Hdfc Recruitment of Financial Consultants

8/3/2019 Hdfc Recruitment of Financial Consultants

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JitendraVirahya

s [email protected]

A PROJECT REPORT ON

RECRUITMENT OF FINANCIAL CONSULTANTS

WITH

HDFC STANDARD LIFE INSURANCE LTD.

SUBMITTED TO SUBMITED BY:

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Dr.Seema Sharma dddddddd

A Report submitted in partial fulfillment of the requirements of

Bachaler of Business Administration (BBA)

[2007 – 09]

ACKNOWLEDGEMENT

I take great pleasure to thank and acknowledgement the permission and

allowance, NAVEEN SHARMA BRANCH MANAGER HDFCSTANDARD LIFE INSURANC VAISHALI NAGAR,JAIPUR and his

help and inspiration provided. I extend a whole hearted thanks to Mr.

JITENDRA VIRAHYAS under whom I worked and learned a lot and for

enlightening me with their knowledge and experience to grow with the

corporate working.

Their guidance at every stage of the Project enabled me to successfully complete this

project which otherwise would not have been possible without their constant

encouragement and motivation, without the support it was not possible for me to

complete the report with fullest endeavour.

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PREFACE

I had undergone a practical training under HDFC STANDARD LIFE

INSURANCE, VAISHALI NAGAR JAIPUR . It was a good exposurefor me to undergo training in such a company to get the knowledge and

experience regarding life insurance and recruitment of capable of life

insurance advisors.

Summer training is one of the major experiencing components of the

knowledge, gain of relevant of information with respect to marketing and

dealing with situations in a professional course like B.B.A. where a

professional person faces a problem in a field. I was able to get familiarized

with the customer relationship and got to know how a company measures

to resolve their grievances and service them to the maximum for future

prospect and success. Field component like survey, generation of

questionnaire with respect to marketing helped me a lot and would be a

great support in future.

“It is good to have enthusiasm but it is essential to have training.

Training can be in all way of life.” Thus I would say that this training was

beneficial educative & good exposure to me, which will certainly help in

my near future. This project was designed with respect to this company.

The project made me to get the enhanced knowledge regarding life

insurance concept and the process of recruiting of financial consultant.

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Table of contents

S. No. Particulars Pages

1. INTRODUCTION 5-11

2. LIFE INSURANCE 12-16

3. LIFE INSURANCE INDUSTRY 17-20

4. ABOUT THE COMPANY – HDFC STANDARD LIFE 21-28

5. PRODUCTS 29-36

6. LIFE INSURANCE IN INDIA 37-41

7. LIFE INSURANCE AGENT & FINANCIAL

CONSULTANT RECRUITMENT

42-45

8. RESEARCH METHODOLOGY 46-49

9. MARKET SURVEY 50-60

10. SWOT ANALYSIS 61-63

11. RECOMMENDATIONS 64-68

12. CONCLUSION 66-67

13. BIBLIOGRAPHY 68-69

14. QUESTIONNAIRE 70-74

15. Glossary 75-85

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INTRODUCTION - INSURANCE

The insurance sector was opened up in the year 1999 facilitating the entry of private players

into the industry. With an annual growth rate of 24.31 percent and the largest number of life

insurance policies in force, the potential of the Indian insurance industry is huge. The year

1999 saw a revolution in the Indian insurance sector, as major structural changes took place

with the ending of Government monopoly and the passage of the Insurance Regulatory and

Development Authority (IRDA) Bill, lifting entry restrictions for private players and allowing

foreign players to enter the market with some limits on direct foreign ownership.

According to the CSO, the insurance and banking services’ contribution to the country’s GDP

is 7.1 percent out of which the gross premium collection forms a significant part. Life

insurance penetration in India was less than 1 percent till 1990-91. During the ‘90s, it was

between 1 and 2 percent and from 2001 it was over 2 percent. In 2003-04 it was 2.4 percent.

The impetus for increase is due to the active role played by IRDA in licensing private

players and taking positive steps in increasing the insurance awareness among the people.

Besides, the insurance companies in general and private insurance companies in particular, are

reaching out to untapped potential in rural areas with aggressive campaigns.

Innovative products, smart marketing, and aggressive distribution have enabled fledgling

private insurance companies to sign up Indian customers faster than anyone expected. Life

insurance is viewed as a tax saving device. People are now turning to the private sector for

providing them with new products and greater variety for their choice. The improvement in

FDI flows reflected the impact of recent initiatives aimed at creating an enabling environment

for FDI and for encouraging infusion of new technologies and management practices. The

Government’s proposal to increase the FDI cap in the insurance sector from the present 26

percent to 49 percent has raised expectations among the international insurance companies.

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Insurance – Defined:

Insurance is a contract in which sum of money is paid to the assured in

consideration of insurer’s incurring risk of paying a large sum upon a

given contingency. -- Justice Tindall

“Insurance is a contract by which one party for a compensation called in

the premium assumes particular risks of the other party and promises to

pay to him or his nominee a certain sum of money on a specified

contingency.” -- E.W.Fitterson

Insurance may be described as social device whereby a large group of

individuals, through a system of equitable contribution, may reduce certain

measurable risk of economic loss common to all members of the group.”

--Encyclopedia Britannica

The above definitions clearly shows that insurance is a cooperative device

to spread the loss caused by a particular risk over a member of persons who

are exposed to it and who agree to insure themselves against risk. Insurance

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does not eliminate risk but only reduces the financial burden, which may be

very heavy.

Evolution of insurance

In the days of yore insurance was in its crude form and was cooperative

and voluntary in nature. When, where and how it originated is still a matter

of research in one way or the other was prevalent in olden days. We can

trace its history from the evolution society from hunting stage to the

modern industrial age. A word “YAGCHHEM” occurs in the world’s most

ancient Hindu Scripture Rig Veda.

The word “YAGCHHEM” means insurance. It clearly indicated that about

four thousand years ago insurance was prevalent in its crude form. It was

cooperative and voluntary in nature. People formed different groups of

organizations to share the loss among themselves incase of a particular risk.

Each member contributed some amount to a common fund to meet the

unforeseen losses. Sometimes they also contributed equally to compensate

person as and when he suffered a loss. Traces of insurance in the ancient

world are also found in the form of marino trade loans or carriers contracts

which included an element of insurance.

Evidence is on records that arrangements embodying the idea of insurance

were made in Babylonia and India at quite an early period. References

were made to the concept of insurance in Manu’s code “Manu Smrity”. It

was akin to “Yagakshemo” of Rigveda in which the well being and security

of the community was aimed at. However, there is no evidence that

insurance in its present farm was practiced prior to twelfth century.

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The Nature Of Insurance

The insurance has the following characteristics which are observed in cases

of life, marine, fire and general insurance.

1. Sharing of risks: Insurance is a cooperative device to share the

financial losses which might befall on an individual or his facility on the

occurrence of specified event such as sudden death of the bread winner, marine

perils in marine insurance, fire in the fire insurance and theft insurance etc. in

the case of general insurance.

2. It is a cooperative device: A large number of persons agree to share the

loss arising sue to a particular risk. Thus, insurance is a cooperative device.

3. Value of risk: The risk is evaluated before insuring to charge the

amount of share called premium.

4. Payment made at contingency: The payment is made at a certain

contingency insured. The Contingency may be death, fire, marine perils etc.

5. Amount of payment: The amount of payment depends upon policy

insured.

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Functions of Insurance

A) Primary Functions

1. Insurance provides certainty: Insurance provide certainty of payments

at the uncertainty of losses. The element of uncertainty is reduced by better

planning and administration.

2. Insurance provides protection. The risk will occur or not, when will

occur and how much loss will be there. There are uncertainties of happening of

time and amount of losses. The main function of the insurance is to provide

protection against the losses.

3. Risk sharing: Risk is uncertain and therefore, the loss arising from the

risk is also uncertain. All business concern faces the problem of the risk and if

the concern is big enough the handling of risk becomes a specialized function.

