Copy of Susanto

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APROJECT REPORT

ON

PERFORMANCE EVALUATION OF ULIP FUNDS INBIRLA SUN LIFE LIFE INSURANCE COMPANY LTD.

With special reference to Birla Sun Life Insurance, Visakhapatnam

A Project report submitted to the Andhra University in partial fulfillment of the requirement

for the award of the degree of

MASTER OF BUSINESS ADMINISTRATION

Submitted by

D NAGESWARA RAO(Regd. No. 109225602037)

Under the able guidance of Ms .Vijaya jyothi

Assistant Professor

NOBLE INSTITUTE OF SCIENCE AND TECHNOLOGY(Affiliated to ANDHRA UNIVERSITY)

VISAKHAPATNAM2009-2011


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DECLARATION

This is to declare that this project PERFORMANCE EVALUATION OF ULIP FUNDSIN BIRLA SUN LIFE INSURANCE is a bonafide work done by me in BIRLA SUN LIFEINSURANCE and has been submitted to the university in the partial fulfillment of therequirements for the award of the Degree of Master of Business Administration (M.B.A)and has not been submitted to any other university or for any other degree. I also declarethat the matter in the report is truly my observation and not false.

Date :

Place :


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ACKNOWLEDGEMENT

I D NAGESWARA RAO would like to thank BIRLA SUN LIFEINSURANCE, Visakhapatnam for giving me this opportunity to do internship in theirreputed company. I take this opportunity to express my deep and profound gratitude to thepeople concerned who have helped me directly or indirectly in successfully completion ofmy project in visakhapatnam.

My sincere thanks to Mr. VIVEK INDERKOCHER Director of NOBLE INSTITUTE OF SCIENCE AND TECHNOLOGY, Visakhapatnam for hervaluable motivation and support to make the project work successful.

I would like to thank our H.O.D Mrs. SAILAJA for his valuablesuggestions and motivation, support to make the project work completing successfully.

I am thankful to MS . VIJAYA JYOTHI my project guide (internal)faculty member of who had helped me to comlete this project successfully under hisvaluable guidance and suggestions towards completion of this project.

I express my thanks to Mr. B KIRAN BIRLA SUN LIFE LIFEINSURANCE, Visakhapatnam for permitting me to do this project in such and esteemedorganization.

I have no words that can better express my feelings towards myparents, my brother, and my friends for their constant encouragement regarding thisproject work.


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CONTENTS

CHAPTER I Page. No

INTRODUCTION 1-3

NEED FOR THE STUDY 4

OBJECTIVES OF THE STUDY 5

SCOPE OF THE STUDY 6

METHODOLOGY 7

LIMITATIONS OF THE STUDY

CHAPTER II

INDUSTRY PROFILE

COMPANY PROFILEZCHAPTER III

THEORITICAL FRAME WORK CHAPTER-- 1V

ANALYSIS AND INTERPRETATIONCHAPTER V

SUMMARYFINDINGS

SUGGESTIONS

ANNEXURE

BIBLIOGRAPHY


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CHAPTER I

INTRODUCTION


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INTRODUCTION

Insurance is an instrument which can ensure the financial security at thetime of losses. It is a social security tool. Insurance is a contract between two partieswhereby one party called insurer undertakes in exchange for a fixed sum called premiumsto pay the other party called insured a fixed amount of money on the happening of acertain event.

Insurance is a protection against financial loss arising on the happening of anunexpected event. Insurance companies collect premiums to provide for this protection. Aloss is paid out of the premiums collected from the insuring public and the insurancecompanies act as trustees to the amount collected.

For example, in a life policy by paying a premium to the insurer, the familyof the insured person receives a fixed compensation on the death of the insured.

Similarly in car insurance in the event to the car meeting with an accident,the insured receives the compensation to the extent of damage.

It is a system by which the losses suffered by a few are spread over manyexposed to similar risks.


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REASONS FOR TAKING INSURANCE:

Insurance is desired to safeguard oneself and ones family against possible

losses on account of risks and perils. It provides financial compensation for the lossessuffered due to the happening of any unforeseen events.

Insurance is considered as a good savings instrument. It contains all thefeatures of good saving plan like

Safety / Security

ReturnLiquidation

Tax benefits

Fulfillment of future financial needs

By taking life insurance a person can have peace of mind and need not worryabout the financial consequences in case of any untimely death.

Certain insurance contracts are also made compulsory by legislation. Forexample, motor vehicles Act 1998 stipulates that a person driving a vehicle in a public placeshould hold a valid insurance policy covering Act risks. Another example of compulsoryinsurance pertains to the environmental protection act, where in a person using or carryinghazardous substances (as defined in the act) must hold a valid public liability (Act) policy.

It is said that

Living long is as much a burden as dying too earlyTerms of life are hard but the terms of life insurance are soft.


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UNIT LINKED INSURANCE PLAN:

A policy, which provides for life insurance where the policy value at any timevaries according to the underlying assets at the time.

Unit linked insurance plan (ULIP) is life insurance solution that provides

client with the benefits of protection and flexibility in investment.

The investment is denoted as units and is represented by the value that is hasattained called as Net Asset Value (NAV).

In todays times ULIP provides solutions for all the needs of a client likeinsurance planning, financial needs, financial planning for childrens future and retirementplanning.


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NEED FOR THE STUDY

Insurance is desired to safeguard one self and ones family against possiblelosses on account of risks and perils. It provides financial compensation for the lossessuffered due to the happening of any unforeseen events.

By taking life insurance a person can have peace of mind and not worry

about the financial consequences in case of any untimely death.

In spite of all these the insurance companies are now a days offering theschemes, which are market linked, which are otherwise popular as ULIPS.

1. The study is to know what are Unit Linked Insurance plans and thevarious ULIP schemes offered by Birla Sun Life Life Insurance.

2. To study the different fund options available in all the ULIPs offeredby Birla Sun Life Life Insurance.

3. This study is to evaluate and know the performances of ULIP funds.

4. To suggest any measures if any based on NAV, with regard to

diversification in the funds portfolio.


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OBJECTIVES OF THE STUDY

1. To discuss the relevance of insurance and private life insurance companies.

2. To identify various ULIPs offered by Birla Sun Life Life Insurance.

3. To know the advantages and disadvantages of ULIPs at differentcircumstances in the bouncing market.

4. To know the different fund options available in the ULIPs.

5. To evaluate the performance of all the ULIP funds in Birla Sun Life LifeInsurance.

6. To evaluate the performances of funds and its NAVs based on returns andrisk.


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SCOPE OF THE STUDY

The study was taken up to Evaluate the performance of ULIPs in lifeinsurance business which are now a days popular. The scope of the study is restricted to theULIPs performances along with the funds performance in Birla Sun Life Life Insurance.

METHODOLOGY

The study has been conducted by making use of both primary and secondary

data.

Primary Data:

The primary data has been collected by interaction with the officials of BirlaSun Life Life Insurance, Visakhapatnam.

Secondary Data:


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Secondary data has been collected from Birla Sun Life Life Insurancebroachers from internet web sitewww.maxnewyorklife.comand newspapers and alsomagazines.

PERIOD OF THE STUDY

The study is totally confined to the city of Visakhapatnam and it is conductedfor a period of 4 years i.e, from 2006 to 2010.

LIMITATIONS OF THE STUDY

In spite of honest and sincere efforts there are some limitations as statedbelow.

There is no depth information given in the investment options by thebranch.

The company has not disclosed the total statistical information withregard to the fund performance.
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CHAPTER II

INDUSTRY PROFILE

COMPANY PROFILE


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INDUSRTY PROFILE

INDIAN INSURANCE INDUSTRY:

Insurers:Insurance industry, as on 1.4.2000, comprised of mainly two players:

Life Insurance Corporation of India (LIC).

General Insurance Corporation of India (GIC)(with effect from Dec 2000, a national reinsurer).

GIC had four subsidiary companies, namely (with effect from Dec2000, these subsidiaries have been de liked from parent company and made as anindependent insurance companies.

1. Oriental Insurance Company Limited with H.Q at New Delhi.

2. New India Assurance Company Limited with H.Q at Mumbai.

3. National Insurance Company Limited with H.Q at Kolkata.


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4. United India Insurance Company Limited with H.Q at Chennai.

YR 2000 2001 (From 2nd April 2000 to 31st December 2001)

Until the year 1999 LIC enjoyed monopoly in India. But in the year 1999 passing theIRDA act liberalized the insurance industry in India. According to this actinsurance business was privatized. That is the act allowed foreign participation ininsurance business as a joint venture with an Indian company with 26:74 shareholding respectively.

Insurance Industry in the year 2000 2001 had 16 new entrants, namely:

Life Insurers:


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General Insurers:

SL NoRegistration Number

Date of Registration

Name of the Company

1 101 23.10.2002 HDFC Standard life Insurance Co. Ltd.

2 104 15.11.2000 Birla Sun Life Life Insurance Co.Ltd.

