COMPARATIVE ANALYSIS OF ULIPS AND MUTUAL FUNDS (1).docx

8/10/2019 COMPARATIVE ANALYSIS OF ULIPS AND MUTUAL FUNDS (1).docx

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PROJECT REPORT

On

A STUDY ON COMPARATIVE ANALYSIS OF ULIPS AND

MUTUAL FUNDS

FOR

THE PARTIAL FULFILLMENT OF THE AWARD OF THE DEGREE OF

MASTER OF BUSINESS ADMINSTRATION

FROM GGS IP UNIVERSITY

DELHI

BATCH: 2013-201

SUBMITTED BY: SUBMITTED TO:

N!"# $% &'# (&)*#+& N!"# $% &'# %!,)&. ()/#($

AMARJEET YADAV DR UMA LUTHRA

MBA 10

ARMY INSTITUTE OF MANAGEMENT 4 TECHNOLOGY5ARMY INSTITUTE OF MANAGEMENT 4 TECHNOLOGY5

GREATER NOIDA 6UP7 8 201309GREATER NOIDA 6UP7 8 201309


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ACNOWLEDGEMENT

I want to show my sincere gratitude to all those who made this study possible. First of

all I am thankful to the helpful staff and the faculty of Army Institute of Management

and Technology. Second I would like to extend my sincere thanks to my Industry

Guide San!ee" kumar#AM$ for his%her untiring cooperation. &ne of the most

important tasks in e"ery good study is its critical e"aluation and feedback which was

performed by my faculty guide 'rof.(ma )uthra. I am "ery thankful to my Faculty aswell as Industry guide for in"esting his precious time to discuss and critici*e this

study in depth and explained the meaning of different concepts and how to think

when it comes to problem discussions and theoretical discussions. My sincere thanks

go to my Institute and family who supported and encouraged me.

A"!;##& Y!*!

C$)(# 8 MBA10


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C#&%,! $% O!&,' $% A". I+(&&) $% M!+!

S


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TO WHOMSOEVER IT MAY CONCERN

This is to certify that Mr%Ms+++++++++++++++ of M,A - batch from

Army Institute of Management / Technology Greater 0oida has

undergone Summer Internship 'ro!ect in our organi*ation. 1is%her

pro!ect title was +++++++++++++++++++++++++++++++++ super"ised

under Mr%Ms +++++++++++++++++++++#Industry Mentor% Guide$ from

+++++++++2une 3-4 to +++++++2uly 3-4. 1is% her conduct and effort

during the Internship is highly appreciable.

A)&'$(#* P#($+

S


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S)/#($ C#&%,!

T'( ( &$ ,#&%. &'!&M AMARJEET YADAV ! (&)*#+& $% M!( $%B)(+#(( A*"+(&!&$+5 B!&,' 8MBA-105 A". I+(&&) M!+!#(& $% ". +$#*##+


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TABLE OF CONTENTS

15&678 A09 TIT)7 'AG7 'AG7 0(M,78

a$ 5ertificate of the company F$+& /!


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EECUTIVE SUMMARY

Insurance in India is booming but not to le"el comparati"e with the de"eloped economics such

as 2apan Singapore etc.Also lineari*ation of the Insurance sector has pro"ided huge self

employment opportunity. Insurance is a federal sub!ect in India. The insurance sector has gone

through a number of phases and changes. Since ->>> when the go"ernment opened up the

insurance sector by allowing pri"ate companies to solicit insurance and also allowing foreign

direct in"estment of up to 3=@ the insurance sector has been a booming market. 1owe"er the

largest lifeinsurance company in India is still owned by the go"ernment.

Bhile doing pro!ect at 8eliance )ife Insurance I obser"ed that unit managers were facing some

serious problem regarding the awareness of people about M(T(A) F(09S A09 ()I'S .The8eliance )ife Insurance and other insurance players are facing problem the same problem. To

find out the reason the main ob!ecti"e of the study is kept as C5&M'A8ATI67 A0A);SIS &F

M(T(A) F(09S A09 ()I'SD

InadeEuate information regarding the work of agents%financial consultant%agent ad"isors is the

main reason of attrition in Insurance industry.

The study is proposed to find out the difference difference mutual funds and tulips and to

compare them. So that a clear picture is depict before In"estor. After analysis I came to the

conclusion that mostly people are unaware of tulips and mutual funds which includes the

executi"e of the company and in"estors too.

The pro!ect work is a sincere attempt to collect the information stating the "arious reasons for

attrition and suggests the useful measure for retention..

INTRODUCTION TO TOPIC


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ULIPS 6UNIT LINED INSURANCE PLANS7:-

The introduction of (nit )inked Insurance 'lans has possibly been the single largest inno"ation

in the field of life insurance .It has addressed and o"ercome many difficulties and concern s that

customers had about life insurance liEuidity flexibility and transparency.