Insurance, as a device is the outcome of the existence of various risks in our

day to day life. It spreads the whole losses over a large number of persons who

are exposed by a particular risk.

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B. Secondary Functions

1. Prevention of loss: Prevention is always better than cure. Prevention is

by far the best solution to the problem of risk. It is more effective and cheapest

method to avoid the unfortunate consequence. But sometimes prevention is not

always possible and Effective.

2. It provides capital: It provides the capital to the society. For plan

development of country there is a great need for huge amount of capital. Now

days, the insurance companies are rendering positive help in the development

of trade, commerce and industry of the country.

3. It improves efficiency: Achievement of goals, it improves not only his

efficiency of the masses is also advanced. The insurance eliminates worries and

miseries of losses as death and destruction of property care free person can

devote his energies for better.

4. It ensures the welfare of society: “Insurance is a saga of service and

security” to thee society. Security of the life and property given by insurance

bring peace of mind to the insured. The investment in LIC in welfare schemes

like electricity, housing, water supply, agro industry estates are able to solve

many problems in India.

5. It helps in economic progress: Insurance provides an initiative to work

hard for the betterment of the masses. Life insurance involves the element of

saving investment through small savings. And which has been growing in

recent yrs at an annual rate of about Rs. 400 crs, life insurance is not a mere

business organization, it has nobler welfare responsibilities in the development

of the economy.

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*****

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LIFE INSURANCE

Definition

The life insurance contract embodies an agreement in which broadly

stated, the insurer undertakes to pay a stipulated sum upon the death of the

insurer to a designated beneficiary.” -- J.H.MAGEE

Life insurance contract may be defined whereby the insurer, in

consideration of premium paid either in lumpsum installments, undertakes

to pay an annuity on the death of the insured of a certain number of

years.” -- R.S.SHARMA

A contract of life assurance is that in which one party agrees to pay a

given sum on the happening of a particular event contingent upon the

duration of human life in consideration of immediate payment of a smaller

sum by another. BUNYON’S LAW OF LIFE

INSURANCE

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Some outstanding advantages of life insurance

1.) It is superior to an ordinary saving plan: this is so because unlike other

saving plans, it offers full protection against risk of death.

2.) Insurance encourages and enforces thrift : many people may not have

the will power to continue a long term saving plan which they may

formulate regular payments in face of money other uses to which their

limited income could be put.

3.) Easy installments and protections against creditors: the proceeds of a

life insurance policy can be protected against the claims of the creditors of

life assured by affection a valid assignment of the policies.

4.) Tax relief: the income tax act exempts from tax that part of an

individuals income which is devoted to payment of life insurance

premium.

5.) Estate duty: life insurance is the most practicable way to ensure definite

payment on one’s death without having resort to conversion of realizable

asset at a loss.

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Why Life Insurance

?

Life Insurance has come a long way from the earlier days when it was

originally conceived as a risk covering medium for short periods of time,

covering temporary risk situations, such as sea voyages. As life insurance

became more established, it was realized what a useful tool it was for a

number of situations, including -

a) Temporary needs / threats: The original purpose of life insurance

remains an important element, namely providing for replacement of income

on death etc.

b) Regular Savings: Providing for one's family and oneself, as a medium

to long term exercise (through a series of regular payment of premiums).

This has become more relevant in recent times as people seek financial

independence for their family.

c) Investment: Put simply, the building up of savings while safeguarding it

from the ravages of inflation. Unlike regular saving products, investment

products are traditionally lump sum investments, where the individual

makes a one off payment.

d) Retirement: Provision for later years becomes increasingly necessary,

especially in a changing cultural and social environment. One can buy a

suitable insurance policy, which will provide periodical payments in one's

old age.

Let us take an example to understand the need for insurance:

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Mr. Pranay is 45 years of age and self-employed. His wife Nandini, who is

a housewife, looks after their two children aged 3 and 7 years.

They stay in a rented accommodation, where the rent is 15,000 rupees per

month. Mr. Atul has taken up a loan of Rs. 2 lakh. His monthly earnings on

average are 40,000 rupees. Mr. Atul passes away in an unfortunate road

accident. What are some of the financial implications of his death on his

family? There may be several financial implications on his family. Some of

these are:

a) The monthly income, previously provided by Mr. Atul would stop.

b) His wife and children may have to seek financial assistance from other

relatives.

c) His wife may not have enough money to pay back the loan of Rs. 2

lakhs.

d) The family may have to move into a cheaper accommodation.

e) His widow may have to take up work to earn money.

f) The education of his children may suffer.

This simple example illustrates the impact premature death can have on a

family, where the main earner has no life cover. Had Mr. Atul taken life

cover, his family would not have faced such hardships in the event of his

unfortunate death. A simple life insurance policy could have provided Mr.

Atul's family with a lump sum that could have been invested to provide an

income equal to all or part of his income.

In simple words, insurance protects against untimely losses. Insurance has

been found useful in the lives of persons both in the short term and long

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term. Short term needs like sudden medical costs and long term needs like

marriage expenses etc can be met with using life insurance.

Cement industries

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INSURANCE INDUSTRY

India Insurance Industry: - New Avenues For Growth

With an annual growth rate of 15-20% and the largest number of life insurance policies in

force, the potential of the Indian insurance industry is huge. Total value of the Indian

insurance market (2004-05) is estimated at Rs.450 billion (US$10 billion). According to

government sources, the insurance and banking services’ contribution to the country's

gross domestic product (GDP) is 7% out of which the gross premium collection forms a

significant part.

The funds available with the state-owned Life Insurance Corporation (LIC) for

investments are 8% of GDP. Till date, only 20% of the total insurable population of India

is covered under various life insurance schemes, the penetration rates of health and other

non-life insurances in India is also well below the international level. These facts indicate

the of immense growth potential of the insurance sector.

The year 1999 saw a revolution in the Indian insurance sector, as major structural

changes took place with the ending of government monopoly and the passage of the

Insurance Regulatory and Development Authority (IRDA) Bill, lifting all entry

restrictions for private players and allowing foreign players to enter the market with some

limits on direct foreign ownership.

Though, the existing rule says that a foreign partner can hold 26% equity in an insurance

company, a proposal to increase this limit to 49% is pending with the government. Sinceopening up of the insurance sector in 1999, foreign investments of Rs. 8.7 billion have

poured into the Indian market and 21 private companies have been granted licenses.

Innovative products, smart marketing, and aggressive distribution have enabled

fledgling private insurance companies to sign up Indian customers faster than anyone

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expected. Indians, who had always seen life insurance as a tax saving device, are now

suddenly turning to the private sector and snapping up the new innovative products on

offer.

The life insurance industry in India grew by an impressive 36%, with premium

income from new business at Rs. 253.43 billion during the fiscal year 2004-2005, braving

stiff competition from private insurers. RNCOS’s report, “Indian Insurance Industry:

New Avenues for Growth 2012”, finds that the market share of the state behemoth, LIC,

has clocked 21.87% growth in business at Rs.197.86 billion by selling 2.4 billion new

policies in 2004-05. But this was still not enough to arrest the fall in its market share, as

private players grew by 129% to mop up Rs. 55.57 billion in 2004-05 from Rs. 24.29

billion in 2003-04.

Though the total volume of LIC's business increased in the last fiscal year (2004-2005)

compared to the previous one, its market share came down from 87.04 to 78.07%. The 14

private insurers increased their market share from about 13% to about 22% in a year's

time. The figures for the first two months of the fiscal year 2005-06 also speak of the

growing share of the private insurers. The share of LIC for this period has further come

down to 75 percent, while the private players have grabbed over 24 percent.

There are presently 12 general insurance companies with four public sector companies

and eight private insurers. According to estimates, private insurance companies

collectively have a 10% share of the non-life insurance market.

Though the focus of this market research report is on the potential growth on the Indian

Insurance Sector, it also talks about the market size, market segmentation, and key

developments in the market after 1999. The report gives an instant overview of the Indian

non-life insurance market, and covers fire, marine, and other non-life insurance. The data

is supplied in both graphical and tabular format for ease of interpretation and analysis.