3 105 24.11.2000 ICICI Prudential Life Insurance Co.Ltd.4 107 10.01.2001

Om Kotak Mahindra Life InsuranceCo.Ltd.

5 109 31.01.2001 Birla Sun Life Insurance Co.Ltd.

6 110 12.02.2001 Tata AIG Life Insurance Co.Ltd.

7 111 30.02.2000 SBI Life Insurance Co.Ltd.

8 114 02.08.2001 ING Vysya Life Insurance Co.Ltd.

9 116 03.08.2001 Bajaj Alliance Life Insurance Co.Ltd.

10 117 06.08.2001 MetLife India Insurance Co. Pvt. Ltd.

SLNo

RegistrationNumber


Name of the Company

1 102 20.10.2000Royal Sundaram Alliance Insurance

Co.Ltd.2 103 23.10.2000 Reliance General Insurance Co.Ltd.

3 106 04.12.2000 IFFCO Tokio General Insurance Co.Ltd.

4 108 22.01.2001 TATA AIG General Insurance Co.Ltd.

5 113 02.05.20001Bajaj Alliance General Insurance

Co.Ltd.

6 115 03.08.2001ICICI Lombard General Insurance

Co.Ltd.


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Insurance Industry in the year 2002 new entrants, namely:

Life Insurance:

SL NoRegistration

NumberDate of

RegistrationName of the Company

1 121 03.01.2002 Reliance Life Insurance Co.Ltd.

2 122 14.05.2002Aviva Life Insurance Co. India Pvt.

Ltd

General Insurance:

Insurance Industry in the year 2004 had 1 new entrant, namely:

Life Insurance:

SLNo

RegistrationNumber


Name of the Company

1 123 15.07.2002 Cholamandalam General Insurance Co.Ltd.

2 124 27.08.2002Export Credit Guarantee Corporation

Co. Ltd.3 125 27.08.2002 HDFC Chubb General Insurance Co.

Ltd.


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Insurance Industry in the year 2005 had 1 new entrant, namely:Life Insurance


Life Insurers:

SL NoRegistration

NumberDate of


1 130 14.07.2006 Bharti AXA Life Insurance Co. Ltd.


Life Insurers:

SLNo

Registration Number


Name of the Company

1 127 06.02.2004 Sahara India Insurance Co. Ltd.

SL NoRegistration

NumberDate of


1 128 17.11.2005 Shriram Life Insurance Co. Ltd.


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SL NoRegistration

NumberDate of


1 133 04.09.2007 Future General India Life Insurance Co. Ltd

2 135 19.12.2007 IDBI Fortis Life Insurance Co. Ltd.


Life Insurers:

SL NoRegistration

NumberDate of


1 136 08.05.2008 Canara HSBC Oriental Bank of Commerce Life Insurance Co. Ltd.

2 138 27.06.2008 Aegon Religare Life Insurance Co. Ltd.3 140 27.06.2008 DLF Pramerica Life Insurance Co. Ltd.

General Insurers:

SL NoRegistration

NumberDate of


12

139141

27.06.200815.12.2008

Bharti AXA General Insurance Co.Ltd.

India first life insurance company Ltd.

Life Insurers:

SL.NO RegistrationNumber


Name of the Company

12

142143

08.6.200905.11.2009

Star union Dai-ichi life insurance Co Ltd.Reheja QBE General Co Ltd.


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ADVANTAGES OF LIFE INSURANCE:

Protection against premature death:Life insurance provides protection to thedependents of the assured incase of his untimely death. The dependents get a largesum in case of the death of their breadwinner.

Provision for old age:Through life insurance, a person can make provisions forhis old age. After is substantially reduced. He cannot maintain his standard of livingwithout substantial livings.

Promotion of Thrift: Life insurance encourages people to save moneycompulsorily. Once a life policy is taken, the assured has to pay premiums regularlyto keep the policy in force and he cannot get back the premium.


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Funds foe Investment:It mobilizes the public savings and chanceless them inproductive investment for the economic development of the country. It is animportant institution for the mobilization and investment of small savings.

Commercial Value:Life insurance policy can be used as a collateral security to

raise loans. It improves the continuity and credit worthiness of business.

Social Utility:Life Insurance has significance for the society also industrialworkers and other poor people can save through life insurance. It enables a personto provide for education and marriage of children and for construction of house.

Superior to an Ordinary Savings Plan:Unlike other savings, it affords full

protection against risk of death. In case of death the full sum assured is madeavailable under a life assurance policy.

Ready Marketability:After an initials period, if the policy holder finds himself unable to continue payment of premiums he can surrender the policy for cash sum.Alternatively, he can tide over a temporary difficulty by taking a loan on the solesecurity.

Tax Relief: Income Tax Act allows deduction from tax payable, a certainpercentage of portions of the taxable income, which is diverted to payment of premiums.

Life Insurance Business:

It is the business of effecting contracts of insurance upon human life, including anycontract where by the payment of money is ensured on death only or the happening of any


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contingency dependant on human life and any contract which is subject to the payment orpremiums of a term dependent on human life and shall be the deemed to include.

The granting of disability and double or triple indemnity accident benefits, of soprovided in the contract of insurance.

The granting of annuities on human life.The granting of superannuation. Allowance and annuities payable out of any fundapplicable solely to the relief and maintenance of persons engaged or who have beenengaged in any particular profession, trade or employment or the dependants of such persons.

EVOLUTION OF INSURANCE MARKET

Lets have a brief look into the evolution of the insurance market, which has come along way starting 1818.

The business of life insurance in India in its existing form started in India in the

year 1818 with the establishment of the Oriental Life Insurance Company in Kolkata.Some of the important milestones in the life insurance business in India are:

1912: The Indian Life Assurance Company Act enacted as the first statute to regulate thelife insurance business.


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1928: The Indian Insurance Company Act enabled the government to collect statisticalinformation about both life and non life insurance business.

1938: Earlier legislation was consolidated and amended by the Insurance Act with theobjective of protecting the interests of the insuring public.

1956: 245 Indian and foreign insurers and provident societies taken over by the CentralGovernment were nationalized. LIC formed by an Act of parliament, viz., LIC Act, 1956,with a capital contribution of Rs. 5 Cr, from the Government of India. (Source:www.ciionline.org).

Prior to 1956, a large number of organizations were managing life insurance andgeneral insurance business. But then in 1956, the life insurance business was nationalized &Monopoly vested with Life Insurance Corporation (LIC). Similarly in 1972, the generalinsurance business was nationalized & started to be managed by General InsuranceCorporation (GIC) and its four subsidiaries namely National Insurance Company Limited,New India Assurance Company Limited, Oriental Fire & General Insurance CompanyLimited & United India Company Limited.

The first sign of government concern about the state of the insurance industry was

revealed in the early nineties, when an expert committee was set up under thechairmanship of late R.N. Malhotra Committee, the most important was recommendingthat the insurance industry be opened up to private firms, subject to the conditions that aprivate insurer should have a minimum paid up capital of Rs. 100 Crs, and that thepromoters stake in the otherwise widely held company should not be less than 26 percentand not more than 40 percent.

Subsequent to the submission of its report by the Malhotra Committee, there wereseveral abortive attempts to introduce the Insurance Regulatory Authority (IRA) Bill in theparliament.

In November 1998, the central cabinet approved the Bill, which envisaged a ceilingof 40 percent for non Indian stakeholders: 26 percent for foreign collaborators of Indianpromoters, and 14 percent for non resident Indians (NRIs). Overseas corporate bodies
http://www.ciionline.org/http://www.ciionline.org/


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(OCBs) and foreign institutional investors (FIIs). However, in view of the widespreadresentment about the 40 percent ceiling among political parties, the bill was referred to thestanding committee on finance. The committee has since recommended that each privatecompany be allowed to enter only one of the three areas of business life insurance,general or non life insurance, and reinsurance that the overall ceiling for foreign

stakeholders in these companies be reduced to 26 percent from the proposed 40 percent.

The committee has also recommended that the minimum paid up share capital of the new insurance companies he raised to Rs. 200 Crs, double the amount proposed by theMalhotra Committee. Today, due to these developments, the Indian insurance marketstands wide open and has attracted a host of global players.

EVOLUTION OF IRDA

The Malhotra committee felt that need to provide greater autonomy to insurancecompanies in order to improve their performance and enable them to act as independentcompanies with economic motives. For this purpose, it had proposed setting up anindependent regulatory body. The insurance Regulatory and Development authorityReforms in the insurance sector were inititated with the passage of the IRDA Bill inParliament in December 1999. The IRDA since its incorporation as a statutory body inApril 2000 has fastidiously stuck to its schedule of framing regulations and registering theprivate sector insurance companies. The other decision taken simultaneously to provide the


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supporting systems to the insurance sector and in particular the life insurance companieswas the launch of the IRDAs online service for issue and renewal of licenses to agents.