These benefits are possible because ()I's are differently structured products and lea"e many

choices to the policyholder. They are structured such that the protection #insurance$ element and

the sa"ings element #in"estment$ can be distinguish and hence managed according to ones

specific needs offering flexibility and transparency. Thus we can say it is such a product that

takes

care of multiple needs.

There were some factors which ga"e entry for ()I's in the insurance marketH Firstly was the

arri"al of pri"ate of pri"ate players and ()I's were the most significant inno"ation done by

them and secondly was the decline of assured returns in endowment plans. ,esides this as the

stock markets were booming which now has become the primary factor. As mentioned earlier

enhanced flexibility and merging of in"estment and insurance in a single entity that ha"e really

endeared them to indi"iduals.

ULIP( !# !($ ,!#* !( B)+*#* P$,#(D.

According to Vijay Sinha ULIP is ideal for someone who is looking for a long term investment

product is under!insured and is averse to taking a traditional life insurance product" Ulipshould #e looked at from an investment as well as insurance point of view and not isolation$

UNIT LINED INSURANCE PLANS:-

7arly the market of ()I's was taken up ,irla Sun they were the first to capture the market in

this field. These are the insurance plans which are attached to (nits Mutual Funds. The

premium amount recei"ed in this policy some part is used in in"estment of funds and remaining

is used for insurance co"er.

()I's are remarkably similar to mutual fund in terms of structure and functioningH premium

payments are con"erted into units and net asset "alue #0A6$ is declared regularly. In"estors ha"e

an option of choosing their fund according to their risk taking ability. They disclose all the

material facts most freEuent and consistent #often Euarterly or halfyearly$ .Also in"estor has a

fairly good idea about expenses. The expenses which are considered are as followsH


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17 M$&!&. R!H These are charged by the life insurance company to co"er the risk of an

e"entuality to the indi"idual.

27 A*"+(&!&$+5 (!#("!#&+< C'!


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the policyholder some restrict the number to !ust three or four. If the number is exceeded a

certain charge is le"ied.

Indi"iduals can also make additional in"estments #besides premium$ from time to time to

increase the sa"ings component in their plan. This facility is termed JtopupJ. The money parked

in a ()I' plan is returned either on the insuredKs death or in the e"ent of maturity of the policy.

In case of the insured personKs untimely death the amount that the beneficiary is paid is the

higher of the sum assured #insurance co"er$ or the "alue of the units #in"estments$. 1owe"er

some schemes pay the sum assured plus the pre"ailing "alue of the in"estments.

ULIP - KEY FEATURES

L 'remiums paid can be single regular or "ariable. The payment period too can be regular

or "ariable. The risk co"er can be increased or decreased.

L As in all insurance policies the risk charge #mortality rate$ "aries with age.

L The maturity benefit is not typically a fixed amount and the maturity period can be

ad"anced or extended.

L In"estments can be made in gilt funds balanced funds money market funds growth

funds or bonds.

L The policyholder can switch between schemes for instance balanced to debt or gilt to

eEuity etc.

L The maturity benefit is the net asset "alue of the units.

L The costs in ()I' are higher because there is a life insurance component in it as well in

addition to the in"estment component.

L Insurance companies ha"e the discretion to decide on their in"estment portfolios.


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L ,eing transparent the policyholder gets the entire episode on the performance of his fund.

L ()I' products are exempted from tax and they pro"ide life insurance.

L 'ro"ides capital appreciation.

In"estor gets an option to choose among debt balanced and eEuity

funds.

M(T(A) F(09

A ")&)! %)+* is a professionally managed type of collecti"e in"estment scheme that pools

money from many in"estors and in"ests typically in in"estment securities #stocks bonds short

term money market instruments other mutual funds other securities and%or commodities such

as precious metals$. The mutual fund will ha"e a fund manager that trades #buys and sells$ the

fundKs in"estments in accordance with the fundKs in"estment ob!ecti"e. In the (.S. a fund

registered with the Securities and 7xchange 5ommission #S75$ under both S75 and Internal

8e"enue Ser"ice #I8S$ rules must distribute nearly all of its net income and net reali*ed gains

from the sale of securities #if any$ to its in"estors at least annually. Most funds are o"erseen by

a board of directors or trustees #if the (.S. fund is organi*ed as a trust as they commonly are$

which is charged with ensuring the fund is managed appropriately by its in"estment ad"iser andother ser"ice organi*ations and "endors all in the best interests of the fundKs in"estor


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A mutual fund is a trust that pools the sa"ings of a number of in"estors who share a common

financial goal. The money thus collected is then in"ested in capital market instruments such as

share debentures and other securities. The income earned through these in"estments and the

capital appreciations reali*ed are shared by its unit holders in proportion to the number of units

owned by them.

A*!+&!


