Com Pars Ion of ULIPs in India-0427-Nandha Kishore D

8/14/2019 Com Pars Ion of ULIPs in India-0427-Nandha Kishore D

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RESEARCH PROJECT

On

Comparative analysis of ULIPS in India

Submitted in partial fulfillment of the requirement for MBADegree of Bangalore University

BY

Nandha Kishore.D

Registration Number

04XQCM6059

Under the guidance of

Dr.N.S.MALLAVALLI

M.P.Birla Institute of Management

Associate Bharatiya Vidya Bhavan

Bangalore-560001

2004-2006


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M. P. Birla Institute of Management2

DECLARATION

I hereby declare that the research project titled Comparative analysis of ULIPS in

India is prepared under the guidance ofDr.N.S.MALLAVALLI in partial fulfillment ofMBA degree of Bangalore University, and is my original work.

This project does not form a part of any report submitted for degree or diploma under

Bangalore University or any other university.

Place: Bangalore Nandha Kishore.D


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PRINCIPALS CERTIFICATE

This is to certify that Mr. Nandha Kishore.D, bearing Registration No:

04XQCM6059 has done a research project on Comparative analysis of ULIPS in India

under the guidance of Dr.N.S.MALLAVALLI M.P. Birla Institute of Management,

Bangalore. This has not formed a basis for the award of any degree/diploma for any other

university.

Place: Bangalore Dr.N.S.MALLAVALLI

Date: PRINCIPAL

MPBIM, Bangalore


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GUIDES CERTIFICATE

I hereby declare that the research work embodied in this dissertation entitled

Comparative analysis of ULIPS in India has been undertaken and completed by

Mr. Nandha Kishore.D under my guidance and supervision.

I also certify that he has fulfilled all the requirements under the covenant

governing the submission of dissertation to the Bangalore University for the award of

MBA Degree.

Place: Bangalore Dr.N.S.MALLAVALLI

Date: Research Guide

MPBIM, Bangalore


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ACKNOWLEDGEMENT

The successful accomplishment of any task is incomplete without acknowledging the

contributing personalities who both assisted and inspired and lead us to visualize the things

that turn them into successful stories for our successors.

First of all I thank the Almighty God for his grace bestowed on us throughout this

project.

My special thanks to my project Guide Dr.N.S.MALLAVALLI, who guided me with

the timely advice and expertise and has helped remarkably to complete the project.

Last, but not the least, I would like to thank my Parents and all my Friends for theirwholehearted direct and indirect support and encouragement.

Nandha Kishore.D


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ABSTRACT

The Life Insurance sector in India is growing at a very high rate through the

Unit Linked Insurance Plan (ULIPs). Most of the Life Insurance companies grow more

than 100% every year all through ULIPs. In this study we have compared the ULIPs

products of five leading Insurance companies, which are hot selling products at present

and also we have concentrated on the ranking of those companies based on the some

criteria like:

1. Minimum premium contribution

2. Minimum Term

3. Charges

4. Agents Commission

5. Returns from 11-01-05 to 11-05-05

6. Returns since inception

Net Asset Value for all those five companies is collected. Considering an

investor wants to invest Rs.5000 every month, the charges and fund management

between each and every companies will vary. After deduction of those charges what

returns will an investor will get if he invest that amount in any of those five companies.

(i.e.,)

1. ICICI Prudential

2. SBI Life

3. HDFC Standard Life

4. TATA AIG

5. BAJAJ Allianz.


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INTRODUCTION

Indian insurance sector with the initiation of the deregulation created a

tremendous change in the last 6 years; The monopoly of big public sector companies in

life insurance as well as general (non-life insurance) has been broken. . Indian insurance

industry showed an annual growth rate of 15-20% and the largest number of life insurance

policies in force.. New private players have entered the market and with their innovative

approaches and better use of distribution channels and technology. They are grabbing the

market share of established public sector companies in Indian Insurance Market. Since the

deregulation has been put in to place, the market share ofLife Insurance Corporation of

India has come down to 71.4% in life insurance sector. Total value of the Indian insurance

market (2004-05) is estimated at Rs. 450 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.

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 ofimmense growth potential of the insurance sector. In order to meet the competition, these

private companies are coming with new strategies and innovative products.

The introduction of unit-linked insurance plans (ULIPs) has possibly been the

single-largest innovation in the field of life insurance. In a swoop, it has addressed and

overcome several concerns that customers had about life insurance liquidity, flexibility

and transparency and the lack thereof.

In this study I am trying to do a comparative analysis of the different hot

selling UNIT LINKED PLANS (ULIPs) which is available in India, on the basis of their

performance using different criterias like premium contribution, term, charges etc.


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UNIT LINKED INSURANCE PLANUNIT LINKED INSURANCE PLAN

ULIPis the innovative insurance product launched by ICICIPRUDENTIAL in India on 24-11-01. Earlier only Endowment plans were there in

Insurance companies for savings and investment purposes.

Most insurers in the year 2004 have started offering at least a few unit-

linked plans. Unit-linked life insurance products are those where the benefits are

expressed in terms of number of units and unit price. They can be viewed as a

combination of insurance and mutual funds.

