Post on 20-Dec-2015
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1.1 INTRODUCTION
IDBI Federal Life Insurance Co Ltd, is a joint venture between three leading
financial conglomerates – India’s premier development and commercial bank, IDBI,
India’s leading private sector bank, Federal Bank and Europe’s premier Bank
assurer, Ageas, each of which enjoys a significant status in their respective business
segments. In this venture, IDBI owns 48% equity while Federal Bank and Fortis
own 26% equity each.
Let us have a brief look over these three companies:
1.1.1 IDBI Bank Limited
Development Banking emerged after the Second World War and the Great
Depression in 1930s. The demand for reconstruction funds for the affected nations
compelled in setting up of national institutions for reconstruction. At the time of
Independence in 1947, India had a fairly developed banking system. The adoption of
bank dominated financial development strategy was aimed at meeting the sectoral
credit needs, particularly of agriculture and industry. Specialized development
financial institutions (DFIs) such as the IDBI, NABARD, NHB and SIDBI, etc.,
with majority ownership of the Reserve Bank were set up to meet the long-term
financing requirements of industry and agriculture.
The Industrial Development Bank of India (IDBI) was established in 1964 under an
Act of Parliament as a wholly owned subsidiary of the Reserve Bank of India. In
1976, the ownership of IDBI was transferred to the Government of India and it was
made the principal financial institution for , promoting and developing industry in
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India. But after the public issue of IDBI in July 1995, the Government shareholding
in the Bank came down from 100% to 75%.
IDBI, formally entered the portals of banking business as IDBI Ltd. from 1 October 2004. In
2006, IDBI Bank acquired United Western Bank in a rescue. By acquiring UWB, IDBI Bank
more than doubled the number of its branches from 195 to 425.
1.1.2 Federal Bank
Federal Bank Limited is a major Indian commercial bank in the private sector,
headquartered at Aluva, Kochi, Kerala. It is the fourth largest bank in India in terms
of capital base. As of 2 June 2014, Federal Bank has 1174 branches spread across 24
states and 1371 ATMs across the country. Its balance-sheet stood at Rs 1.03 trillion
as of end March 2014 and its net profit stood at Rs 839 crore for the full fiscal .
In 1931, Travancore Federal Bank began operations at Pattamukkil Varattisseril
house near Nedumpuram, near Thiruvalla, Kerala. The home functioned as the bank
office for nearly 15 years. A lawyer from Perumbavoor named K.P.Hormis, and his
acquaintances, bought the bank and took over the management. In 1945 they moved
the bank's registered office to Aluva and Hormis became the Managing Director. In
1947, the bank's name was shortened from Travancore Federal Bank to Federal
Bank.
Between 1963 and 1970, Federal Bank took over Chalakudy Public Bank, Cochin
Union Bank (1963) in Trichur, Alleppey Bank (1964) in Alappuzha, St. George
Union Bank (1965) in Puthenpally, and Marthandam Commercial Bank (1968)
in Thiruvananthapuram. In 1970, it became a scheduled commercial bank and came
out with itsinitial public offering in 1994.
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In January 2008 Federal Bank opened its first overseas representative office in Abu
Dhabi.
In August 2013 Federal Bank introduced FedBook, the first electronic passbook
launched by any bank in India. FedBook is a mobile app through which customers
can view their passbook details.
1.1.3 AGEAS
Ageas Insurance Company (Asia) Limited is an insurance company based
in Hong Kong. It was acquired by Fortis, the Belgium and Netherlands based public
finance group in 2007
Prior to then the company was called Pacific Century Insurance Holdings Limited
and was controlled by Pacific Century Regional Developments Limited.
Ageas Insurance Company (Asia) Limited ("Ageas") ranks one of the largest life
insurance companies in Hong Kong. it offers the Hong Kong market a diversity of
financial protection products and wealth management services. Ageas is an
international insurance group with a heritage spanning 190 years. Ranked among
the top 20 insurance companies in Europe
Ageas operates successful partnerships in Belgium, the UK, Luxembourg, Italy,
Portugal, Turkey, China, Malaysia, India and Thailand and has subsidiaries in
France, Hong Kong and the UK. Ageas is the market leader in Belgium for
individual life and employee benefits, as well as a leading non-life player through
AG Insurance. In the UK, Ageas is the second largest Motor insurer and has a
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strong presence in the growing over 50’s market. and has annual inflows of more
than EUR 23 billion.
The literal meaning of AGEAS is:
AG - reflects roots-the creation of AG Leven in 1824
EA - two key markets-Europe and Asia
AS - Assurance, our single minded focus on our core insurance business
Having started in March 2008, in just five months of inception, IDBI Federal became one of the
fastest growing new insurance companies by garnering Rs.100 Cr in premiums. The company
offers its services through a vast nationwide network 2,308 partner bank branches of IDBI Bank
and Federal Bank in addition to a sizeable network of advisors and partners. As on 31st
December 2013, the company has issued nearly 5.5 lakh policies with a sum assured of over Rs.