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REGISTRATION OF MUTUAL FUND:

A//,!&$+ %$ #


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6i7 ,e carrying on business in financial ser"ices for a period of not less than fi"e

;ears and

#ii$ The net worth is positi"e in all the immediately preceding fi"e years and

6iii7The net worth in the immediately preceding year is more than the capital

5ontribution of the sponsor in the asset management company and

6i+7The sponsor has profits after pro"iding for depreciation interest and tax in three out of the

immediately preceding fi"e years including the fifth year

6*7in the case of an existing mutual fund such fund is in the form of a trust and the trust deed

has been appro"ed by the ,oard

6c7 The sponsor has contributed or contributes at least 4@ to the net worth of the asset

management companyH

P$*#* that any person who holds 4@ or more of the net worth of an asset

Management 5ompany shall be deemed to be a sponsor and will be reEuired to fulfill the

eligibility criteria specified in these regulations

6,7the sponsor or any of its directors or the principal officer to be employed by the mutual fund

should not ha"e been guilty of fraud or has not been con"icted of an offence in"ol"ing moral

turpitude or has not been found guilty of any economic offence

6#7 Appointment of trustees to act as trustees for the mutual fund in accordance with the

pro"isions of the regulations

6"7Appointment of asset Management 5ompany to manage the mutual fund and operate the

scheme of such funds in accordance with the pro"isions of these regulations

6)7Appointment of a custodian in order to keep custody of the securities - or gold and gold

related instrumentsand carry out the custodian acti"ities as may be authori*ed by the trustees.


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onsi,#r!ion o" pplic!ion

@ The ,oard may on receipt of all information decide the application.

Grn! o" #r!i"ic!# o" R#)is!r!ion

The ,oard may register the mutual fund and grant a certificate in Form , on the applicant

paying the registration fee as specified in Second Schedule.

T#r$s n, con,i!ions o" r#)is!r!ion

10 The registration granted to a mutual fund under regulation > shall be sub!ect to the following

terms and conditionsH

67The trustees the sponsor the asset management company and the custodian shall comply

with the pro"isions of these regulations

#*7 The mutual fund shall forthwith inform the ,oard if any information or particulars

pre"iously submitted to the ,oard was misleading or false in any material respect

6c7The mutual fund shall forthwith inform the ,oard of any material change in the

Information or particulars pre"iously furnished which ha"e a bearing on the

8egistration granted by it

6,7'ayment of fees as specified in the regulations and the Second Schedule.

R#.#c!ion o" pplic!ion

11 Bhere the sponsor does not satisfy the eligibility criteria mentioned in regulation N the

,oard may re!ect the application and inform the applicant of the same.


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P%$#n! o" nn(l s#r+ic# "##:

12 A mutual fund shall pay before the -7 D#>& %)+*( (,'#"#( 6!($ ,!#* +,$"# %)+*(7

6, 7 D#(%#* %)+*( (,'#"#( 6!($ ,!#* >!!+,#* %)+*(7

6*7 G& %)+*( (,'#"#(

6#7 M$+#. "!#& %)+*( (,'#"#(

6%7 S#,&$ (/#,%, %)+*(

6


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6C7ACCORDING TO TA INCENTIVE SCHEMESH Mutual Funds are also allowed to

float some tax sa"ing schemes. Therefore sometimes the schemes are classified according to

this alsoH

6!7 T! (!+< %)+*(

6>7 N$& &! (!+< %)+*( $&'# %)+*(

6D7 ACCORDING TO THE TIME OF PAYOUT H Sometimes Mutual Fund schemes are

classified according to the periodicity of the pay outs #i.e. di"idend etc.$. The categories are as

follows H

6A7 D*#+* /!.+< (,'#"#(

6>7 R#+#(&"#+& (,'#"#(

The mutual fund schemes come with "arious combinations of the abo"e categories. Therefore

we can ha"e an 7Euity Fund which is open ended and is di"idend paying plan. ,efore youin"est you must find out what kind of the scheme you are being asked to in"est. ;ou should

choose a scheme as per your risk capacity and the regularity at which you wish to ha"e the

di"idends from such schemes.

SOME OF THE TERMS USED IN MUTUAL FUNDS

N#& A((#& V!)# 6NAV7

0et Asset 6alue is the market "alue of the assets of the scheme minus its liabilities. The per

unit 0A6 is the net asset "alue of the scheme di"ided by the number of units outstanding on

the 6aluation 9ate.

S!# P,#:It is the price you pay when you in"est in a scheme and is also called J&ffer

'riceJ. It may include a sales load.

R#/),'!(# P,#: It is the price at which a Mutual Funds repurchases its units and it may

include a backend load. This is also called ,id 'rice.

R#*#"/&$+ P,# : It is the price at which openended schemes repurchase their units and

closeended schemes redeem their units on maturity. Such prices are 0A6 related.

S!#( L$!* F$+& E+* L$!*: It is a charge collected by a scheme when it sells the units.

Also called OFrontend load. Schemes which do not charge a load at the time of entry are

called O0o )oad schemes.


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ULIPS VS MUTUAL FUNDS

()I's are all set to pose serious competition to mutual funds. Though ulips as an in"estment

a"enue are closest to mutual funds in terms of their structure and functioning like disclosing their

0A6s daily etc.

()I's are essentially a long term commitment between the policyholder and the insurance

company and mutual funds are built to cater to the relati"ely short term need of the in"estor.