The number of units that a customer would get would depend on the unit

price when he pays his premium. The daily unit price is based on the market value

of the underlying assets (equities, bonds, government securities, etc) and computedfrom the net asset value.

The advantage of unit-linked plans is that they are simple, clear, and

easy to understand. Being transparent the policyholder gets the entire upside on the

performance of his fund. Besides all the advantages they offer to the customers,

unit-linked plans also lead to an efficient utilization of capital.

Unit-linked products are exempted from tax and they provide life insurance.Investors welcome these products as they provide capital appreciation even as the yields ongovernment securities have fallen below 6 per cent, which has made the insurers slash

payouts.

According to the IRDA, a company offering unit-linked plans must

give the investor an option to choose among debt, balanced and equity funds. If

you opt for a unit-linked endowment policy, you can choose to invest your

premiums in debt, balanced or equity plans.

If customer chooses a debt plan, the majority of his premiums will get investedin debt securities like gilts and bonds. If he chooses equity, then a major portion of hispremiums will be invested in the equity market. Customer chooses the plan according tohis risk profile and investment need.

The ideal time to buy a unit-linked plan is when one can expect long-termgrowth ahead. This is especially so if one also believes that current market values (stockvaluations) are relatively low.

So if investor opts for a plan that invests primarily in equity, the

buzzing market could lead to windfall returns. However, should the buzz die down,

investors could be left stung.
http://www.personalfn.com/insurance/productarena/endowmentplan.htmlhttp://www.personalfn.com/insurance/productarena/endowmentplan.html


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1

WHY OFFER UNIT-LINKED POLICIES?

11GGGEEENNNEEERRRAAALLL CCCOOONNNSSSIIIDDDEEERRRAAATTTIIIOOONNNSSS

A product will only provide good sales volumes in a market if it meets

the requirements of the parties involved in the transaction. For an insurance

product, this means meeting the requirements of the client, the distributor

(assumed to be an intermediary) and the insurer. In this section we look at how a

unit-linked policy meets the needs of the three parties.

2. THE CLIENTTTHHEE CCLLIIEENNTT

Smoothing of investment returns on conventional policies has been

reduced as actuaries, through competitive Unit-linked policies can be designed to

do almost anything a conventional policy can, but they can also offer more

flexibility. The notable exception is achieving the smoothing of investment returns

which was traditionally the objective of conventional policies.

Over the years, the pressures have increased the terminal bonus element of

maturity payouts. The volatility of investment returns under conventional policies has

therefore increased and the main perceived advantage of such policies has diminished.

The major disadvantage of conventional policies lies in their bundled

nature and, in particular, that the cash value of the policy at a particular time is not

clear to the client. The transparent nature of a unit-linked policy has a major appeal

to clients who wish to monitor the progress of the value of their investment. This

has enabled single premium life insurance policies to compete successfully with

mutual funds and other open-ended collective investment schemes.


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Further advantages of unit-linking are that the client has control over the

investment strategy for the policy and may be more comfortable with unit linking as the

concept is closer to other collective investment vehicles than a conventional policy.Notably, clients may control the degree of investment risk by directing premiums to the

funds most appropriate in relation to their risk tolerance. Those clients willing to take on

more risk, for example by investing solely in an equity share fund, would expect to earn

better returns over the long term.

3. THE INTERMEDIARYTTHHEE IINNTTEERRMMEEDDIIAARRYY

The transparency and flexibility of unit-linked policies provide the intermediary with

products that meet a wide variety of client needs and which are easy to explain (in

principle) to clients, particularly in terms of demonstrating investment performance

compared to that of competitors. It is also possible for the intermediary to show how unit-

linked contracts have the potential to outperform their conventional with-profits

counterparts based on past performance.

In general, the maturity values of unit-linked policies invested in managed

or balanced funds where the underlying investments are a mix of shares, bonds,

property and cash should be similar to the maturity value of a conventional with-

profits policy. The maturity values of unit-linked plans invested in equity share

funds would be expected to be higher. In practice, results have varied considerably

between insurers depending on their relative investment performance.

In addition, where the intermediary is acting as the clients investment

adviser, the regular requirement to review the investment strategy for the policy

with the client gives the intermediary a reason to contact the client with the

possibility of further sales as a consequence of the meeting. The quality of unit-

linked business should be better than that of conventional business, in terms of

persistency, for this reason.


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U SES OF U N I T-LI N KED PR OD U C TS

To date, unit-linked products have been structured in many different ways:

I. Endowment assurancesII. Open-ended whole life policies

III. Savings for retirement (deferred pensions)IV. Pensions in payment

Many of these offer the choice of

I. Single or regular (monthly, annual or other) premiumsII. Flexible premiums

III. A single or a multiple life basisA range of covers that can be added (depending on local licensing

regulations), e.g.

I. Life coverII. Guaranteed insurability options

III. Critical illnessIV. DisabilityV. Health

VI. Long term careVII. Redundancy


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These products can be applied in a wide variety of situations.

