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INTRODUCTION
Introduction to Insurance: -
Every asset has a value for its owner and also for those who
are benefited with the existence of that asset. Insurance is
concerned with the protection of economic value of assets.
Every asset has normally an expected lifetime. During this
period, it is expected to perform and provide income/comfort
to the owner. The owner, being aware of this, plans the
things in such a way that by the time the expected lifetime
of the asset expires; he is ready with the funds required for
its replacement. In this way, he ensures that the value or
income from the asset is not lost. Well, this appears to be a
fine arrangement provided the asset completes its expected
lifetime!
All assets carry the risk of being destroyed or damaged. But
all assets may not necessarily get destroyed or damaged.
Only in a few instances, the probability turns out to be true
and the asset gets actually lost or destroyed by accident or
some other unfortunate event before the completion of its
expected lifetime. The owner and those deriving benefits
from the asset will suffer because the arrangement to make
available its substitute is not yet ready.
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Insurance is helpful in mitigating such adverse
consequences. To sum up, assets are insured, as they are
likely to be lost or made non-functional through an
accidental occurrence.
Insurance does not protect the assets. This means that
insurance cannot prevent loss to the assets due to perils. Nor
can insurance avoid the occurrence of the perils. It only
compensates, may not be fully, the economic or financial
loss resulting to the asset from such damage or destruction.
History of Insurance: -
The beginning of insurance business is traced to the city ofLondon. It started with the marine business. Marine traders,
who used to gather at Lloyds coffee house in London,
agreed to share losses to goods during transportation by
ship. Marine related losses included:-
Loss of ship by sinking due to bad weather in high
seas.
Goods in transit by ship robbed by sea pirates.
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Loss of or damage to the goods in transit by ship
due to bad weather in high seas. The first
insurance policy was issued in England in 1583.
Life Insurance in India: -
In India, insurance started with life Insurance. It was in the
early 19th Century when the Britishers on their postings in
India felt the need of life insurance cover.
It started with English Companies like... The European and
the Albert. The First Indian insurance company was the
Bombay Mutual Assurance Society Ltd., formed in 1870.
In the wake of the Swadeshi Movement in India in the early
1900s, quite a good number of Indian companies were
formed in various parts of the country to transact insurance
business. To name a few:: Hindustan Co-operative and
National Insurance in Kolkata; United India in Chennai;
Bombay Life, New India and Jupiter in Mumbai and
Lakshmi Insurance in New Delhi.
Nationalization of Life Insurance in India:
-
In 1956, life insurance business was nationalized and LIC of
India came into being on 1.9.1956. The government took
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over the business of 245 companies (including 75 provident
fund societies) who were transacting life insurance business
at that time. Thereafter, LIC got the exclusive privilege to
transact life insurance business in India
Purpose and Need for Insurance: -
Assets are likely to be destroyed or made non-
functional due to accidental occurrences called perils.
Assets can, therefore, be insured. A few examples of
perils are: fire, floods, breakdowns, lightning,
earthquake etc. Perils are the events. Risks are the
consequential losses or damages.
Possibility of damage to asset caused by any peril is the
risk that asset is exposed to.
Risk means uncertainty or unpredictability about future
loss or damage, which may or may not happen. This
refers to the losses, which may happen suddenly and
unexpectedly.
We can say that a human life is also an income-
generating asset.
Human life may be lost due to unexpected early death
or become non-functional following sickness or
disabilities cause by accidents.
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If this happens by the time one is on the verge of
retirement when his income is about to cease, he might
have made alternative arrangements to meet his
needs.
Yr: 2000-2001:( From 2nd April '2000 to 31st December'2001)
Insurance Industry in the year 2000-2001 had 16 new entrants, namely:
Life Insurers:
S.No. Registration
Number
Date of
Reg.
Name of the Company
1 101 23.10.2000 HDFC Standard Life Insurance
Company Ltd.
2 104 15.11.2000 Max New York Life Insurance Co.
Ltd.
3 105 24.11.2000 ICICI Prudential Life Insurance
Company Ltd.
4 107 10.01.2001 Kotak Mahindra Old Mutual LifeInsurance Limited
5 109 31.01.2001 Birla Sun Life Insurance Company
Ltd.
6 110 12.02.2001 Tata AIG Life Insurance Company
Ltd.
7 111 30.03.2001 SBI Life Insurance Company Limited
.
8 114 02.08.2001 ING Vysya Life Insurance Company
Private Limited
9 116 03.08.2001 Bajaj Allianz Life Insurance
Company Limited
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10 117 06.08.2001 Metlife India Insurance Company
Ltd.
11 133 04.09.2007 Future Generali India Life Insurance
Company Limited
12 135 19.12.2007 IDBI Fortis Life Insurance Company
Ltd.
General Insurers :
S.No. Registration
Number
Date of
Registration
Name of the Company
1 102 23.10.2000 Royal Sundaram Alliance
Insurance Company Limited
2 103 23.10.2000 Reliance General InsuranceCompany Limited.
3 106 04.12.2000 IFFCO Tokio General Insurance
Co. Ltd
4 108 22.01.2001 TATA AIG General Insurance
Company Ltd.
5 113 02.05.2001 Bajaj Allianz General Insurance
Company Limited
6 115 03.08.2001 ICICI Lombard General
Insurance Company Limited.
7 131 03-08-2007 Apollo DKV Insurance
Company Limited
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Types of Insurance
Basically there are two types of
Insurances:
1. Non-Life Insurance 2. Life Insurance
Basically Non-Life Insurance Includes: -
Marine Insurance
Fire Insurance
Miscellaneous Insurance
Vehicles
Furniture
Building
Aircrafts
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General
Life Insurance Includes: -
Only Human Life Insurance
Human beings sickness, illness
INSURANCE REGULATORY & DEVELOPMENT
AUTHORTY (IRDA): -
Composition of Authority under IRDA Act, 1999
Insurance Regulatory and Development Authority (IRDA) is
constituted by the Government of India, which governs all the companiesthat are operating in the insurance sector in India. As per the section 4 of
IRDA Act' 1999, Insurance Regulatory and Development Authority (IRDA,
which was constituted by an act of parliament) specify the composition of
Authority
The Authority is a ten member team consisting of
(a) A Chairman;
(b) five whole-time members;(c) four part-time members,
(all appointed by the Government of India)
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MISSION OF IRDA: -
To protect the interests of the policyholders, to regulate, promote and
ensure orderly growth of the insurance industry and for matters connectedtherewith or incidental thereto.
Duties, Powers and Functions of IRDA
Section 14 of IRDA Act, 1999 lays down the duties, powers and
functions of IRDA.
(1) Subject to the provisions of this Act and any otherlaw for the time being in force, the Authority shall have theduty to regulate, promote and ensure orderly growth of theinsurance business and re-insurance business.
(2) Without prejudice to the generality of the provisionscontained in sub-section (1), the powers and functions of theAuthority shall include, -
(a) Issue to the applicant a certificate of registration,renew, modify, withdraw, suspend or cancel suchregistration;
(b) Protection of the interests of the policy holders inmatters concerning assigning of policy, nomination by policyholders, insurable interest, settlement of insurance claim,
surrender value of policy and other terms and conditions ofcontracts of insurance;
(c) Specifying requisite qualifications, code of conductand practical training for intermediary or insuranceintermediaries and agents;
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(d) Specifying the code of conduct for surveyors andloss assessors;
(e) Promoting efficiency in the conduct of insurance
business;
(f) Promoting and regulating professionalorganizations connected with the insurance and re-insurancebusiness;
(g) levying fees and other charges for carrying out thepurposes of this Act;
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COMPANY PROFILE
The HDFC Group
HDFC was incorporated in 1977 with two primary objectives -
to enhance housing stock in the country through housing
finance systematically and professionally and promote home
ownership. Today they are the largest residential mortgage
finance institution in India, with a net worth of Rs. 2,703
crores as of March 31, 2002 and an asset base of over Rs.