The in"estments are made with a shorter term duration profile when compared to ulips.The seemingly similar structure of both of them makes it "ital for in"estors to be aware of the

fine distinctions in both the offering and make informed decisions. Following are some insurance

companies who offer ()I'sH

L 8eliance life insurance

L ,a!a! Allian*

L I0G 6ysya

L 19F5 Standard

L 19F5 Standard

L ,irla Sun life

L A"i"a )ife Insurance

L Potak Mahindra

L Max 0ew ;ork )ife

L Met )ife

L Sahara )ife

F$$+< !# D%%##+,# >##+ ULIP( 4 M)&)! F)+*


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DIFFERENCE BETWEEN MUTUAL FUND AND ULIPS

P$+&( $% D%%##+,# ULIPS6U+& L+#* I+()!+,#

P!+(7

MF(6M)&)! F)+*(7

17 M#!++< :- These are the Insurance policies

which are linked to units

of Mutual Fund.

It is an in"estment

organi*ation with a main

ob!ecti"e of collecting

funds from "arious

segments

of people and in"esting

the same in a "ariety of

Securities.

27 P"!. O>;#, :- Its main ob!ecti"e is in"estment

/ protection

Its ob!ecti"e is only

in"estments.

37 I+#(&"#+& D)!&$+: It works out for long term

in"estment only.

It works out to medium

term long term / short

Term. 8isky for short

term in"estors.

7 I+()!+,# C$# :- ()I's pro"ide insurance co"er

#except annuity products

which may be issued with%

without risk co"er$ and from

the amount in"ested in ()I's

after netting out the risk

premium for life risk co"er and

administrati"e expenses

the insurer in"ests the balance as

per the ob!ecti"e of the

Specific ()I' product.

MF schemes do not

co"er the life risk and

the amount

in"ested net of

expenses gets in"ested

as per the

in"estment ob!ecti"e of

the scheme

7 E/#+(#( :- Insurance companies ha"e a In MFs expenses


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relati"ely free hand in

le"ying expenses on their ()I'

products with no upper

limits being prescribed by theregulator the Insurance

8egulatory and 9e"elopment

Authority #I89A$

charged for "arious

acti"ities like

sales%marketing

administration and fund

management are capped

#for example in eEuity

oriented

mutual funds expenses

are capped at 3.&. :- Flexibility is limited to mo"ing

across different funds

&ffered with policy. 5orrecting

mistakes can turn out to

be expensi"e. Mo"ing funds

from one ()I' to another

()I' of a different fund house

can be expensi"e.

6ery flexible. 'lenty of

scope to correct

mistakes if

any wrong in"estment

decisions are made.

'ortfolios

can be easily shuffled in

MFs.

7 L)*&. :- )imited liEuidity .It need to stay

in"ested for minimum

6ery liEuid. MF units

can be sold any


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years before redeeming time#except

7)SS$.

@7 I+#(&"#+& O>;#, ()I's can be used for achie"ing

only long term

ob!ecti"es #5hildren education

marriage 8etirement

'lanning$.

MFs can be used as

"ehicle for in"estments

to

achie"e different

ob!ecti"es.#7.g.H ,uying

a car three

;ears from now. 9own

payment for a home fi"e

;ears from now.

5hildrens education -years from

now. 5hildrens

marriage -< years from

now.

8etirement planning 3&. $% S&,'$#(

:-

Insurance companies permit

their ()I' in"estors

usually :4 switch o"ers free of

charge and thereafter

e"ery additional switch o"er

beyond the permissible limit

Is permitted at some cost.

In MFs an in"estor

usually is sub!ected to

exit load

and%or entry load when

he%she exercises a

switch o"er

&ption.


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107 M+")" L$,- +

P#$*

()I's currently are with a

minimum lockin of three

;ears.

MF schemes #except

7)SS which has a lock

in of

Three years$ do not ha"e

any such lock in.

117 I+#(&"#+& (&.#(

!+* P$&%$$

D(,$()#( :-

Insurance companies

declare their portfolios once

in a

Euarter and their in"estment

style are less aggressi"e and

they resort to lesschurning.

Most MFs usually declare their

portfolios on monthly

basis and MFs are generally known

to be more acti"e

in fund management

127 T! >#+#%&( !+*

"/,!&$+( :-

Irrespecti"e of the nature of

the plan chosen by the

in"estor all ()I'

in"estments Eualify for

deductions up

To one lakh under Section

Q5 of the Income Tax Act.In

the case of ()I's the

maturity proceeds are tax

free.

In the case of mutual funds only

in"estments in tax sa"ing

funds i.e. 7Euitylinked sa"ings

schemes

#7)SS$ are eligible for Section Q5

benefits

&n the other hand in the case of

eEuityoriented

mutual funds if the in"estments are

held for a period

o"er -3 months the gains are tax

free and if sold

within a -3month period they attract

shortterm

5apital gains tax R - percent.

