Final Bajaj Project

7/30/2019 Final Bajaj Project

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INTRODUCTION

The project started with class room sessions involving lectures and interactionswith the

mentors Mr. Sanchit Sachdeva (SDM) and Mr. Hridesh Chauhan(BM). They explained all the

plans available with HDFC SLIC in detail andthe pension plan comparison of BIRLA SUN LIFE,

BAJAJ ALLIANZ & LIC.The classroom also involved role plays and games. The role plays

and gamesinvolved students being asked to play the roles of customers or clients and thatof a

person trying to persuade the customer to go in for a plan with

HDFCSLIC.These class room lectures and role-

plays helped me to gain a substantialunderstanding of the plans. This in turn helped me to

effectively explain these plans to people whom I meet or took appointment to meet.The

connect of life insurance has undergone several changes over the years andwhat has myriad

array of attractive options apart from the basic of life

cover.Life insurance schemes also offer tax benefits. In todays scenario lifeinsurance solves the

three objectives.

1.Security

2.Saving

3.Tax Benefit

EXECUTIVE SUMMARYThis project is based upon the fact & figure gathered from the websites about the plans of the

firm.In the first part of the report there are some plans which are frequently sold byH D F C

SLIC in the market , and then comparat ive study of pens ion p lan of d i f ferent

firm namely BIRLA SUN LIFE, BAJAJ ALLIANZ and LIC is there

OBJECTIVE OF STUDY1.Comparative study of HDFC SLIC, BIRLA SUN LIFE, BAJAJALLIANZ and LIC.2.To analyze the pension plan on the basis of features offered.

3.To observe working of various d epartments of the organization

EXECUTIVE SUMMARYThis project is based upon the fact & figure gathered from the websites about the plans of the

firm.In the first part of the report there are some plans which are frequently sold byHDFC

SLIC in th e mark et , and th en co mparat ive s tudy of pe nsion plan of different

firm namely BIRLA SUN LIFE, BAJAJ ALLIANZ and LIC is there


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.In the last part of the project I have given some of the findings and conclusionabout the life

insurance market and what is the potential of th e market. In the end I have give all

the sources from which I have collected all the information

COMPANY PROFILEHDFC LIMITEDHDFC was incorporated in 1977 with the primary objective of meeting a socialneed that of

promoting home ownership by providing long-term finance tohouseholds for their housing

needs. HDFC was promoted with an initial sharecapital of Rs. 100 million. Business ObjectivesThe primary objective of HDFC is to enhance residential housing stock in thecountry through the

provision of housing finance in a systematic and professional manner, and to promote home

ownership. Another objective is toincrease the flow of resources to the housing sector byintegrating the housingfinance sector with the overall domestic financial markets. Organizational GoalsHDFCs main goals are toa) Develop close relationships with individual households,b) Maintain

its position as the premier housing finance institution in thecountry,c) Transform ideas into viable

and creative solutions,d) Provide consistently high returns to shareholders,e) To grow through

diversification by leveraging off the existing client base.

HDFC STANDARD LIFEThe Partnership:HDFC is an organization that strives for excellence, with the twin objectives of enhancing

customer satisfaction and shareholder valueHDFC and Standard Life first came together for a

possible joint venture, toenter the Life Insurance market, in January 1995. At the outset it was

clear that both companies shared similar values and beliefs and a strong relationshipquickly

formed. In October 1995 the companies signed a 3 year joint ventureagreement.Around this time

Standard Life purchased a 5% stake in HDFC, further strengthening the relationship. The next

three years were filled withuncertainty, due to changes in government and ongoing delays in

getting theIRDA (Insurance Regulatory and Development authority) Act passed

in parliament.Despite this both companies remained firmly committed to the venture.In October

1998, the joint venture agreement was renewed and additionalresource made available. Aroundthis time Standard Life purchased 2% of Infrastructure Development Finance Company Ltd.

(IDFC). Standard Life alsostarted to use the services of the HDFC Treasury department to advise

themupon their investments in India.Towards the end of 1999, the opening of the market looked

very promising and both companies agreed the time was right to move the operation to the

nextlevel. Therefore, in January 2000 an expert team from the UK joined a hand picked team

from HDFC to form the core project team, based in Mumbai.


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Around this time Standard Life purchased a further 5% stake in HDFC and a5% stake in HDFC

Bank. In a further development Standard Life agreed to participate in the Asset Management

Company promoted by HDFC to enter themutual fund market. The Mutual Fund was launched

on 20th July 2000.The company was incorporated on 14th August 2000 under the name:

HDFCStandard Life Insurance Company Limited.Their ambition from as far back as October

1995 was to be the first privatecompany to re-enter the life insurance market in India. On the

23rd of October 2000, this ambition was realized when HDFC Standard Life was the only

lifecompany to be granted a certificate of registration.HDFC are the main shareholders in HDFC

Standard Life, with 81.6%, whileStandard Life owns 18.4%. HDFC and Standard Life have a

long and closerelationship built upon shared values and trust. The ambition of HDFCStandard