22,000 crores. HDFC also aim to increase the flow of
resources to the housing sector by integrating the housing
finance sector with the overall domestic financial markets.
HDFC has demonstrated the viability of market oriented
housing finance in a developing country. The World Bank
considers us a model private sector housing finance
company in developing countries and a provider of technical
assistance for new and existing institutions, in India and
abroad.
HDFC is also the largest mobilized of retail deposits in the
private sector outside the banking circle. Their deposits have
been awarded the highest safety credit rating 'FAAA' &
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MAAA by CRISIL and ICRA respectively for eight consecutive
years.
GROUP COMPANIES OF HDFC: -
HDFC Bank Limited
HDFC Securities Limited
HDFC Asset Management Company Limited
HDFC Realty Ltd.
HDFC Deposits
HDFC Standard Life Insurance
HDFC Chubb
Intelenet
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HDFC Bank Ltd.
The Housing Development Finance Corporation Limited
(HDFC) was amongst the first to receive approval from the
Reserve Bank of India (RBI) to set up a bank in the private
sector. The bank was incorporated in August 1994 in the
name of HDFC Bank Limited, with its registered office in
Mumbai. HDFC Bank commenced operations as a Scheduled
Commercial Bank in January 1995.
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Awards
Best Listed Bank of India by Business world.
Best Domestic Bank by The Asset Magazines Triple A
Country Award.
Best Local Cash Management Bank2006 in Large and
Medium segmentsAsia money Awards
Best Bank in India in 2006Euro money Awards
HDFC Asset Management Company Ltd.
HDFC Asset Management Company Ltd. (AMC) was
incorporated under the Companies Act, 1956; on December
10, 1999 and was approved to act as an Asset Management
Company for the HDFC Mutual Fund by SEBI vide its letter
dated June 30, 2000.HDFC Asset Management Company Ltd.
(AMC) is one of the most growing Mutual Fund Company of
India.
Awards
HDFC mutual fund was recently awarded the CNBC
Moddys investor service award for the best performing
fund house for the one-year category.
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Zurich also received the best performing fund house
award for the three-year category.
HDFC Chubb
Its partnership that leverages the strengths of two financial
powerhousescombining the trust and local experience of
HDFC, Indias premier financial services company, with the
120 years proven expertise of CHUBB, a global leader in non-
life insurance backed by a network of 134 offices in 31
countries.
Chubb today provides property and casualty insurance
through more than 10,000 employees in 32 countries of
North America, South America and Asia.
Intel net
Intel net is a leading BPO service provider with the focus on
providing solutions to global Organizations seeking to reduce
the cost while consistently maintaining superior level of
standards two leading global investorsHDFC and Barclays--
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provide the financial banking Intelenet needs to lead in a
global marketplace. Barclays is a venerable financial services
group headquartered in the United Kingdom, ranking
amongst the services group headquartered in the United
Kingdom, ranking among the Top 10 banks in the world
based on market capitalization.
Intelenet impacts your business by seeking to reduce
costs while consistently maintaining superior levels of
service. Our solutions extend across all strata of BPO,
technology and consulting.
Awards
Deloitte Technology Fast 50 India 2005 Program
Intelenet Global Services has been ranked first among
BPOs while standing third overall in the Technology, Media
and Telecommunications (TMT) sectors across India.
Deloitte Technology Fast 50 India 2006 Program
Intelenet Global Services has continued its ranking,
second time in a row, as amongst the top 50 fast growing
technology companies in India.
Maharashtra Information Technology Awards
2005
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Intelenet Global Services came in a close second in
the IT Enabled Services category at the Maharashtra
Information Technology Awards2005.
HDFC Deposits
D E P O S I T S
HDFC has instituted well-defined service standards for both
depositors and deposit agents. HDFC has been able to
mobilize deposits from over 10 lack depositors. Outstanding
deposits grew from Rs. 1,458 crores in March 1994 to Rs.
8,741 crores in March 2006. Much of this success can be
attributed to its strong brand image, superior services,
security and above all, the significant contribution made by
HDFCs deposit agents. HDFC has over 50,000 deposit
agents and distributes all its retail savings (deposit) products
primarily through this channel.
Awards
HDFC has been awarded AAA rating and MAAA
rating for its deposits from both CRISIL and ICRA for thetwelfth consecutive year, representing highest safety as
regards timely payment of principal and interest.
HDFC Realty Ltd.
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Realty Limited
HDFC Realty Ltd. Is a new, organized electronic marketplace
for properties, to provide the entire gamut of real estate
services, bringing together the click world and the bricks
world in a revolutionary and user-friendly way. Making
available the best guidance and the most professional,
transparent, efficient service to the real estate customer.
HDFC Securities Ltd.
S E C U R I T I E S
HDFC Securities Ltd was promoted by the HDFC Bank &
HDFC with the objective of providing the diverse customer
base of the HDFC Group and other investors, a capability to
transact in the Stock Exchanges & other financial market
transactions.
HDFC Standard Life Insurance Company Ltd.
HDFC Standard Life Insurance Company Ltd. is one of India's
leading private insurance companies, which offers a range of
individual and group insurance solutions. It is a joint venture
between Housing Development Finance Corporation Limited
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(HDFC Ltd.), India's leading housing finance institution and a
Group Company of the Standard Life, UK, and leading
providers of financial services in the United Kingdom. HDFC
as on March 31, 2007 holds 81.9 per cent of equity and
Standard Life was holding 18.1 in the joint venture.
Highlights
First life insurance Company in the private sector to get
license from the regulator IRDA.
First life insurance Company to come out with Term
Assurance Plan.
First private life insurance Company to declare bonuses
consecutively for 6 years from inception.
First life insurance Company to introduce open option to
the pension plan policyholders.
First life insurance Company to introduce Automatic
Allocation Option to all the policyholders under Unit
Linked Plans.
Only life insurance Company to give 24 free switching
option to Unit Linked Policyholders.
HDFC is one of the fastest growing Private Life Insurers
and today have more than 8 lakh policyholders.
HDFC have one of the widest networks with more than
160 branches and servicing over 440 towns.
HDFC Standard Life Insurance Company has one of the
highest brand recalls of around 86%. (Source: AC
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Neilson ORG MARG, September 2005). A high brand
recall translates to higher chances of customers buying
insurance from them.
Awards
Over a decade of its operations, HDFC Standard Life
Insurance Company Ltd. has been recognized, rated and
awarded by a number of organizations, which include:
Winner of the Out Look Money Award for two
consecutive years.
Voted as the Most Respected Life Insurance Company
by Business World in 2004.
HDFCs KEY STRENGTHS
Financial Expertise
As a joint venture of leading financial services groups, HDFC
Standard Life has the financial expertise required to manage
your long-term investments safely and efficiently.
Range of Solutions
We have a range of individual and group solutions, which can
be easily customized to specific needs. Our group solutions
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have been designed to offer you complete flexibility
combined with a low charging structure.
Track Record so far
Our cumulative premium income, including the first year
premiums and renewal premiums is Rs. 1532.21 Crores Apr-
Mar 2005 - 06.
We have covered over 1.6 million individuals out of which
over 5,00,000 lives have been covered through our group
business tie-ups.
VISION & VALUES
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Our Vision
The most successful and admired LifeInsurance Company, which means thatwe are most trusted company, theeasiest to deal with, offers the best valuefor money, and set the standards in theindustry. In short, The most obviouschoice for all.
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P.I.P.S.
