Gunjan Charan_ICICI Prudential Life Insurance_people’s perception and awareness about ulips in...

8/3/2019 Gunjan Charan_ICICI Prudential Life Insurance_peoples perception and awareness about ulips in udaipur city

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Mohan Lal Sukhadia University, Udaipur

A REPORT

ON

PEOPLES PERCEPTION AND AWARENESS

ABOUT ULIPS IN UDAIPUR CITY

SUBMITTED BY :

GUNJAN CHARAN

MASTER OF BUSINESS ADMINISTRATION

(2008-2010)

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ACKNOWLEDGEMENT

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The feeling of gratefulness to anyones help directly arises from the bottom of the heart.

The project is dedicated to all the people whom I met, talked, interviewed and learned

something from them. At this occasion I want to grab this opportunity to acknowledge all

those people who made this training a big success.

My gratitude to Mr. Jay Nebhnani ( Associate Financial Services Manager ), my

training guide, for his co-operation, help and proper guidance during the entire stretch of

my summer project. He has been a strong support throughout.

I would like to appreciate the co-operation and assistance provided by the entire ICICI

Prudential Team in course of the project which has been viable in making the project

meaningful. The entire stay at ICICI Prudential has been a wonderful learning process

and certainly a value addition to my career.

At the end, I would also like to take this opportunity to convey my gratitude to Prof.

Karunesh Saxena (Director, Faculty of Management Studies, MLSU, Udaipur), Mr. Anil

Kothari, Dr. Ms. Meera Mathur, and Prof. Hanuman Prasad for their cooperation and

guidance through out the summer project.

( Gunjan Charan )

TABLE OF CONTENTS

Acknowledgement .. 3

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Table of Contents ... 4

Table of Illustrations .. 6

Executive Summary 7

CHAPTER 1 AN INTRODUCTION TO INSURANCE . 8

What is Insurance 8

What is Life Insurance 9

CHAPTER 2 UNIT LINKED INSURANCE PLANS. 12

What is an ULIP . 12

Working of ULIPs... 12

Types of ULIPs ... 13

Benefits of ULIPs..... 18

Types of Funds available in ULIPs 22

CHAPTER 3 COMPANY PROFILE AND ITS PRODUCTS. 23

About ICICI Bank 23

About Prudential ..

23

About ICICI Prudential Life Insurance Company.... 24

ULIP Products of ICICI Pru Life Insurance Company 35

CHAPTER 4 CONCEPTUAL FRAMEWORK .. 36

Need and Purpose of Life Insurance .. 36

Benefits of Life Insurance 37

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About IRDA .. 39

CHAPTER 5 RESEARCH METHODOLOGY

41

Statement of the Problem

41

Reasons for the Project and Objectives.. 42

Research Design ... 42

Scope of the Study 43

Sample Design .. 43

Sample Size ... 43

Data Collection . 43

Area of the Study . 44

Statistical Tools used for Data Analysis and Interpretation.....

44

CHAPTER 6 DATA ANALYSIS AND INTERPRETATION ... 45

CHAPTER 7 CONCLUSION AND RECOMMENDATIONS... 59

Annexure I .. 63

References and Bibliography 67

TABLE OF ILLUSTRATIONS

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Figure 2.1 Premium Break-up 13

Figure 2.2 Various Life Stages and Goals 14

Figure 2.3 Financial Planning in ULIPs 20

Table 2.4 Types of Funds Available in ULIPs 22

Table 4.1 Different Private Companies in Insurance Industry 40

EXECUTIVE SUMMARY

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The service industry is one of the fastest growing sectors in India today. The upcoming

sectors which are really showing the graph towards upwards are - Telecom, Banking, and

Insurance. These sectors really have a lot of responsibility towards the economy.

Amongst the above-mentioned areas insurance is one sector, which took a lot of time in

positioning itself. The insurance business of non-life companies was not much in

problems but the major problem was with life insurance. Life Insurance Corporation of

India had monopoly for more than 45 years, but the picture then was completely

different.

Now many private life insurance companies have come into picture and ICIC Prudential

is one of them. ICICI Prudential Life Insurance is one of the largest Insurance networks

in the country, and 2nd Life Insurance Company in India. Today ICICI Life Insurance has

a customer base of 4 million with total assets exceeding Rs.1, 00,000 Cr.

Previously people felt that Insurance is only for classes not for massesbut now the

picture is vice-versa. With a large population and the untapped market area of this

population insurance happens to be a very big opportunity in India. Today it stands as a

business growing at the rate of 15-20% annually.

With the emerging insurance sector, the concept of Unit Linked Insurance Plans [ULIPs]

has also emerged. ULIPs are a category of goal-based financial solutions that combine

the safety of insurance protection with wealth creation opportunities It is a great

investment option, but people are still more or less unaware about it. Thus. this project

tries to find out the awareness amongst people regarding ULIPs and various options

available in ULIPs.

CHAPTER 1

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AN INTRODUCTION TO INSURANCE

1.1 WHAT IS INSURANCE

Before understanding what are ULIPs [Unit Linked Insurance Plans], we must first get an

insight into the term insurance in general. Insurance can better be explained with the

help of the following definitions:

[a] Insurance is a policy from a large financial institution that offers a person,

company, or other entity reimbursement or financial protection against possible future

losses or damages.

[b] Insurance is a contract between two parties - the insurer (the insurance company)

and the insured (the person or entity seeking the cover) - wherein the insurer agrees to

pay the insured for financial losses arising out of any unforeseen events in return for a

regular payment of "premium".

Thus, in simple terms it is a contract between the person who buys Insurance and anInsurance company who sold the Policy. By entering into contract the Insurance

company agrees to pay the Policy holder or his family members a predetermined sum of

money in case of any unfortunate event for a predetermined fixed sum payable which is

in normal term called Insurance Premiums.

Insurance is basically a protection against a financial loss which can arise on the

happening of an unexpected event. Insurance companies collect premiums to provide for

this protection. By paying a very small sum of money a person can safeguard himself and

his family financially from an unfortunate event.

For Example if a person buys a Life Insurance Policy by paying a premium to the

Insurance company , the family members of insured person receive a fixed compensation

in case of any unfortunate event like death.

Insurance can range from life to medical to general (residential, commercial property,

natural incidents, burglary, etc).

Life Insurance

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It insures the life of the person buying the Life Insurance Certificate. Once a Life

Insurance is sold by a company then the company remains legally entitled to make

payment to the beneficiary after the death of the policy holder.

Medical Insurance

This is also known as mediclaim. Here, the policy holder is entitled to receive the amount

spent for his health purposes from the insurance company.

General Insurance

This insurance type involves insuring the risks associated with the general life such as

automobiles, business related, natural incidents, commercial and residential properties,

etc.

1.2 WHAT IS LIFE INSURANCE

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

assured or, to the person entitled to receive the same, on the happening of a certain event.

A family is dependent for its food, clothing and shelter on the income brought by the

family's breadwinner. The family is secure so long as this breadwinner is alive and is

capable of earning. A sudden death (or disability) may leave the family in a financially

difficult situation. Uncertainty of death is inherent in human life and this uncertaintymakes it necessary to have some protection against the financial loss arising from

untimely death. Life insurance offers this protection.

The Greeks and Romans started the earliest type of life insurance. All surviving members

for the burial cost of a member made contributions. In case of the death of a member the

cost of burial was made out of the contributed fund.

In the 17th century, the Tontine Annuity system was introduced where associations of

individuals were formed without any reference to age, and a fund was created by equal

contributions from each member. The sum collected was invested, and at the end of each

year the interest was divided among the survivors. The last remaining survivor received

both the year's interest and the entire amount of the principal.

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The first organized life insurance company was founded in 1759 in Philadelphia, in

North America. Subsequently, over the past three centuries, numerous life insurance

Companies sprung up, making life insurance a popular tool for protection coupled with

investment.