Life is to mirror the success of the parent companies and be theyardstick by which all other

insurance companies in India are measured.HDFC Standard Life Insurance Company has been

signed on by Blue Star to provide insurance cover to its 1,805 employees across India and

overseas.HDFC Stand ard Life Ins uranc e is one o f th e le ading player s i n th e

gr ou p insurance segment of the life insurance business. Its group business hasgrownsignif icant ly s ince incept ion and now covers over 25,000 l ives ,

a c ro ss th e entire industry spectrum including software, FMCG, pharmaceuticals,

banking,consultancy, BPOs, retailing, and consumer electronics

MISSION:-HDFC Standard Life aims to be the top new life insurance company in themarket.This does not

just mean being the largest or the most productive company inthe market, rather it is a

combination of several things like:Customer service of the highest order

Value for money for customersProfessionalism in carrying out businessInnovative products to cater to different needs of different customers

Use of technology to improve service standardIncreasing market share

VALUES:-1.SECURITY:Providing long term financial security to its policy holderswill be the companys constant

endeavor. It will do this by offering lifeinsurance and pension products.2.TRUST


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: HDFC Standard Life appreciates the trust placed by its policyholders in it. Hence, it will aim

to manage their investments verycarefully and live up to this trust.3 . I NNOVATI ON: Recognizing the different needs of its customers, itwill be offering a range of innovativeproducts to meet these needs. Thecompanys mission is to be the best new life insurance

company in Indiaand these are the values that will guide it in this

Why HDFC Standard Life?There are many reasons why one may choose HDFC Standard Life InsuranceCompany Ltd. asyour partner in meeting your insurance needs:a) Innovative products to meet your needs. b)

Efficient customer service team.c) Good financial track record of both parentsHDFC and

Standard Life.d) Certified Financial Consultants to advise you.e) Professional approach in

managing your investments.f) Income Tax benefits for our insurance products.

FINANCE DEPARTMENT AT HDFC STANDARD LIFEThe finance department of HDFC Standard Life Insurance is headed by theGeneral Manager

(Finance), who reports to the MD and CEO. There are four other departments under the Finance

Departments. These are:1. Accounts Department2. Actuary Department3. InvestmentDepartment4. Underwriting DepartmentThe Accounts Department:The Accounts Department functions like any other Accounts department. It isconcerned with the

disbursement of salaries, reimbursements, incentives,commissions to agents. It also handles the

payments due to other agencies withwhich the Company interacts, viz. event management

companies etc. The work of an Accounts department assumes much importance in an insurance

company because it has to be able to pay the claims arising time to time.

The Actuary Department:The Actuary Department is the Pricing Department of an insurance company.It must be

understood that thebasic premise on which the insurance companieswork is use the corpus of

policy holders for disbursement for any claim.Based on this principle, this department decides

the amount of premium to becharged from a client for a particular policy. This is normally done


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with thehelp of Mortality Tables, which can either be prepared by the company itself,or the

company can use the existing tables available for its use. The IRDA(Insurance Regulation

Development Authority) has prescribed the use of themortality tables used by LIC for all other

companies.The Actuary Department is also responsible for Asset-Liability Management of the

insurance company. It must ensure that the Solvency margin (Assets-Liabilities) must be at least

Rs 50 crores, as prescribed by IRDA. 95% of thesurplus above this has to be distributed to the

investors a bonus. HDFCStandard Life has till now declared three bonuses to its policyholdersThe Investment Department:The Investment Department is responsible for the investment of the money of the investors.

Since the basic reason for the investors investing their money inLife Insurance is security, IRDA

has put certain regulations on such companiesfor investments so that the money of investors is

safe.

These guidelines are:

1. not less than 50% of the corpus will be invested in Government Securities(G-Sec)

2. Up to15% of the corpus will be invested in infrastructure, social and ruralsectors

3. Not less than 20% can be invested in government and other equities.

4. Remaining 15% can be invested in unapproved equities.Till recent time, HDFC has not been

investing in equities. But now it hasdecided to follow the footsteps of its Joint-Venture partner

Standard Life,which invests around 75% of its corpus in equities. The InvestmentDepartment is

also responsible for calculating the returns of the investment tothe investors. Here also the

insurance companies are bound by regulations andguidelines. According to IRDA, the returns

have to be in the range of 6 %-9 %.The Underwriting DepartmentThis department is responsible for taking the decision on whether to insure a person or not. For

this it must take into account the risk premium associated,the reinsurance opportunities etc.

normally, there are charts available with the people of this department on the basis of which they

can come to a viabledecision.

Underwriting is done on the basis of two grounds

Financial Grounds: here the underwriters decide on the worth of the person by taking into account his tax returns

of the last three years. On this basis theyare able to assess the premium paying ability of that

person and accordinglytake a decision.


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Medical Grounds:each new customer is required to undergo acomprehensive medical test, which determines the

persons general health. Onthe basis of this report, the underwriters decide upon the premium to

becharged from customer.Functions of InsuranceThe functions of Insurance can be bifurcated into three parts:1. Primary Functions

2. Secondary Functions

3. Other FunctionsThe primary functions of insurance include the following:1)Provide Protection- The primary function of insurance is to provide protection against future risk, accidents and

uncertainty. Insurance cannotcheck the happening of the risk, but can certainly provide for the

losses of risk.

Insurance is actually a protection against economic loss, by sharing the risk with others.2)Collective bearing of risk - Insurance is a device to share the financial lossof few among many

others. Insurance is a mean by which few losses are sharedamong larger number of people. All

the insured contribute the premiumstowards a fund and out of which the persons exposed to a

particular risk is paid.3)Assessment of risk - Insurance determines the probable volume of risk byevaluating various factors

that give rise to risk. Risk is the basis for determining the premium rate also 4) Provide Certainty- Insurance is a device, which helps to change fromuncertainty to certainty.