Similarly debtoriented funds attract

longterm

capital gains tax R - percent while


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shortterm

capital gain is taxed at the in"estors

marginal tax

rate.

SCOPE OF THE STUDY

THE PROJECT INCLUDES THE FOLLOWING AREASH

#-$I0 T1IS '8&275T T17 ST(9; 87)AT79 T& T17 5&M'A8ITI67 ST(9; &F

MA8P7T )I0P79 I0S8A057 ')A0S BIT1 M(T(A) F(09#3$S(867; &F &. $% ULIP 4 M)&)! F)+* &$ *%%##+& +#(&$(

697 T$ +$ C)(&$"# !!#+#(( !+* /#%##+,#(


24/58


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INSURANCE IS A FEDERAL SUBJECT IN INDIA.

The insurance sector has gone through a number of phases and changes. Since ->>> when the

go"ernment opened up the insurance sector by allowing pri"ate companies to solicit insurance

and also allowing foreign direct in"estment of up to 3=@ the insurance sector has been a

booming market. 1owe"er the largest lifeinsurance company in India is still owned by the

go"ernment.

IRDAcontrols all the Insurance business in India. They are setting structure and boundaries for

the insurance companies to act upon. Starting from licensing to appro"ing the products I89A

directs the companies in India. They also protect customer interests in the country.

INSURANCE COMPANIES IN INDIA APPROVED BY IRDA

L ,a!a! Allian* )ife Insurance 5ompany )imited,irla Sun )ife Insurance 5o. )td

L 19F5 Standard life Insurance 5o. )td

L I5I5I 'rudential )ife Insurance 5o. )td.

L I0G 6ysya )ife Insurance 5ompany )td.
http://www.iloveindia.com/finance/insurance/companies/bajaj-allianz.htmlhttp://www.iloveindia.com/finance/insurance/companies/bajaj-allianz.htmlhttp://www.iloveindia.com/finance/insurance/companies/birla-sun-life-insurance.htmlhttp://www.iloveindia.com/finance/insurance/companies/hdfc-standard-life-insurance.htmlhttp://www.iloveindia.com/finance/insurance/companies/icici-prudential.htmlhttp://www.iloveindia.com/finance/insurance/companies/ing-vysya-life-insurance.htmlhttp://www.iloveindia.com/finance/insurance/companies/birla-sun-life-insurance.htmlhttp://www.iloveindia.com/finance/insurance/companies/hdfc-standard-life-insurance.htmlhttp://www.iloveindia.com/finance/insurance/companies/icici-prudential.htmlhttp://www.iloveindia.com/finance/insurance/companies/ing-vysya-life-insurance.htmlhttp://www.iloveindia.com/finance/insurance/companies/bajaj-allianz.html


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L )ife Insurance 5orporation of India

L Max 0ew ;ork )ife Insurance 5o. )td

L Met )ife India Insurance 5ompany )td.

L Potak Mahindra &ld Mutual )ife Insurance )imited

L S,I )ife Insurance 5o. )td

L Tata AIG )ife Insurance 5ompany )imited

L 8eliance )ife Insurance 5ompany )imited.

L A"i"a )ife Insurance 5o. India '"t. )td.

L Shriram )ife Insurance 5o )td.

L Sahara India )ife Insurance

L ,harti AA )ife Insurance

L Future Ge nerali )ife Insurance

L I9,I Fortis )ife Insurance

L 5anara 1S,5 &riental ,ank of 5ommerce )ife Insurance

L 8eligare )ife Insurance

L 9)F 'ramerica )ife I nsurance

L Star (nion 9aiichi )ife Insurance

L Agriculture Insurance 5ompany of India

L Apollo 9P6 Insurance

L 5holamandalam MS General Insurance

L 19F5 7rgo General Insurance 5ompany

L I5I5I )ombard Gen eral Insurance

L IFF5& Tokyo General Insurance

L 0ational Insurance 5ompany )td

L 0ew India Assurance

L &riental Insurance 5ompany

L 8eliance General Insurance

L 8oyal Sundaram Alliance Insurance

L Shriram General Insurance 5ompany )imited

L Tata AIG General Insurance

(nited India Insurance(ni"ersal Sompo General Insurance 5o. )td
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HISTORY OF MUTUAL FUND

The mutual fund industry in India started in ->=: with the formation of (nit Trust of India at the

initiati"e of the Go"ernment of India and 8eser"e ,ank. The history of mutual funds in India can

be broadly di"ided into four distinct phasesH

F(& P'!(# 8 19-@

An Act of 'arliament established (nit Trust of India #(TI$ on ->=:. It was set up by the 8eser"e

,ank of India and functioned under the 8egulatory and administrati"e control of the 8eser"e

,ank of India. In ->NQ (TI was delinked from the 8,I and the Industrial 9e"elopment ,ank of

India #I9,I$ took o"er the regulatory and administrati"e control in place of 8,I. The first

scheme launched by (TI was (nit Scheme ->=4. At the end of ->QQ (TI had 8s.=N crores of

assets under management.