The approval of institutions for imparting training to agents has also ensured thatthe insurance companies would have a trained workforce of insurance agents in place of

sell their products, which are expected to be introduced by early next year. Since being setup as an independent statutory body the IRDA has put in a framework of globallycompatible regulations. In the private sector 12 life insurance and 6 general insurancecompanies have been registered.

Insurance Regulatory and Development Authority (IRDA) Act, 1999

IRDA:

Its statutory Autonomous board created to perform the role of an effectivewatchdog and regulator for the insurance sector in India. It is vested with the power of make regulations consistent with the act to carry out the purpose of the act.

IRDA is constituted with one chairperson, 5 whole time members and 4 part timemembers, all with tenure of 5 years.


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There will be an advisory committee consisting of 25 members to advise IRDA in itsday to day activities representing commerce, industry, agriculture, consumers,employees etc.

Objectives of IRDA:

To provide for the establishment of an authority to protect the interests of holders of insurance policies, to regulate, promote and ensure orderly Creator of the insuranceindustry.

Important changes brought through IRDA act:

1) Insurance business is opened up to private sector thus ending the monopoly of LIC/GIC.

2) Participation of foreign companies in collaboration with Indian insurancecompanies is allowed: subject to the condition that the foreign Companys sharecapital shall not exceed 26% of the paid up capital of the Indian insured.

3) Controllers of insurance ceases of exist and all functions are vested with IRDA.4) Appointment of chief agents and special agents is revived.5) The concept of insurance brokers is introduced.

Duties, Powers and Functions of IRDA:

I. Issue certificate of registration, renew, modify, withdraw suspend or cancel such

registration.

II. Protect the interest of policy holders in all matters concerning the terms andconditions of contracts of insurance including settlement of insurance claims,surrender value of policy etc.


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private life insurance companies in the country.

Known for its innovation and creating industry benchmarks, BSLI has several firsts to

its credit. It was the first Indian Insurance Company to introduce Free Look Period and the

same was made mandatory by IRDA for all other life insurance companies. Additionally,

BSLI pioneered the launch of Unit Linked Life Insurance plans amongst the private playersin India. To establish credibility and further transparency, BSLI also enjoys the prestige to be

the originator of practice to disclose portfolio on monthly basis. These category development

initiatives have helped BSLI be closer to its policy holders expectations, which gets further

accentuated by the complete bouquet of insurance products (viz. pure term plan, life stage

products, health plan and retirement plan) that the company offers.

Add to this, the extensive reach through its network of 600 branches and 1,75,000

empanelled advisors. This impressive combination of domain expertise, product range, reach

and ears on ground, helped BSLI cover more than 2 million lives since it commenced

operations and establish a customer base spread across more than 1500 towns and cities in

India. To ensure that our customers have an impeccable experience, BSLI has ensured that it

has lowest outstanding claims ratio of 0.00% for FY 2008-09. Additionally, BSLI has the

best Turn Around Time according to LOMA on all claims Parameters. Such services are wellsupported by sound financials that the Company has. The AUM of BSLI stood at Rs. 8165crs as on February 28, 2009,while as on March 31, 2009, the company has a robust capital

base of Rs. 2000 crs.

Vision To be a leader and role model in a broad based and integrated financial services

business

Mission.

To help people mitigate risks of life, accident, health, and money at all stages and

under all circumstances

Enhance the financial future of our customers including enterprises


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Values Integrity Commitment

Passion Seamlessness

Speed

A US $28 billion corporation, the Aditya Birla Group is in the league of Fortune 500

worldwide. It is anchored by an extraordinary force of 100,000 employees, belonging to 25

different nationalities. The group operates in 25 countries across six continents truly India's

first multinational corporation.

Aditya Birla Group through Aditya Birla Financial Services Group (ABFSG),has astrong presence across various financial services verticals that include life insurance, fund

management, distribution & wealth management, security based lending, insurance broking,

private equity and retail broking. The seven companies representing ABFSG are Birla Sun

Life Insurance Company, Birla Sun Life Asset Management Company, Aditya Birla Money,

Aditya Birla Finance, Birla Insurance Advisory & Broking Services, Aditya Birla CapitalAdvisors and Apollo Sindhoori Capital Investment. In FY 2008-09, the consolidated

revenues of ABFSG from these businesses crossed Rs. 4763 crores, registering a Creator rate

of 36%.

Sun Life Financial is a leading international financial services organisation providing

a diverse range of protection and wealth accumulation products and services to individuals

and corporate customers. Chartered in 1865, Sun Life Financial and its partners today haveoperations in key markets worldwide, including Canada, the United States, the United

Kingdom, Ireland, Hong Kong, the Philippines, Japan, Indonesia, India, China and Bermuda.

As of December 31, 2008, the Sun Life Financial group of companies had total assets under

management of $381 billion


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Achievements and awards

Birla Sun Life Insurance achieves the milestone of processing 100% claims received

BSLI ends FY09 with 0 outstanding claims - a new high in the insurance industry

Mumbai, Maharashtra, May 14, 2009 / India PRwire / -- Birla Sun Life Insurance, one

of Indias leading life insurance companies, has set a new benchmark amongst insurance

players, by achieving the milestone of processing 100 % of its claims.

The companys Claims Outstanding ratio has been continuously reducing year-on-

year and has been one of the best in the industry. A reduction from 0.32% in 2007-08 to

0.00% in 2008-09, is a living example of the strong system & processes the Company has set

in and demonstrates Birla Sun Life Insurances customer outcome oriented approach.

Additionally, a recent survey (2008) conducted by 'Life Office Management

Association' (LOMA) of Life Insurance Companies across ASIA (wherein Birla Sun Life

Insurance too had participated) reveal that Birla Sun Life Insurance have had the best Turn

Around Times (TAT's) on all Claims Parameters amongst all the participants.

Mr. Verma further added Claims is one of the most important yardsticks by which a

Company's performance is measured. With the above achievements, we believe that wecontinue to build the faith amongst the public & the insured population, of being the

preferred insurance provider and reinforce our 'Customer First' approach - even when it

comes to critical issue of 'claims processing.

Birla Sun Life Insurance, which has till date sold over 2 million policies, has

positioned itself on the quality platform. The company has developed a strong model based

on defined core values of Integrity, Commitment, Passion, Seamlessness, and Speed. Its

strategy is to establish itself as a trusted life insurance specialist on the basis of quality of

advice. The company has over 1, 68,090 advisors, who are widely considered among the best

in the business.

Here at Sun Life, we take great pride in the accomplishments of our business

operations and our employees worldwide. And were proud to see the results of our
http://www.indiaprwire.com/http://www.indiaprwire.com/


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commitment to excellence around the world. Read on to see what our employees and

businesses are achieving.

June/July 2010

Sun Life recognized for sustainability initiativesThe Globe and Mail Report on Business Report on Corporate Responsibility has ranked Sun

Life # 5, the highest among financial services companies listed on the Toronto Stock

Exchange 60. Sun Life has also been recognized as one of the Corporate Knights Best 50

Corporate Citizens in Canada . For the second consecutive year, Sun Life has been named one

of Jantzi-Macleans 50 Most Socially Responsible Companies in Canada . Each of the

rankings is based on measurements of a company's environmental, governance and social

practices.

Sun Life wins most trusted brand award in Canada (April 2010)

The 2010 Reader's Digest Trusted Brand consumer survey named Sun Life the

Most Trusted Life Insurance Company in Canada. Product quality, customer service and

brand experience scored high among poll respondents who chose Sun Life as their mosttrusted brand of life insurance.

Sun Life named one of the Global 100 Most Sustainable Corporations in the World(January 2010)

Sun Life has been selected as one of the Global 100 Most Sustainable Corporations in

the World .

The Global 100 is derived from an initial list of 3,000 corporations from 24

countries. The final Global 100 list identifies the 100 corporations which have been most

proactive in managing environmental, social and governance issues. Sun Life is the only
http://www.theglobeandmail.com/report-on-business/managing/report-on-corporate-responsibil/few-canadian-companies-disclose-environmental-practices/article1605335/http://www.corporateknights.ca/special-reports/63-best-50-corporate-citizens.htmlhttp://www.corporateknights.ca/special-reports/63-best-50-corporate-citizens.htmlhttp://www2.macleans.ca/2010/06/14/jantzi-macleans-csr-report-2010/http://www.global100.org/http://www.global100.org/http://www.theglobeandmail.com/report-on-business/managing/report-on-corporate-responsibil/few-canadian-companies-disclose-environmental-practices/article1605335/http://www.corporateknights.ca/special-reports/63-best-50-corporate-citizens.htmlhttp://www.corporateknights.ca/special-reports/63-best-50-corporate-citizens.htmlhttp://www2.macleans.ca/2010/06/14/jantzi-macleans-csr-report-2010/http://www.global100.org/http://www.global100.org/


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North American insurance company and one of only 9 Canadian corporations across all

industries named to the list.