Insurance is device whereby the uncertain risks may bemade more certain. The secondary functions of insurance include the following:1)Prevention of Losses- Insurance cautions individuals and businessmen toadopt suitable device to

prevent unfortunate consequences of risk by observingsafety instructions; installation of

automatic sparkler or alarm systems, etc.

Prevention of losses causes lesser payment to the assured by the insurer andthis will encourage

for more savings by way of premium. Reduced rate of premiums stimulate for more business

and better protection to the insured.


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2)Small capital to cover larger risks- Insurance relieves the businessmenfrom security investments,

by paying small amount of premium against larger risks and uncertainty.

3)Contributes towards the development of larger industries- Insurance provides development

opportunity to those larger industries having more risksin their setting up. Even the financial

institutions may be prepared to givecredit to sick industrial units which have insured their assetsincluding plantand machinery.

The other functions of insurance include the following:1)Means of savings and investment- Insurance serves as savings andinvestment, insurance is a

compulsory way of savings and it restricts theunnecessary expenses by the insured's For the

purpose of availing income-taxexemptions also, people invest in insurance.

2)Source of earning foreign exchange- Insurance is an international business. The country can earnforeign exchange by way of issue of marineinsurance policies and various other ways. 3)Risk Free trade- Insurance promotes exports insurance, which makes theforeign trade risk

free with the help of different types of policies under marineinsurance cover

SOME TERMS ABOUT ULIP PLANS

Fund ManagementThe crux of the entire product is the returns that this product can generate andthis is dictated by

the management of the fund. There is no great value in doingwell in all other aspects of the

product delivery if the fund does not performwell.The insurance company has two options

with regards to the management of thefu nd i. e . ex t er n al an d in te rn al . Ex t er n al

funds usually have a proven track record that could be used as a significant

marketing too. In India many of theinsurance companies, which are apart of th e

lar ger financial servi ces groups, already have a sister fund Management Company and they

could bank on their performance. For others, they would usually be having an in-house

investment

team and this could be extended to management of the funds too. The

e x p e n s e s a n d h e n c e t h e c o s t s h o u l d b e k e p t i n m i n d a s b y n a t u r e t h e u

n i t l i n k e d insurance product is a very transparent product and hence this would become

asignificant selling point in the long run.Charges and ExpensesThere are different charges

that can be levi ed by the insurance companies, some of the more common ones


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are:1 ) I n i t i a l c h a r g e s 2 ) A n n u a l c h a r g e s 3 ) In v es t me nt c h ar ge s 4 ) M o r a l i t y

c h a r g e s 5 ) S u r r e n d e r c h a r g e s Initial chargesInitial charges are applied at the time of setting up the policy; this could be inthe fo rm o f ab ind o f fe r sp read and a l so in the fo rm of a l loca t ion o f un i t s known as the

allocati on facto r. It is also possi ble to be levying a per member level charge.Annual chargesThe annual charges can either be fixed or can be linked to the size of the fund.It could also be

linked to the number of members in the scheme. This charge isusually taken to cover the

maintenance expenses of the insurer.

A fund management charge i s l ev ied to t ake ca re o f the fund

m an ageme nt expenses depending upon whether the fund is managed internally or externally.Mortality chargesI t i s poss ib le to have an insurance e lement bu i l t in to the super

an nu at io ncontract and in case of a gratuity there would be an element of insurance

thedegree and the form could differ from company to company.The insurance premium can be

taken as a part of the gratuity contract of it can b e admi n i s t e red o u ts id e t hi s b u t

p ac ka ge d t o l oo k as i f i t is a wh ol e s om e product offering gratuity and insurance to

the employees of the organization.

Surrender ChargesThe surrender charges can be used in multiple ways. It could be used as a wayof recouping the

initial outlay of the insurer in case the company decides towithdraw in the early years

of the contract or it could be used as a deterrent for the company to shift the service provider at

any point of the contract. Usuallythe surrender charges/ penalty would decrease over a period oftime and would be expressed as a percentage of the fund.

Administration


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The un i t l inked po l ic ies a re s ign i f i can t ly complex to admin is te r and

alsowould need a very highly technically trained customer service department

tohandle enquiries. Much of the administer the policy, As the allocation of unitsw o uld b e

ti me d epe nde nt i t is ext rem ely imp ort ant to hav e a ver y ro bus t system that can

take care of allocation, de allocation and reallocation of units.

PLAN BENEFIT

Savings Plans

Endowment Assurance PlanUnit LinkedEndowment PlanChildrens PlanMoney Back PlanUnit

Linked Young Star Plan

Life Insurance with SavingsLife Insurance & Savinwith choiceof investment fundsFinancial Security

for your childFinancial security for your child

withchoice of investment fundsLife Insurance wit

Savings

Investment Plans

S i n g l e P r e m i u m W h o l e o f L i f e

P l a n

I n v e s t m e n t w i t h L i f e I n s u r a n c e

Protection Plans

Term Assurance PlanLoan Cover Term Assurance Plan Life Insurance customized for homeloansLife

Insurance at an affordable price

Retirement Plans

Personal pension planUnit Linked Pension Plan Savings for retirementRetirement Savings with achoice of investment funds


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It is essential to have a s ystem that would be able to talk/ interact with

other s y s t e m s t o c a p t u r e t h e u n i t p r i c e d e t a i l s , t o g i v e o u t p u t s t o a

c c o u n t i n g packages, report generators etc.