Classification of life insurance
plans
Lifeinsurance plans can be classified into the following four
categories according to the
Features:
# Protection Plans
# Investment Plans
# Pension Plans
# Savings Plans
Protection Plans
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Values
IntegrityInnovation
Customer CentricPeople CareTeam Work
Joy & Simplicity
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As the name suggests this category of plans are
designed to protect the income earning capacity of the life
assured. The present income of the life assured thereforeforms the basis of the life insurance. A person with no
income therefore cannot be given this plan. The plan is
therefore not offered to students, housewives and minors.
The plans are in the nature of assurances rather than pure
insurance. Under the plan the insurance company assures
the policyholder that a lump sum of money would be paid on
the happening of the insured event.
Thus even if the life assured does not earn the same
level of income at the time of the happening of the insured
event, as at the time when he took the insurance, the lump
sum is still payable.
The premium collected under this category of plans is
generally sufficient to cover the risk insured. There is no
return of premium on the expiry of the cover; however a
saving element can be built under the plans to return the
savings amount at maturity. The plans do not share in the
profits of the company and have no bonuses.
Under the protection plans the risk is covered for a
premium, which is sufficient to pay the claims and the
expenses. It is therefore necessary for the insurance
company to ensure that the claims do not exceed the
assumed mortality. To ensure this, the insurance company
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would strictly underwrite the protection plans. There is also a
stiff competition under the protection plans as the plans of
two companies can be compared on the basis of the
premium charged. Every company tries to get the share of
the market by keeping the premium under this category
lower. The only way for a company to keep the premium low
over a long period is to control the expenses and claims.
The service factor is also important while selling a
protection plan. How quickly the claim would be settled
matters. In case a company is charging some few rupees
more but is known for quick settlement of the claim the
client would not mind going with such company. Hence the
premium rate as well as the service should be explained to
the client while selling the protection plans.
The plan should be sold on the basis of the Human LifeValue (HLV) concept. As per the HLV concept every
individual has an economic value, which is equal to the
present value of all future earnings of that individual.
Company should sell this plan to clients who have an income
and a financial responsibility. This form of insurance is also
called a young persons privilege as it is easy to get this
insurance when you are young and since savings are low
when a person is young he should possess this cover in case
of an unforeseen event.
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Rider Benefits also fall in this category of plans. Under
the rider the insured event is defined and claims are payable
only if the insured event as defined occurs. Rider benefits
usually come with a number of exclusions. One should
understand the exclusions and the definitions of the rider
benefit before choosing a rider.
HDFC Standard Life Company has two products in this
category and they are:
1. Term Assurance Plan
2. Loan Cover Term Assurance Plan
Investment Plan
As the name suggests this category of plans aredesigned to help the person reduce some of the risk of
investments. All the investment risks cannot be reduced.
What the investment plans try to do is to create a pool of
investors so that they can get the advantage of large funds,
diversified investments, professional management and
better returns. Investment plans can be designed to protect
the policyholder against the market fluctuations. However all
policyholders cannot be protected at the same time against
market fluctuations. It is common to allow the protection to a
small group of policyholders at any given point of time. One
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of the objectives of the investment type of plans is to give a
good return to the policyholder.
When risk covers are integrated with the investment
plans the cost of the risk covers reduce the returns to the
policyholders. To avoid the risk cover costs the plans do not
offer huge risk covers. Hence in these type of plans,
premium paid by policyholder is almost equal to the sum
assured.
The premium under the plans mainly consists of investment.
It would not be correct to compare this category of plans on
the basis of the sum assured and the premium paid. In case
a higher premium is collected under the plan, the company
would be in a better position to pay a bigger amount on
maturity/death.
A better way of comparison would be to compare whatthe client pays and what he would get under the plans. At
the time of selling unfortunately you would not be able to
show to the client as to what he would get under his plan.
Illustrations and past bonuses are something you can use to
convince the client. The company background and the
philosophy of the company can also be used to convince the
client.
Life insurance investment plans are designed for long-term
investments. It is not cost effective for a life insurance
company to design a short-term investment plan. It is
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therefore usual for these types of plans to have a term of 10
years and above. It is important to make the client
understand that he is entering into a long-term investment
when he purchases and investment plan form a life
insurance company.
This plan is useful when the client is looking for investment
for a long-term financial needs, which requires investment of
money for a long term.
The investment plan can be designed as a with-profits
contract or a unit linked contract. In a with profits contract
the returns are smoothened while under the unit linked
contract the returns to the client depend on the movement
of the Net Asset Values (NAVs) of the units purchased.
Pension Plans
Pension Plans are designed to provide pension. With the
interest rates fluctuating and the increase in longevity the
interest in the pension products has been growing in the
recent past. Life pensions provide an income till death and
this is attractive in the above-mentioned scenario.
The Indian society has been moving from the joint
family system to the nuclear family system. There is also no
form of social security schemes, which provide an income in
the old age. It is therefore important that all individuals think
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about their retirement and save for an income in the old age.
Pension Plans help the client to build the pension fund, which
is earmarked, to provide for the pensions and pay the
pensions on the chosen retirement date.
Pension Plans can be further classified into the following two
categories:
1. Deferred Pension Plans These plans help the client
build the pension fund during his earning years and
convert the fund into pensions on the chosen
retirement date.
2. Immediate Pension Plans These plans pay a pension
immediately after the lump sum purchase price is paid
to the insurance company.
HDFC Standard Life launched the following plans in this
category:
1. Personal Pension Plan (with profits)
2. Unit Linked Pension Plan
Savings Plans
The savings plans are designed to help a person save for a
long-term event. Long-term savings have inherent un-
certainties. Besides long term savings instrument are not
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available in the market. The savings plans aims to provide a
solution to the client in this area with the benefit of life
insurance.
It is important to note that the insurance cover offered is on
the savings. While purchasing the plan that the policyholder
has a savings target in mind. The plan aims to protect this
target in the event of the death of the life assured. In the
event of the death of the life assured during the term, in
addition to the amount saved the amount, which could not
be saved is also paid to the beneficiary.
The premium paid by the policyholder consists of the
savings. The risk cover cost on the savings forms a very
small portion of the premium. The effectively means that the
premium paid by the policyholder would determine the
maturity amount that the policyholder would ultimately get.
Thus comparison on the savings products of two companies,
on the premium and the sum assured is a wrong method of
comparison.
Savings plans offer the clients a good vehicle to build
savings for a long-term financial need. The earlier the client
starts a savings plan the lesser he would have to contribute
as his savings would grow bigger due to the effect of
compound interest. To sell a savings plans you need to
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identify the long term savings needs of the client and explain
to him the benefits of savings through life insurance.
Savings plans have a risk element, which needs to beunderwritten to ensure that the death claims are controlled.
In case a company is very liberal in granting the covers the
chances are that the policyholders who survive would get a
lower maturity benefits. Maturity benefits can be enhanced
by a strict control on the claims and the expenses.
Savings Plans can be offered as a with-profits plan or a unit
linked plan.
A with profits fund aims to smoothen the returns to the
policyholder using the bonus mechanism while the returns to
the policyholder under a unit linked plan depends on the
movement of the unit prices.
HDFC Standard Life offers the following savings plans:
1. Endowment Assurance Plan (with
profits)
2. Money Back Plans (with profits)
3. Childrens Plan (with profits)
4. Unit Linked Endowment Plan
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PRODUCTS: AT A GLANCE
1. Endowment Assurance Plan
(Savings for a better tomorrow)
Introduction
The Endowment Assurance Plan is a with profits savings
contract which aims to give good maturity values to the
client by investing the funds as per the IRDA guidelines and
reducing claims and costs. The aim of the plan is to pay good
maturity values so that the savings objectives of the
policyholders are met.