S#,$+* P'!(# 8 1@-13 6E+&. $% P)>, S#,&$ F)+*(7

->QN marked the entry of non (TI public sector mutual funds set up by public sector banks and

)ife Insurance 5orporation of India #)I5$ and General Insurance 5orporation of India #GI5$.

S,I Mutual Fund was the first non (TI Mutual Fund established in 2une ->QN followed by 5an

bank Mutual Fund #9ec QN$ 'un!ab 0ational ,ank Mutual Fund #Aug Q>$ Indian ,ank Mutual

Fund #0o" Q>$ ,ank of India #2un >$ ,ank of ,aroda Mutual Fund #&ct >3$. )I5 established

its mutual fund in 2une ->Q> while GI5 had set up its mutual fund in 9ecember ->>.

At the end of ->>: the mutual fund industry had assets under management of 8s.4N4 crores.

T'* P'!(# 8 13-2003 6E+&. $% P! S#,&$ F)+*(7

Bith the entry of pri"ate sector funds in ->>: a new era started in the Indian mutual fund

industry gi"ing the Indian in"estors a wider choice of fund families.


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RESEARCH METHODOLOGY

CONCEPTUAL AND THEORETICAL REVIEW

RESEARCH DESIGN 8D#(,/ #(#!,' *#((#!&$+5 +**)! *#/&'

+#

RESEARCH INSTRUMENT)#(&$++!#

)#(&$++!# "#&'$*H

In the study Euestionnaire was send to the person concerned with a reEuest to answer the

Euestions and return the Euestionnaire. a Euestionnaire consists of a number of Euestions typed in

definite order on a set of forms. The respondents had to answer the Euestion on their own.

DATA COLLECTION:

PRIMARY DATA:

The primary data are those which are collected afresh and for the first time and thus happen to

be original in character. In this study data is collected through obser"ation guidance of the

super"isor and data is collected through Euestionnaire.

-$ (se of a Uuestionnaire for carrying out a sur"ey


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3$ 'resentation gi"en by the Ad"isors of A,MM.

:$ 9ata explaining the working of the ()I's and mutual funds.

SECONDARY DATA:

In this study secondary sources of data were the "arious websites and insurances manuals .The

mainly pro"ided information about the insurance sector and the companys profile. These help in

gaining knowledge about industry.

-$ ,ooks

3$ 0ewspapers

:$ Maga*ines

4$ 0ewsletter


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FINDINGS

6CUSTOMERS SURVEY7

ANALYSIS PART 1

MUTUAL FUND

1 W',' $% &'# %$$+< +#(&"#+& $/&$+( $)* .$) /#%#

A+!.((: 44@ of respondents ha"e in"ested in bank deposits-3@ in

'ostal sa"ings 4@ of respondents in shares and bonds and3@

In mutual funds :@ in Insurance 'olicy and :4@ ha"e in"ested

In both fixed deposit and postal sa"ings.


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2 H!# .$) +#(* + &'# %$$+


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3 W'!& ( &'# #!($+ %$ +$& +#(&+


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D$ .$) &'+ +#(&+< + M)&)! F)+* ( $&'.

A+!.((: According to the abo"e table


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A+!.((: According to the abo"e table

@ do not plan to in"est 3@ ha"e not responded.

W'#+ *$ .$) /!+ &$ +#(&


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A+!.((: According to the table 3


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A+!.((:

According to the abo"e table


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2 I+ ',' ,$"/!+#( '!# .$) +#(*

A+!.((:

According to the table ==@ respondents ha"e in"ested in )I5 : @ ha"e in"ested in I5I5I '8(

3: @ in ,A2A2 A))IA0V >@ in A6I6A and - @ in others which include 8)I5.

3 W'!& "!*# .$) &$


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A+!.((: According to the table 3N@ of respondents ha"e in"ested in the company for the

,rand name-@ ha"e in"ested for the customer

relationship the company maintains. -4@ of respondents ha"e in"ested for the better policy

options a"ailable -@ ha"e in"ested for other reason and 4@ ha"e not responded.

W'!& #&! >#+#%&( $)* .$) # &$ '!# !$+< &' %# ,$#


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A+!.((: According to table the extra benefit customer would like to ha"e is


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According to table @ of respondents expect security :@ expect high return and -@ expect

minimum premium3Q@ expect easy claim and 3@ expect maximum sum assured N@ expect

security and easy claim.

9 A# .$) !!# $% ULIP $% A*&.! B! 6I% +$


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According to table 3N.3N@ of customers hold (nit )inked Insurance 'lan and

N3.N3 @ do not hold (nit )inked Insurance 'lane

@ W'!& ** .$) # !>$)& U+& L+#* I+()!+,# P!+

A+!.((:

According to table -Q.-Q@ of customers liked liEuidity and >.>@ others and

N3.N3 @ ha"e not responded.

H$ *$ .$) !+ U+& +#* /!+ $% RLIC !( ,$"/!#* &$ M)&)! F)+*


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A+!.((H

According to table -Q.-Q@ of customer has ranked 8)I5 as good

And >.>@ ha"e ranked as satisfactory N3.N3@ ha"e not responded.