INDIVIDUAL PRODUCTS:Each of us leads a unique life and so has unique needs. HDFC Standard Lifeoffers a range

of products and invites you to choose the one that suits you best. PLAN BENEFITSavings PlansEndowment Assurance PlanUnit Linked Endowment PlanChildrens PlanMoney Back PlanUnit

Linked Young Star PlanLife Insurance with SavingsLife Insurance & Savings with choiceof

investment fundsFinancial Security for your childFinancial security for your child withchoice of

investment fundsLife Insurance with SavingsEndowment Assurance PlanEndowment assurance plan is a participating (with profits) insurance plan thatoffers the

following features:Provides financial support to the family by way of a lump sum payment

incase of the unfortunate death of the life assured within the term of the policy.provides a lump

sum payment to the life assured on survival up to maturityThis plan is with profits saving plan

and is well suited for saving money for your long term financial goals. This plan also

helps provide for the needs of your family in your absence by paying out a lump sum in the event

of your unfortunate death during the term of the policy.Optional benefits

You can add the following optional benefits to customise your policy to suityour needs: Critical Illness(CI) Benefit provides an amount, equal to the sumassured chosen under this optional benefit, on

diagnosis of any one of the 6 common critical illnesses(1). The sum assured is payable if


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yousurvive for 30 days after the date of the claim. Once such a claim has been met, no further

Critical Illness Benefit is payable. However, your basic policy continues even after we pay a

claim On this benefit.Additional Term Benefit(ATB) provides an additional amountequal to the sum assured chosen under this optional benefit, in

case of your unfortunate death.

Accidental Death Benefit(ADB) provides an additional amount,equal to the sum assured

chosen under this optional benefit, in case of your unfortunate death:-due to an accident and

within 60 days of an accident.Waiver Of Premium(WOP) Benefit waives the premium for you incase you become totally

disabled. The waiver is applicable during the period of total disability.This plan can be taken ona single life basis or a joint life (first claim) basis.

EligibilityThis plan can be taken as a single life basis or a joint life (first claim)

basis.The eligibility ages are as follows:

BasicPolicy Basic policy with optional benefits

CI ATB ADB WOP

Min age entry 12 18 18 18 18

Minage of entry 60 5 60 55 50

Min age of expire 70 75 70 65 60

M i n i m u m t e r m : 1 0

y e a r s M a x i m u m t e r m : 3 0

y e a r s

Tax Benefits

Tax benefits described in Section 88, Section 80D and Section 10 (10D) of theincome Tax Act are

applicable.Applicable to premium paid for CI and WOPPayment options


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you have the choice of paying your premium either in yearly, half-yearly or quarterly modes,

depending on your convenience

Unit Linked Endowment Plan:The unit linked endowment plan is an insurance policy that is designed to paya lump sumon maturity or on earlier death. The Unit Linked Endowment Planalso gives the option of

additional protection against the six common criticalillnesses, as well as additional protection if

death is as the result of an accident.Your premiums are invested in units of the investment fund

of your choice, based on the prevailing unit price. On maturity you receive the value of

your units. On death (or critical illness, if chosen) you receive the greater of thevalue of your

units and your selected basic sum assured.PremiumsPremiums can be paid either quarterly, half-yearly or annually, throughout theterm of the policy.

The minimum premium amount is Rs. 10,000 each year.Premiums can be paid by cash, cheque

or demand draft.BenefitsThere are 4 different options available to choose from: 1 . L i f e O p t i o n On death within the policy term, the greater of the Sum Assured and thevalue of the unit-linked

fund will be paid to your nominee.On survival to the end of the policy term the value of the unit

linkedfund will be paid to you.

2 .L i f e and Hea l t h Opt i on On death or earlier diagnosis of any one of six common critical illnesseswithin the policy term,

the greater of the Sum Assured and the value of the unit-linked fund will be paid to your

nominee.On survival to the end of the policy term the value of the unit-linkedfund will be paid to

you.The illnesses covered under this option are cancer, coronary arteryby pass graft surgery, heart attack,

kidney failure, major organtransplant (as recipient) and stroke.3 . E x t r a L i f e O p t i o n This option pays the same benefits as the Life Option but, should deathoccur within the policy

term as the result of an accident, an extra benefitequal to the Sum Assured will be paid. 4 .Ext ra L i f e and Hea l t h Opt i on


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This option pays the same benefits as the Life and Health Option but,should death occur within

the policy term as the result of an accident, anextra benefit equal to the Sum Assured will be

paid.Levels of protectionDepending on your age at entry, you may choose between 3 levels of coverLow, Medium or

High. For each level the Sum Assured is based on the amountof premium you pay each year.The

Sum Assured can not be changed during the term of the contract.

Age at entry Levels of cover

Low Medium high

18 to 40 5XPremium 10XPremium 20XPremium

41 to 50 5XPremium 10XPremium

O v e r

5 0

5XPremium

EligibilityThe age and term limits for taking out a Unit Linked Endowment Plan are:(years)

Minimum

term

Maximum

term

Minimum

age at entry

Maximum age

atentry

Maximumage

atexpiry

Life 10 10 30 18 60 75

Life of health 10 30 18 5 65

Extra life 10 30 18 55 70

Extra life andhealth

10 30 18 55 65

The alteration of premium, surrendering of the policy, conditions on stoppingof payment of

premiums and charges are the same as that of the unit linked pensions plan.