In 1818 British introduced to India, with the establishment of the oriental life insurance

company in Calcutta. The first Indian owned Life Insurance Company; the Bombay

mutual life assurance society was set up in 1870.the life insurance act, 1912 was the first

statuary measure to regulate the life insurance business in India. In 1983, the earlier

legislation was consolidated and amended by the insurance act, 1938, with

comprehensive provisions for detailed effective control over insurance. The union

government had opened the insurance sector for private participation in 1999, also

allowing the private companies to have foreign equity up to 26%. Following the opening

up of the insurance sector, 12 private sector companies have entered the life insurance

business.

BENEFITS OF LIFE INSURANCE:

Life insurance encourages saving and forces thrift.

It is superior to a traditional savings vehicle.

It helps to achieve the purpose of life assured.

It can be enchased and facilitates quick borrowing.

It provides valuable tax relief.

Thus insurance is found to be very useful in the lives of the person both in short term and

long term.

Fundamental principles of life insurance contract;

1) Principle of almost good faith:

A positive duty to voluntary disclose, accurately and fully, all facts, material to the risk

being proposed whether requested or not.

2) Principle of insurable interest:Relationships with the subject matter (a person) which is recognized in law and gives

legal right to insure that person.

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CHAPTER 2

UNIT LINKED INSURANCE PLANS

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2.1 WHAT IS AN ULIP

ULIPs are a category of goal-based financial solutions that combine the safety of

insurance protection with wealth creation opportunities. In ULIPs, a part of the

investment goes towards providing you life cover. The residual portion is invested in afund which in turn invests in stocks or bonds. The value of investments alters with the

performance of the underlying fund opted by you.

Simply put, ULIPs are structured such that the protection element and the savings

element can be distinguished and hence managed according to your specific needs,

offering unprecedented flexibility and transparency.

2.2 WORKING OF ULIPs

It is critical that you understand how your money gets invested once you purchase ULIP.

Once you decide the amount of premium to be paid and the amount of life cover you

want, the insurer deducts some portion of the premium upfront. This portion is known as

the Premium Allocation charge and this varies from product to product. The rest of the

premium is invested in the fund or mixture of funds chosen by you. Mortality charges

and administration charges are thereafter deducted on a periodic (mostly monthly) basis

whereas the fund management charges are deducted on a daily basis.

Since the fund of your choice has an underlying investment either in equity or debt or a

combination of the two your fund value will reflect the performance of the underlyingasset classes. At the time of maturity of your plan, you are entitled to receive the fund

value as at the time of maturity. The pie-chart below illustrates the split of your ULIP

premium in a graphical format.

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FIGURE 2.1 PREMIUM BREAK UP

In addition to the investment fund ULIPs give you the benefit of insurance cover as well.

The mortality charge mentioned above goes towards provision of this cover.

Over a period of time, the component of charges as a percentage of the premium paid

tends to decrease. Which is why, you should continue paying your premiums regularly.

That is the best way of making your ULIP deliver on its dual benefit of protection and

wealth creation.

2.3 TYPES OF ULIPs

One of the big advantages that a ULIP offers is that whatever be your specific financial

objective, chances are that there is a ULIP which is just right for you.The figure below

gives a general guide to the the different goals that people have at various age-groups and

thus, various life-stages.

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FIGURE 2.2 VARIOUS LIFE STAGES AND GOALS

Depending on your specific life-stage and the corresponding goal, there is a ULIP whichcan help you plan for it.

ULIPs FOR RETIREMENT PLANNING

Retirement is the end of active employment and brings with it the

cessation of regular income. Today an increasing number of people

have started planning for their retirement for below mentioned

reasons:

Almost 96% of the working population has no formal provisions for retirement

With the growing nuclearisation of family structure, traditional support system of the

younger earning members is no longer available

Developments in the healthcare space has lead to an increase in life expectancy

Cost of living is increasing at an alarming rate

Pension plans from insurance companies ensure that regular, disciplined savings in

such plans can accumulate over a period of time to provide a steady income post-

retirement.

Usually all retirement plans have two distinctive phases -

The accumulation phase when you are saving and investing during your earning years to

build up a retirement corpus and the withdrawal phase when you actually reap the

benefits of your investment as your annuity payouts begin.

In a typical pension plan you have the flexibility to make a lump sum payment or a

regular contribution every year during your earning years. Your money is then invested

in funds of your choice. You can opt to receive the annuity at any time after vesting age

(age at which you become eligible for pension chosen by you at the inception of the

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plan). Most of the Unit linked pension plans also come with a wide range of annuity

options which gives you choice in structuring the post-retirement benefit pay-outs. Also

at the time of vesting you can make a lump sum tax-exempted withdrawal of up to 33 per

cent of the accumulated corpus. In a retirement plan, the earlier you begin the greater you

gain post retirement due to the power of compounding.

ULIPs FOR LONG TERM WEALTH CREATION

ULIPs are the right insurance solutions for you if you are looking for

a strong wealth creation proposition allied to a core insurance

benefit. Such plans are ideal for people who are in their late 20s and

early 30s and by investing in such a plan get the flexibility of using it

to fund any of their long-term financial goals such as purchase of a

house or funding their childrens education. The added element of

life cover serves to make these plans a wholesome financialinvestment option.

Wealth Creation ULIPs can be primarily classified as :

Single premium - Regular premium plan: Depending upon you needs & premium

paying capacity you can either opt for a single premium plan where you need to pay

premium only once during the term of entire policy or regular premium plans where you

can premium at a frequency chosen by you depending upon your convenience

Guarantee plans Non guarantee plans: Today there are wealth creation ULIPSwhich also offer guaranteed benefit. These plans are ideal insurance-cum-investment

option for customers who want to enjoy the potentially higher returns (over the long

term) of a market linked instrument, but without taking any market risk. On the other

hand non guarantee plans comes with an in - built range of fund options to choose from

ranging from aggressive funds (Primarily invested in equities with the general aim of

capital appreciation) to conservative funds (invested in cash, bank deposits and money

market instruments with aim of capital preservation) so that you can decide to invest your

money in line with your market outlook, time horizon and your investment preferences

and needs.

Life Stage based Non life Stage based: Life Stage based Ulips factor in the fact that

your priorities differ at different life stages & hence distribute your money across equity

& debt. Here the initial allocation is decided as per your age since age is a significant

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indicator of risk appetite. Such a strategy ensures that the asset allocation at all times is in

sync with your age and changing financial needs

ULIPs FOR CHILDRENS EDUCATION

One of the most important responsibilities you have as a parent is

to ensure that your child gets the best possible education that can

be provided. Apart from conventional schooling, it becomes

important to expose your child to different activities such as

dance, painting and sports training for holistic development. As a

parent, you want to ensure that their development is not

hampered either due to rising costs or unforeseen circumstances.

Today there are ULIPs that offer money at key milestones of your child's education thus

ensuring that your childs education continues unhampered even if somethingunfortunate happens to you. While, the death of a parent is an irreparable emotional loss,

child education plans safeguard the child against the financial ramifications of the death

of a parent.

Apart from above mentioned benefit, child plans also offers below mentioned features.

Flexibility of adding on various riders like Income benefit rider, disability rider etc to

get additional benefits .For e.g. In case of income benefit rider, In the event of the

death of the parent, the child will receive a regular pre-determined amount every year

to meet the educational expenses.

In case of unfortunate incidence of the death of a parent, not only will the child

receive the sum assured immediately but will also continue to receive money at the

key educational milestones.

ULIPs FOR HEALTH SOLUTIONS

When you are young and working you save for various goals like

marriage, education, retirement etc. but saving for health care is

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never considered or left for later. During these years we have various sources of income

or savings on which we can rely for health emergencies.

But with increasing cost of healthcare, proportion of this spend is increasing at an

alarming pace. This is forcing families to borrow or sell assets to meet expenses during

medical emergencies. And during old age health care expenses increase due to health

deterioration because of age and higher incidence of chronic illness. Thus it is important

for you to invest in health insurance today so that tomorrow you are fully prepared to

meet rising healthcare expenses, which would be incurred during old age, with the right

health insurance plan.