Sun Life wins DALBAR service award

The U.S. division of Sun Life received its fifth consecutive DALBAR Financial

Intermediary Post-Sale Service Award for 2009. The award identifies Sun Life as a service

leader in the financial services industry and recognizes our commitment to our customers.DALBAR, a U.S. financial services market research and consulting firm, annually honours

companies that exceed industry standards in post-sale servicing.

AWARDS:


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ICAI Awards for Excellence in Financial Reporting,

Awarded a Silver Shield in the Insurance category by the Institute of Chartered

Accountants of India (ICAI) for the financial year ended 31st March, 2009

Recruiting and Staffing Best in Class Awards.

Outlook Money Awards 2004 BSLI - Best Life Insurer

(Runner Up) 2004 TROPHY.
http://insurance.birlasunlife.com/AboutUs/Awards/tabid/176/Default.aspxhttp://insurance.birlasunlife.com/AboutUs/Awards/tabid/176/Default.aspx


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Outlook Money Awards 2004 BSLI - Best Life Insurer

(Runner Up) 2004 CERTIFICATE.

The 8th Asia Insurance Industry Awards 2004 - Birla Sun Life Insurance was among

the top five nominees in the category.

The Indo-Canadian Business Chamber- BSLI awarded for its

'Successful Performance' for 4 years April 2005

Birla Sun Life Insurance was presented 'The Hewitt Best Employers

In India Awards 2004' Trophy.


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Management Team

Mr.JayantDuaManaging Director

Mr.JayantDua Dua is the Managing Director at Birla Sun Life Insurance. He is aChemical Engineer from IIT Delhi and an MBA from IMI, Delhi. He also holds anAdvanced Management Program (AMP) from Harvard Business School, USA. He has joinedBirla Sun Life Insurance in July 2010

Mr. Mayank BathwalChief Financial Officer

Mayank Bathwal is the Chief Financial Officer for BSLI. In his current role he provides effective leadership to the finance function towards growing the business of thecompany and partners the CEO and the leadership team in managing the affairs of thecompany.

Mr. Amitabh VermaChief Operating Officer

Amitabh Verma is the Chief Operating Officer for BSLI. He is responsible for determining the organizational strategies for Operations and IT and reports to the Presidentand CEO of the company. He is with BSLI since February1, 2008

Mr. Fabien JeudyChief Actuarial Officer & Appointed Actuary

Fabien Jeudy is the Chief Actuarial Officer & Appointed Actuary for BSLI and isresponsible for all actuarial functions within the company.

He can rightly be called the father of 'Unit linked Insurance Plans' in India amongst the private players. He was actively involved in the architecture/ design of Unit Linked Plans of BSLI that were filed with the IRDA at the time of business commencement in the year 2001.

Mr. Vikram Kotak Chief Investment OfficerVikram Kotak is the Chief Investment Officer (CIO) for BSLI and is with the

company since December 2005.He was a member of the Working Group Committee on investments formed by IRDA and isnow a member of Capital Market Committee Indian Merchant Chambers. He has alsoserved as a Member for Debt Market Committee of Bombay Stock Exchange for the period2002-03 & 2003-04.


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Mr. Rahul SinhaChief Marketing Officer

Rahul is the Chief Marketing Officer (CMO) for BSLI. In his role as CMO, Rahul isresponsible for determining organizational strategies for the marketing initiatives of thecompany and its offerings, with the objective of being the target customer's preferred brandand choice among life insurance companies

Mr.Pramod KrishnamurthyChief Technology Officer

Pramod Krishnamurthy is the Chief Technology Officer for BSLI responsible for providing the crucial Technology edge to enable BSLI to differentiate itself positively in themarketplace and reports to the CEO of the company. He joined BSLIteamonMay,032010.

Pramod Krishnamurthy is an IIT-IIM graduate and has over 20 years of work experience inthe Financial Services Technology area. He has held several senior leadership positions inthe IT and Financial Services Industry, including running his own software company early inhis career. Prior to joining BSLI, Pramod was an Executive Vice President with Fullerton

India Credit

Ms. Vinni SoniHead Group Business

Vinni heads the Group Insurance business for BSLI. She joins us from Sun LifeFinancial, Toronto, Canada with over 30 years of experience in Group Benefits.

Over the span of her career, Vinni has led several departments - Financial underwriting,Business Development, Marketing, and Operations. Her expertise is in building sound

businesses with a distinct focus on creating value for the customers.

Vinni is a Science graduate and holds multiple certificates from prestigious institutions likeHarvard and Wharton.

Mr. Saurov GhoshHead & Senior Vice President - Human Resources

Saurov Ghosh is Head & Senior Vice President - Human Resources. Saurov is anenthusiastic, talented and seasoned HR professional. His subject matter expertise, strong

relationship, influencing skills and business HR approach provides a sound basis for successin his role as Head & Senior Vice President - Human Resources. Saurov is with BSLI sinceJanuary 2008


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Mr. Lalit VermaniVice President Compliance Risk and Internal Audit functions

Lalit Vermani is a Vice-President at BSLI, heading the Compliance, Risk and Internal Auditfunctions for the company.

He has 17 years of experience in various areas of Financial Services including Insurance,Asset Management and Investment banking. Prior to this assignment, Lalit was heading thecompliance function at Birla Sun Life AMC Ltd.

Lalit has an honours degree in Economics and MBA with specialisation inFinance. He is also a certified Financial Risk Manager (FRM) by Global Association of Risk Professionals

Mr. Puneet BansalLegal & Company Secretary

A gold medalist in Law and a Company Secretary , Puneet'sareas of specializationare setting up of robust legal processes, corporate governance and compliance consecutiveyears, during his tenure


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Board of Directors

Mr. Donald StewartMr. Donald A. Stewart graduated from the University of Glasgow in 1968 with first

class honours in Natural Philosophy. He joined Sun Life Financial in 1969 in London,

England, and qualified as a Fellow of the Institute of Actuaries in 1972. In 1974, he left theCompany to pursue a career in benefits consulting, ultimately

joiningWilliamM.MercerinToronto

Mr. Kumar Mangalam BirlaMr. Birla is a Chartered Accountant and has also earned an MBA (Masters in Business

Administration) from the London Business School, London.He is the Chairman of the Aditya Birla Group, which is among India's largest business houses.Among its major companies in India are Grasim, Hindalco, UltraTech Cement, Aditya Birla

Nuvo and Idea Cellular and globally Novelis, Minacs, Aditya Birla Minerals, Aditya BirlaChemicals. Its JV operations include Birla Sun Life Asset Management Company, Birla Sun LifeDistribution Co. Ltd and BSLI.

Mr. Jayant Dua

Mr.JayantDua Dua is the Managing Director at Birla Sun Life Insurance. He is aChemical Engineer from IIT Delhi and an MBA from IMI, Delhi. He also holds anAdvanced Management Program (AMP) from Harvard Business School, USA. He has joinedBirla Sun Life Insurance in July 2010.

Mr. Bishwanath Puranmalka\Mr. Puranmalka is a commerce and law graduate and also a Fellow member of the

Institute of Chartered Accountants of India and Institute of Company Secretaries of India.He is the Director of Aditya Birla Group's Financial Services and has a total workingexperience of more than 45 years. He has been associated with the Aditya Birla Group invarious capacities since the inception of his career.

Mr. Gian GuptaMr. Gupta holds a Masters in Commerce from University of Delhi. He is a director on theBoard of the Company and is the independent director on the Board of Aditya Birla NuvoLimited (holding company of BSLI). He is also a member of the Audit Committee, FinanceCommittee and Share Allotment Committee of the Company.

Mr. Gian Prakash Gupta has been the former Chairman and Managing Director of IndustrialDevelopment Bank of India & Chairman of Unit Trust of India. He has wide and rich


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experience in Project Financing including Infrastructure projects, Capital Market, FinancialManagement and General Management. He is on the Board of various companies.

Mr. Suresh Talwar

Mr. Talwar is a commerce graduate and has done his L.L.B. He practices as asolicitor. He is a partner of M/s Talwar, Thakore & Associates, a law firm he has founded in

partnership with Shobhan Thakore. He was alsoassociated with M/s. Crawford Bayley & Company prior to his forming his firm of Advocates. He also acts as a legal counsel to numerous Indian companies, multinationalcorporations, Indian & foreign banks. His professional specialisation is in corporate law,corporate tax, foreign exchange laws, Monopolies & Restrictive Trade Practices laws, &international issue of securities by Indian companies. He also holds the directorship inseveral eminent public & private limited companies


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Business Continuity PlanBirla Sun Life Insurance is one of the few Indian companies to have a fully operational

Business Continuity Plan (BCP) to ensure minimal impact to the organisation, its people, andmost importantly, its customers. Our Business Continuity Planning (BCP) Program is aresponse plan which would ensure that in the event of a disaster we would be able to restore

and recover operations for critical processes within a predetermined time after the disaster.BSLIs Business Continuity Management PolicyThe objectives of BSLI's BCMS are as follows

Business Continuity Management System Objectives (BCMS):

To have a planned response in the event of any contingency ensuring recovery of criticalactivities at agreed levels within agreed timeframe thereby complying with variousregulatory requirements and minimizing the potential business impact to BSLI. Additionallyto create a system that fosters continuous improvement of business continuity management

Ensuring a Proactive response to any contingency Ensuring recovery of identified critical activities within agreed timeframe. Ensuring that we adhere to our clients, contractual, legal & regulatory

requirements.