I. Personal linesII.

Family protection

III. Mortgage or loan repaymentIV. Inheritance or estate tax planningV. Lump-sum investment

VI. Saving for retirementVII. Saving for school or college fees

VIII. Drawing retirement incomeIX. Charitable givingX. Business lines

XI. Key person insuranceXII. Partnership buy-sell agreements

XIII. Other partnership situationsXIV. Employee pension and other benefitsXV. Executive benefits

Of course, none of this is new just because a unit-linked policy is

involved.

The main points really are:

I. Unit-linked policies can satisfy the same needs as conventional policies.II. Unit-linked policies are easy for the intermediary to explain and

easy for the client to understand. Of course, the actual level of

understanding of the average client will still be very low, but will

nonetheless be better than for typical conventional policies.

III. The flexibility and choices under unit-linked policies enable clients tochoose the insurance coverages they require and to control the level of

investment risk associated with the policy.


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1 . THE I N SU R ERTTHHEE IINNSSUURREERR

The insurer should only offer unit-linked products in response to a demand fromthe market or where it is believed that market conditions will support unit linked innovation

and where it can make a sufficient profit. Clear indications of where unit-linked plans may

be successful are flat or stagnating sales of traditional with profits products, and increases

in sales of pure investment linked trusts (or mutual funds). Offering unit-linked insurance

would be a method to retain existing customers or attract new customers who may

otherwise purchase pure protection insurance (term insurance) and place their savings in

investment-linked trusts or other pure investments.

Unit-linked policies are usually less capital intensive than conventional with profits

policies, i.e. the finance required to support equal volumes of with profits and unit-linked

business is lower for unit-linked business. There are two main reasons for this:

I. The guarantees under unit-linked business are usually much weaker thanunder a conventional with-profits policy (if they exist at all).

II. The reserving requirements under a unit-linked policy are much lessonerous than under a conventional with-profits policy. This partly reflects

the weaker guarantees but is mainly a result of using a valuation basis under

which the reserve is roughly equal to the surrender value at all times.

The lower capital requirement for unit-linked business means that unit-

linked products are suitable products for insurers in start-up situations. In countries

where bancassurance has been successful, the bancassurers have often started by selling

unit-linked products. In some cases, insurers have responded to competition from the

bancassurers by introducing unit-linked products themselves.

Unit-linked policies are often more profitable than conventional with-

profits policies, particularly for proprietary life offices. The reason for this is that

many proprietary life offices operate a 90/10 (or other split) gate within their life

fund.


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This means that at least 90% of the profits of the business must go to the

with profits policyholders, and the shareholders take a maximum of 10%. The

requirement to split the profits in this way is written into the Memorandum andArticles of Association of the insurer (the basic documents governing its

operations) and would be virtually impossible to circumvent. In some cases, the

requirement to split the profits relates only to the profits arising from with profits

business, but often the requirement covers profits arising from non-profit business

as well. Non-profit business could include unit-linked business.

However, by writing unit-linked business in a separate fund or even a

separate company, the requirement to distribute any profits arising from the

business to anyone other than the shareholders is removed.

Insurers will need to decide whether to write unit-linked business either

I. In the existing life fund with segregated assets;II. In a separate fund containing unit-linked assets only;

III. In a separate company.


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CRITICAL SUCCESS FACTORS FOR UNIT-LINKED BUSINESS

I . EFFICIENT INVESTMENT MARKETSA key area in which a unit-linked policy differs from a conventional with-

profits policy is that the investments of the unit-linked policy should be able to be

valued at any point in time. This means that a price for the individual investments

of a unit-linked fund should be available at any time, i.e. efficient investment

markets. This covers not only share markets but also government bond markets,

corporate bond markets and (as far as possible) property markets.

2 . A DEMAND FOR TRANSPARENT INVESTMENTS

In markets where shares, bonds and property are popular investment

media, there is a predisposition towards investments that can be easily valued. This

weighs heavily in favor of a unit-linked policy rather than a conventional policy.

3 . A WELL-DEVELOPED LIFE INSURANCE MARKET

A well-developed life insurance market can be characterized by the following:

A need for protection and savings

A stable economic background Consumer wealth

A sophisticated banking system able to process mass transactions

An advanced supervision system which allows the introduction of newclasses of business


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Trust in financial services institutions

A taxation regime that does not disadvantage life insurance in general orunit-linked life insurance in particular

4 . ADEQUATE SYSTEMS

The flexibility of unit-linked products means that there can be a large

number of options as to how the policy is put together. There are options regarding

the choice of add-on insurance benefits, the term of the policy and whether the

cash value is payable as part of the sum insured or in addition to the sum insured

on the occurrence of the insured event. This means that complex point of- sale

illustration systems are required to support unit-linked products.

Once written, unit-linked policies are complex from a record-keeping point of

view, as, there are large amounts of data required to be held and large numbers of

transactions to be processed. A powerful and efficient administration system is

needed to manage a unit-linked portfolio.