This report also provides company profiles of the major private insurance companies.

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Report Highlights:

• Gains of Liberalization in Indian Insurance Sector

•

Indian Insurance Market Segmentation By Products

• Size of the Market and Market Share Of Life Insurers, In INR (crore)

• Market Share Of Non-Life Insurers

• Forecast of Life Insurance Growth Up to 2012

• Forecast of Non-Life Insurance Growth Up to 2012

• Market Revenue of Both Public and Private Insurers

• Policies and Measures Taken By IRDA To Develop The Insurance

Market

• Research and Development Activities

• Regulation of insurance and reinsurance companies

• Major Challenges That Indian Insurance Sector is Facing

• Profiles of the Major Players

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*****

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HDFC STANDARD LIFE INSURANCE

The Introduction

Standard Life Insurance Company Ltd. is one of India's leading private

insurance companies, which offers a range of individual and group

insurance solutions. It is a joint venture between Housing Development

Finance Corporation Limited (HDFC Ltd.), India's leading housing finance

institution and a Group Company of the Standard Life, UK. HDFC as on

March 31, 2007 holds 81.9 per cent of equity in the joint venture.

Our key strengths

Financial Expertise: As a joint venture of leading financial services

groups, HDFC Standard Life has the financial expertise required to manage

your long-term investments safely and efficiently.

Range of Solutions: We have a range of individual and group solutions,

which can be easily customised to specific needs. Our group solutions have

been designed to offer you complete flexibility combined with a low

charging structure.

Track Record so far: Our gross premium income, for the year ending

March 31, 2007 stood at Rs. 2, 856 crores and new business premium

income at Rs. 1,624 crores. The company has covered over 8,77,000 lives

year ending March 31, 2007.

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HDFC and Standard Life first came together for a possible joint

venture, to enter the Life Insurance market, in January 1995. It was clear

from the outset that both companies shared similar values and beliefs and a

strong relationship quickly formed. In October 1995 the companies signed

a 3 year joint venture agreement. Around this time Standard Life purchased

a 5% stake in HDFC, further strengthening the relationship.

The next three years were filled with uncertainty, due to changes in

government and ongoing delays in getting the IRDA (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 additional resource made

available.

Around this time Standard Life purchased 2% of Infrastructure

Development Finance Company Ltd. (IDFC). Standard Life also started to

use the services of the HDFC Treasury department to advise them upon

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 next level. 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.

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

and a 5% stake in HDFC Bank. In a further development Standard Life

agreed to participate in the Asset Management Company promoted by

HDFC to enter the mutual fund market.

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Promoters of HDFC Standard Life Insurance:

1. HDFC Limited

HDFC is India’s leading housing finance institution and has helped build

more than 23,00,000 houses since its incorporation in 1977. In Financial

Year 2003-04 its assets under management crossed Rs. 36,000 Cr. As at

March 31, 2004, outstanding deposits stood at Rs. 7,840 crores. The

depositor base now stands at around 1 million depositors.

• Rated ‘AAA’ by CRISIL and ICRA for the 10th consecutive year

• Stable and experienced management

•

High service standards

• Awarded The Economic Times Corporate Citizen of the year Award for

its long-standing commitment to community development.

• Presented the ‘Dream Home’ award for the best housing finance

provider in 2004 at the third Annual Outlook Money Awards.

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Standard Life Group (Standard Life plc and its subsidiaries)

The Standard Life group has been looking after the financial needs of

customers for over 180 years. It currently has a customer base of around 7

million people who rely on the company for their insurance, pension,

investment, banking and health-care needs.

Its investment manager currently administers £125 billion in assets. It is a

leading pensions provider in the UK, and is rated by Standard & Poor's as

'strong' with a rating of A+ and as 'good' with a rating of A1 by Moody's

Standard Life was awarded the 'Best Pension Provider' in 2004, 2005 and

2006 at the Money Marketing Awards, and it was voted a 5 star life and

pensions provider at the Financial Adviser Service Awards for the last 10

years running.

The '5 Star' accolade has also been awarded to Standard Life Investments

for the last 10 years, and to Standard Life Bank since its inception in 1998.

Standard Life Bank was awarded the 'Best Flexible Mortgage Lender' at the

Mortgage Magazine Awards in 2006

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Incorporation: Hdfc Standard Life Insurance Company Limited

The company was incorporated on 14th August 2000 under the name of

HDFC Standard Life Insurance Company Limited.

Our ambition from as far back as October 1995, was to be the first private

company to re-enter the life insurance market in India. On the 23rd of

October 2000, this ambition was realised when HDFC Standard Life was

the only life company to be granted a certificate of registration. HDFC are

the main shareholders in HDFC Standard Life, with 81.4%, while Standard

Life owns 18.6%.

Given Standard Life's existing investment in the HDFC Group, this is the

maximum investment allowed under current regulations. HDFC and

Standard Life have a long and close relationship built upon shared values

and trust. The ambition of HDFC Standard Life is to mirror the success of

the parent companies and be the yardstick by which all other insurance

company's in India are measured.

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Our Mission

We aim to be the top new life insurance company in the market. This does

not just mean being the largest or the most productive company in the

market, rather it is a combination of several things like-

Customer service of the highest order

Value for money for customers

Professionalism in carrying out business

Innovative products to cater to different needs of different customers

Use of technology to improve service standards

Increasing market share

Our Values

1. SECURITY: Providing long term financial security to our policy

holders will be our constant endeavour. We will be do this by offering life

insurance and pension products.

2. TRUST: We appreciate the trust placed by our policy holders in us.

Hence, we will aim to manage their investments very carefully and live up to

this trust.

3. INNOVATION: Recognizing the different needs of our customers, we

will be offering a range of innovative products to meet these needs. Our

mission is to be the best new life insurance company in India and these are the

values that will guide us in this.

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Board of Directors:-

1. Mr. Deepak S Parekh is the Chairman of the Company. He is also the

Executive Chairman of Housing Development Finance Corporation Limited

(HDFC Limited).

2. Mr. Keki M Mistry is currently the Managing Director of HDFC

Limited. Mr. Alexander M Crombie is the Group Chief Executive of the

Standard Life Group in March 2004.

3. Ms. Marcia D Campbell is currently the Group Operations Director in

the Standard Life group and is responsible for Group Operations, Asia Pacific

Development, Strategy & Planning, Corporate Responsibility and Shared

Services Centre.

4. Mr. Keith N Skeoch is currently the Chief Executive in Standard Life

Investments Limited and is responsible for overseeing Investment Process &

Chief Executive Officer Function.

5. Mr. Gautam R Divan is a practising Chartered Accountant and is a

Fellow of the Institute of Chartered Accountants of India.

6. Mr. Ranjan Pant is a global Management Consultant advising

CEO/Boards on Strategy and Change Management.

7. Mr. Ravi Narain is the Managing Director & CEO of National Stock

Exchange of India Limited.

8. Mr. Deepak M Satwalekar is the Managing Director and CEO of the

Company.

9. Ms. Renu S. Karnad is the Executive director of HDFC Limited.

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*****

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PRODUCTS

At HDFC Standard Life, we offer a bouquet of insurance solutions to meet

every need. We cater to both, individuals as well as to companies looking

to provide benefits to their employees. This section gives you details of all

our products. We have incorporated various downloadable forms and

product details so that you can make an informed choice about buying a

policy.

For individuals, we have a range of protection, investment, pension and

savings plans that assist and nurture dreams apart from providing

protection. You can choose from a range of products to suit your life-stage

and needs.

For organisations we have a host of customised solutions that range from

Group Term Insurance, Gratuity, Leave Encashment and Superannuation

Products. These affordable plans apart from providing long term value to

the employees help in enhancing goodwill of the company.

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Individual Products

We at HDFC Standard Life realise that not everyone has the same kind of

needs. Keeping this in mind, we have a varied range of Products that you

can choose from to suit all your needs. These will help secure your future

as well as the future of your family.