32,110.48 crores.
1.2 Company’s vision:
To be the leading provider of wealth management, protection and retirement solutions that
meets the needs of our customers and adds value to their lives.
1.3 Company’s mission:
To continually strive to enhance customer experience through innovative product
offerings, dedicated relationship management and superior service delivery while
striving to interact with our customers in the most convenient and cost effective
manner.
To be transparent in the way we deal with our customers and to act with integrity.
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To invest in and build quality human capital in order to achieve our mission.
To deliver world-class wealth management, protection and retirement solutions that
provides value and convenience to the Indian customer.
1.4 Companies values and believes:
Transparency: Crystal Clear communication to our partners and stakeholders
Value to Customers: A product and service offering in which customers perceive value
Rock Solid and Delivery on Promise: This translates into being financially strong,
operationally robust and having clarity in claims
Customer-friendly: Advice and support in working with customers and partners
Profit to Stakeholders: Balance the interests of customers, partners, employees,
shareholders and the community at large
1.5 Company Information
Full name: IDBI Federal Life Insurance Co Ltd.
Legal Address: 1st Floor, Trade view Building, Oasis Complex, Kamala City, Pandurang
Budhkar Marg, Lower Parel ( W ); Mumbai; Maharashtra; 400013 14
Legal Form: Other non-liability limited
Type Joint Venture
Industry Life insurance
Founded March 2008
Headquarters Headquaters in Mumbai India
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1.6 Key peoples:
Board of directors:
Mr. R. M. Malla (Non-Executive Director)
Mr. Suresh Kumar (Non-Executive Director)
Mr. Bart De Smet (Non-Executive Director)
Mr. R. K. Bansal (Non-Executive Director)
Mr. Filip A. L. Coremans (Non-Executive Director)
Mr. S. Santhanakrishnan (Independent (Non-Executive) Director)
Mr. R. K. Thapliyal (Independent (Non-Executive) Director)
Mr. Davinder Rajpal (Independent (Non-Executive) Director)
Senior management committee:
Mr. Ajay Oberoi (Chief People Officer & Head – Administration)
Mr. Ashley Kennedy (National Head – Agency & Alliances)
Mr. Aneesh Khanna (Head – Marketing & Product Management)
Mr. Aneesh Srivastava (Chief Investment Officer)
Mr. Rajesh Ajgaonkar (Head – Legal, Compliance &Company Secretary)
Mr. Vignesh Shahane (CEO & Whole – Time Director)
Mr. George John (Corporate Controller)
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1.7 Products
1.7.1 Childsurance
IDBI Federal Childsurance Savings Protection Plan is a endowment plan that
ensures your child’s future financial needs are fulfilled. Childsurance Savings, is
designed to give you guaranteed annual payouts and aid the important milestones in
your child’s life. What’s more, in the unfortunate event of you not being around, the
policy will continue exactly as you had planned it, without any further premiums
being paid. .In other words, this plan ensures that your child gets to live his/her
dream exactly as you have planned, whether or not you are around.
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Figure 1. 1 childsurence
1.7.2 Group Microsurance Plan
The IDBI Federal Group Microsurance Plan provides affordable life insurance
cover to groupsThe plan is extremely useful to Micro Finance Institutions, Self
Help Groups and NGOs to insure the lives of their group members and thus provide
security to the group members’ families. The plan can also be used for providing
loan protection to the group members’ families
1.7.3 Incomesurence
DBI Federal Incomesuranc Guaranteed Money Back Insurance Plan is a non-
linked non-participating money back plan which gives you guaranteed* returns on
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Figure 1. 2 Group Microsurance Plan
Figure 1. 3 Incomesurence
your investment, so that you stop worrying about the future. With Incomesurance,
you can guarantee a secure future for your family even when you are not around.
1.7.4 Lifesurence
IDBI Federal Lifesurance® Savings Insurance Plan (UIN:135N029V01) is a
fixed term non-linked participating plan that provides you the twin benefits of
long-term savings and life cover. With Lifesurance Savings, your small savings
will help you realise the big dreams that you have for yourself and your family.
This plan also offers you the benefit of life cover that will provide financial
security to your family in your absence.
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Figure 1. 4 Lifesurence
1.7.5 Loansurance Group Insurance Plan
IDBI Federal Loansurance® Group Insurance Plan, hereafter referred to as
Loansurance®, is a group credit protection plan that helps protect your borrower’s
assets and savings. Through Loansurance® you extend peace of mind to your
clients, ensuring that their debt does not become a burden on their family in their
absence. In return, you are also protected from the risk of non-payment of the loan
dueatoadeathaofatheaborrower.
Loansurance® allows you to cover the persons who are directly liable for loan
repayment (and the partners, in case of a partnership) be it a loan taken by
individuals or by business. Thus, even a business entity will be protected against
loan default in case of death of the persons who are responsible for loan repayment.