Need for the Plan
The Endowment Assurance Plan is designed to provide a solution
to the long term financial needs. It is often felt that people save only
when their income is more than their expenses. To put it bluntly if a
person can earn more than what he can spend he can save. In reality
this is not the situation as one finds that it is impossible to save with
the current level of expenses. Why does this happen?
Expenses are a function of our needs, which arise due to ourwants. We all know that the wants of a human being are unlimited.
Consequently the needs keep on increasing and often increase at a
rate higher than the rate of growth of income. Income on the other
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hand is limited and often grows at a much lower rate than the needs.
Consequently it is difficult to save.
There are various savings options available in the market;
however most of the options are short-term or medium term. Life
Insurance savings plans are a better choice as in addition to providing
the vehicle to save for long term the plans also offer insurance on the
savings. Income does not increase with every requirement for finance.
Childrens education, marriage, housing etc. require lump sum
amounts. In case any person has a responsibility to spend on these
kinds of long-term events, he would have a need for the product.
Features of the Endowment Assurance Plan
The following are the features of the plan:
1. Benefits:
a) Death Benefits: In the event of death of the life assured
during the term of the contract, and provided all the
premiums are paid till the time of the death of the life
assured, the sum assured, together with reversionary
bonus and the terminal bonuses (if any) would be paid to
the beneficiary. The policy would terminate on payment of
the death benefit.
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b) Maturity Benefits: On survival of the life assured till the
date of maturity, and subject payment of all premiums, the
policyholder would be paid the sum assured, together with
the reversionary bonuses and terminal bonus (if any). The
policy would terminate on payment of the maturity benefit.
c) Paid-up Benefits: In case the policyholder discontinues
payment of premium after the premiums are paid for at
least three years, the policy would be reduced to a paid-up
policy. The reduced paid-up benefits are payable on death
of the life assured during the term, or survival of he lifeassured till the date of maturity, whichever is earlier.
d) Surrender Benefits: The policyholder can surrender the
policy at any time. In case the policyholder chooses to
surrender the policy before the payment of three years
premium the surrender value would be equal to zero and
nothing would be payable. In case the policyholder chooses
to surrender after three years, he would be entitled for a
surrender value.
2. Frequency of premium payment:
The policyholder can choose yearly, half-yearly or quarterly
mode of payment, as he desire. The frequency of premium
payment can be altered during the term of the contract.
3. Days of grace:
The premium is payable in advance and should be paid within
the days of grace. The days of grace allowed under the plan are
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the minor would have to propose the insurance on behalf of the
minor. The policy would automatically vest in the life assured
when he attains the age of majority.
7. Policy loans:
Policy loans would be available under the plan once the policy
acquires a surrender value. The policy loans would be to the
extent of 90% of the surrender value. The company would quote
the terms and conditions of the policy loans at the time of
granting the loans and the same would vary from time to time.
8. Life cover basis:
The endowment assurance plan can be offered on a single life
basis or as joint life first claim basis. When the policy is offered
on a joint life basis the death claim would be paid on the death of
any one of the lives assured and the policy would terminate.
9. Tax benefits:
The premium paid under the plan qualifies for tax rebate under
section 88 of the Income Tax Act 1961. The claim benefits would
also not be taxable as per section 1010 D of the Income Tax Act
1961.
The plan is also approved under the provisions of
section 80 DD of the Income Tax Act 1961.
Positioning of the Endowment AssurancePlan
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The Endowment Assurance Plan can be positioned as along term
savings vehicle with a cover on the savings. The plan is suited to help
in building a fund for long term financial needs. The guarantees in the
nature of sum assured and the bonuses assure the client of asmoothened long-term return. The philosophy and practices of the
company can help in building the maturity values for the client and
hence positioning the company is also important in the sale of the
Endowment Assurance Plan.
2. Money Back Plan
(Plan with periodic survival benefits)
Introduction
The Money Back Plan is a with profits savings contract which in
addition to the payment of periodic survival benefits aims to give good
maturity values to the client by investing of funds as per the IRDA
guidelines and reducing claims and costs. The aim of the plan is to pay
periodic survival benefits and build good maturity values so that the
short term, medium term and long-term savings objectives of the
policyholders are met.
The net returns to the policyholders at the time of maturity would
depend on the investment and cost experience during the term of the
contract.
Need for the Plan
The Money Back Plan is designed to provide a solution for the short-
term, medium term and long term financial needs. It is therefore
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important to understand the financial needs before suggesting the plan
as a solution.
Since people have some short term and medium term and medium
term financial goals like providing for a vacation, purchasing of a
luxury item or house renovations etc, they require money periodically
in short intervals to meet these goals.
The Money Back Plan is designed to provide money periodically so that
the same can be used for such requirements. The added advantage of
the Money Back Plan is that the risk cover keeps on adjusting during
the term of the contract and the policyholder is assured payment ofthe full sum assured together with the bonuses irrespective of the
survival benefits paid on death of the life assured during the term.
Features of the Money Back Plan
The following are the features of the plan:
1. Benefits:
a. Death Benefits: In the event of death of the life assured
during the term of the contract, and provided all the
premiums are paid till the time of the death of the life
assured, the sum assured, together with reversionary
bonus and the terminal bonuses (if any) would be paid to
the beneficiary.
b. Survival Benefits: Survival benefits are paid at the end of
every fifth year on survival of the life assured. The rates ofsurvival benefits are given below. The policy would
continue after payment of the survival benefit.
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c. Surv
c. Maturity Benefits: On survival of the life assured till the
date of maturity, and subject payment of all premiums, the
policyholder would be paid the sum assured, together with
the reversionary bonuses and terminal bonus (if any) less
all survival benefits paid during the term of the
contract. The policy would terminate on payment of the
maturity benefit.
d. Paid-up Benefits: In case the policyholder discontinues
payment of premium after the premiums are paid for at
least three years, the policy would be reduced to a paid-up
policy. The reduced paid-up benefits are payable on death
of the life assured during the term.
e. Surrender Benefits: The policyholder can surrender the
policy at any time. In case the policyholder chooses to
39
Number of years from the policy
commencement date
PolicyTerm 5 10 15 20 25
10 40%
15 30% 30%
20 25% 25% 25%
25 20% 20% 20% 20%
30 15% 15% 15% 15% 15%
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surrender the policy before the payment of three years
premium the surrender value would be equal to zero and
nothing would be payable.
2. Frequency of premium payment: The policyholder can choose yearly, half-yearly or quarterly
mode of payment, as he desire. The frequency of premium
payment can be altered during the term of the contract.
3. Days of grace:
The premium is payable in advance and should be paid within
the days of grace. The days of grace allowed under the plan are
15 days from the due date of premium. In case the days of grace
end on a holiday then the premium has to be paid on the next
working day.
4. Lapsation:
In the event the premium is not paid within the days of grace the
policy lapses. The policy would be automatically reduced to a
paid up policy in case premiums have been paid for at least three
years. In case premiums are not paid for three years the policy
would lapse without value.
A lapsed policy can be reinstated within one year from the date
of lapse only.
5. Minimum premium:
The following are the minimum premium conditions under the
Money Back Plan.
Annual mode Rs. 1800
Half yearly mode Rs. 1000
Quarterly mode Rs. 550
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There is no condition of maximum premium.
6. Other conditions:
Minimum Term 10 years
Maximum Term 30 years
Minimum Age at Entry 12 years
Maximum Age at Entry 60 years
Maximum Maturity Age 75 years
The policyholder has the choice to choose any term between 10
to 30 years, subject to the maximum maturity age. In case the
policy is taken on the life of a minor then the legal guardian of
the minor would have to propose the insurance on behalf of the
minor. The policy would automatically vest in the life assured
when he attains the age of majority.