Protection Plans

You can protect your family against the loss of your income or the burden

of a loan in the event of your unfortunate demise, disability or sickness.

These plans offer valuable peace of mind at a small price. Our Protection

range includes our Term Assurance Plan & Loan Cover Term Assurance

Plan.

Investment Plans

Our Single Premium Whole Of Life plan is well suited to meet your long

term investment needs. We provide you with attractive long term returns

through regular bonuses.

Pension Plans

Our Pension Plans help you secure your financial independence even after

retirement. Our Pension range includes our Personal Pension Plan, Unit

Linked Pension, Unit Linked Pension Plus

Savings Plans

Our Savings Plans offer you flexible options to build savings for your

future needs such as buying a dream home or fulfilling your children’s

immediate and future needs. Our Savings range includes Endowment

Assurance Plan, Unit Linked Endowment, Unit Linked Endowment Plus,

Money Back Plan, Children’s Plan, Unit Linked Youngstar, Unit Linked

Youngstar Plus .

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Group Products

One-stop shop for employee-benefit solutions

HDFC Standard Life has the most comprehensive list of products for

progressive employers who wish to provide the best and most innovative

employee benefit solutions to their employees.

We offer different products for different needs of employers ranging from

term insurance plans for pure protection to voluntary plans such as

superannuation and leave encashment. We now offer the following group

products to our esteemed corporate clients:

Group Term Insurance

Group Variable Term Insurance

Group Unit-Linked Plan

An investment solution that provides funding vehicle to manage corpuses

with Gratuity, Defined Benefit or Defined Contribution Superannuation or

Leave Encashment schemes of your company

Also suitable for other employee benefit schemes such as salary saving

schemes and wealth management schemes

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Social Products

Development Insurance Plan

Development Insurance plan is an insurance plan which provides life cover

to members of a Development Agency for a term of one year. On the death

of any member of the group insured during the year of cover, a lump sum is

paid to that member’s beneficiaries to help meet some of the immediate

financial needs following their loss.

Eligibility

Members of the development agency and their spouses with:

- Minimum age at the start of the policy 18 years last birthday

- Maximum age at the start of policy 50 years last birthday

Employees of the Development Agency are not eligible to join the group.

The group to be covered is only eligible if it contains more than 500

members.

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Premium Payments

The premium to be paid will be quoted per member in the group and will

be the same for all members of the group. The premium can only be paid

by the Development Agency as a single lump sum that includes all

premiums for the group to be covered. Cover will not start until the

premium and all the member information in our specified format has been

received. The premium rate is Rs. 25 per Rs. 10,000 of lump sum, per

member.

Benefits

On the death of each member covered by the policy during the year of

cover a lump sum equal to the sum assured will be paid to their

beneficiaries or legal heirs. Where the death is as a result of an accident, an

additional lump sum will be paid equal to half the sum assured. There are

no benefits paid at the end of the year of cover and there is no surrender

value available at any time.

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The role of the Development Agency

Due to the nature of the groups covered, HDFC Standard Life will be passing certain

administrative tasks onto the Development Agency. By passing on these tasks the

premium charged can be lower. These tasks would include:

• Submission of member data in a specified computer format

•Collection of premiums from group members

•Recording changes in the details of group members

•Disbursement of claim payments and the mortality rebate (if any) to group

members

These tasks would be in addition to the usual duties of a policyholder such as:

• Payment of premiums

•Reporting of claims

•Keeping policy holder information up to date

Training and support will be available to give guidance on how to complete the tasks

appropriately. Since these additional tasks will impose a burden on the Development

Agency, the Development Agency may charge a Rs. 10 administration fee to their

members.

Prohibition of rebates

Section 41 of the Insurance Act, 1938 states

No person shall allow or offer to allow, either directly or indirectly, as an

inducement to any person to take out or renew or continue an insurance in respect of

any kind of risk relating to lives or property in India, any rebate of the whole or part

of the commission payable or any rebate of the premium shown on the policy, nor

35



shall any person taking out or renewing or continuing a policy accept any rebate,

except such rebate as may be allowed in accordance with the published prospectus

or tables of the insurer If any person fails to comply with sub regulation (previous

point) above, he shall be liable to payment of a fine which may extend to rupees five

hundred

Tax Benefits

INCOME TAX SECTION GROSS ANNUAL SALARY HOW MUCH TAX

CAN YOU SAVE? HDFC STANDARD LIFE PLANS

Sec. 80C Across All income Slabs. Upto Rs. 33,990 saved on investment of Rs. 1,00,000. All the life insurance plans.

Sec. 80 CCC Across all income slabs. Upto Rs. 33,990 saved on Investment of

Rs.1,00,000. All the pension plans.

Sec. 80 D* Across all income slabs. Upto Rs. 3,399 saved on Investment of Rs.

10,000. All the health insurance riders available with the conventional plans.

TOTAL SAVINGS POSSIBLE ** Rs. 37,389

Rs. 33,990 under Sec. 80C and under Sec. 80 CCC , Rs.3,399 under Sec. 80 D,

calculated for a male with gross annual income exceeding Rs. 10,00,000.

Sec. 10 (10)D Under Sec. 10(10D), the benefits you receive are completely

tax-free, subject to the conditions laid down therein.

* Applicable to premiums paid for Critical Illness Benefit, Accelerated SumAssured and Waiver of Premium Benefit.

** These calculations are illustrative and based on our understanding of current

tax legislations, which are subject to change.

Please contact your tax consultant for exact calculation of your tax liabilities.

36



*****

37



LIFE INSURANCE IN INDIA

With such 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 per cent annually. Together with banking

services, it adds about 7 percent to the country’s GDP .In spite of all this growth

the statistics of the penetration of the insurance in the country is very poor. Nearly

80% of Indian populations are without Life insurance cover and the Health

insurance.

This is an indicator that growth potential for the insurance sector is immense inIndia. It was due to this immense growth that the regulations were introduced in

the insurance sector and in continuation “Malhotra Committee” was constituted by

the government in 1993 to examine the various aspects of the industry. The key

element of the reform process was Participation of overseas insurance companies

with 26% capital. Creating a more efficient and competitive financial system

suitable for the requirements of the economy was the main idea behind this reform.

Since then the insurance industry has gone through many sea changes .The

competition LIC started facing from these companies were threatening to the

existence of LIC. Since the liberalization of the industry the insurance industry has

never looked back and today stand as the one of the most competitive and

exploring industry in India. The entry of the private players and the increased use

of the new distribution are in the limelight today. The use of new distribution

techniques and the IT tools has increased the scope of the industry in the longer

run.

38



A Brief History

The origin of insurance is very old .The time when we were not even born; man

has sought some sort of protection from the unpredictable calamities of the nature.

The basic urge in man to secure himself against any form of risk and uncertainty

led to the origin of insurance. The insurance came to India from UK; with the

establishment of the Oriental Life insurance Corporation in 1818.

The Indian life insurance company act 1912 was the first statutory body that started

to regulate the life insurance business in India. By 1956 about 154 Indian, 16

foreign and 75 provident firms were been established in India. Then the central

government took over these companies and as a result the LIC was formed. Since

then LIC has worked towards spreading life insurance and building a wide network

across the length and the breath of the country. After the liberalization the entrance

of foreign players has added to the competition in the market.

The General insurance business in India, on the other hand, can trace its roots to

the Triton Insurance Company Ltd., the first general insurance company

established in the year 1850 in Calcutta by the British. In 1957 General Insurance

Council, a wing of the Insurance Association of India, frames a code of conduct for

ensuring fair conduct and sound business practices. In 1972 The General Insurance

Business (Nationalization) Act, 1972 nationalized the general insurance business in

India with effect from 1st January 1973.

It was after this that 107 insurers amalgamated and grouped into four companies

viz. the National Insurance Company Ltd., the New India Assurance Company

Ltd., the Oriental Insurance Company Ltd. and the United India Insurance

Company Ltd. GIC incorporated as a company.