Health ULIP is a recent innovation from the health insurance industry. In a health ULIP

part of your premiums are allocated for investment designed specifically to build a health

fund to meet future health related expenses. It aims to create a health savings kitty by

investing in a long term flexible savings plan with multiple fund options. The health fundthus created allows you to claim for health related expenses of any kind and also fund

your future health insurance charges. You can also avail of tax benefit on premium paid

u/s 80D.

2.4 BENEFITS OF ULIPs

ULIP distinguishes itself through multiple benefits that it provides to the consumer. Theplan is a one stop solution providing:

1. Life protection2. Investment and saving3. Flexibility of cover continuance4. Transparency

5. Extra protection with riders6. Liquidity7. Tax planning

1] LIFE PROTECTION:-

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The need for life insurance keeps on changing on the basis of following stages:

When we start working

When we start a family

When our children start a career

When we retire

Therefore as our responsibilities grow our need for life insurance grows and as theseresponsibilities are successfully executed the need (insurance) reduces.

2] INVESTMENT AND SAVINGS

Each and every one of us wants to create value for himself by proper investment.

ULIP provides the client with a option of investing as per personal risk profile and getreturns accordingly. There are options of funds where the client can put money in:

1. Equity market2. Debt market3. Balanced funds with a mix of above two4. Short-term debt market

With the option of four funds the investor has always an option to switch in between thefunds as the risk and return orientation changes. Subsequent contributions can beallocated in different funds. Such features ensure that the client is able to use quality fundmanagement for optimum benefit.

Also his future premiums can be allocated according to his will this is known as premium

redirection. This option does not affect the existing funds.

3) FLEXIBILITY OF COVER CONTINUENCE OPTION

Since the insurance is a long-term contract so there are possibilities that a person may notpay the premiums regularly so this option ensures that the life insurance cover continueseven if the person is not capable of paying the premiums due to any other commitment.He/she can resume the payment when he feels comfortable.

4] TRANSPARENCY

In a unit linked plan the investment, which is denoted through NAV is the real timeindicator of the value of the fund. Therefore a policyholder can easily find out the valuethat a policy has accrued on a certain date.

Also the customer is well aware of the charges that he is paying. These charges may be1. Contribution charges2. Administrative charges

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3. Fund Management Fees4. Mortality Charges5. Rider Charges6. Surrender Charges

5] EXTRA PROTECTION

Riders provide more protection to the policyholder and ULIP allows addition of riders atnominal cost.

The cover may be offered against1. Death due to an accident2. Disability3. Critical illness

6] LIQUIDITY

a. During the term partial withdrawalsb. This facility makes the ULIP a very practical insurance in current times. Most life

insurance products do not provide the policy holder the facility of withdrawingmoney in case the need arises.

Unit linked plans provide you easy access to your money as and when you require. Onecan redeem the units after a particular period of time as defined by the planas per theneed. ULIP allows either partial or full withdrawal without panelizing the policy holder.

7] TAX PLANNING

1. Premium payment up to 20% of the sum assured is eligible for tax benefit undersection 80C

2. Any amount paid to you will be eligible for tax benefit under section 10(10) D ifpremium paid in any year does not exceed 20% of the sum assured.

With so many tax-planning tools in one plan ULIP turns out to be an intelligent tax-planning tool.

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FIGURE 2.3 FINANCIAL PLANNING WITH ULIPS

In the context of financial planning with ULIP we can see the above cycle where there

are four stages namely:

I. DEFINE AND PRIORITIZE GOALS: - This strategies necessary in determiningthat what your goals are.

a. RETIREMENT PLANNING: - taking care of your long retirement years.b. FAMILY PROTECTION: -to ensure that financial loss to the family is minimized if

something happens.c. ASSET CREATION: - creation of physical and financial asset.d. CHILDRENS HIGHER EDUCATION: - matching the increasing educational

expenses.

II. PROJECT INCOME, EXPENSES AND INVESTMENTS :- If you are planningfor insurance than you should keep in mind the future years inflows that may be lost ifsomething happens to you and if you are planning for retirements then you should makecalculations for the annuities that you will require.

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Balanced Funds

The following are some of the common types of funds available along

with an indication of their risk characteristics.

FIGURE 2.4 TYPES OF FUNDS AVAILABLE IN ULIPS

CHAPTER 3

COMPANY PROFILE AND ITS PRODUCTS

3.1 ABOUT ICICI BANK

ICICI Bank is India's second-largest bank with total assets of Rs. 3,674.19 billion (US$77 billion) at June 30, 2009 and profit after tax Rs. 8.78 billion for the quarter ended June

30, 2009. The Bank has a network of 1,495 branches and about 4,816 ATMs in India and

presence in 18 countries. ICICI Bank offers a wide range of banking products and

financial services to corporate and retail customers through a variety of delivery channels

and through its specialized subsidiaries and affiliates in the areas of investment banking,

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life and non-life insurance, venture capital and asset management. The Bank currently

has subsidiaries in the United Kingdom, Russia and Canada, branches in United States,

Singapore, Bahrain, Hong Kong, Sri Lanka, Qatar and Dubai International Finance

Centre and representative offices in United Arab Emirates, China, South Africa,

Bangladesh, Thailand, Malaysia and Indonesia. Our UK subsidiary has established

branches in Belgium and Germany.

ICICI Bank's equity shares are listed in India on Bombay Stock Exchange and the

National Stock Exchange of India Limited and its American Depositary Receipts (ADRs)

are listed on the New York Stock Exchange (NYSE).

3.2 ABOUT PRUDENTIAL

Established in 1848, prudential plc is a leading international financial services company

in the UK, with around US $250 billion funds under management and more than 16

million customers worldwide. Prudential has brought to market an integrated range of

Financial services a product that now includes life insurance, pensions, mutual funds,

banking investment management and general insurance. In Asia, Prudential is UKs

largest life insurance company with a vast network of 22 life and mutual fund operations

in twelve countries China, Hong Kong, Indonesia, Japan, Korea, Malaysia, Philippines,

Singapore, Taiwan, Thailand and Vietnam. Since 1923, Prudential has championed

customer-centric products and services, supported by over 60,000 staff and agents across

the region. Prudential made its first acquisitions in the 1860s and as a result ended up

with the title, The British Prudential and Consolidated Assurance Company. This wasshortened to The Prudential Assurance Company (PAC) in 1867.

During the 1980s Prudential focused energy on increasing channels of distribution and

new marketing initiatives. As part of these efforts the company image was revitalized -

new Prudence emerged as the figurehead for the whole corporation, replacing the range

of brand images that had emerged during the previous decade. Modern Prudence looks

forward but she retains the symbols for wisdom, clear thinking and prudent action that

were incorporated in the original company seal in 1848.

3.3 ABOUT ICICI PRUDENTIAL LIFE INSURANCE COMPANY

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2. Having the right products is the first step, but it's equally important to ensure that our

customers can access them easily and quickly. To this end, ICICI Prudential has an

advisor base across the length and breadth of the country, and also partners with leading

banks, corporate agents and brokers to distribute our products.

3. Robust risk management and underwriting practices form the core of our business.

With clear guidelines in place, we ensure equitable costing of risks, and thereby ensure a

smooth and hassle-free claims process.

4. Entrusted with helping our customers meet their long-term goals, we adopt an

investment philosophy that aims to achieve risk adjusted returns over the long-term.

5. Last but definitely not the least, our team is given the opportunity to learn and grow,

every day in a multitude of ways. We believe this keeps them engaged and enthusiastic,

so that they can deliver on our promise to cover you, at every step in life.