Furthermore, with this product, you gain competitive edge while attracting new
customersdanddretainingdthedexistingdones..
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Figure 1. 5 Loansurance Group Insurance Plan
1.7.6 Termsurance
IDBI Federal Termsurance Group Insurance Plan is a pure group term plan
designed to cater to a wide variety of formal and informal groups such as the
employer-employee groups/bank-depositor groups/ customer-supplier
groups/professionals/affinity groups. It is a Group Term Insurance plan that
provides basic life insurance protection to the members of the plan.
1.7.7 Wealthsurance
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Figure 1. 6 Termsurance
IDBI Federal Wealthsurance® Suvidha Growth Insurance Plan (UIN:
135L033V01) is a simple unit linked plan that helps you take your first step towards
wealth creation and that too, with ease. What’s more, the life cover with this plan
provides financial protection to your loved ones.
1.7.8 Retiresurance
IDBI Federal Retiresurance Group Insurance Plan is a non-linked non-participating
variable insurance plan, designed for employer-employee groups only. It enables
employers with more than 10 employees to outsource the management of their
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Figure 1. 7 Wealthsurance
Figure 1. 8 Retiresurance
employee’s gratuity, superannuation and leave encashment funds. It also provides
basic life insurance protection to the members of the plan.
1.8 Size of firm
It is this commitment that has helped us achieve break-even in just the 5 year of
operation and declare a maiden profit of ` 9.24 crore. We offer our services through a
nationwide network of 2,186 bank branches of IDBI Bank and Federal Bank in addition to
a sizeable network of our advisors. As on 31 March, 2013, IDBI Federal Life Insurance
issued over 5 lakh policies with a sum assured of more than ` 28,500 crore.
Moreover, IDBI Federal life insurance is a fast growing insurance company as achieving a
break-even in just 5 years is a great achievement for a insurance company. It also raised
100crores in just 6 mounts, and that’s something highlighting.
After declaring the maiden profit of RS.9.2 crores (approx.) (as on 31st march 2013), it took
a huge jump in reference to profits and declared 80 crores (8.6 times profit of the last year,
i.e., 2013), in 2014 as profit.
1.9 Market Share Of The Firm
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0.00
10.00
20.00
30.00
40.00
50.00
60.00
70.00
80.00
90.00
100.00
63.47
5.885.66 4.4
3.142.73
2.46 2.31.27
1.271.05 1.02
0.990.99
0.5800000000000010.530.42
0.410.41
0.3900000000000010.3300000000000020.20.0900000000000001
Figure 1. 9 market share of the idbi Federal life insurance
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1.10 Organizational Structure
1.10.1 Sales Organizational Structure
Figure 1. 10 Sales Organizational Structure of the idbi Federal life insurance
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1.10.2 Human Resource Organizational Structure
Figure 1. 11 Human Resource Organizational Structure of the idbi Federal life insurance
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1.10.3 Operational Organizational Structure
Figure 1. 12 Operational Organizational Structure of the idbi Federal life insurance
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1.11.1 Objective of study
To compare my skills and knowledge with the requirement of corporate world
To implement the concept studies in academics in real world
To learn about various types of investment tools
To compare the tools and find out the positives and negatives of every tool
1.11.2 Sources of data
Primary data
Primary data was collected by my colleagues, seniors, and by
distributing the questionnaires to the people of different backgrounds. The
questionnaires were carefully designed under the supervision of my supervisor, Mr.
Sanjeev Malik, taking every parameter of my study in my mind.
Secondary data
Data was collected from books, magazines, web sites, going through the
records of the organisation, etc. It is the data which has been collected
by individual or someone else forth purpose of other than those of our
particular research study.
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2.1 Strengths & Weaknesses
2.1.1 Strengths
skilled workforce
reduced labor costs
Superior customer service
High degree of customer satisfaction.
Dedicated workforce aiming at making a long-term career in the field.
Large pool of technically skilled manpower with in depth knowledge and
understanding of the market
2.1.2 Weakness
Management cover insufficient.
Sectoral growth is constrained by low unemployment levels and competition for
staff.
Low customer confidence on the private players
Low or negative growth rate
2.2 Opportunities & Threats
2.2.1 Opportunities
Insurable population : According to IRDA only 10% of the population is insured
which represent around 30% of the insurable population.
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Due to new budget, FDI is possible due to which company can grow
Quick claim settlement (policy of claim settlement in 8 working days)
Efficient R&D team to launch new products
2.2.2 Threats
tax changes
FDI increased the completion
Threat from international players
2.3 Unique Selling Prepositions
the USP of IDBI FEDERAL LIFE INSURANCE PVT. Ltd is that it is a reliable
firm, as it constitute the combination of a government bank, a private but top most
(in south India) bank, and the second largest insurance firm, ageas. Moreover it has
a believe of ‘what we say, is what it is’ which is mostly missing in other insurance
firms.