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Tax Benefits

Option On the death of insurance

parent during policy term

On maturity

Maturity Benefit Plan Future premium waivedandthe policy continues

tillmaturity

Accelerated Benefit plan Sum assured + bonuses paid

and the policy stops.

On the survival of the insured

parent to the maturity date,

sum assured+ bonuses paid.

Double Benefit plan Sum assured paid,

future premiums waived, and

the policy continues till maturity

Sum assured + bonuses paid

Tax Benefits

The premiums you pay will be eligible for tax relief under Section 88 of theIncome Tax Act,

1961. The benefits received under the policy are eligible for tax relief under Section 100 (10D)

of the income tax act, 1961.

Eligibility : The eligibility ages for the life assured under the plan are as follows:

Minimum Age of Entry18 years

Maximum Age of Entry60 years

Maximum Age of Maturity75 years

Min. Term: 10 years Max. Term: 25 years

Levels of protectionDepending on your age at entry, you may choose between 3 levels of coverLow, Medium or

High. For each level the Sum Assured is based on the amountof premium you pay each year.The

Sum Assured can not be changed during the term of the contract.


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Tax Benefits

Tax benefits under section 88 and section 10 (10D) of the income tax act

areapplicable.Surrendering the policyThe policyholder can surrender the policy at any point of time during thecontract term. The

amount payable will be the unitised fund value after applying additional surrender charges

mentioned below.Accessing money?You can make lump sum withdrawals from you funds provided the fund balance after

withdrawal and charges does not fall below the Sum Assured. Theminimum withdrawal amount

is Rs. 10,000

Children's PlanChildrens Plan is designed to provide a lump sum to the child at maturity. Italso provides

financial security to the child in the future, even in case of theinsured parents unfortunate death

during the policy term. Childrens Planreceives simple reversionary bonuses, which are usually

added annually. Thisis a flexible plan with three options for you to choose from, depending on

your requirements. The details of these options are explained in the next section.

Options

You will have the choice of 3 options at the start of the policy.

Tax Benefits


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Option On the death of insurance

parent during policy term

On maturity

Maturity Benefit Plan Future premium waived

andthe policy continues

tillmaturity

Accelerated Benefit plan Sum assured + bonuses paid

and the policy stops.

On the survival of the insured

parent to the maturity date,

sum assured+ bonuses paid.

Double Benefit plan Sum assured paid,

future premiums waived, and

the policy continues till maturity

Sum assured + bonuses paid

Tax BenefitsThe premiums you pay will be eligible for tax relief under Section 88 of theIncome Tax Act,

1961. The benefits received under the policy are eligible for tax relief under Section 100 (10D)

of the income tax act, 1961.

Eligibility : The eligibility ages for the life assured under the plan are as follows:

Minimum Age of Entry18 years

Maximum Age of Entry60 years

Maximum Age of Maturity75 years

Min. Term: 10 years Max. Term: 25 years

Unit Linked Young Star Plan

HDFC Unit Linked Young Star Plan is designed to provide a lump sum to thechild at maturity. It

also provides financial security to the child in the future,even in case of the insured parent's

unfortunate death during the policy term.The Unit Linked Young Star Plan also gives the option

of additional protectionagainst the six common critical illnesses.Your premiums are invested in


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units of the investment funds of your choice, based on the prevailing unit prices. On maturity

the value of the units will be paid. On death (or critical illness, if chosen) the selected basic sum

assured is paid, and the policy continues until maturity. Following a valid death or criticalillness

claim, we will pay the future premiums (at the level originally chosen atinception) into your

policy, as and when they would have fallen due.

Premiums

You agree to pay a level premium regularly, either quarterly, half-yearly or annually, throughout

the term of the policy. The minimum premium amount isRs. 10,000 each year.Premiums can be

paid by cash, cheque or demand draft.

Benefits

There are 2 different options available:

1.Life Option

This option consists of a Maturity Benefit and a Death Benefit.The Maturity Benefit will pay the

value of the unit-linked fund at the endof the policy term.

The Death Benefit will pay the basic Sum Assured on death of the lifeassured during the policy

term. Following payment of this benefit, nofurther premiums are due from the

policyholder.Following a valid death claim, we will pay future premiums on your behalf, as and

when they become due. The level of premium will be thatchosen by you at inception of the policy.2.Life and Health Option

This option consists of a Maturity Benefit, a Death Benefit and anExtra Health Benefit.The

Maturity Benefit will pay the value of the unit-linked fund at theend of the policy term.The

Death Benefit will pay the basic Sum Assured on death of the lifeassured during the policy term.

Following payment of this benefit, nofurther premiums are due from the policyholder and the

Extra HealthBenefit will lapse without value.The Extra Health Benefit will pay the basic sum

assured on diagnosis of any one of six critical illnesses during the policy term.

Following payment of this benefit, no further premiums are due from the policyholder and the

Death Benefit will lapse without value. Theillnesses covered under this benefit are cancer,

coronary artery by passgraft surgery, heart attack, kidney failure, major organ transplant

(asrecipient) and stroke.Following a valid death or critical illness claim, we will pay

future premiums on your behalf, as and when they become due. The level of premium will be

that chosen by you at inception of the policy.


