 6 different levels

B. The criteria for entry into each level will be based on

I. Business (WRP)

II. Persistency

III. Product Mix

C. The qualification period isI. Logins from 1stApr 06 to 31stMar 07

II. Issuances from 1stApr 06 to 15thApr 07

Qualification Criteria67

Level WRP (Rs) Traditional

Products

Persistency

Topaz 1,50,000 60% 80%

Pearl 5,00,000 60% 80%Sapphire 10,00,000 60% 80%

Emerald 15,00,000 50% 85%

Ruby 25,00,000 50% 85%

Diamond 50,00,000 50% 85%

3) Elite Club Scheme:-

In this scheme the advisor, who have login the regular

premium of Rs. 2, 00,000 will be eligible for the Elite Club

Membership.

5.3 COMPARATIVE STUDYPresently there are 15 Life insurance companies in the country.

There is only one public sector company LIC and the rest 14 are

private


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sector. Although LIC has been dominating the Life Insurance

business since

past few years the private players have now started to take the

momentum.

681) Major Market Players: -

Birla Sun Life Insurance Company: -

Birla Sun Life Insurance Company is a 74:26 joint venture

between Birla group and Sun Life Financial. It is a private sector

company.

The company was registered on 31/1/2001. The market share for FY

2005-

06 was 1.89%.

HDFCStandard: -HDFC standard is a 74:26 joint venture between HDFC and

Standard Life. It is a private sector company. The company was

registered

on 23/10/2000. The market share for FY 2005-06 was 2.87%.

ICICI Prudential Life Insurance: -

ICICI Prudential Life is a 74:26 joint venture between ICICI

and Prudential. It is a private sector company. The company was

registeredon 24/11/2000. The market share for FY 2005-06 was 7.35%.

Life Insurance Corporation of India (LIC): -

Life Insurance Corporation of India is a 100% government held

Public Sector Company. Being the first to be established LIC is

the

forerunner in the Life Insurance sector. The market share for FY

2005-06

was 71.44%.

Kotak Mahindra OLD Mutual: -69

Kotak Mahindra OLD Mutual is a 74:26 joint venture between

Kotak Mahindra bank and Old Mutual. It is a private sector

company. The


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company was registered on 10/1/2001. The market share for FY 2005-

06

was 1.11%.

Max New York Life: -

Max New York Life is a 74:26 joint venture between J & Bank,Pallonji & Co and MetLife. It is a private sector company. The

company was

registered on 6/8/2001. The market share for FY 2005-06 was 1.23%.

Aviva Life Insurance India: -

Aviva Life insurance is a 74:26 joint venture between Aviva and

Dabur. It is a private sector company. The company was registered

on

14/5/2002. The market share for FY 2005-06 was 1.14%.

ING Vysya Life insurance: -

ING Vysya Life Insurance is joint venture between Exide

(50%), Gujarat Cements (14.87%), Enam (9.13%) and ING (26 %). It

is a

private sector company. The company was registered on 2/8/2001.

The

market share for FY 2005-06 is 0.79%.

Met Life India: -

70Met Life India is a 74:26 joint venture between 74:26 JV

between J & Bank, Pallonji & Co and MetLife. It is a private

sector

company. The company was registered on 6/8/2001. The market share

for

FY 2005-06 was 0.40%.

Bajaj Allianz Life Insurance Co.: -

Bajaj Allianz Life Insurance Company is a 74: 26 Joint

venture between Bajaj Auto limited and Allianz AIG. The companywas

registered on 3/8/2001. The market share for FY 2005-06 was 7.56%.

SBI Life Insurance Company Ltd: -

SBI Life Insurance Company is a 74: 26 Joint venture between


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SBI and Cardiff S.A. The company was registered on 31/3/2001.It is

a

private sector company. The market share for FY 2005-06 was 2.31%.

The TATA AIG Group: -

TATA AIG group is a 74:26 JV between Tata Group and AIG. Itbelongs to the private sector. The company was registered on

12/2/2001. The

market share for FY 2005-06 was 1.29%.

Sahara India Life Insurance Company Ltd.: -71

First Wholly Indian Owned Private Life Insurance Company.

The Company commenced operations from 30th October 2004. The

market

share for FY 2005-06 was 0.06 %.Shriram life insurance company Ltd: -

Shriram Life is a recent entrant into the life insurance sector

It is a 74:26 joint venture between the Shriram group through its

Shriram

Financial Holdings and Sanlam Life Insurance Limited, South

Africa. The

company expects to start operations soon.