5 . A VIABLE DISTRIBUTION SYSTEMAccess to the market through one or more of the following:

A tied sales force well trained, well paid and well motivated

A reliable independent sales network

Another financial services organization (e.g. a bank)

Other direct access to the market (direct response or other distributionagreements with third parties)


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6. A GOOD INVESTMENT TRACK RECORD

To be successful in the unit-linked market, an insurer must be able todemonstrate a good history of investment performance. For a new entrant to the

unit-linked market, this is clearly impossible (unless, for example, it relies on

tracker funds which replicate the performance of well-known stock indices) and

the insurer must rely on its reputation in the market or else rely on someone elses

track record. This is often done by using external fund managers to manage the

investments, or by investing in funds managed by another fund manager. In either

case, the pedigree of the external fund manager becomes part of the marketing

message.

PRODUCT DESIGN AND PRICING

1. PRODUCT DESIGN (TECHNICAL SPECIFICATION)

The produc t spec i f ica t ion should inc lude (where re levant ) :

1 .1 CLASS OF PRODUCT

1. The technical class of product e.g. whole life, endowment, pension2. Versions available single life, joint life (first death, last survivor), business3. Premium options single, regular, flexible4. Allowable insurance benefit add-ons

1.2 INVESTMENTS

I . Fund l inks ava i lable and inves tment objec t ives of each fundII . Inves tment guarantees (or lack of inves tment guarant ees)

I I I . Method and f requency of uni t pr ic ingIV. The inves tment account ing and management sys tem to be

used


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1.3 MARKETING AND DISTRIBUTION

The distribution channels through which the product is available1. Variations of product design by distribution channel, if any2. The initial and renewal commission payable and clawback rules3. Capabilities of illustration system to be used4. Marketing material to be available5. Other sales aids to be available6. Training and qualification standards of unit-linked insurance intermediaries

1.4 ACTUARIAL AND TECHNICAL

1. Charging structure2. Insurance benefit charges3. Review provisions (if relevant)4. Policy limits (age limits, maximum and minimum premiums/sums insured,

minimum investment in individual funds, fund link rules, rules for fund

switches, etc.)

5. Underwriting rules6. Management and statistical information required7. Valuation and reserving bases8. Solvency margin requirements9. Corporate tax implications10.Policyholder tax implications

1 .5 ADMINISTRATION

1. Business processing rules new and ongoing business2. processing rules allocation of cash to policies, late Policy and

endorsement wordings

3. Cash processing rules4. Permitted policy changes (by the insurer and by the client)


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5. Availability of loans and/or partial withdrawals and the rules foradministering them

6. Non-forfeiture provisions1 .6 OTHER SPECIFICATIONS REQUIRED

1. Administration system specification2. Investment accounting and management system specification3. Illustrations system specification4. Management information system specification

2. PRODUCT PRICING

This means the level and type of charges that the insurer can take under

the policy. The types of charge, which can be levied, are initial charges, surrender

charges, renewal charges, fund management charges, and switch or redirection

charges.

In addition, charges are taken for add-on benefits if the premium for such

benefits is not included in the total premium payable.

a . INITIAL CHARGESInitial charges are intended to cover the marketing, distribution and other

new business costs relating to the policy. There are many different variations of

initial charges, but essentially, whatever method is used, the effect is that less

money is actually allocated to the policy than is received from the client for a

period of time. Some possible ways of doing this are:

b. Allocate no money to the policy for a period of months.c. Allocate only a proportion of each premium to the policy for a period of

months.

d. Allocate money received in the early months of a policy to units that have ahigher fund management charge than those purchased by later premiums.


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e. In the event of the policy being surrendered, the future excess fundmanagement charges, in excess of the regular charges that would have been

levied on these units, are levied at the point of surrender. As such, the

excess fund management charges will be received regardless of whether thepolicy runs its full term or not, and only the amount of money required to

purchase the units net of the excess fund management charges needs to be

allocated to the policy.

f . SURRENDER CHARGESSurrender charges (also called surrender penalties or back-end charges)

are, as their name suggests, applied when a policy is surrendered. They are used to

recover costs already incurred to the extent that they have not been recovered from

the charges made prior to surrender.

g . RENEWAL CHARGESThese are intended to cover the ongoing costs of administering the policy

and any renewal commissions payable. There are various methods of taking renewal

charges:

I. An explicit percentage of each premiumII. A policy fee deducted from the premium before it is allocated to units

III. A policy fee deducted from the funds under managementIV. A bid/offer spread, whereby the price at which units are bought by clients is

higher than the price at which the insurer will redeem them.

For example, units may be sold at 100 and redeemed at 95 (redeemed in

the case of surrenders, partial withdrawals, or to pay certain charges). Both the bid

price and the offer price of the units will change over time to reflect the

performance of the underlying investments and other factors, but the spread

between these prices will usually remain within certain bounds established in the

insurance contract, often close to a constant percentage such as 5%.


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h . FUND MANAGEMENT CHARGESThese are intended to cover the ongoing costs of managing the investments

of the policy and any asset or trail commissions payable. These charges are almostalways a percentage of the funds under management.

i . SWITCH OR REDIRECTION CHARGESThese cover the additional administration costs associated with

switching investments between funds and redirecting premiums. The objective of

these charges is to discourage excessively frequent switches and premium

redirections but often a number of free switches is allowed. Usually there is no

charge for redirection of premiums.

j . ADD-ON BENEFIT CHARGESThese are usually calculated using a current cost method (unless the

premium for add-on benefits is included in the total premium). This means that risk

premium rates are applied each month to the sum at risk under each benefit. Any

charge over and above the pure risk premium charge will help offset expenses.