39



Present Scenario

The government of India liberalized the insurance sector in march 2000 with

the passage of the Insurance Regulatory and Development Authority (IRDA)

bill. Lifting all entry restrictions for private players to enter the market with

some limits on direct foreign ownership. premium rate of most general

insurance. Policies come under the purview of the government appointed

Tariff Agenty Committee. The opening up of the sector is likely to lead to

greater spread and deepening of insurance in India and this may also

restructuring and revitalizing of the public sector companies. A host of private

insurance companies operating in both life and non life segments have started

selling their insurance policies since 2001.

Non life insurance market, In December 2000, the GIC subsidiaries were

restructured as independent insurance companies. At the same time, GIC was

converted into national re-insurer. In July2002, Parliament passed a bill,

delinking the four subsidiaries from GIC.

Presently there are 12 general insurance companies with 4 public sector

companies and 8 private insures. Although the public sector companies still

dominate the general insurance business, the private insurance companies

have a 10 percent share of the market, up from 4 percent in 2001. In the first

40



half of 2002, the private companies booked premium worth 6.34 billion. Most

of the new entrants reported losses in first yr of their operation in 2001.

Insurance costs constitute roughly around 1.2 – 2 % of the total project costs.

Under the existing norms, insurance premium payments are treated as part of

the fixed costs. Consequently they are treated as pass through costs for tariff

calculations.

For projects costing up to Rs.1 billion, the tariff Agent committee sets the

premium rates, for projects between 1 billion and 15 billion, the rates are set

in keeping with committee’s guidelines; and projects above 15 billion are

subjected to reinsurance pricing. It is the last segment that has a number of

additional products and competitive pricing. Insurance, like project finance, is

extended by a consortium. Normally one insurer takes the lead, shouldering

about 40-50% of the risk and receiving proportionate percentage of the

premium.

41



*****

42



LIFE INSURANCE FINANCIAL CONSULTANT

Eligibility for an Insurance Agent

Every person who has cleared higher secondary examination can become an Agent

other than a minor or the person who is convicted in any court for crime or anylegal proceedings. Men and women both can work as an Agent. A single person

can be associated with other life insurance companies.

A training program is there to train a person who wants to become an Agent. There

is 100 Hrs. training program which can be done either with the physical

appearance in the class room or the interest basis. In the classroom training the

trainee has to be physically present in the training session. There are differencesessions of training program. A trainee can attend any session according to his

comfort. The training period is of 25 days approx. If the trainee does not have

enough time to devote in the classroom training, then there is another option left

that is training on Internet.

On the basis of Internet the trainee has provided a login number along with the

password through which he operated his login and completed his training hrs. as

convenient. Each and every hour pass on the net under his login head will be count

on his account. The test for the training program is also on line. This is only

procedure to be an Insurance Agent.

Scope of Insurance Agent

In the present scenario the living standard is becoming higher and higher everyday.

Every person who has a family to survive wants to provide his family each and

every possible comfortable thing. He wants his children to be a well dressed, to be

higher qualified in a well recognized school, colleges, institutes and wants his

children to go abroad for higher education. He wants to live a luxury life full of

pleasure.43



To fulfill all of his needs he has to earn more and more. Any person can be on a

job at a time or can be on a business can’t fulfill his pleasure requirement. There is

a source through which he can make money in a legal way that is insurance sector.

Becoming an insurance Agent provides him the legal source by which he can earn

money with his current status. It is the business in which you deal with you

personal contacts and can gain extra income. This business needs low investment

an not of much effort. Its all depend on your social contacts and your skills to

convince people by helping them to suggest the product which suited them the

most.

As due to critical diseases, growing percentage of accident and fear of financial

crisis every one wants to secure his or her future. Insurance sector plays a vital role

in assuring people about their future. As the scope of insurance enhancing, the

need of an insurance Agent who can guide the potential customers is growing.

Being an Insurance Agent of HDFC-STANDARD LIFE INSURANCE provides a

legal mean to earn money which protects a person from earning through a illegal

source which is harmful for society as well as himself. For the youngsters it

provides great platform to prove them. On the basis of their performance they can

be recruited as unit manager.

Its recruitment procedure is very easy. A person with high educating and well

experience can be recruited after a personal interview and group discussion. After

the training program is completed the Insurance Agent has to appear for the pre-

examination conducted by IRDA. As he clear the exam he provides a license,

which is the proof of a legalized insurance Agent, which permits him to deal in his

insurance business.

44



RECRUITMENT PROCESS:

Steps in recruitment of Insurance Agents

Approach to the likely person

Appointment as per condition

Discuss the topic

Give the documents which includes:-

1. Prospectus of the company

2. Brochure

3. Company’s plan

4. Questionnaire

Collect the document after it’s completion

Forward it to project manager

Feed it in the computer as the database

Follow up as per conditions

Modes of Contact

Personal Contacts

References

Phone Calls

Guidance as per Unit Manager

45



*****

46



RESEARCH METHODOLOGY

Research: - is a process of collecting, analyzing, interpreting and

summarizing in a significant manner for the purpose of framing out

necessary conclusion and findings of data perceived and formulated for

deriving out the meaningful information. To carry our research necessary

telephonic calls needed to be done, suitable appointments were to be fixed

and therefore market survey is to be followed.

Objective of training: - To understand life insurance and recruitment of

capable life insurance advisors for growth prospects.

Process: Methodology or process involving in the Research followed

during the course of summer training is as follows: -

a) Collection of data : - This is an important aspect in formulating the

objective of research process where the data is collected via two process: - i)

Primary Sources and ii) Secondary sources

i) Primary sources: - Where the data is collected primarily by

interviewing and personal observation and is original in nature and accurate to

the considerable extent.

ii) Secondary sources: -Where the data is obtained from some published

and printed sources such as newspaper, magazines, websites and so on.

47



b) Analyzing of collected data : - The data collected through market survey

and published sources are then processed to obtained necessary inferences and

findings for the purpose of achieving the objective as well as to derive

necessary conclusion. A considerable skill and knowledge is involved in

analyzing the data for the purpose of interpreting thereof.

c) Interpreting of data : - it is the significant step where the data collected

and analyzed is interpreted in the forms of graphs and figures is depicted in the

report called Project report.

d) Summarizing of data : - Thereby necessary summary is prepared which

is essential in the project report of the summer training being done under an

organization.

48



Helpful Arms of Research Methodology: -

Questionnaire: - Questionnaire is a set or group of questions being framed for the

purpose of obtaining market perspective about a particular aspect or topic.

There are two types questionnaire bing carried necessary for the market survey of the summer training being undertaken and put for the by the trainee to the sample

people taken as a base for entire population:

a) Open ended Questionnaire: - where the people (also called respondents) are

required freedom to present their views and suggestions for the benefits and success

of the organization.

b) Close ended questionnaire: - where the respondents is limited to the choice

of answer being delivered by the interviewer itself so that quick and fast means of

responses be derived out without wasting much time. Here close ended questionnaire

being followed by me during the course of the summer training market survey.

Sampling: - Sampling is a process of obtaining a number of individuals taken a base

for the entire population since entire population can not be asked about the necessary

objective upon which a questionnaire is put forth needed for the responses to be

derived for the purpose of generation of facts and customer view point regarding

their perception of particular product or services.

There are two type of sampling – i) Random Sampling and ii) Systematic sampling.

i) Random sampling : - Random sampling is a process of selecting the

sample size randomly and no choice or preference to be made about the selection of

respondents for the market survey and questionnaire to be put forth against him.

Here, Random sampling being adopted by me.

ii) Systematic sampling : - it is a sampling where the limited number of

selected respondents is figured out based on some criteria so that only those

respondents can be asked for the purpose of filing questionnaire.