And it also have highly R&D team which innovates its products to make it best.
The company has all unique products on which customers can relay. One such
product is INCOMESURENCE, Which gives GARUNTEED 138% cash back,
from 6th year, on the premium paid, first 5 years.
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Moreover it has a policy of paid-up, in which, if the customer is unable to pay
premium after two years, his policy will be converted according to the amount
paid.
All such products are reliable due to everything mentioned in the policy in writing.
Maximum firms promises such things but do not give these thing in writing ans
they are making virtual promises, but IDBI FEDERAL gives surety about the
money of the customer.
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3.1 Introduction
Saving is income not spent, or deferred consumption. Methods of saving include putting
money aside in a bank or pension plan. Saving also includes reducing expenditures, such as
recurring costs. In terms of personal finance, saving specifies low-risk preservation of
money, as in a deposit account, versus investment, wherein risk is higher.
Saving is closely related to investment. By not using income to buy consumer goods and
services, it is possible for resources to instead be invested by being used to produce fixed,
such as factories and machinery. Saving can therefore be vital to increase the amount of
fixed capital available, which contributes to economic growth.
Investment is the purchase of an asset or item with the hope that it will generate income or
appreciate in the future and be sold at the higher price. The term investment is usually used
when referring to a long-term outlook. This is the opposite of trading or speculation, which
are short-term practices involving a much higher degree of risk.
the various types of investing tools are:
Bank (FD, RD,SA)
Shares
Bonds
Gold
Insurance
Post office
Mutual funds
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All the instruments are good to be invested with some positives and negative factors. Let us
do a detailed study of insurance and mutual funds as the investment tools in current era
and compare both of them.
3.2 INSURANCE
Insurance is the equitable transfer of the risk of a loss, from one entity to another in
exchange for payment. It is a form of risk management. Insurance involves pooling funds
from many insured entities (known as exposures) to pay for the losses that some may incur.
The insured entities are therefore protected from risk for a fee, with the fee being
dependent upon the frequency and severity of the event occurring.
An insurer, or insurance carrier, is a company selling the insurance; the insured, or
policyholder, is the person or entity buying the insurance policy. The amount of money to
be charged for a certain amount of insurance coverage is called the premium.
Methods for transferring or distributing risk were practiced
by Chinese and Babylonian traders as long ago as the 3rd and 2nd millennia BC,
respectively. Chinese merchants travelling treacherous river rapids would redistribute their
wares across many vessels to limit the loss due to any single vessel's capsizing. The
Babylonians developed a system which was recorded in the famous Code of Hammurabi, c.
1750 BC, If a merchant received a loan to fund his shipment, he would pay the lender an
additional sum in exchange for the lender's guarantee to cancel the loan should the
shipment be stolen or lost at sea.
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3.2.1 Types of insurance
Figure 3. 1 types of insurance
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Types Of Insurence
life insurancenon- life
insurance
FireMiscellaneousMotor
Health
travell
Propert
y
Marine
re-insurance
3.2.1 Life Insurance
Life insurance is a contract between an insured and an insurer or assurer, where the
insurer promises to pay a designated beneficiary a sum of money in exchange for a
premium, upon the death of the insured person. Depending on the contract, other
events such as terminal illness or critical illness may also trigger payment. The
policy holder typically pays a premium, either regularly or as a lump sum. Other
expenses (such as funeral expenses) are also sometimes included in the benefits.
Life policies are legal contracts and the terms of the contract describe the limitations
of the insured events. Specific exclusions are often written into the contract to limit
the liability of the insurer; common examples are claims relating to suicide, fraud,
war, riot, and civil commotion.
Life insurance provides a monetary benefit to a decedent's family or other designated
beneficiary, and may specifically provide for income to an insured person's family,
burial, funeral and other final expenses. Basically, the insured person pay premiums
according to the policy, when he is alive, and gets the grantee of payback the total
premium amount with increment in amount in form of interest, bonuses etc, to his
family after his death. Life insurance policies often allow the option of having the
proceeds paid to the beneficiary either in a lump sum cash payment or an annuity.
3.2.2 Reinsurance
Reinsurance is insurance that is purchased by an insurance company from one or
more other insurance companies. The ceding company and the reinsurer enter into
a reinsurance agreement which details the conditions upon which
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the reinsurer would pay a share of the claims incurred by the ceding company. The
reinsurer is paid a "reinsurance premium" by the ceding company, which issues
insurance policies to its own policyholders.
The reinsurer may be either a specialist reinsurance company, which only undertakes
reinsurance business, or another insurance company.
For an example of a reason for purchasing reinsurance, assume an insurer sells 1,000
policies, each with a $1 million policy limit. Theoretically, the insurer could lose $1
million on each policy – totaling up to $1 billion. It may be better to pass some risk
to a reinsurer as this will reduce the ceding company's exposure to risk.