7. Policy loans:
Policy loans would be available under the plan once the policy
acquires a surrender value. The policy loans would be to the
extent of 90% of the surrender value. The company would quote
the terms and conditions of the policy loans at the time of
granting the loans and the same would vary from time to time.
8. Life cover basis:
The Money Back Plan can be offered on a single life basis or as
joint life first claim basis. When the policy is offered on a joint lifebasis the death claim would be paid on the death of any one of
the lives assured and the policy would terminate.
9. Tax benefits:
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The premium paid under the plan qualifies for tax rebate under
section 88 of the Income Tax Act 1961. The claim benefits would
also not be taxable as per section 1010 D of the Income Tax Act
1961.
The plan is also approved under the provisions of
section 80 DD of the Income Tax Act 1961.
3. Childrens Plan
(Plan designed for the benefit of children)
Introduction
The Childrens Plan is a with-profits savings contract designed for the
benefit of the child. The plan therefore has a provision for a
beneficiary, which can be the child, and all benefits under the plan
would be paid to the child. The funds generated under the plan are
invested as per the IRDA guidelines.
The net returns would depend on our investment and cost experience
during the term of the contract
Need for the Plan
Most parents feel that it is their responsibility to provide the best for
their children. In addition to the physical and emotional wants children
also need to be provided for financially. There are two types of
financial needs of the child:
I. Short term financial needs for food, clothing shelter and
education. This need is mostly met from the income of the
parent
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II. Long term financial need for higher education, marriage
and start in life. The alternatives for this are either to save
or raise loans.
In the event of an early death of the parent the child become
dependent of one of the close relative. To ensure that the child would
be taken care even after such an eventuality the parent can look at
providing an income as well as lump sum amounts for the benefit of
the child. The Childrens Plan is designed to help the parent in planning
for the above financial needs of the child.
All the arguments on the need to save and savings being a better
option than raising a loan are applicable while selling the Childrens
Plan.
Features of the Childrens Plan
The following are the features of the plan:
1. Benefits:
a) Death Benefit: Under this option on death of the life
assured during the term of the policy, provided the
premium is paid till the date of death; no amount would be
immediately payable.
The future premiums would be waived and at maturity date
of the policy the full sum assured with the reversionary
bonuses and terminal bonus (if would be payable to the
beneficiary. The policy would participate in the bonuses till
the date of maturity. The policy would terminate on the
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payment to beneficiary.
b) Accelerated Benefit: Under this option on death of the life
assured during the tem of the policy, provided thepremium is paid till the date of death, the sum assured
with the reversionary bonus and terminal bonus (if any)
would be payable immediately to the beneficiary and the
policy would terminate.
c) Double Benefits: Under this option on death of the life
assured during the term of the policy, provided the
premium is paid till the date of death; one sum assured
would be paid to the beneficiary immediately. The future
premiums would be waived and at maturity date of the
policy the full sum assured with the reversionary bonus and
terminal bonus (if any) would be payable to the
beneficiary. The policy would terminate on payment of the
benefit on the date of maturity
d) Maturity Benefits: In the event of survival of the life
assured during the term of the contract, and provided all
the premiums are paid, the sum assured, together with the
reversionary bonuses and the terminal bonuses (if any)
would be paid to the beneficiary. The policy would
terminate on payment of the maturity benefit.
e) Paid-up Benefits: In case the policyholder discontinues
payment of premium after the premiums are paid for at
least three years, the policy would be reduced to a paid-up
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policy. If the Childrens Plan is made paid up, a table of
adjustment factors will be used to adjust the policys basic
sum assured to a paid up value. The adjustment factors will
vary by the policyholders age, the policys original term,policy duration, and frequency.
f) Surrender Benefits: The policyholder can surrender the
policy at any time. In case the policyholder chooses to
surrender the policy before the payment of three years
premium the surrender value would be equal to zero and
nothing would be payable. In case the policyholder chooses
to surrender after three years, he would be entitled for a
surrender value.any)
2. Frequency of premium payment:
The policyholder can choose yearly, half-yearly or quarterly
mode of payment, as he desire. The frequency of premium
payment can be altered during the term of the contract.
3. Days of grace:
The premium is payable in advance and should be paid within
the days of grace. The days of grace allowed under the plan are
15 days from the due date of premium. In case the days of grace
end on a holiday then the premium has to be paid on the next
working day.
4. Lapsation:
In the event the premium is not paid within the days of grace the
policy lapses. The policy would be automatically reduced to a
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paid up policy in case premiums have been paid for at least three
years. In case premiums are not paid for three years the policy
would lapse without value.
A lapsed policy can be reinstated within one year from the dateof lapse only.
5. Minimum premium:
The following are the minimum premium conditions under the
Childrens Plan.
Annual mode Rs. 1800
Half yearly mode Rs. 1000Quarterly mode Rs. 550
There is no condition of maximum premium.
6. Other conditions:
Minimum Term 10 years
Maximum Term 25 years
Minimum Age at Entry 18 years
Maximum Age at Entry 60 years
Maximum Maturity Age 75 years
The policyholder has the choice to choose any term between 10
to 25 years, subject to the maximum maturity age. In case the
policy is taken on the life of a minor then the legal guardian of
the minor would have to propose the insurance on behalf of the
minor.
7. Policy loans:
Policy loans would not be available under the plan.
8. Life cover basis:
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The Childrens Plan is to be sold on the life of the parent with the
child as the beneficiary. The plan is not offered on a joint life
basis.
9. Tax benefits:
The premium paid under the plan qualifies for tax rebate under
section 88 of the Income Tax Act 1961. The claim benefits would
also not be taxable as per section 1010 D of the Income Tax Act
1961.
The plan is also approved under the provisions of
section 80 DD of the Income Tax Act 1961.
Positioning of the Childrens Plan
The Childrens Plan can be positioned as a long term savings vehicle
specially designed to meet the financial requirements of the child. The
plan provides for both the immediate financial needs and the long term
financial needs. In case the client is not worried about the immediate
financial needs of the child on his death then the maturity benefit
option would be suitable to him. The sum assured payable on the
death in a double benefit option would help in providing for the
immediate financial needs of the child. The Accelerated benefit works
exactly like and endowment assurance plan. The guardian of the child
would have an option of either to spend the money for the immediate
benefit of the child or to save the claim amount for a future benefit.
4.Term Assurance Plan
(Protection of Income)
Introduction
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The Term Assurance Plan is a without profits protection
contract designed to protect the income earning capacity of
the life assured. The present earning capacity of the clienttherefore forms the basis of the insurance.
Need for the Plan
Uncertainty is a part of life. In the event of death of the breadwinner
the dependents are put to a lot of financial difficulty as they lose the
source of income. The problem is compounded in case the family does
not have savings to rely on. In case a person has dependents and also
does not have savings on which the family can rely on in the event of
his death, he needs to protect his income for the benefit of the family.
Term Assurance Plan is designed to offer the protection of the income
at the least possible cost.
Term Assurance Plan can also be used to cover liabilities so that in theevent of death the family receives a lump sum amount so that
liabilities are paid off. Term Assurance is an insurance of income and
hence the existence of liabilities is not the basis of granting the
insurance.
Features of the Term Assurance Plan
The following are the features of the plan:
1.Benefits:
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a) Death Benefits: Provided the policy is in force in the event
of death of the life assured during the term of the contract
the sum assured is paid.
b) Benefits on expiry of the cover: On expiry of the covernothing is payable as Term Assurance is designed for
protection only.
c) Paid up Benefits: There are no paid up benefits under this
plan.
d) Surrender Benefits: There are no surrender benefits under
this plan.
2. Frequency of premium payment:
The policyholder can choose to pay by a single premium or
yearly, half-yearly or quarterly mode of payment. The frequency
of premium payment can be altered during the term of the
contract. Please note that a regular premium policy cannot be
changed to a single premium mode during the term of the
contract.