49



*****

50



MARKET SURVEY

LIFE INSUR ANCE I

51

38

16

0

10

20

30

40

50

60

Protection of

human ass e t value

against uncertainty

Tax be ne fit de vice B oth

CATEGOR

R E S P O N S E S

From the survey it was drawn that life insurance is more a protection of

human asset value against uncertainty (conferred by 51 respondents) where

it is a tax saving option (being accepted by 38 respondents). Life insurance

is a service involving both these prerequisites as depicted by remaining 16

respondents. The following depicted this:

Protection of human asset value against uncertainty 51

Tax benefit device 38

Both 16

51



7 8

2 7

0

1 0

2 0

3 0

4 0

5 0

6 0

7 0

8 0

N O . O F

R E S P O N D E N T

S

Yes No

R E SP O N S

IS LIFE IN SUR AN CE ESSEN

It has been observed and applied as a Life insurance is an essential service

and should be applicable to every one, as favored by considerable 78

respondents where it is not essential to an extent by 27 respondents from

the summer training project survey by putting forth the set questionnaire.

52



RESPON DEN T'S QUALIFICATI

33%

10%

57%

Pos t graduate

Graduate

Senior seconda

When further enquired about the qualification of respondents, it was found

that 57% of the respondents were graduates, 33% were post graduates and

remaining 10% were of higher secondary out of total 105 respondents.

Further depicted in the following tabular representation: -

Post graduate 35

Graduate 59

Senior secondary 11

53



AGE QUALIFICAITON:

39%20%

6%

35%

18-25 age group

25 – 35 age group

35 – 45 age group

Above 45 age group

Further, the age qualification for agency recruitment, it was found that 39%

respondents were belonging to 18 – 25 age group, 35% were belonging to

25 – 35 age group where as 20% to 35 -45 age group and remaining 6% to

above 45 age group. Also depicted in the following tale mentioned below: -

18-25 age group 41

25 – 35 age group 37

35 – 45 age group 21

Above 45 age group 6

54



CAUSES OF DISSATISFACTION

17%

16%

10%23%

34%

Low employment

Low earning / income

Low status

Huge capital investment

All of the above

Respondents had different views about the dissatisfaction from the present

status of working or occupation. Dissatisfaction has been depicted in a

table below and graphically above:

Low employment 24

Low earning 3

6 Huge capital investment 17

Low status 18 All of the above

1

0

55



ABOUT CAREER IN LIFE INSURA

59

46

0

10

20

3040

50

60

70

Yes NoRESPONSE

N O . O

F

R E S P O N D

E N T S

When asked about whether they would like to know about a glorified

career in life insurance agency where they can fulfill any and every desire

of their life, 59 respondents agreed while 46 respondents said No and will

see later sometime in future. It has been depicted that life insurance sector

should be promoted at the wide extent as it contribute to the economy as a

useful source beneficial for both nation as well as is citizens.

56



86

19

0

20

40

60

80

100

N O . O F

R E S P O N D E N T S

Yes No

RESPONSE

IS LIFE INSURAN CE A NOBLE SERVI

Indeed Life insurance is a noble business as it provides a needful financial

support in the situation of fatal calamity where the family is deprived by

the fact to live in future and sustains their living. When surveyed about life

insurance as a noble service. 89 respodents agreed and believe that

insurance is a bettering service to human life and society as a whole where

as 19 respondents show disagreement.

57



18

41

0

10

20

30

40

50

N O . O F


Ye s N o

R E S P O N S

ACCEPT LIFE INSUR AN CE AS A CA

From the 59 respondents who agreed to know about the life insurance as a

career, 18 of them agreed to join HDFC Standard life insurance for agency

and come to the company fore more information whereas 41 still took time

to think and postponed to some future date. People are highly dissatisfied

from the earning, status and living standard they are sustaining at present

and would definitely like to make some additional source of earning and

for this agency for life insurance would prove a boon.

58



92

13

0

20

40

60

80

100

R E S P O N D E

N T S

Ye s N o

R E S P O N S

IS LIFE INS UR ANCE IND US TRY GRO

From all 105 respondents, 92 agreed that life insurance sector is a growing

concern and will grow at a rapid pace in future where as 13 took as a mere

stagnant industry. Financial services are growing at a tremendous pace as

people are urging to make their investment in lucrative opportunities and

therefore life insurance sector is playing a vital role in educating the people

to make their investment which could secure their future, needs and living

despite some fatal calamity that might or might not occur.

59



AGR EE WITH PR IVATISATION OF

INSURANCE?

74

31

0

10

20

30

40

50

60

70

80

Ye s N oRESPONSE


Among 74 respondents from 105 respondents favored the privatization of

the life insurance and perceive that the people of India will know be more

aware and knowledgeable with respect to life insurance than that in the past

50 years with the working of LIC.

The myth of LIC since it is a Government concern is still continue to

prevail even though people have become more advanced and they can

invest their hard earned money after undertaking their pros nad cons and

company position in the market.

60



*****

61



SWOT ANALYSIS

STRENGTHS

1. HDFC Standard life insurance offers a range of individual and group

insurance solutions.

2. HDFC Standard Life has the financial expertise required to manage

your long-term investments safely and efficiently.

3. The company has covered over 8,77,000 lives year ending March 31,

2007

4. Rated ‘AAA’ by CRISIL and ICRA for the 10th consecutive year for

High service standards

5. Life insurance industry is a rapid growing and a nobler service

industry.

WEAKNESSES

1. LIC is prevalent and sustains even today a major source of

population.

2. Low number of offices and network and number of life insurance

agents.

3. Lack of knowledge and expertise.

62



OPPORTUNTIIES

1. Life insurance has captured its mere15 – 20% growth therefore a

wide open untapped market is open to the company to develop, grow and

measure its success.

2. Still the number of companies are few and company has every

capabilities to grow and forward its performance areas to the widest

THREATS

1. People are hesitant to invest and put their hard earned money to the

private life insurance company with the fear of getting lost.

2. Belief towards LIC as it is a government corporation phobia is

continue to surmount the people of India despite lots of flaws and development

and liberalization of life insurance.

3. Alternative financial services such as mutual fund, banking services,

share and securities also pose problems and threats to the working of the life

insurance sector.

4. Illiteracy and unemployment also pose threat.

5. Rising real estate industry also pose threat as people are investing a

bulk of their money over to that industry.

63



*****

64



RECOMMENDATIONS

Following are suggestions made for the benefits and augmentation of the

sound working of the company – HDFC Standard life insurance:

1. Need to train and develop life insurance agents with more

comprehensive knowledge and skills to counter every queries of the customer.

2. It is suggested that company should not left any stone unturned

towards sound advertisement and promotional measures on every section

whether it is printed, media or or air via radio.

3. It is also suggested that skilled management graduates need to be places on sales and marketing of financial servies who can render their best

ideas for the accomplishment of the company goals and objectives to the best

extent.

4. Also, care need to be taken that every customer’s grievance should be

met with delight whether before purchase or after sales.

5. There should be an expansion measure for more offices and location

of more centres for offices of the company be established sop that company

may grow its network.

6. there should more advanced measures are required to develop to

capture the needs of customer so that they can be inspire and motivated to

invest in the life insurance products being provided by the HDFC Standard life

insurance.

7. Life insurance Products should be made flexible so as to suit every

section of society.

65



*****

66



CONCLUSION

Summer training is a best example for a trainee to learn about the company

working, corporate culture under which is operating the functions. HDFC

standard life insurance is a life insurance company under which I gained a

significant knowledge with respect to life insurance, its importance and

applicability as well as undertook the task to recruit capable life insurance

advisors which is conducive for the company to grow with more prosperity.

What I taught in the management institute utilized them fruitfully leading

to the best advantage to the company and to the best experience for mine.

At far I can conclude that life insurance is a noble service which is very

important for every citizen to learn and realize its importance because this

is the only source which can remain the status where one is with the family

bread earner and ever when he is not.

With the growing financial sector I would like to opt this industry for my

future career advancement and as an opportunity to service this industry.