3 . PROFITABILITY

Some assumptions about the future must be made to price the product

profitably. These are:

The average size of policy the office expects to write, (i.e. the average

premium and level of benefits), including the timing of premiums and charges for

fully flexible policies. These averages may be related to age, sex and other factors

such as the distribution channel.

The expected costs for the product. They should be what the company thinks

it needs to spend to acquire and administer the product. This should include

overhead (or indirect) costs. The amounts might be divided into initial and renewal

costs and might be related to premiums, benefits or simply to each policy. In orderto allocate expenses at the policy level, sales volumes will have to be estimated.


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Any expected increases in these amounts, due to inflation or other factors, should

also be considered.

Economic assumptions such as future returns on unit-linked and other

funds, future inflation rates, future tax rates and rules.Lapse assumptions calculated in accordance with the time since the policy

was written and (if possible) with age, distribution method or other factors.

The expected death and other benefit claim rates. These are not necessarily

the same as the charges for the benefits.

The valuation method for the policy liabilities (or the reserves) and the need

for any solvency margin. These will be in accordance with the rules laid down by

the appropriate supervisory authorities.

These assumptions need to be based on good information. The best

information is the experience of similar existing policies. If such information does

not exist (or is not available), research will be necessary.


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Problem Statement:

Investors are being confused because many insurance companies approach andexplain that their product is better than other companies product. They have been

explained only about the NAV returns and not the actual returns what they (investors) will

receive after amortizing the charges.

Objective:

To compare the hot selling Unit linked plans in India and to suggest the customers

which company is giving better returns by ranking them.

Awareness of Life Insurance is being created among the people. Standard of life is

increasing day-by-day; many people tend to cover their risk associated with their life by

taking Insurance for their life. People are expecting high returns from ULIPs. Since ULIPs

are hot selling product in Life Insurance Industry, contributing more than 70 % of the

premium collected by each company per year.

Data Type:

The data used for the study is Secondary data.

Source:

I. Insurance company brochures

II. Irdaindia.org

Sample size:

A sample of 5 leading Life insurance companies, whose ULIPs are popular in the

market has been taken for the study.


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Methodology:

Fixing a certain amount of premium contribution of an investor in monthly mode(Rs.5000) and after deduction of charges, remaining amount will be converted into units by

dividing with present day NAV.

Total value of units = total number of units * present NAV

Returns % =100* (Total value of units Total Investment)/ Total Investment

Limitations:

I. Only five Life Insurance companies have been considered for the study.

II. Risk (death) cover charges are not considered.

III. Only first two years of investment charges are taken for ranking.


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SBI LIFE INSURANCE:

SBI Life Insurance is a joint venture between the State Bank of India and Cardif of

France. SBI Life Insurance is registered with an authorized capital of Rs 500 crore and a

paid up capital of Rs 350 crores. SBI owns 74% of the total capital and Cardif the

remaining 26%.

State Bank of India enjoys the largest banking franchise in India. Along with its 7

Associate Banks, SBI Group has the unrivalled strength of over 14,000 branches across the

country, the largest in the world.

Cardif is a wholly owned subsidiary of BNP Paribas, which is The Euro Zones

leading Bank. BNP is one of the oldest foreign banks with a presence in India dating back

to 1860. It has 9 branches in the metros and other major towns in the country.

Cardif is a vibrant insurance company specializing in personal lines such as

long-term savings, protection products and creditor insurance. Cardif has also been a

pioneer in the art of selling insurance products through commercial banks in France and 29more countries.

The company plans to make the insurance buying process quick, simple and based

on well-informed judgment. In 2004, SBI Life Insurance became the first company

amongst private insurance players to cover 30 lakh lives.

The company expects to carve a niche in the Indian insurance market through

extensive product innovation and aims to provide the highest standards of customer service

through a technological interface. To facilitate this, call centers has been installed. Help

lines will also be installed and customers will have access to their accounts through the

Internet or through SBI branches.


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The company proposes to make available ready liquidity to its Life Insurance

policies by way of loans at SBI counters. This will make Life Insurance a liquid asset in the

financial portfolio of households.

SBI Life Insurance is uniquely placed as a pioneer to usher banc assurance into India.

The company hopes to extensively utilize the SBI Group as a platform for cross-selling

insurance products, along with its numerous banking product packages such as housing

loans, personal loans and credit cards. SBIs access to over 100 million accounts provides a

vibrant base to build insurance selling across every region and economic strata in the

country.


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BAJAJ ALLIANZ:

Bajaj Allianz Life Insurance Co. Ltd. Is a joint venture between two leading

conglomerates- Allianz AG, one of the world's largest insurance companies and Bajaj

Auto, one of the biggest 2 and 3 wheeler manufacturers in the world.