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Eligibility

The age and term limits for taking out a Unit Linked Young Star Plan are:(Years)

MinimumTerm MaximumTerm Minimum Ageat Entry Maximum Ageat Entry Maximum Ageat Expiry

Life Option 10 25 18 60 75

Life and health

options

10 25 18 55 65

Surrendering the policyThe policyholder can surrender the policy at any point of time during thecontract term. The

amount payable will be the unitised fund value after applying additional surrender charges

mentioned below.Accessing moneyYou can make lump sum withdrawals from you funds provided the fund balance after

withdrawal and charges does not fall below Rs. 15,000. Theminimum withdrawal amount is Rs.

10,000.

Money Back PlanIt is a participating (with profits) insurance plan that offers the followingfeatures:Payment of cash lump sum, each of which is a proportion of the basic sumassured, at 5-year intervals during the term of thepolicy. (Please refer to thetable given below.)on survival up to maturity, a payment equal to the basic sum assured plusany bonus additions less the cash lump sums paid

earlier is provided.


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In case of the unfortunate deathof the life assured within the term of the policy, the basic sum assured plus any bonus additions

is provided. This is over and above the earlier payouts.This plan helps you plan for future

anticipated expenses by paying periodiccash lump sum to you at regular intervals. This plan also

helps provide for theneeds of your family in your absence by paying them the basic sumassured plus any bonus additions in the event of your unfortunate death during the termof the

policy.BenefitsYou can add the following optional benefits to customise your policy to suityour needs:

Critical Illness(CI) Benefit provides an amount, equal to the sumassured chosen under this optional benefit, on

diagnosis of any one of the 6 common critical illnesses. The sum assured is payable if

yousurvive for 30 days after the date of the claim. Once such a claim has been met, no further

Critical Illness Benefit is payable. However, your basic policy continues even after we pay a

claim on this benefit.Additional Term Benefit(ATB) provides an additional amount, equalto the sum assured chosen under this optional benefit, incase of your unfortunate death.\Accidental Death Benefit(ADB) provides an additional amount equalto the basic sum assured in case you die:- due to an

accident, and- within 90 days of the accident.Waiver Of Premium(WOP) Benefit waives the premium for you incase you become totally disabled. The waiver is

applicable during the period of total disability.All optional benefits must be selected at the outset of

your plan.


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EligibilityThis plan can be taken on a single life basis or a joint life (first claim) basis.The eligibility ages

are as follows:

Basic

policy

Basic policy without option

CI ATB ADB ADB

Min age of entry 12 18 18 18 18

Min age of entry 60 5 60 55 50

Min age of expiry 75 70 75 65 60

SINGLE PREMIUM WHOLE LIFE INSURANCESingle Premium Whole of Life Insurance Plan is well suited to meet your longterm investment

needs. This participating (with profits) plan offers you thefollowingBenefits:A sound investment:Your money will be invested in our With Profits fund. The fund aims to provide secure and

stable long term growth. Normally, we will declare acompound reversionary bonus for your

policy every year and add it to your policy on its anniversary. In addition, on death, surrender

or on the guaranteeddates, a terminal bonus might be payable. You pay a single premium and

the policy will pay you a lump sum.Flexibility of term:Even after choosing your policy, you can decide on the policy term. For 4weeks after any one

of the 10th, 15th, 20th and subsequent five-year anniversaries, you can choose to receive the

sum assured plus any attaching bonuses, in full. Once the money has been received, your policy

will cease.


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Surrender value:You can terminate the policy any time, after it has been in force for at least 6months, and

receive a surrender value.In case of unfortunate death:

Your nominee gets the sum assured secured by your premium, plus anyattaching bonuses. No medical requirements:We do not require you to undergo any medical test for this plan.

EligibilityYou can buy the product on a single life basis.

Minimum age of entry at 18 years

Maximum age of entry 70 years

Tax benefitsT a x b e n e f i t s u n d e r S e c t i o n 8 8 o f t h e i n c o m e T a x A c t a r e a p p l i c a b l

e o n premiums up to 20% of the sum assured.Payment optionsA single premium can be paid by cash, cheque or demand draft

PENSION PLAN The policy is basically a saving contract, which is designed to provide ani n c o m e

f o r l i f e f r o m r e t i r e m e n t , w i t h a n o p t i o n t o t a k e t h e l u m p


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s u m e l s e w h e r e t o b u y t h e a n n u i t y , p r o v id e i t i s p e r m i t t e d b y t h e

prevailingregulations. Your commitment. You agree to pay a single premium or level

premiumsw i t h i n s t a l l m e n t s d u e e v e r y q u a r t e r h a l f -

ye a r o r y e a r t h r o u g h o u t t h e deferment per iod of the pol icy, af ter which youwill start r eceiving your pension. Plan is basically a savings contract, which is designed to provide an incomefor life from

retirement. It does this by accumulating a national lump sumon retirement, comprising

of sum assured plus any attaching bonus.Can I take the national lump sum as cash on

retirement?Subject to the prevailing legislation and regulations, part of this can be taken asa

lump sum and the rest used to buy an immediate annuity.Mode of premiumYou can pay either a single premium or pay premiums is quarterly half yearlyor annual form by

cheque, in cash or by bank drafts.

EligibilityThe age and term limits for looking out a personal pension plan area:

What if I need money?LoansThere is no facility for loans against this contract.