3. Days of grace:
The premium is payable in advance and should be paid within
the days of grace. The days of grace allowed under the plan are
15 days from the due date of premium.
4. Lapsation:
In the event the premium is not paid within the days of grace the
policy lapses. A lapsed policy can be reinstated within one year
from the date of lapse only.
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5.Minimum premium:
The following are the minimum premium conditions under the
Term Assurance Plan.
Single Premium Rs. 2000
Annual mode Rs. 1500
Half yearly mode Rs. 800
Quarterly mode Rs. 450
There is no condition of maximum premium.
6.Other conditions:
Regular Premium Single Premium
Minimum Term 5 years 2 years
Maximum Term 30 years 15 years
Minimum Age at Entry 18 years 18 years
Maximum Age at Entry 60 years 60 years
Maximum Maturity Age 65 years 65 years
7.Policy loans:
Policy loans would not be available under the plan.
8.Life cover basis:
The Term Assurance Plan can be sold on a single life or joint life
first death basis.
9.Tax benefits:
The premium paid under the plan qualifies for tax rebate under
section 88 of the Income Tax Act 1961. The claim benefits would
also not be taxable as per section 1010 D of the Income Tax Act
1961.
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10. Special Rates for Women:
Since women have a lesser mortality rate than men for the same
age, the premium rate charged fro women would be the rate
applicable to men three years younger.
5. Single Premium Whole of Life
Insurance Plan
(Plan designed to give long-term real growth)
Introduction
The Single Premium Whole of Life Insurance Plan is a with
profits investment contract which aims to give long tem real
growth to the client by investing the funds as per the IRDA
guidelines and reducing claims and costs. The aim of the
plan is to generate long term real growth, providing
guarantees at specific times during the term of the contract.
Need for the Plan
The Single Premium Whole of Life Insurance Plan is designed to help
the client in long-term investment. It is therefore important to
understand the problems associated with investments to sell the plan
better.
However all investment is associated with risk. The higher the risk one
takes, the better the chances of getting a better return. Investment is
all about taking risks.
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Various investment instruments are available in the market and the
client has to choose from the investment option available. This
investment instruments are designed to meet short-term, medium-term and long-term objectives. If an instrument is designed for a short
term the same is not suitable for achieving a long term objectives. This
is because the instrument would terminate in the short term and the
client would be exposed to reinvestment risks. Long-term investments
designed to provide real growth is a solution to the long-term needs.
The client can choose to invest directly where the risks are high and
the potential of a higher return also exists. However he would have the
disadvantage of being a small investor, who does not have the
expertise in the market, does not have large funds and is not able to
diversify. The mutual funds help the client in this area and pool the
investment of a group of small investors providing them with expertise
in investment, diversification and better returns.
However investment in mutual fund requires a strategy and the returns
depend on the time of entry and exit from the fund. Two investors may
make different kinds of return due to the different strategies they
follow. The Single Premium Whole of Life Insurance Plan is designed to
remove this problem of the investors by giving insurance in the form of
guarantees on death and at specific time intervals so that the returns
at these guaranteed periods do not depend on the market conditions.
These guarantees in long-term investment are very valuable and since
the product is a whole of life one, the client can continue with the
investment till death.
Features of the Single Premium Whole of Life
Insurance Plan
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The following are the features of the plan:
1.Benefits:
a) Death Benefits: In the event of death of the life assured
during the term of the contract, and provided all the
premiums are paid till the time of the death of the life
assured, the sum assured, together with the (compound)
reversionary bonus and the terminal bonuses (if any) would
be paid to the beneficiary. The policy would terminate on
payment of the death benefit.
b) Maturity Benefits: The Single Premium Whole of Life
Insurance Plan is a whole life plan and therefore does not
have a maturity date
c) Paid up Benefits: This is not applicable to the Single
Premium Whole of Life Insurance Plan since the plan is a
single premium plan.
d) Minimum Guaranteed Surrender Benefits: On
surrender of the policy after a period of three years from
the date of commencement, there is and guarantee that
the minimum surrender value would be equal to 50% of the
premium paid, except in the four weeks immediately
following the completion of the 10th policy year and every
5th year thereafter, when the minimum guaranteed
surrender value would be equal to the sum assured.
e) Special Surrender Benefits: The Company at its sole
discretion may pay special surrender values higher than
the guaranteed surrender values depending on the
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investment and expense experience of the company. The
special surrender values would be paid after completion of
the first six months from the date of commencement of the
policy.
2. Frequency of premium payment:
The policyholder has to pay the premium by way of a single
premium only. The single premium payable is equal to 95% of
the sum assured chosen.
3.Premium:
The following are the premium conditions under the Single
Premium Whole of Life Insurance Plan:
Minimum Premium Rs. 23,750
Maximum Premium Rs. 47,50,000
4.Other conditions:
Minimum Sum Assured Rs. 25,000
Maximum Sum AssuredRs. 50,00,000
Minimum Age at Entry 18 years
Maximum Age at Entry 70 years
5.Policy loans:
Policy loans would be available under the plan once the policy
acquires a surrender value. The policy loans would be to the
extent of 90% of the surrender value. The company would quote
the terms and conditions of the policy loans at the time ofgranting the loans and the same would vary from time to time.
6.Life cover basis:
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The Single Premium Whole of Life Insurance Plan can be offered
on a single life basis only.
7.Tax Benefits:
The Premium paid under the plan qualifies for tax rebate under
section 88 of the Income Tax Act 1961.
The plan is also approved under the provisions of
section 80 DD of the Income Tax Act 1961.
Positioning of the Single Premium Whole ofLife Insurance Plan
The Single Premium Whole of Life Insurance Plan can be positioned as
along term investment vehicle with guarantees at specific dates. The
Plan is suited to help in providing a fund for long term financial needs.
The philosophy and practices of the company can help in building the
policy values for the client and hence positioning the company is also
important in the sale of the Single Premium Whole of Life Insurance
Plan.
6. Personal Pension Plan
(Savings for a better retirement)
Introduction
The Personal Pension Plan is a with profits deferred pensioncontract which aims to give good pension benefits to the
client by helping the client build a retirement fund. The aim
of the plan is to build good fund values so that the client can
enjoy a better pension on retirement.
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Need for the Plan
Income in retirement is becoming more and more important. With the
breakup of the joint family system and the increase in longevity, it is
becoming more and more important to provide for retirement. The fall
in the interest rates and the uncertainty prevailing in the market make
pensions more attractive. Pension can provide a guaranteed income till
death and hence there is a renewed interest in pension schemes in the
recent years.
It is important that the person plans for his retirement. The
planning should start early so that the person contributes lesser
amounts and there is time for the fund to grow. For retirement there is
only one option for the person and that is to save. One cannot raise a
loan for retirement.
There are various instruments of savings and investment, which
the client can use to provide for his retirement. A deferred pension
plan has the following advantages:
I. The deferred pension plan can be issued for long terms so that
the single instrument covers the retirement need of the client.
II. The deferred pension plan automatically vests in the life assured
on the date of vesting. This is an advantage as the likelihood that
the fund would be used for some other purposes is minimized
and fund would be used only for retirement.
III. Special tax benefits are available for investment in deferred
pension plans.
Features of the Personal Pension Plan
The following are the features of the plan:
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1.Benefits:
a) Death Benefits: In the event of death of the life assured
during the term of the contract the following amount would
be payable:
i. In the event of the death of the life assured in the
first year then 90% of the premium paid would be
payable in case of single premium policies and 80%
of the premium paid would be payable in case of
regular premium policies.
ii. In the event of the life assured after the first year
Sum assured plus reversionary bonus
attached would be payable under single
premium policies.