A healthy reinsurance marketplace helps to ensure that insurance companies can
remain solvent (financially viable) because the risks and costs are spread,
particularly after a major disaster such as a major hurricane.
3.2.3 Non- Life Insurance
non life insurance include all other types of insurance other than life insurance. Let
us have a brief review of them. They are
1. Fire insurance
Insurance that is used to cover damage to a property caused by fire. Fire
insurance is a specialized form of insurance beyond property insurance, and is
designed to cover the cost of replacement, reconstruction or repair beyond
what is covered by the property insurance policy. Policies cover damage to the
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building itself, and may also cover damage to nearby structures, personal
property and expenses associated with not being able to live in or use the
property if it is damaged.
2. Marine insurance
Marine insurance covers the loss or damage of ships, cargo, terminals, and
any transport or cargo by which property is transferred, acquired, or held
between the points of origin and final destination. Cargo insurance —
discussed here — is a sub-branch of marine insurance, though Marine also
includes Onshore and Offshore exposed property, Marine Casualty. and
Marine Liability. When goods are transported by mail or courier, shipping is
used instead.
3. Miscellaneous
It includes:
Automobile insurance
A policy purchased by vehicle owners to mitigate costs associated with
getting into an auto accident. Instead of paying out of pocket for auto
accidents, people pay annual premiums to an auto insurance company;
the company then pays all or most of the costs associated with an auto
accident or other vehicle damage.
Health insurance
Health insurance is insurance against the risk of incurring medical
expenses among individuals. According to the Health Insurance
Association of America, health insurance is defined as "coverage that
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provides for the payments of benefits as a result of sickness or injury.
Includes insurance for losses from accident, medical expense,
disability, or accidental death and dismemberment"
Travel insurance
Travel Insurance is insurance that is intended to
cover medical expenses, financial default of travel suppliers, and other
losses incurred while traveling, either within one's own country, or
internationally.
Property insurance
Property insurance provides protection against most risks
to property, such as fire, theft and some weather damage.
3.3 MUTUAL FUNDS
A mutual fund is a type of professionally managed collective investment scheme that
pools money from many miscellaneous investors to purchase securities. While there is no
legal definition of the term mutual fund, it is most commonly applied only to those
collective investment vehicles that are regulated and sold to the general public. They are
sometimes referred to as "investment companies" or "registered investment
companies". Most mutual funds are open-ended, meaning stockholders can buy or sell
shares of the fund at any time by redeeming them from the fund itself, rather than on an
exchange. Hedge funds are not considered a type of mutual fund, primarily because they
are not sold publicly.
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Mutual funds have both advantages and disadvantages compared to direct investing in individual
securities.
The fund manager, also known as the fund sponsor or fund management company, trades(buys and
sells) the fund's investments in accordance with the fund's investment objective. A fund manager
must be a registered investment advisor. Funds that are managed by the same fund manager and
that have the same brand name are known as a fund family orfund complex.
Advantages and disadvantages
Mutual funds have advantages compared to direct investing in individual securities. These
include:
Increased diversification: A fund must hold many securities. Diversifying reduces risks
compared to holding a single stock, bond, other available instruments.
Daily liquidity: This concept applies only to open-end funds. Shareholders may trade
their holdings with the fund manager at the close of a trading day based on the closing net
asset value of the fund's holdings. However, there may be fees and restrictions as stated
in the fund prospectus. For holders of individual stocks, bonds, closed-end funds, ETFs,
and other available instruments, there may not be a buyer/seller for that instrument every
day, making such investments less liquid.
Professional investment management: A highly variable aspect of a fund discussed in the
prospectus. Actively managed funds may have large staffs of analysts who actively trade
the fund holdings. Management of an index fund may just passively re-balance holdings
to match a market index like the Standard and Poors 500 Index.
Ability to participate in investments that may be available only to larger investors:
Foreign markets, in particular, are rarely open and affordable for individual investors.
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Moreover, the research required to make sensible foreign investments may require
knowledge of another language and the rules of regulations of other markets.
Service and convenience: This is not a feature of a mutual fund, but rather a feature of the
fund management company. Increasingly in recent years, there are funds, notably
Exchange Traded Funds (ETFs) that are purely investment instruments without any
additional services from the fund management company.
Government oversight: Largely, the US government's role with mutual funds is to require
the publication of a prospectus describing the fund. No such document is required for
stock, bonds, currencies, and other investment instruments. There is no governmental
oversight of a fund's investment success/failure.
Ease of comparison: Since mutual funds are available from many providers, it is
generally easy to find similar funds and compare features such as expenses.