2) Market Share: -Sr. No Insurer Market Share (%)

1 LIC 71.44

2 Bajaj Allianz 7.56

3 ICICI Prudential 7.35

4 HDFC Standard 2.8772

5 SBI Life 2.31

6 Birla SunLife 1.89

7 Tata AIG 1.298 Max New York 1.23

9 Aviva 1.14

10 Kotak Mahindra OLD Mutual 1.11

11 ING Vysya 0.79

12 Reliance Life 0.54


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13 MetLife 0.4

14 Sahara Life 0.06

15 Shriram Life 0.03

Now lets depict the market share of these players on diagram

73Market Share(%)1LIC2 Bajaj A llianz3 ICICI Prudential4 HDFC Standard5 SBI Life6 Birla SunLife7 Tata AIG8 M ax New York9 Aviva10 Kotak M ahindra OLDMutual11ING Vysya12 Reliance Life13 M etLife14 Sahara Life15 Shriram Life

Here we can see from the diagram that LIC is the market leader and

it

commands the major part of the total life insurance market. Its

market share

was approximately 98% before 2000 but after the entry of private

players it

has significantly decreased.

Among private players Bajaj Allianz stands first. It has the

market share ofapproximately 7.56% in the total market and it constitutes 40% of

the market

share among private players.

HDFC Standard comes third. SBI Life insurance Company Limited

comes

fourth. ICICI Prudential is also one of the fastest growing life

insurance

companies in India.

Rest of the players has market share below 2%.74

3) Capital Fund: -

Capital Fund of Private Companies

( Rs in Crore )

ICICI Prudential 375


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Max New York 250

HDFC Standard 218

Bajaj Allianz 200

Tata AIG 183

Birla Sun Life 180AVIVA 155

OM Kotak 153

Reliance Life 126

SBI Life 125

Met Life 110

ING Vysya 11075

CHAPTER

6RESEARCH METHODOLOGY

76

6.1 OBJECTIVES OF STUDY1) To get some good market exposure by dealing with the prospects

face to face.

2) To improve our ability to sell a financial product like life

insurance.77

3) To know the perception of the consumer about life insurance.

4) To get a deep knowledge of the financial product like

insurance.

5) To get some information about the market share of Reliance Life

Insurance as compared to the giants like LIC and to know the

standing of the company in the market.

6.2 QUESTIONNAIREIt is most common instrument whether administered in person

by phone or online questionnaires are very flexible. The form ofeach

question is also important. Closed end question include all the

possible

answers and subjects matters choices among them.

I have used open-end questions so that customers can write


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answer in their own words.

I have also used closed-end questions, which provide

answers that are easier to interpret and tabulate. I have taken

care in the

wording and ordering of questions. I have used simple, direct,unbiased

wording questions, which are arranged in a logical order. I have

asked

personal questions at last so that respondent does not become

defensive.78

Questionnaire of the customer

I have made questionnaire consisting seventeen questions to

get customers view about life insurance. I have asked personal

questions

at last so that they do not become defensive. I have tried to know

their

performance i.e. whether they want to invest, where thy want to

invest,

up to what amount and since when.

6.3 SAMPLING METHOD AND SAMPLE SIZE

Introduction:-Any organization whether big or small, private or public need

different types of information are to know its popularity. I have

gathered

secondary data and primary data and collected information from the

combination of these two data.

Secondary data: -

Secondary data consist of information that already exists

somewhere,

having been collected for another purpose. I have gathered

secondary data

from website of different operators, different magazines,

newspapers and

libraries.

Primary data: -


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79

I have taken great care while collecting primary data to answer

that it is

relevant, accurate, current and unbiased. I have taken a sample of

50 people.I have visited them personally to get data.

Sample size: -

I have taken sample size of 50 respondents. Because the population

is too

large so it is difficult to survey.

6.4 LIMITATIONSI am a human hang, so there is some limitation of the human

hangs which is reflected in this research.

The following are the limitation of this research study.80

1) The sample size of 50 might not represent the perception of

whole

population, as the sample size is too small for total population

of

Ahmedabad city.

2) The opinion expressed by the respondents may be biased.

3) The attitude of the research might be biased.4) One of the most influencing and most critical limitations is

that I

am not trained for the research study and this is my first study.

I

tried hard to come at conclusion, but there is lack of expertise.