Lower of the sum assured plus reversionary
bonus and return of premium paid withinterest of 8% is payable, under regular
premium policies.
b) Benefits at Vesting: On the vesting date, provided the
policy is in full force the Notional Cash Value (NCV) would
be used to pay the following:
i. Cash lump sum to the extent permitted by theregulations at the time of vesting. The policyholder
may choose either to take the cash lump sum or use
the full NCV to purchase an annuity.
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ii. Purchase of an immediate annuity as per the choice
of the policyholder. In case the policyholder has
opted for the cash lump sum the balance NCV would
be used to purchase the annuity. In case thepolicyholder has not opted for the cash lump sum
then the full NCV would be used to purchase the
annuity.
c) Paid up Benefits: In case the policyholder discontinues
payment of premium after the premiums are paid for at
least three years, the policy would be reduced to a paid-up
policy. The reduced paid up benefits would form the
Notional Cash Value on the date of vesting of the policy.
The paid up policy will not participate in future bonuses.
d) Surrender Benefits: The policyholder can surrender the
policy at any time. In case the policyholder chooses to
surrender the policy before the payment of three years
premium the surrender value would be equal to zero and
nothing would be payable. In case the policyholder chooses
to surrender after three years, he would be entitled for a
surrender value.
2. Frequency of premium payment:
The policyholder can choose to pay single premium or regular
premium by yearly, half-yearly or quarterly mode. The frequency
of premium payment can be altered during the term of the
contract.
3.Days of grace:
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The premium is payable in advance and should be paid within
the days of grace. The days of grace allowed under the plan are
15 days from the due date of premium. In case the days of grace
end on a holiday then the premium has to be paid on the nextworking day.
4.Lapsation:
In the event the premium is not paid within the days of grace the
policy lapses. The policy would be automatically reduced to a
paid up policy in case premiums have been paid for at least three
years. In case premiums are not paid for three years the policy
would lapse without value.
A lapsed policy can be reinstated within one year from the date
of lapse only.
5.Minimum premium:
The following are the minimum premium conditions under the
Personal Pension Plan.
Single Premium Rs. 25000
Annual mode Rs. 2400
Half yearly mode Rs. 1300
Quarterly mode Rs. 700
6. Maximum premium:
Single Premium Rs. 50,00,000
Annual mode Rs. 50,00,000
Half yearly mode Rs. 25,00,000
Quarterly mode Rs. 12,50,0
7. Other conditions:
Minimum Term 10 years
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Maximum Term 40 years
Minimum Age at Entry 18 years
Maximum Age at Entry 60 years
Minimum Vesting Age 50 yearsMaximum Vesting Age 70 years
The policyholder has the choice to choose any term between 10
to 40 years, subject to the minimum and maximum vesting age.
8. Policy loans:
Policy loans would not be available under the plan.
9.Life cover basis:The Personal Pension Plan can be offered on a single life basis
only.
10. Tax benefits:
The premium paid under the plan qualifies for tax deductions
under section 80CCC of the Income Tax Act 1961.
The cash lump sum received at the date of vesting is tax free
under section 1010a (iii) of the Income Tax Act 1961.
UNIT LINKED INSURANCE PRODUCTS
(ULIP)
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61 61
ULIP, AN INSURANCE PRODUCT WITH A TWO-IN-
ONE FEATURE, IS DESIGNED TO CARRY BENEFITS
OF BOTH, AN INSURANCE COVER AS WELL AS
MARKET RELATED INVESTMENT RETURNS...
A Unit Linked Insurance
Popularly Known as ULIP, is
of an insurance and invest
product. It combines a life c
with an investment plan,
unlike a traditional plan m
back or endowment
investment returns are
guaranteed in the case of ULI
ULIP, by its nature, is not a product that is meant to maxim
returns like equity investments either directly or thro
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ULIP plan (Unit Linked Insurance Plan)
Premium
Life Insurance Investment
Combinat
-ionEquityDebt
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SWOT ANALYSIS
63
STRENGTH
Country Wide
Recognition
Need Base
Analysis
Same Standard
Services in allBranches
Fair Deal in allTransactions
Customers
CentricApproach
THREAT
LICs Brand Name
People of Jaipur prefer
short-term investment
rather than in insurance
Upcoming private insurance
companies.
STRENGTH
Country Wide Recognition
Need Base AnalysisSame Standard Services in
all Branches
Fair Deal in all Transactions
Customers Centric
Approach
Infrastructure
OPPORTUNITY
Scope in Jaipur as it is in the
developing phase
Only 25% of insurable
people have any insurance
Higher possibility of growth
in Indian share Market
WEEKNESS
Frequent Job Rotation
Less number of
advertisements
Hidden Charges
STRENGTH
Country Wide
Recognition
Need Base
Analysis
Same Standard
Services in allBranches
Fair Deal in allTransactions
Customers
CentricApproach
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Research Methodology
In order to conduct the study, the methodology has to be
decided. The description of the problem and our objectives will help
us determine the methodology to be adopted. As seen from the
problem description, the area of study is a previously unexplored
area, so the concepts, definitions, opinions etc. are unformed. We
have to understand the customer and markets without any sort of
prior assumptions, so we do not know what information, conclusions
we will obtain from this research. We have started of with a basic
assumption that some variables are relevant to the study, but we
are no means sure as to whether they are relevant or not or how
relevant they are and what should be the importance of each of the
variable. Thus this research is an exploratory research into a
previously uncharted area. The reasons for its exploratory nature
can be summarized as follows:
Need to create concepts and definitions about markets,
customers etc. so that they can be further investigated into
Area of study is new, previously unexplored and information is
vague
Hypotheses are not available, they have to be formed based on
this study
Given the exploratory nature of the research, should we employ a
qualitative or quantitative research methodology? Before deciding that,
let us revisit our tasks. We have to obtain information about variables
such as attitude, motivation, and influence of family etc. of the
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customers, without having any preconceptions about any of these
issues.
A quantitative study will help us give a measure of variables
previously defined and may also help us decide their priorities with
respect to each other given we understand how each variable affects
the subject. But neither do we have definitions in the context of these
variables, nor do we know how each variable affects the subject. In
short, the only things we are sure of is the presence of some variables
and have tentatively decided on some particular variables, but wehave no way of knowing whether, these variables indeed affect the
subject and the nature of their influence. A quantitative study will not
therefore serve our purpose. We have adopted a qualitative
methodology.
There are several instruments for conducting a qualitative study,
and this research used some of them like in-depth interviews and
impromptu focus groups (rather than pre-decided focus groups),
subject observation. In in-depth interviews, there were conversations
with the subjects wherever they are conveniently available. The focus
was on determining what sort of attitudes etc. the people generally
have and how important it is for the brand image, rather than how
many people hold particular attitudes.
A look at the Interview Guides will give an idea of the information
areas sought before the data collection. Separate interview guide is
created for each of the above given respondent type. Interview guide
for each of them is given later in the project report in the sample
questionnaire section.
RESEARCH DESIGN-
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The study was a mix of exploratory & descriptive type and I hope
that it provides for some help to the investors & corporate houses
related to these industries.
SAMPLE SIZE
100 person of Jaipur formed the sample for the survey.
SAMPLE METHOD
A quota sampling technique was employed with 60
samples collected from the business class & 60 from the service
class. Further bifurcations were on the basis of age, where 25 in
each sample belonged to an age less than 30 and rest over 30.
DATA COLLECTION
In attempt to attain the above said objective, our studyneeded to collect data from various sources. It includes data
mostly from secondary sources like the company brochures,
journals, newspaper articles, the Internet, etc.
Also, primary data has been collected by way of meeting some
key people belonging to the concerned industries. A survey has
also been conducted so as to acquire the views of the person
regarding their loan preferences and to extract the factors that
the consider.