3.3.2 VISION AND VALUES

Our vision:

To be the dominant Life, Health and Pensions player built on trust by world-class people

and service. This we hope to achieve by:

Understanding the needs of customers and offering them superior products and service

Leveraging technology to service customers quickly, efficiently and conveniently Developing and implementing superior risk management and investment strategies to

offer sustainable and stable returns to our policyholders

Providing an enabling environment to foster growth and learning for our employees

And above all, building transparency in all our dealings

The success of the company will be founded in its unflinching commitment to 5 core

values -- Integrity, Customer First, Boundaryless, Ownership and Passion. Each of the

values describes what the company stands for, the qualities of our people and the way we

work.

We do believe that we are on the threshold of an exciting new opportunity, where we can

play a significant role in redefining and reshaping the sector. Given the quality of our

parentage and the commitment of our team, there are no limits to our growth.

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Our values:

Every member of the ICICI Prudential team is committed to 5 core values: Integrity,

Customer First, Boundaryless, Ownership, and Passion. These values shine forth in all

we do, and have become the keystones of our success.

3.3.3 PROMOTERS

ICICI Bank

ICICI Bank Limited (NYSE:IBN) is India's largest private sector bank and the second

largest bank in the country with consolidated total assets of about US$ 95 billion as of

March 31, 2009. ICICI Banks subsidiaries include Indias leading private sector

insurance companies and among its largest securities brokerage firms, mutual funds and

private equity firms. ICICI Banks presence currently spans 19 countries, including India.

Prudential Plc

Established in London in 1848, Prudential plc is a leading internal retail financial

services group with significant operations in Asia, the US and the UK. Prudential has

been writing protection and savings insurance for over 160 years, and today has more

than 21 million customers worldwide and over 249 billion in assets under management

(as of December 31, 2008). In Asia, Prudential is the leading Europe-based life insurer

with operations in China, Hong Kong, India, Indonesia, Japan, Korea, Malaysia, the

Philippines, Singapore, Taiwan, Thailand, and Vietnam. Prudential is one of the largest

asset management companies in terms of overall assets sourced in Asia ex-japan, with ?

36.8 billion funds under management (as of December 31, 2008) and operations in ten

markets including China, Hong Kong, India, Japan, Korea, Malaysia, Singapore, Taiwan,

Vietnam and United Arab Emirates.

3.3.4 FACT SHEET

THE COMPANYICICI Prudential Life Insurance Company is a joint venture between ICICI Bank, a

premier financial powerhouse, and Prudential plc, a leading international financial

services group headquartered in the United Kingdom. ICICI Prudential was amongst the

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first private sector insurance companies to begin operations in December 2000 after

receiving approval from Insurance Regulatory Development Authority (IRDA).

ICICI Prudential Life's capital stands at Rs. 4,780 crores (as of June 30, 2009) with ICICI

Bank and Prudential plc holding 74% and 26% stake respectively. For the period April 1,

2009 to June 30, 2009, the company has garnered total received premium of Rs 807

crores and has underwritten over 9 million policies since inception. The company has

assets held over Rs. 43,000 crores as on June 30, 2009.

ICICI Prudential Life is also the only private life insurer in India to receive a National

Insurer Financial Strength rating of AAA (Ind) from Fitch ratings. The AAA (Ind) rating

is the highest rating, and is a clear assurance of ICICI Prudential's ability to meet its

obligations to customers at the time of maturity or claims.

For the past eight years, ICICI Prudential Life has retained its leadership position in thelife insurance industry with a wide range of flexible products that meet the needs of the

Indian customer at every step in life.

DISTRIBUTION

ICICI Prudential Life has one of the largest distribution networks amongst private life

insurers in India. It has a strong presence across India with 2074 branches (including

1,116 micro-offices) and an advisor base of over 225,000 (as on June 30, 2009).

The company has 7 bancassurance partners having tie-ups with ICICI Bank, Jalgaon

Peoples Co-op Bank, Ratanagiri District Central Co-op Bank, Ballia Kshetriya Co-

operative Bank, Renuka Nagrik Sahakari Bank, Arvind Sahakari Bank, Bhandara Urban

Co-operative Bank.

PRODUCTS

Insurance Solutions for Individuals

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ICICI Prudential Life Insurance offers a range of innovative, customer-centric products

that meet the needs of customers at every life stage. Its products can be enhanced with up

to 4 riders, to create a customized solution for each policyholder.

Savings & Wealth Creation Solutions

ICICI Pru Save 'n' Protect is an ideal plan for those who want to accumulate funds

on a regular basis while enjoying insurance protection.

ICICI Pru CashBakis a single policy that combines the triple benefit of protection,

savings & periodic liquidity.

ICICI Pru LifeTime Gold is a unit-linked plan which offers potentially higher returns

over the long term with flexible investment options to help you achieve your goals. It

offers 8 fund options - Preserver, Protector, Return Guarantee Fund, Balancer, Flexi

Balanced, Multiplier, R.I.C.H and Flexi Growth.

ICICI Pru LifeStage RP is unit linked plan that provides you with an option of

lifecycle-based portfolio strategy that continuously re-distributes your money across

various asset classes based on your profile, helping you achieve your desired financial

goals.

ICICI Pru LifeLink Super is a single premium unit linked insurance which offers

attractive premium allocation along with the opportunity to enjoy potentially high

returns over the long term, without compromising on the protection of your family.

ICICI Pru InvestShield Life New is a unit linked plan that allows the customer to

enjoy the benfits of potentially higher returns while guaranteeing him that he will get

back atleast all the premiums paid by him, while providing protection to his family

with a life insurance cover. ICICI Pru InvestShield Cashbak is a unit linked plan that provides premium

guarantee while maintaing a balance between return, safety & liquidity.

ICICI Pru Wealth Advantage is a unique whole life single premium unit linked plan

that provides long term coverage upto the age of 70 years and provides you the option

to systematically withdraw your money.

ICICI Pru LifeStage Assure a unit linked insurance plan that provides Guaranteed

Maturity Addition of 100%- 450% of first year premium based on the term and

number of premiums paid, with the additional advantage of a lifecycle based portfolio

strategy that allocates the investors money across various asset classes based on his

age and risk appetite.

ICICI Pru SecureSave is a unique unit linked insurance plan which aims to grow

your money over time with an assurance of a minimum guaranteed amount at maturity

to protect you from any market downside.

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ICICI Pru Assure Life is a unit linked insurance plan that provides a Guaranteed

Maturity Addition ranging from 140% to 450% of the first year premium while giving

you the flexibility to choose your portfolio strategy from the second year.

Protection Solutions

ICICI Pru Pure Protect is a flexible and affordable term product, with which you canensure your life and provide total security for your family in case of an unfortunateevent.

ICICI Pru LifeGuard is a protection plan, which offers life cover at low cost. It isavailable in 2 options level term assurance with return of premium & singlepremium.

ICICI Pru HomeAssure is a mortgage reducing term assurance plan designedspecifically to help customers cover their home loans in a simple and cost-effectivemanner.

Child Plans

ICICI Pru SmartKid New ULRP is a policy that is designed to provide money at keyeducational milestones in the child's life. SmartKid plans are also available in traditionalform.

Retirement Solutions

ICICI Pru ForeverLife is a traditional retirement product that offers guaranteed

returns for the first 4 years.

ICICI Pru LifeTime Super Pension is a regular premium unit linked pension plan

that helps one accumulate over the long term and offers 5 annuity options (life

annuity, life annuity with return of purchase price, joint life last survivor annuity with

return of purchase price, life annuity guaranteed for 5,10 and 15 years & for life

thereafter, joint life, last survivor annuity without return of purchase price) at the time

of retirement.

ICICI Pru LifeStage Pension is a regular premium unit linked pension plan that

provides you with a unique lifecycle-based strategy that continuously re-distributes

your money across various asset classes based on your age and risk profile

ICICI Pru LifeLink Super Pension is a single premium unit linked pension plan.

ICICI Pru Immediate Annuity is a single premium annuity product that guarantees

income for life at the time of retirement. It offers the benefit of 5 payout options.