Bajaj Allianz Life Insurance:

I. Is the fastest growing private life insurance company in India

II. Currently has over 4,40,000 satisfied customers

III. We have a presence in more than 550 locations with 60,000 Insurance

Consultants providing the finest customer service.

One of India's leading private life insurance companies Bajaj Auto Ltd, the flagship

company of the Rs. 8000 crore Bajaj group is the largest manufacturer of two-wheelers and

three-wheelers in India and one of the largest in the world.

A household name in India, Bajaj Auto has a strong brand image & brand loyalty

synonymous with quality & customer focus.

A STRONG INDIAN BRAND- HAMARA BAJAJ

One of the largest 2 & 3 wheeler manufacturers in the world. 21 million plus vehicles

on the roads across the globe. Managing funds of over Rs. 4000 cr. Bajaj Auto finance is one

of the largest auto finance companies in India. Rs. 4,744 Cr. Turnover & Profits of 538 Cr.

in 2002-03. It has joined hands with Allianz to provide the Indian consumers with a distinct

option in terms of life insurance products.

As a promoter of Bajaj Allianz Life Insurance Co. Ltd., Bajaj Auto has the following tooffer

I. Financial strength and stability to support the Insurance Business.

II. A strong brand-equity.

III. A good market reputation as a world-class organization.

IV. An extensive distribution network.V. Adequate experience of running a large organization


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ALLIANZ GROUP

Allianz Group is one of the world's leading insurers and financial services

providers. Founded in 1890 in Berlin, Allianz is now present in over 70 countries with

almost 174,000 employees. At the top of the international group is the holding company,

Allianz AG, with its head office in Munich.

Allianz Group provides its more than 60 million customers worldwide with a

comprehensive range of services in the areas of

I. Property and Casualty Insurance,II. Life and Health Insurance,

III. Asset Management and Banking.

ALLIANZ AG- A GLOBAL FINANCIAL POWERHOUSE

I. Worldwide 2nd by Gross Written Premiums - Rs.4,46,654 cr.

II. 3rd largest Assets Under Management (AUM) & largest amongst Insurance

cos. - AUM of Rs.51,96,959 cr.

III. 12th largest corporation in the world

IV. 49.8 % of global business from Life Insurance

V. Established in 1890, 110 yrs of Insurance expertise

VI. 70 countries, 173,750 employees worldwide


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INDIAN OPERATIONS

Growing at a breakneck pace with a strong pan Indian presence Bajaj Allianz has

emerged as a strong player in India...

Bajaj Allianz Life Insurance Company Limited is a joint venture between two leading

conglomerates Allianz AG and Bajaj Auto Limited. Characterized by global presence with

a local focus and driven by customer orientation to establish high earnings potential and

financial strength, Bajaj Allianz Life Insurance Co. Ltd. was incorporated on 12th March

2001. The company received the Insurance Regulatory and Development Authority

(IRDA) certificate of Registration (R3) No 116 on 3rd August 2001 to conduct Life

Insurance business in India.

BAJAJ ALLIANZ- THE PRESENT

I. Pan India presence in more than 550 locations.

II. Wide range of products to suit peoples needs.

III. Decentralized organizational structure for increased response and service levels.IV. All CCCs networked with state of art IT systems.V. Highest standard of customer service & simplified claims process in the

industry.


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ICICI PRUDENTIAL:

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

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

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

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

receiving approval from Insurance Regulatory Development Authority (IRDA).

For the year ended March 31, 2006, the company garnered Rs 24.12 billion of weighted

new business premium and wrote 837,963 policies. The sum assured in force stands at Rs

458.88 billion. The company has a network of over 72,000 advisors; as well as 9

bancassurance partners and over 200 corporate agent and broker tie-ups. It is also the only

life insurer in India to be assigned AAA credit rating from Fitch Ratings. For the past five

years, ICICI Prudential has retained its position as the No. 1 private life insurer in the

country, with a wide range of flexible products that meet the needs of the Indian customer

at every step in life.

Prudential plc is an international retail financial services group that aims to help people

secure and enhance their own and their dependants financial well-being by providing

savings, protection and other products and services suited to their needs.

We have strong franchises in three of the largest and most attractive markets in the world,

where rising wealth and changing demographics are fuelling demand for life insurance and

other long-term savings and protection products.

Our strategy is to build successful and increasingly profitable businesses in each of these

markets, and thereby maximize returns to our shareholders over time.


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ICICI Bank

ICICI Bank is Indias second largest bank and largest private sector bank with over

50 years of financial experience and with assets of Rs. 1812.27 billion as on 30th June,

2005. ICICI Bank offers a wide range of banking products and financial services to

corporate and retail customers through a variety of delivery channels and through its

specialized subsidiaries and affiliates in the areas of investment banking, life and non-life

insurance, venture capital and asset management. ICICI Bank is a leading player in the

retail banking market and has over 13 million retail customer accounts. The Bank has a

network of over 570 branches and extension counters, and 2,000 ATMs.