67



*****

68



BIBLIOGRAPHY

Following are sources which helped me during my summer training:

BOOKS:

KOTHARI C.R.: Research Methodology Management , 3rd Edition

KOTLER PHILIP: Marketing Management ” 11th Revised edition ,2002

GUPTA S.P.: Statistical Methods “Thirteen revised edition, 2001

MAGAZINES:

India Today

Business World

REFERENCES

Websites: -

www.hdfcinsurance.com

www.irdaindia.org

www.liccouncil.org

www.businessconnect.com

69

http://www.hdfcinsurance.com/

http://www.irdaindia.org/

http://www.liccouncil.org/

http://www.businessconnect.com/

http://www.hdfcinsurance.com/

http://www.irdaindia.org/

http://www.liccouncil.org/

http://www.businessconnect.com/



*****

70



QUESTIONNAIRE

Name: - ……………………………………………………………

Age:- ……………………………………………………………

Location: - ……………………………………………………………

Occupation: -……………………………………………………………

Q.1. What do you mean by life insurance?

a) Protection of human asset value against uncertainty

b) A sum received after death

c) Both

Q.2. Do you think life insurance is essential for every one?

a) Yes

b) No

71



Q.3. What is your qualification?

a) Post graduate

b) Graduate

c) Senior secondary

Q.4. Do you come under:

a) 18-25 age group

b) 25 – 35 age group

c) 35 – 45 age group

d) Above 45 age group

Q.5. What dissatisfied you most in your occupation

a) Low employment

b) Low earning / income

c) Low status

d) Huge capital investment

e) All of the above

72



Q.6. Would you like to know about a career in life insurance advisor

ship where you can fulfill every desire of your life?

a) Yes

b) No

Q.7 Do you perceive that life insurance business is a noble service

oriented business?

a) Yes

b) No

Q.8. Would you like to become or opt for life insurance advisor under

esteemed and prospering organization HDFC Standard Life

insurance?

a) Yes

b) No

73



Q.9. Do you agree that the life insurance business is a growing industry

and will grow and rapid pace in future?

a) Yes

b) No

Q.10. Do you favor the privatization of life insurance by the

Government where a significant number of companies now in the

market for life insurance to the customers with the alliance of

multinationals?

a) Yes

b) No

Suggestions: -

1. ……………………………………………………………

2. ……………………………………………………………

3. ……………………………………………………………

4. ……………………………………………………………

5. ……………………………………………………………

74



GLOSSARY

Application for insurance: This is the form on where you state information and

answer questions from the insurance company about yourself and your history.

This application along with information from a medical examination, if taken,

from your physicians, any hospitals you may have visited and investigation are

what's used by the insurance company to decide whether or not to offer you life

insurance and at what rate.

Accident Benefit: A rider or An add-on with a life policy. It compensates a

policyholder in the event of death or injury by accident

Annuity: An investment option that makes a series of regular payments to an

individual in exchange for a premium or a series of premia.

Appreciate: To grow in value

Asset: Everything owned or due to a person

Asset allocation: How your investments are spread across various asset classes

Beneficiary: The person(s) named in the policy to receive the life insurance

proceeds upon the death of the insured.

Bond: It is like an IOU. By buying a bond you loan money to a company, a

municipality, state or the Central Government

Bonus: The amount paid as return in a ‘with-profit’ policy. The bonus,

expressed as a percentage of the sum assured, is generally declared every year.

The amount is linked to the profits earned by the insurer. Depending on the time

of withdrawal, there are two kinds of bonuses – reversionary and cash. A

reversionary bonus can be encashed only on maturity of the policy; a cash

bonus can be withdrawn when declared

75



Budget: It is a tool used to monitor and control expenditures and purchases.

Cash (Surrender) Value: The amount that is available in cash for loans and that

may be available for withdrawals in a whole life insurance, universal life

insurance or survivorship life insurance policy. Accessing Cash Surrender

Value may reduce the death benefit and may increase the risk of lapse.

Contestability, Contestable Clause: In insurance there is a clause, which

explains the conditions under which the insurer may contest or void the life

insurance policy. This contestability is for a limited period of time, which in

most states is two years. After that period of time the insurance company

cannot contest the policy.

Convertible Term Insurance: Term insurance which can be exchanged

(converted), at the option of the policyowner and without evidence of

insurability, for a whole life insurance policy or universal life insurance policy.

Capital gains: Profit earned from the sale of stocks, mutual fund units and real

estate. Long-term capital gains arise from assets owned for more than a year

while short-term capital gains are made from assets owned for less than a year.

Compound Interest: Interest computed on principal plus interest accrued during

the previous periods of the investment

Critical illness rider: A rider that provides a policyholder financial protection in

the event of a critical illness

Death benefit: The amount payable to the nominee on death of the policyholder.

The amount paid is the sum assured plus benefits applicable (if any) lessoutstanding loans.

Declining term cover: A type of pure life protection insurance policy where the

premia remain the same while the life coverage keeps declining.

76



Disability / dismemberment benefit rider: A rider that provides for additional

cover in the event of disability, or dismemberment, of the policy holder due to

an accident

Dividends: Payments made by companies and mutual funds to shareholders and

unit-holders, respectively, from the income generated by it.

Dividend yield: The percentage of dividend paid on a share to the value of the

share.

Emergency fund: The money, in the form of liquid investments in bank savings

accounts, 2-in-1 accounts and liquid funds to take care of emergencies like a job

loss not covered by insurance policies.

Endowment plans: An insurance plan that provides a policyholder risk cover

and some return on investment.

Effective rate of interest: The true rate as against the nominal rate, which may

be incorrect.

Equity: The actual ownership interest in a specific asset or group of assets

Financial planning: It covers the essential elements of a person’s financial

affairs and is aimed at achieving a person’s financial goals.

Fixed deposit: Funds placed on deposit in a bank, company or post office at a

fixed rate of interest.

Face Amount: The amount stated on the face of the policy that will be paid in

case of death. It does not include additional amounts payable under accidental

death or other special provisions, or acquired through the application of policy

dividends.

Fixed-income investment: Any investment that provides a stated percentage of

value, say 6 per cent, on the invested amount.

77



Group Insurance: An insurance policy taken out by employers to provide life

cover to their employees. Cheapest form of insurance

Guaranteed additions: The amount paid as returns in assured-return insurance

plans. Guaranteed additions are expressed as a percentage of the sum assured,

with the amount payable being stated by the insurer at the outset.

Grace Period: Life insurance premiums are due on a certain date, if you are late

in paying, policies allow a period of time where you can still pay your premium

and not lose your polcy. This is the grace period. Most policies allow a grace

period of 30 days from the due date. After the grace period, if the premium is

not paid, the policy can lapse i.e. be terminated by the insurance company.

Insurability: Acceptability to the company of an applicant for insurance. Where

Insured or Insured Life: The person on whose life the policy is issued.

Immediate annuity: An annuity that starts payments immediately after, or soon

after, the first premium is paid

Index fund: A scheme whose portfolio mirrors the progress of a particular

index, both in terms of composition and individual stock weight ages. It’s a

passive investment option, as a fund’s performance will mimic the index

concerned, barring a minor tracking error.

Insured: The policyholder

Insurer: The insurance company

Investments: Assets like fixed deposits, post office savings, bonds and stocks

that are acquired for the purpose of earning a return

Investment risks: The risks that your investments face. These include the risk of

interest rate fluctuations impacting your debt investments or the prices of

equities going down.

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Key person life insurance: When one has a key person in a business without

whom the business would suffer financially, key person life insurance is often

purchased which helps to reimburse the company for the business loss incurred

by the death of this person.

Level Premium (Life Insurance): Life insurance for which the premium remains

the same from year to year. The premium is normally more than the actual cost

of protection during the earlier years of the policy and less than the actual cost

in the later years. The building of a reserve is a natural result of level premiums.

The payments in the early years, together with the interest that is to be earned,

serves to balance out the underpayment of the later years.

Level term cover rider: A rider that increases the life cover in non-term plans,

up to a maximum of the sum assured on the base policy. The rider offers death

benefit along, and serves the need for extra protection for a specified time

period.

Life annuity: An annuity that makes regular income payments till the

policyholder is alive. On the policyholder’s death, all income payments cease

and there are no beneficiary benefits.

Liquidity: The quality of assets that can be easily and quickly converted into

cash without any, or significant, loss in value.