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ICICI Pru LifeStage Assure Pension is a unique pension plan that assures

guaranteed additions of up to 200% of the first year premium, giving investors an

unmatched start towards accumulating for their retirement kitty.

ICICI Pru Elite Pension is a unit linked pension plan that provides flexibility to the

customer to pay for a limited term and lets him build a kitty for his retirement to

provide an annuity for life.

Health Solutions

ICICI Pru Hospital Care is a fixed benefit inpatient hospitalisation plan, coveringvarious stages of treatment with a daily allowance, ICU, procedures & recuperatingallowance. It covers a range of medical conditions (900 surgeries) and has a long termguaranteed coverage upto 20 years.

ICICI Pru Crisis Cover is a 360-degree product that will provide long-term coverage

against 35 critical illnesses, total and permanent disability, and death.

ICICI Pru Diabetes Care Active is a long term insurance policy created for

individuals with Type II diabetes and pre-diabetes. It offers long term (upto 20 years)

control over diabetes through a specially designed Wellness Programme including

regular health checkups and a Diabetes Coach to facilitate diabetes management. It

also provides you coverage against seven major critical illnesses.

ICICI Pru Cancer Care is a specialty health plan for most types of cancers. The plan

gives a lump sum payout on diagnosis as well as at different stages in the treatment of

various cancer conditions.

ICICI Pru MediAssure is a reimbursement inpatient hospitalization health insurance

policy that provides guaranteed insurability till age 75 years. ICICI Pru Health Saver is a comprehensive health plan which provides a

reimbursement inpatient hospitalization cover along with building a health savings

fund to cover any other day-to-day medical expenses.

Group Insurance Solutions

ICICI Prudential also offers Group Insurance Solutions for companies seeking to enhance

benefits to their employees.

Group Gratuity Plan: ICICI Prudential Life's group gratuity plan helps employersfund their statutory gratuity obligation in a scientific manner and also avail of tax

benefits as applicable to approved gratuity funds.

Group Leave encashment Plan: ICICI Prudential Lifes Group offers a market linked

and traditional leave encashment plan designed to aid the employer to build a fund to

meet their future leave encashment liability. The contributions made will be invested

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as per the chosen investment plans and will be available for payment of the benefit

when it falls due. Additionally, the product also provides for term cover for all the

employees covered under the policy.

Group Superannuation Plan: ICICI Prudential Life offers a flexible market linked

and traditional schemes that provide substantial benefits to both employers and

employees. Both defined contribution (DC) and defined benefit (DB) schemes are

offered to optimise returns for members of the trust and rationalise cost. Members

have the option of choosing from various annuity options or opting for a partial

commutation of the annuity at the time of retirement.

Group Immediate Annuities: ICICI Prudential Life realises the importance of

prudent retirement planning. With this in mind, it has developed a suite of life and

joint life annuities which guarantee periodic payment to annuitants upto death. Further

there are options which return the purchase price on death of annuitants. These

annuity options are offered to our existing superannuation customers, and also to

superannuation funds not managed by us. Group Term Plan: ICICI Prudential Life's flexible group term solution helps provide

an affordable cover to members of a group. The cover could be uniform or based on

designation/rank or a multiple of salary. The benefit under the policy is paid to the

beneficiary nominated by the member on his/her death.

Flexible Rider Options

ICICI Prudential Life offers flexible riders, which can be added to the basic policy at amarginal cost, depending on the specific needs of the customer.

1. Accident & disability benefit:: If death occurs as the result of an accident during theterm of the policy, the beneficiary receives an additional amount equal to the rider sumassured under the policy. If an accident results in total and permanent disability, 10% ofrider sum assured will be paid each year, from the end of the 1st year after the disabilitydate for the remainder of the base policy term or 10 years, whichever is lesser.

2. Critical illness benefit: Critical Illness Benefit Rider provides protection against 9critical illnesses to the policyholder when attached to the basic plan.

3.3.5 MANAGEMENT PROFILE

BOARD OF DIRECTORS:

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Ms. Chanda D. Kochhar,

Chairperson

Mr. N. S. Kannan,

Director

Mr. K. Ramkumar,

Director

Mr. Barry Stowe,

Director

Mr. Adrian OConnor, Director

Mr. Keki Dadiseth, Independent Director

Prof. Marti G. Subrahmanyam, Independent Director

Ms. Rama Bijapurkar, Independent Director

Mr. Vinod Kumar Dhall, Independent Direct

Mr. V. Vaidyanathan, Managing Director & CEO

MANAGEMENT TEAM :

The ICICI Prudential Life Insurance Company Limited Management team comprises

reputed people from the finance industry both from India and abroad.

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Mr.V.Vaidyanathan,

Managing Director

and CEO

Ms. Anita Pai, Executive Vice President - Customer Service, Technology & Marketing

Dr. Avijit Chatterjee, Appointed Actuary

Mr. Puneet Nanda, Executive Vice President

3.3.6 ACHIEVEMENTS

Beginning operations in December 2000, ICICI Prudentials success has been meteoric,

becoming the number one private life insurer within months of launch. Today, it has one

of the largest distribution networks amongst private life insurers in India, with branches

in 54 cities. The total number of policies issued stands at more than 780,000 with a total

sum assured in excess of Rs.160 billion.

ICICI Prudential closed the financial year ended march 31, 2004 with a total received

premium income of Rs. 9.9 billion; up 135% last years total premium income of Rs.4.20

billion. New business premium income shows a 106% growth at Rs. 7.5 billion, driven

mainly by the companys range of unique unit-linked policies and pension plans.

The companys retail market share amongst private companies stood at 36%, making it

clear leader in the segment. To add to its achievements, in the year 2003/04 it was

adjudged Most Trusted Private Life Insurer (Economic Times Most Trusted Brand

Survey by ACNeilsen ORG-MARG). It was also conferred the Outlook Money-Best

Life Insurer award for the second year running. The company is also proud to have won

Silver at EFFIES 2003 for its Retire from work, not life campaign. Notably, ICICI

Prudential was also short-listed to the final round for its Sindoor campaign in EFFIES

2002.

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In Keeping with its belief that a happy customer is the best endorsement, ICICI

Prudential has embraced the SIX SIGMA approach to quality, an exercise that begins

and ends with the customer from capturing his voice to measuring and responding to his

experiences. This initiative is currently helping the company improve processes,

turnaround times and customer satisfaction levels. Another Novel introduction is the

ICICI Prudential Lifestyle Rewards Club, Indias first rewards programme for Life

Advisors; it allows ICICI Prudential Advisors to redeem points for items ranging from

kitchenware to gold, white goods, and even international holidays.

3.4 ULIPs PRODUCTS OF ICICI PRUDENTIAL LIFE

INSURANCE COMPANY

There are many ULIP Products in ICICI Prudential life insurance company. Out of them

some most ULIP products are given below.

1) Life Time Gold - is a unit-linked plan that offers customers the flexibility and

control to customize the policy to meet the changing needs at different life stages.It offers 7 fund options - Preserver, Protector, Balancer, Flexi Balanced

Multiplier, R.I.C.H and Flexi Growth.

2) Premier Life Gold - is a limited premium paying plan specially structured for

long-term wealth creation.

3) Smart kid - provides guaranteed educational benefits to a child along with life

insurance cover for the parent who purchases the policy. The policy is designed to

provide money at important milestones in the child's life. SmartKid plans are also

available in traditional form.

4) Life stage RP - is unit linked plan that provides you with an option of lifecycle-

based portfolio strategy that continuously re-distributes your money across

various asset classes based on your life stage. This will help you achieve the right

Asset Allocation to meet your desired financial goals.

5) Life Time Super Pension - is a regular premium unit linked pension plan that

helps one accumulate over the long term and offers 5 annuity options (life

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annuity, life annuity with return of purchase price, joint life last survivor annuity

with return of purchase price, life annuity guaranteed for 5, 10 and 15 years & for

life thereafter, joint life, last survivor annuity without return of purchase price) at

the time of retirement.