Programme Overview

As part of our Business Continuity Plan, we have a documented crisis response andrecovery procedure for quick response and stabilisation of the situation, and a

businesscontinuity procedure to ensure recoveryHighlights of our Plan Document

Crisis Management & incident response Data back-up, data and system recovery Recovery of all mission-critical business functions and supporting systems Alternate recovery sites if primary location is unavailable Communication with customers, employees and other stakeholders Assurance to customers that they will continue to receive optimum customer services

at all times

Our Commitment

Risk Assessment & Business Impact Analysis (BIA) annually. Business Continuity Plan for HO & its Critical branches Crisis Management Plan & Pandemic Response Plan at a corporate Level. Business Continuity Plan Testing ensuring viability of all its plans. The activities set forth above may evolve as business and regulatory needs require


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PRODUCTS OF BIRLA SUN LIFE INSURANCE

INSURANCE SOLUTIONS OF INDIVIDUALS:

Birla Sun Life Insurance offers a range of innovatives, Customer-centric productsthat meet the needs of customers at every Life stage, It now has 35 products covering bothlife and health insurance and 8 riders that can be customized to over 800 combinationsenabling customers to choose the policy that best fit their need. Besides this, the companyoffers 6 products and 4 riders in group insurance business.

SAVINGS SOLUTIONS:

BSLI Bachat Endowment PlanThis plan in always there to provide you financial support. It is a perfectmoney-saver solution. On its maturity at the end of 20 years, this policy not

only gives you a guaranteed sum but also any bonus it accumulates. Inmaturity or in case e of unfortunate death, the nominee shall receive allmothly Base premiums paid (or)sum assured (if higher in case of death)+bachat additions earned + the loyalty additions.

BSLI Dream Endowment PlanAs a res ponsible provider to your family you have always wanted a

solution that can give you the guarantee of reaching your financial objectiveswhile retaining the freedom to adapt to any changes in life you the confidenceto live your life with freedom.

Policy term is 30 years. And pay tem is single pay or short pay5,10,15,20 yrs.At maturity you will receive the Basic Fund Value .In case of death we will pay to the nominee the higher of Basic Fund Value or BasicSum Assured.


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CHILD PLANS SOLUTIONS:

BSLI Dream Children Plan

In life there are some dreams like giving your child the possibleeducation , planning for their career or wedding or helping them start theirlife on an assured footing .And you would ideally like to guarantee thisagainst any eventually .BSLI brings its Dream Plan that can meet these needand give you the confidence to live tour life with freedom.

Its payable once your policy mature at the end of the policy term. And

you will receive the basic fund value at maturity. in the unfortunate death,wewill pay to the beneficiary the basic sum assured.

BSLI Saral Children Plan

Providing a guarantee for your Childs future is always been apriorityfor you. However you may have found the process of buying the right plan to

be a cumbersome and lengthy one. With BSLI saral solutions, choosing andapplying for the right child solution simple and easy.

In this policy minimum premium of Rs.10, 000 or more annually.And maturity benefit is payable only at the end of the policy term and only if the policy is still in effect at that time. you will recive fund value plusguaranteed addition at maturity.in case of death we will pay the sum assuredto the nominee immediately. And pay future premium on your behalf andcontinue untill maturity


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RETIREMENT SOLUTIONS:

BSLI Dream Retirement Plan

Through your workimg life you give your family the best and save foryour retirement years .You wish to live your Golden Years in the samecomfort and life style and continue to be the provider for your loved ones.BSLI brings its Dream Plans that can meet these needs and give you theconfidence to live your life with freedom.

In the form of additional units will be added to your plicy on the 10th

policy anniversary and on every 5th policy anniversary thereafter while yourpolicy is in effect.Each guaranted addition is 2% of the average basic fundvalue the last 60months.

Dream Freedom 58 Retirement Plan

BSLI Freedom 58 is designed so thatyou always remain in control of your destiny .Free from worries today, tomorrow and even when you retire .

Every individual has aspiration and we at Birla Sun Life Insuranceunder stand that these aspirations change over an individuals lifetime .WithBSLI Freedom 58 ,we help you in making your aspirations come true.Here eligibility age is 18 to 75 years .policy pay term regular and minimumannual premium is10,000.

secure 58 planThe BSLI secure 58 gives you the freedom to retire any time, and also offersflexibility to access your money .you enjoy a guaranteed corpus of funds atthe threshold of retirement plus the accumulated survival benefit that youcollect over the years. Here growth in savings and freedom to choose yourannuity. this freedom to access your money when you nee it.


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Here entry age is 18 to 80 years. Vesting age is 10 to 40 years from entry agemaximum vesting age is 90 years. Here more protection to your family.

Wealth SOLUTIONS:

Platinum premier plan

It is a savvy investor you have always appreciated the potential of the equity markets to generate wealth over the long term. Presenting theBSLI platinum premier plan, a plan that allows you to invest your firstthree annual premiums in the platinum premium fund. in this plan anyone want to take this plan should having 8 to 70 years of age and policyterm is 10 years. Premium paying term 10 years and minimum Rs.25, 000p.a. if paid annually. Sum assured is minimum 5*annual policy premium

Titanium plus planYou have always looked for financial solutions that offer you both

the width and variety of choice so that your wealth enjoys the upsides of the capital markets but is safeguarded from the risks due to volatility. Weat Birla sun life insurance understand this need to enjoy completefreedom to manage ones assets and believe that with BSLI titanium plusplan, we have ideal solution to meet your needs

In this plan age limit is 8 to 70 years of age and term 10 years,premium paying term 10 years. annual policy premium minimumRs.25,000 p.a. if paid annually and minimum Rs.30,000p.a. if paidmonthly, quarterly or semi-annually and sum assured is minimum5*annual policy premium.


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Health and wellness solutionsUniversal health plan

Over the years health care costs have been steadily increasing inindia.providing for the best medical care and hospitalization isproving to be increasingly expensive, especially when you have todip into your long-term savings to pay the hospital bills.In this plan policy tenure 3years premiums are depends on age andgender. All over the India 5,300 plus network hospitals thatprovide cashless facility. here guaranteed coverage till age 80 years

Protection plan solution:High net worth term plan

BSLI presents the BSLI high net worth plan that gives your familytotal financial security while allowing you to customize the planand also rewards you for leading a healthy lifestyle.

BSLI high net worth plan offers the following key advantagesComprehensive financial security at an affordable cost

Rewards you for your healthy life style and good habits

Customize the plan as per your needs

Accidental death and dismemberment benefit rider

Critical illness plus rider

Critical illness women rider

GROUP INSURANCE SOLUTIONS


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Our Group Plans offer a three-in-one advantage, as they are a powerful tool formotivation, reward and retention, in these times of high attrition.

Group Credit Life Plan

The plan can be conveniently structured in a way such that the entire loanamount or the balance loan amount is paid up in case of the untimely demiseof the borrower. The premiums can also be adjusted every year according tothe reducing loan balance amount.

Max Super Life Plan

Birla Sun Life Life presents one such solution to facilitate employeewellbeing and retention. A single master policy for all employees, Max SuperLife is the mainstay of our employee benefit platform. This easy andconvenient policy is valid for one year and can be renewed annually, in caseof death of an employee, due to natural or accidental reasons, the entire sumassured amount is paid to the employer.

Group Gratuity cum Term Assurance Plan

This plan is especially designed to enable you to fund your gratuityobligation in an organized and convenient manner while enjoying taxbenefits at the same time.


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MARKETING FUNDS OF BIRLA SUN LIFE LIFE INSURANCE

CREATOR FUND

To achieve optimum balance between growth and stability to provide

long-term capital appreciation with Enhancer level of risk by investing in

fixed income securities and high quality equity security.

ENHANCER FUND

To grow your capital through enhanced returns over a

medium to long term period through investments in equity

and debt instruments, thereby providing a good balance

between risk and return

PROTECTOR FUND

To generate persistent return through active management of fixed income portfolio and focus on creating long-term equity portfolio, which will enhance yield

of composite portfolio with minimum risk appetite.

INCOME ADVANTAGE FUND

To provide capital preservation and regular income, at a high level of safety

over a medium term horizon by investing in high quality debt instruments


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GLOSSARY

ACCIDENTAL DEATH INSURANCE

Insurance providing payment if the insureds death results from an accident.

ATTAINED AGE

Your current age. Your attained age is one of the factors life insurancecompanies use to determine your premiums.

BENEFICIARY

The person designated to receive the death benefit when the insured dies.