10 D$ .$) '!# !+. /!+ $% +#(&+< + ULIP + +#! %)&)# 6I% +$


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A+!.((:

According to the table -=.==@ of respondents plan to in"est in a month

==.==@ plan to in"est after a year -=.== @ ha"e not responded.

12 H$ #. !# .$) &$ #,$""#+* +#(&"#+& + ULIP &$ .$) %#+*(

A+!.((:

According to the abo"e table


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CONCLUSION

OVER ALL FACTS AND FINDINGS

Mutual funds are essentially short to medium term products. The liEuidity that these

products offer is "aluable for in"estors.

()I's in contrast are now positioned as longterm products and going ahead there will

be separate playing fields for ()I'S and MFs with the product differentiation between

them becoming more pronounced.

()I's now do not seek to replace mutual funds they offer protection against the risk of

dying too early and also help people sa"e for retirement.

Insurance has to be an integral part of ones wealth management portfolio.

()I's and mutual funds are therefore not likely to cannibali*e each other in the long

run.


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Bhile ()I's as an in"estment a"enue is closest to mutual funds in terms of their

functioning and structure the first and foremost purpose of insurance is and will always

be Oprotection. The "alue that it pro"ides cannot be downplayed or underestimated. As

an instrument of protection insurance pro"ides benefits that no in"estment can offer.

It is important for an in"estor to understand his financial goals and hori*on of in"estment

in order to make an informed in"estment decision. The decision to in"est in either a

mutual fund or a ()I' should depend on the time period of in"estment indi"idual

financial goals as well as risk taking appetite and its about time the industry and

customer reali*e it.

Thus we can say that ()I's are different from Mutual funds and the basic difference

between the two is the Insurance co"er i.e. protection. Also The ()I's are for long term in"estments and Mutual Funds long as well as short term.

LIMITATIONS

L The time constraint was one of the ma!or problems.

L The study is limited to the different schemes a"ailable under the mutual funds and Tulips

selected.

L The lack of information sources for the analysis part.

SUGGESTIONS AND RECOMMENDATIONS

SUGGESTIONS FOR MUTUAL FUNDS

L According to agents pri"ate mutual funds ad"ertisement and logo concept

'lays ma!or role in awareness about the product. So mutual funds should also

9o aggressi"e ad campaign with the celebrity endorsement and inno"ati"e and

5reati"e logo should be there which matches the product and signifies the strength

&f the type.

L An agent in continues should be increased to boost sales.

L As the mutual fund industry is growing and facing tough competition from

Foreign brands mutual funds should focus on product awareness and product

'reference ad"ertising.

L There are some in"estors who ha"e in"ested in mutual funds but they are


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Actually not aware about mutual funds because of the lack of awareness of mutual

Funds so the company should conduct such a awareness programs that the people

Should come to know about the schemes of mutual funds.

L Ad"ertising of the schemes in newspaper should be done aggressi"ely so that

In"estors get to know about the schemes performing well.

L The fund should emphasi*e its uniEue and positi"e features to the brokers

In"estors and corporate.

L The organi*ation should focus on balanced scheme as they are the most

'referred scheme.

SUGGESTIONS FOR ULIPS

L Most of the respondents are not aware of (nit )inked Insurance 'lan the awareness

programmed for nonin"estor should be increased by different Medias like T6

Maga*ines / 0ews 'aper.

L The company has to pro"ide proper training to ad"isors or marketing skills to impro"e

the marketability of products.

L 7ducate people by arranging a meeting or fair for in"estors and explaining about how

()I' works because in"estors are not aware of ()I' as an in"estment option and

in"estors do not ha"e the sufficient knowledge of the basic concepts of ()I' / about the

operating of ()I'.

L 5omplete information should be pro"ided regularly to the ad"isors as well as to the

in"estors to keep them updated about the de"elopments.


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L Many of the in"estors say that they are ready to recommend about in"estment to friends

so the company should approach the

L In"estors through the distributors and explain about the Insurance schemes.

RECOMMENDATIONS TO THE COMPANYH

ULIPS:-

K T'# (,'#"#( ('$)* ># *#()& !($ &'# SA 6()" A(()#*7 #


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Field support i.e. the company should pro"ide a staff wherein they will get a field work done

from them.

The company should pro"ide proper database to their agents. For the database the company can

also ha"e some tieups with some of the companies.

There should be monthly meetings held by the company for the agents wherein they can sol"e

their problems and suggest the new ways for the marketing of products.

There should be separates 5laim Settlement 5ell so that the company as well as the agents do

not face any problem while settlement of claims.

Also the company can support the agents by ha"ing some kind of publicity.

ANALYSIS:-

Thus from this sur"ey I would say that the company should not only target the middle age and

lower class group but also retired and pensioners.

Also the ()I's are gaining lot of popularity but while taking these ()I's one should take few

measures as inH

-$ To know to the ()I' plan which of the insurance type is ad!oined term or endowment.