6) Premium Guarantee -

7) Crisis cover - is a 360-degree product that will provide long-term coverage

against 35 critical illnesses, total and permanent disability, and death.

8) Medi Assure - is a health insurance policy that provides assured insurability till

age 75 years, assured coverage for accepted pre-existing illnesses after 2 years

and an assured price for 3 years.

9) Hospital care - is a fixed benefit plan covering various stages of treatment -

hospitalization, ICU, procedures & recuperating allowance. It covers a range of

medical conditions (900 surgeries) and has a long term guaranteed coverage upto

20 year

CHAPTER 4

CONCEPTUAL FRAMEWORK

4.1 NEED AND PURPOSE OF LIFE INSURANCE

You need Life Insurance because typically the need for income continues for those who

are financially dependent on you, but there is no guarantee of your ability to earn

consistently and for the rest of your life. Life insurance can help you safeguard the

financial needs of your family.

This need has become even more important due to steady disintegration of the prevalent

joint family system, and emergence of nuclear families. The need to protect your family's

ever growing needs is why you need Life Insurance.

1. Replacement of Income

Life insurance products can provide support to the family and take care of the family's

financial requirements. It provides a lump sum or periodic payments to help replace the

income stream, in case of an unfortunate event or an untimely demise of the breadwinner.

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2. Lifestyle Maintenance

Life insurance products can help you build a corpus to protect and maintain your lifestyle

against fluctuations in your future income.

3. Costs of Education

You need to support your child with a sound educational background, to help your child

achieve his/her dreams. Life insurance products can help you fulfill these needs, whether

you are there or not.

4. Retirement Expenses

Retirement is an age when an individual has fulfilled almost all his responsibilities and

looks forward to relaxing. Life insurance products can help you lead a secure and tension

free retired life by ensuring that you get guaranteed pension.

5. Mortgage and Debt protectionWith increasing consumerism and ever-rising demands, loans and debts are now part of

life. Life insurance products help you ensure that your family is not unduly burdened

with their repayments, in case of an unfortunate event or an untimely demise of the

breadwinner.

6. Hardships Protection

Life insurance provides a sense of security to the income earner and to his/her family.

Buying life insurance frees the individual from various unnecessary financial burdens

that can otherwise make one spend sleepless nights.

4.2BENEFITS OF LIFE INSURANCE

1. Superior to Any Other Savings Plan

Unlike any other savings plan, a life insurance policy affords full protection against risk

of death. In the event of death of a policyholder, the insurance company makes available

the full sum assured to the policyholders' near and dear ones. In comparison, any other

savings plan would amount to the total savings accumulated till date. If the death occursprematurely, such savings can be much lesser than the sum assured. Evidently, the

potential financial loss to the family of the policyholder is sizable.

2. Encourages and Forces Thrift

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A savings deposit can easily be withdrawn. The payment of life insurance premiums,

however, is considered sacrosanct and is viewed with the same seriousness as the

payment of interest on a mortgage. Thus, a life insurance policy in effect brings about

compulsory savings.

3. Easy Settlement and Protection against Creditor

A life insurance policy is the only financial instrument the proceeds of which can be

protected against the claims of a creditor of the assured by effecting a valid assignment of

the policy.

4. Administering the Legacy for Beneficiaries

Speculative or unwise expenses can quickly cause the proceeds to be squandered. Several

policies have foreseen this possibility and provide for payments over a period of years or

in a combination of installments and lump sum amounts.

5. Ready Marketability and Suitability for Quick Borrowing

A life insurance policy can, after a certain time period (generally three years), be

surrendered for a cash value. The policy is also acceptable as a security for a commercial

loan, for example, a student loan. It is particularly advisable for housing loans when an

acceptable LIC policy may also cause the lending institution to give loan at lower interestrates.

6. Disability Benefits

Death is not the only hazard that is insured; many polices also include disability benefits.

Typically, these provide for waiver of future premiums and payment of monthly

installments spread over certain time period.

7. Accidental Death Benefits

Many policies can also provide for an extra sum to be paid (typically equal to the sum

assured) if death occurs as a result of accident.

8. Tax Relief

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Under the Indian Income Tax Act, the following tax relief is available

a) 20 % of the premium paid can be deducted from your total income tax liability.

b) 100 % of the premium paid is deductible from your total taxable income.

When these benefits are factored in, it is found that most polices offer returns that are

comparable or even better than other saving modes such as PPF, NSC etc. Moreover, the

cost of insurance is a very negligible.

4.3 ABOUT IRDA

When Indian government decided to privatize insurance sector in 1999, strong need of a

Regulatory authority was felt. This was in the backdrop of experience of investors who

had been robbed before through various financial scams such as stock exchange frauds,Chit funds, Plantation Investments etc. thus IRDA (Insurance Regulatory and

Development Authority) was born.

4.3.1 COMPOSITION OF AUTHORITY UNDER IRDA ACT, 1999

As per the section 4 of IRDA Act' 1999, Insurance Regulatory and Development

Authority (IRDA, which was constituted by an act of parliament) specify the

composition of Authority

The Authority is a ten member team consisting of :-

(a) A Chairman;

(b) Five whole-time members;

(c) Four part-time members,

(All appointed by the Government of India)

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The Basic objectives of IRDA are :-

To protect the interest of and secure fair treatment to policyholders;

To bring about speedy and orderly growth of the insurance industry (including annuity

and superannuation payments), for the benefit of the common man, and to provide

long term funds for accelerating growth of the economy

To set, promote, monitor and enforce high standards of integrity, financial soundness,

fair dealing and competence of those it regulates;

To ensure that insurance customers receive precise, clear and correct information about

products and services and make them aware of their responsibilities and duties in thisregard;

To ensure speedy settlement of genuine claims, to prevent insurance frauds and other

malpractices and put in place effective grievance redressal machinery;

To promote fairness, transparency and orderly conduct in financial markets dealing

with insurance and build a reliable management information system to enforce high

standards of financial soundness amongst market players

To take action where such standards are inadequate or ineffectively enforced;

To bring about optimum amount of self-regulation in day to day working of the

industry consistent with the requirements of prudential regulation.

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FIGURE 4.1 DIFFERENT PRIVATE COMPANIES IN INSURANCE INDUSTRY

CHAPTER 5

RESEARCH METHODOLOGY

Research is a scientific & systematic search for pertinent information on a specific topic.

It is an art of scientific investigation. Research is a voyage of discovery. It is also said to

be the pursuit of truth with.

The methodology forms the core of all research strategies. It refers to the procedure for

the collection of data and its analysis. This chapter deals with various methodological

details in the present study entitled A study on peoples perception and awareness

about ULIPs in Udaipur Citywith special reference to. ICICI Prudential Life Insurance

Company.

The methodology of the present investigation is described in the following sections:-

1) Statement of the problem

2) Objective of research

3) Research design

4) Scope of the study

5) Sample design

6) Sample size

7) Data collection

8) Area of the Study

9) Analysis of data

5.1 STATEMENT OF THE PROBLEM

Peoples perception and awareness about ULIPs in Udaipur City

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the variables; he can only report what has happened or what is happening. Thus, this

would help in finding out the level of awareness about ULIPs. Also, descriptive research

design is a scientific method which involves observing and describing the behavior of a

subject without influencing it in any way. So in every case, this type of research is aptly

suited for the project undertaken.

5.4 SCOPE OF THE STUDY

The scope of the study has been limited to the educated middle class salaried and small

investors, of the age group 25-60, who have some or no knowledge regarding insurance

and ULIPs.

5.5 SAMPLE DESIGN

Since in a research it is impossible to include whole population so to avoid this situation

an appropriate sample from the population depending upon the type of research has to be

taken. In my research I have used convenience or deliberate sampling. It is used in

research where the researcher is interested in getting an inexpensive approximation of the

truth. As the name implies, the samples are selected because they are convenient.