Prudential plc

Established in London in 1848, Prudential plc, through its businesses in the UK

and Europe, the US and Asia, provides retail financial services products and services to

more than 16 million customers, policyholder and unit holders worldwide. As of June 30,

2004, the company had over US$300 billion in funds under management. Prudential has

brought to market an integrated range of financial services products that now includes life

assurance, pensions, mutual funds, banking, investment management and general

insurance. In Asia, Prudential is the leading European life insurance company with a vast

network of 24 life and mutual fund operations in twelve countries - China, Hong Kong,

India, Indonesia, Japan, Korea, Malaysia, the Philippines, Singapore, Taiwan, Thailand and

Vietnam.


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TATA AIG

THE TATA GROUP

The Tata Group (www.tata.com) is one of India's best-known industrial groups with

an estimated turnover of around US $14.25 billion (approximately 2.6% of India's GDP).

With more than 220,000 employees across 91 major companies, it is also India's largest

employer in the private sector. The Tata Group pioneered several firsts in Indian industry

firsts, including: India's first private sector steel mill, first private sector power utility, first

luxury hotel chain and first international airline, amongst others. Recently, the Tata Group's

pioneering spirit has been showcased by companies such as Tata Consultancy Services

(TCS), Asia's largest software and Services Company, and Tata Motors, the first carmaker

in a developing country to design and produce a car from the ground up.

By combining ethical values with business acumen, globalization with national

interests and core businesses with emerging ones, the Tata Group aims to be the largest andmost respected global brand from India whilst fulfilling its long-standing commitment to

improving the quality of life of its stakeholders.

AIG

American International Group, Inc. is the world's leading international insurance and

financial services organization, with operations in more than 130 countries and

jurisdictions. AIG member companies serve commercial, institutional and individual

customers through the most extensive worldwide property-casualty and life insurance

networks of any insurer.


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In the United States, AIG companies are the largest underwriters of commercial

and industrial insurance and AIG American General is a top-ranked insurer. AIG's global

businesses also include retirement services, financial services, and asset management.

AIG's financial services businesses include aircraft leasing, financial products, trading and

market making. American General Finance leads AIGs growing global consumer finance

business in the United States.

AIG also has one of the largest U.S. retirement savings businesses through

AIG SunAmerica and AIG VALIC, and is a leader in asset management for the individual

and institutional markets, with specialized investment management capabilities in equities,

fixed income, alternative investments and real estate. AIG's common stock is listed in the

New York Stock Exchange and ArcaEx, as well as the stock exchanges in London, Paris,

Switzerland and Tokyo.


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HDFC

HDFC Standard Life Insurance Company Ltd. is one of Indias leading private life

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.),

Indias leading housing finance institution and The Standard Life Assurance Company, a

leading provider of financial services from the United Kingdom. Both the promoters are

well known for their ethical dealings and financial strength and are thus committed to being

a long-term player in the life insurance industry all important factors to consider when

choosing your insurer.

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

A wide range of individual and group solutions, which can be easily customized to

specific needs. Group solutions have been designed to offer you complete flexibility

combined with a low charging structure.

Track Record so far

Cumulative premium income, including the first year premiums and renewal

premiums is Rs. 1532.21 Crores Apr-Mar 2005 - 06.We have covered over 1.6

million individuals out of which over 5,00,000 lives have been covered through our group

business tie-ups.Also declared as the 5th consecutive bonus in as many years for our with

profit policyholders.


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DATA ANALYSIS:

1. Returns are calculated by taking the Net Asset Value(NAV) from 11-1-05 to 11-

05-06

2. Returns are calculated from inception till 11-05-06

ASSUMPTIONS:

1. An investor wants to invest an amount of rupees 5000 every month in ULIP

starting from 11-01-05.

2. He is willing to invest only in equity fund.

3. investor is alive till 11-05-06

Investors amount will be invested in equity fund of that company after paying the

company charges. After payment of charges, the remaining amount (contribution) will be

invested in equity fund and it will be converted into units by dividing the contribution by

the respective days NAV. Charges differ from company to company. After deducting all

those charges annually fund management charges is deducted by cancellation of units.

After the lock in period, investor can do partial withdrawal or whole withdrawal. The

returns of the investor is calculated by finding the total number of units and multiply it with

the NAV value on the day of withdrawal to find the total value. Then the invested amount

is deducted from the total value and the result is divided by the total investment. To find

the returns percent multiply it by 100.


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For analyzing the data the criterias are,

1. Minimum premium contribution

2. Minimum term3. Charges in first year

4. Charges in second year

5. Advisors(agents) commission

6. Returns from inception

7. Returns from 11-01-2005 to 11-01-2006.

Ranking is done based on the above criteria.

Returns from 11-01-2005 to 11-05-2006 are as follows:

1. SBILIFE 38.85 %

2. ICICIPRUDENTIAL 24.41 %

3. HDFC 18.83 %

4. TATAAIG (6.04 ) %

5. BAJAJALLIANZ (32.43) %

Returns per year since inception:

1. ICICIPRUDENTIAL 30.04 %

2. SBILIFE 25.01 %

3. HDFC 8.08 %

4. TATAAIG 7.09 %

5. BAJAJALLIANZ (2.71) %


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CONCLUSION

As we have all know todays scenario, awareness of Life Insurance is

being created among the people, standard of life is increasing day-by-day; many people

tend to cover their risk associated with their life by taking Insurance for their life. People

are expecting high returns from ULIPs. Since ULIPs are hot selling product in Life

Insurance Industry, contributing more than 70 % of the premium collected by each

company per year.