5) Another limitation is that there is lack of time. If I give

more time

then studies will be more effective.

There are some limitations of this study. But in spite of their

limitation I

worked with the enthusiasm. And I tried to give the best results

to the

research of this report.

6.5 ANALYSIS OF QUESTIONNAIRE


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Here I have formed a questionnaire to study why people go for life

insurance. What is peoples major motive behind investingin life

insurance?

Do they decide upon their own or they take guidance of an agent?

What istheir perception about Reliance Life Insurance Company Limited?81

Questions:-

There are 7 questions in the questionnaire. Out of these 7

questions, 6

questions are close ended and one question is an open ended one.

Target Population:-

I had conducted this survey among 50 people, and the target group

was a

mix of people from the society. I asked the questions to Doctors,

Professionals, Professors, Advocates, Engineers, and general

public.

Analysis:-

I have used pie charts, and some other statistical measures to

analyze the

questions.

Q.1 What is your main motive behind investing in life insurance?(a) Tax Benefit

(b) Savings

(c) Risk Cover

(d) Return/Yield82

There could be any motive of

people behind investing in a

life insurance policy. The main

purpose of life insurance is theRisk cover of ones life. But some people consider different

advantages of a

life insurance policy. Some people consider Tax benefit as the

main


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advantage of life insurance. Some believe that life insurance is

an

investment so they tend to invest in life insurance. While some

people

believe that it is a compulsory saving. Now lets see what allpeople sayTAXSAVINGRISKCOVERAGERETURN/YIELD

MOTIVE NO.TAX 20SAVING 5RISK COVERAGE 23RETURN/YIELD 2TOTAL 50

83

Here we can see that majority of the people tend to invest in life

insurance

for the risk coverage. The next preferred option is Tax Saving. We

founded

from the discussion with public and some experts that those people

with a

low income tend to invest in life insurance to gain tax benefit.

Saving motive constitutes very small part of the total sample.

Return comes

last.

But this is the general conclusion of 50 people. If we take a

larger sample,

we can get a different result.

As the private players have launched ULIPs, more and more people

areturning towards these products so the Investment motive has been

gaining

command. Also the number of those people who wish to invest for

return is

also increasing.


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According to a life insurance expert (Vinod Thakkar ), life

insurance is for

protection first then for Savings and Tax benefits all those

things.

Q.2 Rank the above motives according to your preferenceMOTIVE OF INVESTMENT

TAX BENEFIT SAVINGS RISK COVER RETURN/YIELD

Preference

1 21 3 24 12 19 11 16 43 8 25 7 104 2 11 3 35

84

0 510

152025303540Preference1234TAX BENEFIT

SAVINGSRISK COVERRETURN/YIELD

We can see from the table and the graph that the number one motive

of

people about investing in life insurance is risk coverage, which

is the main

theme of life insurance followed by Tax benefit. The third

position is of

saving and fourth is Return. This shows that still people considerother

financial tools more viable for return and life insurance is for

Tax benefit

and risk cover.

Q.3 How do you decide about investing in life insurance?


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(a) On my own

(b) family decision

(c) Employer decides

(d) as per the guidance of agent

This is a very crucial question as most of the people are not muchfamiliar

about different life insurance plans offered by different life

insurance85

companies so people take help of the life insurance agent and as

he guides

understanding the needs of the individual, people would invest.

Here one hazardous factor is the moral hazard. People tend to

invest in life

insurance plans to maintain relations though they are not in need

of life

insurance.

Also sometimes it depends upon the convincing power of the agent.ON MY OWNFAMILYDECISIONEMPLOYERDECIDES

AGENTGUIDANCE

Here we can see that majority people (58%) decides on their about

investing

in life insurance. 28% persons decides as per the guidance of the

agent.

SOURCE NO.ON MY OWN 29FAMILY DECISION 7

EMPLOYER DECIDES 0AGENT GUIDANCE 14TOTAL 50

86

There is no contribution of employers in the decision of ones

investment in


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life insurance. 14% people invest in life insurance as per the

family decision.

Q.4. Which life insurance policy would you prefer to buy?

(a) Term Assurance

(b) Whole Life(c) Endowment

(d) Combination of Whole Life and Endowment

(e) Unit Linked

This is another crucial question as there are number of products

offered by

life insurance companies. The products range from pure Term

Assurance

Plans to Unit Linked Insurance Plans, which are relatively new

entrant in the

market.