Since each member in the population does not have an equal chance of being chosen, a

convenience sample is a non-random sampling method. In my research also I took the

responses from only those who are educated, middle class, salaried and small investors of

the age group 25-60, and who were available conveniently.

5.6 SAMPLE SIZE

For the survey, a sample size of 50 has been taken into consideration.

5.7 DATA COLLECTION

The data was collected by using the following tools:[A] PRIMARY DATA Those data which are collected afresh and for the first time.

For this purpose instrument used was questionnaire and personal interview.

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Questionnaire: to elicit the information from the customer, a questionnaire was

prepared. The questionnaire was developed by taking into account the various objectives

laid down in the study. Questionnaire used is simple in language and contains both open-

ended and close-ended question. Open-ended questions allow respondents to answer in

their own words. Close-ended questions provide answers that are easier to interpret and

tabulate.

[B] SECONDARY DATA Those data that are collected from earlier research work

and are applicable or usable in the study. In this project, secondary data was obtained

from journals, magazines, websites etc.

5.8 AREA OF THE STUDY

The area of the study is Udaipur City.

5.9 STATISTICAL TOOLS USED FOR DATA ANALYSIS AND

INTERPRETATION

The information gathered through sample survey has been systematically classified and

tabulated for interpretation. Tables, Bar Diagrams as well as Pie-charts have also been

used to depict the information in more comprehensive manner and make it easily

comparable. The main statistical tools used for the collection and analyses of data in this

project are:

Questionnaire

Pie Charts

Bar Diagrams

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33

11

6

0

10

20

30

40

NUMBER

OFRESPONDENT

AGREE DISAGREE CAN'T SAY

RESPONSE

"INSURANCE PROVIDES LIFE LONG BENEFITS"

CHAPTER 6

DATA ANALYSIS AND INTERPRETATION

1. Do you agree with the statement that Insurance provides life long benefits?

a. Agreeb. Disagreec. Cant say

FIGURE 1The above figure shows that when asked whether you agree with the statement that

insurance provides life long benefits, 33 respondents or 66% of all replied in the

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affirmative, while 11 of them said they dont agree with the statement, and 6 of them

abstained themselves from giving any answer. This indicates that majority of the

people agree with the above stated statement.

2. Are you aware about private life insurance companies?

a. Aware - 47 b. Not aware - 03

FIGURE 2

The above bar diagram shows that when asked about the awareness of Private Life

Insurance Companies, 94% of the respondents said they were aware about it, while 6%

said they were unaware. Thus the awareness level in this case is higher than

unawareness.

- 45 -

47

3

0

10

20

30

40

50

NUMBER

OF

RESPONDENT

AWARE NOT AWARE

RESPONSE

AWARENESS ABOUT PRIVATE LIFE

INSURANCE COMPANIES


46/66

103 4 3

80

0

10

20

30

40

50

60

70

80

NUMBER

OFRESPONDENTS

Risk Coverage Tax Savings Good Returns Security All the above

RESPONSE

LIFE INSURANCE ACCORDING TO RESPONDENT

3. According to you Life Insurance is

PARTICULARSNUMBER OF

RESPONDENTSPERCENTAGE

Risk Coverage 10 10%

Tax Savings 3 3%Good return 4 4%

Security 3 3%

All the above 80 80%

TOTAL 100 100

FIGURE 3

When it was asked to the respondents, that what exactly is Life Insurance accordingto them, then 10% of the respondents said it was risk coverage, 3% said it was tax

saving, 4% said it provided good returns, 3% said it is an instrument which provides

security to them, while 80% said it was a combination of all of the above for them.

Thus, it indicates that Insurance according to the masses is a combination of risk

coverage, tax saving, good returns and security.

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4. Do you know which was the first private life insurance company in Udaipur city?

a. Yes - 27 b. No - 23

FIGURE 4

The above bar diagram depicts that when people were asked whether they knew whichwas the first private life insurance company in Udaipur, then 54% of the respondents said

they know, while the rest said they dont.

5. Have you heard about any ULIP ?

a. Yes - 40 b. No - 10

- 47 -

27

23

0

10

20

30

NUMBER

OF

RESPON

DENTS

AWARE NOT AWARE

RESPONSE

AWARENESS ABOUT FIRST PVT. LIFE

INSURANCE COMPANY IN UDAIPUR


48/66


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FIGURE 6

When it was asked whether they had any of the Unit Linked Insurance Plan, then 64% of

the respondents had one or the other type of ULIP, while 36% did not.

7. In which company do you have ULIP?

a. ICICI - 37 % b. Reliance life insurance - 16%c. SBI life - 19%d. Birla sun life - 09%e. Other - 19%

- 49 -

32

8

0

5

10

15

20

25

30

35

NUMBER

OF

RESPONDENTS

YES NO

RESPONSE

DO YOU HAVE A ULIP


50/66

FIGURE 7

The above diagram shows that 37% of the respondents had their ULIP in ICICI

Prudential Company, 19% in State Bank of India, 16% in Reliance Life Insurance, 9% in

Birla Sun Life and 19% in other insurance companies. Thus this indicates that ICICIPrudential is a leader in ULIPs sales.

8. Why do /will you take ULIP?

a. As a Tax saving tool - 19 b. As a Safety tool - 22c. As an investment tool - 09

- 50 -

NAME OF THE INSURANCE COMPANY

37%

16%

19%

9%

19%ICICI Prudential Life

Insurance

Reliance Life

Insurance

SBI Life

Birla Sun Life

Others


51/66

FIGURE 8

When respondents were asked why would they take ULIPs, then 22% said theyll take it

for safety, 19% for tax saving and 9% for investment.

9. Are you satisfied with the company in which you have insured under ULIP?

a. Highly satisfied - 15 b. Moderately satisfied - 08c. Cant say - 05d. Dissatisfied - 04

- 51 -

1922

9

0

5

10

15

20

25

NUMBER

OF

RESPONDENT

S

TAX SAVING SAFETY INVESTMENT

REASONS

REASONS FOR TAKING ULIP


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FIGURE 9

The above diagram depicts the answers of respondents to the question that whether they

were satisfied with the company they had their ULIP in. 15% said they were highly

satisfied, 8% were moderately satisfied, 5% were dissatisfied and 4% had no clue to the

question.

10. How do you come to know about new policies of ULIPs?

a. News paper - 10%b. Friends & Relatives - 18%c. Electronic media - 10%d. Insurance consultant - 62%

- 52 -

15

8

5 4

0

2

4

6

8

10

12

14

16

NUMBER

OFRESPOND

ENTS

HIGHLY

SATISFIED

MODERATELY

SATISFIED

DISSATISFIED CANT SAY

SATISFACTION INDEX

SATISFACTION WITH THE ULIP PROVIDING COMPANY


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FIGURE 10

When respondents were asked how do they come to know about new ULIPs, then 62%

said there source of information are Insurance Consultants, 18% come to know throughfriends and relatives, 10% through newspapers and rest 10% through electronic media.

Thus, the biggest awareness generating sources are the Insurance Consultants.

11. Do you know about ICICI prudential life insurance company?

a. Yes - 43

b. No - 07

- 53 -

SOURCE OF AWARENESS ABOUT NEW ULIPs

10%

18%

10%62%

NEWSPAPERS

FRIENDS AND

RELATIVES

ELECTRONIC MEDIA

INSURANCE

CONSULTANT


54/66

FIGURE 11

The above figure shows the responses to the question Do you know about ICICI

prudential life insurance company. 43% said they were well aware about the company,

while the rest were not.