MinimumTerms

MaximumTerm

Maximumage of entry

Maximumageof expiry

Minimum ageof retirement

Maximumage of

retirementRP SP RP SP RP SP

10 5 40 15 18 35 60 50 70

Tax benefitsTax benefits described in Section 80 CC of the income tax act are applicable(up to

Rs. 10,000)

Unit Linked Pension Plan


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The unit linked pension plan is basically an insurance contract, which isdesigned to provide a

retirement income for life.Your premiums are invested in units of the investment fund of your

choice, based on the prevailing unit price. On vesting the value of your units will beused to buy

your retirement benefits.On earlier death, the beneficiary receives the value of your units plus a

cashlump sum of Rs 1000.PremiumsYou agree to pay level premiums regularly, either quarterly, half-yearly or annually, throughout the term of

the policy or a single premium at the start of the policy. The minimum premium amount

for regular premium mode is Rs.10,000 each year and for single premium, it is Rs. 25,000.To

facilitate increased investment, we allow additional single premium top-upsat any time. The

minimum single premium top-up is Rs. 5,000.Premiums can be paid by cash, cheque or demand

draft.

BenefitsAt the chosen vesting date, the unitised fund value will be available to secure pension benefits.

Subject to the prevailing regulations, part of this value can betaken in the form of a cash lump

sum and the rest converted to an annuity atthe rate then offered by HDFC Standard Life.

Alternatively, if it is permitted bythe prevailing regulations, the proceeds net of any cash lump

sum can be usedto buy an annuity with any other insurance company who will

accept such business. The current maximum limit for any cash lump sum is one-third of

theunitised fund value on vesting.

On death the unitised fund value will be paid along with a cash lump sum of Rs. 1,000. The

beneficiary may use the proceeds to purchase pension benefitsfor the surviving spouse.Your basic

benefits will be paid by cheque.EligibilityThe age and term limits for taking out a Unit Linked Pension Plan are:(Years)TAX BENEFITS OF INSURANCE AND PENSION PLAN.Life insurance and retirement plans are effective ways of saving taxes. Thetax b reaks tha t a re ava i lab le under va r iou s insurance and pens ion po l ic ies

a re described below:1.Life insurance plans are eligible for deduction under Sec.

80C.2.Pension plans are eligible for a deduction under Sec. 80CCC.3.Health riders

are eligible for deduction under Sec. 80D.4.T he pr oc ee ds or wi th dr aw al s

of life insurance policies are exemptunder Sec 10(10D), subject to norms prescribed

in that section.


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Tax Rates for IndividualsThe rates of income tax for FY 2005-06 are as follows:Surcharge on Income Tax: In case where the Total Income exceedsRs 10, 00,000, there would

be a surcharge @ 10%. Education Cess on Income Tax: Education Cess @2% will bepayable on theamount of income tax (including surcharge)Premiums paid for Life insurance - Deduction under Section 80C1

Category of assesses allowed deduction : Individual assessee and HinduUndivided Family assessee.2 Eligible Savings : Premiums paid or deposited by assessee to effect or tokeep in force insurance

on the life of following persons:In ca s e of in di vi du al as se ss ee

Hi ms el f/ he rs el f, sp ou se , ch il dr en of su ch individualIn case of HUF assesseeany

member

3. 20% limit: If the amount of premium paid in a financial year for a policy isi n ex ce ss o f

20 % o f th e ac tu al c api ta l s um a ssu red , t hen ded uct ion wil l b e allowed only for

premiums up to 20% of the sum assured.4 Limit on amount of deduction: Deduction will be restricted to investmentsof u p t o Rs

100 ,000 in sav ings spec i f i ed under Sec t ion 80C ( inc lud ing

l if ei n s u r a n c e p r e m i u m s ) . I f a n y i n v e s t m e n t s h a v e b e e n m a d e u n d e r

S e c t i o n 80CCC and 80CCD, then the qualifying amount under Section 80C will

standreduced to that extent.5. Deduction limit: The amount of deduction will be equal to the amount bywhich the

income tax payable on such total income is in excess of the amount by which the total income

exceeds 100,000.Premiums paid for Pension plans - Section 80CCC1 Permitted Deduction : Section 80CCC allows for deduction of premiums paid

under a pension plan. As per this Section, a premium paid up to Rs 10,000 by an individual is

allowed as deduction from his total income.2 Disallowance: This benefit will be reversed if the policy lapses / is cancelled.


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3 Limit:It may be noted that from FY2005-06, th e limit of deduction

under Sec t ion 80C CC wi l l be pa r t o f the overa l l l imi t p resc r ibed under Sec

t i on 80CCE.Premiums paid for medical insurance - Section 80DI) Ca t ego r y o f a s ses see

allowed deduction: Individual assessee and HinduUndivided Family assessee.II)

Eligible premiums: Premiums paid by assessee by cheque out of his taxableincome to effect

or to keep in force an insurance on the health of following persons: In case of

individual assessee Himse lf/herself , spouse, dependantchildren and dependant

parents.In case of HUF assesseeany member of HUFIII) Deduction and upper limit:

The qualifying amounts under Section 80D isup to Rs 10,000/-. However, a higher

amount of up to Rs 15,000/- is permittedif the person, for whose health insurance the

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

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

thetotal income of the assessee.Overall deduction limit - Section 80CCEA new Section 80CCE is

proposed to be inserted from FY2005-06. As per thissection, the maximum amount of

deduction that an assessee can claim under Sections 80C, 80CCC and 80CCD will belimited to Rs 100,000.Benefits under insurance policy - Section 10(10D)As per Section