CASH VALUE

The equity amount or saving accumulation in a whole life policy.

CLAIM

Notification to an insurance company that payment of an amount is dueunder the terms of the policy.

DEATH BENEFIT


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The amount of money paid to the beneficiary when the insured person dies.

EXCLUSIONS

Specific hazards listed in a policy for which benefits will not be paid.

EXPIRY

The termination of a term life insurance policy at the end of its period of coverage.

FIXED BENEFIT

A death benefit, the amount of which does not vary.

GRACE PERIOD

Period of time after the due date of a premiums, during which the policyremains in force.

IN FORCE

Insurance on which the premiums are being paid or have been fully paid.

INCREASING TERM INSURANCE


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Term life insurance in which the death benefit increased periodically overthe policys term.

LAPSE

Termination of a policy upon the policy owners failure to pay the premiumwithin the grace period.

LIFE EXPECTANSY

The average number of years remaining for a person of a given age to live asshown on the mortality or annuity table used as a reference.

MORTALITY TABLE

A table showing the incidence of death at specified ages.

PARA-MED (PARAMEDICAL) EXAMINATIONS

The medical examination of applicants for life insurance.

POLICY HOLDER

The person who owns a life insurance policy. This is usually the insuredperson, but it may also be a relative of the insured, a partnership or acorporation.

PREMIUM


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The periodic payment required to keep an insurance policy in force.

REINSTATMENT

Putting a lapsed policy back in force by producing satisfactory evidence of insurability and paying the required past due premiums.

RENEWABLE TERM

Insurance that may be renewed for another term without evidence of insurability.

STANDARD RISK

Person who according to a companys underwriting standards is entitled to

insurance protection without extra rating or special restrictions.

TERM

Period for which the policy runs. In life insurance, this is to the end of theterm period for term insurance.

UNINSURED RISK

A person who is not acceptable for insurance due to excessive risk.


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TAXATION AND INSURANCE

Sections that deal with insurance are:

1. SECTION 10(10D):

Final payments made by the insurer are fully exempted from income Tax.

2. SECTION 80(CCC):

Up to Rs.10000 per annum paid towards premium under pension plan isfully exempted.

3. SECTION 80(DD):

Up to Rs.40000 per annum paid towards premiums for the benefits of

physically handicapped dependant children is fully exempted.

4. SECTION 80(C):

For approved savings by government of India there is exemption from tax.For life insurance up to Rs.70000 per annum is exempted from tax.


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CHAPTER III

THEORETICAL FRAMEWORK


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THEORETICAL FRAMEWORK

BASICS OF UNIT LINKED INSURANCE PLAN

What is a unit linked Insurance Plan?

Unit Linked Insurance Plan:

A policy, which provides for life insurance where the policy value at any timevaries according to the underlying assets at the time.

Unit Linked Insurance Plan (ULIP) is life insurance solution that providesthe client with the benefits of protection and flexibility in investment.

The investment is denoted as units and is represented by the value that it hasattained called as Net Asset Value (NAV).

UnitLinked

InsurancePolicies

Units InFunds

UnderlyingInvestment


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ULIP came into play in the 1960s and became very popular in WesternEurope and Americas. The reason that is attributed to the wide spread popularity of ULIPis because of the transparency and flexibility which it offers to the clients.

As times progressed the plans were also successfully mapped along with lifeinsurance need to retirement planning.

In todays times ULIP provides solutions for all the needs of a client like insurance planning, financial needs, financial planning for childrens future and retirementplanning.

An ULIP structure like as follows:


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Features of a Unit Linked Plan:

ULIP distinguishes itself through the multiple benefits that it provides to theconsumer. The plan is a one shop solution providing.

1. Life Protection

2. Investment and savings

3. Flexibility

a. Adjustable Life Cover

Contribution

Less Charges

Investment Represented asUnits Life Cover


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b. Investment options

4. Transparency5. Options to take additional cover against

a. Death due to accidentb. Disabilityc. Critical illnessd. Surgeries

6. Liquidity

7. Tax Planning

In todays fast paced world, the clients need change equally fast. Taking theabove benefits lets see how each gets morphed with situation changing for the client.

Life Protection:

Can any of us deny that we do not need life protection? Honestly none can especially when we see the fatal events that occur so frequently around us.

However the need may vary and ULIP provides the benefit of adjustingaccording to the varying need of the client.

The life insurance needs keep changing throughout the life stage of onindividual.


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Investment and Savings:

Undoubtedly all of us look for saving the money that we have and to ensurethat the investment that we make should create value for us and more the better.

Many life insurance plans present in the market do not provide justice to thisimportant need of the client. ULIP on the other hand has all the composition of satisfyinginvestment and savings needs of the clients.

ULIP provides the client with the option of investing as per personal risk profile and get returns accordingly. There are options of funds where in the client can putmoney in

Equity Markets

Debt Markets

Enhancer funds with a mix on the above two

Short Term Debt Market

This also helps the client in saving in accordance to the age as a youngerperson can afford to take some risk however a senior citizen might not be in a position tomake investment in comparatively high risk instruments.

With the option of four funds to invest in the client always has the option tochange shift as the risk and return orientation changes. Subsequent contributions andcontribution can also be allocates in different funds. Such features ensure that the client isable to use quality fund management for optimum benefit.


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Net Asset Value:

In traditional plans the policy holders are not aware of the value the policy isaccruing.

In a Unit Linked Plan the investments, which is denoted through a NAV, isthe real time indicator of the value of the fund. Therefore a policy holder can easily find outthat what is the value that the policy has accrued as of now?

Transparency:

Every client has the right to know about the manner in which thecontribution being given by him is being allocated. The biggest concern that is raised isabout the charges.

ULIP are completely transparent and the client knows as how every paisabeing is allocated.

There are various kinds of expenses that are involved in any insurance plan,these expenses may be related to the sales and distribution cost, or the operational costs,the costs related to the life insurance cover or the costs related to the management of expenses. Since all unit linked plans have a transparent structure, they have to exhibit allthe charges, it may be worthwhile to know about the various king of expenses related to aunit linked plan.

The various kings of expenses are detailed below:

1) Contribution Related Charges:


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These are charges that are represented as a percentage of the regular orsingle contribution paid. In case of a regular contribution cost. This charge pays for theassurance and for distribution commissions.

This is a charge to cover the running expenses of the policy. For single

contribution plans this is levied once at the start of the policy. For regular contributionplans this will be charged on a regular uniform basis depending upon the frequency of payments.

Normally these charges are shown as percentage of the contribution.Allocation is another terminology used by the company in actually representing costs.

Allocations are mathematically reverse of the charges. Thus mathematically.

Allocation = 1 Charges. Thus for example is a product has a 70% allocationin the first year, it means 1-0.7=0.3 or 30% charge.

2) Administrative Charges:

These are charges that are levied for that administration of the policy and

the related costs of administration of the insurance company, itself. These costs aredifferent from the assurance and distribution related costs of the product. They are morerelated to the costs like the IT, Operational etc cost of continuing the policy.

There are few prominent ways in which these costs are levied.

1. They can be levied as the percentage of the value of the investments(funds) in the account of the policy holder. So for example, as BajajAllianz levy a charge of 1.25% of the fund for the administration of the policy, every year. These kinds of charges get adjusted in the unitvalue (NAV), as the NAV is declared after adjusting these costs.


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2. They can be levied as a flat charge with an option of increasing it by acertain percentage over years. For example, Birla Levies a flatcharges of Rs.28 per month on its policy. HDFC SL unit linked planlevies Rs.180 annually as the administration charges.

3) Fund Management Fee:

All unit linked plans have underlying funds, which the policy holders choosefor their investments. These funds constitute of various financial instruments such asequity, bonds, money market instruments.

The fund management fees is levied to pay of the charges of managing theinvestments, which basically involve the cost of buying and selling the various financialinstruments for the various funds.

These charges are expressed as a percentage of the asset under managementof the insurance company. So for example, Birla in its creator fund charges 1.25% annuallyof the AUM, HDFC charges 0.80% its equity fund.

Interesting thing to know here is the factor on which the charges depend themain factor begin the fund composition.

For example, the cost of managing a bond is lesser than the cost of managingequity. Thus normally, the fund option, which has a higher percentage of equity, wouldhave higher charges comparatively to other funds.

So for example, where as Birla charges 1.25% of the AUM as the charge for

their creator fund which has 50% equity (Max) and 50% debt, Avivas Equity Fund with100% option charges 2.00% similarly, the debt fund of Birla, which has 90% debt, charges1.00% of the AUM as the annual charge.

4) Mortality Charges:


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This covers the cost of providing life protection for the insured and may bepaid once at the start of the policy or a recurrent manner. For example, this charge islevied to provide the insurance cover under the plan. Normally these charges are 1 yrcharges and keep changing as per the age of the policy holder.

These are normally expressed as per thousand of the sum Assured anddepend on the age of the policy holder.