12. Are ULIPs risky ?

a. Yes - 70%

b. No - 30%

- 54 -

43

7

0

10

20

30

40

50

NUMBER

OF

RESPONDENTS

YES NO

RESPONSE

AWARENESS ABOUT ICICI PRUDENTIAL LIFE

INSURANCE COMPANY


55/66

FIGURE 12

When respondents were asked whether the believed ULIPs to be risky, then 30%

answered in affirmation, while 70% said they did not feel ULIPs are risky.

13. Are you aware about Switch option in ULIPs?

a. Aware - 22b. Not aware - 18

- 55 -

DO YOU BELIEVE THAT ULIPS ARE RISKY

YES

30

NO

70%


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FIGURE 13

The above question is related to awareness regarding various options available in ULIPs.

22% of the respondents were aware about the switch option available in ULIPs while

18% were not.

14. Are you aware about Liquidity in ULIPs?

a. Aware - 32 b. Not aware -18

- 56 -

22 18

0

5

10

15

20

25

NUMBER

OF

RESPONDENTS

AWARE NOT AWARE

RESPONSE

ARE YOU AWARE ABOUT THE SWITCH OPTION

IN ULIPS


57/66

FIGURE 14

When asked about the awareness of liquidity in ULIPs, 32% of the respondents said they

were aware about liquidity, while 18% were not aware.

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32

18

0

10

20

30

40

NUMBERO

F

RESPONDEN

TS

AWARE NOT AWARE

RESPONSE

ARE YOU AWARE ABOUT LIQUIDITY IN ULIPs


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CHAPTER 7

CONCLUSION AND RECOMMENDATIONS

The universe everyday is witnessing unimaginable growth in majority of the

industries and the Insurance Sector is one of them.The insurance sector was opened

up for private participation few years ago. For years now, the private players are

active in the liberalized environment. The insurance market has witnessed dynamic

changes, which include presence of a fairly large number of insurers both life, and

non-life segment. Most of the private insurance companies have formed joint venture

partnering well-recognized foreign players across the globe.

With the emerging Insurance Market, the concept of a new type of insurance plan has

emerged which is Unit Linked Insurance Plan or ULIP. ULIPs essentially combine

the benefits of an insurance policy and a market-linked investment. A certain

proportion of the premium paid is invested in market-linked instruments like equities

and bonds (in line with the stated mandate) and the balance is used to provide for the

expenses incurred on providing the investor with an insurance cover. Like most other

products in the tax-saving segment, ULIPs are also designed to achieve the twin

objectives of tax benefits and capital appreciation.

As this is a fairly new concept, people are either unaware or skeptical about these

plans. The purpose of this project was to find out peoples awareness about ULIPs

and various options available in it. The study shows that though people are aware

about it, still they feel that ULIPs are something which will rob them of their money.

A few reasons being:

In India, insurance is sold, not bought Traditionally, insurance has been

bought for tax-saving, rather than from the perspective of insuring oneself.

Hence, the insurance aspect typically takes a backseat.

The ongoing market swing -It has put the booming business of unit linked

insurance plans (ULIPs) under severe test, as the returns of these plans are linked

to the market.

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The attractive agency commission - An advisor selling a ULIP is likely to pocket

a commission in the range of 30.00 per cent of the premium paid in the first few

years. Conversely, an investment in a tax-saving mutual fund (which offers the

same tax benefits under Section 80C of the Income Tax Act) would fetch him an

upfront commission of 2.00-2.50 per cent of the investment value. Thus, people

dont believe an agent even if the ULIP is suitable for them.

ULIPs are new products and have little history of performance, thus it becomes

very difficult for the customers to compare their performance parameters.

The investor bears the brunt in the form of lower returns in the initial years.

Also, investment returns are not guaranteed.

ULIPs arent popular just for the wrong reasons. Rest assured, they have their

positives as well, which are :

Flexibility offered by ULIPs - ULIPs offer the kind of flexibility that no insurance

product can. For example, investors can select a ULIP with an equity-debt

combination that is in line with their risk profile. A risk-taking investor would

typically select one with a high equity component, while a risk-averse investor

would opt for a debt-heavy one.

ULIP investors have the opportunity to manage their monies . When equity

markets seem overheated, investors can shift their corpus into a debt-oriented

portfolio, and in the process insulate it from volatility in the equity markets.

Similar changes can be incorporated when the investors risk profile undergoes a

change.

Then there are advantages like the top-up facility (which is like a one-time

premium payment) that can be used to gainfully utilise surplus monies.

Another reason for buying a ULIP is the benefit it offers, by bundling insurance

with an investment product.

The client enjoys transparency, by way of returns on the equity markets

simultaneously enjoying the benefits of life cover.

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insurance cover, as well as investment returns based on market performance. Its

primary advantage is that the customer gets the advantages of both insurance and

mutual fund investment in a single contract. Their market awareness and sales is low

but can be increased by adopting above stated recommendations.

Also, the Insurance Regulatory and Development Authority (IRDA) is closely

monitoring the growth of unit-linked insurance products (ULIP) market on a

continuous basis and sees the need for creating greater awareness about the products

among the customers, according to Mr C.S. Rao, Chairman, IRDA. But for this the

life insurers will have to implement the new norms, aimed at ensuring that the

customer gets a fair deal, enhancing transparency and providing a better

understanding of the product.

ANNEXURE I

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Respected Sir/Madam,

I am a student of M.B.A. and as a part of curriculum I am doing a research project, which

is a survey on Peoples perception and awareness about ULIPs in Udaipur City. The

objective of the survey is to find out the awareness among people regarding ULIPs and

different options available in ULIPs.This is a general study and thus I seek to know only

your general views about insurance companies. This is not specific to any particular

company.

I would appreciate your co-operation in making this survey successful by taking part inthe survey and providing us your valuable comments. I assure you that this data will be

used only for study purpose and it will be kept confidential.

Thanking You,

Regards,

Gunjan Charan

QUESTIONNAIRE

Name - _____________

Sex - _____________

Age - _____________

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Occupation - _____________

1. Do you agree with the statement that Insurance provides life long benefits?

a. Agreeb. Disagreec. Cant say

2. Are you aware about private life insurance companies?

a. Awareb. Not aware

3. According to you life insurance is

a. A tax saving planb. A saving scheme with good returnc. A financial security for the familyd. Risk coveragee. All the above

4. Do you know which was the first private life insurance company in Udaipur city?

a. Yesb. No

5. Have you heard about any ULIP ?

a. Yesb. No

6. Do you have any of the ULIPs ?

a. Yesb. No

7. In which company do you have ULIP?

a. ICICIb. Reliance life insurancec. SBI lifed. Birla sun life

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e. Other

8. Why do you/will you take ULIP?

a. As a Tax saving tool

b. As a Safety toolc. As an investment tool

9. Are you satisfied with the company in which you have insured under ULIP?

a. Highly satisfiedb. Moderately satisfiedc. Cant sayDissatisfied

10. How do you come to know about new policy of ULIP?

a. News paper b. Friends & Relativesc. Electronic mediad. Insurance consultant

11. Do you know about ICICI prudential life insurance company?

a. Yesb. No

12. Are ULIPs risky ?

a. Yesb. No

13. Are you aware about Switch option in ULIPs?

a. Awareb. Not aware

14. Are you aware about Liquidity in ULIPs?

a. Aware

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b. Not aware

THANK YOU !

REFERENCES AND BIBLIOGRAPHY

Life Insurance by Kenneth Jr. Black and Harold D., Jr. Skipper

Insurance In India by P S Palander S Shahm L Lunawat

IRDA Journals

ICICI Prudential Company magazines

Newspapers and Business Magazines

Brochures provided by the ICICI Prudential

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WEBSITES

www.iciciprulife.com

http://aboutulips.com/main.html

www.icicibank.com

www.google.co.in/indian insurance industry

www.irdaindia.org

www.thehindubusinessline.com

www.infoaboutinsurance.com

http://www.rediff.com/money/2008/jan/03ulip.htm

www.profit.ndtv.com

www.apnainsurance.com/ulip-india/

http://en.wikipedia.org/wiki/Insurance

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