Mutual funds have disadvantages as well, which include
Fees
Less control over timing of recognition of gains
Less predictable income
No opportunity to customize
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3.4 Comparison of insurance And Mutual Funds
Now after knowing a lot about both, insurance and mutual funds, let us compare both of
them and study the feasibility of investing the money them:
3.4.1 Investing by insurance
By investing in life insurance, almost anyone can transfer the financial risks of
dying early, guaranteeing to family members who might otherwise be left in
economic turmoil. Today's life insurance policies, however, often come with
features borrowed from the investment world, blending traditional insurance with
attributes of a mutual fund account. Those who haven't purchased a policy may be
familiar only with "term" life insurance, which covers the owner for a set period of
time. If the owner lives past that date, the plan expires and is worthless. But now,
life insurance policies are "cash value," which means the fees, or premium is then
invested in a "separate account," either by the insurer or in an account controlled
by the policy holder, building up cash value. Any investment gains can be used in
a few ways: to increase the death benefit, to borrow against for any use or to keep
the policy in effect if one stop paying monthly premiums. In this system, the cash
value and benefits may actually decrease or go away completely depending upon
the performance of the investments
Note: the investment of insurance premium is basically calles ULIP (Unit
Linked Insurance Plans)
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ADVANTAGES:
The advantages of investing in insurance are:
1. Investment
The money given in premium is invested by some experts of the company,
therefore the chances of losses decreases
2.Tax Benefit:
the premium and the bash received back are wholly tax exempted.
3.Insurance benefits:
The thing insured is the basic advantage of the insurance as the risk is
transferred to the company.
3.4.2 Investing in mutual funds
The basics of investing money in Stocks, Bonds, Mutual funds, are simple and
easy as one proceeds step by step . Any successful stock market investor is familiar
with the basics of mutual fund investing. But mostly investors are not even aware
on their investments in mutual funds schemes, where their money have been
invested. Investing in equity, mutual funds, keeping an eye opportunities, watching
the trends is not easy but one can learn the steps for successful investing.
Both the long term and short term investors can benefit from such type investments
but there is a need of regular update on new investing schemes. Talking about
Indian market, Indian stock market is quite mature. In fact India has the largest
investor base in the world after the US and Japan. Investors can invest in shares,
debentures, mutual funds and securities among other investment tools. In addition
to above two main stock exchanges India have 21 recognised stock exchanges but
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the most active ones are the NSE and the BSE. NSE set up has a model exchange
as a fully automated screen based system. BSE one of the oldest in the world
accounts for the largest number of listed companies has also started a screen based
trading system with the introduction of the Bombay online trading system.
Regulations on the capital markets and the protection of investors interest is
primarily the responsibility of the Securities and Exchange Board of India (SEBI)
Headquartered in Mumbai. Consider three parameters while selecting a company.
ADVANTAGES:
Mutual funds are relatively stables as the money is invested in many firms, the
drop in 1 can be compensated by other. The risk factor is low. And returns are
most of the times good.
3.4.3 INSURANCE VS. MUTUAL FUNDS
BASIS INSURANCE MUTUAL FUNDS
Description Insurance Plans refer to
plans, that allow investors to
direct part of their premiums
into different types of funds
(equity, debt, money market,
hybrid etc.).
A mutual fund pools the
money from investors and
uses it to invest in various
securities according to a pre-
specified investment
objective.
Objective They are long term plans
offering you a dual benefit of
insurance and investment.
Mutual funds are ideal
investment tool for the short
to medium term.
Tax Benefit All Plans offer tax benefits Only investments in tax
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under section 80C. saving funds are eligible for
section 80C benefits.
Switching
options
allows you to switch your
investment between the
funds linked to the plan. This
enables you to change the
risk return.
No switching option is
available. If you are not
satisfied with the performance
of the fund you can exit
completely from the same by
paying exit charges, if
applicable.
Additional
Benefits
Some of the Plans give you
an additional benefit or
loyalty benefit by issuing
extra fund units.
There are no additional
benefits issued by mutual
funds
Liquidity Plans have limited liquidity.
One needs to stay invested
for a minimum period of
time as specified in the
policy before redeeming the
units.
You can easily sell mutual
fund units (except for ELSS
and funds that have a
minimum lock-in period).
Charges
structure
Charges in a plan include
mortality charges for the life
insurance provided. In
addition, premium allocation
Mutual fund charges include
an entry load, the annual fund
management charge and an
exit load, if applicable.
37
charge, fund management
charge and administration
charges are applicable.
Table 3. 1 comparison between insurance and mutual funds
38
Review of literature
1. Kumar (2001) investigated the effects of FII inflows on the Indian stock market
represented by the Sensex using monthly data from January 1993 to December 1997.
Kumar (2001) inferred that FII investments are more driven by Fundamentals and they do
not respond to short-term changes or technical position of the market. In testing whether
Net FII Investment (NFI) has any impact on Sensex, a regression of NFI was estimated
on lagged values of the first difference of NFI, first difference of Sensex and one lagged
value of the error correction term (the residual obtained by estimating the regression
between NFI and Sensex). The study concluded that Sensex causes NFI. Similarly,
regression with Sensex as dependent variable showed that one month lag of NFI is
significant, meaning that there iscausality from FII to Sensex.