Loyalty additions: Additional benefits (other than guaranteed additions/bonus)

paid to policyholders on maturity of certain investment-based insurance plans

for staying on through its term.

Lock-in period: The period of time for which investments made in an

investment option cannot be withdrawn.

Life Expectancy: The average number of years remaining for an individual to

live shown at each age based on long term studies by insurance companies.

These statistics as shown on charts called mortality tables..

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Life Insurance: A contract between an owner (often the insured person) and a

life insurance company that guarantees the payment of a stated amount of

money on the death of the insured.

Loan (Policy Loan): A loan made by a life insurance company from its general

funds to a policy owner on the security of the cash value of a policy.

Market value: The monetary value an asset will fetch if sold in the market

today.

Maturity date: The date on which a policy term or fixed-income investment like

fixed deposit or bond comes to an end.

Money-back plans: A variant of endowment plans where survival benefits aredisbursed through the policy term, than paid lump sum.

Net asset value (NAV): A scheme’s NAV is its net assets (the market value of

the financial securities it owns minus whatever it owes) divided by the number

of units it has issued.

Nominee: The person(s) nominated by the policyholder to receive the policy

benefits in the event of his death.

Participative plans: ‘with-profit’ policy

Pension Plan: Investment products offered by insurance companies and mutual

funds that required the investor to make defined contributions over regular

periods, mostly every year. The contributions are invested according to a pre-

decided investment plan. At retirement, the accumulation is paid out through

regular pay-out options.

Periodic payment investments: Investment options that have payouts in fixed

intervals. For example, money-back life insurance policies.

Permanent partial disability: Permanent loss of any body part, one eye, one limb

or one finger or a toe, or injuries that render the insured in capable of earning an

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income from the date of the accident onwards from any work, occupation or

profession.

Permanent total disability: Permanent loss of use of any two limbs, or

permanent and complete loss of sight in both eyes or any other injury that

renders the insured incapable of earning an income.

Policy: The legal document issued by an insurance company to a policyholder

that states the terms and conditions of an insurance contract.

Policyholder: The person who buys an insurance policy as insured.

Policy term: period for which an insurance policy provides cover

Post office schemes: Also known as Small Savings schemes, they are offered at

post offices and carry the highest returns among fixed income instruments.

Government backing makes these instruments like Public Provident Fund

(PPF), National Savings Certificate (NSC), Kisan Vikas Patra (KVP) and Post

Office Monthly Income Scheme (POMIS) risk-free

Premium: The amount paid by the insured to the insurer to buy cover

Recurring deposit: This is offered both in post office and banks where you are

required to contribute a fixed amount ever month. It is a great tool for making

small and regular savings.

Revolving credit: A pre-established credit line, typically in a credit card, against

which a person may borrow to make purchases.

Riders: Additional covers that can be added to a life policy, for a cost

Sum assured: The amount of cover taken under a life insurance policy, it is the

minimum amount that will be paid on death of the policyholder during the

policy term.

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Surrender value: The amount payable by the insurer to the owner of an

investment-based plan in case he opts to terminate the policy after three years

(the mandatory lock-in period) but before its maturity date.

Survival benefits: The amount payable to a policyholder under an investment-

based plan if he survives the policy term.

Temporary total disability: An injury that results from an accident and renders a

person immobile or affects his earning capacity temporarily.

Term plans: A plan that provides life cover for a specified period of time, but

no return on the premia paid

Terminal bonus: one-time bonus paid on maturity viawith-profit plan

Vesting date: It is a date signifying a milestone in a policy. In pension plans, it

is the date from which the policyholder starts receiving pension. In children’s

plans, it is the date from which a child becomes the owner of a policy taken out

in his name (generally, around his 18th birthday).

Waiver of premium rider: A rider that waives the premia payable on the base

policy and other riders in certain circumstances mostly related to death,

disability or injury. An important feature especially for investment products

such as children’s policies.

Wealth: The difference between the value of what you own (assets) and what

you owe (liabilities).

With-profit policy: An insurance plan in which the policyholder gets a share of

the insurer’s profits ( in the form of guaranteed additions / bonus). Along with

the sum assured.

Without-profit policy: An insurance plan in which the policyholder does not get

any share of the insurer’s profits

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Whole-life plans: Class of life insurance policies that provide cover through

your lifetime.

Mutual life insurance company: A life insurance company owned by the

policyholders. Policyholders of a mutual life insurance company may

participate in the "divisible surplus" of the life insurance company as owners.

They can receive dividends, most commonly on whole life policies, which can

enhance the cash value, increase the insurance amount or lower premiums.

Owner of a life insurance policy: A life insurance policy can be owned by the

insured person or an individual, a company or a trust with an insurable interest

in the insured person. Insurable interest means there would be a financial loss

by the owner in the event of the death of the insured person.

Paid-up Insurance: Insurance that will remain in force with no need to pay

additional premiums.

Participating Policy: A life insurance policy that is eligible for the payment of

dividends by the insurer (see also Dividend.)

Permanent Life Insurance: Any form of life insurance except term; generally

insurance that builds up a cash value, such as whole life. Universal life and

whole life are types of permanent life insurance.

Policy Owner: The person who owns a life insurance policy. This is usually the

insured person, but it may also be a relative of the insured, a partnership or a

corporation.

Premiums: Payments to the insurance company to buy a policy and to keep it in

force.

Renewable Term Insurance: Term insurance which can be renewed at the end

of the term, at the option of the policy owner and without evidence of

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insurability, for a limited number of successive terms. The rates generally

increase at each renewal as the age of the insured increases.

Return of premium life insurance: Also known as return of premium term life

insurance, this is term life insurance for a period of time where one receives a

guaranteed return of premiums paid if you keep the policy for the term period.

For example, 20 year return of premium term would guarantee a return of

premium paid after you paid 20 years of premium. Most of these policies also

give a partial return of premium if you keep the policy for a great part of the

years.

Second to die life insurance: Life insurance that pays the benefit after two

people die. See survivorship life insurance in this glossary.

Stock life insurance company: A stock life insurance company is owned by

stockholders. Contrast this with mutual life insurance company.

Survivorship life insurance: Life insurance purchased on two individuals,

usually man and wife, where the life insurance benefit is paid after both

individuals have died. This type of life insurance became popular as a solution

to paying estate taxes. The estate tax law allowed a couple to delay paying

estate taxes until both had died.

Thus, survivorship life insurance became popular as a less expensive way for

heirs to pay estate taxes. The premiums are less than buying life insurance on

one life. By paying premiums now the theory is that one can "pre-pay" the

estate taxes because of the lump sum that comes in after the second death. .

Term life Insurance: Term insurance is life insurance coverage for a specified

period of time. This can be at a guaranteed rate or in some cases a guaranteed

rate for a period of time and then a projected rate.

Term periods can be for 1 year, 5 years, 10 years, 15, 20 and even 30 years. For

example: 30 year level term would guarantee a level premium for 30 years

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based on a specified death benefit. Term life insurance is usually the least

expensive form of life coverage, at least initially. After the initial term period of

years, 5,10,15, 20, 30 etc. the policy could terminate or it can renew at a higher

premium.

If you are allowed to renew it at a higher premium (based on your then attained

age), it is called renewable term life insurance.

Universal life insurance: Universal life insurance is permanent life insurance

with premiums that are not guaranteed. To a certain degree one can "design" a

premium on this type of policy. Universal life insurance often can be set up

with a lower premium initially than whole life insurance.

Premiums and values are based on projections of assumed interest rates, the

cost of insurance (also known as mortality cost) and the insurance company's

expenses. The actual premium paid may increase because interest rates may go

lower or the projected cost of insurance may increase.

Waiver of premium: This is an extra or add-in (called a rider in insurance

lingo) that can be added to most individual life insurance policies which waives

(allows you to stop paying) the payment after the insured person has been

disabled (as described and defined in the insurance policy) for a specified

period of time, usually six months. At that time, the six months premium paid

along with future premium payments are waived.

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Jitendra

Virahya

Hdfc Recruitment of Financial Consultants

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