10(10D) of Income tax Act, 1961, any sum received under a lifeinsurance policy, including the

sum allocated by way of bonus on such policyis exempt from tax. However, this rule does not

apply to following amounts:Sum received under Section 80DD (3), or

Any sum received under a Key man Insurance Policy, or

Any sum received other than as death benefit under an insurance policywhich has been issued on or after

April 1 2003 and if the premium paid inany of the years during the term of the policy is more than 20% of

the sumassured.Rebate in respect of Securities Transaction Tax (STT) paid1Section 88Ehas been introduced by Finance Act (No 2) of 2004.2 As per the provisions, where total income

of an assessee includes any incomeunder the head Profits and Gains from Business or

Profession arising f romtaxab le s ecur i t i e s t r ansac t ions , he sha l l be en t i t l ed

to a deduction from theincome tax on such income.3 Amount of deduction: Amount

of STT paid in respect of taxable securitiestransactions entered into in the course

of business during that previous year 4 The deduction will be allowed if proof of payment ofSTT is furnished alongwith the return. The proof has to be furnished as per the format

prescribed byIncome Tax.5 Maximum deductions shall be equal to the amount of

income tax on aboveincome

COMPARITIVE ANALYSISCONTENTS53


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1.HDFC PENSION-II VS BIRLA FLEXI SECURELIFE RETIREMENT2.HDFC

PENSION-II VS BAJAJ ALLIANZ UNIT GAIN3.H DF C PE NS IO N I I VS LIC

BIMAPLUS

RESEARCH METHODOLOGYSTUDYThe present investigation is a descriptive type of study undertaken to estimatethe comparative

study pension plan of HDFC SLIC, BIRLA SUN LIFE,BAJAJ ALLIANZ, LIC.SAMPLE SIZE57

For the purpose of analysis a sample size of different companies were selected.The sample size

taken was 4.SAMPLING METHODThe sampling method used for the project was Random Sampling. This typeof sampling is also

known as probability sampling where each and every itemin the population has an equal chance

of inclusion in the sample and each oneof the possible samples. This procedure gives each item

an equal probability of being selected.DATA COLLECTIONSECONDARY DATAThe secondary data was collected by referring through web sites, and the finaldata was analyzed

systematically to achieve the desired result.DATA ANALYSIS AND INTERPRETATIONAfter analyzing the data above in the table we came to the followinginterpretation. Interpretation

has been done on the basis of the featuresmentioned in the table.1.AGE AND TERM OF POLICY: Since the minimum age is minimumin BAJAJ ALLIANZ andthe term depends on the customer. Thecustomer has probability of getting the maximum

returns (all other things being equal). And HDFC is offering investment for maximum 30years

which is rated as second best in this feature.


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2.SWITHCHES: After analyzing the feature the conclusion drawn is thatHDFC is offering the

most switches in the year.3.CHARGES :The charges levied on the policy of the insurer is lowest inHDFC SLIC like FMC, PAC,

but initial charge is second lowest which isalso not bad in terms of investment.4.WITHDRAWALS :Withdrawals not allowed in HDFC SLIC & BIRLASUN LIFE because

if withdrawals are there plan would not yield goodreturn.5.INVESTMENT OPTIONS :HDFC SLIC provides you the maximumfunds for investment

(Balanced fund, Defensive Managed fund, SafeManaged fund, Liquid fund & Growth fund).

So HDFC SLIC providesyou better portfolio to diversify your funds which reduces the risk

andmaximizes the return.6.TOP UP :In HDFC SLIC the minimum top up is of RS 5000 with nocharges levied but in others

it is Rs 10000. Here we could see that people with low income can increase the premium with

small amount.7.

BONUS UNITOnly two firms are offering bonus unit to the customer and they are HDFC SLIC

and LIC.8.FLEXIBLE CONTRIBUTION :This feature is available in HDFCSLIC where a customer can

increase or decrease its premium, but onlyBajaj Allianz is offering an increase option only.

RECOMMENDATIONS1.Premium allocation charge (initial charge) should be reduced to providecustomer

with better return.2.Policy administration charge should be reduced to gain more

advantagein the market.3.Surrender charges should be reduced. CONCLUSION

Based on comparative study HDFC SLIC is on the upper side in the privatelife insurance

companies in comparison to Birla sun life, Bajaj Allianz.

HDFC SLIC based on the comparative study has many advantage in thissegment of

product l ike fund management charge, switches facili ty andmaximum number of

investment funds in offering (i.e., 5 namely Balancedfund, Defensive Managed fund, Safe

Managed fund, Liquid fund & Growthfund ) but the res t of the insurance pla yer that is

LIC , Birla sun li fe, Baja jAllianz are also not far behind HDFC SLIC.

BIBLOGRAPHY

WWW.HDFCINSURANCE.COMwww.irda.com

www.LICindia.comwww.birlasunlife.com

WWW.GOOGLE.COM
http://www.hdfcinsurance.com/http://www.hdfcinsurance.com/http://www.irda.com/http://www.irda.com/http://www.licindia.com/http://www.licindia.com/http://www.birlasunlife.com/http://www.birlasunlife.com/http://www.google.com/http://www.google.com/http://www.google.com/http://www.birlasunlife.com/http://www.licindia.com/http://www.irda.com/http://www.hdfcinsurance.com/


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Final Bajaj Project

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