2. Stanley Morgan (2002) has examined that FIIs have played a very important role in
building up India’s forex reserves, which have enabled a host of economic reforms.
Secondly, FIIs are now important investors in the country’s economic growth despite
sluggish domestic sentiment. The Morgan Stanley report notes that FII strongly influence
short-term market movements during bear markets. However, the correlation between
returns and flows reduces during bull markets as other market participants raise their
involvement reducing the influence of FIIs. Research by Morgan Stanley shows that the
correlation between foreign inflows and market returns is high during bear and weakens
with strengthening equity prices due to increased participation by other players.
39
3. Agarwal, Chakrabarti et al (2003) have found in their research that the equity return has a
significant and positive impact on the FII. But given the huge volume of investments,
foreign investors could play a role of market makers and book their profits, i.e., they can
buy financial assets when the prices are declining thereby jacking-up the asset prices and
sell when the asset prices are increasing. Hence, there is a possibility of bi-directional
relationship between FII and the equity returns.
4. P. Krishna Prasanna (2008) has examined the contribution of foreign institutional
investment particularly among companies included in sensitivity index (Sensex) of
Bombay Stock exchange. Also examined is the relationship between foreign institutional
investment and firm specific characteristics in terms of ownership structure, financial
performance and stock performance. It is observed that foreign investors invested more in
companies with a higher volume of shares owned by the general public. The promoters’
holdings and the foreign investments are inversely related. Foreign investors choose the
companies where family shareholding of promoters is not substantial. Among the
financial performance variables the share returns and earnings per share are significant
factors influencing their investment decision
5. Anand Bansal and J.S. Pasricha (2009) studied the impact of market opening to FIIs on
Indian stock market behavior. They empirically analyze the change of market return and
volatility after the entry of FIIs to Indian capital market and found that while there is no
significant change in the Indian stock market average returns; volatility is significantly
reduced after India unlocked its stock market to foreign investors. In the next section we
are discussing the data sources and methodology of the study.
40
The Segmentation of sample as on the basis of gender, age, family status, annual income,
occupation etc. the demographic profile is as follows
Basis Particulars Frequency Percentage
gender
male 14 70
female 6 30
total 20 100
age
18-30 5 25
31-40 4 20
41-50 6 30
50+ 5 25
total 20 100
Marital
status
married 18 90
single 2 10
total 20 100
Income( in
lakhs)
1-2 1 5
2-3 13 65
3-4 5 25
More than 4 1 5
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total 20 100
Occupation business 16 80
service 4 20
total 20 100
Table 3. 2 demografic profile
Q1. Do you know About ULIP Insurance?
Particulars Response Percentage
yes 17 85
no 3 15
total 20 100
Table 3. 3 awareness of ulip
85%
15%
AWARENESS
yesno
Figure 3. 2 awareness of ulip
Interpretation
As insurance sector is growing rapidly so most of the life insurance players are selling ULIP
plans. And the awareness about ULIP is growing most of the people knows the ULIP of life
43
insurance. Since last 4-5 years the returns provided by ULIP were very good so people tend more
to words ULIP.
Q2. Do you have taken any ULIP insurance policy? Can you name it?
particulars Company name responses percentage
yes Idbi federal life insurance 9 45
Reliance Life Insurance 2 10
SBI Life Insurance 5 25
no 4 20
total 20 100
Table 3. 4 preference of company
56%
13%
31%
PREFERENCE FOR COMPANY
Idbi fedral life insuranceReliance Life InsuranceSBI Life Insurance
Figure 3. 3 preference of company
INTERPRATION
While investing, people are most likely to invest in idbi federal life insurance followed by SBI
life insurance and at the end IDBI federal life insurance
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Q3. If yes, which company’s ULIP you have taken and why?
Particulars Response Percentage
SECURTY 5 31.25
INVESTMENT 6 37.5
TAX RELIEF 5 31.25
Table 3. 5 reasons for investment
31%
38%
31%
REASON FOR INVESTMENT
securityinvestmenttax relief
Figure 3. 4 reasons for investment
INTERPRATION
Most of the people invest in ulip for investment.
45
Q4. Do you know about Mutual fund?
Particulars Response Percentage
yes 12 60
no 8 40
total 20 100
Table 3. 6 awareness for mutual funds
60%
40%
AWARENESS
yesno
Figure 3. 5 awareness for mutual funds
Interpretation
As now till date people in India did not to invest in share market because then were thinking that
it is a bad thing but as the awareness about Mutual fund is increasing as more and more private
players are entering in the market. So awareness about MF is Good and it can be improved.
Q5) If yes, what is the preference for choosing the mutual funds?