3$ Bhile choosing of fund there should be balanced of eEuity and debt or if eEuity some small

percentage of debt should be taken so that some returns are fixed.

:$ And consult to the in"estment ad"isor

CONCLUSION OF THE SURVEY

L )ife insurance sector is one of the key areas where enormous business potential exists.

)ife insurance is a form of insurance that pays monetary proceeds upon the death of the


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insured co"ered in the policy. The basic urge in man to secure himself against any form

of risk and uncertainty.

L After comparing (nit )inked life insurance plans and Mutual Fund it can be concluded

that most of respondents are not aware of ()I' products of 8)I5.

L There is the difference between expenses of a ()I' as compared with the expenses of a

mutual fund. If in"estor is looking for a longterm in"estment a"enue with an insurance

co"er then ()I' is the product for them and if they are looking at a product that helps

in"estor to focus purely on in"estment and returns o"er a medium term then mutual fund

is suitable.

CONCLUSION

At the end of the pro!ect the conclusion which can be drawn is that the mutual fund

industry is going to be one of the emerging a"enues for the in"estors in the time to come.

Most of the people show less interest in the mutual funds.

Most of the people who were aware of the funds too were not interested in in"esting their

sa"ing in the Mutual Funds.They were not confident of the safety and security of the

in"estments in Mutual Funds. 'eople normally gi"e preference to the bank deposits schemes as compared to the mutual

funds because of the risk factor associated with it. Most of the people are mainly look for the profitability in the mutual fundswhich

becomes difficult for them because they normally in"est their larger proportion of their

amount in debt instruments as compared to eEuity which gi"es less return. Many people also do not in"est in mutual funds because of the fact that the cost is high in

mutual funds as they ha"e to pay entry and exit load attached to the fund. 'eople normally go through distribution companies while in"esting in the mutual funds

and hence can a"oid any fraud and flaws associated with the in"estments.


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BIBLIOGRAPHY

A BOOS-. Insurance 'rinciples / 'ractices

M.0.Misra S 5hand 'ublications.

3. Insurance

M.2.Mathew 8,SA 'ublications.

:. Insurance Fundamentals 7n"ironment / 'rocedures

,.S.,odla M.5. Greg P.'. Singh

9eep / 9eep 'ublications of 3:

4. Insurance Institute of India I5 ::S.2. Gidwani


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www.iciciprulife.com

www.reliancelife .com

www.moneycontrol.com

www.personalfn.com

www.et.com

www.google.com

F 50,5 T6 -Q

G ,&&P)7T on the &rientation 'rogramme of 7mployees at Tata AIG

H 'olicy ,rochures of Tata AIG I5I5I 'rudential 8eliance )ife / )I5

ANNEURE

UESTIONNAIRE

This information is for our internal use only will not be disclose to any other

organi*ation%department

5&M'A8ATI67 A0A);SIS &F M(T(A) F(09 A09 MA8P7T )I0P79 I0S(8A057

')A0S

0ame Address

Telephone Age

&ccupation Annual income

Marital status single or married #age of child if applicable$

SECTION A

1 W',' $% &'# %$$+< +#(&"#+& $/&$+( $)* .$) /#%#

a$ ,ank fixed deposit

b$ 'ostal sa"ings
http://www.iciciprulife.com/http://www.reliancelife.com/http://www.moneycontrol.com/http://www.personalfn.com/http://www.et.com/http://www.google.com/http://www.iciciprulife.com/http://www.reliancelife.com/http://www.moneycontrol.com/http://www.personalfn.com/http://www.et.com/http://www.google.com/


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c$ Shares and bonds

d$ Mutual funds

e$ Insurances policies

f$ &thers

g$,ank F9 and postal sa"ings

2 H!# .$) +#(* + &'# %$$+


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b$ Moderate return with minimum risk

c$ To ha"e a faster rate of growth

d$ &thers e$ 0on respondent

9 D$ .$) '!# !+. /!+ $% +#(&+< + +#! %)&)# 6% +$


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2 I+ ',' ,$"/!+#( '!# .$) +#(*

a$ )I5

b$ I5I5I '8(

c$ ,A2A2 A))IA0V

d$ 8)I5

e$ &thers

3 W'!& "!*# .$) &$


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a$ Security

b$ 1igh 8eturn

c$ Minimum 'remium

d$ 7asy 5laim

e$ Maximum Sum Assured

f$ &thers

g$ Security and 7asy 5laim

9 A# .$) !!# $% ULIP $% ABMM 6I% +$


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H$ *$ .$) !+ U+& +#* /!+ $% ABMM !( ,$"/!#* &$ M)&)! F)+*

a$ Good

b$ Satisfactory

c$ 0on8espondents

10 D$ .$) '!# !+. /!+ $% +#(&+< + ULIP + +#! %)&)# 6% +$


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COMPARATIVE ANALYSIS OF ULIPS AND MUTUAL FUNDS (1).docx