We have already explained all these policies ahead.

Now lets find out what people have to say:

Type of policy N0.Term Assurance 9Whole Life 9Endowment 7

Combined 19ULIPs 6TOTAL 50

87TermAssuranceWhole LifeEndowmentCombinedULIPs

As it is evident from the chart and the table 38% people prefer

combination

of Whole Life and Endowment product. It gives people double

advantage.

The person would get some amount at the end of the stipulated

period; for


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instance 20 years, and after that period the risk cover continues

and the rest

of the amount would be paid when the person dies.

Q.5 Would you prefer Reliance Life Insurance or LIC for buying the

life insurance policy?(a) Reliance Life Insurance

(b) LIC

This is the most important question as it reflects the scope of

the study. It is

the main theme of this questionnaire.88

Prior to 2000 LIC was the only player in the life insurance market

and it had

the total market. So people had to go to LIC for buying life

insurance policy.

But after the entry of private players in 2000, some people have

also turned

to private life insurers.

Reliance Life Insurance Company Limited is newly launched company.

So it

has fewer customers as compared to LIC. But the ULIP plans are

sold moreof Reliance life insurance as compared to LIC in todays

environment.

Now lets see what people say:Reliance LifeInsuranceLIC

As evident from the chart that 30% of people would prefer Reliance

Life

Insurance while 70% would prefer LIC.

Particulars No.

Reliance Life Insurance 15LIC 35TOTAL 50

89

Personal Details: -


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1) Age

(a) 18 to 30

(b) 31 to 50

(c) 51 to 65

Age No.18 to 30 5

31 to 50 30

51 to 65 15

TOTAL 509018 to 3031 to 5051 to 65

As evident from the chart that I have taken a sample of 50. Out of

which 10% people are aged between 18 to 30, 60% people are agedbetween

31 to 50, and remaining 30% people are aged between 51 to 65.

2) Occupation

(a) Service

(b) Business

(c) Profession

(d) Housewife

(e) RetiredOccupation No.91

Service 5

Business 15

Profession 10

Housewife 5

Retired 15

TOTAL 50

ServiceBusinessProfessionHousewifeRetired

As the evident from the chart that out of 50 respondents 10% are

of service

men, 30% are of business men, 20% are of professions, 10% are of


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housewives and remaining 30% are of retired.

3) Income

(a) 50,000 to 1,00,000

(b) 1,00,000 to 5,00,000

(c) More than 5,00,0009250,000 to1,00,0001,00,000 to5,00,000More than5,00,000

As the evident from the chart out of 50 respondents 20% are

earning

annually between 50,000 to 1,00,000, 50% are earning between

1,00,000 to5,00,000 and 30% are earning more than 5,00,000.

4) Family members

(a) 2

(b) 3

(c) 4

(d) More than 4

Income (Per Annum) No.

50,000 to 1,00,000 101,00,000 to 5,00,000 25

More than 5,00,000 15

TOTAL 5093

Family Members No.

2 5

3 15

4 20

More than 4 10TOTAL 50234More than 4

As the evident from the chart out of 50 respondents 10% have 2

family


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members, 30% have 3 family members, 40% have 4 family members and

remaining 20% have more than 4 family members.

6.6 SWOT ANALYSISSWOT analysis is the analysis of the internal and external

factors, whichhave impact on the survival of any organization. Now lets make

SWOT

analysis for reliance Life Insurance Company Limited.94

STRENGTHS:

1) Reliance Life Insurance Company Limited is the part of the

Reliance Capital.

2) The brand name is enough to sell the products easily.

3) Private placement of Rs. 10,000 crs worth of securities with

RBI

by the government. Led to an improvement in market securities.

4) Strong liquidity from FII was the major reason for the up move.

5) Range of products

6) Reliance has a long and strong history of solvency, financial

stability.

WEAKNESSES:

1) Newly established company, so people seems it risky.2) Lack of staff.95

3) Lack of advertisement, so most of the customers are not aware

of the Reliance Life Insurance.

OPPORTUNITY:

1) There is a vast untapped market in India. The life insurance

penetration in India is approximately 2.5%. So it has large

potential.

2) Intention of traditional products is to encourage long term,

regular and disciplined savings to systematically build up a

target fund.

3) The average insurance premium being collected by the

company has been growing exponentially year on year.

8/2/2019 Project Report on Reliance Life Insurance Comp.

Project Report on Reliance Life Insurance Comp. Ltd.

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