Data analysis
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Age wise distribution
1. Have you heard about
insurance contract.
Yes No Cant
say
65 30 05
20 to 35 yrs. 35%
35 to 50 yrs. 45%
50 and above 20%
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65
30
5
0
10
20
30
40
50
60
70
1
Yes No Cant say
2) Do you know about HDFC-
SL?
Yes No Cant say
50 35 1568
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50
35
15
0
10
20
30
40
50
60
1
yes No Cant say
3. Does any insurancecompany insure you?
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Yes No Cant
say
30 55 05
30
55
5
0
10
20
30
40
50
60
1
yes No Cant say
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4) Have you heard the word
ULIP plans?
Yes No Cant say
65 32 03
65
32
3
0
10
20
30
40
50
60
70
1
Yes No Can'say
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5) Do you think its good
against loss?
Yes No Cant say
80 35 05
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80
35
5
0
10
20
30
40
50
60
70
80
90
1
Yes No Can'say
5). Do you want insurance and
investment plans if we provide
you?
Yes No Cant say
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75
20
5
0
10
20
30
40
50
60
70
80
1
Yes No Can'say
6) Which company you prefer if
you want to insured?
A) HDFC-SL 2) ICICI 3) LIC
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65 20 15
65
20
15
0
10
20
30
40
50
60
70
1
HDFC ICICI LIC
7) Do you invest in general
insurance?
Yes No Cant say75
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50 40 10
50
40
10
0
10
20
30
40
50
60
1
yes No Can't say
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8) Do you think that insurance
contract help a person whole
life?
Yes No Cant say
60 35 05
60
35
5
0
10
20
30
40
50
60
70
1
yes No Can't say
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9) Do you invest in our
company if we provide
insurance and investment?
Yes No Cant say
80 15 05
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80
15
5
0
10
20
30
40
50
60
70
80
90
1
yes No Can't say
10) In which plan you
invest?
A) Childrens plans
B) Pension plans
C) Whole life plans
D) Term assurance plans
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15
20
35
30
0
5
10
15
20
25
30
35
40
1
Childrens plans Pension plans Whole life plan Term assurance plan
Analysis and interpretation
Analysis of the Study
The investment in Unit Linked Products is a new trendintroduced in India with various Insurance Companies into
this segment. This feature is rapidly growing in the Indian
Market. Today, various investment options available in the
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market. The study explains that how people of Jaipur invest
their income. The following diagram explains it very well.
The study has shown that people of Jaipur are much
interested in investing in Mutual Funds and Shares than
Insurance. This is because of people are interested in short-
term investment. But it is assumed by the studies that in
upcoming years this rate of investment in insurance will
increase rapidly.
Among 17 insurance Companies including LIC, the
HDFC Standard Life Company has placed its position onpinnacle. Each Company has the Unit Linked Product in its
portfolio. But HDFCs Unit Linked Products are customer
centric and having special features. HDFCs services are
81
30%
25%30%
15%Mutual Fund
Insurance
Shares
Others
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highly appreciable among insurance companies apart from
its brand name.
HDFC Standard Life Insurance Company is leading the
market in the Returns giving to its customers. All its
competitors are behind in the aspect of Returns. Here in this
given chart, it is shown that how HDFC Standard Life
Insurance Company is ahead from other life insurance
companies.
0
10
20
30
40
50
HDFC SL Tata AIG ICICI
Pru
Aviva
Life
1-YEAR
2-YEAR
From the above survey it is clear that insurance is a growing
Sector, which is very well growing in today scenario. Above
survey told us that most of people want to invest in
insurance sector to earn maximum profit.
Jaipuriest know that ULIP plans provide us investment
and insurance opportunities. This type of plan is very popular
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in present time. The survey gives information that people
must invest for a long time to earn profits.
Graph which show that we have to invest long term-
We should invest for long term or short
term?
0
10
20
30
40
50
60
70
80
90
100
1
Yes No Can't say
HDFC SL provides ULIP to its customer with special benefitswith minimum charges. The Policy Administration Charge
and Fund Management Charge is Rs. 20/- and 0.80%
respectively, which are minimum in their category
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1. In HDFC SL I feel that Insurance sector is one of the
most growing sectors among all sectors in India.
2. I also find that HDFC Standard Lifes Traditional Plansare very useful for a normal person.
3. Jaipur is one of the most growing city and there is lot ofscope of insurance.
4. Most of the people are aware of traditional plans.
5. Electronic media has proved to be very beneficial forpeople to understand about the insurance.
6. There is lot of opportunities for young and energeticpeople in HDFC SL to build there sound career.
7. HDFC Standard Lifes traditional plans like children plan,
one of the most popular product of the company.
SUGESSTIONS:
1) Use of creative advertisements to attract more and
more target customers and to create awareness among
them.
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2) HDFC SL should chalk out some programs to create
general awareness regarding its presence and various
services of the company.
3) Today is the era of competition. In order to increase the
company network (In terms of clients and business
volumes) an aggressive approach is required.
4) HDFC SL should try to make its promotional activitiesmore effectively.
5) HDFC Standard Life Company should regularly conduct
market research and surveys for knowing customers
better and for facing threat from competitors
CONCLUSION
HDFC is the leading insurance service providers to public
and private sector. HDFC Standard Life is the first private
insurance company, which got license in 2000 from IRDA.
Life Insurance in India has a huge potential for growth.
Statistics reveal that only 25% of the insurable population
in India is insured. And those insured are in need of still
higher insurance cover. The cover 100% growth displayed
86
STRENGTH
Country Wide
Recognition
Need Base
Analysis
Same Standard
Services in allBranches
Fair Deal in allTransactions
Customers
CentricApproach
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by private life insurers indicates this huge untapped
potential.
Traditional plans like children plan gives invaluable
support to your child, Term Assurance Plan gives help
secure your family financial needs, Money Back Plan gives
a wide range of terms and cash benefit schedules to
choose from, Personal Pension Plan is designed to provide
a post retirement income for life with the freedom to
choose the retirement date, Single Premium Whole of Life
Insurance Plan is a tailor-made plan well suited to meet
your long-term investment needs, Endowment Assurance
Plan is designed to provide a solution to the long term
financial needs, Loan Cover Term Assurance Plan is
designed to cover outstanding loans at the least possible
cost.
At last we can conclude that HDFC SL provides best
solutions to its customers by giving them best value of
their money.
QUESTIONAIRE FOR DATA COLLECTION
Dear Respondent, your valuable time and effort in filling thisquestionnaire are highly appreciated. The information collectedthrough this questionnaire will be used for academic purpose only.
Personal Details
Name Occupation
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Age Monthly income
Gender Contact No.
1.In which insurance company you areinsured ? Tick them. If you have more thanone, tick both of them.
Life Insurance Corporation
HDFC-SL
Icici-Podential
Others
2.How much risk you can tolerate?
High
Moderate
Low
3.What are the benefits you look forward
from a life insurance policy?
Tax saving
Investment
Security
4.In life insurance which type of plans youinvest your money? if more than one youcan tick both of them?
Whole life plan
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Term plan
One time insurance
ULIP
5.What is the feature you give mostimportance before choosing any lifeinsurance policy?
Premium
Tenure
Maturity value
Tax benefit
6.Why do you invest in ULIP Plans of a
company?
Higher returns
Short term investment
Both
7.Which of the schemes you give importance
while insuring in company?
Single premium Whole life plan schemes
Term Assurance schemes
Children Schemes
Pension schemes
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8.What is the feature you give most
importance while investing in fixed
deposits?
Safety
Assured returns
Tax benefits
9.Do you invest in general insurance?
Yes
No
10. For what you have ad