So, for example one would have the mortality charge as Rs.1.50 per thousandof SA for a 30 year old and Rs.1.55 for the age of 35 years. This means that the cost ofinsurance of Rs.1,000 at the age of 30 is 1.50, where the same insurance cover costs Rs.1.5at the age of 35 years.

All unit linked products have a mortality charge table that is used tocalculate the life insurance cover charge on a yearly basis.

5) Rider Charges:

Rider charges are similar in nature to the mortality charges as they are

levied to pay for the other protection benefits that the policy holder has chosen for like thecritical illness benefit or the accident benefit, etc.

6) Surrender Charges:

When the policy holder decides to surrender the policy or partially withdrawsome of the unit for cash, a surrender charge may be apply. Usually the surrender Chargesonly apply in the first few years after the units are invested and are usually on a decreasingscale. Surrender charges are used to cover initial expenses that have been incurred by thecompany but not yet recovered form the policy holder yet.


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These charges can either be expressed as a percentage of the value of investments or as a fixed flat charge, depending on the structure of the product.

So, the policy holder may have charge of 2% of the unit value as thesurrender charge or Rs.1,000 as the surrender penalty.

Surrender charges usually apply to policies with high allocation, especially inthe first few years.

7) Bid Offer Charges:

In ULIP specifically certain insurers might create a difference in the price atwhich they sell the unit and the price at which they buy the units.

Investors contributions are used to buy units in the investment found at theoffer price and are sold when benefits are required at the bid price. The difference betweenthe offer and bid prices is known as the bid offer spread. This is used cover expenseswhen setting up the policy Bid offer spread is expressed as a percentage of the NAVs andhence also becomes a percentage of the value of units.

So for example a company has bid offer spread of 5% and has an offerprice of Rs.10 per unit. This means that the bid price would be 5% less and hence 95% of the offer price, i.e.95% *10 = Rs.9.50.

Hence, a policy holder having 100 units in his investment would getRs.9.5*100 = Rs950 as his value and if he has to but another 100 units he will have to pay

Rs 10 *100 = Rs. 1,000. This Rs 50 difference is the bid offer spread.

Any fund, which has a bid offer spread would have 2 NAV fund same forbuying and selling.

8) Transactional Specific Charges:


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These charges are levied when the client does some specifics transaction likechanging funds, topping up the investment component or withdrawals.

9) Extra Protection:

Riders facility makes the ULIP a very practical insurance in current times.Most life insurance plans do not provide the policy holder the facility of withdrawingmoney incase the need arises.

Unit linked plans provide you easy access to your money as and when youmay require. One can redeem the units after a particular period of time as defined by theplan, as per the need. ULIP allows either partial & complete withdrawal, withoutpenalizing the policy holder.

For example in the 6th year of your plan, you require 15,000% for certainmedical expenses that came up.

Your investment has been making in the Enhancer fund. If the current NAVof the Enhancer fund is 15%, then all you need to do is the sell 1000 units, which will giveyou 15,000%. The rest of the fund and the policy will continue normally as this is partialwithdrawal.

If need be, the policy holder can withdraw all the money in the funds byredeeming all the units.

Liquidity thus provided to the policy holders is immense value in servicingthe ever changing need for the client.

10) Planning:Regulation in India allows tax benefits in the contribution paid under section

88. Contribution paid for health riders (critical illness and major surgical) is allowed taxbenefit under section 88 D, as per the prevailing tax laws.

Maturity benefits are tax free under section 10 (10) D, provided the life coveris at least 5 times of the annual contribution paid.

Death benefit is tax free under section 10 (10) D.


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With so many tax benefits available in one instrument ULIP tends to be anintelligent tax planning tool.

WORKING OF A UNIT LINKED PLAN

For example:

A client puts in regular contribution of 20,000/-, from this amountpercentage is deducted as a contribution.

Therefore if the contribution related expenses is 20% Rs. 4000/- will bededucted as a contribution charges.

The amount that is not available is 20,000 4,000 = 16,000/-Now, if the client who is aged 30 years were to take a life cover of 5,00,000/-

then mortality (1.50/- per thousand at the age of 30)charges of 750 will be deducted.This amount will provide life cover to the policy holder. The remaining

amount of 15,250/- will be invested in any of the underlying funds i.e. Debt equity or Mixof both the two. The client can invest in any one of them or all of them.

The investment is showed in terms of units. Thus if the client invests in debtfund and the NAV of the debt fund is 16/- (market price) then the number of units that theclient will get is 15,250/- 16 = 953.125. For this investment fund management fee will b

charged and for maintaining the policy an administrative charge is levied.

MEASURES OF FUND PERFORMANCE

SHARPES PERFORMANCE INDEX

Sharpes performance index gives a single value to be used for theperformance ranking of various funds or portfolios. Sharpe index measures the risk premium of the portfolio relative to the total amount of risk in the portfolio. This risk


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than the market return, in the decline. The ideal fund may place its fund in the treasurybills or short sell the stock during the decline and earn positive return.

Tn = Portfolio average return Risk less rate of interest

Beta co efficient of portfolio

Tn = Rp - Rf

Treynors risk premium of the portfolio is the difference between the averagereturn and the risk less rate of return. The risk premium depends on the systematic risk assumed in a portfolio.

RETURNS:

Investors always expect a good rate of return from their investments. Rate of return could be defined as the total income the investors receives during the holding periodstated as a percentage of the purchasing price at the beginning of the holding period.

RETURN = (End period value beginning period value / beginning periodvalue )* 100


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RISK:

Risk of holding securities is related with the probability of actual return

becoming less than the expected return. Investments risk is just as important as measuringits expected rate to return because minimizing risk and maximizing the rate of return areinterrelated objectives in the investment management. Every investor likes to reduce therisk of his investment by proper combination of different securities.

RISK = Rp Rp

BETA:

Beta is a slope of the characteristic regression line. Beta describes therelationship between the stocks return and the index returns.

= nXY (x) y) / nX2 (X)2


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LIFE INVESTTM

PLAN

IN THIS POLICY, THE INVESTMENT RISK IN INVESTMENT PORTFOLIO ISBORNE BY THE POLICYHOLDER.


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Life invest is a powerful insurance plan that empowers us to manage ourinvestments through our insurance policy. In this unit linked plan, we can direct ourinvestments in their customized unit linked funds, which offer investments of differenttypes; Fixed Income ( Eg: Govt. Securities, Company Debentures and Equity Shares).

These funds offer you different combinations of fixed income and equity assets rangingfrom potentially high risk high return to potentially low risk low return to matchyour risk taking ability.

TAX BENEFITS:

This plan may entitle you certain tax benefits on your premiums as well as onyour maturity value.

U/s 80 C of the Income Tax Act 1961 on your annual premium on your policy.

U/s 10(10D) of the Income Tax Act 1961 on your maturity proceeds of the policy.

THE UNIT PRICE OF FUND CALCULATION:

Unit price of a fund will be determined by dividing the net asset value of thefund by the outstanding number of units on the fund valuation date. The value of a fundwill be determined and based on the market value/ fair value at which assets referenced tosuch fund can be respectively purchased or sold, plus the respective cost of purchasing orminus the cost of selling the assets, plus the value of current assets, plus any accrued


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income net of fund management charges, less the value of current liabilities, less provisions,if any. The value of funds may increase, decrease or remain unchanged accordingly.

INVESTMENT OPTIONS:

They have the flexibility to direct our investments in any one or more of thefollowing four unit linked investment funds of the company:

INCOME ADVANTAGE, PROTECTOR, ENHANCER AND CREATOR.

These funds invest in Fixed Income and Equity assets as follows:

ANALYSIS AND INTERPRETATIONANALYSIS OF THE CREATOR FUND

Fund Objective:

INVESTMENTTYPE

FUNDS

CREATOR ENHANCER PROTECTOR INCOME

ADVANTAGE

Equities 20 70% 20 40% 0 15% NIL

Corporate Bonds 0 30% 20 40% 0 50% 0 50%

Money MarketInstruments /Cash

0 20% 0 20% 0 20% 0 20%

GovernmentSecurities

0 30% 20 50% 50 80% 50 100%


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To achieve optimum balance between growth and stability to provide long-

term capital appreciation with Enhancer level of risk by investing in fixed income

securities and high quality equity security.

