Recruitment of Financial Consultants 2

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A

PROJECT REPORT ON

RECRUITMENT OF FINANCIAL CONSULTANTS

WITH

HDFC STANDARD LIFE INSURANCE LTD.

SUBMITTED TO

MANGALAYATAN UNIVERSITY

In the partial fulfillment ofMaster of Business Administration

(2009-11)

SUBMITED BY:

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ACKNOWLEDGEMENT

I take great pleasure to thank and acknowledgement the permission

and allowance by Mr. GAURAV GUPTA , BANCH MANAGER,

HDFC STANDARD LIFE INSURANCE, DELHI REGION and

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

Mr. SANDEEP KUMAR 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.

I would also like to extend my thanks to my College Faculty

Members Ms. Jiveta chaudhary all my colleagues in the company

who supported me in carry out my operation successfully and

generously and provided me vital information/ training regarding the

my project objective.

NAME

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PREFACE

I had undergone a practical training under HDFC STANDARD

LIFE INSURANCE. It was a good exposure for 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 component of the

knowledge, gain of relevant of information with respect to marketing

and dealing with situations in a professional course like M.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 5-14

2. LIFE INSURANCE 15-20

3. LIFE INSURANCE INDUSTRY 21-26

4. ABOUT THE COMPANY HDFC STANDARD LIFE 27-36

5. PRODUCTS 37-46

6. LIFE INSURANCE IN INDIA 47-53

7. LIFE INSURANCE AGENT & FINANCIAL

CONSULTANT RECRUITMENT

54-59

8. RESEARCH METHODOLOGY 60-64

9. MARKET SURVEY 65-75

10. SWOT ANALYSIS 76-79

11. CONCLUSION 80-81

12. RECOMMENDATIONS 82-84

13. BIBLIOGRAPHY 85-86

14. QUESTIONNAIRE 87-91

15. GLOSSARY 92-109

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*****

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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 countrys 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.

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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 Governments 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 insurers 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 does not eliminate risk but only reduces the

financial burden, which may be very heavy.

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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 worlds 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.

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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 Manus 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.

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.

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2. It isacooperative 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.

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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. BUNYONS LAW OF LIFE INSURANCE

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.

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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 ones 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

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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:

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.

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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 term. Short term needs like sudden medical costs

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and long term needs like marriage expenses etc can be met with

using life insurance.

*****

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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.

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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. Since opening 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 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.

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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. RNCOSs 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.

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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.

Report Highlights:

Gains of Liberalization in Indian Insurance Sector

Indian Insurance Market Segmentation By Products

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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.

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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

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.

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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 Indias 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.

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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.

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.

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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.

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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

childrens immediate and future needs. Our Savings range includes

Endowment Assurance Plan, Unit Linked Endowment, Unit Linked

Endowment Plus, Money Back Plan, Childrens Plan, Unit Linked

Youngstar, Unit Linked Youngstar Plus .

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.

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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 members 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.

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.

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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.

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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 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.

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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 Sum Assured 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.

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*****

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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 countrys 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 in India. 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.

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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.

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.

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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.

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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.

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.

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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 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.

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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 committees 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.

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*****

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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 any legal 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 difference sessions 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.

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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.

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 cant fulfill his

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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

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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.

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:-

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1. Prospectus of the company

2. Brochure

3. Companys plan

4. Questionnaire

Collect the document after its 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

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*****

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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.

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

published and printed sources such as newspaper, magazines, websites

and so on.

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

survey and published sources is 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.

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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

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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.

Sample Size: - 105 respondents.

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*****

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MARKET SURVEY

LIFE INSUR ANCE I51

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

RESPONSES

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

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7 8

2 7

0

1 0

2 0

3 0

4 0

5 0

6 0

7 0

8 0

NO.OF

RESPONDENTS

Yes No

RESPONS

IS LIF E INS UR AN CE ES S EN

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.

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RESPOND ENT'S QUALIFICATI

33 %

10%

57%

Pos t graduate

Graduate

Senior seco nda

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

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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

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CAUSES OF D ISSATISFACTION

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

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ABOUT CAREER IN LIFE INSUR A

59

46

0

10

20

30

40

50

60

70

Yes NoRESPONSE

NO.OF

RESPONDENT

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.

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86

19

0

20

40

60

80

100

NO.OF

RESPONDENTS

Yes No

RESPONSE

IS LIFE INSURAN CE A NOB LE 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.

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18

41

0

10

20

30

40

50

NO.OF

RESPONDENTS

Ye s N o

R E S P O N S

ACCEPT LIFE IN SUR 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.

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92

13

0

20

40

60

80

100

RESPONDENTS

Ye s N o

R E S P O N S

IS LIF E INS URAN CE IN DUS TR Y GR O

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.

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AGR EE WITH PRIVATISATION OF

INSURANCE?

74

31

0

10

20

30

40

50

60

70

80

Ye s N oRESPONSE

RESPONDENTS

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.

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*****

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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.

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

insurance agents.

3. Lack of knowledge and expertise.

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.

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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.

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*****

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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.

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*****

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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 customers grievance

should be met with delight whether before purchase or after sales.

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

6. location of more centres for offices of the company be

established sop that company may grow its network.

7. 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.

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

every section of society.

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*****

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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

86
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/


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*****

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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

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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

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e) All of the above

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

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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.

VISHAL KUMAR SHRIVAISHNAV

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HDFC STANDARD LIFE INSURANCE

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

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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

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

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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

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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) less outstanding loans.

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

where the premia remain the same while the life coverage keeps

declining.

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.

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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 persons

financial affairs and is aimed at achieving a persons 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.

Group Insurance: An insurance policy taken out by employers to

provide life cover to their employees. Cheapest form of insurance

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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. Its a passive investment option, as a funds

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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.

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

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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 policyholders 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.

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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..

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 are disbursed through the policy term, than paid lump sum.

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Net asset value (NAV): A schemes 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 income from the date of the accident

onwards from any work, occupation or profession.

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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.

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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.

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

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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 childrens 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

Recruitment of Financial Consultants 2

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