46
Particulars Response Percentage
GOOD
RETURNS
6 50
INVESTMENT 2 16.66
LIQUIDITY 4 33.33
Table 3. 7 reasons for investment in mutual funds
50%
17%
33%
REASON FOR INVESTMENT
good returnsinvestmentliquidity
Figure 3. 6 reasons for investment in mutual funds
INTERPRITATION
While investing in mutual fund 50% investors preferring more to the returns the mutual fund is
providing and 17% for the Investment and 33% for Liquidity reasons.
Q6) Which is the factor you consider the most while choosing any Investment Option?
47
Particulars Response Percentage
returns 6 36
security 11 64
total 17 100
Table 3. 8 Basis for preference of investment tool
returns security
36%
64%
BASIS FOR PREFERENCE OF IN-VESTMENT TOOL
Figure 3. 7 Basis for preference of investment tool
Interpretation
In future people will be more preferring to the security of their money means they want an
secured option which should provide good returns. As ULIP are the option in which you can
have the security also and good returns. The second choice of the investors is return of their
money.
Q7) Whom Do you prefer first for
investment?
48
Investment
Option
Response
(No. of
Persons)
percentage
Mutual Fund 7 41
ULIP 10 59
Total 17 100
mutual funds vs ulip
mutual funds ulip
41%59%
mutual funds vs ulip
Figure 3. 8 mutual funds vs ulip
Interpretation
As most of the people want the option which should provide security and good returns and there
is only option available with good liquidity is ULIP of IDBI federal Life Insurance. 59% people
had opted for ULIP as their future investment and 41% of people opted for Mutual Fund. So we
can find that there not so much difference in these option.
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Table 3. 9
Q8) How would you rate IDBI federal life insurance?
Ratings Response
(No. of Persons)
Fair 3
Average 6
Good 5
Best 6
Table 3. 10 ratings for the company
Fair Average Good Best0
1
2
3
4
5
6
7 Ratings
Ratings
Figure 3. 9 ratings for the company
Interpretation
From this we can analyze that IDBI federal Life Insurance is doing good but it is having good
potential in Market. To improve its market share they should improve the awareness level of the
common people.
Conclusions and/or Recommendations
50
From above analysis and survey we can conclude as follows
Awareness of ULIP is increasing as more number of private players are entering in life
insurance industry.
Mutual Fund is also getting more and more famous in Indian market as many private
companies innovating new funds as the investors demand.
ULIP differentiate from Mutual fund in respect of Insurance cover.
Investors in IDBI federal Life ULIP will be getting the advantage of life insurance cover.
ULIP and Mutual fund are providing same type of investment funds like, equity funds,
debt funds, infrastructure fund, balanced fund etc.
In terms of expenses mutual funds are having low expenses as compared to ULIP of IDBI
federal life insurance.
People are turning to words the ULIP as a good investment option but as ULIP is in its
starting phase so customers are preferring only big brands.
Mutual fund is having good growth but many customers from rural areas don’t have any
knowledge about Mutual fund.
There is a need for insurers to undertake a demand audit in order to understand what the
policyholder wants and needs.
Deriving the right feedback from customers and bringing out innovative products which
cater to customer demands will go a long way in tapping the market potential of the
insurance and Mutual fund sector.
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Mutual fund and ULIP insurance both are facing fierce competition; increasingly more
organizations are seeking to enhance their demand in the market place.
IDBI federal Life Insurance should go for innovating more and more products and
improving the distribution channels as per the area of sales.
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I join the IDBI federal life insurance with the theoretical knowledge gained in the academics,
with an objective to ascertain the practical knowledge. My basic objective was to experience
how the corporate world works in real life.
This internship was full of ups and downs which made me learnt many lessons and help me to
gain several experiences
Working environment was excellent. Great staff members were there. Well maintained office.
All facilities were provided to the employees. Flexibility was maintained. Employees doubt and
suggestions was always welcomed.
We were called on alternative days and trained and made learn about the company profile,
culture, its products and many more things.
Then we were told to contact our closed and dear ones in order to sell the product to the. This
activity gave me confidence as I was feeling as a professional and was dealing with the
customers on the behalf of such a large scale firm. That feeling was great.
Almost all the queries raised by customers was tackled by me, but in case, I got struck anywhere,
the managers act as a support system for me. This culture of firm helped me to fulfill my
deadlines and work well.
Personal Experience
I learned various things:
It helped me in improving my communication skills and presentation skills
My confidence level was increased
How to tackle different client base
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Practical knowledge
Tackling the quarries
Handling the work loads
Difficulties faced during the internship
Overall it was a good experience while working in UAS International, but I faced little bit difficulties
during my internship period.
Handling customers quarries
Meeting with tough deadlines
Competitive working environment
Personally I would like to recommend my friends to be a part of this firm and also like to see
future in the same. IDBI federal life insurance co. ltd. Offers the interns ample of scope to
develop the persons personality, rather say professional personality.
55