Inception Date : 23 Feb 2004

Bench Mark : BSE 100&CRISIL composite Bond Index

ASSET ALLOCATION

Total

52.50%30.50%

14.40% 2.50%0.10%

Equities

Corporate Bonds

Cash and Cash Equivalents

Government Securities

Preference Shares

ALLOCATION TOTALEquities 52.50%

Corporate Bonds 30.50%Cash and Cash Equivalents 14.40%

Government Securities 2.50%Preferences Shares 0.10%

Grand Total 100.0%


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Table showing return on fund and return on Market

YEAR RETURN ON FUND % RETURN ON MARKET %April 06 -1.63 -6.54

Aug 06 3.57 4.25

Dec 06 2.5 4.99April 07 1 1.34

Aug 07 5.12 9.7

Dec 07 0.74 -0.71

April 08 7.57 12.3

Aug 08 2.54 2.27

Dec 08 3.36 7.74

April - 09 5.36 10.6Aug -09 4.97 5.2

Dec-09 6.82 6.5

Apr-10 7.11 10.63

Aug-10 5.46 7.26

Average return on fund R p : 3.01%

Average return on fund R m : 4.59%

Standard deviation on fund : 2.49%

Covariance : 82.72%

Beta : 2.11

Risk free rate of return R f : 8%

Sharpe index : S t : -2.00

Treynor Index T n : -2.36


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INTERPRETATION:

The analysis of the returns for the Creator Fund from April 2006 to April 2009 reveals that the return on fund is fluctuating along with the return on market.

In the year Apr 06 Creator Fund showed a negative return which hasturned into positive figure at the end of the year 2006.

In the year 2007the return has increased to the maximum of 5% and eventouched minimum of 0% at the end of the year - 2006.

CREATOR FUND

-10

-5

0

5

10

15

A p r i

l 0 6

A u g

0 6

D e c

0 6

A p r i

l 0 7

A u g

0 7

D e c

0 7

A p r i

l 0 8

A u g

0 8

D e c

0 8

9 - A p

r

9 - A u

g 9 - D e

c

1 0 - A

p r

1 0 - A

u g

YEAR

R E T U R N

RETUON F%

RETUONMAR%


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During the year 2008 the maximum return is noticed at the beginning of the year i.e. 7.57% and the lowest return in the year is 2.54% in the year 2009. Thereturn on fund in the first quarter is 5.36%. As a whole the graph reveals that the returnon fund in comparatively less volatile than the return on market.

As maximum of the fund is invested in equities i.e. around 52%,. The equitymarket has a lead of equity indicies. That is the reason volatility in return is inevitable.

ANALYSIS OF THE ENHANCER FUND

Fund Objective:

To grow your capital through enhanced returns over a medium to

long term period through investments in equity and debt instruments,

thereby providing a good balance between risk and return

Inception Date : 22 March 2001Bench Mark : BSE 100&CRISIL Composite Bond index

ASSET ALLOCATION

ALLOCATION TOTAL


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Apr 07 1.01 1.34Aug 07 3.43 9.7Dec 07 0 -0.71Apr 08 3.96 12.3Aug 08 1.62 2.27

Dec 08 2.08 7.74Apr - 09 3.11 10.6Aug -09 4.26 7.35

Dec-09 3.9 5.67

Apr-10 3.8 6.49Aug-10 4.1 7.50


Average return on fund R m : 4.59%

Standard deviation on fund : 1.47

Covariance : 84%

Beta : 3.61


Sharpe Index St : -4.25

Treynor Index Tn : -1.73


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ENHANCER

-10

-5

0

5

10

15

A p r

0 6

A u g

0 6

D e c

0 6

A p r

0 7

A u g

0 7

D e c

0 7

A p r

0 8

A u g

0 8

D e c

0 8

9 - A p r

9 - A u g

9 - D e c

1 0 - A p r

1 0 - A u g

R E T U R N

RET

N O

FUN

%

RET

N O

MAR

T %

INTERPRETATION:

The analysis of the returns for the Enhancer Fund from April 2006 to April 2009 reveals that the return on fund is fluctuating in some direction with the return onmarket. But the deviation in the return on market is more than the return on fund.

In the beginning of April 2006 Enhancer Fund showed a negative returnwhich has turned into positive figure at the end of the year 2006. In the year 2007 thereturn has increased to the maximum of 3% and even touched minimum of 0% at the endof the year 2007.


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During the year 2008 the maximum return is noticed at the beginning of the year i.e. 3.96% and lowest return in the year is 1.62% in the year 2009. The return onfund in the first quarter is 3.11%.

As maximum of the fund is invested in corporate bonds i.e. around 39.40%

and 29.30% in equity market. The bond market and equity market fluctuations can be seenin the fund. That is the reason volatility in return is inevitable.

ANALYSIS OF THE PROTECTOR FUND

Fund Objective:

To generate persistent return through active management of fixed income portfolioand focus on creating long-term equity portfolio, which will enhance yield of composite

portfolio with minimum risk appetite.

Inception Date : 22 March 2001Bench Mark : BSE 100&CRISIL Composite Bond index


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ASSET ALLOCATION

ALLOCATION TOTAL

Government Securities 55.10%

Corporate Bonds 30.50%

Cash and Cash Equivalents 4.30%

Equities 10.10%

Grand Total 100.0%

Asset Allocation

55.10%30.50%

4.30% 10.10%


Corporate Bonds


Equities

Table showing Return on Fund and Return on Market

YEAR RETURN ON FUND % RETURN ON MARKET %Apr 06 -0.28 -0.13Aug 06 1.09 -0.35Dec 06 0.7 -0.10Apr 07 0.83 -0.89Aug 07 1.76 0.26Dec 07 0.39 -0.13Apr 08 1.97 -0.82Aug 08 0.66 -0.56Dec 08 1.24 0Apr - 09 1.25 -0.24


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Aug -09 1.55 -.090Dec-09 .95 -0.15Apr-10 1.37 -0.70Aug-10 1.18 0.20


Average return on fund R m : -0.29%

Standard deviation on fund : 0.61

Covariance : 63.5%

Beta : -0.06


Sharpe Index St : -11.5

Treynor Index Tn : 117.33


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PROTECTOR FUND

-1

-0.5

0

0.5

1

1.5

2

2.5

A p r

0 6

A u g

0 6

D e c

0 6

A p r

0 7

A u g

0 7

D e c

0 7

A p r

0 8

A u g

0 8

D e c

0 8

9 - A p r

9 - A u g

9 - D e c

1 0 - A p r

1 0 - A u g

YEARS

R E T U R N

RETURN

MARKET

RETURNFUND %

INTERPRETATION:


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The PROTECTOR fund of Birla Sun Life Live is showing a positive averagereturn 0.96% when compared to market return (-0.29%) which is negative.

From the above graph the fund is showing the negative return during thetime period April 2006 which is correlating with the market return but later the fund

return has turned into positive figure showing 1.09% during August 2006, in December 2006 return has slightly decreased to 0.7% after which it is in increasing trend till Aug 2007 showing 1.76% return on fund (Rp).

The fluctuations during the period December 2007 to December 2008 issimilar and finally the return on fund stood at 1.25% at the end of April 2009.

Analysis reveals that the coefficient of variation is 63.5% on the returns of the fund indicating a good fluctuation which is not a good sign. Even though 55% of thefund is in Government securities and 31% in corporate bonds. The fund return on fund isnot that stable and good.

ANALYSIS OF THE INCOME ADVANTAGE FUND

Fund Objective:To provide capital preservation and regular income, at a high level of

safety over a medium term horizon by investing in high quality debt instruments

Inception Date : 22 March 200

Bench Mark : BSE 100&CRISIL Composite Bond index

ASSET ALLOCATION


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ALLOCATION TOTAL

Government Securities 57.70%

Corporate Bonds 48.80%

Cash and Cash Equivalents 1.50%

Grand Total 100.00%


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Asset Allocation

57.70%

48.80%

1.50%


Corporate Bonds


Table showing Return on Fund and Return on Market

YEAR RETURN ON FUND % RETURN ON FUND %Apr 06 0.19 -0.94

Aug 06 0.28 0.44Dec 06 0 1.80Apr 07 0.93 -0.23Aug 07 0.55 2.84Dec 07 0 -0.69Apr 08 0.53 0.44


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INTERPRETATION:

The Income Advantage Fund of Birla Sun Life Live is showing a positiveaverage return 0.39% when compared to market return (0.71%) which is negative.

From the above graph the fund is showing thee positive return during thetime period April 2006 which is correlating with market return. Later the fund returnhas increased showing 0.28% during Aug 2006. in December 2006 return has fullydecreased to 0%. After which it is in increasing trend till April 2007 showing 0.93% onfund (Rp).

During December 2007 the fund return value decreased to 0% and finallythe return on fund stood at 0.74% at the end of April 2009.

Analysis reveals that the coefficient of variation is 110.25% on the returns of the fund indicating high fluctuation. Even though 57.70% of the fund is in GovernmentSecurities and 48.80% in Corporate Bonds.


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Table showing Return, Standard deviation Beta, Sharpe Index and Treynor Index on allthe Market funds of Birla Sun Life Life Insurance

Performance Evaluation of Birla Sun Life Life Insurance Market Fundsbased on Sharpe Performance Index

SHARPES PERFORMANCE INDEX:Sharpes performance index gives a single value to be used for the

performance ranking of various founds or portfolios. Sharpe index measures the risk premium of the portfolio relative to the total amount of risk in the portfolio. This risk premium is the difference between the portfolios average rate of return and the risk lessrate of return. The standard

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