Investors need the clarity about the products of different life insurance

companies particularly ULIPs. Hence we have tried to give our best to the investors by

comparing the ULIPs of 5 leading insurance companies.

Based on the returns given by the companies, which we have compared,

SBI has given the maximum return compared to the other 4 insurance companies.

And, if we calculate the returns from the inception, the ICICI PRUDENTIAL has given

good returns.

As per the objective of this study we have ranked the 5 major players in

ULIPs. And found that the ICICI PRUDENTIAL leads the other 4 insurance companies.


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DATEHDFCNAV PREMIUM

CONT%

MONTHLYCHARGES

CONT.Rs.. UNITS

11/1/2005 24.94 5000 73% 15 3635 145.75

11/2/2005 26.06 5000 73% 15 3635 139.49

11/3/2005 27.43 5000 73% 15 3635 132.52

11/4/2005 26.02 5000 73% 15 3635 139.70

11/5/2005 26.74 5000 73% 15 3635 135.94

11/6/2005 27.95 5000 73% 15 3635 130.05

11/7/2005 29 5000 73% 15 3635 125.34

11/8/2005 31.28 5000 73% 15 3635 116.21

11/9/2005 33.18 5000 73% 15 3635 109.55

11/10/2005 34.6 5000 73% 15 3635 105.06

11/11/2005 33.4 5000 73% 15 3635 108.83

11/12/2005 38.03 5000 73% 15 3635 95.58

1484.03

-0.80% 1472.16

11/1/2006 39.88 5000 73% 15 3635 91.15

11/2/2006 42.65 5000 73% 15 3635 85.23

11/3/2006 45.99 5000 73% 15 3635 79.04

11/4/2006 50.81 5000 73% 15 3635 71.54

11/5/2006 54.12 5000 73% 15 3635 67.17

394.12

TOTAL UNITS 1866.28TOTAL VALUE 101003.21

RETURNS 16003.21

RETURNS % 18.83


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20-11-03 17.58 5000 96% 4800 273.0420-12-03 19.5 5000 96% 4800 246.1520-01-04 20.45 5000 96% 4800 234.72

20-02-04 21.41 5000 96% 4800 224.1920-03-04 19.59 5000 96% 4800 245.0220-04-04 21.75 5000 96% 4800 220.6920-05-04 17.8 5000 96% 4800 269.6620-06-04 17.71 5000 96% 4800 271.0320-07-04 18.64 5000 96% 4800 257.51

20-08-04 19.33 5000 96% 4800 248.3220-09-04 20.48 5000 96% 4800 234.3820-10-04 21.1 5000 96% 4800 227.49

2,952.21

2.25% 2,885.7820-11-04 22.08 5000 96% 4800 217.3920-12-04 23.76 5000 96% 4800 202.0220-01-

05 23.31 5000 96% 4800 205.9220-02-05 24.87 5000 96% 4800 193.0020-03-05 24.23 5000 96% 4800 198.1020-04-05 23.39 5000 96% 4800 205.2220-05-05 24.04 5000 96% 4800 199.6720-06-05 25.29 5000 96% 4800 189.8020-07-

05 26.79 5000 96% 4800 179.1720-08-05 28.47 5000 96% 4800 168.6020-09-05 30.45 5000 96% 4800 157.6420-10-05 29.02 5000 96% 4800 165.40

2,281.93

2.25% 2230.5820-11-05 31.41 5000 96% 4800 152.8220-12-05 33.8 5000 96% 4800 142.01

20-01-06 34.11 5000 96% 4800 140.72


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20-02-06 35.84 5000 96% 4800 133.9320-03-06 39.02 5000 96% 4800 123.0120-04-06 42.43 5000 96% 4800 113.13

20-05-06 43.37 5000 96% 4800 110.68

916.30

TOTAL UNITS 15,070.57

TOTAL VALUE 653,610.45

LESS: INV. 378,610.45

RETURNS % 137.67653

RETURNS%/YEAR 30.04

CHARGES

COMPANYPRODUCTNAME

MINPREMIUM

MINTERM 1ST YEAR

2 NDYEAR ADV COMM

ICICI PRU LIFE TIMEINR

18,000.00 3 YRS 20.0% 7.5%

BAJAJALLIANZ UNIT GAIN

INR10,000.00 3 yrs 70.0% 2.0%

HDFCSTANDARD

ULIPENDOWMENT

INR10,000.00 10 yrs 27.0% 27.0%

TATA AIGINVESTASSURE

INR10,000.00 15 yrs 40.0% 20.0%

SBI LIFE UNIT PLUSINR

24,000.00 5 yrs 25.0% 7.5%

* % OF RETURNS SINCE INCEPTION


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Documents

Com Pars Ion of ULIPs in India-0427-Nandha Kishore D